PIB: Investors Looking At Nigeria With Uncertainty—Petroluem Engineers

Nigeria has lost some measure of credibility in the investment market due to the non passage of the Petroleum Industry Bill, the Chairman, Society of Petroleum Engineers Nigeria Council,Joseph Nwakwue has said.

Nwakwue said this on
TVC News, Business Nigeria programme monitored by our corespondent where he spoke on ‘Nigerians oil and gas industry: assessing effects of covid-19, regulations refining and pricing issues.’

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He said the oil and gas sector is very key to Nigeria’s economy and as such, must be taken seriously in terms of regulations.

He said the inability of the Federal Government to operationalise the PIB is making investors in the sector to look at the country with some level of uncertainty.

In order to maximize the use of the Nigeria’s oil assets, he said the country requires significant level of investments, adding that there are high hopes that the fiscal regime that will be put in place would be one that will attract the much needed capital for the desired development to happen.

He said, “We can do all the analyse we want but right now we have lost some measure of competitiveness.

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“If you look at the investment in the last 15 years, it’s very clear that capital is not flowing in as it should, so that tells you that investment community is looking at us with a level of uncertainty.

“We are not today competitive enough, we need to do what we need to do to reduce the uncertainty and to come up with a fiscal regime that will be attractive to the investment community, this will help bring in the capital that we need to develop this assets.”

Nwakwue said the outbreak of the Coronavirus pandemic has affected the economy negatively, adding that the fact that Nigeria depends largely on oil revenue to finance its expenditure makes it more challenging.

Recall that the impact of the coronavirus pandemic had forced the Federal Government to cut the 2020 budget in order to stay afloat.

However, Nwakwue explained that the challenges currently being experienced in Nigeria stems from “the fact that we are dependent on a commodity whose demand is rather depressed for now and the other issue is that we haven’t built any reserves over time.”

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He added, “Our reserves level are rather low for a country this size, so that is a very challenging situation we are in. its our hope and prayers that oil prices will recover, that will help, but the forecast is not very rosy, it doesn’t look like its going to recover in a hurry, so we will continue to hope that the economic managers will do what needs to be done to keep the boat afloat.”

Nwakwue urged the Federal Government to work towards passing the PIB and also develop fiscal regime necessary to attract the much needed capital to develop oil assets.

He said, “The medium to long term is much more challenging and that is where issues around PIB will come in. If your think about Nigeria with 40 billion barrels of reserves, I will say if worked on, the number will be much higher than that, so this requires significant investment.

“Where we are today, we do not have as a nation the resources to develop this assets. We do not hope that we will leave behind oil like we left coal, its not the right thing to do.”

Due to its inability to resolve the PIB, Nigeria has been faced with a slowdown in investment especially in the upstream sector of the oil and gas industry

Nigeria’s oil and gas sector has been facing stiffer competition from other African countries where oil has been discovered.

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The Ministry of Petroleum Resources had said it would in few days present the long-awaited oil and gas reform bill to President Muhammadu Buhari.

The bill which is long over due for passage is particularly urgent this year as low oil prices and a shift towards renewable energy have made competition tougher to attract investment from oil majors.

Many oil companies believed new investments in the oil sector are dependent on the passage of the PIB which would take a more integrated approach in addressing issues around the fiscal terms especially following the passage of the Deep Offshore and Inland Basin Production Sharing Contracts (amendment) Bill, 2019 (PSC Amendment Bill).

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