Anyaeto: Nigeria Still Operating Outdated Oil Sector Regulations
Emmanuel Anyaeto is the Managing Director of Integrated Gas and Energy Services, which engages in natural gas and power business from Los Angeles. In this interview, he advises countries and institutions – especially in Africa, on energy related policies.
Why haven’t you contributed towards fixing the challenges in Nigeria’s energy sector?
If you’re sick you go to a doctor, right? If someone is sick and the person goes to a lawyer, will the person ever get well, no. Nigeria has the expertise to solve its problems, both in diaspora and in-country, however, there’s no willingness to solve the problems yet. Otherwise, there are experts all over the world in all fields of science and management, and they are available for hire to solve problems. Energy consumption is directly linked to poverty and wealth. Nigeria’s energy sector lacks both short term and long-term strategy. This is appropriately reflected in the poverty level of the country. Nations with the highest energy consumption per capita are the richest while those with the least energy consumption per capita are the poorest. There is no clear strategic coordinated effort, through policy, regulation to competitively attract private investment for purposes of increasing energy availability, consumption and efficiency in the country.
There’s a bill – the Petroleum Industry Bill (PIB), which many say would largely fix the ills in the oil industry, but passage of that bill in the parliament has stalemated for years now. What needs to be done across board to sought this out?
They should just forget the PIB! It’s too little, too late now. PIB had its window of opportunity between 2010 and 2015 to be in place, but the country missed the opportunity. Nigeria is still operating with outdated oil and gas regulations that are not comprehensive enough to put the country in a competitive position with other African countries. The last time a part of the country’s governing oil and gas law, the Petroleum Act, got amended was in 2004. A child born in 2004 should be preparing to take university entrance examination, JAMB, by 2019. On the other hand, several African countries are attracting major investments in oil and gas exploration because they have better laws and regulations than Nigeria. Major oil and gas discoveries and investments in Africa in the last five years are majorly in Egypt, Mozambique, Tanzania, Senegal, Mauritania, Ghana, South Africa and most of these discoveries of oil and gas in Africa are diminishing Nigeria’s leadership of the industry in Africa. Even if PIB is passed today, foreign investors are focusing their exploration activities in other African countries while major IOCs in the country are already disposing their assets in Nigeria for investments in other parts of Africa and it would take a lot of encouragement to convince their headquarters to change this strategy.
Do you by any chance have an idea of how competitive Nigeria’s oil industry is at the continental stage and are we still topping the chart especially with regards to LNG production and investments?
According to the 2019 Annual Report of the International Gas Union, Nigeria was the fifth LNG exporter in the world in 2018 after Qatar, Australia, Malaysia and the USA with Nigeria exporting about 20.5 million metric tons of LNG which is about 6.5 per cent of global export. However, in Africa Nigeria remains number one producer and exporter of LNG in Africa. It is important to note that President Buhari built the current capacity of Nigeria LNG when he was military Head of State. Since then, further development of NLNG has not only remained dormant but faced with increasing multiples of challenges such as double taxations, financing, politics, regulatory approvals, gas sourcing and regulatory and fiscal regimes.
As Nigeria remains dormant, the LNG terrain across Africa is changing very fast.
Mozambique’s first LNG project, the Coral South FLNG achieved FID in 2017 and has contracted its entire 3.4MTPA capacity to BP. Other Mozambique LNG projects include the Anadarko led Area 1 h LNG project has progressed with site preparation and FID.
Also, another Mozambique LNG project is the Rovuma LNG Area 4 project led by ExxonMobil consortium, which aims to build the world’s biggest liquefaction trains outside Qatar. Both projects will attract an estimated investment of about $30 billion for production of 20 million metric ton of LNG, almost like the current size of current Nigeria LNG production capacity. British Petroleum and its partners are also developing large scale LNG production facility off the west African cost of Senegal and Mauritania where 15 trillion cubic feet (tcf) of gas reserves has been discovered with additional estimated reserves of 50 trillion cubic feet. This alone, with adequate investment, will make Nigeria a lesser LNG producer compared to other African countries. Other African countries that are developing LNG projects include Algeria, Egypt, Equatorial Guinea, Tanzania, Cameroon, Senegal and Mauritania.
Africa countries recently signed a trade pact - the AfCFTA, what impact do you think this will have on natural gas and power trading in the continent.
I must commend the government of Nigeria and other African countries for signing the continental free trade agreement. This agreement is overdue and if it had been executed in the past 10 years or more, Africa would have been in a better energy position. Nigeria currently exports gas into the West Africa region through the West Africa Gas Pipeline (WAGP). It also exports power to other West African countries through the West Africa Power Pool transmission lines. Once AfCTA is implemented, both regional gas and power infrastructures can be extended to other neighboring countries for increased export of gas and power. Nevertheless, it is important to mention that other countries in West Africa that are producing excess electricity and gas will compete with Nigeria in the emerging Africa export market.
But in terms of energy trade with the continent, does Nigeria have any competitive advantage to leverage?
Nigeria currently has competitive advantage in export of gas and electricity due to existing contracts with its customers in the region. However, such advantage may be short-lived because other countries such as Ghana is currently producing more gas and electricity than it requires domestically, therefore, is looking for market within Africa to export the excess capacity. Two major FSRU (floating storage regasification unit) projects for importation of LNG into West Africa are in progress. They are the TEMA FSRU (Ghana) and the Cotonou FSRU (Benin), and both, on completion will compete with pipeline gas from Nigeria and Ghana. On electricity, countries that use to buy electricity from Nigeria like Togo and Benin are fast-tracking the construction of their own power plants and will stop electricity importation from Nigeria in the near future.
Let’s talk about climate change and energy security and supply, do you believe it is real, are there implications of it on Nigeria’s oil industry?
Climate change is real. You can see that in Nigeria we are still experiencing rainy season when we should be enjoying new yam harvests with harmattan session. It has great implications for oil and gas industry in Nigeria because they are the major contributor to global warming through gas flaring which releases a lot of dangerous gases into the air such as carbon dioxide, hydrogen sulphide, Sulphur dioxide, carbon monoxide and other particulate matter. These chemicals not only damage the ozone layer of the atmosphere which causes climate change, they also cause sicknesses, diseases, disability and death in oil and gas areas of operation. That’s why I wasn’t too excited to hear that oil and gas has been discovered in northern Nigeria. Except current laws are changed, communities in those areas will suffer like the people of Niger Delta. Nevertheless, we need to applaud the federal government for starting the gas flaring reduction projection called Nigerian Gas Flare Commercialisation Programme (NGFCP). If implemented successfully, the NGFCP will create jobs, improve the environment, make more energy available to Nigerians and reduce environmental damage in host communities.
I know you’re into mathematics, and other applied sciences, which makes me ask you how important they’re to our national development. And, how well has Nigeria embraced mathematics for development?
Yes, I have passion for mathematics and astrophysics just like most people in Africa have passion for religion. While religion may appear to be a good thing, it is not godliness. Understanding mathematics and sciences is part of godliness because both aids society to create things and solve human problems which is the first commandment of God – create, dominate and take care. Today in Africa we don’t follow that first commandment of God at the Garden of Eden because we pay less emphasis on mathematics and sciences. Lately, people have realised that mathematics is not a science. It is a language which God used to create the universe and humans. It is also the language used to interpret other sciences such as physics, chemistry, engineering, medicine and space science. Mathematics is the common language they are used to produce results. So, any society or country that is poor in mathematics learning will be poor in solving human problems. We are unable to find medical solutions to sickle cell, malaria and other diseases that specifically plague Africa because we lay more emphasis on religion than mathematics and sciences. Both political, economic, social, medical and engineering problems starts and ends with mathematics, otherwise people will remain in darkness or depend on other societies that have fully developed mathematical curriculum.