Whoever takes on the office of minister of Petroleum in the current dispensation would have to contend with a deluge of challenges including the stagnant Petroleum Industry Bill, oil theft, finding solution to the nation’s poor gas infrastructure and cash call issues.
Industry stakeholders say these and other challenges must be tackled head-on by the coming Petroleum minister.
Meanwhile, President Muhammadu Buhari has said he will personally take charge of the Petroleum ministry, to be assisted by a minister of state.
Government has over the years failed to pay its cash call obligations to its joint venture partners, including Shell, Total, Chevron, ExxonMobil and Agip and industry watchers say this has significantly contributed to the snail pace development of the industry.
Industry experts say the minister must move swiftly and deliberately to regain the confidence of the joint venture partners so that more investment can come into the industry.
An executive director in one of the indigenous oil companies who does not want his name mentioned, said that if the government flouts its obligation to its joint venture partners, it should not expect investment.
“Lack of investment based on the joint venture structure in particular, and the failure of the Nigerian National Petroleum Corporation (NNPC) constrained by budget limitations, to meet is financial obligations to the JVs, for replacement of ageing and dilapidated assets, especially pipelines and depots, many of which have long passed their ‘shelf life’ is another risk factor that will continue to affect the efficiency and well being of the industry by substantially increasing operating costs, and environmental pollution, ” he said.
Odein Ajumogobia, a former minister of Petroleum Resources, in a paper he presented in Lagos, had also dealt with the challenges facing the industry.
According to Ajumogobia, the industry has witnessed dwindling fortunes, especially since 2004, when oil industry workers and facilities came under incessant and direct attacks by the militants in the Niger Delta. He noted that the dwindling fortunes of the industry had been affected by several unrelated factors.
“The issues of pipeline vandalism, oil theft, militancy, frequent changes of the management of the NNPC, ageing assets and volatility of oil prices are some other key challenges facing the industry at the moment”, he said.
He further observed that incoherent petroleum policies also posed a major challenge, as the country’s petroleum policies were not always entirely coherent, due in part to the frequent change of important officials.
He said for instance, since the NNPC was created 38 years ago, it has had 17 group managing directors. “In 30 years from 1977 to 2007 there were nine – an average of one every three years. Thereafter, appointments to that office became even more frequent. Since 2010 there have been four other helmsmen in the corporation till date.
The issue of high turnover of personnel in the Department of Petroleum Resources (DPR) is also a major concern for the industry operators as they decried the frequent turnover of directors of (DPR),six DPR directors in seven years, adding that the development is not a recipe for coherent policy making or implementation.
The former minister noted that the dwindling fortunes of the industry had been considerably worsened by plummeting oil prices, adding however that the fall in the oil price was really no surprise.
Another operator said the gaps created by the non passage of the Petroleum Industry Bill (PIB) should be addressed by the new minister, as no expenditure that can take place where the investors don’t know the rules governing investment. “It is either the PIB is passed, or a new law should be put in place”.
They also advise that there should be freqyent licensing rounds, as these help to firm up the industry.
A licensing round that is very transparent will attract big players in the oil and gas industry, one of the operators said.
He further said indigenous oil operators must also be given serious consideration, as they are the last hope for Nigeria, in the event that the big time investors decide to pull out of the country.
Olusola Bello
