‘Nigeria urgently needs to conduct bid rounds for gas development’

Dr. Diran Fawibe is a leading energy expert with wealth of experience from the Nigerian National Petroleum Corporation. Currently heading International Energy Services Limited, Fawibe in this interview with KINGSLEY JEREMIAH discusses critical challenges and pathway in the nation’s oil and gas sector.

The Department of Petroleum Resources has said the nation’s oil reserve will finish in the next 49 years. What are the implications and way out?
We should qualify that deadline. Base on existing reserves, you could say that our reserves will dry up in 49 years but we could still discover more oil. We can extend the period of the running out. A geological survey has said there are still a lot of oil discoveries, especially in deep water in Nigeria that are yet to be made. And if only we could engage in exploration, we would be able to discover some of these and add to the existing reserves.

For example, if we are able to add additional 20 billion barrels to existing reserves, will anybody say that it will run out in 49 years? Of course not. So, that is a statement that we should not accept. To those, who know the industry and the business, there are more reserves yet to be discovered in the country.

What should we then do? I think this is a wakeup call for the industry and the operators. Of course, operators are currently discouraged due to prevailing investment climate in the country. I wish the government know the extent to which the uncertainties in the industry is affecting the sector. When compared with some other countries especially in Africa, there are no attractive incentives to encourage investment, particularly in deep water. So our government should look at this critically and also pass the Petroleum Industry Bill into law. More importantly, passing the PIB is not enough, there is need for the law to capture critical issues that would fast track the growth of the sector otherwise, investors would be forced to reduce their investment or move out of the country.

Nigeria’s current gas reserves basically came from associated gas accidentally discovered while we were exploring for crude oil. Is there need for bid round that specifically focus on gas exploitation?
Yes. People have been talking about transition from oil to energy, particularly gas. Apart from renewable, this country is endowed with natural gas and we often say that Nigeria is more of a gas producing country. Our natural gas endowment is much more than oil. Today we could be talking about over two trillion standard cubic feet of gas. This is coming at a time when we have not really focused on gas exploration. If we focus on gas exploration, we would double our reserves. At a time when there is pressure on the impact of fossil fuel, it is advisable to look keenly at gas. If there is less demand for oil in the foreseeable future, we then have the natural resource of the future, which is gas. It is generally considered to be a cleaner source of energy. With this, the country would mitigate economic challenges that could come from the uncertainties in the oil demand and supply. Government should strategise and focus on this development. We need to convert gas to other products; like power and other related products. This will also reduce our consumption of fuel and diesel. We can convert our gas into fuel.

The country has not held bidding round in over 10 years. The non-passage of the PIB has been cited as part of the delay. Are you worried about this development?
Petroleum Industry Bill is one of the obstacles that needs to be cleared for oil bid round in Nigeria. Until this is done, we may not get the best from the bid round. Investors need clarity. This is where the problem has been for the past decade. Investors cannot take care of what the laws will say; those who have invested particularly in the deep water, are at logger heads with government over the intended review of the legislation. They have to be mindful of what may hurt their businesses. No one would invest when fiscal terms could change prematurely. Projects are pending in the deep water because of some of these challenges. The only way out for government is to look at the sector objectively.

The executive and the national assembly must agree and be determined to pass the bill to law as soon as possible. If that happens, it will be a welcome development. There are so many attractive countries and investors know where they get reward for their investment. So, it is absolutely important for government to make hay while the sun shines.

How can Nigeria and other African countries, especially oil producing countries mitigate the impact of climate change?
There has to be efficiency in the exploration and exploitation of oil. We need to take cognizance of the fact that there must not be environmental problems, for example, there must not be pipeline leak or vandalism, there must be adherence to quality health and safety standards in operating the various fields, then there must not be gas flaring. Government must ensure compliance with extant regulations that mandated that plan for gas is submitted along with initial project plan. It is regrettable that Nigeria has not met zero gas flaring target since we have been setting the target.

Also, African countries can collaborate in terms of technology or other terms of approach to address the looming impact. Oil companies should work and collaborate in terms of the application of technology to address the challenge.

There have been efforts for local content in Nigeria, in the face of job losses to expatriates, in terms of engineering, technology, research and development, how are we performing?
We are not doing much in the industry yet. But thanks to Nigerian Content Development and Monitoring Board that continues to prevent job losses to other countries. Their sensitization on local content and the engagements across the country are yielding desired result. The policy to domicile and domesticate will internalize our resources. Jobs are done in-country and materials are sourced locally unless that material is not available in Nigeria. In some cases, NCDMB will have to give waivers to certain things based on realistic assessments of what we have on ground. These are some of the things that the Nigerian authorities are doing. However, countries can also collaborate in terms of using the technical know-how and the resources available in one country against the other. So today, there is very little research and development going on in the country. Unless we fund research, though expensive we may not develop the sector as we should.

When you’re just concerned with day to day challenges and have little funds to play with, it will be good to look at research and development. Unfortunately, indigenous companies are not funding research and development. International oil companies are the ones that are usually coming up with new technologies. We are not there yet. For those who have resources to do it, we should encourage them and also encourage indigenous companies to in their own little way, engage in full technology in doing things.

How will the new IESL/DORIS Joint Venture address some of the industry issues, especially local content and skill development?
Any idea that will create benefits for Nigeria should be supported. Such is the JV between IESL/Doris. There are so many projects, especially deepwater projects that can be fast-tracked with necessary in-country capacity.

The country is moving into deep water projects; there would be a number of challenges when these projects come up, especially in the aspect of engineering design and asset management. So, with the JV, its expertise would rub off on Nigeria. The JV is primarily focused on supporting local content and Nigerians. It is a long-term relationship which is expected to bring a lot of values to Nigeria, especially now that there is lack of depth in engineering design in Nigeria.

It has the capacity to boost offshore engineering in the country. With specialisations in FPSO and platforms, Nigeria will benefit in terms of subsea development, fixed and floating platforms, top sides and substructure, onshore facilities, fixed and floating wind turbines, cables and transformer platforms and others.

With this development, IESL-Doris will have access to all the engineering capabilities of Doris Group around the world. This means that if works that are to be done in the country require expertise that do not exist here, they would be brought into the country.

The group has in the past succeeded with a number of Floating Production Storage and Offloading (FPSO) projects in the country and with the new partnership, international Oil Companies and independent players like Total, Seplat Petroleum Development Company, First E& P, Chevron Nigeria Limited, and ExxonMobil Nigeria are being engaged and willing to collaborate on the drive.