Experts have expressed worry about mounting challenges in the oil and gas sector now being aggravated by the falling global oil prices.

They stressed the need to address issues such as poor state of the refineries, dwindling oil and gas reserves, rising cases of oil theft, continued delay in oil licensing round and non-passage of Petroleum Industry Bill.

These challenges, they said, were impeding the growth of the oil industry, on which the country relies for 95 per cent of its foreign earnings and about 80 per cent of government’s revenue.

The President of the International Association of Energy Economics, Prof. Wumi Iledare, in an emailed response to enquiries from our correspondent, said the governance of Nigeria’s oil and gas industry was currently not at its optimum.

“Oil and gas reserves are declining. Leadership in the industry changes per second with impunity. The structure of the industry governance is shaky because of putting round pegs in square holes and substituting inexperienced professionals for experienced ones; and enthroning personal interests over national interests in the decision making process. However, I would not say this is limited to the oil and gas industry alone,” he said.

He said the Nigerian National Petroleum Corporation had had five group managing directors since 2010, compared to only two GMDs from 1999 to 2007, adding that the NNPC “group executive directors and managing directors of subsidiaries are changed abruptly without proper succession plans.”

Iledare, who is also an emeritus professor at the LSU Centre for Energy Studies, United States, said, “Look at other OPEC national oil companies; you will not see such an erratic change of guards and structure. We have had four regulators for the upstream sector since 2010 and three executive secretaries in the Petroleum Technology Development Fund in recent memory. Even recently, all the PTDF GMs were let go with ignominy. We have had three ES for the PPPRA.

“The industry still operates as if the NNPC has an executive board chairman, a clear violation of the NNPC Act. How do you explain the fact that the President depends entirely on the Minister of Petroleum on nearly everything that pertains to oil and gas in Nigeria? There is no minister of state. No special adviser on petroleum matters and I am not sure the GMD of the NOC has a direct access to the President unless through the minister,” he said.

He further said that perhaps the industry would have done better if the President did not just put the governance of the industry in the hands of just an individual since 2010.

In April 2010, Alison-Madueke was appointed as the minister of Petroleum Resources.

“Our oil and gas industry is under her watch, but in Nigeria, one of the things rubbishing professionals or good technocrats who are given appointments by government is interference, which could be sectional, political, tribal or even religious,” said an energy analyst and Technical Director, Drilling Services, Template Design Limited, Mr. Bala Zakka.

The Programme Manager, Nigerian Natural Resource Charter, Mr. Ademola Oshodi, said, “The oil and gas industry has seen the continual stalling of the passing of the PIB, divestment of the industry by International Oil Companies, huge rise in oil theft against the backdrop of the emergence of big contracts to protect the facilities by Niger Delta ex-militants, allegation of an unaccounted $10-20bn, and the continuous breach of the gas flaring agreement by the IOCs and lack of enforcement by the government.”

Despite the growing appetite from indigenous oil companies for more upstream assets and foreign investors’ still showing interest, the country has not held licensing round for new exploration acreage since 2007.

Exploration activity levels are at their lowest in a decade and only three exploratory wells were drilled in 2011 in the country, compared to over 20 in 2005, according to the Energy Information Administration, the statistics arm of the US Energy Department.

An energy specialist at Ecobank, Mr. Dolapo Oni, said, “Although Nigeria has strong exploration potential, if licensing rounds are not conducted soon to meet the large appetite for oil blocks currently from indigenous and foreign firms, we could see some of that exploration capital allocated elsewhere – Liberia, Cote d’Ivoire and Ghana are pretty interesting now. Namibia and Gabon are equally coming up too.”

There are strong indications that the marginal bid round, which was inaugurated in November 2013, would not be held until after the election next year.

According to the minister, 31 fields will be put on offer, with 16 located onshore, while the remaining 15 are on the continental shelf. Following the announcement, the Department of Petroleum Resources said the process would not take more than six months as it was slated to commence December 2013 and end in April 2014.

The International Energy Agency, in its 2014 Africa Energy Outlook, estimated that Nigeria currently was losing 150,000bpd to oil theft, the equivalent of $5bn a year.

Stating that oil theft was one of the challenges facing Nigeria’s oil sector, the IEA said, “This has been a problem in Nigeria for many years, but the scale has increased.”

For 2014 oil production projection of 2.388 million bpd, the government applied a risk factor (production losses) of 300,000 bpd due to production shut-in resulting from activities of oil thieves and pipeline vandals in late 2012 and early 2013.

-Punch