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  • ‘Overreliance on oil cause of economic instability’

    ‘Overreliance on oil cause of economic instability’

    • By Esther Uyor

    Nigeria’s overreliance on oil exports has rendered its growth trajectory susceptible to endogenous and exogenous shocks in global oil prices, leading to economic instability.

    Chief Economist, Development Bank of Nigeria (DBN), Prof. Joseph Nnanna, said there was need for strategic initiatives to unlock the vast potential of the economy through economic diversification, human capital development and infrastructural development.

    He lamented that the  economy has grappled with the volatility of global oil prices, leading to economic instability, given its heavy reliance on oil exports.

    Nnanna spoke on ‘Harnessing Nigeria’s economic potential for growth and development: Strategic imperatives’ at the Chartered Institute of Bankers of Nigeria (CIBN) Fellowship investiture in Lagos.

    He noted that the productive base of the economy remains weak, narrow, and externally oriented with primary production activities of agriculture and mining and quarrying including crude oil and gas.

    According to him, Nigeria’s growth is relatively weak, and its susceptibility to shocks is increasing due to the macroeconomic policy framework’s flaws and other economic factors.

    He lamented that Nigeria has missed numerous opportunities to escape the cycle of underdevelopment, despite its abundant natural and human resources, primarily because of its heavy dependency on crude oil resources, noting that the persistent challenge associated with fluctuating global oil prices has prompted a consistent need for economic policies and initiatives aimed at mitigating the impact of oil price volatility on the nation’s economic expansion.

    He explained that growth and development encompass far more than mere economic indicators as such should be reflective in the quality of living of the general citizenry and sustainability of the economy.

    He pointed out that the true measure of a nation’s government lies in its ability to achieve a high standard of development, as this is a fundamental element in a country’s quest for self-sufficiency.

    “Economic diversification emerges as a crucial avenue, leveraging the untapped potential of non-oil sectors to promote inclusive sustainable growth. Also, human capital development takes centre stage, acknowledging that education and health are at the core of economic growth. And, lastly, infrastructure development stands as another cornerstone, underscoring the importance of building a modern and efficient infrastructure network.

    “These strategic imperatives are not standalone solutions and would need to be complemented with addressing policy implementation, resource allocation, corruption, and leadership. In doing so, Nigeria can move beyond the constraints of its past, harness the strength of its resources, and emerge as a beacon of inclusive growth and development on the African continent,” Nnanna said.

    According to him, the challenges to growth and development in Nigeria are manifold, including the imposition of policies on citizens, a shortage of adequate human and capital resources for policy implementation, corruption, and a lack of credible leadership.

    Read Also: Middle East crisis: Oil prices expected to average $90 per barrel , says World Bank

    He noted that many of the nation’s development issues stem from the ineffective execution of policies as policymakers often fail to bridge the gap between policy goals and actual achievements, often presenting overly complex policies which are difficult to implement given their limited time in office.

    “Consequently, many national development plans are abandoned at the end of their respective tenures, with subsequent governments failing to carry forward these incomplete plans. This is a key explanation for the numerous abandoned projects found across the country.” Furthermore, development in Nigeria has been impeded by mismanagement of public funds, along with a lack of transparency and accountability, among other factors,” Nnanna said.

    He urged the government to focus on ensuring the availability of skilled manpower across various domains encompassing social, political, institutional, technological, and economic spheres that drive the processes of growth, development, and industrialisation.

    Nnanna added that infrastructure contribution to economic development, especially in terms of industrialisation, is monumental noting that infrastructural investments are a pivotal catalyst for achieving rapid and sustained economic growth.

    According to him, investment in critical infrastructure is imperative for achieving growth and development in Nigeria, a priority underscored by the government through increased budgetary allocations for capital expenditure in recent years.

    President, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Ken Opara, said the theme for investiture is one that resonates deeply with the aspirations of the nation.

    He noted that in a rapidly changing world, the success of nations is often determined by their ability to harness their inherent strengths and overcome their challenges.

    According to him, Nigeria, with its abundant human and natural resources, possesses incredible economic potentials. However, unlocking these potentials requires strategic imperatives that go beyond mere recognition; it demands deliberate action and innovative thinking.

    “The country continues to face massive development challenges, including the need to reduce its dependence on oil for exports and revenues, diversify its foreign exchange sources, close the infrastructure gap, build strong and effective institutions, address governance issues, and strengthen public financial management systems.

    “Also, inequality, in terms of income and opportunities, remains high and has adversely affected poverty reduction. The lack of job opportunities is at the core of high poverty levels, regional inequality, and social and political unrest. High inflation has also taken a toll on households’ welfare, pushing more people into poverty.

    “Given these numerous challenges, it is abundantly clear that our journey toward harnessing Nigeria’s economic potential for growth and development is marked by both promise and complexity. Addressing these challenges requires visionary leadership and collaborative efforts to transform adversity into opportunity.”

    The path ahead demands resilience, creativity, and a commitment to shaping a brighter future for our country. Hence, it is incumbent upon us, as banking professionals and leaders, to chart a course that leverages the vast potential inherent in our nation’s economy. We must explore innovative strategies and approaches that will drive sustainable growth, foster development, and ultimately uplift the lives of all Nigerians,” Opara said.

  • Middle East crisis: Oil prices expected to average $90 per barrel , says World Bank

    Middle East crisis: Oil prices expected to average $90 per barrel , says World Bank

    The World Bank has said oil prices are expected to average $90 a barrel in the current quarter as a result of the crisis in the Middle East. 

    The Bank’s latest Commodity Markets Outlook added that oil prices will decline to an average of $81 a barrel next year as global economic growth slows.

    The report released on Monday in Washington DC shows that an escalation of the latest conflict in the Middle East could push global commodity markets into uncharted waters.

    The Commodity Markets Outlook provides a preliminary assessment of the potential near-term implications of the conflict for commodity markets. 

    According to the report, overall commodity prices are projected to fall 4.1% next year. 

    “Prices of agricultural commodities are expected to decline next year as supplies rise. Prices of base metals are also projected to drop 5% in 2024. Commodity prices are expected to stabilize in 2025,” it said. 

    The World Bank’s Chief Economist and Senior Vice President for Development Economics, Indermit Gill, said: “The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s—Russia’s war with Ukraine . That had disruptive effects on the global economy that persist to this day. Policymakers will need to be vigilant. If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades—not just from the war in Ukraine but also from the Middle East.”

    The World Bank’s Deputy Chief Economist and Director of the Prospects Group, Ayhan Kose, added: “Higher oil prices, if sustained, inevitably mean higher food prices. If a severe oil-price shock materialises, it would push up food price inflation that has already been elevated in many developing countries. At the end of 2022, more than 700 million people—nearly a tenth of the global population—were undernourished. An escalation of the latest conflict would intensify food insecurity, not only within the region but also across the world.”

    The report observed that the fact that the conflict has  had only modest impacts on commodity prices may reflect the global economy’s improved ability to absorb oil price shocks.

    Read Also: World Bank: social protection reduces people on $2.15 per day

    The report urged policymakers to remain alert in case of unforseen circumstances.

    “Some commodities—gold in particular—are flashing a warning about the outlook. Gold prices have risen about 8% since the onset of the conflict. Gold prices have a unique relationship to geopolitical concerns: they rise in periods of conflict and uncertainty often signaling an erosion of investor confidence.

    “If the conflict escalates, policymakers in developing countries will need to take steps to manage a potential increase in headline inflation. Given the risk of greater food insecurity, governments should avoid trade restrictions such as export bans on food and fertilizer. Such measures often intensify price volatility and heighten food insecurity. They should also refrain from introducing price controls and price subsidies in response to higher food and oil prices. A better option is to improve social safety nets, diversify food sources, and increase efficiency in food production and trade. In the longer term, all countries can bolster their energy security by accelerating the transition to renewable energy sources—which will mitigate the effects of oil-price shocks,” the report said. 

  • PIA: Oil firms inaugurate BoT to manage 3% devt fund

    PIA: Oil firms inaugurate BoT to manage 3% devt fund

    Frontier Oil Ltd and Savannah Energy Uquo Gas Ltd have reiterated their commitment to the prompt payment of three per cent operational expenditure (Opex), as contained in the Petroleum Industry Act (PIA) 2021.

    The Managing Director/Chief Executive Officer of Frontier Oil Ltd, Dada Thomas, an engineer; said this at the weekend during the inauguration of the Board of Trustees (BoT) of Ekid Host Community Development Trust in Eket, Akwa Ibom State.

    He said the Trust Fund was set up in line with the provisions of the PIA to provide a platform for the development of the companies’ host communities of Eket and Esit Eket local governments.

    “The process of selecting the trustees was consultative and thorough. Seven persons (three and four drawn from Eket and Esit Eket) are the trustees of Ekid Host Community Development Trust (EHCDT).

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    “These are men and women of integrity and professional standing and I have no doubt that they will work as a formidable team in collaboration with the settlors to deliver the desired participatory and sustainable development of our host communities.”

    “FOL-SEUGL JV herein reiterates her commitment to the implementation of the provisions of the PIA 2021. We shall ensure prompt payment of the Opex and undertake to support the timely and successful implementation of agreed community development projects.

    “To further demonstrate our commitment to the PIA implementation, we have opened four bank accounts in the name of the trust with Zenith Bank, Ewet and have also deposited FOL’s share of the three per cent Opex for 2021 and 2022. We are confident that Savannah Energy Uquo Gas Ltd will do likewise shortly,” he said.

    He warned against the vandalism of oil pipelines in the communities, saying such incidents was capable of robbing the communities of three per cent Opex.

    Chairman of the BoT EHCDT, Dr. Macaulay Akpan, promised to manage and utilise the funds provided by the oil companies for the development of the host communities.

    “We are entering into a social contract with Ekid people. We are conscious of the socio-economic and infrastructural needs of our people and we will discharge our functions with the fear of God.

    “We will work with relevant stakeholders and government agencies such as the state government, the NDDC to avoid duplication of projects.

    “We will also partner the state government in skills development, rural development, health, etc and even to get the government to augment the three per cent,” he said.

    Akpan said the BoT would work with stakeholders and the communities to provide a conducive environment for the operation of the oil companies.

  • House seeks release of N27.6b to oil bearing communities

    House seeks release of N27.6b to oil bearing communities

    Central Bank of Nigeria and the Ministry of Finance have been called upon by the House of Representatives to immediately release  N27.6 billion to oil-producing communities for the mitigation of the effects of gas flaring on their environment.

     The House said it was aware that the sum paid as a penalty by some oil firms was okayed by the administration of former President Muhammadu Buhari in compliance with the Petroleum Industry Act 2021.

    It, therefore, mandated its Committee on Host Communities to ensure the release of the   N27.6 billion and report back within a month for further legislative action.

    The decisions followed the adoption of a motion by a member representing Andoni/ Opobo–Nkoro federal constituency of  Rivers State in the House, Awaji-Inombek   Abiante, yesterday.

    Read Also; Police arrest parent for flogging teacher to death in Delta

    The motion was titled  ”Need for the Central Bank of Nigeria to release the approved N27.6 billion as part of funds generated from gas flaring penalties to host communities in compliance with the Petroleum Industry Act.”

    The House said it was also aware that over N100 billion has so far been received as gas flaring penalty or fines by the Department of Petroleum Resources and paid to the CBN.

    It pointed out that  Section 104, subsection (4) of the PIA  and other international laws demands that, monies collated as gas flaring penalties be paid to host communities for environmental remediation and relief.  

    The House expressed concern that despite the approval of the N27.6 billion, the apex bank, the   Finance Ministry and other relevant government agencies had yet to comply with statutory provisions.

    It lamented that gas flaring has not only continued to hamper the agricultural activities in the host communities but fuels vandalism and agitations.

  • Ex-Niger Delta warlords unite against oil theft

    Ex-Niger Delta warlords unite against oil theft

    Four leaders of ex-Niger Delta militants resolved at the weekend to align with the Bola Tinubu administration in the fight against oil theft, especially illegal bunkering, in the oil-rich region.

    The former agitators-Mujaheedeen Dokubo-Asari, Ateke Tom;  Ajube Bibopiri and Victor Ebukabowei-met at the palace of Tom, who is now the King of Okochiri in Okirika Local Government Area of Rivers State.

    The presence of Dokubo-Asari, a hitherto known rival of  Tom, at the meeting came as a surprise to many familiar with the days of militancy in the Niger Delta. Dokubo-Asari is a known staunch supporter of President Tinubu.

    During their heydays, Bibopiri was well known in the creeks as General Shoot-at-Sight and Ebukabowei as  General Boyloaf.

    It was unclear at whose instance the meeting was convened. Rivers State Governor Siminalayi Fubara had on August 26 kicked against awarding all pipeline surveillance contracts to a single firm.

    A source close to the ex-agitators hinted that the meeting centred on the best modalities for executing pipeline contracts of the Nigerian National Petroleum Company Limited (NNPCL).

    The ex-agitators were said to have agreed that the best way to resolve the ongoing economic sabotage in the region was for the NNPCL to decentralise pipeline surveillance contracts.

    Read Also; Gunmen kill Civil Defence personnel, abduct one person in Bauchi

    The source revealed that the ex-militant leaders insisted that instead of giving all the contracts to a single firm or an individual, they should be allocated to them in their areas or states of influence.

    He said: “Those in attendance shared the objective of intensifying their efforts to combat oil theft in the area and agreed the contract to be decentralised.

    “It is apparent that it marked a unified front against the persistent problem of oil theft in the region. The stakeholders are resolute in their commitment to boost collaborative endeavours aimed at safeguarding the pipelines and the interests of the NNPCL”

    “This collaborative approach has the potential to be a turning point in the ongoing struggle against oil theft, with far-reaching benefits for the entire region and the Nigerian economy.”

    Another main agitator, Government Ekpumpolo alias Tompolo, whose company, Tantita Security Service Limited,  was in 2022 awarded an N48bn pipelines protection contract was absent from the meeting. The contract was recently renewed by the NNPCL. 

    Another source from Bayelsa State said that the new contract includes offshore surveillance.

    He said: “Tantita’s pipeline surveillance contract has been renewed for another three years. I don’t know the details but I heard additional responsibilities have been included. I was told offshore surveillance was also included.”

    IYN lauds renewal of Tompolo’s  contract

    Meanwhile, the  Ijaw Youths Network has commended President  Tinubu and NNPCL for renewing   Tantita’s contract.   

    Its  Coordinator, Frank Ebikabo and Secretary, Federal Ebiaridor, said in a statement yesterday that the President displayed uncommon leadership in the pursuit of the collective good of Nigeria.

    The group said that the decision  was in spite of  “a campaign of calumny orchestrated” by a group of self-serving individuals.” 

    It called the attention of the security agencies, especially the Department of State Services(DSS) to the Supreme Egbesu Freedom Fighters of Niger Delta, which has issued threats to the NNPC management over the renewed contract.

    The group said” We  commend  President Bola Tinubu and his team for the renewal of the pipeline protection contract awarded to Tantita Security Services Limited.

    “We in the IYN who have monitored the dedication of the Tantita team to the fight against the unprecedented theft of the nation’s resources believe that this President is ready to confront headlong the deadly cabal of oil thieves in Nigeria.

    “By this decision, coming especially in the face of the sustained blackmail and pressure put up by detractors working for wealthy and highly influential oil thieves, the President and his government have shown commendable dedication to the cause of Nigerians. We commend him.

    “The IYN also has a world of encouragement for the Group Chief Executive Officer of the NNPCL, Mallam Mele Kyari who has been dispassionate in facing the challenge of oil theft in Nigeria.

    “We urge him to ignore some disgruntled elements who have besieged the media space to blackmail him. Kyari has done the right thing by recommending the contract for renewal in view of the massive successes recorded by Tantita.

    “We call on the Department of State Services to look into a threat by a group of people who under what they call the Supreme Egbesu Freedom Fighters of Niger Delta. This group has threatened  the NNPCL GCEO and the Minister of State, Petroleum Resources,  Sen. Heineken Lokpobri, over this issue of a renewed contract that went through the normal procedure for contract award and renewal.”

  • Divestments of oil assets ‘ll boost production, employment-NCDMB

    Divestments of oil assets ‘ll boost production, employment-NCDMB

    With the planned divestment of some assets by select international oil and gas companies and concomitant acquisition by Nigerian operating companies, the Nigerian oil and gas industry is positioned for a boost in crude oil production, employment creation, and capital injection, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has said.

    The Executive Secretary stated this while delivering the keynote address on Divestments in oil and gas: the challenges, the opportunities, and the implications to the industry in Nigeria at the 2023 Petroleum and Natural Gas Senior Staff Association (PENGASSAN),  Energy and Labour Summit in Abuja.

    Wabote stated that about 26 oil mining licenses had been divested or acquired by oil and gas companies in the Niger Delta Basin area of Nigeria in the past decade.

    Some of the divestments currently on the cards include the plan by Shell and ExxonMobil to sell oil and gas assets worth billions of dollars, in addition to Eni’s announcement in September of an agreement with Oando PLC for the sale of NAOC interests in six (6) onshore blocks and Okpai gas power plant in, Delta State.

    He emphasized that divestments of oil assets were not necessarily negative, rather they present an avenue for the local capacities and capabilities that had been developed through local content implementation to be brought to bear in the upstream sector.

    Wabote outlined several opportunities that would accrue from divestments, such as the injection of new capital, the rejuvenation of divested assets, and an increase in crude oil production through the investment in technologies by the acquiring firms.

    Other direct benefits are the creation of direct and indirect employment opportunities by the indigenous companies and their service providers.

    He reiterated that the divestments confirmed that Nigerians and indigenous companies had come of age and had acquired the technical, managerial, and financial capabilities to play in the “big league”.

    He added that “the involvement of our financial institutions on the transactions represents means of efficient capital deployment and capacity building on loans syndication on an international scale.

    This is also applicable to legal services, insurance, government relations, employee relations, community liaison, and others.

    Read Also: Oil in the Middle East equation

    “Aside from the opportunities, the NCDMB boss equally highlighted challenges encountered in the divestment exercises.

    These revolved around the time required to get necessary regulatory approvals as well as the substantial interests from various groups covering political, legal, communities, and labour.

    Among other challenges are the potential for the disruption of oil and gas production, job losses, as well as “access to latest technology especially if the new investors lack the technical expertise or have no support from original equipment manufacturers.”

    There are also issues around how “to manage legacy issues or liabilities related to the environment, communities, and other social commitments and pressure on new investors to recoup investments on time to offset loans and address other financial requirements”. 

    The NCDMB boss assured that the Board would continue to partner with industry stakeholders to institute regulations that would ensure that the increasing footprints and stakes of indigenous oil and gas production companies would not lead to a reduction in Nigerian content compliance.

    He promised that the Board would continue to partner with PENGASSAN to shape a future where Nigeria’s energy industry not only survived but thrived in the face of change.

  • Oil in the Middle East equation

    Oil in the Middle East equation

    Exactly fifty years ago, combined Egyptian and Syrian armies attacked Israel on the Jewish holy holiday of Yom Kippur and did some extensive damage to Israeli military capabilities. The powerful Israeli war machine was initially taken by surprise and suffered considerable damage to their undoubted brutal capacity to wage war. However, after the initial and unexpected success of the Arab armies, the Israeli armed forces recovered from their uncharacteristic inertia and with more than a little help from their major sponsor, the United States, began to fight back vigorously. Within a few days, the invading armies had been pushed back and the status quo ante had been restored. And the Palestinians on behalf of whom the surrounding Arab armies had launched their attack were forced back into their wretched camps, to resume their tedious life in exile.

    Although the mission to liberate the Palestinians and extract them from under Israeli boots failed, the world was made to feel the weight of combined Arab displeasure. A lot of the crude oil which fuelled the industrial activities of the rest of the world was extracted from the oil wells which existed in some profusion in Arab lands, especially  in Saudi Arabia. Before what had come to be known as the Yom Kippur war, the price of crude oil was hovering around $3 a barrel and the oil trade was concentrated in the hands of seven Western oil companies, the Oil Sisters who had firm control on oil prices. This control made it possible for those rapacious sisters to set oil prices very low, to the advantage of the industrialised Western countries and to the detriment of the rest of the world. This made it possible for petrol to be sold at the pumps at ridiculously low prices and indulged American preference for monstrously large cars, which burned prodigious amounts of petrol in their powerful internal combustion engines with which they polluted the land with joyous abandon.

    Without the overt help rendered to the Israelis by the USA, the Yom Kippur war would have been a closer affair than it was even, >Ø#Ýthough it must be said that the Arab war effort also had the support of the Soviet Union. The two super powers of the time were flying in arms and ammunition to replace those damaged in the conflict at an unsustainable rate, putting the rest of the world in danger of exposure to a war characterised by a global spread.

    The Arab countries under the political leadership of Saudi Arabia were understandingly miffed by the turn of events which had truncated their jihad and in their helplessness turned to their oil to redress the situation. First, they placed an embargo on the supply of oil to several Western countries with the USA being on top of the list and Japan which did not have a drop of their own oil tagged to the list.

    The effect of the embargo was immediate and shattering as the machines which produced all those home comforts to the Western countries were stopped in their tracks and industrial output fell close to zero. There was very little petrol to dispense in petrol stations and the price of what little was available went through the roof. Life as it was known turned to dust and ashes but more misery was on the way. As a graduate student in England at the time, I experienced the privations which characterised that period first hand. It was the period of three day working weeks, power cuts, very cold winter nights and galloping inflation.

    The embargo did not last very long but when it was lifted, people woke up to an era of expensive oil, the price of which quadrupled within a period of three months or so. Working within the structure of OPEC (Organisation of Petroleum Exporting Countries), the Saudis relentlessly pushed up the price of crude oil bringing unprecedented prosperity to members of OPEC including Nigeria, or perhaps more appropriately, especially Nigeria. The consequences of that glorious or if you prefer, inglorious period, were so far reaching that they are still plaguing our lives.

    Money poured in torrents into our national coffers after the Yom Kippur war so much so that according to our overwhelmed Head of State at the time, the availability of money stopped being a problem but how to spend it. Like the proverbial prodigal son, we spent all that largess at a furious rate so that within six years we were broke, stone broke and scandalously deprived. In the mean time, we had acquired such expensive tastes that we could not bear to tone down our newly acquired expensive tastes. But in that short period of affluence we burnt tons of cash mostly in the acquisition of baubles lacking any lasting value.

    Read Also: Crude oil production hits 1.7mb/d, says Lokpobiri

    For example, it was at this time that the Federal government took over the ownership of all universities in the land and for good measure abolished the payment of school fees in those institutions. To sweeten the deal further, bursaries were paid to students making tertiary education the cheapest commodity in the land. In an ill-advised fit of generosity, government awarded substantial salary increases to all workers but did not stop at that. Those increases were back dated long enough to create a substantial  nest egg to every worker thus setting off inflationary pressures, the benefits of which are still blighting our lives fifty years later.

     The consequences of the oil embargo and steep increases in the price of crude oil were felt in practically all parts of the world. Changes had to be made to accommodate the new and unpalatable reality, especially in Europe and the USA. Many changes had to be made with the expressed purpose of reducing reliance on crude oil. New technologies were invented and adopted so the amount of oil required to run their economy was drastically reduced, to such an extent that there was the danger of an oil glut and a reduction in oil prices became inevitable, which is the reason why Nigeria got into serious financial difficulty within only a few years.

    Although Japan had no oil and had to suffer like the rest of the world, she was perhaps one of the greatest beneficiaries of the new oil price situation. A great deal of gas was guzzled by those larger than life American cars and one of the immediate consequences of expensive oil was the abandonment of those heavy American cars for nifty Japanese and Korean cars which were so fuel efficient that they could travel vast distances without the need of a refill. This being the case, the centre of the global motor car industry shifted suddenly and decisively from the USA to Japan and Japanese cars began to be the vehicles of choice on roads from New York to New Zealand and everywhere in between. The Japanese did not stop at revolutionising the motor car industry but moved massively away from the production of electrical goods and moved on to the production of electronic gadgets for the simple reason that the manufacturing process for electronic goods consumed far less power than electrical goods. The Japanese economy boomed as a result of these adjustments and at one time threatened to become the workshop to the world. It was only in the last ten to fifteen years that this distinction passed on to China, by far the greatest exporter of manufactured goods the world has ever seen. Coincidentally, like Japan, China has had to import every drop of oil needed to produce goods on an industrial scale.

    Perhaps the most fundamental changes took place in OPEC countries which now had access to more money than they could have possibly dreamt of having only a few years before. What has happened in the Middle East since that time is nothing short of an economic miracle. The governments of these countries, all of them monarchies; Saudi Arabia, the United Arab Emirates, Kuwait and Qatar set about building social infrastructures at an unprecedented rate, overtaking  Western countries in this regard. Libya under the long lived dictatorship of Gadhafi was another country where massive changes were going on. Norway, a country sitting so close to the arctic circle as to make no difference also benefitted immensely from rising oil prices even though it was not a member of OPEC. The country has continued along the path of her previous existence but has set up a Sovereign wealth fund now worth $1.4 trillion whilst the size of the counterpart fund for Nigeria is a paltry $2.3 billion. The Arab states also have humongous sums of money in their respective sovereign wealth funds. Both Saudi Arabia and Qatar are spending some of these funds to attract positive attention to themselves. Qatar hosted the World Cup last year and Saudi Arabia is looking forward to hosting it in 2034, all from the proceeds of selling crude oil to the rest of the world. To put things in perspective, Nigeria, albeit in a joint venture with Togo and Benin has just lost a bid to host the African Cup of Nations!

    When Sadat launched his army across the Sinaidesert in 1973, his target was freedom for the Palestinians. He could have thought that his adventure was going to change the world in any way let alone the far reaching consequences of that action. Fifty years on Hamas the controlling body in Palestine has followed in the foot prints left in the sand by Sadat. At the end of a Jewish holiday last week, forces loyal to Hamas stormed the formidable ramparts of the occupying Israeli state in an attempt to inflict some damage to Israel and in doing so, remind the world that  Palestinians are still living under intolerable conditions on the fringes of Israel with which no accommodation has been possible. Both Hamas and Hezbollah the ruling body in Lebanon, lack the weapons to push back the Israeli state and there is no doubt that the Israelis will cause a rain of destructive and deadly bombs to fall on Gaza and other places as punishment for the incursion of Hamas into Israel. Israel is now in a state of war and messages of solidarity with Israel are coming from Europe and the USA which, as was the case in 1973, is offering more than spiritual comfort to Israel. In addition, the USA has reinforced her forces in the region by ordering the largest battle ship in the world and her extensive flotilla of support vessels into the region of conflict in the same way as it was flying war material into the region fifty years ago. The action of the USA and her allies precipitated a crisis which changed the world significantly in 1973. Fifty years later, an identical situation has developed and the West has responded in an identical manner. It seems that the inability of governments to learn from history is causing history to repeat itself. Bearing in mind what Nigeria got out of the Yom Kippur war, I wonder what the future holds for Nigeria this time around.

  • FG to increase oil output to 2m bpd by December

    FG to increase oil output to 2m bpd by December

    Nigerian Upstream Petroleum Regulatory Commission (NUPRC) at the weekend unfolded its plans for increasing crude oil production to two million barrels per day by December 2023.

    Addressing reporters in Abuja at the end of the 4th Phase Consultation with stakeholders on regulations development, Executive Commissioner, Economic Regulation and Strategic Planning, Dr. Kelechi Ofeogbu, dropped the hint that the commission will harness all the acreages and every  capacity from Joint Ventures (JVs) and Production Sharing Contract (PSC) to meet the target.

    He said, “ You know the mandate for us and the industry this year. Early we were doing 1.3million barrels per day.

    “The aim is to end this year with at least 2million barrels and the midterm to do 4million barrels.

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    “We are going to rely on the production on every available acreage whether from PSC or from JV, everything is going to be harnessed.”

    Ofoegbu revealed that the Chief Executive Officer, Engr. Gbenga Komolafe had raised a committee to address the NLNG complaint of non-availability of gas feedstock due to stoppage of Production Sharing Contract (PSC) that has affected deep water production.

    He noted that the commission is working with key stakeholders, including the Nigerian National Petroleum Company Limited (NNPC) to address the issue.

    The commissioner added that: “There are measures such as addressing crude theft and attracting further  investments.”

    Meanwhile, the  Oil Producers Trade section (OPTS) urged the commission to make regulations that will grow the country’s Gross Domestic Product (GDP) and also attract Foreign Direct Investment (FDI).

     OPTS representative at the consultation, Mr. Nathaniel Oyatogun, noted that the growth can only come when the regulations are fair enough.

     Asked to reveal the agenda the OPTS tabled during the consultation, he said, “So basically our interest is that there will be continuous investment in the sector.

  • Govt to cut oil, gas emissions by 60%

    Govt to cut oil, gas emissions by 60%

    The federal government plans to cut fugitive methane emissions from the oil and gas sector by 60 per cent.

    This is coming as the world is fast moving to a carbon neutral future and as part of its Nationally Determined Contributions (NDCs) policy submitted to the United Nations Framework Convention on Climate Change (UNFCCC) ahead of the 26th Conference of Parties (COP26) summit in Glasgow, Scotland.

    Chief Executive, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe,  made this known while presenting his paper at the National Association of Energy Correspondents of Nigeria (NAEC) Annual Conference 2023, held in Lagos, yesterday. The conference had as its theme: “Nigeria’s Energy Transition: Enhancing investment opportunities & addressing challenges in oil and gas sector.”

    He explained that the government has also developed guidelines on the management of fugitive methane and Green House Gas (GHG) emissions in the upstream sector to drive the emission reduction and mitigations targets of the NDC, including the establishment of the Energy Transition and Carbon Monetisation Regulatory Unit within the Commission to drive the carbon monetisation efforts of the upstream sector relaunch of the Nigerian Gas Flare Commercialisation Programme (NGFCP).

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    According to Komolafe, the gas flare commercialisation programme was aimed at driving Nigeria’s target to end routine gas flaring by 2030 in support of the Nigeria Energy Transition Plan (ETP). He explained that said the programme would create value from previously wasted gas resources. The programme, initially launched in 2016, was relaunched by the Commission last year to aid in curbing the environmental menace of gas flaring while supplying gas to the rapidly growing market.

    He said the various initiatives reeled out earlier highlighted deliberate actions taken by the commission in this regard. These initiatives, he said, were geared towards unlocking the full potentials of Nigeria’s upstream petroleum sector, for which the country has begun reaping the rewards.

    “Over the next few months, we are positive we shall record a marked increase in the national oil and gas production volumes,” he said, adding that quick-win strategies such as aggressive drive to reactivate shut-in and declining wells would boost production prior to the onset of more long-term initiatives like operations from the new Marginal Field awardees.

    He said the commission is also working alongside security operatives to bring a halt to the menace of crude oil theft, which has over the years contributed to a huge loss of production.

    Komolafe said with the commencement of projects under the NGFCP, it is expected there would be a rapid decline in gas flaring rates and an increase in gas supply to the domestic market.

    He also said the commission would be leveraging technology to achieve its mandate by ensuring all the processes become fully automated, transparent, and accountable in line with the tenets of the Petroleum Industry Act (PIA) 2021.

    The NUPRC boss said the commission would continue to collaborate and engage with all stakeholders in a timely manner for the sustainable and environmentally safe development of the nation’s hydrocarbon resources with the goal of ensuring a mutually beneficial environment for Nigerians and all investors in the industry. For instance, the NUPRC, he revealed, has partnered with relevant global players to leverage the carbon credit market mechanism hence improving the bankability of projects under the umbrella of the NGFCP.

    Recalling the PIA was enacted to provide fresh legal, governance, regulatory and fiscal framework for the country’s petroleum industry consistent with modern operational and administrative realities, Komolafe said the Act empowered the NUPRC to perform the role of technical and commercial regulator in the upstream petroleum sector, monitoring activities in a manner that would ensure sustainable hydrocarbon exploration and production in a manner that ensures optimal return on revenue for all stakeholders.

    He said the PIA also introduced incentives aimed at driving the growth of the nation’s reserves in a bid to attracting more investments to the sector and boost daily production even in this period when the world clamours for a shift in the global energy dynamics.

    He said Nigeria was blessed with potential for blue energy, solar, wind, biomass as well as other sources of renewable energy in addition to huge hydrocarbon reserves thereby providing the right mix in the energy transition regime.

    “The PIA 2021 had set out a framework to enhance the business landscape of Nigeria’s petroleum industry, as it has provided a more transparent, efficient and investment-friendly regulatory framework for the industry. This renewed disposition reflects the nation’s readiness to attract local and international investors in the oil and gas space.

    “Furthermore, in adherence with the provisions of the PIA, the commission is committed to ensuring peace and harmony in host community environment that would guarantee seamless operations in the industry contribute to reducing unit operating cost, create sanity and predictability while attracting investment opportunities,” Komolafe submitted.

  • Fed Govt eyes infrastructure, non- oil export to drive economy

    Fed Govt eyes infrastructure, non- oil export to drive economy

    The Federal Government has recommitted on infrastructural development and growth of the non- oil sector by putting measures in place to further expand the sector for foreign exchange earnings.

    Vice President, Senator Kashim Shettima lamented that the government cannot rely on revenue from crude oil anymore as the oil sector has brought more pains than gains to the economy, as he assures that the non-oil export is the way to go.

    Shettima, who was represented by the Special Assistant on ease of doing Business, Office of the Vice President Dr. Jumoke Oduwole disclosed this at the Nigerian Export Promotion Council NEPC,  2nd National Conference on Non-oil Export   with the theme, ” Building a Sustainable National Economy Through Non-oil Export” in Abuja, stating that Nigeria is facing numerous economic challenges of  unemployment,  poor standard of living and shortage of foreign exchange inflows among others.

    According to him,  “The recent steps such as the merger of the exchange rate regimen as well as foreign trips embarked  upon  by President Bola Ahmed Tinubu  recently to shop for foreign investors practically explains the present administration’s desire to diversify the economy.

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     “The government  is said it can no longer rely on crude oil revenues as experiences have shown that the volatility in the sector brought more pains than gains to the economy but expresses  optimism that the non-oil exports earnings is the way to go”.

    Speaking, the Minister, Industry, Trade and Investment , Dr. Doris Uzoka-Anite noted  that for too long, Nigeria has operated a mono- economy, focusing on oil and gas to the detriment of other exportable commodities stressing that the nation’s diversification efforts are however, beginning to yield success.

    The Executive Director  Nigerian Export Promotion Council [NEPC] Dr. Ezra Yausak had earlier said  that the council has successfully provided relevant certifications to 154 SME while 200 others are presently undergoing various certifications for HACCP, FDA,ISO 2000 and Hatal to enable them penetrate niche markets and maintain quality and standard of made in Nigerian products.

    In order to encourage banks to adopt the use of Trade Finance instruments, the council organized a technical session for scheduled officers of all commercial banks in Nigeria, in line with first National Conference on Non-Oil export communiqué, backlogs of export expansion grants for 375 beneficiaries were cleared.