2023 was a particularly difficult year for the oil, gas and power sectors in the country. But with the hope of Nigerians now raised by the operators and regulators in the two sectors, 2024 would probably turn out to be a turning point, writes Emmanuel Addeh.
If Nigeria was a woman, then 2023 would probably be termed the year of pregnancy for the oil, gas and power sectors. None of the promises made by the authorities, whether in the oil, gas or power sectors manifested in full, whether in the downstream and upstream of the oil sector or even in the power sector.
In addition, many issues in the sectors remained unresolved last year. In 2024, Nigeria’s longsuffering citizens expect that the promises will materialise.
Proceeds of Petrol Subsidy Removal
For at least seven months, Nigerians have waited for the federal government to announce how much has been saved from the removal of petrol subsidy by the Bola Tinubu administration.
But it would appear that the government has not been forthcoming on its promise to be open and accountable in ensuring that every kobo raked in from the removal of subsidy is accounted for.
On August 1, 2023, Tinubu, in a nationwide broadcast, revealed that the federal government had saved N1 trillion in the two months (June and July) since the removal of the petrol subsidy. Nothing more has been heard on the matter since then.
Ironically, Tinubu said the monies that would have been otherwise squandered by those he called “smugglers and fraudsters” will now be channelled into intervention programmes, targeting families nationwide.
He stated: “In a little over two months, we have saved over a trillion naira that would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters.” But since then, there has been no update.
This had aroused the curiosity of several Nigerians, including organised labour. For instance, Trade Union Congress (TUC) President, Festus Osifo recently asked where the money saved since subsidies were removed was channelled.
Speaking on the matter during an interview on Arise TV, Osifo said since the government announced that N1 trillion had been saved, there was no reason to continue borrowing. He argued that the government should simply deploy part of the funds to settle some of the problems bedevilling the country.
Osifo said: “The president and commander-in-chief on his own came and said the country had saved N1 trillion. The federal government went everywhere to announce that if the subsidy is removed, it’s going to save substantial money.
“And so, we don’t expect them to go everywhere and start borrowing money. They told us they were going to save money. So where is the money that you have saved and how have they deployed this money?,” he asked.
To restore confidence in government, every dime that is saved from the subsidy removal initiative should be accounted for in 2024.
Meeting OPEC’s New Quota
After much back and forth, the Organisation of Petroleum Exporting Countries (OPEC), agreed to raise Nigeria’s oil production quota from 1.38 million barrels per day to 1.5 million bpd this year.
For over three years, the country had not been able to meet its allocation, resulting in the slashing of its quota from 1.742 million bpd to 1.38 million bpd in the first instance and then 1.5 million bpd after consultations.
With production still at 1.25 million bpd as of November 2023, according to the December data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), it remains to be seen how Nigeria will hit 1.5 million bpd which had been elusive for over three years or even the 1.78 million bpd budget benchmark for 2024.
Despite the many odds, the authorities insist that 2024 will present better opportunities in the oil sector, including meeting and surpassing OPEC’s expectations.
“It is not an easy task, but we know we had the challenge of oil stealing and vandalism of our pipelines. Our commitment is to produce at the rate of 2 million barrels bpd anytime from next year (2024).
“But to do this, we have to overhaul our security architecture, so that the incidences of stealing and vandalism of pipelines can be reduced,” Chair of the newly inaugurated NNPC’s board, Pius Akinyelure, stated recently.
Also, on December 12, the Minister of State Petroleum Resources (Oil), Heineken Lokpobiri, pledged that Nigeria will achieve its 2024 crude oil production benchmark of 1.78 million bpd.
Lokpobiri reiterated that Nigeria can increase crude oil production to 2 million bpd, stressing that issues hindering it were being worked on. It however remains to be seen how this will be achieved.
Making the Refineries Work
Of Nigeria’s multiplicity of problems in the oil sector, this probably takes the cake. For years, Nigeria has not refined a single litre of petrol in-country due to its badly managed refining infrastructure.
But now that the completion of the rehabilitation of the old Port Harcourt refinery and Dangote petrochemical refinery have been completed, maybe it’s time to look forward to something better.
According to a report by Dataphyte, the lack of functional refineries has meant continuous importation of refined petroleum for Nigeria, with Nigeria spending as much as $37.9 billion to import refined petrol between 2015 and 2019. In 2022 alone, the country spent over $10 billion importing fuel.
But as the 60,000 bpd part of the Port Harcourt refinery is expected to come on stream this quarter, and the second one which has 150,000 bpd capacity, later, plus the Dangote refinery expected to start with 350,000 bpd, Nigeria’s haemorrhaging FX situation could be curtailed.
In addition, a number of jobs will be created, while the price of the various petroleum products are expected to reduce, even if not significantly.
Taking NNPC Public
Since the Nigerian National Petroleum Company Limited (NNPC) was declared a commercial entity, its leadership has at various times pledged to launch an Initial Public Offering (IPO).
In the first instance, the NNPC said it would be ready for an IPO by mid-2023, as it sought to sell shares to the public.
“We will go to the market and this is going to happen soon. This is the new direction, and I can confirm to you that Mr President is completely committed,” the NNPC boss, Mele Kyari said at an energy conference in the capital, Abuja recently.
In October, speakings to an Adipec audience, Kyari stated that the NNPC was “80 per cent ready for the IPO”. Hopefully, 2024 may just be the year the much criticised national oil company goes public.
Decade of Gas: Beyond Rhetoric
The often repeated saying that “Nigeria is a gas country with a little oil” by industry players cannot be truer, given that the country has over 208 Trillion Cubic Feet (TCF) of natural gas still buried under the ground.
Nigeria’s “Decade of Gas” now appears to be a mere slogan, three years after its launch, even though there are a handful of gas-related projects ongoing. But these projects are either too slow, have severally missed timelines, or have stopped altogether.
In March 2021, former president Muhammadu Buhari declared that year to 2030 as the decade of gas, signalling the government’s renewed focus on gas as the fuel of choice for powering Nigeria’s industrial ambitions.
Nigeria has about the ninth largest gas reserves globally. But despite this huge potential, gas production remains relatively low.
The $20 billion dollar initiative (as then valued) was centred on four key pillars: increasing domestic gas utilisation, expanding gas infrastructure, growing gas exports, and attracting foreign direct investment into the gas sector.
It is not a lack of gas that is hampering NNPC, Kyari recently noted, but pinned it at “It’s a lack of will.”
Nigeria has changed, he continued, noting that, “very global partners are talking to us today about how do we work with you, how do we build the gas.”
A number of countries are talking to NNPC, he said. “In three, four years to come, Nigeria will be a hub of gas in West Africa,” he assured.
In 2024, the Nigerian government and its partners in the oil and gas sector must make hay while the sun appears to still be shining on the gas sector.
Smoothing PIA’s Rough Edges
To be fair, never had the kind of massive consultation and stakeholders’ buy-in that led to the passage of the Petroleum Industry Act (PIA) in 2021 gone into the process during past attempts at pushing the bill to become law.
However, despite that, many stakeholders still seem dissatisfied with the framework.
There are still overlapping functions of the major regulatory agencies in the sector, leading to incessant friction. Added to that, the host oil communities are still complaining. In 2024, the authorities must move to smoothen the rough edges in that very important law.
Time to Halt Oil Theft
The single most critical reason why Nigeria has not been able to meet its oil production target, according to the government and indeed industry players, is oil theft.
Everyday, massive volumes of Nigeria’s crude oil is stolen, even despite the several measures put in place to curb the menace by the authorities. In 2024, Nigeria must move beyond rhetoric and the usual methods that have not worked in the past.
The Nigerian Extractive Industries Transparency Initiative (NEITI) describes crude oil theft and pipeline vandalism as a national emergency challenge. The problem is so huge that for instance, Nigeria has been unable to meet its OPEC quota for over three years.
“With a loss of 619.7 million barrels of crude oil valued at $46.16 billion, or N16.25 trillion between 2009 and 2020, curbing the twin menace of crude oil theft and pipeline vandalism has become a national emergency challenge,” Head of NEITI, Dr Ogbonnaya Orji, recently said.
Orji said solutions must be found for the challenge if investors’ confidence in the country’s oil and gas industry is to be restored and trust rebuilt, towards boosting national economic growth.
This year, the constant damage done to the country’s economy by oil theft must be minimised to have any headway, going forward.
Making CNG Count
Talking seriously, the Compressed Natural Gas (CNG) adoption programme, which seeks to ameliorate the impact of the removal of petrol subsidy, has been mostly talk and little action.
The current government had sought to revive the CNG programme floated by the Buhari administration to encourage cleaner energy adoption and embracing gas as a cheaper form of transportation for the citizens. But it’s still a long a way ahead before the initiative gains traction.
Tinubu, in his nationwide address on July 31 last year, announced that the federal government will invest N100 billion between that time and March 2024 to acquire 3,000 units of 20-seater CNG-fuelled buses.
Subsequently, during his Independence Day speech on October 1, the president assured that efforts were in top gear to make available the new CNG conversion kits. Efforts aside, Nigerians are yet to feel the impact of that programme. If anything, it’s still like a drop in the ocean.
To make matters worse, the gas that’s being touted as an alternative fuel has had its price skyrocket in recent months, while the cost of converting a petrol-powered vehicle to a CNG vehicle remains prohibitive.
Operationalising the Siemens Deal
There’s really nothing about the power sector that has not been written or said. All the problems are in the public space. But for Nigeria to improve its power supply in the short term, it must take the Siemens deal with the German government very seriously in 2024.
Thankfully, the Tinubu administration recently sought to revive the agreement which if implemented would have seen Nigeria ramp up supply to 25,000mw by 2025. Although deadlines and timelines have been missed, it’s not too late to revamp the Siemens contract.
