The Nigerian message was delivered via the country’s apex Petroleum Company, the NNPC, who represented the Minister at a forum organised for stakeholders in Houston.
The 2013 Offshore Technology Conference, (OTC) held in Houston, Texas, the United States of America, (USA) recorded the highest number of delegates, with 104,800 delegates, 278 companies representing 40 countries in attendance. It was understandably a beehive of delegates’ activities.
For the Nigerian delegation to the conference, it was an opportunity for the Nigerian National Petroleum Corporation (NNPC) to lay bare its sore points before the international policy makers and their energy sector players and show case what they have been doing to better the sector for business and the country. The NNPC delved into such issues as crude oil theft, Petroleum Industry Bill, (PIB), divested IOCs assets and so on.
The Minister of Petroleum Resources, Diezani Alison-Madueke, represented by the Group Managing Director of the NNPC, Andrew Yakubu emphatically told the international community to stay off Nigeria’s stolen crude oil; that they should drop their appetite for stolen Nigeria crude oil and join in the fight against the nefarious activities of oil thieves and pipeline vandals.
Presenting the keynote address, she said it was imperative to halt their appetite for stolen crude oil from Nigeria if the country must make appreciable progress in this regard.
“It takes two to tango, if those stealing our crude do not find a market for it there would be no incentive to steal. That is why we are appealing to the international community to take action. The tracing of our crude by DNA to the destination is being looked into to ensure that the finger prints of our crude are traceable to the various destinations. I can tell you that as an industry we are happy to work with government in this regard,’’ she said.
She also assured the international community of the benefits of the PIB, stressing that the proposed legislation was further designed to increase exploration and development activities in the region by creating a more competitive environment for both independent and major oil and gas companies, describing the bill as an essential tool for the sustainable development of the industry.
She emphasized that the proposed law presents multi-dimensional approach to the nation’s oil and gas resource management that would ensure greater active contribution by players and stakeholders under prudent government structure of the industry.
“It also stipulates guidelines for operations in the upstream and downstream sectors which can be viewed in terms of the following thematic areas: policy, legal and regulatory dimensions, economic dimensions including participation and ownership, knowledge based human and institutional capabilities, environmental stewardship as well as governance structure for sustainable resource development.”
Justifying the introduction of the Petroleum Host Community Fund, (PHCF) she informed that the proposed fund incorporates lessons learnt from the Niger Delta on all new frontiers.
“The Fund is a mechanism to formally recognize host communities as important stakeholders by assigning oil and gas infrastructure security to the host communities and minimizing environmental degradation due to vandalism and crude oil theft. This in addition, will attract investment into the sector. Therefore, West Africans will continue to play a significant role in the global oil and gas energy supply mix post-shale oil and gas discoveries in the World.”
The NNPC also used the opportunity to drop a hint on what it would do with the divested IOCsassets. It informed that government would soon begin round bids for the assets as soon as its gets presidential nod.
He said the Department of Petroleum Resources (DPR) had itemised a number of these assets and that they are receiving presidential attention. He said as soon as the compilation was complete the bid rounds would commence and the assets would be made available.
Allaying fears that divestment was bad for the country, the NNPC boss said it was actually an opportunity to have more indigenous participation in the oil and gas industry sector of the country.
He said the divestments were a blessing in disguise as it was an opportunity for the indigenous operators to take over for onward exploitation and production of crude.
“We also have other assets that are being listed for farming in by indigenous participants because they have not received adequate attention by the IOCs. There is a conscious effort to build the capability and capacity of indigenous operators in the upstream sector of the oil and gas industry. That is the good news,” he said.
He said there had been more divestments by the IOCs, including Conoco Phillips, Total and Exxon Mobil, adding that these assets would end up in the indigenous operators’ hands.
“The number has not been high enough but we must add that there has been significant improvement over the years. As at last year, we were just about 10 percent of total production but because of increased government attention we are expanding the capacity of upstream participation, and within the past couple of years there has been a significant divestment of assets from the majors and those assets were the ones that they (majors) actually did not pay much attention to.”
He further assured that Nigeria was still central and strategic in contributing to the energy mix of the world.
“As at today, the country has over 36 billion barrels of crude reserve and 187tcf* of gas reserves and that makes us about the 12th highest reserves in the world. These reserves are mainly spread across the Niger Delta basin. There is of course additional potential which has not been exploited, and we believe when we go into that it is estimated that we are going to strike almost 600tcf of gas.
“So, there is no doubt that we have a very huge asset base and a very robust reserve to production ratio. Nigeria, for a long time to come, will continue to remain central and strategic and will continue to dominate our sub-region, even as we remain key and prominent in the global sphere.”
On the vexed issue of inadequate refineries in the country, Yakubu blamed the current regulated regime in the downstream of the oil and gas industry for lack of interest on the part of private investors to build refineries in the country.
He said the various factors were militating against the establishment of Greenfield refineries in the country and that chief among these was the regulated nature of the nation’s downstream petroleum sub-sector.
“Today, the petroleum products are regulated and there are quite a number of things we need to do upfront to ensure that the business environment is conducive for investors to come and invest. So, it is not about Chinese or any other person bringing money; nobody is going to bring free money.”
He however, stressed the importance of the establishment of new refineries, saying national consumption was currently far in excess of output.
“Our consumption is over 35 million litres on daily basis, and current in-country capacity is about 17 million litres. There is no doubt that we need the Greenfield so that we can make progress in this critical aspect of our energy requirements. But we must get the business model right.”
He informed that efforts were on to rehabilitate the nation’s local refineries, saying they have started yielding results with the recovery of 10 million litres recently.
The MD/CEO of KJ Energy was at the event, and also met with other top executives of sister Nigerian companies. His position and contributions zeroed in on some of the issues that will impede the growth of the sector if not properly handled – the issue of a clear cut transition plan between the period that will see to the full implementation of the PIB to avoid a situation that will heighten investor fears and uncertainties, especially as it relates to the sustainability of the legal and regulatory frameworks being introduced into the PIB.
He also mentioned the role of the NNPC as ‘Regulator’ rather than ‘Operator’ which ought to have been the case, he implored the FGN to start looking at stronger indigenisation policies that will increase and boost local participation in both exploratory and the downstream sectors of the business in Nigeria. He cited the example of Mexico’s oil revolution and how it has transformed the capabilities of Mexico to harness its oil and gas resources and maximise the control of its key assets.
*tcf – Trillion cubic feet