Nigeria needs to invest about N5.7 trillion in the oil and sector between now and 2019 in other to avoid a total crash of its oil production from the present two million to 300,000 barrels per day, a report stated.
According to the report, released by one of the International Oil companies operating in Nigeria, government has not been able to maintain its cash calls obligations, which has hit $6.6 billion as at January, this year. The report noted that the Federal Government has not also been able to meet the $1.1 billion to the indigenous oil and gas operators in the country.
The report also lamented the delay in the release of the yearly budget, which it said, has contributed to the shortfall in JV production output. It also regretted that the JVs have continued to get less than expected from the Federal Government yearly. Stressing the need for the Federal Government to take the funding of JVs seriously despite the low oil prices, the report explained.
ALSO SEE: Oil marketers express worry over fuel price link with forex fluctuations
“There is no business in Nigeria right now that is better that the crude oil business. The cost of producing a barrel of crude oil remained $18 a barrel during the high and low crude oil prices. Between 2005 and 2014, the government received $7 for every $1 investment. The government has made $147 billion from the investment of $19 billion while the IOCs invested $22 billion and made $25 billion”.
The report also wants the government to exert efficiencies, strengthen competitive advantage and maintain relationship. Managing Director of Seplat Petroleum Development Company Plc, Austin Avuru, explained that if challenges, which include long contracting cycle, cash call arrears and Joint Venture (JV) funding are not urgently addressed, the country’s oil and gas production would nosedive further.
Dwelling on the way out, it called for the need for the Federal Government to address the issue of pipeline vandalism. It also urged the government to divest stake-holding to Nigerian investors; make fiscal risk reflective and globally competitive; focus on regulation, revenue optimisation and economic multiplier effects.