The oil industry’s upstream activities such as exploration, production, development and downstream activities such as refining, distribution and marketing all depend substantially on data. No wonder therefore that the first stage in a search for oil fields or presence of oil deposit starts with acquisition of seismic and other geophysical/geochemical data base or bases as the case may be. Acquiring these data sets are very time consuming and a times extremely very expensive processes.

Generally, it is based on seismic data that oil fields/blocs are apportioned, auctioned and developed. But without it, there will be no any chance of finding oil deposit. However, acquiring seismic data alone is not a guarantee that oil deposit will be readily discovered. Otherwise, every inch of an oil bloc can be transformed into a producing oil well rather than a “wildcat” or dry hole!

Still, data is the foundation and as well as the building bricks for oil and gas upstream and downstream activities. Huge sums of money go into its acquisition and once acquired, it becomes very highly priced commodity and well kept and top guarded secret from competitors. This is where the aged-old phrase: “Information (data) is power” is for real.

Once discovered and brought out from the deep bowels of the earth crust in semi-liquid form, crude oil (it is absolutely crude in the true sense of the word) becomes highly priced and strategic commodity. But in its natural state, crude oil has little practical use. However, by refining it, according to industry sources, the following highly valuable products are produced amongst others:

1) Liquid petroleum gas (LPG)

2) Petrol or motor sprit (gasoline as Americans call it)

3) Household kerosene

4) Diesel

5) Jet fuel

6) Gas oil

7) Fuel oils (Low Pour Fuel Oil and High Pour Fuel Oil (LPFO/HPFO)

8) Heating oil and

9) Bitumen.

Refining crude oil also provides the by-products or “feedstocks” for lubricants and, most importantly, for petrochemicals which are the basis for plastics, paints, adhesives, detergents, resins, solvents, synthetic fibres and rubber.

However, according to industry sources, the type of crude oil processed determines the type and quality of product yields - for example lighter and 'sweeter' Nigerian Bonny Light or North Sea Brent blend equivalent or Arabian and or Venezuelan heavy crude - have an influence upon the mix of products a refinery produces. For example, three out of the four Nigerian refineries process a range of predominately Nigerian light crude oils (more than 70% of the total). This helps the refineries produce the high quality, low sulphur road fuels that modern vehicles require to deliver low exhaust emissions.

According to industry sources, typically, a barrel of Nigerian Bonny light or North Sea Brent crude oil will yield 3% LPG, 37% petrol, 25% diesel, 20% kerosene (jet fuel/heating oil) and 12% fuel oil (heavy residue for power generation). However, Kaduna refinery was designed to process imported heavy crude oil (largely from Venezuela). A heavy crude oil will yield a much smaller proportion of petrol, diesel and kerosene - perhaps 50% - and the balance fuel oil residue which requires further processing to transform it into lighter more useful fuels.

I decided to provide the above lengthy oil industry overview to underscore the importance of the statement regarding paucity of oil industry data in Nigeria made by Rt. Hon. Speaker Bankole recently at a function in Lagos. It all started when Speaker Bankole alleged that the Nigerian National Petroleum Corporation does not have the exact record of what the country has earned from crude oil sales since 1968; some 40 years ago!

This statement irked the former Petroleum Resources Minister, the venerable Professor Tam David-West. Professor David-West countered and repudiated this allegation by equally claiming that the Hon. Speaker exaggerated the situation and even went as far as challenging the Hon. Speaker to a public debate over the issue.

I think the two gentlemen are right in what they each and individually believes is the true situation regarding data and information records in the Nigerian oil and gas sector and industry. My guess is that Speaker Bankole was speaking probably from the strength of a House Ad-hoc Committee Report that investigated the affairs of the NNPC and its subsidiary companies in 2000 during the Speaker Rt. Hon Ghali Na’Abba’s leadership. The Executive Summary of that report abundantly stated that:

1) “NNPC has not been working cordially with the DPR who are authorised by law to monitor the activities of all and sundry in the petroleum sector. Hence Shoddy or Nil data from DPR in many areas of export;”[1]and also that:

2) “Record keeping in NNPC is shoddy. Data from NNPC to the Office of the Accountant General of the Federation (OAGF) do not agree with final ones from NNPC itself. This suggests fraud.”[2]

Hence, Professor David-West may be a bit too hasty in condemning or repudiating speaker Bankole, who seemed to have spoken from the available information before his Honourable Chamber. Probably, the document from which Speaker Bankole based his statement from could have overstated the facts.

However, it is common knowledge that Nigeria plans without facts. This notoriety earned the country the sobriquet which says that we are a nation that plans without facts; courtesy of the pioneering work of Wolfgang F. Stolper (1966): “Planning without Facts: Lessons in Resource Allocation from Nigeria's Development,” (Cambridge, Massachusetts: Harvard University Press, 1966).

It is not an overstatement therefore to say that the NNPC Group and the DPR are the most secretive of all the public agencies of the Federal Government of Nigeria. And they have both good and bad reasons to be secretive. The obvious and most important good reason for generally being secretive by the operators in the extractive industries sectors is the one I already mentioned above; with respect to Seismic data acquisition and ownership in the oil industry.

Nevertheless, there are a lot of other reasons why the NNPC and other closely related parties in the oil and gas sector and industry hide data and information when they are available and or fail to keep them when they are mandatory required to collect and keep them. Space constraint will not allow for further elaboration here.

However, according to Professor William L. Ascher (1999): “Why Governments Waste Natural Resources.” Baltimore, MD: Johns Hopkins University Press 1999), poor information and low accountability is very attractive in the manipulation of natural resources exploitations.

The explanation for this behaviour is largely credited to both technical complexity and physical remoteness of the locations of the resources. Hence, these conditions make it possible that only the resource exploiters themselves (and even they, sometimes, lack such information owing to lack of capacity) can translate the physical characteristics of the resources into economic ones, according to Ascher (1999).

This probably explains the reason why Engineer Funsho Kupolokun, the former Group Managing Director (GMD/CEO) of NNPC refused to provide the office of the Auditor (or is it Accountant) General of the Federation the Audited Financial Reports and Accounts and other related data and information covering the operations of the NNPC Group.

Only recently, the finance ministry officials informed the National Assembly that Engineering Kupolokun refused to surrender Audited Financial Statements of Accounts of the NNPC to them and argued that the reports are highly technical and will require the finance ministry officials to undergo special training seminars before they can comprehend and interpret the contents of the documents!

Ascher (1999), however, concluded that natural resource exploiters (i.e. oil companies) avoid even a minimal degree of purely financial oversight for fear of the risk of being exposed of their manipulations in the exploitation and development of natural resources. Thus, they create an atmosphere of data and information vacuum in their operations and institutional culture and behaviour.

Hence, even if Professor David-West knows better than Speaker Bankole about the data and information “bunkers” of the NNPC and DPR, the keys of those “armour-plated” bunkers may be inaccessible to the National Assembly and the Nigerian general public. The risks of being a good corporate citizen by ensuring greater corporate transparency and accountability are too high; given the alleged rots within the sector and industry, which need to be kept out the purview of even a purely minimum financial oversight by the National Assembly and the Nigerian public – the ultimate shareholders/stakeholders of the NNPC and DPR.

This will be the acid test of the current attempt to investigate the NNPC, its subsidiary companies and the DPR among others. For example, for a complete and successful investigation, the Ad-hoc Committee investigation the affairs of the NNPC Group and the oil industry must have access to the following data and information. This means there must be full disclosure by all agencies and individuals required by law and the instrumentality of the House Resolution enabling and empowering the investigation. Thus, full disclosures are required with regards to the following oil industry activities:

Crude oil and refined products production: Statistics that cover actual production, consumption, stocks, imports, exports, costs and prices (including but not limited to costs implications, revenue flows etc) organised either on a monthly, quarterly and or annual basis - all measured using appropriate units of measurements. The data sets should be organised and structured as follows:

A: Crude Oil Production – 1999-2007:

1. Annual total crude oil produced by both JV, PSC. SC and Independents (excluding condensate, Natural Gas Liquids (NGL)); broken down into: a) Cost oil, b) Profit Oil c) Federal Govt./NNPC Share (%), d) Operator’s share (%) and e) Independent producers etc.

2. Annual total condensates produced as in [A: 1] above.

3. Annual total exports (less un-utilised domestic allocation for local refining)

4. Annual total  exports of un-utilised domestic allocation for local refining

5.                  Annual total import of heavy crude oil for use by the Kaduna refinery and petrochemical complex

B: Refined Petroleum Products Production - 1999-2007:

1.                  Annual total local petroleum products produced (see Table 1)

2.                  Annual Refineries Throughputs

3.                  Annual Changes in Refineries Throughputs

4.                  Annual exports of products

5.                  Annual imports of products

The above categories of data templates when the data is obtained should undergo quality and accuracy assurance reviews to ensure that they meet minimum basic standards and are produced free from any political and or industry interference and manipulation/cover-up.

The data and information obtained can be used to provide an evidence base which is vital both for policy-making, legislative oversight activities, and academic research and for long-term investment decisions.

Of course in most of the advanced countries these basic statistical data are easily accessible to those who need them. They are usually compiled by relevant government statistical agencies/bureaux in close cooperation/collaboration with industry players/actors. Why is this not the case in Nigeria? It is up to the National Assembly to make this possible especially if the Freedom of Information Bill (FOI) is reconsidered and passed into law.

Given the scope of activities and complexity of both the upstream and the downstream sectors, producing accurate statistics is a vital and integral part of discerning changing patterns in crude oil and refined products supply, demand and consumption among other issues under President Umaru Yar’Adua’s envisaged reform agenda for the extractive resources sector.  What is needed is an entirely new commitment to public accountability, transparency and corporate reporting and full disclosures doctrine.

As a nation that is overwhelmingly over-dependent on its oil and gas natural resources, we should be mindful of all the challenges facing the sector and industry at the moment and into the future. For example, Nigeria’s high degree of dependency on imported fuel products has been a national disgrace and a subject of numerous analyses and concerns even the West.

It has also been identified as Nigeria’s Achilles’ heel; which if not solved immediately could cause serious unrest capable of undermining Nigeria’s weak democracy. Therefore it is important for our legislative, executive and judicial branches of government; including organised civil society community/stakeholder groups to be alert and awake to address these challenges, and getting the policy and legislative framework right is integral to this new thinking and paradigm shift.

It is also important to remember that dependant upon oil and gas resources export revenues and consumption of petroleum products will continue to be part of our national economy and meet the major part of our immediate and future energy needs and our national aspirations under the much touted and talked about Vision/or Agenda 20-2020 inherited by President Yar’Adua from former president Chief Olusegun Obasanjo and his economic team.

The time is ripe for change and the new crop of our National Assembly members; particularly in the House of Representatives are beginning to show that Nigeria and indeed, Nigerians deserve to have a twenty-first-century legislative, executive and judicial leadership type and style. For instance, according to Simon Zadek (2005) “Democracy is above all about being able to hold governments to account…This requires that all centres of power and influence, including business and indeed civil society and labour organisations, can be held to account by citizens and their (also accountable) representatives” (Simon Zadek, September 12, 2005: “Reinventing Accountability for the 21^st Century”).

In light of the prevailing circumstances discussed above, I think both Speaker Bankole and Professor Tam David-West need to forge a common front and strategy to enhance and ensure transparency, accountability and full corporate reporting and disclosures in our extractive industries sectors and indeed, throughout the rest of the national spatial economy; drawing from the best thinking and international best practices. If there should be any debate (which I think there should be), it should be on this fundamental issue of entrenching transparency, accountability and full corporate reporting and disclosures in our national interest and psychic.

Abubakar Atiku Nuhu-Koko

Sunday, 18 May 2008

Robot  # 1 | 19.05.2008 23:39

Both Speaker Bankole and Professor Tam David-West need to forge a common front and strategy to e...Read the full article.

Agidimolaja  # 2 | 20.05.2008 01:32

Thank you Mr. Abubakar Atiku for that exhaustive explanations.It is now crystal clear that Dimeji, after all, did not function beyond his scope. People should now be greatly surprised as to why Tam West exploded so quickly.Has he something to hide concerning his era as our Oil Sheik?Is he afraid of something? I expected Tam West to have given us this kind of detailed explanations that Abubakar just gave us instead of raining curses and abuses upon Dimeji. Tam West, Sir;isn't it time for you to put your intellectual house in order? Trust me,it may not be too long before you wilfully rename yourself as "menace" which is far worst than nuisance. For eight full years Tam West did not give Obj any breathing space. Everything he said or printed about the ex-President and his administration is horrible and many a time baseless and totally uncalled for.It is as if Obj really did nothing good. Till date no one can point to any specific good done to this country during Tam West's era as the Oil Sheik.What change did the man make and what impact did his time has upon Nigeria and the masses.None! While Tam West was in power,our debt was not paid off neither did he initiate any move whereby the debt may be paid off. Instead he was collecting gifts and bribes from oil contractors.Yet, Tam West busied himself pointing accusing fingers to Obj and calling his administration "the worst". But anyone in his right mind do know that Obj's era was far better than that of Buhari's where Tam West served. Death and sleep are quite different from one another, Tam. Was Tam West not there as Minister when Buhari was killing innocent souls and detaining several Nigerians indefinitely without trial including people from his Niger Delta area?Was David Tam West not there enjoying the brutalities of Buhari and also cheer-leading him? Today, Tam West is a loudspeaker for his Niger Delta people.But ask Tam West;what did he do for his people when he was in the corridor of power?When Tam West had the power and chance to do it, did he ever defend his people against the injustices that the Federal Governments of this country have been doing to the people of Niger Delta since the first oil well was dug at Oloibiri in 1954? Why are we now just hearing so much noises and bunch of useless nonsense fron this great scholar of micro-biology or whatever he specialises in? Poor Tam!