Ifeanyi Nwabugu
Despite some genuine complaints by some elements in the country, evidence abounds that Nigerians have been breathing a sigh of relief in the oil sector since President Goodluck Jonathan mounted the saddle of leadership in May 2011.
Before Jonathan’s assumption of office, reports of scarcity of petroleum products, mostly petrol, was the talk of the town. Kerosine was out of the common man’s reach, while gas was nowhere to be found. Vehicle owners queue all day waiting for petrol, while others did night vigil at the petrol station.
Evidence also abound that during the military regimes, there were incidences of pipeline vandalism by unpatriotic citizens, who made dubious gains from the petroleum resources, including petrol, kerosene and gas and in some cases fire outbreaks from such vandalised pipes claimed several lives and loss of property running into billions of Naira. The pipeline vandalism persisted unabated until the Nigerian National Petroleum Corporation was left with the option of completely shutting down the nation’s refineries, most of which were not properly maintained at the time. As a result, Nigeria, which is the fourth largest crude oil producer within the Organisation of Petroleum Exporting Countries, could no longer produce fuel for local consumption.
During former President Olusegun Obasanjo’s administration, fuel queue, which was a major relic of the dark days of the military regimes, was the order of the day as hoarding, adulteration and black market selling of products continued. When late President Umaru Yar’Adua came into office, his government initiated measures to revive the moribund refineries but could not achieve much as the petroleum industry in the country was already in a stage of comatose.
Determined to reverse the embarrassing trend, Jonathan took the bull by the horns immediately he assumed power by initiating several reforms to reposition the upstream and downstream sectors. Part of the reforms was to engage an expert in the oil industry to pilot the affairs of the Petroleum Ministry. He appointed Mrs. Diezani Alison-Madueke. Until her appointment into the federal cabinet as Minister of Transport in 2007, Alison-Madueke, who hailed from Jonathan’s home state, Bayelsa, was the first female Executive Director of Shell Petroleum Development Company. She moved to the Ministry of Mines and Steel Development in December 2008 from where she was appointed Minister of Petroleum Resources in April 2010. Jonathan appointed Alison-Madueke based on her good understanding of the petroleum sector and the tremendous cooperation she enjoys from chieftains of the oil industry.
So far during Jonathan’s reign, the nation’s crude oil production has been consistently maintained above the budgeted production level of 2.3 million barrels per day. This is a direct fallout of the amnesty programme, which has now allowed for the renewal of production activities in wells hitherto shut-in as a result of the Niger Delta crisis. Efforts at increasing the nation’s stock of crude received major attention under Alison-Madueke, with the increase in oil exploration activities in the Inland Sedimentary Basins, especially in the Chad Basin. Already, the NNPC and the Federal Ministry of Petroleum Resources are concluding arrangements for contract award for advanced seismic data acquisition and processing.
In all, the seven in-land basins of Bida, Gongola, Sokoto, Anambra, Dahomey, Chad and Benue are billed to benefit from the programme. Yet the drive to increase the nation’s crude and gas reserve is not limited to the In-land Basin. As part of the effort at growing the capacity of the Nigerian Petroleum Development Company, eight producing blocks have been assigned to the company. With special support by the President for NPDC’s operatorship of the blocks, the impact has been tremendous on the NPDC’s growth aspiration with current production now averaging 80,000 barrels per day.
At the midstream sector, gas supply for power generation and industrial use has been sustained with supply outstripping demand both in the Western and Eastern axes. Available records indicate that the volume of gas available for power generation is unprecedented in the history of oil and gas in Nigeria. Renewed efforts at ensuring relevant Gas Supply Purchase Agreements are being executed in order to encourage upstream gas development. Report has it that as at the last count, three Gas Supply and Purchase Agreements have been signed among buyers, gas suppliers and Aggregator Company (Egbin/Shell/Chevron/PanOcean). Contracts for the critical pipeline infrastructure for gas supply to Alaoji, Olorunsogo have been awarded with projects’ completion in 2012. Upon completion, this would lead to the availability of additional gas to generate extra 2000MW of electricity.
The Brass LNG project is been fast-tracked, while the implementation of the critical gas projects as encapsulated in the Gas Revolution was given a boost with the visit of the investors – Xenel of Saudi Arabia and Nagajurna of India – to the proposed site at Koko, Delta State for the 1.3 metric tonnes per annum petrochemical and 1.3 MTPA fertilizer plants. There has generally been increased investor confidence in the Gas Revolution, with additional gas utilisation projects being pursued. These include: 2.75 metric tonnes per annum Dangote Fertilizer Plant in Edo State, 2.4 metric tonnes per annum Brass Fertilizer Plant in Bayelsa State, 1.34 metric tonnes per annum Indorama Fertilizer and 1.2 MTPA Methanol Plants at Eleme, Rivers State and 450,000 tonnes per annum methanol plant at Onne, Rivers State. among others.
As for the downstream sector, it is evident that products supply has been sustained nationwide through a combination of offshore processing, SWAP arrangements and increased domestic refining. The first 100 days has seen the re-streaming of Kaduna Refinery and sustained operation of Warri Refinery. The issue of kerosene availability has been tackled through NNPC direct distribution programme. The integrity of key product pipeline infrastructure (Kaduna-Kano, Kaduna-Gusau, Kaduna-Suleja) has been re-established. The impact of this is that more products are now available in inland depots, which will enable faster intervention when necessary.
Beside the aforementioned achievement of the Federal Government in the oil sector, sustained efforts at increasing local refining capacity, through revamping the existing refineries with a view to increasing their contribution to national demand of petroleum products, is ongoing. An NNPC team is currently in Japan to conclude the engagement of the original Engineering Procurement Construction contractor for Port Harcourt Refinery, which will be the first to be so rehabilitated.
Already, the Nigerian Content Initiative signed into existence on April 22, 2010 by Jonathan is designed to ensure that Nigeria achieves the much desired in-country capacity in the oil and gas industry. This would guarantee that a huge chunk of the estimated $20 billion spend annually by the industry remains in the country for the benefit of Nigerians and indigenous Nigerian companies and service providers. Under the watch of the President, the Nigerian Content Development Board, which has Alison-Madueke as Chairman of the Governing Council, has ensured the escalation of the historic use of made-in-Nigeria pipelines by Exxon Mobil recently at its Edop-Idoho Offshore Field, secured the placement of over 100 kilometers of pipelines orders in Nigeria’s only pipe manufacturing company, SCC Abuja, ensured the increase of in-country fabrication tonnage from 1,000,000 in 2009 to 1,200,000 currently and advanced talks with Jiangsu Yulong of China to establish 250,000 tons per annum LSAW pipe mill in Nigeria.
As for employment in the oil industry, the Federal Government has developed the Nigerian Oil and Gas Employment and Training Strategy, which has resulted in the absorption of over 5,000 engineers, geologists, welders and other skill sets into the industry and formed the basis of a national skill database. Nigerian content activities have already generated over 30,000 direct and indirect jobs and will surpass 300,000 within the next four years
Jonathan’s short period in government has witnessed sustained interaction with the Nationa
l Assembly to ensure passage into law an oil reform legislation, known as Petroleum Industrial Bill, that will stand the test of time to the benefit of Nigeria and give fair return on investment. Regulatory control and monitoring considerable efforts have been made under the watch of Alison-Madueke to ensure effective regulatory compliance in the Nigerian oil and Gas industry in the areas of enforcement of flare penalty of $3.50/1000scf to discourage flaring and encourage commercialisation of the gas that is being flared, the launch of the “Offshore Safety Permit” to account for the safety and competencies of personnel who embark on swamp, offshore and deep offshore duties in line with the expectation of the Nigerian Content Policy, the establishment offshore training centre within Nigeria and completion of a pilot scheme of the National Production and Monitoring system aimed at ensuring independent real time production monitoring and accurate production accounting.
The massive transformation of the NNPC, the passage and implementation of the Nigerian Content Act, the push for the passage of the PIB, the implementation of the gas master plan as well as achievement of improved relations with critical stakeholders across the oil and gas value chain, were among practical measures through which the administration has ensured unprecedented stability in the supply and distribution of petroleum products across the country.
Many Nigerians are of the view that the petroleum sector under Jonathan’s presidency has been recording giant leap forward to the betterment of the country and apart from boosting the nation’s earnings from oil, employment opportunities had been increased. Within the past one year that the Nigerian Content Act was passed into law, over 30,000 direct employments and training opportunities had been created for Nigerians, making the sector the highest employer of labour.
However, these commendable efforts require sustainability to enable Nigerians continue to benefit from the reforms being implemented by the administration of Jonathan. Therefore, the need to retain Alison-Madueke in the Petroleum Ministry to continue with the ongoing reforms cannot be overemphasised. Her administration, having shown so much commitment and sympathy to the sector, should be allowed to implement ongoing programmes that have succeeded in restoring the confidence of Nigerians and foreign investors in the sector.
Jonathan has continued to demonstrate his commitment towards improving the lives of Nigerians by ensuring that their basic needs are within their reach. In the petroleum sector, the administration has clearly shown within the past one year that Nigerians can enjoy petroleum products without being exploited by dubious marketers who had made life unbearable for the citizenry for several years. Since this relief came through the instrumentality of Alison-Madueke’s leadership acumen in the Petroleum Ministry and with the enormous challenges ahead that requires an expert to surmount, the status quo should be maintained so that various programmes lined up to ensure stability of the petroleum sector are not eroded by putting a square peg in a round hole by the administration.
Nwabugu writes from Lagos.