INTERVIEW: Tax holiday needed to boost investments in oil sector, says Pan Ocean asset manager

After 52 years in operation, Pan Ocean Oil Corporation’s strategic investments in exploration have contributed to the development of Nigeria’s oil and gas industry, with NewX, its subsidiary, eyeing non-fossil sustainable energy amid the projection of a reduction in demand for oil and gas products in the future.

In this interview with TheCable’s FAKOYEJO OLALEKAN, Tobore Gbemre, general/asset manager (GM), OML147 and Amukpe Escravos Pipeline (AEP), Pan Ocean, spoke about the company’s plan to help Nigeria achieve its target of two million barrels per day (bpd) in 2025, eliminate gas flaring by 2030, and contributions to host communities.

TheCable: What factors encourage Pan Ocean to maintain its investments amid IOCs’ exit and oil theft in Nigeria?

Gbemre: Pan Ocean is one of the oldest oil companies operating in Nigeria. We have been exploring for oil and gas for over 50+ years, so, we are familiar with the Niger Delta terrain and ensure to put in proactive measures to stem some of these challenges. We have a robust plan encompassing oil and gas production, securing the company’s assets, and ensuring that the produced oil gets to the terminal where it translates into revenue for the organisation.

We implement a mix of human and technology in securing our assets, which includes but is not limited to the use of aerial drones for pipeline surveillance, installation of ultrasonic meters, the use of local intelligence, and pipeline surveillance guards, etc. These have been effective in curbing these infractions. Where there is an incident, we look at where the breach occurred and put measures in place to close that vulnerability.

TheCable: In the last five decades, has Pan Ocean’s contribution to Nigeria’s crude oil output increased?

Gbemre: We just transited a very difficult phase where one of our assets was revoked, which caused serious instability in the organisation. We have been able to navigate that difficult phase and are currently in the growth phase, where we aspire to increase crude oil production aggressively while not compromising on health and safety.

Currently, we just finished the drilling of one well, which we will put into production within the next couple of weeks. Drilling of another well is currently ongoing in our sister asset (OML24). This will boost oil and gas production for the company and the nation. These are interesting times for us, but also a very challenging and busy period where we have concurrent operations going on, and these require high-level supervision and adherence to standards, procedures, and processes to ensure that there are no accidents or incidents in our operation.

TheCable: Are there some incentives you think the government needs to implement to encourage investments?

Gbemre: There are a lot of measures the government can implement to encourage investment in the oil and gas sector by private organisations. This can be in the form of tax holidays, tax rebates, tax credits, and offer exemptions on key energy products and infrastructure, while ensuring the right policy framework that will encourage private investment in the oil and gas sector.

There should also be continuity of government policies (irrespective of change of government) as this can be very discouraging to investors when a new government comes on board and revokes the policies of the previous administration. These policies should be explicit, clearly defining the roles of the private sector and how the government can step in.

Project revenues can also be invested in oil and gas infrastructure that will lead to rapid development. For example, this present government is pushing for the adoption of CNG in powering vehicles, generators, and for power generation. There should be adequate advocacy, sensitisation, and the creation of public awareness in both the urban and rural areas so that the populace is aware of this new technology. The government can further go ahead to partner with renowned CNG companies all around the world to build CNG plants in Nigeria and train and develop the locals on this technology.

This knowledge transfer will lead to a shift from reliance on PMS and AGO to the use of CNG, which is cheaper and not as harmful to the environment while creating a new revenue stream for the generality of Nigerians. If managed well, a majority of Nigerians will adopt the use of CNG as long as the conversion is properly done by experts and they can see the immediate benefits of the shift. There are other such initiatives that the government can partner with private organisations to birth and bring to reality by ensuring the right enabling environment and policies are put in place.

TheCable: Is Nigeria’s plan to eliminate gas flaring by 2030 achievable, and what has the company done to support this goal?

Gbemre: This will take a lot of conscious effort by the Nigerian government to achieve. The government must provide an enabling environment for businesses to incubate, set up and thrive without hostilities. For example, the government can grant tax holidays, rebates, etc, to encourage private investors while ensuring that policies are enacted to support such businesses. Gas projects are huge capital projects requiring a huge capital outlay, hence the need for the government to encourage private investors by creating an enabling environment for businesses to thrive.

The government can also conceptualise and articulate a sustainable programme to decentralise the power sector regulatory environment and incentivise investors to boost natural gas production in Nigeria. To achieve the target of 2030 for a complete flare-out, there must also be a shift and aspirations to pursue renewable energy options. For existing facilities performing below par, the government also needs to carry out turnaround maintenance and debottleneck the transmission arm of power generation, as this is not adequate to transmit to Nigeria’s population. Instead of flaring, the gas can be used for secondary recovery during oil and gas exploration where it is pumped back into the reservoir to aid crude oil flow, it can also be used as a feedstock for the petrochemical and pharmaceutical sectors, domestic use as LPG and other sustainable application of gas (e.g., gas stored as hydrates for future use).

At Pan Ocean, we recently commissioned a vapor recovery unit (VRU) compressor that compresses gas that hitherto would have been flared; instead, it collects it, compresses it and sends it to the gas plant for further processing. This has the two-fold advantage of achieving flare-out and the generation of more revenue for the organisation from gas that would have been flared now being compressed and sold. During a recent Audit of Pan Ocean’s OML147 facility, the NUPRC representative adjudged Pan Ocean’s OML147 as one of the greenest facilities in Nigeria. This is because there is a complete flare-out at the facility, as what is seen is the production flare, which is a safe way of operating the facility.

TheCable: With oil theft and vandalism being problematic for the industry, what can the government do to curb these challenges?

Gbemre: There needs to be a collaboration between the government and oil companies. NNPC has tried in this regard as they are trying to galvanise oil and gas operators to share intel and collaborate in the fight against oil theft and vandalism. Also, human patrols and surveillance can be fraught with challenges as they are not proactive. It is slow and can be predicted, hence the need for human/technology interface in the fight against crude oil vandalism.

Oil companies can explore the use of aerial drones to overfly their crude oil and gas right of way (RoW), the installation of ultrasonic detectors, solar-powered cameras with motion detectors, alarms and voice prompts, etc. These will aid in proactively detecting and scaring away potential vandals. Again, this involves a huge capital outlay and the collaboration of all stakeholders to achieve this (telecom, oil and gas, security, etc.)

TheCable: Host communities have often felt neglected by oil companies. What has Pan Ocean done to change the narrative?

Gbemre: Pan Ocean has a robust corporate social responsibility (CSR) programme that aspires to meet the needs of host communities where Pan Ocean operates. Over the years, Pan Ocean has given out scholarships to host community members, trained youths from the host communities in a graduate training programme, and instituted skills acquisition workshops while also building markets, civic centres, schools, water reticulation projects, etc., in the various host communities where Pan Ocean operates. Human needs are insatiable; there might still be a few grumbling, but Pan Ocean has touched the lives of host community members where it operates. You can touch base with our external relations department to give you comprehensive details of projects initiated by Pan Ocean in the various host communities over the years.

TheCable: Can FG achieve its target of two million bpd in 2025, and how does the company intend to help attain this?

Gbemre: We recently just transitioned into the growth phase, where we are planning on increasing crude oil and gas production by drilling new wells. This will help boost production for Pan Ocean and the nation. We have keyed into it, and within the next couple of years, we have several wells lined up for drilling and to be put into production.

Glad to inform you that last week, we completed the drilling and completion of a new well at Pan Ocean, which will bring in an additional circa 1,500bbls/d and app. 4mmscf/d of gas. We are also drilling in our sister company, Newcross. A drilling campaign is planned for this year and next year to increase oil and gas production across the Pan Ocean and Newcross Group of companies. Once we can execute these programmes, we will be able to boost oil and gas production for Pan Ocean and, by extension, for the nation, thereby contributing to the target of two million bpd in 2025.

TheCable: Is the company looking to make new investments in Nigeria?

Gbemre: Nigeria is seen as a country with huge oil deposits, but it will interest you to know that Nigeria is a huge gas colony with pockets of oil deposits. Hence, there are a lot of unutilised and underutilised gas reserves that need to be exploited and processed for domestic use and export. As a business, we are constantly on the lookout for new investments that will benefit the organisation and the nation. We will always seek strategic alliances and partnerships, go into joint ventures, and acquire new fields.

There are a lot of untapped oil and gas reserves which need to be explored and commercialised. Once the economics are right, these prospects are further evaluated for investment decisions.

TheCable: Is there a plan to go public and make acquisitions to expand Pan Ocean’s portfolio?

Gbemre: Pan Ocean is a private oil and gas exploration entity. It was incorporated in 1973 and began oil exploration in the Ogharefe field in 1976. As of now, there is no plan to go public. However, as an organisation, Pan Ocean is open to strategic alliances and partnerships, joint ventures (JV), etc.

Pan Ocean has been operating in a joint venture with the Nigeria National Petroleum Company (NNPC), and they jointly own a couple of midstream assets, such as the Ogharefe Gas Processing Plant and the Amukpe Escravos Pipeline (AEP), which is the pipeline of the future. The AEP is a viable alternative to the Trans Forcados Pipeline (TFP), which was built by Shell in the 1970s and is currently bedeviled with challenges such as leaks, corrosion, pipeline vandalism, crude oil theft, etc.

With the AEP, most of the challenges of the TFP have been taken care of. For example, the AEP was constructed using the horizontal directional drilling (HDD) technology, which ensured the pipeline was laid much deeper in the ground without any disruption to the aquatic ecosystem, and it makes it difficult for intrusion and pipeline vandalism.

For investment forays and acquisitions, as earlier said, we are constantly looking at the oil and gas environment, and if opportunities present, as an organisation, we will evaluate and do the needful.

TheCable: With over 52 years of exploring Nigeria, is Pan Ocean looking to expand its portfolio to other markets?

Gbemre: Pan Ocean Oil Corporation has a sister Company called NewX, which is involved in alternative energy research and development. NewX is working to develop sustainable energy solutions to meet the global demand for cleaner energy. As an independent entity, NewX is actively involved in progressing the alternative energy space through investments and other collaborative efforts in research and development of sustainable alternative energy solutions as a complement to the subsisting energy market.

NewX has a vision of providing non-fossil sustainable energy. With projections that there will be a reduced demand for oil and gas products in the future, NewX is well-positioned to provide non-oil and gas energy for Africa in the near future. NewX’s mission is to invest in the deployment of efficient alternative energy solutions to the sub-Saharan Africa region with the strategic goal of increasing global energy security.

Such proactive measures can bestow on the organisation first-mover advantages, where we can be seen as early adopters in the sustainable energy space, and this comes with a lot of advantages, ranging from research and development opportunities to increasing the organisation’s competitive edge, global market access, and accelerated growth.