The Organisation of Petroleum Exporting Countries (OPEC) has advised Nigeria and other resource-dependent countries to diversify their economy in the light of declining global investments in the oil and gas sector.
Secretary General of OPEC, Dr. Sanusi Barkindo, gave the advise in his address at the 14th edition of the Nigerian Association for Energy Economics (NAEE) Annual International Conference in Abuja.
OPEC said Nigeria’s economy as well as that of other resource-dependent countries may be adversely affected, especially if the current push against fossil fuels continues to gain ground, hence the need for those countries to ramp up efforts to diversify its economy to avoid being caught off guard by the projected crisis.
It pointed out that to resolve the crisis a global cumulative investment of $12.6 trillion in the upstream, midstream and downstream would be required between now and 2045.
Barkindo noted that nations to be mostly affected have less cushion in place to deal with the devastating health and socio-economic outcomes of the predicted situation as well as less ability to immunise their citizens quickly.
He pointed out that the pandemic has had a devastating effect on the oil industries of poorer countries and that the accelerated energy transition in the light of the pandemic was encouraging a move away from fossil fuel usage and investment in addition to the likely suffering emanating from the effects of climate change.
“The energy security risk that would result from too little investment would heavily impact both producers and consumers. Oil-producing developing countries, like Nigeria, would be particularly hard hit. History has shown that energy insecurity brings with it economic insecurity and geopolitical instability.
“All OPEC members, including Nigeria, will have to re-strategise to maintain their positions in the new global energy mix, including focusing on economic diversification. Oil-producing countries, and in particular African countries that rely on oil and gas production for revenues, must create an investment friendly climate,” he stated.
Barkindo, however, stated that with the recent passage of the Petroleum Industry Bill (PIB), there was renewed hope in reviving the fortunes of the oil and gas industry in Nigeria.
He pointed out that reduced Foreign Direct Investments (FDI) into Africa’s oil industry could be catastrophic for many countries, noting that OPEC was greatly concerned about increasing pressure on the oil industry coming from many sides, including decision-makers, along with investors.
“Even within the boardrooms of oil majors, the push is strong to strive for policies and initiatives that could have a drastic negative effect on oil-producing countries. Oil is the lifeblood of our country, thus the importance of this issue cannot be underestimated.”
