Adewale Sanyaolu
There is growing fear among stakeholders that about 90 percent revenue accruing to the Federal Government from oil and gas proceeds may nose dive anytime soon.
This was even as they raised fresh concerns over drawbacks in the passage of the Petroleum Industry Bill (PIB) as well as various unfavorable fiscal and regulatory issues holding the over 15 years bill from being passed into law.
Speaking at a one-day workshop for oil and gas media professionals organised by the Nigerian Association of Petroleum Explorationists (NAPE), experts in attendance warned that the delay has led to a loss of about $ 200 billion fresh oil and gas investments for the country.
They disclosed that about five critical oil and gas projects the could have added 875,000 barrels per day(bpd) are awaiting Final Investment Decision(FDI) which may not be taken anytime soon with the non passage of PIB and other unresolved fiscal issues.
They warned that oil would not be there forever and that Nigeria needs make best use of the natural resources as fast as it could, before a possible sunset for most hydrocarbons in the next 30 years.
NEITI raises concern
The Executive Secretary of Nigerian Extractive Industry Transparency Initiative (NEITI), Mr. Waziri Adio, in 2018 warned that the delay in passing Petroleum Industry Bill (PIB) May have cost the country over $200 billion loss.
Adio stated this at a symposium on the Next Steps for PIB convened by NEITI in Abuja.
A worried NEITI scribe explained that the inability of the country to have a new petroleum sector law in place has led to lack of clarity and inadequate transparency mechanisms leading to the more than $200 billion loss in eight years.
He explained that Nigeria is increasingly in competition for oil and gas investments with many other African countries, beside other oil jurisdictions.
‘‘Now that we are hopefully close to the end of this circuitous journey, it is important for us to focus on the next tasks in a way that will proactively and strategically ensure the intention of the proposed laws are fully realised, to ensure that we have not undertaken the long journey in vain,’’ he said.
The NEITI boss commended the 8th National Assembly in getting the Petroleum Industry Governance Bill (PIGB) passed within two years.
He said the PIGB was first introduced in June 2016, and eventually passed by the Senate on May 25, 2017, while the House of Representatives followed suit on January 19, 2018 when it passed its own version of PIGB, stating that it is now clear that a landmark has already been recorded.
But despite the passage of PIGB by the National Assembly, he said there is still much work to be done in the three other bills still pending, adding that at the end of the day, ensuring effective implementation of the resultant laws in ways that will reposition and transform the oil and gas sector to become a real blessing, and not a curse, for the people is important.
Adio noted that despite the fact that oil prices are still not in the threshold of $100+ per barrel , and in spite of the fact that the best days of hydrocarbons are possibly behind the country, the petroleum sector as at last year still accounted for almost 60 percent of government revenues and more than 80 per cent of export earnings.
He opined that, given the disproportionate impact of government revenues and export earnings on the economy, it will not be far-fetched to insist that the oil and gas sector remains the backbone of not just the economy but also of national life.
‘‘Our expectation is that this meeting will address many of the questions that have been asked, including those yet to be asked, or at least, set us thinking seriously about these questions. Some of these include: what transitional arrangements are being contemplated? What is the plan for the fiscal, host community and administrative bills? How do we create optimal equilibrium between revenues for government and returns for investors on one hand and among geo-political zones on the other?”
$100bn FID on 5 projects doubtful
Stakeholders at the NAPE workshop identified five critical oil and gas projects awaiting Final Investment Decision(FID) to include; Bonga South-West and Aparo project (225,000bpd); Bonga North (100,000bpd); Bosi (140,000bpd); Bosi Satellite Field Development Phase 2 (80,000bpd); Ude project (110,000bpd); Zabazaba-Etan project (120,000bpd); and Nsiko project (100,000bpd).
If these projects are sanctioned, Nigeria’s crude production would rise above 3 million (bpd) and also enhance its competitiveness during low oil price regime.
Principal and Executive Director, Kaptepia Capital, Mr. Tosan Omatsola,explained that Nigeria could change its tax regime to make it investor friendly just as in other economies including the United States of America.
‘‘Investors are not charity organisations. They are all out to maximise profit. They want to operate where they can get good return on equity or investment. If they invest one dollar, they are looking at making $10. Even if your tax structure is good but ROl is not, they won’t invest.’’
Omatshola, disclosed that a lot of fresh investments by some IOCs including Exxonmobil and others are taken place in Guyana, because of safe and friendly investment haven in the areas of ROl, taxes and low country risk being a country of 149,000 people.
He noted that the identified five projects were capable of spurring the economy and generating employment for Nigeria’s teeming youths.
Omatsola, urged the Federal Government and regulatory agencies to address drawbacks to the growth of investments in the country and also unveil incentives to encourage investors to the sector. He lamented that the $100 billion investment in the five projects would fetch the country about $1.5 billion yearly in revenue.
‘‘At a time the country is yearning for revenue we allowed these projects to be idling away for about 20 years. This should not have been the case.’’
The Co-Founder, Pillar Oil Limited and EMR Limited, Mr. Seye Fadahunsi, urged that the sedimentary basins be explored for maximum benefits.