By Jackson Jo- Mthembu, Lagos
Nigerian regulators have treated the country’s independent E&P companies, quite shabbily, at a critical time for both the nation and the players themselves, according to Layi Fatona, CEO of Niger Delta Petroleum Resources.
“We indigenous independents are like orphans”, he said at a recent webinar on the Pandemic-Induced downturn and Nigerian Petroleum Industry, adding that while the entire group of Oil and Gas producers was left out of various palliatives sponsored by the Federal Government and its agencies, “not one regulator stands to be recognized for the Nigerian Independents, sadly.”
Fatona argued that “Nigerian independents own the future. We are the only ones to ensure Nigeria’s Future Energy Independence. Nigerian Independents account for c.20% of Total Oil Production Combined, we are the largest suppliers of Domestic Gas to the Nigerian Economy. We continue in all circumstances to INVEST in Nigeria’s Energy Industry and among the over 15 of us that truly operate our fields, we take the everyday brunt of Insecurity (Pipeline Vandalism, Illegal Bunkering & Kidnapping). Perhaps – We Are the “Stone” the Builder is Rejecting or Neglecting”.
The webinar was organised by Centre for Petroleum Information, a 20-year-old Policy Think Tank.
With a global pandemic forcing travel restrictions that have held down crude oil prices, Nigerian independents have been challenged by the “inability to operate and produce at break-even cost, some shut in of production operations, difficulty in meeting Royalty, Taxes and Debt financing obligations, disengagement of staff and employees in some cases”.
Fatona asked Nigerian regulators to “act as critical enablers and support for advancing the case of the Nigerian Independents”, and called on “agencies such as the CBN need to engage local financial institutions on the possibility of restructuring existing debt obligations to facilitate survival of the industry”. He argued for “more emphasis to be placed on Operational and Cost Efficiency”, and declared that “the Petroleum Industry Bill is needed NOW to create the right fiscal environment for new development investments”.
Nigerian independents, by Fatona’s definition, are Indigenous oil and gas companies with holdings of marginal fields or oil blocks. The assets are in the Niger Delta province in Nigeria, comprising Land, Swamp and Offshore locations. Their gross and equity production, individually, range from 1-85,000BOPD. They are purely indigenous or, in some cases, with minority foreign interests. They operate under JVs, PSCs and TSAs. They are funded by Nigerian/International Lenders OR carry arrangements from IOCs.