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“LOW OIL PRICE PRESENTS OPPORTUNITY FOR NIGERIA’S OIL & GAS SECTOR” …FG By: Ogbonnaya A. Kalu

The GMD, NNPC, Dr. Joseph Thlama Dawha (3rd from left) cutting the tape to officially declare the Exhibition Centre of the Nigerian Oil and Gas Conference open, being ably assisted by MD, SNEPCO, Mr. Tony Attah (2nd from left) with others watching

The Honourable Minister of Petroleum Resources, Mrs. Diezani Alison Madueke has said that the global low price of oil presents an opportunity to the Nigeria’s oil and gas sector to improve efficiency in all her operations. She declared this in her opening address at the Nigeria’s Oil & Gas international conference held recently in Abuja.

In a paper titled “STATE OF THE INDUSTRY, ACHIEVEMENT AND FUTURE DIRECTION”, read on her behalf by the GMD of NNPC, Dr. J.T. Dawha, the Hon. Minister observed that the dramatic global low oil price has brought about declining government revenue to many oil producing countries including Nigeria, with resultant steep challenges in the funding of projects.

However, she assured that the Nigeria’s Oil & Gas Sector is responding to this with a renewed impetus in managing cost, compressing contracting cycles, vigorously addressing the menace of pipe line vandalism and associated crude oil theft as well as the pursuit of the petroleum industry bill (PIB).

Lending his voice to the discourse, the Group Managing Director of NNPC, Dr. Joseph T. Dawha, in his own paper titled “Changing Face of the Oil & Gas Industry: Nigeria Future Strategy in a Global Context,” gave a broad overview of the global energy need and concluded that fossil fuel will continue to dominate the global energy mix despite expected decline due to energy switching. He demonstrated that the global primary energy mix stands as follows: Oil 33%, Coal 30%, Natural Gas 24%, Hydro Electric 7%, Nuclear Energy 4% and Renewable Energy 2%.

The above clearly shows that the global energy mix is dominated by Oil, followed closely by coal and Natural Gas in that order. He went on to explain that the oil industry has evolved in the last century through a rich history of booms, bursts and dramatic technological changes. These changes, he observed, were influenced by politics, economics, technology and environment. The technological development that have brought about unconventional resources like shale Oil & Gas, fracking etc. have led to dramatic growth in reserves and production and this has converted a country like USA from a net importer of Oil & Gas to a position of self-sufficiency. The loss of the US Oil & Gas demand coupled with other economic and geopolitical factors have led to the creation of significant over supply which has depressed global Oil prices in recent times. This collapse in crude Oil prices means a significant drop in government revenue, which consequently aggravates government equity funding.

Furthermore, he stressed that the emergence of new regional competitors: Ghana, Uganda, Kenya, Mozambique etc. with significant Oil & Gas discovery means stiffer competition for more market share in a shrinking global market.

In the light of these prevailing circumstances, countries adopt different strategies to address the issues. “So for us in Nigeria, a highly dependent Oil & Gas revenue economy, a fundamental three strands of forward looking strategies are open for adoption…

GMD, NNPC, Dr. J. T. Dawha and his entourage being welcome to the (NOG 15) Conference venue
by the Board Member, CWC Group, Dr. Aliero Para

A. Diversification of Revenue sources through:
• Agro industrial product: Palm oil, cocoa, cashew, sugar, rice etc.
• Mining Related: Cement, Iron ore/metals, Auto parts/ cars Aluminums etc.
• Oil & Gas industrial products: Petroleum products, Petro chemicals, Fertilizers/Urea & Methanol.
• Liberalization of the Petroleum Down-stream sector
• Broadening the tax base.

B. Diversification from Oil to Gas through the Gas master plan.

C. Addressing the market disruptions caused by new technologies in particular hydro fracking technology in the USA…”

Shedding more light on the strategy to be adopted against the market disruption brought about by the loss of the USA market, Dr. Dawha advocated for a strategic repositioning of the destination of Nigeria’s Crude trade which requires not just a change of destination but should also include direct sales of crude to refineries in new markets and on some longer terms of crude sales contract ‘beyond the current one year term.’

In addition to this, we could also build and run offshore refineries to ensure access to more markets and earn more as some gulf countries have done.

We must also ensure upstream cost optimization to ensure lower production cost per barrel. Prioritization of major projects in view of the low Oil & Gas prices.

Rehabilitation of all our refineries to minimize import of petroleum products and save foreign exchange is a major priority to NNPC as it is in line with the Federal Government’s strategic infrastructural rehabilitation policy.
Establishment of new refineries by private investors is also crucial to meet not just the domestic demand but also dominate the regional market.

Steel is a vital component of the Oil and Gas sector operations. The revitalization of the nation’s Steel industry will not only help conserve our foreign exchange but will also broaden our export base.

In conclusion he affirmed that with these strategies coupled with the discipline and resolve of the Federal Government, the Nation will eventually find itself out of the woods.

The theme for this year’s conference was “The Journey towards Transformation.” Nothing could have been more apt at such a time as this, when global oil and gas landscape is shifting and Nigeria seeks for ways and means to secure its present and future position in a fast changing global environment.

What, with the free fall of the price of crude oil in the international market, the major concern of every stake holder participating in the conference was how to get around the critical challenges thrown up in the industry by the dramatic price fall.

Little wonder the four day conference ignited fervent debates and lively discussions on such key topics as how policy will develop to cope with the shifts in export markets and lower oil prices; Development of strategies at a time of greater competition and lower growth; Creation of domestic Oil & Gas market and the opportunities afforded by the Nigeria Content Act…etc

The star-studded Conference had so many papers delivered and panel discussions on different topical issues ranging from policy issues to the plummeting oil price effect on capital project, from The Nigerian Content Act to the Rise of Nigerian Independent producers; from cost management to security…etc.

Front roll: GMD, NNPC, Dr. Joseph Thlama Dawha (centre) flanked to the left by MD, Total Upstream Companies in Nigeria, Elisabeth Proust and to the right by Dr. Aliero Para of the CWC Group

Such iconic authorities as Dr. Aliero Parra, former Venezuelan Oil Minister and one time OPEC President and current Board member CWC Group limited. Dr. Joseph T. Dawha, Group Managing Director Nigerian National Petroleum Corporation, Dr. Timothy Okon Group Coordinator, Corporate planning and strategy NNPC.

Engr. Ernest Nwapa, Executive Secretary Nigerian Content Development Board. Osagie Okunbor, MD, SPDC & Country chair, Shell Companies in Nigeria. Nolan O’Neal, Chairman/MD, ExxonMobil Upstream Companies in Nigeria. Elisabeth Proust, MD/Chief Executive, Total upstream companies in Nigeria.

Rt. Hon. Charles Osezua, Chairman Vallource Oil & Gas Ltd. Herbert Wigwe, Group MD, Access Bank Plc. Mr. Wale Tinubu, MD. Oando Plc. Cornelius Zegelaar, Senior Vice President & MD Addax Petroleum Nigeria, and a plethora of other legendary professionals gave a timeless value to the conference.

The Conference ended with an NNPC Award Gala Night, where NEST OIL PLC won the Indigenous Oil & Gas Company of the year Award. HYLOCK NIG.LTD won the Nigerian oil and gas Content implementation Award.  And OANDO Plc joyfully went home with the Nigerian Oil & Gas Excellence award.

© 2015 NAPIMS
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