By Salawudeen Olawale
The federal government said it is targeting an annual investment of $10billion in next five years in the oil and gas sector while also optimistic that daily crude oil production will rise from an average of 1.8million barrels per day to 3m barrels per day.
Speaking at the ongoing Nigeria Oil and Gas Conference 2017 in Abuja on Tuesday, the Minister of State for Petroleum Resources, Dr Emmanuel Kachikwu, disclosed that the investment would address challenges faced in the oil and gas industry.
He disclosed that the investment will cover pipelines, refineries, gas and power, facility refurbishment and upstream financing.
According to him, “Time has come to bring down the cost of crude oil production and have the right incentives.
Three years ago, we have cost issues, technological issues but not issues of where the money would come from because of crude price regime.
“Between 2015 to 2016, we took drastic measures on how to moderate prices, while between July 2016 and now, there have been lots of stability in the downstream economy. There are still some challenges but work is in progress.”
Kachikwu disclosed that the major problem in upstream was the over $6 billion dollar Joint Venture (JV) funding debt and other litigations.
He disclosed that an outstanding debt of $5.1 billion would be paid over five years through incremental oil production volumes.
“We now have new cash call model that would free government resources and help production stability. There are still some governance issues to be addressed but once these are resolved, there is expected to be improvement in oil production.
“We are left with options of bringing in investors that will help address the over $45billion infrastructure deficit. Government wants to be bold enough to take steps that have not been taken before. We have to release our assets to private investors”.
“Either gas pipeline or crude pipeline, the time has come to move from government ownership to private ownership for efficiency,’’ he said.
To achieve the three million barrels per day production, he stated that the government has commenced serious engagement with all stakeholders to achieve stability in the Niger Delta region.
Kachikwu said the cost of production was key and the issue of militancy was also key.
“We have set a target of zero militancy for 2017 and it is achievable due to lots of community based activities and motivation. The acting President had visited three states and was planning to visit Akwa Ibom State soon.
“We have to collaborate with the oil companies, state governments and see how we can capture some benefits that will come from this. We have been seeing engagement of youths and we expect more improvement day by day. The states must make their mini-economy agenda and they will work with security agencies,” he said.
In his remark, the Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC), Dr Mohammed Barkindo, commended Nigeria for exiting the Joint Venture Cash Call debt (JVC).
Barkindo said that the cash calls “are the counterpart funding which the Federal Government, represented by the Nigerian National Petroleum Corporation (NNPC), annually pays as its 60 per cent equity shareholding in various oil and gas fields’’.
It is operated by international oil companies in the country for more than four decades and indigenous oil firms and Nigeria owe arrears of $6.8 billion.
Barkindo commended Kachikwu for securing the feat on behalf of the government.
“I must single out the frontal approach on the lingering issue of funding our exploration as well as production – the JVC. Many of my colleagues, here that we served together, will testify that government after government, regime after regime, we have battled with this issue continuously without solution,” he said.