Monday, November 16, 2020 / 7:53 AM / Nifemi Taiyese for Proshare WebTV /
Header Image Credit: WebTV
The Oil and Gas Group of the Nigeria British Chamber of Commerce hosted its 2020 Oil and Gas Webinar themed "Downstream and Mid-stream Sectors - The Way Forward". Mr. Kayode Falowo, President and Chairman of Council, giving his thoughts on the oil & gas industry in his opening address said the Chamber believes that the overwhelming sentiment around the oil & gas sector in Nigeria are at best cautious optimism following the disruptions that have occurred as a result of the COVID-19 pandemic.
He stated that the variables of supply, demand and prices have been negative and projections by experts do not suggest a return to normalcy soon.
Speaking on the vaccine for COVID-19 announced by Pfizer, Falowo was hopeful that the turnaround in the global economy will be faster than earlier projected.
According to him Nigeria being an import-dependent oil & gas economy is more affected economically.
He brought to the fore the recent federal government statements that confirmed that the nation's 2020 revenue projection has been lowered by 40 to 50%.
The President and Chairman of Council at the NBCC highlighted the fact that there are still opportunities in the oil & gas sector, which gives reasons for cautious optimism.
He cited recent data from the National Bureau of Statistics (NBS) which showed that oil provided over 75% of government revenue, and over 90% of its export earnings through taxes and royalties.
Looking at developments in the last few months Mr. Falowo expressed certainty that the statistics would have experienced a significant shift given that the contribution of oil & gas to the economy has diminished resulting from the effect of COVID-19.
"While Oil and Gas are a critical enabler of Nigeria's budget, the GDP data suggests that there is room for improvement for the sector in order to achieve sustainable economic development" he said.
Recently the Nigerian Government declared the year 2020 as the year of gas and the UK government, under its latest plans projects a ban on the sale of new petrol vehicles from 2035 at the latest.
He added that the new normal brought about by COVID-19 has amplified the imperative of digitalization. "COVID-19 with the wide disruption to transportation systems has led to opportunities in seeking and focusing on the nearby markets and Nigeria can make the most of the new normal by embarking on a path of sustainable socio-economic development. The NBCC oil and gas webinar calls for a clear strategic framework that will make Nigeria's oil and gas industry and the larger economy stand out by creating opportunities across all sectors and for all stakeholders" Falowo noted.
He mentioned that investable cash, will chase safe, high quality bankable projects and accompany opportunities for Foreign Direct Investments (FDIs).
Falowo emphasized that if the country had the right policies in place it would be able to attract international and local investments into the sector.
He observed that the following must be done to attract investments into Nigeria:
Mrs. Ronke Onadeko, Principal Consultant, DRNL Consult Ltd. & Expert Advisory Panel Nigeria NRC said in the last 12 months there has been a shift in the world economy as it slowed down towards the end of 2019, and soon after came the avalanche of the COVID-19 epidemic which became a pandemic.
According to her Nigeria being an oil & gas country, saw the conflict between Russia and Saudi Arabia that brought the oil price crashing down. Mrs. Onadeko stated that the challenges have also brought about opportunities and a shift in the approach for Nigeria in both the local and international space.
"On the local scene, we have seen the government regulate and liberalize the downstream sector especially concerning Petroleum Motor Spirit (PMS) which people in the industry had been pushing for. One of the positives of COVID-19 for the oil & gas sector is the fact that the prices have now become somewhat market-driven with certain changes still in the process" she said.
She highlighted the fact that the government has put in place transformative initiatives especially in gas in terms of infrastructure development, distribution, marketing, and financing of the sector.
On his part, Mr. Tunji Oyebanji, the MD/CEO of 11 Plc highlighted the activities of industry operators in the Nigerian downstream.
Speaking on the current situation in Nigeria for the sector, the MD/CEO 11plc mentioned that based on the notice of market-based pricing regime for PMS, government also directed that the guiding retail PMS price sold across the country would be advised by the PPPRA.
Oyebanji highlighted the following challenges in the downstream sector:
In preparing for the future, he observed that the success factors in a post deregulation era, requires consumer protection, sound legislation, renewable energy and a fair and transparent market regime amongst others.
All downstream associations need to develop a charter setting out the dos and don'ts of operations of the Association, he said.
Oyebanji stated it was imperative that the downstream regulator coordinates, collaborates and consults with the industry to ensure the rules set by the industry are appropriate.
With the Africa Continental Free Trade Agreement (AfCFTA), coming into play, the vision is for Nigeria to become the refining hub of West Africa and parts of southern Africa.
He called on the federal government to adopt fiscal incentives for value chain stakeholders.
Also, he pointed out that the government needs to collaborate and consult with the players in the industry to set out the priorities for the industry.
Mr. Tony Attah, Managing Director/CEO Nigeria LNG, said before Nigeria LNG, Nigeria was number 2 in the league of gas flaring nations in the world, just behind Russia.
He called on the government to maximize the value of gas and entrench it as the next platform that would catalyze development in Nigeria.
Nigeria LNG has made a turnaround and a major difference in the nation's storyline as it moved to number 7 in global gas flaring nations, having created an avenue to monetize and harness major gas resources which was otherwise flared.
"Nigeria LNG has helped to reduce gas flaring by more than 65% helping the environment and creating value. Nigeria LNG is in the frontline of helping to build a better Nigeria" Attah said.
Speaking further he called for a national focus on gas to ensure that it can take Nigeria to the next level which is strongly desired as gas would remain prominent in the energy mix in the country.
He believed that the time had come when Nigeria must wake up to the reality of the energy transition.
Mr. Mahmud Tukur, Group Managing Director Ashgrove Group, delivering his presentation on the impact of government policies and initiatives on midstream and downstream oil products, called on the government to pass the important laws for the sector in Nigeria.
He stressed the need to be deliberate about meeting domestic supply and consumption requirements.
Tukur addressed areas of government policy covering product supply, infrastructure, tax, and governance. The National Gas Expansion Program according to him was key to sector development with 2020 haven been declared as the year of gas.
Tukur noted the recent policies and initiatives that have affected infrastructure in the midstream and downstream sectors of the industry to include removal of petroleum subsidy, the exemption of Value Added Tax on petroleum products and the submission of the latest PIB to the National Assembly.
"The fall in oil price and the downgrading of medium-term forecasts has adversely affected Nigeria's fiscal policies and led to a decline in foreign reserves, massive depreciation of the currency, falling from N360 to a USD to N387 to a USD" Tukur said.
With the growth of renewable energy, oil and gas will remain relevant over the long- term maintaining a significant share of the energy mix said the oil & gas expert.
Addressing issues centred on the drivers for energy consumption in Nigeria, he said the focus is on population growth, urbanization, industrialization, and infrastructure development.
The group managing director, Ashgrove Group, said the forces of demand and supply must be allowed to interact freely to encourage price discovery and motivate investments within the mid and downstream sectors.