09 September 2014, Lagos – The petroleum industry has been identified as a catalyst for employment generation and economic development, especially in the areas of the gas, petroleum refining, petrochemical and fertilizer.
This is one of the observations made at a recently concluded international conference on the gainful employment potentials in the oil and gas sector, in Port Harcourt, Rivers State.
Speaking more on the success of the conference, Prof Godwin Igwe, of the Centre for Gas, Refining & Petrochemicals, Institute of Petroleum studies, University of Port Harcourt, said a number of other observations were made.
According to Igwe, the following observations were made:
• That the gas, petroleum refining, petrochemical and fertilizer industries provide the catalyst which ensures the country’s growth and sustainable development through diversifying the revenue stream and growth in other sectors rather than continuing to depend on costly importation and the resultant drain on our foreign exchange earnings.
• Many natural resource-rich countries are diversifying and transforming their economies using the hydrocarbon value chain for wealth creation like the SABIC (Saudi Arabia Basic Industries Corporation).
It focuses on manufacturing, using oil by-products as feedstock. It is a Holding Company, with investment in Joint Ventures with oil majors (SADAF).
It is not an operator and does not have 100 percent ownership. The structure ensures commercial operations and commercial viability of its business arrangement across the world.
Its investments are not only domestic, but international, to secure markets for its oil by-products. SABIC’s diversification strategy includes market diversification.
•There are many opportunities for Nigeria to harness and maximise the oil and gas value chain, and that these opportunities will significantly improve the revenue streams from the downstream sector as well as have multiplier effect on the nation’s economy.
• For tremendous success in employment generation and wealth creation to be made, more needs to be done in enhancing the enormous opportunities that abound in the oil and gas sector. Likewise, the absence of strong entrepreneurial activities in any Nation makes the country to be perpetually import-dependent with the resultant adverse economic and security consequences.
• That a very high gross domestic product, GDP figure means very little if it does not translate into jobs and wellbeing for the youths and teeming masses of our people. What matters is the GDP per capita, where we stand on the human development index, in quality of life for our people. This is the challenge for industry and the Government.
• The Conference particularly noted the enormous opportunities that abound in the gas industry vis-à-vis gas-for-power; gas-for-industries; gas-for-fertilizers etc.
Against this backdrop, Igwe also said the conference therefore recommended that:
• There is urgent need for massive investment in the Nigerian Refining & Petrochemicals (R&P) industry. Development in this sector will not only diversify and transform the Nigerian economy, but also provide an alternative market for the country’s crude oil and natural gas resources. It will make the country less susceptible to the vagaries of the international oil and gas market.
• There is need to create a national focal point for developing industries beyond fuels. Public-Private-Partnership has worked at Indorama Eleme Petrochemicals Limited, IEPL, and NOTORE Chemical Industries Plc. This model should be extended to all public and private industries in Nigeria for sustainable development and employment generation.
• A necessary fiscal system that is supportive of high value hydrocarbon spin-off industries, but not dependent on cost recovery from upstream oil activities is advocated. The Conference calls on government to provide various incentives to enable this sector to operate optimally.
• Appropriate incentives and enabling environment should be provided by Federal and State Governments to support a commercial framework for the development of gas, petroleum refining, fertilizer and petrochemical industries.
In Nigeria, diversification should involve varying the energy mix (from oil to gas) and from fuels to non-fuels. Diversification will result in wealth creation through employment generation, import substitution, and GDP growth.
To achieve the following, the conference equally urged government to take the following steps:
The creation of a national focal point for developing industries beyond fuels and institution of clear fiscal incentives to promote investment in the midstream oil & gas sector, industrial parks with pre-investment in infrastructure by the state.
Others are that grassroot industries should be encouraged in the agricultural sector and an urgent need for more farmer education especially on fertilizer application and the use of improved seedlings, to further provide employment along the value chain.
There is need for greater connection between University researchers, government policymakers, and the industry. The Federal Government needs to invest in research and knowledge generation for innovation and development, and to ensure continuous integration and collaboration. Specific sponsorship should be provided for human capacity building in research centres by government, and internship of students in companies.