FG In Dilemma As America And Other Foreign Countries Plan To Dump Nigeria’s Oil
The administration of President Muhammadu Buhari is facing a new threat in the oil sector as it has perceived that the United States and some other foreign countries have concluded plans to dump the Nigeria oil market.
The development was relayed by the Energy Information Administration (EIA).
In the opinion of EIA in a recently released Annual Energy Outlook for the year 2019, the United States is likely to cut down the rate at which it imports crude oil from Nigeria in the next four years.
Part of the outlook reads: “The transition of the United States to a net energy exporter is fastest in the high oil price case, where higher crude oil prices lead to more oil and natural gas production and transition the United States into a net exporter by 2020.”
“In that case, higher crude oil prices also result in higher petroleum product prices and lower consumption of petroleum products, driving decreases in net petroleum imports.”
“In the High Oil and Gas Resource and Technology case, with more favourable assumptions for geology and technological developments, the United States becomes a net exporter in 2020, and net exports increase through the end of the projection period.”
“In cases with relatively low oil prices or less favourable assumptions for geology and technological developments, US net energy trade still decreases, but the United States remains a net energy importer through 2050.”
Commenting on this new development and its likely implication on the Nigeria economy, the Chairman of the Petroleum Technology Association of Nigeria, PETAN, Mr. Bank Anthony Okoroafor, opined the “we should be looking for alternative buyers, build refineries/upgrade and maintain our existing refineries to focus on adding value to our crude oil which will also create more jobs and more revenue for the country. We can be supplying refined crude to the whole of Africa.”
“Also, we should change from been a net importer of crude oil to a net exporter of refined petroleum products.”
He further noted that “We import over 80% of products consumed. This is a shame. There is a big gap in the supply of refined products in Nigeria and West Africa region. This shows great potential for domestic refining of petroleum products. With oil price hovering between 60 to 70 dollars per barrel, we should focus on refining.”
“Our local refining capacity is 445,000 bpd but they have never operated above 15% capacity which is a real shame. We consume about 17 billion litres of PMS annually, 2.9 billion litres of AGO annually and 390 million litres of aviation fuel annually.”
He also gave tips on how to make the oil sector better in the country. In his opinion, “We must privatize the refineries, deregulate fully refined products and allow demand and supply to regulate price. Deregulation will be a key driver for growth within the refining sector. We really need bold and decisive reforms to attract investors.”
“Government should focus on providing enabling environment for business to prosper. If you want the refineries to work, you will require financial independence; people who will be able to take decisions, carry out their maintenance without seeking higher layers of approval.”
“This is the only way to be bullish. There is need to have KPIs for the Managing Directors of the refineries and let it be self-funding. It should be financially independent; in that way, our refineries will be working. Let’s change from crude oil exporter to refined product exporter in 5 years time.”
It should be recalled that Indian, which was one of Nigeria’s largest oil purchasers had dumped the Nigeria oil market for the United State last year.