My Fellow Colleagues of the Academy, let us shine our eyes! Another brouhaha is already brewing in the Oil & Gas Industry in Nigeria. On 27th August, 2024 BUSINESSDAY reported that NUPRC, Nigerian Upstream Petroleum Regulatory Commission, had rejected the agreement by Shell and Renaissance African Energy on the ongoing negotiation on the transfer of shares of Shell in the Onshore Assets of Shell-NNPCL Joint Venture to free Shell to concentrate on Offshore activities exclusively, by the hitherto much-publicized decisions or indications of the intent of Major IOCs to move Offshore. Details of this report could be glimpsed from an earlier posting on this Platform.
I waited this long to comment on this report, hoping others would pick on the monumental nature of the report and would comment. Regrettably, no opinion either way has been expressed by the Academy. Perhaps I should not have used the word regrettably because very few, if any, of my colleagues could have been privileged to realize that an enduring vision, and policy objective, of the pioneers of the Nigerian Oil & Gas Industry is being realized, perhaps with complete unawareness that a vision of Government, our much-maligned Government, was being realized.
In the ‘70s, ’80s and even the 90s the Nigerian National Petroleum Corporation and the Department of Petroleum Resources actively promoted the earliest Local Content Policy in the Nigerian Oil & Gas Industry by promoting dynamic and pervasive growth of Enterprise Level Participation of the Indigenous Players in the Industry. This was fostered in many ways, and with the cooperation and collaboration of other relevant Agencies of Government like the Nigerian Immigration
Service. These efforts bore fruits early in the Downstream Sector with Independent Petroleum Marketer growing gradually to now occupy commanding heights in the Sector. Dangote Refinery, of course, has now permanently sealed prominence, if not outright dominance of the Indigenous Sector of the Refining Sector.
Until now, however, the Upstream Sector has remained in the unrelenting dominance of Foreign Enterprise. I am not at all maligning foreign investment in the Upstream Sector. Such investment is most welcome, and the more the merrier. However, after almost 7 decades of the Industry, dynamic participation of Indigenous Private Enterprise in the Upstream Sector has become almost existential if Nigeria were to realize the strategic vision of NNPC formulated in 1988 that Nigeria should be producing by the years 2000s 4 million barrels per day of Crude Oil and commensurate level of Natural Gas. NNPCs’ solo efforts in this direction appear permanently stunted.
This is where Private Sector Ventures like those of SEPLAT and RENAISSANCE AFRICAN ENERGY become existential. NNPCL, as is, cannot alone grow Indigenous participation or equity of the Upstream, whilst simultaneously increasing the overall capacity remarkably without the collaboration of the pioneer Marginal Field Operators like SEPLAT and the RENAISSANCE AFRICAN ENERGY JV Partners, MD WESTERN, ARADEL, FIRST EXPLORATION, and WALTERSMITH. The PETROLIN GROUP, the fifth partner in the Joint Venture, is an International Group.
The Marginal Field Development Programme innovated by the then Department of Petroleum Resources and NNPC at the beginning of this Century, some twenty years ago, has indeed matured and is yielding entrepreneurs and enterprises innovative and bold enough to begin to compete in the same field with the International Oil Companies.
Consequently, I want to proceed to the reasons reportedly adduced for the purported rejection by NUPRC of the agreement by Shell and Renaissance African Energy:
The first one, technological expertise to manage the assets being negotiated, is far from being a deal breaker. On the contrary, all the enterprises in the Renaissance African Energy Group reached the heights they have attained individually based on their technological expertise or amenability to technology expertise. This I can personally confirm through my professional association with ARADEL in the early years of Niger Delta Petroleum Resources, which became ARADEL. In any case, Shell certainly must have satisfied itself about the technological expertise of Renaissance to manage the assets before going ahead with the agreement. Lastly, any new technology required could be acquired on the market, as usual.
A second criterion in the divestment framework that is substantive is financial standing. If Renaissance is anywhere close to being financially shaky, Shell would not have agreed. Yet another criterion, covering legal requirements such as decommissioning, abandonment, and environmental remediation procedures, is not relevant because Renaissance and the majority partner, NNPCL, are not going anywhere. Labour and Industrial Relations, Data Repatriation and Host Community Trust, while very important, are not significant enough to be deal breakers because they are routine operating factors, which could be, in fact, improved on dynamically. In fact, the Host Community Relations Policy adopted in the PIA Bill, was first pioneered by ARADEL in its formative years.
So, if there is no apparent tenable rationale for the reported tendency of NUPRC to reject the agreement, again allegedly, then what could be the
problem? My personal private enquiry from a direct stakeholder would seem to suggest that our usual retrogressive syndrome of “Bigmanism” could be the source of the problem. Fortunately, the Presidency is reported in the same BUSINSSDAY article as being very favourably inclined towards immediate or earliest consummation of the agreement between Shell and Renaissance African Energy. A seasoned and highly respected Energy Journalist confirmed to me, while preparing this post, that, in fact, NUPRC had denied disapproving the pending agreement.
Nonetheless, the criticality of this post has not been blunted by these later developments. The vital purpose of the post is to directly bring this exigent national energy resource management issue front and centre before Fellows, as these are rarely tabled in detail before us, with a view to, if possible, catalyzing direct involvement of the Academy in the matter. This is another opportunity to support credible Private Enterprise to break into the realm of high-level competition in the management of our Oil & Gas resources, and potentially collaborating openly and accountably with NNPCL in driving our production capacity sustainably towards the achievable peak envisioned some 40 years ago.
It is my hope that the Academy shall devise an effective but constructive and proactive support mechanism to get the agreement approved.
Engr. B. A. Soyode, a former managing director of Warri and Kaduna Refineries, delivered this piece on the plat platform of The Nigerian Academy of Service
