Dwindling Oil Prices Evoke Fear in the Industry– Total MD

Dwindling Oil Prices Evoke Fear in the Industry– Total MD
Mrs. Elizabeth Proust, Managing Director and Chief Executive Officer of the upstream companies of Total

Prominent industry captains of the Nigerian oil and gas sector have admitted that uncertainty over the fiscal regime and low oil price are causing fear in the country’s petroleum sector.

The Managing Director of Total (Upstream), Elizabeth Proust, said there was fear even among employees in the sector and service contractors, about the future of the industry.

Proust, who stressed the importance for the sector, urged dialogue with the federal government on how to tackle some of the challenges facing the sector maintained that government had to understand that the operators are struggling.

“It is a difficult time that we face together. There is fear in our staff in all the companies. There is fear in the staff of the service contractors, and communities, but we have reasons to be optimistic”.

“We operate in an industry which can adapt and adapt very quickly. We need to be prepared to face, maybe, a long period with this level of price. It is not short- term impact; it is a long-term impact that we need to be prepared,” she stated.

Explaining that the oil industry is one where prediction is important in order to preserve work programmes, she disclosed that companies were at the moment reviewing their business plans due to the challenges.

On the impact of the low crude oil price on the company’s project, Proust explained that there was a major review of projects in Total globally, with projects now being prioritized.

“We are reviewing our plans, not only in Nigeria but worldwide. We are revisiting the economic feasibility of these projects with long span. The effect is that there will be ranking and priorities, and our shareholders to decide what project we go on with,” she said.

According to her, Nigeria needs to push for more exploration activities as it is the future of the sector, given the competition worldwide for investments in exploration.

“It is critical because for many years we have seen exploration activities decreasing and now there are very few exploration works planned this year. At Total we are doing one, but it is very difficult to maintain exploration. And exploration is the future. If nobody explores, there will be no production; there will be no assets divestment.

“We need to incentivize exploration. Companies have to be sure of the fiscal environment to be able to take the risk. We need to discuss with the government because exploration is the back bone of the industry in Nigeria,” she said.

Osagie Okunbor, the country chair of Shell companies in Nigeria, pointed out that with low oil prices and the uncertainties around the industry, there was need for all stakeholders to work together.

“We really need to come together and agree on the priorities we have. We all have a programme that we have agreed for 2015; most of that essentially started before this radical drop in prices. So both sides need to come together such that we don’t get into the business of stopping projects half-way and we end up incurring more cost”.

He continued “And also because we are in joint venture with the government, we need to have collaborative shared vision on ways of going about this. That way we achieve the best we can under the difficult circumstances without panicking or taking irrational decisions”.

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