With oil majors reducing investment in hydrocarbons and turning to renewables, the Minister of State for Petroleum Resources, Timipre Sylva says the country sees its huge gas reserves as its own renewables
Shell and some IOCs have announced plans to shift from hydrocarbons, how is Nigeria positioning itself for this big shift?
On the other issue of Shell going towards renewables, its not Shell alone, the global energy industry is moving towards renewables. Even the investors are taking out investable funds from the oil and gas sector and moving into renewables. Is Nigeria also joining that race? It is something that is difficult to say. We are not in that race as such. There’s a lot of funding required for research for renewables and we are not into that yet. But for Nigeria, we are looking at gas as a transition fuel to renewables. Some people are even looking at gas not as a transition fuel but as renewable. If you have gas you can consider it to be renewable fuel as well. The question I always ask when I go for international events is: if the concern with non renewables is carbon emission, why is the global economy now focusing on developing carbon capture technologies instead of moving away from the non renewables? If the global economy is focused on carbon capture, we can actually clean up the fuel as well and reduce the emission from non renewables, clean it and it becomes something that will not affect climate change. But the global system tends to be moving away from the oil and gas non renewable resources which we have in abundance. So, should we also join them now to move to renewables and abandon our resources? I don’t think so, and I say it boldly everywhere. After all, those economies were built on resources from coal and other dirtier fuels. Okay, today, they have moved to this level. In a situation where 600 million Africans are still without energy, I don’t think it’s a realistic position. That’s why in Nigeria, our focus now is on gas which we consider at best a destination fuel and at worst a transition fuel to renewables. And since we have it in abundance why don’t we maximize it now so that at least we are taking a step forward as well. That’s our position in Nigeria, not necessarily that we want to go into developing renewables. In energy usually, there must be a mix. You are not expected to use only one source of energy. Our focus now is on gas as a major source of energy which we have in abundance.
Is Nigeria finally dropping the case against ENI after the company was acquitted in the Malabo case?
The first question was, is Nigeria dropping the case which has been a very thorny issue? I will not give an answer without again conferring with the Attorney General of the Federation. If you had asked me my opinion, I probably would tell you what my opinion is but when you asked if Nigeria is going to drop the case or go forward with it, it’s something the Attorney General can answer. I think the Attorney General has his views on it but as you know, not much has happened from the Nigerian side on that verdict, so you can guess, at least. Whether you like it or not it’s an asset of Nigeria. If you keep it encumbered in legal tangle, then who is losing? But whether the case continues or discontinues, it’s for the Attorney General to decide. So, we might both join forces to get to the Attorney General. As friends we can get to the Attorney General to know what the position is now.
How much oil price does the government need to balance the budget this year?
You asked me again what price will balance our budget? It’s not just the price, it’s also the production level. You can have cuts, you can halve your production, and then achieve $100 oil, but meanwhile you have lost because your production is now halved. In a situation like ours now, our OPEC quota is about 1.5million barrels per day. If you achieve over $60, you also would be losing from the production end. We don’t want overly high prices because that one comes with its problems. Once prices go beyond a certain level the competition begins to come from unexpected quarters, like Shale oil. Ordinarily, Shale oil is not very profitable when the price is at a certain level but once the price moves beyond a certain level Shale oil comes in and becomes a major competition. We always want a situation where the price is optimal for our own production and not very good for Shale production. OPEC also doesn’t like high prices so that we can balance the market. For Nigeria, $70 oil is not too bad. We can live with that. If for example we can achieve $70 and achieve full production capacity. I won’t be bad for us at all, it’s a balancing act as you know. You achieve $70 today and it shoots up, you want to bring it back to $70, and it goes below $70, and you want to bring it up again. That is the interesting game in the business.
When are we expecting to see the PIB passed by the National Assembly?
I want to tell you that PIB is fully on course and we are very happy. We are focused on that. We’ve had many many meetings with the National Assembly and with stakeholders and today, we are all very satisfied. The National Assembly gave a timeline of April, but a few things came up. I know that the passage of the PIB will not go beyond June. I believe that between now and June, we should be able to pass the PIB, so I don’t think we are far away from the passage of the PIB.
In monetary value, how much investment has come in since you assumed office?
Train7 is over $10billion, we are hopefully going to programme greatly for Train7 in June. AKK which is already on going is $2.8billion. Gas fertilizer is about $2.3billion. So, there are a few FIDs that are in line. We are actually expecting to bring a lot of FDIs into Nigeria within this year. These are the ones that I can remember. Nigeria-Morocco pipeline has been on the drawing board. A lot has gone on already, we’ve had some meetings, a lot is still going on. And it’s expected to cost as much as $21billion,. It’s not a small project! You know that we had the Nigeria-Algeria pipeline before-the trans Saharan gas pipeline which has not worked. And now we are working on the Nigerian-Morocco gas pipeline. We are still working on the feasibility, I cannot say more than that. Finally, I would say the Nigeria gas flare commercialisation programme is fully on cause. We have completed it and you will get the announcement soon. But a few things have distracted us like the marginal fields programme. With the marginal fields off the table, the next thing that we will announce will be the gas flare commercialisation programme. I think a lot of the evaluation has been done already, and for some reason we had to keep it on hold. We’ve gotten to a point where the winners of the programme will be announced very soon.