They argued that the misalignment between the two key
agencies of the oil industry had created overlap that had caused them
operational risks and discouragement to investment in the industry.
While highlighting the plethora of challenges facing the sector
such as steady decline in investment, oil theft, subdued oil and gas production
and other issues that discourage them to remain in the business, the operators
called on the incoming administration to tackle those challenges to save the
industry from further collapse.
The operators comprising the international oil companies
(IOCs) and Nigerian independent oil and gas produced expressed this disappoint
during CEO Roundtable on energy at the ongoing sixth Nigerian International
Energy Summit (NIES) holding in Abuja.
However, the Chief Executive Officer of NUPRC, Mr. Gbenga
Komolafe, who confirmed the overlap between the regulatory agencies, while
speaking at another session at the summit, noted that his agency was
effectively implementing the provisions of the Petroleum Industry (PIA) in
order to enable businesses in the industry.
The CEO Roundtable, with the theme: “Building Energy for
Tomorrow”, which was moderated by the Managing Director of Tenaris Nigeria,
Mrs. Rosario Osobase, had panelists including Deputy Managing Director,
Deepwater, TotalEnergies E&P Nigeria, Mr. Victor Bandele; Chairman of the
Oil Producers Trade Section (OPTS) Chevron Nigeria Limited, Mr. Rick Kennedy;
and Chairman of Shell Companies in Nigeria, Mr. Osagie Okunbor as members.
Others were the Managing Director, Nigeria Liquefied Natural
Gas Limited (NLNG), Dr. Philip Mshelbila; Executive Director, ExxonMobil
Nigeria, Mr. Oladotun Isiaka; Chief Operating Officer, Oando Energy Resources
Limited, Dr. Alex Ainojie Irune, and Executive Chairman of AA Holdings, Mr.
Austin Avuru.
The operators said the ugly state of the Nigerian oil and
gas industry, characterised by rampant oil theft and other security challenges,
debts owed some of them by the government, the steady decline in investment,
subdued oil and gas production, and other discouraging elements give them
sleepless nights.
In his remarks, Isiaka, who said the PIA had brought some
fiscal clarity into the oil and gas business, categorically knocked the NUPRC
and NMDPRA over the misalignment in their regulatory roles and policies.
But in terms of planning and working to guarantee energy
future for Nigeria, he said what was needed as far as Nigeria was concerned was
in doing things that would improve the country’s competitiveness.
Isiaka stated, “We need to ensure that over the next few
years, we do not worsen the ease of doing business and the country will not
have additional risk, which then results in exposures, which then means that
projects that are otherwise profitable will become less-competitive within the
global atmosphere.
“And I’ll use two examples to further buttress what I’m
talking about here. It will be contentious but as of today, there exists
significant misalignment between the two regulatory agents; misalignment that
has created overlaps, overlaps that create gaps, gaps that create risks for us
as operators, in certain instances, legal exposure.
“This particular example has the capability of making
otherwise profitable opportunities less-attractive. Another example is the regulations that are
being put in place, some of those that are being gazetted so far are adding
risk to the portfolio risk that could make opportunities that are otherwise
profitable to become less-competitive.
“So that will be the way I’ll address this. We have a lot of
opportunities and for us to plan to move them forward is to continue to ensure
that we continue to make sure the environment is easy for doing business.”
He maintained that one major problem facing the industry,
which gives him sleepiness was how to continue to attract funds to companies
considering the waning investments in oil sector.
According to him, there have been steady decline in
investments over the past 10 to 20 years, and the decline was alarming.
In his thoughts, Kennedy, who also expressed concerns about
the problems bedeviling Nigerian oil and gas, said the industry was experiencing
turbulent times.
“There are many things that keep me awake at night. these
are uncertain and turbulent times. So what I tend to focus on in terms of
leadership is really our people or workforce. As long as we got a safe,
efficient, reliable, clean operation was cost effective.
“It’s our leadership and it’s our people. And we are focused
very much so on building the business acumen of the entire workforce. I want
everybody to know how our business works and their role within that. And then
no matter what happens, we can adapt as needed, to address any issue very
quickly,” he stated.
For Bandele, safety in operations, loss of required
competent manpower and quality equipment were major challenges currently facing
the Nigerian oil industry sector, blaming the ugly scenario on waning
investments.
He opined, “We have started to have a trend which is a
combination of the two of innovation, in that way, you have declining activity
in the industry.
“What happens is the contractors that we use, the people
that we call upon to work most times, they’re not the best in class, because
these workers are going to be present in areas where there is continuous
investment.
“So, we are now faced with getting the wrong contractors,
the majority of them are using Nigeria as second office. They will have a big
office elsewhere and will have a tiny office in Nigeria. So, it’s a trend that
is alarming.
“We are wondering what’s the quality of equipment that has
been sent to the site. So, safety of operations can be a big issue. If we do
not have continuous and stable high level investment in the country, the future
is uncertain.”
In his intervention, Irune, said the Nigerian oil and gas
industry had reached an inflection point, adding that everything revolved
around portfolio rationalisation.
He said, “Nigeria, if you do not get your act together, you
will run so low, there will be no more monitoring and paraphrasing. If you do
not pay your debts, you will not be advanced more capital for projects.
“I think the point every person was trying to make was, how
do we understand that this inflection point has come, to support indigenous
players to be able to shift naturally into these roles? Some of us are there
already.
“I wrote down a few things: security, policy, funding,
infrastructure. And in that order, I think the panel have taken those points,
so, security is a big issue, and if as independents, we can’t get over that
issue and deliver on all our commitments to our funders, in essence, there will
be no future for the independents.
“And I think for us, that’s the underlying issue there. How
do we continue to sustain the investment that goes into the acceleration of
crude oil extraction that must happen before the world completely dries up?”
Also sharing his thoughts, Okunbor said the government was
owing Shell and some other IOCs some huge debts that were yet to be paid,
adding that a lot needed to be done to bring back Investment into the oil
sector.
He said Nigeria’s race to achieving energy security and
transition would require more investments into major oil and gas development
projects to realise, adding that while the PIA presents opportunities for the
sector, there were still some grey areas that need to be addressed.
Meanwhile, in a fire chat session at the event, Komolafe
confirmed the position of the operators, saying there have been issues of
regulatory overlaps between NUPRC and NMDPRA and that that has been a matter of
concern for the industry.
He, however, noted that his agency was effectively
implementing the provisions of the Petroleum Industry (PIA) in order to enable
businesses in the industry.
He said, “Yes, we recognise the fact that there have been
issues of regulatory overlap between the two regulators and that have been a
matter of concern for the industry. Of course, it is a new law and as pioneers,
we will continue to implement the law and continue to take notes of the
challenges in the course of the Implementation.
“As a matter of fact, we will expect that the incoming
government will be asking us to make special reports that we will present to
it.
“So, we are actually compiling that and we intend to make
that as part of our inputs and observation as pioneers in the course of the
presentation of the report.”
He stated that the agency had already gazetted five post-PIA
regulations for the upstream sector, announcing that another 13 regulations
would be gazetted in the coming weeks.
Komolafe added, “The commission was doing everything
possible to effectively implement the PIA. The industry clearly needs clarity
and certainty in their operations. You need the regulations to achieve this.
“In all, as I speak, the commission has succeeded in
gazetting five regulations and again, all things being equal, in the weeks
ahead, we intend to see the gazetting of additional 13 regulations just within
the space of 16 months”.