With a 2020 Special Publication, Energy Insight NIGERIA: Evolutionary two decades in retrospect edited by the industry veteran, Victor Eromosele, it is heart-warming that its publisher, the Centre for Petroleum Information so marks its 20-year journey of commitment, resilience and discipline. I am honoured and humbled to be chosen for the book’s review.
On reflection, the first thing I must say is that I find the title of the book intriguing. The configuration of the title suggests a nexus connecting the key words: Energy, Insight and Nigeria (in capitals). Consider that Nigeria’s energy journey spans more than a century: dates back 1908. However, it was not until 1956 that oil production commenced at a modest 5,100 bpd. Two years later in 1958, the first oil export out of the country brought hope and excitement. Ironically, that was not shared by the less optimistic western observers, one of whom proclaimed: “… the first oil exports from Port Harcourt will be no more than test shipments to enable properties of Nigerian oil to be evaluated by the refineries in Europe.” We today know better than that flawed projection.
With the benefit of hindsight, we can today say: oil brought fortune to Nigeria and degradation to the Niger Delta region. In the nearly 50 years to 2005, Nigeria earned approximately $461 billion from oil, with associated gas flaring accounting for some 70 million metric tonnes of carbon dioxide (CO2) emissions annually.
Nevertheless, the oil and gas industry and indeed, the wider energy industry including power – covered in the book – is replete with robust activities. These activities, without doubt, present a rich harvest of events which create a suitable medium for retrospective insight. The insight provides a valuable opportunity to capture the sequence of events which upon further articulation present an accurate, indelible addition to the hydrocarbon history of the country. Indeed, the deconstruction of the intriguing title of the book: Energy Insight NIGERIA and the validation of the nexus connecting the key words, set the stage for its systematic review.
Arranged in seven thematic segments, the 440-page book comprises 30 chapters and 16 grey page abstracts. Every contributor is an authority on the subject covered. The first section, global perspective, provides international benchmark and the seventh section, fittingly, covers low carbon future, looking ahead two decades.
The two largest sections are section two: energy policy and legal structure which features eight chapters or more than a quarter of the work, followed by section three: exploration and production which features five chapters or one-sixth of the work. Sections five, six and seven cover gas and power, downstream and the crucial, energy finance. Each section has a summary, which should help readers pick and choose what interests them.
Using case studies in their benchmarks, the two partners of international consultants, KPMG and PwC – Messrs Dapo Okubadejo and Cyril Azobu, contributors of the first two chapters of the book – were remarkably unanimous in their choice of Norway and Brazil. They posited that high level of autonomy and accountability derive from diversified financing base and the adoption of robust governance standards. National oil companies (NOCs) in Africa can profitably benchmark with high performing NOCs to lift performance.
Policy makers should learn quite a bit from section two of the book. In the fourth chapter, Dr Oby Ezekwesili argues: “the higher the level of disclosure and publication, the better investors will be able to make informed and accurate investment decisions to the advantage of Nigerian oil and gas industry.” She links the country’s prosperity to “accountable management of extractive resources.”
Messrs Sola Adepetun and Victor Eromosele zoomed-in on the imperative of incorporated joint venture (IJV) as a beneficial structure worthy of adoption going forward, given the ineffectiveness and colossal loss of value associated with the current unincorporated joint ventures and production sharing arrangements. “Wholesale incorporation of JVs is not the way to go,” one of the contributors argued, based on his experience.
Industry regulation received attention in the book. A former DPR boss in his contribution in the fifth chapter was forthright on transparency issues around bid rounds, stating that many “were carried out under varying conditions of transparency.” He re-assured that the agency in these circumstances had taken steps to standardize transparency in bid rounds. Equally instructive, is that way back 2010, it was already well-known that the “prolific nature of deep offshore operations over time revealed that zero royalty is not in the national interest.”
Godwin Omene in the tenth chapter provides a workable blueprint for peace in oil producing communities: “To mitigate Niger Delta restiveness, a sustainable joint action by government, oil companies and the communities is imperative.”
From five percent in 2010, Simbi Wabote of the Nigerian Content Development Monitoring Board (NCDMB) expressed his delight in the book’s eleventh chapter, to see a growth to 30 percent in the industry’s local content in 2019.
Upstream is well covered in section three and should delight E&P enthusiasts. Reserve expansion is a compelling necessity to protect OPEC quota allocation to the country, noted the former SPE Africa boss Egbert Imomoh. The history and development of marginal fields in Nigeria are well captured by Messrs Afolabi Oladele and Austin Avuru. The latter’s testimony in “How Platform Petroleum developed its marginal field,” a grey box abstract, should prove instructive to any investor planning to venture into a similar investment. No reader would miss Chike Onyejekwe OML 29 production ramp-up ‘miracle’ story in the fourteenth chapter and its enduring lessons.
The gas and power developments are captured in the fourth section. Climate change realities have boosted gas use, which currently accounts for 24 percent of the global energy mix. Messrs Chima Ibeneche and Babs Omotowa, both former chief executives of Nigeria LNG Limited provide rare business insights. However, it is the duo of Messrs Wale Shonibare and Wiebe Boer who not only point the way to resolving the intractable issues in Nigeria’s power sector but also as to how to make it bankable, while diversifying into renewable energy and boosting off-grid capacities.
Under downstream in the fifth section, Nigeria’s petroleum subsidy and the PPPRA template received the attention of a former PPPRA chieftain. A section five table provided a 30-year gasoline and diesel price tracker, a helpful set of information for those wishing to objectively understand the issues and subsidy debate. Dr Layi Fatona tells the story of how Niger Delta Petroleum Resources (NDPR) set up the country’s first mini/modular refinery upstream and generously gave prospective investors tips.
Originally published on naija247news