Business

IOCs’ Exit From Nigeria Worrisome, Not Good For Economy Long Term, Says Nwakwue

The former President of the Society of Petroleum Engineers, Joe Nwakwue, has said that the exit of International Oil Companies (IOCs) in Nigeria is an issue to be worried about, as it will not be good for the economy on a long-term basis.

Discussing Shell’s exit from Nigeria’s onshore oil business in an interview with ARISE NEWS on Thursday, Nwakwue also said that the exit of these IOCs also poses a problem of the trainability of people who will be in the industry in future.

The former president of the Petroleum Engineer society said that although it was good news that Nigeria is picking up the slack brought about by the exit of the international companies in the oil industry, it seemed that the companies were ‘japaing’ as everyone was looking to escape the country.

Nwakwue said, “If they run the asset well, and I hope they do, we will be able to ramp up volumes and production and the country will benefit, that’s one side of it. Overall, it will have a salutary effect on the economy if we can restore the capacities that has been shut in over time. The other one is local capacity building. I have no question in my mind that the persons that are behind this transaction, that is Renaissance, these are capable tested professionals, so, I expect that they will do justice to the asset.

“But on the flip side is what this says to long term sustainability. When the IOCs are leaving the way they are leaving, you’ve got to worry that on a long-term basis, that’s not very good for the economy. We were lucky to have five of the big majors in country, and as we speak now, three have exited the onshore and shallow water, and that to me is worrisome. We need to look at why they are going. You know, we talk about asset rationalization, we talk about all that, but there are serious ease of doing business challenges, and I think that’s contributing to these exits.”

Nwakwue was then questioned on his thoughts on the capacity of those who took over Shell’s stake, to which he responded, “The parties behind this transaction are capable as far as I know. So, capacity in the present is not what bothers me. Capacity in the long term, that’s going forward. Remember that these people were trained and raised by Shell. So, in the industry today, you will see a lot of ex-Shell, ex-Chevron, ex-Exxon Mobil. So, those were people that were raised and trained, and they are competent. How well are the indigenous parties doing with training and capacity building? So, 15/20 years from now, the question would be, are we going to be able to sustain the current level of capacity in the industry?

“So, that is something we need to worry about. Remember also that the low hanging fruits in the industry, I think we’ve plucked them all. So, right now, we’re going into the slightly more difficult to produce, more expensive to produce oil and gas. So, what that means is that we need technology. And we had hitherto depended on the research products that came from the IOCs. So, when the IOCs exit, basically, we will lose that opportunity to domesticate the products of their research.”

However, after voicing his misgivings, he said, “I think that overall, it’s a positive step. Remember that not a lot of investment has gone into this asset in the last 10/15 years. So, we need some players who can change that narrative.”

Nwakwue was then asked if Shell will still be running the venture, to which he responded, “No, I think there will be some handholding for a period which is normal in such transactions. But after that, Renaissance will still assume total control of operations.”

In terms of how this sale relates to the PIA, Nwakwue said, “It’s really a function of what they do going forward after they have taken operational control. Whether they want to convert the assets or whether they want to stay with the Petroleum Act provisions, so, that’s up to them how they want to proceed. But then, they will come under a slightly stricter regulatory regime that the PIA has put in place, so, that should be expected.”

Ozioma Samuel-Ugwuezi