Harness Nigeria’s value

• On IJVs: “In the IJV structure, the government can put as much or as little investment as it desires. Like NLNG, it should run well. That’s the way forward.”

• On financing: “Good projects will always get financed. Finance is never a problem except for projects that are not bankable.”

• On NLNG: “Nigeria LNG’s Train 7 final investment decision ought to have been taken much earlier. Consider that Train 6, which was built around 2006-2007. Yet Nigeria is probably the second-largest gas flaring country in the world, after Russia. We ought to have implemented our development plans a lot more speedily.”

• On development: “Nigeria has never been short of plans, but it has been short of willpower to implement. It is not all about reforms, but about drive and the right mindset.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our interview with Victor E. Eromosele below.

How do you assess developments in the gas sector?
Gas development is heading in the right direction but could be much faster. Nigeria LNG’s Train 7 final investment decision ought to have been taken much earlier. Consider that Train 6, which was built around 2006-2007. Yet Nigeria is probably the second-largest gas flaring country in the world, after Russia. We ought to have implemented our development plans a lot more speedily.
We obviously should have developed the petrochemicals and fertiliser sectors to more fully monetise Nigeria’s abundant gas resources. Courtesy of the Dangote Complex, it is heartwarming that we finally took the bull by the horns. NNPC for several years had different plans for building more refineries, but somehow they never panned out. Nigeria has never been short of plans, but it has been short of willpower to implement. It is not all about reforms, but about drive and the right mindset.

Will financing constrain project development going forward?
Good projects will always get financed. Finance is never a problem except for projects that are not bankable. Lenders tend to price-in country risks for Nigerian projects. However, these risks tend to be exaggerated as the attributable country risk premium is often unrealistic. It must be said that with a bit of creativity, you can successfully finance anything.
A great example is First E&P’s USD 750-million financing deal with Schlumberger. Financing oil and gas projects needs creativity, as well as the right underlying structures.

How should the financing structure of Nigeria’s oil and gas industry evolve?
A lot of value is lost by the Nigerian oil and gas industry because of the adoption of the current unwieldy joint venture structure. Much of that can be resolved if the authorities create more NLNG-like entities: incorporated joint ventures [IJVs] for new mega oil and gas projects. All parties will then sing from the same hymnbook and business will be done like business. In contrast, the existing JV structure is grossly inefficient.
In the IJV structure, the government can put as much or as little investment as it desires. Like NLNG, it should run well. That’s the way forward. Nigeria should then be in a better position to attract financing for its projects. Nigeria Inc. can always earn money through taxation and dividends.

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