Nigeria Unlikely to Become Net Petrol Exporter in 2020 - Report

25 February 2020

Abuja — A new report - the Benchmarking Exercise Report (BER) 2019 - by the Nigerian Natural Resource Charter (NNRC) has said it is unlikely that Nigeria will become a net exporter of petrol this year as planned by the federal government.

The report which was unveiled recently in Abuja, studied Nigeria's progress in accordance with 12 select precepts chosen to determine the country's progress in her oil and gas industry. It explained that so far, existing conditions do not suggest that the country would meet her target of becoming a net petrol exporter in 2020.

The NNRC's 12 BER precepts included strategy, legal framework, and institutions; transparency and accountability; exploration, licensing, and monitoring operations; taxation and other company payments; local impacts; and state-owned enterprises.

It also had for consideration investing for growth; public spending; private sector development; the role of extractive companies and the role of international community in the precepts.

Analysing the country's resource strategy, a part of the BER stated that between 2017 and 2019, average capacity utilisation (ACU) in Nigeria's refineries which are managed by the Nigerian National Petroleum Corporation (NNPC) worsened, dropping from eight per cent in 2017 to less than four per cent during the first seven months of 2019.

"This is a long way from achieving the government's set targets to reduce petroleum products imports by 60 per cent in 2018 and become a net exporter of refined petroleum by 2020," it explained.

It added that: "At the current pace, the government is unlikely to achieve the latter (net exporter of petrol). The oil sector and economic performance also fell short of benchmarks specified in policy documents - evidence of inadequate planning and analysis put into the formulation of strategy documents by state actors supports this."

According to the report, gaps still exist in the institutional and legal frameworks of Nigeria's oil and gas sector especially with the non-passage of the Petroleum Industry Bill (PIB) which it insisted created a further setback for reform in the sector.

The Programme Coordinator for NNRC, Tengi George-Ikoli explained in a note to THISDAY that the BER 2019 covered the findings of NNRC's thorough examination of the country's petroleum resource wealth management from the beginning of 2018 to the end of 2019.

George-Ikoli, stated that the BER was an exceptional policy document that could be used by Nigeria's government to realign her policies in the oil industry.

"This report which was painstakingly put together by a team of well accomplished research institutions is undoubtedly the most incisive, in-depth and well detailed account of the developments in the petroleum sector in the period under review.

"It seeks to find answers to very important questions such as whether the government has clearly identified the country's resource endowment, ownership and full impacts of extraction," said George-Ikoli.

According to her: "It equally demands if the government has an inclusive and comprehensive national strategy for the management of resources as well as to what extent the resource management should secure the greatest benefit for citizens through an inclusive and comprehensive national strategy, clear legal framework and competent institutions, among others.

"Most importantly it highlights the perennial issue of the neglect of oil producing communities and the delays as regards the transformation of the national oil company."

She stated that the NNRC believed that actions taken to address the gaps identified by its 2019 BER will guide Nigeria towards effectively, "translating our petroleum resources under the ground to development above the ground."

"We believe the outcome of today's deliberations will go a long way in aiding the government in achieving this, and accountability actors to focus their advocacy to ensure that we maximise the benefits; revenue or opportunities afforded to Nigeria by her resource endowments," she added.

'Nigeria's Oil Industry Not Free from Hacktivists'

Nigeria's oil and gas industry may not be free from the growing threat of cybercrime in the global economy and could be hit by hacktivists if it doesn't guard against the criminals, the Technical Adviser on Gas Business and Policy Implementation to the Minister of State for Petroleum Resources, Justice Derefaka, has warned.

Hacktivists are groups of criminals who unite to carry out cyber-attacks in support of political causes.

Derefaka who is also the Project Manager for the Nigerian Gas Flare Commercialisation Programme (NGFCP), explained during a recent meeting of the Society of Petroleum Engineers (SPE) in Port Harcourt.

According to him, risks associated with cybercrime were high across the world and Nigeria's oil industry being a part of it could not be exempted from such risks.

He provided examples of how global oil firms such as the Saudi Aramco were hacked by hacktivists, adding that the danger for Nigeria was real and stressed the need to focus on practical and comprehensive measures to guard against such threats.

"Cyber threats are a growing issue, difficult to regulate and damage can be asymmetrical. The oil and gas industry in Nigeria is about the largest economic contributor in terms of added value.

"Due to the high levels of revenue generated by the industry and the high dependency level of other sectors on the industry, it is likely to be affected by 'our common enemy' - cybercrime/hacktivists," said Derefaka in his presentation.

According to him, operators in the country's oil sector should be willing to cooperate to form an eco-system to forestall potential hacks into their operations.

He stated that: "For the Nigerian oil and gas industry, strong cybersecurity has become fundamental to a resilient business and industry ecosystem. With effective cyber-risk management, the industry can achieve smarter, faster and more connected futures, driving business growth."

Continuing, he said cyber threats to business continue to evolve, as "public- and private-sector leaders are called upon to address them in the digital and physical worlds, mitigate any potential harm to individuals and avoid the disruption of critical services to the nation."

He further stated that, "In Nigeria, it is the collective responsibility of government and the oil and gas industry players to take full ownership of the cyber challenge and to work out a remedy together."

Derefaka, equally noted that the global oil and gas industry was familiar with big data, technology and digital innovation and as such should be able to tackle issues of cybercrime effectively.

He said recent digital disruption across industries and economy were good and should be embraced efficiently by Nigeria's oil industry to lower cost and increase value-addition.

"Connectivity has shown the potential to empower millions of people, while providing businesses with unparalleled opportunities for value creation and capture.

"By 2025, it is anticipated that there will be more than 50 billion devices connected to the internet.

"This is having a disruptive impact on many industries, including the oil and gas sector, among others. Digital is a key enabler in the oil and gas industry to lessen costs, make faster and better decisions, and to increase workforce productivity.

"The overarching upside is that, the use of technologies now unleashes new hydrocarbon resources and deliver operational efficiencies across the value chain by rapidly shifting from being the legacy enabler to being a game changer," he explained, adding that this should be embraced with full realisation of the threats posed by cybercrime.

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