Deputy Senate President, Senator Ovie Omo-Agege said yesterday that Nigeria had lost about $235 billion to the non-passage of the Petroleum Industry Bill (PIB) by successive administrations.
Omo-Agege, who spoke at the virtual national colloquium on PIB organised by NewsGuru.com, said the country was losing $15 billion yearly as a result of the delay in passing the PIB.
He lamented that the country has lost significant potential investment to other African countries because the country has one of the least competitive deepwater fiscal terms in Africa.
He added: “As a result, Nigeria with more significant reserves has attracted very little investment, whereas Egypt, Angola and Ghana with about half of Nigeria’s reserves combined, have attracted more investment for new projects, because they offer more attractive deepwater fiscal terms to encourage investors.”
He maintained that some of the projects that have been put on hold and awaiting final investment sanction by investors in the country include the Shell-operated Bonga South West/Aparo field, Exxon’s Bosi, Owowo West, and Uge Orso fields, the Chevron-operated Nsiko field, and Eni’s Zabazaba field.
“Together, these projects represent a reported $47.6 billion of investment and – at forecasted peak production rates – would add over 750,000 barrels of oil equivalent per day of production, an uplift of approximately 40 per cent on Nigeria’s current rates of production,” he said.
According to him, the petroleum industry has been the backbone of the Nigerian economy and the highest contributor to the national wealth, accounting for about one third of the nation’s GDP, over 75 per cent of government revenues and 95 percent of foreign exchange earnings for the country.
He lamented that this critical sector of the economy has been to operate under outdated petroleum legal, regulatory and institutional structures, adding that the current oil and gas code that governs the petroleum sector was adopted in 1969.
He said “now the industry is underperforming. Production of crude oil has declined, just as the growth in the production of natural gas has plateaued and the country’s natural gas potential; the largest in Africa with unproven reserves estimated at 600 trillion cubic feet, remains underdeveloped.
“The petroleum industry is further burdened by a global supply surplus. There is also a constrained demand growth for crude oil, competition from renewable energy and energy transition projects for international capital”.
He stressed that in addition, the industry in the country is troubled by the lack of refining capacity, gas flaring and environmental degradation, sabotage, pipeline vandalisation, oil theft, and the impact of the Covid-19 pandemic.
“On the brighter side is that in spite of the increasing global shift towards cleaner, cheaper and renewable sources of energy, oil and gas is projected to still be relevant in global energy sector in the next three decades. What this demands is that nations that have abundance of oil and gas must be in a hurry to make maximum use of these resources.
“With Nigeria’s estimated crude oil reserves of 37 billion barrels and over 200 trillion cubic feet of proven natural gas reserves, Nigeria’s wealth of petroleum resources has the potential to build prosperity and crucial infrastructure for the people of Nigeria.
“However, the capital available globally to the oil and gas industry has been decreasing due to this paradigm shift. This is to say that available capital will only go to nations whose petroleum industries are most conducive for investment.
“But because Nigeria failed to bring the regulatory framework of this critical industry up to speed with global standards, attracting the necessary impetus to unlock this potential has, become more difficult as prospective investments have moved from the Niger Delta which was once the main investment destination for oil and gas exploration in sub-Sahara Africa, to where they have reformed their industries or are in the process of reform,” he said.
The Deputy Senate President stressed that the last time any significant investment was made in the oil and gas industry in the country was in 2000, as there has been no fiscal stability.
He said that Nigeria also faces unique and long-standing challenges that include the persistent calls for the deregulation of the downstream sector and agitation of the oil-producing communities, stressing that “there are also issues of opaque licensing deals, unaccountable middlemen, graft and lack of electricity to power our homes, streets and industries, as well as calls for the unbundling of the NNPC”.
He said further that the National Assembly and the government of President Muhammadu Buhari, have boldly taken up the gauntlet and will soon enact the Petroleum Industry Bill 2020 into an Act.
He said that when passed into law, “this landmark Bill will enhance competitiveness in the sector, aid the deregulation of the oil sector and help attract more investment, especially Foreign Direct Investment (FDI) into Nigeria.
“This will no doubt increase the contribution of this sector to the country’s economy. More FDI inflow will surely boost external reserves and strengthen the naira against foreign currencies.
“The PIB will also help the development of oil infrastructure, which will boost Nigeria’s oil production and export revenue when passed into law. It is expected that private investors will help in the rehabilitation and development of the new oil refineries, by increasing aggregate oil output. Their investment will also help reduce and ultimately eliminate Nigeria’s reliance on imported refined oil.
“The passage of the PIB would get us one step closer to our country’s ambitions to raise the country’s oil production to 3mn bl/d by 2023, increase its oil reserves, including condensates, substantially to 40 billion barrels by 2025 and gas reserves to 210 Tcf by 2025 and to 220 Tcf by 2030.
“It will also spur government revenue and economic growth as well as help host communities realize their aspirations.
“I am so pleased that this National Assembly has prioritized this Bill that promises to enhance the growth of the oil & gas industry through expanding local capacity, strengthening domestic gas market, modernising our fiscal system, encouraging competiveness, boosting investor confidence and creating harmony for all stakeholders.
“With growing poverty, and millions out of work and rising insecurity from insurgency, banditry, kidnapping and a pandemic, Nigeria needs the Petroleum Industry Bill to be passed into law. It is exactly what Nigeria needs after the enactment of the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Act 2019”.