NLNG Train 7 will create about 10,000 direct jobs in Nigeria — ES, NCDMB

In this interview with some journalists at the just concluded 9th Practical Nigerian Content Seminar in Yenagoa, Bayelsa State, Executive Secretary of the Nigerian Content Development Monitoring Board (NCDMB), Engr. Simbi Wabote, spoke on various issues bordering on the growth of local content in Nigeria.

What, in your own perspective is the benefit of NLNG Train 7 to the Nigerian economy To the Nigerian economy, as you are aware, it would bring more revenue to the country; more taxes would be paid. To the economy, it means a lot. To Nigerians, it also means a lot. It means creation of jobs. As you have heard, we would have about 10,000 direct jobs that would be created because of the Train 7 project.

What that translates to is almost 40,000 indirect induced jobs that would be created. It has been over 10 years since we built the last train, this of course would rejuvenate the economy. It is not just the NLNG Train itself; it is also the upstream projects that would also come because of the Train 7 project. We expect a lot more in terms of activities in the economy — employment, revenue generation and to a large extent, quelling the restiveness that we have in the Niger Delta. So, its contribution is quite enormous. We hear of challenges to the Nigerian Content Intervention Fund (NCIF), in terms of challenges in accessing the fund; have these been brought to your notice

Actually, the only thing that has been brought to my notice about the NCIF is success, success, success. I have not received any complaints. Besides, it is not operators that are applying for the Fund, it is the contractors that provide services. As at today, Bank of Industry (BOI) is approaching NCDMB, requesting additional funds, because with the approvals that they have, they have already exhausted the funds. One thing that you need to be wary about is that if you take the statistics of failed loans with commercial banks, it is quite enormous and when people saw t his funds, as usual with Nigerians, they thought it was free money and they wanted to use the same process with which they collected money from the banks which they could not pay, to access this fund; we said no, because this is a revolving loan where others would benefit from.

You must go through the stringent requirements in order to access the fund. People like free money; people like money that they would not repay. Today, you know about  the Asset Management Corporation of Nigeria (AMCON) and the debt profile that they have been able to accumulate by purchasing failed businesses and failed loans from some of these people that could not pay. We would not fall into that trap. We would continue to remain stringent. Those who are not leveraged; those who are not exposed in terms of borrowing, and those who have legitimate businesses, actually benefitted from the Funds and are clamouring for more funds. We rather deal with those ones than deal with the ones that want free money, and who do not meet the requirements. All we hear is success and not complaints. Local Content: Reps Commend Buhari’s Executive Order 5(Opens in a new browser tab) Concerning the Amended Deep Offshore Act, how do you assure operators that the law is in their best interest.

I am happy you made the point that it is a legislation that is long overdue. Most of the investors and international businessmen, who are here, are here to maximize profit as long as their business is concerned. Therefore, any attempt to make them pay what government is due would create some level of resistance as it were. There is nothing wrong with the PSC Act that has been amended. And as the minister said, it then provides an opportunity for all of us to work together in order to pass the Petroleum Industry Bill (PIB), as early as next year, such that any agitation or any misunderstanding that they have, we should be able to take them on board as we sign into the law, the bigger PIB. It is a normal process all over the world, when you want to change legislation, they must be agitation, an example is Britain, in the Brexit issue. It is a normal process, it is not anything extraordinary. I sincerely believe that those concerns would be addressed in a mutually beneficial, because as a country, we need to review our legislations from time to time.

Some of these things, we wrote them when we had no understanding of the new frontier, in terms of deep offshore that the international oil companies (IOC) were heading into. Today, we are better informed; with technology, we are also very much aware; and with what is happening globally, where information is available everywhere, we are now in a position to say we have come of age and what to have a re-look at some of those agreements that we entered into. The agitations are normal, but I sincerely believe that we would resolve these issues in a mutually beneficial way, if indeed there is any issue. Is there any level of engagement the NCDMB would enter into with multinationals to establish their presence at any level, in their host communities, to give the people some levels of inclusiveness

At NCDMB, we also live by example. Some of the things that we ask industry players to do, we also try to do them ourselves. That is why you can see the structure that we are building in Yenagoa today. If you move round the building and look at the tiles, 99 per cent of the tiles were procured in Nigeria. The contractor that built this edifice is an indigenous contractor. We have the right level of supervision and the rest of it all. We have shown the example that some of these things we put in those communities are possible and we hope that the IOCs and indigenous companies will know that establishing their presence in the communities where they explore and exploit hydrocarbons would create some level of sanity and peace for them. However, these are not things you force. These are things you discuss and you create the enabling environment for. What is important is the enabling environment.

If you create the enabling environment, I am one of those who believe that they would come. But if you have a hostile environment, where security is a challenge; infrastructure is a challenge; people cannot even get hotels to stay; they cannot get water to drink; you cannot legislate and force that process. It has to be a collaborative effort between the state government, the communities, and the local government with the operating companies to have that harmonious relationship and presence in order to do their work. Geophysical companies had on several occasions said they are not feeling the impact of local content. What are you doing in that regard Geophysical companies usually become active when they are exploration activities as such. Quite rightly so, we have not been investing heavily on exploration in the past couple of years. There are two schools of thought in that regard. Some people think we have accumulated enough reserves and we have not been able to exploit that reserve as much as possible; what is the use investing further in exploration.

There is another school of thought that believes that you need to have a reserve addition ratio. As you are exploiting the hydrocarbon, you are adding to it. Local Content: Reps Commend Buhari’s Executive Order 5(Opens in a new browser tab) It is neither here nor there. I know that the government through the Nigerian National Petroleum Corporation (NNPC) has been pushing for more exploration activities which would involve the geophysical companies to actively participate. But I believe that the lull in their business is because of the lack of exploration in the industry.

What are we doing about it We continue to make the point with the NNPC to say we need to encourage international and local companies to engage more in exploration in order to increase our reserve base. At some point, I recall that while exploration activities picked up, there was some kind of bonus that were paid to discoveries in terms of exploration. I do not know if it does exists, but I think it is something we need to look at in order to encourage more exploration. But like the data I had shared, we have almost about 40 billion reserves and we are producing about 2.3 million barrels of oil per day. Angola has about 17 billion reserves and they are doing 1.7 million barrels of oil per day. They have more capacity utilization than Nigeria. The United States has got almost about 28 billion barrels, but they are producing about 12 million barrels of oil per day.

You can see the capacity utilization in that regard. That is where the two schools of thought come in to say you have 40 billion barrels of proven reserve but your production is just 2.3 million barrels, why do we have to spend a lot more money to continue to discover reserves. On the other hand, you can also argue that Saudi Arabia has about 268 billion barrels of proven reserves but they are producing just about 14 million barrels of oil per day, hence the capacity utilization is also perhaps low in that regard. But look at their population; they are not as big as Nigeria with about 200 million people, compared to about 70 million people for Saudi Arabia. We need to do more in terms of exploiting the already discovered hydrocarbon.

Nigerian Content versus African Content Like you know we have signed the Free Trade Agreement in Africa which of course opens up every border in Africa when it comes to effect, in order for us to trade within ourselves. The benefit of that is there will be easy movement of manufactured goods, produced goods from country to country. The advantage of what we have done in Nigeria content is to be able to export some of the capacities that we have developed here in terms of manufacturing, in terms of  fabrication and being able to do things in the oil and gas sector. Vanguard