Drawing the linkages between the oil and gas industry with other sectors of the economy, particularly maritime, is one of surest ways to achieve sustainable economic growth, according to the Department of Petroleum Resources (DPR).
The Department also disclosed that the basis for this synergistic relationship has been laid down in policy documents and plans, including the Economic Recovery and Growth Plans (ERGP), and Nigeria Economic Sustainability Plan (NESP), as well as the resolution of the Federal Executive Council (FEC), on the Oil and Gas Policy and a host of others.
The Director/Chief Executive Officer, DPR, Auwalu Sarki, spoke at a media event in Abuja, themed: Enhancing Effective Synergy Between Oil & Gas and Maritime Sectors for Greater Value Creation, during which he had received an award for his outstanding leadership of the petroleum regulatory agency.
He said: “For hundreds of years, the maritime and the oil and gas industry have enjoyed Siamese-twin type relationship, creating and sharing value together. As an example, the maritime industry is responsible for hauling oil and gas all around the world while oil and gas has fuelled the maritime industry. Imagine about 700 million barrels of crude cargoes and 22 million tonnes of LNG are transported by over a thousand ocean going vessels from Nigeria to destinations across the globe annually!”
He noted that the Federal Government has shown commitment to fortifying the Nigerian economy by enhancing functional linkages and entrenching synergy amongst the critical sectors of the economy.
Sarki reiterated that the petroleum industry is a value creator for the national economy, not just for its capacity to generate a significant proportion of government’s revenues and foreign exchange earnings, but also for being an enabler for the industrial value chain.
“For instance, it has been established that a barrel of crude oil at $20 can generate as much as a whooping $2,000 value to stretch the commodity down the chain.”
Accordingly, he charged Nigeria not to be content with just producing and exporting its hydrocarbon resources, but to add value through refining, and petrochemical to earn more.
“This Government realises this fact and all the elements for sustainable in-country value addition are being emplaced through policies and programmes designed to position the Nigerian oil & Gas sector regionally and in the global arena. Notable among the programmes are the Refinery Revolution and Decade of Gas initiative, both geared towards increased in-country utilisation of petroleum to drive industrialisation, job creation, poverty eradication and additional contribution to GDP,” Sarki said.
Similarly, he noted that just as petroleum is critical to industrialisation, the maritime sector is the backbone of global trade for the transportation of raw materials, components or finished goods by sea, of which Nigeria is a significant part.
Shipping, he said, connects the world and ensures that the benefits of trade and commerce are attained, which in the case of the Nigerian economy is readily measured in at least three ways – contribution to the gross domestic product (GDP), employment, and tax revenues.
Put into context, he noted that while maritime accounted for about 90% of foreign trade worth N36.1trillion in 2019, according to the Nigerian Bureau of Statistics (NBS), petroleum and allied products accounted for about 76% of the export.
Besides, he admitted that fuel prices and availability is a major cost-driver in maritime transportation accounting for as much as 60% of a ship’s operating costs. “Thus, steady rise in oil prices just as what we are experiencing now, will invariably result in increased freight cost for petroleum and other cargoes and have the potential to significantly undermine the trade. A recent study by the United Nations Conference on Trade and Development (UNCTAD) confirms this trend with a 10% increase in oil prices impacting the cost of shipping crude oil by almost 3%.”
Furthermore, high fuel prices continue to influence new designs for more fuel efficient ships globally phenomenon, to which DPR is driving availability and, to some extent, the affordability of fuels through the Government’s refinery revolution and private sector led initiative.