Whoever assumes the position of minister of state for petroleum in the current dispensation would have to contend with a deluge of issues that have bedeviled the oil and gas industry and find ways to make the industry robust again.
Stakeholders say one of the challenges that the minister will have to resolve is government’s inability to pay its own cash call obligations which has undermined the growth of the industry.
They further say that the minister must work on rekindling confidence among the joint venture partners, to facilitate the flow of investments into the industry.
An executive director in one of the indigenous oil companies who does not want to be named, said if government fails in its obligations to it joint venture partners, it should not expect investment.
“Lack of investment based on the joint venture structure in particular, and the inability of the NNPC ,constrained by budget limitations to always 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 lives’ 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, commenting on the issues affecting the industry recently in Lagos, said government must act fast to save the industry from collapsing.
According to him the industry has witnessed dwindling fortunes, especially since 2004, when oil industry workers and facilities came under incessant and direct attacks by the ex-militants in the Niger Delta. He noted that the dwindling fortunes of the industry had been affected by several unrelated factors.
“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 said incoherent petroleum policies also constituted a major challenge. This, he said, was often due to frequent change of key officials.
He said for instance, that 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 industry operators, as they decried the frequent turnover of directors in the DPR They observe that there have been 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 operators said the gap created by the non passage of the Petroleum Industry Bill (PIB) should be addressed by the new minister, as no expenditure can take place where the investors don’t know the law that is governing such investment. “It is either the PIB is passed or a new law should be put in place”.
The issue of licensing rounds in the oil and gas industry is another concern for the operators. Licensing rounds, they say, energise the industry and yet the last of such exercise took place long ago in 2007 for a country that depends on oil and gas as its main source of revenue.
A licensing round that is very transparent will attract big players in the oil and gas industry, one of the operators said.
He also said indigenous oil operators must be given serious consideration as they are the last hope of Nigeria, in event that the big time investors decide to pull out of the country.
The issue of oil subsidy is another monster that the minister would have to contend with. For instance, between December 2014 and now, the Federal Government has spent N950 billion on petroleum subsidy because the refineries are not functioning.
The stakeholders say government should deregulate so that the money spent on importing premium motor spirit or petrol can be made to service other sectors of the ecoconmy.
Iheanyi Nwachukwu
