‘Why investors are shunning Nigeria’s oil, gas sector’

Diezani alison madueke09 september 2013, Lagos – A mix of disincentives may have contributed to the dwindling foreign investment in the nation’s oil and gas sector, according to conclusions reached at the just-concluded oil and gas forum in Aberdeen, Scotland.

The foreign investors cited prevailing insecurity in the Niger Delta area of the country, inadequate infrastructure and inconsistency in government policies, as some of the factors which have specifically kept new players from the Nigeria’s oil and gas business environment.

The Guardian learnt at the just-concluded Society of Petroleum Engineers, SPE, Offshore Europe forum that despite the huge potential in the country’s oil and gas sector, many foreign companies would rather explore the Angola and Ghana oil and gas sector.

They explained further that it costs three times more to operate in Nigeria’s oil and gas sector than any other country in Africa.

The Director for Strategy and Growth, Europe, Amec, a United Kingdom oil and gas company, which currently handles projects for Exxon Mobil, Shell and others, Sandy Clark, told The Guardian  in Aberdeen  that insecurity remained a major challenge in operating in a country like Nigeria.

Clark stated: “Nigeria is a huge market for oil and gas business and we have been handling projects for some international oil and gas companies.  But our major challenge right now is getting personnel to work in our offshore operations due to the insecurity challenges. Many of our personnel are not ready to work in the rural areas for fear of being kidnapped.”

Also, the Business Development Director of Jee, a sub-sea engineering and training expert, Nigel Ross said: “We have presence in Ghana and Angola. We are not considering coming to Nigeria due to insecurity. This is because Nigeria’s security and infrastructural deficiency is too much for our company to handle.  We will definitely explore the Nigerian business environment, when the security issues are resolved”, he said.

Energy Director of Lloyd’s Register, John Wishart said: “We have operations in Angola and we are not considering Nigeria at the moment.  We are a small company and it would take a lot of funds for us to invest in Nigeria because we will have to make provision to handle the insecurity.”

At the United Kingdom Investment programme in Aberdeen, Executive Secretary, Nigerian Content Development and Monitory Board, NCDMB, Ernest Nwapa, said that the Nigerian government was committed to the local content policy.

Nwapa stated: “We want to change Nigeria’s value chain to domesticate a number of technologies in Nigeria.  Most oil-producing countries have learned from experience but not in the case with Nigeria. We are looking for partners that would help in technology transfer in the oil and gas industry.  Investors must be ready to domesticate some equipment in the oil and gas in Nigeria.  We have set up industrial parks to help with the local content development.  Most investors were focusing on getting revenues from Nigeria without adding value to the country.

“It is not just about revenue, but adding value to the system in such a way that it will be a win-win situation. Equipment component manufacturing company is now a pre-requisite for companies coming to invest in Nigeria oil and gas industry.  The country has no plan to endanger foreign investments but that manufacturing of component will be a pre-requisite for government to support.  It will be a pre-requisite for local content certification.”

He said that Bayelsa and Imo states had made land available for indigenous equipment manufacturers o promote the local content policy.

According him, Shell has agreed to build a jetty worth $10 million in Bayelsa. “We are trying to organise a standard training to develop skills for host communities in the Niger Delta.  We have contacted a company to help with the supervision of the training programme. We are equally partnering PETAN to organise industrial training for the people trained.  Every PETAN member must have an internship programme for the people trained from the host communities. We are also encouraging international oil companies to fund Nigerian universities to engage in research and development.”

According to him, Nigeria spends $4 billion on marine vessels to export the country’s crude, and that the local content board is encouraging the foreign companies to partner some Nigerian companies to sell off some of their equities.

Head, Oil and Gas, Strategic Trade Group, UK Trade & Investment, John Crawford, encouraged UK investors to visit Nigeria and that they would be amazed at commercial opportunities in the oil and gas sector.

General Manager, Shell Petroleum Development Company, SPDC, Igo Weli, said Shell was collaborating with the Original Equipment Manufacturers (OEM), since June 2012, adding that these companies were ready to establish manufacturing facilities in Nigeria.

According to him, the SPDC contractor fund is to complement Nigerian content fund, and that four Nigerian banks have agreed to guarantee a soft loan to local contractors. “We are working with PETAN in respect of technology development and we are ready to give long-term projects of 15 to 20 years. We are trying to encourage research development in Nigerian universities. We are already working with the Universities of Ibadan and Port Harcourt on drilling mud solution”, he said.

– The Guardian

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