Specifically,
they believed that the industry needs proper funding, therefore the need to
provide a bailout loans to oil and gas firms in the country.
Delivering a
paper entitled: “Current Realities in The Upstream Sector of the Nigerian Oil
and Gas Industry”, at NAPE’s monthly meeting , the Chief Executive Officer of
Degeconek Nigeria Limited, Abiodun
Adesanya, said that beside the falling global oil price trend, Nigeria is
also having other challenges such as funding challenges; renewed insecurity in
the Niger Delta; low Reserve Replacement Ratio (RRR); poor gas development and
high and uncompetitive production cost.
According to
him, Nigeria’s current national crude oil reserve is down to 28 billion with a
budget deficit at a crude oil benchmark of $38 a barrel in 2016 budget.
Adesanya
insisted that the falling oil price has an instant, direct and major impact on
Nigeria economy, saying that about 120,000 direct and indirect job has been
lost in the country.
He stated: “There has been a shortfall in NNPC Joint Venture cash calls.
The shortfall has led to about 53 per cent drop in NNPC cash calls payment to
JV operations from 2005 to 2015. This has led to a 62 per cent drop in JV
production that is masked by Production Sharing Contract production. It has
also played a part in the decline of crude oil production from 2.3 million
barrels per day to 2.1 million barrels per day in over the same period”.
He also
stressed the need for the government to address the issues of insurgency and
security threats in the country as well as pipeline vandalism, illegal oil
bunkering; kidnaping and hostage taking and proliferation of illegal
refineries.
Speaking on
the need for a bailout fund for oil companies, Vice President at First City
Monument Bank Plc, Ronke Jibodu,
maintained that the crude price had fallen below the $45 per barrel projection
by most of the lenders.
“What
we set as worse target for oil (projection) is $45, but today it’s $35 per
barrel. This is a big challenge for the banking industry,” she said.
This has led
to a major issue facing banks. For instance, she said the bank had $1.2 billion
refund this year. “And how the money could be refunded
by oil firms that are also facing big task to survive the low price is a big
issue. The financial institutions are being faced with ‘if what do we do
scenario?’ The unstable, the uncertainty in the oil sector. What I told my
colleagues is that maybe we could get bailout fund. We need to fund new
projects without being saddled. We still have a need of $20 to $30 million for
new project financing. The biggest issue we have today is the fall in oil
price. However, the oil sector still remains a sector where the banks still
want to play.” (Guardian)
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