Rethinking Policies for Nigeria’s Petroleum Industry
At the 23rd Petroleum Policy Roundtable of the energy think-tank, Centre for Petroleum Information (CPI), speakers and participant reached a consensus that in the near-term Nigeria must use its fossil fuel to diversify as the global energy transition is unstoppable. Local must upscale capacity to finance future fossil fuel investment as international sources will get thinner with time.
The Chairperson of the Roundtable, Elohor Aiboni, Managing Director of Shell Nigeria Exploration & Production Company (SNEPCO) commended the organisers for a timely event focused on “rethinking policies” in these transitional times. She commended the Nigerian government for what she described as “the new terms and conditions for IOCs (international oil companies) – post-PIA 2021 – which have helped remove the ambiguities and unlock value for years to come.” However, she noted that fiscals for gas can still be better to encourage substantial future investments in that segment.
The country chairman of Energy Institute Nigeria (EIN), Osten Olorunsola in his keynote address:
“Balancing energy security needs against energy transition imperatives,” wants a more coherent tone in the pursuit of energy transition in Nigeria. Such a tone must be consistent with the policies enunciated in the Petroleum Industry Act (PIA) 2021; Net-Zero 2060 and the Nigeria Energy transition Plan (NETP). He pointed out that, the “current gross inefficiency distorts the balancing of energy security against the desired energy transition.”
Oil & Gas veteran Dr Layi Fatona in his contribution on the gap left by departure of IOCs from onshore and shallow water projected the ultimate outcome when the divestment is complete. “Only four to five big independents” will dominate. For instance, “Seplat Petroleum potentially could soon have upstream assets larger than those of Chevron and NAOC.” However, independents would need significant financing to grow new opportunities. While commending the Bank of Industry (BoI), he posited that it should further upscale capacity to better support Nigerian independents.
Aka Nwokedi, who is the current President of the Nigerian Gas Association (NGA), explained the role of the body in collaborating with relevant parties to make “DoG” – Decade of Gas – happen. Ten priority gas projects are in progress under “Phase 3.” Beyond 2030, he reminded the Roundtable that natural gas would remain the fastest growing and cleanest fossil fuel in the world.
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The past president of the African Refiners Association, Tony Ogbuigwe looked beyond the current impasse in the country’s refining sector. Given that potentially, Nigeria has 72 per cent of the refining capacity in the ECOWAS region which is higher than domestic demand (at 62 per cent), he projects that Nigeria is in a good position to be a fuel refinery hub for the region.
Finally, the Partner and Oil & Gas Leader at PwC Nigeria, Pedro Omontuemen noted that the big issue is not subsidy itself, but the size of the country’s fuel subsidy and the associated corruption. He noted that Nigeria, over a prolonged period, has been subsidizing its neighbours. Removed subsidy presents an opportunity for efficient government spending. The Centre hopes that the new policy makers on the block will get up to speed as they rethink policies that moves the industry forward faster.
