As robust as Federal Government’s current transformations in the energy sector may appear, the Shell Group has identified a number of challenges undermining the success of the reforms.
These are security, crude theft and pipeline vandalism, as well as funding, fiscal stability and predictability, lease predictability and a host of others.
Shell said that these factors are not only increasing the industry’s operating costs, but also stalling further investments for greater economic benefits.
The Vice President, Nigeria and Gabon, Shell Upstream International, Mr. Markus Droll, identified the challenges while speaking on, “The Journey Towards’ Transformation,” at the just concluded Nigeria Oil and Gas Conference, NOG 2015, in Abuja.
He said: “We still need better security for workers in the oil and gas industry. As I speak, a considerable part of our operations are under strict security limitations. We still need a more effective counter-strategy against oil theft and sabotage. While we have directed even more resources to try to counter this menace, it has become a bigger problem compared to a year ago. The methods employed are even more brazen than ever.
“We still need better funding for capital projects and to clear pending payments on expenditure. We are very concerned about what impact the much lower oil price will have on 2015 funding. We still need more predictability around leases; if we increase certainty around leases, then investment becomes easier to attract.
“And we still need fiscal stability and predictability. This remains key in ensuring investors of all sizes can commit confidently, government revenues can be forecast reliably, and a capable service industry is maintained with a steady work load. As it stands, investors in Nigeria face very tough fiscal conditions.”
Optimism about the future
Droll disclosed that Nigeria’s enormous oil and gas resources is one of the major reasons the Shell Group remains optimistic about the country’s economic future, saying that its optimism and continued investments in the country is being fuelled by current reforms in the petroleum industry as well as the re-prioritising of energy issue across the economic value chain.
Apart from the nation’s growing gas sector, he noted that with the way issues were now being handled, “Nigeria will continue to develop, diversify and grow its economy.”
Already, he said that current investments by Shell Companies in Nigeria are expected to generate up to $5million annually for the next 10 years under the SPDC Joint Venture.
As a result, he said the companies, through various investment projects are now being positioned to support the country more through to its next level of development not only as an oil and gas producer, but also as an emerging market.
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