…Says crude oil may no longer hit $100 in international market
15 February 2018, Sweetcrude, Abuja – The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has stated that Nigeria loses billions of dollars from the current Production Sharing Contracts (PSCs) it has with international oil companies.
Mr. Kachikwu, who stated this in Lagos at the Samsung Yard where the $3.3 billion Floating Production Storage Offloading (FPSO) unit is being integrated by Samsung Heavy Industries (SHI) at LADOL Free Zone, remarked that crude oil may no longer hit $100 per barrel in the international market, except there is a huge calamity in the producing regions.
He said, “Oil is not going to be $100 per barrel again except there is a huge calamity in the North Korea peninsula and whatever. So, we are likely to continue to stay depressed at $60-$70, but even at that, that is a huge movement, coming from where we were.”
Mr. Kachikwu, who maintained that such situation could not happen, said, “What it says to us as a country is that Nigeria is going to begin to look at its priorities differently.
“We are going to look at what is the net value for the country in these future projects. We are not, as a country, very impressed with the PSCs we put together. We lose a lot of money in the contracts,” he added.
The minister, therefore, said that only oil and gas projects that have huge net value to the Federation Account will henceforth be sanctioned by the federal government.
According to him, there is no more need for international oil companies (IOCs) to develop multibillion dollar projects that will not attract payment of royalties to the government.
The minister said that with oil price depressed at $60 – $70, coupled with the production quota imposed by the Organisation of Petroleum Exporting Countries (OPEC), Nigeria would begin to look at its priority differently.
Nigeria lost huge money in some of the previous production sharing contracts (PSCs), Mr. Kachikwu said, adding that no single royalty was paid in some of those projects.
The Minister of State said he had worked hard to keep Nigeria’s production within the OPEC quota, adding that the country would focus on projects where it will make more money.
He said, “So, as you look at your numbers; as you look at the terms under which you want to develop these fields, please spend a good amount of time in checking the bottom line and what goes into the Federation Account”.
“There is no need building a huge $70 billion facility- like one field that I looked at that I felt really pained that no single royalty was paid for one reason or the other. Those kinds of things won’t happen any longer. The terms will change.”