Recipe for Economy-transforming PIB

Chris Paul
The Nigerian Petroleum Industry Bill and the Transformation of the Nigerian Oil and Gas industry in 2021: An Oil Producer Trade Section (OPTS) Perspective was the theme of the webinar put together by the Nigeria American Chamber of Commerce (NACC) last Thursday.

Supported by Chevron Nigeria, the webinar had in attendance a cross section of industry experts and enthusiasts from different countries around the world.
The Director General of the NACC, Sola Obadimu, anchored the programme, while the director, Downstream Gas at Chevron, Sanjay Narasimhalu, was the speaker. Dame Adebola Williams represented the President of the Chamber, Otunba Toyin Akomolafe.

Although, the issue of the PIB and its importance to the Nigerian economy and the nation’s oil and gas industry particularly, has been talked about at many fora, Narasimhalu treated the topic from a fresh perspective.
At the core of his position is the urgent need for government to recognise the damage duplicity of oversight and multiplicity of taxation is doing to the revenue potential of the economy through oil and gas.

Bureaucracy, he said, is a major obstacle to the growth of the industry as it is stifling projects and operations. For instance, in other competitive countries, it takes about six months for projects to be approved. In Nigeria, it could take as long as 36 months.

Like one eating his earnings with both hands, Nigerian government takes 80per cent of its share of Joint Venture proceeds; while it turns a deaf ear to the plea of industry players to make-do with 55-56per cent range to be globally competitive. Meanwhile, at 42per cent and 69per cent operational and project cost in Nigeria are higher relative to the rest of the world.

Narasimhalu warned that the terms of the 2020 version of the PIB for deep water could cost the country 30per cent of its production potential, drawing attention to the profile of investment that came into the industry between 2015 and 2019.

With graphic illustration, he explains the volume of capital that came into the country, within the period.
According to him, Nigeria has received less than 4per cent in industry investment, which is, about $3 billion unlike Guyana that has over $51 billion in the last four to five years.

Nigeria’s competitiveness is driven by government’s take and cost of doing business in the country. If government earning and cost of doing business increases, the benefit that should accrue to the economy decreases.

In his submission, Narasimhalu emphasised that the world was changing and Nigeria needed to change with it. With many countries in Africa and beyond, discovering oil in large quantities, investors now have a choice.
Consequently, capital will move to where production cost is affordable, fiscal terms are reasonable, political environment is less volatile and corporate governance is more responsible.

And so, a legislative framework that is responsive demands become the linchpin that attracts potential investors to the hydrocarbon industry.

The NACC webinar, therefore, served as an urgent reminder to Nigerian government of the imperative to pass not just a PIB, but a bill that provides the appropriate legislative framework that ensures that all the variables, deliverable and dynamics that deliver a highly productive oil and gas industry. And that, he advised, should be done without delay and with an eye for fine details that ensure a profitable oil and gas industry is achieved for Nigeria and Nigerians.

Few days to the end of a dreadful year, no thanks to the COVID 19 pandemic, no time could have been more fitting to address the urgency of the passage of a reasonable bill that addresses the compelling needs of the nation’s oil and gas industry.

For some reasons, no other stakeholders can appreciate the state of emergency the hydrocarbon sector has found itself enough to desperately seek the intervention of such an inclusive, functional legislative document.
The industry needs to be rescued from further decline. Thus none other than the real hands and minds on the plow (the industry players), can give a clear picture of what is required and why it is needed.

First, Narasimhalu works for Chevron. One of the largest oil producers in Nigeria and one of its largest investors, the company operates under a joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC) for the onshore and offshore assets in the Niger Delta region.
With extensive interests in multi-partner deep water operations, Chevron is the operator of Agbami Field, one of Nigeria’s largest deep water discoveries.

The oil company also has a non-operated interest in the Usan Field.
Through Chevron’s principal subsidiary in Nigeria, Chevron Nigeria Limited (CNL), the company operates and holds a 40 per cent interest in eight concessions in the onshore and near-onshore regions of the Niger Delta under a joint-venture arrangement with the NNPC. The US oil giant also does business through other subsidiaries in Nigeria.

With deep water interests, ranging from 20 to 100 percent, in three operated and six non-operated deep water blocks in Nigeria. Chevron operates the Agbami Field, which lies 70 miles (113 km) off the coast of the central Niger Delta region and spans 45,000 acres (182 sq km).

Discovered in 1998, the Agbami Field is at a water depth of approximately 4,800 feet (1,463 m). Chevron has a 67.3 percent interest in the field. Agbami is a subsea development with wells tied back to a floating production, storage and offloading (FPSO) vessel. The original Agbami development scope (Agbami 1, 2 and 3) is complete. To offset field decline, infill drilling continued in 2019.

Chevron has a 30 percent non-operated working interest in the Usan Field, in 2,461 feet (750 m) of water, 62 miles (100 km) off the coast of the eastern Niger Delta region.

The Aparo Field and the third-party-owned Bonga SW Field share a common geologic structure and are planned to be developed jointly. The structure lies in 4,300 feet (1,311 m) of water, 70 miles (113 km) off the coast of the western Niger Delta region.
The proposed development plan involves subsea wells tied back to an FPSO vessel. Work continues toward a final investment decision.

Chevron operates and has a 55 percent interest in Oil Mining Lease (OML) 140. The block lies in roughly 8,000 feet (2,438 m) of water, 90 miles (145 km) off the coast of the western Niger Delta region, and includes the Nsiko discoveries. Chevron’s 30 per cent non-operated working interest in OML 138 includes the Usan Field and several satellite discoveries and a 27 percent interest in adjacent licenses OML 139 and OML 154. The IOC is working with the operator to evaluate development options for the multiple discoveries in the Usan area, including the Owowo Field which straddles OML 139 and OML 154.

Chevron is involved in natural gas projects in the western Niger Delta and Escravos areas, including the Escravos Gas Plant (EGP), the Escravos Gas-to-Liquids (EGTL) facility and the Sonam Field Development Project.
CNL operates the EGP, which has a total capacity of 680 million cubic feet per day of natural gas and LPG and a condensate export capacity of 58,000 barrels per day. Chevron and the NNPC operate the EGTL facility, a 33,000-barrel-per-day gas-to-liquids plant.

This profile cuts across the industry in varying degrees and dimensions among the plethora of players in the nation’s oil and gas industry.

Second, Oil Producers Trade Section (OPTS) is a private industry group committed to the exploration, development and production of Nigeria’s oil and gas resources in a manner that is sustainable and beneficial to the Nigerian people. Indeed, the oil and gas association represents interests of 30 oil and gas companies, operating approximately 90 per cent of Nigeria’s oil and gas industry production; in partnership with the Nigeria National Petroleum Corporation (NNPC) or local and international lease holders.

An affiliate of the Lagos Chamber of Commerce and Industry (LCCI), some of OPTS’ members have also made forays into new energies in-country evolving with the world’s movement towards cleaner energy and as part of its commitment to protect the environment.

The Chevron-supported OPTS PIB campaign programme is another wake-up call to the Nigerian government to get its act together and pass the bill into law. While Narasimhalu succinctly delivers, point by point, why it is mandatory and the need to pass not just any PIB, but one that speaks appropriately to the requirements for the type of industry that will deliver for Nigeria and Nigerians.