Experts in fresh move to address oil, gas woes

Lingering challenges bedeviling Nigeria’s oil and gas sector and the wobbling economy may receive fresh insight if the Federal Government adopts a new solution being canvassed by stakeholders.

Although the oil and gas sector remains crucial to Nigeria’s economy in terms of revenue generation, but prevailing challenges raging from governance and fiscal loopholes, which stakeholders feared drastically affect the country in the face of growing population and a volatile oil market.

Since crude oil exports accounted for 88 percent of foreign exchange earnings, and made up about 85 per cent of government revenue, stakeholders stressed the need for urgent actions to stem these prevailing challenges. Among the commentators were heads of Oil Producers Trade Section (OPTS), Indigenous Petroleum Producers Group (IPPG), Nigerian Gas Association (NGA), Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association (DAPPMA), Independent Petroleum Marketers Association of Nigeria (IPMAN), as well as key government agencies and other private players.

Some of the issues requiring urgent attention according to them include the persistent refusal to assent to the Petroleum Industry Governance Bill (PIGB), which has been pending for over two decades, thereby leading to steady decline in the sector. Others are the implementation of the Gas Master Plan, high cost of oil production per barrel in the country, shift towards renewables in response to climate change.

Also are host community issues and impact on security stability, increased demand for gas for domestic use, especially to address gas to power challenges, impact of fiscals on investments and asset divestitures, challenges with corporate governance systems, political interference in technical and business decisions, and poor incentives to deliver commercial results.

Also cited are conflicting commercial and non-commercial functions, NNPC’s conflicting dual role as a regulator and operator, poor commitment to transparency and accountability as challenges to timely and accurate financial reporting persist as well as Nigeria’s inability to attract sufficient investments or operating funds to meet its over $9 billion yearly investment requirements.

Recall that Nigeria’s oil production had dropped significantly, just as government-owned refineries operate at a fraction of their capacity while other inefficiencies continue to cripple the sector. Indeed, the country has struggled to remain competitive in the global market considering the lack of enabling laws and uncertainties.

To this end, Facility for Oil Sector Transformation (FOSTER), is promoting a dialogue to align optimal strategies in the sector between the political leadership and industry stakeholders.While the current administration has drawn a nine-point agenda to be pursued in the next four year, a high level industry stakeholders already met in Lagos, to facilitate a process for key stakeholders to articulate a set of pragmatic ideas to reform the petroleum industry.

“The engagements will focus on areas of continuity, areas which have not been focused on, and areas which have not yielded positive results. The idea is to help the Minister and other policymakers to appreciate what really matters to the key industry stakeholders — the core industry challenges, opportunities and options (key policies, capabilities, and structures etc) that are essentially required to ensure the reform of the oil and gas sector.

“This exercise is expected to identify how well the new Minister’s agenda is aligned with industry expectations, identify gaps that still need to be addressed by the administration, but also agreement and the next steps that key stakeholders can take to support progress on key policy,” a document made available by FOSTER stated.