Niger Delta indigenes to get oil blocks to douse tension

Experts fret over petroleum industry outlook

To douse tension in the oil-rich Niger Delta, the Federal Government plans to award to indigenes of the region marginal fields’ oil blocks abandoned by the oil majors as being not commercially viable.

The plan is in line with the government’s larger objective of reducing major incidents of restiveness to about 90 per cent by next year. Over the years, there have been agitations over oil resource ownership, which have become intense with allegations that about 90 per cent of northerners own the oil blocks awarded in the country.

If the plan is implemented, the ownership structure of the nation’s petroleum assets will not only begin to change, but also empower the host region, which has for decades suffered economic deprivation and environmental degradation on account of these resources.

The Minister of State, Petroleum Resources, Ibe Kachikwu, who disclosed this yesterday in Lagos, said the plan was part of the larger “stability incentive scheme” under “a harmonised holistic development plan for the Niger Delta.”

Expatiating on the plan, Kachikwu said: “This will include creating stability incentive schemes – jobs, investments, contracting opportunities for the zone, and the use of marginal fields’ allocations to state governments and indigenes to help reduce tension and get buy-in without excluding the rest of the country.”

The minister disclosed this at the Oil and Gas Trade Group Roundtable organised by the Nigerian-British Chamber of Commerce (NBCC), to discuss “The Nigerian Oil and Gas Industry: Confronting Realities.”

Represented by the Acting Permanent Secretary, Ministry of Petroleum, John Eboigbe, the minister also promised that government would sustain institutional engagements with stakeholders in the Niger Delta region to nip agitations in the bud, while promising greater transparency in the industry’s operations.

Despite the promises, industry players are concerned over the sustainability of government’s effort, stressing that the future of the sector is uncertain unless inherent challenges are tackled.

Calling for the immediate passage of the Petroleum Industry Bill (PIB), to fix the challenges, the experts insisted that the sector was still confronted by inadequate private sector engagement and management, poor policy implementation, legacy issues, transparency, trust and security, political will, inadequate infrastructure among other germane issues.

These challenges, many believe, are responsible for the dearth of fresh investments in the sector, and its poor contribution to the nation’s gross domestic product (GDP).
They said projected growth in the sector, particularly as regards efforts to boost the country’s crude oil production from 2.2 million barrels per day (mbpd) to 2.5 mbpd by 2020 might be threatened.

Speaking on refining capacity, the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore, insisted that efforts to repair existing oil refineries in the country would end up as a waste of time and national resources.

For such efforts to be successful, Olawore said the refineries must be privatised to give a lead share of 51 per cent to private owners, 15 per cent to the Federal Government, 10 per cent to state and local government respectively and 14 per cent to local community.

The Chairman, Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor, who said the sector must be concerned about job creation, urged government to channel local fund to allow Small and Medium Enterprises (SMEs) to participate in the sector. The NBCC President, Adedapo Adelegan, argued that the petroleum sector must be structured to achieve multiplier impact across sectors.

He said: “With the fall in oil prices, and inflation rate hitting above 17 per cent, and the depreciation of the naira, there is a serious need for businesses to think outside the box and devise sustainable survival strategies.”

The Chairman, Oil & Gas Sector Group, NBCC, Aisha Abdurrahman, stressed the need to patronise local contractors in project execution, adding that policy somersault, harsh operating environment, and government’s continuous delay of the PIB were not helpful to the sector.

Abdurrahman said: “There is a need to ensure a stable and predictable framework for the oil and gas industry, which in turn creates the necessary predictability that is of crucial importance for our competitiveness. When producers plan their future activities, they look at projections of future demand and future supply, and make their decisions based on market signals. However, when future policy is unclear, market signals will also be blurred. If the policy is unpredictable and/or unstable, markets signals will be unclear.”

Notwithstanding stakeholders’ fears, Kachikwu, assured that the oil and gas sector, remained critical to the nation’s economy. But he admitted that inadequate investment, lack of local capacity, limited cash call, poor economic structure, pipeline vandalism and other factors continued to hinder the sector’s contribution, particularly in the area of job creation.

Going forward, the minister promised that the oil and gas industry was adopting a sustainable and well-structured stakeholder management framework that would address its peculiar needs and circumstances.