For the last ten years, we had an oil reserve level of between 15 and 20 billion barrels. Each year we set a target for ourselves: 20 billion, 25 billion, 30 billion and now we are targeting 40 billion by 2010. We have met each of the targets, sometimes ahead of time. Currently we have about 33 billion barrels, which is ahead of our target of 30 billion for end of 2003. So you can easily see that the projection of 40 by 2010 is achievable.

The areas of challenge have been to build up the production in line with the reserve level. The installation of new capacity takes a lot of investment. At the same time, you have to watch the market to make sure you utilise the capacity so installed. To fund the joint-ventures up to this point in time has required a lot of cash injection from the government. So when you add new projects on top of the on-going joint-venture funding, the build-up becomes quite tremendous. Consequently, within these few years the government has explored innovative ways of funding various stand-alone projects. There is currently a shallow offshore project called the ("EA") project, which is among the pilot schemes that will benefit from this new approach where the government is carried. The government starts to enjoy full net profit from the project after the obligation to the investor is met. Alternative funding is likely to come up even more. This is one of the ways we are trying to meet the challenge.
One of the big things that happened to the upstream is the deepwater offshore which came on around 1990-1991, when the blocks were put on sale. Shell was very much in the vanguard of new companies in the deepwater offshore from 200 meters to about 1500 meters of water depth; Shell, Agip, Elf, all the major operators already here, went for it, while Exxon was among the notable outsiders. It has helped to boost the reserve build-up to the 33 billion barrels we have as of today.

2) With this reserve and the building of capacity through innovative funding, how is it going to evolve in terms of the industry?

The aim is to be able to bring production level more or less commensurate with the reserve level. Currently we have a production-to-reserve ratio of somewhere around 25 to 30 years. The government wants to maximise its revenue stream both from the joint-venture projects and from the new production sharing contracts for deep water exploration where the costs are tremendous and as an alternative way to approach it. Government chose to go into production sharing arrangement rather than the conventional joint-venture arrangement because of the funding burden and risks.

To add to what I said on the upstream, I would like to talk on gas. Associated gas production has always been a nuisance because it is flared causing environmental problems. We set various targets dates in the 1970s for flares to be out. We even levied a penalty for the volume of gas being flared, believing that penalty would pressurise operators to start utilizing gas. This punitive effort did not really work. Government thought about it again and realized that it was better to attract people through incentives to utilize gas than to be punitive. Many projects are now coming up, such as the Gas to Liquid Conversion [GTL] project, a big scheme-involving Chevron. We are hoping that many more will come. Independent power generation, outside the NEPA grid, should also enable us to utilize gas, as does industrial consumption in the Lagos area. There are various other schemes that are on hand. These include the LNG project involving Shell, Elf, Agip and of course the government represented by NNPC. It has surpassed the initial target of two trains and now we are already talking of the 6th train. There is also another scheme planned by Agip and Philips Conoco. The government is a partner in all of these schemes, which are anticipated to come on stream in the near future. Together with the West African Gas Pipeline Project, these schemes have a good chance to reduce flaring considerably, if not stop it entirely by 2008.

3) Can you tell us about what concerns downstream and the development in the creation of new industries related to oil?

Nigeria has a population of 120 million people. With the passage of time, the people have become more sophisticated. People move around, industrial capacity is growing, and thus we have a high demand for refined products. Forecasting this many years ago, government built three refineries with a combined capacity of 450 000 barrels per day of crude oil with the intention to satisfy the domestic market. With time, the refineries started aging so much that the crude being allocated to them was not all being refined and some excess crude was being marketed outside more or less in exchange for products. The government's immediate plan now is to encourage more efficient utilization of the installed refining capacity, by involving the private sector. This is also part of the thrust by the government to involve the private sector more in what used to be a total government preserve. This is part of the privatisation and deregulation programme. Government has, for this reason, deregulated the pricing of petroleum products, because it would not make sense if you bring in a private investor into refining and the government controls the prices. So the government had to see the two sides of the coin: deregulate and divest. The depots and pipelines are also targets for divestment under suitable equity share between public and private, at least initially.

4) What are the structures, facilities you are preparing in order to attract investors?

Very basic, make us an offer in a competitive, transparent bid based on the condition of the assets as you see it. We do not want to add more funds than is necessary to keep the assets in basic functional mode. It is a better policy to keep them as such to get what we can for them. It is a transparent process of bidding; people will have access to inspect what is there and place their offer, and the government will look at the best promising offer, both technically and commercially.

5) Can you tell us more about the plans of privatisation?

The issue of privatisation is being handled by the National Council on Privatisation. Under it there is the Bureau of Public Enterprises, which packages the various public companies. They have progressed in the petroleum sector but a lot more in other sectors. The next targets in the oil sector are the refineries and distribution network. These are all part of the new economic reforms being pursued by Mr. President in his current tenure.

6) There are a lot of projects regarding regional integration; one of the biggest starting in Nigeria is the West African Pipeline. Can you tell us about Nigeria's involvement in this project and what it means for the economy?

Nigeria is the driver of this project; the World Bank and Nigeria jointly hatched the idea. Given the number of West African countries with growing economies and with such a major energy resource such as we have here, it is only natural that while supplying our industrial areas, such as near Lagos, we should extend to our neighbours; Benin Republic, Togo, Ghana, the Ivory coast

7) The Nigerian economy has been dominated for years by the oil sector, bringing most of the foreign currency, contributing a lot to the GDP. There is a tendency to diversify to other sectors, what is the role of the oil sector within this development?

It is a question of how funds are appropriated. In fact, the contribution to GDP is not as high as Government would have liked to see it. It is still very low (between 12% and 15%) because there is inadequate linkage between the oil sector and the rest of the economy. In terms of foreign exchange, oil is bringing between 90% and 95%. The oil sector has been so far a kind of enclave within the economy and government wants to put a stop to it. Mr President is coming up with basic reforms, and one of the platforms of these reforms is to make sure that there is better linkage between the oil sector and the other sectors. Funds that come from oil are ploughed back into other areas such as agriculture, which is commanding quite a high priority. A number of questions can be asked - What is the local contribution into oil activities, not in terms of cash or materials only, but also in terms of know-how? How much can Nigeria contribute in human capital and know-how? It is going to be quantified in all these dimensions. With this in place, in the next few years, there should be better way to monitor the level of GDP contribution from the oil sector.

8) How do you see the oil sector evolving in the next ten years?

In a democratic setting, you can make very long-term projections but any incoming government has the right to review such plans. As far as this administration is concerned, by 2010 the reserve level is projected to be 40 billion, I have already said that we are able to achieve that. As far as downstream is concerned, there will be an end to products price fixing, we foresee more refineries coming in, greater utilization of gas, greater local participation. So in the next ten years, these are the areas where major improvements are going to be made.

9) Could you tell us about your career path?

I have been an oilman right from the beginning. After acquiring primary and secondary education, I was picked by Shell to go abroad for my studies; I studied Geology at the Imperial College of London. On finishing my doctorate degree programme, I came back to join Shell. I have thus been a Shell-man right from the beginning: first as a scholar, then an employee. I went through the ranks and became the first indigenous chief geologist in the industry, then first indigenous general manager and director of exploration, which is one of the functions of high conceptual content in the oil industry. Up until 1992, I was with Shell. Then I was seconded to NNPC. It was the first time someone from the private sector came in at the top of NNPC. I was in that post for about 18 months until a new government came into place and retired me. I have made contributions to national discussions on petroleum matters over the years since my retirement. Mr. President has given me an opportunity to serve again so I came into this position just a week ago.

10) What would be your final message and recommendations to foreign investors?

The resource base is here; with respect to the downstream, the market is here. Within the larger economy, one can make end products such as plastics and fertilizers both of which are consumed in large quantities. You can do a lot of other things; the population is here. The investment climate is very good: there is a vast land mass, a successful democratic system of government, with a very good relationship between the different arms of government. This is a democratic country moving ahead with very dynamic people. I could not recommend a better country for investments. People are very friendly and accommodating, it is the best environment for any investor. Mr. President does not only go overseas to market the country for investment opportunities, but goes beyond that in the various follow-up programmes. It should be very encouraging for an investor to know that there is real political will and commitment coming right from the top.