· As Engr Simbi Wabote of NCDMB reminds Nigerians of reasons for oil production decline
By Ignatius Chukwu
The Executive Secretary (ES) of the Nigerian Content Development and Monitoring Board (NCDMB), Engr Simbi Wabote, has allayed fears of most Nigerians about the consequences of divestment by oil majors.
Engr Wabote said there is nothing to fear and that the international oil corporations (IOCs) were not fleeing Nigeria.
The Executive Secretary spoke at the breakfast engagement with the Guild of Corporate Online Publishers (GOCOP) at the African Continental Hotel in Abuja on Tuesday, October 3, 2023.
Saying it is important to understand this scenario, he outlined the advantages and disadvantages so far.
On the good side, the Warri-born petroleum engineer who worked in SPDC for over two decades said so far, 60 per cent of domestic gas and 15 per cent of crude oil are being produced by indigenous producers.
On why the IOCs were divesting in the first place, the ES said they want to concentrate on offshore areas. “Nigerians should not fear. The IOCs are not running away. They are only doing portfolio rationalization. It is not in Nigeria alone. The IOCs carry out this exercise anywhere that profit falls below a particular threshold.”
He said the local players make more profit out of such divested areas. “Thus, there is no need to fear. It is common in the industry. Even in the Gulf of Mexico, it has been done.”
The expert who is said to have become an international consultant on oil industry issues said there is this concept of red and blue waters. Red water, he said, is used in the industry to indicate shallow waters where all manner of sharks do operate. There is always blood in such waters and the water turns red. But in deep waters, small fishes do not get near, so few fishes are there and the water is always blue because no attacks.
Thus, only few players are in the offshore. Some wells are 2km beneath the surface. No diver gets near that depth because they cannot survive the pressure there. Some are even 3.5km deep. It’s only the IOCs that have the kind of fund and tech needed to operate in such waters, he tutored the newsmen.
On risks of divestment to Nigerians, he said tax is dropping. “The Indigenous producers don’t like to pay tax. It raises the inquiry or concerns of; where is the tax threshold; Is it higher with IOCs and if so, why?”
He said the presidency has seen this and has taken action. “They will identify the problem and fix it.”
He pointed at some trends and how indigenous companies such as Seplat, Aiteo, etc, have snapped up some oil wells from the IOCs, and the impact tis has had on the industry.
“Divestment has paid off in the area of boost in production. For instance, an indigenous producer has increased the production it inherited from 20,000 bpd to 75,000. In Nembe Creek, AITEO has increased from 30,000 to 80,000 bpd in Nembe. This was before the pipeline attacks came much harder. Oando is to grow 900m reserves after acquisitions it made.”
He admitted that there is crude oil theft, massive pollution, illegal refining activities at the shallow waters to add to the pressure on the IOCs to move away from the shallow waters to the offshore.
