Nigeria needs good policy to drive investment — ExxonMobil MD

Tribune Online
Nigeria needs good policy to drive investment — ExxonMobil MD

GLOBALLY competitive fiscal policy, a robust legal framework and a healthy contract integrity culture have been identified as panacea and key drivers to profitability and attracting huge investments in the oil and gas sector, hence, the need for Nigeria to formulate good policies to drive investment.

Managing Director of the ExxonMobil Nigeria, Mr Paul McGrath, who is also chairman of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industries (LCCI), stated this at the 2019 edition of the annual conference of the Association of Energy Correspondents of Nigeria in Lagos.

I’m still communicating with Ajimobi on policies — Seyi Makinde

Speaking as the conference chairman on the theme, ‘Harnessing the Oil and Gas Potential for National Development,’ he noted that the topic was fitting, given the peculiarities of Nigeria’s business environment and clear need to optimise investments in the country in order to maximise obtainable gains for national development.

According to him, “Today, Nigeria is the largest oil producer in Africa and Nigeria’s hydrocarbon prospects are amongst the brightest today. However, there are fixes we must put in place if we aspire to maintain and expand the current investment profile in the Nigerian hydrocarbon industry.

“Nigeria’s  oil and gas industry faces many challenges which include to reduce costs, poor functional refineries, downstream deregulation, transparency issues, crude theft, pipeline vandalism, pollution in the Niger Delta, fuel pricing, inadequate pipeline infrastructure, optimize the performance of  industrial base assets and improvement of environmental footprint.

“Also, operating risks peculiar to Nigeria’s environment have continued to drive the costs of oil and gas projects in the country above the global benchmark.”

He noted that Nigeria ranks amongst the top 10 countries with the highest cost of producing oil and gas equivalents per barrel. High cost is a major disincentive to invest, especially at this time of considerable global competitiveness.

“Operating cost is increasing due to an attendant increase in required maintenance and well work-overs. Security costs are escalating as peculiarities of the business environment require that additional resources must be deployed to secure our people and asset,” he stated.

He, however, emphasized that for Nigeria to remain profitable, it needs to collectively consider modalities and mechanism for cost reduction.

“Also, our governments at respective arms and tiers will need to institute stable and policy frame work that can compete globally,” he said.

He also said that looking at the operational laws, operators in the country will need to explore cost sharing options, especially in areas of logistics, supply chain, security and technology.

The ExxonMobil boss also listed NNPC’s prompt settlement of the cash-call arrears as one of the many interventions by the corporation that helped the company to remain stable in business.

It will be recalled that a study conducted by the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) identified these cost drivers to include insecurity, overregulation and bureaucracy and absence of infrastructure.

Indeed, insecurity, especially in the oil-producing Niger Delta region, posed the greatest threat to the survival of the oil and gas industry in Nigeria, inflating the costs of projects beyond global average.

Nigeria needs good policy to drive investment — ExxonMobil MD
Tribune Online