As Nigeria's oil and gas sector awaits the
passage of the Petroleum Industry Bill (PIB) to
provide clarity on the terms of investments, the
Minister of State for Petroleum, Dr. Ibe
Kachikwu, has stated that the federal
government would finalise four new additional
policies in the sector by the end of October this
year.
Kachikwu has also hinted that the proposed talks
on output cuts by the Organisation of Petroleum
Exporting Countries (OPEC) to ensure the
rebound of oil prices would have limited
influence on the prices as the cartel controls
only 30 per cent of the global oil output.
Speaking yesterday in Lagos at a conference
organised by the National Association of Energy
Correspondents (NAEC), Kachikwu stated that
the country's oil and gas sector was faced with
myriads of problems that required urgent
solutions, stressing that the drop in oil prices
was the least of the country's problems.
Also speaking at the conference, the outgoing
Managing Director and Chief Executive Officer of
Nigeria LNG Limited, Mr. Babs Omotowa,
disclosed that any tinkering of the Nigeria LNG
Act of 2004 will violate bilateral agreements with
international investors as well as cost the
country a huge $25 billion in foreign direct
investment (FDI) and fines running in billions at
the international courts.
Kachikwu said the issue of cash calls deficiency
had been his nightmare with $2 billion shortfalls,
which had accumulated to arrears of about $6.2
billion.
"Every year, we lose 10 to 15 per cent of the
joint venture production. There have been no
new projects in the last five years and most of
the projects touted cannot stand the current
economic realities as they were based on $90
per barrel oil price. We are losing investments to
our immediate neighbours," he explained.
According to him, the drop in oil prices is a
global problem that is not peculiar to Nigeria,
adding that the country has more pressing
problems, arising from the renewed attacks on
oil facilities by the Niger Delta militants.
Kachikwu, who spoke on the topic: 'The Urgency
of Now', revealed that while 3,000 cases of
pipeline vandalism were recorded in the country
from 2010 to 2015, the country had recorded
1,600 incidents between January and June this
year, representing over 50 per cent of the
incidents that occurred in five years.
He said the incidents of vandalism that occurred
in the previous years had led to the loss of 643
million litres of petroleum products, amounting to
N51.28 billion lost in 2015.
"Between January and June 2016, 1,600
incidents were recorded, resulting in the loss of
109 million litres of petroleum products and
560,000 barrels of crude oil to the refineries,"
Kachikwu added.
He added that while 850 million standard cubic
per day of gas has been shut in due to the Niger
Delta crisis, which has led to power outage
exposure of 2,700 megawatts to 3,000MW.
The minister further disclosed that the crisis has
forced a drop in the country's crude oil
production from nearly 2.3 million barrels per day
to about 1.56 million bpd.
"In addition, the Niger Delta crisis has resulted in
loss of lives, high cost of operations, fuel
shortages and environmental degradation.
"Additional 1.1 million barrels of oil per day is
required to be produced between now and end of
the year to meet the targeted annual production.
We don't have money to finance federal budget
due to problems outside the control of the
government. We need to produce extra 1.1
million barrels per day to be able to catch up," he
added.
The minister appealed to the Niger Delta
militants to use the same level of aggression
used in destroying oil and gas facilities to join
the negotiation table.
"I am as passionate as the militants are on
issues concerning the Niger Delta. But whatever
message they want to convey, they must stop
destroying pipelines and use the same level of
aggression used to destroy the pipelines to the
negotiating table," Kachikwu said.
He noted that the country's oil and gas industry
requires policies to remove the challenges facing
the sector.
According to him, apart from the PIB, the federal
government will finalise and gazette four new
policies in the sector by October this year.
Kachikwu identified the four policies to include:
National Oil Policy, National Gas Policy,
Downstream Policy and Fiscal Reform Policy.
"We need to complete these between now and
October, but the problem is bureaucracy. So,
how do we go to the National Assembly to get
the permission for the urgency," he added.
Kachikwu said the gas policy, for instance, would
"unlock the gas potentials; ensure effective
development of the Nigerian gas market with
adequate and sustainable gas supply to the
power and industrial sectors; transit from gas
flare penalty regime to flare commercialisation
and shift focus from government-built to
investor-built infrastructure."
He said apart from the four new policies, the PIB
would also be split into three sections.
Speaking on the proposed OPEC talks to cut
output to ensure price recovery, Kachikwu stated
that OPEC's decision would have limited impact
on the oil market as the cartel controls only 30
per cent of the market.
"OPEC controls only 30 per cent. So, even if we
shut down, it will have limited impact because
the 70 per cent producers are more powerful.
Only a handshake between OPEC and non-OPEC
can solve it by inviting Russia, Mexico and the
United States.
"Are we cutting volumes? I don't see that
happening. Will that meeting help lift the price?
Well yes if we succeed in having conversations
with Russia, the US and Mexico. If there is a
handshake with individuals across the aisle, that
would be the beginning."
The theme of the NAEC conference was 'Low Oil
Price: Impact and the Way Forward'.
Omotowa, who was the chairman at the
conference, has been the Managing Director for
NLNG for some five years and will be handing
over to the incoming Managing Director, Mr.
Tony Attah, on September 1, 2016.
Speaking during his address, Omotowa said
NLNG, through its expansion growth programme
which involves the expansion of production
capacity of the LNG plant in Bonny, Rivers , with
a Train 7 and 8, could attract $25 billion, create
30,000 construction jobs, help to further reduce
gas flaring and generate over $1billion to
$2billion additional revenue to the country in
taxes and dividend.
"In a period of huge youth unemployment and
need for more revenue, this should really be a
cause we should have all hands on deck for
especially as NLNG has demonstrated its
pedigree having attracted $15billion in foreign
investment, grown from a 2 Train to a 6 Train
plant, contributing to the reduction gas flaring
from 65 per cent to below 20 per cent, delivering
$33 billion to Nigeria from a $2.5 billion
investment. This potential $25 billion in
investment, creation of 30,000 jobs, reduced gas
flaring among others are being put in jeopardy by
attempts to renege on promises that Nigeria
gave to foreign investors which enabled the
historical $15 billion investment historically
attracted," Omotowa explained. Source. All africa
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