Rig owners seek alternative funding for oil industry
Rig owners in Nigeria have tasked the Federal Government to implement the alternative funding stream for joint venture operations it approved in November last year.The operators regretted that the inability of government to execute the plan has further thrown the industry into instability, which has drastically affected the nation’s economy.
This was stated in Port Harcourt, Rivers State, during the 2017 Annual Rig Owners and Operators Meeting with the Department of Petroleum Resources (DPR).Speaking, the Chairman, International Association of Drilling Contractors, Nigeria Chapter, Ote Enaibe, said the inability of government to fulfil its share of the joint venture funding has frozen activities in the industry, thereby worsening the economic situation in the country.
He said: “As rig owners, and operators, we have really suffered. All the activities we expected to happen in 2016 did not turn up, so many rig owners are out of work, the industry is now divided into two camps; those who think 2017 is going to look like 2016 and those who have lost all hopes.”
“The Minister of State for Petroleum, Ibe Kachukwu, had talked about alternative funding; presently, we cannot do anything in the industry without funding. It is worrisome that government is not meeting up with the joint venture funding, it is important they look for alternative source for the funding and later they can repay to enable the industry come alive again.
“What is killing us in the industry is lack of alternative funding, we need that funding regime to be implemented, so that funds can be raised through it and the rigs would be operated and the economy thrives.”
Recall that the new funding mechanism was approved during a meeting of the Federal Executive Council last year, chaired by Prof. Yemi Osibanjo. The fund was aimed to eliminating the often difficult cash call regime, which plagued the oil industry for over a decade.
The Chief Executive Officer of Tecon Oil Services, Casmir Maduafokwa, said recently that the vital measurement of the level of activity in the oil sector is the level of rig activity.
“The rig count has been shrinking. In the period 1990 to 1991, the rig count was close to 50. The current rig count is below 30. We have a lot of stacked rigs. We also have four workover units stashed. Even with no income, you have to maintain them. “There are lots of idle rigs in the market. The rig activity normally drives a lot of other activities. If you pull a rig out of the system, all these services basically dry up.
The oil companies are even smart. They have call-off provisions. You can invest and if there is no work, you are not paid a dime. The point is that the oil sector especially the joint venture aspect has performed poorly,” he added.