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IOCs made oil blocks dormant – NNPC

By on October 18, 2013

The Nigerian National Petroleum Corporation has said that international oil companies operating in the country have been sitting on oil blocks and have allowed the acreages to go fallow for years without significant development.

The corporation stated that the recent spate of divestments from certain onshore oil blocks by some of the IOCs would not lead to crisis in the nation’s oil and gas industry.

The Group Managing Director, NNPC, Mr. Andrew Yakubu, said the divestments were not only healthy for the oil and gas industry in the country, but would also go a long way in promoting effective indigenous participation in core upstream activities.

Yakubu spoke on the sidelines of the ongoing World Energy Congress in Daegu, South Korea, according to a statement made available to our correspondent in Abuja on Wednesday by the corporation.

He was quoted as saying, “These are not withdrawals in the real sense of withdrawals. The fact is that a number of these IOCs are moving into more challenging frontiers in the deep offshore and are leaving the onshore blocks, which they consider less challenging.

“So, it is only fair for them to release these blocks so that others, especially the indigenous operators, can have the blocks and grow in the upstream business. This, indeed, is a good development and I think we are moving in the right direction.”

The NNPC boss said the divestment offered immense opportunities for the nation’s  indigenous flagship upstream operator, the Nigerian Petroleum Development Company, to grow its capacity and capability, especially as it strived to meet the target of daily crude production of 250,000 barrels by 2020.

The country’s oil and gas sector has witnessed a spate of divestments by oil majors in the last few years.

The development became a regular occurrence due to what stakeholders described as an unfavourable operating environment.

The divestments by some of the IOCs are linked to the uncertainties surrounding the Petroleum Industry Bill, a development that has also made the oil majors to hold back on future investments.

On the impact that the discovery of shale gas and oil in the United States might have on Nigeria, Yakubu said for now, the development would not have any serious negative effect on the nation’s crude oil fortunes.

“No doubt, the shale gas phenomenon poses a pushback on our oil and gas, but the good news is that as we speak, the impact is going to come a very long time from now because a close examination of the various discoveries of shale gas shows a huge misalignment between what was projected and the actualisation of most of the gas projects that will bring shale gas into full maturity,” he said.

The NNPC boss explained that though the shale gas revolution was real, its availability in the global energy market was being hampered by high cost and other infrastructural challenges, thus making conventional crude oil a cheaper energy source.

Yakubu, however, said that while the NNPC was comforting itself over the development, it was moving to activate measures to ensure that the country was not caught napping if and when shale gas achieved the projected global penetration.

He said, “Once again, the good news in this regard is that the President, through the minister of petroleum resources, has made it clear that the maximisation of our various energy resources is central to the reforms in the oil and gas industry.”

 

 

[Punch]