Fortifying the Nigerian Oil and Gas Industry for Economic Stability and Growth- Engr. Auwalu

Engr. Sarki Auwalu, DPR Director

It is indeed my profound honour and utmost delight to deliver the Keynote Address at this historic 20th Nigeria Oil & Gas Conference and Exhibition event to this esteemed audience of eminent Industry practitioners and stakeholders in the Nigerian Oil & Gas Industry, together with our African  counterparts and international collaborators. What a beautiful way to begin the second half of the year 2021, which marks the start of a new decade that has aptly being described as the “Decade of Opportunities” for Nigeria and Nigerians. As we emerge stronger from the momentous events of the year 2020 which has shaped the face of the globe, the character of businesses and the dynamics of our industry for good, the Nigerian Oil & Gas industry must continue to be responsive and turn the global crisis into a world of opportunities for all its citizens and participants alike. A significant measure to achieving this is encapsulated in the fitting  theme of this conference: “Fortifying the Nigerian Oil and Gas Industry for Economic Stability and Growth.”  

I must congratulate the organisers of the Nigeria Oil & Gas Conference and Exhibition event whose indefatigable efforts and commitment to value creation have, over the past two decades, provided the platform for Policy and decision makers, executives and implementers, all at the highest hierarchy, to  elaborate policy directions, showcase opportunities for investments & partnerships, highlight major capital projects, deliberate on industry challenges and chart a path forward for the growth of the Nigerian Oil & Gas Industry. We at the Department of Petroleum Resources – Nigeria’s Oil & Gas Industry Opportunity House and Business Enabler – join voices to felicitate with NOG on the attainment of 20th anniversary milestone.

True, the current realities have impacted on the  regular course of events this year, including the plans for a physical gathering, however, NOG has indeed come of age as a renowned resilient platform for oil & gas discourses of international repute and global appeal. 

I am indeed privileged to be assigned the keynote speakership role at this august gathering on a theme that I am so passionate about – economic stability, growth, and sustainability. I have reviewed the several sub-themes, presentation topics and panel sessions subjects and I am confident that this theme will be eloquently discussed by the renowned speakers and participants at this occasion beginning with the succinct but profound presentation by our own very global Ambassador, His Excellency, Mohammed Barkindo, the Honorary Chairman for this event.

There is no gainsaying that Nigeria is endowed with enormous petroleum resources currently put at  36.910 Billion Barrels of Crude oil reserves and  206.15 Trillion Cubic Feet (TCF) of Natural Gas reserves as at 1st January 2021. These resource size puts Nigeria at an enviable position within the comity of global petroleum producers. However, in the words of the Honourable Minister of State, Petroleum Resources at the recently concluded NIPS: ‘Yes, Nigeria is blessed with abundant resources; AND SO, WHAT!’ This phrase – And So What! – coming from the highest hierarchy of the petroleum industry in Nigeria – is a clarion call to action by all and sundry.   

Truth be told, the Oil & Gas sector remains pivotal to the Nigerian economy and has historically accounted for upwards of 80% in government revenues and over 90% in foreign exchange earnings, since the beginning of oil exploitation in the late 1950s. Thus, when the sector sneezes, the economy catches cold since it provides the needed cash flow for the functioning of other sectors of the economy.

The main driver for economic transformation transcends revenues; contribution to national economy is more significantly measured in terms of contributions of a sector to the Gross Domestic Product (GDP). Herein lies the need to fortify the Nigeria Oil & Gas sector as the true enabler of national economy.

To put this in context,  it is appropriate to benchmark Nigeria with nations that we share similar national objectives with respect to petroleum resources management such as the Organisation of Petroleum Exporting Countries (OPEC) member countries. For instance, Saudi Arabia’s oil & gas sector contributes about 50% to GDP, comparable to that of Angola.  In like manner, Libya, Kuwait, UAE, and  Algeria contribute  some 60%, 40%, 30%  and 20% to their respective national GDP. In contrast, Nigeria’s oil and gas sector contributes less than 10%  to her GDP and ranks the low among OPEC member countries.

To this end, the theme  of the conference is apt – the need to fortify (or strengthen) the Nigeria oil & Gas sector is both compelling and imperative.

For us at the DPR, we contemplate five (5) broad areas in which the industry needs fortification to support national economic stability and growth. The areas are Legal, Institutional, Financial, In-sector Diversification, and Indigenous Capacity.  And I dare say that, with the focussed leadership of Mr. President, His Excellency Muhammadu Buhari and the steers of the Honourable Minister of State, Petroleum Resources, Chief Timipre Sylva, the key fundamentals for industry growth are being emplaced.

On the legal front, the long-awaited Petroleum Industry Bill (PIB) has just been concurrently passed by both chambers of the National Assembly and awaits harmonization. It is envisaged that Mr. President would assent to the Bill that enhances clarity in legislative, regulatory, fiscal, and administrative framework. It is expected that the evolving commercial institution would be strengthened for efficiency, prudent management, financial stewardship, and operational excellence. By the same token, the regulatory institution should be structured to streamline roles, prevent duplication and promote consolidation which will engender regulatory clarity and ‘ease of doing business’.

Further, the overall Industry financial position must necessarily improve for sustainability. In addition to maintaining oil & gas production levels, tens of Billions of dollars of additional investments are required for developments in deep offshore, inland and frontier basins, marginal field development as well as for gas infrastructure and gas-based industrial development. Recently, the financial closure of landmark deals and major capital projects of over $15 Billion in the NLNG Train 7, the Ajaokuta-Kaduna-Kano (AKK) pipeline, Assa-North Ohaji South development projects, amongst others, is an indication of improving business environment. Be that as it may,  a stable political, legal, and fiscal environment is critical to improving the investment attractiveness index of Nigeria. We are confident that with the legislative certainty that comes with passage of the PIB into law, existing operators would have the reasons to consolidate their portfolios in the Nigeria petroleum industry whilst we witness the influx of new investments from second generation International Oil Companies (IOCs) and the likes.

In a related sense, the concept of in-sector diversification must take on added impetus in the industry for economic sustainability and growth. Although, economic diversification, which entails the expansion of other sectors of the economy, is being driven by Government, the Oil & Gas sector itself must look inwards and leverage the potentials for in-sector growth and expansion geared towards in-country value addition. In-Sector diversification is central to grow the industry from an oil-export based industry to an integrated oil & gas industrial economy where the raw materials mentality is replaced by in-country value addition to guarantee job creation, youth empowerment, poverty eradication & infrastructural development.

Granted, we acknowledge that some modest gains are being recorded in this respect in terms of development of refinery, petrochemicals, gas-based industries, and allied infrastructure. However, more needs to be done. Yes, for us,  it should be a revolution – an aggressive change of approach to grow in-country capacity and establish the basis for midstream infrastructure and oil & gas industrial revolution, which is critical to fostering the economic stability and growth of some of the aforementioned OPEC member countries. This great country has no business importing petroleum products and must attain the status of many of the performing OPEC countries in processing & manufacturing and domestic gas utilisation.

At this juncture, permit me to focus on the role of Gas, as a vehicle for economic growth and stability.  Gas is the resource  of many colours.

***Gas is Power – To address the prevailing energy poverty in Nigeria and Africa.

***Gas is Fuel – A source of alternative fuels for vehicular use – LPG, CNG, LNG

***Gas is Food –Urea and Fertilizer

***Gas is Industry – GBIs 

***Gas is Product – Thousands of everyday products derive from gas.

***Gas is Development  –  Infrastructure, cottage industries, SMEs, economic activities.

***Gas is People  – Results in a secured and prosperous people.

***Gas is Everywhere – Nigeria is a gas province. But value is not derivable with a buried resource. Value must be added to the gas resource to drive economic prosperity and wealth creation.

To this end, Government has made a deliberate and conscious decision  of leveraging gas as both transition fuel  and destination fuel in years to come. Nigeria’s Decade of Gas Agenda must be implemented in focussed and concerted manner to enable this Decade of Opportunities for Nigerians and not otherwise. 

Lastly, there is need to build credible and competent indigenous capacity in the industry that will compete favourable with international counterparts. Let me reiterate that real development comes from within, that is, inside – out. As such, the growing participation of Nigerians and Africans in the development of the nation and the continent is the real direction for sustainable economic development. We must take our destiny in our hands.  Today, Nigerian independents and indigenous companies are taking the centre stage in expanding domestic refining, domgas supply and gas-based industrialisation – a gradual departure from the export-centric companies. Accordingly, deliberate policies that promote indigenous capacity should be continued for overall economic stability.  Part of Government’s efforts in this regard is the recently concluded marginal field bid round which is aimed at deepening indigenous participation in E&P and other similar initiatives. We expect that with the conclusion of the award process, the share of indigenous companies in reserves and production will improve as these fields are developed and come on-stream within the next few years.

We are confident that sustained implementation of the above 5-part ‘strengthening aids’, together with other measures that will be proffered by other eminent speakers and discussants at this event will enhance our position for domestic energy stability, economic growth and for competitiveness in the global arena.  We must all rally in support of Mr. President’s firm commitment  at ensuring  maximum benefits from Nigeria’s petroleum resources for the 200 million shareholders.

On our part at the DPR, we have caused a paradigm shift and changed the narrative from being just a Regulator to growing as an Opportunity House and Business Enabler in the Nigerian Oil and Gas Industry with the objective of fortifying the industry and enabling industry participants through our regulatory service instruments that are designed to ensure that businesses thrive and for economy growth.

As part of our mandate to strengthen industry and ensure sustainability, the Department will be unveiling an industry collaborative strategy for Maximum Economic Recovery (MER) for the Nigeria Oil & Gas sector within the next weeks. This strategy will articulate key delivery programmes to guarantee stability, growth, and development of the industry in line with Government aspirations whilst leveraging the National Oil and Gas Excellence Centre (NOGEC) commissioned by Mr. President in January this year as the techno-economic resource centre to drive industry safety, value, and cost efficiency.

As a Department, we will continue to foster collaboration, influence, facilitate, enable  and promote industry growth, all for economic growth and in overriding national interest.  

Whilst congratulating NOG for this 20th  anniversary milestone,  we join hands with all stakeholders to work to fortify the Nigeria’s oil & gas sector for economic stability and growth agenda under the distinguished leadership of Mr. President and the oversight of Honourable Minister of State, Petroleum Resources, Chief Timipre Sylva.

This Keynote address was delivered by Engr. Sarki Auwalu Director/CEO of Department of Petroleum Resources at the Nigeria Oil & Gas Conference (NOG) Conference.

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