Wednesday, September 18, 2019
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THE NEED FOR SYNERGY IN THE OIL INDUSTRY

Cross section of Panelist at NIPS 2019

By Felix Douglas

During the Nigeria International Petroleum Summit (NIPS), operators from the International Oil Companies (IOCs) and their local counterparts convened and gave their perspectives on the need for synergy between local and international operators. Being a major crude oil producer, if Nigeria is going to stand a chance as a virile operator in the industry, technology funding and partnership must be enhanced. The country has to position itself for the challenge in the future before collaboration and partnership can work since the dynamics have changed. The country must built a national oil company that is competitive. Each speaker in the panel has close to thirty years of experience as captains of the oil industry.
Contributing his ideas on the panel session, Managing Director of Total, Nicolas Terraz, who was represented by the Deputy Managing Director (DMD), Ahmadu-kida revealed that Total is playing a major role as first in Africa. Kida said the company is the largest and completely integrated IOC operating in the upstream, midstream and downstream. It is a fully African company. How the company relates and collaborates where it operates is indeed a success story. He was of the view that NLNG is a good example of collaboration as people come together and in terms of numbers to impact the company’s business, “Number is significant in business.”
To attract investment, there must be enabling environment with openness in terms of sanctity of contract and trust. Value has to be created and when people identify it, collaboration comes automatically without any party being compelled.
Kida submitted that most stakeholders are concerned with partnership but not focusing on competition in detail. The coast might not be clear for NOC at present, but soon they will start competing if they get it right. NOC should get set in future for better partnership and competition.
Looking at local content as a major strategy for IOCs to continue to partner with NOC in West Africa, Vice Chairman and Managing Director, Nigeria Agip Oil Company (NAOC), Lorenzo Fiorillo said there is need to show concern for host country with interest in mind as corporate entity and to know the exigency of host community. Egina for instance gives support base to the host country. According to Fiorillo, if the stakeholder is strong, the host will also be stronger, “Making your stakeholder stronger makes you stronger as well.” Eni operation in Africa ensures it cooperates with national oil company to build capacity and collaborate with host country. What matters is networking, significant framework and participate actively in the needs of the country for stronger relationship. There is still room to increase and resuscitate competition by the NOC.
Arguably, local content has moved from the era of being a charitable venture to more integral partnership with the host country and its communities.
Responding to reactions on whether NOC has been able to measure up in terms of competing with IOC in relation with the true state of oil industry as it is in other countries that have developed national oil companies, Managing Director and Chief Executive, Lekoil Limited, Lekan Akinyanmi said, the country is still far from it. The industry is such that it cannot be monopolized by either the IOCs or NOCs. There will always be space for proper collaboration for sharing of best practices and technology.
Akinyanmi was of the view that Nigeria’s local businesses are under explored and exploited, before focusing on competition IOCs and NOCs should open a portfolio and allow independents to grow. Independent companies with smaller assets should be developed before focusing on competition.
Giving his own perspective, Managing Director of Chevron, Jeffrey Ewing, believed that competition depends on the environment and host community. But there is need to collaborate and work together because “You might be a competitor in the same company that you are a partner.” The major factor is for stakeholders to work together in order to succeed. The oil industry has wide space to accommodate stakeholders to work together and make the industry effective and “Continue the growth for the energy needed in the world.”
Being the Chairman of Oil Producing Trade Section (OPTS), Managing Director of ExxonMobil, Paul McGrath, signified that the essential thing is what the state intends to achieve. State owns resources. Some countries around the world are successful when NOC is in competition with IOC. When IOC and NOC are in competition or partnership, reasons should be specified by both parties. What do they want to achieve?
The OPTS Chairman said indigenous companies and IOCs can collaborate in order to generate best value for both countries involved.
The Chief Operating Officer (COO), Upstream of Nigerian National Petroleum Corporation (NNPC), Bello Rabiu, aligned with stakeholders’ views confirming that the country’s NOC is not yet in competition with the IOC. But those who are not sure should be assured that certainly there will be competition and it has begun. Competition will lead to collaboration for the good of the country. He stated further that Nigeria’s oil industry is not yet trusted in terms of its participation to compete with the IOC. However, transparency, trust and accountable are viable in order for stakeholders to understand what the country does so as to collaborate together for all parties to be comfortable.
Adeyemi Bero from his perspective gave an example that the NOC collaborating and partnering with IPPs worked because of established operating models. IOCs, NOCs, and independents partnership is strong and helps in terms of growth.
Notwithstanding, collaboration with the IOCs revolves around infrastructure. For value to be maximized, there is need to have access to infrastructure.

Energy Focus
Editor at Energy Focus Report.
https://www.energyfocusreport.com

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