The Department of Petroleum Resources (DPR) has unveiled its strategic plan and policy actions for the survival and success of participants in the nation’s oil and industry post Covid-19.
The Director of DPR, Mr. Sarki Auwalu, listed four key areas being pursued by the agency to ensure that the industry comes out of the market crisis very strong and sustainable.
Auwalu in his keynote address at a Webinar conference on “Nigeria Oil and Gas Sector: Surviving and Thriving Post COVID-29,” recently, listed the four areas as Cost control and management, Portfolio rationalisation and asset optimisation, New business and operational resilience, as well as Strategic partnership, contracting models, Service Provider Open Access, and shared Risks and returns.
The Webinar was organised by Future Energy Leaders Nigeria (FEL) in conjunction with World Energy Council (WEC).
Auwalu said: “There is no better time for strategic repositioning and business optimisation. 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 rationalisation and asset optimisation. For this, there would be project screening and maturation; and contract re –negotiation,” he said.
The third step to achieve strategic repositioning and business optimisation 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.”
The director said the DPR had lined up some models for business survival post-Covid-19 among which, according to him are marginal field bid round; policy and regulations; business environment and investment drive; and making this year the ‘year of gas.’
He stated that the pandemic had caused a shutdown of markets globally with impact on all key sectors of global economy, pointing out that, global tourism, travels, hospitality and SMEs were also affected.
He noted that the energy sector received a major hit during the lockdown as transportation was ground to a halt.
“For instance on April 20, 2020, WTI crude oil slumped into negative for the first time, falling to negative (minus) $37 .63. The United States unemployment rate in April and May 2020 reported as 14 .7million and 13 .3million respectively compared to H22019 average of only only 3.6million. Worldwide statistics follow similar trend,” Auwalu said.
Stressing the importance of oil to the Nigeria, the DPR boss said that the sector oils the wheels of the Nigerian economy as it contributes approximately 10 per cent to Gross Domestic Product (GDP).
Auwalu further said: “The sector is also responsible for about 80 per cent 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 would have must learn to work & live around it.”
“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, work tools and electronic media resources, businesses ‘must swim to remain afloat or simply drown’ and to know that challenges creates opportunities.”