PIB is answer to downstream challenges, says Osuno

Continued from Monday

Eighty-year old Mr. Ben Anene Osuno has been in the oil industry for the past 56 years. He joined Shell-BP Petroleum Development Company of Nigeria in 1960, after graduating from University College, Ibadan, as a Physicist. With varied experiences later with the Nigerian National Oil Corporation/Nigerian National Petroleum Corporation (NNOC/NNPC); Ministry of Petroleum Resources, where he rose to become the Director of Petroleum Resources; he has become a veteran human encyclopeadia in oil and gas business.

He is currently a Petroleum Consultant, offering advisory services on oil and gas operations, including environmental matters. In this concluding part of the interview with Business Editor, ADE OGIDAN and SULAIMAN SALAU, he proffers measures that could promote the fortunes of the nation’s downstream oil sector, which is currently facing investment challenges. Specifically, he seeks early passage of the Petroleum Industry Bill (PIB).

What policy measure can be the government put in place to promote upstream oil sector?
Let me first stress that when the environment is right, business will thrive. It was with this objective in view, that government set up the Oil and Gas Sector Reform Implementation Committee (OGIC) in 2007, to work on the implementation of a report that had earlier been prepared by another government committee (the Oil and Gas Sector Reform Committee), which had recommended the need to provide a ‘unified’ legislation for the petroleum industry. The OGIC worked assiduously for about one year to produce the Petroleum Industry Bill 2008 (PIB), which was supposed to guide all aspects of our petroleum industry activities. The progress of accepting and approving the PIB is generally known. If this process is taking so long, are we surprised that the investing public is skeptical about going to start anything new? A few days before the end of the last regime, the legislators passed over 100 bills in one day. Why not the PIB? Why is it taking so many years? There must be a reason why it has not been passed. There are basic disagreements. People have even said that they don’t know anymore what is in the PIB. Many versions have been produced and it has been going from place to place. The PIB is still there for political reasons and the investors are suffering. As it is now, it is difficult for any investor to do a business analysis. You can make some general assumptions but the specific ones on Nigeria cannot be done because you don’t know the parameters.

But what do you think is the way forward, moreso as some multinationals were said to be behind the logjam?
I cannot blame the multinationals. They are here to invest and they are lobbying to get good terms for their investments. But if you accept their lobbying, it’s your fault for accepting. Even Nigerian investors will also want to make sure that they are making profits. If the Senators accept to do something, which they know is against the Nigerian system, it is not the fault of the operators that are lobbying them. In America, there are professional lobbyists, political lobbyists and that is their business. Here we call it corruption but there it is not corruption. If you accept a position based on some facts that have been given to you, then it is not corruption. He has convinced you against your will to do his will and he did not bribe you. If people have a common interest in the nation’s growth, why should somebody come and convince them otherwise? They are the Senators. They know the problems of the country. They know what we need, so why can’t they look at the Bill and do the needful? Like I said, when the pressure was on, they passed over 100 bills in one day. But when it comes to petroleum, for seven or eight years, you put it away. Over the years, I am sure that they have been getting advice from various groups—professionals, communities, legal, technical, etc They do not need any more advice. All what is required now is for them to consider all the facts and arguments, and take a political decision that can stand the test of time, irrespective of what party is in power. Waiting for twenty years or more will not improve the quality of their eventual decision. Meanwhile, it is Nigeria’s oil business, economy and welfare that suffer! This issue of PIB is purely political to the best of my knowledge and outsiders cannot go and tell legislators how to solve it. They should solve it themselves. If they are happy to sit on it and let our oil business go down, they are the ones to be blamed.

What do you think is the politics behind oil production freeze saga in the global market?
It is an old standing issue. There are different groups of interests in OPEC. In OPEC, you will say that their interest is to maximise profit from oil and then have their political control of the industry. Generally, there are 13 countries in OPEC,. But in that group, some are heavy producers of oil, others have other things apart from oil and they have large population, so, within that group, the interests are different. When there is freedom of production, the heavy producers can just be making their money and there is no restriction, but then, there is a problem and prices drop. When that happens, the pressure will be there for everybody to cut down production. Those heavy producers, if they cut that much at the low price. What they are losing depends on certain factors, as more often than not they don’t have other resources to fall back on. Everything they depend on is oil. Now, tell them that they should not produce or they should go and cut back on production, so, what do they do when they cut. So, there is politics in it that you have to look at the peculiarities of each country. Even though all of us have agreed to raise the price by cutting down production, if you look at the economics, it depends on how much you cut. The increase in price may not be enough to offset what they are losing by cutting production, so they have always resisted cutting production. Unless they do their arithmetic and found that it is beneficial to them. They all agreed on the terms and cut at the same level of percentage not considering whether you are a small producer or big producer. Also, within the Middle East, there are those so-called pro-western countries and those who are termed to be non-aligned, who want to fight because they think that the others are puppets of the west, and are accused of wanting to continue producing so as to keep down the price for the western people. They have that political problem. Some countries are also worried that if they do not maximize the profits from oil now, what will they do with it when oil goes out of vogue? Their huge untapped reserves will then become useless to them. If you come out of OPEC, there are many countries like Russia, Norway, Britain that are producing oil and they want to maximise their profits as well. So, those in OPEC say why should they be the ones sacrificing, when others are benefiting?

Saudi Arabia recently announced a $2 trillion mega fund preparing for post oil era. Nigeria has been talking over the years about diversification. What do you think should be the strategy towards transiting to an economy beyond oil?
This has been discussed over the years. What happened to the so-called Windfall profits, excess crude account and sovereign Wealth Fund among others, that government said it was going to keep for the future. The governors demanded for the money and before you know it, they passed a motion and the money was released to them. Where is the money now? It is gone and many of them are now asking for money to pay the workers. You have not been able to pay your workers on normal allocation and you are collecting the one that has been kept for the rainy day. The principle of planning for the years after oil has been over flogged but implementation remains a challenge. Even as you are initiating here, some people are ready to use their positions to scuttle it. What we need more than anything else is the financial discipline and political will to plan appropriately and abide by any decisions to transit effectively to an era beyond oil.