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US Tribunal orders Inter Ocean Oil to pay FG $660,000 Arbitration Cost
Aiteo, Two Others Record Highest Jump in NEITI’s Oil and Gas Compliance Assessment 2019
By Ikenna Omeje
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Aiteo Eastern Exploration and Production Company. Ltd., Neconde Energy Limited, and Network Exploration and Production 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
Benedict Peters
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 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.
“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.
339 Companies Bid for 2020/21 Crude Oil Sales Contract – Kyari
Daniel Terungwa
No 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
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
Mele kyari
Umar Ajiya, NNPC Chief 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.
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.
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.
“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.
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.
NNPC Releases 2019 Audited Financial Statement, Reduces Loss by 99.7 %
Barely 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.
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.
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.
Baruwa: No Pipeline Near Location of Lagos Gas Plant Fire – NNPC
The Nigerian National Petroleum Corporation, NNPC says none of its pipelines are located anywhere close to the location of the Baruwa gas fire incident in Lagos, adding that it has mobilized
The Nigerian National Petroleum Corporation (NNPC) has commiserated with the Lagos 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 Corporation’s Group General Manager, Group Public Affairs Division, Dr Kennie. 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
control.
The Corporation gave this clarification while commiserating with the Government and people of Lagos State, and particularly the residents of Baruwa area, on the 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 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
Otedola Bridge Explosion: NNPC Commiserates with Victims, Lagos Government
property 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
NLNG Generates $110bn Revenue — Mai-Bornu
...to deliver 350,000MT LPG annually
The Deputy 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.
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.
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.
Mai Bornu
“The future envisaged at that time is our current reality today and Nigeria LNG has actualised the objectives.
“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 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.
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 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.
“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.
“This intervention is NLNG’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
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
Bayo Ojulari
The 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, 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
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. “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 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
Local Content: Shell Urges Nigerian Companies to be Creative, Collaborate to Benefit from Opportunities
to deliver Train 7.” 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.”
With the extension of the 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
On Oct. 1, 1960, 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 infrastructure. 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.
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. 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
Buhari Reappoints Wabote, Bosses of PTDF, PEF
Angola Publishes Local Content Law Promoting Angolanization of the Oil and Gas Sector
By Margaret Nongo-Okojokwu
President 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 their appointments were 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.
“Ahmed Bobboi gets his 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.
LOCAL CONTENT
NCDMB Lauds Total E&P, PCN On Ikike Line Pipe Coating Project
....Project Creates 300 Jobs
By Margaret Nongo-Okojokwu
The Nigerian Content 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 nation’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
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.
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 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
By Margaret Nongo-Okojokwu
As part of the initiatives
project timelines. 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.”
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.
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.
NCDMB, NITDA Collaborate on Local Content Development
By Margaret Nongo-Okojokwu
The 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 collaboration with NIMASA, 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 motherboards, electronic 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.
NOGICD Act Amendment: NCDMB, PETAN, OPTS, Others Oppose Increase of Content Fund To 2%, Commission Bill
By Margaret Nongo-Okojokwu
The Nigerian Content 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 leading oil industry 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
Industry Content Development Act 2010 and enact Nigerian Local Content Development and Enforcement Commission Act.
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.
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 Secretary 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 a paradigm shift from the dollardenominated provision to a bicurrency model,” the Executive Secretary explained.
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. “
On the proposal to impose administrative sanctions 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
The 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.
According to him, contracts that are not more than N5 billion are to be exclusively for indigenous firms for bidding, award and execution.
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
February 5, 2018, which seeks to improve local content procurement with regards to science, engineering and technology components of the economy,” Folarin said.
Sylva Visits Lee Engineering, Says FG Plans to Increase Local Content Policy To 70%
The Minister of State for Petroleum, Chief Timipre Sylva, says the Federal Government plans 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 activities, 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 Government would support 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.
FG Approves Construction of $462m Deep Seaport at Bonny Daniel Terungwa FG to Shutdown Bonded Terminal Over Illegal Charges in Efficiency.
The Federal Executive Council (FEC) has approved the construction of a deep seaport at Bonny at the cost of $461,924,369.
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).
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 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 of a deep seaport in Bonny under PPP (public private partnership) and construction of a railway industrial park in Port Harcourt,” he said.
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.
The industrial park, which is under PPP, will cost $241,154,389.31 at no cost to federal government.
“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.
The 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.
Onne Shipyard to Create more than 1000 jobs – Ogbeifun
Daniel Terungwa
The 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 stakeholders recommended 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.
Nigeria’s Cocktail of Policies towards Gas Revolution
By JEROME ONOJA AND AMOS IKE
Global 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
presented by gas.
Nigeria proven gas reserves is currently put at about 203.16 trillion cubic feet, and despite this huge quantity, “ Nigeria’s gas utilization still
ranks low among its peers globally.
To put the situation in perspective, the Petroleum Products Pricing Regulatory Agency (PPPRA), for instance, recently disclosed that “ 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.
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 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
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
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 “ 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.
flared between January and December, valued at $1.6 billion, an equivalent of N592 billion.
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. “ 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.
Chief Timipre Sylva
Specifically, Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed that the declaration 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 production, stable and predictable gas pricing framework, Nigeria will be able to attract further investment in this sector of our industry. “ “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
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
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
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.
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.
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 autogas policy, seeking to encourage motorists to convert their vehicles in order to run on LPG, CNG or LNG.
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
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.
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.
“However, because of the 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.
Vice President Yemi Osinbajo
The initiative was constituted and 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
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.
The programme is targeted at deploying Nigeria’s immense resources in Liquefied Petroleum Gas For affordable energy and sustainable economic growth.
Gas Transportation Code Furthermore, the Federal 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 “ 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 interventions, 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 “ DPR has developed the Network
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.
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 These critical milestones, according to him, included extensive network stakeholders’ engagement; 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. In addition, he explained that the NCELAS would ensure transparency and professionalism in the gas business; monitor activities in the network code; guarantee investments in the gas sector; enable participation and buoy activities in
“all the critical milestones required to make the network code go live had been achieved.
Engr, Auwalu Sarki,
the sector.
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,
“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.
He expressed optimism that “ the updated Master GSAAs templates would help promote gas utilization and increase domestic gas consumption,
including for the purpose of enhancing power generation, deepening the growth of other gas-based business ventures and accelerating Nigeria’s industrialization.
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.
Engineer Mansur Sambo,
On his part, Chairman of GACN and Managing Director, Nigerian 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:
““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
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
“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,
“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 its ‘Framework for the 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
intervention would be financed under the Power and Airlines Intervention Fund (PAIF),
in line with existing guidelines regulating the PAIF, while
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).
“
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 stimulate investments in the development of infrastructure to optimise the domestic 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
the development of gasbased industries particularly petrochemical (fertilizer, methanol, among others) to support large industries, such as agriculture, textile, and
related industries;
to finance for private sector investments in the domestic gas value chain;
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,
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 manufacturers, processors, 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.
