ACN raises alarm, says Nigeria economy on brink of collapse

The opposition Action Congress of Nigeria (ACN) on Sunday raised the alarm that Nigeria is broke and pointed at an impending collapse of the economy, unless the Federal Government cuts the astronomical cost of running a bloated government and takes urgent measures to diversify the economy and shore up the production of oil, which remains the mainstay of the country’s economy.

In a statement in Lagos on Sunday by its spokesperson, Lai Mohammed, the party warned that if urgent measures were not taken, the government might not be able to pay its bills, including workers’ salaries, within the next few years.

”Contrary to what the FG may say, this warning is not about crying wolf but is actually borne out of a patriotic fervour devoid of politicking, which is the usual refrain of this government when alerted to its shortcomings,” the party said. ”We will like to be proven wrong, but this will depend on uncommon and monumental effort, rather than on the basis of the usual canned response from the government.”

The ACN said it was issuing the red alert based on four empirical evidence: The cost of oil production which has skyrocketed from 4 dollars per barrel in 2002 to 35 dollars presently; the massive corruption in the oil sector, with oil theft and sabotage leading to lost production and costing Nigeria some 6 billion dollars annually in crude theft; the sharp fall in the discovery of new oil and gas reserves due to the low investment in the sector, and the most serious of all, the
challenge posed by alternative sources of global supply of oil and gas.

The party said the cost of oil production rose from only 4 dollars per barrel in 2002 to 7 dollars per barrel in 2005 and, from the 12 dollars per barrel at the onset of the Yar’Adua/ Jonathan Administration in 2012 to 35 dollars per barrel in 2012, according to the just-concluded Nigeria Oil and Gas Conference in Abuja, where the mind-boggling cost hike was attributed to the cost of security in the Niger Delta (put at 16 dollars per barrel), it said.

“In other words, the gains recorded from ending militancy in the Niger Delta due to the Amnesty Programme have been wiped off by the cost of maintaining the ‘peace’. Here is how Shell Nigeria MD Mutiu Sunmonu described the situation: ‘Operating in the Nigerian oil and gas environment can be long and tortuous with costs at the high end of the global scale. There are a multitude of security related issues that have to be dealt with on a daily basis.

“In the recent past, militancy has simply been replaced by INDUSTRIAL SCALE oil theft and sabotage(emphas is ours). We, and others, have had to shut-in significant production; spend huge amounts on replacing and repairing hardware and deploying massive resources to clean up spills’.”

On the discovery of new oil and gas reserves, the ACN said the disastrously-lo w level of exploration activity in Nigeria is supported by the statistics released by the US Department of Energy for deepwater discoveries from 2009 to 2011 in which Brazil alone contributed some 40 new discoveries or 20 percent of the global total, US and Australia contributed 10% each, countries like Ghana making nine new discoveries or 5% of the global total, while Nigeria had only 4 discoveries or 2% of the global total during this period.

This paltry discovery of new oil and gas reserves is due to the low investment in the sector, which needs to attract 15 billion dollars annually in capital investment, up from the present 3 billion dollars, in order to remain a significant global oil supplier and a respected player in OPEC, the party said.

It said, however, that all those challenges pale into little significance when placed against the challenge posed by alternative sources of global supply of oil and gas seriously – that is Shale oil and Shale gas!

”Here are the facts: The US has more than doubled its estimates of recoverable domestic Shale-gas resources to some 827 trillion cu. ft. (23 trillion cum), more than 34 times the amount of gas the US uses in a year.

Together with supplies from conventional gas sources, the US may now have enough gas to last a century at current consumption rates.

”Last month, the agency released a similar announcement in respect of Shale oil to the effect that California’s valleys alone hold as much as 15.4 billion barrels of Shale oil, which companies were hitherto unable to reach because the oil exists in pockets of rock that were expensive to reach before the present advancements in fracking technology. Similar announcements are being made in Europe and parts of Asia.

”For the first time in nearly a decade, the US has regained the position of being the world’s largest producer of natural gas and soon also oil. Thus, in less than five years, the US has gone from seeking new sources of oil and gas overseas to being self-sufficient . Industry experts believe that Shale oil and Shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels and alter oil
geopolitics.

”The announced objective of the US Government is to drive down oil prices from the current 100 dollars per barrel to 50 dollars per barrel within 2 years. If this happens, which is very likely in view of the alternative sources, Nigeria, with a cost of production of 35 dollars per barrel, would immediately go out of business, with dire consequences for an economy that thrives largely (if not solely) on oil,” the party said.

It said the signs of imminent trouble are already visible for those who are willing to see: The Brass LNG Project is unable to take Final Investment Decision (FID) because of the collapse in the US LNG market and rising costs; and a similar situation faces the Olokola LNG Project.

The party therefore called on the Federal Government to put on its thinking cap in order to rise to the challenges listed above and save Nigeria’s economy from collapse, adding that any delay could mean that those in charge of the country’s affairs would not have enough time to change
course as the ship of state heads for the rocks.

 


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  • Lanre

    Brilliant, Informative. Goodwork, Alhaji Mohammed.

    • Mpitikwelu_na_Ugwu_Awusa

      even you fell for this one. Have you ever asked where they got money for the proposed FirstNation Airline and Oando? A drug addict and certificate forger is now your hero. I pity you.

  • tualey

    ACN or APC will never win the Presidency, no matter how much noise you make. Lie lie Mohammed, you don start again?, abi na ur drug addict godfather Tinubu, na in u wan make he come be President? or the Boko haram godfather Buhari?…second base jare

    • Kayode Adesola

      tualey, is what you wrote here a claim or an argument? Why dont you refute the claims in the story fact for fact rather than resort to abuse? You have a right and freedom of opinion, but you do not have a right to be uncouth and indecent. Also, you do not have the right not to speak to the fact. So please bring out your own facts. Whatever you say, please know two things(i) this so-called oil is a finite resource, (ii) even if it is not a finite resource, so-called wealth that is derived it depends on availability of buyers. If there are no buyers then any resource is useless-in fact an object ceases to be a resource the day you cannot sell it. That is the thought we in NIgeria need to begin to engage very fast but which you simply cannot comprehend.

      • tualey

        Kayode or whateva your name is, av u ever read any of Lie Mohammed’s insults on GEJ? Then you will know that mine is just a pinch of salt of an argument. Is Tinubu not a beneficiary of one of the oil blocs in the country? oh, or maybe, Oando’s oil bloc is drying up and there are no available oil bloc for them. one thing you dont know is that nay accusation levelled against GEJ by the so called ACN or APC is a total false and blatant lie. So you are the one that failed to comprehend the argument here..

  • Mpitikwelu_na_Ugwu_Awusa

    Another senseless write-up by Tinubu’s poodle. If your argument is that our biggest buyer, the U.S, will soon not need our oil, how is the discovery of new oil wells the answer?
    If ACN has a brain, they will be encouraging GEJ’s efforts to increase our non oil earnings, which by the way is growing by more than 5 percent yearly according to FIRS.

    FOUR MORE YEARS.

  • Fatrik Luuu

    ACN should turn the fashined weapons against the Nass