…As experts paint dim future for oil,gas sectors
By Adewale Sanyaolu with agency reports
As Nigeria marked its 56th anniversary on Saturday, oil prices got a boost, leaping to $50 per barrel. This is third time oil price is hitting the golden-dollar mark this year.
The development may have signaled a boost for the funding of country’s 2016 budget which has suffered a setback due to the continuous slide in crude oil prices in the global market.
The Federal Government had predicated its 2016 oil budget benchmark at $38 per barrel, but the steady decline in crude oil prices has made funding of the budget a difficult task for economic managers.
Last Thursday, oil prices moved up by six percent following the decision by the Organization of Petroleum Exporting Counties (OPEC) to cut production in an attempt to curtail glut.
Specifically, Brent Crude oil traded for $49.34 per barrel, while West Texas Intermediate (WTI) rose to $47.89 a barrel.
Meeanwhile, Some stakeholders in the sector has expressed concern that the current challenges in the sector might frustrate the achievement of major production targets in future.
They listed the challenges to include vandalisation of oil facilities in the Niger Delta which has affected oil production and falling crude oil prices in the international market.
The experts expressed these concerns in separate interviews on the occasion of Nigeria’s 56th independence anniversary.
The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, had said that following the spate of attacks on oil and gas assets, Nigeria’s output of crude oil had declined to 1.4 million barrels per day from 2.2 million.
The Head of Energy Research at EcoBank, Mr.Dolapo Oni, said that oil prices would continue to slide in future with some rather extreme scenarios to under 40 dollars per barrel.
Oni said that if the crude oil prices declined further, many oil and gas companies in Nigeria would face difficulties with meeting repayment obligations to banks.
He said that currently there were cost efficiency problems in the oil and gas industry and the development could make it impossible for government and other stakeholders to reposition the sector effectively.
The oil expert said that one of the challenges facing the sector was the noticeable delay in the contracting processes and this challenge also included funding and security problems.
He frowned at the situation where priority attention was given to oil to the detriment of gas production.
Oni advised that efforts should be made to tackle Nigeria’s dependence on oil to the detriment of gas when the country had about 184 trillion cubic feet of proven natural gas reserves.
The Chairman of Divoc Energy, Mr. Samuel David, advised that Nigeria should continue to diversify its resource base and stop its heavy reliance on crude oil revenue.
David said that diversification required strong leadership, good policies and the political will as well as money.
“So ironically, income from oil is required to diversify Nigeria’s economy to fill the infrastructure gap, to provide power and to create and grow other industries that are holding the country back.”
He said that the industry had witnessed dwindling fortunes, especially since 2015, when oil industry workers and facilities came under incessant and direct attacks by the militants in the Niger Delta.