How did he do it? He listened to a different approach because the approach of the last 8 years was a failure!!! They say imitation is a form of flattery. If so, Nigeria needs to look to Venezuela to reform its fuel sector. Due to the policies of Venezuelan oil company PDVSA, the Venezuela are able to enjoy $0.19 per gallon or N6.12. The Venezuelan oil company, PDVSA, had decided that it was not the the crude oil export business but in the global petroleum and chemical business. So they invested in refining and retail business in Venezuela and almost all their export markets. These market include Europe, Caribbean, South America, Caribbean, Canada and United States. "PDVSA is among the leading corporations in the refining business, with a petroleum processing capacity of 3,285,000 barrels a day (1,285,000 barrels a day in Venezuela and 2 million barrels a day outside the country) through 24 refineries: six complexes in Venezuela, one in the Caribbean, eight in the United States and nine in Europe. I would advice the New President to seek counsel of the architects of PDVSA and also look to what Mr. Putin in Russia is doing to the oil industry."
I would recommend three strategic steps to revolutionize our oil sector. 1.NNPC should be come a government/public firm with part of it shares allocated for Nigerians. This will provide the company with a new direction and ownership need for the global challenges. By the way we have the money in form of excess funds.
2.NNPC should go on a buying spree with the aid of government funds to buy (outright or major) shares in refineries in Africa, China and United States. This will provide us with immediate source of refined products, opportunities to train our people and hard currency. Best of all this does not need the 18 to 24 months to build a refinery. This will also provide us a stop gag measure until we build more refineries. It is all about add value and we need to start doing that.
3.Start building 4 refineries and retail outlets to take care of the local demand as estimated for 2010. This will help put to rest the fuel challenges that we face as a Nation.
Background and answers For most of the people who are ?privatization supporters?, the believe
that private companies only will solve our oil needs at point in time is being unrealistic. After 8 years, 240% increase in price (N11 to N65), 17 licenses granted, zero refineries working and total dependent import. We must say that the Energy policy has been a failure. In most places the people responsible for this failures and continuing to push this failed approach would have been fired at year 2. Why did they fail? I will give you some reasons.
1.Lack of a Nigerian centric approach. Simply put lack of vision.
2.Corruption and not state owned inefficiencies are responsible for our ills. Most of the companies that are interested in Nigerian assets are government owned companies. Which means that state own or controlled companies are profitable and efficient. PDSVA in Venezuela is an example that currently owns 24 refineries worldwide and sells petrol at N7 per litre.
3.It takes lots of money to play and tonnes to compete in a global oil and gas industry. To llustrate this point the market value of Exxon Mobil is $474.12 billion, while the Chairman, NSP Refineries and Energy Services, Prof. Anya .O. Anya one of the companies granted license was not able to put together a mere $200million financing for a refinery.
And for those who want to charge western prices for petrol they should be willing to pay western market salaries. So we can afford to buy the petrol. The argument of paying for subsides is a non starter, because the multiplier effect on the economy when cost of energy is low is tremendous. Energy is like no other commodity. It accounts for a large part of cost of goods and therefore gives local companies the ability to compete with global companies. This will lead to a reduction in
imports of different products while increasing exports for our products. This double ?barrel effect? will more than compensate for the so called ?opportunity cost?. And we should remember when we establish refineries at home and aboard we will not only eliminate need for hard currency but will gain more foreign currency. For all those who keep on hoping on ?opportunity cost? they should stop listening to some foreign interest that are not interested in our well being. If they were these same countries and institutions will first stop stronger nations subsidies before attacking the poorer nations subsides. They keep calling for us to stop subsidizes continue subsidize their own people. Lots of countries provide subsides on several products. USA for example spent $20 billion in farm subsides in 2006 making it difficult for us to sell farm products to them. USA spent $6 billion on
oil and gas subsides. Also we must remember that most of these countries subsides are actually go to affecting the cost of goods like wheat because the cost of wheat is high. Unlike petrol where the cost of extraction and refinery has not change a lot since crude oil was $17.48 per barrel therefore the real subside would have not change if the government had fix and built more refineries in Nigeria in the last 8 years. The so called subsiding is not the same. We are not subsiding cost of product but the high price of crude(and mismanagement of our energy policies zero refineries compared to Venezuela's 24) which today is around $59.25 or 238% from 1999. Last but not the least, the oil
that we consume local are also not part of our OPEC quotas so we do not have any ?opportunity cost?.
I believe that there is need for the government to step into this issue because this is a matter of national security. A country that cannot provide fuel for its society, with the abundant supply of crude oil, will never improve We need to wake up and take take of ourselves.
We have been bless with natural and human resources and it is time to use them. God Bless Nigeria!!!!!!!!!
Apendix
Here is a Profile of Venezuelan Oil Company (Source Citgo a USA subsidiary)
PDVSA Profile
Petróleos de Venezuela S.A.(PDVSA) is a world energy corporation, owned by the Venezuelan State. Its operations cover the exploration, production, refining, transport and marketing of hydrocarbons, as well as the Orimulsión®, chemical, petrochemical and coal businesses.
Resource Base
Venezuela has the largest hydrocarbon reserves in the Western Hemisphere, representing approximately half the region's reserves, which positions the country as fifth in the world in proven reserves.
With the Orinoco Belt reserves, the country possesses the largest accumulation of liquid fuel on the planet.
Production
PDVSA has a production capacity, including the strategic associations and operating agreements, of 4 million barrels a day, while production exceeds 3 million barrels a day.
Refining
PDVSA is among the leading corporations in the refining business, with a petroleum processing capacity of 3,285,000 barrels a day (1,285,000 barrels a day in Venezuela and 2 million barrels a day outside the country) through 24 refineries: six complexes in Venezuela, one in the Caribbean, eight in the United States and nine in Europe.
Marketing
Venezuela generally exports 93 percent of its total hydrocarbon production. Approximately 54 percent of these hydrocarbon exports go to the United States and Canada.
Orinoco Belt
The production and upgrading of the huge extra-heavy crude reserves in the Orinoco Belt is being carried out by four strategic associations headed by PDVSA (Ameriven, Cerro Negro, Petrozuata and Sincor). Private-sector participation includes the U.S. companies: ExxonMobil, ConocoPhillips and ChevronTexaco; and the Europeans; Statoil and TotalFinaElf. Total production from these projects is planned to reach 600,000 barrels a day by 2008, following a $13-billion investment.
Socioeconomic development
PDVSA is genuinely committed to Venezuela's social and economic development, and is especially active in projects focused on health, education, environment, and local economy.
The State oil company has also begun a review aimed at integrating Social Investment into the framework of a vision of Corporate Social Responsibility that works directly with communities, and emphasizes the development of local small and medium-sized enterprises in oil-related and other sectors, especially cooperatives and microenterprises.
PDVSA in figures
Proven Reserves
Crude: 78 billion barrels
Gas: 148 trillion cubic feet
Production Capacity
Crude: 4 million barrels/day
Gas: 8.81 billion standard cubic feet/day
Refining Capacity
Domestic: 1.3 million barrels/day
Overseas: 2.0 million barrels/day
Current Production
Crude: 3.0 million barrels/day
Gas: 8.48 billion standard cubic feet/day
Orimulsion Production 6.2 million tons/year
Petrochemical Production 8.8 million tons/year
Coal Production 7.6 million tons/year
Sales 46.3 billion dollars
Exports to US: 1.5 million barrels/day
joe@nigeriansfor50000mw.com
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