PEOPLE AND POLITICS BY MOHAMMED HARUNA

Among Oil Men

kudugana@yahoo.com

 

Over three months ago I received an invitation from the Nigerian Acting Secretary General of the Organisation of the Petroleum Exporting Countries (OPEC), Malam Mohammed S. Barkindo, to attend the 3rd OPEC International Seminar in Vienna, Austria, the organisation’s headquarters. The two-day seminar billed for September 12 and 13 had the interesting theme of the challenges and opportunities OPEC  would face in today’s so-called New Energy Era.

           

Needless to say it was an invitation one, certainly I, could not decline. First, it was an all expenses paid invitation to one of the most historic and also one of the most cosmopolitan cities in the world, hosting, as it were, several international organizations and agencies. Second, oil, the commodity to be discussed, is an exciting topic any day.

           

Then there was the list of the 30 odd speakers which read like the Who is Who of the oil industry; oil ministers from OPEC and non-OPEC producers, chief executives of the oil majors like ExxonMobil, the largest of them all, chief executives of oil parastatals, leading oil economists, leading energy experts, the lot. An opportunity to listen to all these leading players in the oil business was obviously something that one would be foolish to let pass.

           

And so I arrived Vienna on the eve of the seminar with the hope that I would learn a lot about one of the most important, if not THE most important, commodities in the world. Three days later I must say I left Vienna with my expectations fulfilled - except in one particular detail.

           

Among other things, I’d planned to interview Dr. Rilwanu Lukman, the longest serving Secretary-General of OPEC and also the record holder as President of its Conference, having served in that capacity for eight consecutive terms. As President Olusegun Obasanjo’s first Special Adviser on oil, I thought Dr. Lukman would have a lot to say about Nigeria’s oil industry and its problematic oil refineries and little or no transparency in its upstream operations.

           

I had planned also to interview Barkindo and Dr. Omar Farouk Ibrahim, the head of OPEC’s information department. Barkindo had been Nigeria’s representative at OPEC and has been acting as its Secretary-General since January, having overseen the technical work of the secretariat for over 14 years.

           

As for Ibrahim, many readers may remember him as the managing director of the New Nigerian Newspapers who had a running battle with Malam Nasir El-Rufai as Director-General of the Bureau of Public Enterprise (BPE) over the privatization of the newspaper company. El-Rufai, with the backing of Vice-President Atiku Abubakar, then chairman of the now dissolved National Privatisation Council, the policy making body of the privatization exercise, wanted it sold as quickly as possible. Ibrahim, on the other hand, thought otherwise and seemed to have had the support of the president. This conflict may have been partially responsible for why the New Nigerian has remained in an ownership limbo long after the Daily Times, owned 60% by the Federal Government, had been sold.

           

I thought Ibrahim would have a lot to say about all this – and more: I thought he would have a lot to say about his one-man investigation into the Nigerian Ports Authority even while he was managing director of the New Nigerian. President Obasanjo had personally given him the assignment in 2002 and he had done a thorough job of documenting the pillaging of the ports by its board and management.

           

It was actually his report that the EFCC boss, Malam Nuhu Ribadu, was subsequently asked to review. Ribadu seemed to have discovered even worse abuse than Ibrahim. But as we all know, nothing has happened to any of those that both Ibrahim and Ribadu had indicted. Such has been the consistency of President Obasanjo’s war on corruption.

           

If I left Vienna happy that I learnt a lot about the oil industry after two days of speeches by, and discussions among, oil experts, I came away disappointed that I could not interview any of the three top Nigerians at OPEC I had trained my sights on.

           

However, my disappointment at not getting my interviews was more than compensated by the knowledge and information I gained about the oil industry at home and abroad. For a start, the seminar prompted me to search for and read as much literature on the industry in particular and the subject of energy in general as I could get, ahead of the seminar. In particular, I found the coverage of the industry by the inimitable Economist magazine – why its editors insist on calling it a newspaper in spite of its magazine format I simply do not understand – highly educating and informative. In the last four years alone they had written extensively on oil no less than six times including at least two cover stories and an exhaustive survey in April last year.

           

Titled “Oil in troubled waters,” this survey, in its April 30, 2005 edition, was, in retrospect, like a preview of the OPEC seminar. The long and short of that survey was that though oil prices had been shooting “sky-high with profits to match”, the industry was more likely to face crisis in the long run. It seemed then more than sheer coincidence that OPEC, whose eleven members sit on nearly 75% of the world’s oil reserve of over 1 trillion barrels, chose to focus its seminar on the challenges it faces in the so-called new energy era.

           

This is the era where OPEC is predicted to face stiffer competition from such non-OPEC oil producers like Russia, Mexico and Canada. It is also an era in which oil itself is expected to face competition from bio-fuels, i.e. petrol from crops like sugarcane and cassava, and from fuel-cells that combine hydrogen fuel and oxygen from air to manufacture electricity for use at home and in vehicles.

           

Within the industry itself, conventional oil from OPEC is expected to see its hold on global energy supply loosened by unconventional oil from tar-sand which abounds outside the Middle East in countries like Canada.

           

Right now the Middle-East is by far the world’s single biggest source of oil. It contains no less than 60% of the world’s oil reserve with Saudi Arabia along having 25%. Any wonder then that the region has for long been the world’s greatest flashpoint? With oil having a near monopoly of energy for transportation, especially the car which is central to the lifestyle of Americans, is it any wonder that America, as the world’s largest economy and its only super power, can simply not leave the Arabs alone?

           

However, the threat to Middle-Eastern supply of the commodity, occasioned by America’s self-imposed “war on terror”, has forced consumers including America, China and India, the next economic behemoths, to begin looking elsewhere for it. Elsewhere now includes Nigeria, Africa’s largest oil producer and which, with about 36 billion barrels, contains over a quarter of the continent’s reserve. Speculations are that the Gulf of Guinea which Nigeria, Angola and other African oil producers abut has a potential for huge reserves approaching those of the Middle East.

           

Once upon not too long ago, time when America looked at OPEC with disfavour  - perhaps it still does - and tried to break it up, it regarded Nigeria as the organisation’s weakest link. At that time there were subtle and not-so-subtle pressures on the country to leave the organisation. The argument was that the country’s production quota imposed by OPEC was inimical to its interest which was to produce as much oil as it could to meet the needs of its huge population which was the largest of all OPEC members. The facts that the production quotas were not some arbitrary figures but a reflection of a country’s reserve and its production capacity were conveniently ignored.

           

Fortunately Nigeria, which joined the organization in 1971, i.e. eleven years after its formation in Baghdad, Iraq, in September 1960, has remained a staunch member and there is little or no chance that it will ever leave.

           

As if to underscore Nigeria’s role in the organization, Nigeria’s Governor on its board and the Permanent Secretary, Ministry of Petroleum, Mrs. Ammuna Ali, was chosen to read the citation of the year’s OPEC Award winner. The award, regarded as the oil industry’s equivalent of the Nobel Prize, is given to the person whom the board considers the highest intellectual contributor to the industry’s development during the period under consideration. Mrs. Ali’s flawless presentation of the citation of the winner must have made the Nigerians present at the seminar proud.

           

Speaking on the challenges Nigeria’s oil industry faces, Mr. Funsho Kupolokun, the Group Managing Director of the Nigerian National Petroleum Corporation, said Nigeria hoped to grow its reserve from the current 36 billion barrels to 40 billion and increase its daily production from the current 2.5 million barrels per day to 4.5 million by 2010. Downstream its challenge, he said, was to become self-sufficient in refining to ensure uninterrupted domestic supply of oil products and to provide support for the growth of a petro-chemical industry. It has also put in place a programme for producing ethanol from cassava, he said.

           

In the related gas industry, he said, the aim is to earn as much from gas as is earned from oil within a decade.

           

All this paints a rosy picture for the future of oil and gas in Nigeria. The big question is with the country’s political, business and bureaucratic elite looking upon the liquid gold as a cash cow to be milked dry rather than a cow to be fattened for its many other uses, will oil in Nigeria – and for that matter in the war-torn Middle-East – ever become more of a blessing rather than the curse that it has been all these many years?