The Petroleum Natural Gas and Senior Staff Association of Nigeria (PENGASSAN) has raised the alarm over how some Nigerian oil companies are not adequately optimising assets that were divested to them by International Oil Companies (IOCs).
PENGASSAN revealed that a lot of local companies produce without a plan of how to develop the oil wells and increase production.
President of PENGASSAN, Festus Osifo, said this during the sideline of its just-concluded energy and labour summit in Abuja, where he lamented that this had been a huge challenge, following the divestment of assets by IOCs to Nigerian oil companies.
According to him, initially, oil wells were producing about 100,000 barrels, but today, none of the wells are producing close to 20,000 barrels daily.
Noting that divestment was not a bad idea as it could give opportunities for local content, he faulted the inherent challenges of mismanagement, under-capacity utilisation, and challenges of financing to attract more investment and remuneration for members.
He said: “How have the assets that have been divested in the past been managed? In a situation where SPDC shut down and divested some of its Joint Venture (JV) assets, how have they been managed? Some of the companies that these assets have been divested to are bought by these companies, and we have realized that what a lot of them do is that they produce without a plan of how to develop the wells and increase production. It has been a problem. Initially, the wells were producing about 100,000 barrels, but today, none of the wells are producing close to 20,000 barrels. This is a real challenge.
“Another is the issue of financing. The IOCs could attract finances globally at concessionary interest rates, but the local companies in Nigeria cannot attract the level of finance that IOCs do and, therefore, cannot inject the necessary finance into companies that they have bought. They continuously produce and in the end, the well will run dry.
“We are also facing the challenge of NAOC trying to exit the JV and selling assets to Oando. We ask what the financial arrangement is. We fear that Oando might be like others. From our investigations, we realized that a lot of these institutions that have bought into the JV that they are owing counterpart funding up to billions of dollars and are not able to pay. Will they be able to take care of our members? These are real challenges and we must find a way to deal with them.”
Source- The Guardian Newspaper