Austin Avuru, the executive chairman and founder, AA Holdings Limited has identified increasing disinvestments by multinationals as reasons for Nigeria’s struggling crude oil production.
He stated this on Tuesday during a panel session at the ongoing 45th Nigeria Annual International Conference (NAICE), in Lagos.
“There is a dire correlation between 2012 and now, between a decline in investment in our industry from the peak of $22 billion to $6 billion in 2021.
“The result of that decline in investment is what we are seeing in the decline of our oil production,” he said. “There is crude theft (it is there) but the main reason for our 1.3 million barrels production today (shortfall of 600,000 barrels per day) is the decline in investment.”
Based on direct communication of the latest monthly oil report by the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria’s oil production was pegged at 1.158 million barrels of oil per day (bpd) in June.
Though the country’s production improved from the month before, it was still short of the quota given by the oil cartel.
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The former Seplat Energy CEO said going forward, Nigeria and Africa need to look inward to close the huge security gap in the sector.
“By 2040, the net demand for crude oil and natural resources in Africa will exceed production. Who is going to solve our domestic energy security needs when those who have the funds have pulled the funds away?” He queried.
“We will have to design policies to solve our problems as Africans because those who possess the economic power to fund investments in this industry are pulling their investments away.
“We are going to have to grow African independence that will have to run its own operations so efficiently that over the next 15 years it can build up huge capital reserves.
“We have to get to that point because we are not going to see the funds to borrow from banks in Europe and America that have it,” he said.
“So we have to deal with efficiency so that we can produce the crude oil and natural gas that will satisfy our domestic energy security.”
On how to cushion the disinvestment in the sector, Rick Kennedy, managing director, Chevron Nigeria Limited, who was represented by James Okereke, the company’s manager, applied research and technology, said investment will go in the direction where investors’ confidence is high.
“And those areas are where the economy makes sense,” he said, adding that “there must be a roadmap that shows that we can move from where we are to where we need to be.”
