Nigeria’s Petroleum Industry: Are Competent Hands behind the Wheel?

09 Dec 2012

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Dipo  Akinkugbe
Stressing the importance of the oil sector to the triumph of the Nigerian state, President Goodluck Jonathan, at the opening of Satellite Field Development Project Platforms, designed and fabricated locally at Nigerdock Island Integrated Free Trade Zone for Mobil Producing Nigeria, remarked that”Our gross national earning from the sector is more than 80 per cent, so it is from the oil sector that we can become industrialised.”

Being a critical sector, much attention is usually paid by all stakeholders to the goings-on in the ministry of petroleum resources, which is the primary regulatory body of the critical sector.Little wonder therefore why Mrs. Diezani Allision Madueke has been under the stage light since 2010 when she took the helms of this sector as minister.

Unfortunately, many of Alison-Madueke’s critics have not stuck to the hard facts of the tangible efforts and rare display of courage and competence, which the woman has shown in her management of such a sensitive sector dominated by men.
The argument for the competence of the current petroleum minister is not solely anchored on her sterling academic qualifications from Howard and Cambridge Universities but also on her experience as the first female executive Director of Shell in Nigeria, transport Minister in 2007, Minister of Mines and Steel Development in 2008 and most importantly her visible efforts towards delivering tangible results in  the implementation of a paradigm shift from corruption to transparency in the petroleum industry.

In April 2010, when President Goodluck Jonathan signed the Nigerian Content Act, which aims to increase the percentage of petroleum industry contracts that are awarded to indigenous Nigerian businesses - a reaction to the domination of the sector by foreign operators, stakeholders looked to see how benefits of the new Act would be delivered to stakeholders by the minister.

Industry watchers acknowledge that besides the vital Petroleum Industry Bill (PIB), currently being pushed by Alison-Madueke in a form that is most beneficial to the country, the Nigerian Content Act signed into law by President Goodluck Jonathan’s administration remains the single most important piece of legislation in more than fifty years of oil production in the country.

Like her or not, it goes down in history that this policy, which has given a life line to indigenous players in the most viable sector of the economy came to fruition under Allison-Madueke and as a result, local engineering companies operating in the country such as Leemon Engineering, Titan Tubulars, Enercon Nigeria limited and many other tiny local players are expanding their operations in-country, engaging more indigenous staff and contributing tangibly to the reemergence of the nation’s economy. 

Merely earning money from sale of crude oil to pay salaries and build infrastructure and feed the nation’s teeming population is not a sustainable way to develop a nation and until we make sure that the requirements of the oil industry; at least a reasonable per cent is produced in the country, Nigeria as a nation cannot reap deep seated benefits from the industry.

Thankfully, this act which is being overseen by The Nigerian Content Development Agency under the management of a Board has the objectives of putting in place a framework for continuous growth of Nigerian content in the Nigerian economy through a balanced programme of planning, target setting, monitoring, stimulating employment, improving contractor capability and capacity, while ensuring international competitiveness of the, materials, equipments and services provided by Nigerian companies.
The question is how far has this policy been understood and implemented by the Minister and what has been the new position of stakeholders since the commencement of the Act.

Showing  concise understanding, Madueke has ensured that  the Act’s mandate of  significant retention of the planned capital investments in-country in a non-disruptive manner and boosting indigenous capacity  in-country is being experienced and can be verified.
Also, understanding that the targets set out in the Act present substantial opportunities to establish new facilities in Nigeria, upgrade existing yards and develop human capital to take advantage of the imminent expansion of the industry she vigorously pursued passage of the PIB, stressing that it would give fresh impetus to the Federal Government’s efforts to further liberalise Nigeria’s oil sector and attract greater foreign investment. How else can performance and commitment to duty be measured?

Following the signing of the Nigerian Oil and Gas Industry Content Act in 2010, the Federal government issued a set of medium term targets to guide the Nigerian Content Development & Monitoring Board, NCDMB, on implementation priorities. These targets covered in-country spending, capacity building, employment generation, indigenous ownership of marine vessels, community enlightenment and participation, but one of the cardinal mandates is the establishment of three to four modern pipe mills in Nigeria to service the oil and gas industry, a target that the country is now on the fast path to attaining.

The Minister has also competently explained that the motive for the mandate was the conviction that upcoming industry projects, especially related to field development, Gas Master Plan and Gas Revolution provide adequate pedestals on which investments in new local pipe mills could be based. Beyond this, she added, is the fact that over 10,000 direct and indirect jobs, 3000 training opportunities per annum and hundreds of suppliers the policy will spawn brings immense benefits to all stakeholders.
The competent implementation of Nigerian Content and the high level of collaboration with the NCDMB by stakeholders, and general adherence to the guidelines issued by the board has led to success related to Domiciliation of Equipment Component Manufacturing, Expatriate Quota management, Utilisation of Indigenous Marine Vessels, Indigenous Rig Ownership Scheme and other capacity development interventions of the Board.

More remarkably, the industry in less than two years is witnessing positive results from these NCDMB interventions, growing interest of OEMs and investors to set up facilities in Nigeria, the rising market share of indigenous vessel owners which had risen from less than $200 million in 2009 to $1billion by 2011. Local fabrication tonnage has also risen by 40 per cent to 54,000 MT per annum over the same period. These are significant achievements the country must continue to build on.

One of the main features under the implementation the local content framework is a sufficient provision to protect investments in facilities because the Act does not allow the industry to export work that can be done in Nigeria except it can be clearly demonstrated to the satisfaction of the NCDMB that such capacity has been exhausted.

This provides comfort for all investors and Allison-Madueke as Chairman of the Governing Council of the Board has continued to insist that Nigerian facilities and infrastructure are accorded first consideration in line with the principles of the Nigerian Content Act.
She believes that by insisting on doing more in Nigeria, we are also creating opportunities for training knowledge sharing and technology transfer; opportunities for investment in fabrication yards, facilities to support industry operations; opportunities for Nigerians to own equipment, marine vessels and rigs and other equipment used in industry. These opportunities are the key to rapid and sustainable growth of the Nigerian economy.

Other areas where the current petroleum minister has excelled include actual Oil and Gas Exploration and Production. Government has continued to invest in increasing the country’s Oil and Gas reserves to meet its target of 40 billion barrels oil reserves, crude oil production  of 4million barrels per day. 

Under Allison-Madueke, production has continued to grow steadily attaining a peak production rate of 2.5 million barrels per day.  This has been underpinned by major new projects that recently come on stream, including USAN which was commissioned in April with a production capacity of 180,000 barrels per day.

Additional major projects just committed to include Ofon and Egina with a combined capacity of over 300,000 barrels per day.  These projects will bring foreign direct investment of about $25 billion.

Allison-Madueke however despite her achievements in reforming the oil sector and setting it on the path of verifiable growth, an achievement which some have argued has never before been made by any past petroleum minister,  ironically continues to suffer illogical criticisms which clearly  lack the support of the most basic logical reasoning. Although this does not appear to tamper with her resolve to deepen the ongoing reforms in the sector and her pursuit of the speedy passage of the PIB, Nigerians may need to take the honourable step of pondering on empirical facts before casting aspersions on some of the very few Nigerians who walk the lonely and difficult path of moving the nation away from the endemic culture of impropriety and indiscretion. 

As for Alison Madueke, she has probably drawn her inspiration from the words of Aristotle, which admonishes that when one avoid criticism, says nothing, does nothing, one ends up being nothing.

The PIB  which is an aggregate of over 16 laws that define the operations, governance structure and tax regimes in the oil and gas sector, is also expected to enthrone a regime of transparency and accountability in major areas, including crude oil production and lifting; allocation of oil blocks and concessions and oil revenue accruals and disbursements.

The minister believes that the passage would go a long way in making the nation’s petroleum industry the preferred destination of oil and gas investors and fighting as hard as she has fought for this bill is only a testimony of her character of giving her all to what she believes is best for the nation.

In appraising her efforts kudos must be given to President Goodluck Jonathan for wisely placing competent hands behind the wheels of reform in the oil sector as it would not have been sufficient to have only a road map and a reliable vehicle without a competent driver to get the sector to its destination. And indeed one can say without fear or prejudice in respect of the minister of petroleum resources, Diezani Allison-Madueke “Who the cap fits is the one who currently wears it.”
•Oil & Gas Analyst Akinkugbe writes from Lagos

Tags: Business, Nigeria, Featured, Petroleum Industry

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