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Nigeria Needs $40 bn Annually To Diversify Petroleum Exports

Sopuruchi Onwuka

Nigeria must save hard to explore other sources of foreign exchange revenue from its huge hydrocarbon resources as protracted low price regime in the crude oil market deals sustained impact on the nation’s economic fortunes. According to the Group Executive Director in charge of Gas and Power at the Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, the prevailing low oil prices has resulted in annual revenue loss of $10 billion and compels the need for the country to explore economic values from the midstream and downstream ends of the petroleum industry respectively.

He said industrialized nations of the world are already benefitting from the low oil prices in the international market due to diversification of their petroleum value chain. Dr. Ige who spoke on the theme of Gas and Power at an international energy seminar hosted by the Petroleum Technology Association of Nigeria (PETAN) said government must muster huge funds to rapidly develop mid- and downstream sectors of the industry in order to position the domestic industrial sector to transform low oil prices to economic advantage.

The massive infrastructural development entailed in the process would require government to save princely $30 billion to $40 billion annually for investments in gas, power and steel development in order to trigger critical industrial drivers to support significant growth of gross domestic products (GDP) by 2020. He said the projected development of industries ancillary to oil and gas as well as inevitable linkages across sectors that depend on petroleum for feedstock and fuel would require huge investments in gas development, processing, transmission and distribution infrastructure. Inevitably, he stressed, new gas lines are needed to link new demands.

The scenario, according to him, presents huge opportunity for global investments in the Nigeria gas environment. In his presentation, the Managing Director of Shell Petroleum Development Company (SPDC), Mr. Osagie Okunbor, traced the country’s poor industrial status to neglect of gas at the initial stages of the petroleum industry development, saying that initial focus of exploration activities was on oil.

He pointed out that global energy trends show that gas energy value has caught global attention, adding that gas potential has come into focus in developing countries as well. In countries rich in gas resources, he said, energy cities are attracting investments and creating triggers for rapid economic development. Mr. Okunbor pointed at the Ogidigben Gas Industrial Park in Delta State as a good gas programme initiated by the government and advocated sustainable policies, programmes and infrastructure development projects to support full realization of the objectives of the programme.

He made it clear that government’s role in the development of gas infrastructure would remain critical for   future industrial development of the country. He also stressed that the running gas-to-power programme was too slow and incapable of creating the volume of demand that would drive growth, adding that the country needed a robust industrial base to support growth in the sector.

Mr. Okunbor also took a swipe at the country’s power sector projections for 2020, saying that the 40 gigawatts (40 GW) of electricity targeted in the period is still too belated when placed in comparison with targets set by peer economies in the world. He called on government to evolve effective and efficient funding structures, develop congenial fiscal environment, and robust industry infrastructure to support investments that would drive development in the nation’s industrial sector.

He pointed out that domestic gas pricing which provides commercial incentives for gas investments has remained a huge issue, adding that government needed to get its act right by balancing policy and commercial targets in the gas sector. He also called for implementation of the Nigerian Gas Masterplan (NGMP) as a necessary measure in meeting domestic and export gas investment targets, adding that there is need to develop regional and domestic market to absorb the oversupply of liquefies natural gas ( LNG) in Africa.

Chairman of PETAN, Mr. Emeka Ene, an eminent industry engineer who doubles as the President of the Nigerian Council of the global Society of Petroleum Engineers (SPE), declared at the forum that the association was pushing entrepreneur driven investments in the industry and called for enabling environment for members of the group to provide the service solution to challenges in the industry. He pointed out that the private sector has over the years staked funds in developing capacity to realize national aspirations in the petroleum sector, adding that the gas value chain remains very complex.

He made it clear that the policy environment must guarantee factors that provide services in the industry, adding that three factors critical to realization of targets in the sector remained skill source, skill offtake and funding processes. In his own presentation, the Executive Chairman of Oilserv Limited, Mr. Emeka Okwuosa, advised government to directly drive infrastructural development in the sector of explore public-private partnership in creating the needed industrial corridors in the sector.

He also canvassed price deregulation in the gas sector, open access transmission grid network and full implementation of the NGMP as part of the measures government must take to make the environment congenial for the right level of investments required to launch the industry onto fast track. On the whole, the forum tasked government to lead infrastructural development in the industry to guarantee open access grid network, evolve the right regulatory structure and single enforcement agency, as well as enthrone a fiscal regime that encourages gas investments.

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