INTERNATIONAL Oil Companies (IOC) operating in Nigeria said yesterday that if cases of insecurity should continue in the oil and gas producing zones, they may be forced to stop the production and supply of gas, just as they urged the Federal Government to better police the explosion zones.
The International Oil companies, which expressed their worries over the increasing rate of insecurity and incursion on their facilities, stressed that this has culminated in Mobil Oil Producing Company especially threatening to shutdown production today.
Expressing their ordeals yesterday at the House of Representatives Business Dialogue Series organized by Business Wise Ltd at the Transcorp Hilton Hotel, Abuja, representatives of the oil firms noted that it has become imperative for the Federal Government to beef up security if the set target of becoming one of twenty largest economies of the world must be achieved.
According to the oil firms that include Shell Petroleum, three gas plants such as those at Sogun, Otorogun and Obed are already shut down due to insecurity, even as they said that as oil companies operating in Nigeria, they were not getting the desired cooperation from the security agencies.
Speaking at the forum, Manager, Government and Business Relations, Mobil, Mr. Charles Ndiomu who noted that besides security problem being faced by the company, Mobil requires a high pressure pipeline that is needed to deliver its products to the market as it operates in the Eastern parts where infrastructure have broken down completely.
Also in his remarks, the Chief Executive Director, Exploration & Production, Nigerian National Petroleum Corporation (NNPC), Dr. Chris Ogiemwonyi who confirmed that the security setback has already reduced gas supply to power stations, said it has a serious adverse effect on power supply.
Ogiemwonyi, who noted that the House of Representatives had in the 2008 budget facilitated the allocation of $15billion to the upstream from the usual $8billion, said if the 2009 budget gets similar financial support from the lawmakers, Nigeria would be able to generate the 6000mega watts or 90 percent of the power target.
Ogiemwonyi who however commended the Joint Venture Companies for what he described as improved supply from Shell and Mobil as current players in the supply of gas in spite of the problem of insecurity, said, ““Next year there will be a modest growth, NNPC will contribute 100million standard cubic. By the end of this year, there would be 4,600mega watt supply of power. Most of the projects are down by 2009 the project on gas supply will be accomplished, although security issue must be addressed. The gas supply is now down to 100million standard cubic feet per day.
“If there could be better patrol agency there will be prevention and gas will be provided on daily basis but Soku is the major problem we have.
“It has now been heavily infested by sea pirates/ militants and all the vessels now have to be escorted.
The support from the agencies is insufficient. Services companies do support, although they have their own challenges. If it continues, we may not be able to supply gas to the stations. Indeed, closing the gap is the basic issue. If we don’’t address the issue our discussions are in jeopardy.”
It would be recalled that power supply in Nigeria is now far below 3,000megawatt.
In his summary of their experiences to the Speaker, House of Representatives, Dimeji Bankole, the Chairman, House Committee on Gas, Hon. Ugo Ajuma who noted that, “three plants are shutdown at Sogun, Otorogun and Obed but Sogun has recorded about 100 bunkering points, said, “the major issue is security.
The oil companies are not getting the desired cooperation from the security agencies so Mobil is under the threat of shutting down if nothing happens today and tomorrow”.
According to Ajuma, by next year, Nigeria would invest $5billion in the upstream sector to meet the targeted 2billion cubic standard feet of gas, just as he stressed that the major challenge in the upstream remains the Nigerian content.
According to him, “to have 6,000mw by next year, the Federal Government is pursuing domestic gas availability. There is a mixture between oil, gas and power, so we would discuss freely the challenges between the Oil Companies for the quantity of gas before them next year.”
In his contribution on the security problem in the oil region, Chairman, House Committee on Petroleum(Upstream), Bassey Otu who reiterated that government released N400billion for security last year, said, “We really need to know how to solve this problem. We don’’t need hide and seek game. Let us know whom these militants and bunkerers are. A lot of money has been released, let us know them and to arrest them.”
Also contributing to the discourse, an Independent Power Plant Licensee, Mr. Cyril Agbego stressed that failure on the part of the Nigeria Electricity Regulatory Commission (NERC) to implement the Power Purchase Agreement (PPA) has contributed greatly to the problem of power sector in the country.
In his contribution, the NERC Vice Chairman, Abdulraheem Ado explained that stakeholders need 15 to 20 years PPA even though the law stipulates only 10 years.