FG: Tinubu Determined to Reverse Underinvestment in Oil, Gas Sector

*Allays concern over increase in fuel price, electricity tariff

*Minister inaugurates multi-billion dollar midstream, downstream gas infrastructure fund governing council

Olawale Ajimotokan in Abuja and Peter Uzoho in Lagos

The federal government yesterday, said President Bola Tinubu was determined to reverse the trend of low investment level in the oil and gas sector in order to address the revenue crisis that is severely impacting all Nigerians.
The Special Adviser to the President on Energy, Mrs. Olu Verheijen disclosed this in Abuja at a Ministeria
Also yesterday, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, called on stakeholders, both domestic and international, to join hands with the management of the multi-billion dollar Midstream and Downstream Gas Infrastructure Fund (MDGIF) to boost investments in the gas sector. The minister stated this in Abuja, at the inauguration of the Governing Council of the MDGIF, according to a statement by his Spokesman, Mr. Louis Ibah.
Speaking further, Verheijen, noted that although the oil and gas sector was critical to the ability of the country to grow revenue and forex to stabilise the economy, investments level had fallen short of the country’s potential.
She lamented that since 2016, Nigeria had only accounted for four per cent of Africa’s total oil and gas investments, despite possessing 38 per cent of the continent’s hydrocarbon reserves.

“We need to address the fundamental issues in the sectors so that we can attract capital to the infrastructure and there is no one who’s going to invest in Infrastructure if they don’t have assurance, the line of sight to the attractiveness of gas supply.

“So, if gas suppliers are not making any investment because the fiscal terms of the business environment is a very difficult one in which to invest in, then it will be difficult to continue to mature mainstream projects and downstream projects because you have to deal with the ab initio problem which is gas supply.
 “And that is exactly what President Bola Ahmed Tinubu has done by fast tracking these policy directives to ensure that we have sufficient gas supply whether we’re trying to export, whether we’re trying to compress natural gas or liquefied for domestic use, whether we’re trying to have floating energy as an alternative way of getting gas into the market, all of those things are enabled by these policies.

“A society is not rich because of its resources, but because of what it does with those resources. President Bola Ahmed Tinubu is determined to reverse this trend and take decisive steps to ensure a conducive business climate and reposition Nigeria as a preferred investment destination for oil and gas sector.
“To achieve these objectives, Mr. President has issued a Presidential directive to streamline and clarify the scope of the two regulators in the petroleum sector to provide certainty and create a conducive business environment. He has directed the NSA and Special Adviser on Energy to coordinate enhanced security measures in the Niger Delta,” Verheijen said.

She noted that following the directive, the TNP pipeline which had been repeatedly vandalised was now enjoying improved uptime, while availability had practically doubled since the directives were implemented.
 She said: “This has translated to increased liquids of over 200,000 barrels/day being transported over the last six months. It has increased the availability of NLNG Trains 1-6 from 57 per cent in 2023 to 70 per cent in Q1 2024. The President has also introduced fiscal incentives to deepen Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG) penetration.

“These incentives were designed to ease the impact of fuel subsidies on transportation cost and enable the displacement of PMS/Diesel and; to contribute to stabilising the price of cooking gas in the market and support the transition to clean cooking. Following extensive engagements, analysis and benchmarking, with industry operators and regulators, the President has taken further action to address foundational issues identified in the course of these engagements. Mr President has initiated amendment of primary legislation to introduce fiscal incentives, reduce project execution timelines and promote cost efficiency”.

Verheijen added that one of the policy directives: Fiscal Incentives for Non-Associated Gas (NAG), Midstream and Deepwater Oil & Gas Developments, aimed to facilitate the monetisation of Nigeria’s extensive oil and gas resources, noting that 76 per cent of Nigeria’s gas reserves remain undeveloped., which explains why, despite possessing one of the largest gas reserves globally, the country lacks sufficient gas to meet its domestic needs for industry, for power and for cooking.

She also allayed the concern of the public about an imminent increase in pump price of fuel and electricity tariff. According to the presidential adviser, government was working towards ensuring price stability although the subsidy regime is over.

She argued that the developed countries, including the United States, maintain price stability so as to prevent volatility in the economy, noting that government intervention to stabilise price does not remove the fact that subsidy has been removed.

 “The question of subsidy, the subsidy was removed on May 29, 2023. However, the government has the prerogative whether the US, in the West and other Eastern countries, all governments have the prerogative to maintain price stability and prevent social unrest.

“All governments deserve that right.  And so if for whatever reason the administration has reviewed that it is not the right time to have prices continue to fluctuate given the level of hardship in the country, given inflation, the government has the right to intervene intermittently.

“All governments do so but it does not take away the fact that the subsidy was removed,” Verheijen asserted.

 On the pricing of cooking gas, she stressed that a significant portion of the country’s gas was being imported.

She, however, said because the President was very concerned about the cost of living, he approved the fast tracking of fiscal incentives to enable more investments into the LPG space with the hope that if scale is achieved, then costs can be brought be down and the domestication of some of LNG production can be incentivised.

“We started it, but unfortunately foreign exchange and the market prices began to increase. We are going to continue to work and look at more opportunities to improve supply and scale up and enable all LPG into the market at affordable prices. It is a priority of this administration,” she said.