The outgoing Group Managing Director, Nigerian National Petroleum Corporation, Dr Maikanti Baru has called for a paradigm shift in Nigeria’s business models saying that the huge investment opportunities in the country will mean nothing except they are driven in a sustainable and collaborative manner.
Delivering a keynote address on Tuesday at the ongoing 18th edition of the Nigeria Oil and Gas Conference in Abuja, Baru enumerate various business opportunities in the country and said that out of about $194billiion capital expenditure coming into African continent from 2018 to 2025 for upcoming oil and gas development, Nigeria accounts for about $48billion of the total sum.
The GMD however, noted that promoting investment requires stability in the regulatory framework, adding it is important as oil and gas remain essential building block for Nigeria’s economic growth, particularly as a developing country. “There is, therefore, no gainsaying the fact that from the upstream, midstream, downstream, subsector, the Nigerian oil and gas industry is reflected with massive investment opportunities”
“To balance the objectives requires that we undertake a paradigm shift in our business model to ensure we attract capital and sustain the flow of the investment. This will be with a special emphasis on local refineries. Much more, the recent physical challenge experienced by the nation lends a burden for change.
Outlining some of the indicators signalling a positive outlook of the Nigeria oil and gas industry, Baru said, “Today, Nigeria accounts for about 2.2 per cent of the global oil reserve, our crude oil reserves have grown steadily from about 22billion barrels in 1999 to 37.5 billion barrels in 2018. Nigeria is home to the second largest crude oil reserves in oil Africa after Libya. Our crude oil production hovers around 2.2 to 2.3 million barrels of crude oil and condenses. This was bolstered by coming on stream of the famous Egina field in December 2018 which has currently round up to 200,000 barrels per day.
Continuing, he said “Promoting investment requires stability in the regulatory framework, clarity in terms of physical direction and reforms, access to capital and more importantly effective and efficient deployment of both capital and human resources. NNPC is collaborating with the Department of Petroleum Resources to see that the right physical systems are in place, he assured.
Speaking further, the outgoing GMG said that the industry must adapt and develop standard models of action consistent with international best practices. According to him, the standard model should be developed around assets acquisition, optimize capacity utilization and reduce cost particularly for new entrants.
“The current mentality of each operator installing services where they could share is not recommended to go ahead. Another factor is consolidation. Here, the players must look beyond self-promotion and begin to explore avenues for consolidation. It will help create a better and healthier balance sheet, increase negotiating power and give room for cross-learning, partnerships, joint ventures or other innovative ways to connect the needed synergies must be explored by this indigenous operators.
Improve their engagement with the government. There must be a coordinated channel of engaging government for physical and regulatory reforms that encourage investment in the sector. Engagement with the National Assembly is key in this direction.
Another area is in capacity and human development. This is the engine room for innovation. We can create local solutions that have global applicability. The industry must collaborate to create solutions by turning investments into research that will give room for use of locally-sourced products and encourage import substitution,” Baru said.