A Expert have advised the Federal Government to learn from the oil resource management failure which has brought woes to Venezuela.
Speaking at a roundtable on the Petroleum Industry Governance Bill (PIGB) organised by Centre for Financial Journalism in partnership with Facility for Oil Sector Transformation, a DFID-funded programme, in Lagos, a petroleum industry lawyer, Mr. Israel Aye said the Venezuelan oil sector failed despite having the world’s largest hydrocarbon reserves.
He said the problems with the Venezuelan oil management style are resource nationalism, hubris, lethargy and comatose oil economy.
Aye, who is the senior partner at Primera Africa Legal, noted that hubris as displayed by Nigeria in its two-D approach to the sector management, adding that it is gradually driving the country towards ‘Venezuelan cul-de-sac’.
He said the approach is hinged on state control and investment from foreign investors whereas a three-D approach is based on the state, investor and competition.
Aye observed that because the oil and gas sector has yet to witness the necessary reforms, the country has not experienced the benefits of an oil-powered economy.
“Nigeria, unfortunately, does not operate an oil economy but an extractive industry.”
To address a country as an oil economy, he said, is when the entire value from the petroleum value chain is explored and maximised in-country and used to power other sectors for the benefit of its citizens, citing Norway and United States as examples.
He maintained that the tendency to dismiss the call for improvement in the oil sector by calling for departure from or a diversification away from the sector simply begs the question. This is because the revenue, which Nigeria makes from the oil industry, is what some have called, “easy money” that can be used to power the economy towards genuine diversification just like the American economy.
But this easy money is unfortunately mismanaged or diverted for non-productive purposes in contrast to other nations that used such “easy money”to power and diversify their economy, he said.
Examples are Norway, Scotland, The Netherlands and others around the North Sea. “Nigeria is mismanaging this resource; and so we are pushing ourselves to the brink of a crisis. Indeed the oil economy in Nigeria is in crisis”.
He argued that because Norway runs a better oil and gas economy, in the last 20 years, it has succeeded in accumulating an excess of $1 trillion in its Sovereign Wealth Fund (SWF).
“The gains are due to good management of their oil resource,”he said.
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