It is understatement to say that Nigerian oil is one of the best in the world. We all know that oil and gas export is the biggest foreign exchange earner for the country.
The dynamism in the world oil market and the unprecedented rising competition is taken for granted by the Nigerian Government. However, the government deserves all accolades for its bid to review the award process of oil licenses for marginal oil fields in Nigeria and for announcing plan to sign The Petroleum Industry and Governance Bill (PIGB).
In time when the 2017 Resource Governance Index produced by the Nigerian Resource Governance Institute (NRGI) found that the weakest link in Nigeria’s oil and gas value realization is the oil licensing process, the PIGB possess fundamental reforms that Nigeria needs to attain & maintain a domineering position in the world oil marketing in the near future.
In all manner of modern marketing strategy, the content of the Bill is to enhance transparency, openness and accountability in oil and gas industry.
Delaying the Bill further is no longer a wise decision. It is like a holding on to shoot the target until he shoots right into your direction.
Nigerian oil and Gas industry is the one to bear the brunt if a proactive measure is not taken to sign the bill without further delay. Within the span of 7 years; 2010 and 2017, up to 51 oil licenses expired without any renewals translating into loss of jobs, investment & revenue generation.
The oil license renewal isn’t only the issue but the main issue at stake is ensuring that the PIGB is signed into law, because the bill ensures a competitive and transparent process is adhered to in assigning the oil blocks so that only companies with the required financial and technical capacity are issued the licenses, in order to avert a repetition of an unfortunate history. For example, during the 2005 oil license rounds, several of the firms that were allocated oil blocks lacked the financial and technical capacity to develop the oil fields.
Furthermore, only 30% of the previously allocated marginal fields have reached level of commercial production. Then comes the critical question what happened to the 70%? This is contained in the “2014 Benchmarking Exercise Report”.
That kind of loss results from the existence of outdated, primitive & inadequate law governing the oil licensing process.
Typical example is the Malabu Oil Scandal which is the worst-case scenario of abusing against due process, that has carved a spot for Nigeria on the world map of corruption, consequently, manifesting in a shortage of FDI in the country’s oil and gas industry, the multiplier effect of which include unemployment and a weak Naira.
At the pace things are going, current licensing process gives Nigeria nothing other than the setback in harnessing its economic main stay through which it delivers development programmes.
In conclusion, the PIGB urgently needs to be signed because of heap of financial losses accumulated in 2005, 2006 and 2007 to challenge the quality level of infrastructure and skills at DPR. This led to loss of revenue of more than $2.26 billion. Two, public outcry has been growing on the conduct of the oil licensing process in Nigeria so much so that the past bid rounds have subject to various probes administratively and legislatively, elongating the hardship. Three, there is evidence of non-development of oil fields. Less than 50 contracts were signed or executed after 170 blocks were offered. Four, it is sad that the process contributes to damaged International reputation of oil companies that participate in the Nigeria Bid Rounds, especially the already resident companies that remain without the required bidding qualification in the dynamic competitive environment.
Abubakar Dadiyata Writes from Gidan Liman Jajawa Madobi, Kano state. He can be reached on twitter via @dadiyata