The federal government has expressed concern over the rising international prices of crude oil, saying the increase is not good for the country.
The government bemoaned waning foreign investment in the oil and gas sector, and reiterated the need to float an African Energy Bank to curb the continent’s dependence on Europe, Asia and America for funding.
Also, Nigerian National Petroleum Company (NNPC) Limited on Thursday released details of how it distributed a total of 387.59 million litres of petrol in the last one week to bridge the gap caused by the withdrawal of methanol-blended products in circulation.
This was as the House of Representatives Committee on Downstream investigating the importation of off-spec premium motor spirit (PMS) grilled other importers and suppliers of the product.
Speaking on the rising crude oil prices in an interview with Bloomberg Television, monitored by FirstNews, Minister of State for Petroleum Resources, Mr. Timipre Sylva, said that Nigeria’s comfort zone in terms of oil prices was between $70 and $80 per barrel.
Although Sylva did not particularly explain why higher oil prices were bad for Nigeria, he stated that at the moment, Nigeria was not gaining anything from the soaring prices.
On the back of rising tensions between Russia and Ukraine, Brent, Nigeria’s benchmark, on Tuesday hit $99.03, the highest in the last nine years, almost touching the much-talked-about $100.
Clearly, the country’s controversial fuel subsidy regime, which would gulp N3 trillion this year, coupled with its inability to ramp up production to meet the quota allocated by the Organisation of Petroleum Exporting Countries (OPEC) have combined to limit the gains from the oil price hike.
However, Sylva blamed the inability of Nigeria to activate the oil wells it shut down when OPEC instructed producing countries to cut production as well as the lack of investment in the upstream sector for the country’s inability to increase production.
At the moment, Nigeria is losing at least 300,000 bpd to its capacity challenges.
The minister stated, “I’m hopeful the prices will move around, maybe $80, maybe $70. We are hoping it will come down to somewhere around $70 to $80, which will be sustainable for us to the end of the year.
“We are working hard on that (production increase). What happened to us was the fact that we had to cut back at the time, and, of course, in such a way you can’t really cut back mathematically.
“So, you want to cut back 100,000 barrels that you shut out, maybe we’ll shut down about 200,000 to 300,000 barrels. So at the end of the day, we over-complied because we just couldn’t achieve it mathematically.
“In trying to cut down, we cut down too much. And now to come back, it’s not been easy for us to get the wells back to production.”
The minister noted that a lot of additional investments would be needed to ramp up production, but lamented that foreign funding was drying out for the industry.
“It’s not very easy these days to get the investments in. We really are not able to meet up our quota now. But I believe that we’re working so very hard to ensure that, because we are not happy at all.
“I mean, with the kind of prices we are seeing. We are obviously not happy about it. So we would like to definitely be back on track by later this year. It’s not been very easy to get investments. A lot of people can’t get investments into the sector.”
On what was being done to change the dire investment situation, Sylva stated that Africa was now beginning to realise that it could not be completely dependent on foreign funding.
He said, “So we’re looking at how we can get our African energy bank set up. Also, we’re looking at how we can rally multilateral funding into financial institutions.
“We are talking to Afreximbank. We’re working with other African producers to try to rally some funding for our sector in Africa, because we cannot continue to depend on funding that’s not coming.”
The minister reiterated that the world could not abandon fossil fuels when it had not built capacity to harness the alternative, noting that the decision to withdraw funding was hurting the industry and the countries of the world.
He said, “This is what we’ve been saying all the time. I mean that we have not been investing in the oil and gas sector for too long. And we expected that this was going to happen at some point, because there will be a gap, because now that gap cannot be filled by renewables.
“And that is because you are not also investing that quickly into renewables, you’re not developing renewables that quickly. So now there is a gap. And in addition to this gap, you have all the geopolitical tension.
“We are saying they must move gradually towards renewables, I mean, because if they take out the investment so quickly from fossil fuels, they cannot develop renewables at that same rate. That is what we are saying.”
Sylva further said he was not aware of discussions with the United States for Nigeria to increase supply of gas to Europe on the back of the Russia and Ukraine tensions, explaining that if it has to happen, it would take time and investment. But he explained that in the medium term, the country intended to begin supply to the continent through Algeria and Morocco.
Sylva said, “We are actually having those kinds of conversations with Algeria, we are building a pipeline, the Trans Sahara gas pipeline that is going to take up our gas all the way down to Algeria to Europe.
“We are also planning a pipeline to take our gas to Morocco. So we are planning two pipelines, one to Algeria, to Europe through Algeria, and one to Europe through Morocco.
“So we’re actually planning to take our gas to Europe. But I don’t know of any plan now to take gas to Europe because of the political tensions with Russia.”
On the Trans Sahara line, he stated that Nigeria had just signed with Algeria and had already started construction from the Nigerian end of the 614 kilometres AKK Pipeline, to take the pipeline all the way to Algeria to the border.
For the Morocco pipeline, he noted that it was still at the level of studies, with reports being expected.
“There’s a lot of excess capacity, but it will take some time to build the infrastructure and, of course, the LNG, it will also take a while. So, there is no spare capacity that we can immediately off-take to Europe now.”
Sylva, who spoke on the current OPEC supplies, stated that there was no need to increase quota at this time beyond the already agreed 400,000 bpd, which the cartel embarked upon last year.
He stressed that he planned to visit the headquarters of Chevron, ExxonMobil, ENI and the rest of the multinationals operating in Nigeria to get their commitments on additional investments in Nigeria, especially with the advent of the Petroleum Industry Act (PIA), which has made investment more attractive.
The release of the document by NNPC coincided with the gradual easing of the long fuel queues, especially in Abuja, where traffic had been mostly grounded due to the closure of some roads by desperate motorists.