Indigenous Oil Producers Decry Fall In Crude Oil Production Due To Militancy

An indigenous oil producer, Mr Austin Avuru  last week  said indigenous oil producers were faced with zero output and zero revenue due to incessant militants attacks on oil installations in the Niger Delta region.
Avuru, who is the Managing Director, Seplat Petroleum Development Company Plc, disclosed this in Lagos at the ongoing annual conference of the Society of Petroleum Engineers (SPE), Nigeria Council. 
The News Agency of Nigeria (NAN) reports that the conference which has the theme, “Transparency in the oil and gas business: An imperative for energy security and stability’', also marked the SPE’s 40th anniversary.
According to the oil producer, this is a difficult period for indigenous oil producers in Nigeria.
He said operators were no longer bothered by the drop in crude oil prices because when there was nothing to produce; there will be nothing to export for sale.
“These are pretty difficult times for our industry, and for our country. Today, over 70 per cent of production from the traditional terrain in the onshore and the shallow water is locked in.
“ A year ago, we were faced with drop in oil prices, but today we are battling with zero production, zero revenue for up to five or six months now. 
“Some of us no longer check the oil price, because it is only relevant when we produce. This industry is undergoing a major transformation. 
“Few years ago, we said this industry must move away from just being a primary revenue generator for the government to becoming an enabler for economic development. 
“We said that this industry will move away from domestic consumption of less than 300 million Standard Cubic Feet (SCF) of gas per day to consumption of over 3 billion SCF per day.
“And in the process, transform the economy. In the process, energising companies like Dangote so Nigeria can become a net exporter of cement and fertiliser, delivering over 300GW of electricity.
“The crisis in the Niger Delta has taken a new turn that must worry all of us because when we do not produce, our companies are destroyed, jobs are destroyed, and the economy is destroyed.
“But still, we are hoping that by 2020, somehow that journey will get us to where we intend, which means, our production of natural gas will fire this economy. 
“We should be refining about half of our products in the country by 2020. 
“Domestic refining capacity of 1.2 million barrels per day is realistic by 2020. And as I said 3.2 billion SCF to 3.5 billion SCF of natural gas and all the multiplier effects are realistic,’’ Avuru added. 
He said that in spite of the challenges, Seplat which started from gas processing of 60 million SCF per day in 2010, now delivered 300 million SCF into the domestic production.
The Seplat managing director said the organisation would have a processing capacity of 500 million SCF per day at the end of the year.
He added that by 2020 the company would meet one billion standard cubic feet production.
Earlier, the SPE Chairman, Nigeria Council, Mr George Kalu, said lack of gas gathering and supply infrastructure were hampering the country’s ability to maximise the benefits of gas sales in the domestic market.
Kalu said the delay in the passage of the Petroleum Industry Bill (PIB) had constrained further investment into the sector to the extent that exploration activities were at their lowest ebb.
He said the theme of the conference was timely, given the oil prices, which were hovering around $43 barrel per day currently with significant challenges to the Nigerian oil and gas environment.
“The challenges include funding constraints arising from cash call arrears, exchange rate differential in a cyclical oil price regime, high operational costs due to long contracting cycle time and severely delayed payment to vendors.
“The high cost of borrowing is also affecting the much anticipated boom in the industry.
“The Nigerian oil and gas industry has also experienced massive capital flights due to bureaucratic bottlenecks in releasing information and prospects, fiscal regime, extant laws and feedback on performance of contractors.
“ This has resulted in significant delays in permits approval while providing a breeding and enabling environment for sharp practice,’’ the SPE chairman said.