TELL Magazine

Nigeria has an enormous endowment of natural resources, chief among which is hydrocarbon which is much more preponderantly deposited in the Niger Delta region of the country. Currently, Nigeria has 38 billion barrels of proven oil reserves and 187 trillion cubic feet of gas. The oil and gas resources is the mainstay of the Nigerian economy providing 30 per cent of the country’s Gross Domestic Product, GDP; 80 per cent of government revenue and 95 per cent of the country’s foreign exchange. For Nigeria to realise its national aspiration of becoming one of the top 20 economies of the World by 2020, the success of the oil and gas industry is crucial.

This strategic industry has in the last three years been under the supervision of the Hon. Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke. The question is “how has the industry fared under the stewardship of this Amazon in respect of the His Excellency President Goodluck Ebele Jonathan administration’s Transformation Agenda in the oil and gas industry?” Put differently, how has the management of the petroleum sector by Mrs. Alison-Madueke contributed to the giant strides being made in respect of the strategic objectives of the industry such as:

• Growing the nation’s oil reserves and managing the expansion in production capacity.
• Repositioning Gas for rapid domestic, regional and export penetration
• Continual strengthening of the subsidiaries of NNPC towards making the Corporation a global brand.
• Reforming key institutions to anchor sustained growth in the industry.

To have a robust view of the contribution of the Hon. Minister of Petroleum Resources, Mrs. Alison-Madueke to the industry, it is pertinent to segment the industry activities in respect of its various sectors such as Upstream, Midstream and Downstream.

The Upstream Sector

The Upstream Sector is the heart of the oil and gas industry. Here, the management of the industry under Mrs. Alison-Madueke has exceeded expectations. The Upstream Sector prior to assumption of office of President Jonathan under which the Hon. Minister serves was in near collapse. There was wanton disruption of exploration activities in the Niger Delta due to the activities of myriad militant groups in the region. At about 2010, Nigeria’s daily crude oil production went down to as low as 800,000 barrels per day. Although the former President Umaru Yar’Adua initiated the Amnesty Programme, the Jonathan Administration pursued the initiative with a lot of vigour, which has heralded a regime of peace and tranquility in the Niger Delta thus providing the much needed conducive environment that has encouraged exploration activities to blossom. Today, thanks to the management of the industry by Mrs. Alison Madueke, crude oil production has been maintained at an average of 2.3 million bpd with gas production increased from 6.3 to 8.1 bcf/d by year-end 2013, in spite of incessant pipeline vandalism and crude oil theft.

Despite this achievement, the oil and gas industry under Mrs. Alison Madueke is not conceited as the Hon. Minister has also mounted concerted efforts to grow Nigeria crude oil reserves in the Inland Sedimentary basins especially in the Chad Basin with the acquisition of additional 3D data and commencement of Phase 5 of the exploration programme. Data processing and interpretation are also ongoing to establish drillable prospects in the basin.

Under the stewardship of the Hon. Minister of Petroleum Resources, the abandoned SPDC JV assets have also been reactivated and production ramped up on the divested SPDC JV assets. The result has been an increase in NPDC crude oil production which now averages about 150,0000 per day.

The oil and as industry under the watch of the Hon. Minister of Petroleum Resources, Mrs. Alison-Madueke is also paying deserved attention to the management of the environment of the oil and gas operation. An organisational as well as implementation structure for the execution of the recommendation of the Ogoni UNEP Report which provides information on the level of devastation of Ogoni land has been put in place. Already, the processes and intervention programmes which include remediation, economic empowerment of impacted communities as well as funding have been agreed upon by the industry.

The Midstream Sector

In the Midstream, Mrs. Alison-Madueke leadership performance is no less impressive. Here the role of the oil and gas industry as a backbone of the power industry comes to play. Under the Hon. Minister’s watch, the Industry has sustained gas supply for power generation and industrial use following the execution of gas supply intervention programmes, resulting in increased gas supply to the Western Gas corridor which has in turn positively impacted electric power generation in the country.

Part of Mrs. Alison Madueke’s management of the industry and its attendant success story in the Midstream is the implementation of critical pipeline infrastructure for gas supply which has been pursued vigourously. To the credit of the Hon. Minister ELPS Phase 1 expansion project has been commissioned which has increased the delivery capacity of the Escravos–Warri pipeline system from 399mmscfd to 600mmscfd. It is worthy of note that gas supply to Olorunsogo has also been commissioned, while OB3 and Oredo–Ogherefe gas supply projects are being progressed.

In March 2011, the Jonathan administration launched “The Gas Revolution: Rebirth of Nigeria’s Industrialisation”. The objective of the initiative is to stimulate industrialization of Nigeria through gas based industries. Gas-based industries are those that utilise gas not as fuel, but as feedstock. The initiative will also involve establish an Industrial Gas City in Delta State. The Gas City will comprise establishing a world-class petrochemical plant with the capacity to produce 1.3 million tonnes of polyethylene and 400,000 tonnes of polypropylene per annum. Government plan is that from this plant alone, myriad secondary industries will develop producing such items as plastics, packaging stuffs and high-end products as printed circuit among others. The initiative is expected to bring into the country foreign direct investment of about $10b between 2011 and 2014. Also expected of the initiative is the generation of massive employment opportunities, support for agricultural production and boosting government’s plan to provide stable power for economic development. It is worthy of note that under the watch of the Hon. Minister of Petroleum Resources, the Gas Industrial Park is set to be launched by President Jonathan soon.

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The Downstream Sector

The Downstream Sector is perhaps one that most Nigerians are familiar with probably because activities in the sector touch their lives more or less instantaneously. Yet, it is also a sector that has encountered festering challenges such as pipeline vandalism as well as loss of hard earned resources due to administration of subsidies on petroleum products in the country. In early 2012, attempts by the administration to abolish subsidies on petroleum products could not enjoy the overwhelming support of Nigerians as expected. In spite of these challenges however, Mrs. Alison-Madueke has ensured that all parts of the country receive petroleum products in the quantity that will sustain their economic activities. Where there were hiccups in petroleum products supply, the Amazon had taken up the challenge and put an end to such occurrence.

Aside from ensuring steady products supply nationwide, the oil and gas industry under the watch of Mrs. Alison-Madueke has also undertaken an aggressive repair, rehabilitation and up-grade of industry facilities. In the last few years, the Port Harcourt–Aba product pipeline has been re-streamed, while the integrity of Warri–Benin, Aba–Enugu pipelines are being re-established. Within the period under reference, Aba Depot and Okrika Jetty were re-commissioned. It is worthy of note that the integrity of most of the network of pipelines serving the north has been re-established such that products are now being moved to locations such as Jos, Gombe and Kaduna through pipelines.

Undertaking a holistic rehabilitation of the three refineries has been a major position of the Hon. Minister since her assumption of office. Her plans are to contract their rehabilitation to the original manufacturers to guarantee an excellent job. As at today, Port Harcourt Refinery is undergoing a major rehabilitation while those of Warri and Kaduna have been scheduled.

The vision of the Hon. Minister of Petroleum Resources has been that the rehabilitation of the refineries will enhance local refining of substantial portion of products being consumed in the country, thus enabling Nigeria to save its hard earned foreign exchange being expended on products imports.

While the focus is to abolish petroleum subsidies in the nearest future, it is pertinent to stress that the Hon. Minister of Petroleum Resources has brought a lot of sanity into the administration of the Subsidy Support Fund having put in place stringent measures to curb corruption in the system.

Local Content Development

The Nigerian Content development is an issue which the Hon. Minister of Petroleum Resources, Mrs. Alison-Madueke considers a top priority. Not surprisingly, no sooner she took office than she collaborated with the National Assembly to expedite passage of the Local Content Bill heralding a regime of opportunities for Nigerian players, big or small, in the oil and gas industry. The reality of the Nigerian situation is that more than 50 years of exploration and production of crude oil, Nigerians as a people have benefited but marginally from the industry, notwithstanding the huge revenues that have accrued from the oil business over this period. Till date the contribution of the oil and gas industry to the GDP is a mere 30 per cent. More specifically, it has been found out that although the annual spend on goods and services for the industry is in excess of $15 billion, only a paltry sum of this amount trickles down to Nigerians in respect of utilisation of local materials made by them or from their services in the industry. In plain language, for years, employment, opportunities for training, investment in infrastructure and technology have eluded Nigeria and Nigerians as most of the goods and services are exported to foreign land. What the Nigerian Content Law did was to, in one stroke, reverse this trend by attracting investors to set up facilities in Nigeria, providing avenues to ensure that procurement of goods and services are domiciled in-country, stimulating employment and providing opportunities for training for Nigerians as well as creating an environment that promotes in-country support services and linkage industries.

Due to the enactment of the Nigerian Content Law enabled by the Hon. Minister of Petroleum Resources under the Jonathan administration, expected impact of Local Content on the national GDP in the next four years is put at the following:

• Retention of $10 billion out of 20 billion average annual industry expenditure
• Creation of over 30,000 direct employment and training opportunities
• Establishment of three to four new pipe mills to service industry demands
• Development of one or two dockyards and utilization of existing shipyards
• Transformation of the ownership profile of marine assets supporting the industry.
• Capture of over 50 per cent to 70 per cent of banking services, insurance risk placements and legal services, among others.

When these are achieved in the industry, the foresight of the Hon. Minister of Petroleum Resources in ensuring the passage of the Local Content Law would be much more appreciated.

The Petroleum Industry Bill

Much has been written about the Petroleum Industry Bill, PIB; much more will still be written about it now and in the nearest future. It however suffices to note that the PIB is based on the Report of the Oil and Gas Reform Implementation Committee, OGIC, that was set up by the Federal Government in 2000 to carry out a comprehensive reform of the oil and gas industry in the country. In essence, the bill is a reform legislation which aims to put in place of the existing 16 legislative and administrative instruments governing the petroleum industry one omnibus legislation that establishes clear rules, procedures and institutions for the administration of the petroleum Industry in Nigeria. It promises to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry. It further stipulates guidelines for operations in the Upstream, Midstream and Downstream sectors.

No doubt, the Hon. Minister of Petroleum Resources, Mrs. Alison-Madueke inherited the PIB from the previous administrations. What is however remarkable is that she has shown serious commitment to progress the bill to the point of being passed into law. In other words, she has encouraged continuity of a key initiative of previous administrations. It is to the credit of the Hon. Minister of Petroleum Resources that following notice of existence of versions of the bill, she set up a committee to repackage the bill after which the bill was re-presented to the National Assembly for consideration and eventual passage. As at today, the bill has passed a Second Reading in the House of Representatives, for instance. What is re-assuring is that given the commitment of the Hon. Minister of Petroleum Resources to facilitate the passage of the bill, the industry is hopeful that the PIB will be enacted into law in the life of the Jonathan administration, with all the major changes it promises to effect in the industry and for the benefit of its players.

Giant strides and Mounting Challenges

Although some giant strides are being made in the industry, the journey has been anything but rosy. Challenges posed by pipeline vandalism and crude oil theft are having a heavy toll on the Industry. On occasions, pipeline vandalism has crippled the supply of petroleum products across the country. Similarly, the activities of crude oil thieves also endanger exploration activities in the Upstream Sector. It is estimated that in the past five years these challenges have cost the industry over N248 billion in crude oil and product losses. Such losses are recorded in respect of cost of stolen crude, cost of remediation of spills in the Niger Delta, expenses on extra security arrangements to protect installation and also disruption of the operation of the local refineries. To move the industry to the next level, every Nigerian is encouraged to identify with the efforts of the Hon. Minister of Petroleum Resources, Mrs. Alison Madueke to rid the industry of these unnecessary challenges and move it to the next level.