<h3 style="text-align: justify;">The Chairman, Society of Petroleum Engineers Nigeria Council, Mr Olatunji Akinwunmi, in this interview with ’FEMI ASU, speaks on the cost reduction efforts in the Nigerian oil and gas industry, the impact of COVID-19, and global energy transition, among other vital issues</h3>
Early this year, there was an announcement of the divestment by three international oil companies of their stakes in Oil Mining Lease 17 and related assets to an indigenous operator, TNOG Oil and Gas Limited. Do you think more divestments are on the cards in the nation’s oil and gas industry?
At the beginning of the year, we witnessed what is probably the most interesting asset transfer of the decade. OML 17 was transferred from the operatorship of SPDC to TNOG Oil Gas Limited, which is a Nigerian oil and gas company.
So, we see this as a clear example of portfolio optimisation on the part of the one who is divesting the asset and also on the part of the one acquiring the asset. Optimisation can go either way; it is just for better efficiency. So, we think this is something that could be on the cards more based on the current reality.
To see such a big divestment in what was supposedly a difficult period indicates that there could be more on the way.
A lot of assets and production facilities are aging, and some of them are better managed by structures that have smaller overheads.
So, we think there can be a shift in the ownership of some of these smaller assets. And, of course, you know that the marginal field bid round is also in progress, and this is part of what informed this kind of thinking, in the sense that a lot of companies are going to be operating in the marginal field space.
There will be an exchange of assets or a change of ownership as the situation evolves.
								
									
										
										
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My understanding is that there are a lot of new players that are coming on board, and so we expect that there will be some activity in that area of portfolio optimisation.
The Nigerian National Petroleum Corporation is driving efforts to reduce the cost of producing a barrel of oil in the country; what role is the SPE playing in this regard?
One of the key ways that SPE is supporting this is to encourage operators to be more efficient in all their operations, and also to embrace digital transformation, which could be one of the levers that could help to attain such a lofty goal. Our key objective is well in alignment with that of the industry.
In terms of reducing the cost of oil production, SPE has five sections. Each section has a monthly technical workshop that addresses different aspects of our profession, from exploration all the way to field abandonment.
In every space where we have exploration, development, production, up to abandonment, we have space for cost optimisation and this is the focus of most of the technical discussions that are held during the course of the year.
So, for the year, we have at least 60 technical monthly meetings and we all work together towards the enhancement of the cost.
The COVID-19 pandemic hit many industries hard last year. What peculiar challenges did the oil and gas industry face?
						
							
								
								
									
									
								
								
								
							
						
					
No one imagined at the beginning of last year that we could have had a lockdown of the major economies of the world. When movements are curtailed, limitation of flights, maritime activity and even passenger vehicular movements &#8211; it led to low demand of our products and, of course, the impact is depressed commodity prices which in turn led to an output cut.
So, the impact on the oil and gas industry was and continues to be a major one.
Given the challenges in the COVID-19 era, should the industry focus more on existing assets or go all out for new projects?
I believe the focus should be on efficiency; the industry should strive to be efficient both in terms of cost and by way of reduction of emissions in all our activities: exploring for new oil and gas fields, as well as developing and producing both existing and new fields.
Having said this, the industry in Nigeria is in dire need of new projects, which hopefully, the passage of the Petroleum Industry Bill should enable.
What can government do to help the industry in the midst of these challenges?
I think one clear and obvious message that the industry cannot be tired of passing at this time is to encourage the Federal Government to pass a PIB that would enable the growth of the petroleum industry in Nigeria while taking into account the global realities of the energy transition.
						
							
								
								
									
									
								
								
								
							
						
					
The PIB is a welcome attempt to reform the petroleum industry. It is indeed timely, given the number of years that has been spent trying to rework this most important bill.
In the month of January, there were consultations and SPE had the opportunity also to contribute its part to the discussion by sending in a paper.
So, for the SPE, what concerns us as per the PIB is just that we have a good bill that will enhance and stimulate more activities in the oil industry. That is our desire.
Considering the growing adoption of renewable energy by many countries, do you still see a future for fossil fuels?
There is a future for fossil fuels. With the abundance of the resources we have in Nigeria, there is a very good opportunity with the right enabling policies, for us to be able to efficiently develop and produce low-cost high-quality crude oil.
As for gas which is a transition fuel, we have a wonderful opportunity to develop and produce this abundant energy resource in our country.
The most important message to pass is that the oil and gas industry is still vibrant. I think it is important to say that there is indeed a transformation that is underway where there is a movement from fossil fuels to renewable energy.
						
							
								
								
									
									
								
								
								
							
						
					
Now, the fact is that today the huge contributor to energy as per demand today is fossil fuel (oil and gas and then coal). Gas is much cleaner than oil as long as you are able to control any emissions. Nigeria has abundant gas resources.
First, I will say that if we move towards the development of our gas resources, that is still a fossil fuel. Talking about oil, we have an overall demand that is expected to grow post-COVID-19.
So, even if renewables grow, there is still more space that will be filled in the short, medium, and I will dare say long term by oil, which is today the fuel or energy of choice for transportation and also for feedstock for petrochemicals.
So, in that regard, what the oil industry is doing now is to work on the efficiency of its operations to limit emissions such that we can all work towards the same goal of overall limitation of global emissions.
So, let us not have any fears as long as we have good policies in place that will add value to the upstream work, there is a scope for continued oil and gas development.
As I said earlier, fossil fuels still have a future in contributing to the energy mix of ever-increasing demand. Nigeria as a gas province still has much to offer. And if we can reduce our cost of oil production and improve overall efficiency, the industry still has many years of active operation ahead of it.
Between technology and human resources, which plays a greater role in operational excellence and portfolio optimisation in the oil and gas industry?
						
							
								
								
									
									
								
								
								
							
						
					
I believe that at the foundation of every progress in any sphere of life is the human being – his courage, and his hunger for continuous progress.
Our resilience, our capacity for adaptation and innovation all combine to enable progress. Therefore any and every technological advancement is a product of man’s (or woman’s) ingenuity.
What would be your overall assessment of the over 60 years of oil history in Nigeria?
Without a doubt, it has been a checkered history, but the future is indeed bright if we take advantage of digital transformation, the efficiency of our operations and the relentless pursuit of cost optimisation across our industry.
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The Chairman, Society of Petroleum Engineers Nigeria Council, Mr Olatunji Akinwunmi, in this interview with ’FEMI ASU, speaks on the cost reduction efforts in the Nigerian oil and gas industry, the impact of COVID-19, and global energy transition, among other vital issues Early this year, there was an announcement of the divestment by three international…

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<h3 style="text-align: justify;">The Managing Director/Chief Executive Officer of City Cars Mall, Mr Tayo Onilogbo, speaks to JOSEPH OLAOLUWA on some of the issues affecting vehicle importation and foreign exchange in the auto industry</h3>
Is City Cars Mall an online marketplace for cars?
We bring cars from the United States and Dubai. Most of our brand’ new cars are from Dubai. We deal in brand new cars and tokunbo and we also do car rentals which will be kicking off in the next two to three months.
What is the idea behind car rentals?
For most companies, they may have expatriates coming into the country and they do not have cars to use. So, we can provide luxury cars for rentals. They do not have to buy cars for the few months they will stay. For some of them coming into the country, we can provide vehicles available for pickup and drive them.
There has been an evolution of the auto market from photos on Instagram to online marketplaces. What is the confidence that you will be able to stand out?
Concerning online marketing, we make sure that our cars are in good condition before we put them online. So, when people come to buy from us, the plate numbers are always free as well as free registration. We can guarantee you a fantastic deal and we have good pricing on all our cars. We do not sell salvaged cars; all our cars are accident-free with a little margin, compared to what other dealers are selling.
Where do you import your cars from?
								
									
										
										
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Our brand new cars are from Dubai. You can’t bring in brand new cars from America because in America, you do not sell brand new cars to people. In America, if you want to buy a brand new car, it has to be a car note. You cannot walk into a dealership and say how much is a car? If they say the car is $100,000, they won’t say bring the money and pick the car.
There has to be a car note based on your credit. You pay a certain amount of money and then after sometime, you can get your title of the car. This is why it is difficult to get brand new cars from America and we opted for Dubai.
Bringing in the cars requires forex. How has it been sourcing forex to make the car purchases?
The business has really been slow because it is really hard to get forex to buy new cars. Before, it was easier for us to get cars into the country. Right now, we do it in tranches, not like we used to do before. Before you put money together and send them abroad to bring a car, it takes awhile and it really makes the market slow for us.
This ‘slowing in the business’ is it as a result of the pandemic?
This started last year before the pandemic.
Do any of your buyers offer to pay in cryptocurrency? Do you accept?
						
							
								
								
									
									
								
								
								
							
						
					
No, we don’t. It is not a legal tender in the country and not acceptable. We only accept cash transfers and that is it. Ideally, it would have been better to accept payment in cryptocurrency if the CBN regulations accept it. It would have been a lot easier for people. It is your money and you can spend it however you like.
Cryptocurrency is against CBN regulations; we do not even accept it. There is a lot of fraud going on in the country and we are always skeptical. It has be bank transfer.
How has it been operating a dealership with all of the government policies in the country?
Well, nothing is favourable in the country at the moment but we are sitting on the fence. We are trying to dabble around and make ends meet. One thing about dealers people do not understand is they do not own  a maximum of 10 per cent of the cars in their lots. Many at times, you may never have a car to yourself in your lot. There are dealers who do not have a shop but you just trade with middlemen who remit the money to you.
Just recently, the Nigerian government announced a reduction in importation levy in the Finance Act for cars to 5%. 
The reduction will definitely affect the business positively. Once there is a reduction, I think there would be fair prices of cars.
The government also included a Vehicle Finance Scheme which is in the works. 
						
							
								
								
									
									
								
								
								
							
						
					
That will be the best thing that can happen to Nigeria. It is not easy making ends meet. It is only in Nigeria that if a vehicle is N20m, you have to bring out all the money to pay. Ideally, you drop a percentage and the remaining balance will come. It will be nice if it can be implemented. They should take away old cars in the country.
Do you also assemble cars?
Not yet. We have that in mind. We plan on doing that in the nearest future. Right now, we are just an SME, a dealership trying to make things work. We hope to do that in the nearest future.
In terms of the pandemic, how has the effect been on the industry in terms of sales?
It has really affected us. Sales has really been slow and lots of people are no longer working or getting paid. So it is affecting everybody. It is affecting us precisely but what can we do? We have to do business.
How long have you been doing business and what are your projections?
The pandemic is still on and we do not know what it is going to look like after the pandemic. Right now, it is very slow. Before the pandemic, sales were fantastic, but now it is slow.
						
							
								
								
									
									
								
								
								
							
						
					
Are there any policies you would like the government to address?
The government should give SMEs and car dealerships more support to push their businesses. We have salaries to pay and we have families as well. The government should look into funding us in a little way, no matter how small it is so we can continue our business. SMEs are the major people holding the country. They employ more people and if the government can keep us in business, that will be really great.
For the auto industry, where do you see the future in the next five years following the drive  to create electric cars globally?
For me, I don’t think Nigeria is ready for electric cars. To be frank with you, we are still grappling with electricity tariff and electricity consistency. I don’t think that should be the next thing the government will implement. We need to tackle the electricity challenges first. We have to lay a foundation. You can’t just start from the top and go into electronic cars like that. This can only happen when we have electricity in the country. We should take a step at a time.
Why do some dealers opt for accident prone cars or substandard cars?
This is based on analysis. If you want to buy a Toyota Camry 2010 in the country, it is up to about N3.3m and that is the maximum rate. But if you go online, a Toyota Camry sells for about $10,000. That alone is about N4.7m based on the dollar rate. An accident free car is N6-7m without shipping or clearing. But you bring the car in and airbags are not deployed and you bring it into the country. Let’s imagine it is N150,000. Nobody Will leave a car for N4.5m to buy one of N8.2m. For you to get to the ideal car in the country, you have to pay more.
A couple of people complained that prices are high and that is why they want to stick to lower quality?
						
							
								
								
									
									
								
								
								
							
						
					
Prices are high and it is not our fault. There is the dollar rate plus shipping and clearing. Like I stated earlier, the dollar is about N470 today. Multiply that by $10,000, it is N4.7m. For you to be able to get a good car from America, you will part with between $20,000 and $22,000. That alone is about N10.2m and you still have to ship it and clear it. A $20,000 car in America is a regular 2017/ 2018 highlander which sells for N15, N16m here.
By the time you buy it for $25,000 and you ship and clear it, you are already spending a lot of money. This is why some dealers will opt for cars that are a little bit dented.
How do you make your prices attractive?
We bring in cars and make sure we don’t put high margins on prices. There are a lot of cars in Lagos and we are just trying to meet the standards and offer cars cheaper than the normal market value.
Do you also offer warranties?
We do not offer warranties because we do not manufacture cars. We just bring it in and we sell. There is no way we can give warranties on cars not manufactured by us.
   Copyright PUNCH.
						
							
								
								
									
									
								
								
								
							
						
					
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH. 
Contact: <a href="mailto:theeditor@punchng.com" target="_blank">theeditor@punchng.com</a>

The Managing Director/Chief Executive Officer of City Cars Mall, Mr Tayo Onilogbo, speaks to JOSEPH OLAOLUWA on some of the issues affecting vehicle importation and foreign exchange in the auto industry Is City Cars Mall an online marketplace for cars? We bring cars from the United States and Dubai. Most of our brand’ new cars…

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