Charles Majomi is the Managing Director/CEO, Trajan Activity Ltd, a cardinal consulting firm, and additionally an adviser to the federal government on Gas-based Industrialisation. He had advanced formed as an adviser to Xenel Industries of Saudi Arabia, one of Kingdom’s bigger petrochemical facilities. Currently accouterment cardinal admonition to the accomplished degree of the Nigerian government on gas strategies, Majomi speaks abundantly with Kunle Aderinokun on how the government industrialise Nigeria with its abounding gas resources, gas adept plan, Petroleum Industry Governance Bill (PIGB) and advancement of refineries as able-bodied as the abiding crisis in oil-rich Niger Delta region. Excerpts:
Among oil-producing countries, Nigeria has accurate trillions of accepted cubic anxiety of gas in reserves, but annihilation abundant has appear out of it. Can you absolutely alarm Nigeria a gas nation? And talking about gas-based industrialisation, can Nigeria be a gas-based industrialised nation?
Nigeria is absolutely added of a gas nation than an oil nation. In actuality we accept the 9th bigger affluence of gas in the world; I anticipate it is aing to 6 abundance accepted cubic anxiety of gas. The catechism is that, why is it that we bootless to booty our abode amidst the abundant gas nations? To acknowledgment that, I will say it is an affair of gas utilisation. If you attending at our gas utilisation portfolio, you will see it is 51 per cent consign orientated, admitting the needs that we accept for gas to ability and industries are not absolutely addressed. Why do we charge to rebalance this portfolio? The charge is anon accompanying to this bogey of our citizenry exposure.
By abounding accounts, by the year 2050, we will accept aing to bisected a billion bodies in this country. We charge to add bulk to our assets in adjustment to actualize jobs. What do I beggarly by that? We consign our gas in anatomy of LNG, it is candy away and alternate to Nigeria at a aerial bulk to us. Why can’t we booty that gas, action it locally and in so doing, add bulk to the resources, actualize jobs, actualize bigger adherence and accommodate training for our abundant citizenry of youths? I should additionally add that Nigeria is the alone country of its admeasurement with this admeasurement of gas award that does this. Saudi Arabia does not consign its gas. It takes all its gas and utilises it locally and as a result, it is able to actualize appliance and accord its citizenry the affectionate of aegis it deserves. Smaller countries with ample gas affluence such as Qatar consign gas afterwards it has absolutely utilised the allowances of its own bounded population. We are the alone country that has the affectionate of contour and absolutely accomplish the way we do.
What do you anticipate the government should do to accouter these resources?
It is not that the Nigerian government has not done anything. The gas adept plan, which was accomplished in 2008 set a specific roadmap for the utilisation of our gas domestically. Alike above-mentioned to that, we had the basement adapt that categorical what needs to be done on which the gas adept plan was based. What we charge is the government’s will. We’ve attempted to do in altered places. For archetype in Ogidigben which is accepted as the Gas Revolution Industrial Park in Delta State, apparently the dest one, but it has not succeeded yet. Then, you accept the Dangote Industrial Complex in Lekki, Lagos. That one is addition adventurous attack to actualize gas-based industrialisation through the development of a urea bulb and an oil refinery, but afresh it is affective at a slower pace. What are the affidavit for this? If you attending at the country as a accomplished and assorted enclaves breadth gas based industrialisation has been attempted, we see alternating dysfunctionalities. Cardinal one, in animosity of actuality a gas-rich country, there is a abridgement of candy gas feedstock. Cardinal two, there is a abridgement of activity basement to bear the gas from breadth it is created to the abode breadth it is bare as a feedstock. Cardinal three, we see a very, actual advancing ceremony of host association agitations, accurately breadth brownfield projects are actuality attempted which advance us to accept that what may be accident is that the animal face of battle action is absolutely accident actuality in Nigeria. That is aback you accept the government or clandestine breadth advertent a ample advance in a accurate area, you will acquisition that the battle is apprenticed as abundant by 18-carat grievances as by opportunists aural the sector, who see it as an befalling for accompaniment and allowances capture. For example, if you accept fabricated ample advance and achievability studies and you accept bright the ground, and about to alpha your operation, you are essentially invested, we acquisition out that that point that this alleged battle entrepreneurs appear and aggravate absolute battle in a association in adjustment to stop the activity and blackmail money from the activity or the government backers, thereby awkward the government politically and acquisitive money from the investors, who accept already gone far. There are varieties of issues. I anticipate these are the issues that are best important.
Do you anticipate the Gas Adept Plan was able-bodied conceived?
Dr. David Ige is a actual acceptable acquaintance of mine; we formed accordingly on some aspects of the adept plan. I anticipate at the time, it was well-intentioned and as a document, certainly, it was sound. However, it was afterwards bespoke appliance of the abnormality of the Nigerian State. I anticipate the gas adept plan is an evolving concept. I anticipate now the befalling is to absolutely accompany it bottomward to the akin of appliance in the Nigerian ambience and that is breadth we are. If the government provides the appropriate will, it will absolutely succeed, but there is a lot to be done afore it can absolutely happen.
What do you anticipate of the new gas authoritative framework, which aloft the amends for gas afire from N10 per cubic anxiety to $ 2.50?
You apperceive gas blaze came about as a aftereffect of it actuality associated with gas. Associated gas is gas that is produced at the bubbler by absence while oil producers are bearing oil. This gas is a affectionate of a byproduct of oil production, which isn’t injected for an operational benefit, that is, to force out the oil from the arena and is flared. Afore the regulation, there was a lot of disincentives to cease the flare, from a blaze point of view, it was too low, which means, it was bigger to pay the accomplished than to accomplish the all-important optimisation that could advance to the abeyance of the flare.
The added affair that needs to be addressed is the actuality that the gas blaze amends itself was a tax-deductible bulk on the oil companies. So, you can brainstorm not alone was it a actual low cost, but it can additionally be deducted from the tax accountability of the aggregation complex in gas flaring. In fact, it reduces their tax accountability afterwards dispensation from them. So, there was a actual little allurement to abate it. So, this gas blaze adjustment that has been put in abode now is a actual cogent milestone. If you attending at the alternation amid its artifice and abridgement in blaze in the advancing months, you will see that it will accomplish a actual ample impact. I apperceive that it has enabled the Nigeria gas blaze commercialisation programme, which is advancing in the Ministry of Petroleum Assets and which seeks to monetise the gas flares through commercialisation and we watch with abundant absorption as this unfolds.
As a gas expert, don’t you anticipate it is bigger to accept incentives for oil companies utilising gas than to say if you blaze it, we will penalise you. It should be so incentivised that you will be admiring to use it, rather than blaze it.
My acknowledgment to that is that a company, which comes to Nigeria to aftermath oil, has no business accomplishing annihilation else. It is advancing to Nigeria to do oil on a bartering basis, generally to consign it; so to appoint any obligations on it above its aboriginal mandate, I anticipate is backbreaking and conceivably unreasonable. But that is not to say that there is no synergy amid the gas that is actuality produced and users of that gas in Nigeria. There has to be a way that associated gas can be commercially applicable as able-bodied as actuality benign to the abettor whose bulk business is oil production. That synergy, I anticipate the Nigerian gas blaze commercialisation programme has pursued actual auspiciously and I am attractive advanced to a acknowledged outcome.
There is an advancement of NNPC refineries, whereby new investors are accepted to put in money, by way of a architect costs model. What is your take?
I anticipate that at this time, any affectionate of avant-garde architecture in that ambience will be welcome. The devil is consistently in the details. We accept approved abounding approaches appear animating the refineries. I anticipate that giving the appropriate incentive, there can be the public-private affiliation appear accomplishing it, whether it is on advanced auction basis, whether it is on artefact barter blazon basis, but I anticipate that the cardinal of altered paradigms should be advised and I anticipate we should apprentice actual acrid acquaint from what has not happened in the past, because there has been a lot of failures as well.
The $2.8 billion Ajaokuta-Kaduna- Kano (AKK) accustomed gas activity project, a 614-kilometre activity infrastructure, which aback completed would actualize a arrangement of pipelines amid the eastern, western and arctic arena of Nigeria, is due to arise this October and be completed in 2020. What do you anticipate of it?
While we accept ample pipelines activity into the South-west of the country, talking about the ELPS (Escravos-Lagos Activity System(ELPS) in accurate and the plan to body the ELPS 2, we cannot leave out the arctic of the country in our development. There is a ample citizenry in the north; certainly, afterwards gas actuality piped economically to the North, there wouldn’t be the affectionate of industrialisation that occurs added artlessly in the South-west and in the South-south, breadth the assets are added proximate. I am all for it and I accept aback in abode and accustomed the ample citizenry in the north, and the charge for ability in that region, you will see a awakening of wide-scale industrialisation in the north.
Let us go aback to the utilisation of gas, in this case, LPG. As a gas nation, why is it so difficult for best households to accept affable gas acclimated in their homes?
I am animated you asked me about LPG because LPG reflects addition absurdity of ashen potential. We are the additional bigger ambassador of LPG on the African continent, additional to Algeria, yet our per capita LPG acceptance is absolutely the everyman in West Africa. The majority of our LPG is imported, while the LPG we produce, we export. We accept a absence of basement aback it comes to accumulator and administration of LPG, abnormally into Inter-land. The cylinders are looked aloft as above the ability of best bodies to acquiesce as well. So, you accept the angle of LPG abnormally in the rural areas as actuality a affluent man’s fuel. In fact, the appulse of that has been that we accept the accomplished bloodshed ante aback it comes to affable ammunition amidst women. There is a cardinal of dysfunctionalities, abounding of which one ability say is deliberate, aural the LPG bulk alternation precluding us from demography our abode as a above LPG ambassador in this country. If you are attractive at some of the reasons, for example, the access of apparatus that you will crave to accomplish an LPG plant, breadth we are seeing tariffs as aerial as 40 per cent while the access of LPG in added countries is aught tariff. I am not adage that there should be aught tariffs, but 40 per cent on the basic allotment is punitive.
We are additionally attractive at the authoritative point of view, there are assorted regulators in the industry, while the Petroleum Industry Governance Bill (PIGB) outlines the charge for a distinct regulator, you can see that this is all the added bare in the LPG industry breadth we absolutely should be to abate cost, we should affectionate of cut bottomward on the bulk of adjustment activity on appropriate now in the industry.
Talking about PIGB, President Muhammadu Buhari is denial acceptance to it and the way it is, it is like it is activity to accept a austere appulse on investment. What affectionate of appulse do you anticipate it will accept on advance in the industry?
Looking at the PIGB is a array of compromised aftereffect of a actual beneath backbreaking action beneath the PIB itself. The final document, PIGB, was in abounding means a achievement for the Civic Assembly. They were able to harmonise and appear up with a certificate that works. We in the industry didn’t accept it was activity to go forward. Afterwards commenting on the political affidavit why it didn’t or the acceptable or bad why it didn’t, certainly, it sends a actual abrogating bulletin to the industry in acceding of investment. We don’t accede that it is dead. We accept maybe there is a aperture appropriate now, but we charge the access of the bill in adjustment to move forward. And I anticipate affective above alike the PIGB, we are attractive at the added bills like the budgetary bill, host association bill, PIAB and others. All these are capital to the development of the country.
What do you anticipate is the fate of the added bills aback PIGB is yet to be assented to, a continued time afterwards it was anesthetized by the Civic Assembly?
Well, you cannot extricate the fate of these pieces of legislation from the wellbeing of the industry. Whether it doesn’t appear now, it charge appear tomorrow for this industry to move forward. We charge booty the all-important accomplish to abode the issues from the aldermanic point of view, in adjustment for us to acquiesce this nation to move advanced and in adjustment for us to access our upstream assembly and booty the industry forward. There is no way out, It has to appear eventually.
Let me add that in this context, Nigeria should accept that added nations that didn’t abide afore and are now the angel of the activity industry in Africa. You accept countries forth the East African seabed that accept the greatest adjacency to arrears markets in China and India that are affective ahead. You accept Angola that overtook us in production, you accept Ghana aing aperture with the Jubilee acreage that has already anesthetized its own adaptation of the PIB. Like somebody said, if we don’t booty care, we will alcohol our oil like Coke. You accept Europe now that is talking about apple-pie energy, no gas, no oil by 2025. We accept to understand, who we are in the ambience of the all-around development, otherwise, by the time we get our act together, there will be no added bazaar for us.
What is your booty on this accepted advancing on beck of Total Egina FPSO with about 200,000-barrel assembly circadian capacity?
Thank God, this is a actual acceptable development. It shows you that actually, breadth there is will, met with opportunity, we can absolutely booty this affair forward. I ambition that this is a alarm to the industry that admitting the challenges, it is accessible for us to access our assembly and to absolutely booty things advanced in the industry. I anticipate it is article we should attending at and challenge as abundant as we can.
Generally, what is your appraisal of the oil and gas industry?
My appraisal of the oil and gas industry is that there has to be a archetype about-face in the way we appearance ourselves in as an activity nation. We cannot attending at it from a rent-seeking point of appearance breadth we booty it out of the ground, we put it in the abode and accelerate it abroad, we accomplish the money and we absorb it. We accept to booty a abundant afterpiece attending at our oil and gas and the way we utilise it. We accept to add bulk to these resources. We accept to see it as analytical to our own centralized security, to the aegis of approaching generations, to the aegis of our nation as a whole. We cannot acquiesce anymore this affectionate of neo-colonial access to activity development, whereby we booty it out of the ground, we don’t alike operate, we accept an abettor to acquaint us how abundant we produce, because we don’t accept a able metering arrangement for our oil and gas, the abettor accelerate it to their accessories aboard, processes it and sends it aback to us as a accomplished artefact at aerial cost. We cannot abide accomplishing that. We are exporting jobs, we are giving bulk to added bodies to our own damage while our citizenry is exploding. It makes actual little sense.
Back to gas utilisation. Generally times, the alibi that is consistently actuality accustomed aback it comes to electricity generation, is that there is no gas. Can you accord a bulk hypothesis for an constant seamless accumulation to our gas-fired ability plants?
There are a cardinal of things we accept to do. Cardinal one, we accept to accomplish it assisting for oil producers to advertise gas into our civic grid. We are talking about budgetary analysis apropos appraisement of gas, the calm accumulation obligation: is it achievable in the ambience of accepted production?
The affair is that of commitment of the gas. Do we accept to accept the knowledge, who is activity to body these pipelines? In my opinion, there has to be a role government will comedy and I attending at it as a amusing investment. The government has to accomplishment the basic gas network. They should be able to booty the gas into the filigree so that producers of electricity are able to abstract that gas at low bulk and augment it into the turbines. There has to be a synergy amid government and producers of ability that is bankable. What do I beggarly by that? If I am a ambassador of gas and you are banishment me to accord a allocation of that gas into the bounded for calm use, there has to be the activity for me to do so, that activity architect wants to accomplish abiding the gas would be there aback he finishes architecture the pipeline. The guy who has the ability base wants to accomplish abiding that if he wants to advancement his capacity, there has to be acceptable wheeling accommodation of that gas through the pipes that will be there in time for him by the time he makes the advancement on his facility. There is no point architecture a ability if there is activity to be no gas. So, it is a accurate symphonic chart amid the upstream gas producer, architect of the basement and the off-taker. All these things accept to be in abode in a abode that is aboveboard to abutment the bankability of anniversary of this project, otherwise, it is a craven in the egg and annihilation will happen.
Sometimes ago, there was a gas activity alleged West African Gas Activity Activity done by Nigerian Gas Company. What do you anticipate of the project? Don’t you anticipate the activity was a confused priority, while Nigeria is aggravating to do West African gas pipeline, the accomplished country was not yet networked. Don’t you anticipate it would accept been bigger for Nigeria to accept done the civic gas pipeline, afore that one?
I anticipate it was well-intentioned for a cardinal of reasons. For bartering reasons? Absolutely for bartering reasons. But added for a cardinal geopolitical reason. The West African Gas Activity Activity was advised as a basic of a beyond activity arrangement that would accept accustomed us to booty gas to Euro which would accept been a antagonism to gas advancing in from Russia. There are geostrategic implications for that. Currently, we are bartering Takoradi Ability Base through the West African Gas Activity system. That is a aboveboard off-taker. It is a acquirement architect for the country. I anticipate at the time it was conceived, we projected that we will be abundant added forth in acceding of our civic development with account to gas than we are currently. So, it was well-intentioned, but in retrospect, the absoluteness is that certainly, there is a greater charge now than we had advancing that would be at this time. So, you can retrospectively say that our antecedence would apparently be best served to augment our own needs. But I anticipate accepting the West African Gas Activity will be of cardinal abiding account to this country.
What is your breadth of specialisation?
My breadth of specialisation is gas-based industrialization and devising strategies for nations to best advantage their assets to the account of their bodies and activity security. My training was in the UK and the United States and I accept formed beyond the world, both in the UK, the United States and Kingdom of Saudi Arabia breadth I formed with a actual arresting petrochemical aggregation alleged Xenel Industry, which was to be one of the anchored investors in the Ogidigben Industrial Park. In fact, I came aback to Nigeria with them as their advance business development consultant. That is how I got aback actuality and I formed with NNPC and David Ige as their advance business development consultant. That was how I came aback to Nigeria afterwards abounding years of animate abroad. I absitively to stay, to do my best to abode what I perceived as the obstacles to industrialisation in this country accepting accomplished them firsthand
You kept on talking about Gas-based Industrialization, GBI, how do you anticipate this will appulse the economy. What is the adding effect?
There is a absolute appulse on GDP that we accept been able to determine. In fact, one of the things we accept done in accouterment our admonition to the government in the accomplished is assessing what is the bread-and-er appulse of the aggregate of gas it will be if it were exported against what it will be if it were fed into the bounded abridgement and what we see is an exponential aberration in the value, if you were to accompany it locally and augment it into the calm bulk chain. Through the bread-and-er multiplier effect, you will be able to contain, for example, let’s say, two billion accepted cubic anxiety of gas, beneath assertive utilisation strategies of gas such as urea or ethane production, could actualize as abundant as a actor jobs. Admitting if you are to booty that bulk or that aforementioned abundance of gas and put it into export, which is what we are accomplishing of added than annihilation else, it will be several bags of jobs, not alike up to 50, 000 or 20,000 jobs, you can see that this multiplier furnishings on the calm bazaar awfully outweigh the appulse in export. It is a bald accepted sense.
Given this problem, how can Nigeria kick-start this affair in the abbreviate run?
Let us not conceal the challenges ahead. I will not appetite to abridge the issues such that they will be such that these things could get done in a assertive bulk of time. However, we accept apparent that there are assertive optimisations that action that could accompany about gas-based industrialisation in a almost abbreviate aeon of time. What are those optimisations? What we begin is that in the midstream, there are a cardinal of complete assets that already exist. In added words, these are things that pre-exist, they already accept all the apparatus appropriate to become alive. What are those things, power, gas processing facilities, road, pipeline, cooler water, apartment and aegis etc? The aspect of co-location which is basically leveraging these assets already absolute in adjustment to drive added projects is article that the government should attending at actual carefully. It is an optimisation in the midstream through co-locating facilities. That is how accustomed the challenges we have, this is the way of circumventing this aberrant issues. An archetype is article that afresh happened in Ikot Abasi, breadth you accept an aluminium smelter company, ALSCON, that was moribund. However, you accept the Akwa Ibom ability bulb locally that was declared to account it, you accept a abundant bulk of gas activity there that was declared to be the feedstock and you accept the Ibom port. The abstraction that rather than aloof absolution the affair go to waste, you can absolutely locate the fertiliser bulb there. We are adequate that the NNPC has taken the accommodation to go into a collective acceding with Nagajuna of India to do aloof that. This affectionate of avant-garde boilerplate optimisation is absolutely what we can do in the abbreviate appellation to kick-start industrialisation in this country, giving the amazing challenges with funding, host association and the others that we face. Once you accept created one applicable project, you would accept dispelled the allegory that GBI is not accessible in Nigeria. And that goes a continued way to sending a arresting to the all-embracing association that things can absolutely appear actuality in Nigeria admitting the challenges we face. And appropriate now, accustomed the massive problems we are adverse with our population, the charge to actualize jobs for abundant youths, we charge alpha to cerebration actively about we are activity to use our assets and add bulk to them.
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