Nigeria should strive to be energy sufficient, says Adesanya
Abiodun Adesanya is the President, Nigerian Association of Petroleum Explorationists (NAPE), in this interview with Roseline Okere; he spoke on the Nigeria oil and gas sector and the association’s upcoming conference.
Funding has remained a serious challenge in the Nigeria’s oil and gas sector. How do you think this issue can be tackled?
Every project has its economics. You run the economics in a professional way and you source for funds in the capital market. The government has done away with Joint Venture (JV) funding; The government no longer provides 60 per cent funding. For every project, the operator must raise fund. For instance, if you need fund for Bonga field, the operator must do the documentation, justification, run the commercials. They will then decide whether to take it to the capital market to attract funding. Hence the fund is paid back with interest after the execution of the project. This is real business in which corruption is practically eliminated in a significant way.
This will also eliminate the burden of having to find the budget to fund the JV cash call. All those issues have been taken away with the new funding arrangement introduced by the Federal Government.
What is the future of oil in the energy industry?
When you talk of oil and gas the commonest usage we think of is petrol, kerosene, diesel, gas and so on but oil and gas has petrol chemicals that are used in petrochemical industries. Everything plastic generated including shirts that we wear and some other things are derived from petrochemicals. So, we have those multiplier effects on the economy that is yet to be tapped. You can imagine if nobody is buying petrol or diesel, it means we can’t explore.. Don’t forget that the cars we are driving about need something to charge them, the batteries need to be charged. How do you charge batteries of course? You can have them charged by solar or other sources but 64 per cent of energy today is still being generated from fuel and the percentage will go down as these other sources of energy come up, like solar, nuclear, renewable and so on and so forth. It means that we should begin to wind up no, we in Nigeria still have issues with refinery and power generation so we need to harness and maximize those which we haven’t even started, we are a country of over 170 million people and there is a need , China still uses coal for power generation despite the fact that it’s environmentally not friendly. They don’t care that what they have is their resources.
They rather use what they have and get what they want. As a country, there is need for us in Nigeria to use what we have to get what we want. Let us eat and be satisfied before we give out. Should we continue to be an oil and gas country or should we be an energy sufficient country? Let us be sufficient in energy first and when that is done, the extra can then go out to other places. The reality is that we also don’t have an element of time advantage on our side and that is speaking about various agitations in the Niger Delta and some other places. The need will continue to diminish and it will get to a point where we will have surplus. What I am saying is that a systematic approach should be taken for utilizing what we have. Once, we are able to utilize what we have, then definitely it will be only a smaller volume that we need to be expended outside the country. That is why I think it is very important that we continue to explore and produce and search for these resources in other areas of the country so the story will not become the same thing as coal. There was a time that coal was a major source of energy globally. Enugu and Kogi have a large deposit of coal. Even some parts of Benue, Edo and some other places have coal. These deposits are yet to be explored. Those are the kind of decisions that need to be taken.
As an explorationist, are you satisfied with the level of exploration activities and what do you think should be the focus of Buhari’s administration?
Basically that’s one of the things we have been agitating for, because when the oil price crashed, exploration budgets are usually the first line of items to be suspended by the government. What happens strategically is not a wise decision. If we don’t continue to replenish what we have produced, we will run out of oil. Hence, the need to sustain exploration on inland basins. We also have shale oil in Abakaliki similar to the quality of Shale oil in America and Canada. We also have evidence of oil in Ondo state. Going into the transition zone, so, we need to continually find oil because it is strategic for the future generation. If we don’t find oil and then rely on renewables, production of electric cars and all of that, it will just be exactly the way coal is now almost like we have never exploited coal before .
Can we say that government in Nigeria is actually consistent because during Obasanjo’s administration there was focus on Bitumen exploration licensing in Ondo state?
Bitumen in Ondo state never really got off the ground. We don’t have bitumen being exploited right now. Where we have it is in policy, discussion and talk but we haven’t seen any action.
It is clear that in the run down for diversifying the economy, solid minerals like bitumen should be developed. Other sources of minerals should be developed. Even within the oil sector, gas should be developed. So, we are having a scenario whereby there is a race against time that is very important for us to be conscious of. In 50 or 35 years time, the need for fuel will begin to diminish and we will begin to feel the impact of the reduction in utilization. So, even if we go into denial, it will still affect us at a point in time. That is why, it is very important for everybody to get that understanding of a resource whose demand is reducing in time. However, when that is happening, the government needs to strategically channel those resources into solving our problems. That is a task that must be done.
Many oil and gas firms are moving more into the deep water. Why the rush for deepwater projects?
It is economics. The cost of drilling one well in the deep water is not comparable to drilling one onshore. It is just economic challenges caused by the cost of operating in the Nigerian environment.
You seems not to dwell much on the challenges in the Nigerian oil sector.
Our challenges before are no longer our challenges now. Pipeline vandalism and Niger Delta issues and the infrastructures being routinely damaged created a world of challenges. Those are the challenges that we can manage. However, the challenge we cannot manage is the oil price because it is an internationally determined thing, but because I was talking about cost of doing business, our cost for a barrel is made up of two components, technical cost which is cost of drilling and all that, there is also the non technical cost, which is the cost of JTF, hiring a gun boat, community issues of blowing pipeline and repeated damage and those costs are eventually pasted to cost per barrel and Nigeria’s cost per barrel is one of the highest which doesn’t really make sense for those costs and they are not sustainable.
What do you think we should do to overcome these challenges?
We should try as much as possible to explore what we have and use it for our own development. So, rather than producing crude oil and exporting it for dollar, we should refine crude at our refineries and then sell diesel, premium motor spirit and kerosene, Let us have surplus in Nigeria and then export the rest. We should use the gas in generating power, petrochemicals for fertilizer and Liquefied Petroleum Gas (LPG) for cooking. We should stop people using firewood which will have multiplier effect on the economy. We should use oil and gas revenue to set up petrochemical industries so that by the time oil is no longer relevant just like coal we will have something to fall back on.
NEPA is preparing for its yearly conference. Tell us about it and what participants stand to gain by attending the programme?
NAPE believes that to build a more diversified and more resilient economy it must include finding and enhancing new opportunities and prudently allocate its revenue which comes mainly from oil and gas to the development of other sectors of the economy.
It is against the backdrop of the foregoing that the Nigerian Association of Petroleum Explorationists (NAPE) will at its 35th Annual International conference & Exhibition be examining strategies to tackle these realities.
The conference holds at the Eko Hotel & Suites, Victoria Island Lagos from 19th to 23rdNovember, 2017.
The Theme is “A Roadmap for Nigeria’s Oil and Gas Industry in a Diversifying Economy”.
The conference will also throw its searchlight on survival strategies for petroleum exploration and exploitation in a challenging environment and also examine the effectiveness in the existing policies to drive growth in the oil and gas industry so as to come up with initiatives for the development of road maps and new policy initiatives
The Conference has the following technical Sub-themes:
Nigerian Oil and Gas Business Environment in a Diversifying Economy; The Evolving Global Energy Mix and How Nigeria Can Participate For Growth and Development; Reserves Replacement & Growth: What Strategies, What Action?; Maximizing Production and Profitability through Innovative Cost Effective Reservoir Management Strategies; Frontier Exploration Plays: Niger Delta Deep Potential and Inland Basins.
The Opening Ceremony of NAPE’s flagship Annual International Conference and Exhibition will take place on Tuesday 21st November 2017 beginning from 9:00am. This event will attract key government officials, captains of industry, the legislature and the academia. Some of the guests expected at the event include: Dr. Ibe kachikwu, Honorable Minister of State, Petroleum Resources; Mr. Jeffrey Ewing, Chairman/ Managing Director, Chevron Nigeria Limited.
The All Convention Luncheon usually features Speakers who have distinguished themselves in various spheres of human endeavours locally and globally. This year’s ACL will have in attendance, Dr. Kayode Fayemi, Honourable Minister of Solid Mineral Development and former Governor of Ekiti State. He will be speaking on the topic: Mineral Resources- Building Hope for Diversification. Mr. Peter Obi, immediate past Governor of Anambra State will also be speaking at the event. His presentation is titled: Changes in Global Oil Price and Impact on Nigeria’s Economy- Lessons from the Recession. The All Convention Luncheon holds on Tuesday November 21, 2017, and attendance at the event is strictly by invitation.
The Conference will feature a Management Session. The Management Session this year is focusing on “New Funding Strategies for the Nigerian Upstream Oil and Gas Industry”. The Keynote paper will be delivered by Dr. Maikanti Baru,, Group Managing Director, Nigerian National Petroleum Corporation (NNPC). The event will be moderated by Mr. Osten Olorunsola, former Director, Department of Petroleum Resources (DPR). This event takes place on Wednesday 22 November, 2017.
The Exhibition will showcase the latest technologies, products, services and competencies from major International OCs, Indigenous operators, Services companies in the upstream sector of Nigeria’s oil and gas industry. This year, NAPE will be having a dedicated pavilion for banks/financial institutions, as part of our wider inclusion.
The Awards /Recognition Night, which is the biggest social event of the conference takes place on Thursday 23rd November and will recognize individuals, institutions and corporate entities that have advanced the learning and practice of the geosciences in Nigeria and globally. It will also celebrate high performing companies in the oil and gas industry whose commitment has resulted in achievements that are an inspiration to the membership of NAPE.
The 35th Annual International Conference and Exhibition will also provide other learning Opportunities which include the Young Professionals Programme, and Short Courses.
The Nigerian Association of Petroleum Explorationists (NAPE) is the umbrella association for persons involved in the professional application of geosciences and related disciplines to the exploration and production of oil and gas in the country, it has over 10,000 strong individual and 50 corporate membership which cuts across the oil and gas industry. Founded in 1975, the association’s flagship Annual International Conference and Exhibition holds every year.
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