Oil industry loses $300b to price slump
THE Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said the global oil and gas industry lost over $300 billion worth of investment in three years due to decline in oil prices.
He stated this yesterday at the ongoing 2017 Society of Petroleum Engineers (SPE), Nigeria Council’s Annual International Conference & Exhibition (NAICE) in Lagos.
The theme of the conference is: Building the Waves of Boom and Burst: Common Objectives Diverse Perspective.
The minister said African countries were worst hit in the loss of these investments due to inefficiencies caused by security issues, policy inconsistencies and infrastructure gap.
According to Kachikwu, investors prefer to invest their scarce and limited resources elsewhere than in African countries, lamenting that what Africa is losing, others are gaining it.
“The situation was very challenging when it comes to losing opportunity arising from investment. For the first time in oil sector, the decline in the oil price resulted into loss of jobs.
“Infrastructural gap is another factor that the decline in the price caused. We have Infrastructural deficit because government was responsible for infrastructure, we did not engage private sector.
“The whole idea of new petroleum policy is to move the private sector into financing part of the project because government cannot do it alone,” he said.
The minister said the boom and burst had become the way of life in oil and gas sector.
“I think we have had about five circles of burst and boom over the last 35 years and each time we begin as if we did not expect it. The boom and burst has become the nature of oil and we should not be surprised anymore.
“Over 80 per cent decline in world oil price was recorded between 2014 and 2016 with oil price falling between 25 dollars per barrel.
“All the same, we have managed through the principles of OPEC to keep the price going between $45 and $50 per barrel.
“For now, our expectations between the year 2017 and 2018 is to keep the price to 60 dollars per barrel,” he said.
He however, said countries and people were moving away from oil, adding that electric motors were taking over globally.
“In the next 20 to 25 years, oil lifespan will expire, so we just need only five years to make a change of policy in the sector.
“We must make a traumatic decision on oil sector to survive the innovation.
“The country needs a consistent policy and deal with inefficiency in our system to survive the trend,” he said.
Welcoming the participants, Mr Saka Matemilola, the SPE Nigeria Council President, said the mission of the conference was to disseminate information as regard to oil and gas sector.