LCCI Calls for Urgent Resolution of Security, Policy Challenges in Oil Sector
By Peter Uzoho
The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, has emphasised the need for Nigeria to hasten up and holistically address the security and policy issues stifling investments in the oil and gas sector, especially the upstream segment.
Yusuf, said the federal government should as a matter of urgency provide an enabling environment that guarantees protection of investments and commensurate returns on investment for investors in the nation’s oil and gas sector.
The LCCI DG spoke to THISDAY at the weekend on the heels of the recent pronouncement by the Royal Dutch Shell that it would, “take another hard look” on their onshore operations in Nigeria, citing problems of sabotage and oil theft as reasons for such decision.
Admitting that the possible exit of such multinational oil company like Shell from the country would have negative effect on Nigeria, Yusuf, however, contended that companies reserve the right to decide where to remain or leave, based on their analyses of the business environment and the risks in a country.
He said: “This is not an emotionally issue. It’s not a sentimental issue. It’s a business issue. If you want them to remain onshore, you have to create the environment for them to remain onshore. You know what the security problems have been for so many years, for over a decade.
“Do you have to be asked to be settling people and all of that, community challenges, pipeline vandalisation, all sorts of problems. This kind of thing doesn’t happen in any other clime in terms of oil production; it doesn’t happen. And you know that these investors are multinational investors.
“They have other opportunities in other parts of the world in terms of spreading their investments and they do a lot of comparative analyses to know where they should put more resources, where they should reduce their resources, where they should reduce exposure to risks and all of that.
Yusuf further said: “So, the problem is with us as a country. What kind of environment are we creating for them? What kind of security are we giving them? What kind of protection are we giving to them? So, it is the environment that will determine the decision that businesses should take.
“They are business people and they have to manage their risks. They have to review their business model for a better return. You can’t blame them for that. What you can do is to see how you can create a more conducive environment for them to be able to stay onshore.
“If the environment is good, they will stay. If they don’t stay, other people will come and stay. But what is paramount is the quality of investment environment that you create for those who are in the oil and gas sector”.
He said investors in the upstream oil and gas sector in Nigeria have been facing enormous challenges over time, which have been affecting investments, pointing out that for some time, Nigeria has not been having major new investment in the upstream sector.
“You can see that even generally in Africa, we are not doing well when you compare our performance with some other countries like Angola and the rest of them. We are not attractive. I’m just hoping that the PIB, if it is properly put together, will address some of these concerns. We are not attractive and the time is going,” he said.
Yusuf, stated that fossil fuel and fossil energy is fast running out of fashion, saying Nigeria should urgently reposition to take advantage of the opportunities in its hydrocarbon resources now.
“So, if we are still dependent on this fossil fuel and our environment is not conducive either from the security point of view or from the policy point of view, then it’s not good for the country because we will not attract the needed investments in the oil and gas sector. So we need to look at all these things holistically.
“…If you go to Europe, you go to US, even in Asia, a lot of focus is now moving to renewable. They are talking of electric cars and those are the kind of things that are now becoming popular and gaining a lot of traction. So we need to make hay while the sun is still shinning as far as our oil and gas sector is concerned,” Yusuf said.
On the Petroleum Industry Bill (PIB) and the fresh hurdles facing its passage, notably, the diverse interests at play, Yusuf advised the National Assembly to find a way of balancing those different interests to enable the passage of a good legislation.
He said the lawmakers have a duty to ensure that they protect the interest of oil companies for increased investments in the country while also ensuring that the interest of host communities are also promoted and that all parties should be ready to make some compromise for the passage of the bill.
He added: “You see, when it comes to matters of this nature, it is normal to have diverse views; it’s normal to have different schools of thought; it’s normal to have different interests that people want to protect. What is important is for those who will pass the legislation to be able to ensure a balance between all these interests.
“You have to worry about the interest of investors because if at the end of the day, the legislation is not a good legislation, we are going to lose investments. And just as I told you, these investors are multinational investors.
“They have outlets in other parts of the world, they will just move and we have seen divestments before in the oil and gas sector, both upstream and downstream because of the quality of the environment. So, it is important that you have a good balance for the interests”.