Indigenous Oil Producers Want Level Playing Field

Fri, Nov 28, 2014
By publisher
5 MIN READ

Oil & Gas

Wale Tinubu, group chief executive officer, Oando Plc., is asking the federal government to create a level playing field for indigenous oil producers to thrive in the country

By Anayo Ezugwu  |  Dec. 8, 2014 @ 01:00 GMT  |

FOR Nigeria to survive the recent fall in oil prices in the international market, the country needed to create a level playing grounds for the indigenous oil producers to thrive. One of the things the government has to do to provide a conducive environment is to ensure the passage of the Petroleum Industry Bill, PIB, which has been trapped in the National Assembly for a very long time. There is no way the country can solve the problems in the industry without the PIB and it is so fundamental that the PIB will change the way and manner the country do things in the industry, positively or negatively, said  Wale Tinubu, group chief executive officer, Oando PLC.

Tinubu at The Petroleum Club Meeting on Thursday, November 27, said if the government fails to encourage the indigenous producers it will be on the bad side of history because it failed to create opportunities for indigenous oil companies to thrive. Tinubu, who delivered a lecture titled “Enhancing Indigenous Participation in the Oil and Gas industry”  said there was no doubt that the oil and gas industry is at crossroad because of the fall in oil prices and the emergence of shale oil and gas.

According to him, the only way the industry is going to move forward is not necessarily by individual actions and activities, but when the most brilliant minds in the industry gather together in an environment like the Petroleum Club and come out with resolutions that will help drive the industry forward.

“There is no doubt that the world has changed and there is a paradigm shift to the way things are being done today. There is a paradigm shift regarding the emergence of shale gas as a true fuel for the future. This has made the prices of conventional oil and gas to reduce drastically. US have more reserves of gas today and its main target is to be gas sufficient in few years to come. Shale is clearer, cheaper and far more efficient than oil. There is no doubt that shale oil has really changed the way and manner we look at conventional. The cost of production of shale gas is dropping at alarming rate and technological advances are making a big difference in the cost as well. It could be as cheap as $50 per barrel as the actual cost production. Some analysts said it could go as low as $40 for producers in US. As of few days ago, the US announced that it was producing more than 9.3 million barrels per day, which made them number three after Saudi Arabia and Russia. Saudi Arabia is at 10 million barrels per day, while Russia is at 9.5 million. And US will reach 20 million barrels per day by 2035,” he said.

Funso Lawal, chairman of the club
Funso Lawal, chairman of the club

Tinubu is of the view that Nigeria oil and gas industry need an indigenous charter to solve the problems confronting the industry because the indigenous companies are big now, doing large businesses in the industry. “Our problems are not the same with the IOCs, their risk and portfolio are diversified and they have a lot of cash. They can take risk and survive but we cannot survive on the other hand. In the other industries in the country there are more indigenous advocacies, whether in telecoms or cement industry. It is a big drive when the indigenous participants play an active role trying to drive policies in their directions. We, as an industry, need to gather together like in this platform created by the Petroleum Club. It is our duty to tell Mr. President that this is what we need as an indigenous company to solve problems in the industry, create jobs and this is what we are capable of doing.”

For all these to be achieved, Tinubu said the country needed to solve the security problems confronting it to enable external investors to come in. There is also the problem of non-passage of the Petroleum Industry Bill, PIB, which is sending a wrong signal to the IOCs who are now looking at other options available to them, like Angola, Mozambique, Morocco and Gabon.

Nigeria is very important to the IOCs but because of insecurity and vandalisation of their properties they have decided to diversify their risk, he said. “The external investors are diversifying their risk as a result of insecurity in the country. In the last four years there have been serious financial commitment made to Angola, Mozambique, Morocco, Gabon and Ghana. We have seen more money going in there every single day and new companies registering there. How many new companies get registered in Nigeria or make financial commitment on a daily bases? But the good news is that we have the power to change things in this country. In my opinion, if we have adequate security, no bureaucracy and no PIB looming, indigenous investors will have the chance to bid and buy assets in the industry,” he said.

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