Nigeria’s oil: The future we want from Baru

In 2012, the world converged on Brazil for Rio + 20 to set development agenda for post 2015. The Assembly’s outcome document was: ‘’The Future We Want’,’ recognized that each country faces specific challenges to achieve sustainable development. One of the goals of the Sustainable Development Goals, SDGs, is to ‘’promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. MATHEW DADIYA writes on how Nigeria can sustain its economic growth, especially in the oil sector.

The goal eight specifically discussed achieving higher levels of productivity of economies through diversification, technological upgrading and innovation, including a focus on high value added and labour-intensive sectors.

Also, it seeks to encourage develop – oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation; and encourage formalization and growth of micro-small- medium-sized enterprises including through access to financial services.

According to the projection, by 2030, if successfully implemented, Nigeria will achieve full and productive employment and decent work for all women and men, including for young people and persons living with disabilities, and equal pay for work of equal value.

One posits that the SDGs set by the United Nations are not unattainable. Nigeria’s petroleum resources could be a launchpad for sustainable development, if we do the right thing.

Our petroleum resources managers should not get it wrong at at allgiven the sector’s role in the economy.

We must solve this lingering problem to meet the SDGs, otherwise, we may be cajoled into giving away our four refineries in the name of privatization, as has been touted by some.

The only fully- fledged petrochemical complex in Nigeria, which came on stream in 1990 became moribund in the early 2000s, due to lack of maintenance.

The preferred investors acquired the wholly -owned subsidiary from the NNPC in August 2006, did the normal turn around maintenance (TAM), rehabilitated the complex, which started operations on October 12, 2006.

We have wasted millions of man- hours dissipating energy on whether we should subsidize petroleum products other countries produce which unfortunately we import.

This reminds one of the epithet of a country that ‘’exports what she does not have and imports what she has’’.

That paradox of a nation must be removed from our petroleum. Petroleum is the future we want.

We now have a stabilized market for products across the country through modest local refining efforts, as well as the Direct Supply Direct Purchase (DSDP), scheme.

The Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr. Maikanti Baru recently said that the nation had saved about N40 billion in 2017.

Perhaps, as much as the nation appreciates what he has done, he should rather be encouraged to focus on getting more value for our crude in the DSDP scheme.

To what extent can the DSDP go to solve Nigeria’s problem. It should be a temporary solution to bridge supply gap.

Baru’s drive to reposition the nation’s oil sector must be to yield results. What has been achieved is part of the NNPC’s Key Business Focus Areas to grow the industry.

We are hoping that Nigeria would benefit from petroleum that it has comparative advantage. We will continue to rely on Joint Venture, JV partners for some time.

As cash calls issues are renegotiated, industry players corroborate the GMD’s confidence of the NNPC JV partners to pursue new projects.

The repayment agreements have been reached for JV cash call arrears after negotiations for outstanding up to the end of 2015 for all the IOC partners.

The first line of action is that Nigerians must be in charge by building capacity. In the upstream sub-sector, Nigeria needs high level manpower for exploration and production.

We have advanced a little in exploration, but not much in production, especially with high-tech equipment for offshore drilling.

With Baru, resources are being deployed to the Benue Trough for exploration using the Integrated Data Services Limited, IDSL, and her partners to pursue this government’s aspiration to grow the reserves base of the country.

The corporation had grown the production of the NNPC’s flagship upstream company, Nigerian Petroleum Development Company, NPDC, from 15,000 barrels per day (bpd) to the current peak-operated volume of 180,000 bpd in June 2017.

With about 10 per cent of our contribution to crude production, we still rely more on the International Oil Companies, IOC.

We need more local participation, especially now that the internal combustion engine is being passed out for reasons of perceived carbon emissions.

The vision for the NPDC is to grow its equity production from 180,000 barrels per day to 300,000 bpd by 2018; and by 2019 and 2020, its production is expected to hit 400,000 bpd and 500,000 bpd, respectively.

NPDC Managing Director, Mr. Yusuf Matashi, disclosed that the planned increase in the company’s equity production was to become the fifth largest Exploration and Production Oil Producer in Nigeria. It is a target that is achievable, he said.

The drive for the NNPC is to attain a six-month contracting cycle. The NNPC has lowered operating costs of production from US$27 per barrels to US$22 per barrels for the Upstream.

Cost reduction and efficiency are key features that will make our crude to be more competitive in the international market.

The national average daily production was 1.83 million barrels of oil and condensate, while currently, the Year-To-Date 2017 average production hovers around 1.88 million barrels.

In October 2016, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found.

The Field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading, FPSO with current estimated reserves of 1billion barrels to the national crude oil reserves.

Despite the security challenges in the country, the corporation has continued to trend in the positive direction. Baru himself has attested to this fact when he said that with the improvement in security

and resumption of production on the Forcados Oil Terminal (FOT) and Qua Iboe Terminal (QIT) pipelines, the average national production was expected to increase and surpass 2017 target of 2.2million barrels of oil and condensate per day.

The effect of the efforts has been a significant growth in domestic gas supply in the last few months.

During the period, domestic gas supply had increased from an average of 700 MMscf in July 2016 to an average of 1,220MMscfd currently, with about 75 per cent of the volume supplied to thermal power plants.

Baru as listed the following as areas that should interest investors: Investment in gas processing facilities, mini Liquefied Natural Gas (LNG), floating LNG, Gas storage facilities,

Engineering Procurement and Construction of over 2000 km gas pipelines, gas processing facilities, gas metering and monitoring system and Fabrication of pipes.

With improved security, the NNPC has commenced the resuscitation of products’ transportation pipelines’ network, to move products to depots at faster rate and cheaper distribution costs to consumers.

The Aba, Mosimi, Atlas-Cove and Kano Depots have all been re-commissioned and are currently receiving products, thereby enhancing products availability across the country.
But refining is the key.

The NNPC had improved capacity utilization of the refineries with the projection that they would attain 50 per cent of the non-gasoline white products including diesel and kerosene that are commonly consumed in the Country.

The dormant Asphalt Blowing Unit of the Kaduna Refining and Petrochemical Company, KRPC, was resuscitated to meet road construction needs in the country.

The GMD had also revealed that efforts are ongoing to secure third party financing to revamp the refineries to their full operational capacities.

Now that the crisis over who does what is resolved, the plan to get the comprehensive rehabilitation programme done, which was for 2017, should be revived.

NNPC, last year, said the refinery situation was like having three cars in a garage that have not been maintained for 15 to 20 years while you expect optimal performance from them.

A holistic approaches at full rehabilitation of all the refineries is expeditiously needed.

When crude is heated at varying degrees the following products can be recovered: light distillates as Liquefied Petroleum Gas (LPG – propane and butane), gasoline (premium motor spirit), kerosene, jet fuel and other aircraft fuel.

Middle distillates include automotive and rail road diesel fuels, residential heating fuel, other light fuels.

The heavy distillates are heavy fuel oils, bunker fuel oil and other residual fuel oils. Others are naphtha’s, solvents, elemental sulphur (sometimes sulphuric acid), petrochemical feedstock, asphalt and tar, petroleum coke, waxes and greases, transformer and cable oils and carbon black.

That is employment opportunities and revenue generation and indeed good business for Nigeria and it would be Baru’s legacy.

Perhaps, Baru at the NNPC has been industrial harmony. It is rare for labour unions to have mutual agreement and support with management.

The overwhelming support he received from the corporation’s workers and the Industry’s in-house Unions, Nigerian Union of Petroleum and Natural Gas Workers, NUPENG, and Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, contributed to the successes recorded by NNPC’s management under his leadership in over one year.

Indeed, Baru looks forward to that continued cooperation, unanimous support and collective action, as he navigates the corporation out of its current challenges towards profitability with integrity and transparency.

Mathew Dadiya, Abuja