afrol News, 26 August - Urgent measures need to be put in place to revive Nigeria's oil industry, which is deteriorating daily due to security, fiscal instability, and lack of funding, say stakeholders in the industry.

The escalating situation is further said to be seriously affecting economic growth of industry, according to chairman of oil producers' trade section (OPTS), Mr Basil Omiyi, calling for situation to be corrected.

Three factors have also been identified as major obstacles in development of oil sector, which leads to oil industry to deteriorate in production and restricting further investment into Nigeria oil sector with new possible investors opting to go to other sub-Saharan African countries.

Players in Nigerian oil industry such as Shell Petroleum Development Company (SDPC), point at security issues as most crippling. A select media briefing yesterday was told by oil producers that cases like kidnap and hostage attacks, with at least sixteen deaths so far, as well as crude theft, had already done too much damage.

Mr Omiyi also said with surrounding challenges, there was also a need to reinvest in Nigeria's oil sector, to revamp already existing infrastructure for enhanced output, explaining that due to inadequate funding, maturing oil fields are faced with increasing production decline rates of 10 to 15 per cent annually, while industry also needs additional costs to rejuvenate existing field facilities.

Other issues raised as hampering progress of Nigerian oil industry also included conflicts on deals between oil companies and government, some of which have had to face wrath of president Umaru Yar'Adua anti-corruption campaign.

Nigerian government and major oil companies are reported to have in past two years embroiled in sour deals blessed under past regimes in rather unclear terms.

Mr Omiyi, who is also country chair of Shell companies in Nigeria, also explained that for smooth running of oil sector in the country, there is a need for fiscal terms that are stable, balance risks and reward for the investor, and also yield an economic rent to the host country.

This, he said, would also enable Nigeria meet its oil and gas objectives of growing reserves to 40 billion barrels by 2010 and growing production to 4.5 million barrels per day.

Nigeria's oil operations have been hard hit mainly by crisis in Niger Delta, which has seen the country's production decline by almost a quarter. Militancy and violence has destroyed infrastructure while foreign interests have also operated under constant threat.

President Yar'Adua's government is also under pressure to resolve crisis in Niger, with a proposed consultative conference hitting against water-tight waves and threats of violence.

But, for industrialists, the Niger crisis could just be a simple issue of policing and cleaning the area of bandits.

By staff writer

© afrol News

Related pages and feature

Current afrol News Top Stories