Markus Droll, vice president, Nigeria and Gabon, Shell Upstream International, has said that stakeholders in Nigeria’s oil and gas industry must stay committed to keeping Nigeria’s position as Africa’s largest oil and gas producer.
Although it is not certain if Nigeria’s position in the continent is under threat from other African producers especially with regards to operators’ continued complaints of unfavorable operational environment in the country, Droll however noted that the country must initiate cautious steps to prevent it from sliding from the premier position.
Droll speaking recently in Abuja, explained that security issues, funding for capital projects, predictability around mining leases, and fiscal stability, were all threats to Nigeria staying up in the production ladder.
Describing challenges encountered by oil producers in Nigeria as unique only to the country, Droll said, “Nigeria is one of the leading oil and gas producers in Africa and we must all stay committed to keeping it that way. But as I said earlier, there is also a string case for remaining cautious.”
He added that “There are significant obstacles to Nigeria’s energy transformation. We still need better security for workers in the oil and gas industry. A considerable part of our operations are under strict security limitations.”
Droll noted that the industry requires a more effective counter-strategy against oil theft and sabotage in the country, adding that with about 300 break points recorded in 2014 by Shell, the method employed in sabotage of oil pipelines have become more brazen than ever before.
Going further on the challenges that could limit the progress of the industry in Nigeria, he explained that “We still need better funding for capital projects and to clear pending payments on expenditure.”
This, he said, was necessary with regards to the low price of crude oil in global oil market.
Additionally, Droll stated that uncertainty around oil mining leases and fiscal regime in the industry were holding back further investments that would guarantee growth in oil production in the country.
Considering his claim of five per cent declining rate in oil production per year, Droll said, “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 the key in ensuring investors of all sizes can commit confidently, government revenues can be forecast and a capable service industry is maintained with steady workload.”
Speaking more on insecurity and its threat to further growth of the industry, Droll added that, “Over the years, the industry has learned and adapted well to security threats, but we have done so at great costs.
This is not sustainable, as both our development and operating costs are higher than in many other operating environments globally due to security threat.
“I will like to talk about crude oil theft and pipeline sabotage-activities that have no place in a lawful environment. SPDC is taking a range of actions to counter them but our 2014 production was again severely affected by the direct impact of thieves placing illegal tapping connections on oil infrastructure. This is a problem unique to Nigeria and no other operating environment even comes close.”

Johnson Alabi
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