OpeOluwani Akintayo 07 August 2017, Sweetcrude, Lagos – The Chairman/Managing Director, Dansaki Petroleum, Engr. Adenrele Afolabi, is no stranger in the oil industry. A graduate of Mechanical Engineering in the I960s, registered engineer with the Council of Registered Engineers of Nigeria, two term Chairman, Society of Petroleum Engineers, Nigeria Council, Afolabi is also a fellow of the Nigerian Society of Engineers and the Nigerian Institution of Mechanical Engineers.
You don’t think there is market for it in Nigeria?
Yes, there is market for it in Nigeria but the issue we fear here is militancy. We have to work with our partners who prefer exports. But if we can put it into a storage tank and then decide where to take it or we would take it to ExxonMobil’s depot. When we produce in three phase, we would have our security facilities out there and be able to take it to local refineries out there.
What is Nigeria’s solution to crash oil price?
The solution is to move away from production-oriented market to a refining one. When we refine, the value comes up and you can then get it into the market. But if you are not able to sell the crude oil because of the low price, then you refine because when refined, the value comes up. Another way is to be competitive. Let our cost per barrel go down so that we can have more markers. We can also talk to non-OPEC countries to see how we can reduce the glut from the market.
But OPEC is already cutting while US shale producers are busy pumping more. Now, the world is asking OPEC to cut some more. At whose expense?
While we were enjoying a high price per barrel, the US was using that to develop their shale industry. But when the price came down, they had that oil and they had to use it in their own market which is closer to them.
Shale coming into the market should make OPEC think about the way forward for their oil industry rather than complaining. If you find out that you are not making money from the crude oil you produce, go into refining. For now, OPEC isn’t looking at what you refine in your country. It’s not part of the count.
But, some people are saying OPEC should start investing in shale. Does it make sense?
Shale isn’t cheap at all because producing it is more expensive that our own barrel of crude oil. The oil we have in Nigeria is better produce with minimal cost but with shale, it’s too much. What we should do is focus on refining our own crude
Shouldn’t US also cut instead of putting pressure on OPEC?
Yes, but the problem is that US refused to be part of the group. They had stated their stand a long time ago
What about the likes of Russia who are joining the cut but aren’t part of OPEC?
That’s because the likes of Russia is approachable. Indonesia didn’t join too but later agreed.
What do you think about the PGIB?
It’s a good step. I like how it has been cut into smaller parts. This will help us see the government focus more on each bit of it instead of putting everything into one and then it’s so complicated.
But the locals are saying the PGIB focuses on how the government will make more money from crude oil, leaving them out
That is why it’s a good initiative that government is planning to go into modular refinery. The economy of Lagos is based on attracting investors, that’s why they are able to expand. But if you are limiting yourself and saying you don’t want people to come, then that’s bad. But they can be part of it. If they go through the process, they would be able to get their own oil fields too.
Like when we were going in, part of the requirement was that we must have people from south-south as part of the directors of the company. Dansaki Petroleum has two directors from the south-south. Apart from south-south, we also have from south-east, and others. So, they should want to be part of it instead of not wanting people to go there.
The militants are presently threatening to go back to the creeks because they said government is not keeping to it promises
They should not do that. Look at the effect the bombings had on our economy. We did not have oil to export and refine. We were at a standstill.
But is government keeping to their promises to them?
The government, IOCs and investors are doing the best we can. What is new is the promise that the government will clean up Ogoni and they have told them that the cleanup will takes years. But if you look at the NDDC, a lot of money is going in there, royalties keep increasing
So if NDDC gets so much money and royalties keep increasing, why do you think they keep complaining?
That is why you can see what is going on with corruption. With the level of money that is being paid into NDDC, they are not using the money for what they promised to use it for. And then the royalties get paid to the state government instead of land owners. There should be a separate funds that will be managed not by NDDC, and should be tied to the safe passage of production of oil and gas in the Delta, and make sure people don’t tamper with it.
In this article
- 16th Nigeria Oil and Gas Conference
- Akwa Ibom
- Chevron Nigeria Limited
- Council of Registered Engineers of Nigeria
- Dansaki Petroleum
- Engr. Adenrele Afolabi
- Federal government
- Nigerian Institution of Mechanical Engineers
- Nigerian railway
- Society of Petroleum Engineers
- Tom Shot Bank oilfield