Dr Ibe Kachikwu, Minister of State for Petroleum Resources
Kachikwu disclosed this at the 2016 Annual Conference of the National Association of Energy Correspondents, with the theme: “Low Oil Price: Impact and the Way Forward.” The conference was held in Lagos on Thursday.
The minister also revealed that the country recorded over 3,000 pipeline vandalism cases from 2010 to 2015 and added that the impact of attacks on oil and gas pipelines was that there was no money to fund the 2016 budget.
He said militancy in the Niger Delta had destabilised the country’s oil industry and that Nigeria needed to increase its production by 1.1 million barrels per day to meet its target.
The minister said declining price of oil in the international market had negatively impacted the country’s revenue leading to economic recession.
He said proactive steps were required to bring Nigeria’s economy back on positive track.
According to him, while vandals wreak havoc on oil facilities and cripple local production, over-supply of product in the market is affecting prices and creating shocks to the economy.
Kachikwu said time had come for the country to face the reality of the time as there was no assurance that the price of oil would peak as being speculated.
He hinged his argument on the fact that the Organisation of Petroleum Exporting Countries merely controlled 30 per cent of the market, while 70 per cent was in the hands of major producers such a US, Russia and Mexico, which were not OPEC members.
He said the industry was challenged by $6 billion cash call indebtedness accumulated over the last five years.
The minister said that with inadequate financing of the industry, no investment had occurred in the sector in the last five years.
Kachikwu said 643 million litres of petroleum products amounting to N51.28 billion was lost in 2015, while between January and June a loss of 109 million litres of petroleum products and 560,000 barrels of crude had been recorded.
He said that about 850 billion standard cubic feet of gas production had been lost from crises and power outage exposure of 2,700MW to 3,000MW.
The minister said government was stepping up efforts to make robust policies that would finalise and gazette a comprehensive gas policy, unlock gas potential and ensure effective development of Nigeria’s gas market.
He said the policy would help to transit from gas flare penalty regime to gas commercialisation and shift focus from government built to investor built infrastructure.
Kachikwu said for the industry to rebound, efforts should hinge on developing National Oil, Gas, Downstream, Fiscal Reform policies as well as the Petroleum Industry bill.
He said local refineries would be scaled up to attain full capacity from the present 60 per cent and added that by 2018, the country would reduce importation of products and finally cease product import by 2019.
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