PRESIDENT of the Petroleum and Natural Gas
Senior Staff Association of Nigeria,
PENGASSAN, Comrade Babatunde Ogun, in this
interview with Sweet Crude, speaks on the
increasing incidence of crude theft, pipeline
vandalism, divestment by multi-nationals, the delayed passage of the Petroleum Industry Bill,
PIB among others that are gradually grounding
Nigeria’s Oil and Gas industry. The issue of crude oil theft has worsened with
international dimension to the extent that the
national economy is already at risk. As an
operator in the industry what is your take? I think pipeline vandalism and crude oil theft
have become a thorn in the flesh of Nigerian
government. I also think that lack of
seriousness of our security agencies and
government response that is very slow is a
challenge. As a union, we have engaged them on several occasions, why there must be
maximum security and protection of all our gas
installations. As we speak, we are losing about 150,000
barrels of crude everyday, to theft and about
100,000 or 150,000 that is shut-in because this
one is producible but cannot be produced
because the pipelines have been vandalized.
This means, we have a reserve that is producible and we are not producing it.
Invariably, what it is telling you is this, the
organisation is losing money and the country is
losing money. That is why the nation’s foreign
reserve is going down and the revenue that is
supposed to accrue to government is going down because they cannot produce what they
are supposed to meet and they cannot meet
the expectation of the market. Secondly, organizations are been made to pay
additional fund for production and how does
this arise? First, you make organizations to
provide safety wears and instruments for
protection which are the responsibility of
federal government. So, how do you expect an investor to be investing and producing at the
same time, feeding the military and feeding
the Navy on patrol? If you say, you are going to
mechanize the security of pipelines to engage
the pressure, how will you transmit, even when
you have a distress call and you call, the time of reaction by them is very slow because they
don’t have the equipment to work. Government cannot continue to fold its hands
and believe everything will be done properly. As
we speak, vandalism is there, Petroleum
Industry Bill, PIB, has not been passed. In as
much as an investor knows that there is
uncertainty in the market, either the PIB is favourable or not, there is a serious problem. If
PIB is signed into law today somebody can
determine whether he wants to invest and
business decision can be made. As long as PIB is still in limbo, no investment
will come to Niger Delta and no investment will
come to oil and gas industry. The consequence
for the union is that we are losing members,
multi nationals are afraid of kidnaping.,
vandalism and uncertainty; they will keep back their funds or in the alternative, use it for other
portfolio in other countries. That is driving
away investors from Nigeria. So, government must as a matter of urgency,
address these issues of theft and vandalism of
crude pipelines, if not, we might not able to
achieve anything. In the last eight months the
revenue from oil has been going down, our fuel
reserve has been going down and it will not stop. Chevron as we speak, is divesting about
three to four oil fields, SPDC has been
divesting repeatedly and is going to do another
one, while Total Oil will do as well. So, before you know it, the multi-national
companies will abandon Nigeria. Even if we
believe the indigenous companies can do it, we
cannot leave it in the hands of the indigenous
companies alone .If you look at the
downstream sector, that is left for the indigenous companies, it has been frustrated
and that is why you can see monumental fraud
in the downstream. It is good for us to have a mix of both
indigenous and foreigners or International Oil
Companies, IOCs. With that, we can have a
robust competition and business ethics can be
good. Indigenous companies are trying and
government, maybe politicians hiding under the current government are trying to frustrate
the IOCs, so that some of these assets can be
sold to them. If you are not careful, those
successes we have been claiming in oil and gas
industry might not just disappear one day. You talked about divestment, what are the
implications for the sector and the
development of oil industry in the country? The danger in divestment is this, some
divestments have been done in the past but it
depends on the ability to do it and secondly
most of this stolen crude too might be as a
result of some of these divestments by
operators that are not well known or well established. So wh..en you are doing
divestment, if this organisation is saying they
are not interested in this part of the operation,
this can be because of many reasons. Some of them could be either they are having
kidnapping issues or vandalism is becoming
too uncontrollable, ungovernable and
unmanageable and they believe that well, let us
leave it for the people from that area. With
that, if they are vandalizing it and government cannot do anything, it tells you that whoever
that acquires it might as well be a criminal that
can now be producing and be exporting it on its
own. In that case, you are not expecting government
to recover anything form such divestment
even when the production starts. Secondly, the
way and manner some of these indigenous
companies run their operations in Nigeria is in
secrecy and is shrouded with falsehood. You cannot access them, they don’t have Collective
Bargaining Agreement, CBA, for their staff
even the staff they are using are just casual
staff and government does not have the
means of monitoring them. So, as a matter of fact, allowing indigenous
companies alone is unthinkable. The question
is, why did indigenous companies not start
their own? Are we able to value what is being
divested to them? Who determines the cost of
that investment, and who determines the competency of somebody that is taking over?
So, those are some of the challenges. Are we
talking about the safety implications or the
health hazard for the environment and other
challenges? Secondly, a new person is coming to take over
the divestment you do not know when he is
going to start operation. There are some that
were sold by SPDC but for some time what we
are getting from that divestment in Warri
before has been going down. Nobody knows the actual reason, it
might be the formation or something else. Even for those who are rushing to buy, the
people who are divesting might have studied
and looked at it that it may no longer be
profitable in the future and want to get as
much as possible now. So, going forward might
not be profitable and Nigerians will rush into it. Same thing happened to MRS. MRS went and
acquired downstream since then, it has been
going down in production, in employment
capacity and in satisfying the yearning of the
downstream sector after the purchase. This is
because either it was over-priced or other reasons as well. You talked about PIB, as a stakeholder who has
been part of the passage of PIB that has been
in limbo in the National Assembly for years,
how is it affecting in activities? My candid advice about PIB is like nobody is
sure of what the PIB is. But instead of saying
PIB is in the progress forever, I think if we are
not completely sure that we can produce a
holistic or a complete book that will cover oil
and gas industry, maybe we should look at those clauses in the Bill for now and resolve
them. That will give us ample time to really
study and come out with a better PIB. One of those clauses is the secrecy
surrounding operations, another one might be
maybe the transformation of Nigerian National
Petroleum Corporation, NNPC, unbundling it
and putting it where it can be commercialised
and be able to go to the market, so that at least, other people can partake. But while we
are looking at the other areas that are creating
this fear that IOCs who are major investors, are
complaining bitterly, and the issue of
government take, if there is going to be a
serious problem on this, you might just not do the whole change at once. But the idea of keeping the PIB in limbo where
we are not going forward and backward, I think
it should be discarded. Just like the way they
are doing to the constitution of Nigeria, I think
we should look at PIB in that contest, look at
some changes we can do now and make do with so that everybody can go ahead and people will
know that maybe 5, 7 or 10 years we can come
back and finalize the Bill.
Senior Staff Association of Nigeria,
PENGASSAN, Comrade Babatunde Ogun, in this
interview with Sweet Crude, speaks on the
increasing incidence of crude theft, pipeline
vandalism, divestment by multi-nationals, the delayed passage of the Petroleum Industry Bill,
PIB among others that are gradually grounding
Nigeria’s Oil and Gas industry. The issue of crude oil theft has worsened with
international dimension to the extent that the
national economy is already at risk. As an
operator in the industry what is your take? I think pipeline vandalism and crude oil theft
have become a thorn in the flesh of Nigerian
government. I also think that lack of
seriousness of our security agencies and
government response that is very slow is a
challenge. As a union, we have engaged them on several occasions, why there must be
maximum security and protection of all our gas
installations. As we speak, we are losing about 150,000
barrels of crude everyday, to theft and about
100,000 or 150,000 that is shut-in because this
one is producible but cannot be produced
because the pipelines have been vandalized.
This means, we have a reserve that is producible and we are not producing it.
Invariably, what it is telling you is this, the
organisation is losing money and the country is
losing money. That is why the nation’s foreign
reserve is going down and the revenue that is
supposed to accrue to government is going down because they cannot produce what they
are supposed to meet and they cannot meet
the expectation of the market. Secondly, organizations are been made to pay
additional fund for production and how does
this arise? First, you make organizations to
provide safety wears and instruments for
protection which are the responsibility of
federal government. So, how do you expect an investor to be investing and producing at the
same time, feeding the military and feeding
the Navy on patrol? If you say, you are going to
mechanize the security of pipelines to engage
the pressure, how will you transmit, even when
you have a distress call and you call, the time of reaction by them is very slow because they
don’t have the equipment to work. Government cannot continue to fold its hands
and believe everything will be done properly. As
we speak, vandalism is there, Petroleum
Industry Bill, PIB, has not been passed. In as
much as an investor knows that there is
uncertainty in the market, either the PIB is favourable or not, there is a serious problem. If
PIB is signed into law today somebody can
determine whether he wants to invest and
business decision can be made. As long as PIB is still in limbo, no investment
will come to Niger Delta and no investment will
come to oil and gas industry. The consequence
for the union is that we are losing members,
multi nationals are afraid of kidnaping.,
vandalism and uncertainty; they will keep back their funds or in the alternative, use it for other
portfolio in other countries. That is driving
away investors from Nigeria. So, government must as a matter of urgency,
address these issues of theft and vandalism of
crude pipelines, if not, we might not able to
achieve anything. In the last eight months the
revenue from oil has been going down, our fuel
reserve has been going down and it will not stop. Chevron as we speak, is divesting about
three to four oil fields, SPDC has been
divesting repeatedly and is going to do another
one, while Total Oil will do as well. So, before you know it, the multi-national
companies will abandon Nigeria. Even if we
believe the indigenous companies can do it, we
cannot leave it in the hands of the indigenous
companies alone .If you look at the
downstream sector, that is left for the indigenous companies, it has been frustrated
and that is why you can see monumental fraud
in the downstream. It is good for us to have a mix of both
indigenous and foreigners or International Oil
Companies, IOCs. With that, we can have a
robust competition and business ethics can be
good. Indigenous companies are trying and
government, maybe politicians hiding under the current government are trying to frustrate
the IOCs, so that some of these assets can be
sold to them. If you are not careful, those
successes we have been claiming in oil and gas
industry might not just disappear one day. You talked about divestment, what are the
implications for the sector and the
development of oil industry in the country? The danger in divestment is this, some
divestments have been done in the past but it
depends on the ability to do it and secondly
most of this stolen crude too might be as a
result of some of these divestments by
operators that are not well known or well established. So wh..en you are doing
divestment, if this organisation is saying they
are not interested in this part of the operation,
this can be because of many reasons. Some of them could be either they are having
kidnapping issues or vandalism is becoming
too uncontrollable, ungovernable and
unmanageable and they believe that well, let us
leave it for the people from that area. With
that, if they are vandalizing it and government cannot do anything, it tells you that whoever
that acquires it might as well be a criminal that
can now be producing and be exporting it on its
own. In that case, you are not expecting government
to recover anything form such divestment
even when the production starts. Secondly, the
way and manner some of these indigenous
companies run their operations in Nigeria is in
secrecy and is shrouded with falsehood. You cannot access them, they don’t have Collective
Bargaining Agreement, CBA, for their staff
even the staff they are using are just casual
staff and government does not have the
means of monitoring them. So, as a matter of fact, allowing indigenous
companies alone is unthinkable. The question
is, why did indigenous companies not start
their own? Are we able to value what is being
divested to them? Who determines the cost of
that investment, and who determines the competency of somebody that is taking over?
So, those are some of the challenges. Are we
talking about the safety implications or the
health hazard for the environment and other
challenges? Secondly, a new person is coming to take over
the divestment you do not know when he is
going to start operation. There are some that
were sold by SPDC but for some time what we
are getting from that divestment in Warri
before has been going down. Nobody knows the actual reason, it
might be the formation or something else. Even for those who are rushing to buy, the
people who are divesting might have studied
and looked at it that it may no longer be
profitable in the future and want to get as
much as possible now. So, going forward might
not be profitable and Nigerians will rush into it. Same thing happened to MRS. MRS went and
acquired downstream since then, it has been
going down in production, in employment
capacity and in satisfying the yearning of the
downstream sector after the purchase. This is
because either it was over-priced or other reasons as well. You talked about PIB, as a stakeholder who has
been part of the passage of PIB that has been
in limbo in the National Assembly for years,
how is it affecting in activities? My candid advice about PIB is like nobody is
sure of what the PIB is. But instead of saying
PIB is in the progress forever, I think if we are
not completely sure that we can produce a
holistic or a complete book that will cover oil
and gas industry, maybe we should look at those clauses in the Bill for now and resolve
them. That will give us ample time to really
study and come out with a better PIB. One of those clauses is the secrecy
surrounding operations, another one might be
maybe the transformation of Nigerian National
Petroleum Corporation, NNPC, unbundling it
and putting it where it can be commercialised
and be able to go to the market, so that at least, other people can partake. But while we
are looking at the other areas that are creating
this fear that IOCs who are major investors, are
complaining bitterly, and the issue of
government take, if there is going to be a
serious problem on this, you might just not do the whole change at once. But the idea of keeping the PIB in limbo where
we are not going forward and backward, I think
it should be discarded. Just like the way they
are doing to the constitution of Nigeria, I think
we should look at PIB in that contest, look at
some changes we can do now and make do with so that everybody can go ahead and people will
know that maybe 5, 7 or 10 years we can come
back and finalize the Bill.
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