Deal Making’ Has Replaced Due Process in Nigeria’s Oil Industry, Says Avur

Deal Making’ Has Replaced Due Process in Nigeria’s Oil Industry, Says Avur

The Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru has said that the current challenges facing Nigeria’s oil and gas sector were caused by lack of transparency and due process on the part of the government in the past eight years.

In his keynote address at the 10th Annual Oil Industry Awards Dinner of the Petroleum Technology Association of Nigeria (PETAN) held in Lagos at the weekend, Avuru stated that deal making in the oil and gas industry has replaced due process and transparency.

Avuru alleged that in the past eight years, almost every transaction approved by the government in the oil and gas was because somebody had struck a good deal and not that due process was followed.

He said the development had led to declining production that was fueled by huge funding gap that crippled joint venture production.

According to him, before one of the deepwater fields came on stream in 2005, the country was already producing 2.4 million barrels per day and that the challenge was how to get the Organisation of Petroleum Exporting Countries’ quota to take the deepwater production to the international market.

Avuru however stated that the joint venture production which was 2.4 million barrels per day in 2005 has since declined to 1.2 million barrels per day, while the 1 million barrels per day target in deepwater is yet to be realised.

He noted that in the good olden days, any approval by the National Petroleum Investment Management Services (NAPIMS), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) for building Floating Production Storage Offloading (FPSO) vessel, for instance, was done after careful studies revealed a pressing need for such an FPSO to be domiciled in Nigeria.

“It should not be because somebody who has a contract to bring an FPSO knows somebody in government. In the past eight years, almost everything approved by the government is because somebody has struck a good deal,” he said.

Avuru stated that the oil and gas industry has become an obstacle to the growth of Gross Domestic Product (GDP), adding that instead of contributing to 40 – 50 per cent GDP growth as in other member countries of the Organisation of Petroleum Exporting Countries (OPEC), Nigeria’s oil and gas industry has become an obstacle, contributing only 14 per cent.

He blamed the poor contribution of the industry to GDP on absence of transparency and due process, stressing that the interaction between government and the industry operators has also collapsed in the past eight years.

Avuru said in the olden days, ministers and top officials of government sat together with the operators but added that this tradition has changed in the past eight years.
“Government has after over a long period of being unwilling to listen has become unable to listen. So, when you are talking, they (government) are absent. The government that formulates policies for us now formulates policies from the point of ignorance because there was no interaction between them and those managing the business and who know where the shoe pinches, particularly in the last eight years. So, deal making has replaced due process,” Avuru explained.

Avuru further stated that the downstream sector has collapsed with the collapse of the 19 petroleum products depots across the country.

“As long as the depots do not work, it doesn’t matter how magical Lagos State Governor is, he won’t rid Lagos of those tankers,” he added.

Source: This Day


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