Dr Bolaji Ogundare is the Group Executive Director of Pan Ocean Oil Corporation and the Newcross Companies. In this interview with KINGSLEY JEREMIAH, he discusses key issues shaping Nigeria’s oil and gas sector, including production growth, carbon reduction, costs, security and infrastructure utilisation.

The security of the oil and gas infrastructure, especially in the Niger Delta, and the cost of oil production remain critical issues for most operators. The Nigerian International Energy Summit raised concerns about growing reliance on private security in the Niger Delta. What is your view on this?
It is important to approach this step by step. Much of the early pipeline damage and interference in the Niger Delta began as social agitation. People felt excluded and disconnected from the resources around them, and that frustration manifested in disruption. What we often label as militancy is, in many cases, a signal of deeper social grievance. As the Host Communities Development Trust framework begins to take effect, I believe communities will increasingly see the assets as theirs. That mindset shift is critical, although it will take time.

The reality is that oil production cannot be sustainably high if huge sums are spent on security to protect infrastructure. Today, security has become a guarantor of production, which is neither healthy nor efficient. I sometimes compare it to bad roads. Instead of fixing the road, we buy bigger vehicles to navigate the potholes. You still reach your destination, but at a much higher cost. What we really need is social trust, where communities themselves protect the infrastructure.

Unfortunately, we rely heavily on military personnel to guard pipelines. These are national assets, and the military has a broader mandate. That said, I do believe Nigeria is moving in the right direction and that the current administration is making deliberate efforts to rebuild trust and improve security in the oil and gas sector.

There are fewer reports of vandalism on the Amukpe–Escravos Pipeline Project (AEP), which has a capacity of 160,000 barrels per day. What is the update on that line, and what are you doing differently to keep the pipeline safe?
People often say necessity is the mother of invention. For us as an organisation, that was very true. There was a time when we were essentially operating a single asset, which was landlocked. Between 2006 and 2010, for a significant portion of that period, evacuation via Forcados was simply unavailable. The impact on production, on the organisation, and on national output was considerable.

That experience forced us to rethink risk across our asset base. A significant part of the response was identifying alternative evacuation routes. In this country, there is often a tendency to wait for someone else to take the lead, but we realised that sometimes, nobody wants to bell the cat. Someone had to step forward.

That was how we approached the Nigerian National Petroleum Company Limited to propose a collaborative alternative pipeline from Amukpe in Sapele to Escravos.

Based on our past experiences, we were very deliberate in the design. One key decision was to bury the pipeline much deeper than conventional practice, using horizontal directional drilling technology. In some sections, the pipeline runs as deep as 30 metres below the surface.

We do not usually discuss the specifics for obvious reasons. Still, most pipelines are buried at about six or seven metres, which makes them relatively easy to access. This design makes interference significantly more difficult. Yes, it costs more, but it gives confidence that well over 99 per cent of hydrocarbons will reach the delivery point.

This was the first time in Nigeria that a 67-kilometre, 20-inch pipeline of this nature was built using this approach. It was innovative, and it was born out of hard lessons. That said, we are not yet where we want to be.

While the pipeline has a design capacity of 160,000 barrels per day, throughput at the Escravos end is currently constrained. Chevron currently allows about 50,000 barrels per day. Discussions are ongoing around access and blending arrangements.

Fundamentally, Nigeria needs alternative evacuation pathways. For a long time, Forcados was the only name associated with landlocked assets. Today, the Amukpe–Escravos route is changing that narrative. We also believe it will redefine crude blending in Nigeria, as Escravos crude is heavier than Forcados, and many refineries prefer heavier blends because of higher distillate yields.

As an organisation, we have found that sometimes our thinking runs ahead of the industry at the time, but over time, the value becomes clearer. Today, anchor users of the pipeline include Seplat and NPDC, with significant volumes from OMLs 38, 40, and 41 flowing through the line, particularly when Forcados is down.

We are also engaged in commercial discussions that we believe will further enhance the competitiveness of the Amukpe–Escravos route. Overall, we see it as a strategic opportunity for Nigeria.

With production costs around $40 per barrel and oil prices between $60 and $70, how are operators surviving after royalties and deductions?
People often see $70 per barrel and assume it translates directly into profit. In reality, after operating costs, royalties and taxes, margins can fall to as low as $5 to $7 per barrel.

That is why operational efficiency is everything. Project delivery must be disciplined. If a project is budgeted to be delivered in one month but takes three, a significant portion of value has already been lost. We are focusing heavily on improving execution and using data analytics to identify opportunities for efficiency. It is challenging, but in the current environment, efficiency is not optional; it is essential for survival.

On divestment and asset transfers to Nigerian companies, is this genuinely building capacity or simply transferring risks?
Nigeria is one of the most empowered countries globally in terms of indigenous participation in upstream oil and gas. We have over 130 registered exploration and production companies. Not all are producing, but the capability base exists.

What we need now is greater collaboration. Capital is limited and fragmentation weakens competitiveness.

Collaboration allows indigenous operators to attract technology, improve competence and execute more effectively.

We are already seeing results. Assets transferred to Nigerian companies are recording production increases, not because new oil was discovered, but because wells were re-engineered and previously neglected reserves were prioritised. For international oil companies, incremental barrels may not materially impact their portfolios.

For indigenous operators, they are meaningful and add up over time.

A balanced ecosystem is required. International companies should focus on where their scale and technology offer competitive advantages, while Nigerian operators take ownership where local knowledge and proximity deliver better outcomes. This gives the country greater control over its energy future.

Nigeria has significant underutilised oil and gas infrastructure. Who bears the risk, and are you concerned?
Historically, operators preferred to own dedicated infrastructure, even when it was underutilised. That mindset is changing.

If a flow station can process 20,000 barrels per day and one operator is producing 10,000, it does not make economic sense to build another facility. The main barriers have always been security and trust, accurate accounting, transparency and confidence in payments.

With better agreements and transparency, collaboration is improving. The Ovade gas plant is a good example. It was built to process 200 million standard cubic feet per day, but initially processed less than 30 million.

Today, with third-party gas, it processes close to 180 million cubic feet.

This is the direction Nigeria needs to move in shared infrastructure and value. Trust, security and financing remain critical to making this model work.

Pan Ocean and Newcross are seen as leaders in ESG and carbon reduction. How practical is this in Nigeria’s context?
As far back as 2007, in partnership with NNPC, we eliminated flaring on some assets and became the first in Sub-Saharan Africa to earn carbon credits. The financial return was modest, but the symbolism was important.

Since then, gas commercialisation has been central to our strategy. Methane is significantly more harmful than carbon dioxide; so we have focused on leak detection and repair. Baseline studies show very low methane emissions, confirming that earlier investments were effective.

We still face flaring challenges on OML 24, but projects underway, including gas plant reactivation, should significantly reduce this over the next one to two years. New developments are now designed from the outset to avoid flaring through gas-to-power, LPG or small-scale LNG solutions.

What is your outlook for production and energy transition?
I believe Nigeria can return to two million barrels per day. Current production is around 1.7 million. With improved security, evacuation and execution, growth is achievable.

Across our assets, we produce approximately 50,000 barrels per day and 70-80 million standard cubic feet of gas. Over the next 12 months, we anticipate adding approximately 15,000 barrels per day.

On transition, I prefer to speak about energy security. For most Nigerians, the priority is reliable electricity. Gas remains the most effective transition fuel for power, industrialisation and economic growth.
Oil delivers revenue. Gas delivers development. The future lies in a balanced mix of oil, gas and renewables and working together to deliver energy to every home. That is how success should be defined.