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Future of Nigeria’s oil & gas in private sector refining — Kachikwu

Dr. Emmanuel Kachikwu, Minister of State, Petroleum, in President Buhari’s just-ended first term has said that the future of the Nigerian oil and gas sector lies in private sector refining, as a result of which the Federal Government is creating an “enabling environment to support investment.”

Dr Kachikwu who said this during a parley with newsmen in Abuja disclosed that this is why government is working hard outside the public sector to support the Dangote refinery project. He also said that the modular refinery which was “a concept we used to push for peace in the Niger Delta” is currently working successfully. Three are near production point; about seven others are nearing FID (Final Investment Decision).

“If those ten refineries come on board in the next two to five years, that’s another 250,000bpd refining capacity added to Dangote’s. I look at refineries from volume capacity, not physical assets. On a longer time basis, the refinery is also an export earner; we need to be able to supply products to the rest of West Africa, East Africa and Southern Africa. We are almost at the threshold of signing a Memorandum of Understanding (MOU) with South Africa which will not just cover refineries but also cover pipelines and liquefied natural gas (LNG) investment which are huge.”

On oil blocks, Kachikwu clarified the position of government, saying no oil blocks has been given. His words:

“First, this government has not given out any oil blocks for the four years it lasted. We did not even do marginal fields. The President’s belief was that we should first clean up the sector.

“I am a private sector person. Giving oil blocks to Nigerians is not a bad thing. Who else should get it? Oil blocks obviously take some level of connection to get, no doubt about it. It also requires some level of funding, that is, money to develop the blocks. You need some level of connection to be able to reach out to Joint Venture partners who will bring in the technical expertise. All over the world, those sorts of opportunities are given to people who have come into the upper echelon of society. If you do not have these qualities, you will likely not be able to meet up with the requirements that the DPR sets.

“So, I do not think it is a bad thing but what we need to do is to make sure that those who do get it will actually work the field. They will have to pay the right royalties and taxes. The opportunity should be open to all Nigerians; some of the people who own working oil blocks today were not there 15 years ago. One of the things we have done with marginal fields is to develop guidelines on the basis of technical skill, financial capability, work programme that is monitored and efficient. And if somebody has done well in his own marginal fields, he qualifies to be given more considerations to get more. If you fail in what was given to you then it is time to retrieve it because that is an asset that nobody is doing anything with.

“Some Nigerians get oil blocks and it is like a family picture that the just hang in the house. It does not do anything. They are just running all over the place to find out who is going to buy it from them. They can go on with this till eternity.

There was a time I issued a warning that unless those concerned went back to their blocks and began to work it; we were going to take back those blocks. Some of them said we have a 20 year time-frame. They are right in one sense, you cannot breach contracts but when it comes to the time for renewal, if you are not meeting your work obligation on the block we will take it off you and give it to individuals who would work the field. Government is losing money for every idle oil block.

On oil blocks due for renewal, Dr Kachikwu said: “I do not have the numbers off hand. You know we had an early renewal programme to raise N1.80 billion for the government and most of those have been renewed. The ones that are within the frame of 2020-2021 have already been captured by the early renewal. The ones that are after that we have not dealt with. We did close to about 40 renewals under the early renewal programme. The essence of the early renewal was to get upfront money for government to meet its financial obligations.

On the Petroleum Industry (PIB) bill, Kachikwu said that “the bill will limit the size of acreages for splitting, which will allow more investors to come in. It also protects the rights of those who have been given licenses because if we don’t have a safe business environment we can’t raise money, but ultimately a law is as good as its enforcement. As Nigerians, we ought to be willing to make our country grow which will never happen if we are always looking at the short-time growth. So basically, lack of enforcement has to be the bane of our issues.”