Anglo-Dutch Shell, said yesterday, that Nigeria was losing N2.9 billion daily to oil theft.
Regional Executive Vice President, Sub-Sahara Africa, Shell Upstream, Mr. Ian Craig, speaking at the opening of the 2012 edition of the Nigerian Oil and Gas, in Abuja said the global economy had witnessed high volatility, thereby increasing the uncertainties and economic risks.
While there are still substantial reserves onshore, Craig said, however, that production in the region was being hampered by militancy and security issues between 2005 and 2009, as well as massive oil theft, which he estimated at about 150,000 barrels per day.
Although he acknowledged that the Federal Government’s Amnesty Programme had reduced the incidence of militancy, with most of the shut down productions back on stream, he, however, insisted that production levels were still below pre-militancy levels.
According to him, these experiences not only impacted negatively on revenues for government and the oil companies, but also on costs.
Craig said except the Federal Government mitigated the risks faced by oil and gas companies operating in the country, it would not see the much expected increase in crude oil production.
Government set new industry targets of 40 billion barrels in reserves and four million bpd production by 2020, which is now 10 years ahead of its earlier schedule by 2010, which could not be met due to a plethora of factors associated with the operating environment.
In the petroleum industry, he noted that there have been issues such as oil nationalisation in Venezuela, unrests in the Middle East and North Africa, coupled with the ban on Iranian oil, all of which have impacted negatively on crude production, leading to about 15 per cent drop globally.
With regard to Nigeria, Craig argued that the operating environment needed to be friendlier, especially as some of the sub-sets were now maturing, particularly the onshore area, which has experienced over 50 years production.
In the other areas like the shallow water, the Shell boss said “operators are faced with funding restrictions and delays in licence renewals,” while the deep water is being developed below its full potential given the fact that development cost for a large field in the region is about $10 billion, while the development for a large integrated oil and gas is about $20billion.
He argued that if government must achieve set production targets, all these risks must be mitigated, especially as “Nigeria has the resource to attract hundreds of billions of dollars of investments to potentially double production.”
Oando makes case for indigenous companies
Speaking on behalf of indigenous operators, Chief Executive, Oando Group, Mr. Wale Tinubu, called on government to show greater support for indigenous operators.
According to him, indigenous companies can make up for the short fall in productions by the International Oil Companies, IOCs, stating that the current scenario where local operators contributed less than 10 per cent of total production was not healthy for the economy and the industry.
He noted that the last time indigenous companies were given an opportunity was 10 years ago during the marginal field licences, “and so we are looking for more acreage to indigenous companies, especially from the Joint Venture operations.”
Tinubu argued that in view of government’s handicap in fulfilling its cash call obligations, indigenous companies could be invited to raise for equity participation and bring some of the dormant fields to production.
He insisted that government had not been considerate in its treatment of indigenous operators, saying, that where the IOCs can absorb the financial outlays for their projects in view of the various opportunities open to them, it is however, killing for the indigenous companies who borrow at costs above 15 per cent.
Against this backdrop, he sought for reduction in the approving cycle for oil and gas projects.