Nigeria’s strength in the stormJune 9, 2020
Engr. Simbi Wabote, executive secretary of the Nigerian Content Development and Monitoring Board (NCDMB), talks to The Energy Year about the Nigerian oil and gas industry’s ability to withstand the Covid-19 pandemic and harness opportunities for growth. The NCDMB promotes the development and utilisation of local content in Nigeria and oversees the implementation of the country’s local content legislation.
How do you view the Nigerian oil and gas industry’s ability to withstand the pandemic?
The Covid-19 pandemic is affecting the entire world. It is not isolated to Nigeria or Africa; it is all around the globe and this is the first time since 1918 that we have witnessed a pandemic of this scale.
However, I firmly believe that it is something that provides not only a new set of challenges but also great opportunities for the whole world. Personally, I am an incurable optimist who believes that behind every disaster there is an opportunity and behind every dark cloud there is a silver lining. If anything, this pandemic has provided the world with the opportunity to reboot itself.
We need to take a look at everything we do and question ourselves in terms of our ability to enhance self-sufficiency and produce our own products. We know some countries, even the developed ones, have struggled to secure sanitiser or face masks over the past few months. One of the benefits of globalisation has been the ability to source items from all around the world. That concept was put to the test during this pandemic.
This is the time to look inwards. The pandemic’s impact is particularly reflected in our ability to sell crude oil and other products. However, for Nigeria, the local content journey we started 10 years ago in the oil and gas sector has come in handy for weathering the storm. We have been able to use the past decade to develop a lot of Nigerian suppliers, build new capacities across the oil and gas value chain, and train Nigerian engineers to do most of the work that had been done by foreigners in the past. So, to a large extent, we have prepared ourselves.
That is why I was particularly pleased with the signing of the Nigeria LNG Train 7 EPC contract with Saipem. I am sure this deal came as a surprise to many investors. However, we are determined to go ahead with the development of Train 7 amid the current crisis and we also have other major projects in the maturation funnel.
Our level of resilience in the oil and gas sector has increased to a large extent. We did not bullishly drive our local content development. That would not have served our interests, nor would it have helped the development of our gas industry. Rather, we were pragmatic in our approach. We are now reaping the fruits of what we started 10 years ago.
How is digitalisation important to Nigeria’s national oil and gas players in navigating the crisis?
They are prepared to enhance digitalisation. As a result of this pandemic, everyone has come to realise the importance of digital infrastructure. Normal life had to change from face-to-face meetings and travelling long distances to conducting online meetings. Nigerian entrepreneurs and businesses have encountered plenty of opportunities coming out of digitalisation.
In fact, a lot of them have started to position themselves to take advantage of this period. That is why we were able to quickly adapt to the new normal during the lockdown, as we have the latent infrastructure waiting to be fully deployed. Now, all the people in the tech sector are further ramping up their capacities to embrace digitalisation and artificial intelligence. The pandemic has prompted us all to rethink information-sharing practices and technology deployment around the world, and Nigeria is no exception to that.
How will new technologies revolutionising oil and gas exploration and production impact the country’s labour market?
Luckily for us, the oil and gas sector has always been at the forefront of embracing new technologies. It is unlike any other sector. Today, we can have 2-kilometre-deep wells drilled offshore from a safe distance via automated systems. That is a result of new technologies. By nature, the oil industry has always embraced state-of-the-art techniques and forward-thinking solutions.
The common fear of people that digitalisation will bring about unemployment is only natural. In Europe, when the first automobile was invented, there was this fear that people who manufactured horseshoes and built horse-drawn carriages would lose their jobs. However, the automobile industry contributed positively to the increase in employment. Factories were built to manufacture automobiles which employed more people. Similarly, the opportunities stemming from digitalisation are greater than what we see today.
It may be a new area for many of us, but the opportunities it comes with are greater than the disadvantages it has. Nigeria has come to begin to embrace the potential and role of digitalisation in moving the oil and gas sector forward. We have to prepare ourselves for technology evolution as the world continues to evolve. It should not come as a shock to anybody.
What will be the key areas of growth for Nigeria’s indigenous oil and gas companies post Covid-19?
Opportunities for indigenous players are enormous. With international companies beginning to rethink their investments globally and trying to rationalise their presence in certain areas, indigenous players must be ready to capitalise on new opportunities and fill in the gaps left behind by internationals. The truth is that in a country like Nigeria, where we all depend on oil and gas, the sector will continue to play a significant role in our economic activities. Portfolio rationalisation will bring opportunities to indigenous players.
There are also plenty of marginal field development opportunities that indigenous players are looking at. Nigeria used to be heavy in terms of land and swamp operations. But today, most of the multinationals are moving to the deep offshore, leaving the onshore operations for local players. That area has not yet been exhaustively tapped by indigenous companies. Most of them are looking forward to making the most of these marginal fields in the coming years.
In addition to upstream, there are huge opportunities in petroleum products refining and product distribution for local players. The country’s refining capacity is not adequate. We still import most of our refined products. We have a huge investment coming through the Dangote refinery, which is going to refine about 650,000 bpd of crude. It will be one of the biggest refineries in the world. We have smaller indigenous players who are investing in modular refineries to increase the country’s refining capacity.
If we can refine most of our petroleum products, the sub-Saharan Africa region will be a huge market for us.
Why should international investors stay focused on opportunities in Nigeria’s oil and gas industry?
International investors will look at their portfolios, trying to determine which regions and continents are most favourable to them in terms of human capital, existing and available hydrocarbons reserves, ease of doing business and return on investment. They are going to have to restructure their portfolio investments across Africa and Nigeria will continue to provide huge opportunities for them.
Nigeria still has so much untapped potential. We have proven reserves of almost 200 tcf [5.66 tcm] of gas and we have not even utilised 30% of that. We also have substantial untapped crude oil reserves. I sincerely believe that Nigeria is still an attractive place in terms of human capital and intellectual capacity.
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