The delay in the passage of the Petroleum Industry Bill (PIB) is part of the uncertainties holding back Shell Petroleum Development Company’s (SPDC) planned investment of about 30 billion dollars in two offshore deep water projects in Nigeria.
The Managing Director of the SPDC, Mr Mutiu Sunmonu, made the announcement recently in Abuja at the ongoing 13th Nigeria Oil and Gas (NOG-13) Conference.
Sunmonu, who did not mention the projects when he spoke on “Strategies to Move Nigeria’s Oil and Gas Sector Forward”, noted that “SPDC will rather wait for stable and right conditions before it will commit finances to the projects.”
He said it was regrettable that the country was losing huge revenues and investments, due to oil theft and bunkering because of the uncertainties and the delay in the passage of the PIB.
He added that: “perhaps Nigeria’s oil and gas industry is slipping into the era when it took Mexico about 50 years to recover from such challenges in its oil industry.
“I recall the Mexican story where it took the country 50 years to recover from the loss in its oil production and my worry is that we are slipping toward that.
“If we produce a modest allowance of three million barrels per day and just assume a modest decline rate of 10 per cent, that leaves us with 2.7 million barrels per day.
“What this means is that for us to maintain that level of three million barrels per day, we must produce additional 300,000 barrels per day and that means that we need at least two deep water projects every year.
“If you look at our onshore today, it is nowhere near the capacity we want it to be.
“Most of what we have today come from our deep offshore operations but there are a lot more we can get out of onshore but that is where we have serious financing challenges. “Deep water portends a huge opportunity. In Shell, we have two big projects we will like to do as soon as we are sure that the environment and the conditions are right, costing us about 30 billion dollars and I am sure it is the same with the other IOCs (International Oil Companies) because each of us has projects in the pipeline but we are waiting for the almighty PIB to be able to make these decisions.”
The oil chief said “it is clear in my mind that the potential are there but turning those potential to reality require a lot of hard work, creative thinking and genuine value creation. “We must minimise leakages in our operations today because we have talked about it before that crude oil theft has continued to be a menace in our operations.
solutions that will allow us to be able to forge our operations in a timely manner.
“This is because if contractors knew that they would not be paid on time, they would place high premium on their charges, so we need to create that stability for them and an environment that would encourage competition.”
The Group Executive Director, Exploration and Production of the Nigerian National Petroleum Corporation (NNPC), Mr Abiye Membere said that Nigeria’s total crude loss to bunkering had dropped from 150,000 bpd to 80,000 bpd as at late last year.
“The government’s security measures to curtail the menace of oil theft in the country has so far yielded results and the volume of crude stolen from the country has now dropped from 150,000 bpd to 80,000 bpd as at late last year.”
He noted that passage of the PIB would grant host communities the opportunity to further provide security around oil installations, thereby reducing the menace as the sector progressed.