Nigeria’s Minister of state for Petroleum Resources disclosed that a potential investment worth $8.5 billion has been agreed with the China North Industries Corporation (NORINCO).
The investment is geared towards building and upgrading infrastructure in Nigeria’s oil and gas sector as Dr. Kachikwu Ibe is in China in an attempt to woo investors.
Dr. Kachikwu told Bloomberg on Tuesday, “A lot of the companies are responding positively. We just came out of signing a global $8.5 billion potential investment by one of the companies, NORINCO, in the upstream business in Nigeria,”
“We are beginning the major roadshow this afternoon (yesterday). We are looking to raise about $40 to $50 billion which covers the infrastructural gap that we see in Nigeria, so the interest has been enormous.”
The minister, while justifying Nigeria’s decision to turn to China for such huge investment, stated that: “The reality is that countries like Nigeria haven’t really overtime invested in covering the infrastructural gap in the oil sector, whether it is in the downstream where the pipelines are issues or the refining facilities where the refineries are a challenge, or the gas and power area where there is need for a lot more massive investment to carry the gas to the point of power and get them to export potential.
“The need for new resources is very key and we do not have those resources. Going to places like China with a huge capacity to put in the oil sector is very helpful.”
He said Nigeria, even with drop in global oil prices, still offers investors from China and other countries huge returns on investment.
According to him, “As much as I do agree that the price of oil has fallen, obviously and created a lot of challenges for investors, but the reality is that for countries like Nigeria, and most OPEC countries, you will still find out that per cost per barrel of oil still provides enough incentives and what we need to continue to do is to continue to drive down our costs; create policies that are encouraging and obviously focus government’s attention to the long and short term gains and encourage investors both from the point of view of investing in Nigeria and how Nigeria impacts on the rest of Africa as this continues to be an attractive region to put money.”
He also touched on the volume of oil production following a spate of militant attacks on oil installations in the Niger Delta region.
“All the way from January right through to April of this year, we were producing about 1.9 to 2.2 million barrels per day which is still within the threshold that we budgeted for the year.
“In May and June, we suffered a lot of militant attacks which took us all the way down from 2.2 million barrels to about 1.3 million.
“We have managed to begin to lead conversations with the militants. We have been able to get production back to about 1.9 million barrels a day, we are continuing those conversations and by the time the Forcados pipeline is repaired in July, we should be able to come back to expected to the production ceiling for this year of 2.2 million and begin to look whether we can increase a bit to enable us recover the two to three months hiatus that we had.
“And so, things are looking up, engagements are going on well, we have been able to make inroads into those conversations but what is important is the need to continue that momentum and to look to long term solutions to the Niger Delta crisis that creates the militancy that we have,” Kachikwu stated.