The Group General Manager, Crude Oil Marketing Department, Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, has allayed fears of impending doom for Nigeria’s economy due to the global call for the need to shift from the use of crude oil.
Speaking on the topic “Nigeria’s Economic Development through Oil and Gas” during his appearance as a guest on NTA’s ‘Good Morning Nigeria’ on Wednesday, Mr Kyari said Oil and Gas would still remain the key driver of the country’s economic growth for at least the next 50 years.
The discussion stemmed from calls to steer the country’s oil and gas industry for sustainability and growth as well as the calls to diversify the country’s economy from over-dependence on crude oil.
The discussion equally comes amidst the ongoing 17th annual edition of the Nigeria Oil and Gas Conference and Exhibition (NOG) which has been tagged ‘Driving Nigeria’s Oil & Gas Industry Towards Sustained Economic Development and Growth’.
Mr Kyari said on the programme that was monitored by THE WHISTLER that as of today, crude oil still remains the bedrock of the development of Nigeria’s economy.
The top NNPC executive spoke on how the oil and gas industry still wields a strong influence in the integration of the “economic landscape” of the country.
Kyari said, “What is very obvious to Nigerians is what oil brings at the end of the month which is called the FAAC allocation. What most people don’t know is that oil has the potential of integrating our entire economic landscape in the sense that if we are going to develop gas, it will create the linkages between the oil and gas industry to the rest of the industries…that way you will have clear path to developing the country in the long run. But what is most important for us is to understand that the oil and gas industry is a history going forward. It is clear that in another 40 to 50 years, you will still have oil play a major role in the energy mix. Which means that we [Nigeria] will remain relevant as a country and as an oil producing entity for another 40 to 50 years.
“And if that holds, it means that we have to pay attention to sustainable oil development. Sustainable means that we must focus on integrating the oil and gas business to the rest of the economy, and that way, we know that this country will benefit from it so that we walk away from this perception that the oil and gas industry is all about sharing money at the end of every month.”
Asked to give some depth as to how oil and gas can serve as an integrative function for the economy, Kyari said:
“Two things are involved. The first thing the oil and gas does for you is to provide the resources that you use for development of infrastructure and which is the easy one that everybody understands and that brings cash to the table at the end of every month.”
“The other part of it is what oil and gas can do on its own by integrating industries, providing power, employment, absolute capacity for other people to come and engage and benefit from it. So, it you look at it from this two perspectives you will know that the oil and gas industry can actually be the bedrock of developing this country.”
Responding to a question on how Nigeria, being an authority in oil and gas production in the world, can maintain its global competitiveness knowing what goes on now in the world with the way technology is improving with the discovery of other forms of energy, the NNPC’s Crude Oil Marketing Chief said:
“First of all, you have to get investors to want to invest in your country and for you to do that; you must create the necessary environment that will allow for people to want to invest in your country. And one of the clear things that every investor will like to know is fiscal stability. This means they will like to know what terms are they investing, can they recover their costs? Can they make money from it? And yes we have stable regime that can guarantee that. And good enough for us today is that a number of legislation are being put in place and one of them is the Petroleum Industry Fiscal Bill which will guarantee the international investment community that this country is stable and has a stable and workable fiscal regime. Once you have a stable fiscal regime that people can predict the basis of their investments, you need the social environment itself and a number of works are going on right now to stabilise the situation in the Niger Delta and of course we are far away from what was the situation two years ago and today we have semblance of stability in the Niger Delta in that region because of the intervention that the Federal Government is doing, and that is being progressed and ultimately. And ultimately, that sense of insecurity in the Niger Delta will varnish. If that does, that is the two combinations of issues that every investor will be interested in and thirdly, everybody wants to go to the markets on an improved basis. What if mean by this is that nobody wants to take crude oil to the market, if you can it is best for you to add value to it by processing the crude oil. And as we speak today, the NNPC as an organisation is working its refineries to make sure we can add value to the crude oil before it is exported and that is after meeting our local consumption needs.
“And there are also other initiatives like that Dangote refinery and many other initiatives that are going on to make sure that we don’t just export crude oil but to export the end product of it and once you do that you are seeing some level of relevance in the international oil market and as you grow your production you are obviously going to get a situation where the local refining capacity may not meet that and that means you have to export your crude to other destinations.
“And you must watch the market which means looking at who needs your crude because today there are alternatives to our crude. But that is not a challenge because going forward you have see how you can work around those alternatives to make sure that you are able to penetrate the market. That way the country becomes relevant in the scheme of things as we go forward and look forward for to another 30 to 40 years where crude oil will continue to remain relevant in the energy mix and we would play a part in the sense that we’re stabilising our fiscals and operating environment and we are also penetrating the market in two ways: one by putting out end products and secondly by making sure that our surplus production in the best of terms,” said Kyari.
Others who also spoke during the programme were the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Wabote, and President of the Nigerian Association for Energy Economics (NAEE), Professor Wumi Iledare.