‘Insecurity of Oil Assets May Hinder Nigeria’s Market Share’ - THISDAY
JANUARY 12, 2021
With the easing of production cut by the Organisation of Petroleum Exporting Countries and allies (OPEC+), experts have warned that insecurity in the oil-bearing Niger Delta might hinder Nigeria’s market share in 2021.
They said if the vulnerable oil assets in the Niger Delta are left unprotected, the situation might lead to the shutdown of assets with attendant drop in production, thereby depriving the nation the benefits of the production cut easing.
In their separate chats with THISDAY, some of the oil and gas experts, stressed the need for both the government and the oil companies to work together to ensure adequate protection of the assets this year.
In his intervention, an Emeritus Professor of Petroleum economics and Policy Research, Prof. Wumi Iledare, said: “For Nigeria, insecurity of assets in the Niger Delta may continue to hinder its ability to meet market share. And as evident in the 2021 budget, government is banking on finding alternative sources to fun its budget.”
He, however, cautioned the federal government, “on pegging output at 1.6 – 1.8 million barrel per day at perhaps not more than 45 dollars per barrel, looking at OPEC+ demand projections for 2020.”
In addition, Iledare posited that government must think outside the box on how to generate more revenue outside oil development, saying, gas development must be in the forefront of government’s agenda this year.
“If that is the case, gas policy development as gazetted gives a clue on the way forward. Gas development for industrial grow must be in the fore front.
“Without necessarily sacrificing oil revenue for gas development, but government must surrendered any idea of replacing diminished oil revenue with revenue from gas for the next 10 years at least,” he said.
He said for Nigeria, passing the Petroleum Industry Bill (PIB) 2020 into law was critical to remove political uncertainty, adding that the energy transition dynamics as being conceived in the PIB called for Nigeria to rethink its oil development for revenue obsessions.
He explained: “So the PIB 2020 must bring a new mentality anchors on fiscal designs for investments competitiveness for economic output in the long run.
“So, the 2020 outlook is highly dependent on PIB 2020 becoming law and a low COVID-19 impact on global economic activity. One can only speculate with the hope that the Covid-19 pandemic will be arrested or put under control from a global perspective.
“Oil demand is driven mostly by economic activities across the globe. COVID-19 limited that growth significantly in 2020, hence the low demand despite low oil prices.
“If not curbed, oil demand may still stall but with vaccines available, there is optimism.
Secondly, the speed at which the globe pursues the zero-emission is critical to E&P investments.
“There can be double whamming in terms of oil capacity expansion necessitating higher than normal oil price growth in near term.”
He emphasised the need for governance transparency and accountability, which he described as critical going forward.
However, Iledare raised concerns on the ongoing marginal oil field bidding process, saying, “The optics from marginal field bidding process is not helping in this regard. There seem to be some opaqueness in the process. I would have preferred a delay before going through this process.”
Also, an Agip source, who pleaded to remain anonymous in this report, said insecurity of their oil assets, as indicated in the vandalisation of their pipelines and flow stations, contributes significantly to the high production cost being recorded by the operators.