As the nation waits anxiously for the May 29, swearing in of Muhammadu Buhari, as Nigeria’s next president, experts in the oil industry have set for him an agenda aimed at restructuring the sector, which is the mainstay of Nigeria’s economy.
He noted that Nigeria had a vision 2020 target of increasing its reserve to 40 billion barrels and production to four million barrels of oil per day.
However, the target has not been achieved as no exploration of any great measure has taken place in the last 10 years, neither has there been major discoveries except for oil mining lease, OML 310 between 2012 and 2013 that added substantially to Nigeria’s reserve.
According to him, the new government needs to “remove the uncertainty that the lack of passage of the Petroleum Industry Bill, PIB has caused. This has essentially blocked investment in Nigeria’s exploration and production, E&P sector, both by international investors and in some cases by local investors, by ensuring that as fast as it can reasonably do so, it passes the PIB.”
Thomas also argued that the PIB can be broken into sections which are not fractious. “For instance, the fiscal element which causes so many problems can be easily passed very quickly. The one that is contentious can be addressed later. Therefore PIB passage is a topical matter that needs to be addressed.
“The second thing that needs to be addressed is the corruption in the petroleum sector, both upstream and downstream. The downstream sector witnessed massive corruption in petroleum subsidy. The upstream sector is suffering corruption of lack of will on the part of government to address pipeline vandalism, crude theft and all sorts of irregularities, which is denying the country of much needed revenue.
“The third thing that needs to be done is to find a way of making Nigeria a more attractive investment destination for E and P investors;that links to the PIB to a large extent. “The last thing in my view is that there is the need to enhance the development of the domestic gas sector so that we can unlock the potential of the power sector and the power sector reform, which is largely hinged on gas.
If you talk to anybody today, what the problem in the power sector is, you will be told it is non-availability of gas. Those are the four key things to be focused on by the new government,” he added. For the Chief Executive Officer, CEO, Shoreline Natural Resources Limited, Mr. Kola Karim, the Nigerian President-elect Muhammadu Buhari, faced with low oil prices will need to crack down on crude theft from pipelines to shore up government revenue and help producers.
“The key for me in the first 30 days of government is to put a blitz around oil theft like they would on Boko Haram. The government needs to stop the hemorrhage,” he said.
Karim noted that most of the smaller companies obtained financing based on a price of $70 a barrel, compounding difficulties from the fall in the price of crude, while they struggle to keep production steady in the face of pipeline attacks and oil theft. “Tax incentives to these companies and government-backed support funding would energise the oil industry.
If the government says here’s $10 billion; we’re going to lend to the oil and gas industry to stimulate the industry in Nigeria, at three percent with a backstop guarantee, it’s a no-brainer,” he said.
He maintained that with such a support, smaller Nigerian producers including Shoreline, and Seplat Petroleum would be able to double their share of the country’s oil output to 30 percent in five years, getting Nigeria closer to its target of pumping four million barrels by 2020. Nigeria’s production slipped 90,000 barrels a day to 1.9 million barrels in March, according to Bloomberg.
Oil assets with an estimated value of $5.8 billion will go on sale in the coming months, and Nigeria’s new government will have to “raise incentives” to enable small local companies to acquire some of them, Philipp Chladek, an analyst for Bloomberg Intelligence said.