USA’s rejection of Nigeria’s oil: A wake-up call for diversification

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It has long been predicted that Nigeria’s crude oil reserves would be exhausted in a few years’ time. But the shocking reality facing the nation today, is that Nigeria’s crude oil may lose its relevance, even before it dries up. This is coming on the heels of the recent statement credited to the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, that the United States of America (USA) has finally stopped the importation of crude oil from Nigeria, following the boom in shale oil production by the Americans.

The Minister stated on Wednesday June 4, 2014, at a Workshop on the Petroleum Industry Bill (PIB) in Abuja where she was represented by Dr. Timothy Okon of the Nigerian National Petroleum Corporation (NNPC), that: “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 U.S. …This market called the shale oil and gas has resulted in Nigeria seeking new markets for its oil”.

In 2001, the British Petroleum (BP) issued a report on the quantity of oil reserves available worldwide and how long it would take to exhaust them. In that report, it was indicated that Nigeria’s (22 – 30 billion) barrels of untapped oil reserves, would be exhausted in 29 years time, if the production level (as at 2001) is maintained.

However, the possibility of Nigeria’s crude oil drying up in a few years, is not as imminently dangerous as the likelihood of the U.S. and other large-scale oil-exporting nations, discovering alternative sources of energy, even before our oil dries up. A situation where we have barrels of oil in the market, but no buyer, is indeed worrisome.

 

Lillian Akhigbe is  Communications Officer of Social Action.

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 percent of her crude oil to the US, but that gradually declined to 12.5 percent 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 to 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 U.S. is a wake-up call on the Nigerian government to adopt a sustainable economic strategy that would bring about the much-needed diversification.

We propose an imposition of a moratorium on the production of oil in Nigeria for a significant period of time within which the government would channel our resources to the development of renewable energy, as well as technology, agriculture and other sectors which have so far been regarded as subsidiary to the oil sector in terms of their importance.  It is often said that necessity is the mother of invention. If oil production is stopped, and the oil is left in the soil for a tangible length of time, this would cause Nigerians to seek innovative ideas at developing the non-oil industries in order to generate revenue and also to reposition the nation in the global market with the exportation of non-oil products relevant to the changing global economy. Besides, the environmental pollution caused by crude oil spillage over the years, has done so much damage to the oil-producing areas, most of which have not been cleaned up. Also, the gas flaring from industrial emissions during crude oil exploration promotes global warming and its harsh effects on the environment. Hence, it is absolutely justifiable for a moratorium to be imposed on crude oil production in Nigeria, in order for the government to pay full attention to the development of alternative sources of renewable energy as well as other non-oil resources.

Several policies aimed at diversifying our economy in the past have failed to yield the desired result, not because the government did not understand the need for a diversification, but because so much attention was being paid to the nation’s crude oil wealth and that has been a major distraction for our leaders. Debates on issues such as the allocation each state should get from the surplus oil revenue, has been given more priority than the optimal development of the non-oil sector.

So if oil production is halted, the government at all levels, would have no choice but to expend their energy, time and resources at their disposal, on other sectors. Agriculture for example, used to be the main stay of our economy. Before the discovery of crude oil in Nigeria, every region in the country thrived in agriculture to various capacities. We must relegate crude oil for a while and bring back the lost glory in our agricultural sector in such a way that we would have enough food to feed the nation and also abundant food and cash crops to export in trade to other nations.

Currently, the oil sector accounts for 95 percent of Nigeria’s export revenues. The risk of running an economy largely based on a single raw material is too high to sustain. With a major market like the US suddenly refusing to buy our oil anymore, the risk has become much higher, too high for comfort.

It is therefore pertinent for something drastic to be done to diversify the economy, for indeed, Nigeria’s sweet crude may lose its relevance, long before it gets exhausted.

 

A tribute to Dora Akunyili.

As the shocking news of Prof. Dora Nkem Akunyili’s death gradually sinks into our sub-conscious minds, we commiserate with her family and all Nigerians for the demise of a woman who was metaphorically called – a cat with nine lives, because she risked her life severally, in service to her nation, and all attempts made by her detractors to get rid of her, failed totally as she consistently – landed on all fours. We would remember her for her sheer bravery, when as the Director General of the National Agency for Food and Drug Administration and Control, NAFDAC, she courageously put her life on the line to free Nigerians from the menace of fake drugs and sub-standard food, and thereafter, as a Minister for Information and Communications, she was the first person in the federal cabinet who boldly stood up to the pro-Yar’adua cabal and insisted that GoodluckJonathan, then Vice President, be allowed to succeed the late President Yar’adua who was at the time, incapacitated on account of ill-health.

Dora’s legacy of courage and passionate commitment to the service of one’s nation, would not be forgotten in a hurry. May we have many more of her rare kind, in the nearest future.

 

For further enquiries,

please contact Social Action

on: [email protected];

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