Opinion

What football tells us about Nigeria’s supply concerns


So the latest news from the bigwigs at OPEC is that Nigeria's crude oil production has fallen from 2 million barrels per day to around 1.27 million. This sounds like bad news, anyone can see. And one would be foolish to suggest that a 37.5% decrease in crude production is a welcome shift for our oil and gas sector. But it's no reason to panic.

There are two reasons that put this latest news from OPEC in perspective.

Form is temporary, class is permanent

The first is that markdowns on production are never attributed to systemic failings, but one-off blips. It is a criticism only of our ability to produce, rather than our capacity to. It's like writing off a football team simply because it's too rainy to play a match. The latest news from OPEC blames the drop in production to the closure of two important export grades: the first being Eni's lifting of force majeure on Brass River crude oil exports from Nigeria, the second being Shell's closure of the Bonga field so that it can conduct maintenance.

Two fairly unremarkable and temporary events, even the most objective commentator could agree. And what's more, these occurrences were in February and March respectively so it remains to be seen how the rest of the sector has faired. In March and April we have had a stream of positive news coming from smaller producers and continued efforts from the government to mount intervention procedures to improve the security situation in the Delta.

football


IOC you later, alligator


The second reason is that our over-reliance on International Oil Companies (IOCs) is beginning to change. To date, and even today, we have been tripped up time and time again by our over-reliance on the production capacity and infrastructure provision of the multinational oil and gas players. OPEC blames the markdown on the actions of two large, overseas oil majors, Shell and Eni. There are several reasons that these two companies have been in the news recently, and all of them spell bad news for Nigeria! But the winds of change are blowing through the Delta and with it brings new life and livelihood for local content producers.

Here's why: we are on the verge of passing the most important piece of oil and gas legislation in our nation's history, the Petroleum Industries Governance Act, the government has diluted ties with the IOCs over Joint Ventures in its latest Economic Growth and Recovery Plan, and indigenous oil companies are flexing their muscles and showing that they can not just match the IOCs but outstrip them when given a chance! This can only mean greater opportunities and greater success for local producers. Greater independence, greater innovation and greater reward.

It's also worth noting that, when it comes to measuring the strength of the economy, barrels per day is hardly the metric with the greatest integrity. This is also for two reasons: the first being that, according to a recent report here in Nigeria, there are still conflicting figures on how much crude oil Nigeria produces. This is in spite of the launch of the National Production Monitoring System (NPMS), an online platform to accurately monitor national crude oil production and exports. The figures offered by the NPMS differ hugely from those returned by OPEC's own monitoring which is worrying enough, never mind the potential conflict that could come from any mudslinging between rival figures.

Quite apart from whose figures are correct, the second reason is to me more compelling: barrels per day is a rotten metric for assessing the strength of our economy anyway. Barrels per day is simply a reflection of production, and doesn't assess the value that an oil company is delivering locally, the training it gives its employees, the benefits it shares with local communities or even the taxes being paid to the government to help other Nigerians. If Nigeria is actually going to thrive, rather than just pump out greater and greater sums of oil, we have to make sure we're growing from the bottom up, not the top down.

So think of it like a football team: we encourage younger players, train them properly, support their education alongside, give them opportunities to learn from older and more-established players, give them opportunities to play in the big leagues and watch as they form part of a championship-winning team! Blaming the weather does a disservice to the team, but only if the team is being managed properly in the first place.

FootballOilOPECfiguresstatisticsProductionNigeriaIOCs

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