By Gideon Osaka
Stakeholders of the oil & gas and the maritime sectors recently gathered at the behest of Valuechain Magazine for the 4th Annual Lecture & Awards where they affirmed that the benefits of strengthening the synergy among players in the sectors are enormous and important, given the various emerging challenges facing the sectors. The event, which had as its theme ‘Enhancing Effective Synergy Between Oil & Gas and Maritime Sectors for a Greater Value Creation’, was held on Monday, July 12, 2021 in Abuja, and organised by Valuechain Magazine – a news publication that has gained prominence as a source of reliable industry news and incisive analysis of contemporary energy issues in the oil and gas space, and beyond.
The lecture and awards brought together eminent practitioners in the oil and gas industry, the maritime sector, as well as other stakeholders in the larger Nigerian economy. The Special Guest of Honour for the event, His Excellency, the Vice President, Federal Republic of Nigeria, Prof. Yemi Osinbajo (SAN, GCON), was represented by the Minister of State, Petroleum Resources, Chief Timipre Sylva.
The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Dr. Mohammad Barkindo; Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Mele Kolo Kyari (represented); and the Director General, Nigerian Maritime Administration & Safety Agency (NIMASA), Dr. Bashir Y. Jamoh, were among top industry leaders that graced the occasion.
The landmark event, according to participants, came at a most auspicious time when the government, under the leadership of President Muhammadu Buhari, has shown commitment to fortifying the Nigerian economy by enhancing functional linkages, and entrenching synergy amongst the critical sectors of the economy. The basis for this synergistic relationship, according to the players, has been laid down in policy documents and plans, including the Economic Recovery and Growth Plans (ERGP) and Nigeria Economic Sustainability Plan (NESP), in addition to the resolution of the Federal Executive Council (FEC) on the Oil and Gas Policy amongst others.
The Annual Lecture & Awards is a demonstration of the growing impact and the vital contributions of the Magazine to foster effective synergy for value creation.
The audience, made up of seasoned professionals in the oil & gas industry and maritime sector, were of the unanimous disposition that the Nigerian oil and gas sector is a value creator for the national economy, just like the maritime sector as much of what is used every day either has been or will be transported by sea, in the form of raw materials, components or finished articles.
Vice President Yemi Osinbajo, in his keynote address, urged all the stakeholders present at the event to come up with a common ground that will lead to growth in the oil and gas and maritime industry.
For his part, Kyari, who noted that the oil and gas sector was bleeding from all types of vices, stated that it was only through collaboration with the maritime sector that those vices can be effectively tackled. According to Kyari, who was represented by the Chief Operating Officer, NNPC, Engr. Yusuf Usman, there was a need to latch onto inter-industry synergy, and take advantage of it.
“We have a great country, but what is missing is synergy. We should look inward and strengthen the synergy between both sectors,” he added.
Kyari also noted that while freight for oil shipment stands at about $5 billion, increased activities in the oil and gas sector, especially in the terms of oil production could push the revenue to $8 billion.
“There is the need to look inwards and build capacity locally and strengthen the synergy between maritime as well as oil and gas sector,” Kyari, who said the maritime sector has the potential to contribute 10 per cent to the nation’s GDP (gross domestic product).
“With oil production carried out offshore, and over 70 per cent total production transported by ships, this industry generates $5 billion freight cost annually and has potential to increase to $8 billion,” he said.
In his welcome address, the Publisher and Editor-In-Chief, Valuechain oil and gas magazine, Musa Bashir Usman, noted that the maritime sector had always been of strategic importance to the oil and gas industry since Nigeria began exporting crude oil.
“Therefore, the benefits of strengthening the synergy among operators in the maritime and oil and gas sectors are enormous, and this is important, given the emergence of COVID-19, which has hit the global economy hard, with many aspects of the pandemic affecting all the sectors put together. Other emerging challenges facing the maritime and oil and gas industries underscore the need for greater multisectoral collaboration,” he said.
While delivering the lead paper, the Director of the Department of Petroleum Resources (DPR), Engr. Sarki Auwalu, noted that the two sectors’ activities are central to the national and global economy, and their strengths can be pulled together for even more opportunities.
“For hundreds of years, the maritime and the oil and gas (industries have) enjoyed Siamese-twin type relationship creating and sharing value together. As an example, the maritime industry is responsible for hauling oil and gas all around the world while oil and gas has fueled the maritime industry. Imagine about 700 million barrels of crude cargoes and 22 million tons of LNG are transported by over a thousand ocean going vessels from Nigeria to destinations across the globe annually!
“To put this into context, in 2019, the year before the global COVID-19 pandemic, according to the Nigerian Bureau of Statistics (NBS), the value of total foreign trade recorded for Nigeria stood at N36.1 trillion. This was a 14 per cent increase over 2018, and the maritime industry was responsible for the transportation and facilitation of 90 per cent of these trades. Meanwhile, of these trades, Petroleum and Petroleum Products account for about 76 per cent of the export,” he said.
Despite these huge contributions of both industries to national and global economies, there are constraints, and the need for optimisation is more imperative now than ever. Fuel prices and availability are major cost-drivers in the maritime transportation, accounting for as much as 60 per cent of a ship’s operating costs. Thus, steady rise in oil prices, just as what is being experienced now, will, invariably, result in increased freight cost for petroleum and other cargoes, and have the potential to significantly undermine the trade.
In recognition of the above global phenomenon, Auwalu said the DPR, as part of its contributions to overcoming some of these challenges for the sectors, is driving availability and, to some extent, the affordability of fuels, through the government’s refinery revolution and private sector-led initiative.
In addition to the ongoing Dangote integrated refinery complex, a number of modular refineries have been commissioned, or are still under development to shore up product availability in-country, including marine fuels. The increased capacity of 750,000 refining capacity in the short-to medium term is a significant step to guarantee affordable fuels to ships/marine vessels that come to the Gulf of Guinea for trade.
Significantly, the DPR, he added, has enhanced the Marine Petroleum Products Retail Operations (MAPPRO), popularly known as ‘bunkering’. This measure is to ensure that Nigeria becomes the principal MAPPRO hub in the region.
With respect to security and surveillance, the oil and gas and maritime industries have a lot in common to share. Of the 31 crude oil and gas terminals, 26 are offshore in the form of Floating Production Storage and Offloading (FPSO) and Floating Storage and Offloading (FSO) vessels. Accordingly, offshore production and exports and the associated maritime operations, remains at the centre of the Nigeria oil and gas industry.
To this end, the oil and gas industry has a lot to offer the maritime industry in terms of design and maintenance of offshore installations/facilities, as well as safety and emergency response, together with innovations in digitisation and remote surveillance/monitoring capabilities.
The DPR boss said the recently commissioned Nigeria Oil and Gas Excellence Centre (NOGEC) by President Muhammadu Buhari provides Search Rescue and Surveillance Coordination Centre for Oil and Gas Industry which the maritime industry can leverage.
The maritime sector can also leverage on data which DPR shares with relevant agencies of government to ensure maritime safety and economic wellbeing. Hence, whether in small or big ways, the DPR, according to Auwalu, continues to create a difference in forging effective synergy between the oil and gas and the maritime sectors.
Not only do the maritime and oil and gas industries share collaborations, they also face similar risks and threats in the foreseeable future, including geopolitical tension, cyber-attacks, crude oil price, decarbonisation, climate-change adaptation, global economic crisis, piracy/theft. However, with effective synergy and collaboration, both industries can surmount these challenges and turn them to opportunities for common good and the health of the national economy.
Speaking on maritime security, the Director General of the Nigeria Maritime Administration and Safety (NIMASA), Dr. Bashir Jamoh, revealed how useful the assets under the Deep Blue Project had been to the agency.
“From the directive of Mr. President, we had to deploy those assets. Immediately we deployed those assets, you could see down thread, all data – you can see January 21, we had only one attack – dropped from 10 in December 21. February 0. March 1. April 1. May 2,” he said while pointing at a chart in his presentation.
Jamoh also spoke of the importance of synergy between agencies.
“Well, this event is the kind of event that, from time to time, the industry needs to have, in the sense that, from time to time, you know, the responsibilities of the different sectors (are) inter-webbed. And by so doing, with that collaboration, or coordination, or cooperation, and effective communication, we will all be able to achieve what we want to achieve. For so many decades now, we have been having issues between the different sectors in terms of maximising our own gains into the economy.
“So, the sectors must come together, and look at where they connect. By so doing, they would be able to see how we can coordinate ourselves, and make sure that we maximise the gains that each sector is supposed to get. By so doing, I think we should do a lot for the economy. Now, basically, there are a lot we can discuss in terms of business as it relates to oil and gas. So, today’s discuss is concentrated only on the issue of maritime security. So, what and what do we have to put in place?” he stated.
OPEC Secretary General, Mohammad Sanusi Barkindo, who re-echoed how cooperation, commitment and hard work have helped to overcome some of the unparalleled upheavals in the oil market, added that the theme of the lecture and award, ‘Enhancing Effective Synergy between Oil & Gas and Maritime Sectors for Greater Value Creation’, also underscored the importance of working together, building bridges between various sectors, and implementing reforms to bring about positive changes and create value.
The OPEC scribe, in his goodwill message, said the 4th Valuechain Annual Lecture & Awards was an extremely timely event, not only due to the positive changes evolving in Nigeria’s oil and gas sector, but also, given that the day – July 12, 2021 – was the 50th Anniversary of Nigeria joining OPEC. According to him, the day was a seminal moment for the country and for OPEC.
“It has at times been a rollercoaster journey, with various market cycles being navigated through, and unexpected events, such as macroeconomic uncertainty, natural catastrophes, geopolitics, technological innovations, and especially in 2020/21, global health pandemics, threatening to throw the world of oil and OPEC off course. Through cooperation, commitment and hard work we have overcome these unparalleled upheavals, and many giants of Nigerian public service have played a vital role in this,” he said.
He said the Petroleum Industry Bill (PIB), a long-awaited legislation for the oil and gas sector, that was just passed by both chambers of the Parliament, was a further example of the need to advance working relationships – both at home and internationally, strengthen institutions, initiate new regulatory and fiscal frameworks and help attract much needed investment, that will lead to greater value creation for the country and its citizens.
According to him, the government of President Buhari has made history by breaking the jinx to the applause of the world of energy.