…Association Advocates Enhanced Exploration and Production Business in Nigeria
…Brisk Response to PIB Passage to Guarantee Investors’ Confidence
…Financing the Sector to augment Post Covid-19 issues in the industry arising from fluctuation of oil prices
-By Felix Douglas
Foremost oil and gas industry association, the Nigerian Association of Petroleum Explorationist (NAPE), had its first Akomeno Oteri Annual Lecture to commemorate its 45th Anniversary to celebrate its founding fathers. The virtual conference brought together think tanks and juggernauts of the association that was founded in 1975.
Former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), and member of Board of Trustees, Chief Chambers Oyibo, gave an insight of the Lagos Society of Geology and Geophysicist which eventually metamorphosed into what is known as NAPE. He revealed that as a young geologist with other professionals took up the challenge to jointly form the association.
Chief Oyibo posited that NAPE main business is exploration and production (E&P) and the business is capital intensive which is not easily attained in Nigeria.
The former GMD of NNPC noted that there are two main groups involved in E&P, the International Oil Companies (IOCs) and indigenous companies. The IOCs have been in exploration activities for many years, they have track record with greater access to funds mostly foreign offshore but their indigenous counterparts do not have such opportunity.
He said most Nigerian companies do not have capacity although they are beginning to grow it due to recent development owing to their participation in the industry.
“When you grow offshore with due diligence, it is very strenuous. Even though most of the indigenous companies bought asset, they are interested in development and production. This is the time to look at E&P so as to grow the nation’s reserves,” he added.
Chief Oyibo stated that challenges like the Petroleum Industry Bill (PIB) that is still undergoing legislative process for more than twelve years and has not been passed into law, is hindering progress in the industry. Operators want to know under what laws they are investing in the country.
There are also security challenges in the Niger Delta. The cost of Nigeria’s oil per barrel is one of the highest in the world due to security challenges. Companies spent huge amount of money hiring gun boats for security purpose.
For investment to thrive successful, investors’ confidence must be guaranteed.
On the recent price fluctuations owing to Covid-19 pandemic, Chief Oyibo said, it is not easy for new investment in the country. Therefore, “indigenous operators have to take the bull by the horn and do whatever they can to find more oil. The impact of the virus on oil prices are some of the challenges operators have to go through.”
On its part, NNPC said the corporation has gained traction and reduced its JVC cash call debt from $5 billion in 2015 to $3 billion in five years. The corporation attributed this to the efficient business plan put in place.
Expressing her views at the Anniversary Lecture, the Group General Manager, Corporate Planning and Strategy of NNPC, Meyiwa Eyesan said, the corporation is not in a haste to sell off its equities in oil companies that are in partnership with the corporation.
Eyesan was responding to suggestion that NNPC should shed its financial burdens in JVC commitments. According to her, NNPC has gained traction to efficiently partner with other oil companies in the country. “This is the wrong time to sell our equity to any trusted partners,” she said.
She explained that the corporation is up beat with the current plan to open the $2.3 billion domestic gas market and rehabilitate the nation’s refineries. NNPC had decided not to do it alone, but involved into partnership with private investors.
Eyesan noted, “what we have done in the upstream sector is what we are going to replicate in the downstream by going into partnership with private investors.” According to her it is going to be seen in the rehabilitation of old pipelines and refineries. “The pipelines and refineries are open to partnership on Build Operate and Transfer (BOT) bases.”
Meanwhile in his opening remark at the 45th Anniversary of NAPE, Group Managing Director (GMD) of NNPC, Mallam Mele Kyari made it known that NAPE should think ahead and be proactive bearing in mind the place of oil and gas in the next 40 to 50 years.
The GMD added that NAPE has to remain relevant in the future with regards to the oil industry in Nigeria.
Kyari who is also a member of NAPE, pointed out that there is the need to monitize resources from oil and gas sector to boost the domestic market for petroleum products.
Other panelists who participated in the virtual online Lecture advocated for Energy Bank as a means to properly fund the oil and gas sector since it is capital intensive. The only way to grow E&P business for sustainability is to inject the industry with funds.
They were of the view that given the paucity of fund due to fall of oil price arising from Covid-19 1 percent of turnover being contributed to the National Content Development Monitoring Board (NCDMB) should be the takeoff fund for Energy Bank.
Experts of the oil industry at the NAPE 45th Anniversary were quite optimistic that with support of fund for the industry, indigenous players in E&P business will make the sector luxuriant to grow the reserve base of the country.
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