PALLIATIVE: FG Provides Alternative Fuel at N97/L

Ideally, the key components of governance do not preclude the provision of essential services, with a view to bringing succour to the citizenry in the running of their legitimate affairs. Petroleum products are some of such essential commodities the world over, with regulations. This, no doubt, is one of the reasons why the President Muhammadu Buhari administration is reeling out an alternative to PMS (petrol) for the Nigerian masses that will cost between N95 and N97 per litre, as against the existing (subsidised) PMS sold at N145 per litre. The alternative is planned to take effect from May this year, according to the Minister of State for Petroleum, Chief Timipre Sylva, during his maiden press briefing in the board room of his ministry with journalists, pointing out that Nigerians are all hooked to PMS but need to move forward towards an affordable alternative. Saidu Abubakar was among the pressmen present at the briefing where the minister spoke on the planned alternative fuel and other issues in the petroleum industry.

In this country many years ago, Chief Sylva recalled, Nigerians used to kick anytime the Federal Government wanted to privatise NITEL (Government-owned telecommunication company) because there was no alternative, but when the government finally opened up the telecommunication industry with alternatives, people were given GSM and they got hooked to it, “I for one, didn’t know when NITEL was privatised and most Nigerians didn’t realise when it was privatised and nobody kicked because it didn’t matter to them anymore. So, for me, I believe the issue of fuel can be given the same treatment by offering alternatives to users. Today everybody agitated when the Federal Government muted the idea of increasing pump price and of course, we all agree that that has continued to be a drain on the finances of the country because when you spend so much to subsidise fuel, and the process is manipulated by all kinds of unscrupulous elements, it’s a big drain on the country’s coffers… so what are we going to do?”

“What we’ve decided is to try and give the masses an alternative. If we move the masses to the Compressed Natural Gas (CNG) and it takes transport vehicles to a far distance. For example, transport vehicles out of the PMS loop, making all the transport vehicles to be using CNG you will see that that is the point of contact with the poorest of our population and even further down. Now CNG, unit for unit, costs less than even the subsidised PMS. The subsidised rate of PMS per litre is N145 but CNG will cost about N95 to N97 per litre. That’s why if you say we want to reduce the cost of fuel, I say yes. That way, we believe, when we give an alternative, Nigerians will not even notice when the subsidy on PMS is removed. So that’s the alternative we are working on and it will start very soon to roll out. Already, there’s a pilot program in Benin and it has worked for a long time and about 10,000 vehicles are already on CNG in Benin. It’s all about expanding the CNG program across the country, and it is believed that it will create a lot of opportunities for Nigerians and also give them a new lease of life because they will be accessing their fuels cheaper. Nigeria is settling for the CNG, in the midst of other alternatives like, Biodiesel, Electricity, Ethanol, Hydrogen, Natural Gas and Propane.

On the Vanished Fuel Scarcity
Speaking on the euphoria of vanished fuel scarcity that usually characterises Yuletide periods in the past, Chief Sylva, said “we want to make fuel more accessible and affordable. In that direction, we want to concentrate on the passage of the PIB bill. The team working on the PIB is on the final stage of the harmonisation so as to create an enabling environment for investors as well as appropriate government take in all the oil and gas value-chain. Concerning the harmony between the legislative arm and the executive, we’re optimistic that both the Petroleum Industry Governance, Administration, and Host community bills being on one hand and the Petroleum Industry bill on the other hand, will be passed within the first anniversary of this administration”.

On the Upstream vs Med/Downstream Dichotomy
He pointed out that special focus would be placed on the midstream and downstream sectors of the Industry. Consequently, we are considering two regulators in the industry – one in the upstream and another for midstream and the downstream. The midstream and downstream sectors would consequently open investment opportunities and also create massive job opportunities in the industry.

For example, he added, “investment opportunities would be available in the pipeline engineering, design, procurement and construction, terminal operations, fabrication storage facilities, pipe transportation and laying equipment and refineries are all processing facilities.

On the upstream side, the minister hinted that “we are coming up with more robust physical provision – acreage management, draining or drop program. We will retain investors as well. Two, we will address the security situation around oil and gas installations to curtail theft of petroleum products and crude oil.

On the Planned Next Level for Petroleum Industry
“What do we want to do between now and 2023, as a ministry”, he said during the press briefing, “two main broad things we want to do – one, is to improve and develop the Petroleum industry. Take it from where it is now to the next level, and I’m sure all of you are familiar with the phrase (Next Level). The Petroleum industry hasn’t moved very far in Nigeria and I’m the first to admit it because a few years ago, in my first incarnation in the Ministry of Petroleum, we were already producing as a nation, about 2m barrels per day. And we actually had a projection to move our production to 3m barrels per day, and to 4m barrels by this year, at least.

While laying example with other climes, the Minister stated that “at a time, the United Arab Emirates (UAE) as a country, was producing 2.7m barrels per day or thereabout. Today, the UAE has moved up to producing 4m barrels per day. We are very lucky in this country that we haven’t gone backward. Today we are producing in accordance with OPEC quota 1.774m barrels per day. So you can see there’s a need to move this industry forward. And that is the mandate we have from the President who, incidentally is my Minister of Petroleum. That’s number one, number two – will be to improve the relationship between this industry with the man in the street. A lot of Nigerians on the streets do not have any other relationship with the industry other than at the pump. They go to the filling stations and buy PMS or diesel or gas. That’s their relationship with the Petroleum industry and that’s why we want to improve that relationship with the common man”, according to the Minister.

On Oil Theft
However, one menace that has eaten deep in the flesh of the Petroleum industry which the Minister spoke vehemently against is oil theft. He asked: “why does oil theft linger? There’s an active market for stolen products. Characterised by weak measurement and surveillance mechanisms coupled with inadequate sanctions. It was also characterised by lack of community engagement. Our recommendations are – technology for proactive leak detection; community development in oil and gas aspects; engagement of Petroleum Training Institute for the training of unemployed youths in the Niger Delta region; encouraging Modular Refineries; continuous sensitisation of host communities and storage facilities. We shall also revamp the security architecture completely; increase supplies to under-served areas; infrastructural development of the region; incentives for host communities would be introduced; increased community stakeholding; design and enforce stiffer legislations; mobilise communities with traders-refiners regulatory groups.

On PIB Passage
The Minister also said in the post-PIB passage period, the country will have oil companies that will be more responsible, commercial enterprises in their operations. Various transformation processes have already begun, and are ongoing in the NNPC, growing from business unit focus areas to transparency, accountability and performance excellence and we are considering the incorporation of the NNPC and it’s existing oil venture companies. Government is currently working on the modalities. We are also aiming at conducting bid rounds for marginal fields and opportunities in 2020, to ensure settlement and pave way for also capital projects. New acreage management is thoroughly captured in the upcoming PIB. It’s therefore highly desirable that the bill is passed before any bid round and this is one of the reasons we implore Nigerians to support us in our quest to pass the bill in earnest. We will aim at the marginal field round early but the major bid will have to come after the passage of the bill.” He noted that when the PIB bill is passed, the NNPC will operate as a limited liability company. “The NNPC/Chevron, for example, is unincorporated and the joint venture cannot on its own as an entity go and get funding for it’s operations but when you have the joint venture as fully incorporated it can go out to the capital market, the finance market and get funding for its operations to take out the burden on the government and that is where we are headed in the post-PIB era. The PIB will provide the guidelines for how that process will be consummated.

On Nigeria Being a Gas Economy “As you’re aware, natural gas has the capacity to transform our economy. We’ve seen successful examples all over the world. Qatar, for example, has the world’s highest GDP per capital and it’s growth anchored on natural gas. Saudi Arabia has positioned itself as the world hope for petro-chemicals, creating significant job opportunities and enabling industrialisation of the country.

Nigeria’s gas reserve is significant as currently Nigeria has an estimated 202tcl with the potential for up to 600tcl in undiscovered resources. With the undiscovered potential, Nigeria could be in the same league as Iran, Qatar, Saudi Arabia and Russia. Recognising our enormous gas resources and the unprecedented growth in the domestic gas demand, the Federal Government of Nigeria, through the Ministry of Petroleum Resources, over the years, has championed various interventions to stimulate gas utilisation and monetisation. This led to the gas masterplan policy initiative with detailed gas infrastructures and integration and gas supply project, revamping gas utilisation and tactical plans to accelerate gas supply, Chief Sylva explained, adding that “in addition to our gas industrialisation for investment in fertilizer, CNG, petro-chemicals, and LPG are fully stated. Also, the Ministry of Petroleum Resources is driving the gas flare commercialisation program and the initiative is designed as a strategy to implement the policy of the Federal Government of Nigeria.”

According to him, government is also rehabilitating its refineries and other midstream infrastructure and emplacing an O&M contract for the management of the assets. Review existing gas policy, national policy on methanol fuel and other legislations and regulations to align with the competitiveness of the world oil and gas environment, while taking cognisance of our quest to power manufacturing and production industries, focus on the production reduction cost and contracting circles by encouraging low cost producers because there are a lot of producers in the industry today that have overly high cost of production.

On the Deep Offshore Act
“When we achieved oil prices above $20 the Federal Government should ask for some form of increase in their take but unfortunately, that aspect of the law wasn’t activated, adding that neither the Federal Government nor the oil companies should be blamed for not activating that aspect of the law at that time. “But if we speak from today’s realities, you will agree with me that there’s no way $20 can be considered a windfall. In those days, $20, probably, was considered a windfall that was why it was pegged at that price. For today, and I’m sure for a long time ago, $20 has ceased to be windfall. Ten years ago, oil price was already over $100, even ten years ago, $20 couldn’t have been a windfall. If you even rewind, five years further, maybe 15 years further, you will see that $20 could not have been considered as a windfall. I’m saying this because you cannot now put a blanket rate and say we should calculate from 1992 or 2000 when oil price went above $20 and calculate up to this moment, you will be very unfair, because you must determine, first and foremost, when $20 stopped to be windfall and you can now calculate, it’s not an easy task. It has to go through a lot of processes before we can achieve that. Additionally, this is a partnership with the Federal government and the oil companies. Partnerships will always have these issues which the partners resolve, and in this case too, the Federal Government is looking at it as an issue that could be resolved amicably.”

On the much talked about $62billion Judgment
The Minister stated that it was not as if the government did not think about it, adding that there actually was a court judgment and there are technical bottlenecks. “A court can give a decision but sometimes those decisions will have to be subjected to the realities on the ground. The reality of the partnership between the Federal Government and the oil companies and now discussions are ongoing but it is how to manage the partnership. You cannot say because the court has said you should pay $62billion and it will be brought out from the cupboard. But if it is money stolen and kept somewhere then you can go and bring it from where it is kept. In this case, it is a whole recess of discussing, establishing, reconciling, and other things to happen including going to Chevron you reconcile with them, you go to Mobile, Shell and reconcile with them on figures. No! After the judgment, the technicalities begin. So after the judgment, we have to determine at what point $20 seized to be a windfall. So it is a reconciliation process involving all partners and there is no $62billion anywhere for anyone”, the minister insisted

On the Bid Rounds
The Minister assured that there would be bid rounds but he has a superior Minister who happens to be Mr. President. Everything hinges on him for approval but the need for a bid round is being discussed in the appropriate quarters. “So the bid rounds can only take place after the passage of the PIB bill because the physical environment and physical framework around the operation of the assets will be clearer so as to create more interesting participation. That’s why we are calling all as Nigerians to come together and ensure that we have the PIB bill passed this year because the stagnation in the industry is mostly due to the non-passage of the bill.

On the upcoming NIPS
Chief Sylva pointed out that NIPS has continued to grow not only in Nigeria but internationally and it brings a lot of investors together and “we are hoping that through the NIPS we are going to attract very important investors. We want to expand the operation environment in Nigeria and the only way to do that is to attract new players and new investors in the industry and NIPS is one of such forums for the attraction.”

On Chevron reducing their stake in Nigeria
“Frankly speaking I’m not very aware of it. People have asked me but I don’t see any sign of Chevron reducing their stake in Nigeria. “What they are saying is that they have some assets that have become marginal to them and they want some local operators to take over those assets. You can see that there’s a lot of additional investment going on. In the Train 7 there’s still a lot of confidence. Shell is investing and all the partners of LNG are still investing in Nigeria. So there’s no sign of reduction of their stake in Nigeria but due to the rumour mill that Chevron will reduce its footprints in Nigeria, I’ve asked them and they are not reducing their footprints in Nigeria. In fact when the PIB is passed, many are ready to invest more in Nigerian environment. So Chevron is a very big partner and they’ve never approached us on any plan relating to reducing of their footprints in Nigeria.” He said Gazprom and Lukeoil are very big partners that Nigeria would be happy to have.