Stakeholders express worries over Nigeria’s oil future

Stakeholders in the oil and gas industry have expressed concerns over the bleak future of Nigeria crude oil. This becomes imperative due to moves by other technology – advanced countries that intend to move focus from crude oil as a major source of energy to alternative energy like solar and electricity.

Speaking at the ongoing international conference organised by Society of Petroleum Engineers (SPE) in Lagos, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, stated that “the future is not encouraging at all. Our peers are leaving us behind. Saudi Arabia is floating bonds, UAE is investing in infrastructure. People are moving from oil. Electric cars are taking over, alternatively energy like solar is taking over.

“There is huge infrastructural gap. We realised over $15 billion gap when we were in China and this has not been met. Countries that are smart enough invested in infrastructure all over the world. What we did with oil proceeds was not encouraging.

“The implications are that funds will be moved from oil to alternative energy. We have to take decision in next five years in terms of policy directions to attract the needed funds. Lack of efficiency is another factor we have to look into in near future. When oil price was high, fiscal regime discouraged investment and we can’t even pass a bill that can settle this imbroglio.

“If we can’t negotiate downward cost of production, we will compel it. The issue of cost has to be dealt with. Our engineers need to set goals to address these infrastructural challenges. There is too much monopoly in the industry.

“We will work with NNPC to allow private players in the sector. It is time to start saving, no matter the cost of production.”

Speaking in an interview with the Nigerian Tribune, the President of Nigerian Association of Petroleum Explorationists  (NAPE), Mr Abiodun Adesanya, stated that the impact of shift in focus by some countries from crude oil to other sources of energy is that demand for crude oil will drop internationally.

“Drop in global demand for crude oil will lead to increase in local refining capacity. The Acting President, Professor Yemi Osinbajo, mentioned this fact in Gbaramatu while on a consultative visit to oil producing communities in Delta State. In broad terms, it means demand for our crude overseas will reduce. This is why we need to speedily maximise the benefits of the resource for Nigeria’s development,” he said.

The Chief Executive Officer of Royal Dutch Shell, Ben Van Beurden, also stressed that the future of global energy now lies in electricity and solar. He stated that his next car will be an electric car, admitting the threat on the future of oil.

While Jessica Uhl, chief financial officer already drives a BMW i3 electric car, one of the company’s spokesperson says the CEO will switch from a diesel car to a plug-in Mercedes-Benz S500e in September, 2017.

Van Beurden confirmed this in an interview with Bloomberg TV, stating that the current drive to keep up with the set goals to combat climate change is a good thing.

“The whole move to electrify the economy, electrify mobility in places like northwest Europe, in the US, even in China, is a good thing,” Van Beurden told Bloomberg TV.

“We need to be at a much higher degree of electric vehicle penetration or hydrogen vehicles or gas vehicles, if we want to stay within the two-degrees Celsius outcome.”

This is coming less than 72 hours after the UK said it will ban sales of diesel- and gasoline-fueled cars by 2040.

Only two weeks earlier, France also announced a similar plan to reduce air pollution and meet targets to keep global warming below two degrees Celsius or 3.6 degrees Fahrenheit.

Volvo AB said earlier in July that it will manufacture only electric or hybrid vehicles from 2019 onwards, leading the drive for a cleaner global environment.

While many Nigerians consider the country as an oil producing state, some experts have argued that Nigeria is gradually becoming a non-oil state.

According to a source who preferred anonymity, “so many things that human mind could not comprehend 100 years ago are happening today. Who says internal combustible engines that drive the vehicles cannot be changed in commercial quantities in the next 50 years. Just 15 years ago when I finished university, Twitter wasn’t in existence. Facebook, Android were not established but today, they drive the global commerce.

“Nigeria has lost the chance to utilise oil proceeds to build infrastructure. Nigeria’s peers as oil producers are now largely huge infrastructural countries.”

Furthermore, he concluded that “if truly, Nigeria’s oil reserves is 37 billion and we will not incur any cost to explore the oil and we are entitled to everything, a Nigerian will be entitled to 205 barrels assuming a population of 120 million.

“Let’s assume again that crude price is $50 per barrel, it means a Nigerian is entitled to only $10,250 worth of our oil reserves. But you will agree with me that all those assumptions are not real because NNPC has about 55 per cent of the oil while those with investment and technology have the reminder. I believe the country should begin to shift focus from oil to the non-oil sector.”