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Challenges And Prospects In Nigeria’s Petroleum Industry



Precisely on Sunday, Jan. 15, 1956, Shell D’Arcy Petroleum discovered oil in commercial quantity in Oloibiri in the present day Ogbia Local Government Area of Bayelsa State.

The discovery elicited a carnival-like celebration as it effectively jump-started the development of modern Nigeria, utilizing the vastness of its oil resources.

By the early 1970s, crude oil exploration had reached its peak as an estimated two million barrels of crude oil were produced from the nation’s oil fields daily.

By divine Providence somehow, a son of the Niger delta region of the country , President Goodluck Jonathan, who was barely a year old at the time of the oil discovery — has today become the nation’s Head of State, presiding over the management of the nation’s oil resources, among others.

The occasion of the nation’s 51st independence anniversary has thus afforded perceptive analysts the opportunity to appraise the continued relevance of petroleum resources to the nations’ development despite daunting challenges.

The Group General Manager, Public Affairs Dept., NNPC, Dr Levi Ajuonuma, said recently, for instance, that the efficient management of the petroleum industry had been the key to the economic development and transformation of the nation.

How far this viewpoint goes with Nigeria’s teeming population of analysts is a matter for conjecture but suffice it to say that, no doubt, crude oil remains the highest contributor to the nation’s Gross Domestic Product (GDP).

By a conservative estimate, the contribution of the oil sector is put at 90 per cent, even as Nigeria’s crude oil is highly rated in the international oil market, besides the country being a key player in the affairs of the Organisation of Petroleum Exporting Countries (OPEC) – the club of world’s oil producers and exporters.

While many Nigerian have viewed crude oil discovery as a blessing for the nation, some critics say that it heralded some national drawbacks, especially the drastic decline of agriculture, which had before the discovery of oil been the mainstay of the nation’s economy.

Clearly, therefore, the sector has played a dominant role in Nigeria’s economy as it now accounts for about 90% of her gross earnings. This dominant role has regrettably pushed agriculture, the traditional mainstay of the economy in the early fifties and sixties, to the background.

Since the 1950s when the export of oil started, Nigeria has gradually emerged as a major world supplier of crude oil and an influential member of the Organization of Petroleum Exporting Countries (OPEC).

No doubt, the vast earnings from crude oil has facilitated infrastructural development in the country as well as improved the living standards of the people, though some critics say that more could have been achieved if the revenues from the sector had been judiciously utilized by the nation’s successive leaders since the oil boom years.

Critics have been quick to point to the perceived neglect and the environmental degradation of the Niger Delta region of the nation, where the nation’s oil wealth is derived.

Such discontentment, analysts say, inevitably bred the youth restiveness, insecurity and all manner of social upheavals which plagued the region until very recently.

These, adversely affected the nation’s oil flow and export and by implication led to a downward trend in the nation’s revenue earnings.

The upheavals, nevertheless, culminated in the inception of the Amnesty Programme for Niger Delta militants by the Federal Government under late President Umaru Yar’Adua, which is still ongoing and providing some kind of succor to the aggrieved youths and communities in the area.

Though oil production in the region has picked up since a relative stability has returned to the Niger delta region, the price fluctuations in the international oil market have often created some economic problems for member nations of OPEC, including Nigeria.

Such price instability and security threats in the region have posed serious economic challenges to the country, even as some economists have asked the Federal Government to strive to diversify the economy by reviving the nation’s agricultural sector, which had been neglected.

“The epileptic shifts in the international oil prices and instability in the Niger delta region have made the nation’s economy very vulnerable,” said an economist, Dr Johnson Abejide.

Observers say that despite the multi-billion dollar investments and infrastructural development the sector has attracted over the years, it remained a paradox that the country’s poverty index is still embarrassing to the citizens.

Stakeholders in the oil sector of the economy have alluded to wide-scale corruption and inefficiency in the petroleum industry over the years, which negated the people’s expectations of development from the huge proceeds from crude oil sales.

“There have been lack of transparency, accountability and non-implementation of reforms in the sector over the years and this has limited the nation’s potential in the sector,” said Abejide. That Nigeria has subscribed to the protocols of the Extractive Industries Transparency Initiative, a global organization seeking transparency and efficiency in governance, is somewhat of a development welcomed by many citizens.

In April last year, President Jonathan signed into law the Nigerian Local Content Development Act, which among other things, seeks to develop the indigenous content of the oil sector, with a view to boosting the economic development of the nation. “Expenditure in the industry must transcend returns in terms of revenue and also translate to local capacity, increased technology growth, jobs for Nigerians, capacity to operate and maintain assets and develop critical facilities and infrastructure to support performance of work scopes in Nigeria’’ Jonathan had said.

As one of the immediate gains of the act, the use of made-in-Nigeria pipes for pipeline installations by oil companies is on the ascendancy and this, analysts insist, is capable of enhancing job opportunities in the country. The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, on her part has vowed to continue with the reforms she initiated in the oil industry, with a view to moving the nation’s economy forward.

Industry analyst express the viewpoint that the strict implementation of all enabling laws for the oil industry, and in particular, the passage of the Petroleum Industry Bill (PIB), still pending at the National Assembly, will go a long way to transforming the petroleum sector for the development of the nation.

As Nigerians continues to celebrate her 51st independence anniversary, stakeholders in the industry challenge the Federal Government to develop the political will to strictly enforce all laws in the industry and thus plug all loose ends the exist.

Jimoh writes for News Agency of  Nigeria.

Muyideen Jimoh

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Oil & Energy

RSG Lauds Refining Firm’s Friendly Policies



The Rivers State government has commended Niger Delta Refineries Limited, an indigenous petroleum refining company, based in the state, for its friendly policies on environment and community relations.
The State Deputy Governor, Dr Ipalibo Banigo, made the commendation, when she led members of the House of Assembly Committee on Environment and officials of the State Ministry of Environment on a facility visit  to the company.
She said the state government, was aware of the company’s positive impact within and outside its area of operation, appreciated its impact on environment and in community relations.
According to her, the state government is interested in modular refineries in order to discourage illegal refineries as well as safeguard the lives of the people of Rivers.
“We want to discourage illegal refineries to save lives and ensure a safe environment.
“ We are also interested in knowledge transfer and job creation for our teeming youths,” she said.
Earlier, the company’s General Manager (Refineries/Projects), Mr Femi Olaniyan, who conducted Banigo’s team around the facility, said the company established about 25 years ago was operating on Ogbele Field Oil Mining Lease (OML) 54 in Rivers.
He said the company’s vision was to be completely indigenous, adding that it was 95 per cent owned by Nigerians.
According to Olaniyan, the refinery is managed by Nigerians with proven expertise and track record.
“As early as 2006, our company decided to eliminate gas flaring and a gas processing plant was built and commissioned.
“Now, we are the only indigenous company to supply gas to the Nigeria Liquefied Natural Gas (LNG) facility in Bonny Island here in Rivers state.
“We have so far supplied over 50 billion tons of gas to LNG in Bonny. In 2011, we built 1,000 barrels per day production facility.
“We now produce three trucks of diesel per day from our plant here.
“We also produce diesel in commercial quantity with customers drawn from the North East, North West, Abuja, Lagos and so on,” he said.
He also told the team that in 2016, the company commenced the expansion of its refinery to an integrated facility to produce up to 11,000 barrels of jet fuel, diesel, marine diesel and heavy fuel oil per day, adding that the expanded facility would commence full operations by May 2020.
Olaniyan further said that the company, which also produced gas for domestic consumption, “has since Jan. 26, 2019 clocked one million man hours with zero lost time injuries.”
“Our facility, a subsidiary of Niger Delta Exploration & Production Plc, is privately owned and can convert Naphtha to petrol with 60 per cent of its labour force from the community and has no negative safety issues.
“A considerable number of Nigerians have gained from our deliberate efforts to ensure knowledge transfer,’’ Olaniyan said.

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Oil & Energy

Power Supply: AfDB Set To Invest $200m In Nigeria



The African Development Bank (AfDB) is to invest 200 million dollars through the Rural Electrification Agency (REA) to boost power supply in Nigeria.
The Acting Vice President, Power, Energy, Climate and Green Growth Complex (AFDB) Mr Wale Shonibare, said this when  he led some management staff of the bank on a visit to  the Minister of State for Power, Mr Goddy Jedy-Agba in Abuja on Monday.
Shonibare, also the Director, Energy and Installation in the bank, said that the AfDB board had approved 200 million dollars for the sector through REA to support the roll out of mini grids.
“The AFDB is very active in the power sector of Nigeria and we are ready to do more, the board has approved 200 million dollars to the sector through the REA.
“We are supporting the programme to roll out mini grids across the country and also to encourage productive use of the grids to upgrade communities
“We are also involved in energising education, a programme under which we are dedicating power systems to eight federal universities,’’ he said.
Shonobare said that the bank was also very involved in the transmission sector of the country as it had a 410 million dollars project to support transmission.
According to him, 200 million dollars has already been approved by AfDB board for phase one to improve transmission lines and provision of sub-stations.
“I understand that the agreement was signed last week and we expect the project to progress.
“We are involved in the Jigawa power project, we have approved a grant of one million dollars to support the feasibility study for phase one and the studies are almost completed.
“We are aware of the issues in the sector and we are working with all the players in the sector, the regulators, NBET all along the value chain looking at how we can make the sector efficient,’’ he said.
Responding, the Minister of State, Jedy-Agba said that the federal government was willing to do more in partnership with AfDB to provide electricity for Nigerians.
Jedy-Agba said that power was the bedrock of development, adding that if the country could get it right with technology, they could also do same with power.
He said that Nigeria was in the process of increasing its power generation capacity and the sector as it was keying into funds available by the AfDB to enhance further growth in the sector.
“AfDB had been investing in the sector and they planned to invest more by increasing their funding in development of the power sector,’’ he said.
He assured the AfDB team that any money given to the power sector would be judiciously utilised and accounted for.

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Oil & Energy

PHED Links Power Outage To TCN’s Technical Fault



The Port Harcourt , Electricity Distribution Company, PHED, has disclosed that the power outage being experienced by the residents of Elelenwo,  Old Oyigbo,  Rivers State Television station and its environs,  Onne,  Bori  since Friday, March 6, 2020 was due to a faulty auxiliary transformer belonging to  Transmission Company of Nigeria,  TCN.
The power distribution company, in a press  statement however, stated that  the technical crew from the TCN had already been  mobilised to the station to ensure that the fault was rectified as soon as possible.
The statement added that power  supply will be restored at the affected areas as soon as the fixing of the technical fault was completed.
The statement, solicited  for the patience of its esteemed customers that were affected by the forced outage, while waiting for the restoration.
The company also restated its commitment to quality service delivery to its members.
Meanwhile, some residents of the affected areas have lamented the effects of the outage on their businesses.
A cross section of the residents who spoke with our correspondent, called on PHED and other relevant authorities to fix the  problem and restore power supply in the area.
The residents also called on PHED to live up to its new policies on enhanced service delivery to enhance its business profile and earn the confidence of its teeming customers.
One resident, Comrade Michael Budum, who spoke with The Tide, said power supply had been one of the major challenges in the area.
He said , “I want to use this opportunity to urge PHED to improve on its services to earn the confidence of its  customers, let people get results form their power bills through power delivery services”.


By: Taneh Beemene

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