‘Why economic diversification depends on oil, gas sector’s success’

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Oil-and-Gas sector
Oil-and-Gas sector

Stakeholders in the oil and gas industry on Tuesday said the success of economic diversification policy of the Federal Government depends on the success of oil and gas sector.

They made the assertions at the ongoing international conference organised by the Society of Petroleum Engineers (SPE) in Lagos.

The panelists, comprising industry experts, said government should prioritise oil and gas sector policy that would drive investment as it pursued its diversification.

Setting the tone for discussants, a former Minister of State for Petroleum Resources, Mr Odein Ajumogobia, in a keynote address, said that there was an increasing oil and gas consumption threat to Nigeria.

Ajumogobia said that the threat required pragmatic action on part of the government to reverse lack of development in the upstream sector due to lack of clarity in policy.

He said that Nigeria might go the way of Indonesia, which was a net exporter turned net importer of crude oil.

“Our long honeymoon is over. If we continue the way we are going, Nigeria might become a net importer of petroleum products.

“With its population growing at 3.6 per cent per year, if nothing is done about reserves replacement and production, we will soon go the way of Indonesia,” Ajumogobia said.

Contributing, Prof. Wunmi Iledara of Petroleum Economics and Policy Research, University of Port Harcourt, said: “If we have to diversify, the educational system needs attention.

“If the educational system collapses, there is no hope for diversification. We need human capacity to develop the oil and gas assets that Nigeria is endowed with.’’

Also, Mr Ademola Adeyemi-Bero, the Chief Executive Officer, First Exploration and Production Development Company Ltd., said that Nigeria could easily diversify into agriculture.

Adeyemi-Bero said: “This because of its multiple value chain developments and the fact that these developments will rob-off on other sectors of the economy.

“Other areas are the service sector, manufacturing, unlocking the infrastructure, which will have huge impact on employment and boost household spending.’’

In his remarks, Mr Austin Avuru, the Managing Director, Seplat Petroleum Development Plc, said to move from a rental economy to one that was more productive, Nigeria needed disciplined leadership.

“You must invest; put money aside for the rainy day. Nigeria and Norway started out at the same production capacity of 2.4 million barrels, decades ago.

“But, Norway today has a sovereign wealth fund of one trillion dollars and Nigeria struggled to save 1.5 billion dollars,” he said.

Contributing, Mr Andrew Nevin, the Advisory Partner and Chief Economist Pricewater House Coopers (PwC), said that Nigeria needed to develop its real estate sector with a growing population.

Nevin said, “the sector attract 125 billion dollars in domestic investment and 60 billion dollars in foreign investment annually.’’

Ms Amy Jadesimi, the Managing Director, LADOL, said: “We should get the local private to work in Nigeria as government still constitutes 99 per cent of the capital market in Nigeria.

“We need a level playing field; we need simple practical solutions; despite all the challenges, Nigeria is one of the most valuable markets in the world.”

NAN