MARKET NEWS

By Adewale Sanyaolu and Chukwuma Umeorah

President Bola Tinubu’s recent Executive Order suspending fees payable to NNPC Ltd and redirecting oil revenue flows has triggered renewed tensions within Nigeria’s oil and gas industry, as the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) cautioned that the move could rattle investor confidence, dampen foreign exchange inflows and intensify pressure on the naira.

Addressing a Press Conference on the “New Executive Order and its Implications on the Oil and Gas Industry in Nigeria” in Lagos yesterday, PENGASSAN President, Mr. Festus Osifo, said the union was completely blindsided.

“The only information available to us was that there would be an Executive Bill to amend the Petroleum Industry Act,” he said, referring to the Petroleum Industry Act.

He continued: “We were preparing for engagement at the National Assembly. Instead, what came was an Executive Order. We were not carried along.”

According to Osifo, not only is the content of the policy concerning, but the manner of its introduction is equally unsettling. In a sector anchored on long-term capital investment and regulatory certainty, he warned that sudden policy reversals risk undermining confidence and projecting instability to both local and foreign investors.

“In oil and gas, certainty is everything. You do not wake up and change the rules through executive fiat without engaging critical stakeholders”, he stated.

Osifo acknowledged that the current board and management of NNPC Limited are made up of seasoned professionals with backgrounds in leading international oil companies.

However, he maintained that competence alone is insufficient without real decision-making autonomy, stressing that expertise delivers limited value in the absence of institutional independence.

“If you appoint professionals but do not allow them to operate independently, then the transformation becomes cosmetic.

“The whole idea of commercialisation is to reduce political interference. If that interference continues, investors will see it”, he added.

Osifo stressed that the implications stretch beyond industry boardrooms.

He added that oil and gas remain Nigeria’s primary source of foreign exchange earnings, and those inflows underpin the naira and public finances.

“This is not just about oil workers. When foreign exchange earnings reduce, the naira weakens. When the naira weakens, salaries lose value. The minimum wage loses value. Inflation rises. It affects every Nigerian.”

He pointed to the capital-intensive nature of the industry, noting that offshore rigs can cost upwards of $1.5 million per day, while exploration and production projects require billions of dollars in upfront investment. Investors, he said, model risk over decades.

“You cannot attract that kind of capital in an environment where there is uncertainty about policy direction,” Osifo warned.

Nigeria may hold about 37 billion barrels of proven crude reserves, but Osifo cautioned that reserves alone do not guarantee investment. Over the past decade, countries such as Ghana, Senegal and Mozambique have emerged as competitive oil provinces.

“Capital is mobile. If you destabilise your environment, investors will take their money elsewhere”, the PENGASSAN President noted.

He linked any potential investment slowdown directly to macroeconomic consequences.

Reduced capital inflows, he argued, would dampen production growth and shrink dollar earnings, triggering exchange rate pressure.

“It may not happen overnight. But within one or two years, you will see the impact in production numbers and foreign exchange stability.”

Beyond economics, Osifo raised governance concerns, arguing that where an Executive Order appears to alter or sideline provisions of an existing Act of Parliament, institutional balance must be respected.

“In advanced democracies, institutions respond when there are questions about the law. We expect our institutions to play their roles”, he noted.

He disclosed that PENGASSAN would engage its sister union, NUPENG, consult other stakeholders and convene its National Executive Council next week to determine its next steps.

“We do not act on emotion. We act on facts and figures,” Osifo said.