Achieving an effective oil, gas roadmap hinge on strategic implementation

The actions and inaction of key players especially the federal government in the oil and gas sector has terribly impacted the sector as growing concerns of production outages, exposure to bank loans and the curse of militancy has hemorrhaged government revenue, crimped investments in the sector for over a decade.

Despite the country’s abundance of natural oil and gas deposits, several challenges have over the years continue to stifle the translation of the benefits of this huge resources into improved economy for the country which will in turn translate to better living condition for her citizens.

Industry watchers observe that Nigeria’s crude oil market in the last few years is fast becoming unattractive both to local and international investors due to several factors such as the fall in global crude oil prices, increased insecurity and vandalism of pipelines.

Analysts opine that the consistent delay in the passage of a robust legislation which governs exploration, production, bidding and contracting has no doubt cast a shadow of doubt over the government’s commitment to attract foreign investments into the sector and this has in no small way contributed to the reluctance of potential investors to invest in the Nigerian oil and gas sector.

Experts are however quick to stress that the only workable solution out of the current situation is for the federal government to get the fundamental aspects of legislation right in this case the Petroleum Industry and Governance Bill as this will speed up development and send the correct signal to vital investors.

Conscious of this, the government has recently published both a Road Map for the Nigerian Oil Industry as well as the new Bidding Rules. These, analysts maintain would kick start the process of building reputation for delivery and enhance government’s credibility as it looks to reposition the oil and gas sector.

In the oil and gas sector, the federal government recently launched what it called the 7BigWins document with a robust look at the industry outlining basic planning that would solve the identified challenges in the sector.

A cursory look at the “7 Big Wins”

Tolulope Aderemi, an energy expert in a recent article said that the recently launched Petroleum Industry Road Map (otherwise known as “The 7 Big-Wins”) establishes improved transparency, efficiency and a stable investment climate which is the panacea to a stable and profitable oil and gas market.

The proposed reform according to Aderemi is also expected to identify investment opportunities in infrastructure development of oil and gas facilities, operations, and maintenance across the industry.

According to Aderemi, while awaiting the passage of the historical Petroleum Industry Bill (“PIB”), the Nigerian government is taking proactive measures to carry out reforms in the oil and gas sector. To achieve this, a new Petroleum Bill is being proposed; the Petroleum Industry Governance and Institutional Framework Bill (“PIGIF).

The PIGIF Bill has the following key objective (amongst others): establish a single independent regulator to be known as the Nigeria Petroleum Regulatory Commission; and restructure the State Entity (the NNPC) into two entities; the Nigerian Petroleum Assets Management Company and the Nigerian Petroleum Company”.

He observed that these reforms were designed with a view to improving transparency, efficiency, and government take from the industry. Furthermore, the National Oil Policy is expected to establish a Single Independent Industry Regulator, conduct new licensing rounds (the Guidelines for this were reported to have been published on October 31, 2016), timely lease renewals and the negotiation of new funding options for government. Government also intends to sponsor the passage of a Petroleum Fiscal Reform Bill, which is expected to change the Fiscal landscape of the industry.

On gas revolution, the Nigerian Gas MasterPlan, a robust gas framework for doing business in the Nigerian gas sub-sector is yet to be to be fully implemented. This obviously has affected full implementation of her domestic obligation rule re-introduction, the introduction of its transitional pricing framework, full commerciality in domestic gas prices (export parity), Infrastructure Investment progressing etc. Undoubtedly, with a gas revolution under this administration, it is anticipated that there will be improved gas infrastructure development.

“Government is committed to improving governance and transparency across the oil and gas value chain via increased collaboration with the Nigeria Extractive Industries Transparency Initiative. This would help strengthen governance and accountability in the industry. Under the new regime, oil companies may be required to disclose more details of their operations and financials”. He said.

Industry analysts also observed that to comply with global best practices, government through the 7 BigWins document is determined to introduce transparent licensing rounds, bidding information, fiscal obligations, improved Capacity Building, Institutional Strengthening and Governance Model, Information Communication Technology and Automation, and Performance Management.

They disclosed that the Petroleum Training Institutions will similarly be re-structured to engage to draw from the industry knowledge of practitioners.

On improving Niger Delta and Security, they reasoned that Niger-Delta, Nigeria’s oil and gas hub, has recorded violence resulting in massive destruction of oil assets. Successive governments have in turn also attempted to reduce the impact of this vandalism on the Nation’s revenue stream by making palliative provisions to accommodate some of the vandal’s concerns.

Strategic way forward

Experts have sadly identified as a big problem for successive government the willingness drive to a logical conclusion any good policy. While in the past several strategic government policy have been drafted and allowed to gather dust in the shelve of government offices, it is the expectation of industry experts and operators that this policy document as typified by the 7Big Wins would be allowed to function effectively as this may be the succor that the oil and gas industry need to thrive.

In the views of Tolulope Aderemi, government must get the framework right if it intends to come out of this recession. Although, there has been sterling efforts at diversifying the Nigerian economy, it is clear that our budget will continue to be funded either by our receipts from the oil and gas sector or from external borrowings.

“Creating an enabling environment therefore commends itself to attracting both foreign and local investors. One can only hope that this RoadMap is not just another well-intentioned Plan but one which will deliver the promises of a vibrant and robust oil and gas market”. He said.

KELECHI EWUZIE