Looking beyond an oil and gas policy

It should be clear to the Federal Government at the moment that because the hope of the citizens for radical and innovative policy on oil and gas has been deferred for too long, their hearts are somewhat sick of new promises. That is why a report the other day that the Federal Government was in the process of legalising new oil and gas policies as oil production hit a new high of 2.1 million barrel per day (BPD) would not excite anyone anymore.

According to Vice President Yemi Osinbajo who disclosed the new deal at the Oil Producers Traders Section of the Lagos Chambers of Commerce and Industry, the statutory objective of the new policies is to create a market-driven oil and gas industry, maximise production and processing of hydrocarbon, move away from oil as a source of income and as a fuel for economic progress.

Osinbajo noted that other reasons for the new policy thrust include the expediency of minimising the environmental footprint of oil exploration and production, managing oil and gas resources and renewable energy.

The disclosure of the new policy came amid reports that Nigeria’s crude oil production in the Niger Delta region has reached about 2.1 million barrels per day (bpd) from 2016 crude oil production average of 1.8 million bpd.

The new policies are also expected to move the oil economy to gas, diversify supply options within Nigeria, ensure security of supply, extend gas to the domestic market to sustain the growth of electricity and agriculture, increase the presence of Nigeria’s gas at the international market and to end gas-flaring. This is simply not new. But the question is: When will the governments at all levels walk their talks on oil and gas policies?

It is curious that at a time when the oil-producing world is already thinking out of the oil-and-gas box (as a resource) Nigeria’s Federal Government is listing the challenges in the oil industry to include security, institutional capacity, funding of investment, high industry technical cost, upstream legislation and fiscal regimes, downstream sector issues and infrastructural constraints. These are challenges the oldest bill in Nigeria’s National Assembly first called Petroleum Industry Bill (PIB) is supposed to address. But the nation is waiting for a time even the Federal Government will get serious about passage of the bill which in itself has been bastardised in name, content and structure.

Meanwhile, Saudi Arabia, a kingdom built on oil, is already planning a future beyond it. Ever since oil was discovered in the Arabian Desert in 1938, Saudi Arabia has been the world’s premier petro-state and the dominant force within the Organisation of the Petroleum Exporting Countries (OPEC).

Flush with oil revenue, the country has had neither income taxes nor corporate taxes while granting its people heavy subsidies for food and fuel.

But now, the oil-rich kingdom is fast looking beyond oil. The crash in crude oil prices that began in 2014 has left the country with a gaping budget deficit. And while oil prices have recovered, climate activists have tried to bring the end of the hydrocarbon age closer and many analysts have predicted the approach of “peak demand” that would mark the end of a long climb in global oil consumption.

Now, the 31-year-old crown prince, Mohammed bin Salman, who is driving a reform agenda, has set out to reinvent the Saudi economy by the year 2030. The new plan, called Vision 2030, would trigger new private businesses, improve education and trim the budget deficit by cutting subsidies and introducing a 5 per cent value-added tax.

The most remarkable of the new deal in Saudi Arabia is that the government has proposed selling off a chunk of its crown jewel, the state-owned oil company Saudi Aramco. The company, which for decades was in the hands of four big U.S. oil companies and whose nationalisation became a powerful political symbol, is widely believed to be worth as much as $1 trillion to $2 trillion; its share offering could be the biggest in history.

This is the kind of radical reform that Nigeria should undertake in order for the government’s exertions to be meaningful to the people. This government promised such a radical reform of the behemoth called the Nigerian National Petroleum Corporation (NNPC), but two and half years on, what is being promised is an unimpressive oil and gas policy whose essence cannot change the corruption-prone and crisis-ridden oil. What the nation therefore expects at this time is an uncommon commitment to the passage of the still-born Petroleum Industry Governance Bill (PIGB), which will override the ad-hoc arrangement called new oil and gas policy. The ruling party, the presidency and the federal legislature should give the nation’s economic mainstay a new lease of life. And thereafter look beyond oil and gas in planning a great future.