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By TAYO ELEGBEDE
The Minister of State for Petroleum Resources, Timipre Sylva has outlined some measures taken by the government to mitigate the effects of future crude oil price crash as seen in April following the outbreak of the global COVID-19 pandemic.
According to him, the pandemic is not only a health crisis but also an economic and security threat to nations , especially when revenue from oil and gas can’t fund government budget.
Sylva , at the Inaugural Seplat Energy Summit 2020 themed ‘Business Sustainability and Strategic Leadership in Africa,” however said, be that as it may the situation is not a death sentence but an opportunity to see things from different perspectives and act differently.
It is to that effect that the government has among other things taken some measures like
the embrace of industry wide cost containment strategies, where aggressive capital allocation are given only to priority project with low cost of production as the implemention of the $10 per barell production cost is considered, without jeopardising growth .
He advanced that the ministry through the NNPC have rolled out startegies to achieve the $10 per barrel operating cost by ensuring discipline and also downward renegotiation of all contracts and other business obligations, adding that “we renegotiate contracts to attain minimum 30 per cent cost reduction.”
With the nation’s enormous riches in gas reserves, Slyva retierated that government is working on its diversification portfolio of non oil businesses to cushion the effects of future crush in crude oil prices, and part of the moves was the commencement of the national gas expansion programme, as well as the forming of a committee earlier this year to ensure the domestic penetration of LPG, CNG, LNG in the market.
“The nation has enormous gas reserves and when efficiently utilised and monitise, it will enable significant growth not only in the power generation across the country, but also create economic impact to create jobs and development. That’s why year 2020 was tagged year of gas, ” he added.
The Minister noted also that government has foreseen that global oil investments will Continue to decline and recovery is likely to come beyond 2022, as going by OPEC’s analysis, global average oil demand has declined by about 8.49 million barells per day.
And that the global oil economy is forcasted to decline at about 3.4 per cent in 2020 due to the pandemic compared to 2.9 per cent growth globally in 2019.
Counting areas were Nigeri’s oil and gas industry was affected by the global health challenge,
the minister affirmed that the sub sector is faced with market and revenue insatability, demand and supply imbalance, revenue decline due to low oil prices , pressure on Nigerian crude oil selling price due to supply glut and lack of buyers, and production uncertainties due to refineries shut down in major refining across Europe and Asia.
He listed others as decline in demand of crude oil due to global lockdown, investment deferment and cancellation due to losses from potential investments as a well as product delivery risk , reduced access to capital and slow down progress of project execution, huge revenue losses due to share block in oil arising from supply demand imbalance, project deficits and delivery challenges, as all these are significantly affecting the Nigerian economy.
.Speaking to the theme, Chairman Seplat, Dr. Bryant. Orjiako, linked the importance of the Innugural summit to the company’s intention to add it’s voice to the business community view, but more particularly for Seplat to audaciously participate and contribute their voice towards the climate change narratives, as well as the ESG initiative.
The Seplat boss stated in his welcome address that the event was also to herald the the company’s tenth anniversary as well as handing over to the new CEO Roger Brown from the former Austin Avuru.
He narrated that the company has come thus far in it’s ten years journey and commended the efforts of some of their big wins saying “over the past ten years Seplat has witnessed a series of success starting from growth of production and reserves to being the first and only company that has taken security to both the Nigerian and London stock exchange among others.”
Dr. Orjiako added that Seplat’s growing gas business would become their very first audacious step towards making sure their operations are in line with the global climate change , the ESP initiative and the business environment and it will indeed be their main consideration towards carbon neutral operations in the energy value chain.
ELEGBEDE TAYO OREDOLA , a journalist with five years professional experience is self motivated and a team player. Her experience came from diverse media, like The Guardian Newspaper, Radio Nigeria among others and now with the INSIDEBUSINESS in the bid to explore the new media.
Email: [email protected]
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