So the latest news from the bigwigs at OPEC is that Nigeria's crude oil production has fallen from 2 million barrels per day to around 1.27 million. This sounds like bad news, anyone can see. And one would be foolish to suggest that a 37.5% decrease in crude production is a welcome shift for our oil and gas sector. But it's no reason to panic.
There are two reasons that put this latest news from OPEC in perspective.
Form is temporary, class is permanent
The first is that markdowns on production are never attributed to systemic failings, but one-off blips. It is a criticism only of our ability to produce, rather than our capacity to. It's like writing off a football team simply because it's too rainy to play a match. The latest news from OPEC blames the drop in production to the closure of two important export grades: the first being Eni's lifting of force majeure on Brass River crude oil exports from Nigeria, the second being Shell's closure of the Bonga field so that it can conduct maintenance.
Two fairly unremarkable and temporary events, even the most objective commentator could agree. And what's more, these occurrences were in February and March respectively so it remains to be seen how the rest of the sector has faired. In March and April we have had a stream of positive news coming from smaller producers and continued efforts from the government to mount intervention procedures to improve the security situation in the Delta.
IOC you later, alligator
The second reason is that our over-reliance on International Oil Companies (IOCs) is beginning to change. To date, and even today, we have been tripped up time and time again by our over-reliance on the production capacity and infrastructure provision of the multinational oil and gas players. OPEC blames the markdown on the actions of two large, overseas oil majors, Shell and Eni. There are several reasons that these two companies have been in the news recently, and all of them spell bad news for Nigeria! But the winds of change are blowing through the Delta and with it brings new life and livelihood for local content producers.
Here's why: we are on the verge of passing the most important piece of oil and gas legislation in our nation's history, the Petroleum Industries Governance Act, the government has diluted ties with the IOCs over Joint Ventures in its latest Economic Growth and Recovery Plan, and indigenous oil companies are flexing their muscles and showing that they can not just match the IOCs but outstrip them when given a chance! This can only mean greater opportunities and greater success for local producers. Greater independence, greater innovation and greater reward.