The Nigerian Association of Petroleum Explorationists (NAPE) has said that absence of fiscal policy will continue to retard investments flow in Nigeria’s oil and gas industry, such that attainment of 40 billion crude oil reserve might not be realised.
The association’s president, Mr Andrew Ejayeriese, said that it is not possible to achieve that dream because existing petroleum law is not attractive to investors and does not guarantee return on investments on deep-water explanations.
He said the law was made when exploration centred on shallow and onshore campaigns but activities are now shifting to deep offshore exploration but new investments are currently stalled.
According to him, the Petroleum Industry Bill,(PIB) which has been at the National Assembly for the past 18 years has remained a challenge and no additional volume is being added to existing production.
Dr Maikanti Baru, the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) recently said the corporation would increase the country’s crude oil reserves by one billion barrels yearly to attain 40 billion barrel by 2020.
Baru gave the assurance during his keynote address titled: “Driving Nigeria’s oil and gas Industry towards Sustained Economic Development and Growth,” at the 17th edition of the Nigerian Oil and Gas conference in Abuja in July.
The NAPE president, who said that as technical petroleum professionals, the forthcoming conference was billed to deliberate on major critical issues in a quest to address the challenges in the Nigerian energy industry.
“Oil and Gas will continue to be a commodity characterised by peaks and troughs. The cyclicality of the industry is not a new phenomenon. Stability in oil prices is critical in order to achieve high economic growth.
“The global energy market is getting increasingly more complex; with the low oil price regime, hydrocarbon exploration and exploitation are no longer as profitable it was prior to the price decline in 2015”. he said.
According to him, while global demand for reliable and affordable energy will continue to rise in the foreseeable future, the world is moving toward a low carbon era.
“Consequently, oil and gas companies will find it expedient to review long term strategies and innovate, recognising the possibility that oil is on the brink of suffering a fate similar to coal.
The president observed that although the global economy continues to recover, growth has been slower than anticipated, as oil price fluctuations are strong determinants of inflation rate and unemployment levels which in turn impact the growth rate of a nation’s economy.
Ejayeriese said that for most developing countries, like Nigeria, oil accounts for a large proportion of Gross Domestic Product (GDP) expenditures in energy production and the country relies on crude sales to make up 70 per cent of its revenue.
He pointed out that significant hikes in energy prices will lead to appreciable rise in production, transportation and sundry costs for many allied industries, and that in emerging economies.
He said that the challenges are similar, including uncertainty in regulatory frameworks, poor physical infrastructure, lack of skilled resources, corruption and poor ethics.
For Nigeria, he reasoned that there is no better time than the present to begin to envision an era beyond oil, asserting that, “Now is the opportunity for oil and gas companies to reinvent themselves”.
He said that against the backdrop of low oil price, dwindling oil revenue, there have been strident calls for the nation to diversify her economy from the monolithic economy and absolute dependence on oil into other areas to sustain the nation in terms of revenue generation.
Though, he noted that successive administrations have enunciated economic policies and strategies on how to diversify the nation’s economy from oil to other sectors like agriculture, mining and tourism, unfortunately the Nigerian economy has not diversified at the anticipated rate.
He said that although significant achievements have been recorded in the management of Nigerias oil and gas resources compared to recent past.
The president believes that to build a more diversified and more resilient economy, government’s plan must include finding and enhancing new opportunities and prudently allocating its revenue which comes mainly from oil and gas to the development of other key sectors of the economy.
“Government must offer oil and gas investors an attractive environment by reforming the regulatory, fiscal and licensing systems.