NIGERIA is the place to be. In the Gulf of Guinea, Nigeria is in the centre and globally because of some of the things we have seen in the world, especially the restiveness in the Middle East, the Gulf of Guinea is going to attain a more prominent position and the country has the hydrocarbon in good quantity to supply to the world.
This and many more were the positive assertions that characterised the just concluded Nigeria Oil and Gas conference, which also evaluates the present and future outlook of the petroleum industry.
Nothwitsatanding the appraised aboundant hydrocarbon potentials inherent in the nation’s goegraphical terrain, the stakeholders could not but cited enormous challenges hindering prompt utilisation of the resources, for the benefits of the populace.
Concerns have however continued to mount about the assessed static nature of the industry in recent times, which was attributed to unstable operating environment, lack of perfect policy framework, vandalisation and organised oil theft among others.
The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, was smart to have given a guaranteed light at the end of the turnel, saying that government is mindful of the strategic position of the industry, not just regarding the economy but also the lives of the ordinary Nigerian, particularly given the events that have taken place in the country over the last few weeks.
She however, painted a picture of progressive nature of the sector, since the inception of President Goodluck Ebele Jonathan on May 29, 2011, noting that the oil and gas sector has witnessed a renewed wave of activities and performance levels, which have placed the industry on a renewed path of growth and sustained development.
Giving the performance highlights, she said that the nation’s actual crude oil ( plus condensate) production rose to an average of 2.39 million barrels per day, consistently maintained above the budgeted production level of 2.30 million barrels per day with production records of 2.5 million barrels of oil and condensate per day.
Similarly, Alison-Madueke stressed that gas sales rose by more than 70 per cent to an average four billion standard cubic feet per day in 2011 and for the first time, industry supplied more domestic gas than was consumed by the power and industrial sector.
According to her, “the Nigerian Liquefied Natural Gas company (NLNG) had one of its most successful years, with production peaking at 21.2 million metric tons in 2011 alone. Thanks, in no small part, to the amnesty programme, which allowed unhindered access to oil and gas operations and activities.
“A major enhancement of deepwater oil production was achieved as a result of the arrival of FPSO Usan into the Nigerian waters, which on completion of the subsea wells and facilities tie-in, in a few weeks, oil production will increase by about 180,000 barrels per day,” she said.
In the gas sub-sector, she pointed out that as supply for power generation and industrial use has been sustained with supply outstripping demand both in the Western and Eastern axes, available records indicate that the volume of gas for power generation is unprecedented in the history of oil and gas in Nigeria.
“Having attained a peak in gas supply towards the end of last year, we have recently experienced some technical challenges in supply resulting in a shortfall, which we are working aggressively to bridge.”
She envisaged that renewed efforts at ensuring relevant Gas Supply Purchase Agreements were executed in order to encourage upstream gas development adding that by the end of 2011, three Gas Supply Purchase Agreements (GSPAs) have been signed amongst buyers, gas suppliers (Egbin/Shell/Chevron/PanOcean) and the Aggregator Company.
She listed the challenges within the sector, to mostly characterised by sabotage, financial leakages, lack of structure and other deep-rooted inefficiencies.
She said: “We must all sign-up to elimination of waste in the Oil and Gas sector, whether by eliminating gas flaring, by preventing pipeline vandalisation or by restoring the decaying infrastructure in the downstream.
“We need to open the gates to true reform and fix the inefficiencies in our sector, open the gates to transparency and to accountability and to most certainly open the gates to greater investments into the sector to generate prosperity for all stakeholders,” she said.
The minister listed the outlook of the industry to include implementing the Petroleum Industry Bill, with focus on ensuring clarity of roles, fiscal terms, attracting sustainable investment into the sector, articulating incentives for growth in indigenous participation and establishing a clearer governance structure for industry.
However, the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Austin Oniwon said irrespective of the imperfections in the Nigerian hydrocarbon industry, it remains the future of the Nigerian economy.
He submitted that Nigeria will remain the hub of oil and gas industry in the sub-region and the country has more than enough deposit of hydrocarbon to satisfy the global needs. He pointed out that focus must now be shifted to the nation’s gas resources in order to maximise the opportunities in the sector.
“The way we are looking at the future, gas is going to be the future for this country. If we do not from today start putting some emphasis on what opportunities are there for the gas industry, we lose out on the opportunities in the future. I hope that in future NOG conferences will focus deliberately on downstream and upstream”, he said.
Executive Vice President of Shell, Sub-Saharan Africa, Ian Craig, said that corruption and oil theft is the greatest challenges facing the sector estimating the volume to 150,000 barrels of oil per day (bpd) in Nigeria.
He stated that the shallow water sector, which is the backbone of the Nigeria’s production for sometimes, is not impacted by oil theft to the same degree but funding restrictions and more recently, license renewal delays have curtailed its growth potential.
According to him, “the greatest challenge is the massive organised oil theft business and the criminality and corruption, which it fosters. This drives away talent, both Nigerian and international, increases costs, reduces revenues to both investors and the government and results in major environmental impacts.
“The volume of oil, which is stolen is difficult to estimate but is probably in the region of 150,000 bpd. In December last year, a spill was reported on Shell operated Nembe Creek Trunk Line caused by two failed bunkering connections. Repairs took a month, with a total production deferment of over four million barrels.
“Sadly, as so often happens, thieves used the one-month pipeline depressurisation as a window to install even more bunkering points. Since restart of production in January, there have been multiple trips caused by pressure drops resulting from illegal off-take.
“We have found over 50 bunkering points on the line and associated industrial scale illegal refining with major environmental impacts, which are being removed, Craig added.
He lamented that the poor funding of the Nigeria National Petroleum Corporation (NNPC), as well as, the uncertainty in the country’s oil and gas legal and fiscal terms.
“Nigeria’s deepwater development has been impressive but when compared with Angola, it is clear that the pace of development is well below Nigeria’s full potential.”
“This deepwater developments require huge investments and take many years to pay out. It is not suprising then that investors currently hold back whilst the host nation ponders potential changes to the risk and reward equation.
From his own perspective, the Chairman, Managing Director, Exxonmobil Nigeria, Mark Ward, said that as more nati