Nigeria’s Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu has stated that the key to the resurgence being experienced in the Oil and Gas sector of Nigerian can be attributed to the continuous and holistic implementation of the Nigerian Petroleum Roadmap – “7 Big Wins” which is the short and medium term priorities to grow Nigeria’s Oil and Gas sector.
He made the statement on Tuesday, 2nd May, 2017 while addressing an International Press Conference on the sidelines of the Offshore Technology Conference (OTC) 2017 holding in Houston, Texas with the theme ‘Showcasing the Opportunities, Processes & Reforms in Nigeria’s Oil and Gas sector’
Dr. Kachikwu highlighted that the launch and implementation of the “7BigWins” has laid a foundation for a new approach that is aimed at entrenching transparency, integrity and probity in the running of the affairs of the Ministry of Petroleum Resources and all Agencies being supervised under the Ministry thereby making the sector more result oriented and profit driven.
Kachikwu mentioned some of the key achievements recorded in the past 18 months of his stewardship in the Ministry which the opening up of the downstream sector to private players, private Investment and diversification of products sourcing through the introduction of Price Modulation Mechanism (PMM), and subsequently, Appropriate Pricing Framework (APF). These policies have successfully reignited the commercial vibrancy of the downstream sector with a landmark move from a fully subsidy based sector to a liberalized sector, the total elimination fuel scarcity and long queues at filling stations, products adulteration and diversion, and profiteering that characterized the sector and plagued the nation in the past.
The Minister of State during the Press Conference also said that the Ministry has embarked on reforms to reposition the nation for petroleum products sufficiency and ultimately be a net exporter of such products. In line with these reforms, the Ministry and NNPC are aggressively driving the effort for private sector led refineries rehabilitation and expansion program. This is aimed at repositioning the country for petroleum products self-sufficiency, which will minimise the pressure on demand for foreign exchange for the importation of products.
Another key milestone recorded recently was the commencement of settlement of outstanding joint venture cash call debts the Federal Government owes the International Oil Companies (IOCs), He stated that the first payment of $400 million was paid last week to the IOCs. The $400 million payment was part of cash call debt owed the IOCs in 2016. This, the Minister of State stated, was different from the discounted $5.1 billion cash call arrears it negotiated in December 2016 with the IOCs.
The Federal Executive Council had approved the Ministry’s proposal and the concurrence of the National Economic Council had been obtained to begin payments and The Ministry on behalf of NNPC had engaged the International Oil Companies and secured a discount of 25% with each JV Partner on the pre-2016 Cash Call Arrears resulting in a final settlement in the sum of US$5.1 billion payable from incremental production from the JV assets over a five-year tenor without any interest charges during the repayment period. In addition, the 25% discount will not qualify for tax deduction. The sustainable funding of the JVs will lead to an increase in national production from the current 2.2mbpd to 2.5mbpd by 2019, while the immediate effect of the new cash call policy will increase net Federal Government Revenue per annum by about $2 billion.
Responding to further questions during the Press Conference, Dr. Kachikwu said that the Federal Government of Nigeria having kept its own side of the agreement by making the first tranche of payment, the International Oil Companies have announced new investments to in the upstream sector that will create limitless opportunities including job creation along the entire value chain.
He also harped on the extensive work collaborative work being done by the Ministry of Petroleum Resources with the National Assembly on the Petroleum Industry Governance Bill, this bill he stated would be followed by the Bill on Fiscal Terms. He further allayed fears on the cooperation between the Executive and Legislature in ensuring the passage of the bill by affirming that the Ministry and Agencies have been collaborating with the National Assembly on the PIGB to ensure its passage in record time.
Kachikwu also restated the efforts of the Federal Government to continue to build a strong collaboration between Nigeria and the World Bank on the Global Gas Flaring Reduction Energy and Extractive Global Practices (GGFR). The National targets for gas flare out for Nigeria remains fixed at year 2020 while the target for the global initiative is 2030. The Ministry he said has unveiled the National Gas Flare Commercialisation Programme which is a key component of the draft Gas Policy awaiting the approval of the Federal Executive Council and when fully implemented, it will unleash a gas revolution that will lead to tremendously improved power generation, full scale industrialisation and LPG penetration at the domestic levels.
Part of the successes the Minister stated that was being worked on during the Press conference is the tracking of oil molecules from production to destination and also the work being put in to reduce the contracting cycle in the Nigerian Oil and Gas sector in order to ensure delivery of projects within the projected period.
The Minister of State, while addressing the issues raised on Niger Delta, reaffirmed that pursuing peace, security and stability in the Niger Delta which is BigWin5 under the “7BigWins” is an integral aspect of the implementation of the “7BigWins”. He outlined the substantial progress that has been recorded in the dialogue with Niger Delta communities and leaders so that security and safety could be restored permanently, in the region. Some of the key steps taken include:
• Facilitating the first all in inclusive meeting with Niger Delta leaders and representatives hosted by President Muhammadu Buhari; a follow up of that meeting has been the visit of Presidency led by the Vice President, His Excellency Prof. Yemi Osinbajo to virtually all the Oil Producing States in Nigeria.
• Engagement with host Communities to ensure security and protection of infrastructure
• Engagement with IOCs to take more responsibilities for infrastructure security.
These engagements led to the development and unveiling of a “20-Point Agenda: Roadmap to Closure” which is aimed bringing an end to militancy in the region. An
Inter-Ministerial Working Group consisting of all related Ministries and Agencies that would handle the implementation of the 20-ponit plan has been set up and has also commenced work. The aim is to proffer and implement a long term solution to militancy in the Nigerian Oil and Gas Sector and this approach is presently yielding results with the almost near zero militancy in the past three months.
As part of the ongoing visit to the United States, the Honourable Minister of State will be leading the Country’s delegation to Washington for a meeting at the US State Department scheduled for Thursday, 4th May, 2017 where he would be discussing the ongoing reforms and investment opportunities in the country.
