Yemisi Izuora
The Organisation of Petroleum Exporting Countries, OPEC, has informed the federal government that investor confidence is fast going down and if adequate measures are not taken, investment in the country’s oil and gas sector would collapse.
The OPEC warned that if the current administration fails to fix the problems in the sector, it will take the blame for any negative outcomes.
The cartel in its bulletin for November-December 2016, said that Nigeria needs to combat insecurity in the Niger Delta region and to pass the Petroleum Industry Bill (PIB) in order to lure waning investors.
“Nigeria’s action plan can convert the present challenge into an opportunity — failure to do so will be targeted at the President Buhari regime,” OPEC said.
The document stated that the country’s reforms, encapsulated in the ministry of petroleum’s ‘7 BigWins’ roadmap, are being greeted with mixed reactions from industry players.
“Operators are waiting to see how the road map will materialise and were unwilling to publicly comment on it,” OPEC said via the bulletin.
Industry expert reactions were mixed, with one senior banking source telling the OPEC Bulletin: ‘I do not believe the new road map (which is a rehash of previous ones) will make an iota of difference on the sector. It remains to be seen what, if anything, will actually be done by this government to improve the tragic situation in the Delta.’”
Josh Holland, senior energy analyst at IHS, said that the plan’s mere publication was a step in the right direction, as this showed transparency.
He demanded more details about structural changes in the hydrocarbons sector, particularly the NNPC; the government’s plans for forging a political consensus and overcoming vested interests to ensure that reform moves ahead, and Nigeria’s relative competitiveness compared to other oil and gas investment destinations.
OPEC noted that “investor confidence in the petroleum industry has fallen with the coalescence of insecurity in the Niger Delta, the delay to pass the PIB, and failure to meet contractual obligations in the services industry.
“A major reform of fiscal terms and effective institutional governance, the PIB has stalled in the legislative process for over seven years. A divergence of interests has derailed its passage: oil companies are opposed to fiscal terms, arguing they undermine investment plans, while the government has countered that the fiscal terms are competitive.”