Operators now leveraging cost-effective, sustainable oil production approach
Giving the fact that 2019 is an election year, do you see the performance of the petroleum sector being impacted negatively as a result of this?
For any developing democracy like Nigeria, election circles are important milestones and with each passing election, not only are lessons learnt, but also citizens get the chance to have their voices heard.
The candidate with the highest votes wins the day. This has to be a good thing for our democracy. But looking closer into specifics, over the last two decades or even more, there hasn’t been major earth-shattering policy shifts per say.
What we have seen is that the current administration has moved the sector towards a more transparent set of operations and in the process, blocked some of the leakage that existed in the past.
So, the 2019 elections will be another positive building block in Nigeria’s democracy and we do not in any way see negatives in that.
With falling oil prices prevailing in recent time, what will be your advice to operators?
There are a number of factors impacting oil prices that are beyond our immediate control.
For example, just before we started this interview, the on-going trade talks between China and America, which earlier this week, didn’t show signs of clear direction as we all eagerly awaited news.
This is continuing to have a definite play on global markets and as if that was not enough, news of a reported lower than expected inventory draw from the United States on Thursday 10th January, saw prices drop an average 0.5 per cent, but still had Brent front-month crude futures trading around the $60-$61.20 to the barrel by close of trading day.
Those talks are still on going, and how much more or less there will be a draw on inventories is anyone’s guess.
There are other activities that are difficult to call, from emerging markets to Europe, especially in the context of more recent geo-political activities on the continent. Generally speaking though, I think these things come in circles.
We can all agree that it is a tricky time for investment decision makers. But having said that, I think one of the things the operators have been doing more recently, which I definitely go with, is looking at more cost effective and sustainable ways of production. I think oil is a force for good and will be for the foreseeable future.
The President is yet to give assent to the Petroleum Industry Governance Bill (PIGB) passed by the National Assembly. What are the likely impacts of this on the industry, given that this administration will be concluding governance in a few months?
Going by recent pronouncements by both the legislative and executive arms, I think there is the political will to talk through the grey areas in the best interest of the industry.
This will be one of the topics to be discussed at the 2nd Nigeria Petroleum International Conference from January 27 to 30 in Abuja, and I am quite looking forward to those discussions and I will like to invite all stakeholders to join us at this important event.
How attractive would you say the Nigeria is for oil and gas investments?
If you take into account Nigeria’s condensates production – the daily average production is over two million barrels – there is a very realistic capacity to upscale the country’s proven reserves to 40 billion barrels within the next few years.
So, this market will continue to remain attractive for a long time.
Even if there are no new oil finds, you are looking at another roughly 45 years or so of supply at current rates.
However, when you start to look at the huge gas reserves of well over five trillion cubic feet, which ranks Nigeria as possessing Africa’s largest gas reserves, the picture looks even better. This surely has to be the investment destination of choice and will continue to be.
What is the Federal Government’s objective with the organisation of the annual international petroleum summit?
The Federal Executive Council (FEC) took the decision to approve the event in its current format with a private sector operator to create an international platform for high-level discussions around the hydrocarbon sector, which helps lead Africa’s response to the current and future challenges in the sector. It is one of the ways Nigeria continues to provide leadership in the sector on the continent.
The event, being the property of the Federal Government, also means that all key government decision makers attend to network, provide answers to burning questions and also listen to feedbacks from stakeholders. And with a focus on technology and innovation, the aim is to grow the event into a must-attend meeting for unveiling of major technological breakthroughs.
We are already starting to see this happen and we at Brevity Anderson feel absolutely delighted to be on this journey with the Federal Government.
What is the main thrust of this NIPS2019, the second edition?
Issues around oil market stability continue to be on every stakeholder’s front burner. When you speak to both producers and consumers, you soon get the sense that price volatility hurts both sides.
This sort of market instability means that investment decisions are either delayed or in some instances scrapped all together.
Since 2014, we have been seeing more and more producers turning exclusively to short-cycle projects, the long-term effect of this will definitely have an impact beyond just oil markets.
Within the context of the Organisation of Petroleum Exporting Countries (OPEC) and African Petroleum Producers Organisation (APPO), Nigeria continues to play a leading role in driving talks to help stabilise the market. I would like to stress here and at the same time, commend the Federal Government for deliberately taking concrete steps as part of a bigger strategy of bringing down production costs while initiating the right policies to attract additional investment.
For example, the Honourable Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, announced a roadmap to attract an additional $10 billion worth of new investment into the sector in Nigeria alone. We are seeing a real shift from just talk to tangible action.
Against this background and the technological advancement (or lack of it in some regard), geo-political activities and other very existing topics, the event creates the perfect platform to engage stakeholders as the event will take place at different levels – Government-to-Government, Business-to-Business and Government-to-Business. NIPS2019 will certainly be the place to be between January 27 and 30 this year.
We are glad to report to you that we have received significant amount of interest from both local and international players, including national delegations from seven (7) countries, headed by top political and economic leaders.
For example, Khalid al-Faliih, the Saudi Energy Minister, during his recent visit to Nigeria, specifically mentioned that Africa and in particular, Nigeria, remains a key partner in forging partnerships and he is looking forward to returning to our great country in 2019 both to the NIPS event and to further deepen the special relationship between both countries.
Amongst other international delegates, the Norwegian State Secretary (Deputy Minister) for International Development Jens Frølich Holte also confirmed his participation at the NIPS 2019.
What are the highlights?
There will be a Ministerial Session, an Executive Round Table, a session on OPEC, energy revolution, offshore and marine session, amongst other interesting sessions. There will also be some pleasant surprises. I will not be letting the cat out of the bag just yet.
However, we are excited to announce that at NIPS 2019, we will be incorporating the Honorary Patron’s Dinner/Awards, where patrons and corporates will be honoured during a spectacular evening of business, culture and fanfare. The evening is sponsored by Total.
Specifically, how many speakers, exhibitors and participants are you expecting to attend?
We are planning for about 100 top-level speakers from both Nigeria and abroad. To date, we have confirmed attendance from over 45 countries with more being expected. We are planning to welcome 3,000 participants, including visitors.
Certainly, it will be the place to be to make those deals happen.
For instance, for capacity issues, we have now decided to move the official opening ceremony to the Nicon Luxury Hotel while the main conference and exhibition will still hold at the International Conference Centre, just next door once the opening ceremony is concluded.
How will this year’s edition be beneficial to participants and exhibitors?
The event will be attended by top decision makers from both the public and private sectors and staged on a government-to-government, business-to-business and government-to-business levels, thus, there will be something for everybody. The reports from this event go directly to the highest levels of decision-making. This is certainly not just another talk shop.
What kind of support are you currently receiving from stakeholders, including OPEC?
The support has been tremendous. The OPEC Secretary General, Dr. Mohammad Barkindo, led an official delegation to the maiden edition and they will again be attending with an official delegation, along with other key stakeholders in 2019.
From an organisational point of view, the Nigerian National Petroleum Corporation (NNPC) under the leadership of Dr. Maikanti Baru and as the national host, has been unwaveringly robust in its drive to make a success of this.
Our media partners are working round the clock to promote the event in new and creative ways. The Presidency, PEF, PPPRA, DPR, PTDF, PTI, NCDMB have all been tremendous in their support.
Then or course, we have the outstanding Honourable Minister of State and his team of lieutenants who continue to make themselves available literally round the clock. We have enjoyed the best possible working relationship any public-private partner could wish for.
The civil service structure at the Federal Ministry of Petroleum Resources driven by the Permanent Secretary, Dr. Folashade Yemi-Esan has been immense.
The Executive Secretary of NCDMB Simbi Wabote has been very supportive. NIPS is indeed a national treasure that is here to stay.
What advice do you have for individuals and organisations planning to attend this event?
The key advice is for individuals and organisations planning to attend the event to move quickly to secure their spots.
For health and safety reasons, there is only so much we can fit into the available space and once we reach that capacity, it will become irresponsible to even think about taking on any more bookings.
Our approach is not to view attendees as just customers. We like to see ourselves as their partners, helping to create the enabling environment for their voices to be heard and for their businesses to flourish.
For example, there are companies attending NIPS 2019 who have not been to Nigeria before. These are the sort of stories we are helping to write.