NOG Returns, Discussions Focus on Persistent Industry Challenges

Making its return after a one-year deferment, the annual Nigeria Oil and Gas (NOG) Conference and Exhibition was held recently in Abuja, but with discussions focused on protracted challenges obstructing productivity in Nigeria’s oil industry. Chineme Okaf

When the exhibition floors and conference hall of the annual Nigeria Oil and Gas (NOG) Conference and Exhibition closed at about 1.30pm penultimate Thursday in Abuja, it looked like extended lower prices of crude oil in the global market and Nigeria’s unending operational difficulties may have mutually turned the tide on the conference, cutting down annual attendance and perhaps enthusiasm for making fresh hydrocarbon related deals.

Even though what has been described as the largest gathering of hydrocarbon industry players within Africa had about 250 exhibitors sprawled across extra spaces, attendance at the NOG was observed by THISDAY to have looked quite low when compared to previous editions.

Although, no official record of the attendance figures were provided by its organisers as at the close of the conference and exhibition, the one-year postponement of the NOG had to an extent impacted its well-known reputation as a very busy conference.

From THISDAY’s observations, 34 high profile speakers made it to the 2017 NOG while 28 firms sponsored its hosting, yet pundits, who spoke on the side-lines of the conference suggested that the poor oil prices, and 2016 conference deferment may have delivered a one-two punch on the overall showing of the conference.

Expectations and Deliveries

Without taking anything away from the content of the NOG, THISDAY also observed that expectations on the conference’s deliveries were as usual intact and qualitative.

From a special keynote address on the global oil and gas market outlook and forecast by the Organisation of Petroleum Exporting Countries (OPEC), which its Secretary General, Mohammad Sanusi Barkindo, delivered to the ministerial address delivered by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, on reforming and repositioning Nigeria’s oil and gas industry, the sessions at the NOG were generally decent but concentrated on industry issues that have affected growth of the industry in Nigeria.

There were sessions on new legislation and policy that could be developed to transform the industry, and in which questions on what policies are needed to enhance the Nigerian oil and gas industry’s competitive edge?; what changes in legislation and policy do industry players want to see and what impact will this have?; how will investment be attracted into industry activities within a lower oil price environment?; how does the government plan to support the growth of indigenous operators and service providers?; as well as what changes are required in Nigerian Content law to deepen the level of local participation in the national oil and gas industry? were asked.

Moderated by Chidi Momah, Secretary to the Nigerian National Petroleum Corporation (NNPC), the session had Senator Donald Omotayo Alasoadura, who is the chairman of the Senate Committee on Petroleum Resources (Upstream), Mordecai Ladan, Director of the Department of Petroleum Resources; Simbi Wabote, Executive Secretary of the Nigerian Content Development and Monitoring Board; Wale Tinubu, Group Chief Executive of Oando Plc, and Taofik Adegbite, Chief Executive Officer of Marine Platforms in attendance.

It was at this session that Alasoadura disclosed that the Senate was on the verge of passing the Petroleum Industry Governance Bill (PIGB), in addition to two other laws that could help the industry reposition.

Gas, which has recently begun to gain some prominence in Nigeria was also prominently featured at a standalone session moderated by veteran industry player and former Group Managing Director of the NNPC, Dr. Jackson Gaius-Obaseki, who is currently the chairman of Brass LNG.

The session was tagged‘Nigeria’s Gas Sector - The Catalyst for Economic and Industrial Growth?’ and it had Saidu Mohammed, Chief Operating Officer – Gas and Power of the NNPC; Dr. Timothy Okon, Special Adviser on Fiscal Strategy in the Ministry of Petroleum Resources; Tony Attah, Managing Director of Nigeria LNG Ltd, and Dada Thomas, Chief Executive Officer of Frontier Oil Ltd; deliberating on issues that included the kind of legislative framework necessary to unleash the potential of the country’s gas sector, policies that could be attractive to investors in gas, review of the implementation of the country’s gas revolution plan, as well as ways to overcome the barriers for gas infrastructure development and funding.

The session also had constructive conversations on the kind of plans that could be in place to further secure gas pipelines and decrease the impact of militancy, development of a gas regulatory framework for deep-water projects and downstream and gas utilisation.

There was also a session on harnessing the business opportunities in Nigeria’s downstream petroleum sector, in which Anibor Kragha, who is the Chief Operating Officer, Refineries of NNPC disclosed approval by President Muhammadu Buhari for NNPC to adopt a new business model to the revamp of the country’s moribund refineries in Kaduna, Warri and Port Harcourt.

Kragha explained that within the new business model, the NNPC would allow investors with refining capacity and funding strength team up with local partners with strong downstream business capacities to invest in the upgrade of the refineries, which they would also operate for agreed periods to recover their investments.

The downstream session addressed issues relating to plans to increase the Nigeria’s refining capacity, policy options that could encourage private sector participation in the downstream sector, steps that needed to be taken to increase the supply chain efficiency of the refineries, possible roadmap to creating profitable Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) markets in Nigeria, as well as the role modular refineries could play in closing the output gaps in the downstream sector.

It was moderated by Alex Ogedegbe, a former Managing Director of Port Harcourt and Kaduna Refineries, and had Henry Ikem Obih, Chief Operating Officer of Downstream for NNPC, as well as Dayo Adesina, President of Nigerian Liquefied Petroleum Gas Association (NLGPA) in attendance.

Sessions on energising the upstream sector through increased collaboration and combating crude oil theft and pipeline vandalism through stakeholder collaboration were also held within the strategic sessions of the conference.

Reform

Delivering his ministerial remarks, Kachikwu stated that events in the global oil and gas industry in 2016 tested the resolve and resilience of producing countries especially OPEC members, with spending on exploration and production dropping by about 25 per cent on account of the low oil prices.

He also acknowledged the operational difficulties in Nigeria, and pledged the government’s commitment to restructure the industry for the benefit of all players.

He said: “In 2016, the Nigeria upstream sector of the oil and gas industry was challenged by the menace of upstream assets vandalism. Our crude oil export pipeline system namely, Trans-Forcados to the west, the Obangbiri – TemiDaba - Brass in central Niger Delta, the Nembe creek trunk line and the Trans-Niger pipeline, which evacuates crude produced onshore to export terminals were subject to severe vandalism.

“Similarly, the Bonny - Port Harcourt crude oil pipeline and the Escravos-Warri-Kaduna crude oil supply pipelines were not spared.”

“Despite these, Nigeria however, still remains a leading producer in Africa with potential to boost production to the neighborhood of 3 million barrels of oil per day by 2020, once the required investments flow in and the planned deep-water projects are fully realised to achieve an incremental reserve of at least 1 billion barrels and half a million barrels in incremental production capacity per day,”he added.

Speaking on the reform measures, the government planned to adopt in this regard, the minister said:“We developed and launched a practical and well-reasoned petroleum industry roadmap tagged the ‘7-Big Wins’ for the new Nigerian petroleum industry.”

According to him:“The ‘7-Big Wins’ is not like any other roadmap, as we have never been in short supply of roadmaps.This roadmap is different because it reflects the vision of the country’s leadership and the explicit support and commitment of the industry and all stakeholders to its implementation.

“The roadmap is different as it has very specific time-focused targets and like the many bold steps we have taken in this sector since the inception of the present administration, we are by this roadmap focusing and committing to take unprecedented steps and making dramatic policy shifts in this sector to grow, deepen and open up the business and opportunities in Nigeria’s oil and gas sector.”

Kachikwu added that the roadmap would focus on emplacing new policies, legislations and regulations, enabling the business environment and attracting investments, unleashing a gas revolution to spur multiplier effects including wealth creation, environmental protection and job creation as well as improving domestic capacity for local petroleum products production and attaining self-sufficiency by 2018.

He equally said the plan would seek to sustain engagements with oil producing communities to attain zero militancy in the Niger Delta region by the end of 2017, and enshrine transparency and efficiency in the industry.