SCORECARD: Timipre Sylva lists achievements, fails to achieve 3mbpd, other targets
Nigeria’s petroleum industry, being a major determinant of the health of the country has gone through rough and tumble, as well as better days under the watch of Chief Timipre Sylva, Minister of State for Petroleum Resources.
A critical analysis of his superintendence of the Ministry reveals a mix of success and unachieved targets in the last one year, despite contributing about 90 per cent of the country’s foreign exchange earnings as well as 60 per cent of total income.
The above was the highlight of Sylva’s address when he delivered a presentation on the achievements of his Ministry at the 16th edition of President Muhammadu Buhari’s administration scorecard series, monitored by EnergyDay.
MINISTER’S 9 MANDATE
Sylva who became Minister of State Petroleum Resources in 2019, promised the eradication of smuggling of PMS across Nigeria’s borders, the completion of the gas flare commercialisation programme, the increasing crude oil production output to 3 million barrels per day, and the reduction of the cost of crude oil production by at least five percent.
Others are to aggressively promote the passage of the Petroleum Industry Bill(PIA), promote deep offshore and inland basin production sharing contract amendment bill and ensure its passage, work with operators to increase domestic refining capacity, collaborate with the private sector to create many well-paid jobs in the oil and gas industry, implement strategy towards taking one million Nigerians out of poverty.
ACHIEVEMENT IN 2022
Sylva while rolling out a plethora of achievements of the Ministry with a reflection on the 9 mandates, said that the administration has managed to record significant achievement, following the assent given to the Deep Offshore and Inland Basin Production Sharing Contracts act.
One of the gains of the act was the flag-off of the Kolmani River-II well in the Gongola basin of the Benue trough and the plan to re-launch the exploration activities in the Chad Basin, as well as the completion of the seismic data collection in the Bida, Sokoto and other basins.
The Minister also noted that in 2022, the Petroleum Industry Bill was signed into law by President Muhammadu Buhari, exactly 48 days after it was passed by both arms of the 9th National Assembly.
This, according to him, provided the legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters.
REHABILITATION OF NIGERIAN REFINERIES
Sylva also listed his achievements including the funding for three refineries including the rehabilitation of the 210, 000 barrels per day Port Harcourt refinery, awarded to Italian firm, Tecnimont SPA, which he said would be completed in the next two months.
He also confirmed the rehabilitation of the 110, 000 barrels per day Kaduna Refinery and 125, 000bpd Warri Refinery is being considered.
The Minister said that incentives and financial instruments for investors to encourage local crude refining capacity through the construction of modular refineries.
This claim however failed to achieve the desired result as a number of operators of the modular refinery have blamed the government for failures to address major upstream and midstream issues including the supply of crude feedstock and rising cases of pipeline breaches in the Niger Delta, affecting their operations.
NATIONAL GAS FLARE COMMERCIALISATION PROGRAMME
Sylva also noted that the Government in 2022, re-launched the National Gas Flare Commercialisation Programme, with a view to driving the attainment of zero routine gas flaring by 2035 and net zero emissions by 2060 in the country.
EnergyDay gathered that this was a major milestone as the programme which has been stalled since 2016, was rewarded to existing and new applicants in December under an accelerated programme.
A total of 139 applicants were deemed successful and awarded the Qualified Applicant Status in line with the provisions of the Request for Qualification(RFQ) out of a total of 300 companies who registered to revalidate their prequalification status and submitted a statement of qualification(SOQ) as existing bidders.
REDUCTION IN COST OF PRODUCTION
Sylva said that Buhari’s administration has reduced the cost of crude oil production in the country, adding that local operators who took over from expatriates have found local solutions addressing the cost of production.
He also revealed that the government in 2022, successfully awarded Petroleum Prospecting Licences (PPLs) to 161 successful 2020 marginal fields awardees, a process which began in 2020.
This according to him was a milestone achieved through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The Minister of State Petroleum Resources said that in 2020, the Nigerian government commenced the implementation of the Nigerian Gas Expansion programme (NGEP) dedicated to improving the domestic utilisation of gas for power, and industrialisation in order to deepen Liquefied Petroleum Gas (LPG) penetration in the country
As a commitment, the Central Bank of Nigeria (CBN) released a N250 billion intervention fund for the National Gas Expansion Programme (NGEP), with the target of creating about three million direct and indirect jobs.
EnergyDay’s check showed that the CBN intervention facility was targeted at stimulating finance in the critical sector and motivating investment in the gas value chain.
While some gains have been attained since the NGEP was initiated, a major failure of the programme was the inability of the government to live up to its promise of converting one million vehicles before December 2021 free of charge.
This was however compounded by the failure of petroleum products marketers to build and set up autogas filling stations across the contrary. Some have blamed this on the rising cost of gas.
The programme has slowed down despite its original concept of optimising Nigeria’s proven gas reserves of over 206 trillion cubic feet (tcf) and prospects of an additional 600tcf.
EnergyDay however gathered that efforts by the government to use NGEP as a catalyst to drive domestic use of Liquefied Petroleum Gas (LPG) have suffered a setback due to continuous rise in the price of the product attributed to the insufficient local production of the product and high cost of importing caused by scarcity of foreign exchange, customs duties and Value Added Tax(VAT).
The rising cost of LPG in Nigeria has resulted in a drop in domestic utilisations to less than a million tonnes per annum.
Another major issue slowing down the NGEP is the lack of infrastructure including pipelines to distribute natural gas for both domestic and international sales and delivery.
3 MILLION CRUDE OIL PRODUCTION TARGET
The Minister was unable to give an account of the 3 million bpd projection for the crude oil output for the year, as Nigeria’s crude oil output dropped persistently from 1.39 million bpd in January, being the biggest in 2022.
The country’s crude oil production declined to 1.25 million bpd, 1.24 million bpd, 1.22 million bpd, and 1.02 million bpd in February, March, April, and May, respectively.
The output level suffered the biggest decline in history when it dropped to 1,158,274bpd, 1,083,899bpd, 972,394bpd, and 937,766bpd for June, July, August, and September 2022 respectively.
The output level increased in October to about 1,014,485 bpd and then hit an average of 1.18 million barrels per day (bpd) in November 2022.
The output level ended the year with 1.235 million barrels per day in December 2022, evidently falling significantly lower compared with the 3 million targets by the minister.