The recent memorandum of understanding (MoU) signed by the Nigerian National Petroleum Company Limited (NNPCL) and the Nigerian Content Development and Monitoring Board (NCDMB) with international oil companies will enhance crude oil production. The main goal of the tripartite agreement signed at the NNPCL headquarters in Abuja is to drastically reduce the contracting cycle in the sector to an optimal level of not more than six months. Additionally, this will improve the ease of doing business, reduce cost, and drive efficiency, which will translate to production growth, increased revenue, and enhanced profit.   

Besides, the MoU is expected to contribute significantly to the double-digit economic growth rate agenda of the federal government and generate value for investors, oil companies, and host communities. Beyond this, the management of NNPCL has unveiled other key benefits of the agreement, which, it said, would make open and selective tender contracts competitive and scale down sourcing tender to 180, 178, and 128 working days, respectively. 

This is in contrast with the current best-effort performance of 327,333 and 185 working days. It is hoped that the MoU will mark a new beginning for the oil and gas industry if the three parties in the deal exhibit sincerity of purpose, accountability, and transparency in the implementation of the agreement. It is projected that a better future in optimal crude oil production will be the ultimate goal, to the benefit of all concerned. It is heartwarming that the collaboration is coming at a time when the oil and gas industry is passing through multiple challenges.  The MoU could prove to be a defining moment in the sector.   

Before the MOU was signed, the previous ones with international oil companies (IOCs) were not closely monitored. This led to a low level of compliance with the agreements. Therefore, the MoU should reflect the present economic realities. The oil communities should be treated as major stakeholders in the oil production business. Incidentally, the tripartite agreement came on the heels of the threat by the Ijaw Youth Council to shut down oil production in the Niger Delta region following the retirement of some of their indigenes in the NNPCL. They alleged that the retirement was ill-advised and ill-motivated. 

Let the government tighten all loose ends that may hamper oil production. It is important to ascertain the volume of crude oil produced at any given time to ensure transparency and accountability in the sector.  The deployment of technology will ensure effective monitoring of crude production for export.  It will also reduce the current delays in granting of agency permits that often result in the high cost of drilling.

The security challenges, including crude oil theft, bunkering, kidnapping, and piracy on the high seas, should be addressed. Statistically, Nigeria loses about 400,000 barrels of crude oil daily to oil theft.  Also, Nigeria lost about $46 billion, or N16.25 trillion, to crude oil theft in 11 years. Unfortunately, the federal government has not mustered the political will to stop oil theft.

Sadly, it has also not been forthcoming with concrete efforts to end gas flaring despite setting up some deadlines. Therefore, there should concerted effort this time around to drastically reduce gas flaring. Apart from the loss of huge revenue, the consequences of gas flaring in the oil-bearing communities of the Niger Delta region are enormous. Currently, Nigeria is ranked the second biggest gas-flaring country in the world. Nigeria lost over N2 trillion to gas flaring in the last decade, while IOCs in the country produce over 2.524 of scf yearly.   

There is no doubt that a seamless implementation of the MoU will bring about development, create jobs, and ensure peace and stability in the country. It will encourage foreign investments. The oil and gas sector must be made to be competitive in line with global standards. Nigeria is currently rated as one of the countries with the highest crude oil production costs in the world. The ugly narrative needs to change. 

With the establishment of the National Production Monitoring System (NPMS), crude oil production can be adequately monitored. The crude oil production data can be easily known. With the Petroleum Industry Act in place, it is hoped that the signed MoU will enhance the reduction in oil production costs and drive efficiency and growth in the sector. 

Source- Sun Newspaper.