Timipre Sylva: Nigeria to focus on five critical areas in oil and gas sector in 2020

The Nigerian Minister of State for Petroleum Resources, Chief Timipre Sylva, on Thursday, held his first major press conference in Abuja since he was appointed by President Muhammadu Buhari in 2019, and rolled out the five critical areas of focus for oil and gas sector in Africa’s most populous nation in the year 2020.

Right to Left: Minister of State for Petroleum Resources, Chief Timipre Sylva, and Permanent Secretary, Ministry of Petroleum Resources, Mr. Bitrus Bako Nabasu, during a press conference in Abuja, Nigeria, on Thursday January 16, 2020 
Right to Left: Minister of State for Petroleum Resources, Chief Timipre Sylva, and Permanent Secretary, Ministry of Petroleum Resources, Mr. Bitrus Bako Nabasu, during a press conference in Abuja, Nigeria, on Thursday January 16, 2020

The former governor of Bayelsa State in Southern Nigeria expressed optimism that both the Petroleum Industry Governance, Administration & Host Communities Bill on one hand, and the Petroleum Industry Fiscal Bill on the other, will be passed within the first anniversary of the Buhari administration’s second term in office.

His confidence, he explained, was based on the current harmony between the Executive and Legislative arms of the Government.

President Muhammadu Buhari won a second term of four years in 2019, with his All Progressives Congress (APC) sweeping both chambers of the National Assembly.

That victory gave Mr. Buhari, 77, the backing he lacked in his first term when Senate President Bukola Saraki and Speaker Yakubu Dogara rose to defeat his preferred candidates and antagonized him until the very last minute.

On the PIB, or Petroleum Industry Bill, which is the first priority of Mr. Sylva, he said a special focus will be placed on the Midstream and Downstream sectors.

“Consequently, we are considering two regulators, one for the Upstream (the Commission) and another for the Midstream & Downstream (the Authority),” he said, adding that the Midstream and Downstream sectors will particularly open enormous opportunities to local investors and create massive job opportunities in the country.

“For example, investments will be available in pipeline engineering design, procurement & construction, terminal operations, pipe mills, fabrication of pressure vessels, storage facilities, pipe transportation and laying equipments, Refineries, Central Processing Facilities and also investment in Gas-based industries (Fertilizer, Methanol, Petrochemicals, LPG and CNG) etc. Open access for oil and gas transportation will be fully enhanced,” he said.

“On the upstream side, we are coming up with more robust fiscal provision, acreage management, drilling-or-drop program, etc. We are not only going to retain investors, multitudes will join the leagues of high-value operators,” the Minister added.

Mr. Sylva explained that his second point agenda would be to address security challenges around oil and gas installations, specifically to curtail theft of petroleum products and crude oil.

He said the crude theft was being currently contained with legislation, security, surveillance, community engagement and diplomacy.

Mr. Sylva explained that oil theft lingers because of the presence of an active market for stolen crude and products, a weak measurement and surveillance  mechanism, weak and inadequate sanctions, low cost and high incentive for theft as well as lack of infrastructural development.

As a solution, he proposed to use technology for pro-active leak detection and community participation in the oil and gas assets, as well as engage PTI in the training of unemployed youths in the region.

In addition, the government would have to revamp security architecture, increase supply to underserved areas, provide good infrastructure in the regions where oil is exploited and give incentives to host communities.

This would not be complete without increasing community stake-holding, designing and enforcing stiffer legislations and mobilizing global community, traders, refiners, regulators and international groups.

His third agenda, he said, would be to enable the operations of the National Oil company as a “responsive commercial enterprise” 

Mr. Sylva said various transformation processes were currently ongoing in NNPC – Growing from Business Unit Focus Areas (12 BUFAs) to Transparency, Accountability and Performance Excellence (TAPE). We are considering the Incorporation of NNPC and its existing Joint Venture Companies”.

In addition, his fourth priority would be to conduct bid rounds for marginal and opportunities within 2020 and to ensure settlement of dispute with partners and pave way for FID on major capital projects.

“New Gridding, acreage management and bidding process are thoroughly elucidated in the upcoming Petroleum Industry Bills. It is therefore highly desirable that the Bills are passed before any bid round. This is one of the reason we implore Nigerians to support us in our quest to pass the bills in earnest,” Mr. Sylva said.

His fifth priority would be to deepen domestic gas utilization and overall monetization of gas resource.

“As you are aware, Natural gas has the capacity to transform an economy.  We have seen successful examples all over the world. Qatar has the world’s highest GDP per Capita – its growth anchored on natural gas. Saudi Arabia has positioned itself as the world’s hub for petrochemicals, creating significant job opportunities and enabling industrialization of the country,” he said.

He added: “Nigeria’s gas reserves is significant.  Nigeria current 2P gas estimate is about 202TCF with potential for up to 600TCF in undiscovered resources.  With the undiscovered potential, Nigeria could be in the same league as Iran, Qatar, Saudi Arabia and Russia.

“Recognizing the potential of our enormous natural gas resources and the unprecedented growth in domestic gas demand, the Federal Government of Nigeria through the Ministry of Petroleum Resources over the years has championed various interventions to stimulate gas utilization and monetization.

“This led to the Gas Master-Plan Policy initiative where detailed major gas infrastructure expansion and integration, gas supply development projects, revamp of the commercial framework for gas and tactical efforts to accelerate gas supply to Power sector, in addition to our gas industrialization strategy for investments in Fertilizer, Methanol, Petrochemical, CNG and LPG are fully stated.

“Also the Ministry of Petroleum Resources is driving the Nigeria Gas Flare Commercialization Program (NGFCP). This initiative is designed as the strategy to implement policy objective of the FGN for the elimination of gas flares with potentially enormous multiplier and development outcomes for Nigeria. The objective of the NGFCP is to eliminate gas flaring through technically and commercially sustainable gas utilisation projects developed by competent third party investors who will be invited to participate in a competitive and transparent bid process”.

The Federal Executive Council in June 2016 approved the Nigerian Gas Flare Commercialization Program (NGFCP).

The Federal Government ratified the Paris Climate Change Agreement, and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030 whilst committing to a national flare-out target by year 2020.

In November 2018, the Federal Government of Nigeria called for Expression of Interest (EoI) in the Nigerian Gas Flare Commercialization Program (NGFCP).

Over 850 interested parties registered their interest in the NGFCP. 205 Applicants emerged successful and all 205 companies will be invited to submit their proposal for flare gas utilization through the Request for Proposals (RfP) phase of the NGFCP, Mr. Sylva said.

He added that the commercialization approach has been considered from legal, technical, economic, commercial and developmental standpoints. 

“It is a unique and historic opportunity to attract major investment in economically viable gas flare capture projects whilst permanently addressing a 60 year environmental problem in Nigeria. 

“About US$ 3.5 billion worth of inward investments is required to achieve the gas flare commercialization targets by 2020.

“The analysis also shows that the NGFCP will deliver significant social and economic benefits to host communities in gas-rich regions of the Niger Delta, to investors and to the national economy. Benefits would include,” he added.

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