Minister of state for petroleum (oil) Heineken Lokpobiri, has assured that the International Oil Companies (IOCs) are not divesting from Nigeria but are rather moving from onshore and shallow waters to offshore which requires more investment.
Lokpobiri gave this assurance at the opening session of the seventh Nigeria International Energy Summit (NIES) 2024, in Abuja on Tuesday.
This is as the Nigerian National Petroleum Company Limited, has expressed its willingness to invest in the proposed African Energy Bank as a way of ensuring sustainable funding for energy projects in Africa to guarantee energy security.
The bank is expected to kick off operations before the end of June 2024, with an initial capital base of US$5 billion (within five years) and a gross asset base exceeding US$120 billion by 2028.
The NNPCL, as the largest partner to all the oil producing companies in Nigeria, also assured that its role in the divestment of the International Oil Companies from onshore and shallow water assets in the country is that of a facilitator, and not an obstacle.
Group chief executive officer, NNPCL, Mele Kyari, made the clarification at the opening ceremony of the 7th edition of the Nigerian International Energy Summit 2024 (NIES 2024), at the State House, Abuja, on Tuesday.
In recent times, there had been concerns about the divestments of oil and gas assets by some International Oil Companies.
For instance, in August 2021, Shell launched divestment of its 30 per cent stake in Shell Petroleum Development Company of Nigeria Limited subsidiary.
Also, Seplat Energy Plc announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.
Kyari explained that by virtue of its statutory mandate as the enabler of national energy security, NNPC Ltd.’s role is to ensure that there is optimal and sustainable production from the divested assets to guarantee energy security for the benefit of Nigerians.
On investment in energy infrastructure to drive energy security, the GCEO further disclosed that the completion of the Obiafu-Obrikom-Oben Pipeline was in sight as the tunnelling across the River Niger was currently ongoing.
He assured stakeholders of the company’s commitment to work with them to close the energy deficit gap and create prosperity for Nigerians, adding that from all indications, all issues of energy scarcity in the country would be over in the next 10 years.
The event saw the participation of key industry and governmental figures, including Haitham al-Ghais, Secretary-General of OPEC; Omar Farouk Ibrahim, Secretary General of the African Petroleum Producers’ Organization; Senator Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil); Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas); Amb. Nicholas Agbo Ella, Permanent Secretary of the Ministry of Petroleum Resources; and the Minister of Information and National Orientation, Mohammed Idris Malagi, who represented the Nigerian President, Bola Ahmed Tinubu.
The minister’s position is notwithstanding a 69 per cent decline in investments in Nigeria’s oil and gas sector in the last five years.
“I want to assure you that no IOC is leaving Nigeria, they are only leaving onshore and shallow waters assets for offshore,” he stressed.
According to him, the divestment of onshore assets by some IOCs is a win-win situation “as the IOCs are making further investments in the deep offshore thereby making room for indigenous companies to develop capacity within the onshore and shallow waters space. It is imperative to note that we are strategically managing the divestment processes.”
He stated further: “Our commitment to enhancing our crude oil reserves and production is unwavering, and we are actively exploring innovative solutions to attract investment, optimise operations, and foster sustainable growth. We are open for business and ready to welcome your investments.”
The minister admitted, however, that in comparison to the global decline of investments in the oil and gas industry between 2017 to 2022, investments in Nigeria declined by 69 per cent when compared to the 28 percent global average decline.
He said, “The capital investment to reserve ratio shows the amount of capital deployed to a country’s available reserves. Nigeria has an abysmal capital investment-to-reserve ratio of five per cent compared to Angola (46 per cent), Brazil (115 per cent), Mozambique (92 per cent) and Guyana (617 per cent).
“The window for attracting new investments and exploring our vast reserves is fast narrowing. If the global energy transition accelerates, approximately 60 percent of Nigeria’s reserves could be uncompetitive to produce.”
He said there were many licences with proven reserves not being optimised in the hands of IOCs, NOCs, and others. “In line with Mr. President’s Renewed Hope agenda, we are working on changing this narrative.
“One of the easiest ways to solve the current foreign exchange challenges faced in the country is to aggressively increase production which will in turn bring in additional revenue for the government.
“The additional crude produced will serve as a feedstock to our state-owned, private, and modular refineries, thereby changing the narrative of Nigeria being a major refined petroleum products importer to an export hub. The time to act is now. We need to take bold and decisive actions to harness the vast hydrocarbon resources,” he said.
Lokpobiri decried the clamour for nations to stop investments in fossil fuels, noting that no country was slowing down fossil fuel exploration and production.
He recalled that only recently, the UK government awarded over 100 licences for exploration in the North Sea; the United States of America being the highest producer of oil today is also ramping up production. No country is reducing production.
“As a government, ours is to provide a business-friendly and enabling environment for potential investors. This is what we are doing, and we are resolute in removing all bottlenecks, disincentives, and impediments preventing inflows of such investment. This is the whole essence of the PIA 2021.
“As we acknowledge that additional financing is crucial for growth in the oil and gas industry, it is imperative that we pursue the dream of realising the Africa Energy Bank, which will have an initial capital base of $5 billion (within 5 years), and a gross asset base exceeding $120 billion by 2028.
“We are taking a multi-faceted approach to boost the refining capacity in Nigeria as part of the ways to address the challenges associated with energy security. These initiatives aim to reduce dependency on imported refined products, reduce the pressure on foreign exchange, and enhance the country’s ability to meet its domestic energy needs.
The key strategy in this direction, according to him, includes revitalising government refineries and encouraging private sector investment (Dangote, BUA, and Numerous modular refineries).
We’ve got the edge. Get real-time reports, breaking scoops, and exclusive angles delivered straight to your phone. Don’t settle for stale news. Join LEADERSHIP NEWS on WhatsApp for 24/7 updates →
Join Our WhatsApp Channel
