Tahir: Nigeria’s New Licencing Rounds Can Boost Investment, Competitiveness in Oil Sector

Salahuddeen Tahir, is the chairman of the Society of Petroleum Engineers, Nigerian Council, and Head of Assets and Investments Management at NNPC Gas and Power Investment Services, where he oversees strategic investments in power, LNG, and gas-based industry initiatives. Tahir brings over 22 years of experience in the oil and gas sector. In this interview, he discusses the forthcoming 2024 SPE Nigeria Annual International Conference and Exhibition and sheds light on pertinent industry issues.

Sunday Okobi brings the excerpts: 

The upcoming SPE-NAICE is the 47th edition. In what ways has SPE-NAICE grown or changed throughout its history?

The Society of Petroleum Engineers Nigeria Annual International Conference and Exhibition (SPE-NAICE) has significantly evolved since its first event in 1977. Now approaching its 47th edition, SPE-NAICE has expanded its scope and become a major event in the oil and gas industry, attracting global professionals. It serves as a platform for knowledge sharing, networking, and showcasing industry advancements. Key milestones include introducing technical sessions and workshops to enhance skills, embracing digital platforms for accessibility, and focusing on sustainability and environmental responsibility. The conference continues to foster collaboration and innovation, with the upcoming edition expected to uphold this legacy.

 Based on the theme of this year’s NAICE, why is SPE Nigeria focusing on midstream and downstream development?

The theme: ‘Petroleum Industry Value Chain Optimisation: The Inevitability of Midstream and Downstream Development,’ emphasises the critical role of midstream and downstream sectors in sustaining the upstream business. These sectors manage the transportation, storage, refining and distribution of crude oil, essential for value chain efficiency. Optimising midstream and downstream operations enhances the petroleum industry’s efficiency, reliability and profitability, boosting economic growth and development in Nigeria and Africa. As global energy transitions toward alternatives and reducing carbon emissions, these sectors are pivotal in distributing natural gas and renewables. Investing in their infrastructure and technology ensures energy security and reduces reliance on imports, making this focus timely and crucial for sustainable growth and resilience.

What are the main challenges faced by the Nigeria’s petroleum industry in optimising midstream and downstream segments?

 The Nigerian petroleum industry faces several challenges in optimising its midstream and downstream segments. Insufficient and outdated infrastructure, such as pipelines and refineries, hampers efficient operations. Security issues, including pipeline vandalism and oil theft, disrupt operations and cause revenue losses. Transparency issues deter investment, while the regulatory framework needs improvement to attract capital and encourage innovation. Access to finance is limited, hindering infrastructure development. Environmental concerns about air and water quality require stricter regulations and sustainable practices. Addressing these challenges requires collaboration among the government, industry stakeholders, and regulatory bodies to create a more efficient and sustainable petroleum industry in Nigeria.

 How can investment in midstream and downstream infrastructure lead to cost savings and increased revenue for petroleum companies?

Midstream and downstream infrastructure investment can yield significant cost savings and increase revenue for petroleum companies. Upgrading infrastructure like pipelines and storage facilities reduces transportation costs and delays, enhancing efficiency and lowering operational expenses. Improved refining and processing facilities elevate product quality, allowing companies to produce higher-value products that meet market demands, attracting more customers and boosting revenue. Expanding infrastructure enables better market access and diversification, reducing reliance on a single market and increasing profitability. Strategic storage and distribution investments optimise supply chains, reducing costs and ensuring timely deliveries. Increased flexibility in processing various products allows companies to adapt to market changes, maximising revenue potential.

How do regulatory frameworks impact the development and optimisation of midstream and downstream segments?

 Regulatory frameworks are crucial in shaping the development and optimisation of the energy industry’s midstream and downstream segments. These frameworks include rules and policies to ensure safety, efficiency, and fair competition. In the midstream segment, regulations govern the construction and operation of pipelines, terminals, and storage facilities, focusing on safety and environmental standards. In the downstream segment, they cover quality standards for fuels, pricing, consumer protection, and competition policies. While these regulations promote fairness and public safety, excessive complexity can hinder innovation and increase compliance costs. Therefore, striking a balance is essential to ensure both safety and a favorable business environment, significantly influencing industry development.

 How is the role of midstream and downstream segments expected to evolve in the future of the petroleum industry?

 The midstream and downstream segments of the petroleum industry are set to evolve significantly due to emerging trends. The energy transition towards cleaner sources will likely lead to investments in infrastructure for transporting and storing renewable fuels like hydrogen and biofuels. Digitalisation and automation will enhance efficiency through advanced analytics, AI, and automation, optimising supply chain management and refining processes. Stricter environmental regulations will drive eco-friendly practices, such as carbon capture and emissions reduction. Product diversification will see companies exploring alternatives like petrochemicals and plastics. Additionally, energy security will focus on strengthening infrastructure to ensure reliable supply amidst these changes.

In what ways has the Presidential Executive Order on Oil and Gas Fiscal Terms influenced the operational landscape of Nigeria’s energy industry?

 The Presidential Executive Order on Oil and Gas Fiscal Terms has significantly impacted Nigeria’s energy industry by creating a more transparent and attractive investment climate. It reduces fiscal burdens on companies through lower royalty rates and tax incentives, encouraging increased investment in exploration and production. The order also promotes technological innovation, enhancing efficiency and productivity in the sector. Additionally, it emphasises collaboration between government agencies and the private sector by establishing a coordination committee for stakeholder engagement. Overall, the Executive Order aims to attract more investments, boost production, and foster growth in Nigeria’s oil and gas industry.

Given that SPE Nigeria strongly advocated for Nigeria to host the African Energy Bank, what are the next steps to ensure this development benefits the country and broader African economy?

 Hosting the African Energy Bank in Nigeria offers significant opportunities for the country’s petroleum industry and the broader African economy. Key strategic steps include strengthening collaboration with other African nations through knowledge-sharing and joint investments to build an integrated energy market. Prioritising infrastructure investment in pipelines, refineries, and storage facilities will enhance Nigeria’s production and export capacity. Promoting local content can boost job creation and reduce foreign dependency. Investing in research and development for new technologies and renewable energy will drive innovation. Capacity building and training programs are crucial for developing a skilled workforce. These steps will maximise the benefits and foster economic growth.

How do the recent government announcements on new oil bids and licencing rounds impact Nigeria’s position in the global energy market?

The recent government announcements on new oil bids and licensing rounds could significantly impact Nigeria’s position in the global energy market. As one of Africa’s largest oil producers, Nigeria aims to attract competent oil producers to explore and extract hydrocarbons, potentially increasing its reserve base and production. This could lead to higher revenue and strengthen Nigeria’s role as a key energy supplier, meeting global energy demands. However, the impact will also depend on factors like global oil prices, geopolitical dynamics, and competition from other producers. Overall, these announcements could attract investments and enhance Nigeria’s standing in the energy market.

In what ways can these new oil bids and licencing rounds drive investment and foster competitiveness within Nigeria’s oil sector?

Nigeria’s new oil bids and licensing rounds can significantly boost investment and competitiveness in the oil sector. They offer opportunities for domestic and international companies to invest in hydrocarbon exploration and production, leading to new field development and increased reserves. The bidding process fosters competition among companies, promoting innovation and efficiency. It also allows the Nigerian government to implement policies that attract investment and ensure transparency, boosting investor confidence. Moreover, international companies can bring advanced technologies and expertise, benefiting local firms and enhancing sector capabilities. Overall, these rounds can drive growth, competition, and technological advancement in Nigeria’s oil industry.

 How is the collaboration between industry, government, and security agencies crucial for securing a steady feedstock supply to domestic refineries?

Collaboration between industry, government, and security agencies is crucial for ensuring a steady feedstock supply to domestic refineries. The industry identifies and procures feedstock, and by working with government and security agencies, it can access resources to maintain a reliable supply chain. This partnership helps identify risks and implement solutions, like diversifying feedstock sources and enhancing security measures. Government involvement is vital for creating regulations, offering incentives for domestic production, and promoting alternative feedstock research. Security agencies protect the supply chain from theft, sabotage, and disruptions. Overall, this collaboration ensures the refining industry’s smooth operation and enhances national energy security.

How can diversifying Nigeria’s energy portfolio to include renewable sources help meet the growing energy demand?

Diversifying Nigeria’s energy portfolio by incorporating renewable sources like solar, wind, and hydropower alongside traditional hydrocarbons offers several benefits. It can enhance energy security by reducing dependence on fossil fuels and vulnerability to oil price fluctuations. This shift supports sustainability by lowering the carbon footprint and aligning with global climate efforts. Renewable energy projects stimulate economic growth and create jobs, attracting investments that foster new industries. They also improve electricity access in remote areas through off-grid solutions. Moreover, embracing renewables encourages technological innovation and positions Nigeria as a leader in clean energy, driving research and development in the sector.

Finally, what will be the standout moments and activities at this year’s NAICE edition?

This year’s NAICE edition promises to be remarkable, featuring keynote speeches from industry experts that will provide insights into the latest trends. The exhibition floor will showcase cutting-edge technologies, allowing attendees to explore innovative solutions. A variety of technical sessions will offer in-depth knowledge of industry aspects, catering to professionals and enthusiasts. Exceptional networking opportunities will enable connections with industry professionals and potential collaborators. Workshops and training sessions will enhance skills and knowledge, while panel discussions will provide diverse perspectives. Awards and special recognitions will celebrate outstanding industry achievements, making the event informative, engaging, and inspiring for all attendees.

These standout moments and activities are just a glimpse of what to expect at this year’s NAICE edition. The event promises to be informative, engaging, and inspiring for all attendees.