The Society of Petroleum Engineers Nigeria Council has said many oil and gas projects are not economic at the current oil price of $45 per barrel.
The Chairman, SPE Nigeria Council, Joseph Nwakwue, said the collapse in crude oil prices and demand had huge negative implications for petroleum engineers.
Nwakwue spoke at a press briefing on Tuesday ahead of the SPE Nigeria Energy Industry Transformation Summit slated to be held virtually next week.
He said, “COVID-19 shut down the world economy; with that came a reduction in the demand for our major commodity, oil.
“Reduced demand has resulted in low prices. That means less jobs; people are laying off. Projects that should have been sanctioned, maybe those with breakeven prices in the $50-$60 range, can no longer go forward.
“You can’t employ people for those projects. So, it has had a very massive negative impact on petroleum engineering as a whole.
“If the outlook for prices is not rosy – people don’t think prices are going to recover in the near term because it is going to take a while for demand to reach pre-COVID-19 levels.
“At $45, many projects will not be economic and if they are not economic, you don’t hire people. So, it is not good for us; it has been a very challenging time for the industry.”
Nwakwue said the forthcoming summit would discuss the changing global energy landscape, adding, “SPE Nigeria recognises the ongoing energy transition and the challenges it has thrown up.
“We also feel that as industry experts, we are better positioned to lead the discussion on what the industry and indeed government should be doing to ensure sustainability of not just our industry, but the entire economic system which is anchored on energy use. So, we feel an obligation to help figure out the way forward
“It is important to recognise that we are in the early days of a transition, moving away from ‘dirty’ fuels to ‘cleaner’ fuels. Post-COVID-19, energy demand forecasts are still robust and would require significant capacity adds not just in fossils but in renewables.”
According to the SPE boss, the challenge is how to find and develop these resources in a safe, cost-effective and environmentally sustainable manner.