The Minister of State for Petroleum Resources, Timipre Sylva, has described as disturbing Nigeria’s inability to meet its OPEC production quota due to oil theft.
According to Sylva in an interview in Abuja, the situation is not allowing Nigeria to take advantage of the present high crude price in the oil market.
As at Tuesday, Brent crude was trading at $122.63 per barrel, with West Texas Intermediate at $117.99 per barrel. All this is due to Russia-Ukraine conflict that has led to supply shortfalls globally.
The Minister noted that rising cases of oil theft was one of the reasons International Oil Companies (IOCs) sold their stakes and exited the country.
Our biggest problem is the insecurity of our pipelines. There is a lot of pollution due to oil theft and pipeline vandalism, which has placed us in a precarious situation.
He said the government was working to bring the situation under control and ramp up Nigeria’s oil production.
“It is one of the biggest reasons why IOCs leave Nigeria: they feel that our industry is becoming too volatile and a significant polluter. The criminals who rupture our pipelines to set up illegal refineries which are not regulated are seriously damaging our environment. It is our duty to ensure that we can tackle this issue, which is mainly a question of law and order rather than production. Once solved, all the production that has been lost will get to our tanks, while restoring investors’ confidence in Nigeria.
“Our goal is to restore Nigeria as the leading crude oil producer in Africa. If we tackle security and technical issues, we should be able to ramp our production up to 2.6 million bpd, and in the long run, we can boost it to 3 million bpd,” he said.
He noted that in the last 10 years, the local participation in the petroleum industry has risen from a mere 3 per cent to 35 per cent adding that the federal government has a 70 per cent target for the near future.
“The 2020 marginal field bidding round will bring local companies into the production space by allowing them to learn how to operate with smaller fields. This will prepare them to take over any assets divested by IOCs. Shell has worked in Nigeria since the 1930s, and they have become a solid part of the Nigerian landscape. However, if they decide to divest from bigger fields, our local players will be fully ready to take over thanks to the experience they have built in marginal fields.”
On the issue of fuel subsidies, the minister insisted that it was the biggest impediment to the growth of the downstream sector.
According to Sylva, “Nobody wants to invest in an industry where you cannot even recover your cost of production. We are working to ensure the deregulation of the industry to support its growth.
“The Dangote Refinery will come on stream by the end of the year. A significant number of modular refineries are also coming on line, and the rehabilitations of NNPC’s refineries are ongoing. Once the subsidies are removed and these projects are operational, a golden period for the Nigerian downstream sector will begin.” .
