The Federal Government has announced plans to unveil a petroleum sector roadmap next month, as part of its efforts to unlock the potentials in the oil and gas sector amid low crude oil price.
The government’s plan to move the sector forward was disclosed by the Minister of State for Petroleum Resources, Mr Ibe Kachikwu at the recently concluded annual conference by the National Association of Energy Correspondents (NAEC) in Lagos with the theme ‘Low Oil Price: Impact and the Way Forward.’
According to him, five other regulations to provide clarity on the position of government with respect to the management and development of the sector are also to be rolled out by September.
The minister explained that at a time that capital for investment is shrinking worldwide, there is a need for government to come up with forward looking policies that will encourage the inflow of Foreign Direct Investment (FDI) to grow the sector.
Kachikwu stated that some policies in the oil and gas sector inhibit the flow of investment into the sector, adding that government was doing all it can to ensure that such obstacles were removed in order to encourage private sector participation.
According to him, ‘‘Everywhere you look, there is crisis looming around. And if we are not consistent with our policies, we will lose our market. Reforms are often not easy because they cause changes, sometimes dislocation and inconvenience, but for our industry I am encouraged that we have the determination to see through the structural changes that are needed to create the conditions for prosperity in the near future. The lessons of the past ought to enable us to respond decisively.”
On his part, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, said the decline in oil prices from $110 per barrel in June 2014 to $45 per barrel in July 2016, has significantly impacted government revenue earnings as oil sector accounts for approximately 90 per cent of the nation’s foreign exchange.
“A major challenge which therefore, remains is securing the crude volumes to a level that ensures we deliver the revenue target fully aware of the fact that price is internationally determined. We are therefore working assiduously to resolve the security issues so that we can guarantee volumes.
“Given the low oil price, sustainable returns need to be maintained. To achieve this, we are working on cost saving measures that ensure safe and profitable operations of the assets while guaranteeing adequate margin for both government and investors.
“Initiatives such as service sharing for clustered assets, standardisation of operating framework and contracts, resource pooling and reducing contract cycle time will be pursued,’’ he said.
Baru maintained that to diversify the source of government revenue and capture value across the entire value chain, the corporation will aggressively pursue domestic refining to take advantage of improved refining margin during the period of low oil prices.