Minister of State for Petroleum Resources Mr. Ibe Kachikwu has called for a whittling down of the powers of the Minister of Petroleum Resources, in favour of a stronger industry regulator. At the ongoing Nigerian Economic Summit he said “One thing I can say for sure is that whatever models of the Petroleum Industry Bill we are pushing, we need to begin to see an independent regulator with fairly enormous powers and with less of a political interface, so that the individuals can do their work.
“I am all for whittling down substantially, the powers of the minister, so that these institutions can work well. The reality is that no one stays as a minister forever. It is something we are working on with the National Assembly. We are still working to make the independence stronger,” he added.
At the summit Kachikwu and the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr. Maikanti Baru, put aside their differences and discussed opportunities in the Nigerian petroleum industry and ways to grow the sector. The duo met at the ongoing Nigerian Economic Summit in Abuja, at the Energy Policy Committee session. Baru, a lead discussant at one of the session, came first at the venue of the programme, while Kachikwu walked in about 15 minutes later. As soon as the Minister of State entered, Baru stood, approached him and exchanged pleasantries with him.
Kachikwu also asked that he be represented at the second session of the dialogue by Baru, a request the organisers objected to, because Baru was to chair a session and it would affect his participation. Kachikwu left while the breakout held and did not return till towards the end of the closing session. Baru stood in for him as the Chairman of the session, and when he returned, he joined as the co-chairman. At the end of the programme, they both exchanged pleasantries further, took some photographs, chatted and walked out of the hall together.
Speaking on the opportunities in the Nigerian oil and gas industry, Kachikwu said the industry has immense potentials which are growing on a daily basis. He agreed that the operating environment is tough, but stated that the Federal Government was looking at areas where it can provide incentives to boost returns for investors, so as to attract more investors into the industry. He explained that the Federal Government is putting in place machineries to increase the scope of its earnings in the industry. He also noted that the environment is improving, adding that companies that had suspended their big ticket projects are beginning to look at the potentials of reviving the projects and are set to take Final Investment Decision, FID.
Kachikwu further said that the Federal Government is currently conducting a study to determine why out of the 24 marginal oil fields awarded over a decade ago, only nine were producing and while there were not developed. He disclosed that the essence of the probe was to determine factors hindering the oil fields from producing, if financing or lack of technical skills, stating that is also to move the Nigerian oil industry forward
He said, “Financing is key. We are still yet to developed a model that enables local players access financing very easily. And an environment where we do not have lot of reserves, it would be very tough.
“We are going to be looking at all kinds of guarantee platforms, whether there are money to be set aside over a shorter time period with lower interest rates, whether they are international communities that are ready to invest on basis of guaranteed returns of certain barrels. We are going to see how we would work to come up with a model that would help people. And that is going to come after we do a study.
“We are doing a study right now to find out why the 24 minus nine marginal fields are not producing oil, did not get to development. Let us be sure it is only financing. If it is more of technical skills, then I think we have got to address that differently. If it is more of financing, community development, or quarrels among shareholders, which is a major problem with these teams. A lot of funny bedfellows come together and once they finish, they spend the whole time quarrelling in court and nothing happens. We are going to look at all those.
“At the end of the day, the essence is to move the oil industry forward. All of us make our contributions ; there might be controversies here and there sometimes, but I think everybody is committed to go forward. The actors, the players the regulators.”
Kachikwu assured that the forthcoming marginal oil field bid rounds would be transparent and would ensure that oil producing communities not just participate in the process, but also get the most advantage from the oil fields.
He said, “It is transparency all the way. Whatever we are doing, we are going to be looking to ensure that it is clear to every Nigerian how this things are awarded. Some of the complaints we get from the Niger Delta is how do you arrive at some of these names, how do you arrive at some of these beneficiaries. The more transparent it is, the more you can explain it.
“Even when you do transparency, you have to have some level of inclusive or inclusion. How do you get some of these communities to participate. I hear the suggestions a lot, making sure you engage their stakeholders of some sorts. Whether you arrive at that by having a stakeholders’ percentage that everybody carries along as stakeholders’ participation, or you carve out some of those blocks and ask them to limit the tendering process to just those individuals and investments from those communities.
“The key for this is even when you win, can you develop it? Because you could set all these apart, and as it was said, you have nine out of 14 producing, and you find out that they do not produce. So even when they win it and they have the psychological satisfaction, and yet, no barrels coming out from the ground, hence no benefit to the community. So it needss a lot of balancing to be able to do this.”
He further disclosed that the Ministry of Petroleum is developing models that would enable the President choose what he wants to do and how he wants to go about the marginal fields’ bid round, stating that key issue is that it must be transparent, so that people could see before they go in, what is expected, how the government want to run this and hopefully win on the basis of very well-defined goals.”
Baru, on the other hand, highlighted the opportunities in the forthcoming marginal oil fields bid round, stating that the successful completion of the process would present a veritable opportunity for Nigeria to grow its crude oil output and create employment.
