Sunday, September 24, 2023 10:33 pm
In this interview, Dr Diran Fawibe, the Chairman and Chief Executive Officer of International Energy Services Limited (IESL) discusses critical issues in Nigeria’s oil and gas sector, especially the bottlenecks to investments, the implementation of the Petroleum Industry Act (PIA) as well as the delay in revamping Nigeria’s refineries.
Are you worried that the Port Harcourt Refinery is still not working despite previous promises?
The fact that the refinery is not working is worrisome. It is not on a fast track considering the challenges we have with the supply of petroleum products in the country. The refinery doesn’t give one any confidence in our ability to do things right because when you look at it strictly. People were canvassing for the removal of subsidies with the thought that we’d be able to refine products.
If the price of oil goes to $100 per barrel internationally and we’re still not refining crude locally, how will that affect the local market? The only way we can stop this erratic price movement of fuel at the pump is to start refining locally.
If we then want to do a deal, we can say for the local market given the level of poverty and the effect of the transportation and others, we will moderate the price of fuel and crude oil that serves as feedstock for the local refinery. We’ll still expect the local refinery to operate and still be able to make profits. There is no story you can tell Dangote that has borrowed money from the international financial market not to reflect the cost of production (refining) from the price of the product that is shunning from the refinery.
It is important for Nigeria’s refinery to be working. When the Port-Harcourt refinery was awarded some time ago for $1.5 billion, so much was said, assurances were given that the refinery would be done speedily. Since NNPC is now saying before the year runs out, the refinery will be working, let’s rest our hope on that. If that doesn’t happen, we’ll all be living witnesses to what is going to happen to the downstream market.
There are about 28 refineries currently looking to come on stream. These refineries need crude oil but our production has been low for a long time now. Do you see a situation where Nigeria will start importing crude?
If we don’t do something dramatic to our crude oil production, the refineries will not find enough crude oil. Nigeria would have to import crude oil.
Based on a long-term view of Nigeria’s oil and gas sector, we knew that we had to develop refineries to be able to supply our local markets.
We also felt that if we’re making serious efforts to increase our national reserves, certainly we’ll be able to supply our refineries with crude oil. The 40 billion barrels of crude oil reserve that was a target wasn’t just decided. We believe that the Nigerian offshore deep waters produce and harbor enough hydrocarbons that achieve 40 billion barrels of reserves if there were investments that would go into the development of those fields.
That is why the international companies came in at a time when they expected that the production level would rise to four million barrels per day. Assuming we’re supplying 1.5 million barrels to all the refineries (Dangote, NNPC, private refineries and modular refineries), we’ll still have crude oil to export. Even if we are producing 2.4 million barrels per day, we could still have decent crude exports to supply the refineries.
There will be a shortage of feedstock with the 1.2 million barrels that we’re doing presently due to oil theft and lack of investment.
We also have the same problem with meeting feedstock for gas projects. This is a problem that Nigerian LNG is currently facing. We have six streams and work is ongoing on the seventh stream. But it is difficult to get enough gas for the six streams. Other projects are coming up that require feedstock but if the existing LNG is having challenges with feedstock, how do we cope?
Before going into the development of LNG, you must be sure of the gas feedstock. If you embark on LNG development without concrete plans for the supply of feedstock, it will be a waste of resources.
It’s a vital thing, that’s why people are suggesting we go on the gas bid round as against the oil bid round. We should drive oil and gas development based on our PIA to increase the level of oil production and development, which includes reserves both for gas and oil, not minding the propaganda about fossil fuels.
The president has appointed two ministers of state in charge of the oil and gas sector. Do you see any logic in the decision?
I think it’s a wrong approach to the development of Nigeria’s oil and gas resources. What do we need two ministers for? We continue to make mistakes over time.
Shagari started by not appointing a minister for petroleum from 1979 to 1983, Yaya Dikko was only a special adviser for petroleum. When Buhari took over they appointed a full-fledged minister of petroleum but when Obasanjo came in 1999, he didn’t appoint a minister for petroleum. He took over and was appointed initially minister of state for petroleum and various other people were appointed at different times. We had so many ministers during his eight years tenure.
Jonathan came up with the minister of petroleum, though she didn’t meet expectations. Buhari, in his second coming, came back with the minister of state. People felt he decided because he was commissioner for petroleum from 1976 to 1979.
He stopped all the people in uniform from holding executive positions, there was no one appointed to succeed him, he remained as the chairman of NNPC until September 1979 when the power was handed over to Shagari. It is wrong when you now have the minister of gas and the minister of petroleum, which are the same natural resources. When you are prospecting for oil, you get associated gas produced in association with oil. There are rarely any fields where you produce oil and don’t have the rudiments of gas.
Tinubu is yet to appoint a Minister of Petroleum Resources. What will happen if he assumes that office?
Let’s hold on to see if he wants to appoint himself as the minister or if he’s looking to appoint one soon-to-be senior minister to the two others.
He has not designated himself as the minister for petroleum yet. It will be very unfortunate if he does that because he has so many issues and areas of national development that need to be handled. Security and the economy alone, need serious attention as much as petroleum.
He has to appoint a minister of petroleum. There has to be someone trustworthy to handle that position and give that area of the national economy serious attention. I think the best thing to do for the petroleum industry is to have one single minister who will be responsible.
It has been two years since the signing into law of the Petroleum Industry Act (PIA) was passed. What is your take on the implementation so far?
The PIA has not been fully implemented and the issue of subsidy suspension by former president Buhari is a typical example. One of the things that should be done now is to take a holistic review of the PIA. The fact that it was signed at the end of the Buhari administration was as if the PIA was in a state of transition. So, we now have a full-fledged government that shouldn’t give excuses about the full implementation of the PIA.
We should be able to comply with all the provisions. One of the major obstacles with the implementation is the subsidy removal, which has now been implemented. We can now look at the upstream and the downstream segments as well as the mainstream segment and clear all the bottlenecks.
One of the bottlenecks people have mentioned lately is the dual regulators. Do you support the people calling for a merger of the regulators?
*Continue reading from the source: The Guardian