Question: How many companies has PETAN been able to bring to this year’s OTC conference?
Ene: We have 60 PETAN members and due to lack of space we were not able to accommodate all our members who signified interest in taking part in this year’s conference. Right now, we have 50 of our members in attendance. Beyond PETAN members, we have at least another 50 exhibitors. So, in all, there are over 100 Nigerian companies exhibiting in this year’s offshore technology conference.
What has happened is that the OTC pavilion has become a very viable platform for exhibitors to showcase what they are doing in the industry and also to attract investors to invest in the Nigerian oil and gas conference. It is a very good platform for striking new business deals. Apart from that, it has really portrayed Nigeria in a very positive light.
The conference has created opportunity for people to meet and interact with serious Nigeria players, businessmen, entrepreneurs, technocrats who have been in business for over two decades and this is why PETAN is taking this extra step to bring Nigeria companies to exhibit and make new business negotiations.
We have arranged elaborate programmes through the OTC Week. We are having plenary sessions where the issues concerning PIB would be discussed. We are going to be having a workshop with Nigerian oil professionals abroad to discuss the issues in the country’s oil and gas industry. These are ways and means to create a platform for Nigerians to interact concerning the issues in the oil and gas sector.
How has the non-passage of the PIB affected the operations of PETAN and attraction of foreign investors and how do you intend to address that in this conference?
The PIB is like setting the rules of the game. All stakeholders recognise the need to have the rules set straight and the PIB is set to achieve that. The PIB tries to set a clear structure for operations in the oil and gas industry putting into consideration that there are laws that are decades old, which are no longer applicable in the oil and gas industry.
All stakeholders in the industry recognise the need for the PIB. It is inevitable that the interest of different stakeholders will conflict. There has been some issues concerning investors taking investment decisions in some projects due to the PIB. The reason is that some investors want to understand the PIB. PIB looks at the industry in long term. PETAN has found itself on the side of IOCs and the side of government.
PETAN, by holding the PIB workshop, is to bring the stakeholders to the table and discuss the need to have the PIB so as to attract long term investment in the industry. The oil that we are producing today, was not found yesterday, it was found some decades ago. So the oil that we are going to be producing in the next ten years have to be discovered today, or else, oil reserve will continue to deplete.
What is the long term effect of the delay in the non-passage of the PIB?
If you look at the net oil reserve in the country, for the first time, it has started to decline. If the oil reserve is on the decline today, how are we going to produce in the future? The oil reserve is also a tool to negotiate OPEC quota; if the oil reserve is declining, it is going to be extremely difficult to make case for higher OPEC quota and it will affect oil revenue to the country.
It is our interest to have the PIB passed. What we are saying is that there is need to pass the PIB that addresses the concerns of short term and long term investors in the oil and gas sector. It is not just about passing the PIB alone, but a PIB that would encourage investment in the oil and gas sector.
What are the challenges facing PETAN members and what are the ways to address these challenges?
The challenge has always been to create a level playing field for Nigerian companies. The Nigerian local content policy stands to address that. We want to build skills, we want to build technical know-how and that takes time.
When you hire a Nigerian engineer today, it takes eighteen months of training before he starts to produce for you and it could be longer some times. Access to long term finance and unpredictable interest rates have always been a problem in the oil and gas sector.
Nigerian companies do not get any assistance from government. We have Nigerians working in Angola oil and gas sector and other African countries. What this means is that we are actually exporting our competency to these countries. We have to create the expertise that would create ripple effects in the country.
Are PETAN members synergising to build competency in the country’s oil and gas sector?
The issue of forming consortiums has been on for a long time. PETAN companies form consortiums according to need. We don’t build capacity if there is no work and if there is no need for it. If there is demand for capacity, PETAN members have the capacity to operate. We have members that have been in business in the last 50 years. You cannot say such companies do not have the capacity to do FPSO for example.
Consortiums come out of demand. We have internally formed technical interest groups to handle some projects in the oil industry. We commended NNPC for awarding the Egina projects and insisting that it must be done in country. However, what we want to see is that such projects are opened to PETAN companies that have the technical know-how in some areas. We have some companies that do flow in as consortium and participate in the project.
What is the relationship between the lack of investment in the upstream sector and in-country capacity?
Let us go to the Brazilian model. The Brazil has built their local content in the last five years. But there own approach to local content issue is different from the we we operate our local content in Nigeria. We look at how much work is available and we say in the next 50 years, we are going to build like 100 well, they calculate all these things and put into a mathematics formula and come out with the result.
We know that there are few projects coming up in the next five to 10 years. Let’s quantify the work and identify the capacity to do the work. We can even identify Nigerian companies who do not have the capacity and encourage them to begin to build their capacity to meet up with the demand.
Before you industrialise, you need to capitalise. So asking Nigerian companies to industrialise without capitalisation is not encouraging. We have Nigerian companies with capacity and no work.