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Oil/Gas Industry Stakeholders React to President Tinubu’s Signing of Executive Order for Oil and Gas Industry

 Olushola Bello

…say it addresses some of the flaws in PIA

Stakeholders in the oil and gas industry have reacted to the Executive Order signed by President Ahmed Bola Tinubu saying that it would address some of the flaws and also impact the growth of local content, adding that it seems to be the right step in the direction defining/negotiating commercial terms on projects by project

Dr. Godswill Ihetu, former managing director of the Nigeria Liquefied Natural Gas (NLNG) while reacting to the development said: “I think it addresses some of the flaws in the Petroleum Industry Act (PIA), facilitates investments and increase in oil and gas production.”

 In his comment, Abiodun Adesanya, Chief Executive Officer, Degeconek Nigeria Limited, stated that he suspects it might impact the growth of local content development. “Although I agree standards are falling and something has to be done first to sanitize the list of participants and sustain standards in line with global best practices.”

While Abiola Ajayi, Managing Director of Energy and Mineral Resources ( EMR) said the development seems to be steps in the right direction, defining/ negotiating commercial terms on a project-by-project basis. “This could encourage the international oil companies (IOCs) to quickly advance projects especially those in deep water to final investment Decision (FID) if they can negotiate better contractual terms, which may be a good thing for the industry

The Independent Petroleum Producers Group (IPPG) stated that it wholeheartedly endorses the Executive Orders signed by President Bola Ahmed Tinubu GCFR, aimed at revitalizing investment in Nigeria’s oil and gas sector and positioning the nation as Africa’s premier investment destination within the energy sector.

In a statement signed on behalf of the IPPG by its Chairman, Abdulrazaq Isa, OFR, the group stated that President Tinubu’s policy directives include the introduction of value-adding fiscal incentives for investments in upstream non-associated gas (“NAG”) developments, midstream infrastructure, and deepwater assets. The orders also streamline the industry’s contracting process and seek to reform local content practices.

According to him, all of these measures are pivotal to the future of the industry.   They have been recommended by the industry for many years.

“We are encouraged to see swift progress within a relatively short period. We believe these actions will directly result in the following benefits for Nigeria and the oil and gas industry: Reduced project cost; Faster project execution timelines; Reduction of waste, and multiple layers of middlemen in project contracting processes; Increased number of gas projects reaching Final Investment Decision (FID); Increased gas processing and gas distribution capacity, as gas infrastructure investments grow; and Increased gas supply for domestic use (including power, cooking gas, etc.) and for export”.

IPPG stated that it stands ready to collaborate with the government and all stakeholders to ensure the successful implementation of these directives.

“We believe these reforms will attract more investments into our sector, accelerate project completions, and ultimately, contribute to the prosperity of all Nigerians”.

The global oil and gas industry continues to contend with limited availability of capital, and uncertainty as to the evolution of future demand. In the past, Nigeria often unintentionally compounded these challenges and delayed investment by inserting the government between willing private-sector counterparts. This is recently evident in the delayed approval of recent IOC divestments, the stalled progress in taking FID in the outstanding upstream Deepwater projects as well as gas resource & infrastructural development projects.

“President Tinubu’s policies suggest a new direction that prioritises Nigeria’s strategic interests, ensures that we can harness our vast gas resources effectively and recognises the role of the private sector in driving growth. These Executive Orders are credible impetus required to re-launch the growth of production and revenue from the oil and gas industry, and marks a significant milestone in our journey towards achieving our shared goal of energy security and economic stability for all Nigerians”, IPPG concluded.

The IPPG is a twenty-eight (28) member association of indigenous Exploration and Production companies committed to the advancement and sustainability of the Nigerian oil and gas industry. IPPG advocates for policies that support the growth and development of the sector, ensuring Nigeria’s position as a leading energy provider globally.

The Special Adviser to the President on Energy, Mrs. Olu Verheijen, has however, given reasons why President Bola Ahmed Tinubu signed Executive Orders to transform the gas and energy sectors of the economy, submitting that gas remains the best option for Nigeria’s attainment of energy stability.

The presidential aide, who addressed the media in Abuja on Friday, pointed out that the steps taken by the president was to make gas readily available to Nigerians at affordable rates for all purposes and reduce dependence on petrol and diesel.

Mrs. Verheijen said: “Our ambitions to accelerate our economic growth and diversify the economy for the benefit of all Nigerians require timely, credible, clear and consistent policy. “We are faced with a revenue crisis which is impacting all Nigerians. To urgently address this, President Bola Tinubu is actively seeking ways to grow revenue and forex to stabilize our economy and currency. The oil and gas sector is critical to our ability to do so. However, our current oil and gas production and investment levels fall significantly short of our potential”.

“Since 2016, Nigeria has only accounted for only four percent of Africa’s total oil and gas investments, despite possessing 38 percent of the continent’s hydrocarbon reserves. A society is not rich because of its resources but because of what it does with those resources. President Bola Ahmed Tinubu is determined to reverse this trend and take decisive steps to ensure a conducive business climate and reposition Nigeria as a preferred investment destination for the oil and gas sector,” she explained.

The energy adviser said that it was in a bid to reverse the negative tendencies in the sector that the president issued a directive to streamline and clarify the scope of two regulators in the petroleum sectors and to provide certainty and create a conducive business environment for the players.

She pointed out that consequent upon the directive, the TNP pipeline, which had been repeatedly vandalized, is now enjoying improved uptime and doubled its availability, resulting in increased liquids of over 200,000 barrels/day being transported over the last six months and increasing the availability of NLNG Trains 1-6 from 57 percent in 2023 to 70 percent in Q1 2024.

The adviser said the president had also introduced fiscal incentives to deepen Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG) penetration all aimed at easing the impact of fuel subsidies on transportation cost, enabling the displacement of PMS/Diesel and contributing to stabilising the price of cooking gas in the market and support the transition to clean cooking.

The presidential aide explained that the Fiscal Incentives for Non-Associated Gas (NAG), Midstream and Deepwater Oil and Gas Developments is aimed at facilitating the monetization of Nigeria’s extensive oil and gas resources.

She said: “For Gas, 76 percent of our gas reserves remain undeveloped. This explains why, despite possessing one of the largest gas reserves globally, we lack sufficient gas to meet our domestic needs for industry, for power and cooking. The fiscal incentives introduced will attract the much-needed investments to enhance energy security, catalyze economic activity, attract essential foreign exchange, and promote job creation.

businessstandardsng.com/A strategic cross-reporting initiative.

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