 |
| China to cut back on Nigeria Oil? |
IF the shale oil revolution in the United States hasn’t quite set the managers of Nigeria’s economy in panic mode, perhaps, the latest developments from China – a country with equally humongous appetite for Nigeria’s oil – should.
Like the United States which moved from being the number one buyer of Nigeria’s crude only a year ago to a distant 10th place in recent time, China, according to reports, is also considering massive cuts in its current 900,000 barrels per day imports from Nigeria.That is not good news for Nairaland
Addressing officials of his Communist Party, Chinese President Xi Jinping would observe that “the country needs a revolution in the way it produces and consumes energy, as demands continue to rise and supply challenges mount” just as he gave hints of measures to “restrain irrational energy consumption” through controls on energy use within its 2011-2015 energy sector plan.
By supply challenges, the Chinese President of course meant the comparatively long shipping distance from Nigeria’s Shell’s Bonny Export Terminal to Tianjin, China –some 12,172 miles, compared with United States’ New York Harbour of 5,847 miles. Asian refiners are said to be pushing for discounts on Nigeria’s crude as a way to maintain some competitive edge.
For a country that has come under harsh criticisms over its environmental policies, the push by China towards conservation, and hence optimisation of energy use could not have come at a better time. While it seems the least that the world’s leading energy consuming nation could do at this time, it is a matter of its enlightened self-interest that it pushes to source its energy from sources that assure its global competitiveness.
What lessons does the development hold for Nigeria’s macro-economic stability?
The first must be the continuing folly in wholesale export of Nigeria’s crude. Nigeria only need to recall the lessons of the 1980s to appreciate that the current boom in commodity prices would not last forever. To better appreciate the scenario, it seems unimaginable that the US which took a large chunk of Nigeria’s oil is already pushing to relax the regulation barring exports of crude oil in the immediate aftermath of the shale oil revolution. Today, US crude oil imports are reported as having declined to its lowest levels in 15 years – the result of new fuel efficiency standards. Of course, it seems only a matter of time before the two factors take their toll on energy prices.
Secondly, short of describing the current regime of fuel importation as treasonable, it is, to put it mildly, irresponsible. Spending a huge chunk of Nigeria's reserve to bring in refined crude after exporting our raw crude remains a most unpatriotic practice to engage in. Not only does it perpetuate the structural dependence of the economy on the international cartel of oil traders, it
denies the economy the multiple benefits of economic linkages from processing the crude locally.
denies the economy the multiple benefits of economic linkages from processing the crude locally.
Unfortunately, whereas the developments in US and China provide evidence of how much the leading energy consumers are taking proactive steps to curb their appetite for imported oil, it does not appear to have registered to a producing country like Nigeria which continues to fritter its hard-earned resources on wasteful avenues, including refined petroleum products in the absence of a coherent energy policy. Today, the absence of such policy is just as true in the oil and gas as it is of the alternative energy source, coal, known to exist in abundance but lies untapped.
Today, nearly two years after, the much hyped Petroleum Industry Bill (PIB) said to provide comprehensive framework for addressing the challenges of the oil and gas sector is in the doldrums. While multi-million dollar investments are said to be on hold as a result, Nigeria's National Assembly is yet to find the presence of mind to pass the critical legislation.
Perhaps, one good way to start addressing the challenge is to urgently pass the law.
source The Nation