Ernst & Young identifies top risks elements in Nigeria’s oil sector
By Joseph Bamidele
ERNST and Young, a global consulting Firm, with special interest in Taxation, assurance, transaction and advisory have identified top risks elements currently affecting the Nigerian oil and gas sector just as it also takes a look at possible solutions to help the federal government tackle the said risk elements.
Speaking at a breakfast meeting to discuss issues in the sector with major players and operators in Nigeria’s oil industry the company’s senior partner in charge of Africa Oil and gas Elias Pungong identified the Nigerian economy’s key features as Large population, weak infrastructural and institutional framework, rising GDP per capita, huge natural resource base, policy uncertainty, improved structural reforms especially in the banking sector, political risk and security issues.
According to him there are also ten notable risks in the Nigerian oil and gas sector which are access to reserves, political constraints’ and competition for proven reserves, also there are according to him uncertain energy policies, cost containment, worsening fiscal terms, health, safety and environmental risks, human capital deficit, new operational environments including unfamiliar environments, climate change concerns, price volatility and competition from new technologies.
Meanwhile he listed the opportunities that the federal government should be taking due advantage of as frontier acreage, unconventional sources, conventional reserves in challenging areas, rising emerging market demand, National and International Oil Companies partnerships, building regulatory confidence, acquisitions or alliances to gain new capabilities.
Mr. Pungong further advised government to take advantage of these elements as well as the nations strong GDP growth, sustainable public debt, strong net foreign assets , recapitalized banking sector and huge oil and gas reserves just as it should urgently consider a review and re-habilitation of its poor infrastructure, poor governance and human development indicators, high inflationary pressures, underdeveloped monetary and exchange rate regime as well as exposure to oil price shocks.
These are the factors, according to him that serve as the nation’s major weaknesses and capable of affecting every growth indices if not urgently looked in to and tackled accordingly.
He stated further that it became imperative for industry professionals to sit together and look at issues affecting the sector in an effort to chart a solution to the industry’s seeming myriads of problems, that according to him forms the basis for Ernst and Young’s decision to call all his clients and other stakeholders in the sector together to brainstorm on the way forward as consensus from such sessions which is being planned as a quarterly meeting would be channeled to the appropriate government quarters to form or influence part of government’s policies in the all-important sector.