Majorwaves Energy Report - August Edition by majorwavesenergyreport

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Majorwaves Energy Report

AUGUST 2019, Vol 2 No 5 1

gas development:

our

success story is

Nigeria's success story...

Chevron Nigeria Limited (CNL), has an aggressive gas development strategy that builds a profitable gas business through a portfolio of domestic, regional and export supply projects that fulﬁll the NNPC/CNL Joint Venture Domestic Gas Supply Obligation and support the Nigerian Government’s Gas Master Plan. We have been the highest supplier of high quality domestic gas in Nigeria since 2015 and will continue to explore opportunities to maintain this position. We have since 2008 also reduced continuous gas ﬂaring in our operations in Nigeria by over 90%. We led the development of the West African Gas Pipeline project through which Nigeria supplies gas to Benin Republic, Togo, and Ghana. All these prove that in the area of natural gas development, Chevron's success story is Nigeria's success story.

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INDUSTRY NEWS

Bank Anthony-Okoroafor

PETAN Tasks Mele Kyari on Increased Investment in Oil Exploration As the new Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kolo Kyari settles down to steer the ship of the state-owned oil company, the Petroleum Technology Association of Nigeria (PETAN), has tasked him to among other things, push for increased investment in oil exploration activities. This, according to the association would catalyse Nigeria’s economic d iver si f ic at ion d r e a m. T he Chairman of PETAN, Mr. BankAnthony Okoroafor, gave the advice in an article, while pledging the association’s support for Mele Kyari. According to Okoroafor, to achieve a 45 billion reserve, “we must carry out exploration and drill more wells. Nigeria has the lowest well services activity in the world. Most of the International Oil Companies (IOCs) are not exploring and drilling activity is minimal.” He added: “Your good office with the Department of Petroleum Resources (DPR) 6

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and critical stakeholders must look into this to ensure the operating companies explore and drill more wells. “NNPC also needs to intensify exploration in all the inland basins”. According to him, “the shallow water and onshore contribute about 60 per cent of Nigeria production.” He added that the Deepwater had contributed more than $100 billion to the government in the past 10 year, noting that potential exists for future investment above $70 billion if we can put the right things in place.” He cautioned that Nigeria should “not use Deepwater to kill shallow water,” saying to address low exploration in Deepwater, Mele Kyari should use stick and carrot approach on companies that do not invest in exploration. He added: “We are carrying reserve value of about 37 billion barrels and 174 tcf gas. I believe our reserve is about 200 billion barrels and 400 tcf gas. “We must as a country invest in exploration now that oil is fast going

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out of fashion to derive the full value from our natural resources and use it quickly to diversify our economy and improve on our infrastructure.” “Government needs to create incentives towards exploration for reserve replacement, urge development of allocated but undeveloped blocks and increase in production enhanced; with a total of two billion barrels produced from Nigeria’s Deepwater space since inception, the contribution to national production by Deepwater operations has consistently been on the rise since the NOGICD Act.” The PETAN boss however, urged Mele Kyari to see to the timely conclusion of the ongoing industry reforms guaranteeing legislative certainty and clarity. He pointed out that the petroleum reform bill was holding down lots of Final Investment Decisions (FIDs) and critical investment decisions. Source: Thisdaylive.com www.majorwavesenergyreport.com

INDUSTRY NEWS

World’s Largest Atmospheric Tower Built for Dangote Refinery Leaves China for Nigeria

hina’s leading energy and chemical company, Sinopec, on Monday, said that it had built the world’s largest atmospheric tower for Nigeria’s Dangote Refinery. On its verified Twitter handle, the company shared photos of the tower and revealed that it (tower) had already left its port in China and was traveling to Nigeria. It tweeted: “On July 29, the world’s largest atmospheric tower built by Sinopec slowly left a wharf in Ningbo. Following the Maritime #SilkRoad, it will travel to #Nigeria and be installed at the world’s biggest singletrain facility – Nigeria’s Dangote Refinery.” The piece of equipment is designed to process crude oil for Dangote refinery. Citac analyst, Jeremy Parker, told Reuters on Monday that for the type of refinery the company is building, the atmospheric tower is the primary unit processing crude oil into fuels. The company expects the refinery to start producing fuels in 2023.

was gathered. The 650,000 barrel per day (bpd) refinery is set to be Africa’s largest, with potential to transform the country from an importer of fuel to a net exporter. The refinery is situated on a 6,180 acres (2,500 hectares) site at the Lekki Free Zone, Lagos. In 2018, Aliko Dangote disclosed that he planned to complete the $12-14 billion refinery project in 2019, with additional plans to start production in early 2020. Analysts have however suggested that the project would take longer in order to begin pumping out fuels such as diesel and gasoline. Reuters reported last year that the refinery was unlikely to start production until at least 2022, two years later than the target date. “This is a major milestone, but there is still much work to be done, both in terms of sourcing the other units and in terms of interconnection at the site,” Mr. Parker said of the atmospheric tower shipment.

It will likely take at least a month for the shipment to reach Lagos, it www.majorwavesenergyreport.com

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INDUSTRY NEWS

NNPC, Shell to Grow Oil Reserves

L-R: Vice President of Shell, Nigeria and Gabon, Mr. Peter Costello; Managing Director of Shell Petroleum Development Company (SPDC) and Chairman of Shell Companies in Nigeria, Mr. Osagie Okunbor; and in a meeting with NNPC GMD, Mallam Mele Kyari, during the visit

he Management of the Nigerian National Petroleum Corporation (NNPC) and its agelong partner, Shell Petroleum Development Company (SPDC), expressed resolve to grow existing business relationship aimed at growing the nation’s crude oil reserves. Welcoming the high level Shell delegation led by the VicePresident of Shell Nigeria and Gabon, Mr. Peter Costello, to the NNPC Towers, Abuja, Group Managing Director, GMD, of the NNPC, Mallam Mele Kyari, acknowledged the fact that Shell was its oldest and biggest partner in upstream operations and would continue to enhance the relationship for the benefit of the industry. He said that NNPC would work with Shell to expedite action on some crucial deepwater 8

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projects and create enabling environment to entrench the ideals of transparency and enduring governance framework for the industry. Speaking earlier on behalf of the Shell delegation, Osagie Okunbor, Managing Director of SPDC and Chairman of Shell Companies in Nigeria, congratulated the NNPC GMD on his appointment while expressing confidence in his ability to steer the industry to enviable height. Okunbor said Shell was in sync with Kyari’s vision and growth trajectory for the industry as laid out in his blueprint. He noted with interest the push towards renewed transparency and openness, stating that the essence of the visit was to “underline our unflinching support for you and your team”.

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Total E&P Nigeria Gets New MD

he Board of Directors of Total E&P Nigeria has appointed Mr Mike Sangster as Managing Director/Chief Executive of the company. According to a statement, the appointment took effect from July 1, 2019. Sangster succeeds Mr Nicolas Terraz, who is now the Senior Vice- President for Africa, for the Exploration and Production branch. The statement said, “Sangster has served in various capacities with extensive experience in business and management, within the Total Group. “Before his appointment as the Managing Director/Chief Executive of Total E&P Nigeria Ltd, he was the Senior Vice- President, Investor Relations of Total; Managing Director of Total E&P, Australia; President and General Manager of Tota l E &P, T hailand; Vice- President, Economics, Strategy and Planning for Total Exploration and Production; VicePresident, Business Development and Strategy for Total E&P, USA; and Senior International Negotiator. “A graduate of Electrical Engineering from the University of Aberdeen, Sangster worked as a corporate development manager at Scottish Power before joining the Total Group.” www.majorwavesenergyreport.com

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INDUSTRY EVENTS

SPE NAICE 2019

Promises Bigger, Innovative and Broader Participation -“The culture would transform from seeing data collation as a burden to an asset.” Debo Fagbami

“The challenges associated with the wave created by bid data in our industry would stem from the fact that bit data in itself is a complex terrain. Obvious challenges would come during its integration with existing business processes and methodologies as well as the uncertainties created by management of large and complex data by an industry only beginning to adopt it.

Fagbami

he Chairman Society of Petroleum Engineers (SPE) Nigeria Council, Mr. Debo Fagbami, has said that the 2019 edition of Nigeria Annual I nter nat iona l C on ferenc e a nd Exhibition (NAICE), promises to be bigger and innovative, adding that the programmes for the 3-day event were carefully planned to encourage broader participation of key stakeholders in the midstream and downstream sectors of the petroleum industry. He disclosed this while declaring this year’s theme, which is, “Artificial Intelligence, Big Data and Mobile Technology: Changing the Future of the Energy Industry.” The Council Chairman said that NAICE has always supported and will continue to support participation from the midstream and downstream sectors. He said, “Other sectors like Banking and other financial services have been fully integrated into our NAICE program of activities. This year, we would be having quite a number of power-packed panel discussants trashing out issues in the area of AI and big data and quite a few of these discussants would be coming from the financial services sector.” According to him, NAICE over the years has grown to become the largest upstream Oil and Gas event in Africa, attracting industry regulators, high10

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level government officials, petroleum technology professionals and other key oil and gas industry stakeholders. “NAICE has held annually since inception in 1976 with a focus on collecting and encouraging the dissemination of technical knowledge and technologies related to the oil and gas industry as well as to provide an exploration and production market place for Sub-Sahara Africa.” Fagbami stated that the 43rd edition will hold from August 5 – 7, 2019 at the Expo Centre, Eko Hotel and Suites, Victoria Island, Lagos. “SPE and NAICE continue to break new ground and explore blue ocean territory and our team of volunteers will always come up with innovative programs and activities designed to share technical knowledge and provide avenues for professionals to develop their technical expertise. “My would-be successor in office, Joe Nwakwue would be unveiling the theme for next year’s conference during the closing dinner of NAICE 2019. NAICE 2020 as the name implies promises to be a visionary event and all I can say to you is “stay-tuned” and watch this space.” Speaking on some of the primary challenges and opportunities the wave of data will create, he said:

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“Added to this would be the in-house talent gap as well as the complexities associated with migrating existing data into a big data structure suitable for use in the AI terrain. Synchronizing data across multiple data sources and user groups or function also create a challenge and added to this would be costs associated with migration and providing solutions for specific scenarios and end-user applications. “ “Having said this, Big Data and AI in our industry would open doors for new talent as well as cross-training and skills conversion which is not unfamiliar territory for petroleum engineers to explore and exploit. As more organizations recognize the importance of big data as a means of realizing and entrenching competitive advantage, it would be used as an in-road to gain insight and make more informed decisions.” Fagbami while answering question on what would be the culture of the future for the upstream industry said:” The culture in the industry would transform from one that sees Data as a burden to one that sees Data as an asset” adding that “as long as there is need to utilize and manage large volumes of data, there would always be the requirement to employ analytical tools to make sense of the complex wave and volumes of data available.”

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LOCAL CONTENT

NCDMB signs 8 contracts for Bayelsa, C/River, A/ Ibom Oil & Gas Parks ...Host communities to get 80% labour slots By Margaret Nongo-Okojokwu

h e N i g e r i a n C o nt e nt Development and Monitoring Board (NCDMB) on Tuesday (July 30th) in Yenagoa, Bayelsa State signed eight contracts for the development of the ongoing Nigerian Oil and Gas Park Scheme (NOGAPS) projects in Bayelsa, Cross River and Akwa Ibom states. The beneficiary companies include O.K. Isokariari & Sons, Megastar, EST Masters, Altex, Faith plant, Erdis, and Linzo. Two of the projects will be executed at the park located at Ikwe, Onna Local Government Area of Ibom State and they entail the sand fill and fence works of the 31hectares of land mapped out for the project. Similarly, three contracts will be carried out at the Bayelsa park situated at Ogbia land and they include the construction of hotels, blocks, mini park estate, construction of security and administration block and construction of capacity building center. In the same vein, four projects were pencilled down www.majorwavesenergyreport.com

at this stage for the Cross River state park, located at Odukpani and they include the construction of security and administrative blocks, erection of capacity building centers, construction of internal roads, drainage system and construction of hostels and mini park estate. In his remarks at the event, the Executive Secretary NCDMB, Engr. Simbi Kesiye Wabote explained that NOGAPS was conceived to develop facilities close to oil fields where manufacturing of oil and gas components can be carried out. He described NOGAPS as the Board’s flagship project, which is in line with the mandate “to develop indigenous capacities for the oil and gas Industry by creating the enabling environment for in-country domiciliation of manufacturing and fabrication of oil and gas components.” He thanked President Muhammadu Buhari for approving the award of the contracts and underscored the key roles played by the Bureau of Public Procurement

and the Ministry of Petroleum Resources in driving the projects so far. He expressed optimism that the delivery of the contracts will help to further develop the contractors’ capacities as well as the communities hosting the industrial parks. Wabote pointed out that the seven successful contractors were wholly indigenous firms, stressing that the Board was practising Local Content in its projects. He emphasised that the contracts included provisions for hiring a minimum of 80 percent of all ‘unskilled labour’ from the host and immediate communities for the project implementation. He added that ”a minimum of 50 percent of the semi-skilled and 20 percent of the skilled labour requirements are also expected to be sourced from the host and immediate communities except where there is no response to such advertised positions from the community.

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LOCAL CONTENT Community suppliers shall be included in the supply of sand, granite, water, fuel, and other items as determined by the contractor. Such supplies shall be to the quality required and of fair market price.“ He advised the contractors to build the capacities of indigenes of the host communities to participate in the projects, assuming the right competencies could not be found amongst them before the start of the projects. The Executive Secretary further

charged the contractors to ensure safety and security at the sites and promote cordial and harmonious relationship with the communities as well as with other contractors on site. “Adopt cooperative approach to the various interface issues that will come up on site. Ensure that you deliver on time, within budget, and to the quality specified to boost your profile as local contractors we are proud to associate with.” He promised to organise sessions with the respective host communities where the contractors would be formally introduced to key stakeholders.

Responding on behalf of the c ont ractor s, t he M a na g i n g Director of Megastar Technical and Construction Company Limited, Arch Harcourt Adukeh thanked NCDMB for the opportunity to contribute to delivery of the oil and gas parks. He expressed optimism that several stakeholders will benefit if the parks are developed and operated as envisaged. He promised that the companies will keep to the terms of their contract and collaborate amongst themselves in the delivery of their various scopes.

Executive Secretary tasks Service Companies on IOCs Standards

iger ia n oi l a nd ga s service companies and ma nu factu r i ng f i r m s should strive to meet the standards set by the international oil companies so they would get patronised, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has advised. He gave the counsel recently when he visited Tranos Nigeria Limited in Lagos in company of some management of NCDMB and senior representatives of select oil and gas companies. He stressed that despite government’s drive for Nigerian Content, the oil and gas industry will not compromise quality, hence the need for local firms to meet the required standards, so they can be added to the operating companies’ approved vendors lists. He also charged international operating companies to support local companies in their quest to meet their standards and specifications. The Executive Secretary noted that several Nigerian companies were investing and setting up servicing and manufacturing facilities and assured

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that the Federal Government would ensure that they get patronised by the industry so they can employ more Nigerians. He added that ”for every one person employed, 10 lives are affected by association. We have to build our manufacturing base alongside agriculture because they are the major employers of labour.” He commended Tranos for its investments, noting that the size of the facility was bigger than many foreign yards that produce components imported for the Nigerian oil and gas industry. Earlier in his presentation, the Managing Director of Tranos, Mr. Jude Abalaka said the company manufactures cable trays and ladders that can be used both onshore and offshore in the oil and gas industry and they meet international standards. He added that the company manufactures various generator canopies, enclosures that can be utilised for various electrical power purposes, including as cover for mechanical and rotating equipment and cabinet for various electrical and telecommunication equipment. He also stated that the company produces various skids and modules for onshore and offshore oil and gas applications. The company’s products line also includes switches and sockets, engineering and fabrication as well as maintenance of oil and gas facilities, he added. On the company’s growth plans, Abalaka said Tranos was currently expanding

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its capacity for manufacturing cable trays and ladders and it will grow from the current capacity of 200m per day to 7200m per day, with the target market being the demand from greenfield and brownfield oil and gas projects as well as demand in the industrial sector.” He projected that the facility will start production in September 2020 and will meet all the cable tray and ladder needs of Nigeria, with the possibility of exporting to other African countries. On gaskets, Abalaka stated that no Nigeria company was manufacturing locally despite it being a major requirement in the oil and gas and petrochemical industries. For this reason he said, “we have started placing orders for gasket manufacturing equipment and we will begin the local manufacture of semi-metallic spiral wound and soft cut gaskets in February/March 2010.” The Managing Director solicited for the Board’s support ”for the procurement of Tranos’ products for upcoming oil and gas projects, not limited to BSWA, NLNG Train 7, Ikike Project, Ibot WH Project and other EPCI projects.” He also sought assistance with products qualification, certifications and acceptance into approved vendors’ lists of operating companies and inclusion in the NCDMB’s research and development initiatives on the basis of its proven capacity to innovate creative productions incountry.

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LOCAL CONTENT

Shell Wins Oil & Gas Excellence Award at NOG 2019

hell Companies in Nigeria has won the coveted Excellence Award at the Nigeria Oil and Gas Conference and Exhibition, held in Abuja on the heels of a streak of other industry leadership awards recently garnered. Shell won the best local content company from the Nigeria Content Development and Monitoring Board (NCDMB) and another from the Petroleum Technology Association of Nigeria (PETAN). “Shell you are doing well. Shell should mentor the growth of other Nigerian companies in the industry,” said the outgoing group managing director of the Nigeria National Petroleum Corporation (NNPC), Dr. Maikanti Baru, while presenting the award at a gala night to round off the 2019 edition of Nigeria’s biggest oil and gas event. Baru noted that many efforts and www.majorwavesenergyreport.com

innovations by Shell companies in Nigeria had continued to drive the industry towards sustained economic development and growth. Receiving the award, the managing director, Shell Petroleum Development Company and Country Chair, Shell Companies in Nigeria, Osagie Okunbor, said Shell companies would be further challenged by the recognition to be relentless in making significant contributions to the industry and the Nigerian economy. Okunbor said, “We are pleased that this Excellence Award, a long w ith our emergence as the International Oil Company with the Most Impactful L ocal Content Initiatives in the upstream category at the 2019 edition of the NCDMB’s Nigerian Oil and Gas Opportunity Fair held in Yenagoa in April, is recognition of Shell’s deliberate strategy to grow sustainable Nigerian companies. We are glad that our work is recognised by the industry.

“Our journey to excellence as a leading energy company in hinged on the tremendous dedication and contributions of our staff, the majority of whom are Nigerians; and the strong support of our partners led by the NNPC,” he added. He noted that apart from the energy produced by Shell companies and the revenue they generated for the government, the companies remained at the forefront of indigenizing industry skills and capabilities while growing Nigerian companies to provide key services in-country.” Shell’s Nigerian Content Development Manager,Olanrewaju Olawuyi, described the award as wellearned given the pioneering initiatives and strides by Shell companies in Nigeria which he said had put the oil and gas industry in the hands of Nigerians. Source: Leadership

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LOCAL CONTENT

Oil Service Firms to benefit from AfCFTA - Wabote, MAN President By Margaret Nongo-Okojokwu the AfCFTA, we are going to create a bigger market, four to five times bigger than what exists presently. “ In his address, the Managing Director of Alcon, Mr. Gerardo Della Santa stated that the factory was the largest of its kind in Nigeria and had trained its personnel locally as well as in Egypt and Italy to keep pace with new technologies and new products. He described the facility as landmarks because it will transfer technology in a highly specialized sector, create new jobs and expertise.

ocal oil and gas service companies and manufacturing outfits that have built their capacities and capabilities will benefit immensely from Nigeria’s recent signing of the Africa Continental Free Trade Area Agreement (AfCFTA), the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Kesiye Wabote and President of the Manufacturers Association of Nigeria (MAN), Mr. Mansur Ahmed have said. They spoke recently in Port Harcourt, Rivers State at the commissioning of Alcon’s ultramodern factory for Electrical Power Distribution Panels and Switchgears, set up in partnership with ABB, a world leading electrical and power original equipment manufacturer (OEM). The facility has an annual capacity of 750 main distribution panels, 1,200 sub main DBs to over 5000 consumer units and can engage 150 personnel. Delivering the keynote address at the event, the Executive Secretary stated that investments like Alcon’s open the span of opportunities from the national to continental levels. According to him the “establishment of such manufacturing outfits will enhance the delivery of the target benefits under the AfCFTA agreement.” He said ”if you take the population of Africa and the potential market and given the general level of development of countries, the sky is the limit for any manufacturer that makes the right investment, has the right quality and partnerships.” He commended Alcon for being the first company to obtain NCDMB’s ‘Nigerian Content 14

Majorwaves Energy Report

Equipment C ertificate(NC EC) Category A’ for Electrical Switchgear and Panel Building and announced that the Board would no longer grant approvals for operators in the oil and gas industry to import the products manufactured by Alcon. He further charged the company to continue to deliver top-notch Low Voltage panels as well as introduce new products with the quality than can match those that are manufactured in any part of the world and promised that NCDMB would continue to educate industry stakeholders about the company’s capabilities through the NOGIC JQS platform. Wabote also commended ALCON for its ability to nurture a formidable partnership with ABB, stating that it “attests to the fact that if local companies have the right processes and procedures in place, international OEMs will be willing to form alliances and partnerships that endure. In his remarks, President of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed charged Alcon and other manufacturers to take advantage of the opportunities presented by President Muhammadu Buhari’s recent signing of the continental free trade agreement, which will bring the 55 African countries into one common market. He explained that AfCFTA will generate a market of 1.2billion people and an active economy of trillions. He added that, “every manufacturer or investor should look at that and begin to thrive. I am glad that Alcon is seeing this vision and there is plan for expansion. As we go into

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“

We perform the full cycle of the panel production, design, customization, assembly, testing, packaging and delivery,” he said. Santa confirmed that the company had received all required certifications from ABB and Standards Organization of Nigeria (SON) to operate as a panel builder. He thanked NCDMB for believing in the company’s vision and the Bank of Industry for providing the financial support for the investment. The Country’s Managing Director, Nigeria ABB; Mr. Hany Abd-Elazim Underscored the Company’s long partnership with Alcon and its support for the new production facility, noting that it had huge value addition in line with the Local Content initiative. He expressed delight that the new facility will create job opportunities and improve productivity in Nigeria. He added that the factory provided an opportunity to export products within the ECOWAS region and expand to the continent when the African Free Trade Area takes effect from mid 2020. “This will support the cooperation to have local value added products from Nigeria to be exported,” Abd-Elazim said.

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LOCAL CONTENT

Joe-Ezigbo

‘We’re committed to Boosting Local Content, Indigenous Capacity’- Falcon Corp.

alcon Corporation, an indigenous conglomerate, has marked its 25 years of service in the Nigerian energy space and pledged to support local content growth. The celebration held in Lagos with key players in the petroleum industry. Falcon Corporation has reiterated its commitment to boosting local content and indigenous capacity. At the celebration of its 25 years of unbroken service delivery to the nation, the firm stated that since inception, it has maintained 100 per cent Nigerian workforce and to date maintains over 68 per cent spend on local products/services. According to the Managing Director/ Chief Executive Officer, Professor Joe Ezigbo, the company had grown from a small service company 25 years ago to a conglomerate that significantly plays in the oil and gas industry, fabrication and structural activities, natural gas distribution as well as delivery of pipelines and metering infrastructure. The 25 years anniversary tagged: A Night of Inspiration brought together oil and gas industry bigwigs, policy makers, government officials, entrepreneurs and the firm’s customers. In his opening address, Professor Joe Ezigbo, said: “Today marks the continuation of our long tradition of excellence, quality and unparalleled service delivery to our customers. www.majorwavesenergyreport.com

Our organisation was founded on the principles of integrity and innovation, with a vision to make a tangible impact and elevate the profile of private entrepreneurial development in Nigeria. We started in Port Harcourt from our humble beginning as an oil service company. Our change of operational base, scope of service and corporate name notwithstanding, our sound moral character, spirit of enterprise and excellence, resilience and commitment to creating long-term sustainable value have never wavered. “As we mark our 25 years of commitment to developing an indigenous great Nigerian brand, our spirit of enterprise, excellence and sound ethics has continued to pervade the very fabric of our business to date. “Falcon aims at being a strong player across the value chain of Nigeria’s energy sector. It is strategically positioned to create value-adding jobs for our ever-growing population of vibrant youths. From inception, we envisioned Falcon as it is today, we right now see a Falcon 25 years from now which will outlive its founders and soar high, launching into the international business landscape, comparable to global brands like Coca-Cola, Mercedes-Benz and Nike.” Also the Executive Director and Co-Founder, Falcon Corporation Limited, Mrs. Audrey Joe-Ezigbo, in her welcome address, relived the

challenges the company faced in its early years but noted that it was doggedness and determination that kept the organisation going over the years. “The story of Falcon has been a journey of translating vision and passion into success. It is a journey of obligation to building Nigeria by Nigerians through intentionality, resilience, and dedication against all odds. We started Falcon with very little, but with sufficient zeal, an undying dream and a sense of duty to establish an institution of repute, we have built a formidable organisation of repute and we remain committed to leaving a lasting legacy to the future generation,” she stated Audrey Joe-Ezigbo, who also serves as the President of the Nigerian Gas Association (NGA), the umbrella association for professionals and businesses in the Nigerian gas industry, emphasised that Falcon has made remarkable contribution to the development of Local content in Nigeria. “Falcon Corporation is fully committed to local content development aspirations of our nation. From inception, we have operated with a 100 per cent Nigerian workforce and to date maintain over 68 per cent spend on local products/services. “We consider our local experience to be a critical asset for the growth of our industry in a sustainable manner and a notable contribution by Falcon Corporation to national development. We are determined to continue to develop our competencies and capabilities even further and where appropriate, we are open to the creation of strategic alliances and joint ventures that are designed to enable us to achieve our growth targets. As we celebrate this milestone of 25 years, we are rededicating ourselves to that commitment as part of our contribution to nation building and national development” she said. A Director of Falcon Corporation, Mrs. Benedickter Molokwu, stated that Falcon has sound governance structure, which is one of the strong pillars on which the success of the organisation was built. “Falcon’s commitment to sound corporate governance in the conduct of business is apparent. The organisation projects a transparent and clear corporate governance structure which meets the highest international standards. There is confidence in the ability of its board of directors and management to carry out their duties within a well-defined corporate governance framework. Falcon has put in place a full Corporate Governance Code (CGC) which is in conformity with local and international codes of best practices with demonstrable impact in the company’s sound strategic business management and performance” According to Ben Akabueze, the Director-General of the Budget office, who was one of the distinguished guests at the event, “the Falcon 25th anniversary event lived up to its bill of “A Night of Inspiration”. This organisation has demonstrated itself as a great inspiration for other visionary Nigerian business owners who in one way or the other are contributing to the remarkable growth of the nation’s economy”.

Source: The Nation

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LOCAL CONTENT

Wabote, NCDMB win Nigerian Business Leadership Awards

ng r. Si m bi Ke siye Wabote, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB) was on Saturday in Lagos honoured as the Transformational Business Leader in Public Sector in 2019 by the BusinessDay Nigerian Business Leadership Awards. The NCDMB was also recognized as the Government Agency of the Year for Enabling Business. The awards review committee stated that the Executive Secretary was providing exemplary leadership at the NCDMB and had spearheaded several initiatives which are

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helping to create a conducive environment for the private sector to thrive. It added that the award celebrates ”a public officer under whose inspirational leadership new opportunities for domestic prosperity are being unlocked.” Receiving the awards, Wabote thanked the management of BusinessDay and the Awards Review Committee for the recognitions and expressed delight that ”the media and populace fully appreciate our efforts in using Nigerian Content to create employment opportunities and to promote the growth of the local economy.”

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He dedicated the awards to his family and staff of the NCDMB, stressing that ”I have succeeded in this role simply because I have the full support of the management and staff of the NCDMB. Their commitment and dedication to duty is second to none.” Wabote thanked President Muhammadu Buhari for the opportunity to serve as the Executive Secretary of the NCDMB and underscored the support received from the Presidency to deliver on the mandates contained in the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.

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LOCAL CONTENT

He stated that the Board had pushed a few new ideas in the last two and a half years, including Equity investments in strategic third party projects, introduction of Service Level Agreements (SLAs) with international and indigenous operating companies to enhance the Ease of Doing Business, creation of the US$200m Nigerian Content Intervention Fund to provide affordable and accessible credit for local oil service companies, progression of industrial parks to domesticate oil and gas components manufacturing and construction of

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the Boa rd’s 17-storey Headquarters Building in Yenagoa, Bayelsa State. According to him, ”we feel highly elated that our modest ideas and efforts are making the desired impacts and have attracted recognitions,” assuring that ”these awards will reenergize us to do more for our country.” Other Awards conferred on the night included Life Time Achievement Awards, Global Awards and Sectoral Awards. Personalities honoured with the Life Time Achievement Awa rd s i nclude d M r. Haresh Keswani, the Group

Managing Director of Artee Group; Mrs. Ibukun Awosika, Founder/CEO, The Chair Centre Group and Chairman, Board of Director, First Bank Limited; Dr Layi Francis Fatona, Managing Director, Niger Delta Exploration & Production Plc; Dr. Pascal Dozie, founder and Chairman of Kunoch Ltd and former chairman of MTN Nigeria and Mr. Tunde Afolabi, Chairman/CEO of Amni International Petroleum Development Company.

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DOWNSTREAM

Oyebanji

Fuel Side of the Downstream Sector is a Complete Mess - MD, 11 Plc

he Ma na g ing Director of 11Plc, for merly ca l led Mobil Niger ia Plc a nd Chairmen, Major Oil Marketers Association of Nigeria (M O M A N), Tu nj i O y e b a nj i , ha s sa id that the f uel side of the dow nstrea m sector of the Nigerian oil and gas industry is a complete mess. He stated this i n a n exclusive i nter v iew w ith Major waves Energ y Report, on the side l i ne of the Niger ia n Oil and Gas C onference, which was held in A buja early in July. O y e b a nji , w h o l e d a p a n e l discussion on,” Harnessing the Oppor tunities to Draw Niger ia C loser to Energ y S ecur ity” du r i n g t h e C o n fe r e n c e, s a i d that some of the operators i n the dow nstrea m sector of the Niger ia n oi l a nd ga s i ndustr y a re i n debt a nd a re una ble to ser v ice thei r loa ns, thei r ta n k farms being confisticated by the A sset Management C orporation of Niger ia (A MC ON), leav i ng on ly the brave ones ma na g i ng to i nve st i n other a rea s l i ke

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Liquefied Petroleum Gas (L P G), b el iev i ng t hat t h i ng s w i l l i mprove i n the f utu re. He ident i f ie d i n f lat ion, st a f f continuous demand for increase in sa la r ies, increment in charges by government agencies a nd pr ice f i x i ng of petroleum products by the gover n ment a s some of the factors affecting the dow n st re a m s e ctor. O yeb a nji bla med over reg ulation of the sector a s the rea son why I nte r n at i o n a l O i l C o mp a n i e s (IOC) sold their a ssets, noting t h at even t ho s e who b ou g ht some of these a ssets, are d ivesti ng. “I want to be extremely candid a s fa r a s the f uel side of the dow nstrea m is concer ned. It is a complete mess. It’s a disaster. Ma ny people a re getting out of the business. A MCON is selling p e ople’s t a n k fa r m s b e c au s e t hey c a n’t s er v ic e t he lo a n s t h e y h ave t a ke n . T h e b r ave ones a re sti l l tr y i ng to i nvest i n cer ta i n a rea s l i ke L PG a nd th i ng s l i ke that, hopi ng that

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thi ngs wou ld get better i n the f utu re. But cer ta i n ly r ig ht now, the tr ue ma rg i ns i n the retail side of it are always thin a nd operators there have to be ver y eff icient there to sur v ive. B ut c u r r e nt l y, t h e s it u at i o n is ver y d i re because i n f lation i s there. Sta f fs a re a lways a s k i n g fo r s a l a r y i n c r e a s e s; v a r iou s gove r n me nt a ge nc ie s a re i ncrea si ng the cha rges on us for a l most ever y thi ng. A nd yet, the ma rg i ns we have a re f i xed by the gover n ment. S o, under those circumstances, you see, what you find is that most of the IO C s have lef t a nd even the people who boug ht those companies are also divesting. So nobody needs to tell you. If the thing wa s sweet, people would stay i n the busi nes s,” he sa id. Speaking on the topic discussed at the pa nel ses sion, he sa id that he tr ied to get the v iews o f t h e p a n e l i s t s o n w h et h e r there wa s energ y secu r ity i n the countr y or not,

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DOWNSTREAM

adding that there were divergent views, as those from the Ni ger i a n Nat ion a l Pet r oleu m C or poration (N N PC) bel ieved that there were a lot of positives wh i le those f rom the pr ivate sector thoug ht other w ise. He sa id,” We were look i ng at the su bject of energ y secur ity a s it relate s to t he Niger ia n space here. F i rst thi ng I tr ied to d o w a s to g et t h e i r ow n understa nd i ng of weather we c a n s ay i n Ni g e r i a we h ave energ y secur ity or not. A nd I think the views were different. T he tea m f rom N N PC bel ieve t h at a l ot i s b e i n g d o n e t o enhance security a s far a s our energ y is concer ned a nd those i n the pr ivate sector sti l l see there a re a lot of cha llenges in that a rea. But I thi n k we ca n all acknowledge that something is being done to address it, but

we a re not there yet w i l l be the si mple su mma r y.” On the way for wa rd, O yeba nji called on the Federal G over nment to create a n ena bling env ironment, to dereg u late more a nd i ncrea se acces s to foreig n excha nge. “There are different ways. First and foremost, you know people have to go under the cur rent ci rcu msta nces to do what they ca n to sur v ive. S o, you have to ma na ge your busi nes s more e f f i c i e n t l y, a n d c o l l a b o r a t e among each other to reduce your cost. So, that’s your immediate personal way of sur v iv ing. But beyond that, government really ne e d s to cre ate t he ena bl i ng env i ron ment. T h i ng s nee d to be open. We talked a bit about access to foreign exchange. Who is getting that foreign exchange

for instance at 305? C ertainly, I know many companies are not getti ng it. S o i f some people are getting it and some are not getti ng it, it doesn’t ma ke for a level play i ng g round. The challenges are there. What t h e gove r n m e nt n e e d s to d o i s to create a tra n spa rent a nd op en env i ron ment wh ich can rarely be done under a dereg ulated system. Now, even i f you dereg u late, people have to st i l l b e ef f icient, b e c au s e t h i n g s wou ld st i l l b e tou g h. But at lea st, it’s tra nspa rent. So those who are strong would sur v ive, others wou ld join a nd col la borate. A nd that I th i n k ultimately is the way forward,” he sa id.

NNPC’s Refineries not competing with Dangote Refinery for Market Share - Kyari

he Group Managing D i r e c to r o f t h e Ni g e r i a n National Petroleum Corporation (N N PC), Ma l la m Mele Kya r i, on We d ne s d ay de cl a r e d t h at the nationa l oi l compa ny wa s not in contest for market share w ith the for thcomi ng Da ngote Ref i ner y but rather prov id i ng s up p o r t to t he p r o m ote r s o f the project to boost in-countr y ref i n i ng capacity.

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Spea k i ng whi le receiv i ng the P resident a nd C hief E xecutive Off icer of the Da ngote Group, A l haji A l i ko Da ngote, at the N N PC Towers, Kyari explained that as the chief enabler of the Nigerian economy, the N N PC had a duty to ra l ly i ndustr y players l i ke Da ngote Group to achieve the long held ta rget of ma k i ng Niger ia a net exporter of petroleum products. T he N N PC GM D a s sured that the same level of support would be prov ided to other promoters of ref i ner ies, noti ng that the u lti mate goa l wa s to en ha nce i n- cou nt r y pro duct ion to t he p o i nt o f s e l f- s u f f i c i e n c y a n d u lti mately for expor t. E a rl ier

i n h i s pre s entation, A l haji Dangote emphasized that the bu si ne s s approach of the Da ngote Ref i ner y wa s to see NN PC a s a col la borator rather tha n a competitor, noti ng that the refiner y would rely heav ily on the Corporation’s invaluable knowledge of the refining busi nes s i n Niger ia to ach ieve its centra l objective. Da ngote a l ig ned his compa ny w ith the Federal Government’s aspiration to ensure adeq uate i n- cou ntr y ref i n i ng capacity, stati ng that upon completion the ref i ner y wou ld ded icate 53 per cent of its projected 650,0 0 0 ba r rels per day refining capacity to the production of petrol. “ T he most impor ta nt thing for us is to see how we can partner with NNPC, it is not to see how we ca n compete w ith N N PC . We would like NNPC to be part of us a nd we a lso wa nt to be pa r t of N N PC . I th i n k that is the on ly way we ca n ach ieve a w i n-w i n situation,” he sa id.

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EVENT

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AUGUST 2019, Vol 2 No 5

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INFRASTRUCTURE already having short, medium and long term solutions. Though, there are challenges but we are sure that they will be dealt with. And by August, the Council will sign the $500 million Ibadan Dry Port facility. We are seeing efficiency in our ports but we need to reform our trucking and cargo clearing system,” he said. Maritime sector stakeholders who attended the event expressed concern over lack of adequate attention to the maritime sector by the federal government. Former Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Mr Temisan Omatseye, who was the Chairman of the occasion, said the stakeholders will be ready for the next Minister of Transport and tell him the truth. Similarly, another former DG, NIMASA, Mrs. Ufom Usoro, called on government agencies in the transport sector to collaborate and set target for a better transport system

Hassan Bello

‘Nigeria Requires N3trn to Bridge Transport Infrastructure Deficit’

he Executive Secretary / CEO of Nigerian Shippers ‘Council (NSC), Hassan Bello has stated that Nigeria requires as much as N3 trillion to address the infrastructural deficit in the transport sector of the nation’s economy. He stated this while speaking at a Transport Leadership lecture organised by Kings Communications on the next Level Leadership held in Lagos.

meaning that we need to spend about N100 billion every year till the next 30 years. We should not be down cast by the challenges but be rejuvenated by the opportunities presented by the infrastructure deficit.” He stated that the African Continental Free Trade Agreement (AfCFTA), which President Muhammadu Buhari signed recently, was a wonderful development which could be one way that the transport industry and the ports sector can grow.

Bello said such infrastructural issue cannot be insurmountable but should be seen as opportunities which investors can leverage on to create wealth and jobs in the national economy. He added that Nigeria can surmount the challenges in the transport sector through collaboration between the public and private sector. He said the country needs to invest at least N10 billion per annum in the next 30 years to be able to tackle infrastructure deficit. According to him, “We have a lot of challenges but they are not insurmountable because when I look at the deficit in infrastructure as it is said, we need N3 trillion to make up for our deficit,

“The AfCFTA could be the spur that we need because we are talking about the N2 trillion economy and 1.2 billion population as well 54 countries. We need to have imperial output to these negotiations, ”he said. Nigeria, he added, is currently doing well as far as trade is concerned with cargos coming from the competitors. He said he was optimistic that by the time the issue of infrastructures in Apapa environment was fixed, there would even be more improvement. “We believe that by the time the infrastructure problems around Apapa are mitigated, we will see a resemblance of order but we are

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Usoro also called for an integrated transportation policy, adding that this will lead to an efficient transport system. Organiser of the event and the Managing Director of Kings Communications, Mr Kingsley Anaroke in his welcome address said the advocacy for the appointment of professionals to head the ministries and agencies by stakeholders was gradually shifting from professionalism to performance and leadership assessment. Anaroke said: “It the quest to maximize the huge potentials in the sector through the right leadership or performance based leadership capable of positioning the sector to take its critical place in the Next Level agenda of the current regime and the emerging new technologydriven transportation world that gave birth to the MMS Transport Agencies’ Performance Rating with its reward system, Award for sterling performance to spur others to action, while the lecture arm of it, the Transport Leadership Lecture is to help crystallize the philosophy of good governance.”

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NOG 2019

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NOG 2019

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INFRASTRUCTURE

Addressing Infrastructural Deficit, NNPC Issues Warning to Violators of Pipeline Right-of-Way By Ayo Olakunle

n a bid to mitigate infrastructural deficits and curb the menace of sabotage on Gas pipelines in Nigeria, the Nigerian National Petroleum Corporation (NNPC) has kicked off a campaign, raising the red flag on what it termed “flagrant and dangerous’’ violation of its pipeline right-of-way by some individuals and communities along the corridor of the system 2E pipeline network stretching from Port Harcourt-Aba-EnuguMakurdi. The NNPC In a release by its Group General Manager, Group Public Affairs Division, Ndu Ughamadu, said the infringement on the statutorily guaranteed 25-metres setback for the infrastructure was not only detrimental to the free flow of petroleum products but was far more harmful to dwellers of illegal structures and shanties due to the combustible nature of hydrocarbon. The Corporation noted the inseparable link between the cases of oil pipeline right-of-way-encroachment and incessant pipeline vandalism cum oil theft with attendant negative effect on the economy. According to the NNPC, the creation of the minimum 25-metres buffer for the pipeline is designed to allow for maintenance,

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repairs and replacements of pipelines as need may arise while ensuring the security and safety of the facility. The buffer also ensures that those living contiguous to the lines are shielded in cases of leakage, rupture or explosion.

urgency to the situation along the PHC-Aba-Enugu-Markurdi line whose level of violation is about 75 percent stating that the position is intolerable with clear cases of individuals channeling products into private homes.

The Corporation noted that as first step towards eventual removal of such structures by the team of Army Engineering Corps, its downstream subsidiary, Nigerian Pipeline and Storage Company (NPSC), embarked on extensive consultation and enlightenment exercise targeted at violators in affected communities noting that the safety and wellbeing of the people remain paramount. The NNPC said that based on penetrating reconnaissance executed by the Army engineers stretching from OgaleEleme community in PH-Aba axis to Otade community in Enugu-Makurdi leg, structures in violation of the pipeline safety corridor have been identified and clearly marked with notice of imminent removal served on affected occupants.

‘Such incidents are not only crystal clear cases of economic sabotage but poses unimaginable danger to the entire neighborhood,’’ the NNPC stated. Immediate past Director of the Department of Petroleum Resources, DPR, Mordecai Laden once said inadequate gas pipeline infrastructure is a major challenge in Nigeria’s domestic gas supply and market growth. He recalled that the available gas infrastructure in the country was largely limited to the Escravos Lagos Pipeline System, ELPS, adding that most of the other gas pipelines were project specific, point-to-point and lacks flexibility. Before now, the national oil company in concert with the Army Engineering Corps executed successful clearance of the system 2B pipeline ROW from the Atlas Cove in Lagos to Ibadan

The Corporation noted that the essence of the red flag was to bring

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SOCIAL INVESTMENT

Chevron, Partners Commit N2.7 Billion to Health Infrastructure

takeholders in the health sector in Nigeria have commended the efforts of a Chevron Company, Star Deepwater Petroleum Limited, and its partners in the Agbami field, including Famfa Oil Limited, Nigerian National Petroleum Corporation (NNPC), Equinor, and Petroleo Brasileiro Nigeria Limited for expending over N2.7billion on health infrastructure in the country. The fund was specifically staked on acquiring equipment that would help the country fight the menace of Tuberculosis, Medical Director, Chevron Nigeria Limited, Dr. Paul Areyenka said at a conference in Abuja. Areyenka said: “Through the construction and equipping of 28 Chest Clinics across the country, we have contributed to strengthening health systems and supporting the treatment and care of tuberculosis patients in Nigeria.

“

The chest clinics were built in close collaboration with the National Tuberculosis and Leprosy Control Programme

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(NTLCP) of the Ministry of Health, in existing government hospitals and handed over to the States in which they are located for management”. He added that the facilities were fully-equipped with standard X-Ray machines, male and female wards, treatment rooms, laboratories, and Gene Xpert Machines. Speaking as other stakeholders commended the group’s contributions aimed at reducing TB in Nigeria, Areyenka disclosed that in its over 50 years of operations in Nigeria, Chevron and partners have been supporting Government in strengthening health systems targeting the triad of HIV, Malaria, and Tuberculosis (TB). According to him, the group had deployed a social health investment program targeting TB disease, which covers the building of infrastructures such as chest clinics, conducting awareness and advocacy campaigns and assisting in protecting TB health care workers in order to contribute towards the National Tuberculosis (TB) program goals. Since 2008, the Agbami parties have spent a total sum

of N2.7billion ($16.6Million) to build and equip the chest clinics, which have been donated to government hospitals across the country, the medical expert said. Areyenka noted that between 2015 to 2017, over 48,000 presumptive TB cases have been registered in these facilities, with over 11,000 cases detected. “The chest clinics have contributed to about 3% of the national presumptive TB cases registered and three percent to the National aggregate of TB cases, while the awareness campaigns have reached over 100,000 community folks and tested over 8000 presumptive cases with about 2000 cases detected,” he noted. Stating that finding missing TB cases remain critical, Areyenka said the Agbami parties in close collaboration with the NTLCP and specialized NonGovernment Organizations (NGOs) have conducted TB awareness and advocacy campaigns in Akwa Ibom, Rivers, Oyo, Kano, Kaduna, Nasarawa, and Lagos.

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SOCIAL INVESTMENT

MD SNEPCo, Mr. Bayo Ojulari giving his remarks at the ceremony

Shell, NNPC Donate New Cancer Treatment Machine to National Hospital

he National Hospital in Abuja has received a new radiotherapy machine. The machine, donated by the Nigerian National Petroleum Corporation (NNPC) and Shell Nigeria Exploration and Production Company (SNEPCo), is used for radiation treatment of cancer patients. The device delivers highenergy x-ray or electrons to the patient’s tumour region. The new machine is expected to enable the hospital attend to indigent cancer patients who cannot bear the brunt of treatment costs, officials said. With the new addition, the hospital can now boast of two functional radiotherapy machines. At the launch of the machine, Vice President Yemi Osinbajo who was represented by the permanent secretary at the health ministry, Abdullahi Mashi, said the equipment will open up a new vista to cancer treatment in Nigeria. 26

Majorwaves Energy Report

He decried countless lives lost to the terminal illness in the country, a situation he said government and other cooperate organisations are partnering to alleviate. Mr Osinbajo said two of such machines would subsequently be installed in Zaria and Ibadan. Also speaking, the Group Managing Director of NNPC, Mele Kyari, explained how the initiative was hatched by both oil companies as a civic responsibility. Mr Kyari was represented by a Group Manager, Nduka Mmadu. He urged other institutions and organisations in the country to invest massively in the health sector. “If we are not healthy, we cannot contribute our quota to the country’s economy,” he said. Bayo Ojulari, the managing director SNEPCo in his remark said apart from donating the equipment, a maintenance and operational structure has been put in place as an initiative to maintain the machine.

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“We have built up the skills of health workers critical to the operation and maintenance of the radiotherapy machine and supporting facilities. “An advisory committee, made up of SNEPCo, National Hospital officials, and representatives of the health ministry, will govern and put a monitoring and maintenance plan in place to ensure that the facility is operated in a sustainable manner, Cancer is a public health issue affecting a large number of our population, yet our country has limited resources to manage reported cases”, he noted. The Chief Medical Director of the hospital, Jaf Momoh, thanked the oil companies and described the equipment as “state of the art”. “This state-ofthe-art equipment is the best you can find anywhere in the world in terms of speed, durability and ruggedness, and patients will no longer be interrupted during routine equipment maintenance,” he said.

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SOCIAL INVESTMENT

Vice President, Prof Yemi Osinbajo was represented by the Perm. Sec. Fed Min. Of Health, Abdulaziz Mashi Abdullahi

He said the hospital had been constrained to take in indigent Nigerians. “With this new machine, poor Nigerians can now have access.” The medical director explained how the hospital has evolved in cancer treatment over the years. “We have come a long way”, he said. “We received our first cancer machine in 2000 and in 2012 we built a cancer complex with stateof-the-art equipment. After some years, it became obvious the machine was old and needed change. “So in 2017, we received a second linear accelerator where 850 patients were treated in 20 months with over 25, 000 cycles of radiotherapy sessions. Normally, it takes about 15 minutes for each round of treatment, but with two functional machines, it will now www.majorwavesenergyreport.com

Dr Jaf Momoh, CMD, National Hospital Abuja

take just two minutes for a round of treatment.” Mr. Momoh said country’s like Ghana charge up to $10, 000 for treatment. He said the new equipment will enable the hospital subsidize costs. “Nigerians will now spend just less $2, 000 for treatment.” Cancer in Nigeria Radiotherapy is one of the key routines in the painful fight against cancer. A cancer patient often needs the treatment at one point or the other. Experts say it is often better not to start it than to have a break in the sessions.

machines at the Abuja hospital, Nigeria could only boast of eight government-owned radiotherapy machines located in different areas in the country. Unfortunately, many of the machines have broken down and those functional are not functioning at full capacity. Most have broken down as a result of overuse, old age and lack of proper maintenance, and cannot get fixed due to lack of spare parts and relevant technical expertise. The Chief Medical Director advised Nigerians to modify their lifestyles to prevent the ailment as access to treatment is not countrywide yet.

Access to radiotherapy treatment has been the bane of cancer patients in Nigeria. Apart from the new

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NCD: Beyond Oil, Gas “we’ll work with National Assembly to convert the executive orders into an Act.”

he Nigerian Content D evelopment and Monitoring Board is pursuing a ten-year road map that would see it cover grounds on a number of daring goals, ranging from the proliferation of refineries across the country; creation of industrial parks at strategic regions which would attract original equipment manufacturers (OEM), encourage inflow of investment and jump start the nation’s much-soughtafter industrialization. Still part of its goals is to develop a list of indigenous companies and to give them that worldclass status, such that they can compete internationally; ensure availability of funding for the 28

Majorwaves Energy Report

industry via its NCIF scheme which is being managed by the Bank of Industry; grow research and development such that wellequipped centers of excellence will bring the academia and industry together for home-grown answers to Nigerian oil industry technical challenges. As an independent member of the fourth estate of the realm, Majorwaves Energy Report decided to catch up with the Executive Secretary of the NCDMB, Engr Simbi K. Wabote, in order to ascertain the level of progress with the agency’s goals and to know how Nigerian Content Development will fare in linkage sectors which are outside

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the jurisdiction of the NOGICD Act. Excerpts by Jerome Onoja Why did you restrict Project100 to just a few number of companies, and what is the progress with them? You can’t build capacity of people to deliver highly technical service just in a day; it takes a lot of time. We have transparently selected about sixty of those documents that applied, based on the criteria. Yes, the target is a 100 as we said, but by January 2020, we will then look at the remaining 40, but we will definitely cap it up to 100. www.majorwavesenergyreport.com

COVER STORY for you can’t do it alone. How do you create partnerships with the local businesses and the international ones that have the technology and the expertise? Of course, we couldn’t take all the trainees because we didn’t have that much fund to take them on that journey. Out of the selected ten trainees, eight got visas; the remaining two were deprived. We have developed a strategy to audit these companies. First of all, to know where they are and see where we want to take them. That’s the process that is currently ongoing. It has to be a structured pattern and approach to getting it done and that’s why it is not a fast-track arrangement. It is a long term developmental project and engagement and must be done in a structured manner and that is what we are doing. What’s the update on Nigerian oil and gas parks scheme (NOGAPS)? Two of the construction works are ongoing in Bayelsa and Calabar. The Bayelsa one is at the Phase two, which is the construction of the road. The contractor is already mobilised to the site. The Calabar one in the next couple of weeks will get the necessary approvals. Also the infrastructure on it is moving ahead and we believe that in the next couple of weeks, to next month, we should get the necessary approvals on those Infrastructure. So, our target is to see how it can be completed. As for the power plant that would support the Bayelsa NOGAPS; hopefully, we will commission that in August. It has really advanced and progressed. That’s where we are right now. About a month ago, we organized an extensive training for most of these companies and their managers. It took about 6 weeks to train them in various aspects of project management, how to access opportunities in the industry and the process to go through. Apart from the six extensive weeks of training, we also trained them on underwater activities because the industry is going offshore. Just two weeks ago, we selected ten of the trainees to an oil and gas fair in Calgary, Canada to meet other international companies that need to do business in Nigeria, and to see how they can synergize to start partnerships. To build capacity in the oil and gas sector, you would need partnerships,

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Talking about the Nigeria Content Development Fund; from our interactions with the former Minister of State for Petroleum Resources, he said the plan was to raise the fund to about $1 billion. Can you please give update on how far you have progressed with this? I think the message there is to attract counterpart funding to that level, not necessarily to raise the funds. I think that was the challenge we gave to the Bank of Industry, which is the bank that is managing that intervention funds for us, and I think they are working very hard. Last month, we had a meeting with the leadership of the Bank of Industry; they are about concluding some form of counterpart funding that would add to the $200 million they are managing for us.

So, it’s not to raise but to look for counterpart funding that supports the cause such that we don’t stop the process. They are making good progress and in a couple of months, they would conclude that. You know sourcing for funds is not a day’s job. They are at it and I hope they would conclude very soon. The 9th edition of PNC is coming soon. What’s the assessment on the part of the industry; and for this 9th edition, what are we expecting? The 9th edition would be in December and I’m sure you have followed the trend of what PNC is all about. Most industry players look forward to it because it provides avenue to interact. It actually provides opportunity for the board to assess itself and stakeholders to assess the board on where we are with our programmes, which is a healthy thing. It also gives room for service providers to interact with operators and also see the capacity that has been developed incountry; review local content activities that is practical; future opportunities are discussed; and Industry issues are tackled. We look forward to hosting the 9th edition in Yenagoa, Bayelsa in our modern conference facility. I’m sure it’s perhaps one of the best in the country; people would look forward to it. During that time, people would also know we have moved into our new office in Yenagoa. What is NCDMB doing to ensure that those that have been trained in some fields but are unemployed, can be deployed elsewhere with the opportunity?

“

we selected ten of the trainees to an oil and gas fair in Calgary, C anada to meet other international companies “

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COVER STORY see another refinery coming up in Calabar very soon. What is the drive for this? Well, the push and the drive for it is government’s policy in trying to bring up modular refineries in other to support local refining and production of products in-country. You remember government launched the ERGP programme; these modular refineries are a part of that programme. The mistake people make is that, they think modular refinery is a different kind of refinery. It’s the same but on a smaller scale. It s part of government policy and we are in tandem with it. If you also recall when the government launched the 7 BIG WINS; it was part of the agenda for oil industry to get Nigerians involved in the value chain. Right now, we are addressing the flare down opportunity, gas commercialization among others. So it’s all tailored towards that; just like we are involved in the Walter Smith bit. It is important you guys visit the Azikel refinery and see what is ongoing there. Currently, the tanks are being erected and the detailed designs is about to be commissioned for that to go. We have a timeline to do this, and the Board’s role is to catalyze it. We are a regulatory agency with a developmental agenda attached to it. We catalyze these processes, as they get on, we pull out and focus on other things. We also are into the gas value chain. How can we support the federal government on LPG penetration? Government initiates the policies and the agencies see how they can fit and support government agenda, that’s all we are doing and what the government wants us to focus on. Since I came on board, NCDMB in terms of training has adopted a good and friendly approach. We don’t get involved in training for training sake because a lot of people are already trained either through NCDMB or through amnesty programme, via the NDDC. These fellows don’t see where to work. As such, we have developed a new strategy and we would adopt a 60: 20: 20 approach of training. 60 per cent of our training would be focused on people that would be trained and available access to job opportunities would be there. 20 per cent of training will be focused on those who are on jobs. How do we train them to be able to serve the Industry better? Then the other 20 percent would be given perhaps general training, where they are trained in terms of work ethics, performance and interpersonal relations. 30

Majorwaves Energy Report

If you recall, there is a company called AOS Orwell. It is training electricians for us, and part of the agreement was 60 per cent of those trained will be absorbed, and that if they don’t get absorbed, the company won’t be paid for the training services they provide. So, that’s the way you force people to train and employ, rather than train for training sake. So we are right on course and would design the models to ensure we achieve it and again, we also focused on entrepreneurship training. We are not training people to look for employment; instead how they can sustain and become entrepreneurs themselves and employ people rather than training them to look for employment.

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60 per cent of those trained will be absorbed, a n d th a t i f they don’t get absorbed, the company won’t be paid for the training services they provide.”

We have seen Walter Smith refinery flagged off, and now is Azikel. Following your tweets, one can

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COVER STORY How long does it take to pull out? It depends. Once they come on stream and they might ask us they want to buy us out, even if it’s a year or two to get out of the investment. But we have a target date and at a point, we just move out. Not much is being said about mini refinery; and we have heard the Niger Delta Exploration Company has said and done a lot about the mini refineries and very soon they will begin to produce PMS but beyond what they say, we haven’t heard from government agencies on what’s going on there. Like you know, it’s a private entity. If they want you to know about it, they will tell you and if they want the world to know they will say it. But the ND Western developed 1000 barrel per day modular refinery which they have been operating for years; they didn’t talk about it until we started talking about modular refinery, and we knew that they had done something already. Yes, I’m aware they are trying to upscale it to about 5, 000 barrel but it’s a private company, and if they want us to know, they will tell us. They are doing their own investment. It is a marginal field operator; it’s their own investment process which we welcome, but I can assure you, that project is ongoing on a private level

defaulters. Those who obliged, simply did it out of a free volition. It was only in 2010 it became an Act; when the Nigerian Oil and Gas Industry Content Development Act was passed into law. Now, we are seeing the effects of that legislation. In the same vein, several Executive Orders have been made by the Presidency, all in favour of Local Content. We are planning to work with the national assembly to see that these Executive Orders become an Act. When that happens, ICT, power, manufacturing and other sectors would experience copious benefits of having in-country value addition in their activities. There’s this continued complaint about brief case companies continually winning contracts at the expense of established, local content compliant companies. What is the Board doing about it?

don’t happen, but of course we need information. We need feedback. The onus shouldn’t be on NCDMB alone. We need other stakeholders to join hands with us in achieving it. When these things happen, we find out that the operators are the ones who cave in and permit it, using their discretion. If we all decide to stamp it out, then it won’t be seen again. So, the onus is on the operators.

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“ they are about concluding some form of counterpart funding that would add to the $ 2 0 0 million”

We are doing what needs to be done from our end to see these things

Is there any way you follow up on activities to regulate these ones? We follow them up and see what they try to do, but recently we are trying to encourage more of it. Part of what you have in the Niger Delta is the crude method of trying to refine crude oil, and in the process, the environment is degraded. But, if we can get it organized into modular forms, smaller refineries everywhere, at some point you crowd out those who are cooking crude oil, destroying our environment. So yes, we know what they are doing but some of them don’t make so much noise about it and they don’t need us. It’s the ones that need us that we step in. Wi th the level o f s uccess encountered in the oil industry as regards local content, are we going to see this replicated in other vital sectors of the economy? Before it became an Act, Local Content was first a policy that the NNPC used it to regulate the industry but it lacked the statutory provisions to prosecute

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INFRASTRUCTURE

Total Plans $5bn in Upstream Asset Sales as Q2 Profit Falls

rench energ y giant Total will sell around $5 billion worth of assets, mostly from its upstream exploration and production business, as it seeks to focus on low breakeven projects that can weather weak oi l pr ic e s, it s a id r e c ent ly. T he company reported a 19% year-on-year drop in adjusted net profit to $2.9 billion in the second quarter, which it attributed to a combination of unfavourable market factors. T hese include a 7% drop in o i l p r ic e s s i nc e t he s e c o nd quarter of 2018, a sharp fall in gas prices, and a slide in r ef i n i n g m a r g i n s. “M a rket s remained volatile with Brent avera g i ng $ 6 9 per ba r rel in the second quarter – an increase of 9% compared to t he prev iou s q ua r ter – but natural gas prices down 36% in Europe and 26% in A sia,” Chairman and Chief Executive Patrick Pouyanne said. T h e c o m p a n y, w h i c h h a s carried out a spree of 32

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a c q u i s it i o n s a n d e x p a n s i o n plans particularly in gas and ele ct r icit y u nder Pouya n ne, said it was preparing for the future by focusing on its core strengths in the gas and deep offshore segments. Although gas prices fell sharply, Total said operating cash f low before working capital changes i n it s g a s , r e n ew a b l e s a n d p ower bu si ne s s su rge d 42% thanks to 8% production g row th a nd a 10% i ncrea se in liquefied natural gas (LNG) sa le s. Tota l’s sha re s on the Paris bourse were flat at 0933 GM T. A S SET SA LE Total said the focused strategy wo u l d b e c o mp l e m e nte d by the sa le of a s sets that on ly bre a k even at h i g h oi l a nd gas prices, such as the recent disposal of mature assets in t h e B r it i s h N o r t h S e a . It s organic pre-dividend breakeven is below $25 per barrel, while

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t h e o r g a n i c p o s t- d i v i d e n d breakeven – which would allow it pay dividends and carry out investments – is below $50 a barrel.

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T his active portfolio m a n a g e m e nt p o l i c y w i l l c o nt i nu e w i t h the sale of $5 billion i n a s sets over the 2019-20 period, the majority coming from Exploration and Production,” Pouyanne said. A na lysts said Tota l’s results were i n l i ne w ith ma rket expectations. “ T h e a n n o u n c e m e nt o f t h e asset sales may help to offset some u ncer ta i nty a rou nd the recent growth and M&A strateg y, demonstrating some ongoing discipline around the ba la nce sheet a nd up strea m portfolio,” Barenberg analyst Henr y Tarr said in a note.

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INFRASTRUCTURE

Exxon Mobil’s Second-Quarter Results Expected to Sag, Spotlighting Need for Asset Sales E x x o n M o b i l C o r p ’s p l a n t o a c c el e r ate a s s et s a l e s , a w ay o f d e l i v e r i n g n e e d e d c a s h to finance shareholder returns and major projects, is getting off to a slow start as oil companies pull back on big deals. T he largest U. S. O i l compa ny i s exp ected t o r e p o r t a 7 9 - c e nt s - a - s h a r e prof it, dow n f rom 92 cent s a year earlier, according to data prov ider Ref i n itiv. With l ittle cash from asset sales and a third straight quarter of weaker yearover-year earnings, Exxon cannot resume share buybacks sought by investors this year, said analysts. Chief Executive, Darren Woods, this year set a target of raising $15 b i l l i o n b y t r i m m i n g i t s por tfol io th roug h 2 021, a bove the avera ge $ 3.3 billion a y e a r r at e b e t w e e n 2 017 a n d 2 013. T he sa les cou ld i nclude more oi l-produci ng proper tie s, compared with prior deals mostly i n ref i n i ng a nd ma rketi ng, he said. But those goals are proving d i f f icu lt. I n it s f i r st q ua r ter, proceed s f rom sa le s were ju st $107 million, the lowest in at least 11 quarters, and analysts expect the second quarter to come in at a similar level. Ex xon last q ua r ter a g re e d to s el l a U. S. Gulf of Mexico property for $200 m i l l i o n. “ T h e r e’s n ot e n ou g h cash f low for buybacks, which is what people want to see,” said Je n n i fe r R ow l a n d, a n a l y s t at Edward Jones, who has a “hold” r at i n g o n E x xo n. E x xo n m ay www.majorwavesenergyreport.com

have to use debt to help fund its shareholder div idend, she said.

else; but they just aren’t there,” the person said.

A packa ge of of fshore Gu l f of Mexico oilfields that Ex xon put on the market last autumn has lang uished, said analysts. More recently, the company has begun to market offshore properties in Nigeria and Norway, according to analysts and people familiar with the matter, anyone could raise several billion dollars in a sale, the people said. Stephen Greenlee, w h o ov e r s e e s d i v e s t i t u r e s a s president of Ex xon’s Upstream Business Development group, was not available to address the asset sales, an Exxon spokesman said. Ex xon shares are rated a “buy” by just 23% of analysts, below BP PLC’s at 71%, Chevron Corp’s 74%, Royal Dutch Shell’s 80% and Total SA’s 89%, according to Refinitiv.

T here is no doubt Ex xon’s cash could use a boost. A nalysts slashed earnings forecasts to 79 cents a share from 97 cents after the company disclosed operating u n it ex p e ct at ion s t h i s mont h. “We expect another large funding gap this quarter,” wrote C owen a na ly st Ja s on Ga b el ma n, who estimated Ex xon’s organic free cash f low this quarter will not cover the $3.7 billion needed for div idends.

“ T he market is not ready to pay what Ex xon thinks these assets a r e wo r t h ,” W i l l i a m Tu r n e r, a v ice president at resea rcher Welligence, said of the offshore U. S. proper ties. “A lot of the recent transactions in the Gulf of Mex ico have b een goi ng at discounted valuations.” Ex xon’s pitches are not the only going unanswered, said a U.S. merger a nd acquisition adv isor who re q ue ste d a nony m it y sp e a k i n g about M&A matters. “ T here has been less activ ity. I’m not sure if it is the bid/ask or something

T he two areas expected to show i mp r ove d m a r g i n s du r i n g t h e period, crude sales and refining, were offset by weaker natural gas prices and higher maintenance costs. T he result was “another d i s app oi nt i n g q u a r ter,” w r ote Bi r aj B ork h at a r i a , a n a ly st at R BC Capital Markets, in a client note. Exxon has been investing to boost production in the Permian Basin, t he top U. S . sh a le f ield, a nd in offshore Guyana. Ex xon “is always countercyclical” and “has to be v iewed in the long term,” s a id Joh n Groton, d i re ctor of equity research at Thrivent Asset Management, which holds Exxon shares. Exxon’s shares are up less than 1% over the last 10 years.

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ENERGY WOMAN

COO Starzs Investment Company Ltd., Iroghama Ogbeifun-Obuoforibo

“…As a woman, I’m one who contributes significantly to the industry. I have what it takes to sit at the table” - Ogbeifun-Obuoforibo

roghama OgbeifunO buoforibo is the C hief O p era tin g O f f icer of Starzs Investments C ompany L imi ted , s he i s al so the C hairman Finance an d Mem b ers hip for S hip Owners Association of Ni geria ( SOA N) . T he yo un g and vibrant COO spoke passiona tely on the need for 34

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wom en to b ui ld comp e tenc y and not use gender as a r i gh t; s h e a l s o to u c h e d o n the n eed to d evelop loca l capacity for in - country ship b u i l d i n g a s w e l l a s u rg i n g th e go v e r n m e n t to r e l e a s e the n eed ed f un d to s upp or t this venture. Iro spoke to the Majorwaves E n erg y R ep or t team on the sidelines of AUGUST 2019, Vol 2 No 5

the Ni gerian O il and G as Conference ( NOG) . Excerpts: I was at the D ay of the S e a fa r e rs e v e n t fo r w o m e n s e a fa r e r s w h e n y o u s p o k e p a s s i o n a te ly a b o u t w o m e n , what has been your personal experience as a woman in th e m a r i ti m e s e c to r?

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ENERGY WOMAN

Ju s t t h i s mo r n i n g s o meb o dy s a id me,” I r o, I do n’t t h i n k you s hou ld pl ay t he fe m i n i s t card.” A nd I’m not a feminist. I’m a woman who is operating i n m a le do m i n ate d i ndu s t r y a nd for t h at I don’t s e e it a s a ma le dom i nate d i ndu st r y; I see it a s a n industr y. For me, f i r st of a l l steppi n g i nto it, I r e a l i z e d t h at I mu s t a lway s pr ove my met t le i n wh atever I’m doi n g. W h atever I’m doi ng, I must f i rst of a l l show my expertise, show my c omp etenc e f i r s t, b efor e d i spl ay i n g t h at I’m a wom a n so that I wou ld be ta ken s er iou sly. D ef i n itely, a l re ady being a woman is a challenge, but I do not wa lk into a room fe el i n g t h at I’m a wo m a n. I wa l k i nto a room feel i ng that I h ave t he r i g ht to b e he r e, I h ave wh at it t a ke s to sit at t he t a ble, a nd I h ave v a lu e to b r i n g to t he t a ble. A n d h o w h a s th a t b e e n? I h ave k now n a lot of p e ople he r e. Pe ople wa l k up to me now and they recognize me in my own right. Not in my right t hat oh! I’m Gre g Og b ei f u n’s d au g hte r, but t he fa c t t h at I’m C h ie f O p e r at i n g O f f ic e r o f St a r z s a nd I’m o ne who c o nt r i b ute s s i g n i f i c a nt l y to t he i ndu s t r y. I t h i n k I h ave managed over the last 5 ye a r s b e i n g i n t he m a r it i me i ndustr y to esta bl ish some level of feel i ng that I deser ve to be here; not becau se I’m a wom a n, but b e c au s e I k now wh at I’m do i n g. Part of what was d i s c u s s e d d u r i n g th e D a y o f t h e S e a fa r e r s s u m m i t ha s to d o wi th recogni tion of women based on their capabilities and c o m p e te n c e . D o y o u s e e that card playing out as you operate in the m a r i ti m e s e c to r? Mo st def i n itely. W hen I gave a n i nte r v iew at t he d ay o f t h e S e a f a r e r t h at N I M A S A ho s te d, I s a id s o met h i n g a s I closed my inter v iew; I

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sa id that a s women, a s a p e o p l e , w e s h o u l d n’t p u s h for gender parity on one hand wh i le st i l l lo ok i ng for fema le c o n s i d e r at i o n o n t h e ot h e r h a nd. You c a n’t h ave it b ot h way s . S o i f you s ay you a r e steppi ng i nto a ro om a nd you want to be considered for your competence, for what you b r i n g to t he t a ble, fo r you r capa bilities a nd a bilities; you ca n not on th i s sa me ta ble g ive me c o nc e s s io n o n t he o t h e r h a n d b e c a u s e I ’m a woman, which means ‘do you wa nt to b e t r e ate d a s a woma n? O r do you ju st wa nt t o b e t r e a t e d a s a w o r ke r fo r w h at y o u b r i n g t o t h e t a ble? T h i s a l s o me a n s t h at t he r e a r e c e r t a i n s a c r i f ic e s t h at you h ave to m a ke a s a wo m a n t h at obv iou s ly you r ma le counter parts might not have to de a l w it h. T her e a r e c e r t a i n ot he r t h i n g s you don’t have to a sk for b ec au s e you r ma le cou nter pa r t s don’t a sk for t hem; you ju st f i nd a way around it. Unfortunately, t h at’s t he wo rld we l ive i n. Yo u s p o k e p a s s i o n a t e l y a b o u t the G overnm en t’s p o l i c y to p l a c e a b a n o n the importa tion of vessels; could you just give us a recap o f yo ur m a i n p oi n ts o n th a t d i s c u s s i o n? A s y o u k n o w, N I M A S A has been speaking quite a g g r e s s ively fo r t he l a s t few mo nt h s o n t he i r de c i s io n to cease wavers – the issuance of waver s c ompletely; obv iou sly s t a nd i n g o n t he fou r p i l l a r s of C a bota ge - bu i ld, ow n, m a n a nd f l a g. S i g n i f ic a nt to u s a s m a r it i me op e r ato r s i s t he a s p e c t of bu i ld i n g wh ich they are tr y ing to push. T hey i s s ue d a d i r e c t ive few we ek s a go, wh ich I me nt io ne d o n st a ge, not i f y i n g t he c ou nt r y, noti f y i ng a l l the key a gencies that they w ill no longer a c c e pt t h e i mp o r t at i o n o f ve s s el s – c e r t a i n c ate go r ie s of ve s sel s - over a p er io d of time, starting from December 2 0 2 0 . O b v i o u s l y, t h a t h a s major implications for those of u s that work i n the i ndu str y,

t h at op e r ate i n t he i ndu s t r y b e c au s e ou r wo r r y i s ‘ do we have t he c ap acit y to actua l ly me et up w it h t he st a nd a r d s? A re p e ople goi n g to r u sh a nd circumvent standards? W here do e s cl a s s s o ciet y c ome i n to pl ay he r e? W he r e do we get t he s k i l l s a nd ex p e r t i s e t h at is required to do something as s i g n i f ic a nt a s s h ip bu i ld i n g? T hat’s why I sa id ea rlier that yes, initially there was panic, but a s t i me we nt o n we s aw somethi ng that ha s moved f r o m a ch a l le n ge to a c t u a l ly a n opp o r t u n it y. T h at’s wh at I t r ie d to p o i nt out to d ay, we s p e nt a lot o f time talking about laws in the i ndu s t r y l i ke t he fa b r ic at ion y a r d s t h at we r e e s t a bl i s he d l a s t ye a r o r du r i n g t he t i me o f t he E g i n a , a nd s u dde n ly t hey’ve not had work for a l mo s t 2 ye a r s now. M a ke s me wa nt to a sk, so a f ter t he c o m m i s s io n i n g o f E g i n a , wh at nex t? A nd I’m s ay i n g wel l, i nstead of sitti ng on ou r a r m s o r s it t i n g o n ou r ha nd s wa iti ng for a nother Z a b a z a b a o r B o n g a S o ut h We st or N L NG Tra i n 7, here i s a u n iq u e opp or t u n it y t h at ha s been d ropped on ou r laps by t he Fe de r a l G ove r n me nt who has now taken a ve r y b o l d s te p. S o we c a n e it he r s t a nd o r wh i ne a b out t he i mp o s s i b i l it y o f t he t a s k o r we c a n s ay ‘wh at do we h a v e? W h a t i s a v a i l a b l e? H ow c a n w e m o d i f y ? H ow c a n we t u r n a r ou nd a nd u s e it a nd ut i l i z e it to a ch ieve this objective that the Federal G ove r n m e nt h a s s et b e fo r e u s . A l s o s p e a k i n g o n t h at, we h ave ex i s t i n g s h ip y a r d s a nd Sta rzs for one ha s a s h ip y a r d, Ni ge rD o ck , t he r e i s WAV, t h e r e i s WA S . S o t he r e a r e fa c i l it ie s a l r e a dy ; just that we are not building, we a re just repa ir ing a nd m a i nt a i n i n g , but now i s t he opp or tu n ity for tho se sh ip yards to be expanded to a c c o m m o d ate S h ip b u i l d i n g to me et t he obj e c t ive o f t he gove r n me nt.

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ENERGY WOMAN

So NCDMB is strategically positioned, g iven their histor ica l achievements to actua l ly ta ke the lead w it h N I M A S A to e n s u r e t h at Ni ger i a n s don’t get d r opp e d i n t h i s new d r ive by the Federal Government . We don’t get pu she d out of t he way, b e c au s e you see, foreigners are going to step i n a s q u ick ly a s t hey s e e t he opp or t u n it y, t hey see what can happen. If we as Nigerians don’t have the b a c k i n g o f o r g a n i z at i o n s l i ke t he NC DM B who w i l l en su re that th i s capa bi l ity they have built, they can expand and sustain it a s they hope to do, t hen we w i l l b e b ack to s q u a r e z er o on t he i s sue of maritime from the Niger ia n content a sp e ct i f t h e N C D M B d o e s n’ t step in today a nd r ise w it h t h i s wave s t h at t he Fe d e r a l G ove r n m e nt a n d NIM A SA have set in mot ion. Wi th a vi ew to thi s ki n d o f o p p o r tu n i ty, h o w would you recommend that the aspect of f i n a n c e b e ta k e n c a r e o f, I m ea n thi s i s a lo n e v o i c e , b u t th e n ta k i n g i n to c o n s i d e ra ti o n th e fa c t th a t yo u h a v e n o t b e e n a b l e to a c c e s s th e C VFF (Cabotage Vessels Fi n a n ci n g F un d) , d o your colleagues share the same enthusiasm w i th yo u? We l l l e t ’s b e h o n e s t . W hether we build the ship in Niger ia or not, p e ople a r e buy i n g sh ip s. How a r e t hey buy i n g t he sh ip s? T h at’s a rhetor ic a l question that we need t o p o n d e r o n . M y p o i nt i s t h at n o m at te r w h at , p e ople a r e goi n g to f i nd the funds and they are

Majorwaves Energy Report

going to need to buy ships. But wh at we c a n do i s to try from day one to make it easier, i f we are goin g to build ships in Nigeria, it s ho uld b e c heap er or a t l e a s t c o m p e ti ti v e . S o i f I’ m go i n g to s p e n d $1 0 million dollars b uildin g a ship in C hina, I should n o t c o m e a n d s p e n d $ 2 0 m i l l i o n d o l l a r s to b u i l d th e s a m e s h i p i n Ni geria , b eca use I’m tr y i n g to a d h e r e to th e F e d e r a l G o v e r n m e n t’ s regulation of say i ng you mu st now bu i ld i nc o u nt r y. S o t h e Fe d e r a l G over n ment, C BN, t hey have a lot to do, they have to de a l w it h a lot of f i s c a l issues associated with t h i s new i n st r uc t ion f r om t h e Fe d e r a l G o v e r n m e nt in terms of no more importation of certain ve s s el s. You h ave to m a ke it wo r t hw h i l e; y o u h ave to m a ke it r e a s on a ble, s o t h at p e o p l e c a n a c t u a l l y a f for d it. So on the issue of CVFF, the DG NIMASA, Dr Dakuku has said repeatedly t h at h e w o u l d d i s b u r s e . T he for mer M i n ister of Tr a n sp or t at ion, A m ae ch i, had said on different pl at for m s t h at t hey pl a n to d i sbu r s e. I h ave b e en pa r t of d i scu s sion s a rou nd establishing the guidelines, I have sa id at the la st N I M A S A st a keholder s’ s em i n a r t h at wa s held i n April, where they discussed t he i s sue of c e s s at ion of wa iver s, I act u a l ly s a id it on t he plat for m t hat t here is no point reinventing the wheel, NCDMB has accrued half of what NIM A SA shou ld h ave ac c r ue d a nd NCDMB is disbursing; how is NCDMB disbursing? W hat lega l f ra mework a nd f i s c a l f r a mework a r e t hey

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u s i n g? S o why don’t you ju s t s it d ow n w it h y o u r c ou nter p a r t, NC DM B a nd f i g u r e it o ut. It’s n ot a bi g de a l, b e c au s e it’s t he same people that will benefit from the C V F F t h at a r e b e ne f it i n g f r o m the NC DM B, so how is t he NC DM B get t i n g t hei r c o m f o r t? H o w a r e t h e y getting their security? How are they getting t h e i r c o l l a t e r a l ? D o n’ t r ei nvent t he whe el, i f you a re w i l l i ng a nd com m itte d and have that political will to rea l ly d isbu rse those f u n d s , e v e n i f i t s $1 0 0 million dolla rs, that is there, I mean NCDMB st a r te d w it h $2 0 0 m i l l ion dol l a r s. Nob o dy i s a sk i n g you to br i n g $1.6 bi l l ion dollars. If you have $15 0 m i l l ion dol l a r s i n your f und, br ing it out a nd d i sbu r s e it. T her e i s n o p o i nt ke e p i n g i t a n d accr uing it, accr uing it ba sed on what, w ithout e a r n i n g a ny i ntere st? We a r e not enjoy i n g f r om t he i nt e r e s t i f i t i s e a r n i n g a ny i nter e st. S o s it dow n with your counterpart, and f i g u r e it out. I hop e t h at t he i nc om i n g M i n i ster of Tr a n s p o r t at i o n , w h o e v e r that would be, will r i d e o n t h e c o m m i t m e nt that has been made by t he pr ev iou s M i n i ster of Tr a n sp or t at ion a s wel l as the commitment that the DG of NIMASA has towards en su r i n g t h at t he s e f u nd s a r e d i sbu r s e d, b e c au s e he r e c o g n i z e s t h at t h i s i s a legacy i s sue for h i m a nd i f he i s a ble to ach ieve t hat, he w i l l go dow n i n h i stor y as the only DG that ma na ged to unlock a nd br e a k t he b ond a ge of t he C V F F.

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Majorwaves Energy Report

AUGUST 2019, Vol 2 No 5 37 www.africa-oilweek.com

ENERGY FINANCE

Seplat’s H1 profit rises by 15% as revenue hits $355m

Austin Avuru

eplat Petroleum D evelopment C ompa ny P l c (“ S e p l a t ” o r t h e “Company”), a leading Nigerian indigenous oil and gas company listed on both the Nigerian Stock E xcha nge (NSE) a nd L ondon S t o c k E xc h a n g e (L S E), h a s recorded a rise of 15 per cent i n it s ha l f-yea r prof it b efore deferred ta x. I n its unaud ited consol idated half-yearly financial results for the period ended 30 June 2019 made available to the NSE and L SE recenty, Seplat reported a profit before deferred ta x of $121m (N37 bn) f r om $10 5m (N32bn) reported in the first ha lf of 2 018. T he C ompany’s r e ve nu e fo r t h e p e r i o d a l s o appre ciate d by fou r p er cent to $355m (N109bn), which is higher than the 2018 half-year fig ure of $343m (N105bn). On a similar note, the oil firm’s gross profit rose by 19 per cent to $207m (N64bn) from $174m 38

Majorwaves Energy Report

(N53bn) reported in 2018 halfyear. Operating cash f low hit $255m from $245m, indicating a fou r p er c ent appre ciat ion year-on-year. C ommenting on the company’s financial performance for the p e r i o d , t h e C h i e f E xe c ut i v e O f f i c e r, S e p l a t P e t r o l e u m D e v e l o p m e n t C o m p a n y, M r. Austin Av ur u, sa id: “ Today’s results further empha sise the strong cash generation potential o f o u r l o w- c o s t p r o d u c t i o n ba se and the good prog ress we a r e m a k i n g at t he l a r ge scale A ssa North/Ohaji South (A NOH) ga s a nd c onden s ate development proje ct. “O u r H1 work programme has been impacted owing to unforeseen delays from rig contractors as well as the need to undertake higher levels of maintenance and asset integrity work for longerterm benefit of the assets. Both have affected production during the H1 but we have now secured the necessar y rig capacity for

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the second half to implement the revised work programme which will drive us towards an 2019 exit working interest production rate of 62,0 0 0 barrels of oil equivalent per day (boepd) and b r i n g a n nu a l i s e d p r o du c t i o n within the unchanged guidance r a n g e o f 4 9,0 0 0 t o 5 5 ,0 0 0 boepd.“Meanwhile, we remain on an extremely solid financial fo ot i n g a n d c o n c e nt r ate d o n furthering our growth strateg y as we target both organic and inorganic opportunities to grow shareholder returns.” T he revenue of $355m (up by four per cent year-on-year) was with gas tolling revenue of $67m recognised for the first time in relation to the processing of the Nigerian Petroleum Development Company’s (NPDC) gas through the Seplat sole risk funded Oben Gas Plant 375 million standard cu bic feet per day (M M scfd) expansion between June 2015 and 2018 end.

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ENERGY FINANCE

The gross profit of $207m, according to Seplat, represents a 58 per cent ma rg in (up from 51 per cent i n H1 2 018) wh i le operating profit of $139m is down 12 per cent year-onyear after adjusting for a $40m impairment of NDPC re c eiva ble s Si g n i f ic a nt ly lower finance costs of $25m (down 39 per cent yearon-year) have kept profit before tax flat year-on-year at $120m with net profit from continuing operations standing at $119m. Average working interest production during H1 2 019 wa s 48,0 04 boepd (c o m p a r e d t o 5 1 , 0 9 9 b o ep d i n H1 2 018) a nd c o mp r i s e d 2 2 , 9 74 b o p d l iq u id s a nd 145 M M scfd gas. Production uptime in the period was 88 per cent while reconciliation losses are expected to be finalised at levels consistent w ith pr ior p er io d s. F u l l ye a r 2019 production guidance is maintained at 49,000 to 55,000 boepd on a working interest basis, comprising 2 4,0 0 0 to 2 7,0 0 0 b op d l i q u i d s a n d 14 6 to 16 4 MMscfd (25,000 to 28,000 b o e p d) g a s p r o d u c t i o n . S e q uenci n g of t he 2 019 work programme means the corresponding production uplift w ill be rea lised prog re s sively th roug hout H2. This guidance range is predicated on there being no further prolonged force majeure event. I n H1 2 019, S eplat l i f te d a nd monet i s e d a n e q u iva lent of 2 6 6 k bbl s of oil from OML55, which r e su lte d i n a r e c eipt of $17m . T h e c a r r y i n g va lue of t he i nve st ment in the balance sheet was con s e q uent ly re duc e d to $150m. A longside its oil busines s, the C ompa ny has also prioritised the commercialisation a nd develop ment of t he su b st a nt i a l g a s r e s er ve s a nd re s ou rc e s ident i f ie d www.majorwavesenergyreport.com

at its blocks and is today a leading supplier of processed natural ga s to t h e d o m e s t i c m a rket i n Nigeria. With overa l l operated g a s p r o c e s s i n g c a p a c it y standing at 525 MMscfd, t he C ompa ny i s act ively engaged with counterparties to increase contracted gas s a le s w it h t he i ntention of taking gross production towards the 40 0 MMscfd level on a consistent basis. Of the 525 MMscfd total proces sing capacity, 465 MMscfd is located at Oben w it h t h e r e m a i n i n g 6 0 MMscfd located at Sapele. The 375 MMscfd expansion at Oben (Phases I and II) was completed by Seplat as a 100% investment project. The gas processing capacity expansion is also designed to allow the Company to accept third party gas and receive a processing tariff. During the period, agreement was reached with N PD C i n t he O p erat i n g C om m it te e to b ack i nto their right to 55% of the g a s p l a nt e x p a n s i o n o f 375M Mscfd. A pay ment o f U S $16 8 m i l l i o n w a s agreed between the parties, with US$67 million being booked in H1 2019 as gas tolling revenues. The final b a l a nc e of $101 m i l l ion will be paid and ref lected i n t h e Q 3 r e s u lt s o n c e t h e t r a n s fe r o f N PD C ’s 5 5% i nt e r e s t h a s b e e n concluded. Work is on-going at the Sapele Gas Plant upgrade and which is expected to be completed in H2 2020. The ANOH gas development at OML 53 (and adjacent OM L 21 w it h wh ich t he up st r e a m pr oj e c t i s u n it i s e d) i s ex p e cte d to underpin the next pha se of g row th for the ga s b u s i n e s s a n d S e p l a t ’s i nvolvement p o sit ion s it

at the heart of one of the largest green field gas and conden s ate development s on shore the Niger D elta to d at e . S e p l at i s we l l positioned to leverage the experience gained at the Oben gas processing hub to incorporate operational and cost efficiencies. In March 2019 the Seplat Plc board took the Final Investment Decision (“F ID”) to proceed with the A NOH project where f i r st ga s i s ta rgete d for Q1 2021. The project will compr ise a Pha se One 3 0 0 M M s c fd m i d s t r e a m gas processing plant with accommodation space for sig n i f ica nt f utu re ex p a n s i o n. A NO H G a s Processing Company (“AGPC”), an incorporated joint venture owned 50:50 by Seplat and the Nigerian Gas Company (“NGC”), a wholly ow ned subsidia r y of Nigerian National Petroleum C or poration (“N N P C ”) i s del iver i n g the midstream development and to date have each made a n e q u it y i nve st ment of US$150 million (US$30 0 million combined). T he tota l project cost i s b u d g et e d at U S $ 70 0 million. Seplat and NGC w i l l e a c h c o nt r i b u t e a further US$60 million equity investment (US$120 m i l l i o n tot a l) ov e r t h e r e m a i n d e r o f 2 019 a n d Q1 2 0 2 0 w it h U S $ 2 8 0 m i l l i o n o f de bt f u n d i n g to b e f i n a l i s e d a n d fo r which very strong demand in excess of the funding target has been indicated. The Company held c apit a l m a rket s d ay s i n b ot h L ondon a nd L a go s on 26 June and 12 July respectively for investors a n d a n a l y s t s , p r ov i d i n g a deta i led over v iew of Seplat’s gas business and the A NOH project in particular.

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AUGUST 2019, Vol 2 No 5 39

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Crude Oil Production: Security Is a Great Challenge for Indigenous Operators - Eroton MD Ebiaho Emafo,

he Managing Director/Chief Executive Officer of Eroton Exploration and Production Company, Ebiaho Emafo, has identified insecurity as the major challenge confronting indigenous operators in Nigeria’s oil and gas industry. He stated this while speaking with an online news source at the just concluded Nigeria Oil and Gas Conference, which was held in Abuja in July. Emafo said that vandalisation of flow lines and the export line occur mainly because they are easy to access by vandals, noting that at a point, indigenous operators experienced losses in excess of 30 percent. In the area of gas, he asked the government to build infrastructure to aid the transportation of gas from the point of production to areas of utilisation, so that operators can be able to sell their gas and make return on investment. “Security is a great challenge for all the indigenous operators. Anybody within the swamp or land region is susceptible to security challenges. You have vandalization of flow lines and the export line because it is easily accessible. At a time, we experienced losses in excess of 30 percent, but now it ranges between 20 and 30 percent of our daily production. In value terms, we were losing about 20,000 barrels of crude a day. Some operators produce as much as 20,000 barrels 40

Majorwaves Energy Report

per day and that is a viable business for them. If you are losing 20,000 barrels of crude per day, it severely impacts your cash flow and the return on your investment. So, if the Government is able to fix the security along the export lines, we will be able to realize our full production potential and that will bring significant returns to the business and Nation. “In the area of gas, government needs to create infrastructure to transport the gas that we produce to the areas of utilization so we can have bankable opportunities where we are able to sell our gas and make returns on our gas investment. At the moment, we are restricted in terms of ability to sell our gas in terms of limited infrastructure and that is across board. “Again, security poses another challenge, as there are frequent shutdowns of the export line which occurs because of the oil spills that come as a result of the intrusions on the line by vandals. Sometimes, when the line is down, we are not able to produce neither oil nor associated gas. This year we have lost about 24/25 days of production because of sabotage on the export line. In addition, we have the attendant environmental challenges that come as a result of the pollution caused by the acts of sabotage and vandalization on the pipelines. Statistics show that most of the leakages and spills

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are as a result of vandalism and or illegal bunkering. This could naturally invoke a sense of grievance amongst the host communities who are unfortunately saddled with the negative effects of the pollution caused by vandals which could create a difficult environment for us as business to operate in. We have however worked closely with our Communities to ensure that issues like this remain contained as we continue to enjoy a good working relationship with them,” he said. Emafo, however, said that the indigenous operators are working on the possibility of an alternative crude evacuation line due to the current challenges they are facing, which he is hopeful would significantly reduce crude theft and improve production uptime from the operators’ asset. Speaking on the contribution of indigenous players in the exploration and production of crude oil in the country, he said that indigenous operators’ contribution has moved from 10 percent to about 21/22 percent contribution to the country’s daily production. Although, that is below the 30 percent aspiration of the Nigeria National Petroleum Corporation (NNPC) at a time, he said that the indigenous operators are growing their production capacity.

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Refusal, adding that it naturally makes sense as there always exist the risk of stakeholder having conflicts if too many equity holders exist on one particular asset. On award of oil blocs, he noted that awarding oil bloc should be a priority for the government. According to him, it is a huge opportunity that the government could leverage on to generate revenue and create employment, but was averred that beyond awarding oil bloc, the passing of the Petroleum Industry Bill (PIB) is very necessary. He said that uncertainty can be a disincentive for investors as it limits one from predicting and projecting their returns, which is why the passing of the bill would ultimately improve the ease of doing business in the oil & gas space in the country.

In his words, “Indigenous producers have contributed significantly towards exploration and production in Nigeria. We used to contribute about 10 percent towards Nigeria’s total oil production, today that contribution has moved to about 21/22 percent. The aspiration at a time by the Nigerian National Petroleum Corporation, NNPC, was for indigenous producers to contribute 30 percent of the total daily production, we are not there yet, but we are consistently growing our production and I am sure within the near future, we can attain that target, which has been more or less requested for by NNPC.” On the Federal Government’s planned reduction of its shares in

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Joint Venture Assets from about 55 to 40 percent, he said: “While government participation is good, sometimes for business, working outside the confines of normal government bureaucracy could also be beneficial, as there would be the opportunity to progress at a faster pace with a higher level of efficiency. We expect that with the proposed divestment of Government’s equity, there could be resurgence in investment and hopefully maximization of returns on investment for all stakeholders. The NLNG model serves to buttress this expectation which to date remains a reference point for balanced public-private participation in business.” Emafo said that the right way to do it is for the Federal Government to give existing equity holders Right of First

Emafo frowned at the way the oil and gas industry in the country is overburdened with multiple taxation, fines and levies, saying that it makes it difficult for operators to plan and called on the government to streamline the process and roll out clear policies. “The whole industry faces this challenge. Inconsistency and duplication of relevant policies and levies could be a problem. Typically, any business needs to be able to plan within a known regulatory and compliance framework which would then form the basis for your companies cost of operations and attendant revenue profile. Planning becomes difficult if the business is burdened with multiple levies from different agencies and uncertainty in policies. Government should work towards streamlining the process and roll out clear policies and harmonize roles and responsibilities of government agencies so as to create an enabling environment for business to grow,” he said.

Majorwaves Energy Report - August Edition

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