Nigeria needs globally competitive fiscal policy, legal framework to drive investments- ExxonMobil MD

Globally competitive fiscal policy, a robust legal framework and a healthy contract integrity culture have been identified as panacea and key drivers to profitability and attracting huge Investments in the oil and gas sector.

This is as ExxonMobil attributed its landmark achievements in the Nigerian oil and gas sector to the Nigerian National Petroleum Corporation, NNPC, noting that the result-oriented leadership provided by the corporation has helped a great deal in growing the energy sector in Nigeria.

The Chairman and Managing Director of the ExxonMobil, Mr. Paul McGrath, who is also the Chairman of the Oil Producers Trade Section, OPTS, of the Lagos Chamber of Commerce and Industries, LCCI, disclosed this at the 2019 edition of the Annual Conference of the Association of Energy Correspondents of Nigerian, NAEC, in Lagos.

Speaking as the Conference Chairman on the theme: 'Harnessing the Oil and Gas Potential for National Development.' He noted that the topic is fitting, given the peculiarities of the Nigeria business environment and clear need to optimize investments in the country in other to maximize obtainable gains for national development.

According to him ‘’as at today  Nigeria is the largest oil producer in Africa and Nigeria’s hydrocarbon prospects are amongst the brightest today, however, there are fixes we must but in place if we aspire to maintain and expand the current investment profile in the Nigerian hydrocarbon industry

Nigeria’s  oil and gas industry faces many challenges : which include to reduce costs, poor functional refineries, downstream deregulation, Transparency issues , Crude theft, Pipeline vandalism, Pollution in the Niger delta, PIGB, Fuel pricing, Inadequate pipeline infrastructure ,optimize the performance of  industrial base assets and improvement of environmental footprint.

Also, Operating risks peculiar to Nigeria's environment have continued to drive the costs of oil and gas projects in the country above the global benchmark.

He noted that Nigeria ranks amongst the top 10 countries with highest cost of producing oil and gas equivalents per barrel. High coat is a major disincentive to invest, especially at this time of considerable global competitiveness.

‘’Operating cost are increasing due to an attendant increase in required maintenance and well work-overs. Security cost are escalating as peculiarities of the business environment require additional resources be deployed to secure our people and asset,’’ he stated.

He emphasized that for Nigeria to remain profitable it needs to collectively consider modalities and mechanism for cost reduction. Also our governments at respective arms and tiers, will need to institute stable and policy frame work that can compete globally.

He also said that looking at the operational law, operators in the in the country will need to explore cost sharing options, especially in areas of logistics, supply chain, security and technology.

ExxonMobil boss also listed NNPC prompt settlement of the cash-call arrears as one of the many interventions by the corporation that helped the company to remain stable in business.

It would be recalled that a study conducted by the Oil Producers Trade Section, OPTS, of the Lagos Chamber of Commerce and Industry, LCCI, identified these cost drivers to include insecurity, overregulation and bureaucracy; and absence of infrastructure.

Indeed, insecurity, especially in the oil-producing Niger Delta region, posed the greatest threat to the survival of the oil and gas industry in Nigeria, inflating the costs of projects beyond global average.

In the same vein, stakeholders have decried recalcitrant challenges undermining Nigeria’s efforts to boost electricity supply through gas.

The nation's enormous gas reserves, estimated at 187 trillion standard cubic feet, are grossly under-utilized in the gas to power value chain.

Operators in the electricity sub-sector stated this, at a conference in Lagos. The event tagged "Harnessing oil and Gas Potential for National Development," was under the auspices of Association of Energy Correspondents of Nigeria, NAEC.

Group Managing Director, GMD, Aiteo Eastern E & P Company Ltd, Victor Okoronkwo, who chaired the occasion, said the nation's power shortage could be resolved through optimal utilization of the nation's huge gas deposits.

'Lack of appropriate synergy between policy makers and players in the energy sub-sector is a major factor for the nation's epileptic electricity supply,' he added.

According to Okoronkwo, government should show greater commitment to power generation by providing a favourable environment in order to attract more investors.

Similarly, Dolapo of Nigerian Gas Association, NGA, said there must be maximum co-operation among stakeholders because energy supply is for crucial economic growth.

She also identified lack of infrastructure deficiencies in delivery of gas stockpile to power stations, regulated low prices, poor remittance and policy somersaults, as major challenges undermining their targets and operations.

According to her, provision of adequate infrastructure and robust fiscal incentives would help in reducing losses and low productivity, which will invariably boost investment and economic activities in the industry.

"Proper regulatory and contractual framework will ensure credibility and marketing the products to off takers."

Executive Secretary, Association of Power Generation Companies, APGC, Dr. Joy Ogaji, highlighted the significance of gas in power generation, saying, ‘over 80 percent of power generated in Nigeria comes from gas.’

She reiterated the urgency for collaboration among players in the petroleum industry and the ministry of power, in order to actualize increasing electricity projections and sustainability in the gas to power chain scheme.’

Speaking on the topic: ‘Commercial Viability of Gas in Power Generation,’ OgaJi said, ‘based on statistics from system operators in Transmission Company of Nigeria, there is a demand forecast of about twenty-six thousand Megawatts, 26,000mw, of power in Nigeria.’

"Currently, there is an installed capacity of 13,427 megawatts from all the Generating Companies of Nigeria, GENCOS, out of which 7500 megawatts are available for usage on the average. From 2013 till date only 3500megawatts have been utilized.'

According to her, the nation should invest massively in gas to power generation, in order to attract the right local and foreign investors, given the nation’s huge energy demand and also gas deposits.

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