The revenue woes facing local oil
companies following the sharp drop in global oil prices have been
worsened by the recent upsurge in militant attacks in the Niger Delta,
industry players have said.
They stated this at the 40th Nigeria
Annual International Conference and Exhibition of the Society of
Petroleum Engineers in Lagos.
The Managing Director, Seplat Petroleum
Development Company Plc, Mr. Austin Avuru, said about 70 per cent of the
nation’s production from the traditional terrain of onshore and shallow
water had been locked in.
“A year ago, we were battling with zero
production and zero revenue for upwards of five, six months. Some of us
no longer check the oil price, it has become irrelevant. Oil price is
only relevant when you produce,” Avuru stated.
He added that the oil and gas industry
was undergoing a major transformation a couple of years ago aimed at
moving it away from just being a primary revenue earner for the Federal
Government to becoming an enabler of economic development.
He said, “We have said that this
industry will move away from domestic consumption of less than 300
million standard cubic feet of gas per day to three billion scfpd, and
in the process, energising companies like Dangote so that we can become a
net exporter of cement and fertiliser; in the process, delivering 15
gigawatts of electricity and all its multiplier effects.
“That is the journey that the industry
started a few years ago. That journey, unfortunately, today is being
interrupted by some forces. The crisis in the Niger Delta has taken a
turn that must worry all of us because when we don’t produce, our
companies are destroyed, jobs are destroyed and the economy is
destroyed.”
Recalling that last week, Seplat
released its financial results, Avuru said, “For the first time ever
since we started this business six years ago, we made a half-year loss
from bountiful profits.”
Oando Plc, which is another major
indigenous player, said on Tuesday that it made a loss after tax of
N27bn in the first half of this year, a drop from the N35bn loss it
recorded a year ago.
The Chairman of SPE Nigeria Council, Mr.
George Kalu, said the conference theme, ‘Transparency in the oil and
gas business: An imperative for energy security and stability’, was
timely given that oil prices were hovering around $43 per barrel in
recent times with significant challenges to the Nigerian oil and gas
business environment.
He said, “These challenges including
funding constraints rising from cash call arrears, exchange rate
differential in a cyclical oil price regime, high operational costs due
to long contracting cycle time, and severely delayed payment to vendors,
as well as high cost of borrowing are affecting the much-anticipated
boom in the industry.
“One would think that with the low oil
price, improved revenue will come for gas sales. However, the lack of
gas gathering and supply infrastructure is hampering the country’s
ability to maximise the benefits of the sale of gas in the domestic
market, which is currently more attractive than the international
market.”
Kalu said the recent challenge of
vandalism and outright destruction of oil and gas facilities had further
curtailed Nigeria’s oil and gas production, power generation ability,
reduced the flow of revenue, escalated the cost of environmental
remediation and provision of secondary health care facilities, as well
as increased security surveillance and facility replacement costs.
He added that the delay in the passage
of the Petroleum Industry Bill had constrained further investment in the
sector to the extent that exploration activities were at their lowest
ebb.
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