Countries should develop mega oil and gas projects as world financial institutions are getting reluctant to finance hydrocarbon-related projects
Nigerian oil and gas sector is currently facing liquidity squeeze as global financial institutions are reluctant in providing funds for hydrocarbon and related projects, the Executive Secretary, Nigerian Content Development Monitoring Board (NCDMB), Simbi Wabote, an engineer, has said.
He said the development was affecting production and exploration of oil and gas projects initiated by private companies and the Federal Government.
This happens as many countries are soliciting for funds to finance their economies and also transit seamlessly from fossil fuels to zero-carbon based nations.
Speaking at the sub-Saharan International Petroleum Conference (SAIPEC) organised by the Petroleum Technology Association of Nigeria (PETAN) in Lagos, he said institutions such as Afreximbank, African Development Bank, African Union (AU) and others needed to put in place programmes through which the continent can access funds for energy and other activities.
According to him, funds realised from the above-mentioned institutions, will help in financing activities in the oil and gas industry, especially local content programmes introduced by various governments in Africa.
Still on funding, Wabote said that the agency had, in recent times, spent over $500 million on local contents programmes in Nigeria.
The Board, he said, had extended low-cost credits to oil and gas companies, adding that the money has enabled them to finance manufacturing projects, acquire assets, conduct research, as well as helping women to develop their businesses.
Wabote further said that the Board was using the fund to finance modular refinery projects, gas processing plants, Liquefied Petroleum Gas (LPG) terminals, lube oil blending plants and methanol production, among others.
He said that the Nigerian Content Development Fund (NCDF) was accumulated through one per cent deduction from contracts awarded in the upstream sector of the oil and gas industry.
He advised countries to develop mega oil and gas projects, especially as world financial institutions are getting reluctant to finance hydrocarbon-related projects.
He said: “Let me use this opportunity to once again canvass for the creation of an African Local Content Fund. The fund can be used to set up a bank or finance institution, with a view to provide fundings for oil and gas projects in Africa.
“This is especially important against the backdrop of declarations by banks and financial institutions that they would no longer provide funds for hydrocarbon-related projects.”
Wabote described the recent spike in crude oil prices above $90 a barrel as an excellent opportunity for African oil producers and its service providers to develop new fields and further supply electricity to their people.
He noted that the price of crude oil had increased by 50 per cent in 12 months, urging African oil producers to leverage on the opportunity in order to prepare for energy transition globally.
NCDMB had in the last few years provided local content policies in order to boost activities in the nation’s oil and gas industry.
The development has seen many international oil companies (IOCs) creating local content departments, as well as ensuring that their programmes are integrated into the oil and gas services.
Through this means, many oil firms were made to build and use vessels that were assembled locally for some of their operations.