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Nigeria’s Oil Industry Heading Towards Collapse — Former NNPC GMDs

Crude Oil; oil industry, Price
Posted: Sep 5, 2016 at 5:41 am   /   by   /   comments (0)

Former Group Managing Directors (GMDs) of the Nigerian National Petroleum Corporation (NNPC), who met at Transcorp Hilton, Abuja, at the weekend, to review the current state of the nation’s oil industry, have warned that the Nigerian oil and gas industry was heading towards total collapse, except serious actions were urgently taken to tackle the challenges.

They specifically queried the current petrol price cap of N145/litre, saying that it is not congruent with the liberalisation policy especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges etc that have remained uncapped.

The erstwhile NNPC bosses, after a brainstorming session with Dr. Maikanti Baru, the corporation’s current group managing director, expressed serious concerns on the declining production level and its attendant consequences on the environment and the nation’s revenue.

They unanimously agreed that if the current situation remained unchecked, it could lead to the crippling of the corporation and the nation’s oil and gas sector, which is the mainstay of the Nigerian economy.

They, therefore, urged the Federal Government and stakeholders to chart a new course to reform the country’s oil industry.

They noted that certain operations of the NNPC would have to be reformed to give it a chance of surviving through the prevailing challenges in the industry.

A statement from Garuba Deen Muhammad, the Group General Manager, Public Affairs of NNPC, disclosed that the meeting with the former heads of the corporation was attended by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who was represented by his Senior Technical Assistant, Engr. Johnson Awoyomi.

Baru, in the course of the meeting, presented the operational status of NNPC and the industry as well as his “12 Business Focus Areas” with which he hoped to reposition the NNPC on the path of growth and profitability.

The former NNPC helmsmen, according to the statement, deliberated on ways to resolve issues militating against the progress of the sector and recommended measures to move it forward.

To this end, the former GMDs identified the key challenges including insecurity, which, according to them, “is threatening production and damaging the Niger Delta environment.”

“Insecurity is threatening production and damaging the Niger Delta environment. There is the urgent need for government and security agencies to re-focus and engage the various host communities as well as established social and traditional

structures to develop an actionable partnership framework toward finding a lasting solution to the present unrest,” they noted, adding that they are concerned about the increasing negative perception of the NNPC by Nigerians, especially in terms of opaqueness of its operations and accountability.

They specifically called on the corporation to educate Nigerians on its activities as a commercial entity managing the nation’s assets in trust.

“The former GMDs advised that the refineries be rejuvenated using the original equipment manufacturers (OEMs). Also, the refineries must be restructured to operate as an incorporated joint venture (IJV) similar to the Nigerian Liquefied Natural Gas (NLNG) model with credible partners having requisite technical and financial capabilities,” the statement reads.

Independent gathered that the former GMDs equally commended NNPC for resolving the fuel supply crisis and urged the corporation to emplace measures that will ensure sustenance of seamless supply of petroleum products nationwide.

On funding of joint venture (JV) operations, they said it should be the first line charge on oil revenue to ensure sustainable production and reserve growth. The former GMDs also endorsed President Muhammadu Buhari for sustaining exploration activities in the frontier basins particularly the ongoing efforts in Chad Basin and the Benue Trough.

They, therefore, advised the GMD to pay priority attention to the Chad Basin where promising prospects are recorded; noting that for effective functioning of any National Oil Company (NOC), the technical components of the country’s exploration and production (E&P) must be integrated as part of the country’s NOC.

They posited that NAPIMS being the technical component of Nigeria’s E&P, and not just an investment vehicle, must remain with and managed by NNPC, that taking NAPIMS out will make NNPC an ineffective NOC.

“The current Petroleum Industry Bill (PIB), which proposed the incorporation of NAPIMS and taking it out of the NNPC will inhibit the effective functioning of the NNPC as a National Oil Company (NOC),” they pointed out, adding that it will make NNPC to operate at a different level compared to its peers in other OPEC member countries.

“We would encourage the NNPC to improve its relationship with its key stakeholders such as the Federal Government, the National Assembly, host communities and especially its international joint venture partners,” they posited while expressing serious concerns about the continued dwindling of the corporation’s revenue.

They advised that the corporation should pay particular attention to its revenue-generating entities such as the Nigerian Petroleum Development Company (NPDC), and the refineries to return it to high performance, growth and profitability.

The former GMDs were also concerned about the level of NNPC’s debt profile. They advised that as a matter of urgency, NNPC should establish the true state of its current financial status and immediately decide on the most appropriate capitalisation model.

The former GMDs, who attended the meeting included HRM (Dr.) Edmund Daukoru, Chief Odoliyi Lolomari, Dr. Thomas M. A. John, Engr. Lawrence Amu, and Dr. Jackson E. Gaius-Obaseki.

Others are Engr. Funsho Moses Kupolokun, Engr. (Dr.) Abubakar Lawal Yar’Adua and Dr. Joseph Thlama Dawha.

Chief Festus Marinho, Dr. Chamberlain Oyibo, Dr. Mohammed Sanusi Barkindo. Engr. Austen O. Oniwon, and Engr. Andrew Laah Yakubu were absent, although with apologies.