IN your own opinion sir, do you think the GMD of NNPC can successfully implement any proposed reforms in the oil and gas industry without passage of the Petroleum Industry Bill (PIB)?
The oil and gas reforms can work without the passage of the Petroleum Industry Bill (PIB), if you have a minister of petroleum that understands the workings of the industry and you have leadership of the institution that are governing the oil and gas industry, most of the things that the PIGB is promoting can still be accomplished under the petroleum industry act. The only thing is the sentiment components of it that gives too much power to the Minister of Petroleum Resources that makes it ineffective under the current dispensation. Without the reform of the oil and gas industry, there is not much that could be accomplished. For instance, you told your mum you are coming home from abroad and one year after, two years, three years, you have not returned, what do you think situation will do to her spirit? You told the oil and gas industry stakeholders that you are going to reform the industry 20 years ago and two decades after, are you going to back off and say the status quo remains? No.
If you are going to invite investors, what Nigeria is going through now is very important. There are so many brides in the corner. Nearly all African countries are producing oil or gas today, and they are we were 60 years ago. They are having a better governance structure than we do. And that means there is more certainty in their industry than what we have. And that is basically what the industry investors are looking at. Sustainability of their business and when the structure is not strong, the business is not sustainable. That’s why reform is critical to taking us to where the GMD thinks we could go.
Fortunately, we share same view to a large extent on the importance of reforming the oil and gas industry. Separate the role of regulator from policy maker and from the commercial institution. And promote transparency, accountability and sustainability, that’s what the PIGB has promoted. The only reason why it is not signed is sentiment and patronage and I hope the current team in the NNPC will put that to the background and promote equity, efficiency and effectiveness. If that are their goals, they will make it. But if they allow patronage and sentiment to govern them, when another GMD comes, we are going to be back to square one.
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Did you see finance as the biggest challenge the NNPC may face in implementing its proposed reforms?
The biggest challenge we have in the Nigerian National Petroleum Corporation (NNPC) is the management and not the finance. Leadership with key performance indicator is very important. People should hold the Group Managing Director (GMD) of NNPC accountable, not in terms of merits and demerits, but in terms of accomplishments. He has already given you one key performance indicator to gauge his performance. Are the refineries working in the next three years? What will he do to deliver on the refineries? The other key performance indicator is the 40 billion barrels reserves target which he has set. That’s another thing to pick up with his key performance indicator. The third thing is the three million barrels per day target. He should be reminded of those three things. It is a good idea not to dispose of the Nigerian refineries to any private sector, without knowing the value of it. I think NNPC has a good goal to make the refineries work. The only thing in my opinion is this: will they let the team do their work with those targets?
The last time we offer any lease which is oil block for exploration and development was 2000, till date, maybe only one is working. Before you know it, 2025 is only six years from now. In the short run, you cannot raise your reserves from 36 billion barrels to 40 billion barrels without leases, rigs and exploration. How does he deliver is the biggest question. Put oil blocks out there for sale, create an enabling environment which is to pass and sign the Petroleum Industry and Governance Bill (PIGB), reform your fiscal system, and create incentive so that people can do what normally they would by investing.
But the environment remains uncertain. By the way that is not within his (GMD) jurisdiction, because he is a commercial man, not a policy man. Neither is he a regulator, again, this now becomes the purview of whoever becomes the Minister of Petroleum Resources which we don’t know. Would they allow him to do the commercial aspect of the petroleum industry or would he just buckle himself into the regulatory role and the agency role. I hope that he would realise that leading the NNPC in a commercial manner is the best thing for him to do. He should just let himself loose of any agency role. Let the minister and the ministry of petroleum resources does the policy. Let the Department of Petroleum Resources (DPR) do the regulation while he focuses on the investment aspect for the oil and gas industry either through the joint venture or through the Production Sharing Contracts (PSCs) and then engineer the reform that was started 20 years ago, by perhaps creating the funding mechanism to support it. Because the ministry does not have the money neither does the DPR. NNPC is the only one with money. And it has the public policy goal as part of its purview as a national oil company.
To me, that’s the way to go if you want to go 40 billion barrels in six years. The environment must be enabling for the investor, and for rigs to be able to come, and for the E&P, both independents and international, to attract rigs to come. He needs to work with National Petroleum Investment Services (NAPIMS), to make sure that the turnaround approval process is shortened, that is the way to go. I think he is capable because I know him very well.
The oil and gas industry has been a target of cyber-attack; do you think the Nigerian oil and gas firms are prepare for this?
The oil and gas industry is best prepared for whatever it is that is the best global practice. The key to this is the young mind. Allow the young people that are capable to be involved. I’m not saying the old people are irrelevant, but I’m saying that the young people are very quick to understand the Artificial Intelligence (AI) and digitalisation of the oil and gas industry. That’s why you should not recruit into the oil and gas industry or the oil and gas regulatory agencies and policies and institutions on the basis of sentiments and patronage. You have to begin to think in terms of meritorious appointments and meritorious promotion of your staff. Don’t allow the people that are just doing brown-nosing to be the one to become leaders because leadership truly matters. Leaders that are not competent cannot deliver because they are already afraid of the junior ones working for them in the delivery process of the key performance indicators.
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