OTC: The Changing Face of Oil Business in Nigeria


BY Bisi Daniels

Closing his 14-page speech at the 2017 Offshore Technology Conference in Houston, United States of America, the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, said, “Distinguished Ladies and Gentlemen, NNPC is here and we are open for business.”


That serious tone typified Nigeria’s participation at the just-concluded conference that held in solemn atmosphere of a global oil and gas industry humbled in the last many months by dwindling prices and profitability and threats of oversupply. 

In some of the past conferences, particularly during the “oil subsidy boom” in the downstream sector, Nigeria’s presence was registered with unusually large attendance, comprising mostly people who had no relevance there. Attendance used to be a status symbol and a show of support of cheerleaders for key government officials. 

For many, it was also an opportunity for shopping after a brief appearance at the venue. There were many representatives of Ministries, Departments, and Agencies, as well as lawmakers with no affiliations with the petroleum industry. 

Founded in 1969, the Offshore Technology Conference is the world’s foremost event for the development of offshore resources in drilling, exploration, production and environmental protection. A top-notch conference hosted to showcase technological breakthroughs in oil and gas exploration and exploitation, it is also an opportunity for the organisers to reward individuals, companies and academic researches into these breakthroughs.


Opening of Pavilion

In an industry gasping for recovery with cost-cutting and aggressive shopping for investors, rather than luxury goods and services, the crowd of onlookers is thinning out to make Nigeria’s presence look more businesslike.

 Indeed, declaring open the Nigerian pavilion, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, signalled the mood of the country by stating that deliberations at the conference was expected to produce workable solutions that would impact on Nigeria’s development. That of course included the search for investors, which is not done with jamborees, as some analysts had described some of the country’s participation at the event.

 He announced that from 2018, sponsorship of delegates to the conference would stop. He said 250 delegates from Nigeria attended the 2016 edition, while 50 delegates attended the 2017 edition.

 He pledged to work hard to ensure that the number is reduced to 20, mostly technical experts, in 2018. Apart from those, anyone wishing to attend the conference in future should sponsor himself, he said.

 Bad news for some people; but good for the business!

 As it has always done since 2005, the Petroleum Technology Association of Nigeria (PETAN) organized Nigeria’s participation. PETAN is an association of Nigerian indigenous technical oilfield service companies in the upstream and downstream sectors of the oil industry. It was formed to bring together Nigerian Oil & Gas entrepreneurs to create a forum for the exchange of ideas with the major operators and policy makers.

 Dr. Baru rightly commended the association for this year’s conference. Speaking at the dinner and awards night, he said, “I want to thank PETAN for their continuous leadership in organizing Nigerian representation in the Offshore Technology Conference. Over the years, the OTC has transformed from an uncoordinated representation into a more focused and involving participation.” 

Even in that relaxed atmosphere he was focused. “The OTC of this year is particularly important especially in our quest to transform the industry to growth and profitability.”

 From a traditional oil and gas company to an Energy Company

And then the big one: “The vision is to transit from a traditional oil and gas company into an energy company. This is why a forum like this is important for us to showcase the potentials and opportunities in the sector to support our aspirations,” he stated. 

To transform into an energy company, he said, among other things, the country had concluded “the process of exiting of Joint Venture cash calls and therefore we will require a lot of investment to support our growth plan. In the area of infrastructure development, we are collaborating with investors to bridge the gap. This is why in most of our gas-related projects, we collaborate with third party investors to develop the infrastructure and recover investment from the business.

 We are also focusing on frontier exploration business to grow our reserves and in renewable energy to diversify our business.”

 There was ample opportunity for Dr. Baru to provide details; just as there was for Dr Kachikwu, leader of the Nigerian government delegation, to talk business to conference participants. Dr. Baru was ably represented by Chief Operating Officer, Gas and Power, Mr. Saidu Mohammed.

 In a presentation entitled “Global Energy Dynamics: Challenges and Opportunities in the Nigerian Oil and Gas Sector”, Dr Baru reviewed the sector and seized the moment to present available opportunities to investors.

 He stated that the opportunities in the Nigerian oil and gas sector could be divided into five distinct areas across the value chain: Upstream oil and gas development, Gas Infrastructure and Power plants, Refineries, Downstream, as well as Ventures and new business.

 To show that the NNPC has not gone into sleep mode to wait for investors, Dr Baru highlighted business initiatives being undertaken to move the Corporation forward.

 He said the Corporation’s support for the Federal Government’s Seven Big-Wins initiatives on Gas Revolution, Refinery and Local Production, Business Environment and Investment drive, Niger Delta and Security, Stakeholder Management, Transparency and Efficiency, is being implemented through 12 key business areas. They are security, new business models, joint venture cash calls, reserve and production growth, Nigerian Production Development Company, gas development; and oil and gas infrastructure. Others are refinery upgrade and expansion; renewable energy and frontier exploration; ventures and common services; and staff welfare.

 Reiterating the focus of Nigeria’s participation at OTC, he opened his arms: “The Nigerian petroleum industry remains by far the largest and most vibrant in Sub-Saharan Africa with lots of potentials, especially in the deep water and untapped gas resources. There are unique opportunities for investors across the value chain from upstream to midstream to downstream and we invite you to partner with us.”

 On various occasions at the Conference, Dr. Kachikwu spoke generally about the oil and gas industry in Nigeria, its achievements and attractiveness, and also extended an open invitation to prospective investors around the world. 

Highlights include: the commitment to build modular refineries in oil producing states; plans to announce new investors for the nation’s refineries; withdrawal of idle refining licences from investors; and $400m part- payment to IOCs to settle outstanding Joint-Venture cash call debts.

He also announced that the Zabazaba deepwater project in Oil Prospecting Lease (OPL) 245 will continue in spite of the issues surrounding the oil block.


Comments of Participants

Many participants at the conference commended Nigeria’s serious mood in Houston and the effectiveness of its engagement. They were particularly proud about the quality of the current leadership of the oil and gas industry in the country. 

Also commended were PETAN and the public affairs division of NNPC. “The pavilion was rich and informative and the people in charge were polite,” said a participant. 

“That is what you get when you put knowledgeable and tested people in charge,” said an oil industry executive, who also referred to the achievements of the oil and gas leadership outside the conference.

 Some other participants joined him in applauding the peace in the Niger Delta to free shut-in production, overall increase in supply, which Baru put at 2mpd recently; and Nigeria’s key role among oil-producing countries in stabilizing oil prices.

 Dr Kachikwu, a key player, hinted that Nigeria will be seeking a six-month extension of the exemption it got from the production freeze agreement reached by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members in December 2016 to shore up oil prices.

He expressed a strong conviction that the agreement would be extended and Nigeria also exempted.


Ndu Ughamadu

Summing it all up, Ndu Ughamadu, the Group General Manager, Group Public Affairs Division, described Nigeria’s participation at the conference as “impressive and effective.” He was happy about the commendation of the NNPC pavilion by Dr Kachikwu and Engr Saidu Mohammed.

Explaining why it was a good outing for NNPC, he said, “Many prospective investors were at its stand on investing in refineries and energy projects of the Corporation, which is transforming into an energy conglomerate. Also thousands of investors, who were interested in federal government’s policy on modular refineries in the Niger Delta, received briefs.

“Generally, Nigeria used the forum to market its various investment opportunities, particularly in the oil sector.”

 So much was said at Houston, but to some industry experts and Labour leaders, all that have to be backed with, to borrow the phrase of a CEO in the industry, “a faster walk of the talk in order not to halt the momentum.”

 · Daniels, an author and journalist, worked in the oil industry