The Department of Petroleum Resources (DPR), Nigeria’s oil industry regulatory body recently published its 2015 Oil and Gas Industry Annual Report. The 75-page document offers stakeholders detailed performance of the sector between 2010 and 2015. FESTUS OKOROMADU x-rays the report from the perspective of agency’s executive director.
The Department of Petroleum Resources (DPR) is saddled with the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the oil and gas Industry.
In discharge of these responsibilities, DPR is involved in monitoring of operations at drilling sites, producing wells, production platforms and flowstations, crude oil export terminals, refineries, storage depots, pump stations, retail outlets, any other locations where petroleum is either stored or sold, and all pipelines carrying crude oil, natural gas and petroleum products, while carrying out the following functions, among others.
The agency is therefore viewed by many stakeholders as one which hold the ace to the growth and otherwise of the nation’s oil and gas sectors, thus availing Nigerians with necessary information concerning the sector is considered a priority to its development.
To this end, DPR has embarked on a strategic dissemination of relevant data to the general public. The move, no doubt is key to ensuring accountability and transparency in the industry, recently, the agency published the latest of its report on the Nigerian oil and gas activity data, tagged the 2015 Oil & Gas Industry Annual Report.
Reviewing the report which provides data covering 2010 to 2015, the chief executive of DPR, Mr Mordecai Ladan, noted that the sliding oil prices continued to pose significant challenges to nation since its economy almost depends entirely on the proceeds from oil and gas activities.
The global oil prices dip which fell from US$112 to US$62 in 2014, and found a new bottom in January 2016, when OPEC basket price plummeted to US$26.50, he noted significantly eroded the accruable revenues and widened budget deficits in most of the conventional producing countries across the world.
“The impacts are especially severe on Nigeria that depends on oil and gas proceeds for more than 90 per cent of its annual budget,” he stated.
According to him, the crisis further threw up some salient challenges to the nation’s oil and gas industry, thus advocating for the deployment of more cost-efficient system.
As a way out, he called for comprehensive strategy to revamp the aging infrastructure to minimise the perennial technical losses. There is also a compelling need for a fully-developed downstream sector to locally add value to upstream activities, he added.
Speaking on the moves to attract investments into the sector he said, “Right strategies would enable Nigeria effectively compete for needed foreign investments capital to tackling most of the challenges.
“New capital injection is vital to re-exploring the traditional terrain in the Niger Delta which has stayed largely unexplored since the 1960s.”
Re-exploration of the Niger Delta brown fields with new technology would enable the industry realise the full potentials of the area, he pointed out.
He further stated that new investments would be vital to exploring and developing green fields, especially those awarded in the 2005 to 2007 bid rounds.
According to him, “The re-exploration of the brown fields and development of green fields hold the keys to attaining the 40 billion barrels reserve and the 4 million bopd production targets of government.”
He explained that gas monetisation offers credible options in the current economic challenges, especially in the diversification of the local oil and gas industry.
“The prospects are bright for a vibrant domestic gas market now with the opportunities offered by the local electricity sector,” he stated.
According to him, the rising demand for natural gas in the West African sub-region, domestic gas-to-fertiliser and regional gas-to-power prospects further offered opportunities in medium and long- terms to building a virile gas market in Nigeria.
“Government is therefore working hard to harness the opportunities by instituting a process that would serve stakeholders more efficiently and give fair returns on investments under an open access regime,” he explained.
He described the performance of the country’s existing refineries as abysmal, stressing that the contributions of local refineries to the products market had remained low in the period covered by the Report.
“The four public refineries in Nigeria performed abysmally below the 445,000 barrels nameplate capacity, the 1,000 barrel topping plant under private operation however recorded a more impressive performance. The local refineries only produced 4.85 per cent of their combined installed capacity during the periods,” he disclosed.
He however attributed the dismal refining figures to the low pump prices due to the price-capping policy of the subsidy regime obtained during the period.
But noted that the situation was expected to improve with the new pricing mechanism that now offers a higher profit margin to the refineries and marketers.
He stressed thatthe ongoing modular refinery initiative was attracting more investors that would harness stranded oil assets to aggregately boost local refining capacity.
Ladan submitted that, “The new realities require thinking out of the box in order to maximise values in a lean price environment.Timely collation of data and accurate interpretation of data are required for government to formulate the needed policies and to enable investors make informed decisions,” he added.
This perhaps is why the DPR must henceforth publish this all important report early enough for stakeholders to get a first-hand view of the industry.
