Nigeria’s oil and gas industry outlook for 2020, a mixture of good and bad
The Nigerian oil and gas outlook looks promising on one side and on the other hand not too good as the government might to take certain step to curtail encroachment into her traditional trading territories by the United States of America.
However, given the number of activities that took place last year and some policy pronouncements made by government officials the industry looks promising.
With the taking of final investment decision (FID) on Nigeria liquefied Natural Gas NLNG Train 7, it is hoped that the industry would be energised and by extension boost the economy and create jobs.
The NLNG train 7 has been delayed for several years. The signing is a big boost to the government investment drive and hopefully it would act as impetus for other investors that have been staying on the side-line.
There is likely to be a lot of activities by oil and gas companies this year on account of the FID.
According to Bank-Anthony Okoroafor, president, Petroleum Technology Association of Nigeria (PETAN), he said with this development the Nigerian National Petroleum Corporation (NNPC) has demonstrated capacity to deliver on other big projects.
The NNPC holds 49 per equity stake in trust for the Federal Government of Nigeria in the NLNG.
“This raises hope on other big projects in 2020 like Bonga South West,” he said.
If the government decides to keep to its promise of organising oil licensing rounds whether marginal or for big oil fields, it would then mean that the activities in oil and gas industry would likely be up scaled this year.
With Dangote Refinery itching towards completion and Waltersmith modular refinery expected to commence production,impact on foreign exchange on importation of petroleum products would be highly reduced. Also, if the Niger Delta Petroleum Refinery comes on stream with Jet Fuel, Premium Motor Spirit (PMS) and increase of its Automotive Gas Oil (AGO) production, it means the time for stoppage of petroleum subsidy is in sight
THE Nigeria Content Development and Monitoring Board (NCDMB) is expected to be more aggressive in 2020 to raise the Nigerian content in most projects.
The minister of State Petroleum, Sylva Timipre has assured us that the petroleum Industry Bill (PIB) will be passed into Law by mid year 2020. This will definitely remove the uncertainty around fiscals and sanctity of contracts if this does happen.
If the government maintains the tempos of obeying of court orders as displayed before Christmas, this would definitely have positive impact on the oil and gas investments.
However there are certain concerns by Oil and Gas operators who felt if the government does not take the necessary steps to checkmate some development in the international arena Nigeria would find it challenging to sell her oil, especially at the international market.
For instance, with US crude oil production averaging 13.33million barrels per day (mbpd) and with it putting energy in bilateral trade deals with India and china that are the traditional buyers of Nigeria’s crude oil, it is hoped that this does not affect the country’s crude sales to these countries.
The other areas that can affect oil and gas in 2020 includes weakening global economic growth in USA, Europe and china, Trade tensions , political risks like 2020 USA elections, outcome of Brexit in Europe and any tensions in Middle East.
Also, it is not known if the Production Sharing Contract (PSC )amendment and the new finance bill will have any effect on investments in 2020.