The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has said that oil companies and other related financial institutions operating in Nigeria will not go bankrupt following the current volatility in the prices of crude oil in the international market.
Kachikwu explained that the resilient character of these firms will keep them up through the oil prices slide, that they would survive the price plunge despite its continued impact on their bottom lines.
The minister spoke at the closing ceremony of the Sixth African Petroleum Producers Association Congress and Exhibition (CAPE VI) in Abuja recently.
He however warned that only companies that would embrace new technologies and adopt innovative approaches to their business in the face of the price slump would survive the ensuing difficult operating environment which the low oil price has thrown up.
Kachikwu also stated in this regard that the federal government is driving oil companies operating in the country back to full time work as parts of strategies to overcome the situation.
He said the government is also looking at alternative funding sources for some of its oil projects as well as strategic partnerships that could help it deliver planned projects in the industry.
“I think anybody who wants to survive in this climate today would need to put on the hat of thinking. It is not business as usual, but people are going to survive.
“The nice thing about adversity is that you get to make huge successes also. Companies that are ready to embrace new technologies and strategies and new ways of doing things are going to survive,” said Kachikwu.
He then explained: “It is not going to be for too long. Nigeria for example, has put its strategies around getting the oil companies back to full time work, and we are still looking at alternative funding sources, we are still looking at diverging more into our gas products to complement our oil production.
“New idea on how to survive and how to multiply the sort of income that is available to you is key to survive. I think Nigerian companies are very resilient, they will survive.”
Speaking on his observation of a new attitude to oil revenues in oil rich countries and companies, Kachikwu stated that they have come to the sudden realisation of not only the need to cut cost, but also in ensuring the efficient management of proceeds from crude oil production and sale.
He advocated that African countries should open up their economic space to drive investment in the continent, especially in critical sectors like the petroleum sector and help buoy production.
“There is a sudden realisation that not only do we need to come together to cut our cost to see how to survive in this unhealthy petroleum climate but also that countries would need to do a whole lot more in terms of how they utilise the proceeds of production going forward.
“The unity is fine, the coming together is fine, I think what you will find is opening of the space so that investments will also come to Africa and its territories. Obviously people are concerned about how much you put in the value chain, to ensure you get the very best out of the very tight situation,” Kachikwu noted.
He also spoke on the unending fuel crisis in Nigeria, saying that the government was already considering the possibility of deploying information technology to monitor the fuel supply chain, perhaps because of reported cases of products diversion.
He said in this regard that the government plans to computerise the supply process from export of the product down to the sale of the product to motorists.
According to him, computerisation is one of the key initiatives that are being considered in tackling the fuel shortages, especially as it would enable the tracking of products discharged from oil vessels and tankers to depots and then what was loaded from the depots by trucks.
He explained that it would also help track what the trucks deliver to petrol stations and what was purchased by motorists.