Petroleum Sector: Diezani’s oily touch
By Oscarline Onwuemenyi & Tony Edike
THE Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke can beat her chest with pride for some of the radical initiatives that have swept through the industry over the past one year, but this joy may be tempered by the spectre of the enormous challenges that the industry is battling to overcome.
Until her appointment into the federal cabinet as Minister of Transport in 2007, Mrs.Alison-Madueke who hails from President Jonathan’s home state Bayelsa, was the first female Executive Director in Shell Petroleum Development Company (SPDC). She moved to the Ministry of Mines and Steel Development in December 2008 from where she was appointed Minister of Petroleum Resources in April 2010. President Jonathan appointed Alison-Madueke based on her good understanding of the petroleum sector and the tremendous cooperation she enjoys from chieftains of the oil industry.
Mrs. Alison-Madueke, arrived the Ministry of Petroleum Resources with experience of serving as Minister of Transportation as well as Minister of Mines and Steel Development and was to become the very first female petroleum minister on the continent. She wasted no time in demonstrating her zeal for tackling the myriad of challenges within the sector.
Since coming into her position, the Minister and her officials, mainly executives at the Nigerian National Petroleum Corporation, NNPC, have worked assiduously in reforming the legal apparatus of the petroleum industry with the formulation of the Petroleum Industry Bill, which seeks to overhaul the management of oil and gas resources in the country. Award for the construction of four refineries across the country was given last year to Chinese investors, signaling an end to the wasteful era of exporting crude to other countries and importing the refined petroleum products.
When two months ago President Goodluck Jonathan announced the launch of the Gas Revolution – The Rebirth of Nigeria’s Industrialization in Abuja, it was to great applause by industry watchers. The Revolution, which emphasized the need for the diversification of the economy and for national development, also focused on developing industry to work with oil and gas derivations, the government announced plans for the establishment of two world0-scale petrochemical and fertilizer companies, as well as five fertilizer blending plants, a methanol plant and a Liquified Petroleum Gas, LPG, distribution plant.
Jonathan assured the investors – notably, Xenel of Saudi Arabia, Nagarjuna of India and Chevron Nigeria Limited – of government’s readiness to provide the necessarily support, including the quick passage of the PIB, which serves as an anchor for sustainable and profitable investment in the Nigerian oil and gas industry.
Mrs. Diezani Alison-Madueke detailed the plans for a new stage in the development of the petrochemical industry by creating a national industry for the by-products of the petroleum industry. She explained that over the next few years, full implementation of the entire gas master-plan agenda will result in about $25bn worth of investments in gas processing, transmission and downstream gas utilization projects.
Already, the three projects on which the revolution is anchored will result in foreign direct investment as high as $10bn.
The petrochemical project alone will be the largest industrial complex in Africa with products that will enable the growth of numerous downstream plastic manufacturing industries. With these, secondary industries such as the high end printed circuit boards, car dashboards etc. can be established here in Nigeria.
The knock-on effect of such a huge plant is the redevelopment and expansion of the port facilities near the plant locations. This will create a hub of economic and commercial activity around the hither-to quiet port towns.
The fertilizer plants and their customized blending plants will result in a radical transformation of the nation’s agricultural productivity from subsistence farming to full scale industrial farming. The concept of customized blending plants as introduced by this project will ensure that the fertilizer is formulated to suit the type of soil in the zone resulting in enhanced productivity.
Also, increased productivity will lead to the establishment of many agro processing industries to cope with the production growth that will emerge.
Beyond the specific projects being launched in the initiative, it is expected that the various gas pipeline projects will revive the many textile industries and numerous other industries in the North which have hitherto shut down as a result of high energy costs. Natural gas will replace fuel oil as fuel for industrial boilers.
Alison-Madueke, explained that to this extent, the government would embark on the construction of a gas pipeline estimated to cost about $2 billion, adding that focus on its rapid development is ongoing. She added that the Federal government’s gas agenda, both domestic and export, clearly paves the way for Nigeria to be in that category, with all the attendant benefits.
National Content law
The National Content Act was signed into law by President Goodluck Jonathan last year. Before the reforms, previous governments paid lip service to the development of local content, which led to over 85 percent of jobs in the industry done outside the shores of this country.
However, it is expected that full application of the National Content Law means that as the nation stimulate these jobs and opportunities, a significant portion of the jobs will be for Nigerians. The nation’s service sector should benefit significantly from these opportunities.
Gas to Power
Much as the revolution focuses on gas based industries, the gas revolution also comprises ongoing effort in gas to power. Based on the various steps that were taken last year to reposition the commercial framework for gas in the domestic market, stakeholders are confident that the country now has in place a more sustainable framework to assure gas availability to Power. The impact is becoming evident as the nation has experienced great improvement in gas supply performance relative to last years.
Mention must be made, also, about the World Bank Partial Risk Guarantee for investors in the power sector, which was brokered under the leadership of Mrs. Alison-Madueke. The guarantee is aimed at boosting investor confidence in the power sector. The power agenda will create the undertone for even more widespread wealth.
Fuel scarcity as a minor glitch
Prior to its re-election last month, the administration campaigned heavily on the fact that there had been no fuel scarcity at the stations for over a year since it took over. It was indeed a thing of national pride for an economy that is synonymous with long fuel queues and instability in the downstream sector of the energy industry.
However, the celebrations were cut short when barely a few days after it won re_election, fuel queues emerged in the Federal Capital Territory, Abuja, and most parts of the north. Post-Easter weariness and post_election violence in cities of the north was the major culprit, government agencies and major stakeholders explained even as panic reigned everywhere and commodity prices soared. The good news was that government was able to get to the root of the matter and fuel supply to stations was restored.
Even as Nigerians heaved a sigh of relief that the worst was over, there seems to be another sword dangling over the sector in the form of threat by the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, to go on strike in sympathy with their sacked members in a private oil company.
A nation at work!
Industry experts believe that the Nigerian petroleum sector has never had it so good. They estimate that over 100,000 engineering design and construction related jobs would be created from about 2012 and beyond to deliver on the on_going revolution in the oil and gas industry. Engineers will be required to participate in the design of the petrochemical, fertilizer, central processing facilities and numerous pipeline projects.
Local fabrication yards will need to gear up capacity to provide relevant construction support. Skilled workers such as welders, fitters etc. will also be required. The civil construction effort required both onshore and at the ports will impact on demand for cement.
Government said the strategy adopted for the fertilizer project, for instance, means it would expect a significant increase in employment from the agricultural sector. In total this initiative will result in over 500,000 direct and indirect jobs from construction, logistics, hotel and hospitality service, fabrication, banking and above all agriculture.
Mrs. Alison-Madueke’s achievements in the federal cabinet especially her twelve months stint in the Petroleum Ministry had been commended by stakeholders in the oil sector and other groups including the apex Igbo socio-cultural organization, Ohanaeze Ndigbo.
Secretary General of Ohanaeze, Chief Nduka Eya, while applauding the positive strides made so far in the petroleum sector which, he observed, have not only restored confidence in the economy but have also ensured fuel price stability and product availability, stressed that efforts should be geared towards sustaining various reforms in the sector.
He said, “I doff my hat for Madueke for the way and manner she has injected life and restored confidence in the petroleum sector. It is something worthy of emulation and she should therefore be allowed to continue so as to deepen the efforts she has made so far”.