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2.3m bpd Oil Benchmark In 2019 budget, Ridiculous – Ibilola Amao

Dr. Ibilola Amao, who is a board member of the Energy Insitute, says it is careless and irresponsible to peg the 2019 budget on the stated benchmarks.

Dr. Ibilola Amao: $40 per barrel is a more realistic benchmark / Photo credit: Amao
Dr. Ibilola Amao: $40 per barrel is a more realistic benchmark / Photo credit: Amao

A member, Board of the Energy Institute, London, Dr. Ibilola Amao, is amazed that the 2.3 million barrels per day production target set for the 2019 budget has not been struck out. She speaks on this and other sundry issues in the Nigeria’s oil and gas industry in this interview:

The upstream, midstream and downstream sub-sectors of the oil and gas industry are faced a myriad of problems. Can you give us highlight of the problems and how they can be solved?

Upstream is big money. You are looking at hundreds of millions and billions of dollars. Because we don’t have that kind of capacity, it requires a lot of humility to call for partnership.

Even the International Oil Companies (IOCs) share risks with the NNPC in some of the assets, but I’m yet to see Nigerian companies doing such.

We have to de-risk assets to be able to access huge capitals and investments. That is why we have just the IOCs playing in the upstream.

With the service providers, we have carried a lot of foreign technical partners for too long a time.

We need to begin to look at technologies and localising knowledge because, without technology, we are not going to move any further.

Midstream Nigeria needs to begin to look at gas as the main driver of industrialisation and development.

Domestic gas is the future for Nigeria because we need it in the power, energy, and agro-allied sector where we use gas for feedstock, gas to power, and gas to fertilisers.

We need to look at local gas companies like Falcon, NLNG, Frontier, and others.

We need more investments in gas companies so that we won’t be using just Liquefied Natural Gas (LNG), but Compressed Natural Gas (CPGs) and others.

There are so many categories of gas that could be game changers for Nigeria. In the downstream, they need more refineries.

It would have been nice assuming the Dangote Refinery will be export focused. I would like to see more marginal fields and independent owners who are Nigerians.

We should also have some form of modular refineries at the wellheads of sharing facilities. Kerosene, petrol, and diesel scarcity should become a thing of the past in Nigeria.

I’ll like to see local marginal field owners refining and we focus on refining and exporting refined products.

And, I think we should stop relying on NNPC or government because they have consistently failed us. We need private sector initiatives.

We need more investments in gas companies so that we won’t be using just Liquefied Natural Gas (LNG), but Compressed Natural Gas (CPGs) and others

What is your take on $60 per barrel price and 2.3 million barrels per day crude oil production benchmark for the 2019 budget?

I think that’s ridiculous. Forty dollars per barrel is more realistic.

The 2.3million barrels per day are also ridiculous with the kind of restiveness we are looking at in the Niger Delta.

Also, there is the risk where contracting circle suffers.

There is also a lot of pipeline issues, evacuation issues, including the OPEC problem. I think the Federal government’s benchmark is an over-optimistic projection, and I am worried about the economic policies of this present government.

It is careless and irresponsible to peg the budget on such benchmarks.

I think we should stop relying on NNPC or government because they have consistently failed us. We need private sector initiatives

On local content, are you concerned about the pace and level of participation by indigenous firms in the oil and gas sector?

I was on a journey of local content advocacy for about thirteen years – from 1995 to 2010 when the Nigerian Content and Development Act was passed into law.

In this journey of advocacy, I started work with the National Engineering of Technical Company which was a joint venture with the NNPC.

So, I can say I am one of those who benefited from the technological transfer as a result of that JV.

We then realised that if the National Engineering & Technical Company Limited, NETCO could create value in Nigerian through a single contract executed with local companies then, we can also replicate such because it would help increase local capacity and create value in-country.

That was how the journey of advocacy for local content began, and today, we have multiple NETCOs, likewise independents and marginal field owners who are Nigerians.

We must commend the Petroleum Companies Association of Nigeria that fought the wars of indigenous companies being awarded contracts in spite of their lack of huge capitals.

The IOCs wanted to take over everything because they would argue that indigenous companies didn’t have the capacity and competence, however, we were able to establish the importance of local participation.

We also recognise the efforts of international companies like Schlumberger and Halliburton that helped a lot of Nigerian companies to set up their own, and today, we have Nigerian companies providing services either independently or in partnership.

The passage of the law in 2010 opened the way for a lot of indigenous companies to come in and take advantage of the opportunities.

That’s why you see that contracts are now being published both online and on paper for Nigerians to bid and be part of international companies, which was not the case so many years ago.

So, there’s been a huge improvement but, there’s still a lot more to be done in terms of indigenous companies coming together to form a consortium.

A lot of local companies can do more and execute more projects if we come together. We need to come together so that we can bid for and win bigger projects.

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