Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources : Interview

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Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources

Interview : Emmanuel Ibe Kachikwu

How is the Petroleum Industry Governance Bill expected to impact the gas and oil sector, and what is the current status of the bill?

EMMANUEL IBE KACHIKWU: The bill aims to define a framework for the governance of the petroleum industry by creating new institutions as well as modifying pre-existing institutions. President Muhammadu Buhari has declined to assent to the bill in its current form because of concerns about its fiscal impact, the powers of the minister of petroleum, and the role of some institutions in ensuring orderly and optimum operations within the petroleum industry.

What effects will the planned reforms to the petroleum sector have on the economy?

KACHIKWU: The proposed government reforms to the sector are laid out in three policy documents. The Gas Policy seeks to ensure the development of a viable natural gas market, which is intended to drive industrialisation and improve economic conditions in the Niger Delta and in Nigeria as a whole. The Oil Policy is directed towards developing the midstream oil industry. This involves the processing of hydrocarbons through refineries and the restructuring of existing midstream infrastructure by ensuring that a commercial framework exists to drive investment in the sector. The Fiscal Policy seeks to ensure early and dependable revenue for the state, cost efficiency, international competitivity and fiscal rules of general application. These policies, if enacted, have the potential to enhance diversification from purely extractive activities into domestic utilisation of hydrocarbons for power and manufacturing.

What steps is Nigeria taking to encourage more investment in the oil and gas sector?

KACHIKWU: The proposed new policies will remove the barriers currently in place for new investors wishing to enter the oil and gas industry. Increased investment will be facilitated by creating a more straightforward and accessible system for participation in the upstream and midstream segments of the oil and gas value chain. An example of this is the Gas Flare Commercialisation Programme which launched in September 2018, through which the government aims to have a transparent and competitive framework for gas flare capture and monetisation.

What are the government’s plans to further tap into the sector’s potential?

KACHIKWU: The plans include a robust fiscal system for gas that is not dependent on oil. These proposals include modifications to Section 39 of the Companies Income Tax Act to further strengthen gas utilisation in the domestic market. In addition, there are plans to place more emphasis on gas-based licensing rounds to ensure access to stranded gas resources for use in power and gas conversion industries, such as fertilisers and petrochemicals. The October 2008 regulations are also being reviewed in order to improve the gas pricing framework through the gas aggregation process and strengthen the role of the Department of Gas Resources as a commercial regulator.

How is the capacity for refining crude oil expected to develop in the next few years?

KACHIKWU: The proposed Dangote refinery, expected to be completed in 2020, will significantly increase Nigeria’s nameplate refining capacity. The National Petroleum Corporation is involved in negotiations to improve the existing capacity of 445,000 barrels of oil per day. If these plans come to fruition, Nigeria’s refining capacity will double to almost 1m barrels of oil per day by 2020. This new capacity will be sufficient to meet the near-term domestic demand, which allows for the export of large amounts of distillates. In line with this increase in production, imports of refined petroleum products will also be curtailed.

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The Report: Nigeria 2019

Energy chapter from The Report: Nigeria 2019

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