Osten Olorunsola, says the recent breakout of the deadly Coronavirus, or COVID-19, and the ensuing oil crisis could worsen the state of the Nigerian economy
, and the ensuing oil crisis could worsen the state of the Nigerian economy if the federal government does not handle the aftermath of the global challenge with a sense of urgency and responsibility.
The point is that the oil price itself is going down as a direct consequence of the coronavirus that is fast spreading around the world and affecting the global economy. For countries like Nigeria, where its oil production capacity was already reduced from the usual 2.3 million barrels per day to below 1.9 million barrels per day, and also not getting high price from its exports, it poses a dire situation for the country’s economy.
Between 2005 and 2007, the country gave out oil prospecting licences to 77 new operators. Out of this huge number, only one of the beneficiaries has progressed to production. If we are not careful, we might get to a situation where, like we have so many cargoes on the sea today and nobody is buying them. Also, if we are not careful, we will even have this same oil under the ground and can’t bring it out to the surface, because the value has diminished.
I don’t think anybody who paid so much of his or her hard-earned money to acquire a licence for an oil block would not have expected that by now we would have seen oil wells or production going on. But, we are not seeing any of such things. PT: But, some of them keep talking about certain conditions bordering on port investment climate in Nigeria hindering their plans to develop the oil blocks.They will always give all sorts of excuses. If one wants to listen to excuses, one will always find excuses. Nigeria is not the only country in the world that gives out oil blocks and actually goes for it the way it is supposed to do.For me, the fault is on both sides, between the government and the licensees.
And another person will ask: Even the ones you gave out what has become of them? What have the beneficiaries done with them? If that is the case, does the government really need to give out any fresh licences at all?The answer is that 76 licences that were given out between 2005 and 2007 are still there and nothing is happening. Is there any justification to give out more?OSTEN:
If the PIB is not resolved, I can tell you that it will be very difficult to expect people to go into any bid round. This is because there is no basis for any investor to come into the petroleum industry if the conditions and operational terms are unclear.
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