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By Emmanuella Anokam: News Agency of Nigeria (NAN)
On his inauguration on May 29, 2023, President Bola Tinubu, who is also the Minister of Petroleum Resources, began his administration by announcing the removal of subsidy on Premium Motor Spirit (PMS), popularly known as petrol.
The implications are that the fuel subsidy removal would free up financial resources for other sectors, incentivise domestic refineries for more petroleum products, and reduce dependency on imported fuel and channel funds for development of critical projects.
It is clear that the president stepped on toes with the subsidy removal, as it ended nefarious activities and dealt a big blow on economic saboteurs, especially those in the oil and gas sector.
It also deprived them of their ill-gotten profits.
The saboteurs usually smuggled the subsidised petroleum products to neighbouring African countries and sell them at exorbitant prices.
However, Nigerians are yet to reap the benefits of the fuel subsidy removal, as they currently face hardship, sufferings and economic downturn due to the removal.
Fuel is being sold at exorbitant rate by marketers because of the high cost of refining the crude outside the country, as Nigerians earnestly await oil production by our refineries.
The coming on stream of the 20 billion dollars Dangote Refinery with a refining capacity of 650,000 barrels per day (bpd) in the third quarter of 2023 was a plus to the country’s oil sector.
Though the company has begun pumping refined Automotive Gas Oil (Diesel) and aviation fuel or Jet A1 but yet to begin supply of fuel to bridge the gap and cushion the inadequacy in the sector.
Though presently, the sector has witnessed some landmark achievements.
The Federal Government had on Dec. 21, 2023, announced the mechanical completion and flare start-up of the Port Harcourt Refining Company Limited (PHRC).
Sen. Heineken Lokpobiri, the Minister of State for Petroleum Resources (Oil), who disclosed this during an inspection of the refinery, said the development would herald the production of petroleum products, though Nigerians are still awaiting its full commencement.
The minister said that the mechanical completion of the Port Harcourt Refinery Company was a milestone achievement, with refining operations set to commence within the next quarter.
He said similar advancements were underway for the Warri and Kaduna refineries aimed at supplying petroleum products domestically and to the Sub-Saharan market, thus eliminating the need for imports.
“In collaboration with security agencies and host communities, we have tackled the menace of oil facility vandalism and crude oil theft.
“Ensuring a steady supply of petroleum products without scarcity has been a priority achieved through our work with NNPC, Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) and other agencies.
“Furthermore, with the president’s approval, we have secured Abuja as the host city for the proposed Africa Energy Bank’s headquarters.
“I have addressed critical issues such as subsidy removal and the sustainable supply of petroleum products, scarcity is now a thing of the past.
“Once our refineries, including modular and private monolithic refineries, become operational, we will cease importing petroleum products, thereby, strengthening the naira,” he said.
Lokpobiri, recently, while giving an update on the achievements in the oil and gas sector in the past one year of this administration, based on the Renewed Hope Agenda, Number 4 of Mr President, which aims to unlock the natural resources of Nigeria for economic prosperity, listed further achievements.
He said the foremost achievement was the significant increase in oil production, adding that on assumption of office, production was at approximately 1.1 million barrels per day (bpd), including condensates.
“Today, I am proud to report that we have increased our production to approximately 1.7 million barrels per day (inclusive of condensate).
“This increase is a testament to our relentless efforts to streamline operations and resolve conflicts among stakeholders,’’ the minister said.
Lokpobiri listed the steps taken to increase crude oil production to include; efforts toward revamping redundant oil assets to active status; continuous engagement with the International Oil Companies (IOCs) and others in resolving industry disputes.
According to the Minister, the Federal Government engaged local communities with critical assets on the need to protect the assets to reduce oil theft in the country.
He said that the Federal Government consolidated on existing security framework with private security firms and government security agencies for pipeline surveillance.
These, he said led to sharp decline in crude oil theft and thus increased production for export.
During this period, we also experienced the coming on stream of OMLs 13 (Sterling Exploration) and 85 (First E&P), with the respective assets reaching first oil in the development of their licences.
These assets are expected to produce an average of 20,000 and 40,000 bpd respectively.
He said that investments commitment to the tune of five billion dollars and 10 billion dollars respectively in deep-water offshore assets; and 1.6 billion dollars investment commitment in oil and gas asset acquisition was secured.
Lokpobiri said that the Federal Government has been working diligently to eliminate the bureaucracies and bottlenecks that had stifled investments for over a decade.
According to him, the Federal Government has been providing ministerial consent to companies to divest some of their equity in their assets to companies of proven technical and financial capability.
The year under review also witnessed the presidential ground breaking of the 350 megawatts Gwagwalada Independent Power Plant (GIPP) project which was necessitated by the need for delivering gas toward additional power generation capacity.
The project, being undertaken by the Nigerian National Petroleum Company Ltd (NNPC), will enable gas supply to the plant which is expected to come through the Ajeokuta-Kaduna-Kano (AKK) Gas Pipeline, currently at advanced stage of construction.
The president also recently inaugurated three critical gas infrastructure, which included the ANOH-OB3 CTMS gas pipeline and ANOH gas processing plant in Assa, Ohaji/Egbema in Imo State and the expansion of the AHL gas processing plant 2 gas project in Kwale in Delta.
The projects, being undertaken by the NNPC Ltd. and partners in line with Tinubu’s commitment to leverage gas to grow the economy will add 500MMscf/d gas production capacity to the country and increase the available gas pipeline network by 23.3 kilometres
The increased oil output has been applauded by experts, who also highlighted expectations.
Assessing the administration, an Economic Expert, Dr Chijioke Ekechukwu said although there was an improvement in the last one year in the oil and gas sector, but a lot more could still be achieved.
“The removal of subsidy has reduced the multiple unwholesome malpractices associated with the subsidy and has availed more funds available for the government to deal with its obligations, although we hear subsidy still exists.
“The fight against oil theft has enhanced productivity of oil, though we are still far away from the installed capacity and even from the Organisation of the Petroleum Exporting Countries (OPEC) quota of 1.7 mbpd assigned to Nigeria,’’ he said.
Ekechukwu decried high prices of petroleum products, which however, have contributed to high inflation rate among other factors.
He advised that the economy could rebound significantly in the next one year if we could produce crude oil exceeding the OPEC approved quota and end importation of petroleum products by making all the refineries to produce up to installed capacity.
“The government can end all manners of gas flaring and converting same for local use, end oil theft or even reduce same to barest minimal.
“Ensure all redundant oil Wells are bidded for and leased accordingly, then reduce corruption and increase transparency in the oil and gas industry,’’ he advised.
Mrs Nkechi Obi, the Group Managing Director and Chief Executive Officer (CEO), Techno Oil, hailed the Federal Government for the ongoing reforms in the sector. .
“It is obvious they inherited an economy that was on a free fall and will need much time to patch the mistakes of the last government. There will be light at the end of the tunnel.
“My only advice would be for the Tinubu government to lead by example in the area of transparency and cohesion, reduce ethnic conflicts and encourage more collaboration among private and public sector,’’ she said.
The Techno Oil GMD called for fair competition among private sector unlike the previous government that allowed forex to be traded at different rates for different persons and companies, adding that the current government should provide a safe environment devoid of security risk.
Obi urged the Federal Government to reverse its directive, which placed imported Liquefied Petroleum Gas (LPG) cylinders and other components on custom duties and Value-Added Tax (VAT) payment exemption list.
She described the directive as a clear market distortion, adding that the indigenous manufacturing companies would not be able to compete with the dumping of substandard cylinders from Asia.
“As a matter of urgency, the government should impose duty on imported LPG cylinders. The six manufacturing companies of cylinders have created jobs and wealth and the government should not make it a wasted effort.
“All the efforts are eroded by that single policy. We can meet the demand of the country,’’ she said.
An economist, Mr Yusha’u Aliyu, said the global expectation for the industry was centred on stability in energy supply, especially by the International Energy Agency (IEA).
“However, demand is expected to rise, especially due to Gross Domestic Product (GDP) high forecast in most advanced economies.
” Meanwhile, expanding gas project in sub Saharan Africa, notably the AKK Project in Nigeria, is expected to shape world supply and consumption,’’ he said.
According to Mr Olabode Sowunmi, an oil and gas expert, the refineries are expected to produce or refine crude in 2024, and what they should produce should augment and significantly affect what is being imported.
In his views, there were a lot of activities without motion, adding that the downstream was the only area of the industry that affects the common man; so fuel price should be made affordable.
He called for transparency and harmonised work in the sector
According to some other experts, Nigeria is expected to intensify effort in the programmes concerning energy transition and rapid shift to more sustainable sources of energy and emergence of technologies to reduce carbon intensity of the fossil fuel.
Nigerians are also expectant of the construction of the 25 billion dollars Nigeria-Morocco Gas Pipeline Project which aims to link Nigeria to the European market.
It is expected that the ongoing establishment of Compressed Natural Gas (CNG) stations and vehicles will gain more ground at different points to reduce carbon foot print and provide cheaper alternative fuel to motorists to alleviate the pains and challenges currently faced by Nigerians. (NAN)(www.nannews.ng)
