Leadnaija
A retired Deputy Director of the now defunct Department of Petroleum Resources (DPR), Engineer Sunday Babalola, who is currently Technical Advisor, Green Energy International Limited (GEIL), in this interview with SUCCESS NWOGU, ex-rays the oil and gas sector as well as the general economic development in Nigeria
The Federal Government recently gave information that Nigeria attracted $8 billion investment in deep water projects and gas final investment decisions in one year. What is your view on this?
That is good news. We have our exchange rate. The place is opening up because Nigerians are taking over shallow waters and land. The oil industry is actually opening up very fast.
And with that opening up is coming foreign direct investment. I think it will be helpful. The security in the Niger Delta is getting better. That is why you can find people say, okay, I can put my money here.
So that is my response. So what should be done to attract more investment in the sector?
We continue doing what we are doing, opening up the sector, giving out more blocks. In the downstream, in the upstream area, do more bid round. And in the downstream area and midstream, give incentivize utilization of gas and incentivize distribution of the white products. And let people be able to do their business without harassment.
As an expert in the industry, what have been the impediments to investment in the sector?
Number one is security. That is getting better. The way security was so much, you can imagine somebody produce good while it is flowing. While you process crude to take it to the terminal by pipeline, somebody goes to tap your pipeline and you lose a lot.
These things are happening. Nobody wants to lose money, so nobody will invest. But the industry is going through innovative ways of tackling these things. And then the PIA has helped tremendously in the sense that the communities are now involved as a percentage of whatever thing in the field is, directly or indirectly.
And with that, the restlessness has tremendously gone down. Because people are involved. I think we are doing well. Not perfectly well, but we are much better in the industry today.
So aside insecurity, are there no other things that inhibited investment in the economy and the sector?
The same thing that is impeding investment in the country. You can talk of, when I invest my money, how do I repatriate my money? That is central bank matter.
All those things have been worked on together. And if I have to bring money into the country, I want to know how we take the money out when I have made my profit. And I think the government is working on all those things very well.
So where do you hope to see the oil and gas industry in the next decade?
Our production will go up to about three million barrels per day. I am hoping that a number of people will establish refineries. I am hoping for greater involvement in the midstream and downstream sector by indigenous people.
Because this is our country, nobody will help us do what we want to do or should do. I am hoping that many of the things that we ought to do through research and development, we will be able to do them. And there are many, many things.
The industry is waking up to its responsibility because it has been handed over to Nigerians now. And Nigerians are actually doing very well, taking over from the IOCs where they moved out from.
The Federal Government has set a target of three million barrels per day in the next few years, when the May crude oil production was 1.453million barrels per day, how do you think that target is realizable?
The way things are, it won’t come in one day. It is going to be realizable because the government is opening up more opportunities for more people. And that will help the target.
Are there other things that should be done to make it realizable?
Yes, we can expect to improve that. Because nobody will walk in and invest in an environment that is not secured.
You have to be able to bring in money, to be able to drill wells, to go deeper, and to produce more gas and more oil. It’s not a joke. It takes a lot of determination and efforts and funding.
So, it will create an environment for the funding where we can hit the target. We have the people who have the brains to do this work. I mean Nigerians. They were actually running most of those international oil companies (IOCs).
And they can run their own. In terms of improving security, you agree that the host community harmony is also essential and that the Petroleum Industry Act could also help? The Petroleum Industry Act is helpful if
The industry is waking up to its responsibility because it has been handed over to Nigerians now. And Nigerians are actually doing very well, taking over from the IOCs where they moved out from
it’s implemented by both the companies and the host communities. And I think the laws that is going to help them to implement is already in place.
What would you describe as the state of Nigeria now, in view of hunger, insecurity, poverty, and unemployment? How would you rate Nigeria?
My rating of Nigeria would be, we have not done well. But it is not a problem of the current sitting government. We know it is easy to demolish, but to build is always very hard.
Let us keep seeing what they are doing. You know, my stand concerning certain things, like petroleum subsidy, I knew it will bring hardship. But it is the best thing.
Today, the state governments have more money, which some of them are not using well but that’s not the problem of the federal government. I knew that exchange rate harmonization will bring some hardship.
In both cases, that I mentioned, it is only the businessmen that were smiling to the bank. People were not enjoying them. Yes, these are not as expensive, but people are not enjoying it.
So, I knew they would bring hardship in those areas, but I can assure you, those policies will eventually make the country better.
And there are many other policies that the federal government has (put their hands to do, which I think, in my candid opinion, will eventually benefit the people, even though they will be suffering in the current time.
It’s not a sweet song, but it’s just like, you are eating the whole food you have at about 12 noon, and in the evening, you have nothing to eat, all because you are hungry. Then you will sleep in an empty stomach and wake up the following morning with nothing to eat.
That is what we were doing. But what we are doing now is to preserve some, and say, okay, this afternoon, even though I am not satisfied, I will live a little for this evening, and a little for tomorrow morning, so that I will have breakfast, no matter how small, so that I can go out and walk the mall.
I think that is better than the situation where we just want to lose all our ten fingers, put our ten fingers in the mouth, and eat and eat and eat.
So, I think we are moving in the right direction economically. It’s hard because of the policies, but it will still eventually benefit the people.
So why did you say that the current economic hardship is not solely to be heaped on the current administration of Tinubu?
I said that because the thing has been broken down since 1999, and you can see it breaking down. Was it Tinubu that spoiled Nigeria Airways? Nigeria Airways has been destroyed before even 1999.
So, was it Tinubu that stopped the depots from working? Depots that were created by the military. They were all broken before that time. It will take time to repair those pipelines.
Was it Tinubu that spoiled the power? Power has broken down because people were not doing what they needed to do. It will take time to revamp the sector. It is very easy to demolish a house, in one day, you can demolish a very tall building.
But to build or rebuild that house will definitely take some time. It won’t be one day, no matter how fast you are. But don’t you think there are some policies of Tinubu’s administration that have aggravated the sufferings of the people?
You have to sow a seed in order to be able to reap. So, it’s a sacrifice we are all making.
On that what is your advice to Nigerians on the current state of the nation?
There are guidelines that NUPRC is giving. Regulations guiding all these things. And those regulations are okay. Everybody is trying to work it out. I think, over time, we are going to have a better oil producing community.
We have reports that Nigeria’s oil reserves have reached 7.28 billion barrels. And the gas is 210.5 trillion cubic feet. How do you respond to this report?
We need to get to 14.5 billion of crude oil reserves. And we can get here.
So, could you advise indigenous oil players on how to achieve these 40 billion barrels of oil?
We need to have more exploration, more development drilling, more appraisal drilling, and the deeper-rising evolution and drilling.
So, there are many things we can do. It depends on the volume of funds that we have and the token assets, that will also play a significant role. But there is great hardship in the land.
The middle class is almost extinct. Nano, small, micro and medium enterprises are really struggling because of hardship and bad economic situation.
Yes, I agree that the ordinary man is suffering. But there are a lot of other people who also are making it or prospering. The administration should use the excess money we are having from the subsidy removal and bring quality and accessible education back.
They should use it to change agriculture, so that Nigerian will be enabled to do things that have not been done. They should help the farmers, the fishermen, and everybody.
The administration should be able to also create a network of roads with the excess liquidity that is probably there now so that the people will be able to transport their goods and services very easily.
The administration should look at ways of giving sincere entrepreneurs a leverage to be able to raise funds, to use money to do their business. You cannot expect anything to happen when you have interest rates at the rate in which they are today.
The administration should look at doing something to lower the interest rate with which people can borrow capital in order for them to be able to do business and create employment.
The administration should do quite a number of things. I had said some time ago, that oil prices will eventually find their level. And by today, we can say clearly that they are finding their level.
And it will continue to find their level until everything will stabilise at one point or the other. People have to suffer to be able to make gains.
There must be pain for us to make gains. I give you an example of the tariff of President Donald Trump in the US. They shouted: everything will be bad, everything will go up, everything will go down.
But the reality is that although the first few days of tariff, the stock market went red, but right now it’s green. And you find that inflation has come down.
So, we must be able to take very hard decisions in order to be able to arrive at the point where we will make gains. I don’t see any other way.
If we decide to continue to palliate the whole thing, we will eventually land in a place where the suffering will just continue forever. We have to be able to do something differently so that we get a different result.
Essentially, we cannot keep doing the same thing the same way and expect different results. We have to change direction. We have to change paradigm. We have to make a U-turn somewhere and say, wait, where we are going is not alright, let’s go this way.
There were complaints against the recent bid rounds that a newly registered firm was favored. What do you have to say to that?
Yeah, it actually did not say that you have to be 10 years existing or you have to be 20 before you can be awarded. If there is no law, then you cannot put in the people that did the work.
So if there is no law that is saying that, then they did not offend any later processes. And I used to say to women, when you register a company today, they are doing it tomorrow.
Once it’s properly registered and they have all the documents from Corporate Affairs Commission (CAC), they will be free to say, ah, this man qualifies. And we are able to pay all the application fee and all work notes.
But there are certain conditions of tax for a year or two year tax remittance or so. No. I have not started paying tax. I have to do business before I pay tax. All the time. You can’t say because I have not started paying tax, I will not be allowed to do my business. No. There is no condition like that.
The thing is that you must have your thing, and you must have your whatever other things. And CAC is doing a good job now. They give you certificates. You see your thing number on the certificate. So, things are changing very fast.
Things are improving. So, a man has to do business before he starts paying tax. If the same company has been doing other businesses, then you look at their tax history and say, oh, they are not.
They get a Federal Inland Service (FIRS) zero tax certificate that they have not been doing business. That’s okay. I will abide by your instruction that that was the last question.
