APR Calls for Full in-Country Processing of Nigerian Hydrocarbons
The Abuja Petroleum Roundtable (APR), a private sector led think-tank committed to creating the critical linkage of the petroleum sector to sustainable development, has asked the Federal Government to develop urgent steps that will lead to full in-country processing of all Nigeria’s crude oil and gas production, rather than continue to be primary commodity exporters.
The group argued that in the face of her loss of the main export market for crude oil to recent shale oil production in the United States; persistent low oil prices and the determination of international oil prices through geopolitical considerations, Nigeria must be proactive and initiate a strategic plan to process all her crude oil and gas in-country, as well as secure the 1.2billion-person African market to sell her refined products.
Basing its position on the projection that local processing of $50 a barrel oil will yield local value in excess of $200, the group argued that it is the way to go if Nigeria hopes to get out of her economic quagmire.
The group admonished the Federal Government to immediately privatize the decrepit government owned refineries and vigorously pursue the development of the 26 newly licensed modular refineries, which are profitable with low priced oil and at the same time employ and take idle youth off the streets, reduce pipeline vandalism and security issues in the Niger Delta, and integrate their processes sustainably, so that smaller one-product plants supply feedstock to bigger full process plants.
The APR, built on a triple helix interactive platform which brings together knowledgeable industry professionals, public sector technocrats, successful entrepreneurs, researchers, academics and investment analysts, sounded an alarm for government on the ominous future of LNG processing in Nigeria.
In its conclusions from a Consultative Forum held in Lagos this month, the group warned: “Having dropped the ball by not reacting strategically to the advent of shale oil, Nigeria should not gamble with new LNG investments, since they may become uncompetitive in 20 years, when the humongous Australian LNG projects come on stream. An action plan must urgently be developed for processing Nigeria’s natural gas into all its by-products locally.
Nigeria should learn from integration efforts and successes of countries like Trinidad and Tobago and Qatar for instance, to achieve full in-country value chain for her hydrocarbon resources and linkages to agriculture, education, manufacturing, technology, infrastructure, financial services, research, and transportation” the group concluded.
They also advised that Research and Development must be brought to the front burner and universities empowered to play very active roles in development of the Nigerian economy. “Entrepreneurial universities, research, documentation and patenting of research outcomes must become the new normal for Nigeria to succeed in the new strategic direction”.
They posited further that hydrocarbon based industrial corridors must be encouraged, as one of the models for accelerated industrial development. Those already identified should be encouraged to move faster in their project plans – like the Warri Industrial Park, the Lagos to Calabar coastal highway and railway corridor; the Federal Government led Ogidigben project; the Rivers State Energy Corridor promoted by Techdev Plc and several others.
The one day event, sponsored by frontline indigenous operator, Energia Limited attracted leading players from government, the academia and the private sector.
The group further recommended that:
- Government must clean up the PIB issues and establish firm policy directions for upstream, midstream and downstream, to create the needed investor confidence.
- Government should adequately incentivize downstream projects for both oil and gas, to achieve quick investment decisions.
- Government should drastically reduce its equity stakes in the upstream JV operations and allow them to raise their own funds and operate more efficiently, while paying tax and royalties to government.
- All government owned refineries must be privatized and let the private sector operators go about the most efficient cost effective way of bringing them back to production.
- Government should frontally confront security in the Niger Delta especially and throughout the country and also find lasting solution to crude oil theft, to make investments in new projects attractive.
- Government should urgently streamline all regulatory activities into one agency, thereby eliminating the present irritating and uncompetitive multiplicity of regulators.
- Government must deliberately diversify the economy using the resources from oil revenue, to build a wealthier society and reduce the challenges of poverty.
- Government should encourage the growth of the knowledge economy and provide a pride of place for Nigerian universities in the new economic development paradigm.
- Operators should be encouraged to adopt more inclusive and environmentally sustainable practices, through robust communication platforms with all their stakeholders and adding real economic value to their host communities.
Coordinator, Abuja Petroleum Roundtable.