FG mindful of challenges in oil and gas industry – Osinbajo

Akpobor Jirue, Abuja

The Federal Government says it is making efforts towards creating a more conducive business environment for operators in the the nation’s oil and gas industry, stressing that it’s not
unaware of the numerous challenges facing the sector.

Vice President Yemi Osinbajo stated this on Tuesday while speaking at the official opening ceremony of the 2021 Nigeria Oil and Gas (NOG) Conference and Exhibition in Abuja.

Osinbajo who was represented by the Minister of State for Petroleum Resources, Timipre Sylva, said the Petroleum Industry Bill (PIB), would resolve all legal and regulatory challenges in the industry, adding that the focus has shifted to the huge gas resources in the country.

He stated that the global lockdown triggered by the pandemic pushed the industry into a major crisis, even as the sector is undergoing a transformation. He added that this state of affairs has further amplified the global clamour for cleaner and more sustainable renewable energy.

“The critical assessment of our perspective for Nigeria’s preparedness for oil and gas industry stability and growth in the wake of energy transition dynamics cannot be over-emphasized,” he said.

He noted that the future survival and success of many players in the industry will not only depend on their ability to achieve greater focus on cleaner energy source, but also upon the ability to deliver low cost solutions.

The government under current administration is encouraging the industry players to critically focus on the nation’s vast natural gas resources as the country undergoes a transition period that will function as a bridge between the dominant fossil fuel of today and cleaner energy of tomorrow.

“Natural gas has the ability to meet the increasing global requirements for a cleaner primary energy use, while at the same time enabling much needed domestic industrialisation for rapid economic growth in very few endowed countries such as Nigeria.

“Government is not unmindful of the peculiar challenges confronting the gains of oil and gas operations in Nigeria; from infrastructural deficiency and insecurity to high cost of operations to mention just a few.

“The government is working consciously to tackle all without lagging behind on our path to meeting the global demand that our signatory to international protocols of cleaner energy have placed on us.

“We must have noticed that despite the current global challenges in the industry, the Government has been supporting the aggressive implementation of the nationwide gas infrastructure blueprint.”

Speaking of the tough time the industry is currently in, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, said investments in the sector have dropped to 30 percent.

He stated that the implications of the drop occasioned by global challenges, would begin to manifest within the next three to five years.

According to him, finances for fossil fuel investments were dwindling due to energy transition and as a result, Nigeria and other developing economies would have to depend on hydrocarbon resources to power their economies.

He said: “This industry is very challenged today, the investment has gone down 30 percent so those outcomes will come up probably in the next three, four, five years when we will realise that the lack of investment today will manifest in all practical sense, in our inability to meet demand requirements of oil and gas in the industry.

“Even if we have, unless something happens and there is a catch up period, there is something we can do as an industry but we know that if we don’t do anything, something will happen.

“Energy transition is not about movement from fossil fuel to renewable, its creating the right balance and there is this common mistake that in 2050, fossil fuel will go away and we will be dealing with renewables. That is not true, it is very far from the truth.

“For us as a developing country, energy resource dependent county, we know for sure that beyond 2050 that oil will be relevant for us. Today we are in deficit of infrastructure, power and many other things but so much good works are going on but the fact remains that there is deficit here.

“All the engagements around electric vehicle even in terms of carbon zero objective probably is very questionable if even is the solution to carbon zero emission so many things are happening.

“Post realities will come up in the next five years and we will have to deal with it but for us we know for sure that things have changed; financial institutions have changed their priorities, some of them have stopped lending to energy borrowings etc.

“Yes it may be for the moment, they may come back to the realities probably in another five years but the reality today is you can’t find easy financing for fossil fuel related businesses.”

The NNPC boss who further noted the demand for crude oil was still and would still be there by 2050 despite the energy transition policy, disclosed that operators in the oil and gas sector have begun to focus on quick oil.

“For every forecast that we have including from update from very many other institutions that are not in this business, every body says even if by 2050 we still have oil demand of about 100 million barrels so what you will see is growth.

“We are still at about 95 and 96 today but if we’re still at 100 by year 2050, it means that the growth is very small but there will still be 100 million barrels production on the ground so the position we are taking as the national oil industry and also as an industry, in this country is to produce the quick oil.

“Quick oil means that we have to monitor every resources that is available today, so we will create the resources that will create a future for our country and for our businesses and the oil will provide that fulcrum for us to create the wealth but one thing we are also sure, is that gas is everything”, he state