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At an industry event held recently in Abuja, Minister of State for petroleum,  Dr. Ibe Kachukwu stated three reasons why Nigeria needs to redouble its efforts on gas exploration in the country. One of which may come as a huge surprise to the average Nigerian on the street.  Nigeria may no longer be an oil producing country in a few decades.

He also mentioned the following;

  • Nigeria’s oil reserves will last between 25- 39 years.
  • Nigeria’s gas reserves will last approximately 60 years.
  • Nigeria is the only OPEC country that imports refined petroleum products

The minister also lamented the country’s lagging behind in terms of creating an enabling environment for investors in the oil and gas industry, and the effects it was having on power supply. While one must appreciate the minister’s candour in enumerating these statistics, the very government which he serves has acted as a stumbling block. Despite the increase in crude oil prices which should translate to petrol prices, the government through the Nigerian National Petroleum Corporation (NNPC)  continues to indirectly subsidize petrol. This has led to the corporation becoming the sole importer of petrol into the country, as major oil marketers have refused to import petrol. Why bring in a product you will be forced to sell below cost price?

Though the government seems to have made progress by breaking the Petroleum Industry Bill (PIB) into 3 component bills and passed one, the Petroleum Industry Governance Bill (PIGB), two bills still remain pending. The key one which deals with host communities remains hanging, and may not be passed this year. 2018 is an election eve and most legislators will be more concerned with election activities than debating bills.  Investments in oil and gas may remain on hold, till the bill is passed. One would have expected that a government where both executive and legislature have a majority hailing from the same party, that progress on the bill would be much faster. Especially as Oil and Gas is the driver of the nation’s economy. The drop in crude oil prices and production, lead to the economy slipping into recession last year.

Though the minister sought to allay fears regarding any potential job loss in the private sector partnership in rehabilitating the nation’s refineries, the government’s intentions in this area are unclear. Is the government pursuing a concession (which he has denied)? Or a funding arrangement? The terms and conditions for this partnership are yet unknown. A combination of all these factors, have left Nigeria’s oil and gas industry  performing below its potentials.

 

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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