International Oil companies Shell, Total and other key operators have said for Nigeria to achieve the desired transformation in the oil industry, she must meet certain conditions.
According to them, the issue of cost, security, transparency in the award of acreages and the passage of Petroleum Industry Bill must be fully addressed before any meaningful transformation can take place.
Other conditions listed include a shift from rent-seeking to value-added prone economy; Adoption of pricing regime for gas that encourages investment in gas infrastructure for domestic use and proper management of oil revenue as this will allow for savings that can serve as buffers for the nation during oil shocks; reduce government spending of oil revenue on importation.
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Osagie Okunbor, managing director, Shell petroleum Development Company and chairman of Shell Companies in Nigeria said that there is need for Federal government to implement full fiscal reforms and ensure passage of the Petroleum Industry governance bill as that will shore up the investors’ confidence in the sector.
Okunbor who was represented by Tony Olagunju, general manager in charge of projects, Shell while speaking at the pre-conference workshop of Nigerian Association of Petroleum Explorationists (NAPE) ahead of its 35th Annual International Conference & Exhibition held at Eko Hotels and Suites, Lagos said Nigeria oil and gas operators need to embrace advance technology in their operations if they hope to increase production and meet local demand of petroleum products.
“If Nigeria hopes to surpass the set targets of 2 million barrels of oil per day and 10 billion standard cubits feet of gas per day production, Security of energy infrastructures like oil and gas pipelines and facilities; full fiscal reforms, passage and implementation must take place,” said Emmanuel Egbogah, chairman, Emerald Energy resources and former special adviser to the president on petroleum matters in his keynote address at the event.
While speaking on the topic; Transforming the oil and gas industry in Nigeria to meet emerging global energy market realities, Egbogah observed that energy security also entail government having the political will in transforming the oil and gas industry via appropriate policies to ensure that oil and gas resources are not primarily developed for foreign exchange earnings.
According to him, “Implementation of the flexible fiscal instrument and contract terms is important as the current fiscal and regulatory inadequacies in the Nigeria oil and gas sector is causing it to lose current market share to other African countries.
He further stated that efficient resources allocation mechanism is a prerequisite for the transformation of Nigeria’s oil and gas industry saying that the mode of acreage award practice in-country is currently not at par with global best practices as the process is ridden with transparency and accountability issues.
He said the way forward in adopting and institutionalisation of a competitive bidding process with strict guidelines void of political influence and manipulation which will provide a platform for new investors both local and foreign to grow the industry.
He called for an increase in local refining and consumption of crude oil as energy consumption grows the economy, not energy production.
“The hydrocarbon derivatives by local people within Nigeria domestic and regional markets are more likely to grow economy faster than the hydrocarbon export,” he said.
Nicolas Terraz, managing director of Total E &P Nigeria said operator must share best practices and experiences to enable them to adapt and quickly take action that will sustain their operations in the future.
He assured that despite the challenging operating environment, Total is committed to investing in the country.
OLUSOLA BELLO AND KELECHI EWUZIE
