PIB creates uncertainties in future petroleum development
Dr. Mayowa Afe, is the Immediate President, Nigerian Association of Petroleum Explorationists (NAPE) & Managing Director, Danvic Concepts International Nigeria Limited. He obtained his Ph.D degree in Petroleum Geology from the University of Port Harcourt, Rivers State. Member, American Association of Petroleum Geologists (AAPG).
Chairman, Board of Trustees, McPherson University (A university established by Foursquare Gospel Church in Nigeria), Seriki Sotayo, Ogun State and also current Chairman, Lagos Chapter of the Oil and Gas Trainers Association (OGTAN).
What is your assessment of the 2012 operating year?
In 2012, like the year before it, investment in the oil and gas industry has continued to be focused on the sustenance of production due to the uncertainties in the future development of the oil and gas industry in Nigeria. This result from the hopeless situation we now faced with the non passage of the Petroleum Industry Bill that could have giving the necessary policy direction helped to encourage new investment in exploration thereby leading to more discoveries and also reserve growth.
It is now getting politicized and this is becoming worrisome particularly in the face of oil and gas discoveries in Africa. In the downstream and Midstream sector, the story is worse. As you know, we started the year with the subsidy issues and riots all over the country.
Now, we know that our country is only been ripped off. Painfully, we are ending the year with huge and continued pipeline vandalization and thieving of our petroleum products. All these, have resulted in avoidable deaths and a huge damage to our country reputation. Remember, kidnapping and the Niger Delta peace situation is still very fragile and under close watch.
Well, having said that, it is not all bad news for us in the oil and gas sector. For example, the local content policy is now gaining ground and more Nigerians and communities are really taking huge advantage of this policy. The drivers of the NCDMB are doing a great service to our country in this sector.
So also the training of Nigerians, for example, PTDF is doing so much in the area of capacity development in Nigeria. As we all know the Nigerian oil and gas industry is a growing one when compared with other parts of the world and it should be realized that the impact of policies like these take time to manifest.
For example, we are just witnessing the outcome of the deepwater activities as well as the marginal field development program of 2003. Therefore, new policies will be needed to help broaden operational activities while containing the challenges and threats, especially in relation to environmental impact and communities’ restiveness.
Will Nigeria ever have a workable and uncontroversial PIB and how?
Yes, I believed that achieving a workable and less controversial PIB is possible as with other program and policies of government. As we all know the Government has the responsibility to put forward the framework for the PIB while the National Assembly reserves the right to do as it deems fit in the overall interest of the nation.
Having said that, it is believed that there will be a ray of light at the end of the tunnel. You may want to note that by the nature of resource exploitation, sharing the rent is always controversial not only among supposed owners of the resource but between the owner and the developer. But on the long run, they settle.
It took three years for the country to reach an agreement for the first deepwater PSC that was executed in 1993 and this should be seen in that light. With reference to the PIB and indeed any issue of national importance as this, my appeal to all stakeholders is to allow our national interest be the key consideration as against any other considerations. With this attitude we will make progress together as a nation.
What would you say are the ups and downs of the operating environment during the period?
The challenges do not change with the turn of the year, therefore some of the challenges the industry is facing will invariably continue to the New Year. Project funding, aging infrastructure, threatened refining industry, uncertain gas policy, community related issues, environmental management, and all existing uncertainties will still likely remain with us in 2013.
What does NAPE and the other industry operators expect of 2013?
It’s important that the PIB is passed. Our country must be seen to be serious among the committee of nations and also above all political and ethnic divisions that easily beset us. Our diversity must be turned to strength. Our government must end this ridiculous drama of the PIB in 2013.
In 2013, every operator/stakeholder will like to see government policy encourage increase exploration activities in the country particularly in the inland basins and the deepwater environment thereby helping to increase our reserve growth.
If you take the Joint Venture operation which has always been used as the barometer for gauging the state of upstream activities in the country, exploration activities started dropping long time ago, mainly due to cash call constraints and associated funding challenges on the part of Government. This we will all like to see changed in the coming year.
It is important to note that the trend of exploration success in different parts of Africa is almost unprecedented. Apart from Ghana, there is Sierra Leone, Liberia and Niger on the West African side while virtually all the countries in East Africa have reported good reserves of oil and gas.
Nigeria has to accept that this is a natural trend. The fact that we were early in the race does not mean we would continually take the lead. Other countries will continue to explore for oil and gas and as they record success, it would somehow impact the attraction of Nigeria as the de-facto destination for oil and gas investment in Africa.
In the downstream sector, in my opinion, the drive for deregulation is perhaps the best way to sustain the operation of the refineries and effective development of the downstream sector. If one takes a cue from other sectors of the economy, there is none where government companies are known to be efficient talk less of being profitable. That probably informed the establishment of the National Council on Privatization and the associated Bureau for Public Enterprise (BPE).
In 2013, all stakeholders will like to see more enforcement of existing regulation in the industry. If you recall, Government took the initiative to introduce indigenous players in the downstream as far back at 1982 and did the same for the upstream sector in 1990 with the Indigenous Operatorship Program and the Marginal field allocation in 2003.
However, there are several areas where regulations are required or existing ones need to be updated. For example, while countries like Venezuela and Canada are actively exploring and exploiting their tarsand deposits, our tarsand resources mainly in Ogun and Ondo States are still a subject of political controversy as to the responsible Ministry. This we will like to see a change in the coming year.