- To replace annual lifting contract with 10-year locked-in deals
Chineme Okafor in Abuja
Nigeria will from this year begin to track the volume of its crude oil production from fields of production and loading bays, to sales destinations in a renewed effort to cut down on prevalent oil theft and loss of revenue, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said.
Speaking in a podcast he released tuesday in Abuja where he made projections of his work this year, Kachikwu also said he would initiate processes to gradually move the country away from holding annual crude oil lifting contracts to looking for partners that it could sign long-term lifting agreements with.
The minister explained that the country has lost huge revenues from oil production slippages and thefts, and would in this regard finally move to stop these practices.
“We will begin for the first time to track oil production from production to destination, there are too many slippages and leakages and stories about produced oil in Nigeria. This year, we are going to commit to try tracking our oil so that from the moment one molecule is produced to the time it is sold and where it is sold, we will be able to track that and if we do that, we envisage billions of dollars in savings for the federal government,” said Kachikwu.
He stated that his preference for a long-term crude oil lifting contract against the current short-term regime was based on the need to create some level of contract certainty in marketing Nigeria’s crude oil grades.
According to him, “We are going to firm up long-term markets, we must stop the year-to-year crude terms contracts and gas sales. We have to go to the long-term markets that is what everybody in the world is doing.
“Nobody is letting their oil to circulate and be priced inappropriately in the international market. You have got to find who your term partners are, what do they want, how do you sign five, six, seven, 10 years contract and gravitate away from the year-to-year contract that you see in this industry.”
The minister equally stated that the government would within this year conduct oil license renewals and allocations early enough to raise money to fund the 2017 budget.
He said: “In 2017, we are going to be running with rocket speed, we have so much to do. We are going to firm up our policies, be able to gazette all our oil and gas policies and then pass the PIB (Petroleum Industry Bill). We are going to accelerate Federal Government’s revenues and look into areas where we could have made more monies.
“We will raise money to finance the budget through improvements in royalties’ collections, through early renewals of leases and every other areas. We are going to be conducting oil blocks allocation and marginal fields awards to try and raise money for the government and get investments in some of those sectors.”
He said he would collaborate with the International Oil Companies (IOCs) and demand they bring in investments into the country, adding that his first investors’ relations tour would start with a visit to Agip in Italy and then to others, including indigenous oil firms.
On gas, he said: “Gas revolution is key for us, first we will like to track gas flares and commercialise it so that no more flare will happen in this country. We have set our 2020 date for ourselves and want to make money from the flare.
“We want to look at our gas infrastructure facilities that are suffering, some of them are constructions going on for over 10 years, we need to move on and find out how to complete these investments.”
He noted on his expectations from the Nigerian National Petroleum Corporation (NNPC) that demands would be made on its semi-independent refineries, gas, downstream and upstream units to begin to be self-accounting in a way they can take responsibilities for their profits and losses.