•Say Seplat, Oando, Renaissance have needed competence to optimise oil blocks
•Operators lament suffocation by over 40 regulators
CHIGOZIE AMADI
The Society of Petroleum Engineers (SPE) Nigeria Council has assured Nigerians that the ongoing divestment of onshore oil and gas assets by international oil companies (IOCs) would not lead to job losses and technical capacity erosion in the industry when the local companies buying the assets finally take possession.
The Chairman of SPE Nigeria Council, Mr. Salahudeen Tahir, gave the assurance in Lagos, at the just concluded 47th Nigeria Annual International Conference and Exhibition (NAICE) 2024, with the theme, “Petroleum Industry Value Chain: The Inevitability of Midstream and Downstream Development.”
Tahir, also pointed out that the indigenous Nigerian oil firms buying the assets from the IOCs including Seplat Energy, Oando Plc, and Africa Renaissance, among others have the requisite technical competence, funding partnerships and wealth of experience to operate and optimise the assets and deliver value from them as done by the IOCs.
He spoke just as operators in the upstream petroleum sector decried alleged suffocation of their businesses by 40 regulators with attendant multiple taxes, fees paid in United States’ dollars.
The Nigerian oil and gas exploration and production sector has continued to witness a gale of onshore portfolio divestment by the IOCs over the past few years due largely to general unfavorable operating environment coupled with the global portfolio rationalisation by the multinationals.
Currently, ExxonMobil, Eni, Shell, TotalEnergies and Equinor have all put their onshore assets in Nigeria on sale, and a couple of Nigerian independent companies are buying those assets, with the divestment transactions now at different stages of completion.
However, questions have been raised by some concerned stakeholders about the ability of the local operators pushing to acquire the assets to operate them optimally with the same kind of technical competence and transparency showcased by the IOCs.
The stakeholders also expressed worry as to whether the takeover of the assets by Nigerian locals would not result in loss of jobs by the current staff working for the multinationals in the divested businesses.
But in allaying those fears, the SPE Chairman explained that the new owners of the assets would still retain and make use of the same personnel working for the IOCs, adding that the fear of job losses, erosion of technical competence and transparency should not arise.
According to him, the local companies buying the assets including Seplat, Oando, Renaissance and others have the wherewithal to operate those onshore assets and deliver high value to Nigerians and their partners.
Tahir explained, “In the onshore, we are seeing Shell moving out of the onshore space and there is a company, African Renaissance taking over. That same African Renaissance are taking the same manpower as Shell is leaving.
“These are experts, people that have been doing this job for many years. So, it’s the same people that they are taking.
“Also, Eni is leaving the onshore. As Eni is leaving Agip, Oando takes over and it’s the same people that are working there that Oando will retain. You are not bringing in novices.
“Same with Seplat, if Exxon moves and gives Seplat their asset, it’s the same people that will be working there for Seplat. Each of these companies have their code of conduct and business ethics, they have their governance processes which they are mandated to abide with.
“So if there is a feeling that because one IOCs is exiting in one place and we are going to lose technical capacity and transparency, I would want to tell you to be rest assured that it’s the same capacity and transparency exhibited by the IOCs that you are going to see happening with the indigenous companies taking over these assets.”
To further ensure that the local firms taking over the divested assets play by the rules, the SPE chair pointed out that there are checks and balances in the system.
According to him, the industry has regulators such as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the Nigerian Content Development and Monitoring Board (NCDMB) that regulate activities of the sector including ensuring job security for Nigerians.
Meanwhile, operators in the Nigerian oil and gas industry have decried the suffocation of their businesses by over 40 regulators and the attendant multiple taxes, and fees that are present in the industry.
They lamented that there were too many bottlenecks usually encountered in their efforts to comply with the regulatory procedures, saying that has forced investors to now start looking for solace in other countries.
Speaking during a panel session at the SPE conference, the Managing Director and Chief Executive Officer of Aradel Holdings Plc, Mr. Adegbite Falade, described the Nigerian oil and gas industry as the most regulated in the world, pointing out that over 40 regulators were currently overseeing the sector.
“Some years ago, we were dealing with about 10 regulators, but today, the number of regulators that we are dealing with is not less than 40. We really have to deal with this. We need the regulators but we believe the regulations should be seamless,” Falade stated.
He emphasised the need for regulations to be more digitised, adding that getting approvals these days was a herculean task.
Noting that the payments to regulators were currently done in dollars, he appealed that those fees should be done in Naira, adding “Let our operators breathe.”
While calling for a reduction in the timeframe for securing approvals for projects, Falade, however, applauded the regulators for the support that indigenous firms have enjoyed from them, saying, “the regulators have been supportive, but there is room for improvement.”
Contributing, Executive Director, Oando Plc, Mr. Ainoje Irune, who was represented by the General Manager, Subsurface, Oando Energy Resources, Mr. Babafemi Onasanya, said financial support had been a major concern for indigenous players.
He said finding a financial partner was crucial to the growth of local players in Nigeria.
On her part, the Principal Consultant, Reservoir and Facilities Solution Nigeria Limited, Mrs. Oluseyi Afolabi, said Nigeria must perfect its laws and ensure a seamless regulatory process to avoid changing the rules often.
According to Afolabi, “you can’t change the rule in the middle of the game. The oil and gas industry is a long term investment and investors are in business to make a profit, we don’t need to discourage them.”
