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The panacea for investments to be attracted into the oil, gas and power sectors has been encapsulated by stakeholders in these sectors, as achievable only through; a globally competitive fiscal policy, robust legal frameworks and a healthy contract integrity culture. These they say, are the key drivers to profitability.
Nigeria’s oil and gas industry faces numerous challenges such as high production cost, poor functional refineries, non-deregulation of the downstream subsector, transparency issues , crude theft, pipeline vandalism, pollution in the Niger delta, Petroleum Industry Governance Bill (PIGB), pricing, inadequate pipeline infrastructure, optimise the performance of industrial base assets and improvement of environmental footprint among others.
Paul McGrath, who is the chairman of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industries (LCCI), and also chairman and managing director of the ExxonMobil said: “As at today Nigeria is the largest oil producer in Africa and Nigeria’s hydrocarbon prospects are amongst the brightest today, however, there are fixes we must but in place if we aspire to maintain and expand the current investment profile in the Nigerian hydrocarbon industry.”
Also, operating risks peculiar to Nigeria’s environment have continued to drive the costs of oil and gas projects in the country above the global benchmark.
Nigeria ranks amongst the top 10 countries with highest cost of producing oil and gas equivalents per barrel. High coat is a major disincentive to invest, especially at this time of considerable global competitiveness.
It could be recalled that a study conducted by the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) identified these problems to include insecurity,overregulationand bureaucracy; and absence of infrastructure.
Indeed, insecurity, especially in the oil-producing Niger Delta region, posed the greatest threat to the survival of the oil and gas industry in Nigeria, inflating the costs of projects beyond global average.
The non resolution of some of these issues has also affected the power sector which has depended so much on the oil and gas industry for gas supply to power generations. There is huge shortage of gas supply to the power sector hence the inability of the sector to provide stable electricity in the country.
These recalcitrant challenges are seriously undermining Nigeria’s efforts to boost electricity supply through gas.
The nation’s enormous gas reserves, estimated at 187 trillion standard cubic feet, are grossly under-utilized in the gas to power value chain.
Industry analysts have said the nation’s power shortage could be resolved through optimal utilization of the nation’s huge gas deposits. But lack of appropriate synergy between policy makers and players in the energy sub-sector is a major factor for the nation’s epileptic electricity supply.
Victor Okonkwo, group managing director (GMD), Aiteo Eastern E & P Company Ltd, said the nation’s power shortage and gas issues could be resolved through optimal utilization of the nation’s huge gas deposits.
He said government should show greater commitment to power generation by providing a favourable environment in order to attract more investors.
It is believed that without government showing greater commitment to power generation by providing a favourable environment in order to attract more investors.
Similarly, Dolapo Kukoyi of Nigerian Gas Association (NGA), said there must be maximum co-operation among stakeholders because energy supply is for crucial economic growth.
She also identified lack of infrastructure deficiencies in delivery of gas stockpile to power stations, regulated low prices, poor remittance and policy somersaults, as major challenges undermining their targets and operations.
Olusola Bello
