Nigeria earns N33 trillion from oil, gas in six years




Production activities from the nation’s oil and gas sector raked-in about $220 billion (N33 trillion) into the Federal Government’s coffers between 2003 and 2009.Statistics obtained from the International Oil Companies (IOCs) also revealed that the cumulative capital investment in the sector (excluding exploration) reached about $81 billion (N12.150 trillion) during the period under review.


The Chairman of the Oil Producing Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, Mr. Andrew Fawthorpe, disclosed this at the South West Road Show of the Nigeria Extractive Industries Transparency Initiative (NEITI) in Lagos recently.Fawthorpe, who is also the Managing Director of Chevron Nigeria Limited, disclosed that oil production grows from 2.2 million barrels per day (bpd) in 2003 to about 2.4mbpd in 2005. This, he said, was further slashed to 2.2mpbd between 2007 and 2008 by the militants’ activities in the Niger Delta region, and finally hit 2.3mbpd in 2009.


However, Fawthorpe said the IOCs have over the last 50 years, brought significant technical expertise and financial resources that are crucial to developing Nigeria’s oil and gas industry, but the present fiscal arrangement, as proposed by the Petroleum Industry Bill (PIB), might be a deterrent to further investment in the sector.“The IOCs are committed to development of Nigerian oil and gas, but have great concerns that the proposed PIB would not meet government’s aspirations. As you all know that companies would only invest in areas that are likely to bring returns on investment,” he said.


Fawthorpe, who was represented by the Director, Chevron/NNPC Joint Venture, Mr. Supo Shadiya said, Joint Venture (JV) oil operations have been declining in recent years, while the lack of funding from government on the JV projects has significantly impacted on exploration and production activities. This, he said may likely continue at the post PIB regime, if necessary actions were not taken.


“Under the PIB, this trend will continue, as JV funding issues are not yet resolved. Also the high government take combined with an aggressive price royalty further reduces IOCs investment incentives,” he said.For instance, he explained that the total planned investments by IOCs targeted at opening up new frontiers for crude oil and gas exploitation in deepwater fields in the next six years, could be marred by PIB, moreso as “the industry plans to spend over $20billion in the next five years in the gas sector and to invest about $37 and $77 billion respectively in production sharing contracts and joint venture projects in the next six years.”


The chevron boss, who also disclosed that about $5billion has so far been sunk into the gas industry which had resulted in a 50 per cent growth rate in the last five years, lamented that such further investments could be stalled by the PIB.According to him, the government’s gas and power aspirations may not  be met under the PIB as large number of new gas projects have been made uneconomical by the bill, just as it had failed to resolve infrastructure issues and the absence of payment security and regulated gas prices.


“The PIB increases investors’ uncertainty due to lack of fiscal stability for committed investments and sanctity of contracts and its onerous licenses and leases provisions significantly impact exploration and project viability.“Almost all the production sharing contracts have been rendered economically unviable, and it does not allow for full commercialized national oil companies and does not resolve joint venture funding issues,” he added.


The Chevron boss therefore cautioned that the Federal Government’s aspiration in the gas and power sectors may also be jeopardised by the new regulation, while the wider economy may also not benefit from the multiplier effects.






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