Moving forward, the federal government has announced that it will solely prioritize and evaluate energy companies of demonstrated capability when granting awards during bid rounds. The decision aims to put an end to the blunder of transferring Nigeria’s oil and gas exploration and production assets to companies that lack enough funding and technical expertise in order to fully maximize the potential of these invaluable resources. In Lagos, during the Independent Petroleum Producers Group’s (IPPG) Annual Dinner for the year 2023, Senator Heineken Lokpobiri, the Minister of State for Petroleum (Oil), confidently expressed his views. Lokpobiri gave his word to all individuals involved in the Nigerian oil and gas sector, guaranteeing that the current administration has successfully eradicated the era characterized by lengthy license extensions and the need for ministerial consent.
The minister detailed President Bola Tinubu’s efforts to persuade the leaders of OPEC member nations to back Nigerian request for an augmentation in oil production quotas. During the event, the presidency revealed an exciting news. Mrs. Olu Verheijen, the Special Adviser to the President on Energy, shared that a whopping sum of $13.5 billion is projected to be invested in the nation’s energy sector over the span of the next year. Mr. Abdulrazaq Isa, the Chairman of IPPG, expressed his dismay over the continued lack of investor confidence in the oil sector, even after the enactment of the Petroleum Industry Act (PIA) more than two years ago. Lokpobiri, set to address the gathering, urged the indigenous operators belonging to the IPPG group to elevate their efforts in maximizing the nation’s hydrocarbon reserves.
Gov’t to bolster the sector by creating a favourable investment atmosphere.
Lokpobiri expressed his belief in the ability of the 29-member indigenous oil producers who were currently contributing approximately 200,000 barrels a day. He acknowledged their contributions and expressed optimism that, given appropriate incentives, they would be able to increase this number twofold in the near future. The producers were given reassurance by the minister that going forward under the leadership of Tinubu, there would be no more hindrances in granting their extensions or delaying their ministerial consent, among other things. According to him, the government aims to bolster the industry by establishing a favourable Investment atmosphere and implementing strong financial and regulatory structures.
He expressed the notion that in future bid rounds, it is crucial to exclude the inexperienced individuals and only allow the experienced ones to participate. It has come to their attention that there are numerous licensed people who lack the necessary skills and resources for exploration. The challenges faced by the operators, including fiscal, security, regulatory, funding, and policy inconsistency, were acknowledged by him. He mentioned that it is now the government’s responsibility to eliminate all the obstacles that the players have raised concerns about. In order to achieve the goal of reaching a minimum of two million barrels of oil production per day by 2024, the minister emphasized the significant involvement required from the IPPG as a collective entity. OPEC reportedly informed Nigeria, as per Lokpobiri, that their agreement entailed utilizing their November production as the designated quota for 2024.
Africa’s giant to secure headquarters of Africa Energy Bank.
By disregarding condensates, OPEC granted Nigeria a quota of 1.5 million barrels, which allows it to Finance the budget for the year 2024 through the inclusion of approximately 300,000 barrels of condensate. Lokpobiri emphasized that the African Petroleum Producers Organization (APPO) and the upcoming establishment of the African Energy Bank are key steps in tackling the financial issue confronted by operators not only in Nigeria but also in other African nations. He expressed the ardent efforts being made by Nigeria to secure the establishment of the bank’s headquarters within the country, emphasizing the absence of any continental agency headquarters in Nigeria except for ECOWAS. Verheijen, the Special Adviser to the President on Energy, conveyed in her message of goodwill that her interactions with relevant parties have revealed an abundance of investment prospects within the sector.
Predicted to reach a staggering $55.2 billion in potential by the year 2030, $13.5 billion of investments is anticipated within the upcoming 12 months by energy corporations, according to her statement. Verheijen reiterated that Tinubu’s administration, in alignment with its Renewed Hope Agenda, maintains its unwavering dedication towards enhancing the business and investment atmosphere within the country, emphasizing the energy sector in particular. Verheijen emphasized, during previous interactions with stakeholders, that the president’s dedication to advancing the energy sector remains unwavering. Extensively, she added that the president is diligently investigating diverse avenues to enhance Revenue and bolster the Economy. Despite the country’s untapped potential, she asserted that the Oil and Gas Industry continued to be of utmost importance in this aspect, even though the current levels of production failed to meet expectations.
Identification of key objectives to attract necessary investments.
Isa, chair of IPPG, expressed dissatisfaction with lack of clarity for Investors in Nigerian oil industry, even after PIA enactment. He affirmed its importance for transformations in the petroleum industry and attributed declines in crude production partly to investor uncertainty, global push for energy transition, and Insecurity in the Niger Delta region. Isa stressed the importance of evaluating the lack of investments in the industry and creating a favourable business environment to enhance competitiveness. He further urged for the identification of key objectives to attract necessary investments and boost production. Isa presented a list of remedies to strengthen the regulatory structure and fiscal regime’s competitiveness and Security in the Niger Delta region. He also supports swift IOC divestments and the implementation of the Decade of Gas policy in order to find solutions to the industry’s inefficiencies and reduce costs.
