Oil: What We Want From Baru
In 2012, the World converged on Brazil for Rio + 20 to set development agenda for post 2015. The assembly’s outcome document: “The Future We Want’’ recognised that each country faces specific challenges to achieve sustainable development. One of the goals of the Sustainable Development Goals (SDGs) is to: “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.’’
This goal discussed achieving higher levels of productivity of economies through diversification, technological upgrading and innovation, including through a focus on high value added and labourintensive sectors. Also, it is encouraging development – oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage formalisation and growth of micro-small- mediumsized enterprises including through access to financial services.
Continuing, by 2030, achieve full and productive employment and decent work for all women and men including young people and persons living with disabilities, and equal pay for work of equal value. One posits that the SDGs set by the United Nations are not unattainable. Our petroleum resources could be a launching pad for sustainable development if we do the right thing. Our petroleum resources managers should not get it wrong.
We must solve this lingering problem to meet the SDGs; otherwise we may be cajoled into giving away our four refineries in the name of privatisation, as has been touted by some. The only fully-fledged petrochemical complex in Nigeria which came on stream in 1990 became moribund in the early 2000s due to lack of maintenance. The preferred investors acquired the wholly-owned subsidiary from the NNPC in August 2006, did the normal turn around maintenance (TAM), rehabilitated the complex, which started operations on October 12, 2006.
We have wasted millions of man-hour dissipating energy on whether we should subsidise petroleum products other countries produce which unfortunately we import. This reminds one of the irony of a country that “exports what she does not have and imports what she has’’. That paradox of a nation must be removed from our petroleum. Petroleum is the future we want. We now have a stabilised market for products across the country through modest local refining efforts as well as the Direct Supply Direct Purchase (DSDP) scheme. The Group Managing Director of the NNPC Dr. Maikanti Baru recently said that the nation had saved about N40 billion in 2017. We appreciate that but what he is encouraged to do is to get more value for our crude in the DSDP scheme.
To what extent can the DSDP go to solve Nigeria’s problem? It should be a temporary solution to bridge supply gap. Baru’s drive to reposition the nation’s oil sector must be to yield results. What has been achieved is part of the NNPC’s key business focus areas to grow the industry. We are hoping that Nigeria would benefit from petroleum that it has comparative advantage. We will continue to rely on Joint Venture partners for some time. As cash calls issues are renegotiated, industry players corroborate the GMD’s confidence of the NNPC JV partners to pursue new projects. The repayment agreements have been reached for JV cash call arrears after negotiations for outstanding up to the end of 2015 for all the IOC partners.
The first line of action is that Nigerians must be in charge by building capacity. In the upstream sector, Nigeria needs high level manpower for exploration and production. We have advanced a little in exploration but not much in production especially with high-tech equipment for offshore drilling. With Baru, resources are being deployed to the Benue Trough for exploration using the Integrated Data Services Limited (IDSL) and her partners to pursue this government’s aspiration to grow the reserves base of the country.
The corporation had grown the production of the NNPC’s flagship upstream company, Nigerian Petroleum Development Company (NPDC) from 15,000 barrels per day (bpd) to the current peak-operated volume of 180,000 bpd in June 2017. With about 10 per cent of our contribution to crude production, we still rely more on the International oil Companies (IOC). We need more local participation especially now that the internal combustion engine is being passed out for reasons of perceived carbon emissions. The vision for NPDC is to grow its equity production from 180,000 barrels per day to 300,000 bpd by 2018 and by 2019 and 2020 its production is expected to hit 400,000 bpd and 500,000 bpd, respectively. NPDC Managing Director, Mr. Yusuf Matashi, disclosed that the planned increase in the company’s equity production was to become the fifth largest exploration and production oil producer in Nigeria. It is a target that is achievable.
The drive for the NNPC is to attain a six-month contracting cycle. The NNPC has lowered operating costs of production from US$27 per barrels to US$22 per barrels for the Upstream. Cost reduction and efficiency are key features that will make our crude to be more competitive in the international market. The national average daily production was 1.83 million barrels of oil and condensate while currently, the year-to-date 2017 average production hovers around 1.88 million barrels. In October 2016, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found. The field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading (FPSO) with current estimated reserves of one billion barrels to the national crude oil reserves.
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