· OPEC lacks capacity to prompt price rise
Minister of State for Petroleum, Dr. Ibe Kachikwu, has stated that oil production deficit has dropped by 1.1 million barrels per day (mbpd) due to militancy in the Niger Delta region.
Kachikwu also said that declining price of oil in the international market has negatively impacted the country’s revenue leading to economic recession.
Speaking at the National Association of Energy Correspondents (NAEC) annual conference in Lagos on Thursday, Kachikwu said while vandals wreack havoc on oil facilities crippling local production, over supply of product in the market is impeding on prices and thus creating shock to the economy.
Kachikwu said time has therefore come for the country to face the reality of the time as there are no assurances that the prices of oil will pick up as being speculated.
He hinged his argument on the fact that OPEC merely controls 30 per cent of the market, while 70 per cent is in the hands of major producers like, the United States, Russia and Mexico who are non OPEC members.
On the impact of militancy on the industry, Kachikwu said the attacks have led to 60 per cent decline of gas production, revealing that between 2010 and 2015, the industry recorded 3,000 incidents.
According to him, 643 million litres of petroleum products amounting to N51,28 billion was lost in 2015, between January and June 2016, 1,600 incidents recorded resulting in a loss of 109 million litres of petroleum products and 560,000 barrels of crude oil to refineries.
Furthermore, he said about 850 million standard cubic feet of gas production has been shut in due to impact of crises and power outage exposure of 2,700 Mega Watts to 3,000 Mega Watts.
Going forward, the minister said government is stepping up efforts to make robust policies that will finalise and gazette a comprehensive gas policy, unlock gas potential, ensure effective development of Nigerian gas market with adequate and sustainable gas supply to the power and industrial sectors.
He said the policy would also help to transit from gas flare penalty regime to gas commercialisation and shift focus from government-built to investor built-infrastructure.
Kachikwu said for the industry to rebound, efforts should hinge on developing national oil, gas, downstream, fiscal reform policies as well as Petroleum Industry Regime Bill.