Nigeria Targets $10 billion Fresh Investments in Oil Sector

Wed, Mar 1, 2017 | By publisher


BREAKING NEWS, Oil & Gas

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THE Nigeria government wants to attract more than $10 billion of fresh investments in the oil and gas industry in the next five years.

Ibe Kachikwu, minister of state for petroleum resources, stated this at the ongoing Nigerian Oil and Gas, NOG, conference which started on Monday, February 27, in Abuja.

The new investments will address some of the challenges the industry is currently facing — covering pipelines development, refineries rehabilitation, gas and power infrastructure, facility refurbishment and upstream financing.

The investments are expected to bridge the gaps in funding infrastructure development in the industry.

According to him, the time has come to bring down the cost of crude oil production with the right incentives.

“Between 2015 and 2016, we took drastic measures to moderate crude oil prices. But between July 2016 and now, there have been lots of stability in the downstream economy. There are still some challenges, but work is in progress,’’ he said.

He noted that the major problem facing the upstream sector of the industry was how to resolve the $6 billion Joint Venture, JV funding debt and other litigations.

The outstanding debt of $5.1 billion, according to him, will be paid over five years through incremental oil production volumes, adding that the new cash call model the federal government adopted recently will help free resources to stabilise production.

“There are still some governance issues to be addressed. But once this is resolved, our expectation is that there would be improvement in oil production. We are left with options of bringing in investors that will help address the over $45billion infrastructure deficit.

“Government wants to be bold enough to take steps that have not been taken before. We have to release our assets to private investors.

“Either gas pipeline, crude pipeline, the time has come to move from government ownership to private ownership for efficiency,’’ the minister said.

Kachikwu said government had commenced serious engagement with all interest groups in the Niger Delta to achieve stability in the region to boost crude oil production as it plans to grow the country’s oil production from the current 2.2 million barrels to three million barrels per day.

The minister attributed the high cost of producing oil in the country majorly to the militancy in the Niger Delta region.

He stated that the government has set a target of zero militancy for 2017 which is achievable because of its community-based activities and motivation, especially the ongoing consultation by the acting President Yemi Osinbajo in the region which will continue.

He emphasised the need for the oil sector not to wait for a political solutions to the issues, but for the oil companies to collaborate with state governments on how to capture some benefits together.

In his remarks, Mohammed Barkindo, secretary-general of the Organisation of Petroleum Exporting Countries, OPEC, lauded Nigeria for finding solutions to the perennial funding challenge by exiting the Joint Venture Cash Call debt.

“I must commend Kachikwu for securing the feat on behalf of the government. The frontal approach on the lingering issue of funding our exploration as well as production the JVC is highly commendable.

“The approach has been innovative, the solution very practical. Many of my colleagues, here that we served together, will testify that government after government, regime after regime, had battled with this issue continuously without solution.

“This is a confession: the day you overcome this issue that had beleaguered this industry as well as government, you (Kachikwu) made my day,” Barkindo said.

—  Mar 1, 2017 @ 16:10 GMT

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