In this interview, Heineken Lokpobiri, Minister of State, Petroleum Resources (Oil), reveals how President Bola Ahmed Tinubu's signal to the global investing public is beginning to yield spectacular results with a flurry of foreign direct investments in billions of dollars that are merely awaiting formal announcement. According to Lokpobiri, When others were making money Nigeria didn't make money. Following the Ukraine/Russia war, Aramco declared over $200 billion, only Nigeria didn't make money. What President Tinubu is doing and is committed to is rewriting the story. He's saying let us maximize our production and ensure that Nigeria benefits from these God-given resources that we have. We are bringing back all the service companies because the IOCs need them. The Executive Orders Mr. President signed is working because the impediments standing in the way of investment have been removed. That is why major investments are coming into that space now. We've been able to dismantle the barricades and Mr. President's commitment is unwavering."
What were the biggest challenges you faced when you became minister of state?
Renewed Hope Agenda Number 4 of Mr. President, aims to unlock the natural resources of our great nation for economic prosperity. That is where I come in, working with other relevant appointees of Mr. President. When we assumed office, the biggest challenge met by this administration was a dire lack of investment in the Nigerian oil and gas sector, due to the protracted passage of the Petroleum Industry Act (PIA) and inconsistent government policies, which drove potential investment to other climates. Our primary policy thrust was, and remains, to increase production. You may ask, why is this our focus? Because increased production is the lowest-hanging fruit for Nigeria's economic recovery. Higher production translates to greater investments, increased revenue and foreign exchange for the country, and a more functional midstream and downstream sector. We recognized numerous impediments to our progress early on, such as conflicts among partners, divestment issues, inconsistent policies, insecurity, and bureaucratic bottlenecks. Consequently, over the past nine months, our efforts have been dedicated to removing these obstacles, restoring investor confidence, and ensuring an enabling environment for businesses in the oil and gas sector to thrive.
Our biggest challenge is that we have thousands of idle oil wells that are not exploring. I give you an example, between Rivers and Akwa Ibom which has over one hundred and seventy oil wells, but only ten are producing, the rest are just shot-in with no explanation. They are mostly in the hands of someone who cannot explore. It's just like having a tenant in a house you must get a court order to evict him and we are saying, 'look, the PIA gives us authority to say if you are given license there are conditions attached to it if you are not meeting those conditions, we will farm out and give those who have the capacity to produce them. Unless you bring out the crude oil deposit in the soil there is no value and the good news is that from the projections we have, the oil price will be stable in the next 4 to 5 years. It will hover between $80 to $90. When others were making money Nigeria didn't make money. Following the Ukraine/Russia war, Aramco declared over $200 billion, only Nigeria didn't make money. What President Tinubu is doing and is committed to is rewriting the story. He's saying let us maximize our production and ensure that Nigeria benefits from these God-given resources that we have. We are bringing back all the service companies because the IOCs need them.
Are we even meeting our budget projections in terms of output?
As of today, our budget is predicated on 1.7 million bpd and with condensate we are already meeting our budget projections. At least we are meeting our own mandate. First of all, we are producing what OPEC has asked us to produce which is 1.5 mbpd and we have exceeded it when you include condensate and so we have achieved that. Our target is to ensure we produce 2 to 3 million bpd per day. Our problem hasn't been capacity, our problem has been so many other factors that I do not want to bore you with today. But one of them is the difficulty in evacuations. Some of our pipelines are as old as 50 years, others are as old as the industry itself which started in 1956 in Bayelsa. And so the life span of these pipelines has expired. And so when a young man goes to those pipelines they are busted with ease.
And so even if we produce we have the challenge of evacuation, that is why most of the flow stations are shut down because of the evacuation problems; but we are addressing those challenges. That is why we are confidently saying that the issue has nothing to do with capacity but technicalities which we are addressing and by the time we address these challenges within the shortest possible time, we will increase production to beyond 2 million bpd per day.
How have you fared in tackling the challenges and are there nuggets of success?
Our foremost achievement is the significant increase in production. When we took office, production was at approximately 1.1 million barrels per day, including condensates. Today, I am proud to report that we have increased our production to approximately 1.7 million barrels per day (inclusive of condensate). This increase is a testament to our relentless efforts to streamline operations and resolve conflicts among stakeholders.
Some of what we have been able to achieve is that we have made eûorts towards revamping redundant oil assets to active status; continuous engagement with IOCs and Independent Petroleum Producers Group (IPPG) members in resolving industry disputes towards increasing production; resolutions of internal Joint venture contracts feud between joint ventures partners on critical productions ûelds; engaging local communities with critical assets running through them to protect the assets all in a bid to decrease oil theft in the country; consolidating existing security framework with private security firms and Government security agencies for pipeline surveillance, which led to sharp decline in crude oil theft and thus increased production for export; during this period, we also experienced the coming on stream of OMLs 13 (Sterling Exploration) and 85 (First E&P), with the respective assets reaching first oil in the development of their licenses. These assets are expected to produce an average of 20,000 and 40,000 barrels per day respectively. This achievement is another testament to the commitment of this administration to optimize production from the nation's oil and gas assets by providing an enabling environment for existing and prospective investors.
But a major challenge has been our inability to attract investments into that space. The presidential adviser on energy alluded to this in an interview I had with her recently?
One of our main objectives has been to create an environment where investment can thrive. For over a decade, the non-passage of the Petroleum Industry Act (PIA) and inconsistent policies had driven investments away. Today, I am pleased to announce that President Tinubu's efforts have rekindled investor confidence in the sector. Notable examples include investments commitment to the tune of $5bn and $10bn respectively in deepwater offshore assets; and $1.6bn investment commitment in oil and gas asset acquisition; and the very high global interest noted in the ongoing bid round of assets coming online, arising from the recent roadshow activities in the US and Europe.
Tied to that is the bureaucratic bottlenecks that used to hinder investment. We have been working diligently to eliminate the bureaucracies and bottlenecks that have stifled investment for over a decade. We have made significant strides in attracting and sustaining investments in the sector by resolving conflicting issues and fostering a more consistent policy and business-friendly environment. This also extends to the extension of oil prospecting licenses to technically and ûnancially capable indigenous and international companies all geared towards increasing production and providing ministerial consent to companies to divest some of their equity in their assets to companies of proven technical and ûnancial capability.
The business-friendly efforts of this administration has rekindled investors' confidence in our oil and gas sector and ensured the return of companies such as industry service providers who had earlier ceased or greatly reduced operations in our shores due to the unfavorable business climate. For example, last night I met one-on-one with SLB's global CEO, who further solidified their commitment to Nigeria. Our efforts have extended to the downstream sector. The recent Christmas holiday period witnessed a festive season without fuel queues, a notable achievement attributed to the concerted efforts of stakeholders, especially the Nigerian National Petroleum Corporation Limited (NNPCL) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). This is alongside our policy of constant and continued engagement with critical industry stakeholders such as MEMAN and NARTO, IPMAN amongst others to ensure smooth and eûective distribution of petroleum products across the nation.
So, what's the situation with the IOCs
Let me say that one of our achievements is that when we got into the ministry one of the problems we faced was lack of investments for the past 12 years.
The Total CEO in Kigali said that Nigeria has not attracted any investment in the last 12 years which is true but we are already changing the narrative. I was in a meeting with him and Mr. President last Saturday and all the issues he raised we are already addressing. Also, to tell you that Total has also shown interest in the new bid rounds that has been announced. Mr. President approved a new bid round which we launched in Houston sometime this month and Total is already expressing interest in the new bid round. So also the other IOCs, which means that we have been able to rekindle the confidence of the investing communities and they are coming back. Even this morning, I was playing host to the global CEO of Schlumberger, which is the biggest oil and gas service provider in the world. They are among other oil-servicing companies like Halliburton that left Nigeria . Why did they leave? Because the policies were not favorable. They also left because some people who were implementing the local content act misunderstood the local content to be a substitution of the IOCs. That wasn't the intention. I was in the senate when we passed that law. The law was to build local capacity to play at their own level. As of today, no local company can go to the deep offshore to drill, it is still the exclusive capacity of the big oil servicing companies to go to the deep offshore where bulk of our production is coming from. It is important to note that over 80% of our crude produced locally is produced by IOCs and they have pledged that they are not leaving Nigeria but they are trying to leave onshore to go to deep offshore which is good for our independents and Nigerian-owned companies. With this action, they will not only expand their operations but truly promote what it means for local content to play actively in the industry to grow as big as the IOCs. So, the point is that we have been able to restore the confidence of the investing community in our oil assets. I have met with the global CEO of the big 5 IOCs and the independents. All these are to show that the policies of President Tinubu's administration is working and we are already bringing back the confidence of the investing communities in this present administration.
How are we engaging OPEC to ensure that we do not continue to lose face?
Nigeria still has the highest reserves in oil and gas on the continent. The reason why we haven't seen the benefits of these huge reserves is that Nigeria's capital investments to reserve were the lowest in the world - we had only 5%; Angola had 46%; Mozambique had 65%. And then you ask yourself the question, why did the companies in Nigeria fail to invest in the last 12 years. The reason is simple, the PIA took longer than ever to come into action. And nobody wants to invest billions of dollars in any clime where there is uncertainty, but we have told them the PIA is now passed and we have a stable governance structure. We have the best fiscal policy and the president has signed executive orders and we are saying you have a long history with us, so come back to Nigeria to invest and that is why the two companies I was referring to earlier are old IOCs there are also new companies that are coming in and one of them is interested in putting 1 billion dollars as investment. Our target is that by the end of the year, through our sustained investment campaign, we can increase our production to at least 2million to 2.5 million barrels so that OPEC will be forced to beg us to stop production or slow down instead of begging OPEC to allow us to sustain what we are doing. Last year we had to do a lot of lobbying because if they had followed what the previous government had said, our quota would have been less than 1.3 million bpd. We are meeting our own quota and we are making all the decisions we need to make to surpass this OPEC quota. I will not bore you with too many other issues. But let me also say that one of the reasons why investment companies are coming back is that as a policy, we decided to eliminate all the bottlenecks and I can tell you for a fact that bureaucracy in the system has been completely eliminated. You will agree with me that in the past companies will apply to renew licenses and it would take one to two years, because someone has to know someone who knows the minister, but since I came all that has been eliminated. You don't need to know me before I sign your extension and you don't need to know me before I cancel your own. We must set uniform standards. Just like I do not expect you to come to my office or know me to sign your license. If you do not perform according to the terms of your license we will also cancel it, let us give it to those who have proven technical and financial capacity to explore these oil wells.
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The issue of sustainability is very important. What confidence can you give investors that this administration will not suddenly begin shifting goal posts?
We have done what a government is expected to do to attract investments. With President Tinubu's Executive Orders, it is a signal that we mean business and these oil giants are taking us seriously. I am very happy to announce to you that we have a company that I don't want to tell you their name but in the next couple of weeks will announce a $10 billion dollars investment in the country in deep offshore These were companies that left Nigeria because they believed that we had inconsistent policies and the atmosphere was not favorable but following this administration's policies of deliberately creating the best environment that can compete globally, they are all coming back. Another company will invest another 5 billion dollars and these are not stories, but I do not want to pre-empt the announcement so let it be that when we announce it Nigerians will know that no country can compete with Nigeria in Africa and we are still dominating that position. And these achievements are being recorded because of President Tinubu's focused leadership and determination to make a success of that space. The only way you can sustain an increase in production and generate the money this country needs to finance its economy program is the oil and gas sector. The quickest way to our economic prosperity is the oil and gas sector. Every country that has oil prioritizes its investments in the oil and gas sector and that is what we are doing, to see how we can create an enabling environment so that companies can come and invest. One of the biggest achievements of the ministry of petroleum resources is also sustaining the peace in the Niger Delta. Without the sustainability of peace, oil companies in that region would not have been able to operate. I will give you an example. When the Avengers struck some years ago, we went into the creeks and engaged them. We have to continue to give peace a chance as without peace, sustainable production will be a mirage. So for us, one of the biggest achievements is engaging the relevant stakeholders in the region to sustain the peace so that oil companies will continue to return and reinvest so that we can generate the monies we need for economic development. I am proud of the progress we have made over the past year. While much work remains to be done, this administration's outlook for the sector remains positive. I am confident that with continued dedication and collaboration, we will achieve our goals and secure a prosperous future for Nigeria's oil and gas sector.
We are seeking the support of Nigerians to allow us to realize the efforts we have put in place to achieve these investments and the many more that are coming. I do believe that working together with all stakeholders in the industry Nigeria will soon return to its pride of place in the comity of oil producing nations in the world and Africa in particular.
