Yenagoa – Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC), Mohammad Barkindo, has said that the oil and gas industry is besieged by threats with potential to inflict a bleak future on the sector.
Barkindo disclosed this on Tuesday in his keynote address at the 2022 Nigerian Oil and Gas Conference at the International Conference Centre, Abuja, with the theme, ‘Funding the Nigerian Energy Mix for Sustainable Economic Growth.’
According to him, the oil industry was affected by severe challenges from multiple fronts which were threatening investment potential in the short and long terms.
The OPEC boss, who was the honorary conference chairman, said, “Your industry is now facing huge challenges along multiple fronts, and these threaten our investment potential now and in the future. To put it bluntly, the oil and gas industry is under siege.
“For starters, the evolving geopolitical developments in Eastern Europe, the ongoing war in Ukraine, the COVID-19 pandemic and inflationary pressures across the globe have come together in a perfect storm that is causing significant volatility and uncertainty in the commodity markets, more importantly, in the world of energy.”
He noted that against this backdrop, a number of industrializsd countries and multilateral institutions have continued to pursue stringent policies aimed at accelerating the energy transition and fundamentally altering the energy mix.
He said the industry had not fully recovered from the enormous investment losses of recent years, pointing out that “in a very short time span, the industry has been hit by two major cycles- the severe impact of the market downturn in 2015 and 2016, and the even more far-reaching impact of the COVID-19 pandemic.”
Barkindo described 2020, the first year of the pandemic, as one of the darkest periods in the history of oil as upstream oil capital expenditure fell by around 30 percent.
“This exceeded the colossal 26 percent annual declines experienced during the severe industry downturn in 2015 and 2016. “Looking further down the road, OPEC’s most recent World Oil Outlook give us some perspective on what is to come.
It shows the global oil sector will need cumulative investments of $11.8 trillion in the upstream, midstream and downstream through to 2045 to meet expectations for the significant growth in energy demand,” he added.
He suggested that if national oil companies (NOCs) are to continue to innovate and flourish, it is very important that they have predictable and unfettered access to investment capital, stressing that regular investment at adequate levels is the lifeblood of the industry.
He said it is essential if the NOCs develop new technologies, strengthen human capacity and remain leaders in innovation so that they can do their part to meet the world’s growing need for energy, shrink overall environmental footprints, and expand access to under-served communities.
Also speaking, the Minister of State for Petroleum Resources, Timipre Sylva, said fossil fuel would always have a share in Nigeria’s energy mix for the foreseeable future as the country would not at this time abandon fossil fuel, though the nation had adopted its vast gas resources as transition fuel.
Sylva said, “With proven gas reserve of over 200 trillion cubic feet, the right policies and regulations to expand the utilisation of her gas resources, Nigeria has huge potential to become an industrialised nation.”
He explained that the shift to gas underscored the seriousness and determination of President Muhammadu Buhari in the development of Nigeria’s huge gas resources as a major gas exporting and consuming nation.
The minister pointed out that previous studies had shown that Nigeria was an energy poor country with 62 percent of the people lacking access to electricity while 90 percent could not have access to modern cooking fuels.
He further said, “Our government is working on many initiatives to tackle these challenges, one of which is the gas to power initiative aimed at minimising gas flaring and harnessing our gas resources to electricity to meet Nigeria’s electricity demands.”
The Chairman, Board of Directors of the Nigerian National Petroleum Corporation, Margery Chuba Okadigbo, said the theme of the summit aptly described Nigeria’s current situation as the transition to the next chapter on the country’s journey to maximising its resources for the development of its hydrocarbon assets.
Okadigbo also noted that the oil and gas sector played a critical role towards the economic prosperity of the country.
