NIGERIA OIL AND GAS BUSINESS: A TYPICAL AND CLASSICAL FAILURE1
I think we as Nigerians have waited long enough to express our understanding
to some of Nigeria Government’s policies, actions and inactions in the most
recent time. It has come to our awareness, into how and at a deepest level,
these policies are affecting us Nigerians massively negative. To some extent instead
of our successive government to own up, sit tight and think of way out of the mess,
we can see that they are digressing more out of our fore father’s vision for
this Great nation and coming up with Lies, Deceits and many more illogical defenses
as if Nigerians are Mumus (slang known in Nigeria to be STUPID).
Maybe we may not understand
what fore father’s mission might entails? Part of it is Nigeria’s Unity with
which in the present situation of the country, there’s lot of division among
us. It is also in the mission of our Fore Father’s to build strong Economy for
the Giant of Africa, strengthening our Naira and making Nigeria the Economic
Hub of Africa but unfortunately, in the recent time, the “gi” in the “giant” is
fading away, left us with the three letter words as we were taught in the
kindergarten. If I can’t remember anything or we were very small then, I can
remember the establishment Oodua Investment, Bank of the North, Groundnut
Pyramid in the Northern Part of the country, Smoked Fish and Beans Pyramid from
core North East, Lot of Textile company that spread across all region in the
country. Our Fore father’s made all these possible and what grows a nation’s
economy if not growing local productions?
I wanted to focus on the second mentioned mission of our
Fore-Fathers here, as to our economy that is in bad shape due to great
mismanagement of Assets and resources that we were bestowed with and
unfortunately, the Nature Given asset that has turned many Nations to
Greatness, is becoming our own Liability.
Nigeria Oil and Gas business from ancient times is all time Failure,
hence the use of ”Classical Failure” and not “Colossal Failure” , maybe the two
phrasal words fits, because if no theory fits in Nigeria situation, I found
only one theory about our country and the proving consistent theory is ; “if
anyone can explain Nigeria Problem to someone else and the person understands
it, this means the person that’s explaining it, did not really understand
Nigeria problem”. Yes, you can re-read those bold words! That is first and
outstanding true word about this country.
How can we have Natural Oil in abundant and we will say Nigeria is
Poor? How can we abandon 3 refineries of different capacity and choose to
refine in abroad and brought in fuel and diesel for local consumption? When
three refineries were been budgeted for annually, routine maintenance and
nothing is forthcoming from the three refineries, who are the people responsible
and what’s penalties do they face with?
Okay, accepted! We do not have functioning refinery but we have Natural
Oil to be exported, refined and needed fuel were imported back. What happened
when Dangote Refinery was up and running? the whole world knows how NNPCL
frustrated Dangote product with standardization error. And we also witness how
Dangote price is not favorable to the Nigeria masses. How can we explain such
scenario, with no refinery there’s Natural Oil to export or pay debt with but
with Refinery on ground in Nigeria no Crude Oil for the facility to
refined. In another understanding, we
were made to understand that, that there were many local refineries, but are
Illegal. Okay, for the sake of the Nigeria masses, for the sake of those whom
meeting the ends with the so call illegal refinery, I think there’s nothing
wrong if the FG made illegal refinery a Legal one, licensed them all, regulate
them and support those refineries to be productive even if their supply is
going to be for consumption within State in Nigeria or two. The product will be
cheap and at least a problem fuel scarcity will be partly solved, locally! Get
me right, I am not supporting illegality, I am only trying to provide solution
to the prevailing problem with an idea that we believed to be Illegal. Doing
that will not only solve the fuel scarcity and its inherent high cost but it
provides work for some unemployed youths in the area.
That’s solving our peculiar problem within our peculiar
environment and not an advice from foreign land who are alien to our
peculiarities. I know this idea may be
weird but whatever obstacle its proposed can be surmount having our clear goal
in focus, Modular refinery is in mind. It is a very hard decision to take and
it is not going to be easy! If solving
our inherent problem is in mind, many solutions can be an option and open many
possibilities to build our economy and then a very strict regulations can be
applied to have a balanced operation. Instead of our government to support
those youths they were named “unlicensed” then our government went ahead to
destroy them all…
Successive Government in Nigeria should know that governance is a
serious business and not Moimoi (Food: one of beans varieties in Yoruba) and
Akamu( Food: pap in hausa language). Though the masses should be law abiding in
all ramification and responsible which should include right payment of taxes.
But in general concept, the Government should be aware that, provision for all
round security for the lives and property of the people of Nigeria is
paramount, providing basic amenities like Housing, Good Health, Good Education,
Basic Infrastructure and even defending the Land against home and foreign
enemies are some of the priorities of any great Leaders. For the citizens to be
able to access all these basic life needs, the Government must be able to plan
well with the little resources we are bestowed with. They should know that
resources management should be an added skill for any Leaders leading the
country to greatness while long term planning for economic growth should not be
taken trivially and here is why…
On the 4th of October 2024, I was discussing with my
Mentor, Dr. Atul (as I fondly call him) on a public discussion about world Oil
business on LinkedIn platform and from that information we shared, I begin to
realized that Nigeria Leaders had no interest in Building Nigeria economy, it
is also unfortunate to know that what exactly the Nigerian Government is focus
on building is completely unknown. It is well known fact that, “Useless
weeds are the potential occupant of unnurtured land”. As this fact can intensively affect individual
mind, so can it be more dangerous for the nation with Leaders that lacks proper
planning and developmental skill with available resources.
Every President and every Leader should be aware of the Nigeria
predicaments, socially, economically and psychologically. They should know who
their citizens are and how they (citizens) respond to changes and most
importantly, how the country people think. In another format, how on earth
would I say I have prepared for an exam, only to enter the exam hall and
started to display cluelessness in the particular subject, say economics? Is
that not an absolute failure? Because
citizens livelihood is completely at risk. Just take on the increase in
people’s grievances, hunger and anger and increase number deaths and suicides.
All these stems from somewhere…
Dr. Atul took me through some facts about world Oil Business. It
is an open figure which everyone can clarified and please I want you all to
follow this little mathematics about how other great countries are building
their economy through fossil fuel. Believe me CRUDE OIL is enough to
make a country great.
According to Dr. Atul, like I said you can verify… (please, bpd
means barrel per day)
USA is the largest Crude Oil Producer with approximately
13.5million bpd
Russia is the next with 10.9million bpd
Follow by Saudi Arabia with 10million bpd. Let’s stop there!
I wanted us to focus on growing capacity of US alone. Where you
will believe Nigeria Government is not interested in building Nigeria economy
and what they wanted to build? I dunno!
Try to understand the fact that US is not processing the whole
exploration, between 1970- 2023 East Asian countries has increase oil refinery
processing capacity to 18million bpd, peaking in the latter year. You can see
growing of refinery capacity in India in the recent years.
So, if we have to base our calculation to 18million bpd sold to
the Asian countries
US profit margin is $15 per barrel. Read it well, $15!
Daily Profit = $270 million
Annual Profit= $98.55billion
The Annual return earn by the country doing business with
18million barrel per day @ profit margin of $15 per barrel is approximately
$98.55billion in a year! Please drink water over that… next is below.
US is the largest producer of Natural Gas, accounting for
significant portion of global output. Its production has increased due to
advancement in extraction technologies like Fracking and a shift from coal to
natural gas for power generation.
US Natural Gas (NG) Annual production is 1,035.3 billion m3.
Converted Production is approximately 37.4MMBtu
Sale Price: $2.87 per MMBtu
Total Sale Revenue is approximately $107.4 Billion
So, US is making whooping sum of $107.4 Billion from sale of
Natural Gas.
Summarily, I can tell you today that USA is making
US$300 Billion in Crude Oil profit
US$100 Billion is Crude Oil refinery Margin
US$ 40-50Billion in sales Margin
&
Additional US$110 is sale of Natural Gas.
Bottom line is, all these figures are at the minimal scale, it
means with some condition and market forces, it can be more!
The total is between US$440-US$450 billion annually. About half a
Trillion Annually! Is this not an eye opener? This is Government that has
target and are not joking with the strength of their currency $.
It is true that we can validate these above figures from US Oil
business but it doesn’t come easy for the US government to arrive at the above
figures. It takes long-time planning,
transparency and proper implementation of phases of development to arrive at
where they are currently. You know what? Their Leaders took “a very hard
Decision to arrive here”, I mean all their Leaders subsequently from No 1 to
the recent 46th POTUS (President of the United State). Their main
priorities are all I mentioned as expected from Leaders. They wanted to Best
Medical Facilities for their citizens, they wanted Best Roads for their
Vehicles and Trucks, they support greatly their Education and Research, they
wanted to defend their Land against home and foreign enemies, in short, they
wanted greatness, they wanted Freedom and not enslave their citizens. That’s
their driving force! You can see why I said I don’t know what Nigeria Leaders
plan for the masses or which Development they intend as a Nation!
I still laugh at some people that said $ rate to Naira will
decrease with Dangote Refinery that recently emerge. With what I am looking at,
it is a big joke. The reason is simple, you are selling same commodity, they
are producing far more than you, the refining margin between us is
unimaginable. So please where is the chance or edge of strengthening our
almighty NAIRA?
The level of unseriousness is evident at home (Nigeria) to the
extent that you will hear whole Educated and Prominent Person will be saying
Fuel (PMS) in the US (Maryland) is $0.85 =N1,360 per litre and
(Abuja) Nigeria is $0.71
=N1,140 per litre
The difference is $0.14 =N220.
I don’t know how someone will be so heartless and brought up such
comparison without thinking about US population and their daily consumption,
without taking in to consideration the US policies on Oil and lastly, the
Purchasing power of a country.
Let me take only the Purchasing Power to explain their ignorance:
In the Financial world, Purchasing Power is the ability of a
person, group or company to buy things or the amount of money they have
available to spend. It also known that inflation erodes away the purchasing
power of any currency over time. Think about our Local Inflation rate then add
it to the global Inflation rate. Maybe you will understand…
Using the above fuel price comparison as an example to explain the purchasing power; A Maryland worker on minimum wage ($15/hour) can buy 17 liter of fuel with 1hr work. In Nigeria, a minimum wage worker will work 44.3 hours (5 days plus) to buy same 17liters.
Those who are gullible and making such disgusted comparison should know that Nigerians are not Fools.
Expect the concluding part that differentiate Government with Lazy Decision and Government that made tough Decisions
Babatunde Mutiu Kolawole (10 10)
+2348038193742
https://www.linkedin.com/in/babatunde-kolawole-8120001a/
https://web.facebook.com/babsozone
https://babatunde1010.blogspot.com
https://artemisconsult.blogspot.com
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