For Nigeria to remain competitive in the current era of low global oil price, the Petroleum Industry Governance Bill (PIGB) recently passed by the National Assembly must address the issue of production cost in the nation’s oil and gas sector to allow for competition in the global market.
The minister of state for petroleum resources, Dr Ibe Kachikwu, stated this while speaking at a symposium on the next step for the PIGB organised by Nigeria Extractive Industry Transparency Initiative (NEITI) in Abuja yesterday.
Kachikwu stated that Nigeria currently operates one of the highest costs of extraction among oil provinces in the world.
“The message is becoming clearer that we have to reduce the cost of production if the country is to be competitive in the modern low oil price world.
“Now is the time to tweak the existing industry laws and come up with a new legal, institutional and commercial framework that will liberalise the petroleum industry as well as create a competitive business environment that will enhance Nigeria’s revenue,” he said.
Kachikwu, who was represented by Engr. Johnson Adeyemi, senior technical assistant to the minister, stated that the time had come to address the institutional, fiscal and regulatory uncertainties bedevilling the sector so as to bring to an end the declining foreign investment in Nigeria’s hydrocarbon projects.
According to him, Nigeria needs to take measures to safeguard its future in the light of its former trade partners seeking alternatives to oil for their energy needs.
“With North America becoming more energy self-reliant, Europe has the technology with regards to alternative energy and China maintains a grip on the natural resources of the entire African flank, in addition to the search for oil and gas through fracturing at the home front.
“Our window of opportunity to benefit maximally from the petroleum industry is narrowing. It’s clear that the shale oil revolution is gradually changing the geopolitics of oil, with ripple effects likely to linger on for years which could have a serious global implication if we don’t put our house in order,” he stated.
In his welcome address, the executive secretary of NEITI, Waziri Adio, highlighted the importance of deliberating about, and triggering actions on, the legal and institutional framework for adequate optimisation of the nation’s oil and gas sector.
Adio stated that despite the decline in the price of crude globally, the petroleum sector accounted for 60 per cent of government revenues and more than 80 per cent of export earnings in 2017.
“Given the disproportionate impact of government revenues and export earnings on our economy, it will not be far-fetched to insist that this sector remains the backbone of not just our economy, but also of national life,” he said.
NNPC To Drill 4 Wells In Chad Basin
Meanwhile, plans have reached an advanced stage for the commencement of drilling of four oil wells in the 1, 961kmsq area acquired by the Nigerian National Petroleum Corporation (NNPC) on the Chad Basin, it was learnt yesterday.
NNPC group managing director, Dr. Maikanti Baru, who disclosed this yesterday shortly after being conferred with the honorary fellowship of the Nigerian Mining & Geosciences Society (NMGS), added that NNPC would be going into the deeper Maiduguri sub-basin to acquire more 3D seismic data as soon as normalcy returns to the region.
LEADERSHIP reports that security in the Chad Basin in Nigeria’s North East has been undermined in the last few years due to the terrorist activities of the Islamic sect, Boko Haram.
“While waiting for normalcy to return to the Chad Basin, we have stepped up efforts in the Lower Benue trough. So far, we have acquired 20km of 2D data out of the planned 455km 2D seismic data,” Baru said.
On the Gongola Basin, Baru said four wells were also being planned for drilling in 2018 to further test the prospects identified around Kolmani River-1, Nasara-1 and Kuzari-1.
He expressed the corporation’s readiness to collaborate with the NMGS towards growing the nation’s abundant hydrocarbon reserves.
According to a statement by NNPC’s spokesman, Ndu Ughamadu, Baru acknowledged the “indispensable role” played by geoscientists, mining engineers as well as metallurgists towards the development of the nation’s oil and gas Industry.
Noting that NMGS was critical to the attainment of NNPC’s core mandate, he pledged the corporation’s readiness to continue to work with the body in the search for more hydrocarbon deposits in the country.
He said it was in line with this collaboration that the corporation developed a strategy involving various geosciences departments in the country’s tertiary institutions, which culminated in the renewed search for hydrocarbon deposits in the inland basins.
“Our search is primarily targeted at increasing the hydrocarbon reserves of the country and also to harness these resources which may be (available) in other parts of the country,” he added.
He described as saddening last year’s unfortunate incident which claimed the lives of some University of Maiduguri staff working on the Chad Basin exploration as well as the loss of one of the corporation’s staffers working on the Benue Trough exploration, saying their death will not be in vain.
“I pledge on behalf of the NNPC that their sacrifice shall not be in vain. There is no better way to honour the efforts of our gallant heroes than to continue the good work they died for,” he added.
In his speech, the NMGS president, Prof. Silas Dada, said the body was honouring the NNPC boss for his untiring commitment and service to the growth of the Nigerian oil and gas industry.
Oil Hits 3-Week High At $67.31bpd
Meanwhile, crude advanced to a three-week high as the OPEC-led alliance of major oil producers accelerated the timeline for curbing a worldwide supply glut with Brent for May settlement surging $1.26 to $67.31 on the London-based ICE Futures Europe exchange.
The global benchmark crude traded at a $3.98 premium to West Texas Intermediate (WTI) for the same month. WTI for April delivery, which expired yesterday, advanced $1.54 to $63.60 a barrel at11:10 a.m. on the New York Mercantile Exchange, the highest intraday level since February 27. The more-active May futures contract rose $1.20 to $63.33.
Futures in New York climbed as much as 2.4 percent yesterday. Global crude supplies will come into balance with demand by the end of September, sooner than previous forecasts, according to the special committee appointed by the OPEC-led group to oversee their historic accord. Concerns that President Donald Trump may toughen sanctions against Iran — OPEC’s No. 3 producer — also fanned the rally.
The OPEC-allied nations are “pretty much sticking to their guns and they continue to say they are in it until the oversupply is done,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.
Crude in New York has advanced more than five percent this year as the oversupply that crushed prices in the 2014-2016 slump began to drain. Record high U.S. crude production coupled with mounting levels of stored supplies in American tanks and terminals forestalled any price breakouts. UBS Group AG said it maintains a negative view on prices because of near-term builds in inventories.
“The oil market is in reasonably good health,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen.
“Oil is settling into a wide range between $60 and $70. Storm clouds could emerge if global demand growth begins to be called into question.”
The special committee established to monitor compliance by the nations aligned with Saudi Arabia and Russia to curb supplies said its timeline assumes Libya and Nigeria keep output at February levels and other participants in the deal maintain full adherence, according to the people familiar with the matter who were not authorised to discuss it publicly.
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