‘US rejection of Nigeria’s oil, time for diversification’

June 11, 2014

Dapo Falade-Port Harcourt

A non governmental organisation (NGO), Social Development Integrated Centre (Social Action), has called on Nigerian authorities to diversify the economy, noting that the reality is that Nigeria’s crude oil may lose its relevance, even before it dries up.

The organisation made this known in a press release issued in Port Harcourt on Monday, by its Communications Officer, Lilian Akhigbe, a copy of which was made available to the Nigerian Tribune.

It noted that while it had long been predicted that the crude oil reserves would be exhausted in a few years’ time, a recent statement credited to the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, that the US had finally stopped the importation of crude oil from Nigeria, following the boom in shale oil production by the Americans made the reality more alarming.

The petroleum minister had, last Wednesday, at a workshop on the Petroleum Industry Bill (PIB) in Abuja, said, “The global economy is changing and Nigeria must adopt sustainable economic strategy. I know many of you must have heard of the shale gas and the shale oil revolution. This has literally knocked out Nigeria from the export of oil to the US. This market called the shale oil and gas has resulted in Nigeria seeking new markets for its oil.”

Social Action said the possibility of Nigeria’s crude oil drying up in a few years, was not as imminently dangerous as the likelihood of the US and other large-scale oil-exporting nations, discovering alternative sources of energy, even before the oil dries up.

“A situation where we have barrels of oil in the market, but no buyer, is indeed worrisome. Nigeria, the world’s eight largest exporter of crude oil, is heavily dependent on the oil sector and available reports indicate that in 2009, Nigeria exported 43 per cent of her crude oil to the US, but that gradually declined to 12.5 per cent in the last quarter of 2013, owing to the shale oil surge.

“Before now, the Nigeria oil sector has been faced with challenges posed by certain factors which have affected the crude oil market such as oil theft, oil pipeline vandalism, oil spillage and wastage, sabotage, as well as an unstable oil price.

“While the sector still grapples with these economic problems, the recent pull-out of the US from the Nigerian oil market is indeed a big blow to the market and it brings to the fore an urgent need for a diversification of the nation’s economy.

“The Nigerian government must do whatever it takes to lift Nigeria from its mono-economic status by developing other sectors of the economy. While some stakeholders in the sector are calling for a passage into law of the PIB as a panacea for a robust growth of the petroleum sector, we believe that what is needed to be done, is much more than that.

“If the government is truly serious about the much-touted diversification of the economy into a multi-faceted economy, then the move made by the US is a wake-up call on the Nigerian government to adopt a sustainable economic strategy.”