Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has revealed that Nigeria lost $34 billion in the last two and a half years due to the fall in production from the assets being divested by ExxonMobil to Seplat Energy, a transaction still awaiting approval by the federal government.
Lokpobiri made the disclosure in Lagos, during his keynote speech at the Second Quarter Dinner of the Petroleum Club, with the theme, “Funding Our Way out of the Crisis: Looking up to the Oil and Gas Sector.”
The minister explained that output from the assets declined from 600,000 barrels per day (bpd) to current 120,000bpd, leaving a shortfall of 480,000bpd, which he said amounted to $34 billion loss at a conservative $80 per barrels, in the last two and a half years.
Lokpobiri insisted that Nigeria could ramp up oil production to five million barrels per day within the next 12 to 18 months. He said lack of required investment in the Nigerian oil and gas industry over the past 10 years contributed to the decline in production, and stressed that it was one of the major challenges he faced on assumption of office.
Lokpobiri explained that Nigeria was producing about 600,000bpd from the ExxonMobil assets that were now under divestment, pointing out that today, the production from the asset has dropped to about 120,000bpd.
He stated that if the problem hindering the divestment process was resolved and minimal investment made on the asset, the country would be able to restore the production to 600,000bpd with the addition of 480,000bpd.
With that, in addition to condensate, which is outside the Organisation of Petroleum Exporting Countries (OPEC) computation, the minister maintained that the country was already delivering two million barrels.
Lokpobiri explained, “My own opinion is that, look, we are in short of 480,000 barrels a day from that ExxonMobil-Seplat transaction.
“For the past two and a half years, oil has been moving around $80 a barrel. Four hundred and eighty thousand barrels a day, multiply it by two and a half years, it will give you about $34 billion.
“When I was on this table, I was doing rough mathematics and I guess you have your phones. So, you can do the calculation. If one asset was doing about 600,000 barrels, because of certain problems, which we’re trying to resolve, production declined to 120,000 barrels, which means we’ve lost about 480,000 barrels a day.
“Multiply it by $80 a barrel. Every day, you’ll get about $34 million. Multiply it by two and a half years, you’re talking about over $30 billion. If $30 billion is injected into our economy today, I guess you guys will have to sell more of your dollars because dollar will naturally drop. This exchange rate is sometimes a question of demand and supply.”
As minister, with the mandate of the president, Lokpobiri said he would ensure that all problems hampering investment in the sector were resolved, beginning with the Seplat-ExxonMobil divestment issue.
“If from only that Seplat-ExxonMobil transaction, we have lost about $35 billion, imagine if that money was in Nigeria. Imagine if NNPC has about 70 per cent of that money. If they have that money to expand their investment, I believe that Nigeria will be in a better place,” he added.
Lokpobiri stated that the quickest way to the redemption of the Nigerian economic problems was through the oil and gas sector, arguing that no oil and gas producing country fails to prioritise investment in the sector.
He said President Bola Tinubu had given him a mandate to ramp up production, adding that achieving that needs engagement and collaboration with all the relevant industry stakeholders.
Lokpobiri admitted that the task of ramping up oil production could not be feasible without sustainable investment and without solving the problems in the industry.
He said one of the first problems that confronted him was the ExxonMobil-Seplat transaction, and said for the past two years, they’ve been struggling to resolve the problem.
He revealed that some agreements had been reached in the attempt to resolve the divestment bottleneck, assuring that in no distant time, the problem would be finally solved.
The minister stated, “When I came, what I did was to bring Seplat and NNPC to the table to say, ‘look, we must lock up ourselves in this room. We must find a solution to this problem.’
“What is the problem? They can attest to the fact that we are able to get some agreements. And I believe that in no distant time, we’ll be able to resolve that problem.”
“What is the problem? They can attest to the fact that we are able to get some agreements. And I believe that in no distant time, we’ll be able to resolve that problem.”
He reiterated that his target was to ensure that production was ramped up by guaranteeing sustainable investments and by resolving the critical problems in the sector.
Lokpobiri stressed that production growth needed to happen on sustainable basis to increase the country ‘s revenue and enable the president to deliver the promises he made to Nigerians.
“That is my mandate. That is the mandate given to me by Mr. President. And I can assure you that this present administration is committed to ensuring that that happens,” he stated.
While the divestment was happening across the world, the minister clarified that in Nigeria, the international oil companies (IOCs) were not divesting and running away from the country. Rather, he said, the IOCs were divesting into deep offshore
Lokpobiri added that the development presented another opportunity for indigenous companies under the aegis of the Independent Petroleum Producers Group (IPPG), who have grown capacity, to take over the divested assets, maximise their productivity in these assets and pull Nigerians out of suffering.
Lokpobiri encouraged indigenous firms to put money together and work to overcome their funding challenge.
He explained, “If a group of people come together to say, ‘look, if I have $10 million, you have $20 million, let’s pull our resources together and see how we can fund some assets in this sector,’ I think that would be an alternative solution to our issues.”
He announced that only Nigeria and Ghana were currently in the contest to host the upcoming African Energy Bank (AEB).
He said if headquartered in Abuja, the bank, which would have $5 billion initial capital, would in four or five years grow to about $120 billion, and Nigeria’s economy would benefit from it.
Lokpobiri stated, “But the summary of what I want to say today is that, as a government, our own policy is to ensure that we do everything that is globally possible that other countries don’t have and that other countries are doing to attract investment, so that we can attract the desired investment.
“We are willing to remove all bottlenecks in the industry because every country that has oil, prioritises investment in the oil and gas sector, and that is why as a government, the president has directed that we should resolve all problems we have in the industry.
“And that is why we are also trying to resolve the problem of OML 245, the popular Malabu oil field, because we want to attract all the investment because in my own opinion, if we don’t attract the investment, this resource we have will just be buried under the soil with no value addition.”
