With all things considered, the Federal Government on Monday, soft-pedalled on its initial plan to remove subsidy on petrol, setting aside its much-trumpeted Petroleum Industry Act (PIA) to continue paying about N4.6 trillion provided crude oil price hovers around $85 per barrel.
Journalists had earlier reported last week that petrol may sell for N403 per litre, representing the current landing cost of the product, as against its current price of N165 from July 1, this year.
The Nigerian National Petroleum Corporation (NNPC) Limited had revealed that Nigeria consumes about 19.535 billion litres of petrol yearly, averaging 1.6 billion litres monthly. With about N241 now paid on every litre as subsidy, this brings yearly subsidy to about N4.6 trillion.
But in a reversal that may unsettle the petroleum industry, the Federal Government suspended indefinitely its planned fuel subsidy removal and will now amend the 2022 Appropriation Act to accommodate the new change to provide for subsidy payments from July 1, saying it is clear to even the blind and audible to the deaf that the situation of the country does not allow for that at the moment.
This was announced, yesterday, by the Minister ofFinance, Budget and National Planning, Dr. Zainab Ahmed, in a meeting with lawmakers at the National Assembly. She explained that due to ongoing consultations, it was agreed that the planned removal of fuel subsidy should be shelved till further notice.
This action followed the pressure mounted by the Nigeria Labour Congress (NLC), which threatened to embark on a nationwide protest from January 27.
In the 2022 budget signed into law by President Muhammadu Buhari last month, the provision of petrol subsidy was till June 30, but NLC said fuel subsidy removal at this period of high inflation would be resisted.
In seeking a soft landing based on outcry from Nigerians, Ahmed, the Minister of State for Petroleum Resources, Timipre Sylva, and the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, met with the National Assembly leadership to amend the law to provide for an extension of subsidy provision beyond June 2022.
The Finance Minister said the government had initially planned to remove subsidies on petroleum products from July, a reasonable provision was made in the 2022 national budget for subsidy payment till June.
She said: “Sequel to the passage of the PIA, which indicated that all petroleum products would be deregulated, we amended the fiscal framework to incorporate subsidy removal.
“However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.
“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.
“President Muhammadu Buhari does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.
“One of these measures include the roll-out of refining capacities of existing refineries and the new ones, which would reduce the number of products that would be imported into the country.
“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for a subsidy from July to whatever period that we agreed was suitable for the commencement of the total removal,” she said.
Sylva said: “As far as I am concerned, at this point, it is a legislative duty. The law has been passed but there is no law that is cast in stone.
“It is clear to everyone that operationalising the law is not possible within six months framework that has been provided for and if that time frame provided for in the law is not feasible, then it is a legislative responsibility now to see what can be done in extending that time frame for it to be in the purview of the law.
“It is very clear to the blind and audible to the deaf that it is not feasible at this time to remove subsidy. I know that some naysayers or political pundits want to bring politics into it but it is not within the contemplation of this administration now to remove subsidy.”
Senate President, Ahmad Lawan, therefore, urged the organised labour unions in the country to shelve their proposed nationwide protests, as it was no longer necessary.
“There is need at one point to do away with subsidy but the President genuinely feel for Nigerians, particularly the most vulnerable. Significant arrangement for absorbing the shock that will come with the removal should be done and the timing is such that the impacts and consequences will not add to the hardship.”
He said the sympathy for Nigerians is not about NLC. “We are talking about every Nigerian. NLC is just an organised part of the system. Our concern is beyond NLC.
“I am taking this opportunity to speak to TUC and NLC to shelve this their plan to go on strike or demonstration. It is totally unnecessary. There is not going to be the removal of subsidy, so, let us not create unnecessary tension where there should be none. Please forget about the January 27 deadline.”
President Muhammadu Buhari had last year signed the PIA into law with provisions that deregulated the downstream sector. With the current development, the government may be altering its own law.
This is coming as the Federal Government, yesterday, engaged petrol marketers in Abuja, insisting conversion of cars to run on gas remained a viable alternative to subsidy removal.
Sylva noted that the government was doing everything possible to provide funding and enable an infrastructure that would fast-track the auto-gas policy.
Sylva said the country would convert one million public transport vehicles and install 1,000 refuelling centres within 36 months.
An energy expert, Michael Faniran, insisted that the reversal in the plan to remove fuel subsidy remained a step in the wrong direction.
Faniran, who noted that the national economy is suffering under the burden of fuel subsidy, said corruption opportunities under the fuel subsidy regime has been established by the government itself.
“Policy summersault by government always erodes investors confidence in any economy. Some investors would have been planning to take advantage of deregulation as provided in the PIA.
“Reversing this now means the provisions of the PIA would not be trusted by investors since the government could wake up any day to reverse any of the provisions,” he said.
Faniran noted that upcoming elections played a crucial role in the reversal of the subsidy, stressing that until the government can summon the political will, the country will continue to run around in circles on the subsidy regime.
An oil and gas lawyer, Emeka Okwuosa, noted that there is no best time to take the decision to remove the subsidy, adding that the country has only succeeded in postponing the evil day.
He also believed that the government halted the plan to buy the favour of Nigerians ahead of the upcoming elections.
“The postponement might be political. On one hand, we need complete deregulation for a seamless take-off of the PIA. We cannot keep the subsidy and expect a holistic impact on the positive effects of PIA. The government must have the political will to remove the subsidy,” he said, adding that the Dangote refinery coming on stream could provide succour.
Chairman/Chief Executive Officer, International Energy Services Limited (IESL), Diran Fawibe, said labour unions must be convinced and take the right decision instead of always fighting the removal of subsidies.
According to Fawibe, the government shares part of the blame on subsidy for not being able to fix refineries for over 20 years.
With low crude oil production, Fawibe noted that Nigeria is now facing double jeopardy, adding that the high crude oil price will return smuggling of products, as perpetrators are expected to smile to the bank.
He said: “If the government that has signed the PIA into law fails to implement it, who will take the government to court for violation? Let’s hope that the situation gets better and the government revert to full implementation of PIA in the downstream sector.”
The ruling party, All Progressives Congress (APC) has applauded the decision to suspend the planned removal of subsidies on petroleum products. APC, in a statement by its secretary caretaker committee, Senator John Akpanudoedehe, stated that the decision was in the best interest of Nigerians.
The party explained that the Federal Government took into consideration the fact that the removal of subsidy at this time would heighten inflation and cause undue hardship on the citizenry.
It noted: “Programmes and policies of government are meant to benefit the people. So, if the timing of the planned subsidy removal would cause hardship on citizens, then a review was necessary.”
The party commended President Buhari for always putting the welfare and wellbeing of Nigerians on the front burner through the implementation of programmes and policies.
The APC also commended the cordial relationship between the executive and the National Assembly, which has ensured good governance.
“Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed and the Senate President, Ahmad Lawan on the suspension of the planned subsidy removal,” it noted.
THE Nigerian Bar Association (NBA) has said the APC-led Federal Government suspended the planned petrol subsidy removal because of the forthcoming 2023 elections. NBA President, Olumide Akpata, made this known yesterday while speaking as a guest on Channels Television’s ‘Politics Today’ programme.
He said: “I would have loved to think that the decision to suspend subsidy is because the government cares so much about the people and it is a government that is listening to the cries of the people.
“However, something tells me that this has more to do with what is in the offing; an election is coming up and they (government) must probably have sat down and thought about it and told themselves that it would be suicidal at this point to take out subsidy going into an election which is around the corner.”
The NLC has, however, said there is no going back on the January 27 nationwide protest against the proposed fuel price increase. The NLC, in a post on its Twitter handle, said: “The January 27 nationwide protest against the increase of petrol pump price is sacrosanct, no retreat, no surrender… Aluta continua.
“Three days to go, a nationwide protest against the increase in petrol pump price. One day, the poor will have nothing else to eat but the rich. Fuel price on international rate, pay minimum wage on the international rate.”
Also, sources within the NLC told The Guardian in Abuja last night that labour does not buy into the suspension gimmick.
This comes as the NLC has written to the 36 states governors intimating them on why it is embarking on the one-day protest.
NLC stated that the protest is geared at alerting the government on the sufferings that Nigerians are going through and the additional trauma that Nigerians would be subjected to if the government goes ahead with the hike in the price of refined petroleum products.
NLC maintained that the proposed hike if it goes through, would induce and impose an unprecedented degree of hardship on Nigerian workers, their families and the generality of the populace.
It stated that the net and multiplier effects of such socio-economic dislocation especially with regards to a decent standard of living, productivity and national security are better imagined than experienced.
Meanwhile, the Trade Union Congress (TUC) has said its decision not to be part of the NLC protests is not a disagreement but choosing a different approach.
Secretary-General of TUC, Musa-Lawal Ozigi, told The Guardian that it chose to put its state councils on standby and that modalities have been put in place to ensure TUC members proceed on mass protests and strike as soon as the subsidy is removed. Additionally, he expressed support for the full implementation of the deregulation policy.
His words: “The NEC of NLC met and decided on the nationwide protest. The TUC was not part of the meeting. We are not an affiliate of the NLC. We are a trade centre on our own. The decisions of the NLC are not binding on us. NLC and TUC are allies and we remain one.
“We have chosen to put our affiliates on standby. On our part, we have said consistently since 2020 that we support deregulation that is backed with domestic refining capacity. That is our position. We believe that domestic refining capacity will provide jobs on a sustainable basis, revive the manufacturing sector and grow the economy.
“Also, the government must provide palliatives that are enduring and not the N5,000 transport allowance to 40 million unnamed poor Nigerians. Whatever palliatives the government wants to implement, it must carry labour on board.”
Professor Benjamin Osisoma, President of the Association of National Accountants of Nigeria (ANAN) told The Guardian that it is a good thing the government has listened to the voice of people because the condemnation of the policy has been unanimous.
“The people can only take as much as they can and you know that the burden of everyday living has not been easy on the average Nigerian. All we have seen is an increase in excise duty, an increase in VAT, an increase in this tax and that tax and now you want to increase the price of fuel. There’s no way these things can work.
“What I would the government rather do is to find a way we can generate an upswing in production by the private sector and ensure that every naira spent on subsidy adds value to the system.”
On his part, the Chairman, Online Hackney Practitioners Association of Nigeria, Mr Emeka Emerole, said the government has taken the right step. According to him, “before removing fuel subsidy, the government is supposed to give a long notice for the people to prepare their minds and come to terms with the new reality.”
THE pan-Yoruba socio-political organisation, Afenifere, also yesterday, faulted the action of the Federal Government to suspend the removal of fuel subsidy. The National Publicity Secretary of Afenifere, Mr. Jare Ajayi, said: “It is unfortunate that we can still be talking of fuel subsidy six years into the administration of President Buhari.”
According to Afenifere spokesman, Buhari and his political party told Nigerians when campaigning to be voted into power that fuel subsidy was a scam.
“They promised to do away with it if voted into power. Beyond that, the party and its candidates promised to revamp the then comatose petroleum refineries.
“Over six years after the party came to power, the amount being brandied for the subsidy has gone up considerably while none of the four refineries in the country is working,” Afenifere lamented.
The body maintained that Nigerians are not impressed by the government’s decision to postpone the subsidy removal till further notice.
“It did so not necessarily because it loves Nigerians, but because of the undisguised resolve of the people to resist such unhelpful step,” Ajayi said, submitting that “what President Buhari can do as far as petroleum in the country is concerned, is to get the refineries working. It should also bring the prices of kerosene, petrol, diesel and gas down considerably.”
EARLIER before the announcement by the Federal Government, Femi Falana, a Senior Advocate of Nigeria (SAN), had warned the administration of President Buhari to drop the plan to remove subsidies on petroleum products.
Falana, who is the Interim Chair, Alliance on Surviving COVID-19 and Beyond, described the planned subsidy removal as anti-people, warning that the Buhari administration should jettison the plan in the public interest or be prepared for a popular uprising.
The senior lawyer made this known in a statement titled, ‘Why Nigerians should join the anti-poverty rallies’.
Falana said it is very disappointing that the Buhari regime has concluded plans to remove subsidies on petroleum products after failing to hasten the implementation of the autogas project.
The statement partly read: “Having failed to fast-track the implementation of the autogas project, the Buhari administration has concluded plans to increase the price of PMS notwithstanding its reverberating effect on the cost of goods and services in the country.
“Another justification for increase is that it will curb the smuggling of fuel from Nigeria to neighbouring countries. The implication is that the people of Nigeria are being punished for the criminal activities of smugglers.
“Since the actions of the Federal Government cannot be justified we are therefore compelled to call on the economically marginalised Nigerian people to participate in the rallies scheduled to hold throughout the country on January 27 and February 1, 2022, at the instance of the NLC as well as the progressive extraction of Civil Society Organisations (CSOs).
“The victims of the neoliberal economic policies of the Federal Government have nothing to lose but their chains.
“Since the rallies are designed to warn the Federal Government to stop further provoking the Nigerian people, it is hoped that all anti people’s economic policies will be jettisoned in the public interest. Otherwise, the regime should be prepared for a popular uprising if it goes ahead to remove the so-called full subsidy or under-recovery in June 2022, or thereafter.”
The Independent Petroleum Marketers Association of Nigeria (IPMAN), has commended the Federal Government for approving the importation of petroleum products by private firms.
Mr. Chinedu Anyaso, Chairman of IPMAN Enugu Depot Community, in charge of Anambra, Ebonyi, and Enugu States, said this while reacting to the development in Awka on Sunday.
The Managing Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, on Friday, said private marketers could now import petrol into the country.
Farouk said under the new arrangement, the NNPCL had ceased to be the sole importer of petrol into Nigeria.
“We put the regulation in place, we make sure quality control is complied with, we make sure the product is there and we give license to any prospective importer.
“The market is now open for everybody that wants to import as far as they meet all the requirements. The NMDPRA will no longer fix prices or release templates for petrol.
“As far as we are concerned in the NMDPRA, this is not like before when the PPPRA fixes the price; in a deregulated market, it is the market force that dictates the price,” he said.
Anyaso said this was a positive development and an appropriate response to the demands of marketers and Nigerian masses who had condemned the monopolistic grip of NNPCL on the oil and gas sector for decades.
He said this would create the much-needed competitive pricing environment and allow market forces to demand the price of products.
According to him, “Two days ago, I repeated the call that the Federal Government should issue import licenses to private investigators, I also said it is wrong for the NNPCL, which is a private company, to be the sole importer and determiner of prices.
“I am happy that the same NMDPRA also announced that approval has been given to private importers. This is how it should be in a deregulated Industry.
“The competition that will begin in the coming days will surely ease the pain of high prices of products,” he said.
Anyaso commended the Federal Government for its bold step and called on it to extend the same to refineries to complement the contributions of Dangote refinery when it commenced production.
He said the four existing refineries should be repaired to produce at optimal capacity while licences are issued to more people who could build modular refineries.
He said this was the time to address the problem of Enugu Depot which had been moribund for over 15 years and had made distribution of products in the zone difficult as a result.
“We are appealing that as the government is addressing the issue of supply, they should also address the problem of distribution, Enugu Depot has not functioned for over 15 years, we need the Federal Government to fix it.
“It has not been easy for our members who source products from Lagos, Warri, Calabar and bring by road, the risk, accident, and losses have been too much,” he said.
For decades, the commercialisation of the Nigerian National Petroleum Corporation (NNPC) was the subject of discussions among critical stakeholders in the oil and gas sector. This was largely because there was hardly any framework for its implementation.
But with the unveiling of the entity in 2021 as a Company and Allied Matters Act (CAMA) firm under the brand name of the Nigerian National Petroleum Company Limited (NNPCL), as encapsulated in the Petroleum Industry Act (PIA), the ground was set for a reformed national oil company that was ready to compete with its peers globally.
Before the passage of the PIA, many stakeholders in the industry had admitted that the old NNPC, has not had an enviable past because of the seeming loss of faith by Nigerians and its partners in its operations. But that perception has since changed with the implementation of the PIA under the leadership of the Group Chief Executive Officer of the NNPC Ltd, Mallam Mele Kyari.
Indeed, under the Kyari-ledmanagement, the 44-year-old corporation has joined the global Extractive Industries Transparency Initiative (EITI). It also declared its first profit in about four and a half decades, released its Annual Financial Report to the public, and has generally been more open to public scrutiny.
With the company now fully transitioned into a commercial entity, stakeholders are now seeing a new NNPC that is ready to do things differently.
For instance, at the just concluded 2023 Upstream Investment Management Services Ltd (NUIMS) Annual Value Assurance Review (AVAR) Workshop, Africa’s richest man and the Chairman of Dangote Group, Aliko Dangote; Chairman of Heirs Holdings Ltd, Tony Elumelu; Deputy Managing Director, Deepwater Asset, TotalEnergies Upstream Nigeria Limited (TUPNI), Victor Bandele; the Managing Director of Shell Nigeria Exploration & Production Company (SNEPCo), Elohor Aiboni and other critical stakeholders expressed their appreciation to the leadership of the Nigerian National Petroleum Company Ltd and the NNPC Upstream Investment Management Services (NUIMS) for the level of collaboration geared towards delivering key projects to unlock value for stakeholders.
AVARworkshop
The AVAR is a strategic forum where key issues that shape the oil and gas upstream business landscape are reviewed, and the direction is set with the sole objective of guaranteeing short-term success and long-term value is delivered to all stakeholders.
The NUIMS 2023 AVAR is geared towards consolidating on gains for growth in the PIA era, with a laser focus on the ways NUIMS can better attract and manage capital for sustainable growth by emplacing plans to protect, preserve, and promote NNPC Limited’s upstream business objectives.
The outcomes of AVAR will also serve as relevant input to the ongoing efforts by NUIMS to be well-positioned to attract the required investments into the industry.
Stakeholders’ view
This year’s event has the theme, ‘Consolidating for Growth in PIA Era.’ was attended by the Group Chief Executive Officer of the NNPC Mele Kyari; the Executive Vice President (Upstream), NNPC Adokiye Tombomieye; the Chief Upstream Investment Officer, NNPC Upstream Investment Management Services, Bala Wunti; the Chairman, Heirs Holding, Tony Elumelu and other top investors in the Nigerian economy.
Speaking at the event, the Chairman, Dangote Group, Aliko Dangote said that the NNPC Limited has what it takes to become the African version of Saudi Arabia’s Aramco, adding that the oil giant can generate billions of dollars in revenue if the right decisions are made.
While stating that the PIA brought the transformation of NNPC from a government establishment to a commercial entity with no recourse to government funding, Dangote said that NUIMS has a critical role to play in unlocking funding to take advantage of the huge opportunities in the sector as well as to actively manage the investments to repay its loans, generate reasonable returns, and fund investments in new opportunities.
“I truly believe that NNPC should be our African Aramco. There is nothing that is impossible. You can make it possible and do not let anything scare you. It is just the same thing with us. If I tell you about our own story, you will be shocked as to how. It was not only the refinery that we started about six years ago. We had 32 projects that we all rolled out at the same time.
But then, on the way we had lots of hitches here and there where the devaluation of the currency, COVID-19, and challenges of infrastructure set in. If you want to do a real project in Nigeria, you have to look at the infrastructure that we have, because the infrastructure we have is not meant for mega projects.
We need to look at our infrastructure and see how we can take ourselves to the next level and it has to be driven by NNPC because they are the largest conglomerate and whatever happens to NNPCL, their assets, it actually happens to us either directly or indirectly”, he said.
He stated that if the NNPCL does not perform well, it affects the economy while adding that NUIMS, being an investment arm of NNPCL, plays a critical role in managing the Federal Government’s interest in the oil and gas industry.
“You are a partner in the Joint Venture (JV) assets and the Concessionaire in the Production Sharing Contract (PSC) arrangements. As important as its oversight function is, my expectation in this post-PIA era is that NUIMS should pivot from being overly focused on its role as a ‘watchdog’ to acquiring the mindset of an aggressive Investment Manager.”
The billionaire further said that the NNPCL needs to roll out massive investments in terms of oil and gas to meet demand, adding that there are many off-takers waiting to invest.
Dangote said, “My businesses in Nigeria require 635 million scf of gas per day with further additional demand as we expand capacity. No businessman will leave such an opportunity on the table. Unfortunately, I hardly get 300 million scf per day and there is no clarity as to when the required gas will become available.”
According to the Chairman of Dangote Group, a good investment manager actively seeks out investment opportunities, assesses them, and takes an investment decision and the NNPCL principal objective should focus on delivering strong returns; growing the investment portfolio, and managing portfolio risks.
He pointed out that the NNPC must first look into the cost component of its production as Nigeria has one of the highest break-even prices globally for extracting oil and gas which results in a long payback period.
Dangote said,“Let the NNPCL begin with delivering strong returns, which of course is a function of price and cost. While price in your industry is determined by the market and so clearly outside your control, the same cannot be said about cost. More aggressive cost targets need to be adopted and NUIMS staff rewarded with juicy bonuses if they meet these targets.
You need to benchmark costs with producers in similar basins and aim to be the lowest amongst your peers. Some existing government policies, as laudable as they may be, also need to be re-evaluated. For instance, we need to strike a delicate balance between encouraging local participation in the oil & gas sector and compromising efficiency and cost.”
The Chairman, Dangote Group, suggested to the NNPCL that the next course of action as a manager should be to grow its investment portfolio explaining that it would reduce the influence of IOCs.
Also speaking at the event, the Chairman of Heirs Holdings Ltd, Tony Elumelu, lauded the NNPC for the effort it made to curb crude oil theft.
According to him, due to the efforts of the NNPC Ltd, Heirs Oil & Gas has witnessed 96 per cent recovery rate.
Elumelu said, “When I listened to the Group CEO speak today, talking about us moving to 2.5 million barrels we challenged him to do more. I believe that it is achievable. From losing 97 per cent of our 50,000 barrels production, interestingly and it will be bad of me to have this platform and not share this here.
That day, I got a call from the GCEO and I thought he was going to kill me for speaking up, to my greatest surprise, he said to me Tony, we are sorry about what is happening, we are doing something about it, it will be corrected.
They worked as a team and the Board of the NNPC, the FG, and the security agencies, and last month our recovery factor was 96 percent. So GCEO NNPC, you have delivered”.
He added, “Today, we lifted 501,000 barrels of oil bringing our total lifting this year alone to 2.6 million barrels of oil. I am a great beneficiary of the new NNPCL.”
For his part, the Deputy Managing Director, Deepwater Asset, TotalEnergies Upstream Nigeria Limited (TUPNI), Mr. Victor Bandele, said the intervention of Kyari has unlocked fresh 30,000 barrels per day of crude oil from OML 130.
Bandele expressed his deep-felt appreciation for the Group Chief Executive Officer’s patriotic intervention in enabling the deep-water Production Sharing Contract (PSC) to engage the services of Gerry De Souza Drillship to commence the long-due drilling campaign of seven development wells and one exploratory well.
This assisted in arresting production decline on the asset and unlocking up to 30,000 barrels per day of new oil from the Egina and Akpo fields before the end of the year 2023.
This will generate more value for stakeholders, improve the capacity utilisation of the best-in-class Egina Floating, Production, Storage, and Offloading (FPSO) Vessel, and ensure the attainment of the desired benefits from the attractive crude oil prices in the market.
He reiterated his confidence in the leadership of NNPC Ltd and applauded the Upstream Investment Managers, NUIMS, under the Chief Upstream Investment Officer, Bala Wunti, for always being a step ahead and setting the pace for innovation in the Nigerian upstream oil and gas industry.
The DMD also announced to the gathering that TUPNI has secured the alignment of all the partners on OML 130 to progress with the lease renewal with a target to close out before the end of May 2023. The lease renewal will pave the way to firm up discussions on the Preowei and Egina West projects lined up by TUPNI and the OML 130 partners to introduce additional volumes to the Egina FPSO.
TUPNI is also on course to hit the milestone of one billion barrels of Crude Oil production on the Akpo field within a period of 15.5 years. He attributed this success to excellent reservoir management and the instrumental role played by NUIMS and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in providing the necessary support.
Bandele, impressed by the objectives of the NUIMS Value Assurance Review, promised to replicate the same in his organization.
Sharing her thoughts at the event, the Managing Director of Shell Nigeria Exploration & Production Company (SNEPCo), Elohor Aiboni, expressed her appreciation to the leadership of NUIMS on the level of collaboration geared towards maximizing the potential of the deep-water assets and delivering key projects to unlock value for stakeholders.
Aiboni was full of praise and appreciation for the NUIMS leadership for creating an enabling environment that fosters collaboration among its partners.
Citing the recent lease renewal, the MD restated SNEPCo’s commitment to growing their assets, willingness to deliver big-ticket projects, and exploiting near-term opportunities to continually grow output volumes by working closely with NUIMS.
SNEPCo recently surpassed the one billion barrels of crude oil production milestone and is currently outperforming its production target for 2023 raising daily production output from approximately 90,000 BPD to 131,000 BPD.
Improvements were recorded from the onshore and swamp assets following the launch of the industry-wide security architecture.
Also, activities in the deep-water space have also picked up contributing to the overall improvement in production output.
Aiboni stated further that there is no reason Nigeria cannot grow its crude oil production output to four million barrels per day, leveraging on the vast array of prolific assets, especially in the deep-water space.
She further expressed her appreciation to the leadership of NUIMS for the level of collaboration geared towards maximizing the potential of the deep-water assets and delivering key projects to unlock value for stakeholders.
Speaking at the event, Kyari said the challenges facing the oil and gas industry globally has made it compelling for the NNPC to come up with more ingenious ways of doing things.
He admitted that there have been challenges with security and underinvestment in recent times, adding that with the passage of the Petroleum Industry Act, the NNPC is better positioned to create value for Nigerians.
He said, “The crux of the industry is to make sure the upstream industry works. If the upstream works, there would be cash in the country. We are in a cash crunch in the country today, we are in a forex crunch today because the upstream has not gotten to a level where we can have a surplus to support the economy.
“And the reason is that we have challenges of security, decarbonization issues, energy transition, and the reluctance of financial institutions to lend.
“The practicality of all these is that there is difficulty in having access to capital today and this is very obvious, the whole world is lamenting today and there is an absolute supply gap in gas in the market in the short term and for a while to come and everyone is taking a step backward on what could be done to arrest the situation. “As a company, NNPC is leading this process, we are required to ensure that production cost is optimum, we have interest in nearly every business in the upstream sector and even in the midstream and our performance determines what happens in the industry. We are in a position to go back to normalcy.
“Production targets that we have kept over the years of 2 million barrels are realizable but have remained on the PowerPoint and this is the time to take them off the PowerPoint and resolve the insecurity, investment, and financing issues.”
As a National Oil Company, Kyari said the NNPC must cooperate with its partners to solve the energy challenges facing the country.
He said it is only through collaborative efforts with its stakeholders and partners that the NNPC can guarantee energy for the nation’s industrialization.
Kyari added, “We can solve the problem of energy poverty in the country, we can also support the rest of the world, particularly West African countries, to resolve the energy crisis that we are facing today. We can also help to resolve the issue of food security and by doing this, we will make more money for the country and businesses make more money.
We will invest in power and we are doing it and we believe that at the end of the day, we will create sufficient power for the country so that industries will spring up everywhere and create that prosperity that we desire.
We have the best workforce that we have anywhere in the world and we have seen many things that they have done. This means that our short term is real, our short term is achievable and as a company, we will satisfy the requirements of our partners and shareholders.
Our performance will speak for our us and our country and this is what we are focused on doing, we will work with you, we will work with the industry, we will work with our partners, we will work with our shareholders and ultimately, we will deliver value in a short time of three years and this is sufficient to bring all the value on the table.
We are getting all the support from the security agencies to make sure this works and we are getting maximum cooperation and we will overcome the security challenges and this company will deliver value for all of us.”
In his speech at the event, Tombomieye said the enactment of the Petroleum Industry Act (2021) came with so many expectations for NNPC Limited, which has been transformed into a fully commercial entity.
He said the oil and gas reserve base in Nigeria is enormous as available data indicate that the current crude oil and condensates production of 1.210 million barrels per day as of April has fallen short of the desired aspirations of 1.395 mmbopd for NUIMS.
According to him, additional efforts will be required to meet the objectives of growing reserves, oil and gas production, and monetizing the subsurface resources.
He said, “There is no gainsaying that several challenges have be-devilled our operations over time, ageing facilities, obsolete technologies, evacuation challenges, high production cost, inadequate workforce, inadequate funding.
“NUIMS has consistently demonstrated the zeal to overcome some of these challenges, as depicted in the recent strides for the emplacement of the industry-wide Security architecture, which has assisted in restoring production in some corridors.
“We are no longer in the PowerPoint era, and you must channel your energy towards reducing costs and growing production and revenue. Nigerians are watching us, and we must remain accountable to them.
“The Board and Management of NNPC Limited have tasked us with specific deliverables. We have executed the KPIs with timelines on when to deliver and can no longer afford to return with excuses to our principals for nonperformance.
“Let us consider ourselves partners in progress, and every contribution is for the collective good of the Company. Knowing fully that the strength of a chain is at its weakest link, we must strive to support each other on this journey of making the Upstream Directorate the shining light of the Company as it has always been.”
Conclusion
Through the event, it is evident that while the NNPC Ltd is hungry for even more success, it has remained committed to supporting all its partners to achieve shared prosperity.
… Our commitment to Nigeria’s Decade of Gas mantra unwavering, says Seplat Energy
Seplat Energy Plc, leading Nigerian independent energy company, says its commitment to the Federal Government’s Decade of Gas position remains firm and unwavering. The energy company said it will continue to develop Nigeria’s gas resources to accelerate the replacement of diesel and biomass and support economic growth through the supply of reliable, low cost energy.
Seplat Energy drove these narratives at the 6th edition of the Nigeria International Energy Summit (NIES) which was held at the International Conference Centre (ICC) Abuja from April 16 to 20, 2023.
The NIES 2023 was not only a remarkable outing for Seplat Energy as the company also picked up two major wards bordering on its positions as a Nigerian Domestic Gas Ambassador in its support to the Nigerian Gas Association and for its outstanding commitment to Nigeria’s Decade of Gas mantra.
Mr. Effiong Okon, New Energy Director at Seplat Energy, who represented Mr. Roger Brown, Chief Executive Office, Seplat Energy, said at the continental level, Africa needs access to energy as five-fold increase in investment is required to reach United Nations (UN) Sustainable Development Goals (SDG) 7 by 2030.
According to him, by 2030, 50 per cent of the global population without access to electricity will be concentrated in seven countries, of which Nigeria is inclusive.
Speaking during a Keynote dubbed ‘Africa at Heart of the Global Energy Mix: What’s Ahead in Nigeria’, and a panel session on ‘Improving Gas to Power, Gas to Industries, Gas for Cooking, Gas for Export’, Mr. Okon explained that achieving Africa’s energy and climate goals means more than doubling energy investment this decade, adding that the goal of universal access to modern energy calls for investment of USD 25 billion per year.
He said: “The opportunity is massive for our industry. With a future population of more than 2.5 billion, Africa represents a huge investment opportunity across the entire energy sector; and Seplat Energy will continue to develop Nigeria’s gas resources to accelerate the replacement of diesel and biomass and support economic growth through the supply of reliable, low cost energy.”
The conference-themed, Global Perspectives For a Sustainable Energy Future, had various stakeholders in the Nigerian Energy value-chain in attendance.
Consolidating on its strong stance on the Federal Government’s Decade of Gas Mantra, Mr. Okon explained that Seplat Energy is currently a leading supplier of processed natural gas to the expanding Nigerian domestic market; with working interest gas volumes for the 2022 business year averaging 112.3 MMscfd (2021: 107.9 MMscfd), a contribution of 44 per cent of the Group’s total production volume on a barrel of oil equivalent (boe) basis.
About 43 per cent of Africa’s population lack access to electricity most of them in sub-Saharan Africa with about 970 million Africans without access to clean cooking sources. Additionally, Africa’s share of global oil and gas production has declined from 2010 figures while energy demand continues to rise.
In IEA’s Sustainable Africa Scenario, Africa’s electricity demand increases by 75 per cent to 2030. Renewables, mainly solar PV, account for most new capacity additions due to ever‐declining costs driven by rapid global uptake.
IEA estimates that the prospects for oil and gas production would depend on the pace of global energy transition. However, the outlook for natural gas remains resilient compared to oil increasing in the near term to 2030.
Africa has the world’s lowest levels of per capita use of modern energy and with projected population and income growth, demand for energy is expected to expand by a third between 2020 and 2030.
