*Says passage of PIB critical for industry survival
18 March 2015, Sweetcrude, Abuja – The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has revealed that Nigeria’s plan to raise crude oil production to 4 million b/d by the year 2020 is under threat from current slump in global oil prices.
Alison-Madueke, who was conspicuously absent at the ongoing Nigeria Oil and Gas (NOG) Conference on Tuesday, in Abuja disclosed this much in a keynote address noting that many oil-producing countries including Nigeria are facing declining government revenues due to low oil prices and this would pose challenges to funding projects.
She said that, “Persistent depressed oil prices may limit industry scope to manoeuvre in growing long-term production and reaching the target of 4.0 million barrels of oil per day.
“Under sustained low oil price, industry must challenge itself to raise funding to raise funding for projects in order to meet these targets.”
According to Alison-Madueke, oil companies would need to come up with radical changes including innovative financing mechanism for new and ongoing projects.
The Minister further observed that passage of the Petroleum Industry Bill (PIB) remains critical, adding that “government is committed to ensuring a clear and transparent fiscal rule of general application withh appropriate incentive to the investor and commensurate economic rent to the state.
She added that with this balance of objectives, Nigeria can grow production to meet its target of 40 billion barrels of oil reserves and 4 million barrels of oil per day by 2020.
Industry operators at the conference said global oil prices were not the only problem, with oil theft, growing security challenges, and an unstable fiscal environment also factors hindering growth in Nigeria.
According to the Vice President, Nigeria and Gabon, Shell Upstream International, Mr. Markus Droll, “Oil theft and pipeline sabotage — activities that have no place in a lawful environment — severely affected Shell operations in Nigeria.”
“In 2014 alone, we replaced over 300 theft points on our pipelines,” he added.
In his own presentation, CEO of Oando Plc, Mr. Wale Tinubu, said: “Oil theft in Nigeria is believed to be about 30% of the country’s production, making Nigeria rank at the bottom in the world in terms of attracting investment into oil projects.”
Nigeria is losing over 250,000 b/d of oil to theft, according to industry estimates.
The government needed to put in place a fiscal environment to make investment in the oil sector more attractive, Droll said.
“Fiscal stability and predictability remain even more crucial today in ensuring investors of all sizes can commit confidently (and) government revenues can be forecast reliably.”
Nigeria aims to increase oil output to 4 million b/d by 2020 from around 2 million b/d now, as well as lifting its reserves to 40 billion barrels from 32 billion barrels.