‘Natural gas development demands long term commitment and trust’ –Charles Osezua - Africa’s premier report on the oil, gas and energy landscape.

‘Natural gas development demands long term commitment and trust’ –Charles Osezua

Charles Osezua was so passionate about the prioritisation of gas over crude oil that he earned himself the moniker, Gas Man, from no other than the legendary Aret Adams who was his boss then at NNPC. A strong advocate of gas production and utilisation, Osezua has shared his thoughts, ideas, interventions and regrets around the subject in his book; The Rise of Gas: From Gaslink to a Decade of Gas. In this interview he throws more light on issues touched upon in the book while highlighting what he thinks is right and wrong with the Decade of Gas.

What was the trigger for you to put down your thoughts?

I had published a number of papers and articles and also designed and taught a mini-MBA programme around gas development and utilization at a number of institutions, but my efforts at publishing a book failed each time I tried. That was until my wife told me that all she wanted for her birthday was my book on the rise of gas. This request motivated me to re-examine my previous efforts from writing a teaching book to a more simplified book for a broad-based audience while still offering analytical insights on the Nigerian gas industry, from the perspective of a witness.

Audience at the Book Launch, in April 2024

In your book, you described gas as the queen of hydrocarbons. What does that mean?

I use the word “queen of hydrocarbons”, as a metaphor, to help the reader understand the delicate nature of natural gas, the care it requires in handling, and its power to bestow abundant economic blessings  on  nations who are  able to harness it. Natural gas is the cleanest and most versatile of the hydrocarbons. It is both a fuel and feedstock. As fuel, it emits fewer carbon dioxide and particulate and lends itself to the most efficient applications. As feedstock, it is the source of a myriad of petro-chemical products; fertilizers, formaldehydes, and many more which we use in our daily lives.

In Chapter 4, you shared a very sad story about a huge policy summersault that dumped years of research and a gas pricing policy into the bin of history and set us back. Decades later, how hurt does that memory make you feel?

Sad is the word! It is like a bad scare, each time I think about that policy reversal, it reminds me of the socio-economic development we missed out on, and that makes me very sad. Sometimes, it is difficult to explain to people the true cost of that decision; there was the possibility of having five other states become commercial hubs like Lagos. There was the fact that it stopped our nation from becoming one with steady electricity like Aba, a diversified economy led by the Agriculture and agro- processing sector, maybe you can appreciate what I am saying.

Barbarians at the Gate!-“Our midstream gas projects had a tough time. For example we signed with ExxonMobil, to develop the Ibeano project, at the point of FID, the MD, simply told us the gas was no longer available. In his words, “at the time we signed an agreement with you, we also told you we were conducting a study on gas utilization…and now we plan to utilize the gas.”  Unfortunately, more than twenty years later, the gas is still being flared!”

Let me try to explain.

In 1999, when I met the Governor of Lagos State, Bola Ahmed Tinubu, now the President and Commander-in-Chief, of the Federal Republic, to seek the letter of no-objection to build Gaslink, I assured him that the coming of gas in Lagos would resuscitate, the moribund industries, in the seven industrial estates in the greater Lagos area of the State, with the economy of the state permanently changed for the better. He believed me. With cheaper and reliable supply of energy, industries were resuscitated and blossomed, creating jobs and a thriving economy. Years later the industrial landscape of Lagos has changed, powered by gas; with independent power plants, fertilizer plants, petrochemical, etc. What is important here is that what happened to Lagos, could have occurred in Kano, Kaduna, Port Harcourt, and Onitha, because they all had industries that were moribund because they were energy stranded. The proposed gas thermal power plants in Abuja, Kaduna Kano, and Enugu, by the letter of that study and policy, would have replicated what we have today in Aba, in terms of power reliability, and the fertilizer plants proposed in the scheme, for Abuja, Kafanchan, Makurdi, etc. could have replicated the Dangote fertilizer plant in Lagos!

This is just to give an indication, without counting the opportunity cost and consequences of unemployment and in its wake, the security challenges that have bedeviled our nation! Yes, the cost can only be imagined and, it makes me sad and pained.

What we tried to do in Lagos was to show that it was possible to develop gas infrastructure in accordance with international best practices, power industry, create employment and have a thriving economy for the state.

You can now imagine what the Nigerian economy would have looked like, with multiple “Lagos states”, a well-developed Petrochemical industrial complex, a thriving Agro industrial sector, and 24/7 power supply, with all the multiplier effect! That was what we envisioned for the nation. So, it is painful when you reflect on our current realities against the possibility that was assured in that policy.

2020 to 2030 was declared the decade of gas in which Nigeria will place renewed focus on gas as the fuel of choice for powering Nigeria’s industrial ambitions. 4 years in, do you think that we are really in the Decade of Gas?

The declaration of the decade of gas by government, up till very recently, was more or less the usual Nigerian way of doing things; bold pronouncements with little action, following in the footstep of “the accelerated gas development and utilization policy,” of the Goodluck administration, and “the 7Big Wins,” of the Buhari administration, etc.  The decade of gas, to my mind, was supposed to be a declaration of a state of emergency for the gas industry, enabling government to exercise extraordinary powers to set goals in terms of gas resources and infrastructural development are achieved within a set timeframe. Unfortunately, however, we did not see such moves, rather it was business as usual, with gas flare sites and marginal fields being allocated to political jobbers. Hopefully, with the recent efforts at adjusting the price of natural gas for power generation companies, one is cautiously optimistic that government is beginning to think of the issues that have bedeviled the development of the gas industry and hopefully we may, someday get to the promised land, of willing buyer and willing seller which was enshrined in the 1989 policy. The decade of gas will begin for me in earnest when we see massive private sector investment but this will only happen when government creates the enabling environment, and with sincerity reinvigorate the plans and programmes for gas utilization!  Natural gas development demands long term commitment, and therefore verifiable trust.

President Tinubu was instrumental, as Governor of Lagos state, to the successful take-off of Gaslink as a provider of gas to industries. Today, he is president and his Renewed Hope Agenda is focused on prioritizing gas as alternative feedstock. He mentioned the purchase of CNG buses for transportation at the start of his administration. Are you involved in any way in making this happen and how well do you think this would be applied?

You are absolutely correct, his letter of no-objection kickstarted the process. To your specific question, on the Renewed Hope Agenda, the answer is no. I am not involved.

You were not afraid to name names in your book. You made particular mention of the fact that no government official demanded or received a bribe during the negotiations for Gaslink to supply gas to the industrial clusters in Lagos. Has that been your experience in other places you have done business?

Unfortunately, the experience in Lagos differs from other places because in Lagos, both the State and Federal governments collaborated with me; we saw the project from the perspective of shared national interest.  Government officials and the private investors like me at the time, saw each other as collaborators for a common objective, for the development of our country. When I met the then Governor of Lagos State and presented my plan, his response was; “I am looking for people who will help me develop, Lagos into a city the Blackman will be proud of, and your plan fits in right there.” Continuing he said, “you will not present it to me alone, but you will have to present it to the full Executive Council.” That I did, and he set up a committee of Commissioners, under the Chairmanship of Ogbeni Aregbeshola to facilitate my project!

However, this was not the case with most other places where we tried to develop gas infrastructural projects. A case in point was in 2004 when we had an agreement with Addax to develop Izombe gas processing plant in Imo State. We had the support of the state government, but we had unexpected challenges from my own constituency; NNPC. Even with Ministerial intervention, we still could not break through. Eventually, my Board resolved it was better to terminate the project, because we were bleeding money! We were charged $1,300,000.00 for storage, for the more than one year we experienced delays in shipping the storage tanks we had already transported to Long Beach port, California. We were paying, for the gas processing plant we acquired, which was in storage for more than two years, in Houston! It was a painful business decision, but more importantly, it shows how the business environment and people’s attitude to national interests have changed, across the Nigerian business landscape.

NNPC Was an Obstacle-“My experience in Lagos was not the case with most other places where we tried to develop gas infrastructural projects. A case in point was in 2004 when we had an agreement with Addax to develop Izombe gas processing plant in Imo State. We had the support of the state government, but we had unexpected challenges from my own constituency; NNPC. Even with Ministerial intervention, we still could not break through. Eventually, my Board resolved it was better to terminate the project, because we were bleeding money! We were charged $1,300,000.00 for storage, for the more than one year we experienced delays in shipping the storage tanks we had already transported to Long Beach port, California. We were paying, for the gas processing plant we acquired, which was in storage for more than two years, in Houston!

From the success of Gaslink you moved mid-stream. Share with us your unique insights and experiences during those adventures.

The midstream was an adventure with its unique challenges, which were made more complex by intrigues, backstabbing or conflicts of interest. It is important to note that Izombe, which I just used in my analogy, was our first midstream project, it failed. We signed various other agreements with different IOCs, completed feasibility studies and derisked the project, but  at the point of Final Investment Decision, we found out that the IOCs were just leading us on, without any intent to see the project come to fruition!

For example we signed with ExxonMobil, to develop the Ibeano project, at the point of FID, the MD, simply told us the gas was no longer available. In his words, “at the time we signed an agreement with you, we also told you we were conducting a study on gas utilization…and now we plan to utilize the gas.”  Unfortunately, more than twenty years later, the gas is still being flared!

We had a similar experience with Shell, where one of the Senior Managers, finally told me: “I can understand SPDC spending so much money to develop a project, but I cannot understand your perseverance. The truth is, as an IOC, we cannot implement the government Accelerated Gas Development and Utilization policy because you cannot shave a man’s hair while he’s not present.” In the midstream not even the government could enforce its own policy decisions, so both the investors and the nation lost!

However, we were fortunate with PNG, the Egbaoma gas processing plant. There we essentially took over a failed plant, re-engineered it and built it into a Nigerian success story, with plant availability in excess of 95%.  Platform Petroleum gave us the opportunity to prove, that a Nigerian company can build and operate a gas process plant safely. Thank God, we have been doing that now for more than eight years.

The “years of burning money” cost us billons and stopped the country from moving forward. Do you think we will ever recover the lost years?

We can recover the lost years if we get serious but not the resources. Fortunately, we have enough gas reserves to build up our economy and compete favourably.

You wrote glowingly about Aret Adams as a cerebral technocrat and oil and gas industry leader who was ahead of his time. What do you think his legacy is for the Nigerian oil and gas industry?

Aret, was a great explorationist, who led efforts into the Nigerian frontiers. He made great discoveries in the Nigerian Offshore and advanced exploration in the frontier areas of the North. As a visionary, he designed the modern day NNPC, a company that can compete with its peers as a mega national corporation in the global market. Unfortunately, his drive to enthrone meritocracy in the NNPC, cost him his career. I think his legacy is his pursuit of excellence, and today, in recognition of this, the Aret Adams Award is the highest award bestowed on earth scientists by the Nigerian Association of Petroleum Explorationist (NAPE).

The NNPC has finally been unbundled and many of the dreams Aret Adams had are being fulfilled. What do you think he would make of the state of affairs?

The unbundling of NNPC, was a major desire of Aret. Today, NNPC is in transition, but Aret would have pushed for accelerated actions, to see the company take its rightful place, as a mega-national corporation.

This book helps clarify the opacity surrounding the oil and gas business, but it could also lead to controversies as people read and present their own perspectives. Do you think more people who had ring side seats like you should write their own memoirs and biographies?

I hope so. They owe it to future generations to provide an eyewitness account and provide insight into why we are where we are, and what we could do differently.

Finally, you are still an active man. 5 years from now, do you think the bug will bite and you could decide to write another book?

Always a possibility. We leave that to the future.

 

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