Sound bites from annual Oloibiri Lecture and Energy Forum (OLEF)
Oloibiri Lecture Series and Energy Forum, organized by Society of Petroleum Engineers, Nigeria Council, is an annual lecture series focused on contributing to oil and gas policies development for Nigeria in commemoration of the first oil-well drilled in Nigeria by Shell Darcy at Oloibiri, in Ogbia, Bayelsa State, in 1956.
The annual lecture series attracts participation from the government, regulatory agencies, heads of industry practitioners at all levels, as well as other key stakeholders from around Africa. The 2016 lecture series focused on mitigating the effect of low oil prices through technological advances in hydrocarbon exploration and exploitation.
George Kalu, Chairman SPE Nigeria Council in his welcome address said that the low oil price scenario provides Nigeria with the unique opportunity of maximizing benefits from adoption of low cost technology in asset management as well as industry collaboration between buyers, suppliers and vendor with operators in the oil and gas industry.
OLEF 2016 also coincides somewhat with 60 years of oil exploration and exploitation in Nigeria since the first discovery in Oloibiri in commercial quantity.
Here are some sound bites from the forum;
NNPC to Split into 30 Companies
The minister of state for Petroleum Resources the group managing director of the Nigerian National Petroleum Corporation (NNPC), Ibe Kachikwu said the state oil company will, for the first time in 20 years, embark on a major overhaul of the sector adding that the overhaul is in alignment with the government’s decision to resolving the governance issues in the oil and gas sector as well as at the NNPC.
According to Kachikwu, the NNPC is to be “unbundled” into 30 profit-making companies with separate managing directors in the weeks ahead as part of an ongoing transformation of the national oil company.
“For the first time, we are unbundling the subset of the NNPC to 30 independent companies with their own managing directors. Titles like group executive directors are going to disappear and in their place you are going to have chief executive officers and they are going to take responsibilities for their titles. At the end of the day, the CEO of an upstream company must deliver an upstream result.”
The minister added that he expects the corporation to start making profit by year end and noted that the President Muhammadu Buhari administration is focusing on developing the nation’s gas resources in order to boost revenue as part of the diversification policy of the Federal Government.
Kachikwu said that the petroleum sector, under his watch, would rapidly review the contracting cycle of upstream projects from two years to six months, stressing that efforts are in “top gear” to review existing production sharing contracts. He also emphasized that for the Nigerian oil and gas industry to make “remarkable progress”, there is need for all stakeholders in the upstream, midstream and downstream sectors to be on the same page on cost control, contracting circle, technology and environmental issues.
National Assembly to expedite passage of PIB
The Speaker of the House of Representative, Yakubu Dogara, said the National Assembly shall consider and expedite the passage of legislation of the Petroleum Industry Bill (PIB) to enable the restructuring and deregulation of the downstream sector; thus, allow for competition in all segments including open access to the pipeline as well as providing a robust tariff mechanism for all players.
He said that the Change agenda includes submitting a reinvigorated draft PIB to the National Assembly for passage in addition to the rehabilitation of the refineries.
Dogara said that a strong local refining and petrochemical industry will provide the catalyst which will ensure the country’s growth and sustainable development through diversifying the country’s revenue stream and growth in other sectors.
Countering oil price instability
Ademola Adeyemi-Bero, Managing Director/CEO, First Exploration and Petroleum Development Company Limited said that Current Joint Venture (JV) contracting and procurement and approval process significantly erodes project value adding that the JV Cash Call process in last 10 years has killed growth.
Adeyemi-Bero said that to counter oil price instability smart solutions must be deployed to derive maximum value during project development, execution and throughout asset lifecycle operations.
The smart solutions include maximising hydrocarbon recovery through reservoir development and well, reservoir and facility management in addition to minimising project delivery timeline and lifecycle development costs.
He said that Nigeria can make progress through being open to more credible players made up of good mix of IOCs and strong local indigenous companies, JV partnership that enables funding and improved performance and creation of enabling environment amongst others.
Weathering the storm
Oluseyi Afolabi, Executive Director/GM Upstream Nigeria Business Development, ExxonMobil said that strategies for a low oil price environment include rigorous analysis of capital and operating cost drivers, splitting cost into segments, looking deep and focusing on “big ticket” items, conducting detailed analysis of each component, brainstorming and prioritizing all cost reduction ideas, identifying discretionary and non-discretionary spend, ensuring that cuts should not impact safety of people or integrity of equipment amongst others.