Feb. 22, 2018


Dr. Emmanuel Ibe Kachikwu

Nigeria

Dr. Emmanuel Ibe Kachikwu

Minister of State for Petroleum Resources, Nigeria

"We have Nigerians working all over the world in industrial sectors and the international oil economy."

BIO

Dr. Emmanuel Ibe Kachikwu is the present Minister of State for Petroleum Resources of The Federal Republic of Nigeria and Chairman of the Board of the Nigerian National Petroleum Corporation (NNPC). He was nominated and subsequently appointed by President Muhammadu Buhari to represent Delta State in the President’s cabinet to oversee the daunting task of reforming and institutionalising transparency, accountability and productivity in the Nigerian oil and gas sector.

How can Nigeria overcome the issue of relying on the imports of finished products?

The government is very committed to have as much processing of crude oil as possible within Nigeria and we hope that we can reach a point in the medium term where we can start to export products. Our strategy is to repair our existing refineries and encourage new investment in refining by the private sector. We see great interest in modular refineries and have also received at least four proposals for large world-scale refineries to be established here. We have enough production to support this, although we expect production to increase. We project new refining capacity of about 50,000bpd added to the current capacity and the existing refineries to be up and running within the next two years. If you add the revamped refineries to this, we should have enough to respond to our domestic needs. As for exports, that will likely take several years, when other refineries start production.

What are the ministry's views on gas flaring and monetizing gas?

This government has come up with clear policies toward flare gas monetization and flare gas elimination. We have taken a holistic view; we want to provide third parties that have the technical commercial solutions with access to the flares. There is about 700 million scf of gas being flared daily, making Nigeria the sixth-largest flaring nation in the world. If we can capture some of that gas flaring, we can use that toward power production and industrial use. In addition, the government has committed in the Paris Climate Change Agreement to nationally determined contributions toward the reduction of greenhouse gases. For the petroleum sector, our commitment is to elimate gas flares. To this end, we have designed a comprehensive program called the Nigerian Gas Flare Commercialization Program through which we want to make sure that the flare issue is behind us by 2020.

How will the Petroleum Industry Bill (PIB) open a new chapter for Nigeria's oil and gas sector?

It will completely change the ballgame as there will be more clarity for investors. Currently, big investment decisions cannot be made, and until we bring in legislation, people do not know how things will turn out. Following that, we need a tripod of reforms: policy, which we have now made, legislation which is about to be completed, and next, we need to build institutional capacity for implementation of policies and the legislation. The next stage of action on the bills is concurrence, which means both houses have to look at the differences, reconcile them, and come up with final bills for enactment.

What is the role of Nigerian National Petroleum Corporation (NNPC) in developing local content and talent?

If the experience did not come from international oil companies (IOC) then it came from NNPC. Agreements between NNPC and its partners require localization. It has worked reasonably well, though there is still room for improvement. Now that we have the Nigerian Content Monitoring Board, this will help even further. Nigerian content is improving. We now have a strong regulator that is reasonably independent and will strengthen that system. There is still a large amount of technology developed internationally as it is an international industry; however, we have Nigerians working all over the world in industrial sectors and the international oil economy. That could flow back if we have a better managed industry. As the industry broadens, we expect to see more Nigerians coming back and getting involved. We are building strong Nigerian upstream companies.

What are some of the challenges companies in oil and gas will face in the coming months?

It is important for upstream that we have clarity around the fiscal regime and that works both for the government and investors in the upstream. There is no policy until we actually implement fiscal policy and the earlier we implement them the more clarity one has because it affects investment decisions. For service contractors, and even in upstream, efficiency in contracting will also be a major issue that we have to work on so that decision-making can become quicker and costs are lowered. The way that we procure costs for projects is an issue for us currently on the government side. I want to ensure everyone is efficient in keeping costs to rational levels. We expect tighter rules around cost management and cost containment, which will have an impact on the service level. Service providers must now be more efficient and competitive, because if we put more pressure on the upstream to be efficient cost wise then they have to put pressure on service providers to also be competitive and efficient. As the country grows, we want to make sure we do not leave money on the table when that is not needed; and we want to make sure that what could have been wasted cost-wise goes to the treasury. If we have contractors or upstream operators that are not efficient, then it is important that we do not bear the costs of that inefficiency.

How will the new OPEC quota limits affect the industry?

We still have a buffer because a fair amount of oil production is condensates, which are not counted, and we will still have headroom for another year if we produce another 300,000-400,000 barrels of oil. We produce more crude oil than condensates; therefore, we can still produce more crude. It will not affect us for another 300,000-400,000 barrels of oil, which we have capacity to produce.

What is your outlook for 2018?

Nigerian Petroleum Development Company (NPDC) will produce more oil and we expect overall production to increase. We expect to have completed developing gas tariffs before the end of the year and new legislation for the industry in 2018. We expect to have resolved the network code and tariffs for gas this year and to increase gas supply. This is the culmination of all the hard work that we have done in the last three years that should start kicking in by the third or fourth quarter of 2018.

ADVERTISEMENT