HARRISON EDEH,ABUJA
Experts in the Oil and Gas sector are concerned that 50 years after oil exploration in Nigeria , indigenous companies are yet to have a major stake in Nigeria’s Petroleum exploration and the overall energy sector.
Their concerns are coming on the heels of the comments made last week by Nigeria’s deputy Minister for Petroleum resources, Emmanuel Ibeh Kachikwu, that indigenous companies should brace up for up about 30 percent total production in the oil sector within the next five years.
The Minister informed of Federal Government’s target of $100bn investment in the petroleum sector, while also expressing confidence that Nigera’s indigenous companies could have more grounds to operate in investment in the sector.
The investment targets gas infrastructure, pipe projects, replacement of existing dilapidated pipelines among others.
”Access to investment capital is still impeding local investors in
Both the upstream and downstream sector. I make bold to say that local banks are more comfortable giving loans to International Oil Companies, than to indigenous companies,” said Adeola Adeniju, Professor of Economics and director of the Centre for Petroleum Energy Economics and Law at the University of Ibadan.
“The investment in the petroleum sector, apart from being capital intensive ,the indigenous companies have not really gained enough confidence to spur investment in the sector,” he further stressed.
Adenikinju further explained that for instance, it would cost about $20 million to transmit oil to export terminal of about about 30 to 40 kilometres of pipeline.
“The local banks cannot spur this investment for now, due largely to associated risks, as many of those banks have risk exposure to energy sector,” he said.
He also blamed the delay in the passage of the other components of the Petroleum Industry Bill as another major source of worry to several local and potential investors, who he said are key in determining the direction investors should follow.
The energy expert, however, suggested that Nigeria’s indigineous oil firms could look to international banks, for their funding, if they must attain the 25 percent participation being proposed by the minister.
Another energy expert, Dauda Garba, told Businessday that,”Is it not disheartening that our local content law came in place in 2010, after about several years of oil exploration. We must go back to the dictates of the local content law to ensure we harvest the benefits in the oil sector and job creation for our teeming population.”
Garba also pointed out that the matter is worsened by the fact that even the local banks are still not so much disposed to funding the petroleum sector due to certain risk exposures.
The Nigerian Content Development and Monitoring Board (NCDMB) was established by the Nigerian Oil and Gas Industry Content development Act of 2010.
The key thrust of the Act is to ensure integration of oil producing communities into the oil and Gas Value chain, foster institutional collaboration, while also ensuring maximum participation of Nigeria’s in the Oil and Gas activities.
In line with the provisions of the act, Kachikwu remarked that the focus of the much needed $100bn investments to improve the petroleum sector is to ensure local content through well articulated programmes to achieve incremental local participation in oil and gas projects.”
“I have already set a timeline for the Nigeria Content Development and Monitoring Board to set a 10 year plan to plan for a total Floating Production Storage and Offloading, FPSO,” Kachikwu noted.
