Non discovery of new oil wells in Nigeria worries oil companies

oilDearth of new oil discovery in the country may have stoked fresh concern among industry operators, who lamented none addition to the present reserve, despite assessed abundance of untapped hydrocarbon resources in the country.

Indeed, the stakeholders stressed that the country’s position in the continent as the current second leading oil producer may be further compromised, with aggressive exploration posture of Ghana.

Nigeria, through a mix of factors, has ceded the top position to Angola, with Ghana now coming hot on heels of the country.

A worried Chairman, Society of Petroleum Engineers, Mr. Bayo Ojulari, said that the inherent issues hindering the exploration and production activities in Nigeria must be resolved very urgently by the stakeholders to move the sector forward.

According to Ojulari, factors such as funding, political interference, delay in approval of projects and community unrest, must come under stringent focus.

He said that the country is blessed with a lot of oil and gas potentials, but lamented that the nation merely has a lot of oil and gas reserves without new discoveries.

“There is abundant oil and gas wells in Nigeria. In terms of the reserves, we have in the ground, we have gas reserve and we have oil reserve. Angola reserve is not up to half of what Nigeria has. What has happened in Angola now, you can see that their production level has gone up. And why? It is about three things that accounted to these.

“One, they do not have the funding crisis we have in our own oil and gas industry, so they open up their economy to international funding.

“Two, they do not have the bureaucracy bottleneck that we have here in Nigeria in terms of approving things.

“In Nigeria, it takes up to three, four to five years to get approval for major projects. In Angola, it takes only about 18 months. If you have for example, $5 billion project in Nigeria, before it goes through all the bureaucratic process of contracting signatures and everything, it’s already three to five years.

“And what you also found out, is the delay in approving the project and that is one of the reports we submitted to the government, because if you do a global survey, you would find out that Nigeria today has an incubation period of between four to six years compare to most other countries even Brazil.

“In Brazil, within two years, deep water project has been consummated. And you can start implementation. And what Angola has done is to tackle these issues long time ago that is why their production level is now catching up with us. I must say that it is sad. But I would tell you one more thing, watch out for Ghana.

“Ghana today is almost nothing in term of production, but with the way they are going, with a focused leadership and government and international support, don’t be surprised if in five years time, Ghana would be producing more than Nigeria,” he said.

He continued: “For me, if you are in touch with global events for example, you have to keep running, you have to keep improving yourself and innovating and becoming better. If you standstill, other people would meet you and overtake you. As far as I am concerned, Nigerian oil and gas industry has been stagnant for almost five years now, and even more so in the last three years, because of the issues that you have seen around the whole business environment, communities and funding.

“If we don’t solve these problems, I can tell you, as you have seen now that Angola is now producing as when due. Ghana is relatively behind us, if we don’t resolve these problems and converts them into opportunities and tap into our talent and capacity, am sorry to say we may become playing a fifth fiddle not even a second fiddle.”

Commenting on the slow development of local content in the oil and gas industry, the chairman said: “It’s a question I think in the minds of Nigerian people today. Policy-making is easy but its implementation in Nigeria has been one of the difficulty challenges we have had. One of the issues we have in this oil and gas industry is that it is highly capital intensive. Most of the local contractors are fragmented.

So, in most cases, some of the very big projects they cannot handle them. That is one of the main reasons. In terms of fragmentation of local contractor, instead of having one big contractor for a project, you see them forming two or three contractors jostling for a project.

So, you often see that in our local environment. That is one of the biggest challenges I have seen in terms of my experience of local content in the industry.

“The second thing I have also seen is that some of the local capability building, instead of fronting Nigeria or developing Nigeria, and taking side with their Nigerian counterparts, you see them depending on expatriates, either Chinese or Koreans or Indians to do some of these things.

“And if you don’t do it by yourself, you cannot learn it. You have to do something for yourself. You have to practice it by yourself. Its through practice you get perfection. So you need things that would make you improve.

“The third thing I think for me in my own mind because of what I have seen in other countries, it’s incentive. More incentives are needed to enable the local contractors to collaborate. I must say that the government and the leadership of any nation determine how successful a policy implementation is.

“Policy formulation and enacting policy is one step. To implement policy, the government also has to put in more incentive. One of the incentives that I hope Nigerian government would do is to bring one or two contractors coming together to do business. To win a big contract, you must give them tax incentive.

“For example, this would encourage them to come together if it is like that I think it would facilitate local content development. Secondly, they also need to have a monitoring body like the Directorate of Petroleum Resources (DPR) that is what they do in other countries.

Also, they monitor the history of Nigerian development in the industry like their own country, they see how many Nigerians have been developed technically. What’s the number? How many of them have become international technical professional? They monitor that at a costly level. So oil Companies have successfully developed Nigeria should be given recognitions. So that others would learn from them and they would imbibe with what ever they are doing.

“Companies that are not sincere and not be allowed to develop the local agenda in developing Nigeria, make it public as well. You have to apply rules and regulations to make them succeed.”

Source: The Guardian

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