By Desmond Kazim
Nigeria’s immediate past Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu, contributed immensely to the stability and efficiency that characterised the oil and gas sector under President Muhammadu Buhari who also doubled as Minister of Petroleum Resources. With the support of the President and the leadership of the Nigerian National Petroleum Corporation (NNPC), Kachikwu repositioned the sector to compete effectively with the corporation’s major peers in the Organisation of Petroleum Exporting Countries (OPEC).
On assumption of duty Kachikwu, still bubbling in the spirit of efficiency, profitability and productivity for which the private sector is known, articulated his plans to transform NNPC into an efficient and profit-oriented organisation. He implored the corporation’s management to team up with him to close the skill gap towards turning the fortunes of the organisation around. Specifically, he pledged to fix the moribund refineries and reposition them to run efficiently and profitably while meeting the energy needs of the country. He was clear about his goals.
The wheels of Kachikwu’s strategic plan had barely started rolling when the journey was truncated. The ex-ExxonMobil executive was removed by Buhari who replaced him with Maikanti Baru as the group managing director of NNPC in July, 2016. Kachikwu had been appointed Minister of State for Petroleum Resources by President Buhari in November 2015, barely three months he became NNPC’s chief executive officer. His new status also placed him in the position of alternate chairman of the NNPC board.
The appointment and replacement drama coincided with the 15-month recession that invaded the Nigerian economy, occasioned by the double tragedy of huge slump in oil prices in the international market (from $100 to below $50 per barrel) and disruption in local production (declining to 800,000 from 2.2 million barrels per day). Niger Delta militants had embarked on attacks against oil companies, destroying their facilities in oil-bearing communities. Kachikwu rolled up his sleeves and took a dive into the field. The responsibility of stablising the oil and gas industry amidst increasing volatility in the international market, as well as neutralising the rage of the rampaging militants was an acid test for a “novice” in the public sector setting. Only a big heart of undiluted patriotism could effectively grapple with such challenge.
A major landmark of Kachikwu’s tenure was that the lingering problem of cash call which plagued the Nigerian government was frontally tackled. Through his international contacts and global industry exposure, the country was able to raise over $6 billion to settle the arrears. In what appeared an unusual negotiation tactics, substantial deductions were made (from the arrears) resulting in reduced cash call commitment of about $5 billion spread over a five-year period – on incremental production volume base. That’s the first time anyone will pull out that in the industry.
Obviously, Nigerians do not realise how much was gained by virtue of that deal. But once that happened, confidence returned to the sector, people began to invest back, we began to return to the fields. Over 30 per cent reduction in production cost was another major feat. Reports showed that NNPC operates production cost dropped to about $23 per barrel as against $33 that obtained. Kachikwu said he aimed at $15 per barrel target and that some oil companies had achieved that. “My target is to get down to $15 per barrel; in fact one or two oil companies have achieved that. The more margins you are able to create the more profitable it is and the more you can resist the price shocks in the international environments”.
Nigeria’s moribund refineries will become functional again if the government would look the direction Kachikwu had pointed at: the private sector. The lack of political will to transfer management and operation of the refineries to operators in the private sector is responsible for the continued importation of refined petroleum products and huge resources committed to fuel subsidy. Nigeria imported N2.3 trillion fuel and paid N2.9 trillion subsidy in 2018.
Taking Nigeria back to the position of respectability in the international community earned the country robust confidence among foreign investors. The key roles played by Kachikwu at the Organisation of Petroleum Exporting Countries (OPEC), Gas Exporting Countries Forum (GECF) and African Petroleum Producers’ Organisation (APPO) leaderships repositioned Nigeria for strategic investments that enhanced her revenue stream and created more job opportunities for indigenous companies under the Nigeria Content Development and Monitoring Board (NCDMB) activities.
The introduction of the Nigeria International Petroleum Summit (NIPS), hosted in Nigeria for the first time in February, 2018, brought wide acclaims from stakeholders at home and in the Diaspora. “In the past, most Nigerian energy and petroleum industry players spent huge foreign exchange to attend the popular Offshore Technology Conference (OTC) in Houston, United States. Kachikwu changed the narrative by conceptualizing and hosting the new Nigeria OTC, which seeks to bring investors and players in the sector to Africa for the first time,” said President, National Association of Nigerian Students (NANS), Chinonso Obasi, , after participating in the event in Abjua, February 2018, on Kachikwu’s approval. The next edition of the NIPS will hold in February 2020.
Tackling corruption in Nigeria’s oil and gas sector is not a mean feat. The sector and the nation’s national oil company, NNPC, now operate on the window of transparency never recorded in history, which boosts investors’ confidence. The Automatic Tracking Oil Production has enabled government to monitor crude oil production and conveyance, thereby blocking leakages arising from unaccountable volume of the product produced at a time.
Government recovered N1.2 trillion in royalty arrears from oil companies operating in Nigeria through the Crude Oil Liquefied Natural Gas Tracker (COLT), a facility stakeholders describe as major blow to corruption in the oil and gas sector
Kazim, a public affairs analyst, wrote in from Abuja