PETAN expresses concern over Nigeria’s depleting oil reserves

Holds inaugural international conference in Lagos

The Petroleum Technology Association of Nigeria (PETAN) has expressed concern over depleting state of Nigeria’s crude oil reserves.The Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor, therefore stressed the need for the Federal Government to provide enabling environment to encourage more investment in exploration and production.

Besides, the association has outlined activities for its first West Africa international oil and gas conference in Lagos.Emphasising on the need to increase the country’s reserves base Okoroafor said, “if the country had continued with the aggressive exploratory activities of 1967, the Federal Government would have achieved more than the four million barrels daily and 40 billion reserves targets set in 2010, which are yet to be achieved in 2016.

He therefore charged the government to encourage more investments in oil exploration activities so that the country’s production and reserves targets would not be unrealisable.

He said for this to be achieved, the fiscal regime should be stabilised and uncertainty removed to guarantee the future of investments. Okoroafor noted that the fiscal regime was the most contentious issue that stalled the passage of the previous versions of the Petroleum Industry Bill (PIB).

He said to achieve the desired fiscal stability that would incentivise investments, the government should pay off joint venture cash calls, and also make it a first line charge.

To end the Niger Delta crisis, Okoroafor urged the Federal Government to invest in human capital development in the oil producing communities. “It is in the government interest to solve the Niger Delta crisis and pipeline vandalism in Nigeria because Niger Delta is the goose that lays the golden egg and this cannot change for a very long time.

“The insecurity of assets is a major source of concern for government, the oil industry and Nigeria as a whole. It is possible that the government moves to solve the protracted crisis in the Niger delta has not been fully communicated to the people. I still believe that what we need is a plan for the rapid development of the Niger delta area.

“Those who fail to learn from history are condemned to repeat it. We must start with tangible developments that can create sustainable employments, entrepreneurs and ensure 24 hours power supply. By creating opportunities for many, businesses can thrive, the security of lifes and property can improve and we will not be discussing this bilateral agreement with neighbouring countries to import crude oil. All this will take time but the result will be sustainable and a win-win formula for both the Niger delta region and the government.

“We should not fool ourselves that it will be easy but it will stabilize the goose that lays the golden egg – the Niger Delta region and our oil industry at large. Also government must continue to engage constructively and sincerely with the Niger delta no matter the difficulties. These problems took long time to manifest and cannot be solved easily. It will take time but will be solved”.

He urged government to focus on improving the security of lives and assets in the Niger Delta, which he said, may be repelling investment in the region. “There should be a sense of urgency on this. Restoring sustainable peace agreement in the Niger Delta should be our most important agenda on the table now. This should be treated with all   urgency. Restore confidence on security of people and assets in the entire Niger Delta. In present-day Nigeria, oil accounts for 95 per cent of foreign exchange earnings and 75 per cent of government revenue for Nigeria”, he added.

He emphasized the need for the country to increase production target in order to earn more revenue in the midst of the low oil prices. “Crude oil production by OPEC is about 40 per cent of worlds crude oil and OPEC oil exports represent about 60 per cent of the total petroleum traded internationally. OPEC is not the only determinant of crude oil price but its actions can, and do, influence international oil prices. Oil supply from outside the OPEC represents about 60 per cent of world oil production. So changes in non-OPEC production can affect oil prices.

“Also oil prices are not only affected by actual non-OPEC production, but also by changes in expectations about future non-OPEC supply. For example, U.S. Shale, Soviet Union, North sea and others. Inventories act as a balancing point between supply and demand. There is a relationship between oil price and inventories.

Geopolitical and weather related events can affect oil prices. Any event that can lead to actual disruptions or create uncertainty about future supply or demand can lead to higher volatility in prices. Much of crude oil are located in regions that have been prone historically to political upheaval|”.

Okoroafor also stressed the need for the Federal Government to make Nigeria self-sufficient in petroleum refining. “We can make Nigeria self-sufficient in petroleum refining by creating business friendly policies that encourage entrepreneurs to invest in refineries, by running our refineries as strategic business units, that will buy their crude, refine and sell, pay their costs without resorting to Abuja to pay contractors.

“We can empower the refineries managing directors to run them as strategic business units and remove all bureaucracies hanging over their necks. Once this is done, we can then hold them accountable to move from cost centre to profit centres. Any one that does not deliver can then be replaced with performers. Also Government should play its role and secure assets and people so that business will focus on those things that can create sustainable value. We must create a secure environment for investment to thrive in our place. We must encourage many more Dangote’s with good fiscal policies, no policy summersaults no matter the government in place”.

Speaking on the inaugural West African International Petroleum Exhibition and Conference (WAIPEC) taking place 21 to 23rd February 2017 in Lagos, Okoroafor said: “There has never been an operator-service sector engagement conference by the industry for the industry. PETAN therefore decided to start one. This is unique and specially designed by the industry for the industry. There are strategic sessions, technical sessions, exhibitions that really structured by the industry for the industry”.

Dwelling on the objectives of the programme, the PETAN Chairman stated: “The main objectives of the conference is to bring together experts from the entire upstream, midstream and downstream oil and gas value chain; to stimulate discussions on the directions, opportunities and challenges of the regional oil and gas industry; networking face to face with key stakeholders in upstream, midstream and downstream sectors; creating opportunities for businesses and building new regional partnerships; sharing strategic industry experiences and technical expertise; and promoting Nigeria and West Africa oil and gas opportunities”.