Oil May Lose Economic Importance In Few Years, NNPC GMD Warns

The Group Managing Director, of the Nigerian National Petroleum Corporation Mele Kyari has warned that crude oil may lose its economic importance in the nearest future as countries including the United Kingdom have said that no car will run on fossil fuel in the next ten years.

Kyari, was quoted to have said this at the 20th Nigeria Oil and Gas Conference with theme: “Fortifying the Nigerian Oil & Gas Industry for Economic Stability & Growth” which held virtually.

Kyari in statement on Wednesday said that the global demand in the oil and gas industry will remain suppressed substantially till the end of 2020.

However, despite threats of low crude oil demand, the NNPC GMD said that oil will continue to play a significant role in the energy mix till 2050.

He said, “So, it doesn’t mean oil will vanish. What it means is that in terms of its significance, in terms of the volumes of contribution, it will reduce as the years go by.

“It is also true that many countries have made significant business decisions in the use of fossil fuel, including the United Kingdom, which has said that no car will run on fossil fuel in the next 10 years.

“This portends a huge change in the way we consume fuel and as we progress, many countries may follow suit.”

He noted that the ensuing global oil challenge will have an impact on NNPC’s production, which means that the Corporation must become more cost-efficient and be quick to the market.

Kyari added, “As a National Oil Company, looking forward to 2021 means we have to be more resilient and efficient in our operations.

“As a country, we have decided to bring down the cost of our oil production so as to remain competitive, be able to get to market earlier and remain in this game and ultimately, return value to our shareholders.”

He explained that the NNPC was already working hard to deepen domestic gas utilisation by putting in place the right fiscal environment and the right infrastructure in order to generate more employment and broaden Nigeria’s economy.

According to the GMD, the Petroleum Industry Bill was the key enabler that would ensure that NNPC’s fiscal environment becomes more competitive and transparent, where investors can project into the next 30 years.

He reinstated commitment to bringing down the unit cost of oil production in the country to $10 per barrel, so as to remain competitive in the Industry and deliver value to all Nigerians.

The Minister of State for Petroleum, Timipre Sylva, in his remark confirmed the need for the government to take urgent steps in ensuring the survival of the Nigerian oil and gas industry.

“For us in the Ministry of Petroleum, we are looking at the National Gas Expansion Programme, which will boost the use of natural gas in the short and medium terms.

“It is also part of the plan by the Federal Government to shift from crude oil to gas. We have initiated actions to improve gas accessibility and availability, and promote gas-based industrialisation as well as economic diversification,” Sylva stated.