Methodological approaches to oil supply models have evolved from a strict focus on engineering and geophysical drivers of reserves depletion through the incorporation of economic and regulatory variables to the consideration of climate change targets. Four alternative models of oil supply are specified and estimated, following which the key policy elements of climate change are intersected with oil depletion forecast models
A trinity of objectives are pursued in this report as follows:
- To assess Nigeria’s oil industry performance indices relative to OPEC and the global industry.
- Specify and estimate four alternative models of oil depletion models.
- Intersect the key elements and assumptions of climate change policy with the oil depletion forecast.
The performance of Nigeria’s oil industry is consistent with the supply-side expectations required to avert the global temperature increase above 1.5 °C. The reserves replacement ratio has declined to 76% – lower than even the global average of 97% for 2000 – 2019. Recoverable reserves growth has averaged ~ 2% from 2000 – 2019.
Statistical modeling shows that continuous coordination with OPEC exhibits the largest influence on Nigeria’s production from 1970 – 2019. According to the statistical model of depletion forecast, oil production declines from 1.90 MMbbls/day in 2022 to 1.25 MMbbls/day in 2040 . This decline is accompanied by an increase in upstream carbon emissions to 94 million tonnes of CO2 eq by 2040. Correspondingly carbon tax payouts by upstream players amount to $4 billion by 2040 if the carbon tax policy is implemented at the timing and level suggested by the net zero by 2050 target.
Key opportunities have been highlighted to improve carbon intensity specification of upstream oil operations in the Niger-Delta.
Details of the report can be downloaded here