Majorwaves Energy Report October 2020 by majorwavesenergyreport

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SOCIAL INVESTMENT

INFRASTRUCTURE

Nigeria’s Cocktail of Policies towards

Gas Revolution NCDMB, PETAN, OPTS, Others Oppose Increase of Content Fund to 2%, Commission Bill Contracts less than N5 billion not for Foreign Firms anymore –FGN Baruwa: No Pipelines near location of Lagos Gas Plant Fire -NNPC USTDA Provides Suppoo for Senegal’s First Major Gas Pipeline FEC approves $2m for West African Power Pool 2020 budget

Majorwaves Energy Report OCTOBER 2020, Vol 3 No 10

CONTENTS OCT 2 0 2 0 VOL 3 NO 10

MAJORWAVES ENERGY REPORT

LOCAL CONTENT

NGN2,000 10 Ghc US $5.00

www.majorwavesenergyreport.com

SOCIAL INVESTMENT

INFRASTRUCTURE

Nigeria’s Cocktail of Policies towards

Gas Revolution NCDMB, PETAN, OPTS, Others Oppose Increase of Content Fund to 2%, Commission Bill Contracts less than N5 billion not for Foreign Firms anymore –FGN

Deregulation: Nigeria to Become Refining Hub - MOMAN

SEPLAT Activates Investigation Team on Okpe, Sapele Incident

Baruwa: No Pipelines near location of Lagos Gas Plant Fire -NNPC USTDA Provides Suppoo for Senegal’s First Major Gas Pipeline FEC approves $2m for West African Power Pool 2020 budget

Energy Transition: Shell to Slash Oil and Gas Production Cost by Up to 40 Percent

US Tribunal orders Inter Ocean Oil to pay FG $660,000 Arbitration Cost

FG Borrowed N1.7 Trillion in Three Years from CBN to Sustain Subsidy Payment for Electricity – World Bank

DisCos to Repay CBN N9.96bn Debt in Four Months

Equatorial Guinea to Build its First Modular Refinery in Punta Europe

NNPC, TOTAL, Partners Commission Women & Youth Development Centre in Umuahia

Nigeria’s Cocktail of Policies towards Gas Revolution

43 “...there are a lot of opportunities to pivot, especially with the traditional companies transitioning to integrated energy (and data) companies.” -Mervin Azeta

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Endearing the Elites to the Youths In the wake of Nigeria’s Diamond Jubilee, the nation was greeted with protests against the special anti-robbery squad (SARS), which have swept Nigeria and gained international support. For years, the police unit has been plagued with allegations of extrajudicial killings, torture and extortion. Within a short space of time, the protest spread across cities and the government responded. Federal Government disbanded the SARS unit, and promised a host of reforms. Perhaps, clearly defined timeframes and action plan would have been more convincing because the protesters instead, increased in number with the announcement of the new unit- SWAT. The youths lacked leadership and didn’t approach the negotiating table as expected, parts of the protest were later hijacked by hoodlums. However, the ugly turn of events which took place on Tuesday, 20.10.2020 at the Lagos Lekki tollgate is shameful, and should be investigated by the Federal Government. The visibility of the carnage, which has since been widely described as the “Lekki Massacre”, cannot be downplayed. A decisive action by the Federal Government on the culprits would distance the ruling elite from the monstrous action meted out to harmless, young Nigerians who were exercising their rights. But, it is the speedy implementation of the promised reforms, alongside more youth-targeted programmes, creation of independent and sustainable institutions, periodic accountability by public office holders, and a drastic reduction in insecurity that will endear the politicians to the very sceptical young population. In solidarity with the growing youth population, which would outnumber the United States by 2050, our Energy Woman column is focused on a distinguished youth with the world at her feet. We also bring you an analysis of well-crafted policies by the Nigerian government to unleash gas revolution. The opportunities have been spelt out for willing entrepreneurs, with statutory funding support from Central Bank of Nigeria running into hundreds of billions of Naira. Once again, congratulations to Engr. Simbi Wabote, the distinguished Executive Secretary of Nigerian Content Development and Monitoring Board (NCDMB) on his re-appointment. Let’s hear from you, please.

Jerome Onoja

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Editor’s Note Publisher Joshua Bretz Managing Editor Jerome Onoja Editor Margaret Nongo-Okojokwu Business Development Stanley Etim Taiwo Olamilekan Amicable Aluu Production Solomon Obande Toma Stephen Research Analyst Simon Olanipekun Correspondents: Lagos Ikenna Omeje Abisoye Vincent Emeka Enunwah Daniel Terungwa Chukwunonso Mordi Port Harcourt Arit Dan Stella Odogu US Omaya Joko UK Kunle Kazeem

Majorwaves Energy Report is published by Majorwaves Communications, 25B, Adebayo Doherty Street, Lekki Phase 1. Lagos Phone: +2349035477966 Email: info@majorwavesenergyreport.com www.majorwavesenergyreport.com

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INDUSTRY NEWS

Deregulation: Nigeria to Become Refining Hub - MOMAN

igeria stands to become the refining haven for Africa if it allows full deregulation of the downstream sector.

The above assertion was made by Chairman, Major Oil Marketers Association of Nigeria, MOMAN, Tunji Oyebanji at the maiden webinar session of the Association of Nigerian Energy Correspondents, NAEC. In his presentation as the guest speaker of the event, Mr. Oyebanji explained that full deregulation of the downstream sector would set Nigeria ahead of other African economy in the area of local petroleum products refining as against exporting crude oil for refining. He listed other benefits to be expected from the process as; alignment with the Nigeria National Petroleum Policy, construction and maintenance of refineries, product availability in the country and for export, increased foreign exchange earnings, including transforming the country into a centre for innovation and technology. Others are the growth of local refining capacity, leading Nigeria to become a net exporter of refined petroleum to West and Central Africa, and meeting local, regional

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demands and earning Nigeria increased foreign exchange, a winwin for the Nigerian consumer, industry stakeholders and the country, importation of PMS by marketers can resume, freeing the Federal Government from the unsustainable cost and increasing debt burden associated with a regulated pricing system. This he said, will also lead to the beneficiation of all petroleum products and the increase in ancillary industries, raising the nation’s GDP and increased economic growth.

Oyebanji called for legislation to support deregulation, explaining: “Wherever you have a free-market operation, there needs to be a watchdog: a consumer protection agency that will oversee and make sure that operators are not colluding to exploit the public. “That is an area that needs very close regulation. In countries like the US and parts of Europe, if you collude to fix prices in a particular area, whoever is involved is punished with a very stiff penalty and in some cases, possibly, jail terms.”

Admitting that price deregulation does not mean the outright end of regulation in the industry, he said there is still the need to regulate issues like product quality and how products are sold to give consumers value for their money.

He, however, stressed the need to initiate right internal economic policies and legislations as Nigeria transitions from a regulated price environment to a deregulated environment. He also listed the opportunity cost of fuel subsidy, on which Nigeria has spent about N10 trillion in the last 10 years, to the economy, saying that subsidy deprived Nigeria huge social investment.

He called for regulation of issues aroun d H ealth , Safet y an d Environment (HSE) across the value chain of the downstream sector, adding another area that needs to be regulated is competition.

Themed: Challenges and Impact of a Deregulated Downstream Sector on Nigeria’s Economy, Oyebanji who was the guest speaker harped on the econometrics of a fully deregulated downstream sector.

However, he said, that for Nigeria to take advantage of this opportunity, the right internal economic policies must be in place.

INDUSTRY NEWS In his opening remarks, Vice Chairman of NAEC, Mr. Ugo Amadi, said despite the challenges that came with the COVID-19, a good government is expected to take decisions that would reshape the economy, part of which was to remove subsidy, and deregulate the downstream sector.

Energy Transition Could Push Oil Majors to Sell or Swap Oil and Gas Assets of More than $100 Billion Rystad

“The issue of reforming our downstream sector such as Refining and Distribution of petroleum products has been on for quite some time, although, it was only recently that the federal government removed subsidy, leading to increment in petrol prices. As a matter of fact, the retail price of petrol increased by about 10 percent to about N160 per litre”.

By Ikenna Omeje

“As a result, many Nigerians, including the Nigeria Labour Congress and the main opposition party, PDP, condemned the price increases which unfortunately happened amidst the biting impact of the COVID-19 pandemic”. “Absolutely, the country is today plagued by multiple challenges such as COVID-19, low earnings, nearcollapse of the oil market, floods, threats of terrorism and banditry, however, notwithstanding the challenges, a good government must take decisions for the people’s good”, he said. In her closing remarks, the Association’s Public Relations Officer, OpeOluwani Akintayo added that the take home point for the attendees was for all to join hands in ensuring the smoothest transitioning of the downstream sector from that plagued by subsidy, to a free market where both consumers and investors would get value for their money. Representatives from MOMAN members in attendance were Total Nigeria Plc, 11 Plc, Conoil Plc, Forte Oil Plc, MRS Oil Nigeria Plc, and OVH Energy Marketing Limited. The session was also joined by representatives from Oando Plc, and the Nigerian National Petroleum Corporation, NNPC.

outh program on the US Elections, coming up on the 27th of October

Barriers to participation and strategies to election In their bid to adjust to the global quest for energy transition, major oil and gas firms across the world are revising their long-term oil price and demand outlook, and need to streamline their portfolios significantly to improve cash flow, cost efficiency and competitiveness. As a result, several billions of dollars in assets are about to change hands, Rystad Energy study has revealed. According to the independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry, its study of the geographical spread of ExxonMobil, BP, Shell, Total, Eni, Chevron, ConocoPhillips and Equinor, reveals that to adjust to the energy transition, the eight companies may need to divest combined resources of up to 68 billion barrels of oil equivalent, with an estimated value of $111 billion and spending commitments in 2021 totaling $20 billion.

The company said in a release: “Our key criteria for determining whether a Major+ would benefit from staying in a country are the company’s cash flow over the next five years, the potential growth in its current portfolio, and its presence in key E&P growth countries towards 2030. Based on this we see that the Majors+ may seek to exit 203 country positions and as a result reduce their number of country positions from 293 to 90.” Speaking on the study, Rystad Energy’s Senior Vice President, Tore Guldbrandsoy was quoted as saying: “Companies will look to expand in the prioritized countries through exploration, acquisitions or asset swaps with other Major+ players. However, to stay in a country that our criteria exclude, a company may instead seek to grow its local business more aggressively to make sure the portfolio will have a positive and more significant impact on overall performance,“ Rystad said that based on its criteria, it sees that the major oil firms altogether need to exit 203 country positions in 60 countries,

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INDUSTRY NEWS adding that the remaining countries after the screening vary from six to 16 countries per company. It further stated that the results of the study indicate a number of potential deals among major players buying portfolios from each other to boost their position in a key country. “Rystad Energy’s study shows that all the Majors+ companies are likely to keep a presence in the US, and most of them may also remain in Australia and Canada. On the other end of the scale we see quite a few countries with only one oil major present, including Argentina (BP), Ghana (Eni), Thailand (Chevron) and Guyana (ExxonMobil). In some of these countries it could be tempting for others to stay or increase their presence as the competition may be more limited. At the same time, these countries could also be growth targets for other companies than the Majors+.” The company explained: “For example, BP, Eni and ConocoPhillips could consider acquiring the Indonesian portfolios of ExxonMobil, Total and Shell. Shell’s and Total’s portfolios

could be of interest to BP if the UKbased company wants to enlarge its Indonesian LNG asset base and take on a new growth asset. “A further analysis of other parameters of the portfolios, like hydrocarbon type, supply segment, size and asset location, will help identify the best acquisition target for each region. Indonesia is clearly a place to stay for gas assets, with a mixture of onshore, offshore shelf and deepwater assets across all lifecycles – but a company’s portfolio needs to be material over the longer term. “In recent months we have seen that the Majors+ are already putting larger portfolios up for sale, like ExxonMobil, which is planning several country exits including the UK, Romania and Indonesia, and Shell which was trying to exit a key LNG asset in Indonesia in 2019. This shows that the Majors+ are well aware of the need to focus their portfolios to improve cashflow, efficiency and competitiveness as the energy transition accelerates – but so far, the steps may be too small.

that the cash available for acquisitions could be limited, and price volatility could make it difficult for buyers and sellers to agree on a valuation. An alternative way for the Majors+ companies to exit some countries and grow in others could be to do swaps between country portfolios. This could include two or more countries to align values and reduce the cash element of a deal. “We see several such opportunities: For instance, BP could swap its position in Algeria for Eni’s holdings in Australia. As BP’s Algerian portfolio is valued at around $320 million and Eni’s Australian portfolio at about $466 million, the companies would have to find additional conditions to even out a swap. Another example could be Shell swapping its assets in Norway for Total’s portfolio in Oman. “We also expect that the Majors+ will divest assets with high emission intensity to meet long-term targets for reducing emissions, however this consideration is not included in this study.”

“The current market situation means

SEPLAT Activates Investigation Team on Okpe, Sapele Incident ....no oil seepage, spill traced to its facilitie By Ikenna Omeje

ollowing a complaint from five households recently at Okpe and Sapele in Delta State, indicating the presence of hydrocarbons in their respective dug shallow water wells, Nigerian energy giant, Seplat, immediately activated an emergency response, the company said in a statement signed by its General Manager, External Affairs and Communications, Dr. Chioma Nwachuku, on Wednesday. According the statement… “an investigation team comprising the Department of Petroleum Resources (DPR), the National Oil Spill Detection and Response Agency (NOSDRA), and Delta State Ministry of Environment conducted a joint investigation visit, alongside the Seplat emergency response team” in the area.

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INDUSTRY NEWS The company expressed its commitment to the safety of residents of the areas of its operation, stating that it will continue to support the investigation and provide support to the affected households.

Energy Transition: Total Investing More Than 500 Million Euros to Convert its Grandpuits Refinery Into a Zero-Crude By Ikenna Omeje

Seplat also appreciated the affected households for their co-operation and peaceful approach and reassured them and the communities that it is “expediently investigating the root cause of the incident.” “Seplat prioritized the safety of the residents of the affected area by providing potable water and secured the water wells from access. We will continue to support the investigation and provide palliative support to the households in line with the company’s firm commitment to its robust Health, Safety and Environment culture in all areas of its operations. “Seplat has carried out checks of other water boreholes in the same vicinity and have drilled additional test boreholes. None of them has any signs of hydrocarbon in the water. No oil leaks or seepage has been traced back to the Seplat operated facilities.” “We wish to thank the affected households for their co-operation and peaceful approach and to reassure them and the communities that we are expediently investigating the root cause of the incident,” the company stated. Seplat, which has a 45 percent working interest in OMLs 4, 38 and 41, located in Edo and Delta States onshore Nigeria, is the operator of the three blocks on behalf of the NPDC/Seplat Joint Venture. “Seplat has built strong partnerships with its vital local communities, promoting trust and confidence amongst its various stakeholders, ultimately resulting in a stable operating environment that facilitates the creation of shared value,” the statement added.

ithin the framework of its net zero strategy, French energ y giant, Total, will convert its Grandpuits refinery (Seine-et-Marne) into a zero-crude platform for biofuels and bioplastics, a release by the company said recently. The company disclosed that by 2024, following an investment totaling more than €500 million, the platform will focus on four new industrial activities, which it stated to include: Production of renewable diesel primarily intended for the aviation industry; production of bioplastics; plastics recycling; and operation of two photovoltaic solar power plants. “Meanwhile, crude oil refining at the platform will be discontinued in the first quarter of 2021 and storage of petroleum products will end in late 2023. Operations at service stations and airports in the Greater Paris region will not be affected: they will be supplied by the refineries at Donges— currently undergoing a €450 million modernization — and Normandy.

“This decision to end its oil refining comes in the wake of an audit conducted over several months on the 260-kilometer Ilede-France pipeline (PLIF), which carries crude oil from the Port of Le Havre to the Grandpuits refinery,” it said. The company explained that “the refinery was forced to shut down for more than five months in 2019 when a leak appeared on the PLIF, following an earlier leak near Le Havre in 2014. With the approval of government officials, the PLIF’s maximum working pressure was reduced to ensure safe operation. As a result, the refinery could operate at only 70% of its capacity, threatening its long-term financial viability. “The audit found that normal operations at the refinery could be restored only by replacing the PLIF, at a cost of nearly €600 million. Given France’s plans for the energy transition up to 2040, therefore, Total has decided to end its oil refining at Grandpuits and embark on an industrial transformation of the site, backed by a major investment plan.”

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INDUSTRY NEWS Speaking on the company’s decision, President of Total Refining & Chemicals, Bernard Pinatel said: “With the industrial repurposing of the Grandpuits refinery into a zero-crude platform focused on energies of the future connected with biomass and the circular economy, Total is demonstrating its commitment to the energy transition and reaffirming its ambition to achieve carbon neutrality in Europe by 2050.” “Grandpuits will remain a major industrial site drawing on the knowhow and expertise of its teams, and our partner firms will be playing a key role as well.” The company noted that it “…will carry out this industrial redeployment with

no layoffs, with early retirements and internal mobility within the Group’ sites, providing each employee with an appropriate solution.” Of the 400 jobs at the Grandpuits platform and its associated Gargenville (Yvelines) depot today, 250 will be maintained after the conversion. Furthermore, 15 additional jobs will be created on the Grandpuits site in a packaging unit connected to the bioplastics unit. “In addition, the work projects generated by this industrial investment of more than €500 million will create up to 1,000 jobs over the three-year period for construction of the new units. “Total has also carried out a thorough

review of the partner companies working on the platform, which amount to the equivalent of 300 full-time jobs. The Group is committed to supporting each partner company during the industrial repurposing of the site. In its new configuration, the Grandpuits platform will continue to prioritize its partner businesses, which will represent the equivalent of 200 full-time jobs. “Total will, of course, comply with all of its contractual commitments to its customers. “Total and the Ile-de-France region intend to launch a campaign to attract other industries to the property made available at the Grandpuits site and on industrial estates near the Grandpuits and Gargenville sites,” it added.

Energy Transition: Shell to Slash Oil and Gas Production Cost by Up to 40 Percent Competition is also likely to intensify with utilities and rival oil firms including BP and Total all battling for market share as economies around the world go green. “We had a great model but is it right for the future? There will be differences, this is not just about structure but culture and about the type of company we want to be,” said a senior Shell source, who declined to be named.

n its drive to save cash so it can overhaul its business and focus more on renewable energy and power markets, Royal Dutch Shell is looking to slash the cost of oil and gas production by up to 40 percent, Reuters reports. According to Reuters, the company’s

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new cost-cutting review, known internally as Project Reshape and expected to be completed this year, will affect its three main divisions and any savings will come on top of a $4 billion target set in the wake of the COVID-19 crisis. Reducing costs is vital for Shell’s plans to move into the power sector and renewables where margins are relatively low.

Last year, Shell’s overall operating costs came to $38 billion and capital spending totalled $24 billion. Shell is exploring ways to reduce spending on oil and gas production, its largest division known as upstream, by 30% to 40% through cuts in operating costs and capital spending on new projects, two sources involved with the review told Reuters. Shell now wants to focus its oil and gas production on a few key hubs, including the Gulf of Mexico, Nigeria and the North Sea, the sources said. The company’s integrated gas division, which runs Shell’s liquefied natural gas (LNG) operations as well as some gas production,

INDUSTRY NEWS is also looking at deep cuts, the sources said. For downstream, the review is focusing on cutting costs from Shell’s network of 45,000 service stations the world’s biggest - which is seen as one its “most high-value activities” and is expected to play a pivotal role in the transition, two more sources involved with the review told Reuters. “We are undergoing a strategic review of the organisation, which intends to ensure we are set up to thrive throughout the energy transition and be a simpler organisation, which is also cost competitive. We are looking at a range of options and scenarios at this time, which are being carefully evaluated,” a spokeswoman for Shell said in a statement. Shell’s restructuring drive mirrors moves in recent months by European rivals BP and Eni which both plan to reduce their focus on oil and gas in the coming decade and build new low-carbon businesses. The review, which company sources say is the largest in Shell’s modern history, is expected to be completed by the end of 2020 when Shell wants to announce a major restructuring. It will hold an investor day in February

2021. Speaking to analysts on July 30, Shell Chief Executive Ben van Beurden said Shell had launched a programme to “redesign” the AngloDutch company. Low-carbon fuel Teams in Shell’s three main divisions are also studying how to reshape the business by cutting thousands of jobs and removing management layers both to save money and create a nimbler company as it prepares to restructure, the sources said. Shell, which had 83,000 employees at the end of 2019, carried out a major cost-cutting drive after its $54 billion acquisition of BG Group 2016, which has helped boost its cash generation significantly in recent years. Shell’s operating costs, which include production, manufacturing, sales, distribution, administration and research and development expenses, fell by 15%, or roughly $7 billion, between 2014 and 2017. But the sharp global economic slowdown in the wake of the COVID-19 epidemic coupled with Shell’s plans to slash its carbon

emissions to net zero by 2050 have led to the new push. Shell cut its 2020 capital expenditure plans by $5 billion to $20 billion in the wake of the collapse in oil and gas prices due to the pandemic amid warnings it could have lasting effects on global energy demand. Van Beurden said in July that Shell was on track to deliver $3 billion to $4 billion in cost savings by the end of March 2021, including through job cuts and suspending bonuses. He said travel restrictions during the pandemic had accelerated the digitalisation of Shell while machine learning was being rolled out to minimise outages and shorten maintenance time at refineries, oil and gas platforms and LNG plants. Besides cutting costs at its downstream retail business, Shell is pressing ahead with plans to reduce the number of its oil refineries to 10 from 17 last year. It has already agreed to sell three. The review of refining operations also includes finding ways to sharply increase the production of lowcarbon fuels such biofuels, chemicals and lubricants. That could be done by using low-carbon raw materials such as cooking oil, one source said.

United Nations Initiative Confirms Eni as Global Compact LEAD Participant By Ikenna Omeje

he United Nations Initiative, on Monday, confirmed Italian energy giant, Eni, as Global Compact LEAD participant for the third year, in a sign of the company’s ongoing commitment to the United Nations Principles for responsible business. Eni was identified among the most engaged companies to lead a new era of sustainability, at the UN Global Compact special event to mark the opening of the 75th session of the UN General Assembly,

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INDUSTRY NEWS A release by the company recently said: “Eni was identified as being among the most highly-engaged participants of the world’s largest corporate sustainability initiative.”

must be even stronger today, at a time of global transformation, as only through international and multilateral cooperation, can we build a sustainable future.”

LEAD is a platform for highlyengaged participants in the UN Global Compact, which is a global movement that supports companies in aligning their strategies and operations with ten universal principles on human rights, labour, environment and anti-corruption; and in taking strategic actions to achieve broader UN goals, such as the UN Sustainable Development Goals.

The release explained: “Eni has demonstrated its commitment to the UN Global Compact this year by participating in Action Platforms on Reporting on the SDGs and Financial Innovation for the SDGs. Each UN Global Compact Action Platform convenes business, Global Compact Local Networks, leading experts, civil society, Governments and UN partners to solve complex and interconnected issues and innovate around the Sustainable Development Goals.

Speaking on the recognition, the release quoted Eni’s Chief Executive Officer, Claudio Descalzi as saying: “This recognition confirms our efforts on sustainability and further reinforces our long-term vision, strongly oriented towards creating value for and in partnership with our stakeholders – from international organisations to the civil society, from investors to the communities where we operate – combining environment, social, and economic sustainability. Our commitment

“In line with these commitments, Claudio Descalzi has also signed the UN Statement from Business Leaders for Renewed Global Cooperation, committing to invest in addressing systemic inequalities and injustices through inclusive, participatory and representative decision-making at all levels of the business, as well as to strengthen access to justice, ensure transparency and respect for human rights. The statement

also calls on Governments to enhance multilateralism and global governance to fight corruption, build resilience and achieve the SDGs. “Finally, Eni is among the signatories of the CFO Principles on Integrated SDG Investments and Finance. The principles, announced on the margins of the UN General Assembly and signed by Eni’s Chief Financial Officer Francesco Gattei, aim to emphasize the role that businesses and CFOs can play in contributing towards financing the SDGs. The principles, developed in the framework of the CFO Taskforce for the SDGs created by the UN Global Compact, seek to guide companies in aligning their sustainability commitments with credible corporate finance strategies to create real-world impact on the SDGs. The goal is to work with the investment value chain, including investors, banks, development finance institutions, credit ratings agen cie s an d sus tainabilit y assessment firms to create a broad, liquid and efficient market for SDG investments and capital flows.”

L o n d o n C o m m e r c ia l Court Tuesday, September 29, 2020, ordered the release of the $200million guarantee put in place as security for the stay of execution granted Nigeria for the appeal filed against the judgment of Justice Christopher Butcher for the execution of the Arbitral award of $10 billion in favour of Process & Industrial Development (P&ID), a firm based in the British Virgin Islands.

P&ID: UK Court Orders Release of $200m Guarantee to Nigeria 12

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P&ID had sought to increase the security to $400 million, but the court presided over by Sir Ross Cranston rejected the request and ordered cost of £70,000 against P&ID. The court had earlier in the month of September granted another cost of £1.5million against P&ID. Commenting on the outcome, the Governor of the Central Bank of Nigeria, Godwin Emefiele, said:

INDUSTRY NEWS “Due to the substantial evidence of prima facie fraud established before the Court, we are pleased that the Judge has agreed to release the guarantee. We are also pleased that the Court has rejected P&ID’s application to increase the guarantee, which was clearly intended to be a diversionary tactic and entirely misconceived. This release which is an accretion into the reserves will further enhance the nation’s management of the exchange rate of its domestic currency, the Naira. “This is a further and significant victory for Nigeria in our ongoing fight to overturn the US$10 billion award procured through fraud and corruption by P&ID and former government officials. “P&ID and its backers, Lismore Capital and VR Advisory, are increasingly seeing their case slip between their fingers. They continue to resort to employing delay tactics, disseminating

misleading claims, and taking every step to obstruct our investigations across multiple jurisdictions. “The FRN will not rest until we secure justice for the people of Nigeria – no matter how long it takes. Investigations are ongoing, and we are confident that more of the truth will be revealed over the coming months.” On January 31, 2017, an arbitration tribunal had ruled that Nigeria should pay P&ID, the sum of $6.6 billion as damages and breach of contract after a 2010 deal for a gas project in the Niger Delta part of Nigeria collapsed. The pre and post judgement accrued interest of 7 percent has seen the amount standing against Nigeria, rise to almost $10 billion, an amount that will be a serious dent on the country’s external reserve. Nigeria has moved to upturn the judgement, alleging corruption in the award of the contract, which it also

said was awarded on illegal terms. In September 2019, a high power delegation from Nigeria was in the UK regarding the case in an effort to present a proper case for Nigeria. The country in September successfully sought the right to appeal an August ruling that would have converted the arbitration award to a judgment, which would make it easier for P&ID to seize its assets. Justice Cranston J. of United Kingdom High Court had on September 10, 2020 ordered P&ID to make an interim payment of more than £1.5 million to the federal government within 21 days. The £1.5 million was to cover legal costs the federal government incurred as part of its successful application for the extension of time to challenge the arbitration award and procedural hearing earlier in the year.

DPR Pays Pre-Commissioning Visit to Waltersmith, Confirms Suitability of Refinery to Commence Operations By Ikenna Omeje “We can confirm that the refinery is very much ready to commence operations. We have seen all the preparations. To us, the plant is alive. The commissioning is just symbolic. Everywhere is ready to start off. My overall assessment is excellent.” “We have been to other modular refineries but we have not seen anything like this: the space, the way it is arranged and the way it will work”, Auwalu added.

he Department of Petroleum Resources (DPR) has affirmed the suitability of the 5,000 barrels per day (bpd) Waltersmith Modular Refinery project for refining operations, after paying

a pre-commissioning visit to the project site located at Ibigwe, Imo State. The Director of DPR, Sarki Auwalu, who said that the purpose of the visit was to make sure that the refinery is ready to start operations said:

Explaining the role the agency is playing to promote businesses, the DPR director said that people should start seeing the department as an enabler and not a regulator as their focus is on how to create opportunities on how Nigeria’s vast oil and gas resources are managed for the betterment of Nigerians. “The role we play is to enable businesses and create opportunities. When DPR issues you a license, it enables you to invest and as a result, that opportunity we create, that business is enabled”, Auwalu said.

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INDUSTRY NEWS According to Auwalu, “Waltersmith is one of our success stories. We consider the project as ours. We have been tracking their growth and we are happy to see that our child is growing. It is our plan that they expand and they have the potential”. In his remarks, Chairman of Wa l t e r s m i t h R e f i n i n g a n d Petrochemical Company Abdulrasaq Isah, said: “What you see here is a proof of the absolute faith we have in our country. We want to demonstrate that it is practically a waste of resources to produce crude oil and just sell it. It is more impactful to add value and make more significant impact on the GDP of our nation”, “This is the first phase of a series of refinery development which will culminate in the delivery of up to 50,000bpd refining capacity that will expand the product slate to include PMS, LPG and Aviation fuel”, Isah said adding that the expansion

plan consists of 20,000bpd crude oil refinery and a standalone 25,000bpd condensate refinery both of which are at early stages of project development.” Speaking on the sustainability of the refinery project, Managing Director/ Chief Executive of Waltersmith, Chikezie Nwosu said that domestic consumption is more sustainable that crude export. “With export, there are things you do not have control over and for every dollar you gain by exporting crude oil as a commodity, you gain multiples of those dollars in terms of GDP growth by consuming the energy within the economy”, Nwosu said. The 5,000bpd modular refinery, scheduled for official commissioning on October 26, 2020, has a crude oil storage capacity of 60,000 barrels and is projected to deliver over 271 million liters per year of refined petroleum products comprising

of Diesel, Kerosene, Naphtha and Heavy Fuel Oils to the domestic market. The bulk of the crude supply for this phase will come from Waltersmith’s upstream business with backup from nearby third-party crude. Wa l t e r s m i t h R e f i n i n g a n d Petrochemical Company obtained License to Establish from DPR in June 2015 and obtained Authority to construct in March 2017. The company partnered with Nigerian Content Development and Monitoring Board (NCDMB) who are 30 per cent equity holders while the Africa Finance Corporation (AFC) committed significant financing to the project. The company signed an EPC contract in June 2018 with a consortium of Vfuels and Lambert Electromec.

US Tribunal Orders Inter Ocean Oil to pay FG $660,000 Arbitration Cost Daniel Terungwa

Abubakar Malami,

he United States-based International Centre for Settlement of Investment Dispute has ordered Inter Ocean Oil Company to pay the federal government of Nigeria the sum of $660,129.87 as reimbursement of its share of the arbitration costs incurred in the proceedings. The tribunal, headed by Prof. William Park, also absolved the federal

government from any liability, maintaining that Nigeria did not breach any of its obligations in the contract agreement with Interocean Development Company and Interocean Oil Exploration Company. In a statement by Dr Umar Gwandu, the media aide to the Attorney General of the Federation (AGF) and Minister of Justice, Mr Abubakar Malami, the oil companies through their legal team, led by Mr Olasupo Shasore (SAN), had requested, among others, relief from the tribunal directing the Federal Government of Nigeria, its relevant privies and instrumentalities to pay aggravated damages in an amount to be proven during these arbitral proceedings which the claimants estimate at being in excess of $ 1.5 billion. According to the statement, the

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tribunal in its judgment delivered Wednesday, held that the federal government has not breached its obligations towards the claimants under Nigerian law or under international law. “The tribunal finds no liability on the part of respondent in connection with claimants’ loss of control over their investment, Pan Ocean,” the judgment reads in part. Malami, in a remark, described the judgment as an addition to the multiple success stories recorded in international litigations by the Federal Ministry of Justice. “Gone was such an era of connivance to deprive the nation of its resources for gratifying ulterior motives of vested interest at the expense of the Nigeria populace,” he said.

INDUSTRY NEWS

Aiteo, Two Others Record Highest Jump in NEITI’s Oil and Gas Compliance Assessment 2019 By Ikenna Omeje data submission exercise showed improved compliance among covered entities. “In 2019, 49 entities (out of 72) scored 100 percent in the compliance score, while 14 entities (out of 65) scored 100 percent in 2015. Thus, 68 percent of the covered entities fully complied in 2019, while 21.54 percent fully complied in 2015,”the report stated.

Benedict Peters

iteo Eastern Exploration and Production Company. Ltd., Neconde Energ y Limited, and Net work E x p l o ratio n a n d P ro d u c tio n Limited, recorded the biggest jump in the 2019 Nigeria Extractive Industries Transparency Initiative (NEITI) oil and gas compliance assessment report. The report, ranks companies in terms of data compliance with the data submission requirements of the 2019 oil and gas audit process. According to NEITI, the three oil and gas companies increased from 0 percent in 2015 to 100 percent in 2019. The report, which also ranked government agencies, examined the level of compliance by entities to the data gathering component of the audit process with focus on two indicators: template timeliness and template completeness. While timeliness looked at submission of templates within the agreed deadline, completeness focused on submission of all templates applicable to each entity. Highlights of the compliance report showed that forty-nine entities, representing 68 percent of the

72 entities covered, attained the maximum score of 100 percent. The compliance report stated that “one entity scored 95 percent while another scored 93 percent. Four entities scored 88 percent, while two entities scored 75 percent, and two entities also scored 50 percent. One entity each scored 81 percent, 72 percent, 70 percent, 68 percent, 67 percent, 63 percent, 59 percent, 40 percent, 20 percent and 18 percent. Finally, three scored 0 percent.” Further analysis showed that out of the 72 entities covered by the exercise, 58 or 81 percent of the entities assessed scored between 75 percent and above, while 66 or 92 percent of the entities scored between 50 percent and above. The exercise evaluated participating companies and government agencies on a scale of 0 percent to 100 percent using the two indicators mentioned above. While 0 percent shows total non-compliance with the data collection process for the audit, 100% indicates total compliance with the data collection process. NEITI’s first compliance exercise focusing on the 2015 oil and gas industry audit cycle was published in August 2017. A comparative analysis of the assessment scores for the 2015 and 2019 oil and gas

“With 68 percent of entities fully compliant in 2019, as opposed to 21.54 percent of entities in 2015, full compliance improved by over 200% between 2015 and 2019,” NEITI’s report further stated. Further breakdown shows that nine (9) entities retained their 2015 compliance scores of 100 percent in 2019. The report also revealed that fourteen (14) entities recorded a drop in their compliance scores. The biggest drop was from 88 percent in 2015 to 0 percent in 2019. Commending companies and government agencies covered by the audit exercise for improved compliance in their submission of the audit templates used for data gathering, the Executive Secretary of NEITI, Waziri Adio, said: “The data submission compliance rate for the 2019 oil and gas audit is very impressive.” “It is remarkable not just because of the massive improvement across the board but also because this improved compliance happened with all the restrictions imposed by COVID19. This underscores the strong commitment of the affected companies and the government agencies. We commend them and urge them to keep it up.” NEITI’s plan to release the 2019 report this year is on course, as the data gathering, data validation and reconciliation stages of the exercise have been concluded.

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INDUSTRY NEWS

339 Companies Bid for 2020/21 Crude Oil Sales Contract – Kyari Daniel Terungwa

Mele kyari

o fewer than 339 companies are bidding for the 2020/21 sales and purchase of the Nigerian crude oil grades. The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari made this known recently in Abuja at the 2020/2021 Crude oil tender prequalification bid opening ceremony. He said that the event marked another transparent process for the corporation and that in spite the challenges posed by COVID-19, the Corporation had modified the bidding process by leveraging on technology to progress the cycle

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of crude oil bidding. According to him, there will be strict compliance with all the extant regulations and reinforcement of commitment by the Corporation to transparency and accountability. ” We have continued to see a strong demand for different grades of Nigerian crude in the oil market despite the lockdowns and refinery run cuts. ” We are also witnessing demand for Nigerian crude switch from traditional destinations such as India and finding home in new markets such as china,” he said. Represented by Mr

U ma r A ji ya , N N P C Chie f Financial Officer, he said that the 2020/21 crude oil bidding had many objectives, which include engaging reputable, qualified and high capacity international and indigenous companies. He stated that companies would guarantee market placement of the Nigerian crude oil at optimum value during the next contracting cycle. Kyari noted that other objectives were to ensure that selection of off-takers was aligned with tested transparent and accountable procedures in compliance with the Public Procurement and Nigerian Content Acts.

INDUSTRY NEWS The GMD further reassured that apart from the objectives, the corporation would sustain transparency in all process and establish the best partners through robust mix of big international players.

NNPC Releases 2019 Audited Financial Statement, Reduces Loss by 99.7 %

He guaranteed support for indigenous companies’ capacity development in the process. ” Ultimately, crude oil is a major revenue earner in Nigeria; therefore, the credibility of this process is very important to us all. Chief Operating Officer Upstream, Mr Adokiye Tombomieye, in his remarks, said that the corporation had taken steps to ensure the process of producing the best bidder emerged while adhering to COVID-19 principles. He added that the process also adhered to the Corporation’s Transparency, Accountability and Performance Excellence (TAPE) agenda, extant statutory requirements and most important the Public Procurement Act. Tombomieye noted that stakeholders like the Nigerian Extractive industries Transparency Initiative (NEITI), Bureau of Public procurement (BPP), Department of Petroleum Resources (DPR), Civil Liberty Organisation (CLO), among others were part of the bid opening as part of statutory requirement. Also, the Group General Manager, Crude Oil Marketing Division, Mr Billy Okoye stated that the selection of off-takers aligned with tested transparent and accountable procedures in compliance with the BPP act.

arely five months after publishing its 2018 Audited Financial Statement, the Nigerian National Petroleum Corporation (NNPC) has released its 2019 Audited Financial Statement with a 99.7% reduction in its loss profile from 803bn in 2018 to 1.7bn in 2019. A statement by the Corporation’s spokesman, Dr. Kennie Obateru, quoted the NNPC Chief Financial Officer (CFO), Mr. Umar Ajiya, as saying that the 2019 Audited Financial Statement, which was concluded five months after the release of the 2018 Audited Financial Statement, will be published on the Corporation’s website for all to see in keeping with Management’s commitment to transparency and accountability and in consonance with the principles of the Extractive Industries Transparency Initiative (EITI) of which it is a partner.

“The bid submission process was modified by replacing it with virtual submission interphase on the NIPex portal to ensure all applicants were granted equal opportunity and access to unified submissions platform,” he said.

Giving further insight into the 2019 AFS, the CFO disclosed that general administrative expenses also witnessed a 22% dip from 894bn in 2018 to 696bn in 2019.

He further assured that the commitment of the Corporation was to deliver the selection process with utmost transparency and accountability and to support the GMD’s agenda to deliver NNPC’s obligations to its stakeholders.

According to Ajiya, majority of the subsidiaries posted improved performance namely, the Nigerian Petroleum Development Company Limited (NPDC) which recorded 479Billion profit in 2019 compared to 179Billion in 2018 representing

167% increase; the Integrated Data Services Limited (IDSL) recorded 23Billion profit in 2019 compared to 154Million in 2018 representing 14966% increase; the Petroleum Products Marketing Company (PPMC) recorded 14.2Billion profit in 2019 compared to 9.3Billion in 2018 representing 52% increase; while the Refineries have maintained the same level of losses as in 2018 but which will reduce significantly in 2020 due to cost optimization drive. The CFO explained that the improved performance in the 2019 financial year was driven mainly by cost optimization, contracts renegotiation and operational efficiency. He said “the 2019 AFS goes further to demonstrate our unwavering commitment to the principle of Transparency, Accountability and Performance Excellence (TAPE) while the outlook for 2020 looks promising in view of the Management’s strong drive to prune down running cost and grow revenues.” It would be recalled that the Group Managing Director of NNPC, Mallam Mele Kyari, had promised to sustain the publication of the Corporation’s Audited Financial Statement as part of efforts to deepen transparency and accountability and keep stakeholders abreast of NNPC operations.

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INDUSTRY NEWS

Baruwa: No Pipeline Near Location of Lagos Gas Plant Fire â&#x20AC;&#x201C; NNPC

h e Nigerian National Petroleum Corporation, NNPC says none of its pip elines are loc ated anywhere close to the location of the Baruwa gas fire incident in Lagos, adding that it has mobilized

control.

its Health, Safety and Environment (HSE) Team, in collaboration with other relevant agencies of Lagos State Government, and ensured that the situation was promptly brought under

T h e Corp oration gave this clarification while commiserating with the Government and people of Lagos State, and particularly the residents of Baruwa area, on the

gas plant fire incident that ravaged the community in the early hours of Thursday, October 8th 2020. Kennie Obateru the spokesperson of the corporation, in a statement said that NNPC feels saddened at the loss of lives and property caused by the incident barely a few weeks after a similar incident at Iju Ishaga area of the state. The corporation called on operators of gas plants and other petroleum products facilities in the country to ensure strict adherence to safety rules and regulations to avoid incidents of this nature and the unnecessary loss of lives and property

Otedola Bridge Explosion: NNPC Commiserates with Victims, Lagos Government

h e Nigerian National Petroleum Corporation (NNPC) has commiserated with the L agos State Government and victims of the tanker explosion which occurred on the Otedola Bridge in the early hours of Saturday, Oct. 17, 2020. The Group Managing Director of NNPC, Malam Mele Kyari, in a statement signed by the Corporationâ&#x20AC;&#x2122;s Group General Manager, Group Public Affairs Division, Dr Kennie.

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According to him, the incidents could have been avoided. The News Agency of Nigeria (NAN) reports that the incident occurred when a container truck loaded with fabric experienced a brake failure and collided with a 33,000 litres fuel tanker loaded with Premium motor spirit (PMS), belonging to a downstream operator. Upon the crash, there was fire outbreak which led to the explosion

which was later extinguished by officers of the Lagos State Fire Service. No fatality was, however recorded in the in incidence. Kyari admonished motorists and downstream operators to continue to ensure strict adherence to safety rules and regulations to avoid these unfortunate incidents that always lead to loss of lives and propert

INDUSTRY EVENT

NLNG Generates $110bn Revenue — Mai-Bornu ...to deliver 350,000MT LPG annually In his words, he said, “We also set up a conservation area, the Finima Nature Park in Bonny Island, an area of about 1,000 hectres that acts as a carbon sink in pursuit for a cleaner environment underpinned by our strong focus on safety Goal Zero which demands zero harm to people, zero harm to the environment and zero harm to our facilities.

Mai Bornu

h e D ep ut y Managing Director, Nigeria LNG Limited, Sadeeq Mai-Bornu has disclosed that company since it started operations in 1999, has delivered over 5000 Liquefied Natural Gas (LNG) cargoes to various destinations globally and generated about $110 billion in revenue.

“The future envisaged at that time is our current reality today and Nigeria LNG has actualised the objectives.

Mai-Bornu in remarks recently at the 2020 NLNG/Business Day Conference On Series themed Nigeria @ 60 : “Harnessing Nigeria’s Energy Potential for the Future” which was anchor-sponsored by NLNG said, the company is focused on harnessing the country’s energy potential for the future.

He expressed that last year alone, Nigeria LNG achieved plant reliability at a record 98.4per cent and a production record of 316 LNG cargoes, 32 LPG and 24 Condensate cargoes, essentially exporting at least a cargo everyday down the Bonny River.

According to him, “This is riding on the back of history that a little over 60 years ago, similar conversations gave rise to the dream to setup Nigeria LNG to harness the nation’s abundant natural gas resources and to reduce associated gas flares in the Niger Delta and monetise the resource. For 30 years, the conversation remained a dream until 31 years ago, precisely in May 1989, when Nigeria LNG was incorporated, marking a significant milestone in the nation’s energy sector.

“Since we started operations in 1999, NLNG has delivered over 5000 LNG cargoes to various destinations globally and generated about $110 billion in revenue.”

He said till-date, Nigeria LNG has converted about 6.8Tcf of Associated Gas to Liquefied Natural Gas and Natural Gas Liquids, thus contributing to reduction of gas flaring by upstream companies from over 60 per cent before we commenced operations to less than 20 per cent currently. He said it is set to achieve the production of 350,000 metric tons of Liquefied Petroleum Gas (LPG) annually from a paltry of 75,000mt it was when it started some years ago.

“In 2007, in continuous demonstration of our commitment to the vision of “helping to build a better Nigeria”, NLNG intervened in the domestic LPG market and today we are committed to delivering 350,000 metric tons of LPG annually to the domestic market to ensure the availability, reliability and affordability of the commodity in the country. “ T his inter vention is N LN G’s contribution towards the conservation of the environment and the elimination of health challenges attributed to smoke inhalation from cooking with hazardous fuels which adversely impacts the health of mostly women and children. This way, we are contributing to a healthier society.” He maintained that as one of the most successful companies in Nigeria, NLNG is a major revenue earner for the nation. On this he said, “Over 70 per cent of NLNG’s profit goes to Nigeria, via NNPC through dividends, and Company Income Tax. Other taxes that NLNG pays include VAT and Education Tax. “NNPC also gets 55-60 per cent of the feed gas purchase revenue through its participating interest in the upstream JVs.” Speaking further he said, the company’s Train 7 expansion project, when completed and operational, will add about 35 per cent capacity to its extant 22mtpa plant which should continue to place Nigeria as a gas nation and NLNG as a major supplier of LNG globally. Speaking on challenges, he said, “It is necessary to point out that there

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INDUSTRY EVENT are still challenges in the sector that need to be addressed to encourage the entry of more players into the sector and to make the sector even more profitable for all stakeholders. “Expansion of the sectorand a stronger focus on gas will generate more income for the government and a cleaner environment. “Some of the challenges include under-investment in gas exploration, appraisal and development activities; lack of a sustainable commercial framework for gas supply and the need to provide more security for the protection of oil and gas assets. “These are some of the issues that we expect that an event like this with experts from all segments of the value chain shall tackle and provide creative and indigenous solutions to. “While our successful operations continue to guarantee the values

I have already listed, we are also contributing significantly to human and infrastructural development in our host community and the nation.” On Bonny Island in Rivers State where the plant is located, he said, “NLNG is working towards making Bonny Island Nigeria’s first malaria-free city through our Malaria Rollback programme and our sterling Community Health Insurance programme which we are driving in partnership with the state government, to ensure access to quality healthcare for resident of the Island. “NLNG is also co-financing, with the Federal Government N120 billion ($315million) Bonny-Bodo Road project to connect Bonny Island to the mainland. “More recently, as part of the Oil and Gas Industry Collaborative Initiative spearheaded by NNPC to fight the

COVID-19 pandemic, Nigeria LNG sponsored the donation of medical equipment and consumables worth over $4million to our host state, Rivers State, Lagos State, Bayelsa State, Akwa Ibom and Adamawa States.” He added that, “To end this remark, I believe this forum provides a rare opportunity for unfettered discourse on how best to harness and manage Nigeria’s energy potentials going forward. We need more collaborative forums like this to ensure a more robust gas industry in Nigeria. “With this year having been rightly declared the “Year of Gas”, NLNG is leading the conversation for expansion of the sector with the award of the Train 7 EPC Contract to Saipem Chiyoda and Daewoo (SCD) JV and the JV is now in the driving seat for the execution phase to deliver Train 7.”

Local Content: Shell Urges Nigerian Companies to be Creative, Collaborate to Benefit from Opportunities By Ikenna Omeje at the 12th Edition of the annual PSRG–RICHARDSON Health, Safety, Security and Environment (HSSE) Forum, which had as theme “Nigerian Content Development: Facing The Future”, he projected that while there is increasing support, regulations are going to get stricter to ensure full compliance by companies. Bayo Ojulari

he Managing Director of Shell Nigeria Exploration and Production Company Limited (SNEPCo), Mr. Bayo Ojulari , has said that industry players and companies ready to be creative and collaborate have immense business opportunities in providing quality solutions to the challenges that the oil and gas industry faces in implementing Local Content as required by the Nigerian Oil & Gas Industry Content Development (NOGICD) Act. According to a release issued by Shell Media Relations Manager, Bamidele Odugbesan, the SNEPCO boss stated this while speaking,

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“There are areas where we can quickly close gaps identified in local content implementations”, Ojulari reiterated at the Forum, which held as a Webinar due to health protocols induced by the COVID-19 pandemic. He repeatedly emphasised the need for collaboration among Nigerian companies as a reliable way to harness the different skills that will grow the industry. “Collaboration is key to unlocking value. Don’t do it all alone, you always benefit from partnering”, he said. Several leading industry players at the Webinar highlighted that “local content is a marathon and not a sprint”, with Ojulari underlining the need to

reinforce established processes and framework that will lead to achieving the goals of Nigerian Content. He reminded indigenous companies to continue to invest in improving the quality of their products and services since, he said, “we cannot implement Local Content at the expense of quality. Don’t compromise on quality or safety. Instead, have a system in place to manage both quality and safety.” W it h t h e e x te n si o n o f t h e implementation of Nigerian Content to other industries, like mines, power and information technology, Mr. Ojulari projected that there is more potential for success in these industries if the learnings from the pioneering example of the oil and gas industry are applied. “The oil and gas industry is very complex and highly technical. With the success achieved in the oil and gas industry, other industries have good example to follow”, he said.

Op-ed

60 YEARS AFTER INDEPENDENCE NIGERIA’S ENERGY INDUSTRY HASN’T REALIZED ITS PROMISE — BUT IT’S GETTING CLOSER By NJ Ayuk

n O c t . 1 , 196 0 , everything seemed possible for Nigeria: After nearly 80 years of colonialism under Great Britain, it was finally an independent nation. During the newly independent nation’s earliest days, there was every reason for Nigerians to envision a bright future for themselves and their country, one in which Nigeria’s vast oil and gas reserves would deliver widespread prosperity. One of stability and growth. Tragically, Nigeria’s story moved in a different direction. Yes, there was a brief period of economic growth, but that was followed by multiple coups, civil war, military rule, corruption, and poverty. Instead of helping everyday Nigerians, the country’s oil wealth went to an elite few in power while leaving communities, particularly those in the Niger Delta, to deal with environmental degradation and dwindling means of supporting themselves. Instead of using its oil revenue to strengthen other sectors and diversify the economy, Nigeria has made oil its primary source of government revenue. In recent decades, instability in the region has only worsened and contributed to the rise of terrorist groups like Boko Haram. I still believe that 60 years of independence is an important milestone. We still have much to celebrate, including a future in which we can right the wrongs of our past. While getting Nigeria to the point where it can realize the full potential of its petroleum resources has been slow going, the country appears to be on the right track. As I write this, Nigeria’s long-awaited Petroleum Industry Bill (PIB) — intended to bring transparency and new life to the country’s oil and gas sector — is closer than ever to passage. Nigeria is working to monetize its natural gas resources, and we’re seeing great interest in the latest marginal field

bidding round. So like those who celebrated their nation’s independence in 1960, I’m hopeful about Nigeria’s future. My optimism might be tempered a bit by Nigeria’s unresolved challenges, including continuing concerns about government transparency, but it has not by any means been extinguished. I truly believe that Nigeria can learn from its mistakes, take a strategic approach to the opportunities before it, and create a country where all Nigerians can begin a chapter of safety and prosperity. Nigeria’s energy industry can realize its full promise. Nigeria is Rich in Resources, Poor in Policy Just like I believe that Nigeria’s oil and gas are key to improving the country’s future, I see that mismanagement of these resources has contributed to many of its struggles. Too many times during the last 60 years, Nigeria’s government has missed opportunities to channel the country’s oil and gas resources into economic growth. It has been particularly frustrating to see Nigeria — with natural gas reserves at an estimated 185 trillion cubic feet — struggle with energy poverty. Only about 45% of Nigerians have electricity, and even those with access to the power grid deal with regular power outages. Again, weak governance plays a role in this. Violence and security issues, and Nigeria’s reputation for corruption, have slowed Nigeria’s ability to develop sufficient power plants and hindered foreign investment infrastruc ture. Meanwhile, Nigeria is paying a steep cost for its power shortages: about $28 billion or 2% of Nigeria’s gross domestic product, as lack of power impedes Nigerian entrepreneurship, private investment, and job creation. I’m certain that Nigeria could bring reliable power to more people by

harnessing its natural gas resources. And, to its credit, the government has been talking in recent years about putting an end to Nigeria’s costly and wasteful natural gas flaring — more than 276 billion cubic feet of natural gas was burned off from Nigeria’s oil fields between September 2018 and September 2019 alone — and capitalizing on this valuable resource. But up to now, Nigeria’s progress on this front has moved at an agonizingly slow pace. The government, for instance, set a Zero Routine Flaring target for 2020 but announced in August that it will not be able to reach its goal. It also has failed to set a new goal. Then there is the issue of corruption, which has fed into dangerous chain reactions. In 1966 and 1967, shortly after Nigeria gained its independence, corruption was used to justify coups that led to civil war, and ultimately, to military rule for nearly three decades. More recently, frustration over corruption has eroded confidence in local governments, which in turn, has made it easier for terrorist group, Boko Haram, to radicalize and recruit young Nigerians. What’s more, corruption and mismanagement in Nigeria’s security sector have hampered Nigeria’s ability to effectively protect Nigerians from Boko Haram. This year, with Nigeria’s economy dealing with the one-two punch of the COVID-19 pandemic and low oil prices, decisive government action is more critical than ever. As of late August, the economy had contracted by 6.1%, and 27% of Nigeria’s labor force was unemployed. I want to be clear: I’m not saying that Nigeria’s problems are insurmountable. Not in the least. In fact, Nigeria is better positioned to start strategically capitalizing on its natural resources than ever before. And if the country can do that, it will be well on its way to a better future.

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Op-ed All is Not Lost – Far From It While there’s no guarantee that Nigeria’s PIB will become law this year, it has reached an important milestone: President Muhammadu Buhari approved an updated version of the bill and presented it to the National Assembly Sept. 28 for their approval. Both chambers of the National Assembly have to pass the bill before it can be sent to the president for his final signature. If it is passed, the PIB would be transformational for Nigeria’s oil and gas industry and, ultimately, for the country as a whole. It would play a vital role in addressing the inefficiencies plaguing the Nigerian National Petroleum Corporation (NNPC), from slow approval for oil projects to budget shortfalls that hinder its ability to pursue public-private partnerships. What’s more, the bill would create a supportive environment for both IOCs and indigenous petroleum companies, help protect the environment and the interests of host communities, support economic diversification in Nigeria, and critically important, promote transparency in Nigeria’s administration of petroleum resources. Putting the oil industry on strong footing also could give the government more room to maneuver when it comes to resolving problems in the Niger Delta — including environmental concerns, lack of economic opportunities, crime, and militant activity — and implementing reforms to restrain the advance of Boko Haram. If oil and gas production stabilize, for example, Nigeria’s government will be better positioned to create jobs in the region, both in petroleum and other sectors, which likely would contribute to greater stability there. More investment by IOCs also could lead to much-needed infrastructure in the area, educational and job-training programs for locals, and environmental initiatives. And greater oil and gas revenue — followed by economic growth and diversification — would help Nigeria to fund the security resources it needs to enforce anti-terrorism measures. The PIB’s progress is good news, but it’s not the only reason I’m optimistic for Nigeria. The government also deserves praise for launching, through the Department of Petroleum Resources, its first marginal field bid round in nearly two decades. Marginal fields hold discovered resources that have been left unattended for more than 10 years. Nigeria is offering 57 fields with total resources estimated at about 800 million barrels of oil and 4.5 trillion cubic feet of gas. Already, interest in the marginal fields has been high, and this could be just the jumpstart Nigeria needs to rekindle interest in the country’s untapped resources.

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I also find it encouraging that Nigeria has moved a step closer to natural gas monetization through the Department of Petroleum Resources’ creation of the Nigerian Gas Flare Commercialization Program. Proper channeling of flared gas could impact the country’s gross domestic product by up to $1 billion per year, the department estimates. It could create up to 300,000 jobs, produce 600,000 million tons of liquefied petroleum gas per year, and generate 2,5 gigawatts of power. I commend the federal government for creating this program. Next, Nigeria needs to put in place the legislation, infrastructure, and pricing regulations necessary to make commercialization possible. Nigeria already has successful liquified natural gas (LNG) projects in place — just this year, Nigeria LNG Ltd. signed a $3 billion corporate loan to finance the construction of its seventh LNG train — and with the right policies, they can be even more beneficial. Also working in Nigeria’s favor has been the country’s membership in OPEC. Not only has OPEC played a critical role in stabilizing global oil prices through production cuts this year, it also has been working to secure the fair value of member countries’ oil resources with the understanding that a thriving petroleum industry contributes to economic growth and improved standards of living. I believe Nigeria’s membership in the OPEC Fund for International Development, a multilateral development finance institution that targets key projects – primarily in energy, transportation, agriculture, water, education, and health —will be beneficial as well. It has been encouraging as well to observe the fantastic working relationship among OPEC Secretary General Mohammad Barkindo, Minister of State for Petroleum Resources Chief Timipre Sylva, and NNPC Group Managing Director Mele Kyari. In fact, Barkindo recently expressed a strong vote of confidence in both Nigerian officials. “I’ve known both Timipre Sylva as a friend and Mele Kyari as a colleague for a very long time,” Barkindo said last year. “I had worked with both, and I know that if they work together, they will make a good team that will provide the leadership and the corporation that the industry requires.” The cooperation and respect among these leaders can only work in Nigeria’s favor. Nigeria’s Independence Must Be Respected As Nigeria takes measures to revamp its petroleum industry, leaders should be prepared to stand their ground against external forces eager to remake Nigeria’s future in the image they want for it. I’m referring to western environmental

groups intent on influencing is how Nigeria, and other African countries, transition from fossil fuel production to sustainable energy sources. Many have been pressuring investors to stop supporting oil and gas projects in Africa to prevent climate change. Frankly, they need to back off. Nigeria is celebrating 60 years of independence. This is not the time to go backward. Outsiders need to respect Nigeria’s right to control its own destiny — and to choose the path it takes to improve its future. Nigeria must be the one to map out and executive its energy transition. And it must do it on its own timetable. And Nigeria already is, by the way, beginning to embrace green technologies. With a $350 million World Bank loan, Nigeria plans to build 10,000 solar-powered mini-grids by 2023. The government also is investing in hydropower projects, including the $5.79 billion Mambilla Power Station in central Nigeria. All of those projects can work hand in hand to contribute to Nigeria’s economic growth. No one should be pressuring Nigeria to miss out on the many benefits its petroleum resources offer. And today, when the country is finally moving toward harnessing its oil and gas resources in a way that could truly benefit everyday Africans, it would be heartbreaking to see non-Africans knock Nigeria off-course. Nigeria is So Close Sir Abubakar Tafawa Balewa, Nigeria’s first prime minister, had this to say about an independent Nigeria: “Our political advance will be of no value if it is not supported by economic progress.” He was absolutely right. Nigeria needs revenue to resolve its challenges, and that revenue is within Nigeria’s reach. With the necessary legislation in place, Nigeria can revitalize and capitalize upon its oil industry. And instead of flaring its abundant gas to power, Nigeria can start using it to power households and businesses. To provide feedstock for petrochemicals and help diversify the economy. The gas can even play a valuable role in Nigeria’s energy transition by providing revenue for green initiatives. All of this is possible, Nigeria simply needs the kind of legislation and policies that are conducive for business to thrive. One of the best ways Nigeria could celebrate its 60th anniversary as an independent nation would be to finally put those measures in place. NJ Ayuk is the Executive Chairman of African Energy Chamber

LOCAL CONTENT

Buhari Reappoints Wabote, Bosses of PTDF, PEF

Angola Publishes Local Content Law Promoting Angolanization of the Oil and Gas Sector By Margaret Nongo-Okojokwu

resident Muhammadu Buhari has renewed the appointments of the Executive Secretary of Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote and heads of two other agencies. The heads of other agencies t h eir a p p oint m e nt s w e re renewed are: the Executive Secretary, Petroleum Technology Development Fund (PTDF), Bello Aliyu Gusau and the Executive Secretary, Petroleum Equalization Fund (PEF), Ahmed Bobboi. Wabote and Gusau were first appointed into their positions in September, 2016. A statement by presidential spokesman, Femi Adesina said the reappointments were made after recommendations from the Minister of State for Petroleum Resources, Timipre Sylva, adding that the reappointments take effect immediately. “Dr Gusau is credited to have run the PTDF successfully in the past

four years, keeping faith with the seven strategic priorities he had introduced in January 2017,” the statement reads. “These are: domestication, cost cutting, sustainable funding, efficient internal processes, linkages with the industry, utilisation of centers of excellence, and pursuit of home-grown research. “A h m e d B o b b o i g e t s h is reappointment for having run PEF in a way that made it a key and strategic player in the administration’s oil and gas reforms, especially in stabilising the supply and distribution of petroleum products across the country, among others. “ Wabote won his pips for managing the Nigerian Content Development Fund prudently, completing the headquarters building of NCDMB, and also initiating many landmark projects that are widely commended by industry players.”

Angola’s Presidential Decree 271/20, which approves a new legal regime for local content in Angola’s oil and gas sector, was published this week. The decree strongly encourages the acquisition of national goods and services and the replacement of expatriates by Angolan workers. According to H.E. President João Lourenço, the decree will aid in wealth creation and the promotion of economic diversification in Angola. It will also promote participation in the oil sector from commercial companies owned by Angolan citizens. The new legal regime emphasizes the strengthening of national entrepreneurship, highlighting that foreign technical assistance or management contracts must contain detailed training programs, knowledge transfer, technology, development and improvement of professional skills for the national labor force; and also promotes the use of national raw materials in an aim to reduce imports and increase domestic production.

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LOCAL CONTENT

NCDMB Lauds Total E&P, PCN On Ikike Line Pipe Coating Project ....Project Creates 300 Jobs By Margaret Nongo-Okojokwu

h e N ige ria n C o nte nt Development and Monitoring Board (NCDMB) has commended Total Exploration and Production Nigeria (TEPNG) and Pipe Coaters Nigeria (PCN) Limited for the local content strides being recorded on the Total Ikike Line Pipe Coating Project, which is ongoing at PCN facility in Onne Free Trade Zone, River State. The Executive Secretary of the NCDMB, Engr. Simbi Kesiye Wabote gave the commendation on recently when he inspected the ongoing project. He hailed Total E&P for embarking on the Ikike project during the period of COVID-19 pandemic, describing it as evidence that the company believes in Nigerian Content development and the nationâ&#x20AC;&#x2122;s economy. He hinted that the Ikike Subsea, Risers & Flowlines (SURF) Engineering Procurement Construction and Installation (EPCI) project will create huge opportunities for local companies like Pipe Coaters Nigeria

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and numerous Nigerian youths especially during the period of the COVID-19 when most businesses and projects are shut down. According to technical details of the project, the planned duration is five months, and it involves 12 inches X 28km Line pipes that would be coated with 3LPE, 5LPP and Concrete Weight Coating (CWC). Additional services will include Bends coating and Anodes installation and they are scheduled to be completed by November 2020. This would be the first time in Africa that a facility would be applying CWC on top of a Thermal Insulation (5LPE) coated line pipe. The Executive Secretary who was represented at the event by the General Manager Projects Certification and Authorization Division (PCAD), NCDMB, Engr. Paul Zuhumben lauded PCN for developing the capacity to execute the job and showing that local companies now have the capabilities to match their foreign counterparts

in the delivery of oil and gas projects to the highest quality and standards. He noted that PCN had acquired experience that had spanned over two decades in Oil Country Tubular Goods (OCTG) pipe management, pipe threading and line pipe coating for deep water applications. The Executive Secretary also thanked President Muhammadu Buhari and the Minister of State for Petroleum Resources, Chief Timipre Sylva for their commitment towards ensuring that the Ikike project continued despite the lull in the global business climate. In his comments, the Operations Senior Manager of Tenaris/PCN, Mr. Ugochukwu Chijioke stated that the Ikike coating project would be executed by 100 percent Nigerians workforce and it offered the opportunity for the employment of over 300 direct personnel, training and the use of locally sourced materials, amongst others.

LOCAL CONTENT He thanked the Executive Secretary and management of Total for making the project a reality and appealed to relevant stakeholders for more projects so that the skills and capabilities that were developed during the project can be retained. He conveyed the company’s pride to be associated with the project for the Total/ NNPC Joint Venture and the remarkable accomplishments that would be attained and assured that it would be completed in record time to meet the Ikike development project timelines.

Wabote Pledges Timely Completion of Facility Upgrade at Technical School Abak - Pledges timely completion of facility upgrade at Technical School, Abak By Margaret Nongo-Okojokwu complete overhaul and facelift given to the woodwork and carpentry workshop, describing it as worldclass standard. He said: “I am impressed with what I have seen today. When I visited here some time ago, I saw the deplorable state of the laboratories and wondered what sort of technical education about 2000 students were getting. So NCDMB decided to intervene to upgrade some of the laboratories and workshops in this college.”

s part of the initiatives by the Nigerian Content Development and Monitoring Board (NCDMB) to bridge the shortage of vocational skills and competency gaps in the country, the Executive Secretary, Engr. Simbi Kesiye Wabote has pledged the timely completion of the first phase of the renovation

and equipping of the Government Technical College Abak, Akwa Ibom State, being sponsored by the Board. He made this commitment on Monday during an inspection visit to ascertain the level of work being done in the school. Wabote expressed delight at the

Speaking on the choice of the school, he explained that Government Technical College, Abak is one of the foremost technical schools in Nigeria and it had produced technicians who were able to deliver quality work across several years. He charged the school authority to utilize the renovated facilities properly, noting that modern equipment had been installed and they can be used to produce all forms of furniture.

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LOCAL CONTENT

NCDMB, NITDA Collaborate on Local Content Development

He also recommended the engagement of a competent company to manage the facility to sustain its optimal operations. “We hope and believe that the Akwa Ibom State Government would take these facilities seriously and ensure that they are maintained to the benefit of the school and state at large. That way successive students would continue to have the opportunity to use a state of art equipment during their stay here in the technical college.” He confirmed that the Board would complete the mechanical workshop and the science laboratories within few months, and they will be handed over to the state government. In his remarks, the Chairman, Akwa Ibom State Technical Education Board, Hon. Godwin Udom commended the Board for the laudable initiative and for looking towards Akwa Ibom State, which is the cradle for technical education in Nigeria. He promised that the state will take proactive steps to ensure that the equipment and facilities are safe and used for the promotion of technical education. Overwhelmed with joy, the principal of the school, Elder Friday Udoka applauded the Board for the giant steps it had taken to restore the glory of the foremost technical college. In his words, “our hearts are filled with joy for this feat that is being achieved during my time. I can say categorically that when these projects are completed, the world will be here without much announcements”. While beckoning on other corporate agencies in the country to emulate the example of the NCDMB, Udoka pledged that the investment will be protected and used properly.

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By Margaret Nongo-Okojokwu

he Nigerian Content Development and Monitoring Board (NCDMB) and the National Information Technology Development Agency (NITDA) have agreed to set up a sixman joint committee that will foster their collaboration in the development of local content in information and communications technology, oil and gas industry and related sectors. The Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote and the Director General of NITDA, Mr. Kashifu Inuwa Abdullahi made the decision after a meeting they held via the Teams online meeting platform on Tuesday. The Executive Secretary explained that the operations of the oil and gas industry relies heavily on artificial intelligence and information technology, to such an extent that the Floating Production, Storage and Offloading (FPSO) platform might in the coming years be navigated remotely, without human occupants onboard while operating 150 kilometers offshore. He emphasised that “there is a lot of opportunities to synergize and support what our respective agencies are doing. We have similar collab oration with NIM A SA , Immigration Service, Ministry of Interior, Ministry of Justice and other agencies and we undertake common projects.” Wabote listed possible areas of collaboration to include the promotion of in-country production of m otherb oards , elec tronic components, system integration and assembly. Other areas of collaboration include the mentoring of the beneficiaries of NCDMB sponsored GSM repair training, development of mobile applications and personal computer applications as well as the optimization of the use of locally developed virtual meeting platforms. Responding, the Director General described the planned inter agency team as an excellent idea,

adding that NITDA shares information with several ministries, departments and agencies and operates with a flexible system. He stated that now was the perfect time for collaboration between NCDMB and NITDA that share similarities in their mandates, especially as the COVID-19 pandemic had compelled several sectors of the economy to digitize their operations. He identified capacity building as another possible area for collaboration between NCDMB and NITDA, indicating that personnel from about 100 government agencies were undergoing trainings currently at NITDA’s e-government centre in digital transformation. Abdullahi recalled that NITDA partnered with NCDMB in training 1000 youths in Yobe State on GSM repairs. He emphasized the need for further mentorship of the trainees till they get to the market. “We would partner and develop a monitoring and evaluation portal that can track the number of people we have trained and mentored and the jobs they create. This is line with Mr President’s pledge to lift 100 million Nigerians out of poverty in the next 10 years.” Prior to this time, NCDMB has been providing immense support for the local ICT industry through the procurement of locally assembled personal computers, utilization of MainOne for Internet services and in-house development of staff service applications. Other NCDMB Interventions in ICT include enforcing compliance with provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act to ensure local service companies are engaged in all IT related job in the Oil and Gas industry, sponsoring development of software packages under research and development intervention, training of youths on GSM repairs and establishment of ICT centers in selected secondary schools across the country.

LOCAL CONTENT

NOGICD Act Amendment: NCDMB, PETAN, OPTS, Others Oppose Increase of Content Fund To 2%, Commission Bill By Margaret Nongo-Okojokwu

h e N i g e r ia n C o n te n t Development and Monitoring Board (NCDMB) and key organisations in the oil and gas industry – the Petroleum Technology Association of Nigeria (PETAN), Petroleum Contractors Trade Section (PCTS), Oil Producers Trade Section (OPTS) and the Nigeria LNG Ltd have advised against increasing the percentage of the Nigerian Content Development Fund (NCDF) from the current one percent to two percent as proposed in the amendment of the Nigerian Oil and Gas Industry Content Development (NOGIDC) Act. The NCDF is deducted from the value of contracts awarded in the oil and gas industry and was pegged at one percent by the NOGICD Act of 2010. The organisations canvassed this position in separate presentations they made on Monday, 19th October in Abuja at the two-day

public hearing organised by the Joint Senate Committee and House of Representatives Committee on Nigerian Content Development and Monitoring. The public hearing is focussed on three proposed legislations, namely the Bill for an Act to amend Nigerian Oil and Gas Industry Content Development Act, Cap 2, 2010 and other maters connected thereto and the Bill for an Act to enact Nigerian Local Content Act for the development, regulation and enforcement of Nigerian Content in all sectors of the Nigerian economy except Oil and Gas Industry Sector and for related matters. The third legislation seeks to repeal the NOGICD Act and enact Nigerian Local Content Development and Enforcement Commission Act and establish the Nigerian Local Content Development and Enforcement Commission.

In his submission, the Executive Secretary NCDMB, Engr. Simbi Kesiye Wabote argued that the one percent NCDF deduction should be maintained “given the pressure that the global oil and gas companies are facing with cost escalations and price reductions in the industry. With prudent management of the NCDF and the full cooperation of the operating companies, we believe Local Content shall continue to operate efficiently and grow.” In their speeches, representatives of the lea ding oil in dus tr y organisations advised against the proposed increment, stressing that an amendment of the NOGICD Act should promote and protect local businesses and encourage entry of foreign capital and technology into the country to further grow the sector. They also strongly opposed the proposed bill which sought to repeal the Nigerian Oil and Gas

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LOCAL CONTENT Industry Content Development Act 2010 and enact Nigerian Local Content Development and Enforcement Commission Act.

a paradigm shift from the dollardenominated provision to a bicurrency model,” the Executive Secretary explained.

The representative of the OPTS, Engr. Joseph Ofili posited that that the group was totally against the Commission Bill because it would erode the gains of the past 10 years of Nigerian Content implementation and return the industry to ground zero with regards to Local Content implementation.

On the requirement for Companies Seeking Expatriate Quota (EQ) to Provide Additional Information, Wabote said the Board supports the review “because it increases the information to be provided by companies seeking Expatriate Quota approval which will further prevent abuse of the process and roundtripping of expatriates across sectors of the economy. We have a very good interface with the Ministry of Interior; the proposed amendment will further enhance data exchange and inter-agency collaboration. “

The PETAN Chairman, Mr. Nicolas Odinuwe stated that it would be a grave mistake to repeal the NOGICD Act which had been acclaimed by several stakeholders to be very successful. He insisted that the best strategy would be to fine-tune a few areas to make it more effective. On the new provision to earmark 0.5 percent of gross revenue of oil and gas companies for research and development, the Executive Secretar y NCDMB who was represented by Director Planning, Research & Statistics, Mr. Daziba Patrick Obah stated that the Board welcomes it on the condition that the money would be for the operator’s own utilization. The Board also supported the proposal by the amendment to add Naira to the Benchmark Currency for Local Contracts “This means

On the proposal to impose administrative sanc tions on defaulters of the Act , the Executive Secretary stated that “the Board welcomes the change because “it categorizes the various violations and stipulates sanctions that could be applied upon conviction and now empowers the Board to mete out administrative sanctions against erring companies on certain categories of infractions without first securing a conviction in court. We believe this will further enhance the regulatory functions of the Board and reduces additional burden on the courts.”

In his remarks, Chairman of the Senate Committee on Local Content, Senator Teslim Folarin Teslim clarified that the Bill for an Act to amend NOGICD Act and the Bill to enact Nigerian Local Content Act for the development, regulation and enforcement of Nigerian Content in all sectors of the Nigerian economy were sponsored the Nigerian Content committees of both houses of the national assembly. He explained the that the justification for proposing a separate legislation for the other sectors of the economy was because the oil and gas industry was peculiar and its operations and governance structure of the NOGICD should not be disrupted. Also speaking at the event, the Deputy Leader, House of Representatives, Honourable Peter Akpatason, who represented the speaker of the House of Representatives, Rt Honourable Femi Gbajabiamila explained that the proposed bills have significant impact on the national economy. He noted that 10 years of Nigerian Content implementation have resulted in noteworthy achievements, listing them to include the employment of many Nigerians in the oil and gas industry, engagement of Nigerians in high-tech activities of the industry, significant reduction in capital flight and retention of spend in-country

Contracts Less Than N5 Billion Not For Foreign Firms anymore – FG By Margaret Nongo-Okojokwu

he Federal Government of Nigeria has directed that contracts below N5 billion will no longer be awarded to any foreign firm in order to empower local contractors. This is in line with proposed Local Content Bills being considered by the Senate. Minister of State for Works and Housing, Abubakar Aliyu told the National Assembly Joint Committees on Local Content recently in Abuja that the N5 billion categorisation was part of measures being put in place to strengthen local content laws.

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LOCAL CONTENT According to him, contracts that are not more than N5 billion are to be exclusively for indigenous firms for bidding, award and execution.

Sylva Visits Lee Engineering, Says FG Plans to Increase Local Content Policy To 70%

But when asked by the Chairman of the Committee, Senator Teslim Folarin, whether the new policy would affect construction firms like Julius Berger, the Minister said proper categorisation would be done to determine that. According to him, Julius Berger is more or less an indigenous foreign firm going by high involvement of Nigerians in its operations and management over the years, which makes its categorisation a bit difficult. He added that other measures like registration of expatriates and proof of valid residence permit are also part of recommendations in the local content development bill. Earlier, Folarin said the three bills being considered are very important to the development of the oil and gas industry, which is one of the most viable sectors of the economy. He explained that the bills, among other things, seek to consolidate on the gains of the implementation of local content component in the oil and gas industry, pursuant to the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, 2010. “One of the bills also seeks to provide the needed legal framework for the implementation of local content in other key sectors of the economy, including power, ICT, Construction and Transportation. The enactment of this Bill, will no doubt, provide Februar y 5, 2018 , which seeks to improve local content procurement with regards to science, engineering and technology components of the economy,” Folarin said.

he Minister of State for Petroleum, Chief Timipre Sylva, says the Federal G ove rn m e nt p la n s to increase the country’s local content policy from its present 30 per cent to 70 per cent by 2027 to create jobs for unemployed youths in Nigeria. He stated that the President Muhammadu Buhari-led government will continue to patronise indigenous oil and gas company to boost the local content act and provide jobs for the teeming youths across the country. Sylva stated this when he led top officials of the petroleum ministry on a facility tour to the nation’s leading indigenous engineering and construction company, Lee Engineering and Construction Company Limited at Ekpan in Uvwie Local Government Area of Delta State. The minister and his team, who were conducted round the facilities by the Executive chairman of Lee Engineering and Construction Company Limited, Dr. Leeman Ikpea, hailed the construction firm for its contribution to the nation’s oil and gas sector. While applauding the firm for full compliance with the implementation of the Local Content Act in its ac tivities, he described Lee Engineering and Construction

Company Limited as a trailblazer in the oil and gas sector in the country. Chief Sylva expressed satisfaction with the state-of-the-art facilities at Lee Engineering, assured the management that the Federal G overnm ent wo uld sup p or t indigenous oil and gas firm especially Lee Engineering and Construction Company Limited. He explained that the government has grown its Local Content Policy from three percent in 2010 to thirty percent and hope to grow it to seventy percent in 2027. One of the facilities inspected by the minister was the ultra-modern manufacturing and fabrication workshop that is still under construction. Earlier, Dr. Ikpea informed the Minister that the ultra-modern manufacturing and fabrication workshop with state-of-the-art equipment when operational will manufacture heat exchangers, pressure vessels, process skids, tanks, valves and fittings as well as other very important oil and gas tools. He added that the facility which will be completed in seven months will be commissioned by President Muhammadu Buhari and appealed for government patronage.

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MARITIME

FG Approves Construction of $462m Deep Seaport at Bonny Daniel Terungwa

he Federal Executive Council (FEC) has approved the construction of a deep seaport at Bonny at the cost of $461,924,369.

of a deep seaport in Bonny under PPP (public private partnership) and construction of a railway industrial park in Port Harcourt,” he said.

The Minister of Transportation, Rotimi Amaechi, made this known when he briefed State House correspondents on the outcome of the 18th virtual meeting of the Federal Executive Council (FEC).

He stated further that the Bonny deep seaport will cost $461,924,369, at no cost to the federal government, while the railway line will be at the cost of $3,020,279,549.

Amaechi said that FEC meeting also approved award of contracts for the rehabilitation and reconstruction of the Port Harcourt-Maiduguri eastern narrow gauge railway, with new branch lines and transshipment facilities.

The industrial park, which is under PPP, will cost $241,154,389.31 at no cost to federal government.

“The Federal Executive Council today, approved the award of contract for the rehabilitation and reconstruction of the Port Harcourt to Maiduguri Eastern Narrow Gauge Railway, with new branch lines and trans-shipment facilities. “It also approved the construction

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“The Port Harcourt to Maiduguri narrow gauge railway will have new branch lines: from Port Harcourt to Bonny and from Port Harcourt to Owerri are new lines. “There is another connecting the narrow gauge to standard gauge at Kafanchan. There is a branch line from Gombe or before Maiduguri to Damaturu and Gashua. That’s what has been approved,” said the minister transportation.

FG to Shutdown Bonded Terminal Over Illegal Charges in Efficiency.

he Federal Government has called on all bonded terminals in the country to desist from charging shippers and freight forwarders illegal fees and improve on efficient delivery and management of cargo or face total shutdown. The Executive Secretary/CEO of the Nigerian Shippers’ Council (NSC) Mr. Hassan Bello, stated this during an on the spot assessment of Denca Terminal and Kachicares Bonded Terminal, both located within Amuwo-Odofin lagos. Bello threatened to shut down Denca Bonded Terminal if it fails to return about N46 million illegal charges obtained under the guise of transfer and storage charge from Nigerian Shippers and freight forwarders. He condemned the indiscriminate citing of bonded terminal and issuing of approvals by the Nigerian Custom Service (NCS) stressing that henceforth, the NSC would engage customs to ensure that it is consulted before bonded terminals are licensed. The NSC, he stated had in July issued a circular, directing all seaport terminal and bonded terminals to stop charging shippers for transfer of cargoes from Apapa to bonded terminals.

MARITIME

Onne Shipyard to Create more than 1000 jobs – Ogbeifun Daniel Terungwa

he Chief Executive Officer of STARZS Marine and Investment, Engr. Greg Utomwen Ogbeifun has said 1,000 people would be initially employed at commencement of Onne Shipyard. The nation’s foremost shipping mogul in Lagos, expressed hope that the shipyard would translate into a positive multiplier economic effect once fully on board as it would attract ships from other countries in Nigeria. He noted that Nigeria, through the Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), in tandem with stakeholders in the nation’s shipping as well as the Oil and Gas industries, is working assiduously at ensuring the country acquires vibrant shipyard, anchored on Private sector initiative. “This facility is expected to employ about a thousand people at commencement, direct labour and maybe about five thousand multiplier effects. It’s going to bring about skill transfer for the country. “We have decided that we were not going to stop with ship repairs. One of the cardinal requirements of the Cabotage Act is that ships operating

in Nigerian waters have to be built in this country,” he said. Ogbeifun stated that for a ship to be built in country, shipbuilding facility is required; and as a result, two shops for new shipbuilding have been incorporated with each having the capacity of taking a maximum length of 65m, this means 99% of the ship operating upstream of the oil and gas industry can actually be constructed in Nigeria. “If we speak to an agency like Nigerian Port Authority, you will find out that majority of the ships they own, tugs in particular were built by Damen Shipyard in Holand. If you have this facility here, chances are that NPA for example will like to build their ships here. It is an opportunity for everybody, both indigenous and foreigners. “Just like Nigerian ship owners take their ships out of the country to go to places like Abidjan, Las Palmas, Thelma, sometimes as far as South Africa, Namibia to carry out ship repairs, ships in other countries will also come into this country to patronize this facility, both for the new building and for the repair he said. STARZS Marine and Investments together with NIMASA, and other

s t a ke h o l d e r s re co m m e n d e d increasing the length of the lifting capacity from 90 meters to 120 meters in order to accommodate some of the coastal tankers that fall within. The Managing Director, Nigerian Ports Authority (NPA) Hadiza Bala Usman, while receiving the team, pledged support for the project, stating that she would work relentlessly to ensure actualization of the project. Engr. Ogbeifun said the company has engaged the services of consultant to help in the process of procuring the transaction advisor. “RMP was put together detailing what the work of the transaction adviser is supposed to be: which is to start with us from where we are, develop the detailed design, develop the outline business case, get involved in the full business case, procurement of ABC contractor that will do the construction, identification of the international company that will partner to work with us in the operations up to commissioning, including funding structure and helping to raise finance for this project. All these are part of the responsibilities of the transaction adviser,” he said.

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Nigeria’s Cocktail of Policies towards Gas Revolution By JEROME ONOJA AND AMOS IKE

lobal focus is tilting towards cleaner energy, especially with the impact of fossil fuel on the environment. However, despite the positive global outlook and growth in domestic production, Nigeria’s gas utilization remains low. This article highlights the various initiatives put in place by the government in recent times to deepen gas utilization in the country and also its push to ensure that gas plays crucial roles in the country’s quest for development. Nigeria, it has been said, is more of a gas country than an oil nation, but the country had over the years, failed to utilize the enormous potential and harness the vast opportunities

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presented by gas. Nigeria proven gas reserves is currently put at about 203.16 trillion cubic feet, and despite this huge quantity,

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Nigeria’s gas utilization still ranks low among its peers globally.

To p u t t h e si t u a t i o n i n perspective, the Petroleum Products Pricing Regulatory Agency (PPPRA), for instance, recently disclosed that

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71.35 per cent of the Liquefied Petroleum Gas (LPG) also known as cooking gas, consumed in the country in the month of August 2020 was imported. According to the PPPRA’s report of LPG supplied in August 2020, a total of 123,554.329 metric tonnes (MT) of LPG in vacuum (VAC) was supplied in Nigeria in August, by six companies, out of which 88,157.108 MT (VAC) of LPG were imported, while 35,397.221 MT(VAC) were sourced locally.

COVER STORY than the 81,848.585 MT (VAC) supplied in August 2019. Specifically, in July 2020, a total of 136,098.648 MT (VAC) of LPG was supplied, with 61,035.814 MT (VAC) of LPG imported, while 75,062.834 MT (VAC) was sourced locally; in addition, in August 2019, 100 per cent of the 81,848.585 MT(VAC) of LPG supplied were imported into the country. The fact that Nigeria continues to import cooking gas leaves much to be desired, especially when viewed against the huge gas resources in the country, as well as the launch of the National Gas Expansion Programme, NGEP, which seeks to increase gas utilization in Nigeria through the auto-gas scheme and LPG expansion programmes. The cooking gas import scenario seems consistent with that of Premium Motor Spirit, PMS, also known as petrol. Despite having abundance of crude oil, the country continues to import PMS which consumes a huge portion of its foreign exchange. It further spends millions of dollars to subsidise the product, among others. Gas Flare Ironically, despite the import of LPG, oil and gas

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The volume of cooking gas imported into the country in August 2020, by four companies out of the six, represented a rise of 44.44 per cent, compared to 61,035.814 MT (VAC) imported in July 2020, and also represented an increase of 7.71 per cent compared to 81,848.585 MT (VAC) imported in August 2019. On the other hand, the volume of LPG sourced locally for consumption in August, was 52.84 per cent lower than the 75,062.834 MT (VAC) of LPG sourced locally in July 2020. However, the total volume of cooking gas supplied in August 2020, was 9.22 per cent lower than the 136,098.648 MT(VAC) of LPG supplied in July 2020 and 50.96 per cent higher

companies operating in the country flared 225.1 billion standard cubic feet of gas, BCF, from January to July 2020, valued at $787.7 million,

an equivalent of N299.33 billion. According to report obtained from the Federal Government’s Gas Flare Tracker, the volume of gas flared between January and July 2020, declined by 19.86 per cent compared with 280.9 BCF of gas, valued at $1 billion, an equivalent of N380 billion, flared by the companies from January to July 2019. In addition to the amount of money lost to gas flaring, the companies are

expected to pay fines, totalling $450.1 million, an equivalent of N171.04 billion; while the volume of gas flared was also an equivalent of 12.0 million tonnes of carbon dioxide emission. Also, the report stated that

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the 225.1 BCF of gas flared by the oil and gas firms in the first seven months of 2020 was capable of generating 22,500 gigawatts hour of electricity. Defaulting Firms

Six companies were indicted of having the worst record of gas flaring in the period under review. The six companies flared gas from 10 oil exploration sites. They are

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Mobil Producing Nigeria, which flared 16.4 billion cubic feet of gas and 8.0 BCF of gas from Oil Mining Lease (OML) 70 and OML 67, respectively; Nigerian Agip Oil Company (NAOC) flared 14.3 BCF, 12.5 BCF and 6.3 BCF from OML 61, OML 60 and OML 63 respectively; while Elf Petroleum Nigeria Limited flared 8.1 BCF from OML 56. Famfa Oil flared 7.6 BCF of gas from Oil Prospecting Licence (OPL) 216; Shell Petroleum Development Company (SPDC) flared 6.9 BCF, 6.7 BCF and 5.4 BCF of gas from OML 11, OML 29 and OML 18 respectively; while Nigerian National Petroleum Corporation’s (NNPC) upstream subsidiary, Nigerian Petroleum Development Company (NPDC) flared 4.6 BCF of gas from OPL 091.

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In 2019, 466.2 BCF of gas was flared between January and December, valued at $1.6 billion, an equivalent of N592 billion.

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COVER STORY In addition, the volume of gas flared was also an equivalent of 24.8 million tonnes of carbon dioxide emission; capable of generating 46,600 gigawatts hour of electricity; while the defaulting oil and gas firms are expected to pay penalties of $932.5 million, an equivalent of N345.025 billion.

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The value of gas flared by the oil companies in 2019 was higher than the N315.56 billion capital expenditure budgeted by the Federal Government for the Ministry of Works and Housing in the 2020 budget; In addition, the value of gas flared in the period under review, would conveniently finance the capital expenditure of the Ministry of Education, which is N185.34 billion; Ministry of Power, N129.08 billion and Ministry of Health, N109.91 billion, which stood at a combined total of N424.33 billion. Gas Policy However, to change the narrative, the Federal Government declared year 2020 as ‘The Year of Gas’ and introduced a number of measures to ensure that the country utilises its vast gas resources for the development of the nation.

of 2020 as ‘Year of Gas’ was now being pursued through the National Gas Expansion Programme (NGEP), to deepen gas penetration and avail Nigerians options for alternative fuels and cleaner environment. According to him, as the country fast-tracks its race to cleaner energy through gas, cognisant of the development in other climes, it is a wake-up call for Nigeria to increase efforts and reduce her dependence on oil. Sylva noted that the growth of the Nigerian economy was hinged on constant power supply, stating that Nigeria has favourable conditions to bring electricity to its citizens at modest costs compared to many other nations. He revealed that in collaboration with stakeholders, the Ministry of Petroleum Resources was seeking to ensure that the country converts the massive amount of gas being flared at the moment to energy for Nigerians at affordable rates. He said: “Therefore, a significant network of additional gas pipelines is a priority. The flag-off of the construction of the AjaokutaKaduna-Kano (AKK) pipeline is the first important step in this direction. “The development of an optimal framework for electricity generation based on natural gas will create a strong basis for providing electricity to all Nigerians. Based on increased gas pro duc tion , stable and predictable gas pricing framework, Nigeria will be able to attract further investment in this sector of our industry.

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Chief Timipre Sylva

Specifically, Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed that the declaration 34

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“Industry must be aware of government’s effort at stabilizing gas pricing with the inauguration of a gas pricing committee, currently at work. The proposed Petroleum Industry Bill (PIB) will also provide a wide variety of features to ensure that natural gas makes the optimal

contribution to sustainable industry and national development in the medium to long term.” Furthermore, the minister stated that with the NGEP, existing policies, legal and regulatory frameworks and commercial instruments that hindered the development of the local gas sector were being reviewed. Market Structure He said that a cardinal objective of the NGEP was reforming and implementing the promotion of a market structure in a manner that would ensure the utilisation of gas infrastructure, assets and facilities on a common carrier and co-sharing basis. He added that strategies that would promote cost-effective distribution of the various gas streams by marine, rail and road for achieving a most affordable, available, acceptable and accessible gas to Nigerians were being formulated. “All these are being considered with the involvement of other stakeholders under the following: deepening domestic Liquefied Petroleum Gas penetration; auto-gas (LPG, CNG and LNG) for automobiles and other prime movers; Compressed Natural Gas (CNG) for electricity; and gas-based industries revitalization,” Sylva explained. He maintained that

“

substituting traditional white products with gas would cushion the effects of deregulation, foster human capital development through new investments and create enormous job opportunities

for Nigerians. The NGEP was part of the National

COVER STORY Gas Policy that was approved by the Federal Executive Council in June 2017. The National Gas Policy led to the introduction of the Nigerian Gas Flare Commercialisation Programme (NGFCP), which is targeted at commercialising the gases flared in the country. The National Gas Policy, is also an offshoot of one of the Seven Big Wins --- Big Win No3 (Gas Revolution) --- which has as its intention to drastically reduce gas flaring by harnessing otherwise flared gases to stimulate economic growth, drive investments and provide jobs in the Niger Delta through the utilisation of widely available innovative technologies. In the National Gas Policy, the Federal Government made it clear that it would take measures to ensure that flare capture and utilization projects were developed, and would work collaboratively with industry, development partners, providers of flare-capture technologies and third party investors. It also vowed to open an industry consultation mechanism, as an important measure in ensuring flaring targets are feasible and regulations are realistic; maximise utilisation of associated gas for supply to power generation and for other industrial uses. Ending Gas flaring

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It hopes to increase the gas flaring penalty to an appropriate level sufficient to de-incentivise the practice of gas flaring,

whilst introducing other measures to encourage efficient gas utilisation. The National Gas Policy commits to ending gas flaring, creating an enabling environment for investors,

seeking value addition for gas, and improving governance in the sector.

gas policy, seeking to encourage motorists to convert their vehicles in order to run on LPG, CNG or LNG.

The Federal Government had promised that it would work to grant open access to all pipelines and other essential midstream infrastructure. With respect to pricing of gas for the domestic market, which is largely controlled by the Federal Government under a transitional pricing framework, the current framework, the policy stated, would be retained for a limited period until a sufficient gas market is established.

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The policy objective, it had stated, was to move to marketled wholesale gas pricing without gas price regulation, except where there are natural monopolies. The design of the NGFCP, as conceptualized and launched on December 13, 2016 is an innovative, robust and scalable approach to gas flare reduction - consistent with the climate change action plans anticipated in the Paris Climate Change Accords, which could be replicable in many other gas flaring countries around the World with Nigeria setting the pace. One key accomplishment of the Programme was the historic and record-breaking achievement of the enactment and approval of the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 (Regulations). The regulations were signed by President Muhammadu Buhari, on the 5th of July, 2018 as the regulatory instrument that would underpin the implementation of the NGFCP. It was gazetted within a record time on the 9th of July, 2018. Auto-Gas In addition to the NGFCP, the Federal Government introduced the auto-

Justice Derefaka T.A (Gas Business & Policy)Ministry of Petroleum Resources

Chairman of the NGEP, Mr. Mohammed Ibrahim, disclosed that various gaseous fuels had been shown to be able to serve as propellant fuel for automotive purposes. However, he noted that the practicability on large scale had been demonstrated mainly with Liquefied Natural Gas, Compressed Natural Gas and Liquefied Petroleum Gas respectively, expressing satisfaction that Nigeria has significant reserves of these gases. Ibrahim added that

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auto-gas is cheaper than petrol and diesel, as engine oil and spark plugs need changing less often with LPG vehicles, and there is also reduced service costs than cars that run on petrol. He said: “We are in times where concern for the environment has become a priority as depleting natural resources and an ever increasingly scarred earth is reeling from the consequences of unchecked and combustion of fossil fuels.

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COVER STORY

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“Nigeria has, under the guidance of the President, assented to several climate change conventions which the country is bound by.

This is one of the areas identified as having great potential to help us achieve these targets. “Advances in technology have meant that natural gas has been adopted and is a growing fuel source for automotive and transportation purposes in many parts of the world. Nigeria is lagging behind. “ H oweve r, b e c a u s e of t h e technologies currently out there, Nigeria can easily catch-up with other nations and even surpass them in Natural gas usage for automotive and transportation because technologies are adaptable and we do not have to re-invent the wheel, but adapt to suit our needs.” LPG Expansion There is also the National LPG Expansion Initiative, a Presidential Inter-ministerial Committee chaired by Vice President Yemi Osinbajo, with the Honourable Minister of State for Petroleum Resources as the deputy chairman.

saddled with the responsibility of coordinating proposed interventions under the initiative, as well as oversee and drive all the disparate efforts undertaken by industry stakeholders for the growth of LPG consumption in Nigeria. The committee’s objectives included providing strategic direction, overall leadership, and acting as focal point for ultimate resolution of issues, as well as have oversight functions for the implementation of the programme tasks and activities. The mandate of the National LPG Expansion Initiative included

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facilitating the growth of Nigeria’s LPG consumption from the current 500,000 metric tonnes per annum (MTPA), to over five million metric tonnes per annum within 10 years. The immediate target of the office is to implement the first phase of the expansion program – which is to convert 10 million households to LPG use as cooking fuel in two years. The initiative is saddled with the responsibility of fostering the sustainable growth of the LPG Sector in Nigeria, by educating individuals and corporate bodies about LPG, its usage, safety and accessibility. It was also designed to create an enabling environment for the use and exploitation of LPG in Nigeria; ensure that the expansion programme benefit both urban and rural communities; impact the Nigerian economy; add value to the gas sector by driving premium demand for LPG.

Vice President Yemi Osinbajo

The initiative was constituted and

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The programme is targeted at deploying Nigeria’s immense resources in Liquefied Petroleum Gas For affordable energy and sustainable economic growth. Gas Transportation Code

Fu r t h e r m o r e , t h e F e d e r a l Government, in August, launched the Nigerian Gas Transportation Network Code (NGTNC) aimed at deepening the use of gas in Nigeria, especially by the industrial and power sectors and also speed-up the country’s economic development. The

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NGTNC is a contractual framework between the Network Operator, which is the Nigerian Gas Company (NGC), and the users, that would provide open and competitive access to gas transportation infrastructure in the country. Speaking at the flag-off of the operation of the NGTNC and the Nigerian Gas Transportation Network Code Licensing and Administrative System (NCELAS), Minister of State for Petroleum Resources, Chief Timipre Sylva, stated that the implementation of the network code, which is a set of rules and principles, guiding the use and operations of gas transportation network system, would deepen the domestic gas market and unleash the potential of accelerated growth and economic development of the country. He said, “In the coming months, this code, together with related inter ventions, would enable improved gas supply to power, growth of gas-based industries, domestic liquefied natural gas, LNG, liquefied petroleum gas, LPG, and compressed natural gas, CNG penetration, as well as enhance revenue to government and create investment opportunities for our people. “To this end, the

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DPR has developed the Network Code Electronic Licensing and Administrative System (NCELAS),

COVER STORY the sector.

which would be used by the regulator to receive, process and issue all applicable licenses to all network players as well as administer all regulatory roles required to ensure the optimal market impact.

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“The NCELAS is a secured online environment that would provide optimum value for all stakeholders that would be operating under the network code. With the unveiling of the NCELAS and the execution of the network code framework agreement the regime of gas transportation through a world class network code would have been firmly established in Nigeria for the benefit of all stakeholders.” He explained that following the declaration of 2020 as a year of gas, the government was driving key policies and regulatory initiatives in the sector. These policies and initiatives, he said, would enhance gas reserves growth to support domestic and export project; expand domestic gas supply and address the perennial challenges of gas flaring, with its attendant waste and environmental impact. Deepening Gas Markets Also commenting on the launch of the NGTNC and the NCELAS, Director/Chief Executive Officer of the Department of Petroleum Resources (DPR) Engr, Auwalu Sarki, explained that

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all the critical milestones required to make the network code go live had been achieved.

Engr, Auwalu Sarki,

These critical milestones, according to him, included extensive network s t a ke h o l d e r s’ e n g a g e m e n t ; establishment of the NCELAS, that would issue licenses for network transporters, shippers and agents; commence migration of existing gas transportation agreements into the network. He added that the DPR also established network code operating procedures; and also emplaced a robust stakeholders’ management support, with assistance from the Nigerian National Petroleum Corporation (NNPC). He said the DPR would continue to work with all stakeholders to deepen the Nigerian domestic gas market, while he expressed optimism that the gas sector would benefit from the Code, especially as it is for the benefit of investors and for other sectors. Sarki further stated that the NGTNC would ensure non-discriminatory access to pipeline system; guarantee secure, available, reliable and safe transmission system and ensure cost-reflective tariffs for pipeline service.

The government is also expanding Nigeria’s gas opportunities with the construction of the AjaokutaKaduna-Kano (AKK) pipeline project, the Nigerian Liquefied Natural Gas (NLNG) Train 7 project, the Escravos-Lagos Pipeline System II Project, the Obiafu-Obrikom-Oben (OB3) gas pipeline projects,

among others. GSAA Periodic Review To support these initiatives, the Gas Aggregation Company Nigeria Limited,

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GACN, said it was crucial to continually undertake periodic review of the Master Gas Sale and Aggregation Agreements (GSAA),

to boost the growth of the Nigerian domestic gas market and deepen the utilisation of gas across the country. Managing Director and Chief Executive Officer of GACN, Mr. Olalekan Ogunleye, disclosed that the Master GSAAs had made significant contributions to the growth of the domestic market, adding that in line with best practice, it was imperative to periodically review the Master GSAAs to ensure they continue to reflect current market realities.

In addition, he explained that the He expressed optimism that NCELAS would ensure transparency and professionalism in the gas business; monitor activities in the network code; guarantee the updated Master GSAAs templates investments in the gas sector; enable would help promote gas utilization and participation and buoy activities in

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increase domestic gas consumption, Majorwaves Energy Report OCTOBER 2020, Vol 3 No 10

COVER STORY including for the purpose of enhancing power generation, deepening the growth of other gas-based business ventures and accelerating Nigeria’s industrialization.

Petroleum Development Company Limited (NPDC) Engineer Mansur Sambo, noted that 2020 had proven to be a pivotal year for the gas sector notwithstanding the challenges. He said:

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“The Federal Governments’ prioritisation of this sector through its strong support for the Ajaokuta-Kaduna-Kano (AKK) Project, OB3 project, NPDC business expansion and the Petroleum Industry Bill (PIB), are huge enablers for oil and gas based industrialisation Mr. Olalekan Ogunleye,

He added that the GACN was engaging with stakeholders having the hope that the review of the document would expedite negotiation and execution of transaction documents; incentivising payment and contract performance; and minimisation of risks and potential for contract disputes. Ogunleye noted that it would also facilitate new investments in the gas sector; promote contract flexibilities consistent with market realities; facilitate gas trading and gas swap transactions; and transactional cost reduction for the gas sector.

and sustainable economic development and growth for Nigeria. “The Honourable Minister of State, Ministry of Petroleum Resources’ declaration of 2020 as the Year of Gas is backed-up by several game changing initiatives such as the National Gas Expansion Programme, nationwide gas penetration initiative through the Liquefied Natural Gas-Compressed Natural Gas, CNG, nationwide roll-out, ongoing domestic gas price review, among others, all providing further positive impetus. “It is in the foregoing context that GACN’s current effort to secure broad industry alignment on improvements to the key gas commercialization document — the Gas Sale and Aggregation Agreement (GSAA) — is most welcomed. “It is also pleasing that

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Engineer Mansur Sambo,

On his part, Chairman of GACN and Managing Director, Nigerian

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other gas sector value expansion documents such as the Gas Swap Framework and the Interruptible Gas Sale Agreement (IGSA) Master template would be considered.”

CBN’s N250bn Fund Furthermore, to support the Federal Government’s gas expansion drive,

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the Central Bank of Nigeria (CBN) in collaboration with the Ministry of Petroleum Resources, have set up a N250 billion intervention fund to help stimulate investment in the gas value chain, under the NGEP. In it s ‘Fram ework for th e Implementation of Intervention Facility for the National Gas Expansion Programme,’ released few weeks back, the CBN stated that the interest rate under the intervention facility shall be at not more than 5.0 per cent per annum, all inclusive, up to 28th February 2021, thereafter, interest on the facility would revert to nine per cent per cent effective from 1st March 2021. The apex bank explained that

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large-scale projects under the intervention would be financed under the Power and Airlines Intervention Fund (PAIF), in line with existing guidelines regulating the PAIF, while

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small-scale operators and retail distributors would be financed by the NIRSAL Microfinance Bank (NMFB) and/or any other Participating Financial Institution (PFI) under the Agribusiness/Small and Medium and Medium Enterprises Investment Scheme (AgSMEIS).

COVER STORY

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Projects eligible for financing by the intervention fund, according to the CBN, included the establishment of gas processing plants and small-scale petrochemical plants; establishment of gas cylinder manufacturing plants; establishment of Liquefied Compressed Natural Gas (L-CNG) regasification modular systems; establishment of auto gas conversion kits or components manufacturing plants and establishment of CNG primary and secondary compression stations.

The fund would also finance the establishment and manufacturing of Liquefied Petroleum Gas (LPG) retail skid tanks and refilling equipment; development/enhancement of auto gas transportation systems, conversion and distribution infrastructure; enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets. Others are the establishment/ expansion of micro distribution outlets and service centres for LPG sales, domestic cylinder injection and exchange; and any other mid to downstream gas value chain related activity recommended by the Ministry of Petroleum Resources (MPR). The CBN disclosed that the initiative, which was to be implemented in collaboration with the MPR, was

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aimed at improving access to finance for private sector investments in the domestic gas value chain;

stimulate investments in the development of infrastructure to o p t i m i s e t h e d o m e s t i c gas resources for economic development; fast-track the adoption of CNG as the fuel of choice for transportation and power generation, as well as LPG as the fuel of choice for domestic cooking, transportation and captive power. It also added that the initiative was

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targeted at fast-tracking the development of gasbased industries particularly petrochemical (fertilizer, methanol, among others) to support large industries, such as agriculture, textile, and related industries; providing leverage for additional private sector investments in the domestic gas market; and boosting employment across the country. Term Loan The CBN further stated that manufacturers, processors,

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wholesale distributors, among others shall be eligible for a maximum term loan of N10 billion per obligor and a working capital of a maximum of N500 million per obligor; while Small and Medium Enterprises (SME) and retail distributors are entitled to term loan and working capital of N50 million and N5 million respectively, maximum.

In terms of loan tenor and moratorium, the CBN said: “For ma n u f a c ture r s , p ro ce ss o r s , wholesale distributors among others, term loans shall have a maximum tenor of 10 years (not

exceeding 31st December 2030) depending on the complexity of the project. Each project tenor shall be determined in relation to its cash flow and life of the underlying collateral. “Term loans shall be allowed maximum of two years moratorium on principal repayment only; working capital facility of one year with a maximum rollover of not more than twice, subject to prior approval. “For Small & Medium Enterprises (SMEs) and Retail Distributors, term loans shall have a maximum tenor of five years (not exceeding 31st December, 2030). Each project tenor shall be determined in relation to its cash flow and life of the underlying collateral. “Term loans shall be allowed a maximum of two years moratorium on principal repayment only; working capital facility of one year with a maximum rollover of not more than twice and subject to prior approval.” The CBN stated that on repayment of the facility as it concerns deposit money banks, monthly interests on the facility would be amortised and transferred to it monthly; while for Nirsal Microfinance Bank (NMFB) interests on the facility would be paid monthly after the moratorium period.” From the foregoing , if the various initiatives by the Federal Government and other stakeholders’ are implemented effectively, the immense potential of the Nigerian gas industry would be fully unleashed and the sector would be able to make the necessary contributions to the growth and development of the Nigerian economy.

Godwin Emefiele

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POWER

FG Borrowed N1.7 Trillion in Three Years from CBN to Sustain Subsidy Payment for Electricity – World Bank

he World bank has disclosed that since 2017, Federal Government has borrowed about N1.3 trillion from the Central Bank of Nigeria (CBN) to sustain electricity subsidy payment in the form of covering tariff shortfalls. According to THISDAY, the Bank also stated that about 80 per cent of subsidy the Federal Government provides in the electricity sector benefits mostly the country’s wealthy citizens with only two per cent of such getting to the poorest population. The bank also stated that since 2017, the government has borrowed about N1.3 trillion from the Central Bank of Nigeria (CBN) to sustain the subsidy payment in the form of covering tariff shortfalls. It disclosed this in a program appraisal document on a proposed credit worth $750 million which it intends to extend to Nigeria under the Power Sector Recovery Programme (PSRP) jointly developed to revamp the country’s power sector. In the document, the bank explained that the country cannot continue to

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fund electricity tariff shortfalls which is rising annually and would have to allow for a cost-reflective tariff in the sector. The Bank stated: “The significant fiscal resources spent on funding tariff shortfalls disproportionately benefit the (relatively) rich Nigerians.” It noted that the power sector’s revenue shortfalls have been on the rise and could reach N4.3 trillion by 2023.

and less than 2 per cent benefits the poorest 20 per cent,” said the Bank in the document which outlined how the proposed loan would be administered. It further stated that, “the FGN cannot afford inaction. If the issues discussed are not addressed, the fiscal burden of the sector will continue to rise, and the sector will continue to seriously hinder economic growth.

“While access to grid electricity of the poorest 40 per cent, ranked by per capita household expenditures, is 37 per cent, 68 per cent of the richest 60 per cent reported access to the grid. Living in more affluent neighbourhoods, the top 60 per cent also experienced fewer outages, and spent almost twice as much on electricity as the bottom 40 per cent.

“For 2020-2023 under an inaction scenario; annual tariff shortfalls will total N3,082 billion (US$7,937 million) with aggregate tariff shortfalls for 2017-2023 reaching over N4.3 trillion (US$12.0 billion). COVID-19, decline in oil prices and the economic downturn projected for Nigeria will likely further aggravate the precarious financial situation of the power sector, making the need for action even more urgent.”

“As a result, the fiscal expenditure on tariff shortfalls largely benefits the rich. Eighty per cent of the fiscal expenditure on tariff shortfalls benefits the richest 40 per cent of the population, while only eight per cent benefits the bottom 40 per cent,

To ensure that power generation companies (Gencos) and gas suppliers received sufficient payments to continue generating electricity, the bank explained that the government has borrowed from the CBN a total of N1.301 trillion since 2017.

POWER “The debt service obligations for the CBN PAF is a significant fiscal burden on FGN, at N198 billion (US$550 million) per year from 2020 to 2027 per the original agreed term-sheet. The original PAF was unconditional and was used by NBET to supplement the remittances of Discos and ensure at least 80 per cent payment to Gencos.” “The PAF expansion (approved by the FGN in May 2019) is conditional and underpinned by an accountability framework. Power sector shortfalls are rising and are fiscally unsustainable. From 2015 to 2019, the tariff shortfalls – the difference between allowed tariffs and cost-reflective tariffs, which the FGN is responsible for funding, increased significantly as allowed tariffs stayed flat while the costreflective tariff increased due to FX depreciation and inflation.

“In 2019, with tariffs at only 56 per cent of cost-reflective levels, the annual tariff shortfall was estimated at N524 billion (US$1,718 million). Tariff shortfalls between 2017- 2019 totalled N1,249 billion (N1.2 trillion). This situation is not fiscally sustainable and takes away resources for human and physical capital investment – in 2019 the FGN budget was only N428 billion (US$1,403 million) for health and N650 billion (US$2,131 million) for education,” it added. The Bank equally stated that it has identified risks that could derail the implementation of the PSRP, and which include political and governance, macroeconomic, sector strategies and policies, institutional capacity for implementation and sustainability, as well as stakeholders and operational risks associated with distribution constraints.

According to it: “Macroeconomic risk is rated high, as a result of the significant uncertainty over key macro-fiscal parameters and the heightened macro risks related to COVID-19. In 2020, COVID-19, decline in oil prices and the projected economic downturn for Nigeria will likely further aggravate the precarious financial situation of the power sector making it challenging to implement the PSRP financing plan. “Op erational risk linked to distribution constraints is rated high. The program’s objectives will not be achieved if the existing constraints in the distribution segment are not addressed. The program thus has a strong focus to incentivize improved performance by Discos and to strengthen regulatory oversight and accountability.”

DisCos to Repay CBN N9.96bn Debt in Four Months

lectricity distribution companies in the country are expected to repay in four months N9.96bn of the debts owed to the Central Bank of Nigeria, according to Punch.. In September 2014, about a year after the privatisation of the power sector, the CBN introduced a

N213bn intervention fund, called the Nigeria Electricity Market Stabilisation Facility (NEMSF). The NEMSF, a loan facility with a 10year repayment period, was meant to assist the generation companies and the Discos to settle legacy gas debts, execute agreed metering and maintenance programmes,

and finance procurement of transformers and other equipment. The Nigerian Electricity Regulatory Commission, in its Multi-Year Tariff Order 2020 for the Discos, gave the power firms minimum remittance thresholds with respect to the CBN loan.

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POWER Enugu Electricity Distribution Company is expected to repay N1.65bn from September to December; Benin Disco, N1.47bn; Abuja Disco, N1.45bn; Ibadan Disco, N1.25bn; and Kaduna Disco, N1.01bn.

remittance requirement in any payment cycle in accordance with the terms of its respective contracts with the Nigerian Bulk Electricity Trading and the Market Operator, an arm of the Transmission Company of Nigeria.

Port Harcourt Disco is expected to repay N1bn; Jos Disco, N789m; Ikeja Disco, N526m; Kano Disco, N508m; and Eko Disco, N293m.

The Discos recently lamented the impact of the CBN loan on their financial transactions and remittance obligations.

Yola Disco has the lowest payment obligation of N17m in the four-month period, according to NERC.

According to the Association of Nigerian Electricity Distributors, the total amount of Discos’ portion of the CBN NEMSF is N49.9bn and a part of the cash was used as collateral for letter of credit guarantees to banks.

According to the commission, all the Discos are obligated to settle their market invoices in full as adjusted and netted off by applicable tariff shortfall approved by the commission. It said the Discos would be liable to relevant penalties/sanctions for failure to meet the minimum

“The NEMSF loan currently encumbers Discos’ balance sheets and is worsened by the difference in aggregate technical, commercial and collection loss as used in the tariff model versus reality,” it said.

The Discos had early this month announced what they called ‘new service reflective tariff’, which took effect from September 1, with the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply rising by over 70 per cent. The PUNCH reported last week that following the recent increase in electricity tariffs, the 11 distribution companies in the country are allowed to collect a total of N417.09bn from their customers from September to December. The amounts recoverable by the Discos through the allowed enduser tariffs range from 61 per cent to 90 per cent of the total revenue required, according to NERC. The Federal Government would fund a tariff shortfall of N104.5bn that would be recorded by the Discos in the four-month period, the regulator said.

FEC Approves $2m for West African Power Pool 2020 Budget By Ikenna Omeje

he Federal Executive Council (FEC) has approved Nigeria’s contribution of $2 million to the 2020 budget of the West African Power Pool (WAPP), at its 19th virtual meeting presided over by President Muhammadu Buhari. This was disclosed by the Minister of Power, Saleh Mamman, who stated that the specialised pool covers 14 of the 15 countries of the regional economic community, namely Benin, Côte d’Ivoire, Burkina Faso, Ghana, Gambia, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, and Sierra Leone.

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Mamman, who briefed journalists alongside Information an d Culture minister, Lai Mohammed; Digital Economy minister, Dr. Isa Pantami; and Transportation Minister, Rotimi Amaechi, said participating in the regional market would generate immediate foreign exchange for Nigeria as oil revenue is dwindling. “The pool is about having synergy within the West African region. The decision has been taken by ECOWAS, it’s for the generation of electricity in the region, so as to have more constant and steady power supply. It’s like the national grid in Nigeria. So we are going to have regional grid. It means, in case there is a failure in one country, another can supplement. The $2 million is a contribution,” he said.

Also commenting, Mohammed said: “The West African power pool is made up of all West African countries because each member state contributes annually to the cost of power transmission across the pool. Because, the consequence is that if there is a problem in one country, it could inadvertently affect the other country. “This was created in 1999 by authorities of the West African Heads of State. It’s a common pool and every country has its own section and our contribution for this year is $2 million. It’s not as if we are giving $2 million to ECOWAS, we are simply paying our own contribution to the transmission from Nigeria to other West African countries and vice-versa.” WAPP is a specialized agency of the Economic Community of West African States (ECOWAS), which was created by a decision of its highest organ -- Authority of Heads of State and Government in 1999, at the 22nd Summit of the regional group.

ENERGY WOMAN

“...there are a lot of opportunities to pivot, especially with the traditional companies transitioning to integrated energy (and data) companies.” -Mervin Azeta

talents, and promoting higher levels of engagement and internal alignment to sustain solid performance in an increasingly competitive and dynamic marketplace.

Mervin who is a Product and Service Delivery Manager with one of the world’s largest energy service and technology providers, Schlumberger. Currently based in the Republic of the Congo, she focuses on improving the quality of delivery of oil and gas well completion projects, developing

She has been featured in media publications as an influencer and trailblazer, keenly passionate about sustainable development, gender equality, youth engagement as well as cultivating the next generation of female scientists, technologists, engineers, mathematicians and transformative leaders. Mervin serves on multiple boards, inspiring a shared commitment

oung, smart, energetic , hardworking, tenacious and resourceful are words that best describe Mervin Ekpen Azeta, an award-winning Nigerian energy professional, intersectional advocate, and presidential scholar.

to deliver a cleaner, healthier, secure and sustainable energy future for all. Mervin holds a BEng, with First Class Honors, in Chemical Engineering from the University of Benin, as well as an MSc, with Distinction, in Sustainable En e r g y Fu t u re s , M e c h a n i c a l Engineering, from the Imperial College London. Mervin, alongside two other Nigerian women, emerged winners of the ExxonMobil Power Play Awards 2020 announced virtually on September 16, 2020.

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ENERGY WOMAN The program was created to recognize the accomplishments of remarkable women and the men who support and empower them in the LNG industry. She won under the Rising Star category presented to an outstanding female professional, age 35 or younger. In this interview with our Editor, MARGARET NONGO-OKOJOKWU, Mervin speaks about her passion for engineering, challenges faced by female engineers and the future of the oil and gas industry. Excerpts: Congratulations once again on your award as Rising star of the ExxonMobil’s Power Play Awards, how do you feel about this? Thank you very much for the kind words. I am deeply honored to be named the winner of the Power Play Rising Star Award, from amongst an esteemed group of finalists, and I truly appreciate the team at ExxonMobil for recognizing my contributions to making the LNG industry an inclusive, impactful and sustainable one. I am also incredibly grateful to my family, friends, mentors, and employer (Schlumberger) for the exceptional support I have enjoyed in my career. Give us a brief description of your background; how did you rise to become a ‘Rising Star’? I have a bachelor’s degree in Chemical Engineering, with First Class Honors, from the University of Benin; and, a Masters in Sustainable Energy Futures with Distinction, from Imperial College London. I joined the industry shortly after my National Service in 2011. Prior to joining the industry, I made a conscious decision to excel in all that I do and avail myself of opportunities to learn and positively impact others. By the special grace of God, I have been committed to that for as long, and particularly serving the world with my resources and talents through numerous avenues, including corporate work, and extracurriculars in organizations like the World Energy Council, Society of Petroleum Engineers, Society of Women Engineers, amongst others. I

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have also been very passionate about inspiring girls’ interest in STEM, mentoring and supporting others in their careers, and influencing greater access to affordable, cleaner, reliable, smarter and sustainable energy for the millions, who are currently unserved and/or underserved.

“

I made a conscious decision to excel in all that I do

and avail myself of opportunities to learn and positively impact others. And, I have been committed to that for as long, and particularly serving the world with my resources & talents through numerous avenues, including corporate work, and extracurriculars in organizations like the World Energy Council, Society of Petroleum Engineers, Society of Women Engineers, amongst others. I have also been very passionate about inspiring girls’ interest in STEM, mentoring and supporting others in their careers, and influencing greater access to affordable, cleaner, reliable, smarter and sustainable energy for the millions, who are currently unserved and/or underserved. What informed your choice of engineering? An innate desire to tackle the toughest global challenges, and the limitless opportunities engineering provides to make a terrific difference in our world. What can you identify as a major challenge with female engineers? Firstly, the perception that engineering is a tricky discipline and one for the boys; and it gets really complicated when these female engineers are not able to find as many role models or senior female engineers to learn or glean inspiration from, as they progress in their studies. And secondly, there is the broken

rung, which, according to the Lean In & McKinsey’s ‘Women in the Workplace’ report, are obstacles that keep women from advancing in their careers, right at the start of the corporate ladder. A few friends and I could easily have been victims of this systemic barrier, but for the grace of God, the support of mentors/ sponsors and a stern determination to rise above it.

“

these female engineers are not able to find as many role models or senior female engineers to learn or glean inspiration from,

as they progress in their studies. And secondly, there is the broken rung,

ENERGY WOMAN which, according to the Lean In & McKinsey’s ‘Women in the Workplace’ report, are obstacles that keep women from advancing in their careers, right at the start of the corporate ladder. How in your own opinion can these challenges be surmounted? I would state just three things, for now: By encouraging insightful conversations around the challenges, especially within the frameworks of STEM education and diversity, equity and inclusion, as awareness is a critical step; Secondly, we also have to address as many barriers (political, legal,

cultural, structural, and otherwise), stereotypes and unconscious biases adversely impacting the talent pipeline and gender representation across engineering professions; and, Lastly, we need to actively mentor the next generation of innovators, thinkers and leaders so they are properly guided, and equipped to wade through whatever challenges they face. Who’s your role model and what informed your choice? I have several; Jesus Christ, my parents and a good number of phenomenal men and women, who have devoted, and continued to devote, their lives to pleasing GOD, as well as making the world a better,

cleaner, healthier, prosperous and secure place for all. Have you experienced any form of biases due to your gender? How did you handle such? Sure, I have. I find this is a given in our world; and, I clearly understand that I am going to continue to experience some form of bias in and out of the workplace, my country of origin or any other environment. So, I have resolved to never let it get to me. I have called, and would continue to call it out whenever I am able to. I would also have an honest, possibly sweaty palm, conversation, if necessary; and educate as many more women I am able to reach, so we do not stall or lose the progress we are making on diversity, equity and inclusion.

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ENERGY WOMAN Where do you see yourself in 10 years as per career path you desire? Influencing policy, leadership and innovation to deliver an inclusive and sustainable transition to a lowcarbon energy future. You have automatically become a role model to many, what advice do you have for young people like you out there especially young girls aspiring to go the same route of STEM? There is so much you can achieve, if you stay humble and curious, willing to serve with a mix of purpose, courage, kindness and professionalism, and determined to create value. Do not let anyone or anything hold you back or make you feel less of yourself!

“

Be fueled by your fears, instead! Any thoughts of entrepreneurship in the future? I do think

“

How do you see technology changing the landscape of your profession in the future and how are you bracing up for the change? Technology has the potential to fundamentally transform every profession and deliver tremendous benefits in terms of efficiency, reliability, safety and performance, albeit making many jobs redundant, if not extinct. So, I can’t help but embrace it, remain radically curious, constantly reskilling and upskilling to stay relevant, whilst meaningfully contributing to the industry.

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Aren’t you concerned about the future of oil and gas as an engineer presently in the hydrocarbon field? Not quite! I do believe oil and gas will remain relevant for the foreseeable future; and, there are also

“

a lot of opportunities to pivot, especially with the traditional companies transitioning to integrated energy (and data) companies.

entrepreneurship should be an integral part of quality STEM education, and our curricula should be modified to encourage this being taught in schools,

including elementary schools. Helping kids explore their curiosity and creativity, take on challenges with a problem-solving mindset and develop other valuable life skills early on in life would always prove to be highly advantageous when they pursue their respective career paths, in the long run.

ACROSS AFRICA

USTDA Provides Support for Senegal’s First Major Gas Pipeline

arly in September, the U.S. Trade and Development Agency announced grant funding for a feasibility study to develop Senegal’s first major domestic onshore gas pipeline. This project will support cleaner and lower-cost power generation and enhance the country’s economic growth. USTDA’s engagement will help the developer – Fonds Souverain d’Investissement s Stratégiques (FONSIS), Senegal’s sovereign wealth fund – attract financing to the project. A grant agreement was signed in a virtual ceremony that included USTDA Chief Operating Officer, Head of Agency Todd Abrajano, Senegalese Minister of Petroleum and Energy Mouhamadou Makhtar Cisse, U.S. Ambassador to Senegal Tulinabo S. Mushingi, and CEO of FONSIS Papa Demba Diallo. “This pipeline will become the backbone of Senegal’s domestic gas sector and help create the infrastructure to supply the country’s power plants and transform its energy sector,” said Todd Abrajano, USTDA Chief Operating Officer, Head of Agency. “U.S. companies are eager to partner with Senegal on this opportunity, and we intend to make a meaningful difference in the lives of millions of Senegalese by reducing power generation costs by

up to 50 percent.” The USTDA grant will help define the technical specifications and project economics of the onshore pipeline network. Specifically, the feasibility study will recommend a final pipeline route, finalize technical specifications for each segment of the pipeline and define the technical requirements for the front-end engineering and design phase of the project. The study will also verify the gas demand and provide updated economic and financial analysis. “Today, we highlight another example of U.S.-Senegal energy cooperation. The United States Trade Development Agency has approved a grant of nearly $1.3 million to support the development of Senegal’s natural gas pipeline system. This system will help Senegal transition its electricity generation to clean, inexpensive natural gas, using its own energy resources,” said U.S. Ambassador to Senegal Tulinabo S. Mushingi. “This grant from USTDA will help us define the technical specifications and economic aspects of this very strategic project for our country and thus allow us to accelerate its implementation,” highlighted the Chief Executive Officer of FONSIS, Papa Demba Diallo. CEO Diallo

continued “Working with PETROSEN and SENELEC and in agreement with the Ministry of Petroleum and Energy, this is a strategic project that will accelerate the use of gas, especially in electricity production, and contribute to lowering the cost of electricity. This will help spur Senegal’s industrial sector and make our companies more competitive.” “Power Africa applauds Senegal’s efforts to advance their gas capacity for export and domestic use. The U.S. government, through the Power Africa Initiative partnership between USTDA and USAID, supports Senegal’s continued progress towards self-reliance and its stated goal of increasing its generation capacity to 2.5 GW by 2030. The Power Africa-funded Senegal Gas Roadmap, completed in July 2019, proved instrumental in bringing this project to fruition. We look forward to working with our partners to support Senegal’s ongoing work towards energy independence,” said Mark Carrato, U.S. Power Africa Acting Coordinator. This project supports the U.S. government’s Power Africa and Prosper Africa Initiatives, as well as USTDA’s U.S. Gas Infrastructure Exports Initiative.

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ACROSS AFRICA

Equatorial Guinea to Build its First Modular Refinery in Punta Europe

abriel Mbega Obiang Lima during the presentation of the Punta Europa Modular Refinery project at Hotel Colinas in Malabo explained in reference to the delay that meant that Equatorial Guinea had its own national refinery. “The scenario of equipping the country with its own refinery had not yet been handled since the exploitation of hydrocarbons began, due to viability issues, costs and the financing involved,” To date, it uses the international ones. For the mining department, the start-up of the aforementioned refinery, among the objectives it pursues, is the avoidance of stock breaks and the supply of refined products to national consumers, taking into account the strategic role of the national economy . According to technical feasibility study, the project will consist of two phases; The first, the installation of a CDU unit and its auxiliary equipment will be carried out, within a completion period of 20 to 24 months, while the second, the reformer for gasoline production

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will be installed, with the period of 30 to 36 months. According to the technicians of the oil company, Marathon GE and the Ministry of Mines, two scenarios are being considered for the implementation of this project. On the other hand, with a refining capacity of 10,000 barrels / day, more than 200 million US dollars would be needed, with an estimated income in the first year of 67.6 M $ and amortization in 34 months; and the other refinement scenario of about 5,000 barrels per day, which they project at the best, more than $ 147M will be needed, while it is estimated that around $ 13M can be raised with a repayment plan of 60 months. The raw material that will be used in the facilities will be the condensate produced in the Alba and Alén fields, which is expected to produce up to a total of five crude derivatives, such as gasoline, kerosene, diesel, Jet Fuel and the Naptha in light and heavy state, whose work will be carried out by VFUELS OIL & GAS COMPANY.

One of the points that are still uncertain in this project, Ministry of Mines and Hydrocarbons claims, is the question of financing shareholders. As Mbega Obiang Lima pointed out, Equatorial Guinea will only have a minimum percentage of participation, which today is estimated at 20%, while 80% would be distributed in private sector investment companies. The possible economic results that the ministry of Mines and Hydrocarbons presented seem very optimistic, with the price of condensate projected at $ 55 a barrel, which implies a discount from Brent, although it has not been determined whether the price of fuel that is now being Paid in the country will be reduced taking into account that the State will have to stop incentivizing the price as it continues to do to date, but with total security, the ordeal of fuel shortages, especially gasoline, will be history in the country, since the main target market will be domestic consumption, although it is not ruled out that it will be sold abroad in the event of a surplus.

ACROSS ACROSSAFRICA AFRICA

India’s African Oil Imports Hit 10-Month High in August

ndia’s oil imports from Africa jumped to their highest in 10 months in August as refiners switched out more expensive crude from the Middle East, shipping data provided by trade sources showed. The world’s third biggest oil importer shipped in about 3.95 million barrels per day (bpd) of oil in August, the highest volume since April, with African nations accounting for about 17.5per cent, or an eleven month high of 688,000 bpd, the data showed. “Spot prices of west African oil versus Brent were down in the most part of July compared with June. That along with lower freight offered an opportunity to buy Nigerian oil,” said Ehsan Ul Haq, analyst with Refinitiv. He said in order to raise revenue, Nigeria was supplying more oil in July than it pledged under a production cut agreement between OPEC and its allies, while Angola was scouting for a new market after the Chinese cut purchases. “And the new home was India.” An internal OPEC report showed Iraq and Nigeria were the least compliant over the May-July period. Strengthening diesel cracks also prompted Indian refiners to buy African grades, while an increase

Angolan 2020 Onshore Bid round to Open in January 2021

in official selling prices by key gulf producers including Saudi Arabia deterred them, Haq said. India also shipped in Venezuelan oil in August after a gap of two months as Reliance Industries obtained permission from the US to swap diesel for oil. Higher intake of Nigerian and Venezuelan oil lifted the share of OPEC’s oil in India’s overall August imports to 77.6per cent, the highest since January, from 67.2per cent last month, the data showed. OPEC’s share was, however, at a record low over the April-August period, the first five months of the fiscal year. The share of Middle Eastern oil shrank to 62.4per cent, the lowest in three months, from 71.3per cent last month, while that of Latin America rose to 9.7per cent from 6.3per cent. During the month Iraq remained the top oil supplier to India followed by Saudi Arabia and United Arab Emirates. Nigeria, which was the 8th largest supplier to India in July, rose to No.4, pushing the US to fifth position. Kuwait stayed at No. 6 while Venezuela, replaced Colombia, as the seventh top supplier.

ngola 2020 Onshore Bid Round will officially open in January 2021 and bids must be submitted by March 10th 2021.

Nine blocks are on offer, in the Lower Congo and Kwanza Basins. The country’s International Competitive Bid Round for oil gas licenses, announced last year, is a scheduled offering for onshore and offshore, in the period 2019-2025. Last year, Angola’s National Agency of Petroleum, Gas and Biofuels (ANPG), awarded three blocks: 27, 28, and 29, offshore in the deepwater Namibe Basin. This year, the bidding plans have been disrupted by COVID-19 complications. The blocks on offer are CON1, CON 5, CON 6, KON 5, KON 6, KON 8, KON 9, KON 17 & KON 20 (See map here), located in the Lower Congo Basin and the Terrestrial Kwanza Basin. Data available includes 2D seismic coverage of the Lower Congo Basin, a recently updated Geological Map and Database of the Onshore Kwanza Basin and a compilation of recent aeromagnetic data covering the Transition Zone and Shallow Waters of the Lower Congo and Kwanza Basins.

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ACROSS AFRICA

Africa’s Natural Gas Projects Are Crucial for Global Energy Transition – NLNG GM

frica’s natural gas projects are crucial to the energy transition and economic d eve l o p m e nt in t h e region and can be used to power industrialisation while reducing the emissions released into the atmosphere, said Leye Falade, General Manager of Production at Nigeria LNG (NLNG) at ADIPEC Energy Dialogue held recently. Natural gas is an integral part of the global energy story accounting for 25% of the global energy that is consumed. With a total proven natural gas resource estimated to be about 600 trillion CFT (ft3), the opportunities for natural gas in Africa are enormous. Falade highlighted that gas is cheaper, cleaner, and more available than the traditional oil forms, and it can support realistic transitioning to the new energy world order. Speaking about NLNG’s latest expansion programme – the Train-7 Project – which will increase the company’s production capacity by 35% from the current 22 million tonnes per annum (mtpa) to 30mtpa, Falade pressed upon the importance of the project to all stakeholders as it is expected to increase Foreign Direct Investment (FDI) inflow into Nigeria by more than US$7bn over the next five years. With the addition of Train-7 and the increase in production capacity,

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NLNG will stand a chance to maintain its position as the sixth major supplier of LNG, globally. The project is anticipated to create more than 12,000 new jobs directly, and more than 40,000 indirectly, particularly during the construction stage. According to Falade, while COVID-19 has the potential to limit some of the project activities that can be carried out for a period of time, this is not expected to affect the overall cost of the project significantly. He also said that the Engineering, Procurement, and Construction (EPC) contract for Train-7 is progressing well under the approved COVID-19 restricted contractor’s decision strategy and various stakeholder engagements have been initiated to ensure that any possible unforeseen risks are mitigated. Meanwhile, when it comes to the volatility in global oil and gas prices, Falade believes that with lower oil prices, there are also opportunities. “As 2020 has become a year of survival, and companies started operating in crisis mode, this has enabled us to have more control of our costs and make prudent calls to keep the business afloat,” he explained. “Ultimately, no-one in the industry can run away from the impact of COVID-19. Now is the time for companies to showcase whether they have the ability to stay in the game during the ‘lower-for-longer’ cycle in the industry by remaining

profitable while not compromising their ability for sustained existence,” he added. Addressing the opportunities for international industry stakeholders in the Nigerian gas market, Falade said that they now have the opportunity to participate in the areas of service and manufacturing by partnering with local Nigerian companies and service providers. They can also support Nigerian companies wanting to utilise LNG as an alternative clean energy source, as well as financing the needs of the partner company when it is required. The ADIPEC Energy Dialogue is a series of weekly online thought leadership events created by DMG events, organisers of the annual Abu Dhabi International Exhibition and Conference. Featuring key stakeholders and decision-makers in the oil and gas industry, the dialogues focus on how the industry is evolving and transforming in response to the rapidly changing energy market. With this year’s in-person ADIPEC e x h ib i t i o n a n d c o n f e r e n c e postponed to November 2021, the ADIPEC Energy Dialogue, along with insightful webinars, podcasts, and online panels continue to connect the oil and gas industry, with the challenges and opportunities shaping energy markets in the run-up to and following, a planned four-day livestream virtual ADIPEC conference taking place from 9-12 November

SOCIAL INVESTMENT

NNPC, TOTAL, Partners Commission Women & Youth Development Centre in Umuahia

n continuation of their social corporate responsibility programme targeted at empowering vulnerable women and youths across the country, NNPC, Total and partners have officially handed over a women and youth development centre in Umuahia, to Abia State government. The state-of-the-art facility consists of four fully equipped halls for the training of fashion designing and tailoring with 34 industrial sewing machines, industrial weaving machine and embroidery machine as well as catering and hotel management. Others include, computer training and mixed training facility, a sick bay, 400 sitter a u dito rium a n d lo un ge and, thereâ&#x20AC;&#x2122;s is also an accommodation for 16 persons, 40KVA generator and 12KVA inverter for solar panels. In an address the General Manager, CSR, on behalf of

the Managing Director/Chief Executive, Total Upstream Nigeria Limited, Mike Sangster noted that Total commenced its robust plan to deploy CSR infrastructure developments across the country, adding that 33 project were launched in 2017 covering education, health, capacity building and access to water across the country, including the woman and youth development centre Umuahia, Also speaking, the Group General Manager (NAPIMS), Bala Wunti represented by Bumi Lawson said the completion and inauguration of the women and youth development centre is in furtherance of the corporate social responsibility initiative through the Oil and Gas Sector across Nigeria He said in NNPC, the vision for social intervention is to continue to operate in an ethical and sustainable manner.

the Secretary to the State Government, Christian Exem thanked the NNPC and Total Upstream for their unique display of corporate social responsibility adding the facility provided will help the women and youths of Umuahia become empowered, create employment and make them entrepreneurs His Royal Majesty Joseph Ndubusi Nwabeeke thanked the NNPC and Total Upstream and partners for the facility saying that Abia is blessed to receive what he called a precious gift from the oil industry. The Abia State commissioner for Wom en an d Yo uth Development Affairs, Ukachi Constance Amaka who added her voice to the encomium like Oliver Twist, called for the empowering of women and youths after the training.

The Abia State governor who was represented by

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SUSTAINABILITY

Nigeria to Take Steps in Undoing Biodiversity Loss By Jerome Onoja

resident Muhamma du Buhari has listed a number of steps towards reversing some biodiversity loss of flora and fauna that are peculiar with Nigeria and already on the brink of going extinct. According to the President’s Special Adviser on Media and Publicity, Mr. Femi Adesina, this was made known by the President to a virtual audience at the 2020 Biodiversity Summit, held on the margins of the 75th UN General Assembly, in New York. Buhari said: “Regrettably, most of the indigenous flora and fauna commonly found within the country are becoming endangered and facing extinction. ‘’To reverse this situation, we have developed the National Biodiversity Strategy and Action Plan as an enabler for integrating biodiversity considerations into sectoral and cross-sectoral policies, plans and programmes at all levels of government. ‘’We are reviewing our biodiversityrelated laws and developing shelter belts across 11 states in the country.

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In addressing biodiversity loss, we are implementing the Hydrocarbon Pollution Remediation Programme in Ogoniland. ‘’The on-going clean-up is another landmark in the ecosystem restoration initiative of our administration. It is aimed at improving livelihoods of communities in the South-South Region of the country,’’ he said. Also, he noted that tackling illegal wildlife activities is helping to prevent extinction, while establishing a nature-based tourism sector. He affirmed the nation’s commitment to the Nagoya Protocol on Access to Genetic Resources, the Fair and Equitable Sharing of Benefits Arising from their Utilisation, as well as the Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety. The president said: “Concerning ocean governance and marine biodiversity protection, Nigeria is among the first twelve countries to sign onto the 30 by 30 Global Ocean Alliance.

‘’Accordingly, we have identified two viable sites for the establishment of Marine Protected Areas to help in the protection, conservation and management of both marine and coastal biodiversity resources. ‘’Leveraging on the Strategic Action Plan of the Lake Chad Basin, Nigeria is spearheading sub-regional biodiversity action to mitigate insecurity, provide jobs, boost agricultural output, food security and reduce poverty. ‘’Towards the delivery of our biodiversity aspiration, Nigeria has concentrated on the provision of the Convention on Biological Diversity, the Protocols adopted un der th e Convention an d oth er releva nt m ultilateral environmental agreements into national environmental policies and programmes,’’ he said. Highlighting benefits of Nigeria’s national forest policy introduced earlier in the year, he noted that it would spur socio-economic growth and development.

SUSTAINABILITY ‘’Furthermore, we are currently implementing a national programme on Reducing Emissions from Deforestation and Forest D egra dation , a m echanism developed by Parties to the United Nations Framework Convention on Climate Change.

NCF Calls for Concerted Effort to Preserve Environment

‘’This programme is aimed at discouraging deforestation , conserving already existing forests, enhancing carbon stock and mitigating climate change impact. ‘’We have also facilitated the designation of Finima Nature Park in Bonny Island, Rivers State as the 12th Ramsar Site of international importance. ‘’The government is equally incorporating biodiversity into tourism sector through a national programme targeted at combating illegal wildlife trade and trafficking in two pilot protected area sites, namely: Gashaka-Gumti National Park; and Yankari Games Reserve,’’ Buhari added. The summit availed the President an opportunity to restate Nigeria’s commitment to a Post-2020 Global Biodiversity Framework, building on the Aichi Biodiversity Targets, adding that Nigeria’s national mangrove restoration project would ensure multiple benefits to its Niger Delta region. He also canvassed for the international community’s support of the sub-regional efforts to raise $50 billion towards recharging the Lake Chad. ‘’In order to ensure that no country is left behind in meeting the 2050 Vision for Biodiversity, Nigeria enjoins advanced economies to support developing nations with capacity building, technology transfer and technical assistance. ‘’I firmly believe that traditional knowledge, innovation and the application of nature-based solutions are plausible steps to drive the biodiversity agenda,’’ he said.

he Nigerian Conservation Fo un dation (N CF ), on Wednesday, called for a concerted effort toward the protection of the environment and the conservation of nature. The foundation made the call at its 31st Annual General Meeting (AGM) in Lagos. Welcome participants, Chief Philip Asiodu, President, Board of Trustees of NCF, said that the foundation had identified the need to partner with religious organisations and groups in this direction. “This metamorphosed into the creation of a Nigerian faith-based initiative on the environment. “Also, during the year, NCF partnered with the West African Forest Plantations Limited (WAFP) to conduct a field assessment of the Oluwa Forest Reserve in Ondo State,’’ Asiodu said. According to him, the partnership is aimed to evaluate the potential for the rehabilitation and sustained management of a 32,000 hectares forest plantation in the reserve and

its surroundings. “This is to support the ongoing conservation efforts around a proposed wildlife sanctuary within the reserve. He said Nigeria was among the five countries with the highest rate of deforestation in the world. The country, he said, is at the risk of losing its biodiversity-rich rainforest landscapes which are among key hotspots in Sub-Saharan Africa. He noted that the remnant forest landscapes in South-Western Nigeria were now highly degraded and fragmented. “But the forest still harbour flagship species of high conservation value such as the African forest elephant, Nigeria-Cameroon chimpanzee and white-throated monkey, all of which are critically endangered. Chairman of NCF, Chief Ede Dafinone, in his presentation, remarked that the establishment of the NCF SouthWest Zonal Office in 2019 was timely. Dafinone said that NCF was rallying support, building partnerships and catalysing actions in aid of reversing forest landscape degradation.

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SUSTAINABILITY SUSTAINABILITY “We are quite excited that NCF and Total E&P Ltd have built on contacts initiated last year and signed a Memorandum of Understanding, which is set to result in the promotion of habitat restoration, nature and conservation.

remained a strong voice in the advocacy campaign and awareness creation for the conservation of endangered species like vultures, illegal wildlife trade, like the pangolin, adjudged most trafficked mammal in the world.

He said that environmental education, ecotourism, research, policy advocacy, public engagement, preservation of cultural heritage and integration as well as the provision of other tangible and intangible benefits to the environment and people of Nigeria were being promoted through this partnership.

In his contributions, D-G NCF, Dr Muntari Aminu-Kano said that eradicating the ongoing loss of nature globally and in Nigeria was a herculean task.

The chairman also said that the foundation is also “jointly working with Shell Petroleum Development Company (SPDC) to implement a four-year Biodiversity Action Plan (BAP) project at the SPDC’s Integrated Oil and Gas Project Site bordering Taylor Creek Forest Reserve and some portions of Upper Orashi Forest Reserve at GbaranUbie in Bayelsa’’. Dafinone explained that NCF has

Aminu-Kano said that the enormity “is graphically illustrated by a report of UN experts from more than 50 countries that was released in March 2019’’. He said that the assessment by the Inter-governmental Platform on Biodiversity and Ecosystem Services (IPBES) shows that more than a million species are on the brink of extinction due to human activity. “It also highlights that we are in the middle of the sixth mass extinction. “Habitat change, especially from deforestation as a consequence of

agricultural expansion, is the major driver. “This is true in Nigeria as well as across the globe,’’ the DG said. In view of this erosion of nature and the environment, he said that NCF would continue to focus on its Green Recovery Nigeria (GRN) programme to tackle the loss of nature crisis in our country. He said that during this past year, NCF has perfected plans and assembled all the key human, financial and technical resources with one ambition of planting at least 2.5 million trees across Nigeria in 2020. “This will form 10 per cent of President Muhammadu Buhari’s commitment to the United Nations in September 2019 that Nigeria will plant 25 million trees in 2020. The News Agency of Nigeria (NAN) reports that the AGM was held virtually in compliance with the COVID-19 pandemic protocol.

INFRASTRUCTURE

Nigeria’s Edo Modular Refinery to Increase Production to 60,000bpd

igeria’s Edo Modular Energy refinery is set to increase crude oil production from 6,000 barrels per day (bpd) to 60,000 bpd. The project, which is being developed by two Chinese firms; AIPCC Energy Limited and the Peiyang Chemical Equipment Company Limited, is expected to commence operations in October. The first phase will produce 1,000 bpd, while the second phase will produce 6,000 bpd; with a long-term goal of producing 60,000 bpd. Phase one – which is almost complete – will target a production ratio comprising 55 percent diesel, 38 percent fuel oil and less than 10

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percent naphtha. According to AIPCC Energy Limited Head of Quality, Health and Safety/ Community Relations, Segun Okeni.,“Some of the products will be exported to boost foreign exchange earnings and by the time we extend it into different phases. We would be able to take care of more than 80 percent of diesel requirement in Nigeria. That is the vision we have for the next five years.” The investment will benefit the Edo people through job creation, increased revenue and ease of pressure on other refineries.

In a recent statement, the Chairman of ERPC, Michael Osime, said the refinery is set to earn about $125m foreign exchange from the exportation of naphtha. The refinery, which benefits from the Federal Government’s ease of doing business programme through which it granted fiscal incentives such as duty waiver on importation of equipment, has reached 90 per cent mechanical completion and efforts are in top gear to beat commissioning deadline, with a team of over 250 locally-recruited engineers, fabricators and other workers engaged on the project.

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Majorwaves Energy Report October 2020

Articles inside

US Tribunal orders Inter Ocean Oil to pay FG $660,000 Arbitration Cost

Equatorial Guinea to Build its First Modular Refinery in Punta Europe

FG Borrowed N1.7 Trillion in Three Years from CBN to Sustain Subsidy Payment for Electricity – World Bank

Energy Transition: Shell to Slash Oil and Gas Production Cost by Up to 40 Percent

Deregulation: Nigeria to Become Refining Hub - MOMAN

DisCos to Repay CBN N9.96bn Debt in Four Months

NNPC, TOTAL, Partners Commission Women & Youth Development Centre in Umuahia

SEPLAT Activates Investigation Team on Okpe, Sapele Incident