The Member representing South-South Zone in the Nigeria Extractive Industries Transparency Initiative, NEITI board, Engr. Christian Awowo has said that the recently passed Petroleum Industrial Act (PIA) by President Muhammadu Buhari administration will bring massive development to Nigeria as well as close loopholes in the oil and gas sector.
Awowoh, who has over 15 years of post-qualification experience (14 of it active in the oil and gas sector) and has worked in about 3 IOCs in Nigeria (Shell, Chevron and ExxonMobil), stated this on Wednesday, November 17, 2021, in Calabar, Cross River State capital while addressing newsmen, adding that the act will also address the issue of environmental pollution, revolutionize the sector, reduce unemployment among the youths among others.
Excerpt of the interview…
Based on your expertise/ Experience in the field that places you suitably qualified for your recent appointment into the NEITI Board as Member, what do you have to say about the Frontier Basin Development Fund established in the PIA?
The Frontier Basin Exploration Fund as created in the Petroleum Industry Act (PIA); let me, first of all, thank President Muhammadu Buhari for signing the bill into law because the oil and gas sector in Nigeria over the years has suffered setbacks due to lack of proper governance. Now, the petroleum industry in Nigeria has good governance. Before now everything was NNPC but today, we have the Nigeria Upstream Regulatory Commission and the Nigeria Midstream and Downstream Regulatory Authority. These two agencies are in charge of the oil and gas sector.
Coming back to your question, about what the frontier basins in Nigeria will bring. The frontier basins in Nigeria are known to be prolific in Hydrocarbon. most of them, especially the Anambra, Lake Chad, Bida, Calabar Flank, etc. They are proven to be very rich in Hydrocarbon scientifically, knowing the importance of gas to the economy of the country in crucial areas such as power generation, industrial development, Domestic utilization and fuelling of machinery, vehicles and vessels. As it stands today, if you need gas in Kano to set up a plant, you have to connect pipeline from either Eskravos in Delta state or Brass in Bayelsa State. which is Agip, Ir Bonny Terminal in Rivers all the way to Kano. Is highly capital intensive to do that – that’s a problem. But, if we have gas in Bida basin or Sokoto Basin and it’s developed and made available for all of these industries across the country, it will reduce the cost and ease the country road map to industrialization. Of course, Industrialization comes with multiple benefits. Such as job creation, GDP growth and increase our export potential and improve the Nation’s income per capita.
The PIA is coming up with such fund that will help the country develop gas infrastructure evenly across the country for ease of doing business and increase the Nation’s wealth.
My only reservation is that the fund should be called Frontier Basin Exploration and Development Fund. Why because the law has come to stay and a provision has been made for funds to come in from NNPC profit sharing (30%) annually for this purpose. So what happens if the commission in the future complete the exploration of all the Frontier basins in Nigeria. It becomes a dormant Fund and misappropriation will set in.
What is your take on the 3% “Host Community Development Fund” and its impact on the communities?
The 3 per cent host community development fund; when the bill was up for signing, there were so many issues, especially from the South-South Zone which I represent. The 3 per cent we are talking about, so many got confused why the 3 per cent and 30 per cent for the Frontier Basin Exploration Development Fund. The 3 per cent is actually the 3 per cent of the annual budget of operation of every oil mineral license of the operator. the budget that an oil company has for that bloc annually. It is not the same as the 30 per cent of NNPC sharing for the Frontier Basin Development.
We’ve not had it before, the development we have in oil communities used to come from mostly NDDC projects. But this one has also come to add to infrastructural development in the coming days for the host communities, and that 3 per cent I can assure you that it’s a huge compared to nothing. Subsequently, the law will be amended and then it could be increased. So the 3 per cent grossly not too exact, will be close to about 600 million dollars, which is about 300 billion naira. And if you have 1000 host communities across the oil-producing areas in the country, each community would have about 300 billion for the development of their water, schools, hospitals etc. Especially in the Riverine Areas of Bayelsa, Delta, as well as Rivers and across board. So, the funds will go a long way to help in infrastructural development in the areas if properly put to use. I can assure you that within 5 years, the host communities that have suffered so much from activities of oil exploration will become a better place.
Considering the huge value chain associated with Natural gas, what has the PIA done to address it?
We are very happy with what the PIA has, regarding the gas infrastructural development. Over the years, the oil companies in Nigeria were so much interested mostly in the oil for the cheap reason that it is easier for them to process and sell. Gas is either flared or reinjected into the reservoir to boost oil recovery. This has been the practice since the inception of oil exploitation in Nigeria whereas undermining the huge benefits of Natural Gas to the country. With the PIA coming in place, the industry will be liberalized, and we will have more players coming in to develop the Gas sector. Flaring of gas is actually environmentally unfriendly, so if we compress this natural gas and utilize it for power generation, industries are going to grow. There will be job creation because there will be industrial growth.
Gas flaring has been a huge problem in Nigeria unlike other parts of the world where Hydrocarbon is developed. What has the PIA done to address it?
There’s a penalty in the PIA regarding gas flaring. When you flare gas, there’s a fine you pay and the good thing now is that that gas flaring penalty instead of going to the national coffers, it’s going to the host community development fund because they are actually the ones suffering from gas pollution. We hope and believe since the industry now supports the gas infrastructure development, and of course, there’s a 0.5 per cent Midstream and Downstream Gas infrastructure development fund. How is that fund coming? Every bulk procurement of petroleum product in Nigeria, be it PMS, be it diesel, kerosene, aviation fuel, natural gas, you are going to pay 0.5 per cent of that bulk procurement into a fund that is referred to as the Midstream/Downstream Gas infrastructure development fund. It is in the PIA and those funds are going to help the country develop the gas infrastructure.
The issue of environmental pollution and vandalism has had adverse effects in the oil and Gass sector, what can be done to curb the trend?
It is not the responsibility of the board to curb vandalism. Vandalism and pollution, majorly in the Nigerian law, as an operator of an oil mineral license, you are supposed to operate according to the standard provided. You are supposed to make sure you operate without pollution. But unfortunately, we have it that the youths are involved in some of these activities due to joblessness. The federal government with all this infrastructure coming up; that is, bringing in industries, liberalization of the petroleum sector, companies coming in, we are going to have more refineries springing up, more natural gas companies coming up, and that will take so many youths off the streets. And of course, when you are busy you will not engage in vandalism. Vandalism has a whole lot of risk involved and you know that when there’s a gas pipeline explosion, it’s very disastrous. So, going to tamper with gas product pipelines is very dangerous to lives, the environment and properties. It’s something that Governments over the years have been battling with. The solution I can assure you is job creation, which by the coming of the Petroleum Industry Act (PIA) now in place, will curb.
Since the assumption of office, what are the new development in your office, especially the recovery of royalties and other levies owed to the Nigerian government by IOCs?
In October 2021, Nigeria Extractive Industries Transparency Initiative (NEITI) held a roundtable meeting with the media and in that meeting, the Executive Secretary of NEITI made a presentation and I can assure you that Nigeria wasn’t the same since that day because it was very expository. Most of the funds that are owed to the federation up till this point were revealed, I think to the tone of 2.6 trillion naira. That’s huge. It wasn’t long that the president came in to set a committee to look into the recovery of the funds. So, NEITI has been very active. You cannot rule out NEITI in all this. Since NEITI Act was enacted in 2007 up to date, Nigeria has enjoyed it so much. It is the responsibility of the civil society to make sure that they utilize the data that NEITI has provided. You have to hold the government accountable but the responsibility of NEITI is to make sure that you have the data. Once the citizens have the data, they know what goes to the Government and the work with it.
Since the loss of the oil-rich Bakassi and the 76 oil Wells to neighbouring Cameroon and Akwa Ibom respectively making it a non-oil producing state. In your opinion, what is the place of Cross River State in the derivation principle and her hope for future oil exploration and exploitation?
Cross River State is in the South-South and is positioned in the Niger Delta sedimentary basin. The fact that existing oil wells in the Cross River estuaries were taken due to the ceding of Bakassi to Cameroon by the Nigerian Government and subsequent issues with Akwa Ibom State, we see Cross River State bouncing back in the coming days. The state lies in the Eastern Sedimentary Basin. About 4 or 5 local governments within Southern Cross River occupy the Eastern Niger Delta sedimentary basin which has a sedimentary thickness of 9,000 to 11,000 metres. With that kind of sedimentary thickness is obvious geologically that the region is Hydrocarbon prolific. I believe that in the coming days when the government will put effort in that direction, all those places will be explored and exploited. Cross River will gain its position in the oil and gas production sector again. And also with the Frontier Basin Exploration Fund coming, in the South-South, we have the Calabar flank. This flank is also rich in hydrocarbon. With this Fund, the state will benefit from it. course, the federal government has that in plan. That development is going to get Cross River State back with oil revenues. There’s no cause for alarm. It’s just for the state to key in properly and have that achieved.
What is the structure of your office and how can it be accessible to the people of the South-South that you represent in the NEITI Board and also the role the Civil Society should play in actualizing the implementation of the policies of the government in the sector?
NEITI is media-friendly, and of course, the secretariat is making effort to get the office of NEITI decentralized to the various zones in the country. The South-South is a zone, so by the grace of God when that is implemented, the six geopolitical zones have representations which is fair enough. When the secretariat is decentralized and has subnational offices then the South-South is going to be closer. Civil society is part of our engagement. So, we also count on the civil society because most times when this data from NEITI come, we need the civil society to use it. That’s the role of the civil society. The citizens need to know what is happening and the general citizenry.
NEITI is an Agency of the federal government saddled with specific obligations among others to audit and disclose to the citizen what is accrue to the federation coffers from the Extractive Industries. Such as Oil and Gas, solid minerals, etc.