The
Minister of State for Petroleum, Dr. Ibe Kachikwu, has warned International Oil
Companies operating in Nigeria to stop treating the country like a “trading
colony” and instead invest in the energy sector if they want to retain access
to the nation’s resources.
Such
investment, according to him, includes crude refining locally.
Dr
Kachikwu stated this in an interview with Financial times where he lamented that Some of the world’s biggest
independent oil traders, had benefited for years from exporting Nigeria’s crude
and selling to the country refined petroleum products, without putting money
into developing the sector.
“We
have to get selfish on this,” “If you have been selling to me (refined)
products for six years and you can’t put a foothold in the country, then I
shouldn’t be buying products from you.”
Kachikwu’s
comments come as Nigeria faces an economic crisis, with the halving in oil
prices since 2014 and renewed militancy in the Niger Delta pushing the country
into its first recession in more than 20 years.
Until
recently the Organisation of Oil Exporting Countries’ member was Africa’s
largest crude producer. But dysfunctional refineries have left its 180 million
population reliant on trading houses such as Vitol, Trafigura and Mercuria for
refined fuel imports.
“Nigeria
cannot become a trading colony. I’m saying to them, ‘If you want to trade, put
your base here, do the refining here,’” Kachikwu said.
Oil
price fall is the main reason for tough times in Nigeria, with the country’s
status as Africa’s largest economy under threat
Some
trading houses have already invested in infrastructure in Nigeria, while others
have complained about the difficulty of doing business in the country.
Vitol
has built an import terminal for liquefied petroleum gas and invested in Oando,
the country’s largest independent oil conglomerate.
Industry
sources say a refinery tender this year for rehabilitating the country’s
processing plants, which had interest from foreign companies, was suspended
because of the political sensitivity around the prospect of even a
part-privatisation of state-owned assets.
Separately,
some of the biggest energy producers operating in Nigeria are owed billions of
dollars in arrears for joint ventures with the government. Many are shifting
their focus offshore as security concerns and payment issues mount.
“You
cannot coerce a company to invest. There needs to be a well thought out policy
in place to attract such investment,” said one oil industry veteran.
Last
month ExxonMobil agreed to sell its majority stake in its Nigerian marketing
and retail arm to a local company, Nipco Plc.
But
Kachikwu said he needed companies to invest in more infrastructure such as
refineries and pipelines, while the country was also seeking crude-for-loans
deals to monetise its untapped oil resources.
“The
petroleum industry got us here. It has got to get us out of here too. It (high
oil prices) spoilt everybody and we messed it all up,” he added.
The
former ExxonMobil executive said Nigeria was also in talks with governments and
could sign a preliminary $15bn five-year forward sales agreement with India by
the end of the year.
“You
have to be careful as to how many (forward sales deals) you take. You have to
tie that to your capability to produce and your ability to grow production,” he
explained.
Drawing
in foreign investors is particularly critical as the government struggles to
borrow from international sources of funding. Investors and lenders, including
the World Bank, have raised concerns about the government’s management of the
economic crisis, and plans for a Eurobond and foreign borrowing have so far not
come through.
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