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[email protected]: Oil, gas sector tottering amidst untapped potential

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images 6 Nigeria@60: Oil, gas sector tottering amidst untapped potential

64 years after oil was first discovered in Oloibiri, present day Bayelsa State, Nigeria’s oil and gas sector still ranks far behind countries such as Ghana, Angola, among other that discovered oil several years after Nigeria did.

Statistics from Organization of Petroleum Exporting Countries (OPEC) revealed Africa biggest oil-producing country’s oil sector contributes the lowest to its Gross Domestic Product (GDP) among other members of the Organization of Petroleum Exporting Countries (OPEC).

In Angola, Africa’s second-largest oil producer, oil production and its supporting activities contribute about 50 per cent of the nation’s GDP and around 89 per cent of exports. Oil and gas sector accounts for about 60 per cent of Libya’s GDP and about 40 percent of Kuwait’s GDP.

In Saudi Arabia, the cartel’s largest producer, the oil and gas sector accounts for 50 per cent of the GDP and about 70 per cent of export earnings while Libya’s oil and gas sector accounts for about 20 per cent of GDP.

About 30 per cent of the United Arab Emirates’ GDP is directly based on oil and gas output, while Venezuela’s oil and gas sector is around 25 per cent of the GDP.

Nigeria, Africa’s top oil producer, derives 95 per cent of export earnings and 70 per cent of government revenue from the oil sector, which saw its contribution to the real GDP growing by 5.15 per cent quarter on quarter against -1.46 per cent in Q1 2019. This is the first and biggest growth recorded since Q1 2018 were the sector recorded a GDP growth of 14.02 per cent.

While other countries are reaping the benefit of these natural resources, through improved living standard, infrastructure and low unemployment rate, same cannot be said of Nigeria in 60 years as dilapidated infrastructure smears the country in the face.

More worrisome is the inability of the country to attain increased oil production figure which stood at 2.7 million barrels in first quarter of 2020, despite having abundant oil reserves in excess of 35 billion barrels.

Some of these challenges confronting the sector could be attributed to a lack of fiscal and regulatory terms needed to move the sector forward, chief among which is the inability of the country to pass the much anticipated Petroleum Industry Bill (PIB) to law in about 20 years.

Mineral/energy resource person and former President of the Nigerian Association for Energy Economics (NAEE) Prof, Wunmi Iledare, said the coming of oil just few years before independence brought some winners curse, which the war exasperated.

‘‘We came out with no winners and no vanquished and to a large extent, oil production offered the opportunity to heal quickly. And in all honesty we had a great growth as a nation from 1970-1976 before the February 13 Coup.

The oil boom with military hanging on to power beyond 1975 created what one would call the beginning of the collapsed of the value system in Nigeria and the first opportunity to change it failed in 1979 when Nigeria opted for prosperity with no due consideration for posterity which effective petroleum revenue management demands.’’

The second missed opportunity according to him was in 1983, which led to series of military coups that still plague Nigeria today even after the handover of power to civilians.

‘‘Interestingly and glaringly so is the selection process of who participates in the goverment. The selection of the presidential system of government with a rent seeking and sharing driven constitution makes governance intractable over the years because of black gold.’’

He argued that the opportunity to reform the oil industry in order to add value disappeared into thin air years after years from 2000-2020, adding that the only bright spot is the Local Content effort. He worried that Nigeria since 1960 has not been able to optimise petroleum value chain for sustainable development.

The don posited that the country paid too much attention to upstream revenue and missed disappointedly the value creation midstream and downstream.

‘‘The reason is simple, revenue from upstream was so tempting that value creation lost the battle to revenue creation and industry and the society suffers with significant welfare loss since 2010 date. Nigeria then first the fear of social unrest began to treat petroleum products as public good in error and spent nearly a trillion Naira per year to subsidize PMS consumption at the expense of health, education and infrastructure.

I can keep going but what is the way forward. Industry reform, industry reform, and industry reform. The opportunity was missed in 2008 with the first reform bill, in 2012 with the 2nd reform bill and in 2018, regrettably with the 4th petroleum reform bills. The expected 2020 bill offers the 5th opportunity to reform the oil and gas industry and this opportunity must not slip away.’’

He added that the industry is plagued with amorphous governance regulatory and commercial institutions and the failure of the industry is apparent to closed eyes.

‘‘I hate to say it, oil money glued Nigeria together and the mismanagement of it has created disequilibrium in the system and the Nigeria project because of loss opportunities over and over again. But, there is a way out and it begins with an effective, efficient, equitable and ethical governance of oil and gas industry with PIB 2020. I hope I am wrong, but without a quick reform in the oil and gas in Nigeria, venezuela moves to become a wolf at the door. God forbid’’

Also commenting, partner, Bloomfield Law Practice, Dr. Ayodele Oni, said Nigerian oil and gas industry has been fraught with allegations of corruption, mismanagement and general government maladministration in the oversight of the sector.

The result according to him is an undeveloped sector with more potential than actual output.

He disclosed that the major missed opportunity is that 60 years later, Nigeria has failed to take its place as a primary global oil and gas player.

This, he said is mostly attributable to a difficult investment terrain which is antithetical to injection of fresh capital required to scale up reserves and production.

A worried Oni lamented that awards of licenses and approvals for project development are characterized by exchange of dollars and nepotism.

‘‘There has also been the failure in our ability to add value by refining our crude such that we have only relied on the base crude and not its refined and useful end-products. In addition, the NNPC which had, at the onset, the capacity to become a mammoth state owned profitable entity currently pales in comparison with the Saudi Aramcos and CNPCs of this world. Armed with the sweet crude produced from our fields, we had the opportunity to be the toast of the whole world, unfortunately this is currently a pipe dream as all we continue to see, rather than measurable progress, is different types of policies, programmes and initiatives without actual impact.

We can still recover. The world is gravitating towards cleaner energy, of which gas is a component. Pursuant to the abundance of Nigeria’s gas reserves, we are often described as a gas rich province with some oil. We can take advantage of the current gas enthusiasm to position ourselves as a market leader. Rather than lip service, we should stimulate the current gas processing framework sufficiently enough that investors flock in with development and we are in no time characterized as the Russia of Africa. We need more NLNGs; CNG and LPG penetration and this should become a core policy focus.’’

National President, Petroleum Products Retail Outlets Owners Association of Nigeria, Dr. Billy Gillis-Harry, said oil exploration activities in Nigeria has not really translated to economic gains, infrastructure development, human capacity and futuristic development for the country can be said to be a real shame.

He said the country needs to wake up to realize that the earlier and faster we start dealing with these shortcomings, the better it is for us as country.

He said countries which included Angola that started oil exploration way back after Nigeria are already reaping the economic benefits and making lives more comfortable for their citizens as against what obtains in Nigeria.

Society of Petroleum Engineers (SPE), Mr. Joe Nwakwue, said he believes the country got it wrong from day one, adding that country got into the industry without a clear view on how to manage the proceeds and allowed the windfall from oil to crowd out all other national productive opportunities when the country should have deployed the windfall to develop world class infrastructure that would have enabled other sectors of the economy and hence national productivity and development, saying Norway is a good example of what we should have done.

‘‘No, we cannot quite recover lost opportunities as the landscape is ever changing and the imperatives significantly different but we can indeed still use the industry as a linchpin to re-industrialize the country…”

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COVID-19: Sterling Bank pledges N10bn to revamp domestic tourism

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download 4 COVID-19: Sterling Bank pledges N10bn to revamp domestic tourism

Sterling Bank Plc, has pledged a N10 billion facility for the purpose of revamping domestic tourism in the country post COVID-19.

Chief Executive Officer (CEO) of the Bank, Mr. Abubakar Suleiman, made the commitment while addressing participants at a tourism webinar organised by the Nigerian Tourism Development Corporation (NTDC) with the theme: Nigerian Domestic Tourism: Re-Imagined.

Suleiman who spoke on the topic: “Investment for the Tourism Sector to Enhance Domestic Tourism,” noted that, “Sterling Bank has funding capacity and is ready to inject N10 billion into domestic tourism” if the right stakeholders are available in the industry.

He enjoined stakeholders in the industry to collaborate rather than compete, saying stakeholders need to come together to offer worthwhile experience in different aspects of the industry.

Suleiman encouraged operators in the domestic tourism industry to sit down with their bankers to build the experience together, adding that the sector is a billion dollar business. He stressed the need to have extensive discussion with stakeholders in the tourism sector in order to scale up. He advised the stakeholders to stop approaching the government as individuals but as a team so they can push for policy initiatives that would be beneficial to the industry.

Minister of Information and Culture, Alhaji Lai Mohammed, who declared the virtual meeting open, noted that tourism assets and other social imprints in the country are huge just as tourism remains the largest employer of labour.

The Minister who was represented by the Permanent Secretary, Mrs. Isu Gekpe, said the restriction of the tourism sector in the wake of the COVID-19 pandemic has affected the most vulnerable groups in the industry.

She observed that the promotion of tourism is the first step to re-starting the economy post COVID-19 and encouraged stakeholders to promote existing tourism assets in the country while a robust legal framework is being worked out.

Also speaking, Director-General of NTDC, Mr. Folorunsho Coker, expressed the hope that the commission would be able to exploit opportunities in the hospitality industry through packages, affordability of flight and access to tourism destinations. Coker said there was a need to have a solid foundation for domestic tourism which international tourism could lean on in the future.

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Naira slides to 460/$ at parallel market

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images 48 3 Naira slides to 460/$ at parallel market

The naira fell slightly at the parallel market on Monday , as it exchanged to the dollar for N 460 / $ as of the close of work .
The naira had exchanged to the dollar on Friday for 458 / $ .
This is as the country ’s external reserves continued to maintain its downward trend.
Figures obtained from the Central Bank of Nigeria revealed that the country ’ s external reserves which stood at $35 . 75 bn as of October 02 had lost $ 78 . 34 m to close at $ 35 . 67 bn as of October 16 .
The CBN had stated in its report on ‘ Monetary, credit , foreign trade and exchange policy guidelines for fiscal years 2020 / 2021 ’ that external reserves were expected to lie between $ 29 . 9 bn and $ 34 .3 bn by 2020 ending .
It said, “ Sequel to the COVID -19 pandemic, the viability of the external sector in 2020 is expected to deteriorate , given the present worsening current account balance and depletion of external reserves driven, largely , by decelerating export receipts, particularly oil .
“ Specifically , the degree of external reserves accumulation is expected to decelerate , as outflows are expected to outweigh inflows .
“ As a result , external reserves are expected to lie between $ 29 .9 bn and $ 34 .3 bn at end -December 2020 ( predicated on current declining oil price between $ 20 and $ 40 ) . ”

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External reserves drop to $35.67bn

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images 42 3 External reserves drop to $35.67bn

Nigeria’s external reserves, last week, fell for the fourth consecutive week to $35.67 billion even as the naira depreciated to N462 per dollar in the parallel market.

Data from the Central Bank of Nigeria (CBN) show that the reserves fell to $$35.672 billion on Thursday last week from $35.725 billion the previous week. This translated to week-on-week (w/w) decline of $53 million dollars, more than 100 percent increase from the $23 million w/w decline recorded in the previous week.

According to the CBN data, the reserves have been on the downward trend for four weeks since September 17th. It fell by $139 million to $35.672 billion last week Thursday from $35.811 billion.

Prior to the four weeks decline, the reserves rose steadily for two weeks, by $145 million to $35.811 billion on September 17th from $35.666 billion on September 2nd.

Investigations reveal that the sustained decline, especially at a time of relatively stable crude oil prices, might not be unconnected to the CBN’s dollar injection in the foreign exchange market in a bid to keep the exchange rate stable.

However, in spite of the intervention, the naira depreciated by N5 in the parallel market last week, though it remained stable at the Investors and Exporters (I&E) window.

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