OPEC’s Oil Production Cut Affected Nigeria’s Revenue Negatively – Buhari

President Muhammadu Buhari, has said that the impact of the Coronavirus pandemic and OPEC production cuts has been huge on the economy particularly in the area of low revenues.

Speaking at the launch of the National Oil and Gas Excellence Centre on Thursday, Buhari said that the unprecedented challenges occasioned by the Coronavirus pandemic had placed severe shocks on the global economy, leading to oil price crash.

Specifically, he said the OPEC production cut had a direct impact on government’s revenue projection and national economy.

Nigeria, as well as other member countries of OPEC had voluntarily reduced the level of daily oil production to promote market stability and boost crude oil prices.

OPEC+, consisting of members of OPEC and their allies in non-OPEC, are expected to cut a total of 7.125 million barrels per day, and 7.05 million barrels per day in March.

Nigeria, of its 1.829 million barrels per day capacity is expected to cut down about 313,000 barrels, to bring its daily output figure further down to 1.516 million barrels per day till March.

Buhari said, “Nigeria was not spared from the impact of the Covid-19, oil price crash and OPEC production cuts with direct impact on government revenue projections and national economy.

“However, we are emerging more resilient in 2021 owing, in part, to efforts of the agencies of the Ministry of Petroleum Resources who work under my leadership and the direct supervision of the Honourable Minister of State, Petroleum Resources, to keep oil & gas production levels stable, optimise government revenues, and ensure domestic energy security.

“The creation of the National Oil and Gas Excellence Centre at this time is a further demonstration that the Nigeria Oil and Gas Industry has come of age, even against the odds.”

Buhari explained that establishment of the Centre aligns with the administration’s commitment to foster stability, growth and sustainability of the Nigeria oil and gas sector, as it seeks to offer investment, cost reduction and capacity development opportunities to the Nigeria petroleum industry.

He assured that the Centre would provide the oil and gas industry with much needed technical and resource capabilities for stability, growth, safe operations and cost efficiency for the benefit of all stakeholders.

He said, “We are confident that the Centre will support the attainment of the President’s clear development imperatives for the sectoral growth and industry performance target set for the ministry for a fortified oil and gas sector.

“These Centres would provide cost effective data and analytics invention for investors, financiers, operators as well as resources for oil and gas capacity building and training.

“At the beginning of this administration, we set a clear roadmap for the sector, in order to increase revenue from the huge resources and potentials and create opportunities for investors both local and foreign when I declared that Nigeria is open for business.”

Speaking further, Buhari stressed that his administration would continue to leverage the oil and gas sector to deepen its development and diversification drive across all sectors.

He said that the Integrated Centre would enhance the contribution of the oil and gas sector to the nation’s GDP as well as strengthening Nigeria’s position as the regional leader in the industry.

The Minister of State Petroleum Resources, Timipre Sylva in his remarks said that the Integrated Centre encompasses five units, designed to comprehensively cover key areas of the industry while enhancing safety, value and cost-efficiency.

The units are Search, Rescue and Surveillance, Command and Control Centre; National Improved Oil Recovery Centre; Oil and Gas Alternative Dispute Resolution Centre; Oil and Gas Competence Development Centre and Integrated Data Mining and Analytics Centre.

He said, “SERAS will therefore drive cost reduction and improve operational efficiency across the industry. Conservatively, it is projected that upon full implementation of SERAS the annual industry expenditure for offshore and remote locations, flight logistics and emergency response will reduce by 50 per cent.

“It is projected that upon full implementation, the annual industry expenditure for offshore and remote locations, flight logistics and emergency response will reduce by up to 50 per cent, a significant gain towards reducing cost per barrel across operations.”

He said that the centre will trigger tertiary and secondary recovery operations in the industry, as it will collaborate with operators, global technology centres, international oil and gas regulators and other relevant parties to leverage experiences and best practice for the application in Nigeria.

Sylva said, “The foregoing measures will result in reserve growth, production increase, improved asset circle cut and reduced cost per barrel, all with positive impact on national economy and investor profitability.

“In another vein, the oil and gas dispute resolution centre is created to arrest the prevalent value erosion attributable to sub-optimal development or non development of oil and gas assets, due to lingering dispute in the industry.

“The centre shall offer arbitration, mediation, utilizing industry and technical experts who will provide fair and balanced resolution of industry related disputes from an informed position that will result in value optimization.”

The Director of Department of Petroleum Resources, Auwalu Sarki stated that the project was in line with the directive of the president Buhari’s administration to reduce cost and create employment.

According to him, the centre encompasses industry focus that will drive strategic industry growth, skills and competence development and artificial intelligence for decision making.

He said, “We have concluded the framework and modalities for successful takeoff of the program within the national oil and gas centre for excellence for commissioning

“We have no doubt that industry now has the resources and platform to interact, cooperate, collaborate on salient industry issues that remain an impediment to cost reduction, and value optimization.”

He said the centre would enhance safety, value and cost efficiency in the Nigeria oil and gas sector.