Economic Recovery: PETAN urges FG to look inward to avert austerity

By Anayo Korie  / Ag Energy Editor


Experts, who gathered at the business dinner and award ceremony organized by the Petroleum Technology Association of Nigeria (PETAN), have urged the Federal Government to look inward for a more effective strategy for translating the huge petroleum resources in the country into rapid industrial and economic growth.

Various speakers at the annual event held in Port Harcourt over the weekend highlighted the need for the nation to look inward and tap its indigenous human and capital resources in driving full industry operations in the petroleum industry in order to efficiently retain and recycle capital in-country.

This, according to them, means that the drive for increased local content in the petroleum industry by successive administrations of the federal government has been quite timely and strategic against the dreaded oil price slump, which currently threatens commerciality of operations.

The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Ernest Nwapa, who was one of the keynote speakers at the event, noted that the local content policy has progressed beyond reversal, advising that indigenous players in the industry must rise to the challenge of driving the industry at times of commercial adversity.

He urged PETAN and other group associations in the industry to assume more responsibility at critical moments to ensure the survival of the Nigerian petroleum industry, saying that the only way out of the tight oil price curve was for the different business interests in the industry to foster unity in tackling a common problem.

“Collaboration among local and international players in the industry is what is required to sustain the development of the economy,” he declared.

Nwapa pointed out that the indigenous players in the oil and gas industry have escaped the average psychological limits in the country, noting that the mindset of the industry has developed above the Nigerian psychological template.

According to him the recent advances and milestones recorded by local players indicated that investors have started advancing into new frontiers driven by strong belief in local capacity to deliver on tough assignments in challenging terrains.

He also explained that the capacity and efficiency so far demonstrated by indigenous oil companies through acquiring  of  divested assets have addressed the concern about the sustainability of the government’s local content policy, adding that wisdom of President Goodluck Jonathan in enacting the policy into law has been  justified.

He lamented that the decades wasted in depending on the multinational joint venture operators to groom the Nigerian National Petroleum Corporation (NNPC) for exploration and production operations had proved futile, adding that no group of players would realize Nigeria’s national aspirations in the industry better than indigenous players.

“The hope of the industry must be planted in the indigenous players,” he said, adding that industry tradition has started moving in favour of local content. He pointed out that the changing tradition has made it easier for violation of Nigerian Content provisions to be very obvious whenever it happened. He said with the evolving tradition, services around the industry have also started responding to the needs of compliance, while also noting that bankers’ support for the industry has continued to improve with the rising indigenous capacity for job execution.

He urged members of PETAN to optimize the use of the Nigerian Content Development Fund (NCDF) by collaborating closely with NCDMB. He also assured them of enforcement of compliance to the rules of disbursement on participating banks.

He made it clear that all banks participating in the NCDF must justify holding the account with evidence of disbursement. He also asked banks that fund local firms outside the arrangement to integrate such loans under the NCDF to enable NCDMB write off part of the funding cost on the companies.

The gains of the Nigerian Content policy, he noted, explained why the oil price drop has not created high level of panic as dreaded in the past. He also pointed out that the cyclical nature of the oil market has entrenched fluctuation and a regular feature, adding that government is responding to the needs of the industry with packages of incentives that would reward compliance to policy targets.

For instance, he said, gas incentives have achieved more advances in gathering and processing investments than penal measures pursued in the past, with the seemingly white elephant gas masterplan now simplified under a new package of incentives introduced with the Gas Revolution programme of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.

Nwapa lauded PETAN for sustaining the tempo in capacity building and training of indigenous workforce in the petroleum industry, adding that beneficiaries of PETAN’s training programmes are fit for employment in other sectors of the economy.

On his own speech, Managing Director of Oando Gas and Power, Mr. Bolaji Osunsanya, who was also a co-speaker with Engr. Nwapa, agreed that the survival of the Nigerian Petroleum industry and the success of running policy programmes depend on the ability of local service providers to deliver without compromise.

He stated that PETAN has the challenge of developing the technology that would enable the industry overcome lean margins under the current price downturn.

Delivering a paper titled, ‘Monetizing Natural Gas to transform Nigeria’s Economy’, Osunsanya, who is also the current President of the Nigerian Gas Association (NGA), advised that harnessing more gas for catalysing rapid industrial growth is the sustainable path to economic development.

While pointing out the key role of gas in global power generation, he said that the combination of gas and power form the prime index of a country’s economic development and key indicators of standard of living.

He noted that Nigeria has one of the world’s biggest natural gas resources in equal split between associated and non associated gas, but lamented that the domestic petroleum industry and policy formulators have failed to translate the resources into economic development.

He also lamented that poor electricity supply to homes and businesses in the country account for the nation’s poverty profile in the global community.

On Nigeria’s gas supply shortage, he lamented that the country’s petroleum industry has continued to re-inject or flare about 44 per cent of total produced gas, noting that only 10 per cent of Nigerian gas is utilized for power generation, 5 per cent for industries, and 41 per cent liquefied and shipped abroad in search of foreign exchange revenue.

He listed the challenges in the sector to include infrastructure gaps; pricing tariffs, power fiscal structure, facility vandalism, insecurity and unstable fiscal climate.

Speaking on Gas Master plan, he said that in as much as the gas master plan was addressing some of the issues, more collaboration is required for full gas monetization, urging indigenous player in the industry to think more of Nigeria and explore practical solutions to the Nigerian power and gas supply challenges through technology and investments.

He tasked PETAN to evolve technical solutions and technology that are specific to the Nigerian situation, suggesting the adoption of models like captive power, industrial clusters, gas-to-liquid plants, mini liquefaction projects, gas compression, and pipelines as options in the nation’s gas monetization programme.

He also called on government to evolve realistic commercial structures as a critical success factor in the gas commercialization agenda, adding that public and privates polices must collaborate  to encourage investors urgently needed to develop Nigerian economy.

He said for the market to achieve supply sufficiency, policies must ensure that the elimination of gas flares is vigorously pursued to logical end.

He urged PETAN to lead in evolving solutions that would resolve the technology challenge.

In his speech, Chairman of PETAN, Engr. Emeka Ene, noted that Nigeria’s current oil price dilemma was a universal concern that affects all interests in the oil industry, adding that players must face the new reality by adopting cost efficient measures in keeping afloat.

He said local content remains the only path for the oil industry to scale through the prevailing market turbulence. In the domestic environment, he said that gas demand for local industries and power plants have become imperative in the face of the new realities in the industry, adding that local content journey have started yielding fruits after 13 year.

He said local content policy introduced by the government has significantly transformed the industry landscape in a manner never experienced in the Nigerian petroleum industry, noting that international oil companies have continued to collaborate with PETAN in a win-win approach.

He also observed that banks in the country have started providing loans to back projects by indigenous players in the industry, calling on the NCDMB to broading and be more creative in its training initiatives with PETAN member who, he said, provide over 250 different services in driving petroleum industry operations.

Meanwhile, all the speakers agreed that the time has come for all groups in the industry to forge collaboration with policy makers to evolve a domestic approach to cut costs, grow efficiency and domicile more industry jobs in order to overcome the challenges posed by price adversities and crumbling commercial interest.

Source : Independent

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