Orient energy review, January 2016 by Orient Energy Review

Covering Local Content * Oil & Gas N300 3Ghc US $2 1.5

Vol. 5 No. 01 January, 2016

Outlook 2016:

The African Oil industry; thriving amid uncertainty, volatility NCDMB Will Ensure Viability, Profitability of New Projects – Kentebe

Tullow Remains Upbeat About 2016 despite fall in Oil Price

OWA @ 20: ‘Offshore West Africa will always play a significant role in the market place to provide opportunities for our partners’ - Richardson

EDITOR’S NOTE

Happy New Year!

PUBLISHER/EDITOR-IN-CHIEF: Nneka Ezeemo EDITOR: Margaret Nongo-Okojokwu PRODUCTION: Pita Ochai CORRESPONDENTS: Shola Akingboye (Abuja Bureau Chief) Vivian Osuji Isreal (Head, South-South Bureau, Port Harcourt) Pita Ochai (Lagos) Gilbert Boyefio (Ghana Correspondent) Business Development Executive: Uche Ezea Ruth Muo (South Africa) CREATIVE: EtimSkill CIRCULATION MANAGER: Ajayi Kayode

LONDON OFFICE:

Charity Place, Unit 1 Thurrock Park Way Thurrock Park Ind. Estate Tilbury, Essex Rm 18 7Hz. +447974199137

GHANA OFFICE: +0243915206 gilly2002gh@gmail.com orientenergyreviewgh@ gmail.com

CONTENT

ORIENT ENERGY REVIEW has emerged to be the platform and voice for the growing local content policy across the world. It is a monthly publication of Orient Magazine, Newspaper and Communications Limited 5, Dipo Dina Drive, Abule Oshun, Badagry Express Way Lagos. www.orientenergyreview.com email: info@orientenergyreview.com

elcome to 2016, the year of great possibilities, wonderful discoveries and surprises. The year 2015 ended on a sad note of the continuous fall in global oil price, but 2016 came in with a bigger surprise when the price of crude oil dipped further below $30 per barrel, and the fall continues. Meanwhile, this decline in oil price has plunged Africa’s oil and gas industry into dire straits, a situation exacerbated by factors such as uncertain regulation, corruption and the prospect of political and social instability. Yet, some industry experts who are keeping close tabs on the situation, believe that Africa still stands a good chance to stand strong in the face of this decline. Our correspondent, Godspower Ike, gives us an in-depth analysis on this position. Still in this edition, we bring you a special report from the state of Pennsylvania in the USA. Core PA Global hosted a group of international journalists for 4 days, show casing the vast potentials of this region of the United States, with the hope of attracting Foreign Direct Investment into the states. Now the second-largest producer of natural gas in the U.S., Pennsylvania shale gas is driving down energy costs and opening new opportunities for manufacturers. Businesses ranging from small family operations to huge multinational corporations are taking advantage of Pennsylvania’s abundant natural resources to advance their businesses in today’s global economy. We also have some other interesting stories in this edition that will keep you abreast with happenings around the Oil, Gas and Energy industry in Africa. Keep reading and we do hope you enjoy our very first edition for the year 2016. Please endeavour to send in your feedback and comments using the email address bless. Thank you and have a great read!

INDUSTRY 4 NEWS LOCAL CONTENT 6 10 COVER 16 SPECIAL REPORT 20 - 21 PHOTO GALLERY 23 INTERVIEW THE 26 FROM NIGER-DELTA 28 GHANA REPORT / 32 EXPLORATION DRILLING 34 ALTERNATIVE ENERGY 35 MARITIME/LOGISTIC 37 POWER

Margaret Nongo-Okojokwu Editor, Mobile +234-8136329948

6 Orient Energy Review January 2016

INDUSTRY NEWS

Dwindling Oil Prices: Kachikwu Faults Saudi’s Market Share Policy NNPC Shuts Port Harcourt, Kaduna Refineries T

HE Nigerian National Petroleum Corporation, NNPC, on Wednesday, January 20, announced the operational shutdown of the Port Harcourt and Kaduna Refineries owing to crude supply challenges arising from recent attacks on vital crude oil pipelines. A statement by the corporation said that the plants were shut simultaneously on Sunday after the Bonny – Okrika crude supply line to the Port Harcourt Refinery and the Escravos-Warri crude supply line to the Kaduna Refinery suffered breaches. The NNPC stated that before the closure, the Port Harcourt Refinery was recording a daily PMS yield of over 4.1 million litres while Kaduna Refinery was posting a daily petrol production of about 1.3 million litres. The statement noted that the Warri Refining and Petrochemicals Company, WRPC, is still on stream and producing a little above 1.4 million Litres of petrol per day. The NNPC, however, assured that it has put in place strategies to guarantee unimpeded country-wide availability of petroleum products. “In response to the unexpected setback, we have activated comprehensive remedial measures to sustain the prevailing stability in the supply and distribution of petroleum products across the country,” the NNPC said in a statement signed by Ohi Alegbe, group general manager, Group Public Affairs Division, NNPC. 4

Dr Ibe Kachikwu

Orient Energy Review January 2016

igeria’s Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu, has faulted Saudi Arabia’s insistence to keep oil market share despite dwindling oil prices, saying it was a policy “gone too far.” Kachikwu, who is bullish over the future of oil, said: “For us that policy is going too far, we need to sit back and see, how we can balance the need to protect market share, with the survival of the business and the survival of the countries who run these businesses. “There is a lot of energy around, and meeting won’t make any meanings except you have the protagonists agree to a common position.” At its December 4 meeting in Vienna, Austria, the Organisation of the Petroleum Exporting Countries, OPEC, ministers, propelled mainly by Saudi Arabia, voted not change the organisation’s strategy of defending its market share as a way of combating a supply glut that has sent oil prices crashing many folds. Since OPEC chose to defend its market share, and let prices sink, over 44 percent plunge in crude has slashed

members’ revenues by almost half a trillion dollars. Undeterred, the group has pressed its strategy to batter rival producers. Saudi Arabia, OPEC’s biggest member, appears determined to see through its plan to eliminate a supply glut by squeezing out competitors like US shale drillers, even as the resulting price collapse spurs dissent from Venezuela, Algeria and Iran. Nigeria has joined the fold of the dissenting nations with Kachikwu’s latest outburst against the Saudi policy. For some OPEC members opposed to the kingdom’s plan since they unveiled it in November 2014, the cost has been too high. Venezuela, which faced a 10 percent economic contraction last year that would be the steepest in the world, has repeatedly called for a summit between OPEC and other producers to end the crisis.

INDUSTRY NEWS

weneboa Enyenra Ntomme (TEN) field, located offshore Ghana, is over 80 percent complete and on schedule for first oil between July and August this year, according to a statement from the operator of the field, Tullow Oil plc. In a trading statement released Wednesday, the company also confirmed that it will be reducing its capital expenditure (CAPEX) in 2016. So far, all the key milestones of the project have been met with the next event being the sailaway of the TEN FPSO from Singapore to Ghana. The vessel is expected to depart in late January 2016 and will arrive in Ghana in early March when it will begin to be connected to risers and subsea infrastructure. A gradual ramp up in production towards plateau is anticipated during the second half of 2016 as the facilities go through the final commissioning stage and wells are tied into the FPSO. Tullow estimates that TEN average working interest production in 2016 will be around 23,000 barrels of oil per day gross. The TEN project, which has a total estimated gross cost of almost $5 billion, contains gross reserves of 300 million barrels of oil equivalent and is expected to reach a daily output of around 80,000 barrels of oil by early 2017, according to Tullow. Described by the company as Ghana’s second major oil development, the TEN field is situated around 40 miles offshore Western Ghana and just 12 miles from Tullow’s flagship operated asset, the Jubilee field, which came on-stream in December 2010. Tullow’s interest in the TEN development stands at 47.18 percent and its partners in the project comprise Kosmos Energy Ltd, which holds a 17 percent interest, Anadarko

Tullow: TEN Project Over 80% Complete, CAPEX Reduction in 2016

Tullow announces that it will be reducing its capital expenditure in 2016 and that the TEN field, located offshore Ghana is over 80% complete.

Petroleum Corporation, which also holds a 17 percent interest, GNPC (Ghana National Petroleum Corporation), which has a 15 percent interest, and PetroSA (Petroleum, Oil and Gas Corporation of South Africa (SOC) Ltd), which holds a 3.82 percent interest. In addition to news about the development of the TEN project, Tullow revealed that it expects to deliver revenue of around $1.6 billion, gross profit of $0.6 billion and operating cash flow of $1.0 billion in 2015. The group also confirmed that it will reduce its CAPEX associated with operating activities from $1.7 billion in 2015 to $1.1 billion in 2016 and stated that it will look at additional opportunities to reduce it further.

Aidan Heavey, Tullow Oil plc chief executive, commented in a company statement: “In 2015, Tullow not only reset its business to deal with very difficult market conditions but also delivered on its key operational goals. “We continue to focus on driving down our costs and capital expenditure and, at the beginning of 2016, Tullow has a mark-to-market hedge value of over $600 million and financial headroom of $1.9 billion. Accordingly, we have a diversified balance sheet which supports our planned activities for the year ahead.” *Rigzone

Orient Energy Review January 2016

LOCAL CONTENT

Nigerian Content: Oilserv Graduates 28 Technical Trainees By Margaret Nongo-Okojokwu

ilserv Limited, an oil and gas service company with expertise in pipelines and flowlines has completed the training of 28 Nigerian youths in auto-welding, manual welding and fitting and rigging activities as part of its technical training scheme. Other focus areas of the scheme included basic equipment maintenance, assets training, horizontal directional drilling operation and operation of heavy duty equipment. Speaking at the graduation ceremony of the programme held in Port-Harcourt, Rivers State recently, the Managing Director of the company, Sir Emeka Okwuosa stated that most of the trainees would be absorbed by the company. He explained that the company was committed to human capital development and was determined to make young Nigerians participate in the development of the Nigerian economy. Okwuosa expressed satisfaction that the training was conducted without any

Orient Energy Review January 2016

incident, rather the trainees exhibited professionalism and good attitude to work. He noted that a batch of the trainees assigned to the Obiafu/Obrikom to Oben (OB3) gas pipeline project welding crew welded a total of 360 joints without a repair. He promised that more young Nigerians will benefit from the scheme and more awareness will be created about the programme. In his comments, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzil Kentebe commended Oilserv Limited for initiating the technical trainee scheme, which was in line with its strategies for implementing the Nigerian Content Act. The Executive Secretary who was represented by the Manager, Human Capital Development,

Mrs. Michelle Aiyegbusi explained that part of the Boardâ&#x20AC;&#x2122;s mandate is to empower Nigerian entrepreneurs and imbue young Nigerians with trainings across specialties in the oil and gas sector. Aiyegbusi challenged other companies to initiate similar programmes as the products will contribute to the industrialisation of the country. She urged the trainees to be diligent in in their work, stressing that success in life is not only propelled by technical skills but also the kind of attitude one adopts. In their reaction, the graduands expressed their gratitude to Oilserv Limited for the opportunity given to them and promised to put in their best in all they do.

LOCAL CONTENT

SPDC wins 2015 PETAN Local Content Operator Award

he Shell Petroleum Development Company (SPDC) has won the 2015 Local Content Operator of the Year Award by the Petroleum Technology Association of Nigeria (PETAN), in recognition of its achievements in embedding Nigerian content in the oil and gas industry in Nigeria.

PDC was commended for many initiatives that have promoted Nigerian content including the domestication of original equipment manufacturing services; contractor funding schemes; and the collaboration with PETAN on similar programmes and projects. “The award is a strong endorsement for the many successful interventions we have made in the Nigerian content space and an impetus for us to continue to grow indigenous capacity for the industry,” said SPDC’s General Manager, Business and Government Relations, Simbi Wabote, while receiving the award from the Executive Secretary of the Nigerian Content Development and Monitoring Board, Denzil Kentebe. PETAN, an association of Nigerian indigenous technical oilfield service companies in the upstream and downstream sectors, also honoured the former Managing Director SPDC and Country Chair Shell Companies in Nigeria (SCiN), Mutiu Sunmonu, with the PETAN Chairman’s

GM Business & Government Relations, SPDC, Mr. Simbi Wabote (right), receiving the 2015 PETAN Local Content Operator award from the Executive Secretary, Nigeria Content Development & Monitoring Board, Mr. Denzil Kentebe.

award in recognition of his support for in-country capacity development. SPDC and Mr. Sunmonu were among corporate bodies and individuals who were honoured at the 10th PETAN Annual Oil Industry Awards Dinner held in Lagos recently. PETAN Chairman, Emeka Ene, commended the awardees for their efforts, and described 2015 as “a year of celebrating the industry and those who helped to move it forward.” He said that Nigeria should continue to actively encourage the development of indigenous manpower and service providers in order to engender lasting growth in the oil and gas industry. SPDC and other Shell companies in Nigeria continue to make a major contribution to developing the country’s human capital and contracting

capacity. Some 90% of SCiN contracts were awarded to Nigerian companies in 2014. Their Nigerian content development policies are hinged on indigenous asset ownership and development of human capacity and supplier services. For example, since 2010, SPDC has awarded five-year contracts for the building of 14 vessels to Nigerian companies to encourage Nigerian firms to play more active roles in the maritime sector. Ownership of key assets such as rigs, helicopters and marine vessels is another area of key focus. It is recalled that PETAN had in 2013 honoured Shell Companies in Nigeria with the Local Content Operator of the Year award.

Orient Energy Review January 2016

LOCAL CONTENT

NCDMB Will Ensure Viability, Profitability of New Projects – Kentebe

he Nigerian Content Development and Monitoring Board, NCDMB, is working to ensure the viability and profitability of new projects despite dwindling oil prices in the international market, according to its Executive Secretary, Mr. Denzil Amagbe Kentebe. He also disclosed that as the country enters 2016 and so long as the price of oil remains low, the Board’s challenge would be to device strategies that will accommodate local content, adding that his team was engaging the International Oil Companies, IOC’s, and partner with them on that. “The Board will continue implementation of its Capacity Development Initiatives (CDIs), to create a robust local supply chain that will meet the human and material requirements of the industry within acceptable cost, schedule and without compromising safety, environment and quality. “On manufacturing and infrastructure development, we are implementing several initiatives to domicile manufacturing activities, to achieve in-country value addition,” he said. Kentebe maintained that the board will stimulate local pipemill manufacturing from

100,000Mt/ annum in 2010 to 270,000Mt/ annum while also noting that effort to develop Polaku Pipemill and the efforts of 3rd party investors will be aggressively pursued in 2016, to achieve 600,000Mt/ annum local capacity by 2017 (compared to annual demand estimate of 800,000Mt/ annum). The NCDMB boss explained that the Board will work towards establishing oil and gas parks to support service providers interested in manufacturing activities, adding that the Board has acquired suitable land in three states – Imo, Bayelsa and Cross River states; and have

Orient Energy Review January 2016

Executive Secretary, NCDMB, Denzil Kentebe

commenced training of SMEs for the scheme.

PHOTO NEWS The newly constituted Local Content Board for the electricity sector by the Nigerian Electricity Regulatory Commission, NERC

COVER STORY

he persistent decline in the price of crude oil in the international market threw up a number of challenges and difficulties for the Africa’s oil and gas market in the year 2015, ranging from declining output, reduced demand, oversupply, downsizing and introduction of cost-cutting measures among others. In this article, operators attempt to review and highlight key issues in the region’s oil and gas industry in 2015 while projections were made for 2016, providing insights on ways operators can thrive despite the challenging operating environment. By Godspower Ike

he oil and gas industry in Africa was in 2015, badly affected by the declining price of crude oil in the international market, which brought in its wake, uncertainty, declining revenue, low exploration activities and oversupply of crude oil in the face of declining crude oil demand. In reaction to the decline in the price of oil globally which started in 2014, industry operators embarked on a reduction in headcount and other cost cutting measures, such as reducing their capital budgets, while it also led to a decline in frontier exploration activity. Specifically, the Organisation for the Petroleum Exporting Countries, OPEC, had projected that in 2016, non-OPEC oil production is expected to contract by 0.13 million barrels per day (mb/d), over 2015, to average 57.11mb/d. It also stated that globally, nearly five million barrels per day of projects had been deferred or cancelled due to the current low price environment. 10

Orient Energy Review January 2016

Outlook 2016:

The African Oil industry; thriving amid uncertainty, volatility

According to OPEC, there has also been some capital expenditure (capex) reductions at fields that are currently producing, including Enhanced Oil Recovery (EOR) and in-fill drilling activity that would otherwise offset natural declines. This, it said, was likely to lead to an increase in global decline rates from the current five to 5.5 per cent. OPEC further noted that marginal fields producing less than 10,000 barrels per

day are being shut down across the North Sea and even in Brazil, adding that their short lifespans, high decline rates and maintenance costs generally require oil prices that are above $80 per barrel to be economic.

PEC, had also in November 2015, projected that by end 2015, Africa’s oil supply would likely average 2.34 million bar-

COVER STORY declines, other countries such as Egypt, Gabon and South Africa will show steady production in 2015. It maintained that on a quarterly basis, Africa’s oil supply in 2015 is expected to average 2.40mb/d, 2.38mb/d, 2.29mb/d and 2.29mb/d, respectively, while it projected that in 2016, Africa’s output is expected to decline by 0.03mb/d. The OPEC report further projected that Africa’s production was expected to remain flat until 2017, before growing again to 2.5 mb/d in 2020. It said, “Oil supply from Egypt is expected to remain almost flat at 0.7 mb/d over the medium-term. Output from Sudan and South Sudan, which until recently produced the majority of oil from East Africa, is likely to be significantly affected by political risk factors. However, it is projected to eventually grow again to reach its 2010 level of nearly 0.5 mb/d by 2020.”

rels per day (mb/d), dropping by 30,000 barrels per day year-onyear. By the end of 2015, according to OPEC in its monthly oil report, oil production from Equatorial Guinea and the Sudans is expected to grow by 10,000 barrels per day to average 0.29 million barrels per day each.

t stated that while Chad, Congo and others would see supply

owever, OPEC stated that Africa is well positioned for downstream capacity additions, especially as the region imports around 30 per cent of the refined products it consumes, making it, in relative terms, by far the largest net product importing region. The situation, according to OPEC, exists not only due to insufficient ‘nameplate’ refining capacity, but also because of very low utilization rates in many of its facilities. It said, “With oil demand in the region continuing to grow and with many countries having domestic crude oil available for processing, there is evidently the need and potential for more refining facilities. Nonetheless, despite these factors, there are currently only a few projects under construction or in an advanced planning stage in Africa. “In summary, it is estimated that around 0.55 mb/d of new crude distillation capacity will be available in Africa by the end of 2020.” Speaking in the same vein, Managing Director of the International Monetary Fund, IMF, Christine Lagarde, in her recent visit to Nigeria, stated that over the medium term, oil prices are likely to

remain much lower than the 201013 average of more than $100 a barrel. According to her, the decline in the price would be occasioned by the huge oversupply in global oil markets, drop in demand and OPEC’s actions or inactions. She said, “Think of the shale oil boom in the United States, and some historically large producers such as Iraq and Iran coming back to the market. Other factors include OPEC’s strategic behavior and the drop in global demand for oil, especially in emerging economies.” Continuing, she noted that, “Already, lower oil prices have sharply reduced Nigeria’s export earnings and government revenues. Both are likely to remain at depressed levels, reducing the space for policy interventions to address Nigeria’s social and infrastructure needs. “Private sector investment will also be affected. Investor confidence about the outlook has remained weak, and financing is likely to become more difficult and more costly for everyone. With U.S. interest rates expected to continue to rise, albeit slowly, the likelihood of capital outflows will increase, and exchange rate pressures could mount as investors re-assess their appetite for risk.” Also, in their analysis of Africa’s oil and gas industry in 2015,

In summary, it is estimated that around 0.55 mb/d of new crude distillation capacity will be available in Africa by the end of 2020. Orient Energy Review January 2016

COVER STORY analysts at Price Waterhouse Coopers (PWC) stated that the oil price decline, skills shortages and uncertain regulatory frameworks have put the industry on the continent in dire straits. According to these analysts, the combined effect of these challenges places an increased burden on exploration activity and economies heavily reliant on oil and gas revenues, which may have far-reaching socio-economic impacts as a result.

Despite continued insurgency in South Sudan, production has increased by just over 60 per cent compared to 2013. At 159,000 barrels per day, this is still a far cry from pre-2013 production levels of 240,000 barrels per day.

hey noted that Africa’s share of global oil production dropped marginally since 2014, moving from 10.1 per cent to 9.6 per cent of the world’s total, adding that untapped proven oil reserves on the continent are estimated to be around eight per cent of the global total, which is nearly the same as the previous year, with these reserves projected to increase as appraisal of new discoveries ensues. In general, these energy analysts noted that the petroleum industry activity in Africa had slowed down given the reduced oil price, while exploration activity was the hardest hit. According to them, new discoveries have been fewer as exploration activity globally has slowed due to the reduced oil price environment. They noted that from a proven oil reserve totaling 129.2 billion barrels, Africa produced 8.2 million barrels of crude oil per day (bbl/d) in 2014, with over 76 per cent of this production came from Nigeria, Algeria, Egypt and Angola in 2014.They said, “The fragile political situation in North Africa continues to have an impact on production levels, which saw another year-on-year decline in oil production in the region of 22 per cent. Libya alone, in the throes of civil war, saw production decline by almost 50 per cent. “Despite continued insurgen-

Orient Energy Review January 2016

Amieyeofori, CEO Energia Limited

cy in South Sudan, production has increased by just over 60 per cent compared to 2013. At 159,000 barrels per day, this is still a far cry from pre-2013 production levels of 240,000 barrels per day. This is largely due to the damage that has been sustained by the local infrastructure, and analysts expect a full rebound only by 2020. “As of the end of 2014, Africa has proven natural gas reserves of just fewer than 500 trillion cubic feet (tcf) with 90 per cent of the continent’s annual natural gas production still coming from Nigeria, Libya, Algeria and Egypt. This is a slight drop in reserves compared to 2013, and production also decreased slightly over the period. Consequently, the continent still has nearly 70 years of natural gas production available given current production rates.” Meanwhile, Dr. Jude Amaefule, Vice Chairman/Chief Executive Officer, Emerald Energy Resources Limited, stated that in the last couple of months, global economic weakness, tougher fuel economy regulations, more viable forms of alternative energy; and the development of extraordinarily efficient engines on equipment as varied as cars, earthmovers, and power plants have all combined to dramati-

cally curtail the need for oil. He listed the challenges confronting the African petroleum industry in the last few years to include declining production, low exploration and appraisal drilling due to policy uncertainties and lack of adequate funding and lack of adequate capital availability at competitive interest rates. Others, he said, are low infrastructural investment, troubled partnerships due to forced ‘marriages’ by government; inadequate technical and financial capacity of prospective foreign partners/ investors; limited availability of cost-effective technologies; stringent conditions of International Oil Companies, on use of existing facilities; host community management issues and operational & security challenges among others. To survive in a low oil price environment in 2016 and beyond, Amaefule, who spoke to Orient Energy Review at the recently held APR Consultative Forum; advised oil companies to adopt cost reduction and production enhancement strategies. He said the companies need vision and technology to improve returns, reduce risks and increase sustain-

COVER STORY

ability; improve cashflow by faster extended revenue streams at significantly lower costs and also minimize reservoir uncertainty by maximising production rates while reducing capital expenditure (CAPEX).

n addition, Amaefule maintained that efforts should be made to reduce uncertainty, capitalising on extended reach drilling technology for Maximum Reservoir Contact (MRC), thereby, maximizing drainage and reducing the optimum number of wells with capex reduction. To this end, he advised that in the short term, operators in the African oil and gas industry should venture into new markets, finding alternative buyers, while in the long term, the companies would need to build their own capabilities and critical knowledge base towards the development of unconventional hydrocarbon resources from sedimentary basins.

hese, he said, should be achieved through a combination of joint ventures under-

takings between African nations and companies, operating and service companies; and formal training of staff members of Gulf of Guinea’s National Oil Companies with interest in unconventional hydrocarbon. He further stated that broader value chain enhancement as opposed to direct lifting of crude oil is the way to go, beginning from refining, gas utilization, and other spin-off sectors from oil and gas, such as petrochemicals. For the industry to thrive in 2016, Amaefule recommended that operators should focus on being competitive in the global market; improve fiscal and regulatory frameworks to encourage investment and capital inflow; improve security; improve industry efficiency and transparency; put in place clear and coherent laws and policies with strong independent regulators and the phased removal of fuel subsidies. In the case of Nigeria, he said, “Nigeria should focus on improving existing refineries; encourage local entrepreneurs to set up private refineries via appropriate fiscal policies; acquire foreign based refineries, with the intent of foreign income earnings from sales of refined products and technology transfer.”

“Generally, in a low price environment, emphasis should be on reducing the cost of services, such as operating expenditure and capital expenditure; removing bureaucratic and operational bottlenecks; revise fiscal terms to attract investments and value creation through technology.” He, however, stated that focus should be on better tax collection from 70 per cent of Gross Domestic product (GDP) activities; optimise gas utilization and value addition and also improve governance and transparency. Speaking in the same vein, Mr Felix Amieyeofori, Managing Director, Energia Limited, advocated several measures to be adopted by the African petroleum industry in the period of volatility in the crude oil market, among which are that the oil producing countries should establish firm policy direction for the industry – upstream, midstream, and downstream.

e further urged the countries to provide relevant incentives and tax holidays to encourage quick investments in the downstream sectors and also free joint ventures (JV) companies to secure funding to boost upstream sector, while the government should consider relinquishing or reduce its equity in the JVs. Other measures, he said include, “To fully integrate the service providers with proper regulation for efficiency and cost optimization; government must confront the insecurity in the country and in the oil zone to attract investment; quickly work to capture the African continental market on refined product. “Lasting solution must be found to crude oil theft and pipeline vandalisation in oil-producing areas, such as the Niger-Delta area in Nigeria. Closer attention must be paid to tertiary institutions to ensure alignment with the economy.

Orient Energy Review January 2016

COVER STORY The use of LPG, mainly in the residential sector, is also set to increase in the future as economic development promotes a switching away from traditional fuels for cooking and heating to commercial fuels such as LPG “Also, efforts must be made to diversify the economy into other viable sectors; streamline regulatory agencies to eliminate current conflicts and bottlenecks in the system, while lasting solution to crude oil theft and pipeline vandalization must be found.” Again, analysts at PWC stated that to cope in 2016 and beyond, especially in these challenging times, strategy and long range planning are even more important in today’s uncertain environment, maintaining that oil and gas companies must control costs. The analysts said, “They should continue to weigh the risks versus benefits of new projects, new products and how much capital to invest. Behind such decisions, there are regulatory, safety and environmental considerations. “Balancing the need to supply the world with hydrocarbons, companies are considering investments in alternative energy sources. Technology is driving potential breakthroughs in both hydrocarbons and new energy sources in Africa. Unconventional hydrocarbons, such as shale oil and gas, bitumen and coal bed methane could expand the supply of oil and gas. “The oil and gas industry is indeed a complex one, fraught 14

Orient Energy Review January 2016

with challenges. Despite this, the outlook need not be grim. Gearing up for a prosperous future must not be complicated or short-sighted – focusing only on mitigating the impact of very real challenges – or forget to position for market revival and the opportunities it brings.” They further opined that business and governments need to rethink their fundamental roles as industry players and consider how they can begin to create lasting value, adding that one area where this is proving possible is in skills development. According to them, a collaborative, value-focused approach ensures that governments meet their skills development objectives, while businesses begin to move beyond compliance and take a more proactive role in creating local citizen benefit. “In the current uncertain climate, we encourage all industry stakeholders to take a step back, relook, revise & re-strategise in an aim to move from fragile to agile. More than this, oil and gas players should take courage in the expected rebound in the oil price, which should make developing our wealth of natural resources even more attractive.”

nergy analysts at PWC also stated that agility and learning to adapt quickly are very critical to surviving the fragile ups and downs of the oil and gas market cycle. They said, “In situations of low commodity prices, many companies have a knee-jerk response and introduce broad, sweeping cost reduction programmes. Doing so could be much more effective if they took the time to understand what specific costs are, how they compare to peers and what reductions are truly possible. To be effective, cost reduction programmes must be targeted and realistic. “A health check scorecard is another useful tool that companies can utilize to determine how to optimise their portfolios in a new price regime. As margins erode, companies must move from a growth strategy to a flexible position that will support the return to a growth strategy or enable a position to endure a downturn. “The lower oil price environment has also led to a greater level of interest on the part of oil & gas companies in redesigning and recalibrating their existing finan-

COVER STORY cial and forecasting models, or in building new financial models, against the backdrop of a number of recurring themes.” However, it is not all gloomy for Africa, as OPEC forecast that together with the Asia-Pacific region, Africa is where demand for refined products is expected to grow the fastest, stating that between 2014 and 2040, demand will increase by an average of 1.7 per cent per annum in these two regions.

t also noted that because of a much lower base in 2014, demand in Africa is set to increase by just 2.5 million barrels per day over the forecast period, from 4.7 million barrels per day to 7.2 million barrels per day. OPEC further projected that Africa and the Middle East are the only two regions where demand growth is expected for every refined product category, especially as most of the demand growth in Africa is concentrated in gasoil/ diesel and gasoline, which are set to increase by 0.9 million barrels per day and 0.5 million barrels per day, respectively, during the forecast period.

ontinuing, OPEC said, “Demand for ‘other products’ is also expected to exhibit relatively strong growth in the future. Expanding demand for this product group will mainly relate to the asphalt/bitumen used for road construction. “The use of LPG, mainly in the residential sector, is also set to increase in the future as economic development promotes a switching away from traditional fuels for cooking and heating to commercial fuels such as LPG.” Meanwhile, predictions on what can go right in 2016 as published by the Africa Oil and Gas reports, has it that the most certain project to come on line in 2016 is the TEN Project off

Ghana. In Equatorial Guinea, barring any dramatic events around the oil price, FID for the2.2MMTPA Fortuna Floating LNG is expected in mid-2016 with the first gas forecast for mid-2019. In Egypt, ENI is bullish on Zohr, the mammoth gas find it made in the deep waters of the Mediterranean in August 2015. It says it will fast track development of the 30Trillion cubic feet property; with FID likely in 2016, and first gas by 2018. The report clearly says we should not expect much exploration activity in Angola and Nigeria in 2016; but there will be an uptick in infill drilling in the latter while rig count will fall further in the former. In Angola, the deep-water pre-salt adventure will be on hold. In Nigeria, majors will have a little more money, as a result of improved receivables from the state company, to carry out basic work programmes. A raft of exploratory activities was kept on hold in 2015; many of them will happen in 2016, if crude oil prices don’t have a dramatic fall. Kosmos has been lucky with the drill bit in the Mauritania-Senegal Basin and Cairn will continue to appraise its Senegalese discoveries. Tullow got lucky in Kenya

as 2015 wound down, making a discovery that extended northwards, the oil pools in the South Lockichar.

herefore, despite the challenging operating environment and instability, oil-producing countries in Africa must be seen to be properly positioned and re-tooled to be able to cope with the times. Also, it is expected that for the region to continue to meet the demand of its population, shore up its revenue and build critical infrastructure, it must be proactive and introduce measures that would enable it grow revenue and tap from the opportunities presented by the declining oil price.

A health check scorecard is another useful tool that companies can utilize to determine how to optimise their portfolios in a new price regime.

Orient Energy Review January 2016

SPECIAL REPORT

Core PA Global Opens Pennsylvania’s Mining, Oil and Gas Industries for Investment * International Media Tour to Attract FDI into Pennsylvania

nnovation in mining, oil and gas is beating in the heart of Pennsylvania, and CORE PA Global hosted a tour to showcase some of those regional industries to international and national journalists. The journalists toured six companies from Oct. 5 to Oct. 8, starting in Wilkes-Barre and ending in Williamsport. On the tour, they learned about the supply chain, foreign investors in the region, infrastructure, workforce and education, producers, and liquid natural gas port and pipeline. They also heard from regional partners, industry experts and additional companies about the oil and gas industry, and the effects of the energy industry on the state. CORE PA Project Manager Noelle Long said Pennsylvania has much to offer the world. “The goal was to globally expose the great assets the core region of Pennsylvania has in the mining, oil and gas fields. We want to show the world what fantastic resources we have,” Long said. The world’s first commercial oil well was drilled in 1859 in Titusville. Room-and-pillar mines have been active in Pennsylvania’s bituminous coalfields since the late-1700s, 16

Orient Energy Review January 2016

Journalists at the Bridon American facility during the tour

and natural gas production in Pennsylvania dates back to 1881. The real story of innovation in mining, oil and gas in Pennsylvania is happening today. Now the second-largest producer of natural gas in the U.S., Pennsylvania shale gas is driving down energy costs and opening new opportunities for manufacturers. Businesses ranging from small family operations to huge multinational corporations are taking advantage of Pennsylvania’s abundant natural resources to advance their businesses in today’s global economy. The following companies and organizations were featured on the tour: Bridon American, 280 New Commerce Blvd., Hanover, manufactures wire and fiber rope solutions on a global scale. With over 30 design and manufacturing specialists, they specialize in efficient processing of wire and enhanced

rope properties that give improved performance. They also offer rope inspection services, rope installation, maintenance and training. Bridon serves the lifting, material handling, oil, mining, communications, marine and fishing industries. Medico Industries, 1060 Hanover St., Hanover Township, manufactures high-pressure swivel elbows and tool joints for the oil and gas industry. The company masses tool joint sets for the oil and gas industry, and can produce over 2 million pounds of steel per month. They also offer engineering services for plant design, layout and installation. Clark Technology Systems, Inc., 2297 Housels Run Road, Milton, has been engineering, designing, and fabricating packaged equipment for over 25 years. They support the local

SPECIAL REPORT and global energy, refinery, petrochemical, power plant, paper mill, and mining industries. They source local- or U.S.-made materials and components whenever possible. They specialize in a variety of turbomachinery packages and related auxiliary systems for refinery and petrochemical applications worldwide. Panda Patriot is an 834-megawatt natural gas power plant under construction in Montgomery that will begin powering up one of the three turbines by the end of 2015, with full power slated to be operational in spring 2016. Constructed to take advantage of its proximity to the Marcellus Shale, the plant will be cooled by air rather than water to eliminate the need for drawing or discharging water from the nearby Susquehanna River, preventing potential impacts to river habitat. The plant should create up to 500 construction jobs. The facility will create about 27 skilled jobs for operations and 45 local indirect jobs to support the plant. Halliburton has expertise in the emerging U.S. shale plays including the Bakken, Barnett, Bone Spring/Avalon, Eagleford, Fayetteville, Haynesville, Marcellus and the Utica – and provides well construction and well completion products and services. Halliburton North America (the toured location was 343 Riddell Road, Montgomery) focuses on both conventional and unconventional reservoirs containing oil and natural gas, as well as geothermal wells for electrical power generation. Their goal is to maximize the value of

these oil and gas assets through leveraging other reservoir expertise and tailored technology solutions. This goal is achieved by delivering a secure source of superior products, quality materials, and reliable equipment with an experienced, knowledgeable and safe workforce, while protecting the environment. NuWeld, Inc., provides customers with over 280 years of combined experience in welding, engineering and fabrication. NuWeld’s main facility encompasses 211,000 square feet of high-capability manufacturing on 24 acres with direct rail access. Located in the Industrial Park of Williamsport at 2600 Reach Road, their fabrication shop is equipped with 13 overhead cranes with capacities of up to 20 tons, which offers a variety of field and shop services to the nuclear, natural gas and power industries. Wirerope Works, Inc., sits on a 46-acre manufacturing complex at 100 Maynard St., Williamsport, and with over 620,000 square feet under

roof, is the single largest wire rope manufacturing facility in North America. It has been in business for over 100 years, and manufactures a complete line of Bethlehem Wire Rope® in a wide variety of constructions, lays, cores and steel grades. They serve many industries including construction, logging, marine, mining, oil and gas, and steel. Journalists represented Alberta Oil Magazine of Canada; Australian Mining; Oil and Gas; and Manufacturers Monthly of Australia; and Site Selection and Rigzone magazines of the U.S. Featured speakers were from CORE PA; Procter & Gamble; Linde Corporation; EthosGen; Vibra Tech Engineers; IMG Mid-Stream; Franklin County Area Development Corporation; Volvo Construction Equipment; Appellation Pre-Fab; St. Francis University; Pennsylvania College of Technology; Inflection Energy; Canary Labs; and LNG Allies. The tour was CORE PA funded and executed, with additional support from the TEAM PA Foundation, Pennsylvania Department of Community and Economic Development (DCED), and Tierney, a public relations firm, whose services were secured through DCED. CORE PA Global is an initiative established to increase the visibility of the 53 counties that make up the core region of Pennsylvania to potential investors in both the international and domestic arena as well as reshoring prospects. SEDA-COG is the host organization for the initiative. *By Liz Regan, www.seda-cog. org

Orient Energy Review January 2016

SPECIAL REPORT

IMG Midstream Eyes Increased Gas Supply, Create New Niche Market for Local Gas Producers

MG Midstream has stated that its facilities would help boost gas production and create a new market to sell gas. The company, a power generation solutions company, develops, owns and operates distributed power generation plants in the Northeastern U.S. By using locally produced natural gas to generate electricity for the region. It is also currently working with local producers to reinvest in the community and provide family-sustaining jobs for the region. In his presentation during a familiarization tour of its facilities by international journalists, Matt Tripoli, senior Manager Development noted that his company would create a long term firm market supply opportunity, multiple gas price options, local gas use and low pressure load Tripoli explained that all their

Orient Energy Review January 2016

plant sites are wholly owned subsidiaries of IMG Midstream and are built using similar size, capacity and equipment to allow for economics of scale and operating efficiencies in building and maintenance costs. According him, all IMG sites are located in close proximity to natural gas production as well as local substations to maximize utilization of existing infrastructure and minimize the need for additional infrastructure. Their development model was designed to use locally produced gas to generate electricity for the region. Tripoli further explained that IMG Midstream operations aims to create a new niche market for local gas producers, while providing for community reinvestment and the creation of family-sustaining jobs, adding that it also focuses on the utilization of existing natural gas and electric infrastructure. On the benefits of its facilities, the senior Development manager noted

that, “Locally produced electricity – keeps gas produced in the region that would otherwise be exported – local supply reliability; improved grid security and local reliability; while cleaner generation – Meets or exceeds environmental standards. “Others are: community oriented design, low profile design, minimal noise impact and sustainability of jobs.” Continuing, Tripoli said in its business model, “IMG Midstream’s facilities are located in close proximity to natural gas production as well as local substations or electric lines, where it would be able to utilise existing infrastructure and minimize need for additional infrastructure to be built. “We also have Best Available Control Technology (BACT) to significantly reduce air emissions, while our facility also has advanced noise mitigation technology.” IMG’s power generation solutions come with low profile design with minimal lighting, while its site are designed for operating efficiencies and flexibility.

SPECIAL REPORT

We help you Succeed with your Projects – Clark Technology System

By Pita Ochai

or almost three (3) decades, Clark Technology System, Inc. prides itself as the champion of the technology world. Founded in 1987, Clark Technology Systems, Inc. has been engineering, designing, and fabricating packaged equipment in Milton, Pennsylvania for over twenty-five years. According to the company, using the latest Autodesk software, its designers have the tools to turn your next project into a world class success. “CTS personnel have been trained by Autodesk to properly use Autodesk Inventor Professional, AutoCAD Plant 3D, AutoCAD P&ID and Autodesk Showcase.” It stated that importing and exporting models and drawings in other formats helps to maintain a seamless transfer of information to our customer. CTS can also support your project design calculations by providing system and component FEA (Finite Element Analysis). In addition to the product design, CTS can provide a complete Bill of Material for use by the Purchasing group. According to its management, engineers and designers follow your product through every step of the company’s fabrication and testing process to guarantee that the strictest quality standards are

upheld. “Most importantly, they will keep you up to date on the status of the project and will ensure that your system gets delivered to you on time, every time,” it stated. Describing their strategy for achieving success in their jobs, the company management stated that: “Weeks before the start of fabrication, the manufacturing group reviews the project details and develops a manufacturing plan. This prevents the ‘oops’ at the end when you are about to ship. At the project kick off meeting, not only is the general project explained, but all the ITP (Inspection Test Plan) requirements are reviewed. In addition, any peculiarities are explained to the project team,” it stated adding that: “Typically a project is fabricated at our facility by our certified pipe welders and structural welders. A P&ID inspection is completed prior to the unit being disassembled, blasted, painted and reassembled at that facility. Process tubing and electrical is completed prior to testing.” “A thorough run test is performed and documented using the appropriate test procedure. A completed ITP is signed off and a certificate of conformance is issued if required. A dossier of quality documents is issued along with a complete Installation, Operation, and Maintenance Manual. Upon request, export boxing can be supplied. I know this process works and is followed through with each and every project. We have a ‘standard work’ written for each of our engineering and

manufacturing processes. Any deviations from them results in a CPAR (Corrective/Preventative Action Report) to determine the cause and corrective action. Our employees are here to make your project a success.” Conveniently located near Williamsport, PA and Interstate-80, Clark Technology Systems, Inc. supports local and global energy, refinery, petrochemical, power plant, paper mill, and mining industries. It is a company proud of its Pennsylvania heritage and source local or U.S.A. made materials and components whenever possible. “We are ISO 9001:2008 certified and hold every project to the highest company and customer quality standards. We are able to meet API 614/API 618 as well as other industry and customer standards. We specialize in pipe welding and take pride in our ability to customize project designs to meet the needs of our customers,” it stated.

Orient Energy Review January 2016

PHOTO GALLERY 10th PETAN Annual Oil Industry Awards Dinner, Lagos 2015

embers of the Petroleum Technology Association of Nigeria (PETAN) ended the year 2015 on high last week with an award dinner and honours to some deserving frontline individuals and corporate organisations in the countryâ&#x20AC;&#x2122;s oil and gas industry. Former Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr. Gaius Obaseki; former Kaduna Refinery Managing Director, Sani Bello; Chief Executive Officer of Oilserv Limited, Emeka Okwuosa, as well as Nigeriaâ&#x20AC;&#x2122;s late oil minister, Rilwanu Lukman, were some of the people garlanded on the occasion.

Minister of state for Petroleum, Dr Emmanuel Ibe Kachikwu making a presentation at the industry awards dinner.

PETAN President, Engr. Emeka Ene, making his presentation at the dinner

Malije Okoye of Neconde, receiving an award from the Executive secretary, NCDMB, Mr. Denzil Kentebe

Orient Energy Review January 2016

It was an evening to remember when PTEAN members and their

Mr. Dapo Oshinusi, PETAN Secretary, presenting financial institution award to FBN represented by Olalekan Adelekan and Ezinne Obikile

Charles Ngoka (middle) receives his award

PHOTO GALLERY

guests converged on Oriental Hotel, Lekki, Victoria Island, Lagos. The occasion was the 10th PETAN Annual Oil Industry Award Dinner. Among the guests were the Chairman, House Committee on Local Content, Emmanuel Ekong; Executive Secretary, Nigerian Local Content Development and Monitoring Board, Denzil Kentebe; Mrs. Ifeoma Oraukwu, who represented Governor Willy Obiano of Anambra State and Prof Sylvester Monye, who stood in for Delta State governor, Ifeanyi Okowa. There were representations from the Directorate of Petroleum Resources, among other attendees.

CEO Oilserv Ltd, Emeka Okwuosa,(left) receiving an award

Lawal Gbolahan, CEO, GIL Automations receives his award

CALISTA AZOGU OF AGIP

SANI BELLO, PETAN CHAIRMAN OUTSTANDING ACHIEVEMENT AWARD

PETAN

Annual Oil Industry Awards

Orient Energy Review January 2016

SPECIAL REPORT

Exploration, Production Activity in West Africa in 2016 By Andreas Exarheas

fter a busy year packed with a host of exploration and production developments, West Africa’s oil and gas industry doesn’t look like it’s letting up in 2016. Several countries in the region are scheduled to undergo a variety of E&P projects this year, with a mix of major and independent energy firms taking part in upstream operations in the area. One country that will be the focus of many oil and gas companies in 2016 is Nigeria. In September 2015, the Nigerian National Petroleum Corporation (NNPC) announced that it had secured a $1.2 billion multi-year drilling financing package to contribute to the running of 36 oil wells across the OML 49, 90 and 95 license areas over two stages, under the NNPC/Chevron Nigeria Limited Joint Venture. Stage one, comprising 19 wells, is projected to deliver 21,000 barrels of crude oil and condensate per day, alongside 120 million cubic feet of gas per day over 2015 and 2016. The second stage will include 17 wells and is projected to yield 20,000 barrels of crude oil and condensate per day, alongside 7 million cubic feet of gas per day between 2016 and 2018. Another energy firm planning activity in Nigeria is Lekoil Ltd., which revealed in an operations update December 3, 2015 that it plans to spud an appraisal well within OPL 310, with its partner Optimum, before the end of 2016. The well will be drilled following the completion of interpretation work on 3D seismic data acquired from the region in 2014. In addition to drilling at OPL 310, the company expects to run a well test and completion at its Otakikpo-002 well, located in the southeastern part of the Niger Delta, by the end of the first quarter of this year, which will allow continuous production to commence from the

Orient Energy Review January 2016

well. The Otakikpo-003 well is also scheduled to be drilled, tested and completed around mid-year 2016. Erin Energy, which commenced production from the Oyo-8 and Oyo-7 wells last summer, announced in June 2015 that it would participate in upstream activity in Nigeria this year by drilling the Oyo-9 development well in the first half of 2016. MX Oil, which anticipates the Aje field to enter the production stage by January this year, is also scheduled to be active in the country in the fourth quarter of 2016 with its plans for exploration drilling in the OML 113 license. In Senegal, final processed products from a 3D seismic survey covering 1,005 square miles across the Sangomar Deep, Sangomar Offshore and Rufisque Offshore permits will be available in mid-2016, according to FAR Limited, which commenced the survey in September with its joint venture partners Cairn Energy plc, ConocoPhillips and Petrosen in a bid to delineate the SNE discovery made last year. As part of an evaluation strategy to assess the SNE field, the joint venture plans to commence drilling operations at the SNE-3 and BEL-1 wells by 1Q and 2Q 2016, respectively. SNE-3 will test the southern extent of the field and BEL-1 well will initially test the Bellatrix prospect before evaluating the northern part of SNE. The JV also has a program and budget outline for three further optional wells in Senegal for 2016/2017. T5 Oil & Gas could potentially drill a well in Senegal this year, considering the first exploration period on its 90 percent owned onshore Louga Block lapses in July 2016. This demands the acquisition of 683 miles of 2D seismic and the drilling of one exploration well to 9,842 feet. Kosmos Energy plans to drill several wells in Senegal/Mauritania and the Greater Tortue area all throughout 2016. Venturing slightly further south, Oryx Petroleum is planning exploration activity in the AGC Shallow and AGC Central blocks this year, which are joint petroleum exploitation zones established by Senegal and Guinea-Bissau. Oryx, which is the operator of the blocks, has identified three structures in AGC Shallow, of which two are drill-ready prospects, and plans to drill an exploration well in 2016, according to Edison Investment Research Limited. Edison also outlined that Oryx has found shelf-edge

plays similar to SNE on seismic data in the deepwater AGC Central block, and stated that Oryx expects to acquire new seismic data in the region in 2016. The Tullow-operated Tweneboa Enyenra Ntomme (TEN) field, located offshore Ghana, is on schedule and budget to deliver first oil in mid-2016, which represents a significant milestone for the company. The TEN project, which has a total estimated gross cost of almost $5 billion and contains gross reserves of 300 million barrels of oil equivalent, is currently over 80 percent complete and is expected to reach a daily output of around 80,000 barrels of oil by early 2017. When on-stream, TEN will deliver “significant additional cash flow” to Tullow, according to the company’s chief financial officer Ian Springett, which is great news for a company that posted a 35 percent revenue drop and a gross profit decrease of 50 percent year-on-year in the first half of 2015. Elsewhere in West Africa, Exxon Mobil Corp. revealed that it intends to start drilling late 2016/early 2017 in Liberia, after the country was declared Ebola-free in September. ExxonMobil had signed for Liberia’s Block 13 in 2013 but the project was put on hold due to the Ebola epidemic. Erin Energy also announced in September that processing and interpretation results of the data acquired in a new 3D seismic survey off the coast of The Gambia will be available during 2Q 2016. The survey covered approximately 622 square miles across Erin Energy’s 100 percent owned A2 and A5 blocks, which are on-trend with last year’s FAN-1 and SNE-1 hydrocarbon discoveries offshore Senegal, according to an Erin Energy statement. A vast array of exploration and production developments are planned in West Africa in 2016, with Nigeria and Senegal in particular the focus of much activity. The progress of Ghana’s TEN development provides a much needed boost for Tullow, and ExxonMobil’s venture into Liberia is a sign of the country’s economic recovery following a tough period. If Erin’s A2 and A5 blocks are similar to the Senegalese discoveries made last year, 2016 could also prove to be very important for The Gambia when the company’s 3D seismic survey is completed. With so many countries in the region scheduling upstream operations over the next year, it looks as if 2016 is shaping up to be an exciting twelve months for the West African oil and gas industry. *Rigzone

INTERVIEW

OWA @ 20: ‘Offshore West Africa will

always play a significant role in the market place to provide opportunities for our partners’ - Richardson

rom January 26-28, the Eko Hotel and Suites, Victoria Island, will host stakeholders of the oil and gas industry in West Africa, in an annual event organised by Pennwell Corporation. Nick Richardson, Strategic Business Relations Manager of Pennwell, in a chat with Orient Energy Review unveiled a little of what participants should expect at the 2016 event. Excerpt:

ffshore West Africa is the Pennwell brand for this event and you have been running it for 20 years now, what has been your story so far?

he last 20 years has been quiet a success especially in the challenging markets place that we find ourselves today. The success has always been seen in the feed backs that we get from our exhibitors, visitors, and delegates - they keep on coming back, which means we must be doing something right. And I think we have facilitated a lot of opportunities, be it business to business, be it opportunities to cooperation, the opportunities to learn and gain insights, and to develop organisations. As you mark your 20th anniversary, what special thing are you going to add to the event’s line up in order to spice up the celebration? We have a few different things which we are going to be under-

Nick Richardson

taking at the event to celebrate that. We are going to have a reception period for which we are inviting about 150 guest to come and celebrate our 20 years of success at the event. We are going to continue to do what we have been doing for the past 20 years, and as I said before it is all about understanding the objectives of stakeholders. So we’ve got new programmes like the youth empowerment programme which we launched last year and has now tripled in size where we have up to 300 participants now. All the facts and figures show that we are actually going to be twice as big as we were last year. To be honest with you the event is going to be focused, to ensure that we deliver another great event and provide an opportunity for our partners to get

success on their return on investments. Going forward what are your plans? Are we going to see an Offshore West Africa that involves other West African countries?

think the event always focuses on West Africa, one of our key objectives is to continue participation from all West African countries – Ghana and other countries, that is something me and my colleagues will be working on in the next 12 months to increase the cooperation. In addition to that as the West African market

Orient Energy Review January 2016

INTERVIEW

OWA @ 20: ‘Offshore West Africa will always play a significant role in the market place to provide opportunities for our partners’ - Richardson continue to be an exciting market place, you will also see more of international pavilions. So we have the Scottish International Development partner here which will bring in 17 companies from Scotland who has interest in doing businesses over here. We believe from the conversations that we are having that you may start to see 2-3 international pavilions. With the current situation of oil prices, what do you think should be the role of OWA in developing the West African oil sector?

he key role is the facilitation of opportunities for people to come together to collaborate,

e-learn, and I think Offshore West Africa will always play a significant role in the market place to provide these opportunities. What motivated the increase in the number of participants in the youth empowerment programmes from what you had last year?

e had significant interest last year 2015, last year was our first on the programme and what we did last year was the panelists’ exercises, we worked very close with the Energy Institute in London. This year because of the confidence we had in that we have been able to triple that figure, what we want to do is to ensure that we provide fantastic experiences for the students, we are looking at expanding it further and we are in talks with a number of organisations in Ghana about bringing in the Ghanaian element to the youth programme next year, but it is still at the stage of discussion.

Does the fall in oil price affect your delegate fees and sale of exhibition booths? Of course it does, we put that into consideration in setting our price and strategy. What I would say is that our concentration has 2 tracks so that we have twice as many speakers as we had last year, very high profile and fantastic speakers from the industry who will share in their experiences so the price has to come down a little bit but in terms of the value for money people are getting, it is going to be twice as much in terms of speakers and conferences. And in addition to that anybody who comes as a paying delegate will receive complementary membership from the Energy Institute, and the conference is CPD (Continuous Professional Development) endorsed which means that it contributes to the individual’s CPD.

OWA @ 20:

Offshore West Africa: A Rich Heritage

he Offshore West Africa Conference & Exhibition, owned and produced by the PennWell Corporation, is delighted to introduce delegates, exhibitors and visitors to the upcoming 20th anniversary edition in Nigeria. The first of its kind in West Africa, the event premiered in 1996 in Nigeria to an international audience of delegates, exhibitors and partners. Borne out of

Orient Energy Review January 2016

a need to provide a networking and technical knowledge sharing platform in the West African Oil & Gas sector, this annual event has grown from humble beginnings into the Oil & Gas phenomenal event it is today. The Offshore West Africa Conference has over its rich 20-year history been instrumental to the growth of the Oil & Gas Sector globally by delivering a first class networking platform in West Africa and continues to do so. To mention a few: The paradigm shift

in the Nigerian Oil & Gas Sector from land and swamp operations to Offshore Oil & Gas Exploration and Production, with the major International Oil and Gas companies delving into the use of FPSOs (Floating Production, Storage and Offloading Vessels) as the ‘new way’ in offshore E&P (Exploration & Production) operations in the last 15 years. The Offshore West Africa forum has also played a signifi-

cant role in showcasing new and relevant technologies that have been instrumental to the discovery and development of new and major offshore Oil & Gas Fields in West Africa as was the case with the Ghanaian Oil & Gas industry when hydrocarbon deposits were discovered in commercial quantities in the last 10 years. This in turn has attracted more international Oil & Gas companies to the West African Offshore E&P market as well as generate new frontiers in far off Asia for the manufacture of FPSOs, allied technology, products as well as requisite global training of manpower to operate new systems and operate in fresh markets. Indeed, the Offshore West Africa Conference is truly indigenous to the countries where the forum has held over the years – as our continuous partnership with the Nigerian Content and Development Monitoring Board (NCDMB) and various similar institutions in the West African Oil & Gas Sector attest to. International Trade Missions with global reaches such

as the United Kingdom Trade & Investment Council (UKTI), the Scottish Development International (SDI) and the International Trade Council (ITC) as well as Regional Industry government heavyweights such as the Nigerian National Petroleum Corporation (NNPC), the Department of Petroleum Resources (DPR), the Ghana National Petroleum Corporation (GNPC), International Oil Companies - IOCs (such as Royal Dutch Shell, Total, Addax, Nigerian Agip Oil Company and Saipem), EPIC companies, major financial institutions operating in West Africa have also continuously partnered with the Offshore West Africa Conference over the years. This list is still growing. Foremost Institutions such as the African Energy Association, the Energy Institute Nigeria and Lonadek have also continued to partner with the Offshore West Africa Conference as Strategic Partners for the 20th annual Offshore West Africa in 2016. As featured during the Offshore West Africa 2015 conference, the Year 2016 conference will also feature a Continuous Development Programme for fresh engineers and a Youth Empowerment Programme for a stipulated num-

ber of university students from Ghana and Nigeria. These programmes will be run in conjunction with Lonadek and the Energy Institute’s Young Professionals Network and they form a part of PennWell’s overall corporate social responsibility initiatives. The programmes involve Career Counselling, Industry Related Awareness and an Empowerment Workshop. As plans are being finalised towards the 20th anniversary edition of the Offshore West Africa Conference, the event promises to be better than ever. Taking place on 26-28 January 2016 at the Eko Hotel & Suites, Lagos, Nigeria, and Offshore West Africa will build on the success of the 2015 event, which also took place in Lagos and attracted a record breaking international audience of almost 2,400 leading oil and gas industry professionals from more than 30 countries worldwide. The event will continue to feature a technical and strategic conference program developed by an Advisory Board comprised of leading industry experts, as well as an exhibition showcasing products, technologies and services from global and regional oil & gas companies, held concurrently, bringing together exhibitors and attendees from around the world for three days of education, networking and new business development. Offshore West Africa is a truly West African event and addresses key technology and development issues for the West African offshore Oil and Gas market, through a comprehensive educational program and three-day exhibition and conference, with the 2016 event focusing on Positioning for a Sustainable Future as the core theme. Offshore West Africa welcomes you to join in the celebrations as the event hosts its 20th anniversary celebrations.

Orient Energy Review January 2016

FROM THE NIGER DELTA

Exxonmobil Commissions N100m Community Assistance Projects

XXONMOBIL affiliate, Esso Exploration & Production Nigeria Limited, EEPNL, in production sharing partnership with the Nigerian National Petroleum Corporation, NNPC, and Shell Nigeria Exploration & Production Company, SNEPCO, its co-venturer on the Erha North Phase II Development, EPC2, has built and donated community assistance projects worth more than N100 Million in six communities in Lagos, Ondo and Rivers States. The projects include a community town hall and water purification plant in Onne, Rivers State; water purification plants for Igbologun 1 & 2, Igboeseyore and Igbosu communities in Lagos State and the reconstruction of a community market and water purification plant for Igbo-Egunrin

community in Ondo State. Speaking at the official hand-over ceremony for the CAP projects donated to Igbo-Egunrin community in Ondo State recently, John Unietis, project executive, who was represented at the occasion by Tunji Obawole, technical manager, EPC2, EEPNL, said the projects signified “yet another important step we have taken as an organization to improve living conditions in communities across Nigeria through investment in such infrastructure as clean and safe drinking water, as well as the promotion of economic well-being of these communities through various support schemes and initiatives.” Obawole said the water purification plant “is meant to improve the overall well-being of the community through the provision of clean, potable water thereby reducing the incidence of water-borne diseases in the community, along with their negative conse-

quences,” adding that it was based on the Meckow Aquapur technology, which meant the plants could be powered by solar energy; could purify over 24,000 litres of water daily and is also durable. He further said the EEPNL undertook the reconstruction of the Igbo-Egunrin community market to improve economic activity in the community, adding that as “the major market in the Ilumeje axis of Ilaje local government area, we believe the reconstructed market will help improve the economic well-being of the communities it serves through the provision of this enhanced operating environment.” Governor Segun Mimiko of Ondo State, who was represented at the occasion by BankWWe Sutton, chairperson of the Ondo State Micro-Credit Agency, expressed appreciation to the ExxonMobil for taking the lead to come to the community’s assistance through the projects donated. While commending the company for supporting the state governor’s vision of building conducive market spaces for traders, Sutton promised that her agency would avail loans to traders who are interested and qualified towards improving their businesses. Philip Kalejaiye, traditional ruler of Igbo-Egunrin, thanked the ExxonMobil for the projects donated to the community, noting that they would uplift the living conditions of the community as well as improve economic activity through the reconstructed market. Erha North Phase 2 Development is an extension of the existing Erha subsea system and infrastructure currently producing to the existing Erha.

Militants Give Condition to Stop Bombings in N/Delta

op militant leaders, who have been causing havoc in the Niger Delta and major oil depots in the South-West, have laid out conditions under which they would stop the renewed bombing of oil installations and embrace peace. The militants told one of our correspondents in Abuja that they would only drop their arms when the Minister of State for Petroleum, Dr. Ibe Kachikwu, meets and negotiates with them. The militants issued the position after a secret meeting involving their leaders from the Niger Delta and their counterparts in Arepo, Agric, Epe, Ikorodu, Itoki and Igbokoda areas of Lagos. One of the top leaders, who gave his name as General Levi, told Vanguard

Orient Energy Review January 2016

that they would not want to back down until the Petroleum Minister meets them and secures amnesty for their members to avoid being persecuted by security agencies. The militant leaders also said after meeting with the minister, they would thereafter take over the responsibility of tracking and exposing those bent on causing further destruction to all facilities and meting our appropriate punishment to them. They said they had been pleading for amnesty since the days of the President Jonathan’s administration but nobody took them into consideration and were ready to work with the new administration to bring about an end to oil bunkering and pipeline vandalisation in the Niger Delta region and the South-West. Levi said: “We are ready to drop our arms and denounce hostility with the government on the condition that the Minister of Petroleum will meet

with us and hear our own side of the story. We are not against the government but we have genuine issues yet to be addressed by successive administrations in this country. “We are ready to commence discussion and denounce association with this present situation. From now henceforth, we are ready to block any channel for anyone not to go through to bomb oil pipelines.” The bombing of oil installations in the Niger Delta commenced last week as militants blew up major oil and gas pipelines in the area. *Vanguard

FROM THE NIGER DELTA

NDDC to Train Workforce on Niger Delta Master Plan

Ibim Semenitari, acting NDDC boss

he Niger Delta Development Commission (NDDC) said that it had concluded plans to train its staff on implementation of its master plan. The acting Managing Director of NDDC, Mrs Ibim Semenitari, stated this in Port Harcourt at a two-day interactive session with Civil Society Organisations (CSO) in the Niger Delta. She said that shortage of expertise was partly responsible for the commission’s poor record in actualising the Niger Delta Master Plan. “We are all confronted with the critical challenge of ensuring that NDDC meets the nation’s expectations of providing best practices and standard excellence in its operations. “We will not allow NDDC to add to the statistics of previous intervention efforts set up by the Federal government for the region’s development. “To achieve this, requires a quick overhaul and reinvigoration of our systems and procedures in line with global standards anchored on innovation and creativity. “We are making plans to re-professionalise the workforce to create a new generation of officers with sufficient skills, knowledge and motivation to coordinate NDDC management systems,” she said. Semenitari said that efforts were ongoing to eliminate loopholes discovered in its procurement and public expenditures processes. She said the commission’s transformation would strengthen President

Muhammadu Buhari’s position of transparency and accountability in the conduct of government business. According to her, NDDC, under my leadership will focus on the core mandate of embarking on infrastructure development, while providing services to

the people of the region. In his remarks, the Country Director of Stakeholder Democracy Network, Mr Inemo Samiama, who spoke for the Civil Society Organisations, called for accountability and transparency by the commission. He said that if NDDC must succeed, it should follow international best practices in the award and execution of contracts and projects. Samiama said that lack of expertise and non-engagement of CSOs by the commission was partly responsible for the large number of uncompleted projects scattered across the nine states of the region. He, however, commended the commission for organising the interactive session and pledged to partner with it in ensuring its success in the region.

Nigeria’s Delta Amnesty Program to Continue for at Least One Year

igeria’s amnesty program for former Niger Delta militants will continue for at least another year contrary to expectations that it was due to be shut down. Since 2009, the program has provided job training and education to former rebels who wrought havoc on the oil-rich southern region before that by kidnapping foreign workers and attacking oil facilities, crippling the country’s key industry. Many, particularly in the oil sector, feared an end to the amnesty program could trigger fresh unrest there. President Muhammadu Buhari indicated in his inaugural speech last May that he would let it expire and replace it with other investments. Buhari, a northern Muslim, defeated the incumbent Goodluck Jonathan, a southern Christian, on an anti-corruption platform in the March 2015 presidential election. His intention to end the program has caused tensions between his administration and Delta leaders. Despite being home to Nigeria’s vast oil and gas resources, the Niger Delta states remain underdeveloped and frequent oil spills have devastated the ecosystem and local fishing communities. Instead of closing it down, the government will streamline the amnesty program launched to give 30,000 former militants a chance to find productive work. “We’re in the last phase of the amnesty

to reintegrate those who have gone through various programs and trainings, a gradual wind down,” program spokesman Owei Lakemfa said. The program is helping about 17,000 who have finished training to set up a business or find jobs. By the end of this year, about 10,000 more are expected to finish training and the rest will stay on until they complete their courses. The spokesman did not give an end date for the program. For those who want to start a business, the program will budget 2.3 million naira ($11,500) per beneficiary, providing training in running a business, renting premises and getting government permits. “For fish farming, for instance, there will be provision of a pond,” said Dortimi Kester Tawari, who is running this part of the program. “For welding, equipment will include materials to be used for the first 3-6 months.” The program is also changing how beneficiaries will receive their monthly 65,000 naira ($325) stipends, which were previously distributed through former militant leaders. That system was prone to abuse, so payments will now be sent directly to individual participants in the program.

Orient Energy Review January 2016

GHANA REPORT

Atuabo Shut Down Will Not Trigger Load Shedding – Power Ministry

Ghana National Gas Company, Atuabo gas plant.

he Ministry of Power has rejected claims that the shutdown of the Ghana National Gas Company’s Atuabo gas plant for routine mainte-

nance this week will bring about intense load shedding in the country. According to the Power Ministry the Volta River Authority, VRA, with the support of

FPSO Mills Begins Ghana Sail Late January

ullow Oil Plc has said work on the Tweneboa-Enyenra-Ntomme (TEN) project is almost over, with the “next important event being the sailaway” of TEN’s Floating Production Storage and Offloading (FPSO) from Singapore to Ghana. The vessel is expected to depart in late January 2016 and arrive in Ghana in early March when the vessel will begin to be connected to the risers and subsea infrastructure. A gradual ramp up in production towards plateau is anticipated during the second half of 2016 as the facilities go through the final commissioning stage and wells are tied into the FPSO. Tullow estimates that average working interest production by TEN in 2016 will be around 23,000 bopd gross (net: 11,000 bopd). Following the success of the Jubilee field discovery, the partners in Ghana embarked upon an exploration programme to find the next major deepwater field. In March 2009, the Eirik Raude rig successfully drilled the Tweneboa-1 wildcat well in the Deepwater Tano licence, around 20 km west of Tullow’s Jubilee field and some 45 km offshore from the Ghana mainland. This initial discovery was followed up by a series of further successful appraisal and exploration wells which resulted in the discovery of the Tweneboa-Enyenra-Ntomme (TEN) field. In May 2013, Ghana’s Energy Minister at the time approved the Plan of Development for the field and Tullow commenced with its second major operated deep water development project in Ghana.

Orient Energy Review January 2016

Similar to Jubilee, the development includes the use of an FPSO, which has a facility production capacity of 80,000 bopd, which will be tied in to subsea infrastructure across the field. A naming ceremony of the FPSO took place in September 2015. Ghana’s First Lady named the vessel ‘FPSO Prof John Evans Atta Mills’, after the late president, who oversaw First Oil from Ghana’s Jubilee Field in 2010. FPSO Prof John Evans Atta Mills will produce and store oil from the TEN oilfields, which lie around 60 kilometres from the coast of the Western Region. The vessel is nearing the end of its construction at Sembcorp Marine Shipyard in Singapore and Tullow says it will set sail to Ghana by the end of this month. Upon arrival in March, FPSO Mills will be hooked-up to the subsea production equipment, which is being installed on the seabed in the TEN fields. Tullow said in its latest update that the TEN Project continues to make excellent progress, and is over 80% complete, and remains within budget and on schedule for first oil between July and August 2016. The TEN Project is Tullow’s second major operated deepwater development in Ghana, which will produce up to 80,000 barrels of oil per day.

the government has procured some 600,000 barrels of Light Crude Oil, LCOm, to run the Aboadze Thermal Plants. The country is said to lose some 600 megawatts of power with the shutdown of the Ghana Gas plant for two weeks routine maintenance beginning tomorrow January 15, 2015. But the 600,000 barrels of Light Crude Oil purchased according the Power Ministry is adequate to run the thermal plants to mitigate any generation shortfall from the Aboadze generation enclave. Chairman of the Load Shedding Management Committee and the Chief Executive officer of Ghana Grid Company (GRIDco), Ing. William Amuna told Citi Business News ‘very soon Ghana Gas will be due for mandatory routine maintenance but if that happens we could be losing over 600 megawatts because the plants from Aboadze run on gas from Ghana Gas. Now we have put in place measures to ensure that adequate supply is maintained during this period. During the period VRA is going to run on light crude oil and VRA has already procured over 600,000 barrels of the light crude oil that would be used to run the plants in Aboadze in other that we don’t have any short from the generation from Aboadze during the period.” This we know is very expensive to the state but in other that we don’t have any shedding of load VRA through the government of Ghana procured this amount of crude oil to ensure and assure power production during the period of the gas plant shutdown, Chairman of the Load Shedding Management Committee and the Chief Executive officer of Ghana Grid Company (GRIDco), Ing. William Amuna said. Meanwhile the Deputy Minister of Power John Jinapor says a technical team is working around the clock to convert the other generating plants like the AMERI which currently run on gas to be able to run on crude as well.

GHANA REPORT

Tullow Remains Upbeat About 2016 despite fall in Oil Price By Gilbert Boyefio

ullow Oil Plc (Tullow) has indicated that it is upbeat about the company’s prospects in 2016, projecting that, “In 2016, West Africa average working interest oil production guidance is expected to be in the range of 73,000 to 80,000 bopd. This includes production from the TEN development which remains on track for first oil between July and August 2016.” In 2015, West Africa working interest IN oil production was within guidance averaging 66,600 bopd. In a trading statement and operational update issued on January 13 to summarise recent operational activities and to provide trading guidance in respect of the financial year to 31 December 2015, Tullow said Jubilee production performance for 2015 exceeded the 100,000 bopd target, averaging 102,600 bopd gross (net: 36,400 bopd). It pointed out that good performance from the onshore gas processing facility has allowed significant gas export from the Jubilee field with an average rate of gas export of around 85 mmscfd in the last quarter of 2015. Tullow is forecasting Jubilee 2016 average production to be around 101,000 bopd gross (net: 36,000 bopd). This reflects the impact of a planned two week FPSO maintenance shutdown in the first quarter 2016 and a period of reduced water injection capacity which is currently being addressed. The Greater Jubilee Full Field Development Plan (GJFFD), which includes the Mahogany and Teak fields, was submitted to the Government of Ghana in December 2015 and approval is targeted for the first half of 2016. This project, to extend field production and increase commercial reserves, has been redesigned given the current environment, to reduce the overall capital requirement and allow flexibility in the timing of the capital investment. TEN The TEN Project continues to

make excellent progress, is over 80% complete, and remains within budget and on schedule for first oil between July and August 2016. To date, all the key milestones of the project have been met, with the next important event being the sailaway of the TEN FPSO from Singapore to Ghana. The vessel is expected to depart in late January 2016 and arrive in Ghana in early March when the vessel will begin to be connected to the risers and subsea infrastructure. A gradual ramp up in production towards plateau is anticipated during the second half of 2016 as the facilities go through the final commissioning stage and wells are tied into the FPSO. Tullow estimates that TEN average working interest production in 2016 will be around 23,000 bopd gross (net: 11,000 bopd). WEST AFRICA NON-OPERATED West Africa non-operated production was in-line with expectations for 2015 at 30,200 bopd net. Due to the low oil price environment there has been a reduction in capital allocation by the operators across a number of these fields for 2016 which will impact production. West Africa non-operated production in 2016 is therefore expected to be around 29,500 bopd net. FINANCIAL UPDATE During 2015, Tullow increased the capacity of its RBL and Corporate Facilities by $450 million. At the end of 2015, Tullow had total facility headroom and free cash of $1.9 billion and net debt of $4.0 billion. The improvement in the year end net debt and liquidity versus previous forecasts is largely due to ongoing capex and cost management plus the timing of payments in relation to the TEN Project which has resulted in 2015 Group capex totalling $1.7 billion versus guidance of $1.9 billion. In 2015, Tullow is expected to deliver revenue of some $1.6 billion, gross profit of $0.6 billion and operating cash flow of $1.0 billion, all in line with market expectations. Due to the current low oil price, a number of accounting charges are forecast to be incurred in the 2015 income statement. These charges comprise a post-tax exploration write-off of c.$0.4 billion, a post-tax impairment charge of c.$0.3 billion and an onerous rig contract charge of c.$0.2 billion

as a result of much lower levels of exploration and appraisal drilling activity planned for 2016. As we look ahead to 2016, Tullow’s hedging position provides significant protection of future revenues and cashflows. The mark-to-market value at the end of December 2015 was $623 million and Tullow will benefit in 2016 from approximately 52% of entitlement oil production hedged at an average floor price of around $75/bbl on a pre-tax basis and approximately 64% hedged on a post-tax basis. These hedges are accounted for separately and are not used in impairment calculations which compare book values with future prehedge discounted cash flows. The Group’s capital expenditure associated with operating activities has reduced from $1.7 billion in 2015 to $1.1 billion in 2016 and the Group is looking at additional opportunities to reduce it further. The current total comprises TEN capex of c.$600 million, Jubilee of c.$150 million, West Africa non-operated of c.$100 million, East Africa pre-development expenditure of c.$150 million and Exploration and Appraisal of c.$100 million. Despite current low oil prices, Tullow expects to maintain sufficient liquidity throughout 2016. The Group starts the year with financial headroom of $1.9 billion, is benefiting from a significant hedge position, will see West Africa oil production increase with TEN first oil and will continue to focus on reducing costs and capex across the portfolio. The primary focus of the Group in 2016 remains to deleverage the balance sheet. The trading statement and operational update is in advance of the Group’s Full Year Results, which are scheduled for release on Wednesday 10 February 2016. The information contained herein has not been audited and may be subject to further review and amendment.

Orient Energy Review January 2016

GHANA REPORT

Ghana’s Oil Will Be a Blessing and Not a Curse Petroleum Minister Assures Chiefs

Chamber of Petroleum Consumers to Seek Injunction against Energy Levies

By Gilbert Boyefio

he Minister of Petroleum and Member of Parliament for the Ellembele Constituency, Emmanuel Armah-Kofi Buah has assured the chiefs of the western region that government is working assiduously to ensure Ghana’s oil and gas becomes a blessing and not a curse. Speaking at the second edition of the annual stakeholders meeting with the western regional house of chiefs under the theme “Development in the petroleum sector – The role of our traditional leaders”, the minister assured the Chiefs that, Government will continue to involve them in all decisions regarding the sector. He took the opportunity to brief the chiefs and traditional rulers about the current happenings in the industry, and also addressed their concerns. Hon Buah also used the occasion to update the chiefs on progress made in the implementation of programs and projects in the petroleum sector such as the US$7 billion OCTP Sankofa Gas project which will usher in Ghana’s third FPSO and how government is eradicating the use of solid fuel through the Rural LPG Distribution Programme. Western region is the home of Ghana’s emerging oil and gas industry.

Orient Energy Review January 2016

hamber of Petroleum Consumers (COPEC) says it will seek court injunction against the Energy Sector Levy passed by parliament in December 2015. According to the group, they gave government seven days ultimatum to scrap the law that has caused astronomical increases in utility tariffs, taxes and fuel prices but government failed has failed to adhere. The Executive Director of COPEC, Duncan Amoah, recently told the host of Adom FM’s “Burning Issues” Programme Afia Pokua that COPEC is consulting on the way forward. “As I talk to you now, our lawyers are currently working on our suit to put the government before court on the levies,” COPEC Executive Director stated. Utilities regulator, Public Utilities Regulatory Commission (PURC), increased electricity and water tariffs by 59.2% and 67.2%, respectively in December last year. Organised Labour says the tariffs should be reduced to 50%. They also want the recent 27%

increase in fuel prices reduced. Prices of petroleum products shot up after the passage of the Energy Sector Levy. Organised Labour have scheduled to go on a two-day nationwide strike and demonstration on January 21 and 22, as part of measures to put pressure on the government to reduce utility tariffs, fuel prices and taxes. Per an industrial action roadmap, Organised Labour asked its members to start flying red bands at the various offices from Thursday January 14. The demonstration would run concurrently throughout all the regional capitals to protest against the recent increases in utility tariffs and the energy sector levies among other things. Dancun Amoah says although the group is in support of the demonstration by organised labour, it will still go to court to force government to scrap the recent 27% increase in fuel prices. Source: myjoyonline.com

DRILLING/ EXPLORATION

wiber Holdings Limited (the Company and together with its subsidiaries, the Group) disclosed Tuesday that Swiber Offshore Construction Pte. Ltd. (SOCPL), a wholly-owned subsidiary of the Company, has acquired 9,500,000 nil-paid ordinary shares of Deltatek Offshore Limited (DOL) with nominal value of $0.005 or NGN 1.00 each (the Shares), representing 38 percent of DOL’s entire issued share capital (the Acquisition). Following the Acquisition, DOL has become an associated company of the Company. The aggregate consideration for the Acquisition is NGN 9,500,001 (equivalent to approximately $47,679) (the Consideration) comprising $0.005 (NGN1.00) paid in cash to the seller of the Shares and NGN 9,500,000 as capital injection for DOL as and when DOL calls on the nominal value of the Shares. The Consideration for the Acquisition was arrived at on a willing-buyer, willing-seller basis Based on the audited financial statements of DOL for the period ended Dec. 31, 2014, the net tangible

Swiber’s Subsidiary Acquires 38% Stake in Nigeria’s Deltatek Offshore asset value of DOL was NGN 4,661,930 (equivalent to approximately $23,397). DOL is a company incorporated in Nigeria and will be principally engaged in providing offshore engineering, procurement, construction, installation and commissioning services in the Sub-Saharan Africa region. The Acquisition will be funded through internal resources and is not expected to have any material financial impact on the consolidated net tangible assets per share and consolidated earnings per share of the Company and the Group for the current financial year ending Dec. 31, 2016. None of the directors or controlling shareholders of the Company has any interest in the Acquisition, save for their interests arising by way of their respective shareholdings and/or directorships, as the case may be, in the Company, SOCPL and/ or DOL

Cairn Energy Drilling SNE-3 Appraisal Well Offshore Senegal

V partner FAR reports that the second appraisal well to be drilled on the SNE oil field, 100km offshore Senegal, has been re-entered and will now be drilled to planned total depth. TheSNE-3 well, located approx. 3km south of the initial SNE-1 discovery well, will further evaluate the potential of the worldclass SNE oil field. The SNE-3 well follows the successful first appraisal well at SNE-2 (refer ASX announcement 4 January 2016). SNE-2 successfully flowed oil at 8,000 bbls per day constrained and estimated at over 10,000 bbls per day on an unconstrained basis. SNE-2 appears to have the same high quality 32 degree API oil seen in SNE-1. The oil flows from the SNE-2 drill stem testing (DST) were important in demonstrating that the SNE field is a world class oil discovery with the ability to flow oil at commercially viable rates as well as highlighting the potential of the upper ‘heterolithic’ reservoir units to make a material contribution to SNE resource and

production volumes. This positive result has helped confirm the overall scale and extent of the SNE resource base and is expected to support a future revision of the SNE resource estimates. The SNE-3 well will be drilled in approx. 1,180m of water to a total vertical depth sub-sea (TVDSS) of approx. 2,782m and is expected to include an extensive evaluation program involving coring, logging and flow testing. SNE-3 was previously drilled to a depth of 1,755 metres by the Ocean Rig Athena prior to the spud of SNE-2 (refer ASX announcement 2 November 2015). FAR expects SNE-3 to reach TD after recommencement of drilling and after the completion of coring in the latter part of next month. It is expected

wireline logs will then be run followed by a drill stem testing (DST) program. A key aim of the SNE appraisal program is to progress towards proving a minimum economic field size for the SNE discovery, which FAR estimates to be approx. 200 million barrels of recoverable oil as well as determining flow rates for the planning of a future development. In addition, the BEL-1 well, which will evaluate the untested Buried Hills play to test the Bellatrix exploration prospect, will also appraise the northern portion of the SNE oil field (refer Figures 1, 2). BEL-1 will be drilled after completion of SNE-3. Senegal JV partners: Cairn Energy (Operator) 40%, ConocoPhillips 35%, FAR 15% and Petrosen 10%.

Orient Energy Review January 2016

DRILLING/ EXPLORATION

Epic Refinery Group has signed agreement with Chiron Refineries to build a modular refinery at Okporoma, Bayelsa State

Epic Refinery Signs Consulting Agreement to Build Refinery

PIC Refinery Group, a Nigerian firm, has signed a consulting agreement with Chiron Refineries, for the completion of the construction of the 100,000 barrel capacity refinery that is expected to provide employment for 100,000 Nigerians. The agreement, according to Barango Mathew Wenke Jnr., managing director, Epic Refinery, followed the granting of license for operations to the company by the federal government. Epic Refinery Group is aware of the hardship and the needs of

Shell Exits Development Of Bab Sour Gas Reservoirs In Abu Dhabi

hell has announced that, following a careful and thorough evaluation of technical challenges and costs, it has decided to exit the joint development of the Bab sour gas reservoirs with ADNOC in the emirate of Abu Dhabi, and to stop further joint work on the project. The evaluation concluded that for Shell, the development of the project does not fit with the company’s strategy, particularly in the economic climate prevailing in the energy industry. Shell had announced April 30 2013 that the Company had been chosen by the Abu Dhabi National Oil Company (ADNOC) to participate in a 30-year joint venture (JV) to develop the majorBab sour gas reservoirs in the Emirate of Abu Dhabi. Shell was to hold a 40% equity stake in the JV, with ADNOC holding 60%. It was intended that the gas would supply the local market in the United Arab Emirates.

Orient Energy Review January 2016

Nigerians and has taken a decision to start constructing a relocation refinery on its site in Bayelsa state. The company signed a consulting agreement with Chiron Refineries as the best match for Epic’s location, saying the future is Brownfield, as opposed to Greenfield, to find a lasting solution to the energy problems in Nigeria. The agreement for the construction of the refinery was sealed in Lagos, by representatives of both companies led by the Wenke and Ron Kuperberg, managing director, Chiron Refineries, an expert on relocation and assets management. According to Wenke, the initiative is his company’s response to the growing demand for refined products in the country, in the midst of the sharp decline in the price of crude oil in the international market. He also said that with the forecast that the price of crude oil may further drop to below $20, it is imperative for the country to commence refining of its crude. It is also to meet the country’s increasing demand and in view of the government encouragement to proceed with a relocation as opposed to a Greenfield. “The impact of this project can never be over emphasised with an anticipated creation of over 100,000 jobs and more than 180 petrol stations across the nation. With electricity generation of over 500 megawatts and their multiplier effects on the economy, no one is in doubt of the enormous benefits of this project to the country and Africa as a whole,” he said. Wenke said funding for the project is

guaranteed and that the promoters have blocked the first $30 billion for the project meant for upstream, midstream and downstream. “We have already proposed a jet at Akasa from the Atlantic ocean where the government has approved as oil and gas free trade zone. This is just 60 kilometres to our base within the brass area free trade oil and gas zone. “The Department of Petroleum Resources, DPR, has inspected and approved the land, a massive land at Okporoma. There had been delay on the issuance of the licence because some big people had sat on it which had delayed fund to be released. It is a direct foreign investment. The resources may be slim, but we are ready to emulate the big names. We worked hard to get here. We got the licence on June 15.” Recall that the federal government and Epic Refinery and Petrochemical Industries recently signed a Memorandum of Understanding, MoU, to establish a refinery with the capacity to create 100,000 new jobs. Epic refinery boss had said that the firm would inject $7.5 million into the project. Epic Refinery Group is joining other companies like Dangote and Ode-Aye Refinery Limited in building private refineries in the country. President Muhammadu Buhari had in June 2015 granted licences to 65 Nigerian companies to construct modular refineries. The companies were selected from more than 285 applications that were screened for the purpose. The decision of the federal government to award licence to establish refineries was born out of its desire to see the increase in domestic refining capacity to meet local demand, thereby reducing huge import bills for subsidy. Modular refineries are mini-refineries with capacities ranging from 1,000 to 10,000 barrels per day, bpd, which can be assembled and separated easily for enhanced performance and efficiency.

DRILLING/ EXPLORATION

ussian news agencies have reported on Friday that Lukoil, Russia’s largest private oil company in the world, exited projects in Cote d’Ivoire, where it led exploration in the deep offshore. The company confirmed the information about leaving the projects to TASS News Agency. Lukoil has operated in the Gulf of Guinea (Atlantic Ocean) offshore Cote d’Ivoire since 2006. Last August, Lukoil pulled out of the oil and gas exploration drilling project (development of block SL-5-11) that it began in Sierra Leone, only explaining to local Russian news agencies, that the company did not currently have any projects and has backed away due to poor exploration results in Sierra Leone. A couple of years ago, Pavel Bogomolov, Government & Public Relations Manager of Lukoil Overseas Ghana Ltd, spoke to the Buziness Africa media about the Lukoil company’s operations in Ghana and its plans to expand business operations to other African countries, such as Cote d’Ivoire and Sierra Leone. He said that Lukoil has focused on upstream exploration projects in the waters of other West African states. Lukoil’s senior manageme/nt has emphasized on more than one occasion that, if the quantity of the reserves to be evaluated on the blocks proves to be sufficient for their industrial development and exports, some intensifying and broadening of the regional program would become likely to consider. He also explained that the only real difficulty Lukoil has faced on the African continent was the constitutional crisis and conflicts in Cote d’Ivoire. Those lamentable events temporarily paralyzed foreign investment in that country, according to Bogomolov. The information about Lukoil

Russia’s Lukoil Exits Projects in Cote d’Ivoire

Mart Updates Umusadege Drilling

The testing results for the UMU-16 well will be released after full interpretation of the drilling, logging, and sampling data and upon obtaining the required approval by the Department of Petroleum Resources. The UMU-15 well short string completed in the XIV sand has been production tested at multiple choke settings, resulting in a final rate of 1,908 bpd on a 36/64 inch choke during a six-hour flow test. It was also long string completed in the XXa sand which was production tested at multiple choke settings, resulting in a final rate of 1,084 bpd during a six-hour flow period. The remaining zone in the long string (XVIIa sand) has been cleaned up however no production testing was

art Resources issued an update on its operations in Nigeria at the Umusadege field. The company and its partners spud the UMU-16 well on December 6 to appraise the West Prospect potential. The UMU-16 was drilled to the planned total depth of 10,597 ft, following which the zones of interest were logged and sampled and the 9 5/8 inch casing was cemented in place. The well was then drilled to 11,372 ft. The deep section is currently being logged and sampled, after which the deep section will be plugged back.

Lukoil workers

possibly terminating operations in Iraq, Venezuela, Cote d’Ivoire, Egypt, Ghana and Ukraine, was reported in August 2014. The company’s report said that Lukoil has been active in a number of countries with a high level of political and economic risks that could significantly complicate the work of the company in a particular region, and even lead to its termination. In 2014, it was reported that drilling in West Africa, including in Ghana, Côte d’ivoire and Sierra Leone, did not bring Lukoil the expected results, so as not demonstrated commercial hydrocarbon reserves. Vice-President of the company Leonid Fedun did not rule out that Lukoil could withdraw from al-

most all of the projects in West Africa. Russia’s Lukoil is one of the world’s biggest vertically integrated companies for production of crude oil and gas, and their refining into petroleum products and petrochemicals. The company is a leader on Russian and international markets in its core business and its key mission is to harness natural energy resources for human benefit and supports long-term economic growth, social stability, prosperity and progress in the regions where it operates. Light oil and gas condensate accumulations were discovered in sand beds after drilling an exploration well (Independance-1X) in the Independance structure of the CI-401 block in December 2011. Drilling the first appraisal well (Independance-2A) in October-December 2013 confirmed the oil content of the Independance field Turonian sands. The second appraisal well was completed in January 2015 (Independance-3A) to determine the field’s hydrocarbon reserves and geological model. The information about Lukoil possibly terminating operations in Iraq, Venezuela, Cote d’Ivoire, Egypt, Ghana and Ukraine, was reported in August 2014. The company’s report said that Lukoil has been active in a number of countries with a high level of political and economic risks that could significantly complicate the work of the company in a particular region, and even lead to its termination. As TASS reported earlier, in 2013 Lukoil sold its Odessa refinery, in August 2014 - its network of filling stations in Ukraine. At Lukoil’s Karpatneftechem in Ukraine production was stopped in the autumn of 2012. Lukoil has closed all its projects in Vietnam. The company intends to focus on projects in West Africa, where Lukoil operates also in Sierra Leone and Ghana.

undertaken. This zone will be placed on commercial production after depletion of the XXa sand.

Orient Energy Review January 2016

ALTERNATIVE ENERGY

Nigerian Energy Support Programme to benefit 10,000 lives – GIZ boss

aving built the first renewable energy power plant in Nigeria that combines more than one technology and operates both off-grid and on-grid, the German Agency for International Corporation, Abuja (GIZ), said it is implementing the Nigerian Energy Support Programme (NESP) on behalf of the European Union and the German Government with an overall budget of 24.5 million Euro. Renewable-energyGIZ provides advisory services to Nigerian partners on rural electrification, energy efficiency and renewable energies, and has been contributing to the success of the Nigeria-German Energy Partnership (NGEP) since 2002. It affirmed that the Kainji plant serves as a demonstration of innovative small-scale electrification solutions which is the first renewable energy power plant in Nigeria that combines more than one technology, and is able to operate both off-grid and on-grid. According to GIZ’s Country Director, Thomas Kirsch the hybrid power systems based on new and renewable energy sources, especially photovoltaic and wind energy, are an effective option to solve the power supply problem for remote and isolated areas far from the grid. He explained that photovoltaics, combined with small wind turbines have gained increasing recognition as a reliable, cost effective alternative to grid extension and diesel generator sets. “Electricity grid extension is generally uneconomical, while diesel generator

sets are expensive to operate and maintain, and do not provide long-term environmentally and economically sustainable solutions, especially for the rural poor. “The plant electrifies parts of a National Power Training Institute of Nigeria (NAPTIN) training site in Kainji, which helps to reduce electricity costs. Furthermore, the power plant serves as a training facility for NAPTIN students,” he said. According to Kirsch. “GIZ is implementing the Nigerian Energy Support Programme (NESP) on behalf of the European Union and the German Government with an overall budget of 24.5 million Euro. NESP advises the Nigerian Government on how best to provide reliable and sustainable electricity to its people.” As part of its activities, Kirsch stated that NESP supports the increase of clean and sustainable electricity production by incentivizing investments in renewable energy which includes the development of a modern and transparent bidding system for renewable energy projects, by bringing the Nigerian energy sector at par with countries like South Africa. He also said that NESP helps to improve energy access in rural Nigeria using clean technologies, in collaboration with 5 pilot states (Sokoto, Niger, Ogun, Cross River and Plateau). “Altogether 10 projects for rural electrification will be developed in the pilot states together with private sector project developers. 10,000 people will directly benefit from NESP support: The activities of NESP are complemented with trainings of renewable energy experts to fulfill the need to establish a vibrant indigenous clean energy market,’ he said.

Firm urges Fed Govt to prioritise solar energy

he Managing Director, Demarg Nigeria Ltd, Mrs. Funmilayo Fadunsi, has urged the Federal Government to take steps that will popularies the use of solar energy in the country. Speaking with reporters at the 2015 Annual Praise and Thanksgiving Service Reception for the firm in Abuja, she said although there is a commission in charge of renewable energy in the country, it only exists in name. According to her, government should work its talk to show that it is serious about the adoption and implementation of alternative energy policy in Nigeria by using solar energy in government buildings and houses. Mrs Fadunsi said with the use of solar energy, Nigeria could end pollution, depletion of the ozone layer and attain a cleaner envrironment . She said: “We already have commission in charge of renewable energy in solar in Nigeria. They should do more to

Orient Energy Review January 2016

buttress the importance of renewable energy in Nigeria, not just bearing the name for bearing sake. “ More should be done; they should just stop the lips service they are paying presently and go into the actual and embrace it themselves even in their buildings, having their office equipment, their homes and what have you going solar. “Even in doing that, we will have a cleaner environment, all this pollution we are talking about, the depletion of the ozone layer will be a thing of the past.” She insisted that all hands must be on deck to save the environment by going solar. The Chairman of the company, Gen. Ademola Fadunsi (rtd), advised the government to embrace solar in its entirety because there is no limit to what the Federal Government can get from the sun. He said:“The Federal Government can even power the whole country from solar. We have sun in abundance in Nigeria. “

Nigeria to re-focus on renewable energy – Kachikwu

he Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, has emphasized the need for Nigeria to give serious consideration to renewable energy as the solution to its energy challenges. Speaking in an interview on the sidelines of the World Future Energy Summit currently in Abu Dhabi, United Arab Emirates, the Minister acknowledged that crude oil and gas are exhaustible resources, noting that the way to make energy accessible to Nigerians in every nook and cranny of the country is to exploit renewable energy sources. “We need to refocus a lot more effectively on alternative energy resources, particularly solar energy. There is really no reason why a country like Nigeria should not have more of its power supply from solar. President Buhari is very focused on this. This is something we are going to apply a lot more energy to in the days ahead”, Dr. Kachikwu stated. He said he did not believe that the exploration of renewable energy would pose a competition to the petroleum industry but rather would complement it as petroleum alone could not meet the huge energy need of the country, more so when the crude oil and gas would get exhausted someday. Daily Trust

LOGISTICS/ MARITIME

2016 Is Expected To Record Nigerian Ship Industry-Wide Loss in owners Plan Container Shipping Export Crude Oil

By Pita Ochai

urther widening of the supply-demand imbalance at the trade route level and insufficient measures to reduce ship capacity will lead to an acceleration of freight rate reductions and industry-wide losses in 2016, according to the latest Container Forecaster report published by global shipping consultancy Drewry. The decline in global container shipping freight rates is anticipated to have been as great as 9% last year and Drewry is forecasting that carrier unit revenues will decline further in 2016, albeit at a slightly slower pace. Excluding 2009, the past 12 months has seen the lowest spot rates in most major trade lanes and all at the same time. This is not solely due to fundamental supply/ demand imbalances caused by weak volumes and over supply. End of year 2015 spot rates from Asia to the US West Coast and US East Coast were around $815 and $1,520 per 40ft container respectively. These were easily the lowest since 2009 and with decent cargo growth and load factors of over 90% to the US west coast, the rate deterioration emphasise that carriers have been fighting for market share and are positioning themselves further for the potential shifting of cargo from the West to the East Coast after the Panama Canal widening. Spot rates of below $200 per 40ft container in the Asia-North Europe trade during June 2015 were also unprecedented. While spot rates have staged a recovery since the start of 2016, Drewry believes that these gains will prove short-lived. Many stakeholders point to the fact that bunker prices of for example $140 per tonne in Rotterdam (IFO380) are clearly contributing to lower overall container freight rates, but Drewry believes that a new and worrying trend has become apparent for ocean carriers. Our most recent data suggests that they are no longer able to cut costs faster than the prevailing declines seen in the freight rate market. Drewry believes that oil prices have probably hit the market bottom right now and costs for the positioning of empty containers and vessel lay ups will increase this year. Our latest calculation is that a 10,000 teu vessel would incur a minimum of

By Pita Ochai

A $450,000 in reactivation costs if laid up in Asia for three months or more. It should also not be forgotten that many lines no longer even quote a BAF on some trade lanes. The consequence of this is that Drewry expects industry losses to widen to over $5bn in 2016. Ocean carriers believe they have taken a great deal of corrective action during the final three months of 2015 in order to lift very low freight rates. But the removal of six major east-west services and the blanking of 32 voyages in November and 21 in December did relatively little to improve trade route supply/ demand balances. At the beginning of October 2015, average head haul east-west load factors were only 85%, compared to 94% one year earlier. The GRI initiatives implemented in late 2015 did not work for carriers on many trade lanes and in some cases were suspended or postponed because conditions were simply too feeble. Drewry believes that more needs to be done by the industry to bring about any kind of stability. Proposed or forthcoming industry consolidation may well reduce the number of big market players and improve individual company efficiency, but this will not reduce industry vessel capacity in any way. With the idle fleet touching one million teu in late 2015, or just under 5% of the global fleet, decisions need to be taken by lines to remove more vessels and re-structure more trade lanes with new operational agreements. Big vessels no longer guarantee decent profitability and should Asia to North Europe contract rates be signed at an average $900 per feu (and this could be too optimistic) for 2016, this equates to an estimated $1.4 billion loss for the carriers on one trade lane. Neil Dekker, Drewry’s director of container research, said: “Comparisons are being made to 2009 when approximately 1.3 million teu was removed from a considerably smaller fleet. The mass scale lay ups were triggered by the fact that lines ran out of cash. The industry is not there yet as some lines are still making a profit and the very low fuel prices are propping them up. But a further two or three quarters of declining financial profitability may trigger a notable rise in the idle fleet as we enter the second half of 2016.”

fter years of its absence from exporting Nigerian crude, the Nigerian ship owners Association has revealed that it is making plans to get involved in the exportation of crude oil to international markets. Currently, no Nigerian ship owner is involved in the exportation of the nation’s crude which is being carried on a Free on Board basis to by foreign flagged vessels. The Secretary General of the association, Tunji Brown said this had become necessary following the persistent fall in global oil prices. He said, “The current oil prices have discouraged importers from bringing in refined petroleum because the prices are unprofitable. And you know our services lie in the inward movement of refined products into the country via the coast. “Due to the low patronage we are getting, we plan to be involved in the exportation of crude oil. We have started discussing with the government on this. Even if it is only one million barrels of crude that will be exported, we want to be involved.” Brown lamented that coastal shipping of refined petroleum products from the point of discharge at Lome had suffered a 30 per cent reduction in patronage. He said that NISA was hopeful about the upward movement of oil prices in the future so that its members could have jobs. He said, “There has to be someone who is willing to import the refined petroleum products before we can begin to move them into Nigeria. “I know offshore oil rigs were previously active; most of the oil companies are not producing. Their cost of production is above $30 and the oil price is about $35 per barrel so they are shutting down their platforms. “Until they come back on stream, we can’t have jobs. Most of our members have their tankers idle at the jetty with the hope that oil prices will go up.” Brown added that the association had submitted a proposal to the government for the movement of goods and passengers through the inland waterways to the hinterland. He said, “We want to explore that sector and raise revenue because it will not be oil dependent. The government can assist by dredging the channels for goods and passengers.”

Orient Energy Review January 2016

LOGISTICS/ MARITIME

Nigerian Navy Recorded High Arrest of pirates and vandals in 2015 By Pita Ochai

he fight against insecurity in the Nigerian waterways and vandals of petroleum facilities gained successes last year. According to the Nigerian military, 1,610 pirates, militants and criminals in the Niger Delta region were arrested in 2015. The arrested people were suspected of piracy, illegal bunkering and kidnapping in the region. Security forces also seized 50 oil vessels, 200 barges and weapons during the raids. According to the officials, security operations started a sharp increase in September 2015. “The announcement comes amid uncertainty over the future of the amnesty agreement between the president and former militants in the region,” PVI said, claiming that former militants staged protests on December 14 in Warri, Delta State amid reports the government was planning to cut the amnesty budget. The Niger Delta had a quiet five months until October 2015 when armed pirates attacked and boarded a refrigerated cargo ship and kidnapped four crewmembers. This incident took place further west than earlier kidnappings, showing signs that criminal gangs are expanding their area of operation, according to UK-based maritime intelligence company Dryad Maritime. In 2014 alone, six attacks on vessels were reported and 13 crewmembers were abducted in the area for the purpose of ransom. The Nigeria Security and Civil Defence Corps (NSCDC), Lagos State Command, also revealed that it arrested 234 suspects in 2015 for vandalism of government’s critical infrastructure and other offences. The Lagos State Corps Commander, Gabriel Abafi, who made the disclosure while speaking with journalists in Ikeja, said the command contributed immensely to ensuring that critical assets within its domain were protected. “In view of the operation of the command in 2015, the command arrested 234 suspects for vandalism, mostly oil pipelines. “The activities of the command spread across Anti-Vandalism, Disaster Management, Surveilance/Intelligence gathering and supervision of 36

Orient Energy Review January 2016

Private Guards Companies among others. “The command had between January and December in the area of anti-vandalism arrested about 150 suspected vandals who were caught vandalising petroleum pipelines and installations. “The arrests were made in different locations from Badagry to Isawo-Ikorodu, Amuwo Odofin, FESTAC Town, Ijora Waterfront and Oyingbo in Ebute Meta Waterfront, Igando, Ibeju Lekki/Epe axis and Apapa. “It is pertinent to note that all these areas are prone to vandalism,” he said. Abafi said the command also arrested some suspects who were involved in adulteration of petroleum products. “All the petroleum products seized in the course of the arrests so far in 2015 have been transferred to the appropriate authorities for further investigation and prosecution,” he said. Abafi also said that the command in protecting the national assets ensured that all the electricity and telecommunications installations were protected. “However, there was vandalism of these installations in different locations in Lagos, especially in Ikeja axis, adding that it was pertinent to note that all the culprits were arrested,” he said. He said the command ensured that all private guard companies within Lagos

metropolis complied with the rules and regulations guiding their operations. He added that the command sealed about 50 private guard companies which were operating illegally and helped in the registration process and renewal of licenses for some of them. Abafi noted that within the period under review, the suspected vandals arrested had been arraigned in different courts within Lagos after conclusion of investigation by the command’s Intelligence Unit. He said the corps had been able to assist in emergency situations in 2015 and thanked other sister agencies which assisted the command for the good of the country at large. He added that the corps would continue to maintain 24-hour security surveillance everywhere. According to him, the command has mapped out strategies to ensure that the critical assets of government in the state are protected in 2016. “This year, the command will focus especially on Lagos waterways. “Statistics have shown that majority of the crimes committed within the state are through the waterways. We are mindful of this and we will do our best to curtail it,” he said.

POWER

Fashola Inaugurates Power Sector Leadership Forum

*As Stakeholders Promise Improved Service Delivery

Babatunde Raji Fashola, SAN

By Sola Akingboye

he Minister of Power, Works and Housing, Babatunde Raji Fashola, SAN, has assured Nigerians that with the buy-in of major stakeholders in the Power sector, the newly inaugurated Monthly Leadership Meetings among operators will identify gaps, as well as collectively identify and proffering practical solutions to issues facing the Nigerian Electricity Supply Industry (NESI). The Minister who presided over the inaugural session, enjoined all operators to ensure highest executive level representation, adding that he expects people who can take decisions and not junior levels officers who cannot take actions. The meeting, which provided the opportunity for the sector to intensify efforts at resolving bottlenecks associated with gas supply to the power sector, was well

attended by the top echelon in the Nigerian Electricity Supply Industry. Those in attendance are the Managing Directors and CEO of Generating Companies (GENCOs), Distribution Companies (DISCOs), Transmission Company of Nigeria (TCN), Nigerian Bulk Electricity Trading Company (NBETC), Nigerian Electricity Regulatory Commission (NERC), and Nigerian Electricity Management Services Agency (NEMSA) were all in attendance. Representing the oil and gas industry, the Hon. Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, led the team of Senior Executives in the Nigerian National Petroleum Company (NNPC) and the Gas Aggregating entities, especially the Nigerian Gas Company (NGC). Dominant discussions at the meeting bordered on public engagement with stakeholders. Stakeholders were enjoined to take advantage of the reach of the national broadcasting entities such as the NTA and FRCN Nigeria, as well as other media houses

in their various localities to enhance public enlightenment, more importantly on tariff related matters. On collection, payment and debt, participants resolved that operators in the sector should adopt innovative and creative strategies in dealing with issues of vandalism, reluctance of customers to pay for energy consumed as well as equipment maintenance. Dealing with protracted Metering deficiency and better service delivery, operators vehemently agreed to embark on aggressive and sustained roll out of prepaid meters in ensuring that customers pay only for what they consume. The investors however agreed to patronize genuine local meter manufacturers that meet required standards, while the transmission constraints were exhaustively discussed, especially as gas supply is set to improve. TCN is nevertheless expected to brace-up to the challenge of strengthening its wheeling capacity, with a brief at the next setting. Tackling concerns raised by participants, on embedded generation, the stakeholders directed NERC to review such concerns on the matrix â&#x20AC;&#x153;willing buyer and â&#x20AC;&#x153;willing sellerâ&#x20AC;? basis, just as the Hon. Minister reiterated his commitment to run a sector that prioritize safety. Meanwhile, the NNPC team, led by the Minister of State, Ibe Kachikwu agreed to share information on significant gas projects that would impact positively on supply, especially those scheduled for completion in Q2 of 2016.

Orient Energy Review January 2016

POWER

Eko DISCO Prepares For Commencement of New Tariff

ko Electricity Distribution Company, popularly known as Eko DISCO, would be meeting with electricity consumers within its network area to appeal for compliance with the

new tariff recently announced by the Nigerian Electricity Regulatory Commission, NERC, and which is billed to take off on February 1. Head, Corporate Communications at the company, Mr. Godwin Idemudia, who disclosed this to our correspondent in a telephone chat said the aim of the meeting is to seek understanding on the tariff regime. He explained that electricity custom-

BEDC to Begin Installation Of Prepaid Meters

he Benin Electricity Distribution Company, BEDC, has concluded plans to commence installation of prepaid meters within its area of operation. House of Representative member, representing Ethiope East constituency in Delta State, Mr. Evance Ivwurie, said in a statement that the decision was reached with management of BEDC to address perennial blackout in some communities and epileptic electricity supply in other communities within his constituency. Ivwurie explained that he embarked on a fact-finding mission on why the connection of Abraka and surrounding communities of Eku to the Sapele power sub-station, which ought to have been commissioned since 2012 to enable Ethiope East Communities enjoy stable and reliable electricity supply, is still stalled till date. During his meeting with BEDC management, Ivwurie said the issue of the frequent attacks and beating up of BEDC staff everywhere they went to disconnect electricity from debtor homes, leading to disconnection of various communities from electricity supply was discussed. Regarding the issue of the frequent 38

Orient Energy Review January 2016

Power transmission station

attacks by people of Ethiope East against BEDC staff when they go to disconnect some homes from electricity supply because of debt, Ivwurie suggested to the management of BEDC that this problem occurs in Jos, Lagos, Ibadan and everywhere in Nigeria and the solution is found in the installation of prepaid meter in every house. He added that the managing director of BEDC, Engr. Albert Esenabhalu, has assured that the initial problem BEDC had with the Dafinone Rubber Plantation which obstructed them from energising the power line has been resolved and the right-of-way has been granted to BEDC to test run the power line.

ers with prepaid meters within the company’s network would be the first to feel the impact if the tariff hike while those on estimated billing will fill the impact at the end of February. Mr. Idemudia noted that the new tariff is based on market price, adding that it is a win-win situation for both customers and the distribution companies. “It is a win-win situation for everybody. Electricity customers have clamoured for the removal of fixed charges and our company’s new tariff is the lowest in Lagos,” he said. It would be recalled that NERC announced the removal of fixed charges for all classes of electricity consumers, noting that power users would henceforth only pay for what they consume. NERC, while outlining the rates of increase in tariffs for various customer classes in selected locations across the country, said residential customer classification (R2) in Abuja Electricity Distribution Company will no longer pay N702 fixed charge every month. Their energy charge will increase by N9.60. Also, residential customers (R2 customers) in Eko and Ikeja electricity distribution areas will no longer pay N750 fixed charges. They will be getting N10 and N8 increase respectively in their energy charges. Similarly, the burden of N800 and N750 fixed charges would be lifted off the shoulders of Kaduna and Benin electricity consumers. “These consumers will see an increase of N11.05 and N9.26 respectively in their energy charges,” the commission stated.