Daily Independent (Lagos)
Sola Alabadan
10 July 2009
Lagos — In spite of the fact place to develop the sector, says Odunayo Bammeke, General Manager, Group Insurance Department, Nigerian National Petroleum Corporation (NNPCthat Nigeria holds the largest natural gas reserves in Africa, the country has limited infrastructure in ).
Bammeke, who presented a paper at the Insurance Stakeholders Parliament in Lagos on Thursday, lamented that the natural gas associated with oil production in the country is mostly flared.
With the development of regional pipelines, expansion of LNG infrastructure and policies to ban gas flaring, he said it is expected that the growth of the sector will be accelerated both for export and domestic use.
He also that about 33 per cent gross of the $101.14 billion (about N11 trillion) oil and gas related risks exposure is retained in the country. This means that only $33 billion of the risks are being underwritten by local insurance companies while the remaining $68 billion is insured by foreign underwriters.
With regards to NNPC oil assets put at $1 billion with sum insured of $32 billion, Bammeke informed that the indigenous insurance companies accounted for 42.5 per cent of the NNPC Consolidated Insurance Programme in 2007 and 52.5 per cent in 2008.
If the percentage of risks being retained in the country is any thing to go by, it means that the insurance industry is not yet maximising the benefits of the local content policy introduced by the Federal Government in the oil and gas industry.
According to the NNPC, "Nigerian Content is defined as the quantum of composite value added or created in the Nigerian economy through the utilisation of Nigerian human and material resources for the provision of goods and services to the petroleum industry within acceptable quality, health, safety and environmental standards in order to stimulate the development of indigenous capabilities."
The targets set by the Federal Government for Nigerian content is 45 per cent by 2006 and 70 per cent by 2010.
Meanwhile, the Minister of Stat for Petroleum, Odein Ajumogobia, said it is sad that the nation's insurance industry is not meeting the local content target in the oil and gas sector as majority of the risks emanating from the sector is still being insured abroad.
He therefore charged the operators in the insurance industry to strive to be at par with their counterparts in other parts of the world.
Apart from increasing their capital base, he stated that there is the need to strengthen the regulations in the industry.
The Federal Government on its part, the Minister said must give teeth to the implementation of the local content policy in the oil and gas sector, noting that it will be highly beneficial if the nation can ensure greater participation by all stakeholders in the sector.
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