The President, Nigerian Association of Petroleum Explorationists, (NAPE) Abiodun Adesanya in this interview with Ayobami Adedinni and Dotun Akintomide speaks on restructuring, impact of the Local Content Act and other issues. Excerpts.
Sir, with the fact that Basins are scattered all over the country, how do you think the agitation in the Niger Delta can be addressed?
You know that the agitation coming from there is intense and it is affecting the whole of the country because we are not able to produce as much as we can coupled with the fact that the oil price is also low. Commonsense dictates that you can go and look for oil somewhere else, in order to give the whole country a sense of responsibility.
So, what I am trying to say is that every region that is the North, East, South West, South-South and other regions should have a quota of resources they can contribute to the table. The other thing I mentioned is that the Niger-Delta is well explored.
The other basins are not as well explored. We need the companies that operate in the country to do a bit of data gathering on exploration work that would lead to drilling and discovery of oil and gas. We still have a number of areas that the operators have not been touched.
Niger Delta is not the only sedimentary basin for crude oil deposits in Nigeria. We have about half dozen sedimentary basins in this country.
To the west, we have the Benin basin which includes Lagos, Ogun, and parts of Ondo, Badagry, Anambra, Togo, and Benin and definitely in the North.
Do you think restructuring will address the issue of state ownership of oil?
Well, because oil and gas will continue to play a prominent role in the economic life of this country despite all the efforts to diversify the economy. There are two types of mineral resources. We have Oil that is mineral resources and solid minerals that is mineral resources. You find out that most solid minerals are found at a relatively shallower depth but Oil and Gas are found at a much deeper depth.
So, what happens for resource control – if we have to call it is that the tax system has to be discriminatory. Some charges will apply. So, if you give me as Bayelsa State the right to mine, explore and produce the oil within my state, then if I refine, Bayelsa State must pay tax to the Federal Government. So you are using one stone to kill two birds. This is in the sense that Bayelsa would see itself as controlling the resources within its land and then, it would reduce the agitation and the challenges that we have. So, it is needed. Then when you have a state like Osun State where they have resources like gold, those ones too can attract another regime of taxation.
So, you have taxation differentials, which take care of different things. By that, everybody will believe that ‘Yes, I am controlling the resources within my state.’ That will counter the agitation for resource control. I don’t know if the Federal Government really has any long-term interest. It is the money that comes out of it that it is interested in. So, they can surrender management and control and just make sure that they have an efficient team for taxation to handle that.
With the downturn in oil prices, do you think this is the right time for more exploration?
Well to be honest with you, no one knows how long the oil price downturn will last. As a country, if we don’t explore, you don’t replace what you are using up. For your generation and the one coming after you, somebody must find what we call new oil.
Oil is a finite resource. It can finish. If you don’t keep up with finding, it may run out. The amount we spend on new exploration is not giving us enough discoveries. So, we need to step up on exploration and we find new oil, that means when the lifeline is assured. So, it’s very important that we continue to explore.
Has oil exploration worn out in the Niger Delta?
Well, the reserves have been depleted. I can’t give you the figure because I don’t have it. You know Shale Oil that they have in the USA. We have not started exploring ours. Some of them are available in Niger Delta especially the edges of the Niger Delta. So, as you produce, you must replace. If new ideas come, some of the places you have explored before you might go back there and find more oil. That’s why there has to be some investments in research and development as well.
Seven years after, what is the impact of the Local Content Act?
We have done very well. We gave a target of 70 per cent but we are at 45 per cent in compliance level right now. So, we still have a lot of work to do but even the little that we have done has significantly transformed the industry and re energized our people by giving them opportunities to showcase what they know.
The issue of data discrepancy has been a major one in the industry in the sense that NNPC will bring out a figure while OPEC comes up another. What do you think is the cause?
I think the difference is that some of the figures NNPC produces, not all of it is for export. Do you understand? Some of them are consumed locally especially in the area of Gas most of which is consumed locally. It’s only the LNG that is exported. So, EIA and OPEC only restrict themselves to what goes out externally.
Is there any challenge accessing the Nigerian Content Fund (NCF)?
There is no problem accessing that fund. It is just that there are some measures that need to be put in place. There are certain key aspects that must be put in place before you begin to give out money. But the most important aspect is that you have to have a sort of guarantee. The Executive Secretary of NCDMB has already said that is going to happen very soon.
How many indigenous firms have accessed the fund?
Nobody has accessed it. It is about $600 million and they are just about to start.