Akinboro Aruwajoye, who retired as the first Nigerian deputy managing director of Nigeria Agip Oil in 2007 after a career spanning 35 years in the company, speaks with FUNSHO BALOGUN and BOSUN OLADIMEJI on the problems and prospects in the Nigerian oil industry Would you say that all is well with the Nigerian oil industry? I am sorry to say the industry is not well. As an oil man, I would say the very simple indices to know the health of the industry is reserve replacement. This means, with the oil and gas you are taking out, how much are you discovering to replace it so that you can have a sustainable economy. Today there is no emphasis on exploration. To find oil you have to do some exploration. You have to do the seismic and drill exploration wells. It seems as if the government of today does not focus on that fundamental which is very vital for the survival of the industry. And because there is this major disparity between government and the operators, when it gets to the development of policy it seems as if the two sides are talking but neither of them is hearing each other. I believe that if there is a honest discussion between the sides involved–that is, the government as regulators, the oil companies and the independent producers–the industry can get back to its prime place to meet the aspirations of the country. The way we are going now, which just emphasises bringing in products and subsidy issue, is not what supports the industry. The support of the industry is based on the amount of exploration works going on and the amount of training. If you have positive results in these two aspect then the industry will be healthy. From the upstream to the downstream. What was the situation concerning the issue of local content when you started your career? The issue of local content has always been there. When I joined the company in 1972 even common operators, people who opened and closed values or changed chokes, or who were just patrolling the lines to see that they were clean, were all expatriates. And it was obvious that the expatriates were the captains of the manor. [caption id="attachment_14863" align="aligncenter" width="300"] •Aruwajoye[/caption] When I came into Brass in 1975, the only people I knew in the plant were the Italians; because I had never worked in Nigeria and I did not know my Nigerian colleagues. At the mess, Nigerians would sit on one side while the expatriates sat on the other side. Because the people I knew were Italians, and I could speak Italian and could talk to them, I started sitting with them to eat. And some of my Nigerian colleagues would say: ‘What’s going on with that guy? Does he think he is superior to anybody here or what?’ There was that issue of being accepted even by your people. And at that time we would do three months and get on month’s leave; whereas today you do two weeks on, two weeks off. It was difficult at that time to find a Nigerian who would have a company-assigned vehicle, whereas all the expatriates, including those working with you or working for you, had these company vehicles. And at that time too, the mess was not offering Nigerians food. And a lot of Nigerians did not like that. I am emphasising these little things to let you know where we came from. Participation was really minimal. And to find somebody who had a clear-cut responsibility of being in charge of aspects of the activities was not very common. And these were the things we had to fight. The union became stronger and things started changing. And the industry has now changed completely. The efforts of the Nigerian content development people must be commended, considering the opportunity now being given to Nigerians to participate in the commanding heights of the industry. It is something worth celebrating. Why has government and the international oil companies not been able to find a solution to the issue of gas flaring? The international oil companies, IOCs, and government have not been able to get themselves to be on the same page. I laugh when I hear people say ‘Shut them down’. But when you shut these facilities down, the government itself bears 50 per cent of the losses. And all the tax derivable from the operations of the IOCs also ceases. Flaring is an economic decision. If the gas price is right, then there will be investments in gas utilisation. But if you want to collect the gas for free, then nobody is going to invest in it. And that is what has been holding things back. But there is some light in the horizon now from the new power policy that allows a free market environment through the willing buyer willing seller initiative. This is more realistic than just decreeing it. The growing preference for shale oil is affecting the demand for the sweet crude that Nigeria produces. How real is this threat, and what will be the eventual effect on our economy? The effect is real and it is on. That is why you find oil price crashing to just a little bit above $80 a barrel. But I think it is the novelty that is resulting into the price crash. Demand for crude oil and gas in the developed economies outstrips the incremental or decremented quantity that America is not taking. So if we do an energy balance, we will still find that there is enough demand to support the production of today. But this is not saying that the American market has evaporated for now from Nigeria. And it is going to be like that for quite some time because the quantities that shale gas and shale oil are putting on the American market is significant enough that they might not need to import. Our salvation still lies in China, India and the Asian axis, because they still have energy demand that can support what is being produced in the oil market today. What do you think is responsible for the delay in actualising the Petroleum Industry Bill? The PIB delay is infortunate. The PIB is well-intentioned for everybody involved in the industry–for the government, regulators, IOCs and the independent producers. But in structuring such s mammoth bill there is bound to be differences and divergences. I believe that the greatest problem why it is not having the blessing of majority of the stakeholders is because they are not talking to each other at all. And if they are talking perhaps they are not listening to each other. Our refineries are not in the best shape so there is a low capacity to refine. Why are we still not able to refine products at required and appropriate levels? The people who make policies should simply listen to the operators. We have had the telecoms revolution and even though we are yet to get the result of power privatisation, there is sill hope. I want to give an example which anybody in the oil industry can verify and validate. When the government was running Eleme Petrochemical, it was at a loss to government. I was in Agip at that time and we were the ones supplying them gas. They owed us so much for the gas we supplied to them. But no sooner it was privatised than things changed. I was reading somewhere not too long ago about the dividend they now pay to government for the 20 per cent ruminant shareholding it has. Eleme is planning on doubling its flanks and also expanding the scope of the plant. This was an establishment that was just creating losses for government at a time and was a mere drain on government revenue before it was privatised. We have had a lot of reversals concerning the refineries. The government people involved would say give us this and give us that and we would fix it. After taking all the money, we end up with the same old story of no solution. Somebody should just be bold now to say we should privatised it, and then we will cut our losses. It’s been done in several sectors and I cannot see why this should be different. Are there no examples of governments or states that operate refineries successfully? In the free market economy, I doubt if there is any success story of a government that is running a refinery. There might be but I don’t know any. Is it true that you are involved with OPEC and its activities. And are you linked in any way with the board? No, it is not true. I was never involved with OPEC and was never on a delegation to OPEC. The only time I was on government delegation was on Climate Change. I was on the Nigerian delegation to the United Nations in 2002 on World Climate Change. And there was a follow-up meeting in Milan in 2003 that I was also part of. And I think everybody can see the issues raised on climate change are still here with us today. People were shouting themselves hoarse that if we fail to reduce carbon emission and we don’t manage resources better than we were doing it could provoke catastrophic events. And we are seeing these today. I graduated from the University of Ibadan in 1972 and joined Nigerian Agip Oil Company that same year. And I studied Chemistry. As at that time, the University of Ibadan was not offering any engineering course. The best you could do was Chemistry, Physics, Geology etc. When I joined Nigerian Agip Oil Company, they took me to Italy that same year where I started a course on Petroleum Technology. I did that for another year and a half before coming back to start work in Nigeria. In the course of my career I served in the laboratory for crude oil export in Brass and almost immediately that job became too small for me, as owners of the job felt. So they took me to a life-changing career, by deploying me to Budget and Operations Control. This had a very big effect on my life because it taught me about money budget, planning and particular the tying of operations to money, which is what life’s game is all about really. Unfortunately too, I did not last for too long there; I was only there for a few years, and then we entered 1978 when the oil industry and the environment became top issues in Nigeria. So I created an environment and quality control department of Nigerian Agip. And that was about the year that all other oil companies too created such outfit. And we exchanged ideas, if we had spills that were bigger than our individual capacities we learnt to cooperate. And because the issue of environment was getting a lot of mention the NGOs and all such graps now decided to found the Nigerian Environmental Society. I think I was number 12 on the register, and was offered a fellowship of Nigerian Environmental Society. That was around 1985 or 1986. I had earlier been moved to the Operations department in the company where, in 1984 I was deployed to head Brass. I was the first Nigerian to do that. Two years thereafter, the gas plant was built by Agip; it’s still one of the largest plants in Nigeria. The Decree 99 of 1989 made it compulsory for oil companies to stop flaring by 1999, and they had to submit proposals to government about their gas utilisation. At that time Agip decided that it would be injecting some of its gas, and was looking for outlets for gas supply. Eventually it got two gas projects. One was the production of NGL for Eleme Petrochemical, the other was to produce for the Nigeria LNG Export. By the time I was on that plant it was new and we were mainly focused on gas injection, with all the treatment facilities. I was the first to head that. From there I was moved to become the maintenance manager, responsible for the maintenance of all the outlets in the company. And it was at this time too, as a manager in the department, that we introduced computerised maintenance management system. This meant that we could predict foresee things and prescribe actions to take to minimise some unfavourable developments in operations. Computer usage was new then, and it was quite exciting to do that. I did that for another five years, and by 1994 there was another new challenge in the industry. Agitation and militancy was coming up. This was the period of the Kiama Declaration. Kiama is a village in Bayelsa where the Ijaw Youth Movement met for the first time and decided that they were going to pursue resource control and their participation in the industry on a more aggressive note. It was there that the militancy of kidnap, shutting down plants, forcibly taking over facilities came up. And because I had this experience of more or less working in most areas of the company, I knew quite a lot of the boys who were involved. So I moved from Operations to become the Divisional Manager for Community and Public Affairs. That was in 1994. Apart from knowing these people, I come from a background, a household where people value human relations. This helped me a lot. At that time, while most of the operations of the oil companies were shutting down, Agip managed to keep on producing. This continued until 1999. But every good story has an end, good or bad. In 1999, when politics came in the political class felt that I was too visible. They talked to my top management that they wanted me removed. At the period when I was Community and Public Affairs manager I went through kidnappings, through hassles and pains of walking without shoes when taken by these militants and you kept on trekking long distance as directed by those small boys. However, I was never kidnapped for more than 48 hours at a time, and we would talk all through the nights. We usually found a way to negotiate with the boys at the period. But by 1999, I was witnessing the downside of all these things. And the security agencies also picked up intelligence that my life too was in danger. I had to be moved to Lagos where our head office was. There were not really any operations jobs in Lagos, and I was made general manager, Government and Public Affairs. I spent most of my time shuttling between Lagos and Abuja. In 2006, I was made the Deputy Managing Director. And I went on retirement in 2007, after 35 years of service in Agip. Since then I have been trying to put a few things together, investing in asset ownership and in the service industry. And God has been faithful. Were there any individuals or circumstances that influenced your choice of career? Two people really affected my career. My working with Agip was inspired by Chief M.O. Ferede of blessed memory, who was one time secretary-general to OPEC and was at another time the head of Department of Petroleum Resources. Actually, he was the founding head of the department. He was an inspiration and I liked him, his attitude, his carriage and the fact that he was a quiet and effective person, even under a lot of pressure. Some things he did were beyond explanation or the usual. All his life, he must have visited me more than I visited him. Whereas he was the superior and the older person. He was one person that I really admired. And I also had a boss who was my friend then. There was a time the oil industry was not as flamboyant as it is today, and was not the choice place to be. This was in the period of “essential commodities”, when people selling beer and selling cement were instant successes on the street. I felt I should also try it out. Then I applied to Coca-Cola, and they offered me a place. The salary was not too far from what I was earning. But then, the glamour of parties, not myself going to the parties, but every Nigerian appeared crazy about parties then; it was the in-thing, and things were in short supply. So, if you were the one who would make their parties happen you became a society person. A celebrity. And I almost turned in my letter of resignation. But my boss who was my friend said “Akin, are you crazy? How can you be thinking of leaving the oil company?’ Honestly, I was just carried away with the glamour of that period. Your wanted to leave oil for Coke? (Laughs) Yes, that was the irony of that period. Then, when you got a job in the breweries or served there, you were very successful in Nigeria market. I thought it was the place to be. However, I had a few of my friends who did that. And I don’t know any of them that are now the better for it. It was just a bit of luck for me, and a narrow escape.