*Blames govt participation for downstream asset disposal
The Society of Petroleum Engineers, SPE, Nigerian Council, yesterday, disclosed that the inability of the country to fix its refineries was more as a result of institutional challenges than technical challenges.
Addressing newsmen in Abuja on its forthcoming 2020 Oloibiri Lecture and Energy Forum Series, Chairman of the SPE Nigeria Council, Mr. Joe Nwakwue, noted that the fact that the country was unable to revamp the refineries after several years of dilapidation, was a reflection of the failure of the state to effectively manage its assets.
Nwakwue explained that the refineries can be revamped, adding that the problems of the facilities were not technical but institutional.
He said, “Running refineries is not rocket science. Refineries are run everywhere in the world. I had worked in a company whose refinery built in 1932, was still running till today.
“That we cannot run the refineries here have more to do with institutional challenges than technical challenges. We can see that private refineries are coming and they would be run. It is not that we cannot run refineries, Nigeria can run refineries.
“It talks to a deeper issue; the failure of the state to do what needed to be done. I believe that the move towards private sector refining is the answer. The refineries are not working not because running refineries is rocket science, but because we have not put our house in order.”
He also blamed the divestment of international oil companies from the Nigerian downstream petroleum industry on government’s participation in the sector.
According to him, the reason why asset disposal is rampant in the downstream sector was because it is impossible for a private sector player to compete against a state-owned entity.
He, however, noted that the international oil companies’ divestment from the downstream sector was not a signal of loss of confidence in the sector, noting that if the role of the Nigerian National Petroleum Corporation, NNPC was reduced in the market today, a number of multinationals would return to the sector.
Nwakwue said, “The disposal from the downstream sector is because it is difficult to compete against a state-owned entity. So why would you create a situation where the NNPC becomes a major supplier of the market and you expect those entities to exist and continue to compete with an NNPC? It does not.
“No sensible investor goes to compete against a state-owned entity, because you will not win. This is because the state-owned entity has all the power and strength of the state behind it. You cannot win. Your best bet is to partner with the entity.”
He further cautioned the federal government against the disposal of its stakes in oil and gas assets at the moment, noting that with the current declining price of crude oil in the international market, the government would not get the fair value from the assets.
He disclosed that the theme of the 2020 OLEF, tagged, ‘Asset acquisitions and divestments in the Nigerian oil and gas industry: Status, challenges and the way forward,’ would afford industry stakeholders the opportunity to clarify issues regarding asset disposal, host communities interest, abandonment and de-commissioning of oil assets.