Government targets additional N800billion yearly from oil

Crude Oil Production

The Federal Government has unveiled plans to restore crude oil production to 2.2 million barrels per day (mbpd) and increase its revenues by additional N800 billion yearly.

It also expected to optimise the delivery of at least 10 Giga Watts (GW) of operational power capacity by 2020 to boost economic activity across all sectors and improve the quality of life of the citizenry.
This is part of the short term plans to boost the Nigerian economy, which is about 90 per cent dependent on petro-dollars for its survival, while also enhancing the petroleum industry’s contribution to the nation’s gross domestic product (GDP) put at about 45 per cent by the National Planning Ministry.

The Ministry of Budget and Economic Planning, which made this disclosure in the Economic Recovery and Growth Plan (ERGP) 2017 -2020, added that government also plans to reduce petroleum product imports by 60 per cent next year. It also hopes to become a net exporter by 2020, save foreign exchange and prevent reversion to the fuel subsidy regime. According to the agency in the report released on Tuesday, the energy sector is fundamental to development across all other sectors of the economy.
It stated that the ERGP will address issues of energy from the perspective of electric power and the petroleum sector. With regard to the power value chain, efforts will be concentrated on overcoming the current challenges, which relate to governance, funding, legal, regulatory, and pricing issues across the three main power segments of generation, transmission and distribution, and ensuring stricter contract and regulatory compliance.
It stated: “The ERGP aims to optimise the delivery of at least 10GW of operational capacity by 2020 and to improve the energy mix including through greater use of renewable energy.
“The Plan also aims to increase power generation by optimising operational capacity, encouraging small-scale projects, and building more capacity over the long term. Government will also invest in transmission infrastructure. With regard to the oil and gas sector, the intention is to increase the production of crude oil and gas while adding value in the downstream petroleum sector.
“Nigeria has 12.5 GW of installed capacity, but less than one-third is operational (average 3.9 GW in 2015; 3.2 GW in November 2016). Overall, only about 15 per cent of installed capacity is eventually distributed to end users, resulting in a huge shortage of electricity supply across the country.”
Dwelling on the oil and gas sector, the ERGP noted that the upstream sector has been the main pillar of Nigeria’s economy for decades, contributing only 10 per cent to GDP in 2015, and accounted for 94 per cent of export earnings and 62 per cent of Government revenue.
It said that Nigeria has proven reserves of 38 billion barrels of oil and 187 trillion cubic feet of gas, making it the 10th largest oil producer in the world and the seventh-largest owner of proven gas reserves.
It added: “In 2012 to 2015, crude oil production was stable at an average 2.2 mbpd, but in 2016, repeated attacks on oil pipelines and production facilities by militants in the Niger Delta reduced production from 2.1 mbpd in January to 1.1 mbpd in August.
“However, oil production averaged 1.8 mbpd by end 2016. This was attributed to the repairs of damaged facilities and agreements to cease sabotage and related vandalism.
“The downstream sector accounted for just 0.3 per cent of GDP in 2015. Nigeria has four refineries with an installed capacity of 445,000 bpd, which operated far below installed capacity. The nation accordingly had to import $7.83 billion worth of refined petroleum that year alone.”

Speaking on how to achieve high production target, a partner with a leading commercial law firm in Lagos, Ajumogobia & Okeke, Patrick Osu, stressed the need for the Government to bring an end to the Niger Delta. He said: “So what you really should be focused on is identifying the problems of the Niger Delta people. Why are they agitating as the first thing? The second thing is having identified why they are agitating, what then do I do to resolve their problems? If you haven’t answered those first-two basic questions, it will be difficult to resolve the crisis in the region.
“Amnesty ordinarily involved training people and trying to pay them a salary to a certain period or whatever it is. But I am saying the lasting solution cannot be that. It cannot be just paying them amnesty because some people hijacked it. The original plan probably wasn’t followed and if it wasn’t followed, it means the money is given to the people it shouldn’t get to and if the money doesn’t get to people it supposed to get to, it means that you have some other people who are waiting and should have benefitted from that, but didn’t benefit.”
The Chairman, Society for Petroleum Engineers (SPE) Nigeria Council, Dr. Saka Matemilola, lamented that progress in domestic gas utilisation has been slow.
The reason for this, he noted is not the lack of market. “The challenges range from lack of adequate domestic gas infrastructure and gas pricing mechanism, to the extent that some companies consider it cheaper to burn associated gas rather than to sell.”
He therefore called for more incentives ranging from security for return of investment and policy consistency, as the catalyst for realising the fortune in Nigeria’s gas industry.

from Nigeria Newspaper- Nigeria News| Naija News http://ift.tt/2m6NT4g
via IFTTT

SHARE THIS