Experts call for deregulation of the downstream

Kunle Kalejaye

23 October2012, Sweetcrude, LAGOS – Oil and gas industry experts have maintained that deregulation of the downstream sector is the only way out of Nigeria’s current predicament characterised by petroleum products shortages and distribution hiccups.

They argued that for the oil and gas sector to be viable, the private sector should play the leading role in building of refineries, construction of pipelines and storage facilities, among others.

Speaking with newsmen at the end of it pre-conference workshop in Lagos, the president, National Association of Petroleum Explorationists, NAPE, Dr. Afe Mayowa, noted that the government cannot be regulating the petroleum industry and at the same time be doing business.

According to him, “What we are telling the Federal Government is to deregulate the refineries, let them take their hands off it. Government cannot be regulating and at the same time be doing business.

“Look at the road built at Epe/Aja axis. It was not constructed with government‘s money. Allow people to run this business. “We don’t have roads, our pipelines are not working, trucks are the ones causing problems in Lagos traffic and the roads are not good. At this age Nigeria should not be using trucks to carry fuel.

“They will use trucks to transport petroleum products from here to Damaturu, to Kastisna, to Calabar. Let the refineries work, let government give this business to other people, private sector, let them run it that is what we are telling government, they don’t need to have hand in it. Why should government be laying pipelines? That is not their business; let them give it to other people.”

Stressing the importance of untilising the country’s gas resources, President of the Nigerian Gas Association, NGA, Mr. Chima Ibeneche, noted that given the fact that some African and European countries have discovered shale gave, there will be less demand of Nigeria’s gas.

He said, “The Energy Information Administration, EIA, forecast that the United States Liquefied and Natural Gas import is dropping. This is a bad market signal for LNG exporting countries like Nigeria.

“Soon US imports of LNG would be negative and exporters of LNG might shift base to the Middle East, where the demand for natural gas till remain high. Now is the time for Nigeria to have more LNG plants and contracts.”

Besides, as noted by the NAPE president, the US has also discovered huge amount of gas, adding that in another 10 to 20 years, America will be exporting gas.

“So a countries like Nigeria that have gas, should be thinking of how to use the gas in Nigeria, because there will be no country where we will be exporting the gas to in another 20 years because America that is the biggest user of gas will be exporting their own gas,” he said

He further suggested that Nigeria should focus on areas where gas can be utilised in country, saying, “We should look at areas that we can use our own gas locally in Nigeria. That is what prompted us to discuss this issue at the workshop because we have to tell the government that the resources that we have today, others will have the same resources tomorrow. So, instead of exporting what we have, other countries will be looking for where to export their own gas.”

Also commenting on gas flaring, Mayowa urged government and the companies to reach a compromise, saying, “We are not blaming government, we are suggesting how things should be done properly. Gas flaring is capital intensive. People that are flaring gas are not happy that they are flaring gas, it is capital intensive but you need proper planning to transport this gas from the location you have seen it to where it would be used. The infrastructures to do this are not there, which is why some of the gas is being flared.

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  • Nigeria must embrace complete deregulation of the downstream petroleum sector if the country must enjoy the benefits derivable thereof.