The Petroleum and Natural Gas Senior Staff Association of Nigeria PENGASSAN, says that the Nigerian government must ensure that adequate security is provided for the operators in the oil and gas sector in the country.
Addressing the media on Monday while reacting to the recently signed Executive Order by the Nigerian President bordering on the cost of production in the country’s upstream oil and gas industry, the President of PENGASSAN, comrade Festus Osifo, stressed that the provision of security in that sector globally, lies within the purview of the government.
He said that players in the sector should not be left alone to bear the cost of security.
“I mean, the insecurity in Nigeria has also delved into the oil and gas industry. One of the challenges that is affecting us today in Nigeria oil and gas industry is that the cost that the upstream companies spend in protecting their facilities, in protecting their infrastructure, both in land, in sea, shallow waters, deep waters, etc., is quite prohibitive.
“We have said it over and over again that if you go to an average installation that is in offshore location, you are going to realize that for every one installation, you are going to have minimum of three or four security vessels and these security vessels will be manned by NAVY personnel.
“These security vessels, you pay for them on a daily basis, you pay for the crew on a daily basis, you have to fuel them on a daily basis.
They are standing by and trying as much as possible to ensure that there is no intruder into these facilities whereas in other countries, it is not like that”, Osifo stated.
According to the PENGASSAN President, the reason the majority of the oil and gas operators, the international oil and gas companies started leaving Nigeria was principally because of insecurity management structure, and clearly define what the operational structure should be.
“Majorly, because the cost of securing facilities, the cost of securing infrastructure in the Nigerian oil and gas industry became prohibitive.
He believes that issue of insecurity in the sector was the reason places like Mozambique, Guyana among others became attractive to operators and called on the Nigerian government to take urgent measures to address the issue.
Comrade Osifo however, commended the Executive Order’s proposed tax credits for companies that are much more cost efficient, where companies reduce their cost of operations, they could enjoy up to 20 percent tax credits saying it was a good step by the present administration.
“There is also the tax credit that will be given to companies who would invest in producing the non-associated gas.
As you know, when you produce oil, most of the wells, they have gas. But when you produce oil from the well that has gas, it is because you are looking for oil.
“Some of these are fled, while some are also passed through the value chain, but if you produce gas, there are some wells that are principally gas wells. So when you produce gas or when you invest in such wells, you have up to 20% tax credit.
“For us, that is quite commendable. For you, for us, that is quite something, that is quite good. Because when investors take opportunity of this, it’s going to increase our gas production as a country“, he said.
Comrade Osifo in the media briefing he themed “State of the nation“, also spoke on the Incessant pipeline vandalization saying that government and security agencies must be alert in the protection of the facilities.
He disclosed that some operators in the sector have had to bring security experts locally and internationally to protect their interests.
“On the issue of pipeline vandalization, a lot of these companies have deployed private drones.
A lot of these companies have brought in security experts, even from abroad, on how the issues of pipeline vandalization could be solved.
“Whereas in other countries, these are facilities that are protected by government.
“So government must be alive to its responsibility to ensure that the oil and gas infrastructures across the whole capital of Nigeria are well protected.
“That was the first item in the executive order. We have other items there, which for us, they are quite good”, Osifo said.
Proffering solutions on how to make the nation’s refineries work, PENGASSAN called for the adoption of the NLNG model in the management of the facility.
“The last 15 years or more, we have called on government to bring about the NLNG model in the management of the refineries because that model has worked.
“A model where you have the international oil companies partnering with the MNPCL are told to be able to drive value in the NLNG. So why can’t we bring about that same model, that similar model, in the management of our refineries?
“By bringing in investors, internationally certified investors that have built or managed refineries all over the world, government will now reduce their shareholding to much lower, 49%, and you allow these investors to now take the lion’s share, as it is today in NLNG, where the private companies, Shell, Total Energy and E&R, they have combined shares of 51%, that government has 49% and this model has worked
“So if this model has worked elsewhere, why can’t we bring this model into operation in MNPC Limited, because when this is done, we will reduce policies it will reduce government’s interference at all levels“, he stressed.
Osifo also disclosed that the instruments that brought about the NLNG clearly spelt out the funding structure, the management structure, and clearly define what the operational structure should be.
“That is why NLNG is profitable today. It is making billions of dollars per year as profit, so why can’t we bring this similar structure to the operation of the three refineries?“, the President asked.
Comrades Festus Osifo also commended the Nigerian President, Ahmed Tinubu for honouring those he called democracy heros, with National Awards including labour leaders during his national broadcast on June 12th to mark Democracy Day in Nigeria but lamented that more labour leaders should have received the honour.