*We have paid IOCs cash call debts, says Wunti
Emmanuel Addeh in Abuja, Peter Uzoho in Lagos and Olusegun Samuel in Yenagoa
The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Wabote, yesterday argued that the oil and gas industry could return to contributing double-digit to the country’s Gross Domestic Product (GDP), given the right decisions and clement environment.
Speaking at the fourth edition of the Nigerian Oil and Gas Opportunity Fair (NOGOF) 2023, organised by the board in Bayelsa State, Wabote, highlighted that of late, the role expected of the oil and gas industry had been dwindling due to missed opportunities as a result of policy inconsistencies, deferred decisions, and investments apathy.
To set the context, the executive secretary of NCDMB drew attention to the country’s Gross Domestic Product (GDP) growth rate between 2021 and 2022, as released by the National Bureau for Statistics (NBS).
Over this period, he stated that the growth of the GDP had been marginal, saying that the reality is that Nigeria needs to drive the growth rate to double digits to achieve the level of economic advancement and development it desires.
Wabote said: “The NBS report noted that the total annual contribution of oil to aggregate GDP in 2022 was 5.67 per cent compared to 7.24 per cent in 2021. The oil sector has steadily dropped behind agriculture, trade, telecommunications/ICT, and real estate in terms of sectors that contributed the most to Nigeria’s GDP.
“These are signs of a dying sector, and we must all join hands to stop the decline so that we can return oil and gas contribution to GDP to double digit levels similar to other major oil producing countries.”
According to him, Norway has doubled its GDP in the last two years from $171.2 billion to $367 billion with the oil and gas sector contributing about 20 per cent, followed by their hydropower.
He added: “Although Norway is in a different clime from Nigeria, we share some similarities when we look at the huge deposits of natural resources coupled with a skilled labour force and the adoption of new technology that made Norway a prosperous country during the twentieth and twenty-first centuries.
“It is my belief that the oil and gas sector can serve as the catalyst that will enable us to achieve the desired double-digit GDP growth rate if we are bold and disruptive in our strategy.”
Wabote said one probable means through which double-digit GDP growth could be achieved was by harnessing the array of opportunities in various categories enabled by the oil and gas industry.
He said NOGOF was designed to showcase opportunities in the upstream, midstream and downstream sectors, provide opportunity for foreign and local investors to build synergies in the Nigerian oil and gas industry, and provide companies and prospective investors an opportunity to showcase their capabilities.
He added that NOGOF would provide stakeholders with information on upcoming projects to enable Nigerian companies/manufacturers tailor their business development strategies as well as identify high impact activities with potential for in-country value addition with a five-year outlook to deepen the practice of Nigerian content.
In his address at the event, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mallam Mele Kyari, urged all stakeholders to join NNPC in growing crude oil and gas production, noting that with the expected coming on-stream of Dangote refinery, NNPC will be supplying 300,000 barrels of crude oil per day to the company.
Kyari said: “We want to address the energy challenges so that industrialisation can come to the country. Forty-eight per cent of all revenue that comes to government comes from the oil and gas sector and we are in a very good position to support the growth of the economy.”
In his remarks, NNPC’s Chief Upstream Investment Officer, Mr. Bala Wunti said the company had officially cleared the backlog of cash calls owed the International Oil Companies (IOCs) to the tune of about $4.68 billion. Wunti said the move had enhanced cash flow in the sector.
THISDAY recalls that as of May 2022, the national oil company had paid $3.81 billion as cash call arrears to its Joint Venture (JV) partners, including Shell Petroleum Development Company (SPDC), Mobil Producing Nigeria (MPNU), Chevron Nigeria Limited (CNL), Total Exploration and Production Nigeria (TEPN), and Nigeria Agip Oil Company (NAOC).
That left NNPC with an outstanding balance of $873.34 million, out of the total renegotiated debt between the government and the five IOCs of $4.68 billion from 2016. By July 31, 2022, NNPC had already paid $4.04 billion to five of the foreign oil businesses.
Essentially, cash calls are sent by joint venture operators to non-operating partners for payment for expected future capital, operating expenditures or the need for additional capital contributions.
The federal government, through NNPC, had over the years piled up unpaid bills, referred to as cash calls, which it was obliged to pay the IOCs with which it had JVs for oil exploration and production. The huge debts had hobbled investment in the sector for years.
But speaking at the event, Wunti who aired his views during a session on upstream opportunities, said the national oil company had fully settled the arrears. He stressed that before he got back to Abuja from Bayelsa, the last tranche would have hit the IOCs’ accounts.
Wunti said: “As of today, NNPC is not owing anybody cash call debts. We have paid all the cash call. They are up to date, up to the month of April. And probably before I get back to Abuja, it will hit your accounts and that wouldn’t have been possible without production recovery.”
He said the development had re-energised the JVs to recalibrate their focus towards sustaining production and increasing their spending to procure the necessary services required to increase crude oil production.
According to the NUIMS chief, who represented the Executive Vice President, Upstream of the NNPC, Mr. Adokiye Tombomieye, the national oil company and its partners have now successfully confronted a trilemma of challenges.
He added that Nigeria was poised to increase national production output and usher in a new era of growth and opportunities in the Nigerian upstream oil and gas industry.
Wunti stressed that the enactment of the Petroleum Industry Act (PIA) 2021 and its effective implementation ended the fiscal uncertainties and empowered the newly established institutions to discharge their mandates effectively.
On the security challenges, which often affected oil production in the Niger Delta, Wunti said NNPC had deployed industry-wide security architecture. He added that this was done after NNPC sought and got a presidential approval to rally stakeholders to implement holistic hydrocarbon infrastructure security architecture to tackle the issue of crude oil theft and vandalism of oil and gas assets.
He said, “The security operations are monitored and coordinated from a central command and coordination centre that leverages state-of-the-art technology to detect illegal activities and escalate to the front line for swift response in a timely, cost-efficient, and effective manner.”
Furthermore, Wunti stated that an industry-wide security arrangement was in place to drive down the cost of crude production. He stated that the focus had shifted towards raising production to 1.8 million barrels per day in July 2023 and two million barrels per day by December 2023.
Governor Douye Diri of Bayelsa commended Wabote for the Oloibiri Museum and other infrastructural projects in the state, including the training and retraining of youths and women.
Represented by the Commissioner for Mineral Resources, Mr Ebiere Jones, Diri urged the Nigerian government to look into establishment of pipeline company in Nigeria.
He said many youths in Bayelsa State were unemployed, and charged oil firms to create opportunities for Bayalsa youths to be trained.
Others, who spoke at the event, included Chief Executive, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, represented by Executive Commissioner, Economic Regulation and Strategic Planning, Dr Kelechi Ofoegbu.
Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, was represented by Mansur Kuliya, Executive Director, Midstream and Downstream Gas Infrastructure.
Also represented were Director General, Nigerian Maritime Administration and Safety Agency (NIMASA), Bashir Jamoh; Permanent Secretary, Ministry of Petroleum, Gabriel Aduda; Chairman/MD Chevron, Rick Kennedy; and Managing Director, Total E&P, Mike Sangster. Country Chair, Shell Companies in Nigeria, Osagie Okunbor, also spoke at the event.