STRATEGIC POLICY FOR THE SURVIVAL OF NIGERIA’S OIL INDUSTRY POST COVID –DPR

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By Mordi Chukwunonso

The Department of Petroleum Resources (DPR) has released strategic plan and policy for the survival and success of the industry post COVID-19.

In his keynote address at the webinar organised by Future Energy Leaders Nigeria(FEL) entitled; Nigeria Oil &Gas Sector: Surviving and Thriving Post COVID-19’’, the Director of the Agency, Engineer Sarki Auwalu underlined four key areas in which the country is organizing to stay afloat despite the difficulties posed by the Coronavirus pandemic on the economy.

‘’there is no better time for strategic repositioning and business optimization. There are four ways this can be achieved. There are four ways this can be achieved. The first which is cost control and management has to do with realignment of cost of production per barrel as well as corporate, business and financial stewardship

The second is portfolio rationalization and asset Optimization. For this, there would be project Screening and maturation; and Contract re-negotiation,’’ he said.

The third step to achieve strategic repositioning and business optimization is ‘’new business and operational resilience, which include vertical integration model covering the refineries; Operational Excellence; and Compliance.

The last in that stage is strategic partnership; contracting models; Service Provider Open Access; and shared Risks and returns’’, He said.

Auwala said the agency has underscored the following Model for surviving and thriving post-COVID 19 which includes Marginal field bid round; Policy and Regulations; Business environment and investment drive and making this year the Year of Gas.

According to the DPR Director, COVID-19 caused a shutdown of businesses and markets all over the world and has an impact on all key sectors of global economy. Stating that global tourism, travels, Hospitality and SMEs were affected, Auwalu maintained that the Energy Sector was a major hit, as a transportation was ground to a halt.

He gave an instance of WTI crude oil slumping into negative on April 20th, 2020 for the first time in falling to negative (minus) $37.63. The United States (US) unemployment rate in April & May 2020 reported as 14.7 million & 13.3 million respectively compared to H22019 average of only 3.6 million. Worldwide statistics follow similar trend.

The DPR boss, on the oil and gas and the Nigerian Economy, stated that the sector oils the wheels of the Nigerian Economy as it contribute approximately 10% of Gross Domestic Product (GDP)

‘’the sector is also responsible for about 80% of Government  revenues as it is also the principal source of foreign exchange earnings and Foreign Direct Investments (FDIs).

‘’There are, expectedly, direct impacts of falling oil prices on the country, which include; change in Budget benchmark as well as the Revised 2020 Budget. These have brought about a new normal also known as a new reality which is that COVID-19 may be with us for some time. The world must learn to work and live around it.’’

He continued,’’ the global economies gradual easing of lockdown; slow, sustained growth in the economy and changing work environment and work processes are signs that we will need to work and live around it. Others in this category are utilisation of online resources, Businesses ‘must swim to remain afloat or simply drown’ and know that challenges creates opportunities’’.

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