The Nigerian Content Development and Monitoring Board (NCDMB) has said that uncertainties and non-passage of the Petroleum Industry Bill (PIB) is scaring investors away from the country, bringing fresh anxieties as the deepwater project; ZabaZaba Integration platform by Nigerian Agip Exploration (NAE) nears completion.
Shipping Position Daily gathered last week that President Muhammadu Buhari has refused to assent to the Petroleum Industry Governance Bill (PIGB) and has returned it to the Senate.
Speaking at a one day seminar on Local Content in Shipping, Oil and Gas Logistics Operations in Nigeria organized by Maritime Reporters Association of Nigeria (MARAN) in Lagos last week, Executive Secretary of the NCDMB, Simbi Wabote stated that the ZabaZaba project is sequel to the EGINA Floating Production Storage and Offloading (FPSO) Platform which had 40% local content, he said that the Zaba Zaba project has more than 50% Nigerian content.
Represented by Dr. Ginah Ginah, General Manager, Corporate Communication and Zonal Co-ordination, NCDMB, Wabote enumerated many achievements recorded by the organization and noted that lack of production of steel locally was among the challenges slowing down oil and gas industry from recording the expected growth.
Wabote maintained that non-passage of the Petroleum Industry Governing Bill and high cost of production have pushed back investors from investing their money in the sector, saying that production of oil and gas in Nigeria is the costliest in the world, which has made the minister of petroleum call for reduction in costs of oil and gas exploration.
He lamented that completion of contracts in the oil and gas industry used to take up to four years and there is a lot of negatives around such arrangement.
In line with solving this problem, he said the board has reduced the cycle to 14 months in the ZABAZABA project.
“The project is owned by Agip, we were able to implement the contracting process in fourteen months, the minister is asking for six months, so we are going to see how we can further push it down to six months.
With this kind of success, more foreign investors would be encouraged to come into the oil and gas industry”
“The other challenge is Petroleum Industry Bill, if there is no investment; there is no Nigerian content, Nigerian content is at the back of projects, if you don’t have projects coming in, you cannot have Nigerian content. In the EGINA project, we achieved Nigerian content level of 40percent, now we are looking at 50percent plus in the ZABAZABA which is the next big one, the uncertainties around the PIB and non-passage of the law is making investors to withdraw their investments until they are sure of what is going on in the sector”
“As we speak now, the law has still not been passed, once it is passed, there would be employment, contract and capacity building at the back of these projects” Wabote said
Meanwhile, Shipping Position Daily learnt from industry players that non-passage of the Bill has set back the petroleum industry reform by at least two years.
There were reports that President Buhari rejected the bill on the grounds that, it whittles down his power as Petroleum Minister and that he did not see any fiscal terms in the bill.
Speaking on how to mitigate the impact of these challenges on the growth of the industry, Wabote informed that the organization had set aside 200 million dollars as Nigerian Content Intervention Fund (NCIF) and domiciled with the Bank of Industry, which the bank would give out as loans to local investors at an 8 per cent interest.
He added that the essence of the NCIF is to save the industry from foreign dominance and provide fund to empower and boost capacity of Nigerian participants in oil and gas production.
He expressed displeasure that the disbursement of the loan by Bank of Industry was very slow as only three stakeholders had benefited.
“Eight years ago, there was no capacity for doing integration, but now we have been able to get some capacity, we have several fabrication yards now. Before now, there was no finance for out indigenous players so we had to descend to commercial banks which were not designed for long term loans”
"Our country does not have an efficient steel industry and everything in oil and gas industry requires steel. Nigeria is losing a huge foreign exchange to importation of steel. Steel used in the industry is imported; government has to do something to revive iron and steel industry. Local content in the sector will jump to 50 per cent if we produce steel locally,’’ he said.
He also noted that most of the pipelines transporting petroleum products were weak as a result of many decades of usage and not necessarily damaged by militants.
Wabote said that the industry was confronted with shortage of research institutes as most of the oil and gas researches used to develop and carry out exploration were usually done abroad. He said that most of the Nigerian universities that could have produced manpower for the industry were running outdated curricular which has made their products inadequate to take rightful positions in the industry.
According to him, oil and gas industry is a specialized industry and NCDMB is in the process of establishing research institutes that will be domiciled in four universities in the country and also in discussion with the National University Commission on the review of curricular of petroleum studies. He noted that the establishment of the research institutes would save the country foreign exchange being spent on researches abroad.