As the advanced countries of the world continue to seek ways to be energy independent or significantly reduce their energy imports, Nigeria should optimise value of its hydrocarbon resources by creating very competitive policies and incentives that it a haven for investors.
Chairman and Managing Director, Mobil Producing Nigeria Unlimited, Mark Ward, made this call at the Aret Adams Lecture series in Lagos.
In his paper entitled: ‘World energy outlook and potential impact on Nigeria’s petroleum industry,’ Ward, who was who was the guest speaker, gave highlights on breakthroughs made by advance countries including the United States in terms of extraction of oil and gas from shale formations. He believes this would position the U.S. from a consumer to a net exporter of oil and gas by 2030.
To be relevant and competitive in the global oil market at all times despite advancement and achievements expected to be recorded from shale formations, Ward said the Federal Government’s focus on restructuring the industry through the Petroleum Industry Bill (PIB) is timely, but the bill must be designed and implemented correctly.
He said that the government should ensure that the bill provides globally competitive fiscal terms to attract capital. It must also be stable and there should be a fair business investment climate with appropriate protections to ensure that fundamental issues such as funding limitations and operations inefficiencies are addressed. Besides, he said the government must develop a completely thought-through transition to avoid major disruptions.
He saidNigeria should maintain what has attracted investors to its oil and gas industry. He said: “It would be worthwhile examining a number of factors that have contributed to what could possibly be a global game changer in our industry: First, there was availability of a huge prime resource base. Second, there was expanded access to this resource, with clear resource rights to investors. This allowed for investment in, and application of appropriate technology. Third, you had a system that tried to avoid arbitrary and punitive tax policies. Fourth, clear regulatory system that not only supported safe development and production, but responded to industry push to expedite the permitting and construction of pipelines and other infrastructure necessary to get these new energy supplies to market.
“These conditions, mostly absent in other places, came together at the right time and created what we are witnessing today. With Nigeria’s proven natural gas reserves put at an estimated 180 trillion cubic feet as of end 2011 – the ninth largest in the world – the country needs to open up her market and focus on being a competitive, low-cost, high-reliability supplier to the global market.”
With what is happening, he said that Nigeria must recognise that a significant resource shift has turned a key trade region into possibly a direct competitor, (referring to the U.S.). Nigeria he said should avoid creating barriers with potential to make her industry uncompetitive for investments. Noting the emergence of other resource basins in East, Central and South African countries, he said Nigeria must work to maintain her place as a key contributor to global energy supply.
He shared some views from the ExxonMobil’s outlook. He said the “ExxonMobil’s outlook is a comprehensive and detailed assessment of the energy landscape over decades. It is part of the foundation on which we have built our business. The Outlook to 2040, as with past analyses, is based upon a combination of public and proprietary data covering more than 100 countries.
“We look at world demand, the types of energy needed to meet that demand and other factors that might impact energy supply and demand on a global, regional and national level. These include things like expanding prosperity among a growing world population, the cost and availability of various forms of energy, the development and use of new technologies, and government policies and regulations.
“More recently, we have shared it beyond our board room to public audiences around the world to broaden understanding of the energy challenges and opportunities all of us face in the years ahead. This is even more important for an energy rich, and energy dependent nation such as Nigeria.”
He said it is important to understand the links between population growth, economic progress and the amount and type of energy used around the world, adding that growing populations advance economically over time and seek better living standards, which in general leads to increased energy use.
He said: “We expect that by 2040, global population will reach 8.7 billion, and the non OECD will make up 85 per cent while Global GDP is expected to increase at about 2.9 per cent a year from 2010 to 2040, led by the rapidly expanding economies of the non OECD.”
Ward also noted that forecast for global energy demand will be in quadrillion British Thermal Units, BTUs (quads), stating that energy demand is projected to grow significantly through 2040, and will be driven mainly by population and economic growth in the non OECD.
The outlook also showed that the world is moving into a more multilateral, energy demand era, an era in which countries such as China, India, Africa and Latin America command a larger share of global energy demand.
It added: “By 2040, we expect Asia Pacific market will account for close to 45 per cent of demand, up from just 20 per cent in 1980.”
