Petroleum Summit: Pricing major issue affecting oil industry – Kachikwu

Ibe Kachikwu
Ibe Kachikwu [Photo Credit: THISDAYLIVE]

The Minister of State for Petroleum Resources, Ibe Kachikwu, on Tuesday identified pricing mechanism as one of the issues negatively affecting the progress of the oil and gas industry.

He disclosed this in a speech he made shortly before a session on the short and medium term priorities to grow Nigeria’s oil and gas industry in light of the ”seven big wins” at the Nigerian International Petroleum Summit in Abuja.

He said, “Pricing is obviously a big issue on gas, it is something that needs to be addressed just like pricing in power is also key.

“Ultimately, I think the greatest challenge this country would have and still has is power. Everybody wants gas available, everybody wants power and everybody wants freely delivered fuel with no queues.

“People are not ready to make the sacrifices essential for these things to happen. Sometimes it’s a pricing issue and we have got to get to a point where we have to deal with some of these issues in a manner that doesn’t hurt our people but at the same time creates a level of efficiency and so removes the arbitrages and patronages that are inbuilt in them.”

In his address at the summit on Monday, Mr. Kachikwu gave details on his ministry’s progress in realisation of the seven big wins.

The seven big wins include: Policy and Regulation, Business Environment and Investment Drive, Gas Revolution, Refineries and Local Production Capacity, Niger Delta Security, Transparency and Efficiency, and Stakeholder Management and International Coordination.


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“We have done a lot in the last two years, First, we have been able to, through a lot of struggle change the pumping mechanism for the upstream and that has helped energise investors in the upstream sector.

“Now we are beginning to see projects like Egina (15 billion), Bonga (potential 10 billion) and the likes. That is close to about 40 billion worth of potential investments over the next five years if we do the right thing, set the right model, set the right policies and give the right skill that is essential,” the minister said.

On the Niger Delta militancy issue, he said, “We have dealt with the Niger Delta militancy issue, though not always final, but at least we have moved it from a point where we are at an all-time production of one million barrels near full recovery of our barrels.

“We have been able to find a way of engagement that respects the community, focuses on their leaders and takes them serious not just as agitators but indeed as partners in the process of exploration of crude and natural resource.”

He added that, “For the first time, we are creating a model where private investments are going into our dilapidated refineries. Some of those will be announced over the next one month.

“We are still targeting to be able to get these refineries up and running from about 14 per cent utilisation capacity today to about 90 to 95 per cent over the next 18 to 20 months.

“If we do that hopefully, we will be able to move drastically to self-sufficiency in the production of refined petroleum products.

“In the area of legislation and regulation, we have been able to bring out the gas policy, and the petroleum policy, we have submitted the fiscal policy before the Federal Executive Council, we’ve held that back to have a sort of conference to discuss the essentials to fine-tune and make sure everyone is on board,” Mr Kachikwu said .

He also added that Nigeria’s oil exploration business model has to change.

”My position is that the business has got to change. It has got to change to taking your crude oil and been able to refine. It has got to change to be a major player in the power sector. It is got to change from oil, into gas and into clean energy. We have got to look into moving incentives away from oil, back into gas and back into cleaner energy.”

Mr. Kachikwu added that there was no reason why oil companies would do their business in Nigeria and take 100 per cent of the crude oil produced out of the country.

“What are they doing with it? They are going to take it to refineries; they are going to crack them somewhere. If there are incentives for them to crack them here, they would do so. Ultimately, Nigeria must aim to be the refining corridor for the whole of Africa. That is becoming very critical,” he said.

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