HEINEKEN Lokpobiri, the Minister for Petroleum Resources (Oil), has said the federal government would not hesitate to take back oil assets, as only five out of 60 licences issued during the 2021 marginal oil field bid round are currently in use.
Lokpobiri disclosed this at an event organised by The Petroleum Club in Lagos.
According to him, FG is looking to ramp up crude oil production to boost revenue, and would not tolerate dormant oil licences.
“I don’t need to know you to renew or sign your licence and I will also not look at your face for me to cancel it. Out of those who benefited from the last marginal bid round, out of about 60, maybe only about five have started producing. Their licences will expire sometime this year because it is for three years, and renewable for another three years. But the condition is that you have a work plan. if you don’t follow your work plan, I also have the discretion to cancel it.
“If somebody has the marginal oil licence and can’t raise funding, you’re just impoverishing him,” the former senator mentioned.
He said the government would no longer allow any company or individuals to hold onto licences as souvenirs.
“The ‘Big Boys’ are holding on to these licences as souvenirs, they are not doing anything about them. That is why we are farming them out. We will not allow any company to do that. Let’s start to do things differently,” he noted.
The minister said, “The worst thing that will happen to Nigeria is for our refinery to be fully rehabilitated and we will have to import crude from another country. That’s why I’m here to engage you that together, let’s change this story.
“In solving the funding challenges, pull your resources together, go into partnerships, so that you can fund the investments in this sector”.
The minister said Nigeria had lost about $30bn to low oil production in the past two and half years, adding that increasing crude oil production would automatically drop the dollar against the naira.
Lokpobiri said, “For the past two and a half years, oil has been hovering around $80 per barrel. 480,000bpd, multiplying it by two and a half years will give you about $34bn. When I was on the table, I was doing rough mathematics.”
”If one asset was doing about 600,000 barrels; but because of the problems which we are trying to resolve, production declined to 120,000 barrels, which means we’ve lost about 480,000bpd. Multiply it by $80, every day you get about $240m; multiply it by two and half years; we are talking of over $30bn. Inject that into our economy today, the dollar will naturally drop. This exchange rate is a matter of demand and supply”.
Lokpobiri maintained that his target was to ensure the country ramped up production through investments and grow revenue, stressing that was the mandate given to him by President Bola Tinubu.
He said, “One of the things we want to do to ramp up production is to see that any idle well has to be allocated to people. The Petroleum Industry Act gives the opportunity that any well that hasn’t been used in the past few years could be farmed out and be given to people who have proven capacity to do exploration so that we can boost production.
“I am engaging stakeholders, the IOCs, the Nigerian National Petroleum Company Limited to say, ‘Look, if you have a multiplicity of oil wells and you are not using them, we will apply the law’
“One of the reasons why our production is low is because we have too many shut wells, some of them contiguous to our marginal fields or oil wells. But by the time we take those wells in line with the law and give you people, and we give a timeline upon which you must produce, we will be able to increase production.”
The latest report by the Organisation of the Petroleum Exporting Countries (OPEC), disclosed that the country’s oil production had depleted from 1.4mbpd to 1.2mbpd, a situation the minister said was being addressed to grow production.
The minister added that he was optimistic that Nigeria could produce more than 2mbpd if there is sincerity.