I started my career in the oil industry as a Geologist in Texaco Overseas 10 years prior to joining NNPC. Precisely, in 1977, I was called upon alongside other Nigerians in various oil companies to come together as a result of the merger between Nigerian National Oil Corporation (NNOC) and the Ministry of Petroleum Resources. I was posted to Warri, in charge of the Warri Zonal office and The Department of Petroleum Resources then an Inspectorate. Later, I moved on as the General Manager in charge of Port Harcourt Refinery, next as General Manager, Kaduna Refineries and Petrochemical Company.

Interestingly I was the 1st Managing Director of Nigerian Petroleum Development Company (NPDC) Benin and also Eleme Petrochemical before I was promoted to Group Executive Director Upstream and Gas (now Exploration and Production) Directorate before being elevated as Group Managing Director. Then, Managing Directors used to have a very short life span in office so, my tenure lasted for only one year, nine months.

NNPC has gone through several reorganizations. Kindly throw more light on these phases and the basic reasons for these structural changes.

The first change occurred in 1973 when NNOC was formed. Prior to then, Ministry of Mines and Power had been managing the affairs of petroleum since its discovery in Nigeria. In 1977, the first major re-organisation took place which was the merger of NNOC and Ministry of Mines and Power to form the NNPC.

This was in reaction to what was happening in OPEC then, causing oil producing nations to take their destinies into their hands rather than allowing foreigners to do every thing and also to consolidate the human resources into one organization since there was a dearth of qualified personnel at that time.

In 1988, after many months of consultations with Arthur Anderson, the government intervention brought about the formation of eleven subsidiaries, since then only minor changes have been made.

What is your Understanding of the Issue of unbundling of NNPC? Do You Think it is a Good Omen forNNPC?

There are a number of legal issues that are involved here. All the Joint Operating Agreement (JOA) were
signed between the government and the International Oil Companies (IOCs) and Production Sharing Contract (PSC) between the companies and NNPC. All those concessions are NNPC concessions. If you are going to unbundle then there would be the issue Asset ownership - who keeps those assets? The new company or NNPC? If it is the new NNPC, then what is their asset base? Any oil company that does not have a concession to explore and produce is not an oil company.

However, the new company, when it comes into place, should be such that it is empowered to operate – free to go to the Stock Exchange, pay royalties, taxes and dividends to government and part of the profit ploughed back into operations.

Whether we bundle or unbundle, if we don’t give them authority to run on a commercial basis, perhaps our children will come and rebundle what they are about to unbundle.

In any case there is nothing wrong with the name NNPC. Change of name without change of substance means nothing. As for the Petroleum Inspectorate Commission, it is long over due. If the industry is to move forward, the regulatory body should be a well funded and a fully independent commission as has been proposed several times 15 – 17 years ago.

Another part of the ongoing reorganization is the National Petroleum Directorate which is to
replace the Ministry of Petroleum. The objective is very good because there is a need for professionals to be in charge of that aspect of government planning and thinking. The PPMC is going to merge with PPRA to form the Petroleum Distribution Authority (PDA).

PPMC as it is should be a commercial organization. The marketing and sales of petroleum products is an integral part of an integrated oil company, so the federal government has to sort that out. In the downstream, there is a need to have an integrated oil company. Refineries must be allowed to operate commercially and given time to evolve on their own.

At the time I took over from Chief Akpeyi, the Port- Harcourt Refinery was being run commercially. As a result, the refineries were working at a capacity between 95 – 98% efficiency some times even 102 – 105%. The operations were commercial until funding became an issue after NNPC came in.

Are you saying that you are an advocate of deregulation of the oil industry?

Yes, People should bring in products, sell at a price that will enable them to recover cost and make gain but if someone somewhere should insist on fixing the price at which to sell products; then NO! The reason we are yet to have new refineries is because of the fear that fixed prices may not be beneficial. I believe that deregulation will be beneficial for the industry though there should be a price check to make sure that people don’t make undue profit; if they do; they should be able to pay the commensurate taxes.

The Crisis In The Niger Delta Seems To Affect The Operation Of The Oil And Gas Sector. What Steps Would You Suggest In Addressing This Problem?

The crisis has had a severe adverse effect. Upstream drilling activities are lower than before. Pipeline construction and other production activities are even less and this affects movement of products. Most of the construction companies have either relocated or are spending too much on security which makes the price of their projects high. There is fear in the minds of people whether individuals, oil companies and even the government authorities.

The people in the Niger Delta feel they are not being adequately compensated, not being develpoed alongside with he oil and gas industry that provides majority of the fund for the development of the country. Now the government is taking it in different ways; but I believe there are other ways forward:

1) Dialogue: Government should show sincerity in the promises it makes inorder to provide a peaceful environment.

2) Infrastructural Development: Roads and Bridges should be put in place so that people can move around, create employment and generate wealth in the communities etc.

3) Political Discussion on Resource Control and Derivation should be continuous.

There Seems To Be A Belief That NNPC Is Not Moving Along With Its Peers in Other Nations, What Do You Think Is Responsible For This?

Apart from Statoil that had some technology in ship building because it is a maritime nation and used some of these technologies in their upstream activities, there is also PETRONAS - the Malaysians who had more skilled personnel and were allowed to run commercially without frequent government interventions and changes.

They had to report only twice yearly on their operations. This has not been the case with NNPC. When NNPC was formed in 1977, the level of authority of a Managing Director was higher than the level of authority the Managing Director now has and yet the operations are growing bigger. The Corporation has not been able to move so fast because it was not challenged on commercial basis.

If NNPC is to move forward, it should be purely commercial and a Technical board should be formed with people who are knowledgeable in those areas and can add value to the operations. Let them bring in their own budget and say what they want to do within a given time and then be held responsible for it.

Is This To Say That With The Unbundling We Are Going Back To The Old Days?

It is not unbundling. There is nothing wrong with the structure we have now it is only how we operate it. Every Organization looks at their circumstances and change their structure to suit those circumstances.

NNPC as it is can look at what it is doing now. It has Independent Power Plants (IPPs) which were not there before; these are areas where they can create a new unit to handle. NAPIMS was set up to manage the company’s investments. Let the unbundling be from the inside. Companies have always been changing structures.

Whether you call it unbundling or restructuring, if not done on commercial basis, change has not yet occurred. The government needs to believe that the workers can do the work, if they don’t, they should replace them with people who can perform and let them be the ones to come up with a new structure that can work and take their suggestions or recommendations to government for approval.

You Were A Group Managing Director (GMD) In NNPC, Were There Decisions You Made or Failed to Make That If Given the Opportunity Now, You Would Act Otherwise?

One area will be the deep offshore - the Production Sharing Contract (PSC). I did not have enough knowledge and expertise in negotiating the PSC, but the issue of PSC at that time was to encourage investors. And that was a good idea. If I was put there again, at that stage, I would do the same thing but with the details of the agreement we made with the companies, perhaps now, with a sense of hindsight we would have gotten better deals. More recent GMDs have been tackling that problem to make sure that they get better deals.

Apart from that, another thing we did that is not working is the pipeline system. Left to me, every major city will have its own petroleum depot and pipeline, because it is the cheapest way to transport products. It is not working because we did not know people will be breaking the pipe lines and stealing the products.

PipeLine Vandalization And Kidnapping Are A Major Problem Faced Today. How Would You
Tackle It If You Were Given The Opportunity To?

I am not a military man but this is one area I think an offender should be given a life sentence. He should spend the rest of his life in prison until he is too old to break a pipeline. Kidnapping is also a terrible offence and should attract life sentence or a maximum punishment. No man has the right to deprive others of their freedom. These acts affect the industry and the only way the majority could benefit in doing business is when there is an enabling environment. As it is with the vandalisation and kidnapping, oil
companies are abandoning the area.

We Are Looking At Having About 40 Million Barrels Reserve Of Crude Oil By 2010. Do You Think This Is Feasible?

2010 is only 2 years from now and the only feasible way is if all the oil drilling activities in the swamps and upland are carried out and if we have peace , then it will be possible. All things being equal, oil industry is an organised and focused sector which is able to achieve its targets. I believe it is achievable.

Gas Monetization And Utilization Is A Major Factor In The Oil Industry Today, What Do You Have To Say On That

We produce a lot of gas in our refineries. We need gas to be processed to liquid for export purposes; but most importantly we need this gas for the development of our economy.

People used to say that gas is the gold mine of tomorrow but I say gas is the gold mine of the present and not the future

The best way to use it is in power generation, and as feed stock for industrialization. The standard of living will increase; there will be increased business life. We must monetize our gas and even though we get foreign exchange from exporting it as LNG, gas is a must for internal development.

Are You An Advocate For Nigerian Content?

A big Yes. When you import labour as input that is not Nigerian Content. The oil industry itself does not employ many people. What employs people is the ancillary support services – making valves, pipelines etc here in Nigeria rather than importing them is what gives job and direct link between the oil and the economy and spreads prosperity. I believe very strongly in the Nigerian Content.

At The Height Of Your Career What Were Your Major Challenges.

I enjoyed doing my work so each time I was moved around; I enjoyed it. However, there was a major challenge and that was how to ensure product delivery as the refineries had to work at maximum capacity. In setting up the NLNG, change of technology and awarding the contracts to those who could make all the arrangements for the take off of the project posed a major challenge. Another area of challenge was the negotiation of the PSC Agreement.

At that time, we lacked the experience in that area. Persuading the companies to go to the deep offshore and convincing them that there was oil there was not easy. The human resource challenge, managing people, communities and all of that posed different challenges. There are quite a lot of things that happened in the 20 years I spent in NNPC.

Can You Tell Us Your Major Achievements?

They are several but first, as Operations Manager, I ran the refineries very well ensuring products refined in the country were available. I was intricately involved in the Eleme Petrochemicals which provided basic tools for industrialization. Also I was very much involved in the NLNG.

Then there were many waivers, several concessions were given but now that it has so much expanded, they have to look at them in order to know if those concessions are still relevant. Most of my life was in the industry and I got to the peak of my career so it is difficult to pin point the best part.

Do You Have Any Advice For The NNPC Staff and Management

NNPC is a good company to work for. Everyone that has the opportunity to work there should strive to do his/her best. The management should have the courage to tell the government what cannot work, even if it means being sacked. Without this, we will not progress because there is too much interference. Management cannot move a company forward alone, they need a dedicated work force; since they are well taken care of, they should reciprocate by g i v i n g 1 0 0 % commitment to the Corporation.