• Reiterates need to boost exploration
The Nigerian Association of Petroleum Explorationists (NAPE) has expressed worry over the continued drop in price of crude oil and the anticipated negative impact it will have on the economy.
NAPE President, Mrs. Adedoja Ojelabi said the falling oil price shouldn’t have been a concern if the necessary precautions were put in place. She said that in any normal market, prices are expected to rise and fall but the fact is that as a country, we don’t anticipate issues that will drive up or down the price.
She stated that although Nigeria doesn’t have control over oil price because it’s internationally determined through the forces of demand and supply but it can mitigate the effect locally. She said: “Nigeria cannot control the price of oil in the international market but can mitigate the effects locally by producing and refining sufficiently. If we have this self-sufficiency, the effect will trickle down to other sectors of the economy.”
Ojelabi said imagine if Nigeria doesn’t import products but produces and refines more than it requires locally, in a period of continued drop in prices, it can export refined products and create jobs and value in-country. Also if proceeds from oil have been sufficiently invested in making power available to Nigerians, the benefits should be unquantifiable. Imagine if Nigeria will have two years of uninterrupted power supply what the effect will be on industrialisation, manufacturing and technology development, she added.
She said the effect of the falling oil price is worsened by the fact that Nigeria has not been meeting its production target for a long time. Although she couldn’t say much on the effect of the falling price on the economy, it is noteworthy that production target and price benchmark have been two critical indices on which Nigeria’s budget is hinged, therefore, inability to meet production targets coupled with continued drop in price, should be a major cause for concern to Nigerians.
However, Ojelabi noted that mitigating effects of falling oil price is by ensuring steady power supply in the country, which is the only way to industrialisation, reducing gas flaring and monetising it. “Although putting the mitigating facilities in place will take a long time, it will not only boost other sectors but also industrialisation through steady supply. Gas supply constraint has been a major challenge to generating enough power while huge quantity of gas is flared,” she added.
Also speaking on the declining oil reserves and the need to check it, Ojelabi said: “The Nigerian oil and gas industry landscape has in the last five years or so witnessed some of the sweeping changes since the discovery of crude oil in the country more than five decades ago. On the international scene, the advent of shale gas has proved to be a game changer and a peculiar threat to the industry, especially in the LNG market where Nigeria is a major player within the Atlantic basin region. On the other hand, the spate of oil and gas discovery in other African countries is putting a lot of pressure on Nigeria as the ‘favourite’ destination for oil and gas investments.
“On the local scene, the changes are even more profound. For the first time in several years, the nation’s reserve is showing a sign of decline as exploration, drilling has hit the lowest level ever experienced in the nation’s history. Expectedly, reports of new discoveries are few and far between and where reported, the reserves are getting smaller.”
Also NAPE President-elect, Chinwendu Edoziem, said that one of the causes of the drop in oil price is self-sufficiency of consumer countries such as United States of America (USA). Let’s hope the price hold at current price, he added.
He stated that it is important the price of crude doesn’t go down further because it is the price that determines whether an oil firm will go and drill or not. Search for oil is often driven by price of crude, he added.
Oil price traded at $81.46 per barrel on Friday as against an average of $100 per barrel some months ago.
