The maiden Nigeria International Petroleum Summit (NIPS) came to an end on Friday with positive reviews from a gathering of major stakeholders in the oil and gas industry both locally and internationally.
Eleven sessions held over a period of five days touching virtually all areas, including the opportunities and challenges in the sector, gas revolution, infrastructural development, refining, environmental issues and the future of oil and gas.
According to Ibe Kachikwu, minister of state for petroleum resources, the summit was organised on the premise of attracting investments into the country for medium to long term development.
He said the summit was the equivalent of the Offshore Technology Conference (OTC) that holds annually in Houston, United States, and will be a reference point for the Nigerian oil and gas industry in the near future.
Here are 10 highlights from NIPS that cuts across the past, the present and the future of the oil and gas industry.
‘DOLLAR RAIN’ FOR INDIGENIOUS OIL SERVICING FIRMS
The minister spoke on the launch of “Project 100” — a federal government initiative kicking off in April.
Under “Project 100”, government will partner international oil companies (IOCs) to provide financial support to indigenous companies in the oil and gas value chain to ensure expansion and guaranteed growth.
“The difference in the approach of local content is not just to push oil companies to comply… I would like to see a handholding which means that we can identify under project 100, some of these very critical companies that are in the background offering services and do not have the capital to expand and buy the latest technologies and skills, how do we work the oil companies to help them provide guaranteed loans, guaranteed financial support and begin to grow,” he said.
“In April of this year, we’ll be inviting them to launch at project 100… so all hands are on deck to see how we can push local content.”
Giving an example on Nigerian participation in investment projects, Kachikwu spoke on the Egina Floating Processing Storage Offshore (FPSO) facility, saying that future projects will explore greater local participation.
“In terms of Nigerian participation, Egina will be able to achieve 30 to 40 percent of local content…which is so very exciting,” he said.
“We intend that any future FPSO will achieve incremental local participation much more than that.
“In fact I have set a target for NCDMB (Nigerian Content Development and Monitoring Board) to pursue a 10 year strategic plan to build 100 percent FPSO in Nigeria.”
NIGERIA WILL COMPLY WITH OPEC SUPPLY CUT POST-EXEMPTION
The summit noted that the “historic” declaration of cooperation by Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC countries led to recovery recorded so far in the global oil market.
Mohammed Barkindo, secretary general of OPEC, had on Monday said a new legal framework been to make permanent the pact between OPEC and non-OPEC member countries is being institutionalised.
He expressed delight at Nigeria’s willingness to support the deal as the end goal was to foster stability in the global oil market.
“I am delighted by Nigeria’s determination to contribute to the Declaration of Cooperation partnership’s successes,” he said.
Kachikwu also reiterated Nigeria’s determination to continue its contribution to OPEC as “market stability will continue to play key roles in global economy.”
CROSS-BORDER COLLABORATION WILL PROMOTE REGULATORY EFFICIENCY
In his remarks at the closing ceremony, Yemi Osinbajo, a professor and vice-president of Nigeria, called for continent-wide collaboration as a recipe for promoting regulatory efficiency
He called on other African countries should also “open their doors to entrepreneurs” for shared experiences that will drive growth in the sector.
“Africa must increasingly look within for solutions to resolve the challenges that impedes the growth of industries, commerce and of economic growth generally,” he said.
“In addition, the increasing number of African countries joining the league of oil and gas producing states, calls for greater cooperation among the old and the new in the industry.
“With the largest proven gas reserves in Africa, and the seventh largest in the world…Nigeria’s experiences can be useful to other African countries.
“Collaborations, synergies and knowledge sharing are critical.”
‘7 BIG MUST WINS’ TO GROW NIGERIA’S OIL AND GAS INDUSTRY
Kachikwu reeled out the ministry’s agenda to chart new course for short to medium term strategies, saying that the strategies are “7 big must-wins” that will be accomplished on schedule.
According to him the “7 big must-wins” are hinged on seven key focus areas which are policy and regulation; business environment and investment drive; gas revolution; refineries and local production capacity; Niger Delta and security; transparency and efficiency; and stakeholder management along with international coordination.
He said: “The petroleum industry roadmap will ensure a paradigm shift towards improved governance, transparency, accountability…to ensure the entrenchment of sustainable policies fiscal systems and regulations in the oil and gas industry.
“This will in turn boost investor confidence and deepen the resource base across the full oil and gas value chain.”
NIGERIA WILL NOT SELL ITS REFINERIES
The minister said in clear terms during different sessions, that Nigeria will not sell its refineries but will instead invite private sector investors to rebuild the ailing refineries by provision of loans.
He said rather than selling off the refineries, the country will be the refining hub of Africa.
“For the first time, we are creating a model where private investments are going into our dilapidated refineries. Some of the winners will be announced over the next one month,” he said.
“We are still targeting to be able to get these refineries up and running from about 14 per cent utilisation capacity today to about 90 to 95 per cent over the next 18 to 20 months.
“Ultimately, Nigeria must aim to be the refining corridor for the whole of Africa.”
MORE INCENTIVES FOR MODULAR REFINERIES?
Kachikwu encouraged investors “to sink their teeth” into modular refineries as the federal government planned on providing incentives such as waivers.
He however said that though crude oil will be guaranteed for any investor willing to set up modular refineries,” it would not be at the expense of the government.
“Even if crude is sold in Naira, it will be at the normal exchange rate. We will not sell crude at a discount,” he said.
“What we guarantee those build refineries is that we will put crude next to you. They will enjoy the usual discount NNPC would ordinarily give to international buyers of this product.
“There are lots of ways we can assist them, without a peril to the policy that crude must be paid for at the right price.”
Panelists agreed that Nigeria should increase capacities on legal refineries to phase out the illegal refineries. Modular refineries they said, will help bridge the gap for the short fall of refined products.
RESTIVENESS IN NIGER DELTA SHOULD BE QUELLED
Niger Delta security was deeply debated as it is considered key to the growth, development and stability of Nigeria’s oil and gas industry.
In a session dedicated to issues in Niger Delta, Usani Uguru Usani, minister of Niger Delta affairs, said the federal government’s amnesty program to engage militants is ongoing. He said regional integration is planned for the Niger Delta to achieve traction to leveraging on what is available in the oil producing states as the region should be the hub of oil and gas.
Demola Adeyemi-Bero, chairman, Independent Petroleum Producers Group, had in an earlier session said sustaining the peace in the region involved hard work for economic growth and development to be realised.
He said that continuous engagement of the Niger Delta militants would also help to buy in investors in the country.
“The resources are there in Nigeria, investors are willing to come into the country, so continuous engagement with the youths and all stakeholders in the region is very important. Again, there is the need for enabling environment to be created,” he said.
Kachikwu said federal government is engaging governors of all oil producing states and host communities and is also in continuous dialogue with the Niger Delta militants.
REDUCED COST OF PRODUCTING OIL TO FOSTER COMPETITIVENESS
Kachikwu said the federal government would ensure that oil companies drive down oil production cost to $15 per barrel, from the current high of $23 to $24 a barrel.
According to him, low production cost must be maintained to keep the industry afloat within a competitive price threshold.
He said: “I will hate to take a costly barrel to the market when I have a cheap barrel.
“So what it means is that everybody will need to drive down to that $15 concept that we have set as the ideal cost of production in this country, not $22 or $23.
“And like I said two of the companies have met that and we’ll like get other companies to begin to push that.
“So there’ll be incentives, both in terms of your access to the market and willingness to produce and also incentives in terms of what we’re going to give to you by being a least cost producer. We’re going to work that out.”
APPROPRIATE FISCAL POLICIES WILL ENSURE GAS REVOLUTION
The summit harped on the need for Nigeria to adopt globally competitive fiscal policies, especially in the oil and gas industry.
Players in the industry were charged to be “globally competitive in the service they provide” and to adopt proper gas pricing systems.
Calls were made for a transition to willing buyer, willing seller pricing arrangement in a transparent and deregulated manner.
Panelists also urged that the Petroleum Industry Fiscal Bill be passed by the national assembly before end of this administration, to serve as enablers for the development of the sector and economy at large.
Nigerian investors charged to take initial risk to make investments in gas infrastructure to tap into opportunities that could potentially provide power for over 90 million people without access to it.
IOCs AND INDEPENDENT OPERATORS EXPRESS OPTIMISM
Giving vote of thanks, the heads of international oil companies (IOCs) and independent producers in Nigeria expressed optimism in the future of Nigeria’s oil and gas industry and the investment potentials therein.
Jeff Ewing, chairman and managing director, Chevron Nigeria, said: “Oil and gas industry is here for the long term. We are going to be here for a long time and we need to make sure we do business in a very effective way, both environmentally and otherwise.”
Massimo Insulla, managing director of Agip, said: “It is really exciting for me to be here today for this event. I still continue to believe that business opportunities are in Nigeria.”
Tony Attah, chief executive officer, Nigeria LNG (NLNG), said: “The future definitely is for gas, for cleaner energy as we all agree. We think there are opportunities for NLNG to raise the game, not just from an energy standpoint but also from an environmental standpoint. NLNG is here to stay.”
Ufuoma Hamilton Esi vice president, corporate communications, Lekoil, said: “We are interested in seeing issues on the regulation side of the industry move forward and get better. We are very interested in continuing attraction of oil investments and to develop opportunities in the country and in that sector.”