Oil and gas companies operating in the country have tasked the incoming administration with the need to end ongoing oil theft and pipeline vandalism that has suppressed production in the oil-rich Niger Delta region.
Speaking at the CEOs panel at the Nigeria International Energy Summit in Abuja, they said the constant attacks on pipelines have reduced oil and gas supply to just 60 per cent capacity in the past few years.
Oil production in the country has failed to meet the quota set by OPEC in the past two years, negatively impacting on the nation’s revenue and the operations of companies.
They said the new administration must ensure that investors such as gas suppliers to the power sector are paid for their investments in the sector.
They called for the full implementation of the Petroleum Industry Act 2021, pointing out that while there are gaps in some of its provisions, it remained a foundation for the growth of the sector.
The managing mirector, Nigeria NLG, Dr Phillip Mshelbila explained that due to challenges in the sector, the company operated at 60 per cent capacity utilisation, urging the in-coming government to take urgent actions to improve the business environment in the industry.
Mshelbila noted that fixing the electricity supply sector must be a priority for the new administration as it remains the core of every energy effort.
He said: “The starting point is that we have the resources underground and the second point is we have the demand. They are starved of energy yet live directly above the reservoirs. It is really about that connection. How do we connect the two in a sustainable manner? And that has been our biggest challenge.
“For example, we are a global business, six trains. In 2022, we operated roughly about 62 per cent, why? Because we couldn’t get that connection to work. Coming into the domestic market, roughly 4 Gigawatts of electricity for a population of 200 million people.
“So while the PIA has done a great job, there are many things that remain to be dealt with. How do you make the gas-to-power sector work? For me, whatever we want to discuss energy for Nigerians in Nigeria if we don’t fix that value chain, you can pass 10 PIAs and all the other acts in the world it is not going to solve that problem.
“How do you ensure that the person investing upstream in gas development, the person who is transporting it, the person who is building the power plant, the transmission and distribution systems, can all get paid at the end of the day?”.
He noted that the priority given to these issues by the next government would determine “the success of failure or failure of whatever energy policy that they have going forward”.
He said oil theft has greatly impacted oil production and export has an impact on export gas, calling the government to stop playing the ostrich and address the issue.
On his part, the Chairman, of Shell Companies in Nigeria, Mr Osagie Okunbor disclosed that the government still owed the company $200 million for gas supplied to the power sector.
While calling for the implementation of laws and policies governing the sector, he noted that the country is not short of frameworks and written documentation.
“What keeps me awake today is the story of my onshore business in Shell, is the fact that I simply cannot operate the pipelines. That’s what is responsible for the 60 per cent capacity. It aligns with how much gas we can supply because one of the key gas infrastructures, the TNP, is shut down for one year, from March to March. We removed 460 illegal connections from that line. We just reopened that line. We have lifted force majeure on Bonny and today we are struggling to catch up with our repairs programme.
“We think of this in terms of meeting up with our OPEC quota but an equally devastating implication is that we cannot supply the gas required to Nigeria LNG.
“So, if you ask me what the number issue for the incoming administration is, it has to be the security of our oil and gas infrastructure. I think it is so existential to us that if we don’t fix it, we have a huge problem on our hands”, he added.
