Nigerian oil sector receives $ 67.1 bn for 3-year investment plan

Sep 27, 2005 02:00 AM

Nigeria launched an aggressive investment drive for the petroleum sector, where it planned to spend $ 67.1 bn (N 8.6 tn) on oil and gas projects between now and 2008.
The Federal Government said the investment plan carries the potential of creating over 10,000 new jobs in the sector.

Unfolding the government's three-year investment strategy for the nation's oil sector at the ongoing 18th World Petroleum Congress (WPC) in Johannesburg, South Africa, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engineer Funsho Kupolokun, said oil exploration and production would gulp a total $ 34.4 bn while $ 32.7 bn would be spent on gas production, supply and distribution.
A further breakdown of the investment plan in Kupolokun's presentation which attracted widespread commendation for its depth and graphical illustrations, showed that engineering design for oil and gas projects will gulp $ 500 mm per year over the next three years, fabrication in the upstream sector($ 8 bn), and procurement of materials ($ 25 bn).

According to the NNPC GMD, the objectives of the investment plan include maximizing oil and gas sector value to the national economy, improving the Nigerian capacity and content in the sector, growing the nation's oil reserves and production capacity to 40 bn barrels and 4.5 mm bpd, respectively, creating as much revenue from gas as oil within this decade, and transforming the nation's energy sector from just an oil industry to an integrated oil and gas industry.
At present, Nigeria's oil output is 2.4 mm bpd while reserves totalled 35 bn barrels. A significant increase in Nigeria's oil production capacity, according to Kupolokun, is key for global energy stability, adding that the steady growth in the country's oil reserves and production capacity, is an indication of Nigeria's prospectivity.

He said the gas sector was also evolving rapidly, with the demand for the commodity projected to record the fastest growth in the world from present 1.5 bn cfpd to 25 bn cf in 2025. The government is keen to having the energy initiative contributed to doubling the GDP over the next 10 years, he said.
"A lot of the spending will be in the upstream, some in the downstream, some in the gas sector," said Kupolokun, adding however, that a greater percentage of the funding for the projects would come from the private sector.

He said that Nigeria offers attractive opportunity for investment to fill refined products gap both at the domestic level, (totalling some 300,000 bpd) as well as in the West African sub-region and other markets totalling another 300,000 bpd.
"We put in a number of initiatives to provide enabling environment for these opportunities. The fiscal system is simple, straight forward, progressive and creates a level playing field. There is stability of agreements. Even during the military years, agreements were stable in Nigeria. Now under the current dispensation they can only be better," he said.

The NNPC, he added, has already begun a massive multi-faceted transformation to enable it respond more effectively to the challenges associated with the expected growth in oil industry.
Speaking shortly after Kupolokun's presentation, Deputy Senate President Ibrahim Mantu said the Federal Government was already planning a major restructuring of the nation's oil sector, with the aim of creating a strong and virile regulatory agency to back the investment drive.

Mantu said the National Assembly was prepared to provide legislative backing to every policy initiated in this regard.
"We have never really had any problem in giving them legislative backing because nobody will invest in an environment where he is not sure of law protecting his investment," said Mantu. The proposed regulatory body for the oil sector, he added, would take the form of the Nigerian Communications Commission (NCC), which had helped in revolutionalising the communications sector by creating a level playing field for public and private sector operators.

Source: This Day
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