In what has become a ‘just do’ for Nigeria’s oil and gas sector, the Minute of State for Petroleum, Chief Timipre Sylva unveiled his vision for a sector that is in dire need of the needed filip to enable it fulfill its enormous potential; BENJAMIN UMUTEME reports
When oil was discovery in Oloibiri community in present day Bayelsa State many felt the country was on the part of becoming a global economic powerhouse, but alas, it has not been so as several decades after, Nigeria’s oil and gas sector is still struggling with the same old issues which cropped up at the sectors’ inception.
Analysts and industry watchers are of the opinion that for Nigeria’s petroleum industry to fulfill its potentials there is need for wide reaching reforms that would move the petroleum industry to where it ought to be — which is competing with leading global players in the industry.
Round peg in round hole
When President Muhammad Buhari appointed Ibe Kachikwu as the minister of state for petroleum, analysts affirmed that it was a master stroke as Kachikwu was an industry man who knew the in and out of the sector.
During his time, Kachikwu started some reforms like the Nigeria Gas Flare Commercialization Program (NGFCP) amongst others.
However, with the coming on board of Timipre Sylva, the President was ready to put the right people at the helm of affairs to drive their various sectors.
Many industry players see Chief Sylva as one their own considering he was Special Assistant to Minister of State for Petroleum Resources between 2004–2007.
He came with that understanding t leave a lasting mark on the sector. And he has been clear in the changes he wants foe the sector which continues to be held back by the non passage of the petroleum industry bill (PIB), which many say has long held back the industry.
In his first major parley with journalists covering the sector, Sylva reeled out his plans for the country’s petroleum sector saying that he was going to do things differently to ensure that the industry makes progress.
Ensuring passage of Petroleum Industry Bill
Part of his agenda for the industry includes ensuring that the PIB is passed into law. According to the minister, he is committed to not just the progress but also consideration and passage of the overall Petroleum Legislation noted that it includes harmonisation of all the existing versions from 2000 to date (2009, 2012, and 2018) with consideration to the concerns raised by industry players to create an enabling environment for investors as well as appropriate government take in all the oil and gas value chain.
Sylva said that he would take advantage of the current harmony between the Executive and Legislatve arm of government.
“We are optimistic that both the Petroleum Industry Governance, Administration & Host Communities Bill on one hand and Petroleum Industry Fiscal Bill on the other will be passed within the first anniversary of this administration. “Special focus will be placed on the Midstream and Downstream sectors. Consequently, we are considering two regulators, one for the Upstream (the Commission) and another for the Midstream & Downstream (the Authority). The Midstream and Downstream sectors will particularly open enormous opportunities to local investors and consequently create massive job opportunities in the country. For example, investments will be available in pipeline engineering design, procurement & construction, terminal operations, pipe mills, fabrication of pressure vessels, storage facilities, pipe transportation and laying equipments, Refineries, Central Processing Facilities and also investment in Gas-based industries (Fertilizer, Methanol, Petrochemicals, LPG and CNG) etc. Open access for oil and gas transportation will be fully enhanced.
“On the upstream side, we are coming up with more robust fiscal provision, acreage management, drilling-or-drop programme, etc. We are not only going to retain investors, multitudes will join the leagues of high-value operators,” he said.
Containing oil theft
Also, security situations around oil and gas installation, specifically to curtail theft of petroleum product and crude oil remains high on his ‘.just do’ list.
With current container strategies of satisfaction, security, surveillance, community engagement, and diplomacy, the situation has improved but that is still more to be done.
In spite of numerous efforts by government and oil companies, crude theft continues to linger in part due to factors such as: an active market for stolen crude and products; Weak measurement and surveillance mechanism; Weak and Inadequate sanctions; Low cost and high incentive for theft; Lack of infarstructure development, and Lack of community inclusion and engagement.
To address this perennial challenge, stakeholders have recommended the use of technology that would pro-actively detect leak, Community participation in the oil and gas assets, Engage PTI in the training of unemployed youths in the region, Encouraging Modular Refineries, Continuous Sensitization of the Host Communities, and storage facilities. Other recommendations include the revamp security architecture, increase supply to underserved areas, Infrastructural development of the region, Incentives for the Host Community, Increase community stake-holding, Design and enforce stiffer legislations, and Mobilisation of global community; traders, refiners, regulators, international groups.
Making NNPC a responsive commercial enterprise
The minister noted that various transformation processes are currently ongoing in NNPC – Growing from Business Unit Focus Areas (12 BUFAs) to Transparency, Accountability and Performance Excellence (TAPE).
According to him, “We are considering the Incorporation of NNPC and its existing Joint Venture Companies. Government is currently working on the modalities.”
Deepening domestic gas utilization
The minister said 2020 is the year of gas for Nigeria. He insisted that Natural gas has the capacity to transform an economy. We have seen successful examples all over the world.
He cited Qatar and Saudi Arabia as examples of what the country could do with its huge gas reserves if properly harnessed.
With a significant gas reserve, Nigeria current 2P gas estimate is about 202TCF with potential for up to 600TCF in undiscovered resources. With the undiscovered potential, Nigeria could be in the same league as Iran, Qatar, Saudi Arabia and Russia.
“Recognizing the potential of our enormous natural gas resources and the unprecedented growth in domestic gas demand, the Federal Government of Nigeria through the Ministry of Petroleum Resources over the years has championed various interventions to stimulate gas utilization and monetization. This led to the Gas Master-Plan Policy initiative where detailed major gas infrastructure expansion and integration, gas supply development projects, revamp of the commercial framework for gas and tactical efforts to accelerate gas supply to Power sector, in addition to our gas industrialization strategy for investments in Fertilizer, Methanol, Petrochemical, CNG and LPG are fully stated.
“Also the Ministry of Petroleum Resources is driving the Nigeria Gas Flare Commercialization Program (NGFCP). This initiative is designed as the strategy to implement policy objective of the FGN for the elimination of gas flares with potentially enormous multiplier and development outcomes for Nigeria. The objective of the NGFCP is to eliminate gas flaring through technically and commercially sustainable gas utilisation projects developed by competent third party investors who will be invited to participate in a competitive and transparent bid process.”
The Federal Executive Council in June 2016 approved the Nigerian Gas Flare Commercialization Programme (NGFCP).
The FGN ratified the Paris Climate Change Agreement, and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030 whilst committing to a national flare-out target by year 2020.
The FGN called for Expression of Interest (EoI) in the Nigerian Gas Flare Commercialization Programme (NGFCP) in November, 2018.
Over 850 interested parties registered their interest in the NGFCP. 205 applicants emerged successful and all 205 companies will be invited to submit their proposal for flare gas utilization through the Request for Proposals (RfP) phase of the NGFCP.
“The commercialization approach has been considered from legal, technical, economic, commercial and developmental standpoints.
“It is a unique and historic opportunity to attract major investment in economically viable gas flare capture projects whilst permanently addressing a 60 year environmental problem in Nigeria.
“About $3.5 billion worth of inward investments is required to achieve the gas flare commercialisation targets by 2020.
“The analysis also shows that the NGFCP will deliver significant social and economic benefits to host communities in gas-rich regions of the Niger Delta, to investors and to the national economy. Benefits would include: curbing pollution in local communities; providing households with clean energy, particularly LPG (cooking gas); job creation, particularly in small and medium scale businesses; increasing electric power generation potential through gas-to-power; and alleviating social unrest.
The NGFCP could generate approximately 300,000 direct and indirect jobs
“Once operational, projects launched under the NCFCP would reduce Nigeria’s emissions by ~13 mln tons of CO2 per year, consistent with the President’s commitments to the reduction of Greenhouse Gases under the Paris Climate Change Agreement (which could also be monetized under an emission credits/carbon sale programme at a value range of $400 – 500million).
“On the gas export market, part of our strategic aspiration for gas is to strengthen our footprint in high value gas export through LNG and aim to secure about 10% of global market share of traded LNG. On the expansion of our existing 22MTPA NLNG plant, we took Final Investment Decision (FID) for additional 8MTPA NLNG Train 7 Plant last December,” he added.
Rehabilitation of refineries
According to the former Bayelsa governor, the government has finalize rehabilitation of refineries and other midstream infrastructures and emplacing Operating and Maintenance (O&M) contracts for the management of the assets.
He said the government would “Review existing gas policy, national policy on methanol fuel and other regulations to align with the competitiveness of the world’s O&G investment environment while taking cognizance of our quest to power our manufacturing and production industries.
“Focus on the reduction of production costs and contracting cycles by encouraging low cost producers,” he also said.