PIB’s delay is holding SPDC’s $30 bn Deepwater Investment
Nigeria’s challenging business environment and the delayed Petroleum Industry Bill (PIB) have stalled the execution of two Shell Petroleum Development Company of Nigeria (SPDC) investments worth $30 billion in the country.
Mutiu Sunmonu, Country Chair, Shell companies in Nigeria and SPDC’s managing director, gave this hint yesterday, while participating in a panel discussion at the ongoing Nigerian Oil and Gas conference (NOG) in Abuja.
This is just as the Group Executive Director Exploration and Production of the Nigerian National Petroleum Corporation (NNPC), Mr. Abiye Membere has disclosed that Nigeria’s total crude loss to bunkering activities has dropped from 150,000bpd to 80,000bpd as at
late last year.
Sunmonu however did not disclose these projects when he spoke yesterday on strategies to move Nigeria’s oil and gas sector forward at the ongoing 13th Nigeria Oil and Gas (NOG-13) conference in Abuja but said that SPDC will rather wait for stable and right conditions
before it will commit finances to the projects.
While regretting 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 amongst others, Sunmonu explained that perhaps, Nigeria’s oil and gas industry may been slipping into the era when it took Mexico about 50 years to recover from such challenges in its oil industry.
Sunmonu 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 percent 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.
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.