‘Investment in gas will provide solution to Nigeria’s economic problems’
Hogan Lovells, a global law firm with speciality in oil and gas, recently was in Nigeria for an art exhibition with the aim of projecting other sources of revenue. Christopher Cross, its representative in the Middle East, had a talk with Olusola Bello on how government could re-energise the oil and gas industry in Nigeria. Excerpts
What is the level of your company’s involvement in the oil and gas industry in Nigeria?
In terms of oil and gas, we have been involved in joint venture agreements and arbitration. We have done quite a lot of work in many Nigerian companies. We have worked for First Hydrocarbon Nigeria and Afren. Most of my work when I moved to the Middle East was on Nigerian Oil and Gas companies. We have spent about 10 years working for Nigerian companies. We have been partnering with some of the law firms locally; you know this is an environment where most people tend to be discreet about their businesses.
We have done projects finances for companies and have worked for Koreans companies.
The Nigerian oil and gas industry is nose diving, what hope does the industry have in the nearest future?
We moved to the Middle East when it was in recession and the oil prices was worse than what we have here, yet we had a vibrant oil and gas industry where people have looked into advanced recovery techniques particularly focusing on ways to incentivising the international oil companies to use fallow oil fields.
The problem with this approach is that it is expensive to explore. The present government in Nigeria can delay repayment schedule, give tax breaks, delay the penalty for companies to pay if they are not exploring or undertaking obligations under the exploration agreements.
Government can also create an environment where international oil companies can make sensible comparism; there is oil in Libya and elsewhere around the world. Nigeria should make sensible comparism to ensure that companies actually continue with their works in Nigeria rather than view Nigeria as costlier to operate their work to other African countries with favourable business climate.
What is your view about the local content development?
The local content Nigeria is great, but the major concern would be does the country have the skills to meet the requirement of international oil companies? Your guess is as good as mine. Not having the required skills makes it more expensive because the locals would have to double up.
It is important the country invest in training so as to make it easier for the international businesses to meet their requirement and also have diversified industry and other types of business.
Look at Saudi Arabia; they are higher in terms of companies that use plastics. I think in order to strengthen the oil and gas industry, we need to diversify. There are huge opportunities because the Nigeria environment is regulated, you have huge number of local talents, there are enormous amount of wastage within the system. A lot of money doesn’t go to the right places, community projects are not working the way one would have hope.
What connection has Harmattan Workshop with Oil?
The Harmattan workshop is a wonderful community project; it is based in Delta State. All the projects are there. It is important that the government and other Nigerians begin to create environment that would make it attractive for investors to want to invest in creative industry.
Oil would not be at $100 a barrel again for a long time to come. But if you can create an enabling environment or something sensible that would make investors want to come back to the country it would boost the economy. However this is somewhat difficult in an environment where the perception of Nigeria as regards business environment is not always what it should be.
So what should be done to kick start the oil and gas industry once again?
I think the best thing to do is for the government to set right the issue of gas development. Look at the amount of gas that is being flared in the Niger Delta; See the Brass LNG that is not going ahead. The country has huge gas resources, but it is expensive for the government to develop, she can take a chunk of the money that recovered so far invest it in the gas to effectively jump start the economy. When this is done, you will discover that great things will happen to the economy and the oil and gas industry. Gas is a long term solution to Nigeria’s problems.
We need to be able to liberalise the market and diversify the economy through gas because through gas a lot of plastic manufacturing companies can spring up. Investment in gas is more sustainable and it would help the country with its emission problems and environmental requirement globally so that the country can find money from other pots to allow her pick up economically.