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Minister of Oil speaks on increased production and price

Minister of Petroleum Resources, Mrs Diezani Alison-Madueke declared as a result of the increased production of crude oil that Nigeria is earning about $282 million (about N42 billion) from oil revenue daily. Her quote, ."Nigeria now earns average revenue of over 282 million dollars per day from crude oil-based on the combined daily production figure of crude and condensate which stands at 2.4 million barrels. "  She continued, “Many of you will recall that eight months ago, the nation’s crude oil production was as low as one million barrels per day. However, as I speak to you today, thanks to the vigorous implementation of the Amnesty Programme of this administration, the story is different.”  Nigerian President Goodluck Jonathan has been successfully implementing Amnesty Programme and it makes all the difference.

Mrs Diezani Alison-Madueke disclosed this at Lagos rally of the ongoing national campaign of Peoples Democratic Party Presidential PDP)

Speaking on job creation she continued, "By giving our country a Nigerian Content Act, the President has reversed the trend. This means; a retention of $10 billion out of 20 billion average annual industry expenditure, creation of over 30,000 direct employment and training opportunities, and the establishment of three to four new pipe mills to service industry demands, as well as the development of some dockyards and utilisation of existing shipyards among others."

Mrs Diezani Alison-Madueke said, "Petrochemical plants are fertilizer plants that will increase our agricultural and food production, and methanol plants that will boost industrial production with a combined initial investment of about $20 billion. This will result in the creation of over 300,000 jobs across the nation."

Oil Rig  Pic:vanguard

According to Dily Trust Newspaper, "Mrs Madueke said that plans are on to speed up the process leading to the construction of three proposed Greenfield refineries in Lagos, Kogi and Bayelsa states to totally eliminate product importation while assuring that the ministry through the NNPC has intervened to ease off the recent artificially induced gap in the supply and distribution of kerosene in some parts of the country through massive injection of extra volumes of kerosene into the market to force down the price.

It means increased average revenue for government with which this administration is now using to provide the much desired dividends of democracy to the citizenry. Whether you look into education, roads or health care, there is improvement in the provision of these services to the citizens of this nation,’’ the minister stated.

Mrs. Alison-Madueke stated that in the weeks ahead, the Federal Government through the Ministry of Petroleum Resources will execute some binding MoUs with a consortium of International Oil and Gas firms for the construction of a Petrochemical plant and some fertilizer processing plants in Lagos and some other parts of the country valued at over $20 billion."

As a result of the onging uprising and instability in Middle East and North Africa the was a continous rise in the price of oil.  Nigeria appears to be gaining from the spike of oil price but it has its downside which makes implementation of Nigerian budget arduous. Moreover, it gives Central bank of Nigeria(CBN) more work to do with sudden rush of cash into the system putting more pressure on inflation. The good thing about increase of oil price is the subsequent replenishing of the country depleting foreign reserve. In reality oil market needs stability not gyrations of price that makes demand and supply unstable and unrealistic.

Mrs Diezani Alison-Madueke is fiirst and only woman appointed  Petroleum Resources Minister in Nigeria by President Goodluck Jonathan.

 

 

A large oil reserve estimated 2 billion barrels has been found in the Albert region of Uganda by oil firms Tullow Plc and Heritage Oil & Gas Company. The people of Uganda including President Yoweri kaguta Museveni are elated about the discovery. This is good news and with efficient management Uganda can say good-bye to poverty. Uganda can now increase her GDP and foreign reserve.

The oil discovered in Uganda contains less sulfur which is good but it is waxy with high viscosity. It does easily coagulate at room temperature making it difficult to extract and transport. Therefore it might be expensive to extract and refine. It is estimated that Uganda needs $8 billion to develop its oil infrastructure. Uganda does not have such enormous capital instead she will turn to foreign financiers and international financial institutions. Uganda must be deliberate, careful and calculative in order not give up her new found wealth by payment of high interest rate and arrears on loans for financing the oil development.

The East African country - Uganda is a poor country with majority of the population surviving with less than one dollar a day. In next two years the production, exploration and extraction of the oil will be in full force. Most of the oil produced will be geared towards internal consumption and the remaining will be for export.

Uganda is making arrangement with Norway to build a functional oil refinery in the country so she can process crude oil in her country and provide jobs to the citizens. Unlike Nigeria that refine her crude oil outside the country due the breakdown of her ill-equipped refineries, Uganda is making the right decision to use her oil to lunch industrialization in her country.

This is a big breakthrough for Uganda and 30% of the revenue to finance her budget comes from foreign donors. Therefore with this development Uganda will free herself from foreign donation and its attached strings. Uganda must live up to her international obligations with unwavering commitments to democracy, free enterprise and respect for human rights.

Uganda government and managers can now formulate economic policy to transform their country. President Yoweri kaguta Museveni has been talking about industrializing his country; with the new found resources he can lay down the industrial rudimentary that will prepare her country to take off industrially. The most important thing the government and policy makers can do is to train their work force with superior education that is needed to compete and perform efficiently in 21st century globalized economy.

With this new found wealth from oil, the country might be tempted to neglect the agricultural industry of the nation and relied on food importation to feed her people. It will be a big mistake with deplorable ramifications. The country must be vigilant and utilized the oil generated resource to booster agriculture in the country.

On agriculture, Emeka Chiakwelu, Principal Policy Strategist at Afripol said, "Agriculture is the future of Uganda and Africa for arable land must be cultivated. Oil can generated the capital to finance modern farming in Uganda. Africa must feed herself and Uganda can become food exporter. Oil is a limited and diminishing energy based commodity and its future is unstable with the emergence of renewable energy for 21st century. Uganda must diversify her economy, so she will not depend wholly on oil."

Uganda just like the rest of African countries is beset with poverty and corruption. If the government of Uganda is serious about improving the lot of their people, they must be aggressive in arresting the two mentioned problems. The government must explore the ways to improve the standard of the living especially in the rural areas. The basic needs of housing, light, clean drinking water and roads must be provided to ameliorate wellbeing in the urban and rural areas.

The environmental integrity of the nation must be upheld in spite of the temptation to relegate the issue of environment to the back burner. Oil exploration is associated with oil spill and air pollution that can pose a threat to the environment, which can devastate the ecosystem. Therefore this calls for standard of operation backed with best management practices to be formulated and implemented.

The issue of corruption associated with petrodollar is a reality in that part of the world. The poor people of African oil producing countries including Nigeria, Angola and Gabon are testaments and have not benefited from their country’s oil wealth.

The only panacea to corruption is transparency and open book. The news coming from Uganda that the government is not disclosing the contracts they signed with the oil companies is not encouraging.. Uganda claims to be a democratic nation and in democracy the power belongs to the people. There must be an open book, transparency and probity in order to avoid the curse of oil wealth in the east African country.

 

Thursday, 24 June 2010 21:14

Africa Must Produce or Perish

Excerpted from a speech delivered by Philip Emeagwali to the African community in Valencia, Spain on May 11, 2008. The entire transcript and video are posted at emeagwali.com.
Imagine that it is May 25, 2063, the 100th anniversary of Africa Day, a day for reflecting on Africa’s successes and failures. The newspaper headline announces, “Last Remaining Oilfield in West Africa’s American Territory Dries Up.”

The article continues: “The last patch of rainforest will soon be empty land scarred by oil pipelines, pumping stations, and natural gas refineries. Wholesale pollution will be the environmental legacy for future generations.

“Africa’s offshore oil reserves will ebb away. Abandoned oil wells could well become tourist attractions, and oil-boom settlements will be transformed into derelict ghost towns.

“In a world without oil, air travel will disappear, and people will voyage overseas on coal-powered ships. Farmers will use horses instead of tractors, and scythes instead of combine harvesters. As crops diminish and populations soar, famine will grip the globe. With no means to power their vehicles, parents will be housebound, without jobs, and children will walk to school.”

This scenario could become a reality, because we no longer have an abundant oil supply. We know oil exists in limited quantities and that most oil wells dry up after 40 years. It is as certain as death and taxes. Rather than debate the exact year when we will run out of oil, I prefer to imagine that we have already run out. It may come sooner than any of us expect. Our heirs will thank or curse us for how much oil we left for them. Instead of asking, “When will Africa run out of natural resources?” we should ask, “When will Africa be unable to export raw materials, either for lack of our own oil or because foreign markets have themselves dried up?”

A $100 bar of raw iron is worth $200 when forged into drinking cups in Africa, $65,000 when forged into needles in Asia, $5 million when forged into watch springs in Europe. How can this be? European intellectual capital – the collective knowledge of its people – allows a $100 raw iron bar to command a 50,000-fold increase! It could be said, therefore, that a lack of intellectual capital is the root cause of poverty.

Without African intellectual capital, iron excavated in Africa will continue to be manufactured in Europe and exported back to Africa at enormous cost. To alleviate poverty, Africa needs to cultivate creative and intellectual abilities that will allow it to increase the value of its raw materials and to break the continent’s vicious cycle of poverty. Poverty is not an absence of money, Rather, it results from an absence of knowledge. 

In oil-exporting African nations, multinationals such as Shell (selling rigs for a 40% royalty on exported oil) are getting rich, while the oil rig workers remain poor. Instead of addressing the underlying causes of poverty – minimal productivity resulting from a lack of intellectual capital – Third World leaders have focused on giving false hope to their people. 

We need less talk about poverty and more action to eliminate it. So how do we do this? Education has done more to reduce poverty than all the oil companies in the world. So it is disheartening to realize that few leaders believe that their people’s potential is far more valuable than what lies beneath the soil.

Intellectual capital, not higher wages, will eliminate poverty in Africa. If we all demand higher wages, we will end up paying the higher wages to ourselves. Intellectual capital will result in the creation of new products derived from new technologies. The end result will be not just a redistribution of wealth, but the creation and control of new wealth.

And Africa’s power to reduce poverty will open the floodgates of prosperity for millions of people. One catalyst for such prosperity could be telecommuting. If 300 million Africans could work for companies located in the West (just as millions of Indians do), then both regions would benefit. The strategy would be to recognize the labor needs of the global marketplace, and enable Africa to fulfill those needs.

For example, tax preparation experts living in Africa, where labor is cheaper, could fulfill the needs of US-based accountants. Furthermore, the time difference could allow for a fast turnaround in service. It is clear that knowledge and technology is crucial to alleviate Africa’s poverty.

Africa will perish if it continues to consume what it does not produce, and produce what it does not consume. The result will be a depressing cycle of increasing consumption, decreasing production, and increasing poverty. We are missing a golden opportunity by not using the trillion dollars earned by exporting natural resources to break Africa’s cycle of poverty.

We are at a crossroads where one signpost reads “Produce” and another reads “Perish.” We risk becoming like the driver who stops at an intersection and asks a pedestrian, 
“Where does this road lead?”
And the pedestrian replies, “Where do you want to go?” 
“I don’t know,” the driver replies.
“Then it obviously doesn’t matter which road you take!” replies the pedestrian. 

If we adopt the same attitude as the driver, Africa will have lost its chance to “choose” its future. 

For decades, power in post-colonial Africa rested in the hands of those with guns, not those with brains. We were not always at war with our neighbors, but we were always at war with poverty. And we spent more on guns than on books and bread.

Africa’s choice is clear: produce or perish. However, it is important that we do not blindly choose the lesser of two evils – producing what we cannot consume or consuming what we cannot produce. We can avoid this. My wish is that by the end of the 21st century high-end products in New York City will sport the label: “Made in Africa.” 

We cannot look forward to our future until we learn from our past. Five thousand years of recorded history reveal that technology was ancient Africa’s gift to the modern world. Forty and a half centuries ago, geometers in Africa’s Nile Valley region designed the Great Pyramid of Giza, the last of the Seven Wonders of the Ancient World. That man-made mountain remains the largest stone building on Earth. It is an icon of engineering, and testifies that Africa was once the world’s most technologically advanced region.

It is absolutely imperative that Africa regain its technological prominence, which will enable it to produce what the world can consume. When we do that, Africa will finally be eating the fruits of its own labor. When Africa has regained its technological prominence, the world’s leaders will seek it out. And, like a rainforest renewed, Africa will flourish again.

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