The fortune of Nigeria’s oil and gas industry may further dwindle this year and even beyond as banks funding to the country’s highest revenue earner declined by $3 billion in 2019.
This was even as the Nigerian National Petroleum Corporation (NNPC) disclosed that it has been able to reduce its Joint Venture (JV) cash call arrears by over $3 billion from the 2015 figure of $5 billion.
Industry figures made available to Daily Sun indicated that funding to Nigeria’s oil and gas industry in 2014 was around $12.5 billion in 2014.
But according to the Managing Director of AMNI Nigeria Limited, Mr. Tunde Afolabi, who spoke during the First Akomeno Oteri Annual Lecture organised by the Nigerian Association of Petroleum Explorationists(NAPE) in commemoration of the its 45th anniversary, indigenous oil companies were the worst hit in terms of funding constraints. Afolabi said capital spend of the oil industry between 2010 to 2019 was largely influenced by the robustness of oil prices, saying a significant drop in prices affected the whole value chain of oil exploration and production. He noted that the capital spending of the oil industry per annum when oil prices averaged $100 per barrel was in the region of $18 billion per annum, but lamented that between 2016-2019, when oil price averaged $60 per barrel, capital spending dropped to $7.5 billion per annum.
He noted that the COVID-19 pandemic has had a debilitating effect on the fortunes of the oil industry, with crude prices hitting $18 per barrel as the end of QI 2020 as against $60 per barrel in January of same year.
The effect, he said led to over 100 million of homeless crude oil hovering the waters with no buyers because the refineries were filled to capacity while tankers were used as emergency storage.
The AMNI boss noted that producers whose income come from marginal field operations have ebbed at the mercy of their banks, adding that some have been lucky to have hedged early, as funding challenges for E&P companies have been brewing for years.
He however called on the Federal Government to licence a purely Oil and Gas Bank to cater for the unique needs of the industry because it would understand better the dynamics of the oil industry as against a general multipurpose Bank.
Meanwhile, the Independent Petroleum Marketers of Nigeria (IPMAN) has said it might withdraw its services in Anambra State by August 25, if the government fails to pay debt owed Siluch Oil and Gas Limited. The debt, amounting to N13.6 million, according to the Managing Director of the firm, Uche Okoye, was for petroleum products supplied to the Transport Company of Anambra State (TRACAS) in 2017 wherein the transport company owed for four months.
The petroleum marketers had in August 4 issued a 21-day ultimatum to the state government to pay their member being owed and also address other issues raised by the association.
Chairman of IPMAN, Enugu Depot, Mr Chinedu Anayaso, while speaking to newsmen in Awka, said that the Association would shut down its operation in the state completely until all conditions were met. He added that another issue being contested apart from the debt payment was the question of tax/levy increment being pushed by the state government which he said the economy cannot presently support.
Anayaso disclosed that the group had secured the support of NUPENG and Petrol Tanker Drivers, adding that anyone who violated the order would pay a fine of N500,000.
Source: The Sun