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Why Marginal Fields Programme Failed

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The Federal Government in 2005 initiated the Marginal Fields Programme (MFP) to encourage indigenous participation in the oil and gas industry in Nigeria. This is after decades of monopoly by the Shell Petroleum Development Company (SPDC) and other international oil companies that came in later.

In a bid round that year (2005) for the 24 marginal fields, the federal government issued 30 licences; out of which only seven marginal fields have been developed and attained production, according to  the Managing Director of Treasure Energy Resource Limited,Dr Eddie Wikina,  a Rivers State-owned oil and gas company.

Wikina explained that with only seven developed marginal fields out of that number, it shows that MFP success rate was less than 30 per cent, therefore the full potential of the programme has not been achieved.

He noted that the objectives of the programme which were to increase Nigerian local participation in the industry and enhance economic growth have only been partially realised and it is not good, he added.

Variety of factors, according to Wikina were attributed to the failure of the MFP, one of which was basing award more on political and patronage considerations rather than on more business related issues. Some companies that were given these licences have father, mother and children as operators which have no know-how on oil business but were awarded marginal fields because they are related to one big politician or the other, he said.

Another factor that has made the MFP a failure is that the operators lacked technical competence, the knowledge of the operating environment, and business and no financial capacity to finance the business. Indigenous oil companies have not broken even in terms of attracting requisite funding and infrastructural capacity to explore these marginal fields. This has defeated the objective of increasing the participation of Nigerians in order to boost the economy of local areas and creating jobs, as the financiers were mostly foreign oil companies.

He explained that the seven functional marginal fields were headed by people with technical competence and financed by foreign companies. Citing Afren and Matt Resources as instances, he said Afren was a United Kingdom Company while Matt Resources was a Canadian Company and they provide technical and functional support  to operators of the functional marginal fields.

Others that have recorded success, he added, headed by technical professionals include platforms, Energia, Mid Western and Britannia-U.

‘Others are deficient in technical capacity. They basically have political patronage and this cannot bring oil from the ground. They are not ready to spend money on technical expertise but run on boards that are  based on family affiliations with no oil and gas experience’, Wikina explained.

He advised that during the next bid round, the Federal Government should play down on patronage and political sentiments and consideration should be given to qualified companies and indigenous persons from oil bearing states. This is the only way, he stated, that they can contribute to the economic development of the states and create jobs.

Explaining further he said an analysis of the current marginal fields awarded shows that only 30 per cent goes to the South South, 24 per cent to the North, 30 per cent to the South West and 15 per cent to the South East. In terms of the major oil blocs the South South which is where the oil is coming from,  has 13 per cent as its quota, North has 29 per cent, South West 30 per cent while the South East gets 19 per cent.

A further breakdown of the quota that goes to the South South shows that most of the ownership belong to those from Delta States while Rivers, Bayelsa and Akwa Ibom States are marginalised.

He urged the Governors of these three South South States to redirect their focus and walk together to see that this imbalance was addressed as this is denying the region  economic development.

He added that marginal field operators should be, based on the Nigerian Content Act, compelled to establish functional offices with decision authority within the state hosting the marginal fields or close to the areas of operations as failure to do this is denying the host states and areas of operations economic development.

He argued that thousands of jobs will be created in the Niger Delta  States which host oil fields if these offices are located within the states, and if dormant oil fields held by major oil companies were released for development and brought to production.

There is this trend that the oil majors and federal government have concentrated on the high-yields fields. For instance, experts are unanimous on the fact that Abia State’s oil and gas potentials were under-exploited as out of 103 oil fields, only about 50 are producing. The Abia case is applicable to most oil fields in the South South.

The TERL boss also pointed out that putting into consideration the suggestions could help address the current spate of militancy and insecurity in the country as it would ensure that the right environment is created to facilitate investment which results in economic growth.

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Surviving Economic Realities In 2020s

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Heraclitus of Ephesus, a Greek philosopher of the late 6th Century, in his famous apothegm said, “The only constant is Change”. Literally, whether change is desired or not is inconsequential as it occurs independently; devoid of assents or prior notice. And the earlier people prepared their mind for it, the better as it is inevitable. This is thus, a clarion demand for reprogramming the minds to adapt as it occurs. Not even resistance deters it except to be left behind; an unhealthy option.
Typically, the major and fastest agent of change is civilization which everyone profoundly cherishes. Nobody in their right senses will kick against civilization due to the comfort, speed and productivity it offers. However, the bad side of it is, the same pace it opens new opportunities to the sensitive minds, is also how it pushes out the indolent and conservative minds out of jobs and businesses.
For example, the evolution of modern computers; Central Processing Units (CPUs) and laptops sent conservative typists and typewriter-merchants that were insensitive to upgrade out of jobs and businesses. Similarly, online shopping has become the most utilised medium across the world thereby affecting daily sales of shop owners. Arguably, technological advancement is moving fast.
Presently, foodstuffs including fresh tomatoes, potatoes, vegetables and even native cooked foods are ordered online and delivered with ease in Nigeria. Likewise, the usual taxi business which required people to board on the road is being overtaken by connected system which can access, negotiate variety of taxis in the comfort of the living rooms.
Churches are not left out as people in the comfort of their homes now actively participate in church services same way as onsite worshippers. In banking industry, higher volume of transactions are currently done virtual which reduces human activities in the banking halls alongside overhead costs. Of course, by design, banks are profit-oriented and not charity organizations, hence, will always switch over to most cost-effective system.
Conversely, the labour market is adversely affected as technology drops human activities thereby increasing unemployment ratios. Even those already in employment are likely to face more retrenchments as their services can be rendered cheaper and more efficiently through technological revolution.
For emphasis, on September 3, 2019, an energy firm, Oando Plc, sacked about 100 workers. Similarly, on November 21, 2019, First Bank of Nigeria recorded a mass sack of staff numbering over 1000 across the federation. The record goes on. The umbrella body of the workers; National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE) threatened fire and brimstone to reverse the action.
Though the solidarity was commendable, unfortunately, NUBIFIE forgot the employers’ obligation to discharge employees is to be laid off accordingly. The union overlooked to do a feasibility study vis-à-vis the management’s unflinching action, without any panic against possible collapse of the bank by the volume of the retrenchment. This is a critical oversight.
For instance, Automated Teller Machines (ATMs) can now withdraw and also collect deposits into customers account in few seconds. The implication is that scores of contract staff that mount the tellers may be drastically reduced to virtually zero. Believably, all banks are working in that directions which implies that more retrenchments are looming particularly in the banking sector in the new decade.
Realistically, NUBIFIE and other unions may not do much to counter the trend. This is because they cannot provide the funds to subsidize overhead costs; to secure their members’ jobs. Convincingly, the bank discovered an alternative mode to handle operations without such a crowd of employees. To call a spade, a spade, the sacks were no accidental discharge but necessitated by profit maximization which is its major goal.
Laudably, a leading financial institution, United Bank for Africa (UBA), recently recorded a massive recruitment drive of about 4000 new staff alongside promotion of 5000 existing staff members with inspiring increments. However, the truth must be told. Industrialized economy is rapidly succumbing to digitalized economy.
The top-secret is technological innovation that economically, efficiently handles human tasks. In other words, repositioning is crucial. A stitch in time they say, saves nine. Sensibly, those not considering modern economy are vulnerable to be victims of the contemporary economic dynamics. Another bitter truth is that government alone cannot provide the much needed jobs for the high number of unemployed population.
However, governments must obligatorily provide the enabling environments for businesses to thrive. Economy must be stimulated and made attractive for investors. And essentially, insecurity must be unrelentingly wrestled not merely by empowering security agents but creating jobs for unemployed populations alongside empowerment with skills acquisitions. Government must meet these critical demands.
Interestingly, the most striking feature of the new economic direction is that it can empower distressed persons from zero level to financial independence without capital unlike the phasing-out industrialized economy. Above all, it creates secure incomes alongside conventional vocations. Instructively, most of the capitalists in the developed economies do not survive by commonplace hustling but connected economy.
Thus, whilst it is ideal to have exciting new year resolutions, big dreams and accept nice predictions, efforts must be put in top gear to think outside the box. People should expediently, ardently consider realignment. By the rapidity of technological advancement in the world, it is obvious a lot of employments may be in danger.
The way out is to embrace the modern economy to run with the changes against the challenges. Connected economy, distinctively, thrives by merely building relationships and fostering connections, rather than assets (money) and stuffs as exists in industrialized economy. However, extreme caution is required as scammers have infiltrated digitalized economy knowing it is the new face of the world economy.
Umegboro is a public affairs analyst.

 

Carl Umegboro

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DPR Shuts 12 Gas Plants In PH

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The Department of Petroleum Resources (DPR) has begun a shutdown of illegal gas plant and roadside retailers of Liquefied Petroleum (LPG) operating within Rivers State.
Addressing newsmen shortly after a surveillance operation in Port Harcourt, DPR’s Operation Controller, Port Harcourt Zone, Bassey Nkanga, disclosed that 12 illegal  gas plants were sealed off across the sate
Nkanga said the sealed gas plants were operating without approval, license and unsafe environment.
According to him, this illegality must stop and no one is permitted to operate without license or approval,  adding that they would be unsealed when they follow due process.
The Operation Controller explained that  DPR was out to ensure that all gas operators in the State adhere to safety and health requirements as well as follow due process.
According to him, the department is taking audit of all gas operators across the state including roadside retailers.
He warned those transfilling gas products against the practice, describing it as illegal and highly risky, adding that the department will not condone such act.
He also urged operators of Liquefied Petroleum Gas (LPG) to always consider the safety of people and environment during operations.
Nkanga further encouraged the use of LPG popularly known as cooking gas, saying it is safer and economical than kerosene.

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Russia To Partner Nigeria On Gas, Power Development

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The Russian Federation has expressed its readiness to partner the Nigerian National Petroleum Corporation (NNPC) in the development of Nigeria’s upstream, gas and power sectors.
This was made known by the Russian Federation Ambassador to Nigeria, Alexey Shebarshin, during a working visit to the Group Managing Director, NNPC, Mele Kyari, last Friday.
Shebarshin, who stated that the visit was to consolidate on the gains made from the Russia-Africa Summit held in Sochi last year, added that the Russian embassy in Nigeria was keen on enhancing the bilateral co-operation between the two countries across the oil and gas value-chain.
He was quoted in a statement issued by the NNPC, as saying, “We are particularly interested in participating in Nigeria’s power infrastructure projects.
“We would also keep close track of the ongoing negotiations between the NNPC and Gazprom on the restoration of the bilateral cooperation which aims to revive and solidify the venture between our two companies for gas infrastructure development in Nigeria.”
Shebarshin highlighted the Memorandum of Understanding signed between the NNPC and Russian-based company, Lukoil, which focused on refinery rehabilitation, adding that he was ready to provide assistance to move the project forward.
Kyari thanked the ambassador for the visit and assured him of the NNPC’s commitment to partner the Russian embassy in Nigeria to ensure that the two countries benefit from the bilateral cooperation reached in Sochi, Russia.
He said, “As a national oil company, we are committed to growing Nigeria’s economy. We will set up communication channels with the Russian companies, Lukoil and Gazprom in particular, to promote this collaboration for the benefit of our two countries.”

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