July 8, 2021

Investments in Nigeria’s petroleum sector down 30%, says NNPC

NNPC spends N123.7bn as petrol subsidy in September

By Obas Esiedesa

The Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Mallam Mele Kyari, has disclosed that investment in Nigeria’s oil and gas industry has fallen by 30 per cent due to global challenges.

Kyari who stated this at the official opening of the 2021 Nigeria Oil and Gas Conference in Abuja said operators in the sector are now focusing on quick oil.

He pointed out that though the impact of the fall in investment is presently not seen, it would manifest in the next few years.

He noted that though finances for fossil fuel investments are dwindling due to energy transition, Nigeria and other developing economies would depend on hydrocarbon resources to power their economies in the coming decades.

He stated: “Energy transition is not about movement from fossil fuel to renewable, its creating the right balance and there is this common mistake that in 2050, fossil fuel will go away and we will be dealing with renewables. That is not true, it is very far from the truth”.

He added: “For us as a developing country, energy resource-dependent county, we know for sure that beyond 2050 that oil will be relevant for us.

“Today we are in deficit of infrastructure, power and many other things but so much good works are going on but the fact remains that there is deficit here.

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“All the engagements around electric vehicle even in terms of carbon zero objective probably is very questionable if even is the solution to carbon zero-emission so many things are happening.

“Post realities will come up in the next five years and we will have to deal with it but for us we know for sure that things have changed; financial institutions have changed their priorities, some of them have stopped lending to energy borrowings etc.

“Yes it may be for the moment, they may come back to the realities probably in another five years but the reality today is you can’t find easy financing for fossil fuel related businesses”.

The NNPC boss stressed that despite the energy transition policy, the demand for crude oil is still there.

“For every forecast that we have including from updates from very many other institutions that are not in this business, everybody says even if by 2050 we still have oil demand of about 100 million barrels so what you will see is growth.

“We are still at about 95, 96 today but if we’re still at 100 by year 2050, it means that the growth is very small but there will still be 100 million barrels production on the ground so the position we are taking as the national oil industry and also as an industry, in this country is to produce the quick oil.

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“Quick oil means that we have to monitor every resources that is available today, so we will create the resources that will create a future for our country and for our businesses and the oil will provide that fulcrum for us to create the wealth but one thing we are also sure, is that gas is everything”.

The Federal Government, however, has said it is aware of the challenges facing the industry in Nigeria and working towards making the business environment better for the operators.

Vice President, Yemi Osinbajo, who stated this when he officially opened the conference said the Petroleum Industry Bill, PIB, has sought to resolve legal and regulatory challenges in the industry.

Represented by the Minister of State Petroleum Resources, Timipre Sylva, Osinbajo said the focus for the country is on its huge gas resources.

“The global lockdown triggered by the pandemic pushed a transforming industry into a state of major economy crisis and further amplified the global clamour for cleaner and more sustainable renewable energy.

“The critical assessment of our perspective for Nigeria’s preparedness for oil and gas industry stability and growth in the wake of energy transition dynamics cannot be over-emphasized.

“The future survival and success of many players in the industry will not only depend on their ability to achieving greater focus on cleaner energy source but also upon the ability to deliver low-cost solutions.

“Consequently, the government is encouraging our industry players to critically focus on our vast natural gas resources as a transition period that will function as a bridge between the dominant fossil fuel of today and cleaner energy of tomorrow.”

Vanguard News Nigeria