27 December 2011
Though Nigeria’s crude oil production was restored to its 2005 level in 2011, due to the amnesty programme in the Niger Delta, new investment in the sector has remained only in the papers as the National Assembly prevaricates on the passage of the Petroleum Industry Bill (PIB); while a new debate on fuel subsidy takes centre stage. Ejiofor Alike writes
Crude Oil Production
In 2005, crude oil production hovered around 2.5million barrels per day, before militants in the Niger Delta embarked on massive attacks on oil and gas workers and infrastructure, which started on January 10, 2006.
From a record level of 2.5 million barrels per day in 2005, the country’s total production nose-dived to1.4 million barrels per day in 2009, before late President Musa Yar’Adua granted amnesty to the militants.
In 2011, crude oil production averaged 2.4million barrels per day, excluding condensates, which was estimated at 200,000bpd, during the year under review.
There were reported cases of production shuts in but the effect on crude oil export in 2011 was minimal.
For instance, Shell had shut down the 200,000barrels per day Bonga deepwater field, twice in 2011 for routine maintenance and to stop crude oil leak.
However, despite the improvement in crude oil production, there was a lull in investment in the sector in 2011, a development, which was blamed on the non-passage of the Petroleum Industry Bill (PIB).
Gas Revolution
A landmark development in Nigeria ‘s oil and gas sector in 2011 was the launching of a Gas Revolution in March by President Goodluck Jonathan.
Minister of Petroleum, Mrs. Diezani Alison-Madueke had earlier unveiled plans by Jonathan to unveil the revolution agenda.
The country has a proven gas reserves base estimated at 187 trillion cubic feet and a further undiscovered potential of 600 trillion cubic feet.
Jonathan had stated that the Gas Revolution would result in about $25 billion worth of investments in the country and creation of about 500,000 jobs.
Tagged: “Gas Revolution: Rebirth of Nigeria’s Industrialisation,” the President also expressed optimism that it would end gas flaring in the country.
He said apart from earning about $10 billion over the next three years, the initiative would also generate other direct and indirect jobs from construction and other related fields.
According to him, it is expected that by 2014, the government would have positioned the country firmly as the undisputed regional hub for such gas-based industries as fertiliser, petrochemicals and methanol.
“As a nation, we are continually striving to realise the fullness of the great potential in the vast human and natural resources, which Nigeria has been blessed with. One such major resources is our proven gas reserves base estimated at 187 trillion cubic feet and a further undiscovered potential of 600 trillion cubic feet.
“Today’s event marks the beginning of what I believed will be a fulfilling journey towards the restoration of Nigeria into the League of Nations , which have successfully leveraged on the advantage derivable from the abundance of natural gas to positively impact on lives of present and future generations of our citizens,” he said.
However, due to the uncertainty of the operating environment, occasioned by the non-passage of the PIB as well as apparent lull in the implementation of the Gas Master Plan, most of the pledges by foreign and local investors on gas-related projects are still mere paper works.
Hot Debate on Subsidy
The controversy over planned removal of oil subsidy dominated the last quarter of 2011 and eclipsed the debate on the non-passage of the PIB.
While government officials, fuel marketers, Nigerian Governors’ Forum (NGF), a section of the National Assembly were sympathetic to the removal, which was initially planned for January 2012, some civil-society coalitions, some National Assembly members and a faction of the organised labour were vehemently opposed to the plan.
The opponents of the plan, who claimed to be speaking for the masses, said the planned removal would hike fuel price and inflict hardship on the people.
The debate on the removal climaxed last week in Lagos when the Newspaper Proprietors’ Association of Nigeria (NPAN) brought together all the parties in a Town Hall Meeting.
President of NPAN and Chairman/Editor-in-Chief of THISDAY Newspapers, Mr. Nduka Obaigbena had in an opening remark, stated that the meeting was organised to bridge understanding between the government and the civil society.
NPAN is the organiser of the Town Hall Meeting
While supporting the removal at the Town Hall Meeting, Edo State Governor Adams Oshiomhole was of the view that President Goodluck Jonathan has more complicated financial problems than his predecessors and urged the organised labour and other civil society coalitions to support the removal of subsidy.
He commended both late President Musa Yar’Adua and President Jonathan for keeping fuel price at N65 per litre since the past five years, adding that beside fuel price, there is no other price that has not changed for five years.
“Yar’Adua never increased the price; he only reduced it. And of course, Jonathan has left it where he met it. It never happened before now,” he said.
Oshiomhole, who stated that he would always be on the side of the people, noted that leadership was not a popularity contest.
“We must be sure of what we want to achieve; we must have the courage to do what we want to do. I do not want my colleagues in the labour to be shocked by the views I am going to express. The truth of the matter is that beside petroleum price, which other price has remained what it was five years ago? Can we therefore conclude as rational human beings that there are certain forces that could have guaranteed stable N65 per litre, and yet every other price in the system has been changing. I think that you can’t argue that every other price can change except petroleum”, he said.
The Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, used the opportunity provided by the forum to present statistics on the harmful effects of subsidy to the economy.
“The funds that would be saved from that would be used for the development of many pressing social and infrastructural facilities. We are also concerned about borrowing. This year, we borrowed N852 billion to fund the budget. For the proposed budget for 2012, we would have borrowed over N1.1 trillion, which is almost the total of our capital expenditure,” she said.
Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, disclosed that between January and November this year, the total amount of forex demand at the Wholesale Dutch Auction System (WDAS) by oil marketers was $8 billion.
He also disclosed that the total amount of fuel subsidy that was granted to oil marketers within the same period was $8 billion.
“If the federal government continues to subsidies fuel subsidy, the next government would face crisis that may even be worse than the euro crisis. Our reserves have fallen to the extent that if oil prices drops, we may not have a shock absorber to withstand any shock.
Subsidising imported petroleum products only create jobs for the country where the products is being imported from,” Sanusi said.
But opposing the removal on behalf of NLC, its Vice President, Comrade Isa Aremu stated that the labour did not have confidence in the deregulation policy and argued that previous policy implementation of government had shown consistently that it could not be trusted.
“There is already a problem with this policy because it seems to us in labour that if care is not taken this is going to be a very strong policy and our fear is that it is not going to be a win-win policy.
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