Barkindo commits to enhancing OPEC+ DoC
…Says OPEC/non-OPEC relationship to be captured in charter
Dr. Mohammed Sanusi Barkindo is the Secretary-General of the Organization of the Petroleum Exporting Countries, OPEC, appointed to superintend the group’s affairs at the break of the deepest oil price downturn cycle in history. Following his appointment in 2016, he has initiated unprecedented measures aimed at restoring confidence in the global oil markets while also getting both OPEC and non-OPEC oil producers to collaborate under the aegis of the Declaration of Cooperation, DOC. In this interview with the SweetcrudeReports, at the OPEC headquarters in Vienna, Austria, Barkindo speaks on a wide range of issues, including but not limited to oil pricing, the need for oil producing nations to continue to collaborate towards stabilising the market, the relationship between OPEC and US shale producers, and his expectations for Nigeria’s unending oil reform programme.
Excerpts:
You emerged OPEC Secretary-General to meet an industry in crisis. What was your immediate impression of the international oil market on assumption of office, especially as it concerns prices?
The oil market and the industry was in despair facing a devastating impact of the price plunge by 80% within a short span of time that stayed with us very long. The depth and length of the cycle and the crisis were unprecedented with severe consequences on tumbling revenues of producing countries and shrinking investments in the oil industry.
To put them in the right context, the oil prices dropped by nearly $90 per barrel to low of $20’s in early 2016; the loss of the OPEC member countries in terms of foregone revenues was as much as $1 trillion; and the global upstream investments were in the negative two consecutive years in 2015 and 2016.
The oil market was facing an acute imbalance reflected in a mountain of stock overhang that reached more than 400 million barrels and called for an urgent attention to address this disparaging trend and restore stability in the market again.
Can you speak to the low and high points in the making of the OPEC Declaration of Cooperation? There must have been times when you felt that this wasn’t going well and there must have been times when you felt this is going well and there is hope?
This is a very important question and it has sent my mind sprinting down memory lane. I recall before I was elected here, Emmanuel Ibe Kachikwu, the Minister of Petroleum of Nigeria invited me to join him in Doha, Qatar in April. He told me since you are now an official candidate of ours, I know you don’t need to campaign much but there is no harm in you joining me in Doha where there was a meeting convened by the Qataris in conjunction with other producers of the OPEC and non-OPEC group in order to forge a common front on how to address the alarming market conditions of the time.
So I went to Doha and, if I recall correctly, they were able to bring together up to 20 countries both from OPEC and non-OPEC and there was a meeting to agree on a common position. Before we went to bed at night, there was a common consensus by all the parties involved, everybody was happy.
In the morning, I came out and went for breakfast and met some delegates and they told me the deal was off. I said ‘oh my God!’ What happened was that in the middle of the night, the Saudis met some difficulties going ahead with the details of the deal. At that time, I was not yet in OPEC, I was just a part of Kachikwu’s delegation but it was one of the concrete efforts taken by Qatar together with OPEC and non-OPEC to convene this meeting in order to create a consensus.
I came here in June and the conference elected me that same month. At that time there was no agreement and I remember the ministers telling me ‘Mohammed, congratulation. At least we have elected you and even if we don’t have an agreement but now that you are on board, we are confident that now we would be able to get something’. By June I think the market was in a spiral, volatility was very high, confidence was gradually evaporating on the ability of the organisation to get its act together.
This was in 2016?
Yes, in June 2016. We had significant challenges to even get our act together as a group before taking a common position, not to talk of reaching out to those outside OPEC to come and join us. I told them I needed time to officially assume duty and we agreed that I would come back here in August. By the time I came back here on August 5, the situation in the market had deteriorated even further and as in the past the news media was awash with stories about the end of OPEC, its burial, its funeral, its lost glory, and some of my friends were even concerned whether I took the right job.
So, we started the journey on the 1st of August, and I spent the whole month here I remember trying to get briefs from all colleagues, all departments and working the phones, to inform all our member countries and partners that I am in town. And I decided it was not possible at that point in time to stay here and get things done. I needed to go round to meet with the highest authorities possible because it was a combination of a deep oil cycle that had seen prices collapse by over 80 percent in the midst of geopolitical tensions even among our member countries, breaking diplomatic relations. To even get them round a table was a big challenge. I had to therefore go higher.
My first port of call was to Saudi Arabia where I went to see the king and he congratulated me and asked me ‘what are your plans? We are concerned with market conditions and the situation with OPEC but we are glad you are on board.’ I said to him first of all we need to restore confidence and to restore confidence we need to go the extra mile to bring back our member countries round the table to insulate them from what is happening so that as technocrats we would be able to brainstorm and hopefully take decisions but at the moment this is difficult unless if you make it easier. He asked how? I told him, first of all I need your prayers and secondly, I need your permission on this approach to visit all your fellow Heads of States and Governments with your blessing that we need to get all of us to come back to the table, jointly take decisions and reach out to the non-OPEC, especially the leading ones to be able to persuade them to come and join us, and he said ‘yes it sounds like a good idea, where do you want to go?’ and I said I want to go to Iran.
Don’t forget they had broken diplomatic relations with Iran in a very nasty way but I knew it was impossible to get them together with Iran without the blessing of the King and the President, the leadership there and in Iran. We thank God he was very understanding, he agreed, immediately, he said ‘yes, you should go, it is very, very important, I don’t have any problem with it, we want OPEC to continue, they are a founding member and we are a founding member of OPEC. We are the leading producers in OPEC and you should visit all the others. If you need any assistance reaching them I’ll help you’. That’s how I went around, I went to Tehran and I met President (Hassan) Rouhani and I laid out the issues and I became an envoy, I conveyed the King’s greetings and best wishes to him. He was very happy and they also laid out their problems.
The geopolitics of the time overwhelmed the fundamentals of OPEC and severely impacted on our ability to function effectively. That was the biggest obstacle, but, getting the King and President Rouhani together to agree on the approach to support it, I think was a major breakthrough. And I went back (to Nigeria) to see President (Muhammadu) Buhari and explained to him the situation and he kindly agreed also to write to all the presidents which I then carried to the Presidents. We leveraged on his tremendous goodwill that he has internationally especially among his fellow Heads of State. This journey took me across all these capitals.
Every capital I visited, they had their own issues, not necessarily with OPEC but with fellow member countries which affects us and we agreed to meet informally. After I had gone round and I sensed that there was growing appetite to come back to the negotiating table, we agreed, that is, some of the member countries. Algeria that was hosting the International Energy Conference (IEF), which is held normally every two years, it is at ministerial level for producers and consumers. I think all our member countries are members of the IEF, which means that all our ministers would be in Algiers and we agreed that we should use the opportunity of the IEF meeting in Algiers to carry out consultations and also give me the opportunity to report back to them my missions around the countries I visited.
We talked to the Algerians and we agreed, during the IEF they gave us a room, but, before then the news had leaked that OPEC was going to meet in Algiers during the IEF and the media became awash with all sort of local stories, including the local media in Algeria, and the minister there, Nurudeen Boutafa was very new. I had first met him in early September in Paris, we had been talking on the phone, he was just appointed and I had just resumed duties here.
I remember that myself, the Saudi minister and the IEA (International Energy Agency) representative, I remember we were traveling to Paris and when we met I remember he was complaining that ‘I am new to this game and one of the first briefs I got when I arrived was that we are hosting the IEF’. For me it was an opportunity to achieve two things – one for me to meet them in a group and to report to them my meetings around their capitals and my thoughts on how to go forward. Secondly I was armed here with our reports, including our projections going forward based on different scenarios, including ‘the do nothing’ scenario. It was going to be really catastrophic, so I thought we should use this opportunity to lay it bare. This is the choice, it is up to you as member countries – it is either we do something or we are heading to the gutter.
The numbers were very clear. So we went into this meeting and it turned out to be the longest ever meeting that has ever been conducted in the history of OPEC. We were in this room for seven long hours at a stretch, when I came back we checked with our secretariat and they confirmed it was the longest OPEC meeting ever and it was because the message sank. By the time I went through my reports with my charts and graphs and then reported to them what their heads of states told me and so on, the message really sank. We had to take a decision; we had about 500 media men and women waiting outside. Our meeting was supposed to be consultations but it turned out that the entire media who came to cover the IEF all migrated to our consultations and they had to even upgrade the level of security for us.
Our member ministers now agreed after ever body had talked that we had to do something but how should we do it and what should we do? I was straight forward; I said this is a consultative meeting and it is informal and you cannot take a decision here but if you agree that we should take a decision here, which is the right thing to do, all we need to do is to convert this meeting to a formal meeting and it becomes a formal extra-ordinary conference if somebody moves a motion and with that we can now agree to take a decision. That’s the only way it can become a decision making conference. So, they agreed and at that point everybody became anxious for us to take a decision.
Nobody wanted ‘the do nothing scenario’ because we painted it very well with charts, graphs and numbers, and the crux of the decision was to cap our production, if I recall, within a range of 32.5 million to 33 million barrels per day. We agreed on that range because of the conditions of some of our member countries which we also captured in our presentation. Iran was under sanctions and they were just coming out of that; Libya’s production had collapsed; Nigeria’s production had shrunk because of the Niger Delta issues at that time. It was around one million barrels per day. So we decided to agree on a range to cap it. We had to form a committee, work out individual member country’s production limit and we also agreed to exempt these three countries, Nigeria, Libya and Iran because of the reality. These were also part of the scenarios that we took to them which they agreed to but this is after they all exchanged their fireworks.
This was a turning point, it was a turning point and between Algiers on the 28 of September to the 30 of November when the conference convened here in Vienna we had to work out each individual production limit in the committee that we had set up. And, I also decided that that was the best time to reach out to the non OPEC group because at least we had an agreement in our hands so we had demonstrated our cohesion as a group which we didn’t have, we had begun to restore confidence, despite the political issues between the member countries at least we had demonstrated we could still come back together to discuss and take a decision. So, those non-OPEC who were telling me on the phone and in many other places that we met to first get our house in order, saying we cannot talk with you, what are we going to discuss with you, we do not know what you want, we want to do something but we do not know what you want. So, you get your house in order, you come back and then we can discuss. So, within that period I think I visited almost all the non-OPEC countries and they agreed to come.
We met here on November 30 as OPEC group reducing the ceiling to individual country production limits and we invited the non-OPEC. They came here on the 10th of December for 10-days in between when we signed the historic Declaration of Cooperation. This I can say was the highest point, it was unprecedented, very historic, it was the first time in the history of the oil industry for OPEC and non OPEC, 24 in number, seating down here, jointly taking a decision and deciding innervatively to establish a mechanism of making that decision including establishing the first ever joint ministerial monitoring committee of OPEC and non OPEC co chaired by Russia for the non OPEC and Kuwait at that time for the OPEC side. It was unprecedented and the market shocked because in the first place, all through that journey the skeptics were not convinced that we could do it because of the history.
They said even if we took that decision it would be impossible to implement. How are they going to verify, how are they going to monitor? It’s not possible, but Algiers was a turning point and the conference here on the 10th of December was historic and we saw the implementation from January 2017 to date as phenomenal. It beats the imagination that these countries could stick together through these trials, jointly implementing and amending the supply adjustments a couple of times in the course of implementing this novelty. It is still a work in progress because the oil market as you know has always been cyclical, volatility has always been part of the market and the OPEC strategy itself, its principles are very clear on the objectives of maintaining oil market stability on a sustainable basis. We remain on course and I believe we had turned a historic page in December 2016 and from January 2017 to date we have developed this relationship with the non-OPEC group and in the course of the implementation of our joint decisions I believe we have started writing a very glorious chapter in the history of the oil industry.
Where do you want to take the relationship? The Declaration of Cooperation was indeed a turning point for the market because it has forced stability which is sustainable. Now, how do you intend to sustain the cooperation between the OPEC and non-OPEC? I am aware that there’s been talk about a Charter of Cooperation, what will that accomplish in the long run if you are able to get that off the ground?
In taking the decision of the Declaration of Cooperation on the 10th of December 2016 there were two pillars to the Declaration – one was the supply adjustment, of adjusting supplies of a combined output of 1.8 million barrels per day, 1.2 million barrels per day by the OPEC group, 600,000 barrels per day by the non-OPEC, and the establishment of the joint ministerial committee to monitor, verify the numbers. Also, the Declaration sought to institutionalise this partnership between the OPEC and non-OPEC groups. Cognizant of the time it took us to bring these groups together – the meetings, the challenges, the obstacles, having reached that point, a historic point, it was a unanimous decision that we needed to cement the relationship. It should not be an ad hoc one, it should be continuous. Why, because our objective was to restore market stability on a sustainable basis. To ensure the sustainability you needed these groups to continue to function effectively and efficiently, it should not be on an ad hoc basis – only when you are in a cycle, then you begin to run around to look for producers.
We have been relatively successful in the sense that we have over this time maintained the cohesion not only within the OPEC group but with the non-OPEC group. The mechanism and the organ of the implementation of the Declaration of Cooperation have all functioned very well and the 10 non-OPEC members have literarily become part of the OPEC system. For example, at the ministerial level we now hold our conferences back-to-back. We have our ministerial conferences and it is immediately followed by the OPEC/non-OPEC ministerial meetings. At the technical level we have the meetings of the Economic Commission Board of OPEC back-to-back with the OPEC/non OPEC Committee meeting. On the issues of the environment and sustainable development, we also do the same. The secretariat here hitherto served 14 OPEC member countries; today, we serve 24 of these countries. There is a complete turn-around; a complete change; including in the perception of OPEC outside.
We have embarked on a reach out campaign poised on the transparency that we are promoting in the conduct of our work, in our data, the all inclusiveness of our decisions; the Declaration of Cooperation has now established OPEC firmly on the international energy scene as a responsible, responsive, open and transparent organisation. All our data for example which is the raw material of our work from 1960 to date are all accessible on your Iphone on an app free of charge. Accessible to all, our monthly Oil Market Report, our World Oil Outlook, our annual statistical Bulletin, these are the key raw materials of our work, they are all uploaded and accessible to all and sundry, hence, the advocacy that we are no longer a cartel and we should not be referred to as one. We are an open, transparent organisation serving the interest of producers both within OPEC and outside OPEC, and taking decision in the interest of both producers and consumers of oil.
Will this relation between OPEC and non-OPEC be captured in a charter anytime soon?
We have been discussing since the Declaration of Cooperation on how to cement this relationship for the long term. Various meetings have been held and several more will be held. Today, we just concluded one of the meetings of the OPEC and I am going to meet with the non-OPEC group. The consensus is we want to keep this group and any producer who may wish to join. We want to design the architecture that would not only solidify the relationship but to sustain it for the foreseeable future. I have been quoted a few times on this issue and that we want to develop a catholic marriage, a marriage that does not tolerate a divorce and we are on course.
Where does that leave oil producers in the United States, like those driving Shale whose activity continue to impact pricing. When you cut production, they increase production. It’s a very interesting dynamic. We see that when prices begin to rise they are encouraged to produce. Given OPEC’s new philosophy of inclusivity, are you looking at getting these shale producers involved in this cooperation?
There has always been built-in volatility in the oil markets and the cyclical nature of the petroleum industry has been well known, too. However, we should be able to avoid boom and bust.
At this juncture, it is important to reaffirm OPEC’s continued commitment to stable markets, mutual interests ofproducing nations, efficient-economic-regular supply toconsumers with a fair returnon invested capital.
The complexity of energy andoil markets in today’sglobalised and interdependentworld called for burden sharingamong the major producers. Itcould no longer be expectedfrom only a few or one group alone to overcome theproblem.
There has been a strongcommon ground to seeklasting and sustainablesolutions together, not at the expense of one or the other. With this understanding, there should be a way forward for cohesive, credible, and effective action.
With this perspective, OPEC, and its non-OPEC partners, through the ‘Declaration of Cooperation’ will continue to pursue a balanced, stable and sustainable global oil market. Moreover, this serves the interests of consumers, producers, the industry and the global economy at large. This is the best platform from which the industry can invest and expand.
It is vital we work together as an industry, and with other stakeholders to meet the challenges before us, and ensure that global energy demand growth is achieved in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment.
We have actually reached out to them and had opened discussions with them. When I first met with them two years ago in Houston, it was an ice breaking meeting. Some of them described it as the breaking of bread meeting in the sense that we had never had any official contact with them because of the encumbrances of the anti-trust laws in the United States and so on. It had been a challenge for us to enter into any dialogue with them. Don’t forget that this cycle that started in 2014 so far has been the longest cycle. It’s taken the industry 4 years from 2014 to 2018 to officially exit the cycle. Prices had crashed by over 80 percent. We as OPEC in terms of revenue have lost over $1 trillion, the industry itself in the United States had incurred losses where over 100 companies filed for bankruptcy with thousands of jobs shed; investments which is the life-line of the industry shrank, between 2015 and 2016 investment shrank by over 50 percent cumulatively and this was also unprecedented sowing the seeds of fresh supply crises. And so in trying to understand probably why they responded to our reach out is the numbers.
We met in Houston, almost all the big players showed up with their anti-trust lawyers seating by their side to guide the meeting and we had a very good meeting. It was really ice-breaking and bread breaking, we understood ourselves better and we agreed at this meeting that we should continue. It was very educating for them, very useful, we were very open, very transparent, very frank with each other and we all realised at that meeting and agreed that we were all in the same boat, same market. So, what happened to them affected the entire industry and, they had already started benefiting from the actions that we took and they openly supported what we did. So far we have held two meetings, the third meeting would be held in March – next month I will meet with them again. We have opened if you like a line of communication; we have established dialogue with them on a technical level.
Here at OPEC what would you consider a desirable outcome with these shale producers going forward – a continued line of communication or what?
We are conscious of their legal encumbrances, it’s their own law, the anti-trust law is their own law and they have to abide. We are not in the business of circumventing laws but we believe that at technical level we can cooperate, we can exchange views; it is beneficial to the industry. Going forward, today the U.S. is the biggest producer of oil in the world; it is also the biggest consumer. Therefore, what is good for OPEC is good for the United States. We should be seen as partners and not as competitors.
At a time such as this, we were surprised to learn of the exit of Qatar as a member of OPEC. Couldn’t Qatar have been persuaded to stay within the fold? Doesn’t the exit of Qatar send a signal that the reach and influence of the group may have waned considerably?
It was sad to hear that Qatar wanted to leave the Organisation. But every Member Country has the sovereign right to withdraw from the Organisation and this requires no approval from the OPEC Conference. The Organisation respects the decision taken by the State ofQatar.
The OPEC Secretariat has expressed its thanks to the State of Qatar for its support of the Organisation over the many decades of its membership. We have valued its input, and I fondly recall working with His Excellency, Dr. Mohammed Bin Saleh Al-Sada in 2016, when he was then Qatar’s Minister of Energy and Industry and OPEC Conference President. He was a central figure in helping us deliver the historic ‘Declaration of Cooperation’ in December 2016.
However, I do not believe the influence of OPEC has waned. In the past three years, OPEC has seen Gabon (2016) rejoin the Organisation and welcomed new members, Equatorial Guinea (2017) and the Republic of the Congo (2018). OPEC appreciates the continued interest of producers wanting to join theOrganisation.
Thereisalsotheimpactofelectricvehiclestoconsider.Several Europeancountriesand someothersinAsiahaveannounced planstobanfossilfuelpoweredcarsinafewyears time. It goes to reason that in an era when there is mounting global concern over carbon emission,morecountrieswouldgetonthe‘banfossil-fuel-powered-cars’bandwagonwith it attendant implications for fuel consumption. Does this scenario give OPEC cause for concern?
The OPEC Secretariat acknowledges that significant progress has been made in the development and promotion ofEVs (Electric vehicles) inrecent years. Nonetheless, oneshould bear in mind that in2017, EVs accounted for wellbelow 1% of the globalpassenger fleet. Thus, it iscoming from a low base. However, in OPEC’s WOO (World Oil Outlook) 2017, it is underscored that EVs will witness a further penetration of the passenger fleet market in the decades ahead. It is expected to account for around 15% of the market by2040.
It is important to note that many uncertainties and constraints for EVs remain. The cost competitiveness of EVs is still questioned, particularly if generous subsidies are eliminated. In this regard, the cases of Estonia and Denmark where EV sales plunged significantly after governmental subsidies were slashed provide an interesting insight. Moreover, the investment required todevelop a reliableinfrastructure for charging, aswell as electricity generation,could also be seen as aconstraint to further growth.
Furthermore, we should be reminded that in addition to the passenger car segment – where the penetration of EVs is expected to be highest – there is the commercial vehicles segment. The WOO’s projections indicate that oil demand growth in this segment of road transportation will be much stronger (compared to passenger cars) as sales are not anticipated to undergo electric diversification at anywhere near the level of passenger vehicles.
With this in mind, it is important to stress that the OPEC Secretariat does not see peak oil demand before 2040,and that oil will remain themain fuel source in thetransportation. In the road transportation sector alone, in the WOO 2018, an additional 4.1 million barrels a day (mb/d) of demand isestimated up to 2040. This ismainly driven by the fact thatthe car fleet, both passengerand commercial, are forecastto double. Moreover, significant demand growth is expected from other sectors such as petrochemicals and aviation, with an additional 4.5 mb/d and 2.7 mb/d, respectively between 2016 and 2040.
Similarly, owing to the growingconcern over carbon emissionand global warming, there’s been a significant growth in investment in renewable energy. Even the IOCs (international oil companies) appear to have caught the bugand are investing heavily. Does it not go to reason that asinvestment in renewables grow, so shall investment in the development of hydrocarbon resources shrink?
In some quarters, we hear stories that suggest renewables are our only energy future. This is clearly misguided. Renewables are evidently coming of age, with wind and solar, expanding fast, and others such as hydropower and biomass, maintaining their shares in the energy mix out to 2040. However, even by 2040, in OPEC’s World Oil Outlook 2018 they are estimated to make up only around 19% of the global energy mix. Let me stress that many OPEC member countries have great sources of solar and wind, and significant investments are being made in these fields.
With the share for nuclear expected to be at just over 6% by 2040, it means that the world will need to look elsewhere for around three-quarters of its energy needs by 2040.
In terms of oil and gas, there is no doubt that they will remain central to supplying an expanding global population with the critical energy it needs. In our WOO, oil has an expected share of around 28% in the global energy mix, and gas is at 25%, by 2040. Even in the most optimistic of outlooks I have seen for renewables, I have not observed one predicting that they will come close to surpassing oil and gas in the decades ahead.
Oil will clearly remain a fuel ofchoice for the foreseeablefuture. We see oil demandincreasing by around 14.5million barrels a day (mb/d)between now and 2040 toreach close to 112 mb/d. Moreover, this is the second consecutive year we have raised our oil demand number in the WOO for 2040.
InmostOPECproducingcountriesthere’sbeenasignificantdropininvestmentinoiland gas exploration and production with implications for reserves addition. Does this developmentgiveOPECcauseforconcern?
Investments are the lifeblood of our industry. And yes, in the last industry downturn between 2014 and 2016 we saw one trillion dollars in investments being frozen or discontinued and exploration and production spending fell by an enormous 25% in both 2015 and 2016.
Given that we see oil demandincreasing by around 14.5mb/d between now and 2040to reach close to 112 mb/d, itis vital that investmentscontinue to be made.
In this regard, let me stressthat OPEC, and its non-OPECpartners, through the‘Declaration of Cooperation’ will continue to pursue a balanced, stable and sustainable global oil market. This serves the interests of consumers, producers, the industry and the global economy at large. And this isthe best platform from whichthe industry can invest andexpand.
Investments are central to our future. Our industry is very capital-intensive and technology driven. Complex by nature, it requires significant up-front investments. The return of timely, adequate and continuous investments, in both short-cycle and long-cycle projects, has been a key focus of the ‘Declaration of Cooperation’.
This is brought home by the scale of the investment requirements. Oil-related investments across the up stream, midstream and downstream are estimated in the WOO 2018 at around $11 trillion in the period to 2040.
Of course, we do recognize the industry is susceptible to a myriad of challenges, both regional and global, such as those related to the environment, technologies and geopolitical developments.
Thus, it is vital we work together as an industry, and with other stakeholders, to meet the challenges before us, and ensure that global energy demand growth is achieved in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment.
Let’s move now to Nigeria. We both know you’ve played a pivotal role in the reviews of the oil laws under the auspices of what used to be the OGIC (Oil and Gas Implementation Committee) which eventually metamorphosed into what we call the PIB (Petroleum Industry Bill). This is 2019 over 10 years later and the review your team carried out and the work you started at the NNPC has stalled. For some of us who cover the industry we consider the current turn of events as a strange paradox – here you are leading the rejuvenation of the market on the global stage but back home in Nigeria the review has stalled. We are at a standstill. What do you want to see happen in the oil industry in Nigeria in 2019?
I would like to see a vibrant industry in our country. We have the resources underground and on the surface in terms of the human capital that we have trained and developed over the years. We had commenced the reform programme for the upstream, midstream and downstream including gas onshore and offshore, it was a gargantuan task that we decided to undertake in order to bring the industry to the 21 century level in terms of the regulations of the industry both technical and fiscal in a manner that would continue to attract investment which is the life-line of the industry.
These reforms are necessary to continue to facilitate the expansion that is badly needed in our reserves, in our production capacity, in our refining capacity, in the downstream expansion programmes taking into account the growth rate of the country both in terms of the economy as well demography. In addition the Nigerian oil and gas sector has always served not only that country but the entire region as a whole. Unfortunately, the reform programme due to changes in government and changes in policy over the years as you just said now they seem to have stalled. At the moment I don’t have all the facts on where they are on the reform programme but I am confident that going forward those who are vested with the responsibility of managing this industry with its huge resources would continue to focus not only on the short term challenges of supplying fuel to consumers which is extremely important but would also be able to focus on the medium to long term. Oil and gas would continue to be the driving force of the Nigerian economy for the foreseeable future and the tremendous amount of effort in diversification of the economy but this remain music for the future in the sense that the economy would continue to need the contribution of this energy resource.
