By Derrick Bangura
Mr. Austin Avuru, a co-founder and former CEO of Seplat Energy Plc, has called for a state of emergency in the Nigerian oil and gas sector, claiming that up to 80% of oil extracted in the country, mainly in the east, is stolen.
Mr. Tony Elumelu, Chairman of Heirs Holdings, decried the deteriorated situation of the industry a few days before Avuru’s remarks, stating that around 95% of oil production does not make it to the port. Elumelu’s oil holdings are in the Niger Delta.
Elumelu also chairs the Board of the United Bank for Africa (UBA), holds a controlling interest in Transnational Corporation (Transcorp) and runs Trans-Niger Oil & Gas Limited (TNOG).
The owner of TNOG, which recently bought 45 per cent of Oil Mining Licence (OML) 17, argued that oil theft was generally responsible for Nigeria’s inability to meet its Organisation of Petroleum Exporting Countries (OPEC) quota.
“How can we be losing over 95 per cent of oil production to thieves? Look at the Bonny Terminal that should be receiving over 200,000bpd barrels of crude oil daily, instead it receives less than 3,000 barrels, leading the operator, Shell to declare force majeure,” he had lamented.
But writing for Africa Oil & Gas Report, Avuru, who is the Founder/ Executive Chairman, AA Holdings and Vice Chairman Platform Petroleum, maintained that as far as 1990, Nigeria’s average daily oil production was about 1.85 million barrels per day when the country’s oil reserves at the time stood at about 16 billion barrels.
However, he deplored the current situation in which Nigeria cannot meet the quota allocated by OPEC and had been struggling to produce 1.4 million barrels per day. He argued that aside theft of Nigeria’s oil, with eyes fixed on divestments and exit, the International Oil Companies (IOCs) have not made any meaningful investments in the sector in the last 15 years, with the result being the current declining production.
“Much worse, the entire export pipeline network has been surrendered to vandals and illegal ‘bunkerers’. Thus, the phrase ‘crude theft’ which crept into the industry about 2010 has taken on a new meaning.
“There are some pipeline systems now (particularly in the East) where 80 per cent of production injected therein does not make it to the terminal! Almost every producer is now cooking up alternative evacuation schemes that cost four to five times what pipeline export would normally cost,” he lamented.
Avuru noted that while the decision to leave by the IOCs was outside Nigeria’s control, the country’s delay in passing the Petroleum Industry Bill (PIB) ensured that investment in the sector dried up a long time ago.
“In fact, my projection is that, by Christmas day of 2025, Total would be the only IOC in Joint Venture (JV) with the NNPC,” he said.
He pointed out that the situation was not different with domestic gas delivery, adding that even though Nigeria continues to weave all the right slogans about the future of gas in Nigeria, in the past five years, he could only point at a couple of Nigerian independents who are investing in gas development and processing for the domestic market.
“The state of the Nigerian petroleum industry is a national emergency. Oil production is down to about 1.4 million barrels per day and declining and this includes about 600,000BOPD from the deep water.
“Domestic gas production has stagnated at about 1.2 billion cubic feet (Bcf) per day over the past five years at a time when projected production should have been 3.5Bcf per day. The collateral impact of course, is the low level of power generation which itself has stagnated at about 4,000 megawatts per day since 2015,” the businessman said.
On recommendations, Avuru stressed that between the upstream regulator (the commission) and the Nigerian National Petroleum Company (NNPC), they need to set up a, “war room”, or some form of an effective task force to develop a blueprint for returning the industry to full bloom.
“The responses we hear today to the myriad of problems outlined above have been ad-hoc, knee jerk and in some cases only self-serving. I dare repeat that the situation has to be treated as a national emergency,” he explained.
He argued that a well-organised transition driven policy direction, from the retreating IOCs’ needs to be developed, noting that intervening by pre-emptive acquisitions cannot be a sustainable solution proffered by the NNPC.“There has to be a deliberate policy-driven return to the traditional onshore/shallow water terrains. Eighty per cent of our remaining reserves are still in this belt.
“To do this, we have to address the twin problems of reliable pipeline evacuation and community restiveness. These problems have become heightened, not because there is no solution, but because we have abandoned every attention to them in the last 15 years.
“When these two problems are tackled, plus a strict application of the ‘drill or drop’ provisions of the new PIA, huge investments in drilling and facilities revamp will flow again into this terrain.
“Finally, we have to match our gas slogans with effective, measurable, policy actions to drive investments in domestic gas supply. The current flip-flops on pricing and commercial structure of the gas business cannot stimulate investments in the sector.
“This industry will not wake up by God’s miracle. We have to wake up and design the stimulant that will revitalise it,” Avuru said.
Sylva: Nigeria Will Not Support Single Track Energy Transition Strategy
Meanwhile, the Minister of State, Petroleum Resources, Mr. Timipre Sylva, said yesterday that Nigeria was not in support of any narrative that supports a single lane energy transition strategy.
The minister insisted that Nigeria would remain at the vanguard of the crusade for a multifaceted energy transition timetable that will attract more investments for Africa, while taking cognisance of the current global drive towards renewables.
A statement by the Senior Adviser (Media & Communications) to the minister, Horatius Egua, quoted Sylva as having made the declaration on the heels of a collective decision by African petroleum and energy ministers to present a common voice at COP 27, in Egypt.
The minister insisted that Africa should be allowed to continue to exploit its hydrocarbon deposits for the development of the continent, rather than being stampeded into a process which does not fully benefit its people.
“Nigeria will continue to drive the direction of the narrative for the African energy transition programme. We have stood out to say ‘no’ to a single track energy transition programme.
“We will continue to support a transition agenda that will promote gas and renewed investments in the hydrocarbons sector for Africa,” Sylva said.
According to the statement, Sylva, and the Egyptian Energy Minister, Terek el Molla had been the main voices in articulating a multi-track approach to the energy transition programme for Africa.
“Both leaders are of the view that for the energy transition programme to be meaningful, Africa must be factored into the global energy transition programme in such a way that takes care of the peculiar African situation.
“Nigeria will continue to advocate for gas as a transition fuel for Africa. We have said that we cannot move at the same pace with the rest of the world because we contribute less than two per cent of the global greenhouse gas emission. We are not the problem and we cannot be made to pay for the sins we did not commit,” he stated.
The minister added that for anyone to say Africa should abandon its abundant hydrocarbon deposits for the uncertainties of renewable energy was most unfair.
He noted that as at today, there are still people without clean cooking fuels in Africa, explaining that over 600 million people are without basic energy.
“So, how do we meet their energy base load? We can only achieve this through gas. It’s only through a multi-pronged approach that we can achieve this. It is obvious that we cannot move at the same pace with the rest of the world as far as the energy transition programme is concerned,” he maintained.
At the just concluded CERAweek, in Houston, United States of America, the statement noted that Sylva and el Molla led other African ministers to meetings where they resolved to project a common front in the energy transition timetable for Africa.
“We have a huge hydrocarbon deposits in the continent and must we abandon it because some people have said we should? Some African countries like Ghana, Angola and others are just coming to the table and should they just abandon what they have because some countries are saying we should develop renewable energy? That will be an unfair decision.
“We are not saying we won’t be part of the transition train for renewable energy but what we are saying as Africans is that we should be allowed to develop our natural resources and enjoy the God-given resources.
“I am happy that the world is beginning to listen to Africa and we are happy about that and we intend to build on that momentum at COP 27 in Egypt by coming out with a common position,” he noted.