BY WALE TINUBU
The economic downturn experienced in the last quarter of 2014 through to the second quarter of 2017 undoubtedly hit the country hard. The situation however, forced the Government to look inwards to create policies that would ensure a diversified economy, and create a buffer for future shocks. The reality is that in navigating the downturn of our oil dependent economy, we must focus on growing revenue from the sector to aid diversification of the economy. In other words, we need oil, to exit oil dependency.
The Government’s laudable introduction of the ‘7 Big Wins’ initiative in 2016 presented a framework for the sector to navigate the economic downturn. While it is clear that the Government has done a commendable job in the development of the industry, we in the private sector must continue to proactively look for opportunities to collaborate amongst ourselves and with the Government to bring about positive and lasting solutions that will revolutionise the Nigerian Oil & Gas sector.
In line with the ‘7 Big Wins’, and one of the key conversation themes of the Nigeria International Petroleum Summit (NIPS), “deepening collaboration in the sector”; collaboration is a crucial strategy in the forward movement of the industry and economy at large. With this understanding, we at Oando, have always been firm believers in the African proverb, “If you want to go fast, go alone. If you want to go far, go together”, and every step of the way, we have approached and tackled each challenge by collaborating with private sector partners and the Government where necessary.
Oando were the first private company to enter gas distribution in Nigeria and pioneered gas distribution in the Greater Lagos area with the aim of spurring industrialization. Our notable gas projects include the development of circa 260km gas pipeline grid across Nigeria, Alausa and Akute Independent Power Plants and a Compressed Natural Gas Plant. These infrastructures offer clean and affordable energy solutions which equate to significant cost advantages for industries across the country.
We also conceived and launched the Lagos Midstream Jetty (LMJ) in 2017, the first of its kind in sub-Saharan Africa. The N54 billion ($150 million) jetty will save marketers approximately N43.2 billion ($120 million) annually; increase receipt capacity, efficiency in product discharge and reduce vessel waiting time; ultimately eliminating demurrage and lightering requirements
Industry peers are also making giant strides to ensure the realisation of the ‘7 Big Wins’. The Nigerian National Petroleum Corporation (NNPC) and Total Upstream Nigeria Limited (TUPN) in collaboration with the China National Offshore Oil Corporation (CNOOC), South Atlantic Petroleum Limited (SAPETRO) and Petróleo Brasileiro S.A. (Petrobras) recorded a significant milestone with the arrival of the Egina Floating, Production, Storage and Offloading (FPSO) at the start of the year. The vessel has come at a time when the country needs to maximise the opportunities created by her exemption in the OPEC production cut. The Egina FPSO is expected to ramp up the country’s daily oil production by up to 200,000 barrels of oil per day (bopd). It is the largest FPSO ever installed in Nigeria and the largest investment project currently on-going in the Nigerian Oil & Gas sector. The project is being developed locally to accelerate the pace of knowledge and technology transfer; it will also generate significant opportunities for local contractors in non-Oil & Gas sectors, an additional stimulant to local content development in Nigeria.
Lagos Deep Offshore Logistics Base (LADOL), a logistics and engineering company is the first 100% Nigerian, 100% privately developed port facility in Nigeria with its N108 billion ($300 million) shipyard which is the largest vessel construction and integration yard in West Africa. LADOL is currently hosting Egina for the construction and final integration of the FPSO. The LADOL Free Zone is an industrial free zone which also caters to players outside the Oil & Gas sector. It offers a favourable tax climate including a range of Government incentives to foreign investors, with the hope of attracting Foreign Direct Investment into the country. Like Oando, LADOL’s focus is on strategic investments and the building of infrastructure that will have a multiplier effect on job creation and in the medium to long term positively impact the nation.
Seplat is another example of a company that has used its business activities to support the achievements of the Governments development goals for the country. Following the shut-in of the Trans Forcados pipeline (the main route for the company’s exports), Seplat focused on accelerating development of the Oben Gas Processing Plant. The gas processing plant allowed for the “trapped gas” in the Niger-Delta to be transported to the West where it is being utilised to generate electricity in wider parts of Nigeria; in support of the Governments Gas Revolution initiative and even more importantly, driving the nation closer to meeting its power generation target.
The ‘7 Big Wins’ also addresses the upgrade of the nation’s refineries and increasing local production capacity with the objective of becoming a net exporter of petroleum products and value added petrochemicals by 2019. The Federal Government publicly called on private partners, both local and international to support the reformation program. We strongly believe that it is intuitive and patriotic for anyone partaking in the provision of refined products to the country to also partake in the rehabilitation and refurbishment of these refineries. Hence, we at Oando are exploring innovative funding options to support the Government’s refinery rehabilitation efforts.
The Vice President’s engagements with key stakeholders and communities in the Niger-Delta has enabled Nigeria meet OPEC’s quota of 1.8million barrels per day, fetching the country upwards of N43.9 billion ($122 million) daily. This is a welcome relief to both the sector and the country. To further this cause, we, alongside our Joint Venture (JV) partners have and continue to work hand in hand with our host communities to improve the livelihoods of indigenes of the Niger-Delta through a variety of sustainable empowerment projects. Some of which include skills acquisition schemes aimed at developing youths and transitioning them from a cycle of unemployment and poverty to one of entrepreneurship, under the Access to Energy Initiative, electrification projects which have impacted over 1 million indigenes and the building of infrastructure for long term enhancement of lives, in addition creating employment within these communities by using local hands for these infrastructure builds.
There is also the Green Rivers Project (GRP) an initiative developed to revolutionise agriculture in, and diversify the economies of Niger-Delta states through the creation of an enabling environment for farmers to thrive, motivating and highlighting the importance and dignity of farming. With an annual spend of over N1.08 billion ($3 million), the project has to date created and improved the livelihood of over 35,000 farmers in 120 communities, via the provision of innovative agricultural methods, equipment and microcredit schemes.
By increasing the percentage of work done locally, we are all creating a win / win situation, with GDP growth and job creation benefiting the Nigerian public and private markets whilst international companies operating in Nigeria benefit from drastically lower costs.
The Nigeria International Petroleum Summit (NIPS) opens today and it is well timed to kick-start conversations around the success of the Government’s endeavours to maintain the viability of the Oil & Gas sector; the biggest of which is the ‘7 Big Wins’ initiative. Some of the key achievements of the ‘7 Big Wins’ include the Government’s commitment in achieving the highest production since 2015 last year as well as engaging Niger Delta stakeholders in a bid to improve the operating environment. We have also seen a promotion of transparency and accountability in the NNPC reforms, and the implementation of effective policies with the passage of the PIGB and National Gas Policy. We should not take these successes for granted and applaud the Government for their efforts to date.
The summit also presents the much needed platform to engage public and private sector Oil & Gas leaders and stakeholders on strategies to navigate the recently exited recession.
At Oando, we will continue to collaborate with the Government and private stakeholders to champion projects that will strengthen the sector but more importantly enable the eventual diversification of the economy. We commend industry peers that are already playing their part, however there is still more that can be done. We must all actively seek out platforms for collaboration and ideas to support the successful execution of the ‘7 Big Wins’ and propelling the economy forward.
•Tinubu is Group Chief Executive, Oando PLC