Potential investors in the Nigerian Oil sector have been left in panic-mode, questioning the Nigerian Oil sector, following the recent cancellation of the exploration rights awarded to a South Korean consortium in 2005, which is the second successive Oil License cancellation under the country’s past and current administration.
Another source of worry for oil investors in Nigeria is said to stem from the fact that the country has had an alarming number of oil contracts, that were signed during the regime of former President, Mr. Aremu Olusegun Obasanjo, revoked.
These happenings have rallied oil investors into demanding for some assurance on the part of the federal government and oil ministry authorities — they want to be provided a stable environment for their businesses to blossom and their investments to pay-off. However, the government has done little to encourage the investors as there have been huge delays by the National Assembly to pass the Oil and Gas Sector Reform, which experts say is key to attract substantial investment and introduce healthy competition that will guarantee availability and affordability of petroleum products.
Some experts have also asked that the oil sector be fully deregulated if the funding problems the country faces must be ended. To this regard, the Federal Government has planned to reshape the Nigeria National Petroleum Corporation (NNPC) to make it commercially beneficial.
At the ongoing Nigerian Oil and Gas (NOG) Conference holding in Abuja titled: ‘Increasing the Supply of Affordable Petroleum Products – Deregulation and Investment Opportunities,’ the petroleum minister, Mr. Odein Ajumogobia, yesterday stated that deregulation was the response to two principal challenges.
The first, the minister said, is attracting the substantial investment capital required and secondly, introducing competition to stimulate efficiency and effectiveness. “I think there is a broad consensus that public ownership of facilities and government regulations of the prices of petroleum products have been unable to concurrently attract the capital required to improve the supply of petroleum products to meet its growing consumption need and at the same time achieve efficiency and innovations often associated with the private sector.”
Mr. Odein Ajumogobia also revealed that “experiences gathered from the telecommunications and banking sectors had shown that the reform of the country’s petroleum market is a critical component in the development of the economy and liberalizing markets. For the corporation to be a commercially-oriented and quasi-autonomous company, the National Assembly would have to provide it with a new legal status.”