Look­ing be­yond an oil and gas pol­icy

The Guardian (Nigeria) - - EDITORIAL -

IT should be clear to the Fed­eral Gov­ern­ment at the mo­ment that be­cause the hope of the ci­ti­zens for rad­i­cal and in­no­va­tive pol­icy on oil and gas has been de­ferred for too long, their hearts are some­what sick of new prom­ises. That is why a re­port the other day that the Fed­eral Gov­ern­ment was in the process of le­gal­is­ing new oil and gas poli­cies as oil pro­duc­tion hit a new high of 2.1 mil­lion bar­rel per day (BPD) would not ex­cite any­one any­more.

Ac­cord­ing to Vice Pres­i­dent Yemi Os­in­bajo who dis­closed the new deal at the Oil Pro­duc­ers Traders Sec­tion of the La­gos Cham­bers of Com­merce and In­dus­try, the statu­tory ob­jec­tive of the new poli­cies is to cre­ate a mar­ket-driven oil and gas in­dus­try, max­imise pro­duc­tion and pro­cess­ing of hy­dro­car­bon, move away from oil as a source of in­come and as a fuel for eco­nomic progress.

Os­in­bajo noted that other rea­sons for the new pol­icy thrust in­clude the ex­pe­di­ency of min­imis­ing the en­vi­ron­men­tal foot­print of oil ex­plo­ration and pro­duc­tion, man­ag­ing oil and gas re­sources and re­new­able en­ergy.

The dis­clo­sure of the new pol­icy came amid re­ports that Nige­ria’s crude oil pro­duc­tion in the Niger Delta re­gion has reached about 2.1 mil­lion bar­rels per day (bpd) from 2016 crude oil pro­duc­tion av­er­age of 1.8 mil­lion bpd. The new poli­cies are also ex­pected to move the oil econ­omy to gas, di­ver­sify sup­ply op­tions within Nige­ria, en­sure se­cu­rity of sup­ply, ex­tend gas to the do­mes­tic mar­ket to sus­tain the growth of elec­tric­ity and agri­cul­ture, in­crease the pres­ence of Nige­ria’s gas at the in­ter­na­tional mar­ket and to end gas-flar­ing. This is sim­ply not new. But the ques­tion is: When will the gov­ern­ments at all lev­els walk their talks on oil and gas poli­cies?

It is cu­ri­ous that at a time when the oil-pro­duc­ing world is al­ready think­ing out of the oil-and-gas box (as a re­source) Nige­ria’s Fed­eral Gov­ern­ment is list­ing the chal­lenges in the oil in­dus­try to in­clude se­cu­rity, in­sti­tu­tional ca­pac­ity, fund­ing of in­vest­ment, high in­dus­try tech­ni­cal cost, up­stream leg­is­la­tion and fis­cal regimes, down­stream sec­tor is­sues and in­fras­truc­tural con­straints. Th­ese are chal­lenges the old­est bill in Nige­ria’s Na­tional Assem­bly first called Pe­tro­leum In­dus­try Bill (PIB) is sup­posed to ad­dress. But the na­tion is wait­ing for a time even the Fed­eral Gov­ern­ment will get se­ri­ous about pas­sage of the bill which in it­self has been bas­tardised in name, con­tent and struc­ture.

Mean­while, Saudi Ara­bia, a king­dom built on oil, is al­ready plan­ning a fu­ture be­yond it. Ever since oil was dis­cov­ered in the Ara­bian Desert in 1938, Saudi Ara­bia has been the world’s premier petro-state and the dom­i­nant force within the Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC).

Flush with oil rev­enue, the coun­try has had nei­ther in­come taxes nor cor­po­rate taxes while grant­ing its peo­ple heavy sub­si­dies for food and fuel.

But now, the oil-rich king­dom is fast look­ing be­yond oil. The crash in crude oil prices that be­gan in 2014 has left the coun­try with a gap­ing bud­get deficit. And while oil prices have re­cov­ered, cli­mate ac­tivists have tried to bring the end of the hy­dro­car­bon age closer and many an­a­lysts have pre­dicted the ap­proach of “peak de­mand” that would mark the end of a long climb in global oil con­sump­tion.

Now, the 31-year-old crown prince, Mo­hammed bin Sal­man, who is driv­ing a re­form agenda, has set out to rein­vent the Saudi econ­omy by the year 2030. The new plan, called Vi­sion 2030, would trig­ger new pri­vate busi­nesses, im­prove ed­u­ca­tion and trim the bud­get deficit by cut­ting sub­si­dies and introducing a 5 per cent val­ueadded tax.

The most re­mark­able of the new deal in Saudi Ara­bia is that the gov­ern­ment has pro­posed sell­ing off a chunk of its crown jewel, the sta­te­owned oil com­pany Saudi Aramco. The com­pany, which for decades was in the hands of four big U.S. oil com­pa­nies and whose na­tion­al­i­sa­tion be­came a pow­er­ful po­lit­i­cal sym­bol, is widely be­lieved to be worth as much as $1 tril­lion to $2 tril­lion; its share of­fer­ing could be the big­gest in his­tory.

This is the kind of rad­i­cal re­form that Nige­ria should un­der­take for the gov­ern­ment’s ex­er­tions to be mean­ing­ful to the peo­ple. This gov­ern­ment promised such a rad­i­cal re­form of the be­he­moth called the Nige­rian Na­tional Pe­tro­leum Cor­po­ra­tion (NNPC), but two and half years on, what is be­ing promised is an unim­pres­sive oil and gas pol­icy whose essence can­not change the cor­rup­tion-prone and cri­sis-rid­den oil. What the na­tion there­fore ex­pects at this time is an un­com­mon com­mit­ment to the pas­sage of the still-born Pe­tro­leum In­dus­try Gov­er­nance Bill (PIGB), which will over­ride the ad-hoc ar­range­ment called new oil and gas pol­icy. The rul­ing party, the pres­i­dency and the fed­eral leg­is­la­ture should give the na­tion’s eco­nomic main­stay a new lease of life. And there­after look be­yond oil and gas in plan­ning a great fu­ture.

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