Kachikwu urges indigenous operators to boost investment in major operations

THE Minister of State for Petroleum Resources, Dr Ibe Kachickwu, has urged indigenous operators and investors to channel their investments and take over major operations from international oil companies, as many are considering divesting and charting new paths.

Global oil giant, ExxonMobil is planning on selling some of its oil and gas assets in Nigeria worth $3billion, to focus on investing in the U.S shale and Guyana.

“Exxon is actively divesting in Nigeria,” Reuters quoted one source who was briefed on the divestment plans.

Speaking at the ongoing Nigeria Oil and Gas Opportunity Fair (NOGOF) in Yenagoa, Bayelsa State on Thursday, Kachikwu said changes in the global oil and gas industry are presently challenging the present exploration and investment strategies as oil is fast becoming a degenerating asset with alternative sources of energy taking over and attracting new investments.

He noted that while the world is moving on from fossil fuels, Nigeria was yet to take advantage of the opportunities in the sector and design strategies to harness the advantages of renewables.

He, therefore, urged indigenous firms to take over and stop playing safe if they will benefit from the opportunities availed through new trends in the industry.

The Minister of state for petroleum Resources Dr Ibe Kachikwu said on Thursday that Federal government has succeeded in ensuring ensure that the cost of the crude product was reduced to 23 dollars per barrel from about 32 dollars.

Meanwhile, he stated that henceforth, approval for projects in the petroleum industry would be based on the cost of producing oil and gas which he puts at $23 per barrel. He added that efforts were on to further ensure the cost was brought down to below $15 per barrel.

“The ministry is going to be coming up with a bench mark to analyse and compare companies who do business in Nigeria and what cost of production they are running. This is because any unbelievable cost of production will basically impact the revenue stream of the country.

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“One of the mandates that I am giving the Department of Petroleum Resources (DPR) is that as we begin to look at new projects, the cost at which we are going to produce that oil is going to become critical to our ability to approve those projects,” he said.

He commended the NCDMB complex, which he said would be a rallying point for stakeholders in the sector.

He noted that it was the duty of government to provide securities, policies but said it was important that they continue to drill for oil when there is a host community free of crisis.

“We have seen that in Ogoni land. It is important that for every area that you are active, you must begin to ask yourself what more can you do more than what the law said you should do.

“It is not an issue of meeting compliance as it doesn’t take away crisis but an issue of what is seen in an operating environment. And I do understand that the burden imposed on oil companies can be huge, but it is what it is.

“Also, we need to over the next few months begin to work together to set up what is globally enforceable Memorandum of Understanding, MoU, that we can see around oil-producing areas and what more can we do, and if the government needs to be part of it, so be it.

“But we cannot get into the circle of coming out and then after one year going back into the hole.”

The APPO president said that the government had also successfully achieved the Nigerian Content Development and Monitoring Board $200 million Nigerian Content Intervention fund.

He said that the NCI Fund is a portion of the Nigerian Content Development Fund set aside to manage and lend directly to indigenous manufacturers, service providers and other key players in the oil and gas industry to meet their funding needs.

Besides, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr Simbi Wabote, called for policies to further drive the establishment of modular refineries and local production of LPG cylinders.

According to Wabote, there are multiple opportunities in the oil and gas sector yet to be harnessed by indigenous operators as policies have been designed to drive the implementation by operators.

Specifically, he identified the opportunities to include those ones driven by policies, funds, infrastructure, linkages and people, adding that recent IEA data revealed the rising demand for gas, especially from Africa, necessitating Nigeria to maximise the opportunities and play a key role in the sector.