A Review of the Nigerian Energy Industry

‘Minister of Petroleum should cease to be chairman of NNPC board’

25 September 2015, Lagos – Geologists and geophysicists in the country under the aegis of the Nigerian Association of Petroleum Explorationists (NAPE) have called on President Muhammadu Buhari to separate the office of the Minister of Petroleum Resources from that of the Chairman of the Board of the Nigerian National Petroleum Corporation (NNPC).

Mrs Diezani Alison-Madueke, immediate-past Minister of Petroleum

In a communique at the end of the 2015 special workshop on “Positioning the Oil and Gas Industry for Enhanced Performance in the New Dispensation,” which was released at the weekend in Lagos, the petroleum explorationists recommended that the Minister of Petroleum should cease to be the Chairman of the NNPC Board “to allow for effective, purposeful and business-focused decision-making.”
The communiqué, which was read jointly by the President of NAPE, Mr. Chikwnedu Edoziem and the President-Elect, Mr. Nosa Omorodion, also recommended the restructuring of the NNPC and devolution of the state-run firm.

According to the body, NNPC should be restructured into an upstream company that is commercially-viable semi-public Nigerian oil and gas company with world-class capacity for hydrocarbon exploration, development and production.
The association suggested that the Petroleum Industry Bill (PIB) should be unbundled and that the relevant sections of the extant Petroleum Act be amended to meet the current realities and to position Nigeria to be globally competitive as an oil and gas producing country.

NAPE noted the weakness of the Department of Petroleum Resources (DPR) in regulating the oil and gas industry and proposed that the agency be renamed “Petroleum Directorate,” to reflect the proposed changes, increased role and overarching autonomy.

The explorationists noted that the full potential of the regulatory agency would better be realised if it is empowered as an independent oil and gas regulator.
According to NAPE, “DPR is currently unable to achieve its full potential as an oil and gas industry regulator.”

The body noted that excessive interference through political appointments of the agency leadership and its operations has increased short term focus at the expense of longer-term view of the oil and gas industry as the DPR is often hamstrung in enforcing regulatory compliance.

It also recommended the provision of enabling environment and incentives to increase exploration opportunities especially in high-risk frontier basins and under-explored deep High Pressure High Temperature (HPHT) plays.

“NAPE proposes that Nipex is further optimised to reduce contracting cycles for services and projects to maximum of three months and nine months, respectively. Lowest bidder concept is being abused through ridiculously low bids. NAPE proposed that for low to medium cost technical services bids significantly outside operator estimated cost ranges be disqualified,” the association said.

“Procurement and contracting cycles in Nigeria’s oil and gas industry is about 36 months, making it the longest and most inefficient in the world. The long contracting cycle results in high levels of uncertainties in costing and planning thereby creating a sluggish business climate,” NAPE added.

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