Delay in PIB, Financial Crisis Stalls 40 Barrels Oil Reserve Target 

Diezani Alison Madueke, Hon Minister Petroleum Resources

…Capital expenditure may further suffer this year
The Nigerian oil and gas industry may have been shocked to an unprecedented level, as the Federal Government recently declared that the numerous challenges facing the sector are threatening the national aspirations of growing its hydrocarbon reserve to 40 Billion barrels per day by 2020.
Besides, the 4 million barrels per day production target may also be a mirage after all, going by the speculations that the flexibility in capital expenditure and funding may be further constrained in 2015.
Mrs. Diezani Alison-Madueke, the Minister of Petroleum Resources, disclosed this at the 15th Nigeria Oil and Gas Conference. (NOG) in Abuja urged the oil multinationals and their indigenous counterparts to brace up for the imminent challenges and device strategies of raising funds for project execution.
Alison-Madueke, who was represented by the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Joseph Dawha, said the conference is more apt now that the energy competitiveness map of the world is also evolving and affecting countries, companies and consumers alike.
She, however, noted that the persisting drop in crude oil prices have  forced companies globally to slash capital spending in 2015, while it  continued to take its toll on Nigerian petroleum business as a whole.
According to her, “Persistent depressed oil prices may limit industry  scope to maneuvers in growing long term production and reaching the  target of 4.0 million barrels per day”.
The national aspiration also includes growing the hydrocarbon reserve  to 40 billion barrels per day.
She continued: “Under a sustained low oil price, industry must  challenge itself to raise fund for projects in order to meet these  targets. This will call for radical changes in the cost environment,  improved contracts/project management and innovative financing  mechanism.
“However, in the event of moderate oil prices recovery, we would still  require innovative funding and greater private sector involvement  across the hydrocarbon value chain. Nevertheless, at a high price, we  must maintain a prudent and incentive based fiscal environment that will prevent the return of high cost of production currently experienced in our industry”.
Joseph Dawah, however, harped on diversification of the national  economy, noting that other areas such as agro-industrial,   mining-related products and petrochemicals industrial products among  others could contribute largely to the national purse if adequately harnessed.
Dawah also called for liberalization of the downstream petroleum  sector, adding that the NNPC has reviewed its strategies to reviving the refineries and make Nigeria a net exporter of refined products by the year 2020.
He noted that diversification from oil to gas is also crucial, as the country is set to tap into the environmental potentials that gas offers in its quest to drive the economy.
“If the last 50 years is regarded as the oil age, then the next 50 years will be age of gas”, he said.
The Vice President, Nigeria, Gabon, Shell Exploration and Production Africa, Marcus Droll, said despite the challenges, Nigeria could develop into a major energy consumer, adding that Shell is well placed to support Nigeria in all places of its journey to transforming the energy sector.
To overcome the obstacle, he said Nigeria needs better security, more effective strategy to combat oil theft, enhance funding for capital projects and promoting fiscal stability.
The Group Chief Executive Officer, Oando Plc, Wale Tinubu, said there was need to bring a renewed perspective to the way and manner the oil and gas sector will be managed.
He, however, cautioned the industry about continuous downsizing, which, he said, may lead to increased vandalism and oil theft in the industry.