One Year of Driving Rebound of  Nigeria’s Oil Industry

Nigeria’s oil industry, under the leadership of the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, in the past one year, has  experienced significant rebounds in many areas with notable achievements  recorded, writes Peter Uzoho

On August 21, 2024, Nigeria’s Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri marked his one year on the saddle. Lokpobiri, a former senator and minister of state for agriculture, began his latest national assignment upon his appointment, and subsequent inauguration in August last year by President Bola Ahmed Tinubu to head the oil segment of the nation’s petroleum ministry following the creation of a separate ministry for oil as well as for gas, by the president.

The splitting of the hitherto single ministry of petroleum into two was understandably because of the president’s vision and determination to reform, revive and optimise each of the two segments with targeted policies in order to unlock their potential and ultimately boost their contributions to the country’s economy.

Expectedly, immediately after his assumption of office and getting the necessary briefings and updates relating to his new ministry, Lokpobiri swung into action. Indeed, from day one of being in charge of the oil ministry, the Bayelsa-born minister hit the ground running.

This was because Lokpobiri already understood the enormity of the task placed on his shoulder as well as the high expectations from industry players and stakeholders, and he was determined to deliver. He met an industry that had almost lost its vigour and excitement due to years of neglect, massive under-investment, loss of investor confidence, rampant oil theft and vandalism, divestments by multinationals, corruption and general lack of favourable operating environment. These effectively led to the slump in Nigeria’s oil production to just one million barrels per day, with adverse impact on the country’s revenue earnings.

Increased Oil Output with Sound Leadership

Over the last one year, the Lokpobiri effect, or better still, solution, has been felt in Nigeria’s oil production numbers since he assumed office. From a low of just one million barrels per day (bpd), the country’s oil production has now increased to 1.7 million bpd including condensates. This resulted from his conscious implementation of policies and strategies. The rise in oil production has led to increased revenue generation for the government, which is now helping in driving national economic growth and development.

However, despite the growth in oil output, the minister is not resting  as he is continuously making efforts towards boosting production further by ensuring the revamping of redundant oil assets to active status. He has been in continuous engagement with the international oil companies (IOCs) and the national oil company -the Nigerian National Petroleum Company Limited (NNPCL) in resolving critical industry disputes  in order to increase production to a much higher number.

Lokpobiri had led several resolutions of internal contracts feuds between joint venture partners on critical production fields. For instance, he mediated and led the resolution of the NNPC and ExxonMobil in the divestment dispute. That development is expected to pave the way for new foreign investments when the deal is finally concluded, allowing Seplat Energy to become the new operator and JV partner in the assets.
The minister has also enhanced inter-agency synergy and unified all the agencies and state oil firm under the ministry to work synergistically towards increasing crude oil production. The NNPCL, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian Content Development and Monitoring Board (NCDMB) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) are now working together to achieve a common goal.

Moreover, the minister has strengthened community relations between operators and oil communities by engaging with host community stakeholders in the Niger Delta region to ensure the security of oil installations, with the ultimate aim of bringing oil theft and pipeline vandalism to the barest minimum. In particular, the minister has been having robust engagement with community leaders to effectively monitor the implementation of the three per cent Host Community Development Fund (HCDF) as provided by the Petroleum Industry Act (PIA).

Indeed, the minister has leveraged his stakeholder management prowess and experience to drive the rebounding of the oil industry being witnessed today, which is beyond the expectations of the stakeholders.

Streamlined Licensing Processes

To further boost the country’s oil production through increased investments, Lokpobiri has eliminated all bureaucratic bottlenecks in operational licensing, which had impeded  investments and oil output in the past.

He has ensured that nowadays, approvals are granted without favoritism. He had stated in several fora that he intended that oil business is for ‘men’ and not for ‘boys’. He had explained that the current government will not follow the past ugly pattern of awarding oil blocks to people that have no sufficient technical, financial and execution capacities  as well to operate and optimise the assets after award. This, no doubt, had been the bane of Nigeria’s oil and gas industry for many decades.

Transforming Crude Accounting

However, in a bid to entrench transparency and accountability during oil production operations, Lokpobiri’s oil ministry has gotten the federal government’s approval for the implementation of the Advanced Cargo System and real-time metering of all flow stations to track revenue online. This is a significant step towards curbing oil losses. This measure has been viewed by industry stakeholders as a game changer in the industry because of its capacity to engender transparency and accountability during crude oil accounting.

Facilitated Foreign Investments

Also,  Lokpobiri has facilitated several  investments into the oil and gas industry by creating an attractive investment climate, providing fiscal incentives, and promoting partnerships with international oil companies. A number of fresh investments from major industry players, including Eni, Chevron, and Schlumberger have been secured and brought into the industry through regular meetings between the minister and the IOCs. Again, he facilitated the engagement between the IOCs and the Central Bank of Nigeria (CBN), thereby initiating a channel for the multinationals to address their concerns with the apex bank regarding their investments.

The oil minister has, no doubt,  achieved this through his visits and participations in international programmes where he convincingly marketed the nation’s oil and gas industry to the world.

Cleared Legacy Bottlenecks
Similarly, the minister has ensured that bottlenecks in the ongoing divestments deals are removed so that new operators can take over the assets. In realising this, has granted ministerial consent to some of the companies wanting to divest their onshore and shallow water upstream assets to companies that are technically and financially capable. This was to meet the goal of the president in improving Nigeria’s oil production and increased revenue for the country.
At the moment, the industry is witnessing a restoration of investor confidence. More rigs are now being deployed as the industry is gradually coming back to life with new investments, new field development and more exploration activities. All these are happening because Lokpobiri has been in constant engagement with industry stakeholders and churning out policies to rekindle investor confidence in Nigeria’s oil sector.

Timely Approval of Licences
However, unlike in the past where licences due for renewal or ready for award were delayed for too long, the oil ministry under Lokpobiri has experienced speedy and timely approval of oil prospecting licences to technically and financially capable indigenous and international companies. Again, this is all geared towards increasing production.
Similarly, the minister has never hesitated in approving extension of oil prospecting licences in line with the extant laws to enable operators continue to develop the assets to increase production and revenue generation. He is doing that while spearheading the implementation of critical reforms brought by the PIA to enhance transparency, accountability, and efficiency in the sector.

Driving Infrastructure Development
To enhance seamless production and supply of crude oil for both domestic use and export, the minister has been Initiating projects and partnerships to develop critical infrastructure such as pipelines, storage facilities, and refineries to support the efficient operation of the sector. He has led major improvement of pipeline security and efficiency and oversaw maintenance of the Trans Niger Pipeline (TNP), thus enhancing its efficiency and security.

Promoting Local Refining Capacity
In the midstream space, the minister has initiated a number of measures in the last one year to revamp and expand domestic refining capacity to reduce Nigeria’s dependence on imported petroleum products and enhance country’s energy security. Under his watch, the rehabilitation of the Port Harcourt Refinery was successfully completed and waiting for resumption of refining and production of petroleum  products.  Lokpobiri has been on a progressive supervision and monitoring of the Warri and Kaduna refineries’ rehabilitation works towards meeting scheduled deadlines.
The minister has also been supporting private refineries such as the Dangote, Waltersmith, Edo, Aradel, Opac and other local refineries through different policy interventions including the recent order for regular crude oil supply to them in naira.

Improving Downstream Sector
Moreso, the oil minister has in the past one year been churning out and implementing policies aimed at transforming the downstream sector. Specifically, he has implemented reforms and attracted investments to enhance the efficiency and transparency of the downstream sector, including petroleum product distribution and pricing mechanisms. Like the upstream sector, he has deployed his sound stakeholder management finesse in building strong partnerships and collaborations with industry stakeholders, regulatory bodies, international organisations, and other relevant entities to address challenges in the downstream sector.
Lokpobiri has established a sustainable petroleum supply and distribution chain, thus preventing scarcity of petroleum products, particularly petrol, notwithstanding pockets of shortages caused by unscrupulous elements in the supply and distribution chain.

Attracting  African Energy Bank to Nigeria
Quite remarkably, Lokpobiri successfully led Nigeria to finally obtain the hosting right for the multi-billion dollar Africa Energy Bank (AEV), a multilateral financial institution that is expected to spur greater economic growth in Nigeria and Africa through increased funding accessibility for oil and gas development projects.
Also, the minister established international partnerships between Nigeria and other countries and organisations. One of which led to the  signing of a Memorandum of Understanding (MoU) with the Kingdom of Saudi Arabia for collaboration in transforming the oil sector.
In all, Lokpobiri has surpassed the expectations of the industry stakeholders as the industry now flares better than he met it.

Key Action Points
However, analysts believe that despite all the remarkable achievements recorded by the minister, it is not yet time for celebration for the Nigerian oil sector, considering the country’s 37 billion barrels oil reserve and her production capacity which is put above  three million bpd.
Therefore, according to them,  the minister should redouble his efforts in seeing that the remaining divestment deals are concluded and that the environment is made more conducive for the local firms taking over the assets to operate optimally. He should also put in more effort to ensure that new final investment decisions (FIDs) on oil development projects are achieved in the shortest possible time.  
Lokpobiri should also ask questions as to why none of the over 50 marginal fields awarded between 2021 and 2022 is yet to hit first oil with a view to tackling the challenges facing them.
Furthermore, the minister should also be concerned that about 3,000 oil wells shut in since 2020 which have the potential to add over one  million bpd to Nigeria’s production are still not yet reactivated.
Lastly, the war against oil theft, pipeline vandalism, and smuggling of petroleum products to neighbouring countries need to be strengthened more for better results.