‘We must take advantage of existing opportunities in the Nigerian Oil and Gas Industry’ – Kachikwu
Sir, what do you have to say about opportunities in the Nigerian oil and gas sector?
What is important as we see some of these developments is realizing really how much opportunities lie in this country that have been wasted. I congratulate the Executive Secretary of NCDMB, Engr. Simbi Wabote for organizing the Nigeria Oil and Gas Opportunity Fair (NOGOF), this has deepened the concerns for the opportunities in the oil and gas sector to the opportunities in Nigeria because there are huge opportunities in Nigeria that we have abandoned so far and the time has come to begin to look again.
This very minute before us, I will say I am almost impatient with Nigeria, because this is one of the very few countries in the world where there is advantage of population and never mind what we earn, we have the advantage of land mass and as we fly the sea, tons and tons of land are still available and not developed for agriculture or whatever else we want to do.
It is absolutely resourced in a way that God has not resourced any other nation, both by manpower and resources in the land. It is resourced by people with a very strong sense of culture, anything that will make a nation be the very best in the world is here. I just wonder what is wrong. What is wrong is us. Because we fail to see these potentials, we fail to take advantage of them; we concentrate on the negative and fight each other all the time. I am hoping that we’ll look at local contents in terms of what we need to do as a nation to create our expectations, our targets and our aspirations as individuals.
So, how important is NOGOF?
Advancing Indigenous Participation in the Nigerian Oil and Gas Industry for National Development is very apt. It is coming at the time when the focus of the federal government has shifted to nationalization with not a sense of expurgation but a sense of focusing on the latent contents and potentials that we have as a nation- growing the food that we eat, providing the manufacture that we use, focusing on the services that we can provide. And for the oil industry, we are looking at how to internalize those opportunities that exist in the oil and gas sector and to deepen the whole process.
How is the government planning to leverage on these opportunities?
Early this month, the Federal government itself lunched an Economic Recovery and Growth Plan (ERGP) and part of that was basically ‘think Nigerian, think Nigerian and think Nigerian’ and very important in the oil industry, it sets out very lofty aims.
When I dream, I dream big because I think this country have the capacity to deliver in the dream if we just focus on it. I see that 2.2 million barrels of oil is been too long in production, we need to move on. We hold those numbers as if the whole world focuses on 2.2 million.
This country has the capacity to produce 4 million barrels of oil. We need to find out what it will take for us to produce 4 million barrels of oil. We need to remove institutional and financial constraints to move forward rapidly to those numbers. And so in this plan we have put 2.5 million barrels. We have the capacity with emerging share coming out from Chevron, Exxon Mobil, we have capacity in this country to produce oil in excess of 3 million so why are we crying about the difficulties that the present times have created? I said we need to focus on the opportunities that there are with the decisions that we have been given to find solutions to the problems that we see. We are focused on local refining because after 40 years, our refineries are basically decrepit. The time has come for us to begin to move away from transporting and externalizing the export of crude to begin to refine petroleum in its very finest.
The OPEC world today has changed. Being a supplier of crude does not necessarily own an advantage and in fact in the next 15-20 years, the bodies may over strip the games in the oil sector. So like the vice president keep saying in his speech, “the time has come, the urgency is now” but I said, the urgency is yesterday. We need to begin to refine petrol, get into the petro-chemical industry; we need to limit the amount of raw product we send out of the country and this responsibility not just for the NNPC’s portion of crude but also for the IOCs who work here. The business model will not continue to remain, to trail, to produce and to export. It must be to trail, to carry to refine and to export.
The model will have to change and over the next couple of years as the incentives roll out, we are going to see a new level of skills geared out in different participation and productivity in oil and gas sector. And I urge our friends who work here, to take advantage of these.
We will look at how we deal with spill. For very many years we look at spill as the usual thing in phraseology and ecologies. Time has come when all of us to begin to say what does oil do as an impact to those communities and how do we do something to reverse that. And so the things we will have to look at now will have to change from just approving of licences to finding out how you intend to exist. What are your production patterns? What are the things that you respect? The rule of safety must merge with the role of survival in terms of cleanliness and so there are a lot more deepening in terms of global content philosophy.
What’s the role of Financing in all of this?
Unless you find the funding, everything we say, is entertainment and so we need to begin to focus very seriously as a nation on dealing with the financial challenges of the sector not just for the big players but indeed very importantly even for the small players and so we are taking the very first step under the Seven Big Wins launched by the president to look at how to exit the boat and imposing cash calls…. We’ve reached an agreement with majors in December, we are trying to finalise the process of the first stage of payment in April and once we do that, the funding constraints that we have had in the sector will go. And once they go, and indeed just preparatory to go in, the tremors that I hear and see in the oil sector, in terms of opportunities that have been taken advantage of, and our project that has been re-launched that have been dropped are becoming quite exciting. I think while others in other sectors may worry about the downturn in the economy, you guys in the oil sector should get excited about what is happening. There’s no sector of the economy well-placed than the oil industry in helping the country solve its problems, and to continue to multiply the opportunities and advantages in this national economy. So, we must all begin to look at different frame of doing things and Nigerians must continue to challenge themselves to the opportunities that are there. Those who have tried have succeeded. When the President declared in the road map in October that “The task before the Ministry of Petroleum Resources is to maximise the potentials and opportunities across the whole range of the oil and gas industry to stimulate our economy in spite of the current challenges;” to this requires creativity, innovation, technology and robust partnerships amongst various stakeholders.” We have commenced very aggressive implementation and tracking of specific actions arising from this same road map. We focus on limiting the time that contractors take to get approval. We also focus on the cost of production and moving from a $27 per barrel to hopefully between $15 and $18 per barrel and creating incentives around those who are able to match this very quickly. We focus on creating early renewals because historically people wait for you to beg for renewals. We are actually approaching you, expecting you to come early enough and let us do the things that we need to do.
Looking Into New Frontiers
For the Ministry, there are a lot of things we’ve done differently over the past one and a half year but there’re more opportunities still. So I say to you that when people talk of challenges, I see a lot of opportunities everywhere. When people talk of uncertainties in the system, I see a lot of growth opportunities; when people see unpredictability, what I see is a chance for innovation. When they talk about delays, I look for opportunity for rebirth. When they hammer on the fear, I say have a sense for adventure. And when people talk of local content rivalries, I say talk of local content collaboration. Everything you see as a gap in our system, there is a huge potential to make a difference. The upstream sector alone spent over 12 billion in Joint Ventures investment. It’s going to get higher with the funding arrangement that we have put in place because new projects are on board. But it is important that as we do this, all of you must begin to deepen their areas of specialization because the greatest problem of the Nigerian phase is overcrowding. There are tons and tons of opportunities but everybody wants to follow the same business model. And once you succeed in creating a new one, everybody runs into it. The time for individual’s selective creativity has come because only that would make you survive in a very competitive environment. I ask you to help us make Nigeria a Japan of sort. For us to do this, we have to reduce the time we spent on bureaucracy. I have very little patience for bureaucracy and those people that have dealt with me know that I like to cut through the chase. If anybody stands in your way and give you bureaucracy rather than speed and services, please come to me, you will have a hearing. It is absolutely essential that we drive public officials to provide services, not road blocks.
On Institutional Capacity
The NOGAPS which is the Nigerian Oil and Gas Park Scheme which the NCDMB is instituting is an attempt by us to enhance local manufacturing by providing research and services scheme for those who want to go into manufacturing. I ask all of you to take advantage of that. We need to think of how to empower investors with fiscal incentives. Lower taxes today mean imploded earnings tomorrow for government and with this; we’ll begin to look at the long term rather than the short term.
Training of Nigerian companies has come a long way but we are not there yet. I am looking for a wholesale Nigerian company that can one day compete with ExxonMobil or Chevron here in this place with its own abilities to produce locally, at its own risks. I am looking out for this and it is not too much to ask. Training is key and I urge everyone that is part of this from the oil companies that give scholarships to NCDMB, to PTDF to continue to dialogue at Joint Ventures with the academia. There is too much gap between the academia and the actual industry and we need to bring them together to be able to make some veritable difference.
There are a lot of complain about accessing the Nigerian Content Development Fund (NCDF), what are you doing to help the situation?
I have directed the management of the NCDMB to review the operative model of the NCDF to make it readily available for those who have very unique proposals to grow local content. It is the era of transparency and we are focusing on this. In an era where the stories you hear about the oil companies are stories of graft, gaps and difficulties; that is not the oil industry that I want to bequeath to this country. We want an oil industry that is transparent and transparency should move away from avoidance. In other words, the fact that we hide things from you is not transparent. Transparency means that we must open our boxes to you and to correct those things we think we are doing wrong. So one of the steps we have taken is to ask most of the agencies including the NNPC to work very collaboratively with groups like NEITI whom I find enjoyable working with; although in a critique, I found out some gaps and until you get those criticisms and work collaboratively with a mind to correct, you won’t be able to make progress. So when we see legislators around, we must see them as joint venture partners.
So, what must we do to make local content grow for us as we go forward?
The first is security. We have gone all over the country trying to involve all those who have one thing or the other to do with security to make it better. We are working collaboratively with the Ministers and His Excellency, the Vice President who has found time to go around with me. I am working collaboratively with governors with no party lines at all to try and find a solution and this is yielding results. In three months, we’ve not had an incident. If you look at our seven roadmaps, one of our key commitments is a zero free shutdown on the basis of militancy in 2017. So far, we are delivering but a lot of work still needs to be done. So, if you want to grow local content, you’ve got to provide the enabling environment. When I hear talks about moving headquarters, I totally support that, we need to look at the new model but I will also place on you the imperative of providing the requisite secured environment. The second is we encourage what I call the antelope leapfrog. We cannot accept the chase that requires gradual process. We are so far behind in everything you think of; from infrastructure to refining, to production model and virtually, everything. So, we need to be leapfrogging like an antelope in a haste, to get to the finish line.
How bright is the future?
The future lies in self belief, in hope. The future lies in trying to get ourselves out of the melancholic environment in which we think we have given up. For all the difficulties we’ve had today, there is so much attraction in this place, so many opportunities available. And local content is probably the most practical example of how we can deepen the participation of Nigerians, so oil companies should be a little more calm and bubble anytime we talk of local content. Sometimes, we see delays inter-agencies competition that stretches time for the approval of contracts. I have given a directive that average contracting time should not exceed six months and we already have a committee working across board to do this and I hope that by the end of this year, we would have achieve this objective. I am very hopeful of this country. I think there are lot of opportunities and I believe our time is now but the moment must be seized. We no longer have the luxury of time, to quarrel and get confused in polemics. We need to have practical, simple and direct steps and move forward. We’ve taken six, seven solid steps in case you have not noticed since we began this sojourn. We’ve dealt with your downstream, funding, transparency in the NNPC and we are dealing with a whole more. We are just beginning and if we keep up with this fast pace, very focused, very direct, we would achieve what we want our local content to become what everybody enjoys and help us to achieve what is the basic thing we want, which is reduced cost and giving opportunities to Nigerians. However, we get there; we need to get there fast.