Chevron: Investment in Nigeria’s Oil and Gas Industry Drops by 20%

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The President of Chevron Africa and Latin America Exploration and Production, Mr. Ali Moshiri, has raised the alarm that total investment by all players in Nigeria’s oil and gas industry, which stood at $20 billion in 2014 has dropped by 20 per cent in 2015.

This is coming as the Governor of Lagos State, Mr. Akinwunmi Ambode, has said that the state will soon become the 11th oil producing state in the country, but decried what he described as the declining reserves, profitability and competitiveness of Nigeria’s operating environment in the oil and gas business.

Speaking yesterday in Lagos at the annual conference of the Nigerian Association of Petroleum Explorationists (NAPE), Moshiri said Nigeria accounted for $20 billion out of the $600 billion global investment in the oil and gas industry in 2014.
He however pointed out that in 2015, investment in Nigeria’s oil and gas industry dropped by 20 per cent.


In Africa, Moshiri said Nigeria was the top producer of liquid hydrocarbon and number three in gas production, stressing however that the country’s position in gas production was caused by the absence of gas infrastructure and not because of gas resources.
According to him, Nigeria has much more gas resources that could catapult it to the third or fourth largest producer in the world, but had failed to attain its potential due to lack of gas infrastructure.

“When you talk about investment, total industry investment in 2014 was about $600 billion and Nigeria had around $20 billion. After the price crash, there was tremendous reduction in global investment.

“Now the question you may ask: is that reduction because of cost efficiency or is that reduction because of investment? They are not doing the same thing they did before and it is cheaper. As you can see, investment in Nigeria has significantly dropped by 20 per cent,” Moshiri explained.

He said Nigeria had tremendous capacity and resources to produce far above two million barrels of crude oil per day, but added that much investment would be required.

He noted that $20 billion investment would be required yearly for the country to replace its current production levels.
Moshiri said many projects were locked up in Nigeria because of cost and identified the Bonga South West project as one of the projects.
He said the current slump in crude oil prices should not come as a surprise to anyone as he had witnessed four of such declines in his 40 years in the oil and gas sector.

According to him, anytime there is an increase in inventory in the oil market, the price will slump, adding that without the United States’ unconventional oil (shale oil), the price of oil would have been significantly higher than what it is today.

Moshiri said between 2014 and 2015, about four million barrels per day of unconventional oil was introduced into the market and blamed the decline in oil price to this development.

In his remarks, Ambode stated that with the efforts of Lekoil, Afren and Yinka Folawiyo, Lagos State would soon become the 11th oil producing state in the country.

The governor however stated that Nigeria currently maintains an economically unstable energy trade balance in which the country exports virtually all the crude oil produced and imports a substantial part of the petroleum products consumed in the country.
Ambode, who was represented by the Commissioner for Energy and Mineral Resources, Mr. Olawale Oluwo, also argued that the country had under-utilised other energy sources such as bitumen, coal and non-carbon-related energy sources.

“Therefore, the challenge before us is to determine how we as a nation can adapt to these emerging scenerios in the global and national oil and gas sector so that we take advantage of them and shape them to our advantage,” Ambode noted.

Source: This Day