Latest News

‘$16b share of global industry investment not low’

Nigeria’s yearly investment in the oil and gas industry is about $16 billion, 10 per cent of the global investment of $160 billion. To the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, the investment is not bad for local content development, given that many Afrcan countries produce oil and gas, writes AMBROSE NNAJI

Is Nigeria’s $16 billion investment in the oil and gas sector too low?

No, says the Executive Secretary (ES), Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote.

Wabote stated this while responding to a statement by the Managing Director of Total Nigeria Plc, Mr. Imrane Barry.

Barry had during an oil and gas forum in Lagos said about $160 billion was being spent in oil and gas globally, but that Nigeria only got about $16 billion inflow yearly, which to him, is not enough.

On whether the investment is affecting local content development, he also said no.

The ES explained to The Nation,  that the number of countries into oil and gas had increased.

‘’Currently, we are talking about Senegal, Cote d’Ivoire, Ghana, Kenya, Tanzania and Mozambique, among others. These are countries that never had oil and gas in the past.

‘’Ten years ago, investments were coming into those African countries that had oil and gas, such as Nigeria, Gabon and Algeria, among others. But, today, the money is being shared with other countries. So, to have $16 billion out of that is not a bad number given that other countries have been able to discover oil and gas and share from the global investment inflow into the industry.

“I’m sure we are getting a lot more than other countries in the Africa. I consider what we get extremely good because other countries that are discovering oil and gas relax all their fiscal regimes and regulations because they want investments to come. So, investors will go there if the fiscal regimes and regulations are a lot more lib-eral.

“Having been in production for over 56 years, Nigeria has maintained some of the regulatory requirements as well as the fiscals and investors are still able to bring in funds to the country, so I think that in itself is remarkable,’’ he said.

According to him, the international oil companies (IOCs) are talking about Nigeria’s stand on its fiscals and regulation.

‘’They (IOCs) want Nigeria to be operating the same fiscal regime and regulations of 20 years ago.

‘’Don’t forget that the IOCs are strictly business concerns and they do everything to maximise profit.  So, if they can leave you where you are 20 years ago, they will leave you there so that they will increase shareholders’returns on investment.

“No businessman will sit down and see his take being eroded without complaint. For the IOCs, their home countries would ask why their returns were dropping. For instance, five years ago, they made $5 billion profit from Nigeria and it suddenly dropped to $1 billion, they would be asked what was going on. So, they have to work to show that they are trying to influence government policies, regulations so that their profit margins would remain high,” he said, adding that they could do anything to keep you where you were to continue to maximise profit.

“But for us, we need to recognise that other players have come into the market, and strategise on how to sustain our market share as a country,’’ he added.

He said there was also the need to take into cognizance the existence of other new players and the possibility of capital moving into those areas, and to nip and adjust some of our regulatory regimes and fiscal policies to retain them (investors) or to bring them.

“Don’t forget that they are comfortable in Nigeria because they know the system. The level of uncertainty of our geology was limited as compared to new frontiers. So, they will rather like to stay with what they know than the unknown. It is only in extreme circumstances when they see that things are very tough and their margins are not increasing, they can say, ‘let’s take a plunge into those areas that we don’t know’,” he added.

“It is a continuous struggle. It is not something that will remain where it is. We will continue to review it as we go, especially with latest technologies, and shale oil and gas everywhere. These were things that didn’t exist about 10 years ago. It is imperative for us to look at what we have and make adjustment to retain our market share in the business.

“I agree that the Petroleum Industry Bill (PIB) is taking quite some time, but I can assure you that all hands are on deck to see that this year, the bill is passed to end the level of uncertainty that we have in the industry.”

Wabote, however, agreed that  Nigeria and the IOCs were suffering as a result of the non-passage of the PIB. He noted that the IOCs were here to make money while Nigeria benefits from the proceeds of oil, adding that it’s a two-way thing. ‘’We probably are losing. They are also losing because of the level of uncertainty that it creates,’’ he stated.

Wabote emphasised the need for collaboration among African countries to host local content in the oil and gas, adding that the deal among African countries in terms of local content development was ongoing.

A lot of Nigerian capacities, he said, have been established in places like Uganda, Senegal and Kenya by providing services, such as seismic interpretation and feasibility studies.

According to him, Nigerian firms have ventured into those areas since the discovery of oil and gas in most of those countries, including Ghana.

“Also in terms of providing some vital services, for instance, chopper and helicopter.Today, Caverton, which started in Nigeria, is providing services to companies in Ghana. So, that effort to penetrate is ongoing but is it getting the desired grip? The answer is no. The idea was to continue to create a platform for this discourse, to demonstrate the existing capacities and to see how we get African countries to realise that all of these services that they desire in the oil and gas industry could be got from sister countries, which of course brings down the cost of execution.’’

On the African Free Trade Agreement, he said it provided a veritable tool to share those services and reduce cost of activities in the  sector.

Akahi News Recommends This Source Link For Details


Links: 1. OAU School of Nursing 2. OAU JUPEB 3. OAU Pre-Degree 4. OAU Post-UTME 5. NYSC Registration Centres 6. School of Nursing Past Questions 7. Questions from JAMB-Sweet Sixteen 8. Latest School News 9. Download Latest Music 10. Call Akahi Tutors - 08038644328