BUSI­NESS IOCs divest­ment will re­duce oil work­force by half -Gambo

Daily Trust - - INTERVIEW - From Mo­hammed Shosanya, La­gos Seyi Gambo

What is your take on the cur­rent level of oil theft and pipe­line van­dal­ism in the coun­try?

By govern­ment’s own ad­mis­sion, more than 10% of Nigeria’s to­tal crude oil pro­duc­tion i.e. about 200,000 bar­rels, is stolen ev­ery day, this is al­most dou­ble the to­tal pro­duc­tion of our neigh­bour, Ghana. The na­tion, there­fore, loses be­tween $6 bil­lion yearly to crude oil theft and an­other N165 bil­lion to theft of re­fined prod­ucts. As if this is not enough, there is also the brazen van­dal­ism of pipe­lines which has ad­versely af­fected the sup­ply of crude to the re­finer­ies, re­sult­ing in low or no out­put from our four re­finer­ies.

Can the sec­tor cope with the grow­ing level of in­se­cu­rity in the coun­try?

Re­lated to oil theft and pipe­line van­dal­ism is the in­se­cu­rity of lives and property in Nigeria. Ter­ror­ism rav­ages the north while kid­nap­ping and armed rob­bery reigns in the south. Life in Nigeria has be­come nasty, brutish and short with gen­eral in­se­cu­rity of our mem­bers, our fam­i­lies and other cit­i­zens. This gen­eral in­se­cu­rity has also se­ri­ously in­creased the cost of do­ing busi­ness in our in­dus­try and im­pacted neg­a­tively on each one of us as our col­lec­tive bar­gain­ing re­sults in the last few years will at­test. You will re­call that we made a strong worded state­ment when Boko Haram killed some young Nige­rian pupils in their hos­tels some months back… it’s a pity the se­cu­rity chal­lenges is be­com­ing a monster to­day. I have al­ways, and will con­tinue to hold the north­ern elites, in par­tic­u­lar, and all Nige­ri­ans, in gen­eral, for the ad­vent of Boko Haram. Look at it, there is ab­ject poverty in the north that does not re­flect the decades in which the north­ern­ers ruled Nigeria. To­day we have mil­lions of north­ern youths who are dis­il­lu­sioned, they are will­ing to work but there is no work. All the in­dus­tries are dead, no tex­tile fac­to­ries, cot­ton and ground nut pyra­mids is a thing of his­tory. Mil­lions don’t know where their next mill will come from, and they see our mil­i­tary and po­lit­i­cal

Seyi Gambo is Na­tional Pub­lic Re­la­tions Of­fi­cer of Petroleum and Nat­u­ral Gas Se­nior Staff As­so­ci­a­tion of Nigeria (PENGASSAN). In this in­ter­view, he speaks on is­sues in the na­tion’s oil and gas in­dus­try. Ex­cerpts:

elites per­pet­u­at­ing cor­rup­tion, go­ing free and throw­ing it at you. These youths are easy prey to many in­flu­ences, in­clud­ing il­lit­er­ate cler­ics and mis­chievous politi­cians. If we can­not pro­tect the in­dus­try that gives us more than 80% of our rev­enue, what can we pro­tect? Ethipoia’s ma­jor source of in­come is the Ethopian Air­lines, the smooth oper­a­tion of that air­line is never dis­rupted. But, what do we have here? In­stead of the Navy to pa­trol our ter­ri­to­rial wa­ters and ar­rest il­le­gal ves­sels freight­ing our crude away, we re­sort to giv­ing con­tracts to pa­trol such a sen­si­tive space to Tom­polo, an ex mil­i­tant.

The spate of divest­ment by in­ter­na­tional oil com­pa­nies in re­cent times is wor­ri­some, even though the NNPC says it will pro­mote lo­cal con­tent. What in your view is the im­pli­ca­tion of the de­vel­op­ment to the sec­tor?

The com­bined ef­fect of in­se­cu­rity, oil theft and pipe­line van­dal­ism has made the in­ter­na­tional oil com­pa­nies (IOCs) to tweak their busi­ness strat­egy. You will re­call that in 2003 many of these com­pa­nies planned to mas­sively in­vest in the Nige­rian up­stream oil and gas sec­tor for the pe­riod 2004-2010. This was based on an am­bi­tious as­pi­ra­tion by the Nige­rian govern­ment to in­crease na­tional oil re­serves from circa 30 bil­lion bar­rels in 2003 to 40 bil­lion bar­rels in 2010, and daily na­tional pro­duc­tion from circa 2 mil­lion bar­rels, per day, to 4 mil­lion bar­rels, per day, in 2010. How­ever, from Fe­bru­ary 2006, the mil­i­tancy in the Niger Delta es­ca­lated and forced many of the multi­na­tional oil and gas com­pa­nies to shut their op­er­a­tions in the Niger Delta. The planned in­vest­ments by some of these com­pa­nies, some of which had al­ready kicked-off, could no longer be re­alised. As mil­i­tancy re­duced, oil theft and pipe­line van­dal­ism be­came the or­der of the day. Based on the pat­tern of the mil­i­tant at­tacks cou­pled with some in­cen­tives by the govern­ment for deep wa­ter in­vest­ments, many IOCs be­gan to shift from on­shore (land and swamp) op­er­a­tions to deep-wa­ter op­er­a­tions. In fact, many of these com­pa­nies have di­vested and are di­vest­ing some of their on­shore and swamp as­sets. The im­pli­ca­tion of this for the in­dus­try is bet­ter imag­ined. If noth­ing is done to ur­gently ar­rest the sit­u­a­tion, PENGASSAN may lose some 50% of its mem­bers in the next three years.

Un­der­fund­ing is a se­ri­ous con­cern in the sec­tor. Would you say the de­vel­op­ment has, to some ex­tent, slowed down the growth of the na­tion’s oil and gas sec­tor?

Our mem­bers in the up­stream will re­call how in Oc­to­ber 2013, the govern­ment cut the pro­gramme budget by al­most 40%. This is even when ex­pen­di­ture had al­ready taken place based on an al­ready scaled down budget. Year on year, it is clear that the govern­ment is not keen about rein­vest­ing in the strate­gic oil and gas in­dus­try. Politi­cians are keener about shar­ing the pro­ceeds from oil and gas but close their eyes to the ur­gent need for growth and de­vel­op­ment of the in­dus­try.

The govern­ment is set to pri­va­tise the na­tion’s re­finer­ies. What are the im­pli­ca­tions of the sale of these as­sets?

It should be very clear even to the blind that the govern­ment is de­ter­mined to pri­va­tise our four re­finer­ies. Al­ready, we can see that they are not com­mit­ted to hon­our­ing the agree­ment signed with NUPENG and PENGASSAN on the is­sue, early this year. In or­der to lay the ground for the pri­vati­sa­tion, govern­ment en­sured the re­finer­ies are un­able to pro­duce. Ac­cord­ing to data from the NNPC, the com­bined aver­age ca­pac­ity util­i­sa­tion of the na­tion’s four re­finer­ies fell from 30.87 per cent in De­cem­ber 2012 to a pal­try 6.46 per cent in Novem­ber 2013.

Blinded by its pri­vati­sa­tion glau­coma, govern­ment fails to see that much of the gains as­cribed to pri­vati­sa­tion by the pro­po­nents of the pol­icy are ac­tu­ally gains from other re­forms. For in­stance, the govern­ment did not pri­va­tise NI­TEL for MTN, Econet (now Air­tel) etc. to sprout and grow. They sim­ply cre­ated the en­abling en­vi­ron­ment and the GSM mar­ket blos­somed. This is also our ar­gu­ment re­gard­ing the planned sale of the re­finer­ies. We have con­sis­tently ad­vised govern­ment to cre­ate the en­abling en­vi­ron­ment that will en­able pri­vate businesses in­vest in re­finer­ies. For in­stance, we sug­gested in our PIB pre­sen­ta­tion, that ef­fec­tive in­cen­tives should be granted to al­low for the de­vel­op­ment of pri­vate re­finer­ies, along­side the ex­ist­ing re­finer­ies. Let me tell you cat­e­gor­i­cally, that hell will be let lose if these re­finer­ies are sold with­out the en­dorse­ment of the unions who are hold­ing it in trust for Nige­ri­ans. Did Obasanjo sell NI­TEL till to­day be­fore MTN, ECONET and Glo come to rev­o­lu­tion­alise the sec­tor? Let govern­ment keep to the agree­ment we signed with NUPENG and PENGASSAN as re­gards first do­ing the TAM of the re­finer­ies which money was bud­geted for and re­leased, then we can talk of the model of pri­va­ti­za­tion, if need be. This is how MOU was signed with ASUU and we all know the his­tory of that mat­ter. We are all Nige­ri­ans, equal stake­hold­ers in this coun­try. No­body can treat us as sec­ond class cit­i­zens in our father­land. We are ready to fight this govern­ment, just as we took on the mil­i­tary govern­ment, for the sake of our chil­dren, the next gen­er­a­tion. Some­how, I have a deep seated feel­ing that some people want Pres­i­dent Good­luck to fail. Why court wa­hala when there is no need for it?

The de­lay in the pas­sage of PIB is said to be one of the rea­sons for the slow growth of the in­dus­try. Where do we go from here?

You will re­call that the Petroleum In­dus­try Bill (PIB) was pre­sented to the Na­tional As­sem­bly (NASS) in July 2012. Pub­lic hear­ings were con­cluded by the House of Rep­re­sen­ta­tives in July 2013 and the Se­nate in Novem­ber 2013, from then till now, not much has been done by the law­mak­ers. Mean­while, in­vestors have con­tin­ued to adopt a wait-and-see at­ti­tude, re­frain­ing from mak­ing any new in­vest­ment, pend­ing the pas­sage of the bill. Since 2009 when the Yar’adua govern­ment first in­tro­duced the PIB, no new Fi­nal In­vest­ment De­ci­sion (FID) has been taken on any oil and gas project in Nigeria, not even on the govern­ment-pro­moted, Brass LNG project. While we are dither­ing in Nigeria, there are new oil dis­cov­er­ies all over Africa, draw­ing in in­vestors just as new tech­nol­ogy is mak­ing hitherto un­reach­able and un­eco­nomic hy­dro­car­bon de­posits ac­ces­si­ble in Europe and North Amer­ica thus, at­tract­ing in­vestors to those en­vi­ron­ments. I was re­ally ashamed one day when I heard the Se­nate Pres­i­dent say­ing we won’t be in­tim­i­dated by the In­ter­na­tional Oil Com­pa­nies. Okay, don’t be in­tim­i­dated, but for heaven’s sake, pass the PIB and let ev­ery­body know the rules of the game!

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