Economy: Crude oil won’t be an income resource in 10 years – Kachikwu

The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, says the world is moving away from oil and that it will no longer be an income resource in 10 years.

Kachikwu said this in Abuja on Thursday while answering questions on “His Outlook for the Commodity in 2018”.

According to the Minister, 2018 looks like a better year for crude in terms of pricing but countries are focusing on alternative energy.

“Everything all added up together is showing us that towards the last quarter of 2018 we expect a better market. Does that better market translate to your 100 dollars price (per barrel)?

“Never! I don’t see it, frankly I don’t see it. It’s going to take a major calamity. Largely because on the back of all these, countries are racing away from oil.

“If Europe is saying in five years time, `we are going to exit oil cars to electric cars’, oil, therefore, is getting its last years.

“Except for those who produce and use it for local consumption because they’re moving slowly away from it but in terms of an income resource, you can begin to count the years in your hands.

“In 10 years’ time, I’d be very surprised if any country that hasn’t diversified enough is counting really seriously on oil,’’ he said.

On outlook for price of crude by year-end, the minister said “this year, maybe 60 dollars per barrel but I don’t think it’s going to happen, so let’s say mid 50 dollars.

“If I get 55 dollars per barrel at the end of the year, I’m contented and by late 2018 60 dollars,’’ he said.

Kachikwu said private investment was the only way out of bad infrastructure and better income for government in the sector.

“Pipelines, infrastructure, whether it is gas whether it is crude; there is absolutely no way you can have this country get away from these inefficiencies we see.

“Unless we get the private sector build pipelines, build infrastructure, tariff those infrastructure, then you’ll suddenly see the books of NNPC, government income, stability would all improve.

“More jobs would be created; you’ll have gas to power much easier.’’

According to Kachikwu, as of today, Nigeria has hit 7,000 megawatts of electricity but only has the capacity to distribute about 4,000.

“This means we have about 3,000 megawatts sitting there. What does it take? Infrastructure, so we’ve got to step out. All over the world, state by state you have about two or three power providers.

“They run their metering, charging the right tariffs for it, life goes on and they can do their investment in terms of generating the power.

“So they’re fundamental things that we need to do, especially in the oil industry but we are being very constrained.’’

He said if Nigeria had more Dangotes building refineries, the equation would change, as focus would shift from scarcity to export, thereby bringing down price.

On militancy, he said “militancy is in two directions: there’s criminal militancy and political or philosophical militancy.

“The ones we’ve tried to deal with are the philosophical militants where people are angry because of neglect.

“So, the 20-point agenda and all the things we are doing are geared towards getting a sense of belonging, fairness, development.

“There are, however, individuals who do it for quick gain, no matter what we do, you will always have people who puncture pipelines because it’s easy money.’’

He said although the government was sometimes handicapped by cash, time, tolerance levels on delivery of promises, continuous engagement and honesty had brought understanding between both parties.

“In some states, the militants just want to go to school; some are graduates but just need to work; some are angry that they are not given opportunities to work with the oil companies,” he said.

“So, sitting down with the local governments and agreeing on what to do and the way forward makes both parties happy.’’

On the promised modular refinery to each state in the region, he said two investors had shown interest and had begun to ramp up.

“There’s no barrier as to how many modular refineries in a state. It’s subject to availability of crude.

“My dream under this new concept is to see at least two per state actually begin well-funded, well-established, well-located, everything in place and they are actually beginning to build.

“Challenges to modular are that an average modular is about 20 million dollars; you need to have the right partners, right crude supply.

“On this, we just recently sent a team to Russia in connection with the modular refineries.’’

The Minister said current production was 1.6 million barrels per day, but that with recent fluctuations it was inevitable that Nigeria would get more crude-cut exemptions from the Organisation of Petroleum Exporting Countries. – NAN.

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