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INTERVIEW WITH:
MR ARET ADAMS
FORMER SPECIAL ADVISER ON PETROLEUM
TO THE FEDERAL REPUBLIC OF NIGERIA.
February 26th,1999 |
FORBES: We’d like to start with a general question. Nigeria now is among the biggest producers and exporters of oil in the world. But how do you see the future of the industry in about 5 years’ time or so?
ADAMS: I think the oil-and-gas industry in Nigeria has a very, very bright future and I think we’ll see more emphasis on gas development. You must be familiar with the recent announcement by the Shell-NNPC Joint venture, regarding the major off-shore discovery which will contribute gas to the Nigeria LNG project, for which the first train is already being planned. We are also still having major discoveries off our (shores), so while that is happening, because we’ve been an established oil-producing country, we really want to see what we can do. A lot more advances are being made in the utilization of gas, in the next couple of years, gas will also become a very dominant product in this country.
FORBES: You mentioned that there’s been recent discoveries of off-shore gas. There’s also been oversea discoveries of off-shore oil. Can you tell us what quantity oil and gas in the sub-sector and for how many years there are reserves?
ADAMS: Well, if I can … we still have years of reserve, because we have estimated at anything between 35 and 50 years. That number depends on how much oil you are actually producing at a particular point in time, but of course the government is also doing everything possible to encourage investors, companies in the oil industry to continue exploration, so, whereas today we might say we are thinking of 35 years, from just sheer discoveries alone you can find that within a year, that same figure goes up to 40, 50 years. That is a general statement. You can expect our production of oil to last about 35 years, at current rates of production. But with the targets we have set in our Vision 2010 programme, to reach about 40 million barrels in 2010, and with all the efforts being put in, barring what we have seen at this time where we have global depression in the oil industry we have seen this cycle move forward, up and down, I expect that on balance, we’ll be able to meet that kind of target and therefore we’ll increase the life-span of our oil industry much beyond the 50 years that I have mentioned.
FORBES: So what’s been the direct effects of oil crisis on Nigeria?
ADAMS: Well, our income as a nation from oil, the petroleum industry has decreased by at least 40 percent, which is a significant decrease for anybody in the economy. For me, in my personal opinion, it has its good points, in the sense that we now have more serious pressures to look at the way we are doing things, our pattern of expenditure, the way we manage our economy, and I expect to see that we are going to do things much better than we have been doing in the past.
FORBES: For example, the pipelines, the refineries, I know that the major refineries are being refurbished and reconstructed. The Kaduna Port Harcourt and Warri…
ADAMS: That’s right.
FORBES: Have you got any foreign companies which are intending to help you in this reconstruction?
ADAMS: What we’ve done in the past, when we want to do our regular, bi-annual, turn-around maintenance, we give out a tender, get contractors to come and help us to do it. The new thrust of course…the mode now is to privatize most of these facilities. The first tranch, the government announcement said 40%, most of these investments… I believe with time when we’ll all see the benefits of privatization, I believe in my lifetime I will see that, everything is now in the hands of the private sector, because really, my personal opinion is that government should not be anywhere near any investment that is expected to be commercial and to yield profits, because we have seen in every aspect of our economy that government is not a good manager of petroleum investment at all. And thank God, most Nigerians have said that this is the way to go. Perhaps not exactly in the tenure of this administration, but shortly after, within this year, there’ll be some major privatization exercise completed.
FORBES: Which foreign multinationals are going to be involved in this phase of the privatization?
ADAMS: Well, I can’t tell you because it’s not been published. There is the Bureau of Public Enterprises (BPE) which really has the mandate to privatize all these enterprises. The last public announcement they made, only last week, they named a number of the key,… in the oil sector, and again they are not ready to disclose the names because they still have to do … due diligence, and all that … so, it looks like it’s (getting) a good reception, internationally.
| FORBES: Em, what would say are the competitive advantages of the Nigerian oil sector in the world-wide market at the moment and in the future?
ADAMS: At the moment, we’re still a major, low-cost oil-producing area and that’s a major advantage. We’re still, in spite of the reputation we have had in the past… Government after government, administration after administration has demonstrated that we abide by the contracts, by the agreements by which foreign entrepreneurs, the major oil companies, their service companies and so on… I think geographically we are very well-positioned to trade with Europe and the US as far as oil is concerned, so on balance, we have major advantages over a number of other oil-producing countries. I think the fact that we are also English-speaking … in many instances it’s a big help. I was talking to the guy that just left here. He is a computing expert, Indian. He just trains a lot of computer hands and develops them and sends them to the US. He is amazed that we are not doing that because we are at advantage in that we speak English and the Americans can understand us more easily than (they can) the Indians, and it seems to me that it is a plus being an English-speaking country.
FORBES: Are you investing heavily as well in your human resources … how are you developing your personnel?
ADAMS: Yes we are, but I personally believe (that) we are not doing enough. I expect that the new administration will really invest heavily in this area; the public sector of the oil industry which consists essentially the Department of Petroleum Resources, and NNPC. NNPC is doing quite a bit, because they have the funds--the DPR has really almost been neglected for the last couple of years. So, I have submitted proposals which are receiving attention, to improve investment in training and human resource development in DPR.
FORBES: So the privatization programme is taking effect as of now; what measures is your Ministry taking to accommodate foreign investors, people who have not necessarily established themselves here already, to introduce the country to the market and to attract them?
ADAMS: To tell the truth, we would like to see the presence of more entrepreneurs who have not already established in Nigeria. What we are doing when we open up, is to have a greater experience of those who are already here. I believe we are not really opening up. Opening up for me means more new people coming in to invest in this country.
FORBES: To create more competition.
ADAMS: To create more competition, more jobs, em… more diversity really, because I think we’ll benefit much more from that. The strategy that the Bureau of Public Enterprises has taken was to advertise and invite both local and foreign companies, to try to impress them in investing in Nigeria. The big debate (as to) whether that is the right way to go, in my opinion is, the more we open up and try to tell the world about it, the better the chances. Some people are of the view that in any sector whether it is steel, or oil and gas, there are a couple of … the ten, twenty very well-known, big companies operating in these areas. And really what you need to do is to go to them to say look, we want you to come and invest here.
FORBES: Good.
ADAMS: What the BPE has done was to advertise, perhaps what to do, in addition to having advertised, would be when we now look at the kind response they get, if they asked me, I would say look, still go and talk to the big people in this business world-wide, and invite them to come and participate in the exercise. I think that way, we can have better response.
FORBES: Well, on a personal level, tomorrow is election. How do you see the future of Nigeria with the new government coming in?
ADAMS: I am very excited, very, very excited, I believe we’ve seen all the disadvantages of military regimes, no matter how benevolent they are. Nigerians are really yearning to participate generally in government, and therefore I see tomorrow’s election as a major turning point in our national life. (it does not) really matter who wins. The fact that we now have thrown up, two people, based on free associations of political parties, free choice, and they are going round the country canvassing for votes, I think whoever emerges as President, will take us to the promised land.
FORBES: Well, thanks very much Mr. Adams. |
© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Nigeria published in FORBES Magazine,
May 31 st issue.
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NIGERIA
