Mr Saka Matemilola says oil and gas should invest in infrastructure

According to Nigeria Today, stakeholders in the Nigerian oil and gas industry have identified the dearth of infrastructure as the biggest challenge facing the sector. Consequently, the call has been the need to urgently focus on addressing this key sector, with the private sector favoured to be the driver. In this report, FESTUS OKOROMADU writes on the need to help the private sector drive the initiative.

Nigeria Today reports that the need for investment in infrastructure has continued to take the front burner in most discussions across the nation’s oil and gas industry in recent times. Last week, the Nigerian council chairman, Society of Petroleum Engineers (SPE), Mr Saka Matemilola, while speaking with the media in Lagos revealed that the country would  require $28 billion investment in infrastructure to harness the abundance gas resources at its disposal.

According to him, such investment would help the country achieve its target of producing 3 million cubic feet of liquefied gas per day, stressing that with the provision of such infrastructure, the nation’s economy would experience a turnaround as every sector would be positively impacted.

He stated that with stability in domestic gas production, power generation would  improve and the multiplier effect would  be an economic boom as the manufacturing sector and service providers would  begin to work optimally.

Similarly, participants at the just concluded first West Africa International Petroleum Exhibition and Conference (WAIPEC) organised by the Petroleum Technology Association of Nigeria (PITAN), the consensus was on the need to urgently focus on infrastructure development so as to ensure productive at a competitive cost.

Speaking at a panel discussion, former managing director and chief executive officer, Conoil Producing Limited, Dr. Moses Omatsola, noted that except the challenge of poor infrastructure in the industry was addressed, companies operating in the country cannot compete favourably with others in the global market.

Making a presentation titled: “Service Company – Operator, Collaboration Models – Drawing On Experience From Other Oil Province,” managing director, The Shell Nigeria Exploration and Production Company,Bayo Ojulari, cited example of how the provision of infrastructure has helped Brazil to become a dominate player in the global oil and gas industry.

According to him, not only were infrastructure provided but the enabling environment was created to allow for a synergy between researchers and operators even as on the job practical training exposures are provided for students in higher institution. The result is that research finding are translated to the market place stressing that this brings about reduce cost hence they can compete better in the global market place.

Similarly, some participants at the on-going Nigerian Oil and Gas (NOG) conference and international exhibition have submitted that the industry can only deliver maximum benefit when the necessary infrastructure were provided.

For instance, the group chief executive, Oando Plc, Mr Wale Tinubu, while speaking at a panel session wonder how the cost of petroleum products could reduce when such transported by road which was expensive.

According to him, a truck may have to use-up 20 per cent of the content it was convening to a particular distance, by implication that will be an additional cost, but when such goods are transported through pipelines such cost is eliminated.

Wale was however emphatic that experience has shown that indigenous private companies were better in terms of handling such infrastructure. He then called on the government to handover some infrastructures already built but were now abandoned due to vandalisation.

His call came on the heels the unveiling of the challenges face by the oil industry from the global perspective which is basically reduction in foreign investment into the sectors. The Nigerian case becomes even more peculiar as the lack of infrastructure has resulted in higher cost of production at a time when global price is low.

Speaking during a press conference hosted by the minister of state for petroleum resources, Dr. Ibe Kachikwu, on Monday, the secretary-general of the Organisation of Petroleum Exporting countries (OPEC), Dr. Mohammad Barkindo, lamented that the crash in crude oil price, Nigeria as well as other OPEC member countries have lost about $1 trillion since the crash, in terms of deferred projects and outright cancellations across the supply chain, upstream, midstream and downstream.

The OPEC secretary-general noted that the industry was capital intensive, stressing that consistent investment was required to harness it and by implication such should be focused on infrastructure.

“Our industry is capital intensive; we make consistent investments in order not only to maintain current production, but also to take care of reserves that would produce as well as secure security of future supply,” he stated.

Opening A Window Of Investment Opportunities

Generally, there is a consensus that government’s involvement in the running of enterprises has failed in Nigeria, consequently, the clamour now is for the private sector to take the front seat in the new infrastructure investment initiative.

The government on its part is encouraged to create the conducive environment to encourage private sector participation.

Fortunately, the minister of state for petroleum resources appears to be working in this direction. For instance, in order to correct some seaming imbalance in the laws governing the  industry even as the proposed petroleum industry bill (PIB) still awaits legislative approval after almost 10 years now, the minister has commenced to process aimed at addressing critical policy issues with a view to an overhaul of sector policies.

To this end dialogues have been held with stakeholders in the industry and civil society on critical sector issues and the expected outcome of this process is a new National Oil Policy, a new National Gas Policy and a new Fiscal Policy which would allow the private sector to take the front seat in infrastructure development in the sector.

Source: Nigeria Today