By Amechi Ogbonna
Amid the virulent diatribe against Federal Government’s desire to end the highly contentious subsidy regime, its officials have continued to use every opportunity at their disposal to drum up support for its full implementation.
Just as the Finance Minister, Zainab Ahmed at a popular TV programme last week told Nigerians that transport allowances would be paid to them to cushion the effect of subsidy removal, Minister of State for Petroleum Resources, Chief Timipre Sylva, at the just concluded Nigeria International Partnership Forum listed the benefits of subsidy and full deregulation of the oil and gas sector.
Among other benefits, Sylva said the policy if faithfully implemented would attract more investments into the Nigerian oil and gas industry and help the country raise its 260tcf of gas to over 600tcf over the next 5-10 years.
In this interview on the sidelines of the investment forum, the minister reeled out what the country stands to gain in a fully commercialised and deregulated oil and gas market
The minister who was recently named head of the steering committee for the implementation of provisions of the Petroleum Industry Act by President Muhammadu Buhari, said the passage of the Petroleum Industry Bill (PIB) and its subsequent signing into law after more than 15 years of being in the works , remains a watershed moment for Nigeria.
According to the presidential statement on the appointment, “The primary responsibility of the steering committee would be to guide the effective and timely implementation of the PIA in the course of transition to the petroleum industry envisaged in the reform programme and ensure that the new institutions created have the full capability to deliver on their mandate under the new legislation,”
The minister explained how the PIA and other government initiatives are helping Nigeria to attract more foreign investors into the oil and gas sector. He emphasised that the removal of subsidy in the oil and gas industry would help Nigeria expand its production capacity, create jobs as well as give impetus to more foreign direct investments, bolster the country’s race towards cleaner energy and climate change compliance among other benefits.
Significance of Nigeria International Partnership Forum in Paris
This event is a very useful one and it’s the kind of thing we should be doing as a country because the whole idea is about marketing the nation to the global business community. When your president comes by himself to market the country, you can imagine what mileage it will bring to us as a nation. The event also presents the very first opportunity for the country to canvass for investments after the passage of the Petroleum Industry Act on August 16.
As a nation, Nigeria has done a lot of good things over these years under President Muhammadu Buhari.
In my sector, for instance, we have passed a new law which gives a new face and new opportunities to investors in the oil and gas industry and so we cannot just sit down back in Nigeria and do nothing but to tell the whole world what we are doing and so it was important that we are here to interact directly with potential investors to inform them of the opportunities that now exist in Nigeria to enable them make their investment decisions.
What’s the guarantee that these investors will actually come in the midst of security challenges facing the country
From the inquiries we are getting, we see that this is a serious audience and we are quite hopeful that a lot of investments will come from here. I have received over seven enquiries since we came into Paris and these investors are asking questions about specific sectors they are interested in, thus showing the significance of this forum.
In what specific areas is government hopeful of partnerships from the global business community?
We already have a major partner here in Total Energy and that is the French major investor in the oil and gas sector. But of course, there are independent and smaller investors that we are also talking to us from here who are willing to invest in our country. But definitely from here, gas is our new pathway and we want to focus on the development of gas as a cleaner fuel of which our President has already demonstrated strong commitment to it, having declared 2020 -2030 as a Decade of Gas Revolution. We are committed to achieving net zero dirty fuel by 2060 but we want to use gas as our transition fuel. Today, we have about 206 trillion cubic feet of gas in reserves but we are also expecting that if we focus on the development of gas, we should be able to increase that to 600 trillion cubic feet of gas over the next few years as there is abundant gas resources in Nigeria and of course as part of making sure that we are about to take out subsidy, we are also trying to encourage people to drive their cars on gas. The decade 2021 to 2030 was already declared as the Decade of Gas by President Muhammadu Buhari and so we are very serious about it.
How we’re improving Nigerian investment climate with Petroleum Industry Act
The whole idea of signing the PIA into law and the inauguration of the steering committee which I am privileged to chair is for us to really overhaul and give the oil industry a complete makeover that will open up new opportunities for investors in the oil industry.
For instance, the PIA has actually reduced royalties and taxes in the oil industry in Nigeria and has made the oil and gas industry more attractive to prospective investors which is also part of the reasons we are here today.
In coming up with this new law, the IOCs that are already operating in Nigeria worked closely with us and we had assured them that we are able to get a law that is acceptable to most investors, including IOCs and even indigenous investors in the oil industry.
So, there is no better time for you as an investor in the oil industry to come to Nigeria than now and under this dispensation.
Highpoints of the PIA
The PIA incentivises growth of the mainstream sector which hitherto has not really developed in Nigeria but of course the PIA has incentivised that segment of the industry as there are now a lot of opportunities in the mainstream of Nigeria’s oil and gas industry for investors who are interested in coming to invest for robust returns.
Of course, we know that the NLNG in Nigeria is one of the most profitable mainstream companies in the world today and you can see that there are lots of opportunities in that sector.
So far, we have open reserves for 260 TCF of gas with an upside of about 600TCF and so there are a lot of opportunities for investors in this sector.
As a country, we have also decided to take gas as a transition pathway to the global climate change and so our focus now will be on the development of the gas sector.
You would recall that when recently Mr President recently signed the Petroleum Industry Act (PIA), the whole idea is to use the legislation to serve as a liberalising force in the industry, by introducing incentives such as tax holidays, zero-interest loans to operators and investors in the sector and to achieve easy repatriation of profits when desired.
Our plan here is to increase Liquefied Natural Gas exports and also expand our domestic market.
Other issues that militate against investment in the oil and gas sector have already been dealt with by the PIA which is mainly the host communities. There was really big issues with host communities and problems in the Niger Delta all of which have now been squarely addressed by the PIA and so all the issues that people use to worry about when they want to take decisions about investment in oil and gas sector have been taken care of by the PIA and that is a brand new opportunity.
Expanding oil production
We have a national goal of increasing our oil production to about 4 million barrels from where we are, which is about 2 million barrels and our target is to increase production to 4 million barrels per day. So you can see that there is a lot of headroom for growth and this shows that there is no better time for investment in the oil and gas business environment than now.
Why are we’re still investing in oil, gas sector when others are moving to renewable energy?
We all agree that oil and gas will be with us for a long time to come and all the outlooks, projections tell us that oil and gas will still be part of the global energy mix over the next 10-20 years and therefore it is very wise for people to come to invest in this sector which we are building up for the very first time in the history of Nigeria’s oil and gas industry.
Our overall strategy is to monetise the oil and gas sector to enable investment in cleaner energy and diversification of the economy. We believe that the easiest way to diversify Nigeria’s economy is still within the oil and gas sector because it is a sector that will create this new phase. From gas, one can get fertilisers, which will open up the agricultural sector, from gas, you can get petrochemicals, methanol to enable the pharmaceutical and chemical businesses function, and also power industries and so this is actually the sector that has the most organised framework in Nigeria. So far, it will be the mainstay for a long time to come. I can assure you that the oil and gas industry will continue to contribute its quota to the economic development of Nigeria.
Is Nigerian private sector ready for this new revolution?
Of course, they are but we did not come to France to discuss with the Nigerian private sector. We are here for foreign investors but when we get back home, we know how to talk to them and see areas of collaboration and support to give them the necessary impetus for engaging with potential investors from across the world. But right here in Paris, our focus is to woo foreign investors to Nigeria.
Why we’re still talking about gas when others are investing in renewables
Whether they like it or not, gas is still part of the global energy mix. That explains why you are having problems with gas prices which is going up in Europe and I am sure we are feeling it in Nigeria because they say they are going to take out investment and if you do not invest, you will feel the impact tomorrow. If that happens, your production will reduce in the future and so now they know that the lack of investment is also going to be felt in the future and it is in their enlightened self interest to at least continue with investments in this sector until such a time that renewable will take over. But renewables at this point have not reached a point where they can take over the whole energy supply.
What does that mean for climate change and the national drive toward cleaner energy
We are all in it and Nigeria is on the trend as we have declared that we want to achieve net zero by 2060. But if you say climate change, then it is cleaner fuels for the future. It does not mean renewable alone because cleaner fuels for the future must include cleaning up fossil fuels by developing carbon capture technology. There are technologies now that can clean up the fossil fuels pollutants and that must be part of the mix and so let us develop these technologies alongside the development of renewable energy.
The country’s commitment to expanding the scope of our oil and gas infrastructure was further demonstrated when President Muhammadu Buhari met with the Chief Executive Officer of Total, Patrick Pouyanne, in Paris, France, where he assured him and other investors that gas remains a top priority for the country, considering its huge benefits in terms of returns and utility.
Mr President had told the French oil major that Nigeria had made huge investments in gas, and will continue to create enabling opportunities for expansion, while looking at improving alternatives for renewable energy.
He also informed the Total Energy boss that Nigeria was mindful of the target of zero emission by 2060, having already started putting in place necessary natural structures that will ensure balance and safety for citizens and the global community. So we’re not leaving nothing to chance but will continue to match our commitments with necessary actions to ensure the attainment of our desired goals as we partner the rest of the global community to achieve safer climate
Fate of oil, gas workers under PIA
I have earlier assured the Union that no job will be lost in the nation’s petroleum sector following the signing of the Petroleum Industry Bill into law.
What the signing of of PIA does is to provide a legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, development of host communities, and related matters.
Therefore fears about workers in the petroleum sector, losing jobs should not be an issue since the move will instead create more jobs.
“We have already made provisions in the law to ensure that no job is lost in the oil industry as a result of the PIA,”
“So, no job will be lost as a result of the Petroleum Industry Act. All jobs in the petroleum industry will be intact.
“That has already been taken into account through our extensive discussion with labour in course of drafting the bill.”
On the benefits for the oil workers, I believe the workers have more to gain since the government does not pay as much as the private sector. Indeed the PIA is a big game changer for the Nigerian economy and particularly the oil and gas industry.