Abuja — The Country Chair of Shell Companies in Nigeria and Managing Director of the Shell Petroleum Development Company of Nigeria Limited, SPDC, Mr. Mutiu Sunmonu, has said that the non-passage of the Petroleum Industry Bill, PIB, is among several other uncertainties holding back $30 billion worth of investment in two offshore deepwater projects in Nigeria.
Although Sunmonu did not disclose the particulars of the projects when he spoke on strategies to move Nigeria's oil and gas sector forward at the ongoing 13th Nigeria Oil and Gas, NOG-13, conference in Abuja, yesterday, but disclosed that SPDC will rather wait for conditions to be stable and right before it will commit finances to the projects.
However, the Group Executive Director, Exploration and Production of the Nigerian National Petroleum Corporation, NNPC, Mr. Abiye Membere, told stakeholders at the conference that Nigeria's current total crude loss to bunkering activities has reduced from 150,000bpd to 80,000bpd as at late last year.
While expressing dismay at the country's seeming loss of revenue and investments from such uncertainties as the awaiting passage of the PIB, crude oil theft and bunkering as well as insecurity among others, the Shell boss explained that perhaps, Nigeria's oil and gas industry may be slipping into the era when it took Mexico about 50 years to recover from such challenges in its oil industry.
He said: "I recall the Mexican story, it took them 50 years to recover from that loss in oil production and my worries is that we are slipping into that, even today if we produce a modest allowance of 3mbpd and just assume a modest decline rate of 10 per cent that leaves us with 2.7mbpd."
What this means is that for us to maintain that level of 3mbpd, we must produce additional 300,000bpd; it means that we need at least two deep water projects every year and then you are talking about additional $30 billion investment every blessed year for us to remain at that level but that is not going to be easy."
He further explained: "If we look at our onshore today, it is nowhere near the capacity we have today, most of what we have today comes from our deep offshore operations but there is a lot more that we can get out of onshore but that is the place that has serious financing challenges.
Deep water portends a huge opportunity, in Shell, we have two big projects we will like to do as soon as we are sure that the environment and the conditions are right, costing us about $30 billion and I am sure it is the same with the other IOCs (international oil companies) because each of us have projects in the pipeline but we are all waiting for the almighty PIB to be able to make these decisions. It is very clear in my mind that the potentials are there but turning those potentials to reality requires a lot of hard work, creative thinking and genuine value creation."
"Making sure that we minimise the leakages in our operations today because we have talked about it before that crude oil theft continues to be a menace; if our country is losing 100,000bpd to 150,000bpd that is huge, some of the countries that are parading themselves as crude oil production companies today cannot even boast of 80,000bpd and if we are filtering away that much, then it calls for urgent action.
We must minimise these leakage and I am really pleased about what the President is doing about it; he is taking it very seriously and he is doing it internally and externally. The other important factor is for us to make sure that the contractors that are coming to work in Nigeria have a level of stable operating environment in terms of the uncertainties around their contracts, making sure that they get paid on time and so the whole issue of funding becomes very important," Sunmonu noted.
The chairman further stated that the amount of money required to drive growth in the oil industry would need a different kind of approach in terms of funding, adding that key financial institutions must begin to see how they can come in to provide funding measure that would further the growth of the sector.
He said: "Government must also be flexible about what is really possible and oil companies must come up with innovative solutions that will allow us to be able to forge our operations in a timely manner because if contractors know that they are not going to be paid on time, then they will place a premium on their charges, so we need to create that stability for them, an environment that will encourage competition."
Meanwhile, Membere stated at the conference that the government's security measures to curtail the menace of oil theft in the country has so far yielded results and that the volume of crude stolen from the country has now dropped from 150,000bpd to 80,000bpd as at late last year.
He added that the passage of the PIB will equally grant host communities opportunities to further provide security around oil installations, thus, reducing the menace as the sector progresses.