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Future of oil in Nigeria’s economy falling faster than predicted —Kachikwu

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REFINERIES: Nigeria woos Saudi Arabia for investment

Nigeria’s immediate past Minister of State for Petroleum Resources, Ibe Kachikwu, has said that crude oil’s contribution to the mation’s economy will fall rapidly.

Currently, oil makes up 10 per cent of the country’s Gross Domestic Product even though it provides as much as 65 per cent of government’s revenue and nearly 90 per cent of foreign exchange earnings.

“The future of oil may be coming to an end faster than the twenty-year historical predictions. This does not mean that oil will not continue to be relevant,” Kachikwu said on Monday in a document titled, ‘The future of Africa without oil’.

According to him, oil will continue to be an essential component of the GDP and create funding for development in countries like Nigeria and Angola, which have 40 to 50 years’ proven reserves.

“But its contribution to those two key economic indices will continue to shrink…and fast too. So, common sense compels that serious focus on retooling the dependency basis of our African economy must begin,” Mr Kachikwu said.

Read also: Nigeria’s economy may contract from coronavirus lockdown next quarter –NECA

The International Energy Agency released its 2020 investment forecast earlier in June, revealing that investments in oil were falling.

He observed that two to four per cent growth in new investments was projected for the industry – both crude and refined – before COVID-19 set in.

“But with COVID-19, the lockdowns, the economic meltdowns, the crumbling of the travel and hospitality industry, and the crash of oil prices to all-time lows, the investment forecast turned out much worse.

“It is projected that new investment in the oil sector will be down by a frightening 20 per cent. This means that a lot of projected oil field developments, exploration and production, and even investments in refining will suffer.”

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