Dearth of exploration worries oil sector operators
•Association seeks establishment of modular refineries
Phenomenal reduction in oil exploration activities in the country may assail the nation’s economic development and growth, especially on the long term, given the situational assessment of the industry by operators.
Specifically, Nigerian Association of Petroleum Explorationists (NAPE), affirmed that the current low-profile oil search could disrupt oil and gas supplies; power generation; loss of revenue; and collapse of the country’s manufacturing sector.
NAPE at a media parley in Lagos yesterday, in a communiqué issued at the end of the association’s last conference titled: “Positioning the Oil Industry for Enhanced Performance in the New Dispensation”, stressed the need for the Federal Government to build micro refineries in the ‘Niger Delta Economic Corridor’ pooling the current burgeoning illegal and unsafe refinery operators.
To increase exploration activities in the country, NAPE President, Chikwendu Edoziem, called on the administration to provide enabling environment and incentives to increase exploration opportunities especially in high-risk frontier basins and under-explored deep high pressure high temperature plays.
According to him, the cost of deep water exploration is so high that the oil companies will not be able to carry out any activity without adequate incentives and the right fiscal terms.
He said that potential revenue to Nigeria, employment opportunities for young Nigerians and businesses are lost due to non-performance of a significant number of oil block/acreages that were awarded during past bid rounds.
Edozien stated: “Fiscal instability, significant gaps and uncertainties in the oil and gas regulatory policies and laws have resulted in loss of investor confidence and preferential investment in other countries in West Africa and other regions by International Oil Companies. There are concerns that value may be further eroded through attempts by the executive arm of government to open fresh debates in the National Assembly in attempts to pass the Petroleum Industry Bill (PIB).
Edoziem said that the PIB should be unbundled while the relevant sections of the extant Petroleum Act be amended to meet the current realities, to position Nigeria to be globally competitive as an oil and gas producing country.
He stated: ‘‘Procurement and contracting cycles in Nigerian oil and gas industry is about 36 months making it the longest and most inefficient in the world. The long contracting cycle results in high levels of uncertainties in costing and planning thereby creating a sluggish business climate.
‘Insecurity, oil theft and illegal refining are bigger threats to the oil and gas industry in Nigeria than the declining price is rather a reflection of an over-supply of oil in the world market’’
Dwelling on the need for more refineries, the NAPE president urged the Federal Government to adopt a strategy of standardised design, streamlined and cumbersome-free approval process, to ensure and efficient turn-around time for construction to full operation of 12 months. “There is an opportunity to reactivate the dormant licenses for private modular refineries and eliminate the perennial fuel scarcity caused by a lack of local refining capacity’’.