The Nigeria oil and gas sector is gradually climbing out of the doldrums that has frankly lasted too long.
Just eight years ago, we thought we had line of sight to at least five major capital projects- Bonga SW Aparo by Shell, Zabazaba by ENI/Shell, Owowo and Bossi by ExxonMobil, and Nsikoby Chevron. Collectively, these projects represent a capital inflow worth of $80 Billion.
The projects would have boosted our production anywhere between 800,000 to one million barrels per day. Today, not a single FID has been taken on any of these projects.
Interestingly, these are deepwater assets not prone to vandalism and theft that are prevalent in the onshore and shallow water environment. What a benefit we would have reaped with oil prices now hovering around $90/barrel. Imagine how much better our external reserve and foreign exchange situation would have been if we were getting an additional $28 Billion USD annual inflows from these projects.
Nigeria LNG, easily the biggest cash cow for the nation, has been producing at 50% to 60% capacity for some years due to lack of sufficient gas feedstock. Yet, Nigeria has over 200 TCF gas reserve, on paper.
To put it simply, Nigeria has lost billions of Dollars in revenue due to suboptimal performance of this national jewel.
The drag on ExxonMobil divestment has cost the country a huge drop in production and precipitated severe asset integrity issues due to near abandonment of the shallow water assets.
ExxonMobil Eketfacility used to produce 600,000 bpd, buttoday it is hardly producing 120,000 bpd. SPDC (Shell) has slowed down investment for over five years now; they also intend to divest. These companies are no longer interested in shallow water assets, and they cannot be forced to put them to productive use.
Nigeria is the looser in the final analysis. The sooner NNPC and the regulatorsconsummate these divestment deals, the better for the nation.
It was reassuring to hear the Minister of Petroleum, Mr. Lokpobiri, at the recent Petroleum Club first Quarter dinner, confirm that he’s working hard to ensure these deals are closed out soon. We wish him and his team well on this outstanding assignment.
It doesn’t matter which direction you look, when it comes to energy matters, Nigeria appears intractable. In a recent conversation with the distinguished Prof. Barth Nnaji, a two-time Minister of the Federal Republic of Nigeria and Chairman of Geometric Power Group, I asked him why Nigeria is unable to generate electricity for its citizens since he was once the Minister of Power.
The problem of inadequate electricity supply has dogged Nigeria for far too long. A country that cannot solve identified,but non-exceptional, problems for over 40 years should know the issue is not the problem but the entity itself.
It was surprising when Prof. Nnaji mentioned to me that he resigned from office as the Minister of Power because, amongst other things, the political system would not allow him to implement the NEPA privatisation in the way that would work for the country. Now we all can see the result of his foresight.
What really is the issue? Nigeria has not had a deep coordinated and well-executed investment in the electricity sector in over 30 years. During the same period, the demand for electricity has quadrupled due to urbanisation and explosive population growth.
So, where do we go from here? The government must put on its thinking capand be bold in engaging the nation’s brilliant minds. America has hydro, coal, gas turbine, geothermal, renewable, and nuclear energy mix. Nigeria must not jettison the use of coal. We have lots of it in Enugu.If that will help us achieve energy sufficiency, let’s do it and do so in a responsible way.
We must urgently investigate the viability of nuclear power plants in the six geopolitical zones of the country. The nuclear energy is particularly exciting because it is a combo order for Nigeria. It will provide an ample supply of electricity while we also benefit in practical ways from the scientific advancements that come from this cutting-edge technology.
What are we afraid of? No venture, no gain. Societies that are developed have done so not by being timid. Now, we have an opportunity in a President that could be described as anything, but timid. The possibility of a nuclear incident is real but not unassailable. We have no interest or any reason to weaponise nuclear knowledge and must make this clear in our approach from the get-go. The International Atomic Energy Agency (IAEA) has no reason to worry. South Africa has nuclear technology. Nigeria, as the largest black force in the world, must engage and access nuclear energy technology.
The current Minister of Power, Adebayo AdelabuPenkelemess,is a practical entrepreneur.
Some have complained that being an accountant, he’s a square peg in a round hole. I do not subscribe to that.
Adelabu is a brilliant mind. What one needs to succeed in this type of position is not what you studied in school. It takes capacity, determination and deft execution skills to deliver on such arduous national assignments. I wish Adelabu all the best.
The country needs him to succeed. My only caution is for him to take his time to ensure that the mid to long-term policy direction is rigorous, bankable and subject to “implementation-assurance-review”. After all, there is an old Chinese saying that, if you miss your direction and double up your effort, it leads you twice to the wrong destination. It is no secret that our long-term execution strategy in Nigeria is notoriously predisposed to policy summersault.
Let’s face it, Nigeria cannot achieve a trillion Dollar economy in a short order without ample power supply and drastically improved oil production.
But how can we get our acts together and stop being merely transactional. To do so requires bold initiatives, long-term energy sector financial structure with disciplined execution.
By now, it should be clear to discerning minds that emilokan is steady, reassuring, and emilokan is big on bold initiatives. What is not yet clear is can emilokan deliver sufficient power to Nigerians?
