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Low Oil Price: Indigenous Operators Should Focus On Gas – Bero

The Marginal Field Bid Round of 2003 produced some indigenous operators in Nigeria’s oil and gas upstream space. At present, there are more than 10 indigenous oil companies producing while some have metamorphosed from marginal field into core offshore operations. Others are listed in major Stock Exchanges across the world.

Explaining the role of indigenous participation in Nigeria’s upstream space was Mr. Ademola Adeyemi Bero, Managing Director of E&P Exploration and Petroleum Development Company. Bero is also Chair of the Independent Petroleum Producers Group (IPPG) comprising Nigerian Independents in the upstream industry. Bero gave his insight at the World Energy Council webinar.

The IPPG chair said what happened in the last three months of the oil industry, has never been experienced in his 30 years plus as an operator. “In this industry, I have never seen this kind of dynamics at play.” Even though it has happened, it is difficult for the industry. The issues should be managed to reduce risk uncertainty.

Due to the pandemic the oil price fell even though it is about $39 to $40 it is still in the low circle of uncertainty.

Nigeria’s local banks are impacted by the current situation, it posed a threat to indigenous local bankers as they felt the impact.

Bero made it known that where the concern lies is the people because their social lives have been affected including the host communities, for five weeks they were shut down.

Unfortunately, with the ugly development in place operators in the industry will reduce contract cost from $50 to $20 which pose a major challenge for indigenous players. Clearly, the Covid-19 is a message that if oil price increases to $100 in future, companies must make cost sustainably low.

Bero stated further, “How do we thrive? I think we need to learn to live in a world of Covid-19. It is not going to end this year.” Collaborative effort is needed for all indigenous companies to share thoughts together and forge ahead.

The IPPG chairman stated that indigenous companies’ focus should be on gas. “Gas for domestic consumption in Nigeria is where we have to play and dominate.”

There is hope that if indigenous players work together with national oil company, the economy of Nigeria will be diversified using gas.

For a robust oil industry that will attract investors, Bero submitted that indigenous companies are firmly focused on the Petroleum Industry Bill (PIB). He said the bill should be an investor friendly framework.

The industry is in a new dynamics and operators have opportunity to reinvent it.