A former Group Executive Director, Engineering and Technology Directorate of the Nigerian National Petroleum Company (NNPC), Alexander Ogedegbe, has spoken on the factors behind Nigeria’s recurring woes in the oil sector. He said that the Petroleum Industry Act 2021 hasn't significantly improved oil and gas operations in Nigeria.
Ogedegbe, who
retired from the NNPC in 2003, spoke on Arise TV’s breakfast programme, ‘The
Morning Show’ on Wednesday.
He said the country’s
oil sector has been underperforming due to the incompetence of NNPC staffers
and other operators in the industry, pointing out that the oil firm has failed,
for a long time, to invest in staff training for optimum capacity.
He claimed that the
NNPC has been “outsourcing all its technical capabilities” for the past 20
years.
He said, “I tell you, when we
were in office, you could look at every level of manning, that’s staffing, and
see competence and experience. But how many people at the level of executive
directors, for instance, have ever drilled a well or been in an operative
position. That’s the problem. When you have people, who man the company but
have no hands-on experience, then what are we talking about?”
The former group
director said the country has failed to record adequate production due to a
lack of investment in the industry’s operational facilities.
According to him, Gas investment in the
last 10 years has been almost nil. For instance, there are no new wells. The
old wells have been overdrawn. And oil companies are not investing. The wells
can only produce and decline in production rate. You have to have new wells,
development wells, and even some appraisal wells, but none of these has
materialised. If you don’t have new wells, you can’t produce.
“If you recall in 2017
or 2018, the expectation of new investment was about $16 billion to $17
billion, but only three or four per cent of this came on,” he said.
Despite being ranked
the 15th oil-producing country in the world, Nigeria’s oil industry has
continued to suffer declining oil production.
With an average of 1,083,899 barrels per day in
July, Nigeria’s crude oil production plunged below one million barrels per day
(972, 394 bpd) in August, the lowest ever in several years, according to the Organisation
of the Petroleum Exporting Countries (OPEC).
The situation,
exacerbated by the rising oil theft, has continued to hinder the development
aspirations of Nigeria, a country heavily dependent on oil revenues to meet its
needs.
To solve the recurring
woes in the sector, the Nigerian government recently unveiled the
new Nigerian National Petroleum Company Limited (NNPCL),
which officially changed the oil firm from a wholly state-run entity to a
commercial oil company, limited by shares.
But Mr Ogedegbe, an
engineer, said he was yet to see the difference between NNPC and the NNPCL,
aside from the change of name.
“Maybe we will see
something (differently) when they (NNPCL) roll out properly,” he said.
On the Petroleum
Industry Act 2021, the former NNPC official said “not much” has been gained
from the act and that the operations of oil & gas were not significantly
improved by the act.
On oil theft, the former director said it is “completely a security problem”
that should be tackled by the government and not the NNPC.
“NNPC cannot handle security outside its limits, (there is) no facility to do it,” he said
To address the recurring dilemma in the country’s oil and gas sector, Mr Ogedegbe said the oil firm should invest in training its staff members and recruit of “best hands” into the industry.
“When I look back, 10 to 15 years ago, I don’t
see capable people replacing those who are leaving,” Mr Ogedegbe said.
He also said the government should invest in the
repair and consistent maintenance of refineries, saying it was disturbing that
the country’s refineries have not been working for years.
“In 1991, Nigeria was producing 100 per cent of its requirements for the products. All the refineries were running, some 90 per cent, some 80 per cent – I mean the refineries at Warri, Kaduna and Port Harcourt. Slowly, because of attrition of experienced staff and lack of proper funding and maintenance, the capacity decreased,” he said.
Mr Ogedegbe equally asked the government to
privatise the country’s refineries to reverse the trend. He said he had written
to successive Nigerian governments, detailing how to properly carry out the
privatisation, but that his suggestions were ignored.
“I said (it should be) majority shareholding to
competent operators with at least 25 to 30 per cent to the government or NNPC,
so that you can still continue to get your dividends,” he said.
“But, under the present circumstances, the NNPC is
incapable of running the refineries because all the staff that were trained and
have experience are no longer there.”
He said the government “must remove subsidies”
before privatising the refineries, explaining that without removing the
subsidies, operators will not make a profit.
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