Vice President Yemi Osinbajo (SAN) yesterday assured Nigerians that President Muhammadu Buhari will not waste time before signing the Petroleum Industry Bill (PIB), which has just been passed by the National Assembly.
Osinbajo, while declaring open the 20th Nigeria Oil and Gas (NOG) Conference and Exhibition in Abuja described the passage of the legislation as a “feat,” noting that he was not unmindful of the challenges faced by operators in the oil and gas sector.
Osinbajo, represented by the Minister of State for Petroleum Resources, Mr. Timipre Sylva, said the global lockdown triggered by the COVID-19 pandemic had pushed the industry into a state of major economic crisis and further amplified the global clamour for cleaner and more sustainable renewable energy.
Osinbajo stated that the future survival and the success of many players in the industry will not only depend on their achieving greater focus on cleaner energy sources, but also upon their ability to deliver low-cost solutions to their stakeholders.
He added that the federal government is encouraging industry players to focus on the country’s vast natural gas resources as a transition fuel that will function as a bridge between the dominant fossil fuels of today and the cleaner energy of tomorrow.
According to him, the country is ramping up its ability to meet the increasing global requirement for cleaner primary energy, while at the same time enabling much needed domestic industrialisation for rapid economic growth.
Osinbajo said: “We are not unmindful of the peculiar challenges confronting the oil and gas operators in Nigeria from infrastructural deficiencies and insecurity to the high cost of operation, to mention just a few.
“The government is working consciously to tackle all without lagging behind on our path to meeting the global demand that our signatory to international protocols on cleaner energy have placed on us.”
He said despite the current global challenges in the industry, the government had been supporting the aggressive implementation of the nationwide gas infrastructure blueprint, which informed Nigeria’s declaration of the year 2021 to 2030 as the Decade of Gas, coupled with the enormous work on the PIB to free the industry for investment.
“As you are aware, just last week, the National Assembly passed the long-awaited Petroleum Industry Bill. This unprecedented feat has been adjudged as a watershed moment for our nation.
“Let me assure you that the bill when transmitted to the presidency for assent, would receive necessary and timely consideration. Infrastructural development, security issues, high cost of operations and other various issues are well covered in this all-encompassing bill.
“On behalf of the government, I can assure you that the eventual Act, if fully operational, its governance, administrative and fiscal provisions will be some of the most attractive in Africa,” he added.
In his remarks, Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC) Dr. Sanusi Barkindo, said the long-awaited legislation for the oil and gas sector would help guide the reforms designed to strengthen institutions.
In addition, he said it would solidify regulatory and fiscal frameworks and attract much-needed investment in a sustainable manner, adding that “the 9th National Assembly has engraved itself in gold in passing the Petroleum Industry Bill.”
On the global front, Barkindo, whose keynote address was themed: “Global Oil Market Dynamics in a Decarbonising World” stated that investors, environmental lobbyists and even some corporate boards have been pressuring oil companies and governments to pursue radical policies and initiatives that could, in the end, be more disruptive than productive for the global energy industry.
He said: “There have recently even been calls for investments in oil and gas to be discontinued, which is a dangerous and unrealistic scenario. These voices have emerged particularly in the context of the ‘net-zero’ 2050 emissions discussions.
“The fact is, however, that oil and gas have an important role to play in the energy transition. Let me be clear, OPEC supports the need to reduce emissions, bolster efficiency and embrace innovation, but we must be aware of the risk we run of not adequately investing in the future of this industry.”
According to him, the industry is already dealing with the harsh impacts the COVID-19 pandemic has had on investment, which declined by 30 per cent in 2020.
He said if this were to continue, the world could see demand exceeding supply, posing an energy security risk to both producers and consumers.
Barkindo added that this could result in knock-on effects for both the global economy and geopolitics, as there is simply no “one size fits all” solution to addressing climate change.
Instead of jettisoning fossil fuels altogether, he said the deployment of cutting edge technologies and advanced innovations, can all be leveraged to promote a lower carbon future such as carbon capture, utilisation, and storage (CCUS).
Barkindo stated that there are challenges to achieving net-zero emissions by 2050, stressing that in terms of scale and timing, the 28-year period from now until 2050 is not adequate to achieve net-zero emissions, considering the scale of investments required, the availability of land and the required massive expansion of the electricity grid.
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“The last transition took nearly 200 years to cycle through, and now we want to achieve an even more ambitious transition in less than 30 years! This is simply not realistic,” he added.
He stated that 790 million people worldwide did not have access to electricity in 2020, most of them located in Sub-Saharan Africa and developing Asia, with roughly 2.6 billion people who did not have access to clean cooking fuels, 35 per cent of whom were in Sub-Saharan Africa, 25 per cent in India and 15 per cent in China.
“Climate financing for adaptation and mitigation is an extremely complex process, and questions continue to be raised as to how the $100 billion per year committed in the Paris Agreement will be secured, much less the even more ambitious $5 trillion annual funding needed globally as set out by the net-zero 2050 plan,” he stated.
Also speaking, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, stated that it is now clear that the industry is challenged today.
“As we all know, investment has gone down 30 per cent. So, those outcomes (non-investment in the oil sector) will come up probably in the next three, four, five years when we will realise that the lack of investment of today will manifest in a very practical sense in our inability to meet demand requirements of oil and gas industry,” he said.
He stressed the need to create the right balance, adding that the world is making a mistake by assuming that in 2050, fossil fuel will disappear and yield the space to renewables.
Director of the Department of Petroleum Resources (DPR), Mr. Sarki Auwalu, in his comments said the oil and gas sector remained pivotal to the Nigerian economy and had historically accounted for upwards of 80 per cent of government revenues and over 90 per cent in foreign exchange earnings, since the beginning of oil exploitation in the late 1950s.
He expressed confidence that with the passage of the PIB into law, operators would have the reasons to consolidate their portfolios in the Nigeria petroleum industry while the influx of new investments from second-generation International Oil Companies (IOCs) is being expected