**Interview with Magnus Onyibe**
**Q: Mr. Onyibe, can you tell us about the current challenges facing Nigeria’s oil and gas industry, particularly in light of recent remarks by key investors like Tony Elumelu and Aliko Dangote?**
Magnus Onyibe: Certainly. The alarm was initially raised by Tony Elumelu, chairman of Heirs Holdings, when he invested over $1.1 billion in 2021 to acquire a 45% stake in the OML 17 oil drilling asset. This venture was significant, especially considering that major players such as Shell, Total, and Eni had relinquished their stakes, leaving the Nigerian National Petroleum Corporation Ltd (NNPCL) with 55% on behalf of the Nigerian people.
However, in 2022, Elumelu discovered that a considerable amount of the crude oil produced from his wells was being stolen even before it could reach its intended destination through the Escravos pipeline. This rampant theft, as he pointed out in a recent interview with the Financial Times, accounts for nearly 18% of production. Elumelu compared the situation to serious crimes, highlighting the urgent need for the government to address this issue.
**Q: How has the government responded to these concerns?**
Magnus Onyibe: In response to Elumelu’s concerns, a special task force has been established to combat the oil theft syndicate. This task force has reportedly had some success, allowing the NNPCL to project an increase in oil production from 1.3 million barrels to 2 million barrels next year.
However, the downstream sector is facing its own challenges. Aliko Dangote, another significant investor, has expressed concerns about the lack of crude oil supply for his newly launched $19.5 billion refinery, which has a capacity of 650,000 barrels per day. There are accusations against International Oil Companies (IOCs) for withholding crude oil, which has delayed petrol supply to the Nigerian market. The Vice President of Dangote Refinery, Davakumar Edwin, has noted that they’ve only been able to obtain crude from limited sources, indicating a broader issue in the supply chain.
**Q: What steps are being taken to improve local refining capabilities?**
Magnus Onyibe: In light of these difficulties, President Bola Tinubu has created a committee led by Finance Minister Wale Edun to develop a framework that allows crude oil to be sold in naira to local refineries, starting with the Dangote Refinery. This initiative aims to localize petrol production and alleviate the national treasury’s burden of providing foreign exchange for imports.
The outlook from Dangote’s refinery could significantly impact local fuel prices and reduce long queues for petrol, an issue many Nigerians hope will see some resolution.
**Q: Why do you think the involvement of private investors like Elumelu and Dangote is pivotal for the industry’s future?**
Magnus Onyibe: Their involvement represents a critical shift from government dependence to private accountability. Both entrepreneurs have made substantial investments and are determined to protect their interests, which contrasts sharply with the past indifference of public officials. The lack of a proper metering system for crude oil production reflects a broader neglect of Nigeria’s interests that could have lasting repercussions if not addressed.
What’s clear is that these disruptions by Elumelu and Dangote should be seen as opportunities for reform rather than obstacles. Their pressure is driving the much-needed transformation of an industry that has faced longstanding issues of accountability and efficiency.
**Q: How does Nigeria’s history with oil exploitation feed into the current situation?**
Magnus Onyibe: The legacy of oil extraction and export, rooted in colonial practices, continues to shape Nigeria’s economic landscape. Under colonialism and beyond, the focus has often been on exporting raw materials rather than developing local industries. This pattern is increasingly unsustainable, especially given the recent establishment of local refineries like Dangote’s.
**Q: In conclusion, what message do you want to convey regarding the future of Nigeria’s oil and gas industry?**
Magnus Onyibe: It’s essential for Nigerians to understand the broader implications of these challenges within the oil and gas industry. With the right reforms, including increased local refining capacity, Nigeria could transform its economy significantly. The involvement of private sector players is crucial for ensuring that we finally break free from the cycle of dependency that has historically hindered our progress.
