A few weeks ago, I was among a select group of editors and bureau chiefs of leading media organisations in Nigeria, which held an interactive session with Senator Heineken Lokpobiri, Nigeria’s Minister of State for Petroleum Resources [oil] in the Ahmed Bola Tinubu administration. Considering the current multifaceted challenges confronting the Oil and Gas industry in Nigeria, Lokpobiri is certainly not in an enviable position. Saddled with the responsibility to drive the reform agenda of President Tinubu in the Oil subsector of the Oil and Gas industry in Africa’s leading oil producer is an onerous one at a time the national economy is quacking from oil related shocks.
Upon assumption of office, President Tinubu left no one in doubt about his radical reform of the economy along with the operation of its mainstay, which is the Oil and Gas industry. In carrying out his reform agenda, President Tinubu was determined to implement the Petroleum Industry Act comprehensively including the full deregulation of the Oil and Gas industry. Full deregulation in the context of Nigeria’s peculiarity means the removal of government dictated price control on vital petroleum products like petrol. So, without too much ado, President Tinubu pronounced subsidy on petrol ‘’gone’’ on his very first day in office on May 29, 2023. Since then Nigeria has not remained the same economically. Market reflective price of petrol, which is Nigeria’s most utilized energy shot through the roof, resulting into unprecedented levels of inflation, consequential cost of living crisis and predictable social unrest.
Despite the negative consequences of deregulation of the downstream oil sector, the Tinubu administration has maintained that the pain are both necessary and momentary to usher in a better economy for all as subsidies on petrol are no longer sustainable given the financial state of affairs of the Nigerian state. And in choosing a minister that will drive Nigeria through this turbulent phase of transition from pre to post PIA era, the lot fell on Senator Heineken Lokpobiri. A lawyer, politician, former senator from the oil rich state of Bayelsa, former minister of state for Agriculture in the Buhari administration and with a Ph.D in Law from Leeds Becket University, UK, Lokpobiri is also an Environmental Law and Rights Expert.
Initially considered an outsider to the oil and gas establishment bureaucracy in Nigeria, Minister Lokpobiri in a little over year in office has proven to be as astute a politician as he is a competent oil sector administrator. Like many Nigerians, I am reform sceptic and have voiced my concerns about the removal of subsidy on petrol by the Tinubu administration. But with an uncommon grasp of both the technical and commercial components of the oil industry in Nigeria, Minister Lokpobiri is doing a meticulous job at driving President Tinubu’s vision for the oil industry and because he is a firm believer in his principal’s reform agenda, the Bayelsa born politician and technocrat is helping the federal government to make sense of the important policy decision of deregulation and how it will impact Nigerians positively.
According to the minister, the president and his government at large is as pained as Nigerians over the hardship caused by the painful but necessary policy decisions of subsidy removal on petrol; necessary because the country was not in a financial position to continue to shoulder the burden of petrol subsidy. While acknowledging that Nigerians deserve affordable energy, Minister Lokpobiri expressed the empathy of the federal government by saying ‘’the mind is willing but the body is weak’’. However, he was able to point out the quick gains of the reforms. For the first time in many decades, Nigeria is about to be self-sufficient in locally refined petrol, as the policy of deregulation has allowed massive investments in the midstream [refining] sub sector of the oil and gas industry enough to break the jinx on over reliance on importation. This development has eased pressure on foreign exchange especially with the adoption of Naira for crude sale to local refineries. And with the Dangote Refinery leading the pack, Nigeria will soon be a net exporter of refined petroleum products, which will boost Nigeria’s foreign exchange earnings. Just as the savings from subsidy removal on petrol has increased the financial position of the 36 states of the federation and for the first time, state governments are boldly implementing above the 70,000 naira minimum wage set by the federal government of Nigeria. In the estimation of Minister Lokpobiri, whatever difficulties Nigerians are going through will be eased by provision of increased welfare as government’s fiscal position improves through sustained reforms.
And to further improve government revenues and strengthen its fiscal position, Minister Lokpobiri believes the Upstream [oil production] holds the key. In the last 12 years there has been a dearth of investments in oil mineral exploration in Nigeria. In addition to oil theft, the low level of investments has kept Nigeria’s daily oil production at less than 1.5 million barrels per day. Having identified the impediments against investments in flow into the upstream oil sector, Minister Lokpobiri with the full support of President Tinubu has been able to reverse the trend. In his words ‘’through executive orders and other administrative instruments, Mr President has cleared the way for massive investment inflow into the sector. So far we have secured commitments of over 50 billion dollars’ worth of investments, some of which is expected to come on stream before the end of the year’’. Industry experts are optimistic that these investments will ramp up Nigeria’s daily oil production to anywhere between 2.5 and 3.5 million barrels per day.
As a testament to renewed investor confidence in oil mineral production in Nigeria, International Oil Company, Chevron has announced the discovery of a new oil field in the country. This ‘’new gold mine’’ is estimated to hold 17,000 barrels of oil per day and is located in the shallow offshore area of the Niger Delta. Similarly, in a recent visit to Minister Lokpobiri, the President EP Total Energies, Mr Nicolas Terraz, expressed his company’s satisfaction with the government’s ‘’on-going efforts to provide a stable and investment friendly climate’’ while conveying the International Oil Company’s desire to embark on further investments in Nigeria, particularly in the Bonga North Offshore project and joint ventures with Shell Petroleum Development Company and the Nigerian National Petroleum Company Limited.
Courtesy of this improved investment climate, Shell has expressed its willingness to commit 25 % of its annual investment portfolio into the Nigerian oil market beginning from this year. As the conversation and interrogation of President Tinubu’s reform agenda continues, it has become pragmatic to restate the immortal words of Deng Xiaoping that a Cat can be Black or White as long as it catches the mouse. And because they are essentially policy distillates of the Petroleum Indstry Act, one thing is certain and it is the fact that Minister Heineken Lokpobiri , a lawyer, is a round peg in a round hole that is brilliantly coordinating the reform agenda policies of the Tinubu administration with a high quotient of patriotism, discipline and integrity. A business friendly public administrator and promoter of free market enterprise in the oil and gas industry, Nigerians are waiting with cautious optimism for Minister Lokopbiri’s Cat to catch the mouse.