Nwosu: Nigeria Should Leverage on Oil and Gas Resources to Diversify her Economy

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Chairman of the Society of Petroleum Engineers (SPE), Nigeria Council, and Deputy Managing Director of Addax Petroleum Development (Nigeria) Limited, Mr. Chikezie Nwosu spoke on Arise Television, a sister broadcast arm of THISDAY Newspapers, on Nigeria’s economic diversification and the impact of effective legislation on the development of the oil and gas industry. Ejiofor Alike presents the excerpts:

The administration of President Muhammadu Buhari has embarked on measures to diversify the country’s economy away from oil to agriculture and solid minerals. With oil and gas accounting for over 90 per cent of the country’s export revenues and over 60 per cent of the budget, do you think Nigeria can do without oil?

I have a different way of discussing oil. We have God-given resources, which are oil. We also have gas resources. We had better started taking a look on how we can leverage on the oil and gas resources to help in diversifying the economy. So, to me, it is not a question of what can we do without oil. It is how we can leverage on the oil and gas resources we have to help in growing the economy of Nigeria. That is the way I will look at it.
Some analysts have argued that oil and gas can be the enabler that will help Nigeria achieve her diversification dream. Do you subscribe to this assumption?

Absolutely! From the Society of Petroleum Engineers (SPE), I will just give you context of what we are doing in this council year. We started the council year with the theme about diversifying the Nigerian economy with oil and gas as enabler. And part of that is that we reached out to companies that are in renewable energy space to try and find out where we can be of service to them. It is a three-pronged approach. The first one is to see whether the major international oil companies (IOCs), who are our partners – most of the IOCs have renewable energy division. So, how can we leverage on the technology and adapt it to the Nigerian situation.

So, these renewable energy companies were invited for our conference – Oloibiri Energy Forum to see if we can form this kind of partnership between IOCs and these renewable energy companies. The second part is: Are there other technologies that have been available to oil and gas outside the renewable space, which we can also adapt to use in the renewable space as well? The third but not the last is: Is there where we can support them with respect to legislation? I give you one example. One thing that came of the conference is the fact that although the oil and gas companies enjoy oil and gas free trade zone, the renewable companies don’t have such incentive.

So, we started talking about why don’t we have an energy free trade zone where we can leverage in the experiences we have in the free trade zone for oil and gas to try and enable the growth of the renewable industry. So, that is one area where we can impact that growth. The other areas are gas-to –power and gas-based industries. The gas resources in Nigeria are currently very underutilised and we believe that if we have a little more focus on gas than oil, which is just a commodity where we traded, we should be able to leverage on gas to expand the power industry and the gas-based industries, as well.
Why is Nigeria’s gas resources underutilised?

It is about the history of exploitation of hydrocarbon resources in Nigeria. The goal was always to go for oil and gas was treated as a second cousin. Therefore, it became challenging to try and determine what properly quantify the resources of gas. That is one area. The infrastructure is lacking because we relied on hydro-electric power for a long time, without realising that gas was a power stream that could be utilised to much greater effects than hydro-electric power for Nigeria. So, it is just now that we seem to be waking up. When I say waking up, for the last 10 years, conversation has been going on. But now, I see some traction in getting the gas resources properly utilised.

The administration of former President Olusegun Obasanjo had initiated steps to enact a modern legislation that would replace about 16 obsolete legislative and administrative instruments governing the Nigeria’s oil and gas industry. This idea gave birth to the Petroleum Industry Bill (PIB), which was prepared by the administration of the late President Umaru Musa Yar’Adua. Is legislation one of your biggest problems?

It is and I will talk about the current discussion on the Petroleum Industry Bill (PIB). It tries to look at all that legislations you are talking about and to try to know whether there is a way to provide some sort of concise guidelines that could help the industry. The PIB, before, was a humongous bill. It tries to answer every single question. What is being done is that it has been split into four different bills. There is the Petroleum Industry Governance Bill (PIGB), which is the one that everybody understands that it is about to receive presidential assent.

There is the Petroleum Industry Administration Bill (PIAB), which is coming up soon. Public hearing has been held on that. There is the Petroleum Industry Fiscal Bill (PIFB), which has also been subjected to public hearing. There is also the Petroleum Industry Host and Impacted Community Bill (PHCB)). Now, by splitting up that bid humongous bill into f our different bills, it is easy to pass it. But you have also to make sure that there is consistency in interpretation that will occur in each of the bills as well. So, I see that as a very positive move. Now, you were asking if this will impact the industry. The answer is yes. It addresses a lot of challenges the industry has.

For instance, the PIGB is all about how we make sure that the governing entities – typically the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR), are more efficient. So, we talk about single industry regulators; we talk about turning NNPC into more efficient organisation to deliver its own oil and gas promises to the nation. The fiscal bill opens more investment opportunities. So, we must look carefully at what we are doing to make sure that we find a means of developing the sector. The government wants to have more revenue.

That is fine, but we also have to attract more investments because we have to grow the size of the pie of the cake for the government to have a larger take from that as well. Then you have the host and impacted community bill. This is very critical to address insecurity in the Niger Delta and the fact that the host communities believe that they have not actually been partners. The host communities believe that they are more or less, slaves, which they use to describe themselves, sometimes.
To simply throw something across to them, we have to find a way where we can partner truly with the host communities to make sure that they become partners in this journey to grow the economy of Nigeria, through oil and gas.