For the last 40 years, oil has been a volatile commodity that has had many peaks and troughs, and over the years, the petroleum industry has become much more sophisticated in how it handles the downturns.
Stakeholders at the just concluded Society of Petroleum Engineers (SPE) Nigeria International Conference & Exhibition, decried the low oil prices, and proffered strategies to cope with the bust in the oil industry.
Speaking at the conference, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, identified a number of strategies adopted by the Corporation to curtail the effects of low crude oil prices on the Nigerian economy.
They include renegotiation of the Joint Ventures (JVs) and Production Sharing Contracts (PSCs); promotion of synergy and collaboration among stakeholders thereby encouraging resource pooling, shortened contracting cycles
He said renegotiation of JVs and PSC contracts in line with the tumbling oil price has saved the Corporation billions of Dollars.
Presenting a paper tagged: "Riding the Waves of Boom and Bust: Common Objectives, Diverse Perspectives," Baru said NNPC has resolved to develop its domestic refining capacity. This is to position it to take advantage of improved refining margins during the periods of low oil prices.
He said further: "NNPC's strategic plan for gas is to deliver 5bscfd to the domestic market by 2020. To be clear, NNPC definitely doesn't intend to lose focus on retaining and expanding Nigerian share of the global market.
"The recent drive by the Ministry of Petroleum Resources and NNPC to create an enabling environment for growth of the domestic gas market cannot be overemphasized. So far, over 1000km of major gas pipelines have been laid and commissioned, an additional 470km is currently in construction phase whilst a further 1400km is intended for construction before the end of 2017.
"Also, along with the development of physical infrastructure, commercial frameworks are being put in place to support the growth of the domestic gas market. Progress has also been made in the reduction of flared gas volumes from a peak of 2.5bscf/d a couple of years ago to about a current volume of 700MMscf/d.
"We envisage a near zero flare in the not too distant future as adequate infrastructure and frameworks are being put in place. Government's intentions to develop this market will be made clear to the prospective investors."
Also, President, Director General & Country Chair, Shell Gabon, Osa Igiehon, said winners in the current oil price environment will be those who can evolve and maintain structurally lower cost operations and projects.
Igiehon urged operators to evolve and maintain structurally lower cost operations and asset management; develop and invest in competitive capital investment and projects; and supply chain improvements and process de-complexification.
He added that there is also a need for government to develop policies, allow an operating environment and agreements to enable structurally lower costs, and also to increase in-country processing and value addition, while enhancing domestic energy security.
Welcoming the participants, the Chairman, SPE Nigeria Council, Saka Matemilola, said the conference is intended to disseminate information as regards the oil and gas sector, adding that the petroleum sector remained the main focus of the national economy.
He said the current challenges in the oil sector provided the necessary catalysts to provide opportunities for the country.