DEVELOPMENT observers believe that apart from the Coordinating Minister of the Economy who is also in charge of Finance, Dr. Ngozi Okonjo-Iweala, one of the pillars on which this current administration solidly rests is her Petroleum Resources counterpart, Mrs. Diezani Allison-Madueke.
For this, the latter has been inundated with commendations and criticisms in equal measure for much of the policy thrust of President Goodluck Jonathan’s administration.
Her tenure as petroleum minister has seen a number of firsts in the oil industry. Not the least of these is the signing into law in April 2010 by the President of the Nigerian Content Act to increase the percentage of petroleum industry contracts that are awarded to indigenous companies.
Expectedly, the increasing involvement of Nigerian engineers and entrepreneurs in the once exclusive preserve of foreign technocrats has had a salutary effect on the national psyche.
However, mid-last year, the nation was jolted with the news that about $50 billion, an amount equivalent to 70 per cent of the national revenue, was missing. This statement was given credence by the then Central Bank governor, Lamido Sanusi.
Amid the hullaballoo of this startling revelation, Sanusi recanted and admitted to the Senate committee investigating the allegation that $20 billion was the actual sum in question. But in May this year, the Senate approved a report by its finance committee dismissing his claims that $20 billion (N3.2 trillion) oil revenues had been diverted from government coffers.
The committee said claims that the huge sum had been diverted or stolen were incorrect and misleading: “There was never any unremitted $49.8 billion.” The only funds not accounted for by the NNPC, which must be paid to government, stood at $927 million, the committee maintained.
In the buildup to the presidential election of February next year, the opposition All Progressives Congress (APC) has reiterated its strident call for the head of Allison-Madueke over the “missing $20 million.” This is also backed by some groups of Nigerians who are calling on Jonathan to remove her from the headship of the oil and gas ministry.
Amid the various calls, there have been little efforts by way of explanations put forward by her antagonists to justify their position other than the rehash of the celebrated $20 million missing funds.
Beyond the calls for sack, Allison-Madueke, the first female to head one of the most sensitive and important ministries in the country, may not have performed to the expectations of the over 140 million Nigerians, but so far, her agitation for local content, if properly adopted and implemented, would not only be to the advantage of the nation’s oil and gas industry, but it will also boost the capacity of the average Nigerian and open opportunities for employment.
The attack on Allison-Madueke started shortly after Sanusi (now Emir of Kano) alleged that the ministry, through the Nigerian National Petroleum Corporation (NNPC), failed to remit $49.8 billion to the federation account over a 19-month period. Sanusi’s allegation was contained in a letter he addressed to the President in September last year. However, the allegation did not become an issue until its content was leaked to the media.
As Sanusi put it: “Between January 2012 and July 2013, NNPC lifted $65 billion worth of crude oil and only remitted $15 billion into the federation account. This implied that about $50 billion was missing from the federation account.”
The allegation has however failed to achieve whatever intent for which it was conceived. And to the chagrin of those who believed it and were already making mountain of it, the story is now history as the Senate Committee on Finance, led by Alhaji Ahmed Markafi, after carefully investigating the matter, cleared the minister of misappropriating any fund.
However, Allison-Madueke’s antagonists have failed to see the various achievements and milestones the Jonathan-led government has achieved in the oil and gas industry within the last couple of years. But she has been underterred.
In her reflections during the recent Nigeria Oil and Gas (NOG) Conference and Exhibition, the minister while listing some of the achievements in the industry over the last six years, said that since the inception of Jonathan administration’s in 2010, “there is no doubt that the oil and gas sector has witnessed a wave of activities and performance levels, which have placed it on a renewed path of growth and sustained development.”
According to her, some of the major achievements include:
• Ensuring average crude oil production of approximately 2.3 mbopd crude oil and increased gas production from 6.3 to 8.1 bcf/d by year-end 2013, despite incessant pipeline vandalism and crude oil theft.
• Maintaining unprecedented stability in the supply and distribution of petroleum products across the country, until the very recent episode of shortages created by a combination of supply glitches and panic buying as well as hoarding and diversions engendered by rumours of increase in the price of petroleum products.
• Commissioning of the Usan Floating Production, Storage and Offloading (FPSO) vessel with a processing capacity of 180,000bbls/day operated by Mobil. The Usan field is currently producing 103,000 barrels a day.
• Increasing the participation of indigenous oil and gas companies in the industry, leading to the commissioning of several critical infrastructure projects by local firms including the establishment of Ebok terminal by a Nigerian company, with current daily crude oil production by 7,000 bpd and a plateau production of 50,000 bpd at full capacity; commissioned Africa’s largest vessel, christened Akpevweoghene, an offshore pipe-laying/Derrick Barge, in May 2013; and commenced the landmark Egina FPSO vessel platform integration in Nigeria.
• Engineering the comprehensive re-draft of the Petroleum Industry Bill (PIB) that is currently undergoing legislative process at the National Assembly and when passed into law shall be the first of its kind in Nigeria in terms of its coverage and sweeping reforms.
• Revamping and rehabilitating previously non-functioning petroleum product depots and pipelines, including the Benin Depot, Warri-Benin pipeline, Aba pipeline, Enugu, Gombe and Port Harcourt depots and restored product supply to the facilities; totally rebuilt the burnt-down Okrika Products Loading Arm and Jetty.
• And in line with the transformation programme, in terms of Gas to Power, we have continued frontier exploration in the Chad Basin and signed agreements for the aero-magnetic survey of other hinterland basins.
• Ongoing implementation of the Gas Master Plan and announcement of a major investment initiative for the establishment of the Ogidigben Gas Industrial City in Delta State.
• Completing over 307 km of critical gas backbone pipeline infrastructure including Itoki – Olorunshogo, Escravos, Warri, Oben, Imo River, Alaoji, Oben, Geregegu.
• Kicking-off 1,860 km of ongoing gas pipeline infrastructure comprising: Oben, Lagos, Obiafo, Obrikom, Oben (Ob3), Calabar, Ajaokuta and Kano
• Commencing Front-End Engineering Design (FEED) of the 850mcf/d Gas processing facility, to support domestic supply of gas to power and the Ogidigben Industrial Park.
• In line with this, we have with the assistance of the Ministry of Finance raised $450 million in Eurobonds in support of pipeline extensions for the Calabar – Ajaokuta – Kano Pipelines project. We are also in discussions with the International Finance Corporation (IFC) to bring in additional funding.
• Initiating a critical gas flare-down campaign, which in two years, has seen gas flaring reduced by 20 per cent to as approximately 16.7 per cent of produced gas.
• Completing 100 per cent of the transitional phase objectives recommended by UNEP including capacity building initiatives; identification of site for Integrated Soil Management Centre; designing clean-up plans and developing livelihood strategies for Ogoniland.
• Developing a comprehensive secondary school curriculum on the effect of Hydrocarbon pollution, in collaboration with the University of Port Harcourt.
• Putting together the provision of critical support to the Joint Task Force that patrols the Niger-Delta’s onshore oil fields to apprehend pipeline vandals and crude oil thieves.
• Significantly increasing the level of indigenous ownership and enforcing utilization of Nigerian owned assets such as marine vessels and rigs in supporting oil and gas industry operations.
• Maximizing local value addition, by encouraging the manufacturing of equipment components and parts in the country, in furtherance of the Nigerian content Act of 2010.
• Ensuring unprecedented tonnage of work placed in local yards by operators, and growth in indigenous participation in the provision of goods and services to the upstream sector from 10 per cent to 60 per cent in four years.
• Successfully introducing compressed Natural Gas (CNG) to Nigeria, with over 2500 taxi cabs now running in Benin City and many more being converted daily.
• Celebrating NLNG’s export of its 3,000th cargo.
Allison-Madueke’s leadership of the oil and gas industry does not only pride itself in achievements but is also projecting by making adequate plans for future development.
In what she termed: ‘The Next Step,’ the minister said: “In mitigating crude oil theft, sabotage and vandalism, there is a direct need to enhance Nigeria’s efforts to stem this scourge, thereby increasing government revenue. In July 2013, Mr. President established the National Economic Council Committee on Crude Oil Theft and Pipeline Vandalism to assist in combating this menace.
“Subsequently, choke points have been established at strategic locations within Nigeria’s littoral waters, and collaboration among security agencies and pipeline operators has significantly improved.
“The Ministry of Petroleum Resources has reached out to various international governments and fora, in a bid to stimulate international collaboration to mitigate crude oil theft, sabotage and vandalism.”
She said the most recent was an anti-crude oil theft session that Nigeria co-hosted at the 2014 Cambridge Energy Research Associates (CERA) Week in Houston, USA. Government is also finalizing a framework for a comprehensive strategy that will deal with oil theft at local, national and international levels. This framework will amalgamate the work already being done by a range of agencies at varying levels to ensure a holistic approach for the stemming of these criminal acts.
On downstream deregulation, she explained: “Now that Nigeria’s power sector reforms are well under way, government’s commitment to restructuring the oil and gas sector remains unwavering. In this regard, downstream deregulation remains an important part of a reform framework that seeks to restore financial sustainability and investor confidence.”
Emphasizing the fact that continuing deregulation is injurious to the economy, Allison–Madueke said: “Without belabouring the point, government has sought to deregulate the downstream sector. Continuing regulation has several negative effects – it is fiscally unsustainable, it distorts demand, discourages investment, and principally benefits the rich not the masses in society that we intend to reach in the first place. Deregulation remains the only way in which capital investments can be encouraged and new employment opportunities created, for both foreign and local operators.”
To create an industry that is open, fair and transparent with fiscal rules of general application and regulatory monitoring that is consistent with international best practices, the minister said the passage of the PIB is key.
According to her, “The present administration’s intention to transform the sector is encapsulated in the proposed Petroleum Industry Bill (PIB).”
Diezani stressed that the ongoing industry reform would make Nigeria an attractive destination for oil and gas investments by reducing the risk premium associated with poor governance.
Taking Nigeria beyond oil to gas age
Over the years, one of the challenges the industry has been going through is ‘gas flaring.’ This issue has been a problem, which previous administrations and ministers couldn’t find a solution to. But under Allison-Madueke’s leadership, the industry is tilting beyond the oil age to the gas age.
In her projection, the minister noted: “If the first 50 years of oil production in Nigeria (1958 – 2008) can be regarded as the oil age, I think it is safe to say that the next 50 years would be the age of gas.
“Government’s commitment to gas utilization is reflected in the Gas Master Plan and the gas regulations issued in October 2008, which laid the framework for reforms in the gas sector. The reforms are basically three-pronged, namely: the domestic gas supply obligation, the gas-pricing framework and the gas infrastructure blueprint.”
She said that the enabling sector policy includes the domestic Supply Obligation (DSO) Regulation, which provides the legal basis for gas supply to the domestic market and is currently being implemented by the Department of Petroleum Resources.
She went on: “Gas commercialization aspects of the reforms including gas pricing; world class contractual frameworks for supply, transmission and access; World Bank revenue securitization scheme to mitigate risk of payment failures for gas supplied to the power sector; and establishment of the Gas Aggregation Company of Nigeria (GACN) to facilitate DSO, manage price aggregation and mediate in the negotiation and execution of various Gas Supply and Aggregation Agreements (GSAA).”
It is also part of Allison-Madueke’s projection for the nation to adopt a gas-based development programme.
According to her, “Nigeria’s adoption of a gas-based development programme is necessitated by the current global view that gas will become the principal fuel of choice in the not too distant future.”
Her other projections include revitalising the domestic refineries, pipelines and storage facilities and recapitalisation of the National Oil Company.
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