Interview: Mohammed Sanusi Barkindo

How important is reform to the future development of Nigeria’s oil industry?

MOHAMMED SANUSI BARKINDO: Restructuring Nigeria’s oil industry, a central plank of President Muhammadu Buhari’s reforms for the country, is vital to the development and expansion of its oil sector. The country has great potential, with over 37bn barrels of proven crude oil reserves, but to ensure this potential is met a steady hand is required to guide the industry through the challenging times it faces both at home and globally.

The focus thus far has been on reforming the Nigerian National Petroleum Corporation (NNPC), targeting missing barrels and illegal crude transactions, looking at the fiscal terms under which the industry operates and providing more regulatory certainty.

There is no doubt that significant steps have been taken. NNPC is undergoing restructuring into seven new divisions, major efforts have been made to reduce crude theft and return stability, and industry stakeholders have held talks about how best to attract the critically needed new investment to the sector and deliver future cash flows to the country.

The streamlining of Nigeria’s oil industry in the years ahead will be crucial for the country’s development. I am confident that through the oil reforms being initiated the government will find permanent and stable solutions to the challenges it faces.

To what extent have OPEC’s members been affected by the volatility of global oil prices?

BARKINDO: All OPEC member countries – in fact, all oil producers – have felt the impact of falling prices and the volatility that has come with this. It is clear that some OPEC members have been hit harder than others, and there are varying degrees of reliance that each country has on petroleum revenues. However, the revenue derived from petroleum plays an important role in the economic and social development of each nation’s young and expanding population.

From the perspective of the oil market and the economies of OPEC members, it is vital to reduce the levels of volatility seen recently. It is in everyone’s interest to see more stable markets, and to see prices at levels that enable producers to earn a reasonable income and to invest in the necessary production capacity so as to ensure that consumer needs are met. I should also highlight that we are seeing many countries use the situation of lower oil prices to create incentives to use energy more efficiently and implement sustainable policies that could lay the groundwork for more diversified and less energy-dependent economies. I believe it is becoming increasingly crucial for oil producers that still depend heavily on oil revenues to look to other sources of income. Diversity, in this regard, is vital.

What is OPEC’s view on the Paris Agreement reached at the 2015 Climate Change Conference?

BARKINDO: OPEC welcomes the agreement made in Paris in December 2015. The environment and climate change are concerns for us all, and all our member countries were part of the Paris Agreement, submitting their “intended nationally determined contributions”. However, we do need to be realistic about our energy future. Can renewables meet the energy needs of the world? No, they cannot. Do we need all energy sources? Yes, we do. Are fossil fuels going to remain the mainstay in the coming decades? Yes, we believe they are. It is important to stress that environmental protection and the use of oil and gas are not mutually exclusive. We can still use oil and gas and have a cleaner environment – and this means focusing on technologies. At OPEC, we recognise the importance of continually looking to advance the environmental credentials of oil, both in production and use. In OPEC member countries, technology-related initiatives – in terms of research, development and deployment – are being carried out every day.