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11

OPEC bulletin 10/17

C o n f e r e n c e N o t e s

production adjustment decision, has already been con-

tributing to the stabilization of the market.

A lot of work has been done to improve the security

situation in the Niger Delta. Confidence in the system is

building, and the economy is coming back, he said.

“The reality is that for nearly two years, Nigeria has

contributed all the volumes needed to stabilize the mar-

ket. We had below one million barrels out of the market

completely. Everyone benefited from that, but we are

suffering.”

Dr Kachikwu supports of the process that has been

built up within OPEC to deal with the oil market crisis over

the past year, including OPEC and non-OPEC talks and the

building of a monitoring mechanism.

“First, I like the concept; it brings confidence to the

market. Above and beyond the usual resolutions we have

in our general assemblies, we have been able to put an

enforcement team behind it. I think it’s a model that we

will always adopt going forward, once things begin to fall

out of place. I think it’s worked very well for everybody.”

Plans at home

Back in Nigeria, deepwater projects — for which invest-

ment was long suspended due to fiscal and security

challenges — are being revived again, according to the

Minister. In order to help this, oil and gas policy has to

be defined to create some predictability. About 250,000

deepwater barrels are potentially ready to come online

sometime late next year, he explained.

“We have three or four such deepwater projects. It’s

just a matter of finding new funding, then they are ready

to go.”

One of the things the government undertook, which

has been very helpful, is a cash call policy to deal with

debts.

“We signed agreements on how to pay off existing

backlogs, and this brought back confidence. We have a

newmodel on how to deal with the cost of oil,” he stated,

adding that these policies have helped boost funding.

“On the back of this certainty, we need to go back

to look at costs. We have one of the highest production

costs among OPEC Countries, and we need to work on

that.”

Bringing back the refineries

He stated another area requiring his urgent attention is

in the downstream sector whereby a ministerial directive

has been issued to have all refineries up and running

by 2019. Many teams have been set up to deal with the

issue, and there is a lot of financing interest, he added.

“I hope that by the end of December, we will attain

the financing we need. But infrastructure is a major gap

in the oil industry in Nigeria, so we need to think outside

of the box.”

He said plant life is about 40 years, and most refiner-

ies are in dire need of replacement, but there is no money

in reserve for that. Price models from the private sector

are the only alternative.

“We have to tariff them or concession them and be

able to move forward. We need to do that like yesterday.”

As to changes in the country’s policy structure, the

all-embracing petroleum policy is moving ahead, and all

indications are that a rudimentary Petroleum Industry

Bill (PIB) should be passed by the end of the year, he

said.

The first two deadlines are complete, and, “Once

we do that, we will capture the A–Z of all the policies we

need. Now we need to move from policies to directives,

and regulation of these policies. We work so often with

National Assembly to finalize work on the PIB,” he said,

adding the whole house is working on the PIB. “This will

show the business models we are going to embrace, and

how we will deal with environmental issues.”

The shift to gas

Gas policy is also being taken into account, he stated,

adding “the business model is going to change from

being an oil producer to being a gas producer with a

lot of oil reserves, because that’s really what we are.”

He said that a gas bill to power the country has already

been approved.

“Incentives are underway for gas produced on a

non-associated basis, most of which now goes to asso-

ciated plants,” he stated. Proper incentives will aid in gas

exploration.

“Regarding gas flaring, great progress has been

made,” he said. “A 2020 deadline has been set, and

the country is already 70 per cent compliant with expec-

tations, and is hoping to be 100 per cent compliant by

the 2020 deadline.

“Part of that is a gas commercialization programme,

which was launched as a policy in the Ministry. Gas is

taken straight from the flare and put into practical use.

It’s going very well, faster than we thought, so we are

happy about it.”