Financial Energy Review
Minister of State for Petroleum Resources, Chief Timipre Sylva, Thursday, disclosed that the Federal Government has adopted key strategies to help strengthen the Nigeria petroleum industry after the COVID-19 pandemic and also insulate the economy from a future crash in the prices of crude oil.
This was also as the Nigerian Association for Energy Economics, NAEE, argued that the Nigerian petroleum industry, had over the last 20 years, showed that it lacked the necessary capacity to change and adapt to global trends.
Speaking at the 13th International Conference of the NAEE in Abuja, Sylva stated that the ongoing transformation of the Nigerian National Petroleum Corporation, NNPC into a diversified energy company and the increased focus on domestic gas utilization, were major strategies adopted that would strengthen the oil and gas industry and help cushion the effect of a future crash in crude oil price.
According to Sylva, the COVID-19 pandemic and progressive decline in crude oil prices in 2020, had made it imperative for Nigeria to aggressively pursue the diversification of its portfolio to non-oil businesses so as to cushion the effect of a future crash in crude oil prices and position the oil and gas industry for growth in a post-COVID world.
He further stated that the government had come to terms with the application of domestic gas as a platform to drive a truly sustainable in-country economic diversification.
“Our strategy to strengthen the Nigerian oil and gas industry in a post-COVID-19 world is to transform our national oil company into a diversified energy holding company to enable us respond swiftly to the twin challenges of a future crash in crude oil prices and decarbonization, by moving rapidly to becoming an energy holding company with more diverse interests.
“Consequently, we have strategically focused on our vast natural gas resources, as a critical transition fuel to help battle global warming and function as bridge between the dominant fossil fuel of today and the renewable energy of tomorrow.
“Natural gas has the intrinsic ability to meet the increasing global requirement for cleaner primary energy use, while at the same time, enabling much needed domestic industrialization for rapid economic growth in very few endowed countries, such as Nigeria.
“We expect that substituting traditional white products with gas would cushion the effect of the deregulation of the downstream petroleum sector; stimulate economic growth; further improve Nigeria’s energy mix; drive investments and create enormous job opportunities for Nigeria.” Sylva said.
Also speaking, National President of the Nigerian Association for Energy Economics, NAEE, Professor Yinka Omorogbe, also warned that the Nigerian petroleum industry might be negatively impacted by the COVID-19 pandemic, especially as the industry currently lacks the capacity to change and adapt to global trends.
According to her, Nigeria presently stands at a critical moment as a petroleum dependent nation, adding that there was an urgent need to critically understand and unravel energy and petroleum issues in a post-COVID-19 world and see how best the country can weather the inevitable storm.
“What is worrying is so far, is that the Nigerian petroleum industry has so far exhibited a worrying incapacity to change and adapt, as evidenced by about 20 years of petroleum reform, that has refused to even take the first step of enacting badly needed legislation.
“This is tragic, because even before the COVID-19 pandemic, Nigeria had ceased to be a beautiful bride, several new producers were springing up in Africa, and all over the world and the green movement is becoming a reality” she said.
Speaking in the same vein, Executive Secretary of the Petroleum Technology Development Fund, PTDF, Dr. Bello Gusau, noted that the COVID-19 pandemic had significantly impacted on its programmes, especially as most of its human capital development programmes were conducted overseas and through physical meetings.
Gusau, who was represented by General Manager, Strategic Planning of the PTDF, Mr. Jide Adebulehin, explained that in the second quarter of 2020, many of these programmes were severely disrupted due to physical distancing protocols and closure of airports among others.
“The prospect of declining revenue from oil, high inflation, high cost of materials and the advent of a recession, have impacted the development of new infrastructural projects and completion of ongoing projects is now at a very high cost. In addition, there have been reduced opportunity for industry stakeholders’ collaboration and linkages.
“However, to mitigate these challenges, the fund had to quickly review its operations to eradicate manual processes, to pave way for new automated flow work that are safer and efficient. It is necessary that as 2020 winds up, the various challenges should be considered as learning points for players in the petroleum industry” he said.
