By Prince Okafor
Ahead of the planned divestment of oil leases by International Oil Companies (IOCs) due in 2019, some indigenous oil producers have called for a stable fiscal framework to make the bidding rounds competitive.
Speaking during the Aspen Energy Roundtable in Lagos, titled: “Growing Nigerian Independents to World Class Exploration and Production Companies,” the former Director, Department of Petroleum Resources (DPR), Osten Olorunsola, stressed the need for operators in Nigeria’s petroleum industry to always consider trends in the global energy demand before making their business decisions.
He stated that: “Apart from rising demands and supply deficits, the sub-Sahara Africa energy sector is huge and will continue to widen growth opportunity for Nigeria. Nigeria should begin to move away from exporting crude oil.
“It is very necessary that we consider the growing impact of shale oil, technology advancement and the ongoing penetration of electric cars and the broader mobility revelation.
“Crude oil buyers are now net exporters, LNG is overtaking pipelines and technologies is allowing faster break through.”
In his remarks, the Managing Director of Vertex Energy, Mr. Segun Olujobi, noted that China is making deliberate efforts to move away from internal combustion engine, adding that, “With that, you can understand why, there are concerns about the environment and they don’t have oil. This is a big issue for us.
“So we must ensure that we make our fiscal framework is very competitive, even if you put money on the table it is far more important to keep independents growing to create jobs, peace in the Niger Delta and create the volumes needed to grow our economy.
“The focus should not be on rent for government, the focus should be on investments, on jobs even if we have to leave some money on the table. We should focus on incentivising investments.”
In a keynote address delivered by Mr. Austin Avuru, Chief Executive Officer, Seplat Production Development Company, said that local firms should build good corporate governance structure, diversify their portfolio with multiple sources of income and varying risk profile and sustainably grow production and reserves to be competitive.
He noted that large volume of reserves would soon be available for grabs as many OMLs expire in the near term, particularly the Shell Joint Venture licenses in 2019.
Avuru emphasized the need to encourage more local content implementation in Nigeria’s oil sector, saying: “Local content without capacity development is meaningless.”
Investigations shows that operators in the oil sector are already set to acquire N4.3 trillion asset divestments by IOCs, which are expected to expire between 2017 and 2019.
Since 2010, three IOCs, Shell, Chevron, ConocoPhillips, have divested 24 Oil Mining Leases (OMLs) worth $10.78 billion which 13 indigenous exploration and production companies acquired with loans from consortiums of local banks.