KPMG explains drop in Nigeria’s crude oil reserves

Global Chairman, Energy and Natural Resources Sector, KPMG, Michael Soeting, has given reasons why Nigeria’s crude oil reserves is depleting.

Soeting, who spoke at a press conference in Lagos at the weekend, attributed the development to non-availability of investment in the oil and gas sector to boost reserves in line with international practices.

He also said tax holidays given to indigenous operators who took over some marginal fields from the International Oil Companies (IOCs) is responsible for the depletion.

He noted that Nigeria’s economy depends on crude oil export and there is need for the country to do it right.

He said: “Non-passage of the Petroleum Industry Bill (PIB) has resulted into investment apathy in the sector. The IOCs are uncertain about what the fiscal terms in the PIB would become after passage and they have refused to invest.

“Unfortunately, more countries are becoming energy players across the world, creating alternative markets for the IOCs to channel their investment. After discussion on PIB was introduced about 10 years ago, countries like Ghana, Mozambique Angola and others have discovered oil and already attracting investment from IOCs.”

Similarly, the Head of Tax, KPMG, Victor Onyenkpa, said Nigeria should expect the abundant crude and shale gas resources scattered globally to lead to reduction in crude oil prices.

He explained that in order to avert shock on the economy as a result of falling crude oil prices in the future, Nigeria has to produce more by attracting investment to grow its reserves.

“This may also provide for us, the opportunity to diversify by improving power supply, building more gas infrastructure and adding value to our crude oil by refining domestically rather than just exporting,” he said.