Amid concerns arising from the current fall in crude oil prices caused by the COVID-19 pandemic and its effect on the Nigerian economy, industry experts and policy analysts have stressed the need for the country to seize the opportunity to reform the petroleum sector and diversify the economy.
The experts who spoke at the maiden webinar session on Post-COVID-19 Petroleum Agenda for Nigeria (PoCoPAN), jointly organised by OrderPaper Nigeria, Publish What You Pay Nigeria and DotCivics, recently, however predicted that despite the current crisis in the global oil market there would still be stability in oil price.
The event with the theme: “COVID-19 Opportunity for Petroleum Reforms in Nigeria”, featured the Chairman, Society of Petroleum Engineers (SPE) Nigeria Council, Mr. Joe Nwakwue and entrepreneur and presidential candidate of the Abundant Nigeria Renewal Party (ANRP) in the last general elections, Mr. Tope Fasua.
In a communique at the end of the virtual conference signed by the Executive Director of OrderPaper Nigeria and Convener of PoCoPAN, Mr. Oke Epia, the speakers noted that the crude oil price stabilisation would occur once the global economy picked up.
The communique read: “Crude oil price would eventually stabilise as global economy gradually picks up (this is due to the fact that price volatility is an inherent characteristic of the Oil and Gas industry).
“There is however, a pervasive concern that the nation may not learn from this present experience based on patterns deduced from previous oil price crash scenarios.
“The present pandemic-induced economic crisis occasioned by the fall in crude oil price is as a result of obsolete and inappropriate policies that regulate the petroleum industry; lack of will by government to use resources from oil and gas to facilitate development of industry value chain & other sectors of the economy; over-dependence on foreign technology; and exportation of raw materials rather than refined products.
“Funding of the 2020 national budget in the current crisis is a huge challenge attributed to the fact that Nigeria runs a petro-dollar economy (53 per cent revenue of 2019 budget was provided by foreign exchange from oil and gas industry).
“The country’s oil and gas industry has not witnessed new exploration in the last decade as critical stakeholders such as investors, host communities and the government remain unsatisfied with the current path the industry threads.
“Diversification and re-invention of the economy from a sole petro-dollar source is highly imperative to insulate the country from the effects of future price volatilities.”
The speakers also stated that critical decisions had to be made to determine models that would be most suitable for efficient running of the nation’s Oil Gas industry.
According to them, Joint Ventures (JVs) and Production Sharing Contracts (PSCs) need to be re-evaluated so as to determine if the current arrangements are providing maximum benefits for the country.
While highlighting the potential of the Nigerian oil and gas industry potential to generate between 12 and 15 trillion naira per annum, insisted that there was no better time to reposition the sector other than now.
The communique further read: “Revenue from Oil and Gas operations is needed to facilitate the country’s emergence from the Dutch disease hence, it was recommended that Reserve to Production (R/P) ratio should be increased, gas assets developed and the midstream sector enhanced in a string of industry diversification that will impact the economy in general.
“The petrol subsidy regime strongly impedes development of the industry and cobbles the participation of private investors and should therefore be abrogated to allow for deregulation of the downstream sector.”