• Tuesday, April 23, 2024
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Saudi Aramco, Petrobras, offer lessons for Nigeria’s oil reform quest

Worries over Nigeria’s oil fortunes as weak midstream capacity, policy mishmash bite deeper

The Nigerian government has numerous lessons to learn from systemic oil sector reform offered by successful global national oil companies such as Saudi Aramco, Petrobras on how they were able to build a commercially viable firm that served as the springboard to their economic diversification.

Those who know say the lessons are critical especially as the government continues to shift its oil reform plans with the lingering delays in passing the Petroleum Industry Bill (PIB) which is a fiscal governance framework that should guide commercial viability of Nigeria’s oil sector.

The after-effect of this lingering delays in the passage of the PIB have seen diversion of investments in billions of dollars to countries with better fiscal governance framework such as Mozambique, Equatorial Guinea, and Angola. Nigeria on the back of these lingering delays has boxed itself to the corner economically, going on a borrowing spree and not allowing the National oil company, the Nigerian National Petroleum Corporation, NNPC lead its economic diversification.

“Aramco the national oil company of Saudi Arabia is a fundamentally different type of company from NNPC. Saudi Aramco is more like a project manager contracting people with huge global experience to manage the National company. That is why their commercial viability is top-notch. They bring in the brain, buy the brain in managing and driving their policies and plans, Najim Animashaun, a legal expert in oil and gas governance told Businessday.

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“Saudi Aramco lessons are a great one, drawing its strength from commercial viability and its ability to divest. They have a board of directors and nonexecutive directors one of the best’s money can buy globally. Former CEO of Shell, Former MD of Slumbergers, Former CEOS of Ernst & Young one of the big four accounting firms globally are drivers of their oil firms.

Petrobras the Brazillian Multinational Corporation he explained also is fundamentally an oil company, a commercial enterprise and a national champion.

“The Petrobras was established not to fund the government of Brazil. This is why they behave like an international oil company like Shell, Chevron and some other global oil giants. Its job is to provide energy for the government and people of Brazil.It operates more like an International Oil Companies, IOCs

More so, the commercial viability of Brazil’s Petrobras has made it the world’s foremost offshore producer.

It would be noted that following its successful record, Brazil’s national oil company plans to have 12 FPSOS installed in Buzios field by 2030 which is anticipated will be pumping more than 2 billion barrels of crude daily, making it Brazil’s largest oilfield.

Nigeria’s deepwater assets, on the other hand, account for 40.47 percent of the total NNPC’S inefficiency, and this explains it’s lack of profitability. The corporation is rooted in a lack of commercial objective at inception and manifested in prioritisation of non-commercial objectives primarily to meet government political demands.

Speaking on NNPC, he said, “We didn’t have an industry that ploughs back into the Nigerian economy as such in the way it was established that to run. What we had was more like an extractive industry and a rent-driven economy not a commercially viable one.