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Building Capacity in Petroleum Sector Governance in Nigeria

June 10, 2021

By Kelechi Deca

The emergence of renewable energy sources notwithstanding, about two billion dollars a day of petroleum is still traded worldwide, which makes petroleum the largest single item on the balance of payments and exchanges between nations. And petroleum represents the larger share in total energy use for most net exporters and net importers and will most likely command an important pride of place for the next half a century, thus the need for countries to efficiently deploy the resource for development.

A major impediment to Nigeria’s development has been the phenomenon of the resource curse whereby the nature of the state as a “rentier” dilutes accountability for development and political actors are able to manipulate institutions to sustain poor governance. Experts seem to be in agreement that the impact of the political elite’s resource-control and allocation of revenues on core democratic mechanisms is central to understand the obstacles to development and governance failure.

Although there have been efforts at reforming the petroleum sector, such reforms are still fragile thus the need to be deepened and institutionalized. This is basically behind the activities of the Nigeria Natural Resource Charter (NNRC), a not for profit policy institute that has in the last decade been at the forefront championing for sustainable management of Nigeria’s natural resource wealth for the development of the country and good of the people.

Using its biennale Benchmarking Exercise Report (BER) since 2012, the NNRC analyses the governance of petroleum wealth in Nigeria and also identifies gaps within the sector. This is driven by the belief that a country that wants its future generations to benefit from an exhaustible resource, such as petroleum, must transform this non-renewable resource into a renewable one by investing in productive capital, such as energy and transportation infrastructures and water resources and sanitation and human resource capital.

To give further backing to the need to follow up on the findings of the BER, and the need to address some of the gaps discovered therein, especially as regards legislation and oversight of the sector, the NNRC collaborates with the National Institute for Legislative and Democratic Studies (NILDS) to produce a toolkit which aims to improve capacity in the extractive sector governance in Nigeria. Both organizations had through a painstaking process which started a year ago developed a specialized toolkit aimed at helping stakeholders especially members of the national and state legislatures to fully understand the challenges of making laws and oversight functions in the extractive sectors.

The Extractive Industry Toolkit is designed to ensure that knowledge of the extractive industry is institutionalized and reposed within a credible and effective institution committed to ensuring current and future National Assemblies learn from the mistakes from the past, draw perspectives from more successful regions and are capable of charting an informed path forward for the extractive industry. It further highlights the contributions made by National Assemblies to improvements in Nigeria’s performance against global best practice indices and its competitors, providing practical examples on how the legislators may better enhance the benefits of resource extraction for Nigeria and her citizens.

Using the toolkit, existing legislators and those charged to govern within the relevant legislative committees, clerks, legislative aides and new entrants into the extractive industry legislature will gain deeper knowledge of the sector. It provides an avenue to better understand the findings of the NNRC’s Benchmarking Exercise Report (BER)’s which reveal governance gaps in extractive industry.Also, to understand the range of partnerships and collaborations with local and international actors in the industry available to foster improved governance of the sector. Laws and bills can be assessed using the methods within the toolkit for a better grasp of the issues and the available options for resolutions.

This toolkit couldn’t have come at a more opportune time as Nigeria resolves to consolidate its petroleum resource gains to diversify the economy amplifying the gains from solid minerals. The legislators, guided by the toolkit, will better understand the context of the resource control challenges being faced, address conflicts in those regions, embrace strategies that ensure greater management of Nigeria’s solid mineral assets and other key strategies and lessons gained from successful resource rich countries. It further provides a platform for the discourse, for the industry, MDA’s, civil society organizations and media to mainstream the natural resource charter approach and principles in better understanding issues and advocating for improvements in the extractive industry as a whole.

We anticipate that the curriculum developed using the Toolkit will entrench the principles within the Natural Resource Charter and will be used to deepen the understanding of extractive resource governance across the federal and sub-national parliaments for better resource management in Nigeria for the benefit of the public.

Feedbacks from industry stakeholders and experts points to the fact that the toolkit coming at a time when oil revenues are dwindling, will equally aid effective technical decision-making as well as transparency and accountability in the management of oil, gas and mineral wealth of Nigeria for the good of all Nigerians as it provides templates for conducting independent analysis of laws, sectors and issues within the natural resource space. It is hoped that if properly deployed the legislative interventions outlined in the toolkit have the potential to address some of the issues in Nigeria’s extractive sector. The measures identified can support lawmakers in developing legislations with ‘adequate safeguards, checks and quality controls to guard against conflicts of interest and undue discretion.

It not only seeks to build the capacity of legislators to understand the extractive sector but also outlines strategies that legislators can use to deepen oversight of the sector through mechanisms such as audits, oversight visits, as well as corporate transparency and monitoring. There is a general consensus that Nigeria might be able to get it right in this last quarter of its resource management by using its natural resource wealth to effectively diversify the economy and industrialise the country.

Kelechi Deca, a development journalist writes from Lagos.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Nigeria’s President Buhari Signs Long-Awaited Petroleum Industry Bill

September 24, 2020

President Muhammadu Buhari has signed a long-awaited oil-reform bill and it will be formally presented in the Senate as early as next week, four sources familiar with the matter told Reuters. The legislation has been in the works for the past 20 years, and the main laws governing Nigeria’s oil and gas exploration have not been fully updated since the 1960s because of the contentious nature of any change to oil taxes, terms and revenue-sharing within Nigeria.

But reforms and regulatory certainty became more pressing this year as low oil prices and a shift towards renewable energy made competition for investment from oil majors tougher. The alignment of both chambers with Buhari’s All Progressives Congress party has also given the reforms the best chance of passage in years. Buhari officially signed the bill late last week, and his team has already been building support for it in the National Assembly.

The sources, who asked not to be named because of the sensitivity of the issue, said the assembly has already chosen teams of members who will work most closely on individual portions of the bill. Both the Senate and the House of Representatives must approve it before Buhari can sign it into law. Two presidential spokesmen declined to comment and the Senate had no immediate comment. The Ministry of Petroleum Resources sent the draft, the product of months of consultation between Nigerian officials, oil and gas companies and other industry stakeholders, to Buhari last month.

Excerpts from the bill seen by Reuters included provisions that would streamline and reduce some oil and gas royalties, boost the amount of money companies pay to local communities and for environmental clean-ups and alter the dispute resolution process between companies and the government.

It also included measures to push companies to develop gas discoveries and a framework for gas tariffs and delivery.

Commercialising gas, particularly for use in local power generation, is a core government priority

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Nigeria and Ghana top Projects Destinations in the Oil and Gas Industry in 2020

December 11, 2019

Nigeria and Ghana has been identified as leading investment destinations in the oil and gas industry in 2020 based on findings and surveys from the African Energy Outlook 2020. The Report which was launched last month by the African Energy Chamber highlighted the importance of increased infrastructure capacity in Africa’s long-term industrial development.

Spotlighting the $12 billion Dangote Refinery in Nigeria and Ghana’s Tema LNG Terminal, the Chamber noted essential role such projects play in revamping the sector and creating opportunities for private sector investors. “At a time when the low oil price is gripping treasury revenues, private capital is developing key oil and gas infrastructure projects which could have a significant impact on the African energy and power landscape over the next decade,” the report said.

On the Dangote Refinery, the Chamber called attention to the current state of Nigeria’s infrastructure and the contribution the project would have specifically as the country works towards tripling its refining capacity to 1.5 million bpd by 2025 as a means to reduce its reliance on fuel imports. To this, the Report said, “the refinery’s tank farms are set out for completion in Q4-19 and they may be used as a depot before the refinery’s production starts. This would provide an immediate increase to fuel storage capacity.”

Ghana’s determination to become sub-Saharan Africa’s first LNG importer in 2020 is set to become a reality as the Tema LNG terminal project nears completion. The project will be able to cover 25 percent of Ghana’s total electricity generation capacity, with gas providing a cheaper alternative to oil.

“The deal with Rosneft enables Ghana to diversify gas imports away from Nigeria, which has consistently failed to provide the agreed level of supply since the West African Gas Pipeline started operating back in November 2011,” the Chamber explained. Adding that the emergence of offshore storage and regasification technology is enabling smaller, lower-risk, rapid LNG solutions that could be replicated elsewhere in the region in countries with substantial gas reserves.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Equatorial Guinea Promotes Corporate Social Responsibility in Oil & Gas Sector

November 29, 2019

Ahead of the 2nd Gas Exporting Countries Forum taking place in Malabo, Equatorial Guinea starting tomorrow, the country launched a handbook on corporate social responsibility highlighting key achievements in corporate social responsibility projects within Equatorial Guinea’s oil and gas sector. The book which will be circulated free to delegates at the gas summit captured notable projects in the country including the Bioko Island Malaria Elimination Project, Bioko Biodiversity Protection Program and former Program for Education Development of Equatorial Guinea. Government sources say that apart from distributing the book at the Gas Exporting Countries Forum International Gas Seminar, it will be further distributed throughout the 2020 Year of Investment international events and roadshows.

Director of Local Content for the Ministry of Mines and Hydrocarbons Jacinto Owono

The Book which was launched by the country’s Ministry of Mines and Hydrocarbons documented the country’s key corporate social responsibility projects, spearheaded by public-private partnerships.

Equatorial Guinea: Achievements in Corporate Social Responsibility in Oil & Gas highlights the impact of investment in social projects on malaria reduction, healthcare, access to clean water and infant mortality rates. Notable projects include the Bioko Island Malaria Elimination Project – which recently received the P3 Impact Award at the 2019 Concordia Summit for its high impact and degree of success; the Bioko Biodiversity Protection Program; the Baney District Hospital Project; the Ver Bien project; Tuberculosis Control Project and the construction of water wells throughout the country.

Speaking at the book presentation earlier today, the Director of Local Content for the Ministry of Mines and Hydrocarbons Jacinto Owono said that the book demonstrates the contributions of the oil and gas sector to the people of Equatorial Guinea, who continue to remain the country’s highest priority. He further noted that what has been done in the past 25 years, in terms of the elimination and prevention of malaria on Bioko Island, teacher training and access to education, the Program for Education Development of Equatorial Guinea, distribution of clean water to rural communities, the construction of schools and parks throughout the country, and more “speaks to what we can and will accomplish in the next 25 years”.

The book also focuses on efforts in education and sustainability activities, including training and giving scholarships to students in and outside of the country, as well as the construction of an education infrastructure. Key projects include the former Program for Education Development of Equatorial Guinea; the construction of the National Technological Institute of Hydrocarbons of Equatorial Guinea; the construction of primary schools throughout the country and the Books for Bioko project.

Under the official endorsement of the Ministry of Mines and Hydrocarbons, the book includes commentary from H.E. President Teodoro Obiang Nguema Mbasogo, Minister of Mines and Hydrocarbons H.E. Gabriel Mbaga Obiang Lima and Jacinto Owono, Director of Local Content for the Ministry of Mines and Hydrocarbons.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Obasanjo Urges Africa to Collaborate for a Strong Oil and Gas Future

November 7, 2019

Former President of Nigeria, Olusegun Obasanjo has urged African countries, especially those endowed with huge deposits of oil and gas to come together and collaborate to safeguard the continent’s energy future. The former President who made this known in Cape Town, South Africa at the ongoing Africa Oil Week said that this is not the best of times for the energy industry thus requires innovations and greater cooperation among countries to be able to withstand the upheavals of the market and technological disruptions.

Olusegun Obasanjo, former president of Nigeria

Obasanjo admits that the sector faces some challenges on the continent over the coming decades, saying that “the challenges that we face in Africa are adequate investment in oil and gas, challenges of infrastructure, challenges of security, challenges of local content, challenges of regulation and challenges of predictability and stability,” he explains. “These are then same in the oil producing countries, the oil market and in the industry in general.

“These challenges are not challenges that only one country can deal with on its own. They are national challenges, they are regional challenges that they are also, what I would call oil and gas industry challenges, which we must handle together. Whatever the challenges we are facing as an industry must be able to disaggregate and find the best instrument, the best institution or the best organisation to deal with the challenges.”

Pointing out that his experience in Nigeria puts him in good stead to play the role he has played over the years overseeing Nigeria’s first democratic handover of power and administrative reforms that accelerated economic growth. He is credited for his pivotal role in the regeneration and repositioning of the African Union, including helping to establish the New Partnership for Africa’s Development (NEPAD) and the African Peer Review Mechanism (APRM), designed to promote democracy and good governance.

Despite being out of office for 12 years Obasanjo is still a very influential and popular figure in the continent and at this year’s Africa Oil Week he was on hand to give his view on a sector that he helped to shape. “Over the 26 years that it has been in existence, I think the fortune of the African oil and gas sector has been up and down,” he says. “I will not dwell too much on the past, except to let the past enlighten our present, and our future. Not too long ago somebody looked at me and said to me, you will drink your oil. I thought he was angry because the price of oil was high, and I said to him, we will use our oil, will you join with me in using our oil? I was of course coming from an oil producing and exporting country.”

When it comes to the sustainability of the sector and the rising tide of renewable energy, he believes that despite the need to reduce carbon emissions the oil and gas sector still has an important role to play and a bright future in Africa. “The present challenges particularly include renewable resources growing into the areas where oil and gas has been predominant,” he says. “I believe this should not really worry us too much.

“For me, I believe for the foreseeable future there will be no renewable energy that will be as portable as oil and gas. That is something that we can take as the advantage of to ensure oil and gas will still be there for the foreseeable future.” But H.E. Obasanjo believes that technology will pave the way to extending the life of oil and gas. “With technology we have to make the production of oil and gas cheaper and if production of oil and gas is cheaper, we will be able to get oil and gas going on for much longer than some people have predicted.

“I believe that this is the area where the oil countries should really work together and take advantage of new technology that is part of the digitalisation transformation such as artificial Intelligence. All the technology that are here now that were not available to us 15 years ago. They are there for use everywhere but are very important in the oil and gas industry. Of we bring this into the industry I believe that the industry and the fear that we have now will all be a thing of the past. The next 10 to 15 years may not be the way some people think.

As for the foreseeable future, Obasanjo points to collaboration as the key to sustainability for the sector. “I see collaborations at the national level, at the regional level, and at the industrial level, and of course, collaborating, at the global level,” he says. “Collaboration and taking advantage of technology. That would make the life of the oil industry much longer than reduce the fear that some people have that renewable energy resources will make oil and gas a thing of the past. If we can surmount this challenge, then the future of oil and gas cannot be dictated by anybody except by us; the producers and the investors. This will maintain oil and gas as an active resource for humanity.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Equatorial Guinea’s to boost Opportunities for African Services Companies with Upcoming Oil & amp; Gas Meeting Day

July 18, 2019

In order to strengthen cooperation amongst African companies, encourage the development of strong African content and promote joint-venture opportunities, Malabo will be hosting the Oil & Gas Meeting Day on October 1-2, 2019.

The summit is part of Equatorial Guinea’s Year of Energy and will focus on exploring opportunities and deals amongst services companies, which are central to the development of strong African capabilities across the oil & gas value chain.

The African Energy Chamber strongly supports the National Alliance of Hydrocarbons Service Companies (NAHSCO) in the organization of this upcoming Oil & Gas Meeting Day.

We invite all our partners, especially national oil companies and public and private services companies, to come to Malabo in October. This will be a key platform for dialogue and deals with international, technology and services companies.

“Equatorial Guinea is rapidly becoming a hub for African service companies, driving a regional approach to local content based on partnerships and oil industry cooperation,” said Nj Ayuk, Executive Chairman at the African Energy Chamber and CEO of the Centurion Law Group.

“The development of a strong African oil services industry is crucial if we want to get value out of our natural resources and create jobs. The way to build African capacities is to work together and create jobs, and we are happy Malabo is bringing everyone together.”

The Oil & Gas Meeting Day will offer opportunities for African services companies to make deals with regional and international partners and drive global transformations within the oil services industry.

More importantly, it will provide a platform to share experiences on local content and advocate for regionalization of local content development within African oil markets. “With this meeting, African services companies and national oil companies have the chance to not only be part of the game but change it to their benefits,” added Nj Ayuk.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

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African Energy Chamber’s President to Lead Angolan Services Companies’ African Outreach at Upcoming Oil & Gas Meeting Day in Malabo

July 17, 2019

Angolan and Mozambican services companies are answering to Equatorial Guinea’s call to cooperation and will be participating in the Oil & Gas Meeting Day in Malabo on October 1st and 2nd, 2019. The delegation will be led by President of the African Energy Chamber in Angola, Sergio Pugliese.

The growth of Africa’s oil & gas sector presents the continent’s services companies with tremendous opportunities for partnerships and regional expansion. As Africa’s second-largest oil producer and thanks to its strong local content efforts, Angola is now home to countless services companies with the necessary capacities to expand across sub-Saharan Africa.

“Angola is known for having strong local services companies,” said Sergio Pugliese. “The growth of our local content is now accelerating thanks to the reforms made by President João Lourenço and his administration. We now have Angolan companies that developed strong capabilities and are ready to expand beyond Angola.

They are seeking partnerships and deals with other African and international services and technology companies, to serve both their regional expansion plans but also to further support the growth of the Angolan industry at home. The Oil & Gas Meeting Day provides the perfect platform to seal such deals.”

The African Energy Chamber supports the Oil & Gas Meeting Day, a Year of Energy event organized by Equatorial Guinea’s National Alliance of Hydrocarbons Service Companies (NAHSCO). Malabo has positioned itself as the hub for services companies to engage in meaningful conversations on how to build the next generation of African oil & gas leaders and companies.

The services industry is a massive job creator and a strong pillar of the global oil & gas industry. As cooperation amongst African oil markets increases, the need for services companies to step up their game and pursue an aggressive outreach has become a necessity.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.