The Nigerian Oil and Gas (NOG) Conference and Exhibition is Africa’s leading energy event that attracts delegates from all over the world. This year, it provided a unique platform for big and respected players in the industry to deliberate on the right actions and directions to follow in achieving energy sustainability for all, as Yange Ikyaa narrates.
The Nigerian Liquefied Natural Gas Company (NLNG) was prominently represented at the 2022 Nigerian Oil and Gas (NOG) Conference and Exhibition in Abuja, where it openly expressed its plans to boost Nigeria’s gas production by looking at the supply side, the infrastructure, and also the commercial or economic framework needed to address the construction of gas pipelines through the ongoing NLNG Train 7 project.
This was disclosed by Phillip Mshelbila, who is the Chief Executive Officer, NLNG, during a panel session, themed “Harnessing the Opportunities in the Nigerian Gas Sector.”
Other stakeholders, including, Mr. Roger Brown, the Chief Executive Officer, Seplat Energy Plc, said issues faced by industry players include currency convertibility to enable the importation of equipment in dollars, having mainly a Naira revenue stream.
The NLNG Boss said there was a need for a collaborative and comprehensive solution to the issue, which was already captured in the “Decade of Gas Plan” of the Federal Government.
He stated that “what many people may not be aware of is that we actually have the plan captured in the decade of gas framework. It’s an excellent piece of work. It has looked at the demand side of natural gas in Nigeria, domestic and export, looked at the supply side, then looked at infrastructure, and then it has looked at the commercial or economic framework that is needed to address all of this. And it has outlined very specific things that need to be done to address it”. The plan includes the ongoing NLNG Train 7 project as well as the gas to power initiative that would drive industrial growth in the country.
Seplat boss, Mr Roger Brown, said “there’s a wall of money ready to come into this country, but they look at barriers to it and one of the biggest barriers is the currency. “So, currency convertibility you know, bringing equipment in dollars and then having a mainly Naira revenue stream.
“These things are fixable. We need to get those right there in any amount of big projects and really exciting projects. And what I like about the economics here in Nigeria is that they are unbelievably good.”
On boosting supply, he hinted that $700 million ANOH Gas Processing Company being constructed by Seplat and the NNPC at Asaa, Ohaji/Egbema, in Imo State was near completion.
He stated that when completed, it would provide gas to boost the much-needed supply of power to millions of homes and businesses across Nigeria to facilitate a better standard of living and drive economic growth.
Vandalism of crude oil and gas pipelines for product theft has been a major setback and a cause of energy shortage for Nigeria in recent decades. As a result of this, international oil companies (IOCs) operating in the country have repeatedly complained of their inability to produce more crude oil for export, also making it difficult to make prompt payments on its oil lifting contracts with business partners.
Recently, NNPC data showed that five international oil companies operating in Nigeria are to pay or remit an outstanding balance of about N400 billion in the month of July.
The data is on April 2022 domestic crude oil which is payable in July 2022 and it indicated that the companies would pay N399.91 billion this month for domestic crude oil sold by the firms in April 2022.
The five oil firms include Chevron Nigeria Limited, Mobil Producing Nigeria, Shell Petroleum Development Company, Total Exploration and Production Nigeria, as well as First Exploration and Production, which are joint venture partners of NNPC.
Data from NNPC indicated that N92.64 billion for 2.2 million barrels of crude oil would come from Chevron, while N201.49 billion for 4.75 million barrels of oil would be paid by Mobil.
On the concerns posed by oil theft, the Managing Director, Seplat Energy Plc, Roger Brown, who spoke at the just concluded 2022 Nigeria Oil and Gas conference in Abuja, said there was the need for more synergy between the public and the private sectors to address this issue.
Brown further explained that Nigeria has abundant resources of crude oil and gas, but that this could translate to value only if properly harnessed.
“It’s clear that on the oil side, the theft levels are just unsustainable. We have a crippling economy because of it and that has to be solved,” Brown maintained.
The GMD/CEO of NNPC, Malam Mele Kyari, assured during the opening ceremony of the 2022 edition of NOG that the days of complacency were over, following the repositioning of NNPC to focus on profitability and value addition to its shareholders.
Declaring the conference open, Kyari who was represented by NNPC Chief Financial Officer, Umar Ajiya, called on operators in the nation’s oil and gas industry to focus more on gas development. He said emphasis should be on gas-to-power, gas-to-industry and gas-for-export projects and activities.
Kyari further explained that with the reality of the global energy transition and Nigeria’s commitment to use gas as its transition fuel, value now lies in gas development. The Boss also said that the Petroleum Industry Act (PIA) has now provided ample incentives for investors in the gas sector, urging delegates and exhibitors to use the opportunity provided by the conference to network and brainstorm on solutions to the challenges brought about by the global energy transition and the Russian-Ukraine war, while finding better ways to maximize the potentials inherent in the nation’s abundant gas resources.
In his own remarks at the NOG 2022, the Group General Manager of National Petroleum Investment Management Services (NAPIMS), Bala Wunti, said that Nigeria would require between $750 billion and $800 billion investments to deliver between 3.5 million and 4 million barrels of crude oil per day, as well as in-country midstream conversion capability and requisite downstream infrastructure.
He told participants at the event that time has come for Nigeria to look inwards and develop its huge oil and gas potentials by structuring the industry to attract the much needed investments that would create wealth and prosperity for the country across the oil and gas value chain.
Wunti solicited for stronger partnership and collaboration among stakeholders in the oil and gas sector, particularly in the area of finance, project execution, and technology development to make this happen.
Giving a breakdown of the investments required, he said that Nigeria needs about $400 billion in the upstream and midstream segments of the value chain of the economy, while another $250 billion investment would be required in the downstream sector across the country in order to ensure energy access.
According to him, “what we have today is not oil but reserves, and it is only when you produce the reserves that you have oil and the gas that will translate to value. We need technology, funding, project, and operational expertise to convert this oil from reserves to use able hydrocarbon.
“We need $400 billion in upstream and midstream, we need another $250 billion for downstream and all together, we require between $750 billion and $800 billion of investments for us to be able to deliver about 3.5 million to 4 million barrels of oil and about 4 to 5 BCF per day of gas to the domestic market, while meeting our export aspiration. To be able to have that, we have positioned ourselves to convert about 50 per cent of that domestic gas to chemicals, and that requires capital.
“And so we need stronger collaboration between the asset operators, the investors, and the service providers, and all of you will soon be investors because NNPC has aspiration to go public very soon.
“Together with the service providers who are currently represented in this room today, we need that collaboration to create a homegrown solution in the form of technology and whatever combination we need to get.”
In what would eventually, dramatically and unexpectedly become his last ever attendance at the NOG, the eloquence with which Dr. Muhammad Sanusi Barkindo, now Late and Former OPEC Secretary General, delivered his speech made Abdulrazaq Isa, the Chairman of Waltersmith to call for another applause and standing ovation for him.
Barkindo arrived for the opening session accompanied by the Minister of State for Petroleum, Timipre Sylva; the Group Managing Director of NNPC, Mallam Mele Kyari, and the Board Chairman of NNPC, Margery Okadigbo, among other top dignitaries at the event.
While expressing his excitement for being back home to attend the event after the lockdown that was caused by the COVID-19 pandemic in 2020, he said “It is very refreshing, indeed a great pleasure to be back home and to join the NOG in person for the first time since the outset of the COVID-19 pandemic.
“Sharing this important platform with such a distinguished line-up of speakers, and seeing so many old friends, fellow comrades and familiar faces, is a special privilege.
“We owe a debt of gratitude to the organizers of NOG, Odiri Umusu of DMG, and the Nigerian National Petroleum Company NNPC Ltd, along with all those who have worked so hard to make the NOG Conference and Exhibition one of the premier events on Nigeria’s energy calendar.
“Allow me to pay tribute to the founders of NOG – Late Dr. Rilwanu Lukman and Dr. Allirio Parra, both of blessed memory and congratulate the organizers for keeping the legacy alive.”
Barkindo then proceeded to talk about the milestones that the Nigerian petroleum industry has achieved since the last one year.
He said: “One year ago this month, the Petroleum Industry Bill was adopted by both houses of the 9th National Assembly and signed into Law by President Muhammadu Buhari.
“This was a groundbreaking achievement, culminating many long years of hard work. I am confident that the implementation of the law will help unlock the full potential of our petroleum industry, strengthen its ability to attract long-term investment, as well as support a dynamic and diverse economy.”
The OPEC Boss also intimated the gathering about the funding challenges facing the industry and how much would be required to bridge the investment gap by 2045.
He said that a cumulative investment of $11.8 trillion would be needed between now and 2045 by Nigeria and other oil and gas producing countries to meet the growing energy demand worldwide. Furthermore, Barkindo said OPEC projections place total primary energy demand growth at a robust 28 per cent in the period to 2045.
He reiterated that oil is expected to retain the largest share of the energy mix, accounting for 28 per cent share in 2045, followed by gas at around 24 per cent.
According to him, “the implication of this is that oil and gas together will continue to supply more than half of the world’s energy needs for many decades.”