Separation in gas, petroleum call for anarchy, stakeholders say
Nigeria heading in direction of Venezuela, experts insist
Bassey: Priorities on gas without ministry of environment, renewable disastrous
Nigeria’s bleeding oil and gas sector, which is gasping for fresh breath after eight years of former President Muhammadu Buhari’s poor handling, may be heading for a final collapse if President Bola Tinubu follows the path of his predecessor by reserving the ministry for himself, stakeholders have warned.
With crude oil production failing from about two million barrels in 2014 to about 900,000 barrels a day in 2022, revenue plummeted to a historic low starving the economy of the needed foreign exchange (FX) with consequences seen in falling external reserves and exhausted excess crude account.
Stakeholders told The Guardian, at the weekend, that any attempt by Tinubu to retain the office of the Minister of Petroleum Resources would amount to an invitation to catastrophe.
They insisted that Tinubu had already shot himself in the foot with the appointment of separate ministers of state for gas and petroleum, adding that only an ill-advised president would have made such a mistake, especially with the operators already struggling with the two regulators.
A few years before Buhari assigned himself the position, oil revenues were buoyant. Oil revenue was $68.44 billion in 2011 while it was $62.84 billion in 2012. It was $58 billion in 2013, $54 billion in 2014 but went nosedived to $24.79 billion in 2015.
In 2016, it was a meagre $17 billion before hitting $20.98 billion in 2017 and $32.62 billion in 2018. It was $34.21 billion in 2019. The total revenue received from the sector was $20.43 billion in 2020.
While Nigeria collected N21 trillion ($45.6 billion) from the sale of crude oil in 2022, according to the National Bureau of Statistics (NBS), remittances to Federation Account Allocation Committee (FAAC) were scanty as the government sustained borrowing to sustain fuel subsidy.
Sadly, the leadership issue in the oil sector comes at a time when Nigeria and other African countries are projected to record $6.7 trillion loss in stranded fossil fuel assets due to pressure from the energy transition.
Recall that investment into the sector has plunged just as crude oil reserves have stagnated at about 37 million barrels for over a decade even as religious and regional sentiments escalated in the eight years of Buhari as the petroleum minister.
The two ministers of state who served during the tenure, Ibe Kachikwu and Timipre Sylva were constantly at loggerheads with northerners dominating management of the state oil firm, Nigerian National Petroleum Company Limited, even as decision-making favoured those who had access to the then unavailable petroleum minister.
Renowned energy expert, Prof. Wunmi Iledare, who believes that Nigeria is deliberately pushing its way to the Venezuela situation, urged Tinubu to perish the idea of making himself the Petroleum Minister.
The President, according to him, should avoid adding complex responsibilities to the enormous task of governing a complex nation, stressing: “Perhaps he has not been properly briefed about the Petroleum Industry Act (PIA) institutions.”
While the Nigerian economy is on crutches with oil and gas still a major revenue earner, Iledare noted that Venezuela offers Nigeria a great lesson on what not to do concerning managing the oil and gas sector in a petroleum-dependent economy.
“The last eight years under Buhari as the Minister of Petroleum left much to be desired. The mandates in the PIA for the Minister of Petroleum are very tasking and the responsibilities are daunting.
Buhari
The institution, if moved to the presidency as was the case under Buhari, may become weaker and perhaps lead Nigeria to follow the Venezuela experience, which will mean the collapse of the oil and gas industry,” Iledare said.
He said even if the President eventually comes to terms with the complexity of the Nigerian Republic, the complexity of managing petroleum resources and the development process is not child’s play and is global in scope and structurally conservative.
Regarding two ministers of state to manage the petroleum policy anchor institution in the PIA, Iledare said he was baffled at those advising Tinubu, adding that gas resources in whatever forms are part and parcel of Petroleum Resources.
“I am shocked at the designation of a separate Minister of State for Gas Resources and another Minister of State for Petroleum Resources. Honestly, this is erroneous and perhaps, a good reflection of the lack of proper understanding of gas as a secondary energy and natural gas resources as a primary energy source. And decoupling the upstream aspect of crude oil and gas development is not recommended. It is understandable, however, if the present concern of the President is to unlock the midstream and downstream of gas. Then he must define the responsibility carefully to avoid a tug of war in the ministry. Thus, there has to be a rethinking and these are my recommendations.
“First, I still don’t understand the reasoning for separating gas resources and petroleum resources functionally. As I said earlier, petroleum is not crude oil alone. It is inclusive of liquid petroleum and gas resources as well as shale oil, shale gas, gas shale and oil shale resources to manage upstream together,” Iledare said.
The professor noted that there could be a Ministry of Petroleum and Energy with a Minister of State for Power, one for gas and another for petroleum.
He noted that the first two would be dealing with gas and power as secondary energy sources while the Minister for State for Petroleum in the Ministry of petroleum would be responsible for primary petroleum resources and crude oil value chain mandates, adding there is a lesson to learn from OBJ, who eventually surrendered the portfolio.
Iledare said a Coordinating Minister for Petroleum and Energy could then serve as the clearing and consolidating agent of ideas for connectivity concerning petroleum and energy matters in general, but stressed that this cannot be Tinubu.
The Executive Director of Health of Mother Earth Foundation (HOMEF), Nnimmo Bassey is also unsettled with the development, especially the separation between petroleum and gas.
The lineup of Tinubu’s ministries remained a grave danger to the environment, Bassey said as he added that three of the announced ministries, the Ministry of Gas Resources, and the Ministry of Petroleum and the Ministry of Marine and Blue Economy raise special concerns at this time of our history.
“It is shocking to see that the Environment has no minister. Not appointing a minister for the environment sends a signal to Nigerians about the concern of the president for a sector that is so fundamental to their survival.
“While we have continued to raise concerns about the degraded environment, creating a Ministry of Gas Resources would only give license to the continuous gas emissions which are a major cause of climate change and attendant problems faced by our communities,” Bassey said.
He insisted that placing a special focus and promoting the gas industry, would inexorably discourage the development of cleaner and more sustainable energy alternatives thereby further creating a long-term dependency on fossil fuels, at a time when all efforts should be made to “depetrolize” the economy.
A former Chairman of the Society of Petroleum Engineers (SPE), Joseph Nwakwue said it would be difficult to justify that Tinubu would retain the Petroleum Minister position.
“We have tried that without much success,” Nwakwue said, stressing that it would have been better to appoint an oil and gas technocrat, which the country has in excess to drive growth in the sector.
“This sector is bleeding badly and gasping for air. The Nigerian economy is hugely dependent on this sector. To reverse our dwindling fortunes, nothing but a competent and tested professional would work,” Nwakwue said.
He also insisted that the separation of gas from Petroleum is ill-advised.
Former management staff at Shell, Madaki Ameh noted that the prevailing development showed that the country is headed for another incompetent handling of the oil and gas industry in Nigeria.
President Bola Tinubu
Ameh said: “Tinubu does not know the Oil and Gas Industry to opt to be the substantive Minister of Petroleum Resources. We will see another period of cluelessness and ineptitude in the running of the Petroleum Industry. These initiatives are going to implement the Petroleum Industry Act even more tenuous and duplicative.”
Ameh rejected the separation of the Minister of State for Oil from the Minister of State for Gas, stating that if the intention was to focus on Gas, it would only increase the level of red tape around the running of the industry, thereby increasing the cost of governance.
A renowned energy scholar at the University of Ibadan, Prof. Adeola Adenikinju, believes that Tinubu may be able to handle the petroleum industry better and differently than Buhari.
According to him, it has the advantage that the sector would attract the highest level of attention.
“I think the personalities of Buhari and Tinubu are different. It may not be right to use the same brush to paint them. You can infer that in the way and manner labour strikes have been addressed under the two presidents,” he noted.
Adenikinju, however, said the separation of gas from petroleum with a separate minister of state may further complicate the operations of the petroleum sector if not properly managed.
“Operators are already finding it difficult with the two regulators in the petroleum sector. There are overlaps of functions and undercurrent competition between the two regulators,” he noted.
Noting that although the arrangement could have some merits, a lot of work must be done to ensure that lines of responsibilities and jurisdictions are clearly defined.
Director at the Centre for Transparency, Faith Nwadishi, said although the President has not publicly declared himself as the minister of petroleum, such development must not happen.
“If that happens, it will be business as usual because the President is very busy handling the country and ECOWAS chair. Taking over petroleum would be back to square one.
Nwadishi lauded the gas plan, saying that a state of emergency should be declared on gas for the projected plan to be achieved.
She however warned that separating the roles and ensuring that the development does not create further instability is sacrosanct.
