Step up Investments to Take over Major Operations from IOCs, Kachikwu Tells Local Operators

Ibe Kachikwu
Ibe Kachikwu

Emmanuel Addeh in Yenagoa

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has tasked indigenous operators in the oil and gas sector to step up their investments and take over major operations from international oil companies (IOCs).

Kachikwu made the assertion at the opening ceremony of the 2019 Nigeria Oil and Gas Opportunities Fair (NOGOF) in Yenagoa, Bayelsa State Thursday.

According to him, changes in the global oil and gas industry are presently challenging the present exploration and investment strategies.

This, he said was because, oil is fast becoming a degenerating asset with alternative sources of energy taking over and attracting new investments.

Kachikwu said, while the world was moving on from fossil fuels, Nigeria has yet to take advantage of the opportunities in the sector and design strategies to harness advantages of renewables.

The minister urged indigenous firms to take over and stop playing safe if they would benefit from the opportunities availed through new trends in the industry.

Kachikwu said that the federal government had reduced the cost of crude production to $23 per barrel from about $32.

He said that some companies in the Joint Venture with NNPC had already driven the cost down to $15.
The minister said henceforth, approval for projects in the petroleum industry would be based on the cost of producing oil and gas.

According to him, efforts are on to further ensure the cost is brought down to below $15 per barrel.
He said that efforts to bring down cost of production should not be by the government or through policies, but should be driven by the private sector.

“The ministry is going to come up with a benchmark to analyse and compare companies who do business in Nigeria and what cost of production they are running.This is because any unbelievable cost of production, basically impacts on the revenue stream of the country.

“We need to start finding out how companies awarded recognition are doing, and why are the others not going in that direction.

“However, excuses of the environment being different or absent infrastructure can no longer hold water, because there are a lot of countries with peculiar situation as ours that are producing oil at relatively lower level.
“One of the mandates that I am giving the Department of Petroleum Resources (DPR) is that as we begin to look at new projects, the cost at which we are going to produce is going to become critical to our ability to approve those projects for you.

“This has brought us to another milestone in the industry where the crude oil loading and export can be effectively monitored from my office.

“So, it is becoming a major front burner item,” he said.
Kachikwu said that government had invested tremendously in the oil and gas sector toward building capacity and investing in human development.

In his speech, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote called for policies to further drive establishment of modular refineries and local production of LPG cylinders.

According to him, there are multiple opportunities in the oil and gas sector yet to be harnessed by indigenous operators, adding that policies have been designed to drive the implementation by operators.

Wabote explained that in spite of the achievements recorded in the milestones set in 2017, opportunities were availed to indigenous operators, who took advantage of the five policy frameworks designed for the industry’s growth.