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“NIGERIA ENERGY EVOLUTION: A GLIMPSE AT THE FUTURE” By: David Olurunleke, Chuks Otunyo & Ogbonnaya A. K.

The Chief Celebrant, Pioneer GMD of NNPC, Chief F.R.A. Marinho and his wife Chief Mrs. Yetunde Oreoluwa Marinho

The premier Group Managing Director of NNPC, Chief Festus R.A Marinho recently turned 80. As part of the Octogenarian’s birthday celebration some friends of his, serving and retired Oil and Gas industry giants, came together and organized a symposium in his honour.

The occasion was star studded with Captains of industries and distinguished men and women from all walks of life. Most of the former Group Managing Directors of NNPC: Dr. Thomas M. John, Mr. Lawrence Amu, Chief Chamberlin Oyibo, Dr. Jackson Gaius-Obaseki, Engr. Funsho Kupolukun were in attendance.

Three former Honorable Ministers of State for Petroleum Resource graced the Occasion: HRH Dr. Edmund M. Daukoru, the Nengi of Nembe Kingdom and former Minister of State for Petroleum Resources was the Chairman of the day; Chief Emmanuel Odusina, former Minister of State for Gas and the erudite, urbane and unassuming former Minister of State for Petroleum, H. Odein Ajumojobia (SAN, OFR). The renowned Don of Lagos Business School and PAN African University, Prof. Pat Utomi; the Chairman Board of First Bank of Nigeria Plc and former Group Executive Director Corporate Services NNPC, Alh.Ibrahim D. Waziri and a litany of other Eminent Nigerians.

The gathering was indeed an assortment of personalities, professionals and leaders of thought from the academia, commerce and business, Government and of course the Petroleum industry.

The Chairman of the ocassion, His Royal Highness Dr. Edmund Madubebe Daukoru, in his opening remarks, acknowledged Chief Marinho as “the father of Oil & Gas Industry in Nigeria”. He recalled Chief Marinho’s constructive engagement with the IOCs and how most of them (Nigerians) working for Shell benefited from his protective arms. The royal Father said Chief Marinho was a very good Manager of human resources and a visionary leader. He averred that the Nigeria content we harp about today was perhaps pioneered by him and stressed that Chief Marinho is a very kind man, who stands for integrity and forthrightness in his dealings with people. He prayed for his good health and long life.

The keynote address titled “Nigeria’s Energy Evolution: A glimpse at the future” was delivered by the former HMSPR, Odein Ajumogobia. It turned out to be a fourteen page well researched academic treatise. He traced the Nigeria Oil and Gas evolution from the 1903 to the present day. Highlighting Land mark events and naming Companies, persons and regimes whose actions and inactions have in various ways contributed to the evolution of the Nigerian Oil & Gas to the present day.

In very many ways, with dates, facts and figures he took his audience through the many episodes of the sector’s booms and bursts and its various price regimes.

The former Minister lamented that aside from membership of the Organization of Petroleum Exporting Countries (OPEC), the Country has not done anything concrete to act as a buffer against the cyclic global price fall of crude oil. He pointed out that the nearest we have come to that was the creation of Sovereign National Wealth.

He went further to share his personal experience as an HMPRS, when he tried to propose a formula for Government to adopt a policy of saving for the raining day under what he termed the “ Oil risk market and hedging”. He narrated it this way.

“In July 2008 the 2008 the Oil price was above $145 per barrel and many respected commodity experts and financial analyst including the highly influential Goldman Sach were predicting $200 pbd Oil. I decided to explore a proposed hedging strategy and had presentation made to myself and the then Minister of finance and the President’s Chief Economic Adviser by respected international firms, on the simple proposition but complex mechanism of Government looking in a price of future production at a discounted current price, to guarantee a stable and predictable revenue stream over a defined period with scope to participate a significant upside in the event of a further price hike.

Some former Group Managing Directors of Nigerian National Petroleum Corporation (NNPC) that attended the symposium L-R: Chief Chamberlain Oyibo; HRH, Dr. Edmund Daukoru; premier GMD, Chief Festus R. A. Marinho; Engr. Fundho Kupolukun; Mr. Lawrence Amu; Dr. Thomas John and Dr. Jackson Gaius-Obaseki

The proposal was sadly but perhaps understandably dismissed by the Finance Ministry. The political risk of implementing a hedging strategy, as Mexico for example has successfully done over several years was seen as simply too high.

Apart from the issue of transparency or lack of it, that could give rise to charges of corruption. If the Oil price had hit even $160 bpd, it was obviously much easier for the Ministry of Finance to simply blame the subsequent crash of the price to $32 per barrel from $140 per barrel on Int’l Oil market than to face the prospect of a probe by the National Assembly Committee followed perhaps by an EFCC inquiring...”

He went on to point out that apart from the albatross of Oil price Volatility, Nigeria’s Oil and Gas sector is bedeviled by many self-inflicted problems. Such as pipeline vandalism, Oil theft, Militancy, Aging assets, Poor funding, inconsistency in policy formulation and implementation and other extraneous factors like the shale Oil & Gas revolution with the resultant loss of the USA market.

He concluded with a warning that besides these aforementioned challenges, “the bigger threat to the industry is the constraints to new investment, especially in the deep offshore or in unexplored basins, deriving from the uncertainty of the commercial and fiscal terms that could attend any such proposed new Investment.”

Many other people made much thought provoking contributions. Engr. Babs Omotowa advocated strongly that more emphasis should be made on Gas; Engr. Obembe called for reposition of the industry and speedy infrastructural rehabilitation, Chief Chamberlin Oyibo called for immediate and complete deregulation of the downstream sector so that government could re-channel the enormous amount being expended on Subsidy to develop the upstream and increase our reserve base.

The symposium seem to have the consensus of strong voices calling for a critical look at our continued membership of OPEC and a stronger call for a total abrogation of the subsidy as well as a speedy passage and urgent implementation of the Petroleum Industry Bill (PIB).

At end of the session, Chief Marinho the octogenarian gentleman, on whose behalf the symposium was organized, had to add his own voice to the discourse. He thanked the Organizers of the program and appreciated everyone present. He said that though the gathering was in his honors but it really wasn’t about him. He stressed that it is about the industry that laid the golden egg. He revealed that throughout his years as the CEO, he served under the military where decision making was short and without the shackles of bureaucracy.

He said he is likely to be the only GMD to get a legislation signed into law in seven days. He thanked God that he was lucky to have served under Heads of state who saw his proposals - whether it is the refinery construction, the Pipelines or human capacity development, for what it was: an effort at national development; and gave him all the necessary approvals and supports.

He urged the powers that be to consider every issue highlighted at the symposium and ensure that urgent steps are taken to address them.
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