Nigeria’s next petroleum minister

It is no longer a secret that the Nigerian economy depends so much on hydrocarbon resources. The statistics over the years have remained the same: about 85 percent of the country’s earnings and over 90 percent of its foreign exchange come from the oil and gas industry.

While the talking points over the years have been on how to diversify the economy, it is also critical that the oil and gas sector is well-managed at this point in time that the country seems to be moving towards a national rebirth. That is why stakeholders in the oil and gas industry as well as watchers of the economy are watching with keen interest to see who will emerge as Nigeria’s next petroleum minister.

Expectations are that Nigeria’s next petroleum minister should be an experienced, thorough-bred technocrat who is deeply knowledgeable about the industry, with no baggage of any sort. There is also the need to reverse the trend whereby the role of group managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC) has been diminished by “successive power-hungry petroleum ministers”.

This is why we agree with the Centre for Petroleum Information (CPI) which said in a recent commentary that Nigeria’s next petroleum minister “should be charismatic enough in the international circuit and yet very effective in the domestic front”, “should be focused on shaping and giving bite to policies rather than competing with NNPC GMD for day-to-day operational duties”, and “must be reputable, visionary, deeply knowledgeable about the industry, experienced, not conflicted in any way, and very patriotic”.

We also agree with Emeka Ene, chairman of the Society of Petroleum Engineers (SPE), Nigeria Council, that the oil and gas industry in the coming dispensation should be driven by technocrats. According to Ene, “The Nigerian oil and gas industry is a complex industry and therefore requires complex solutions by experienced hands and technocrats. Technocrats will be in the position to look at the investment flows, match them with the technology flows, the local content requirement as well as the inherent demands that are not just demands for the rights of the stakeholders.”

Without a doubt, given the mounting high expectations of Nigerians on the incoming Buhari administration, one clear route of getting things done right is putting in place a minister of petroleum with enough strong will and determination to push through policies and initiatives. Such policies will include the issues of correct pricing and subsidy on petroleum products. This may be the first acid test that the Buhari administration will have to confront.

At the industry level, the next petroleum minister will have to guide President Buhari on legal and fiscal framework regarding the industry, key among which is what to do with the draft Petroleum Industry Bill. BusinessDay has argued in a previous editorial that one way out could be to do away with the largely controversial bill and seek other ways of moving the industry forward.

The incoming petroleum minister must, within the shortest possible time, decide what to do with Nigeria’s comatose refineries – whether to privatise them or carry out a real turnaround within a given timeframe to get them back on their feet. The minister must also brace up to the challenge of tackling the issue of allocation of oil blocks and bid rounds in a transparent manner using global best practices. We recall here the botched second marginal fields bid round which fizzled out after so much noise.

Furthermore, the next petroleum minister should chart a way forward for the gas sector and ensure that the gas master plan is implemented to the fullest and also have a foothold on the issue of gas flaring.

The Federal Government some years ago initiated a policy to boost Nigeria’s crude reserves to 40 billion barrels by 2010 and hit 4 million barrels per day of crude oil production. However, the country has stagnated at a reserve base of 36 billion barrels with daily crude oil production hovering under 2 million barrels. The petroleum minister Nigeria needs at the moment should devise creative incentives and ways of funding Joint Venture operations to ensure that we grow our reserves and also increase our production output.

Another nagging issue is the minister’s consent. While some stakeholders accept that obtaining the minister’s consent is desirable prior to completing certain transactions in this very important industry, it is our view that it is also important to have clearer rules beyond the Petroleum Act as regards timing for the grant of consent. This is because delays in the granting of consent, which could be upwards of two years, can pose a huge drawback to oil and gas transactions.

We, therefore, urge the incoming Buhari administration to take these issues into consideration in selecting the next petroleum minister and ensure that it puts a round peg in a round hole in order to move the nation’s oil and gas sector forward.