UPDATED: New Oil Policy targets long term sales of petroleum products

Nigeria’s Federal Executive (FEC) Council on Wednesday approved a National Oil Policy which amongst other things targets long term sales of petroleum products, which is the main source of the country’s revenue.

In implementing the policy, officials say the government will hitherto consider geographical markets in long term contracting and sales of its oil as opposed to the currently structured contracting.

“How we sell our crude is going to be looked at, there is a lot of geographical market we need to look at long term contracting and sales as opposed to systemic contracting we have been doing” Emmanuel Ibe Kachikwu, Nigeria’s minister of State for Petroleum Resources told journalists at the Post FEC briefing.

Nigeria, Africa’s Top Oil producer struggling to exit its worst ever economic recession in 25 years, depends mostly on revenue from its oil resources to drive the economy even as it recently commenced moves to generate more income through non oil sources like tax.

FEC’s approval of the policy his comes a month after a National Gas Policy was approved by Council to drive changes in policy that will make gas a hub of the Nation’s economy. The last review of the oil policy was done 10 years ago amidst dynamic changes in the sector.

The gas policy document built on the policy goals of the Federal Government for the gas sector as presented in the 7 Big Wins initiative(www.7Bigwins.com)developed by the Ministry of Petroleum
Resources and the National Economic Recovery & Growth Plan (ERGP 2017-2020).

The policy targets the exit of importation of fuel in 2019 and also captures “the cash calls changed we have done which enables the sector to fund itself through incremental volumes, it captures the
reorganisation in the NNPC for efficiency and enable accountability. it captured the issues in the Niger Delta and what we needed to do as a government to focus on stability and consistency in the sector” Kachikwu told newsmen.

Apart from the fact of fluidity in pricing and uncertainty in terms of the price regime in crude, the oil policy will push “for a refining processing environment to move away from exporting as it were to refining petroleum product. that’s one change you will see. Those are the fundamentals, it’s a document if well executed will fundamentally take the change process that we began in 2015 to its logical conclusion hopefully in the next couple of years”. Meanwhile, the minister also said the government is is targeting crude production of 2.5million to 3million barrels per day in the next two
years if the Organisation of Petroleum Exporter Countries (OPEC) environment rules permit.

According to Kachikwu “We targeting to recover our full barrels. We are working hard at it. Over a longer time and provided OPEC environment permits, I think I see a potential to be between 2.5m and 3m barrels a day if the OPEC rules allow me to do that. But again we are all looking at market flows this year and the whole of the pricing challenges that go with how much we pump into this market”.

Already a steering and technical committee has been put in place headed by chief operating officer in NNPC and are currently meeting with individuals who are willing to put money into the refineries.

The minister said already over 30 people have indicated interest in the financing of the refineries. “I need to state this clearly, this is not a sale, this is not a concession, this is a financing scheme.
“They are going to go through the usual due process mechanism to see who qualifies for that financing. What we have resolved however which we have at least have a landing is that each of the refineries would be repaired by the individual company that built the refinery. Who does the work is different from who does finance the work to be done. We are still dialoguing who is going to get the financing opportunity but who is going to get the contracting opportunity to do the work is already decided” he explained.

He said the government is not putting money any money into the scheme as it will be a sector led effort and they will recover their money through incremental volumes that will arise from the production increase arising from the repairs.

Council also approved a National Social protection Policy, which seeks to provide social justice, equity and inclusive growth using a transformative mechanism for mitigating poverty and unemployment in Nigeria. Government’s N500billion Social Investment Programme was drawn from this policy, Minister of State for Budget and National Planning, Zainab Ahmed told newsmen at the briefing.

“What we have done is to submit to the council today, a policy that is largely inspirational, aspirational but seeks to ensure that every Nigerian gets at least a minimum of what is required in terms of human development and protection” she said.

FEC also approved a National Employment Policy which was last reviewed in 2002. The policy according to the Minister of Labour, Chris Ngige, will take care of things like employment, for people with disabilities,decent jobs programme and doing jobs without polluting the environment and other things that are new and contemporary in the labour market.