SweetCrude Sept 2009 - Digital Edition Demo by Phlxx Media Limited

Rockson moves gas turbines across Imo River

PIB should create better opportunities for indigenous companies P.10 -Tinubu

P.28

A Vanguard Monthly Review Of The Energy Industry VOL 01

N0. 05

SEPTEMBER, 2009

UPDATES MONTHLY BASKET PRICE Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09

160.00

$ 131.22 $ 112.41 $ 96.85 $ 69.16 $ 49.76 $ 38.60 $ 41.54 $ 41.41 $ 45.78 $ 50.20 $ 56.98 $ 68.36 $ 64.59

Monthly Average Price (US Dollar)

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Production begins at Murphy's Azurite field BRAZZAVILLE, REPUBLIC OF CONGO: Initial production has commenced at Murphy Oiloperated Azurite field in the Mer Profonde Sur block offshore the Republic of Congo (Brazzaville). Azurite is Murphy's first operated development in West Africa.

Deepwater Pride South Pacific to continue operations offshore W/A Pride International announced that its deepwater semisubmersible rig, Pride South Pacific, has been awarded a one year contract by a subsidiary of Noble Energy, Inc. for operations offshore Equatorial Guinea. The contract is expected to commence during the first quarter of 2010.

Questions, hostility trail petroleum industry bill Multinationals plot to stop investment Niger Delta State Governments concerned PAGE

ASCON

ASCON GROUP …An evolving Nigerian brand Petroleum Storage/Marketing, Shipping, Telecommunications, Insurance, Construction, Real Estate

OFFICES: Corporate HQ 27, Balarabe Musa Crescent, Victoria Island, Lagos. Tel: 234-1-9504385

Abuja 86 Adetonunbo Ademola Str., Wuse 2, Abuja.

Kano Maiduguri Road, Opp. NNPC depot, Kano. Tel: 234-64-634306

Port-Harcourt 16 Choba Street, D-Line, Port-Harcourt Tel/Fax: 234-84-238823

Contents 4 6 10

COVER

Questions, hostility trail petroleum industry bill

OIL

Oil coy owe FG $5bn

FOCUS

PIB should create better opportunities for indigenous companies

LABOUR 22 NUPENG, PENGASSAN fault PIB

24 Nigerian insurers should initiate INSURANCE

energy risks

26 FINANCE PIB introduces new fiscal regime 28 POWER Rockson moves gas turbines across Imo River

FREIGHT 31 Crisis in Freight Forwarders' groups stalls collection of practising fees

33 GAS FG restores Escravos -Lagos-Pipeline, concern mounts over gas

DEVELOPMENT 36 COMMUNITY Uduaghan agonises over Escravos -Lagos gas pipeline repairs Sweet Crude is a publication of Vanguard Media Limited

THE TEAM EDITOR

Hector IGBIKIOWUBO heckie4real@yahoo.com

CORRESPONDENTS Victor AHIUMA-YOUNG Ifeanyi UGWUADU Godwin ORITSE Yemie ADEOYE Ebele ORAKPO Jimitota ONOYUME Samuel OYANDOGHA GROUP BUSINESS EDITOR Omoh GABRIEL

Editor South-South Emma AMAIZE

DESIGN/PAGE LAYOUT Francis AYO Johnbull OMOREBEE Jide BABATUNDE

Printed and Published by Vanguard Media Limited. Vanguard Avenue, Kirikiri Canal, P.M.B. 1007, Apapa.

Enquiries Call: 08051100256 Internet:

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he need to carry ou Nigerian oil and ga t reforms in the s industry to align it with global best practices and achi government's lofty eve development goals cannot be overemphasized. In deed this was what informed the establishment of the Oil and Ga s Industry Committee (OGIC) in year 2000. The co mmittee has reviewed the existing laws gove rning the industry and submi tted a petroleum ind ustry to the national assem bly. However, the dr bill has attracted unima aft bill ginable hostility an d raised a lot of unanswered que industry stakeholders stions from concerned . We have focused att on the PIB in thi s edition, undersco ention ring the hostility and the que stions raised for you r reading pleasure. We have also called attention to concern s over the impact of the CBN take over of five c ommercial banks on the supply and distribution of pe tro products, especiall y against the back leum drop of rejection of letters of cre banks. And, even tho dit emanating from local ugh the movement of turbines across the Imo River provided power cheering news for the bel eagu fizzled out in the fac ered power sector, this e has caused manufac of the CBN action which turers abroad to sto p ongoing work on equipment. In this edition we have also kept fai th with coverage of indu stry related Labou r issues, Power, Freight, Ga s, Insurance and Co mmunity Development. Enjoy. Please Note: We understand th at some of you (industry enthusiasts) would like Please send such w to write for Sweet Crude. rite-ups (not more than one and half pages of typ e-written material), not later th a n M o nd a y 2 s t 1 Se p te m b e r, 2 0 0 9 to heckie4real@yaho o.com. Editor

Sweet Crude

Cover Story

Questions, hostility trail petroleum industry bill Multinational plot to stop investment Niger Delta State Governments concerned Hector IGBIKIOWUBO

F the activities of the Oil and Gas Industry Committee (OGIC) superintending the reforms attracted measured criticisms, the public hearing for passage of the bill before the national assembly appears to have opened the floodgate - attracting outright hostility and leaving more questions than answers. Investigations have also revealed that the multinational oil companies operating in the country may have decided to starve Nigeria of any future investments in the development of the acreage they control for the next five years. Meanwhile, the Niger Delta state governments continue to express their concerns about the implications of passage of the bill to the presidency, while urging the representatives in the national assembly to ensure it is not passed in its present form. Most stakeholders who made submissions, including the multinational oil companies, organised labour, host communities in the Niger Delta, major marketers of petroleum products, among others had major concerns against passage of the bill in its current form. Sweet Crude gathered that the original intention of the OGIC was to create an even playing field for all participants in the oil and gas sector; encourage new investors and competition into the sector, enable the National Oil Company to operate rather than regulate the sector, plug the loopholes in the collection of Government revenues and operational efficiency through stronger regulatory bodies, encourage the participation of Nigerians and Nigerian goods and services in the sector. However, the document before the national assembly seeks to do the opposite by creating a more monstrous national oil company that does not operate in the sector but owns Government assets, can organise its own acreage bidding, appoint other companies to operate for it, sit on the boards and managements, dispose of Government crude oil and gas and

For Africaâ&#x20AC;&#x2122;s poor, oil is no gift LAGOS, NIGERIA - Nigeria and Angola are Africa's top two oil producers, yet most of their people live in wretched poverty, often in shanties dwarfed by fire-belching derricks. Corruption has long kept oil revenues from making life better for ordinary people in the two countries, and the growing anger, which swells the ranks of militant groups, creates instability that threatens the world's fuel supply. This week it is drawing the attention of U.S. Secretary of State Hillary Rodham Clinton as she travels across the continent. Her visits to Angola and Nigeria underscore the increasing importance the U.S. attaches to African oil as it seeks to reduce its need for Mideast oil. Clinton on Monday was wrapping up a twoday visit to Angola - which supplies vast amounts of petroleum and liquid natural gas to the U.S. market - and plans to go to Nigeria later this week on her seven-nation tour. Clinton stressed the need for greater accountability and transparency, and urged the government of President Jose Eduardo dos Santos, in power in the former Portuguese colony since 1979, to adopt a new constitution, investigate and prosecute human rights abuses, and hold promised presidential elections. Dos Santos "was very positive in his reaction to the points we were making," she told reporters traveling with her.

Afren secures GSF Adriatic IX for Ebok program

Dr. Lukman

declare artificial profits, while Government revenue is severely hampered. Usurpation: For example, section 151 of the bill states that: 'NOC takes over all current Government JV and PSC upstream assets in which NNPC is representing the Government and thus inherits Government oil. If this is allowed then there is very little 'useful' acreage left for the minister to award. It stops the privatisation of its downstream assets in which it has demonstrated that it cannot operate. The wisdom of injecting private sector capacity into these ailing facilities is lost.

Sweet Crude gathered that the original intention of the OGIC was to create an even playing field for all participants in the oil and gas sector

Similarly, section 265(3)&(10) states that the NOC appoints majority of the members of the Boards and Managements of the IJVs but it does not say how it would gradually obtain the transfer of technology necessary to take on the real operations of the IJV as already enshrined in the JOAs. Indications are that the NOC may only be interested in sitting on the boards and management while still asking the operator to operate for it. Clearly, there is a conflict between section 150(5) and section 261(2). In section 264, the NOC takes on the responsibility of disposing of CONTINUES ON PAGE 5

LAGOS, NIGERIA: Afren and its partner Oriental Energy Resources have signed a drilling contract with Transocean for jackup GSF Adriatic IX, commencing in September. GSF Adriatic IX has been secured at a rate of US$97,000 per day for the first 250 days of operations, with a rate of US$85,000 per day thereafter, based on a 425 day extension. GSF Adriatic IX will be used to carry out an extensive drilling campaign at the Ebok Field located in OML 67, offshore southeast Nigeria. Pending government approval of the formal Field Development Plan, Ebok Field development will commence with the drilling of six horizontal production wells and one vertical water injection well. Two appraisal wells to test the additional upside potential within the Ebok West Fault Block and D2 Southern Lobe of the Field will also be drilled. The rig is currently warm stacked at Port Gentil, Gabon. The Ebok Field Development Plan (FDP) has been submitted to the Nigerian

Cover Story

Oil Rig

Questions, hostility trail petroleum industry bill CONTINUED FROM PAGE 4

Government crude oil produced by the IJV, which it has not worked for and to pay taxes to the FIRS as the IOCs does; a process which only short changes the Government and which the reform originally intended to address. Under such a dispensation, the Govt will not have any crude oil of its own to sell at world market price (at least now Government gets about 60 per cent of the crude oil produced). Government would have to rely on the taxes and dividends paid in cash by the NOC (calculated at the Official Selling Price) to fund its budget and programmes! It was gathered that the initially agreed position at the OGIC was that NNPC would integrate with the IOCs primarily in operations and understudy it as in Petronas and gradually begin to perform the operations to the satisfaction of the parties in the IJV as in the JOAs. Under this arrangement, government will receive more or less the same volume of crude as it presently receives by collecting its royalty, tax and profit in oil. Government may even elect to ask the NOC to sell it on its behalf and pay the NOC a handling fee - allowing commerciality to thrive. The original intent of the OGIC bill was to get NAPAMA (or Directorate as now referred) to focus on technology transfer. Section 266 of the bill captured this much, stating that NAPAMA should focus on the gradual transfer and sharing of

technology between the IJV and the operator, who still holds the license to the asset. However, the phrase 'technology transfer' from the International Oil Companies (NOCs) to Nigerians was not mentioned in the entire document and technology transfer and funding are the two key deliverables of the IOC, which the reform is intended to encourage and maximize. Unfortunately, the document did not give focus to these. In section 267, subsection (2), alternative funding is implied and this runs counter to the original intention of the reforms which is aimed at getting projects financed in the open financial market utilising the borrowing power of the IOCs. The financial power of the IOCs is required to support the IJV as it grows in its own borrowing power. Sections 269(3), 271, 272, 435(1), 39(2f), 28, 264(1) and 445 all seek to vest powers of the minister of petroleum and roles of the federal government with the NOC in what appears to be a clear departure from the original intent and purpose of the reform Treatment of investors: The original intention of the reform was not to punish private oil and gas investors through the imposition of new taxes but rather to encourage them to do what they know to do best - technology and funding and for the National Oil Company to maximise its benefit, first by working and learning from them, integrating its staff into their operation and gradually taking over the operations

as envisioned in the Joint Operating Agreements. Essentially, chapter 3 which stipulates reviewing upwards the entire royalty and tax rates tantamount to fishing in troubled waters. Operators who spoke with Sweet crude disclosed that Nigerian oil tax rates are already quite high. Operators also noted that section 437 which related royalties to production discourages higher producers. "The tested method is to distinguish between marginal producers, indigenous producers, new entrants and major producers, which has been tested and is working. Not a problem in the sector at this time of security concerns and low prices. Hiking royalties in the deep offshore to 25 per cent is ill advised," one of the operators volunteered. Sweet crude checks also revealed that section 432(3), 443 which deals with Nigerian Hydrocarbon Tax is new and proposed to be charged on gross income, which includes costs. That is, operators pay tax on their costs. Again, this tax is not deductible, so the company pays income tax on a levy! Checks also revealed that section 446 and 501 which deals with deductible costs for tax purposes is an issue that has a long history and agreement had been reached over the years and re-opening this now is not helpful. The expectation is that Government would collect what has been previously agreed efficiently and correctly. An operator who spoke on the basis

of anonymity pointed out that starting up a fresh discussion on this issue would unnecessarily hamper the passage of the bill and if approved by the National Assembly, may lead to many companies leaving the country. Sweet crude checks also revealed that the provisions of section 446(K,L,M,N,O,P,Q,R) and 500(2) will stifle new comers and ultimately kill the industry if passed like that into law. Regulatory Institutions: The original intent of the reform was to build strong regulatory agencies. Rather, under the current proposition the agencies are multiplied with overlapping roles. The National Petroleum Directorate (NPD) that was intended to serve as the secretariat of the Minister; assisting the Minister in formulating policies and representation in local and international fora is now saddled with acreage administration overlapping the role of the Inspectorate. This means that Government which has limited technical resources will now have to spread out its technical manpower across the Inspectorate, NPD Authority and Agency to duplicate the same work and possibly confuse the operators, while the holes in data and revenue collection of the state remains. Under section 37, subsection (3), the DPR migrates to become the Inspectorate, which is only an upstream regulator. However, this leaves the downstream and midstream departments of the DPR stranded. Ideally, the upstream department of the DPR should migrate to Inspectorate together with NAPIMS, while the downstream and midstream departments move to the Authority and Agency respectively. Sweet crude also checks revealed conflicting roles and functions in the inspectorate arms contained in the proposed dispensation and this is largely underscored in sections 39(i), 31, 57, 95, 133, 269, 271 273(4) & (8), 274 (4), 276, 277, 278, 279, 280 and 294. Chapters 7, 8, 9 & 10 as well as sections 78 & 116, 305 & 410 further underscore the conflicting roles and functions the agencies to be created following the passage of the bill into law may have. Multinationals plot to stop investment: A ranking official of one of the multinational oil and gas exploration and production companies who did not want his name in print told Sweet crude that the multinationals always have options to fall back on, adding that the current line of thinking amongst them is to starve the country of further investment for the next five years in the event the bill is passed in its current form. "Without investments, production can only dwindle further, revenue will shrink, the economy will be weakened even further and they will negotiate re-investment with a totally emasculated Nigerian leadership. Government must see and treat the multinationals as development partners and not adversaries," the official urged. He decried efforts by government and OGIC officials to compare Nigeria to Venezuela, noting that this was very wrong because the circumstances and realities of both countries' petroleum industry 'are poles apart'. Niger Delta state governments concerned: State governments in the Niger Delta remain resolutely opposed to the

passage of the bill and have instructed their representatives in the national assembly to stop its passage into law. Rivers State in particular, arguably the largely oil producing state going by the number of oil wells, reserve portfolio and derivation received on oil production, had sent a member of the state executive council to canvass its reservations over the planned incorporation of the NOC and the kind of powers to be conferred on it over the entire acreage in the country. Representatives from other states also submitted memoranda questioning particular sections of the bill, especially as it affects community rights. To underscore the depth of its reservations about the bill, the Warri branch of the Nigerian Bar Association (NBA) has dragged the federal government to court, arguing that the bill was flawed, in favour of the north.

Chevron profit plunges 71% in quarter Chevron Corp.'s profit plunged 71 percent in the second quarter to the lowest level in more than five years as reduced oil prices and a vicious global recession took their toll, the San Ramon company reported Friday. But Wall Street took the drop in stride, after other big international oil companies earlier in the week reported similarly dismal results. Analysts cheered Chevron for cutting costs and increasing oil production, something the company struggled for years to do. "Obviously, they're not going to make the kind of profits they did last year," said Philip Weiss, an analyst at Argus Research. "But they've done a good enough job cutting costs out that they can grow in this kind of environment.â&#x20AC;? Chevron, the nation's second largest oil company, made $1.75 billion for the quarter (87 cents per share). During the same three months last year, Chevron's profits hit $5.98 billion ($2.90). But last year's second quarter saw oil prices nearing their alltime peak, finally topping $145 per barrel in July. By late summer, oil and gasoline prices were in free fall, tumbling faster and further than ever before. Oil sold on the New York Mercantile Exchange now costs $69 per barrel - quite high by historic terms, but less than half of last year's high. Profits for Big Oil have shrunk accordingly. Exxon Mobil Corp., the world's largest publicly traded oil company, reported Thursday that its second-quarter profits dropped 66 percent, to $3.95 billion. Royal Dutch Shell saw its profits plunge 67 percent, to $3.82 billion.

Oil

Afren taps Adriatic IX jackup for offshore Ebok development Afren and its partner Oriental Energy Resources have signed a drilling contract for the Transocean Adriatic IX jackup drilling rig for the Ebok Field oil development offshore South East Nigeria. Commencing operations in September 2009, the Adriatic IX jack up drilling rig has been secured at a rate of US $97,000 per day for the first 250 days of operations, with a rate of US $85,000 per day there-after, based on a 425 day extension. The Adriatic IX rig will be used to carry out an extensive drilling campaign at the Ebok Field located in OML 67, offshore Nigeria. Pending Government approval of the formal Field Development Plan, Ebok Field development will commence with the drilling of six horizontal production wells and one vertical water injection well. Two appraisal wells to test the additional upside potential within the Ebok West Fault Block and D2 Southern Lobe of the Field will also be drilled.

Oil Bunkering Vessels

Oil coy owe FG $5bn -NEITI report

…Report indicts NNPC, DPR, FIRS &AGF Oil and gas industry throws Oscarline ONWUEMENYI weight behind ICCA

Top Executives of the Nigerian oil and gas industry have pledged their readiness to support the effective take off of the International Cancer Center, Abuja, ICCA, a nongovernmental initiative of the First Lady, Hajia Turai Yar'Adua. The captains of the industry made this commitment at a lunch meeting organized by the Minister of Petroleum Resources, Dr Rilwanu Lukman, at the Amphi-Theater of the NNPC Towers, Abuja, to officially present the ICCA initiative to stakeholders in the industry. Speaking through their umbrella body, the Oil Producers Trade Sector OPTS, of the Lagos Chambers of Commerce and Industry, the major oil producers said they would give the project their full support as it was a laudable initiative aimed at stemming the cancer scourge that has ravaged the country. Engineer Charles Ngooka who spoke on behalf of OPTS said, “On behalf of OPTS, I can assure you that you have our support. We will table the issue in our meeting next month and get back to the ICCA.” On their part, the Secretary General of the Major Oil Marketers Association of Nigeria, MOMAN, Mr Femi Olawore, who spoke in similar vein said the major oil

BUJA -THE latest report on oil and gas revenues released by the Nigeria Extractive I n d u s t r i e s Transparency Initiative (NEITI) has uncovered financial discrepancies and outstanding payments totaling over US$5 billion from revenues generated by the sector in 2005. The report also identified unprecedented financial discrepancies, mispaid taxes, and system inefficiencies in the financial, physical and process audit of the sector. Presenting the report on Monday during the Stakeholders' Roundtable on the Report of the 2005 Audit of the Oil and Gas Sector, in Abuja , the Chairman of the National Stakeholders' Working Group (NSWG) of NEITI, Professor Assisi Asobie, said the report addresses the sensitive issue of the correctness of the underlying calculations that result in revenue flows. For instance, the report showed over US$800 million of unresolved differences between what oil companies said they paid in taxes, royalties and signature bonuses, and what government said it received. Of this amount, US$560 million was identified as shortfalls in taxes and royalties owed to the government and around US$300 mullion in payment discrepancies relating to signature bonuses, paynments of dividends, interest and loan

repayments. An estimated US$4.7 billion owed to the government by the Nigeria National Petroleum Corporation for payments of domestic crude, making it the largest single figure identified in the report. According to Asobie, the 2005 audit was “quintessentially, a propoor audit, directed at helping the federation of Nigeria secure full value from its petroleum industry and thereby be in a stronger position to provide for the welfare of the people.” Asobie noted that the report “identifies challenges confronting the industry, pinpoints deficiencies in its governance or management, and at the same time, recommends strategies to confront the challenges and remedies for the deficiencies.” He said by this event, NEITI was kicking off a full blown national debate on the 2005 audit report, adding that the Initiative would soon commission the audit of the oil and gas industry for the years 2006, 2007 and 2008. He added that the timing of the release of the report was momentous

coming at a time when there was vigorous national debate on the Petroleum Industry Bill, which proclaims transparency and accountability as the basic principles underpinning the proposed reforms of the industry. On its own part, the auditors of the report, Hart Group, lamented the lack of reliable data about gross production at the well heads as well as the non-cooperation of companies operating offshore in providing field data about the volume of oil produced by them. A representative of the group, Mr. Sam Afemikhe, also expressed concern that the Department for petroleum Resources (DPR) provided data on the volume of production that differed from those provided by the oil companies. He said, “As a result of these, it was difficult to determine precisely losses of oil occurring between the well head and the terminals.” The auditors also stated that in 2005, the management of signature bonds, an important source of revenue for the country, was not transparent. Specifically, it asserted

that the agencies concerned, DPR, OAGF, CBN, and PTDF were not able to confirm the signature bonus payable by the companies in 2005 vis-a-vis what was actually received in that year. Afemikhe pointed out that in respect of royalties for the year 2005, there was no rigorous verification of the royalty computed by the companies, and that the oversight function of the DPR in respect to royalty payment was inadequately discharged. He added, “In respect of the petroleum profit tax (PPT) in the year, the Federal Inland Revenue Service accepted the self-assessment made by the companies without verification and validation. “The Office of the AccountantGeneral of the Federation (OAGF) did not in that year exercise sufficient management and control over the financial flows from the sector, and there was poor system interface between the office and the CBN, DPR and the NNPC.” Furthermore, a statement from the Extractive Industries Transparency Initiative (EITI) Secretariat in Oslo , Norway , quotes the Chairman, Peter Eigen, as saying that the release of the 2005 audit of the oil and gas industry shows a strong signal by the Federal Government's determination to increase transparency in the sector. According to Eigen, “The 2005 NEITI report offers a great opportunity to inform the better management of Nigeria 's most important sector and bring benefits, rather than the harm, of these resources to ordinary Nigerian citizens. The findings of this report will serve as a wake-up call to address the fundamental problems of the industry.

West Africa Total Rigs in Drilling Fleet Rigs Under Contract Rigs w/o Contract Fleet Utilization Rate

Today

Last Week

Month Ago

Year Ago

62 45 17 72.6%

60 44 16 73.3%

60 57 3 95.0%

Oil

Nigeria records engineering feat at Nigerdock …7500 tons FPSO topsides fabrication ongoing

Deepwater Pride South Pacific to continue operations offshore W/A Pride International announced that its deepwater semi-submersible rig, Pride South Pacific, has been awarded a one year contract by a subsidiary of Noble Energy, Inc. for operations offshore Equatorial Guinea. The contract is expected to commence during the first quarter of 2010, in direct continuation of the rig's current contract commitment offshore West Africa and a scheduled shipyard program to be executed in Cape Town, South Africa. The one year contract duration could be extended by up to three months on the same terms and conditions following notification by the customer, which would be provided within the initial six months of the contract.

Ongoing fabrication at Niger Dock

Hector IGBIKIOWUBO

N engineering and fabrication feat hitherto the exclusive preserve of Europe, America and Asia have been recorded in Nigeria with the work on the topsides for the Usan floating, production, storage and offloading (FPSO) vessel at Nigerdock. At the weekend, the 2nd of a five stages load-out sequence involving the shipment of a total 7500 tons of fabricated steel was recorded. At the weekend, while explaining the scope of work to those present at t h e l o a d - o u t M r. M a n s s o u r Jarmakani, executive director, Nigerdock Plc disclosed that the first load-out was recorded in April and that it involved the shipment of 981 tons of fabricated steel for the topside integration at the Ulsan yard, operated by Hyundai Heavy Industries (HHI) in Korea. The 1st load-out of fabricated steel was for the 'riser support type 1 & 4 and this was achieved in record time. The 2nd load-out which commenced at the weekend involves the shipment of 1524 tons of fabricated steel for the 'crew boat landing stair', '10 number P1 and S1 lay down module' and the 'secondary riser support'. It is expected that the third load-out of the water casing, crane pedestal and collation platform will take place in October, 2009, while the 4th loadout involving shipment of the helideck support is expected to take place in January, 2010. The 5th and final load-out

involving shipment of the mooring protection structure as well as all other topsides items is expected to take place in June, 2010. The executive director disclosed that the contract was proceeding according to schedule considering that the 2nd load out was initially scheduled for October 2009 before it was brought forward by Total to ensure that the FPSO is ready before the end of 2011. “Nigerdock has achieved over 12,000 Kilometres (km) of welding on this job between January and August 2009 to fast-track the fabrication contract at 0.23 repair rate for defect which is the best quality welding record globally. We have also recorded about 450,000 man-hours,” he said. Jamakani said Nigerdock was prepared to undertake full integration of an FPSO, noting that the company requires more jobs to stay in business. “If Nigeria decides that 100 per cent of FPSO would be constructed in-country, we will be the first company to go out and invest in the acquisition of the equipment and facilities to make sure it a success. One thing we can never do is fail, because if Nigeria fails, everything

else collapses, we will start exporting work outside and our children and our work-force will have no jobs. “We did topsides of Agbami FPSO and other projects we have executed include manifold, scaffold, subsea structures, steel risers and buoys. There is nothing we cannot construct in our yard. We need more jobs to keep technicians trained in various stages of fabrication. Each project that comes up, we want to get more and more involved and we will continue to invest in those works,” he said. Jamakani disclosed that the staff strength of the Nigerians working in the company has declined from 2,000 to 750 due to low patronage of the yard by oil firms. He gave the assurance that 4,000 Nigerians would be gainfully employed if the company is given the opportunity to execute 100 per cent of FPSO at the yard in-country. The contract for engineering and fabrication of the Usan FPSO topsides was signed in July, 2008 and awarded by Elf Petroleum Nigeria Limited (EPNL), a subsidiary of Total Upstream, the operator of the Usan deepwater field located in oil mining lease (OML)

138. On completion, it is expected that the Usan FPSO will have an installed storage capacity of two million barrels of oil and it will be anchored in 750 metres of water in Usan field, 100 km southeast of Bonny Island offshore Rivers State. The dimensions of the Usan FPSO is said to be 320 m long and 61 m wide, with a depth of 32 m and will weigh 114,000 tons. It will have a production capacity of 160, 000 barrels per day (b/d) of crude oil and 5 million cubic metres per day of natural gas Proved and probable reserves of the Usan field are anticipated in excess of 500 million barrels of oil. The field development plan comprises 23 producer wells and 19 water and gas injector wells tied back to a FPSO. Co-venturers in the Usan development include Elf Petroleum Nigeria Limited with 20 percent equity and operatorship, Chevron Petroleum Nigeria Ltd (CNL) with 30 percent non operating interest, ExxonMobil's Esso Exploration and Production Nigeria (EEPNL) (Offshore East) Limited with 30 percent, and Nexen Petroleum Nigeria Limited 20 percent.

Offshore Platform Rigs In addition to mobile drilling units, 269 platform rigs are deployed worldwide. Area U.S. Gulf of Mexico Europe/Mediterranean Worldwide

Platform Rig Fleet Total 56 107 297

Contracted 23 105 248

Contracted Fleet Utilization Rate 41.1% 98.1% 83.55%

Revenues which could be generated over the firm one year contract duration are approximately $117.2 million, excluding revenues for mobilization, demobilization and client reimbursable. The Pride South Pacific is one of eight deepwater semi-submersibles and drill-ships in the Pride International fleet. The rig, which completed a significant upgrade in 1998, utilizes a conventional chain and wire mooring system. The rig's current equipment configuration allows for operations in water depths of up to 5,000 feet.

GATE successfully starts up Chevron Agbami minox system G AT E ( G i b s o n A p p l i e d Technology & Engineering) LLC has successfully completed the commissioning and startup of the Chevron Agbami Minox system offshore Nigeria. The system, consisting of two complex 225,000 BWPD systems in parallel, required precision planning and execution to enable a successful commissioning and startup. Prior to mobilization GATE developed a Minox process model for verification and calibration that will eventually be used by operations staff. The startup process included testing the chemical injection

Oil

BUJA -THE National Extractive I n d u s t r i e s Transparency Initiative has said billions of naira is lost in the nation's oil and gas industry due to lack of transparency and poor monitoring of oil and gas production in the country. The Chairman of the National Stakeholders Working Group of NEITI, Professor Assisi Asobie, who disclosed this on Tuesday in an interview with our correspondent, further noted that lack of accountability in the industry was at the root of the crises in the Niger Delta. Asobie, who spoke at the background of the on Oil and Gas Production Accounting Workshop organized by the Department of Petroleum Resources (DPR) and the Norwegian Petroleum Directorate (NPD), said poor accounting and measurement of oil and gas production was a major challenge to the initiative. He said, “We have been having problems with knowing exactly how much is produced, so we have commissioned a consultant to help us know the international best practices with regards to production accounting. “It is so important because if you do not determine how much is lost, those companies that are producing benefit, and Nigeria is cheated. It is in the interest of producers that the status quo is maintained and that the nation never knows how much is lost and who is stealing the product. “You know wherever, there is anarchy, some people take advantage of the situation, and the way Nigeria's oil and gas industry is structured today has given so much room for stealing and corruption to go on. According to him, there is need, therefore, to use the latest electronic technology that can detect where these pipelines are sabotaged, and then capture the images, so that the perpetrators can be apprehended and made to face the wrath of the law. He said, “Oftentimes, the DPR has complained to us that they cannot do it (effective monitoring and measurement) that is why we got someone from abroad to help us identify these technologies that use sonic systems and then use cameras to capture those behind the theft. “We know that there are bigger personalities behind all these pipeline sabotage than the so called militants, so it is important that we begin to do things differently to ensure that a few people do not benefit from the wealth that belongs to everyone.” He added, “What we do in NEITI is to find out how much oil and gas are being produced in Nigeria , and therefore how much royalty and taxes also accrue to the country. “Part of our responsibility is also to find out the deficiencies in the regulatory agencies like the DPR,

reposition the industry and reviewing our strategic approach that will culminate in the reinvigoration and create a more robust system that will boost revenue generation and eliminate uncertainties in the production value chain.” Similarly, he said, government was committed to ensuring compliance with the NEITI Act of 2007, adding that, “One of the critical challenges facing the oil industry globally is that of an efficient hydrocarbon accounting mechanism.” He said the country had a hydrocarbon accounting system that is custody transfer-based, which is against the global practice of well head-based accounting system. “In view of this, the DPR established the National Data Repository (NDR) that will serve as the database of the industry, promoting and maximizing the value of Exploration and Production (E&P) data assets and the sharing of data amongst operators,” he said. Ajumogobia said the government was also developing

NEITI indicts oil operators over lack of transparency

Oil Rig Offshore

Oscarline ONWUEMENYI and help to remedy those deficiencies; we want to know what challenges they face in determining how much oil is produced and exported from the country.” On the issue of militancy in the Niger Delta region, Asobie, who is a professor of Political Science, averred that a faulty Federal system and lack of development at the rural level was to blame for the rise in militancy. He said, “First of all, I think we have moved away from the proper Federation that encouraged subsidiary, which simply means attacking development from the

lowest levels of the country. “In those days when we had regions, those regions had their own separate constitutions, and where able to develop and grow at their own pace; and there was competition which it possible for development to begin from the local government to the federal government.” Meanwhile, the Minister of State for Petroleum Resources, Mr. Odein Ajumogobia, has said a major challenge in the realization of an effective hydrocarbon accounting system in Nigeria is the issue of pipeline sabotage, leakages and vandalism, security threats and crude oil theft. He said, “Government is doing

its best to curtail these developments through constructive engagement, surveillance, community involvement and the security agencies. In addition, government is reinvigorating the NDDC to effectively improve the socio_economic living conditions of the Niger Delta region.” Ajumogobia added that government was vigorously pursuing the issue of amnesty and reformation programme for the region's militants to ensure that peace and harmony prevailed in the Niger Delta. The minister said a seminar on production accounting was timely “especially at this time that we are

One of the critical challenges facing the oil industry globally is that of an efficient hydrocarbon accounting mechanism.

the National Production Monitoring System (NPMS) that will help overcome the challenges that the industry is currently facing, by bridging the lapses in the hydrocarbon accounting and to ensure that all production data were received real time in DPR offices through state of art equipment and facilities. n his own part, the Norwegian Ambassador to Nigeria, Mr. Tore Nedrebo, remarked that how to account correctly and transparently for petroleum production and revenues was extremely important, but also a complicated and sensitive issue. He said, “We have had projects on metering and accounting in the bilateral cooperation programme on petroleum management between Norway and Nigeria for a number of years, since the MoU was signed in 2000.

Sweet Crude

Improving lives in the Niger Delta

Focus

r Jubril A d e w a l e Tinubu needs little or no introduction. As the Group Chief Executive Officer of Oando Plc, he has led a team of indigenous professionals to position the company as Nigeria’s fastest growing energy conglomerate, with interest cutting across the entire energy value chain. In this exclusive interview with Sweet crude, (Vanguard’s monthly energy review), he opened up on a number of issues currently affecting the sector. He also bared his mind on the controversial Petroleum Industry Bill (PIB) and opined that then bill should be an opportunity for serious and professional indigenous companies to thrive. Excerpts: How will the dual listings of Oando PLC on the Lagos (Nigeria) and Johannesburg (South Africa) Stock Exchanges boost the company’s chances of a successful capital raising of the N200 billion the Shareholders have given nod for? The very essence of having a foreign listing is to have the benefit of raising money in a different market and get the benefit of an average cost of bonding, because by virtue no two markets ever have the same return on capital requirement and of course by listing elsewhere you can tap from different markets. We shall make that announcement on securing the necessary regulatory approvals. Oando is steadily emerging as a fully integrated energy company_operating in the downstream, upstream and the midstream, circumnavigating Lagos state with gas pipelines, interests in power generation supply and distribution, etc. Can you share with us some other challenges the group currently faces? Without a doubt, the biggest challenge is the cost of capital. Nigeria is a very expensive place to do business, where you pay up to 18 – 22 % interest on loans. So to give the shareholder good returns on investment, you need to shoot for 50% return on capital employed. That is the number one hurdle Nigerian businesses have to scale. The second challenge is long term funding. We are one of the few non_banking institutions that have raised in excess of $500 million in medium to long term facilities from the international markets in the last 3 or 4 years. The Nigerian banks have supported us with medium term loans of 5 – 7 years, which we deployed in the construction of our gas pipeline systems. Invariably, long term funding is now being addressed via pension funds availability, which will make a big difference in the development of long term financing in the country. Such funding have successfully steered Oando to the status of an integrated energy solutions provider, by adding gas and power, exploration and production, international supply and trading and energy services to our traditional downstream marketing business. In 2007, Oando invested over $250m in the development of Nigeria’s first

Wale Tinubu

PIB should create better opportunities for indigenous companies -Tinubu indigenous Oil Services Company. In less than 24 months, Oando Energy Services (OES) is Nigeria biggest rigs provider with 5 rigs, 3 of which have secured contracts. OES is now successfully operating in what was previously the preserve of international service companies but with world-class international safety and engineering standards. Also in 2009, our Exploration and Production division secured Nigeria’s 1st ever acquisition of a deep offshore oil & gas asset from an International Oil Company by an indigenous corporate. With $300 million already invested in the upstream sector, and superior growth strategy, we hope to soon move from our 5,000 barrels production a day to 100, 000 barrels by 2013. Our Gas & Power subsidiary is

today the leading privately owned gas distribution (via pipeline) company in the sub-Saharan region. It has successfully constructed and is operating a 100km gas pipeline grid in Lagos, which currently supplies gas to over 80 companies in Lagos. It is also constructing a 128km gas pipeline traversing Cross River and Akwa Ibom states, designed to partly power the Unicem cement factory and offer a total gas powered solution to the energy needs of the states in the South Eastern region. The company’s power business has designed for the Lagos State Government a $25 million independent power plant that will ensure a steady supply of water in the state through the Lagos State Water Corporation. This is specifically gratifying because this is one project

With $300 million already invested in the upstream sector, and superior growth strategy, we hope to soon move from our 5,000 barrels production a day to 100, 000 barrels by 2013

10 that will affect the lives of more than 14 million people in Lagos State. These series of investments are in the high margin sectors projected as the company’s future cash_cow in the next five years. In a reaction to a question on government foot_dragging over the proposed full blown deregulation of the downstream, the Minister of state for petroleum resources was quoted as saying government was concerned about a small group of persons hijacking and mobilizing the reigns of supply and distribution. What is your reaction to this? Do you think this fear is founded? These fears are unfounded as deregulation is a purely market_driven regime, it is not individualistic. In truth, full deregulation of this sector will not only guarantee constant supply of petroleum products to Nigerians but will significantly nourish the economic growth in Nigeria. The Major Marketers are ready and willing to fully support the government’s initiative and will ensure continuous and adequate supply of petroleum products. Marketers will implement the government’s decision effectively, including the importation, supply and delivery of petroleum products throughout the country at competitive prices. Marketers already have the logistics in place such as storage facilities, vast retail outlets, standard trucks, etc to support deregulation. In addition, Major Marketers plan to work very closely with the NNPC and PPMC in scheduling import vessels, effectively utilizing the jetties, pipelines and storage facilities, to distribute products across Nigeria. Deregulation will allow market forces to determine prices of petroleum products, which will enhance competition in the Nigerian market. Competition will enable the Marketers to operate more effectively and efficiently to the overall benefit of Nigerians. Many countries have either deregulated their petroleum sector or have made significant progress in that direction. Consumers in these countries have benefitted by having adequate fuel supplies at competitive prices, which support economic growth. Major Marketers’ emphasis on Safety, Health and Environment issues will continue to be aggressively applied in all our operations. How far exactly has your group’s plans for establishment of a petroleum refinery at Lekki progressed? We are adopting a phased_ approach to the development. We have always said that the long term future of our downstream industry and our nation as a whole is dependent largely on our petroleum refining capacity. We know that local refining can be veritable, sustainable and efficient. We are also aware that a refinery project is very expensive: it could cost between $2 and $3 billion to construct a refinery that would process 100,000 barrels of crude oil per day. But we are undaunted. We have taken up the

CONTINUES ON PAGE11

Focus

Everyone Has the opportunity of contributing to the bill so I encourage every stakeholder to do so L-R GMD NNPC Dr. Mohammed Barkindo, Comrade Muastapha Wali and Mr. Peter Akpatson during the House publc hearing on PIB

PIB should create better opportunities for indigenous companies CONTINUED FROM PAGE10 task of building a refinery that would refine 350,000 barrels of crude oil per day. Due to the cost implication, our strategy is to approach the projects in stages. Two years ago we conducted a pre_feasibility study on the project. Subsequently, we carried out a full feasibility and acquired a 450 hectares expanse of land for the project. 450 hectares is a little more than the size of core Victoria Island, so you can imagine the size of the site. As Refinery is one of the largest industrial complexes you will find globally, we are paying considerable attention to environmental safety and set standards regarding the handling of crude oil and the citing of crude oil tanks, the main refining units and the finished products tanks. The first stage of the refinery development would be the construction of an import terminal. We have completed the Front End Engineering Design (FEED) of the import facility, which will be the largest in Sub_Saharan Africa. The facility will be fed by a 7km offshore pipeline system, so that we will be able to import products into Nigeria via a deep drafted tank farm or terminal. The second stage of the refinery development would be the actual construction of the refinery complex and the conversion of import terminal into the finished products terminal of the refinery. In effect we will be able to bridge the petroleum products supply gap in two years and at the same time embark on the construction of the refinery which will effectively put an end to products importation. However one of the factors militating against investments in petroleum

refinery projects is the uncertainty surrounding the deregulation of the downstream sector. Potential investors, both debt and equity, wants to know the state of play regarding deregulation in the country because, it is very hard to embark on a $3 billion project without knowing whether or not you will sell the finished products and make profitable margins. We saw you at the ministry of petroleum resources organized stakeholders forum on the petroleum industry bill which took place in Abuja recently. What is your impression of the bill? I will start by commending the

HREE weeks after the Central Bank Governor Sanusi Lamido Sanusi sacked the managing directors of five leading banks in the country over alleged poor management and exposure amounting to N1.43 trillion worth of non-performing loans, indications are that the supply and distribution of petroleum products may be negatively impacted.. It was gathered that following the CBN move, foreign correspondent banks have been rejecting letters of credit from counterpart Nigerian banks for fear of losing money. Since August 14 when the decision of the federal government was made public, the development has continued to take its toll on virtually every sector of the economy with the downstream oil sector appearing the worst hit, accounting for N487.02 billion of the debt portfolio. Sweet Crude investigations revealed that the CBN move has slowed down investment in most organisation cutting across diverse sectors of the economy and fears are that if not properly managed,

Federal Government of Nigeria for creating an environment where we can engage in dialogue. The essence of having democracy and a modern day system that functions on the rule of law is the opportunity to negotiate and amend laws to suit and satisfy the different stakeholders. The existing Petroleum Act of 1962 is obviously obsolete. Amending the act by way of introducing a bill before the National assembly is a step in the right direction. Everyone has the opportunity of contributing to the bill so I encourage every stakeholder to do so. As a company, we have put together our own views which have been forwarded to the National Assembly. I applaud the civility of the Niger Delta communities who came forward to express dissatisfaction about some of the provisions of the bill, indeed this is what a civilized society should be. I am quite satisfied with the intellectual arguments and discourse going on around the groups. It would have been a travesty if the National Assembly had passed the bill into law without giving the public ample opportunity to make contributions.

The oil sector accounts for over 40% of GDP and about 95% of our foreign exchange earnings, the indigenous companies should have a better deal in the industry. We need some positive discrimination in favour of indigenous companies and we also believe that certain businesses should be reserved for indigenous companies to be able to create capacity for them over the years. Industry laws are dynamic tools that are created to deal with the different times experienced in the industry. Maybe 20 years from now there may be another round of amendments, which will best suit the times. Who knows by then, we may be clamoring for more foreign investments. Conclusively, the Petroleum Industry bill is a welcome document. Nigerians should contribute to make it better. I trust our distinguished Senators and Representatives will do a good job on the bill. I have no doubt they would accept all our recommendations, sieve through them and come up with an acceptable law for the petroleum industry. Will your group be submitting any

Banking crises impact supply and distribution of fuel Yemie ADEOYE it may affect supply and distribution of products across the country thereby signaling another round of scarcity. Investigations show that most of the facilities granted by the affected banks were obtained by operators in the downstream sector for the purpose of petroleum products importation into the country. Most of these loan facilities were obtained when the market was upbeat with clear indications that it could be defrayed within the tenure. Some of the indebted companies operating in the downstream who spoke with Sweet Crude all opined that the CBN’s move was hasty and leaves much to be desired. They queried why different figures were popping up from different

sources regarding such a very sensitive issue. According to them the most effective banking tool which is public trust and confidence has being seriously eroded by the CBN’s action. They argued that the CBN could have carried out its oversight functions in a more humane manner given the sensitive nature of the issue at stake. Also speaking on the development a close industry source who also pleaded anonymity stated that the major marketers involvement in the issue is quite minimal, adding that the marketers’ capacity to import had already been impacted by the indebtedness of the Petroleum Products Pricing and Regulatory Agency (PPPRA) put at N70 billion. According to him the main issue which may bring about a fresh round of scarcity is not the current

memorandum to the National assembly when the public hearing on the petroleum industry Bill opens in Abuja? Yes. We have reviewed the provisions and sent our recommendations to the House of Assembly. I have no doubt they would accept all our recommendations, review them and come up with an acceptable law for the petroleum industry. Has the militancy in the Niger Delta affected your group’s operations? Yes. But it is a fundamental problem of the nation that requires a holistic solution which involves dialogue and consultations between the governments at all levels, the private sector and the communities. The government must play its own role by ensuring that policies are implemented and the money earmarked for projects in communities are judiciously utilized. The constitution allocates 13% of Nigeria’s oil revenue to the oil producing states; at least 3% of oil companies’ capital expenditure goes to the NDDC. These monies need to be deployed and deployed effectively and consistently for infrastructural development. Years of neglect will not be sorted out by one year of development; it is a constant development approach. Secondly, we need to get the co_operation from the communities before we can say we have hit the bull’s eye. Then we can start looking forward to creating an interactive union between oil companies, governments and communities. And of course the oil companies need to make their own play, which is basically to hire and train people from the environment so that they can have a feeling of ownership. Also, some of the jobs can be sub contracted to reputable companies owned by the members of the communities so that everybody has a continued interest in ensuring unhindered operations. These can be done in addition to the execution of corporate social responsibility projects.

bank crises but the unpaid debts of the PPPRA. “I will say that the only thing which may lead to immediate decrease of products importation, distribution and supply is if the PPPRA does not pay us our money. Remember we said they are owing us N70 billion. They have now said its not N70 billion but N46 billion and what we are looking at now is for them to even pay the said N46 billion. Just give us that one because the difference between our figure and theirs is due mainly to the exchange rate. At the time they gave us the N17 billion that they are talking about in the newspaper they used an exchange rate of N136 whereas as at that time we showed them proof that we have got the dollar at N148 and N149. And our own position is to outline the principle of restitution. We went to the bank, took some money, we imported and we sold at a price lower than what we should have sold because we want to obey the government bidding.

Sweet Crude

An Overview of the PETROLEUM INDUSTRY BILL 2009

Sweet Crude

An Overview of the Petroleum Industry Bill 2009

OUTLINE Fundamental Objectives The Sector Institutions Upstream Operations and Fiscal Systems Incorporated Joint Venture

THE SECTORS Upstream Sector Oil Exploration & Development Gas Explorations Development

Midstream & Downstream Project Approval and Licensing

Midstream Sector Oil Transportation & Gas Transmission

Midstream Operations, Downstream Products & Special Provisions with Respects to Natural Gas

Gas Processing LNG/CNG/GTL Derivative Processing/Production

Indigenous Oil Companies, Nigerian Content and Host Communities

Oil Refining Downstream Sector

Health, Safety and Environment Transparency and Accountability

Gas Distribution/Sale Petroleum product distributions & Storage Petroleum Product Retail

FUNDAMENTAL OBJECTIVES Vests Oil & Gas resources in the sovereign State of Nigeria.

The Institutions

Separates policy, regulations and commercial activities Licenses, leases and permits granted leases, permits granted only through guided procedures established by the Act. PETROLEUM TRAINING INSTITUE

Any company shall apply and be granted leases, permits in accordance with the PIB Management and allocation of petroleum resources in accordance with the principles of good governance, transparency and to promote sustainable development and economic value to Nigeria. Guaranteees government participation in licenses or leases and in the exploitation of natural gas. The institutions and NOC to be guided by the provisions of the NEITI Act of 2007. Honours international environment al provisions and obligations. Encourages communities relations and the development of Nigerian content.

POLICY NPD

Upstream Technical and Commercial Regulator NPI

PEF

The Minister

Downstream Technical and Regulator PPRA

PTDF Midstream Technical and Commercial Regulator NAMIRA

RESEARCH

NPRC

COMMERCIAL NNPC Ltd

Sweet Crude

An Overview of the Petroleum Industry Bill 2009 INSTITUTIONAL AND REGULATORY FRAMEWORK PIB Institutional Re-Alignment

Technical Regulation

Engineering Safty Environment Geo. Science

Commercial Regulation

Cost Economics Local Content

Technical Regulation

Engineering Safty Environment Geo. Science

Commercial Regulation

Cost Economics Tariff Local Content

Technical Regulation

Engineering Safty Environment e.t.c

Commercial Regulation

Cost Economics Tariff/pricing Local Content

Upstream Inspectorate

Midstream Agency

Directorate

Downstream Authority

Policy

Coordination

Regulation

NOC IOC IJV Gas Exploration MFO & Dev. IDOC Oil Exploration & Dev.

Oil Transp. & Gas Transmission Gas Processing LNG/CNG/GTL Derivative Processing/Production Oil Refining

NOC IOC IJV IDOC

Gas &Dist./Sale Petroleum Product distribution & Storage Petroleum Product Retail

NOC IOC IDOC

Commercial Operations

PART II-INSTITUTIONS OF THE OIL & GAS INDUSTRY THE MINISTER AND THE NATIONAL PETROLEUM DIRECTORATE The Minister

INSTITUTIONS: REGULATORY INSTITUTIONS AND NATIONAL OIL COMPANY National Petroleum Inspectorate (NPI) Technical and Commercial Regulator Reserve Evaluation Reservoir Management Monitoring Periodic Technical Audit of E&P Operations Local Content & HSE National Midstream Regulatory Agency (NAMIRA): Oil Transportation and Gas Transmission Gas Processing, LNG/CNG/GTL Derivative processing/Production & Oil Refining Local Content & HSE Petroleum Products Regulatory Authority (PPRA) Gas distribution /Sale Petroleum Product Distribution & Storage Petroleum Product Retail National Oil Company -NNPC Limited Receives Assets of NNPC prescribed by Act Self funding and financing involved in entire value chain Wholly owned by Govt. Partner in IJV Holder of concession for PSC

Supervises Instituions and the Industry Represents Government Right to preemption Coordination Makes regulation

The NPD Policy formulation for the Oil and Gas sector

INSTITUTIONS: OTHER AGENCIES Frontier Exploration Agency(FEA): Effective and sustainable exploration in the frontier basins. Evaluation of unassigned concessions. Promotion of third party interest in the frontier basins. Carry out studies in unassigned frontier acreage.

Petroleum Equalization Fun (PEF):

Monitoring and Supervising government policy in the industry

Receiver of surplus revenue of marketing company Manages reimbursement of losses by companies. Receivers of any funds set aside by the Federal Government.

Providing the Minister with the Institutional platform for coordinating the industry

Petroleum Technology Development Fund (PTDF):

Represent government in international oil and gas bodies Custodian of all unassigned acreage Provides the secretariat for the National Energy/Petroleum Council Collects proceeds of each barrel of fiscalised crude for financing the activities of the distinct regulatory bodies.

Training of Nigerians in fields related to oil & gas activities. Endowment to Universities. Carry out other capacity building activities.

National Petroleum Research Centre (NPRC): Carry out in all matters pertaining to the petroleum industry. Conduct technical evaluation Develop patents and technologies Maintain database Funding and Management provisions for all Institutions clearly defined

Sweet Crude

An Overview of the Petroleum Industry Bill 2009 UPSTREAM PETROLEUM OPERATIONS Vest Acreage in NPD and transfers leased help by NNPC to NNPC Ltd. Creates new National Grid System with 2x2km parcels

FISCAL PROVISIONS

THRUST OF FISCAL PROVISIONS All companies engaged in Upstream Petroleum operation to pay Company income Tax, including NNPC Ltd.

Institutes Transparent Licensed Award Process Licenses and Leases Creates exploration & prospecting licenses and mining leases.

Introduces a resources tax-Nigerian Hydracarbon Tax (NHT), A simplified version of PPT

Awarded to winning bidder or the NOC. Petroleum Prospecting Licenses shall be for crude oil and natural gas or for oil or gas alone. Provides for size and tenure of PPL, PML & exploration License

Eliminates Tax Offsets and Upstream Investment Tax Allowances Reduction of Deductible items for NHT

Sets time frame fro declaration fo commercial discovery and FDP Sets obligation to meet Dom Gas requirements

PART III: UPSTREAM PETROLEUM OPERATIONS

Introduces volume and price based royalties

IMPACT OF FISCAL PROVISION: ENCOURAGES DEVELOPMENT OF SMALL FIELDS

Relinquishment provision for inactive leases with retention clauses Provide for relinquishment from current licenses & leases and marginal fields

Comparative Government Take between Current and Proposed System for shallow water JVâ&#x20AC;&#x2122;s

Current

Provides for award of leases of Marginal Field Operators List grounds for License revocation Establishes environment quality management obligations Provides for Abandonment, Decommissioning and Disposal of facilities

750 OIL $100 120 OIL $80 40 OIL $60 20 OIL $50

Proposed

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Undiscounted Government Take (real)

Very small fields will have a low government take compared to current and international conditions in order to encourage the development of these fields by small Nigerian owned companies and marginal operators.

Sweet Crude

An Overview of the Petroleum Industry Bill 2009 IMPACT OF FISCAL PROVISION:COMPETITIVE TERMS COMPARED TO OTHER JURISDITIONS FOR LARGE DEEP WATER FIELDS

PART III UPSTREAM PETROLEUM Incorporated Joint Ventures Interest held by NNPC in the current JV shall be vested in the NNPC Ltd.

Comparative Government Take

Assets and interest in current JV to be transfered to a limited liability company

Indonesia Brazil Angola

1500 OIL $100 250 OIL $80 120 OIL $60

Norway

Model article of association to be approved by the minister Each IJV to be owned by parties to current JV in proportion as in current JV

US-GOM Nigeria Proposed 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% Undicounted Government Take (real)

Despite the higher royalties and taxes, the proposed terms are competitive with other deep water terms in the world, and are favorable for small fields under low oil prices.

FURTHER FISCAL PROVISIONS... PSC WITH NOC NOC to enter PSC based on minimum conditions

Parties to IJV will enter into shareholders agreement. Parties may buy Crude Oil proportionate to equity on the basis of prices determined for Tax and Royalty purpose Right of parties guaranteed proportionate to their interests.

MIDSTREAM AND DOWNSTREAM PROJECT APPROVAL & LICENSING

set by Act

New projects or modification or expansions requires project approval certificates

Signature bonus to be paid to inspectorate

Certificates to include technical and commercial licenses

Contract areas Ring Fenced for Cost and Profit Oil

Commercial License required: Pipeline Transport

Cost Recovery Limit of 80% Introduces non recoverable Cost-Fair Market

Petroleum Network Supply of Downstream Products or Gas

Value principle

Gas Distribution network PSC to be based on Model Contract Approved by the Minister

Refining, marketing or operating any petroleum processing or transmitting plant

Sweet Crude

An Overview of the Petroleum Industry Bill 2009 MIDSTREAM OPERATIONS, DOWNSTREAM PRODUCTS & SPECIAL PROVISIONS WITH RESPECT TO NATURAL GAS Refining: Product supplied at benchmark prices at import parity. Open access to storage and delivery facilities guaranteed. Ownership of Refinery Depots Reorganization of Midstream & Downstream NNPC Assets: PPMC split into two companies: National Transport Logistics Company-for product pipeline and bulk terminals and depots owned by the government Downstream Product Marketing Company owned by NNPC. Nigerian Gas Company split into two companies National Gas transportation Company for Midstream Gas pipeline Transportation A Downstream Gas Marketing Company owned by NNPC limited.

MIDSTREAM OPERATIONS, DOWNSTREAM PRODUCTS & SPECIAL PROVISIONS WITH RESPECT TO NATURAL GAS Assets of the National Transport Logistics Company to be divided into geographical regions and concessioned to storage depot companies. Activities of regional depot companies limited to bulk storage and transportation. Open access to product pipeline systems, jetties leading facilities and depots of the regional depot management guaranteed. Interconnections facilities to be ensured by the institutions. Ownership of independent pipelines and depots allowed. Provisions fro tariff methodology, national strategic stock, operation stock and price monitoring

MIDSTREAM OPERATIONS, DOWNSTREAM PRODUCTS & SPECIAL PROVISIONS WITH RESPECT TO NATURAL GAS Establishment of Network Code: Consultation with licenses and other stakeholders. Network code to be made available to interested parties

Wholesale Gas Market: Establish classes of customers Wholesale customers entitled to secure Gas from any leased holder Guaranteed third party access

Gas pricing: Establishes basis of wholesale Gas prices Guarantees Customer Protection Guarantees competitions Wholesale gas pricing shall be negotiated but agency to ensure transparency. Tariffs charged for transportation and distribution networks shall reflect reasonable and efficient investment/capital costs, operating/maintenance expenses and a reasonable return to licenses on their investments.

MIDSTREAM OPERATIONS, DOWNSTREAM PRODUCTS & SPECIAL PROVISIONS WITH RESPECT TO NATURAL GAS... Domestic Gas Supply Obligations. Provides support for the Government's Gas Master plan Provides for Domestic gas supply requirements with aggregate gas price Establishes domestic gas market aggregator Aggregator to manage a gas model, gas curtailment and serve as intermediary Creates gas franchises Requires gas export license

Sweet Crude

An Overview of the Petroleum Industry Bill 2009 INDIGENOUS OIL COMPANIES , NIGERIAN CONTENT AND HOST COMMUNITIES:

PART VI: INDIGENOUS OIL COMPANIES AND NIGERIAN CONTENT

Support for indigenous Upstream Oil Companies No Federal Government participation

Nigerian Goods & Services:

No quota restriction for production below 10,000 bpd.

Purchase of goods & services only where Nigerian alternative are unavailable.

FG to set targets for indigenous oil & gas reserves. Small field allowances Low royalty rates for small producers 0% NHT under certain conditions

Nigerian goods and services clearly defined. NC plan to include procurement procedures that allows purchase of Nigerian goods.

Ownership leases for marginal field operators.

Minimum Nigerian employment stipulated.

Measurable indigenous personnel participation.

Specific training and employment provisions.

INDIGENOUS OIL COMPANIES AND NIGERIAN CONTENT AND HOST COMMUNITIES:

HEALTH, SAFETY ENVIRONMENT:

Nigerian Content & Local Social Responsibility. No approval for FDP without an approved Nigerian content provision plan for projects exceeding $10 million. The NC plan to include purchase of Nigerian goods, procurement guidelines, employment of Nigerians, training, education, research & development and reporting. Specific provision for local communities. Mandatory provision for infrastructure development, education, employment of indigenes, purchase of goods from indigenes, creation & support of local businesses, training specific to local employment, consultation with communities and requirements for MOU.

The Regulatory institutions shall have responsibility over all aspects of health, safety and environmental matters without prejudice to the responsibility of the Federal Ministry of Environment. Clear relinquishment, abandonment and restoration provisions Provides for environmental quality management system

Sweet Crude

An Overview of the Petroleum Industry Bill 2009 TRANSPARENCY, ACCOUNTABILITY & GOOD GOVERNANCE

TRANSPARENCY, ACCOUNTABILITY & GOOD GOVERNANCE

One of the fundamental objectives of the bill is full compliance with the NEITI Act, 2007 by all the institutions and the National Oil Company to be established.

Further Accountability and transparency provisions.

Creates an open framework by eliminating confidentiality of:

A clear distinction between upstream, midstream and downstream

All texts of licenses, leases, contracts and amendments

Establishing an open and competitive bid process

Amounts of revenue payments to the government by individual companies.

Creating uniform but flexible royalty and tax term that apply to all.

All geological, geophysical, technical and well data.

Establishing equal conditions to regulated installations through open apen access rules.

Approved budgets of JVs & PSCs Production, lifting/quantities and values lifted.

Clear guidelines for the revocation of licenses and leases. All decision of the minister on petroleum administration shall be based on equal rules applicable to all.

CONCLUSION The implementation of these reforms will strongly open up the Nigerian Oil and Gas sector to new local and international investors for competitive growth and sustainable development in line with International best practices. In particular, when the PIB is passed into law. It will help in. The creation of a modern petroleum legal framework Alignment of the Nigerian Oil & Gas sector to international best practice Enhancement of transparency and on open framework Establishing good governance practices and processes Reinforcing linkages between the oil and gas industry and other sectors of the Nigerian economy Support the energy objectives of Government enshrined in the seven point agenda.

Sweet Crude

Labour

HE two unions in the nation's Petroleum industry, the National Union of Petroleum and Natural Workers (NUPENG) and its Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) counterpart, have taken a critical appraisal of the executive sponsored Petroleum Industry Bill (PIB) before the National Assembly and expressed misgivings over several p r o v i s i o n s o f b i l l . Among the major concerns of the oil workers on the PIB include no provision for local refining of petroleum products, silence about the composition, roles and functions of the Petroleum Training Institute (PTI) and no provision in the bill for the protection of the interest of host communities in the form of royalties or equity ownership to encourage their participation. Leaders of the two unions under the umbrella of NUPENGASSAN, a fusion of NUPENG and PENGASSAN, in a memorandum submitted to the House of Representatives public hearing session holding on the PIB, however applauded certain provisions of the bill and declared that the need for all encompassing Law to replace the archaic, multiple and sometimes overlapping laws governing the Oil and Gas in Nigeria is overdue. According to the oil workers, “whereas NNPC and other private importers have spent billions of dollars over the past years for the importation of refined products and payment of subsidies, there is no provision in the bill to consciously stimulate local refining and discourage importation. There is no deliberate attempt through any provision in this bill to stem the tide of importation either in the short, medium or long run. With the vagaries of international crude oil pricing and unstable nature of the Naira, the need for local production and refining of our crude oil as a prelude to the deregulation of the sector need not be overemphasized. Our suggestion therefore is that this Honourable House should insist that not less than fifty per cent of crude oil produced per day is refined locally. Secondly, the bill should make provision for a certain percentage of our export crude oil to be purchased in Naira in order to strengthen our local currency and ease the demand for FOREX.. The conspicuous silence about the composition, roles and functions of the PTI in the new dispensation, is worrisome. The total exclusion of the PTI in section 478493 as one of the institutions to be enshrined in the bill is a source of concern to us. We therefore suggest that the status, roles and functions of PTI be inserted in the bill.” “The PIB mandate that oil and gas licenses and leases are separated. This practice raises serious issues. Where different operators exploit hydrocarbons (oil and gas) on the same lease, the operational risk and safety, health and environment (SHE) conflicts resulting from potentially misaligned operational strategies could be unimaginable. The thrust of the PIB reforms should be to attract investment to drive the growth of the Nigeria oil and gas

Oil workers restate conditions for deregulation LAGOS: WORKERS in the nation’s petroleum industry, have warned that the country is ready for full deregulation and called on government to ensure that all necessary pre-conditions are in placed before the policy is implemented. Under the umbrella of the National Union of Petroleum and Natural Gas Workers (NUPENG) and its Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), the workers warned any deregulation without meeting some identified preconditions would throw the nation into confusion. In a petition addressed to the Secretary to the Federal Government, the leaders of NUPENG and PENGASSAN, state categorically that their position is that the policy must be that of a guided deregulation. The petition entitled “ NUPENGASSAN Position on deregulation policy of the Federal Government” and signed by Comrades Lumumba Okugbawa and Elijah Okougbo, Acting General Secretary and General Secretary of PENGASSAN and NUPENG respectively, read in part: “Our attention has been drawn to various interpretations concerning our position.

PHCN workers get pay rise Babatunde Ogun

NUPENG, PENGASSAN fault PIB Says no provision for local refining Raises labour concern, other issues

Victor AHIUMA-YOUNG sector. However, the current provisions requiring that investors must re-apply for new petroleum mining leases will accomplish the opposite. This is because less than 25% of all exploration ventures in the deepwater have achieved commercial success and any unsuccessful investment are borne solely by PSC contractors without

any economic reward. Consequently, increasing investor risk by requiring investors to re-apply for licenses will be antithetical to further i n v e s t m e n t s . ” Downstream sector deregulation Continuing, NUPENG and PENGASSAN, posited that “lack of competition in the downstream sector of our industry has stalled growth and affected job opportunities. We have also

reasoned that any policy that guarantees competition and delivering of products to consumers will be encouraged on the grounds that the enabling environment is provided and appropriate criteria put in place for sincere and effective implementation of the reforms. Such policy must seek to promote local refining and discourage reliance on importation and to eradicate, the CONTINUES ON PAGE 23

THE Management of Power Holding Company of Nigeria (PHCN), has approved a 13 percent pay rise for over 30,000 workers of the company effective August 1, 2009. This is coming even as the Minister of Labour and Productivity, Prince Adetokunbo Kayode, has commended the role of labour in economic development, stressing that issues of job security, dignity of labour need to be included in the Vision 20-20 programme to enhance the n a t i o n ’s e c o n o m i c development.Sweetcrude gathered that the 13 percent pay rise was agreed upon last week at a meeting between the management of PHCN and the two unions in the sector, the National Union of Electricity Employees (NUEE) and its Senior Staff Association of Electricity and Allied Companies (SSAEAC) counterpart. The workers who were said to have not received any wage increase in the past nine years, are demanding a 150 percent pay rise. The management and the two unions also reached agreement “that at attaining Power generation of 3,500 Megawatts, 4,000 Megawatts, 5,000Megawatts and 6,000Megawats respectively, management and the leaders of the two unions would meet.

Labour

Amnesty: Rehabilitate displaced people of Gbaramatu, Odi Labour insists N AT I O N A L U n i o n o f Petroleum and Natural Gas Workers (NUPENG), has called for immediate rehabilitation of displaced indigenes and habitants of Gbaramatu area of Warri, Odi in Bayelsa and others people displaced as result of the crisis in the Niger Delta region to boost the amnesty deal, warning that the continued neglect of these displaced people is a threat to the amnesty deal. President of NUPENG, Comrade Peter Akpatason, in a chat with Sweet Crude, “what we are saying is that there is the need for government to come out and effect practical development and put projects in place because you and I know that the amnesty itself does not solve the problem. It only creates the enabling environment for the militants to surrender their arms and for the government to sincerely develop the communities and address the real issues that led to the crisis in the first place. When you create the environment and development action does not follow immediately, it creates doubt in the mind of people.

John Holt boss laments absence of infrastructure in Niger Delta CHAIRMAN of John Holt Plc, Chief Christopher Ezeh, condemned the poor state of public infrastructure across the country and the security situation in the Niger Delta as being responsible for the continued relocation of senior personnel and businesses out of the country. At the company’s 47th Annual General Meeting (AGM), Chief Ezeh also disclosed that all John Holt employees are covered by the group’s free health care, safety and welfare programmes as well as personal accident insurance cover. Chief Ezeh said however that the company’s management would continue to focus on the group’s strength and ensure that the various businesses are competitive as well as develop new initiatives towards achieving increased turnover and profitability.

There seems to be no provision in the bill for the protection of the interest of host communities in the form of royalties or equity ownership to encourage their participation

Peter Akpatason

NUPENG, PENGASSAN fault PIB CONTINUED FROM PAGE 22

obstacles that could render any policy ineffective, be it regulation or deregulation. Some of the most prominent impediments include; inadequate receptive facilities, such as jetties and deports, absence of good rail system, roads and functional pipelines network; the existence of cartel who manipulate policy implementation to their selfish benefits. Given that successive Governments have not demonstrated sufficient political will to provide better Healthcare, unemployment benefits, social security system, efficient transportation system, good road network, Power, Education etc. to mitigate the strong impact of sudden policy changes; -we maintain our support far guided deregulation. Therefore we shall not hesitate to vary our position, if the bill does not seek to ensure that aforementioned conditions precedent to deregulation are met. Expatriate quota abuse has been a source of concern in the Oil and Gas sector. Expatriate with little or no added value to the system are brought into the country in droves through a very loose immigration

l a w . ” “There seems to be no provision in the bill for the protection of the interest of host communities in the form of royalties or equity ownership to encourage their participation. It is our sincere believe that the successful implementation of any reform in the industry is dependent on the level of peace in the Niger Delta Region, Therefore, any policy that does not take the interests of host communities into account will likely

run into stormy waters. We suggest the inclusion of a clause that will involve the host communities in the ownership and operation of the JVCs operating in their region. This is without prejudice to the provision for corporate social responsibilities of the various companies. The issue of Corporate Governance concerning equity participation in the Incorporated Joint Ventures must be clearly stated in the bill. With effect from the date of incorporation, all Nigerian staff of the current joint venture arrangements shall automatically become employees of the new Incorporated Joint Venture Companies, (JVCs) on terms and conditions no less favourable than those obtainable immediately prior to the incorporation. The JVCs shall continue to fulfill all obligations in respect of pension schemes to which the IOCs-NNPC JVCs were obliged in respect of the employees prior to the take off of the JVCs. A one year period for full implementation of the JVCs take off does not seem feasible, we therefore suggest a twenty four month period. 5. Those wishing to collect their accumulated benefits before migrating to the new incorporated joint ventures should be a l l o w e d . ” L a b o u r

i s s u e s

For the oil workers,“in any restructuring process, there is always a business decision targeted at reducing the workforce. We are general y concerned about the intention of this Bill concerning the

existing structures of the Oil and Gas sector as it effects employment We hereby request that provisions should be made in the Bill to Government Agencies Harmonization of all staff benefits and pensions for all intergovernment agencies for the National Oil Company, Harmonize the collective bargaining agreements (CBA) and joint negotiating council for the agencies. With effect from the date the enactment of this bill all staff of DPR, PEF, PTDF, PPPRA, and PTI shall be deemed to be employees of the NPI, PEF, PTDF and PTI on terms and conditions no less favourable than those enjoyed immediately prior the incorporation. We have also observed the apparent oversight in the exclusion of the Unions (NUPENG & PENGASSAN) from appointment into the Boards of the new Institutions. As strategic stakeholders, this should be addressed to enable workers make meaningful inputs into the d e v e l o p m e n t o f t h e s e c t o r. NUPENGASSAN support the ongoing Federal Government restructuring of the petroleum and gas industry as encapsulated in the PIB, with our opinions herein observed and stated for considerations- The Government's idea of creating the Niger Delta Ministry and an apolitical NDDC as well as the recent amnesty to the militants is hereby supported by the union and association.” The oil workers however threw their support for the full commercialization and capitalization of NNPC to attain the status of a viable and competitive integrated company, the creation of a fully funded and autonomous Inspectorate to replace the current Department of Petroleum Resources, to function as a single technical regulator for all sectors of the industry and that Petroleum Products Regulatory Agency (PPPA),should be made the single commercial regulator of the downstream sector of the industry. They added that since the intention of the bill is “ to serve the dual purposes of increasing Government earnings and boosting investment and growth. Therefore, we are of the opinion that this Honourable House should benchmark the proposals in the Memorandum by Federal Government Inter-Agency Team on the bill with best practices in other oil producing developing country, to ensure that the fiscal policy supports the Nigerian dream of optimizing earnings from oil production while at the same time not constituting a disincentive to investment and growth.

Mobil Nigeria confirms 3 party workers' strike

obil Producing Nigeria Unlimited (MPN), operator of the Nigerian National Petroleum Corporation (NNPC)/MPN Joint Venture has confirmed that some workers of Labor contractors providing 3rd party services to MPN are currently undergoing a work stoppage over work benefits.

A statement signed by Gloria Essien Danner, one of the company's Executive Directors' disclosed that Mobil has encouraged the contract staff to take up issues relating to their contracts and benefits with their respective employers. We continue to urge both contract staff unions and the companies involved to follow

the due process and obey the law. We expect all personnel to comply with MPN's workplace policies while in its premises. We believe that open dialogue is the most effective mechanism for resolving issues of this nature and hope for a successful conclusion.

Insurance

24 abroad, there are a thousand insurance brokers in Nigeria who can do essentially the same if not better”, he claimed in an exclusive interview with Vanguard. To fashion a system that works as a local content in concept, the CEO wants Nigerian brokers’ participation to be on production basis so they can then choose international partners to work with. “Let Nigerian brokers be the producing brokers which means they will originate the business.

International Energy Insurance to expand CSR

SBM produced at Niger Dock

LOCAL CONTENT:

Nigerian insurers should initiate energy risks -Ojumah Ifeanyi UGWUADU & Chika AKUNNE

he current practice in local content energy business has been faulted on the grounds that it robs indigenous players of playing key role in the channeling of the placements. The proper routing of the businesses will empower insurers to play decisive role in the process. Managing Director of FBN Insurance brokers, one of Nigeria’s leading brokers, Mr Val Ojumah said local content in the energy insurance business as practiced today is not beneficial to the country as the subsisting routing of

the process raises the cost of insurance. Currently, the way it’s going now involves “the reinsurance broker through a lead underwriter outside bringing the risk into Nigeria.” Reviewing the state of energy business in Nigeria, Ojumah declared “I have not seen any change in the state of energy insurance in Nigeria. Looking at it practically, the sources of energy insurance in Nigeria are several. Number one is the government through NNPC and NAPIMS. Number two is the multi-nationals and finally private producers excluding the oil services companies. For NNPC and NAPIMS, nothing has changed,” he concluded This channeling, according to

Ojumah is informed by the leading role played by captives of multinationals oil companies in the country who use their own insurance companies (captives) to execute their insurance business in the country. “The reason is that multinationals have interests in captives not registered in Nigeria. So, they use insurance companies registered in Nigeria as either fronts or those companies take a proportion of the risks and the proportion they cannot take, they transfer abroad. This represents the concept of local content as initiated by the federal government.” This process, Ojumah stated keeps the business overseas and allows foreign players to dictate the business process and terms for

local players. But he noted that if local content is aimed at empowering local players, it has failed to produce results as the old system has been transferred. Ojumah explained that “joint venture projects, which is between NNPC and the multinationals, the insurance go through NAPIMS and follow the same system; the same market, the same primary underwriters following the same method of taking in what they can and shipping out the excess.” He said much money is being wasted in what Nigerian brokers can best do than their foreign counterparts. “What the reinsurance brokers are doing

I have not seen any change in the state of energy insurance in Nigeria. Looking at it practically, the sources of energy insurance in Nigeria are several

International Energy Insurance Plc (IEI), the only Nigerian underwriter partnering CNN’s global greening programme has assured that the company will continue to give back to the society in fulfillment of its corporate social responsibility function. The company disclosed that it will continue to back activities that impact overall society’s efforts at renewal and assisting in promoting social work. According to the management, the company’s rising CSR profile which has received international recognition informed the sign_on of IEI as the official underwriter of the FIFA under 17 world cup tournament billed to hold in the country in October. In another development, the management said that IEI which came to being through the acquisition of the former Global Insurance Company Limited in 2003 by some visionary investors has grown to become a force to reckon with in the financial service sub sector providing services in pension fund administration, asset management, real estate as well as insurance. The 35 year old underwriter, according to reports is also leading force in oil and gas underwriting with a capital base in excess of N15billion making it the highest capitalized insurance company in Nigeria today. “Our company has grown to become a group providing services in pension through IEI pension Limited, IEI Asset Management Limited and of course, the insurance. Our focus is to own a bank.” management reiterated. It will be recalled that International Energy Insurance plc rebranded after the acquisition of Global Insurance Company Limited in 2003. Since then the new ownership of the company whose vision and mission has remained to provide financial service to customers both locally and internationally with sound international best practice and corporate governance principles has steadily and consistently proving a point in the market place through rapid expansion network and investment portfolios, premium income and profitability.

Insurance

Eni Fires Up Gas Production in Mediterranean Sea

Niger Insurance Plc at the Tinapa Business Resort in Calabar held its 39th Annual General Meeting. R- Alhaji Bala Zakariya'u, Chairman of the company, Dr Justus Uranta, MD/CEO and Mr Kola Adedeji, Deputy Managing Director of the insurance company during the AGM.

Members push for dissolution of NOEIP Patience SAGHANA

ttempts made by some members of the Nigerian Oil and Energy Insurance Pool (NOEIP) to dissolve the pool nine years after nine years of its existence was bungled by some other members of the pool. Vanguard gathered that some members of the pool had on three occasions pushed for dissolution of the pool on the grounds that it no longer served its purpose of attracting patronage from the energy industry but the attempts to dissolve the pool was thwarted by other members of the pool who are still nursing the hope on the actualization of the aim of NOEIP. The pool was floated by some insurance companies to improve capacity of insurance companies in writing oil and gas business but its takeoff had been continuously frustrated by both internal and external conflicts including the multinationals that have refused to cede business to the pool Membership of the pool started in 1999. As at 30th April 2000, the Pool has 14 members with a deposit of US$975,000.00 representing 39 Lines. Membership of the pool grew from 17 as at April 2001 with a deposit of US$1,350million

approximately 54 lines to 26 members as at 30th April 2002 with a total deposit of US$1,6million or 64 lines. The membership increased to 27 as at April 2003 with a total deposit of US$1,95million or 78 lines and by November 2003, the list went up to 35 with a total deposit of US$2, 225m representing 89 Lines. As at December 2004, there are 51 members with US$2, 975million or 119 lines. Post recapitalization membership stood at 27 with total number of lines reduced to 85 lines. But currently the NOEIP has 23 members with number of lines at 79. Insurance companies that are members of the pool screeching for withdrawal from NOEIP are: Consolidated Hallmark; LASACO Assurance Plc; Leadway Assurance Co. Ltd; Prestige Assurance Plc; Regency Alliance; Sterling Assurance; Law union & Rock; Nigeria Agricultural Insurance Corporation and Oasis Insurance Plc The withdrawal of some of the members of the pool had further weakened the pool as the remaining companies are seriously considering taking out their contribution and thus signaling the intention to collapse the pool. Out of the Nigerian oil and gas risks exposure amounting to $101.14 billion (about N11 trillion), about $33 billion, representing 33 is being retained by

the indigenous insurance companies, according to Nigerian National Petroleum Corporation. As the premium payable on these oil and gas risks amounted to $224 million, the nation's insurance industry loses $151 million (about N16.1 billion) since only 33 per cent of the risks amounting to $33 billion risk exposure is retained in the country. Recapitalisation of the insurance industry resulted in the increase in the net assets of the 40 companies operating in the country to N177 billion ($1.5 billion) as at December 2007, and with a market capitalization of N670billion as at December 2008 yet NNPC insists that local market capacity is still relatively low. NNPC oil assets, he noted have MPL of $1billion with underlying sums insured of $32 billion excluding well and third party, pointing out that only 42.5 per cent of the NNPC Consolidated Insurance Programme was retained in the country in 2007 and 52.5 per cent in 2008. Thus, NNPC recommended that the insurance industry should adopt risk based capitalization by creating separate balance sheet for each class of the business. Meanwhile, Minister of State for Finance, Mr. Remi Babalola had lamented that substantial part of the risks emanating from the nation's oil

and gas industry are still being underwritten by foreign insurance companies. Babalola stated that the local insurance industry is being confronted with all manner of hurdles preventing it from fully participating in oil and gas insurance. While the government has set a local content target of 45 per cent in 2006 and 70 per cent in 2010, the minister said even though the country has recorded appreciable progress in other areas, the performance of the insurance industry in this initiative has been dismal. The overall aim of the local content policy of the Federal Government in the energy sector is to enable Nigerians develop and maximize the potentials for local companies participating in the business of the sector. He therefore charged operators in the local insurance industry to rise up to the occasion by building capacity to underwrite the energy risks, while also undertaking a major review of their operations.

Mr. Fola Daniel, the nation's commissioner for insurance who gave the advice in Lagos last week had regretted that the structure of the oil and gas insurance is such that it is difficult for most insurance companies to win accounts on standalone basis. According to him, the demand for consolidated accounts of companies as precondition for listing as possible oil and gas underwriters is almost impossible for companies to comply with hence the need to form consortiums. The commissioner's challenge came on the heels of the declaration by the membership of the Nigerian Energy Insurance Consortium that it does not intend to operate as a cartel.

Eni, The parent organisation of Nigerian Agip Oil Company (NAOC), has started up subsea gas production in North Bardawil field, within the North Bardawil Concession, located in the Mediterranean offshore of Egypt. The expected maximum production rate will be 2.7 million standard cubic meters per day, approximately 17,000 barrels of oil equivalent (boe)/day, of which about 6,000 boe/day is Eni equity share. The companies working in this project are Ieoc (Eni's affiliate in Egypt) 60% and KUFPEC (Egypt) Ltd (Kuwait Foreign Petroleum Exploration Co. affiliate in Egypt) 40%, whereas the operator is Petrobel, a joint operating company made of Ieoc and EGPC. The project consists of two subsea wells drilled by semisubmersible Rig Scarabeo 4, the installation of 24 Km of sea line in a water depth ranging between 110 and 350 meters, and the tie back to the existing production platform Barboni.

SPE raises alarm over Niger Delta safety Oil explorers under the aegis of the Society of Petroleum Engineers (SPE) have expressed concern over the vandalism of oil facilities in the Niger Delta region. SPE said destruction of the oil facilities by militants would adversely affect development in the region. SPE's Chairman, Bayo Ojulari said recently in Lagos that the activities of the militants would stifle foreign investment in the country's oil sector. "The attacks will discourage foreign investments and create instability in the sector as people are not ready to work in the region for fear of being attacked. "They go to other areas or change their line of business," he said. Ojulari spoke against the backdrop of a notice issued by the Movement for the Emancipation of the Niger Delta (MEND) to oil workers to vacate the region by June 8 or risk being attacked. He noted that the real struggle for the development of the region had been hijacked by some unscrupulous elements. "There are three militant groups __ those clamoring for development and want the companies to implement certain things. "The second group is made up of people using the struggle for their political gains to cause instability while the third are the poor criminals.

Financing

PIB introduces new fiscal regime Luka BINNIYAT

he Federal government and oil and gas producing firms are set for a major collision should the new fiscal provision in the Petroleum Industry Bill (PIB) scale through two chambers of the National Assembly of Nigeria into an Act. This is because government has introduced, for the first time, radical measures that will lead to higher revenue from royalties, rents, penalty and the rest. This as a result of the clear fact government makes very little from taxes in the secor, as a result of the difficulty of calculating them in the first instance and collecting them.

least attractive in the sub region. They insist that eroding their margins of profit with new laws may chase them out of Nigeria. But, Stakeholders representing Nigerian interest and government agencies were unanimous in calling off the bluff of the operators. But, more all other forms of revenue in the proposed fiscal measures, Royalty and Rents, received the most amendment. Here are some sections of the proposed legislation. Royalty rates based on value. 438. (1) The royalty rates based on value shall be identical for the various geographical regions, including frontier acreages, and shall be based on the average value for the month from each PML (Petroleum

They argue that doing business in Nigeria is not only costlier than most part of the world, because of poor instradtucuer, but the issue of security has made the Nigerian Oil and Gas ventures the least attractive in the sub region

But, the oil firms have protested this move during the last public hearings organised separately by the Senate and the House of Representatives. They argue that doing business in Nigeria is not only costlier than most part of the world, because of poor instradtucuer, but the issue of security has made the Nigerian Oil and Gas ventures the

Mining Lease) for the petroleum production as determined pursuant to section 434 hereof and shall be determined separately for: (a) crude oil plus condensates, and (b) natural gas. (2) the royalty rates for crude oil plus condensates shall be: (a) 0% for a value from US $ 0 per barrel and up to and including US $

The MD of Total, Guy Maurice (R) welcoming the Minister of Petroleum, Dr. Lukman to Total's exhibition booth at the 2009 SPE conference and exhibition in Abuja. 70 per barrel, (b) over US $ 70 per barrel and up to and including US $ 110 per barrel the royalty rate shall increase by 0.4% royalty percentage for every US $ 1 increase in value over us $ 70 per barrel, (c) over US $ 110 and up to and including US $ 140 per barrel the royalty rate shall be 16% plus 0.2% royalty percentage for every US $ 1 increase in value over US $ 110 per barrel, (d) over US $ 140 and up to and including US $ 170 per barrel the royalty rate shall be 22% plus 0.1 % royalty percentage for every US $ 1 increase in value over US $ 140 per barrel, and (e) over US $ 170 per barrel the rate shall be 25%. (3) the royalty rates for natural gas shall be:

FG to pay N177b in electricity subsidy

NDICATIONS are that the Federal Government will pay N177 billion as subsidy for electricity consumption over the next three years. Imamudeen Talba, the Administrator of Nigerian Electricity Regulation Commission (NERC) disclosed that the payment will derive from savings accruing from the N5.20 tariff increase to be paid by consumers during the period,

according to. He stated this at an awareness campaign tagged: “Power Consumer Assembly,” organised by the commission in Katsina. “By 2012, the problem bedeviling the power sector would have been solved and we believe that if there is constant power supply, Nigerians will pay the full tariff,” he said. Talba, who expressed the hope

that the ongoing reform in the power sector would ensure efficiency and quality service delivery, lamented that customers across the country owed PHCN more than N79 billion. He said poor payment, illegal connections, hostility to PHCN workers, vandalism, theft of grid equipment, as well as fraudulent collusion between customers and utility workers, were some of the challenges facing the sector.

(a) 0% for a value from US $ 0 per million Btu up to and including US $ 2 per million Btu, (b) over US $ 2 per million Btu and up to and including US $ 6 per million Btu the royalty rate shall increase by 0.3% royalty percentage for every US $ 0.10 per million Btu increase in value over US $ 2 per million Btu, (c) over US $ 6 per million Btu and up to and including US $ 10 per million Btu the royalty rate shall be 12% plus 0.2% royalty percentage increase for every US $ 0.10 per million Btu increase in value over US $ 6 per million Btu, and (d) over US $ 10 per million Btu and up to and including US $ 15 per million Btu the royalty rate shall be 20% plus 0.1 % royalty percentage increase for every US $ 0.10 per million Btu increase in value over US $ 10 per million Btu, and (e) over US $ 15 per million Btu the rate shall be 25%. (4) The oil price levels and the US $ 1 in subsection (2) hereof and the gas price levels and the US $ 0.10 in subsection (3) hereof shall be adjusted pursuant to section 431 hereof. Rents for licenses and leases 433. (1) Every Petroleum Exploration License ("PEL") shall be subject to a rent of US $ 10 per square kilometer included in the PEL upon the grant of the PEL and any anniversary thereof. (2) Every Petroleum Prospecting License ("PPL") shall be subject to a rent of: (a) US $ 100 per square kilometer upon the grant of the PPL and the first and second anniversary thereof, (b) US $ 300 per square kilometer on the third and fourth anniversary of the PPL, and

(c) US $ 500 per square kilometer on the fifth anniversary and any further anniversaries of the PPL (d) During any significant gas discovery retention period pursuant to subsection 277(10) hereof the rent shall be US $ 10,000 per square kilometer per annum and shall be paid on the declaration of a significant gas discovery and any anniversary thereof. (3) Every Petroleum Mining License ("PML") shall be subject to a rent of US $ 1000 per square kilometer upon the grant of the PML and any anniversary thereof (4) A PEL, PPL or PML cannot be granted without prior payment of the applicable rent for the first year. (5) Failure to pay the rent upon any anniversary of the PEL or PPL shall result in the application of an interest rate of LIBOR plus 2% to the outstanding payment in US $ and where the payment of the applicable rent is not made within three months, termination of such license pursuant to subsection 293(1)( d) hereof shall be initiated. (6) The rents shall be adjusted pursuant to section 431 of this Act. (7) Any rents shall be verified and collected by the Inspectorate “Everyone can calculate and verify on the back of an envelope how much royalties should be collected from each oil and gas field each month”, he said. “If oil prices go up unexpectedly as happened in 2008, Nigeria will reap an instant benefit from such high prices, because royalties are levied every month”, he said. The proposed Royalty is hinged on daily oil and gas production and also on the prevailing prices.

Financing Table showing number of oil acreages, expected and actual payments on them as at 2007 before the expiration of the last administration Zone

Blocks

Anambra Benue ChadBasin Continent Onshore Deep IPP LNG Refinery Total

Expected payments ($000)

5 2 4 6 6 8 4 3 6 l44

2,8323 1,020 2,121 386,000 233,600 999,250 165,000 145,010 697.952 2658,276

Actual Payments ($000) 6613 1,020 1,038 57,995 828,104 10,000 11,010 87,805 983,585

Payments in 2005 = $73,964,000; Payments in 2006 = $901,001,000; Payments in 2007 = $8,620,000 Total = $983,585,000

2005 OIL INDUSTRY AUDIT:

Unanswered findings worries NEITI

he nigerian extractive industries initiative (neiti) has expressed grave concern over several mind-boggling findings in the 2005 audit of the nigerian oil and gas sector for which answers are yet to be provided. Neiti, passed into law in 2007, is the official watchdog of nigerian extractive sector and is empowered to mete out penalties to erring firms, including license revocation. Neiti in 2005 contracted the hart group of london and a nigerian auditing firm, s. Afemike to carry out an independent financial, physical and process audit of the nigerian hydrocarbon sector. The two had earlier done a similar job for nigerian that covered the periods between 1999 and 2004. In his presentation at the a stakeholders' roundtable on the 2005 audit report of neiti , the

Luka BINNIYAT executive secretary (es) of neiti, mallam haruna sa'eed made several troubling observation concerning findings in the audit report. One of such is the 2005 bid rounds conducted by the department of petroleum resources (dpr). He noted that while 44 oil blocks were put on sale, the number of those who applied and took part in the bid cannot be provided by the dpr. But, that the dpr came out to say that 115 companies won the bids. “there is enough reason to worry about the process that saw to the emergence of the winners”, he told the stakeholder, who included the board of neiti, the civil society organasiation, the diplomatic core, government representatives and the press But the most troublesome issue

on the 2005 bid rounds is the confusion surrounding the signature bonus paid the so-called winners of the oil acreages. Citing the audit report, he said that of the 44 oil fields sold, the expected revenue from the transaction is $2. 658,276 billion but that the actual payments till 2007 is $983.585 million . “and there-in lies the confusion”, he said Amount reported by companies as paid = $245,805,000; Amount reported by DPR as received = $129,011,000; Difference is $116,794,000 Amount reported by OAGF as received = $126,791,85 (source: NEITI, 2009)

The actual payments made in 2005 for that year's bid round was $73,964,000. In 2006 more companies paid about $901,001,000 and

in 2007 some firms paid another $8,620,000 to swell government coffers by $983,585 million. “But according to the 2005 audit report”, he said,” oil companies claimed that they paid $245.805 million and not N73.964 million”, he said. “Strangely”, he went on, “the DPR claimed in the report that it only received $129.011 million”, he said. This clearly leaves a difference of $116.794 million hanging till date. “And to make matters worse”, he went on, “the Office of the Accountant General of the Federation (OAGF) said it has $126.791milion as its records for payment for Signature Bonus of 2005”, he said The Chairman Board of NEITI, Professor Assisi Asobie, in the same line, pointed out more areas of concern saying, underpaid royalties and taxes; nonremittance by the Nigerian National Petroleum Corporation (NNPC) of what it received from sale of domestic crude are among the ways that government lost resources in 2005, based on

27 the audit report. “Underpayment to the Niger Delta Development Commission (NDDC) in relation to its receipts from oil companies and the difference in lifted quantities of crude between the terminal operators and the companies making the lifting, are areas where government has lost revenue in 2005”, said that former ASUU Chairman. He however said that poor record keeping on the part of government agencies in the oil and gas sector is perhaps the most worrisome of the problems. “For example”, he told the gathering, “the most possible shortfall in the payments of royalty and petroleum profit tax (PPT) resulting from anomaly in the interpretation and application of MOU clauses and the clauses of the relevant laws is estimated at $309.9 million for royalty”, he said. “Oil Companies established that the NNPC owed to the Federation account the sum of N654.825 billion; NNPC claims it owed N651.583, but added that the sun of N222.387 billion was being withheld as part of subsidy payment due to it from the federal government. “The auditors are right in saying that the NNPC should first pay what it has accepted as owing and then demand payment of the subsidy later, It should also pay the sum of N3.242 billion over and above the total sum that the NNPC claimed it was owing the federation account. “The auditors lamented the lack of reliable data about gross production at the well heads as well as the non corporation of companies o p e r a t i n g o ff s h o r e i n providing few data about the volume produced by the,. They were also concerned that the DPR provided data on the volume of production that differed from those provided by the companies as a result of these it was difficult to determine precisely the lose of oil occurring between the well and the terminal”, he said.

Power

Rockson moves gas turbines across Imo River …Plots Ala-Oji start up in 8 months

Movement of turbines across the Imo River

R . B i y i Sangowawa, the executive d i r e c t o r (operations) of Rockson Engineering is a seasoned engineer and an executive director of Rockson Engineering Company Limited, a renowned engineering company with a reputation for efficient delivery of projects. In this interview with Hector Igbikiowubo, Editor of Sweet Crude, he brings us up to date on the hitherto beleaguered attempts to get gas turbines stuck at the Onne port in Rivers state across the Imo River to 1,074 MW power plant near Ala-Oji and the state of development at the Egbema, Omoku and Gbarain-Ubie power plants, all being handled by the company. Excerpts: We noticed you have finally been able to get the gas turbines across

the Imo River bridge, can you give us a fair idea how you were able to accomplish that feat given the well known constraints? I would like to thank the president, the vice president of the federal republic of Nigeria and the steering committee. In March, the vice president visited Alaoji and at that occasion in question, he made a commitment that within a particular period, they will find a way forward for the Alaoji project to continue. You will recall that we have had two years delay in the execution of the project because of this issue of Imo River bridge. Since then, the federal government and NIPP have worked with us to look at the issue of the river crossing, the contract terms and they made guarantees to us which we were able to pledge with our banks and we were able to start the process of constructing a ramp. It took us about two months to construct. We originally planned to

do this in four months but we had very good cooperation from both the Rivers state and the Abia state government and the local governments involved, and all the people around. We have been able to even transport within two weeks as against four weeks originally planned. We have made a lot of savings in time and this is despite the heavy rains in June and July. Based on that, we see a way that within the shortest possible time, say between 6 to 8 months we should be seeing at least one of the plants being fired if gas is available. The government is working on all these constraints; we still have about 700 containers of equipment at the port and we are working to remove these constraints. The way the government is being proactive gives us the impetus to work and one of the things we are going to do is try and work overtime to move the project forward. Because of the

The first phase will be the simple cycle and we have four units of 120 megawatts each. Each unit will be coming up one after the other and it is the first unit that I am referring to when I say 6 to 8 months

28 time it took government to act on the turbines that were stranded at the port, some equipment that were expected were delayed. But at the rate at which things are progressing now, when the new equipment that are being expected come in, it will be like a plug in and play situation. We believe that since the project has recommenced, we should be able to generate light in the very near future. You talked about 6 to 8 months time frame to generate power from the Alaoji plant. How many megawatts do you see being generated from the Alaoji project then? The Alaoji project is supposed to generate about 1074 Megawatts (MW), but this will come in phases. The first phase will be the simple cycle and we have four units of 120 megawatts each. Each unit will be coming up one after the other and it is the first unit that I am referring to when I say 6 to 8 months. There are some things we cannot fast track. For example when you do a foundation base, when you cast, you have to wait for 28 days before you can put your physical equipment there. There are some equipment we have to pre-commission. What we can always do is that once we have the materials we make sure that men are mobilised to start work. But now the things that will help us to achieve mileage are the release of the power supply equipment stuck in containers at the port within the next three to four weeks. The NIPP is working with the Central Bank of Nigeria, the standing committee; we are working with the shipping companies, Customs has released the goods. We hope that with all these efforts around the project, things will move on quickly. We have been able to demonstrate our commitment with the Imo River crossing, we only signed the contract on June 30th but by first week of August, we have achieved this much. What exactly has government done? Is it to give you a bankable guarantee or what? What they do is that they establish a letter of credit. It is important to note that 70 to 80 per cent of the input for the project is imported goods and when we are buying, the manufacturers want guarantees that if they start manufacturing a product that will take nine months, at the end of the period, they will get their money. It is not necessary that cash must be physically in their hands. There are some that we have paid money for and we have financed with the banks. Government is releasing money in stages to meet this kind of payment and because of the improvement the banks have a positive disposition towards the project. We see it as a partnership working together. CONTINUES ON PAGE 29

Power

Rockson moves gas turbines across Imo River CONTINUED FROM PAGE 28

In the media we noticed there was some measure of harassment from the House of Representatives under the guise of a probe. Has that stopped? Are you getting any cooperation from them? When the House of Representatives gave indication of visiting and reviewing the project, we looked at it as a complement and that this was a good thing because everything in life must be auditable. You must be able to audit the process, you must be able to audit the awards, and as we have seen in developed countries, having oversight over budget by the House of Representatives or the Senate is a good thing for a process. We did cooperate and we know there may be areas where things may have needed improvement because there were things discussed before the visit to site which shows that there was some documentation which we needed to ensure were in place. For example on contracts we needed to show what was in place, if there was any modification to the original schedule, we needed to approve it

and finally transfer this into some form of agreement. We actually did not get any harassment but for the negative information in the press where people were being misquoted as saying there was nothing on site. This was very demoralizing, especially to our workers because some of them had been working on the site for three to four years. It took a lot of effort to get their spirits up again to continue this work. We would implore that future audits by either of the Houses should be done with some element of looking at the documentation like when you have information that a letter of credit had been open and you have done 10 per cent of it, yet somebody says no you have done 100 per cent whereas the money is still with the Central Bank of Nigeria. That is something we need to make sure is reported in the actual sense of it. Everybody knows that if you open a letter of credit you must back it 100 per cent with cash. That is different from whether the LC has been plundered or not. That is the kind of clarification we expected at the meetings. Another problem is the issue of the compensation. There are lessons we can learn from

it. The payment of compensation was not an issue at the time the contracts were awarded but for future projects we think this is one of the issues that need to be looked at. As we speak there are compensation payments that are yet to be done. For the ones we are working on we actually paid compensation. For Alaoji, we paid in 2005 and we are just about to be refunded this money. You can then imagine if we had not paid the original owners the initial compensation for the land and economic crops, the project will not be anywhere now. You mentioned other projects involving your company and I know you are handling about five of them, can you tell us the status of all of them? We are handling a power plant at Alaoji, Gbaran, Omoku, Egbema and a sub-station at Owerri and then the transmission line. For the sub-station and transmission line, we have not been able to do any work on site. We were driven out in 2007 from the Owerri site and what we understand is that government is in the process of releasing funds to pay compensation on these

At the precommissioning stage, that is where the original equipment manufacturer, General Electric has to come in. At Alaoji, all the transformers are already installed, just waiting for the precommissioning

Movement of turbines across the Imo River

particular projects. The ones for the power plants, we paid them and we have been refunded all of them except the one for Alaoji because of the contractual issues. What is the level of work done so far at the other sites? What exactly is the level of completion? I would say 80 per cent completion at Gbaran, at Omoku it is about 60 per cent, at Egbema it is about 75 per cent. Egbema has all its turbines installed but we have a delay because General Electric has to move people to support the precommissioning stages. At Omoku, for the contract, there is still a lot of money being owed. The contract, there is additional land involved for it to be completed and we are moving towards this. We see a situation too at Gbaran. As you can see that is a far cry from when the legislators visited. There is a lot of improvement. What is the level of completion of phase one of Alaoji? For phase one of Alaoji, it is very difficult to determine because we have some common services and there is a lot of work that we have put in for the combined cycle. For example, we are constructing 12 million litres of water reservoir for the combined cycle which is not necessary for phase one start up. The phase one is about 85 per cent complete with the turbines on site now. By the time the turbines are placed and all the other ancillary items installed, we will be getting into a pre-commissioning stage. At the pre-commissioning stage, that is where the original equipment manufacturer, General Electric has to come in. At Alaoji, all the transformers are already installed, just waiting for the precommissioning. So some major equipment will be ready for commissioning in the 4th quarter of this year. Earlier, you talked about gas supplies concern. Can you throw some light on this? At the meeting we had with the presidential steering committee, the contractor of NGC (Nigeria Gas Commission) had some issues similar to what we had at Alaoji, were some equipment are imported but they are at the ports because there is difficulty clearing it and contractual documentation is not upgraded. The government is going to look into it and the steering council is even having a meeting next week Monday to address gas issues for all the projects. Based on the projection following the visit of the vice president to Alaoji in March, if we had gotten a commitment some months ago, by now we should have moved along substantially in the assembling of the equipment. This is why I mentioned six to eight month.

Sweet Crude

Freight Terminals Weekly Updates Terminals PPTML APMT P& CARGO ENL ABTL GDNL FIVE STAR TICT J/DAM IBAFON RAJ NISPAN EKO SUP INTERGRATED OBAT CAPITAL F/W SBM BOP

Ships 5 29 1 3 2 4 4 5 1 1 1 1 1 1 1 1 1

Types Of Cargoes Containers Containers Gen/Cargo Gen/Cargo G/Cargo/Pet Product Vehicles Containers/Gen/Cargo G/Cargo Petroleum Products Petroleum Products Petroleum Products Petroleum Products Petroleum Products Petroleum Products Petroleum Products Petroleum Products Petroleum Products Petroleum Products

Tonnage 2,789fcl 746fcl 118,528.18mt 45,505mt 60,767.336mt 1,000 unit 1,196 fcl 4,000mt 12,500 mt 41,000 mt 5,000 mt 32,995 mt 5,000 mt 6,700 mt 5,000 mt 10,000 mt 5,000 mt 39,181 mt 10,021mt

Crisis in Freight Forwarders' groups stalls collection of practising fees

any attempt to collect the fee. In his reaction the founder of the National Association Government Approved Freight Forwarders (NAGAFF) Dr Boniface Aniebonam said that the issue of the freight forwarders' fee is a constitutional thing. He stated that although, NAGAFF does not recognize JACFF, but that does not stops it from working with other groups for the well being of members of the entire group. Aniebonam disclosed that members of NAGAFF have commenced payment of the fees at its national secretariat, adding that as soon as other groups resolved their leadership crisis NADAFF will direct its members to make payment at the central body. He explained that the fee is not a fee, but association levy that every freight forwarder ought to pay on a regular basis. “Collection at the center will ensure total compliance by all groups of freight forwarders, and this money will be shared in ratio among the three major groups” “While ANLCA will take the biggest share, followed by NAGAFF and the National Council of Managing Directors of Licensed Customs Agents which is the smallest group will take its own share” he added. The seasoned freight forwarder however suggested an amendment of the constitution setting ANLCA, adding that it is only when this is done and a succession programme is put in place that the current crisis

NIMASA to introduce compulsory registration for oil tankers The Nigerian Maritime Administration and Safety Agency (NIMASA is set to introduce compulsory registration for all ships loading petroleum products in Nigeria in a bid to ensure a fairer treatment for Nigerian ship owners. Director General of the agency, Dr Temi Omatseye declared at a recent media chat that henceforth every oil and gas vessel that seeks to continue NIMASA. Omatseye argued that domestic operators do not benefit maximally from Nigeria's' local maritime trade and lamented that about 80 per cent of oil vessels doing business on Nigerian waters are not registered with NIMASA and regretted that this has been militating against the full realization of the objectives of the Cabotage law which was enacted in 2003. He stated that before any oil tanker can get its permit from the Department of Petroleum Resources (DPR), it ought to have obtained a certificate from NIMASA as a regulator. “Majority of the vessels operating in the oil and gas industry are not registered with NIMASA, so how are they getting their DPR permit? As a regulator we are supposed to give them the permit to trade on Nigerian waters before they go somewhere else, so obviously there is a loop hole in the procedure”, he observed.

The Terminals Last Week (Chart) Godwin ORITSE

HE proposed collection of freight forwarders' practicing fees has been staled following the crisis that is currently rocking the different freight forwarding groups in the Nigerian maritime industry The collection of the said practicing fee ought to have started had all freight forwarding groups in the industry signed an agreement to that effect. The three major namely the Association of Nigerian Licensed Customs Agents (ANLCA), the National Association of Government Approved Freight Forwarders (NAGAFF) and the National Council Managing Directors of Licensed Customs Agents (NCMDLCA) before now were to have signed the agreement under the Joint Action Committee of Freight Forwarders (JACOFF), but along the line the leadership tussles with ANLCA and NCMDCLA may have put paid to the project. Vanguard gathered that there have been several meetings as to the modalities on the collection ,and as

at the of filling this report freight forwarding groups were yet to reach a compromise as leadership tussle of the various groups. Speaking to Vanguard on the further delay of the collection of the fee the Executive vice Chairman of the Tin-Can Island port chapter of the Association of Nigerian Licensed Customs Agents Chief Achike Molokwu said that several meetings held to fine tune the modus operandi of the collection has not yielded any result. He explained that the proposed collection of freight forwarders' practicing fee is a child of circumstances, adding that the Council for the Regulation of Freight Forwarders in Nigeria is supposed to come out with a policy statement to stamp its authority on the collection. He stated that the Council was also to have provided the working tools like receipt, uniforms and police security for those that would effect the collection. He however blamed the Council for not living up to its responsibilities and getting everybody around to agree and effect the collection.

34% 23% 5%

Bulk Cargoes Vehicles Containers Petro. Produ

39% “The Council ought to have written to the management of the Nigerian Ports Authority to intimate them of the planned collection, provide all the necessary working tools to the collection to commence”. He said. He disclosed that the money when collected would be shared amongst the three major groups of freight forwarders and other parties like the Nigerian Ports Authority and other stakeholders. Meanwhile, the National President of the Council of Managing Directors of Licensed Customs Agents Mr Lucky Amiwero told Vanguard that nobody can collect fee in the port as he and his group are opposed to the collection. Amiwero , who currently being challenged on his hold onto power in the last thirteen years also said his group would legally challenge

bedeviling the be resolved. The leadership crisis recently took a turn for the worse when some members of the Lucky Amiwero led Council mastered minded his arrested, arraignment and further detention at the Kirikiri maximum prison for over a week. While NAGAFF is enjoying the support and cooperation of members, both ANLCA and the Council are still embroiled is crisis that no one knows when this whole brouhaha will end. Meanwhile, the Council for the Regulation of Freight Forwarders in Nigeria (CRFFN) which is suppose to be the umbrella body for the entire freight forwarding groups has failed to called the warring parties to order despite being empowered by law to regulate and sanction any freight forwarder found wanting in any way.

llegal Oil Bunkering: FG Counsels the Navy Ithe federal government has acted to allegations of illegal bunkering of crude oil and refined petroleum products, saying that it was in the best interest of the Nigerian Navy to correct the impression. Some militants alleged recently that some offices ad men of the Nigerian Navy were partakers of illegal bunkering and that militants put them on pay roll. Confirming the allegations to senior naval officers during a recent working visit to Naval Headquarters, defence minister, Major General Godwin Abe stated that government was worried bout the allegations that naval personnel work hand in hand with militants to illegally se crude oil and petroleum products. “There are series of allegations here and there, series of stories all about the militants trying to divert attention. “The militants say they are smuggling oil because the Navy are on their payroll and all those rubbish and I said I will mention it to you. Between now that the

Sweet Crude

Gas

N a desperate bid to ensure the availability of the 6000Megawatts of power by the end of the year, the federal government seems to have restored the failed portions of the strategic Escravos-Lagos gas line said to be the only remaining source of gas supply to the thermal plants across the country. Meanwhile, concerns have continued to mount over the seeming shortage of gas supply to the various thermal power plants across the country. Not a few players operating in the industry confirmed that the major setback which may hinder the proposed 6000 Mw generation by December is inadequate gas supply. According to them the Federal government needs to take a step further and ensure a holistic solution to the Niger-Delta issue before it can guarantee Nigerians uninterrupted supply of power. At a time when the Government was confident it has about 2400 Mw of power and only requires 3600mw to make up the much anticipated 6000Mw in three months time, the already bad situation was further worsened by the explosion of Utorogu gas line on the 13th of August, the line said to be the only major pipeline supplying gas to power the thermal stations in the country since the sabotage on the Escravos line. The situation was said to have dealt a big blow on the proposed 6000Mw by December as not less than 1000Mw was lost to the attack. But in a swift reaction the federal government quickly moved in to assess the damage and also ensure the quick repair of the defunct line. When contacted the Special Assistant to the Honorable Minister of Power Mr Dejo Odunuga confirmed via a text message response to sweetcrude’s enquiry that the Utorogu line has been restored, but that the management of the line belongs to the Nigerian Gas Company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC) and not the Ministry of power. It was however not very certain if the restored line has also resulted in a boost of the current power capacity

Gas Tank Farm

FG restores Escravos -Lagos-Pipeline, concern mounts over gas Yemie ADEOYE

Nigeria, which has about 4,000Mw thermal power generation capacity could only generate and distribute a little above 1,000 Mw in the country owing inadequate gas supply.

back to 2400Mw as the enquiry sent to the NGC spokesperson Mrs Comfort Adepoju did not get a response as at the time of going to press. However, stakeholders in the power sector have continued to express fears that inspite of the new Minister’s effort the much talkedabout power generation may not be achieved at the end of the year. A close source in the power ministry who pleaded anonymity stated that the move to increase the nation’s power generation capacity by the Yar’adua led government is a right step in the right direction, but inadequate supply of gas may be the hindrance to the actualization of the programme. According to him the upgrading of the power turbines is not enough as extremely necessary at this point is adequate gas supply, but the

government is not focusing on this direction, noting that inadequate gas supply is the main cause why the nation has been experiencing power blackout. Nigeria, which has about 4,000Mw thermal power generation capacity could only generate and distribute a little above 1,000 Mw in the country owing inadequate gas supply. The Nigerian National Petroleum Corporation (NNPC) had said that it has concluded plans with the major oil firms operating in the country to make gas available for the project as part of the steps to actualize the presidential mandate. According to the Group Managing Director, NNPC, Dr. Mohammed Sanusi Barkindo, the corporation would parley and cooperate with its counterpart, the Power Holding Company of Nigeria (PHCN) on the attainment of the set objective. Besides, sources in the power

sector have been saying that the main task before Mr. president now, is to ensure gas availability to power the already existing gas turbines in the country, as part of his efforts to boost power supply in the country. This move, according to them, would renew the confidence of the stakeholders in the power sector and the Nigerian public as a whole. They noted that the nation’s gas turbines are in deteriorating conditions due to inadequate gas availability, and this has resulted to a waste of the multi billion naira investment in the power sector. To them, if adequate moves are not taken by the government to arrest the current situation in the country, a lot of firms in the would close shop and this would deter foreign investors from participating in the nation’s power sector, even as it also results in a huge loss of revenue to the nation. Another source recently disclosed to Vanguard that two of the major oil

firms, which supply gas to the Nigerian Gas Company (NGC), are currently battling with issues of vandalism on its pipelines by militants in the Niger Delta region. This has also resulted to the company’s inability of meeting its gas supply obligations. In a telephone chat with the Executive Managing Director, Chaste Mutual Investment Limited Mr. Ayo Olatunde in Lagos recently he said that the construction of another power plant by the government to increase the nation’s power generation is of no use, noting that the need to look at alternative energy to boost the power generation in the country should be the government’s priority. According to him, setting up power plant now in the country is not the best strategy to solve the issue of electricity in the country. “why is the government embarking on this project, when there is no infrastructure programme in place”? he queried. He said that renewable energy and other sources of energy would boost the nation’s power sector, adding that it is time the country commence sourcing for solar, coal, wind to support the existing power plants “The government is aware that gas infrastructure is not there. So why are they embarking on a plant that would not work. The government is fully aware that there is no gas infrastructure in the country. So, I don’t know how the 6,000mw power generation would work in this country”, he enthused.

Sweet Crude

36 Emma AMAIZE

O V E R N O R E m m a n u e l Uduaghan of Delta State must be wondering by now why some people are bent on sabotaging his efforts to put behind the ugly episode in which the facilities of facilities of the Nigeria National Petroleum Corporation (NNPC), Chevron Nigeria Limited and Shell Petroleum Development Company (SPDC) in the state were destroyed by the Movement for the Emancipation of the Niger-Delta (MEND) between May and June. Before the militant group declared its subsisting 60-day ceasefire, it threatened to revisit any of the facilities that the government or oil companies dared to repair while the issues that led to the face-off with the Joint Task Force on the Niger-Delta had not been addressed. And truly, it bombed a facility belonging to the Chevron, which the company obstinately repaired. Leaders of Gbaramatu kingdom also took umbrage that the Federal Government was desperate to effect repairs on the damaged pipelines, but, was not desperate to repair the homes of the people that were destroyed by soldiers for them to return home. Some uninformed Ijaw indigenes accused Dr. Uduaghan of not doing much to ensure the return of the people to their communities, but, unknown to them the governor has their interest at heart and was liaising with the authorities of the JTF, which declared a Cordon and Search operation in Gbaramatu

Gas Pipeline in the Niger Delta

Uduaghan agonises over Escravos -Lagos gas pipeline repairs kingdom and banned movement on the waterways of the state to lift the siege. When eventually the discussions sailed through, Governor Uduaghan announced government's plan to relocate the displaced persons from their camp in Ogbe-Ijoh back to their communities and then came the issue of repairs of the damaged facilities. The most controversial of them at the moment is the Escravos-Lagos gas pipeline. The youths and elders of Gbaramatu kingdom are currently embroiled in a row over patronages from the contractor, while some indigenous contractors are also slugging out the local content package of the repair works with the company doing the job. The Escravos-Lagos gas pipeline is a key component of the federal government's plan to meet the target of 6000 megawatts, expected to stabilize power supply in the country by December 2009 and its non-operation at this stage is quite worrisome to the government. Governor Uduaghan understands this point clearly and that was why he summoned a stakeholders' meeting with Gbaramatu elders

and chiefs, officers of the Joint Task Force, the chairman of Warri South- West local government area, Mr George Ekpemuokpolo and oil companies to sort out the grey areas, early August. At the meeting, he stressed the necessity for congenial atmosphere for repairs to be effected by the c o n t r a c t o r , D e Wa y l e ' s International limited. He stated that oil giants, Shell and Chevron have already embarked on the repairs of their damaged pipelines and assured the contractor that adequate security would be provided by the JTF. He said government was aware that power was a critical issue and the worsening situation was leading to a shortfall in gas production, occasioned by the vandalisation of pipelines in the aftermath of the May 13, 2009 military bombardment of Gbaramatu kingdom. NNPC representative at the meeting, Engr. Voka Mukoro, disclosed that the nation was loosing 180 million cubic feet of gas daily as result of the damage to the Escravos Lagos Pipeline. Tebu-Biri youths spit fire The governor left the meeting

believing that the bone of contention had been resolved, but, lately, a youth group, identified as the Tebu-Biri Youths Federated in Gbaramatu kingdom has also threatened to disrupt the ongoing repairs on the Escravos-Lagos gas pipelineif the contractor, De Wayles International Limited did

The youths and elders of Gbaramatu kingdom are currently embroiled in a row over patronages from the contractor

not provide job slots of unemployed youths in the area and also negotiate with them. The chairman of the group, Mike Itima and the spokesman, Nanakumo Boi said the contractor, officials of the Nigeria National Corporation and the Nigeria Gas Company relegated the youths in the arrangements for the repairs of the pipeline, vowing that they would stop the project. It was learnt that Governor Uduaghan put his finger on a beneficial arrangement to the parties at the meeting in question but the Tebu-Biri youths claimed they were sidetracked. Investigation showed that the JTF soldiers were fully deployed to ensure that the contractor was not harassed, but, the fear is that the pipeline may be vandalized if the grievances of the youths were not addressed. Also, a youth leader in the area, Chief Moses Bebenimibo has implored the federal government and JTF to compel the main contractor handling the repairs of the Escravos gas pipeline to involve indigenous contractors to prevent the repairs running into troubled waters. Speaking in Warri, Chief Bebenimibo who is the financial secretary of Kunukunuma community in Gbaramatu kingdom said, "I want the Federal Government and the JTF to compel the contractor to embrace the local content so that local contractors from the area will participate fully in the repairs. If indigenous contractors are involved, there will be food on the table and nothing will threaten the process". According to him, â&#x20AC;&#x153;Those from the Gbaramatu kingdom collaborating with the main contractor to enslave our people should desist from such act capable of stalling the repair of the pipeline. Indigenous contractors should participate - Bebenimibo An indigenous contractor, Chief Moses Bebenimibo who spoke to Sweet Crude implored the federal government and JTF to compel the contractor handling the repairs of the Escravos-Lagos gas pipeline to involve indigenous contractors to prevent the repairs running into troubled waters. Bebenimibo who is the financial secretary of Kunukunuma community in Gbaramatu kingdom appealed to the federal government and JTF to prevail on all the contractors for the pipeline repairs to adhere to the local content.

PENGASSAN task N/A on workers freedom

ORT HARCOURT: THE imbalance of power between employers of labour and their employees have been identified as one of the major challenges facing workers unions in the country. To bridge some existing gaps, the national assembly have been urged to make laws that address article 4 and other similar documents of the international Labour organisation which the country is a signatory to into existence. “We appeal to the National Assembly to review the Nigerian labour laws to give f u l l e ff e c t t o t h e I L O conventions ratified by Nigeria. They should also incorporate Article 4 of ILO Convention 158 of 03/11/2005 as part of our labour laws” Making the appeal in a paper presented before the general meeting of Air Transport Senior Staff Association of Nigeria, (ATSSAN) and Federal Airports Authority of Nigeria (FAN), Port Harcourt branch, Public relations officer, Port Harcourt zone of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr Chika Onuegbu said it was sad to note that because of the harsh economic realities Nigerians were now been forced to sign all kinds of documents before being employed. Noting that some of the contracts gone into with these employers were exploitative he blamed this on the absence of relevant laws to regulate labour operations in the country. While calling for what he termed employment protection laws to be in place to protect the Nigerian workers Onuegbu said legislation of ILO conventions which Nigeria is a part of would guarantee workers the needed atmosphere to operate. According to him, situation where government as the largest employer of labour in the country also regulates the employment sector was bad. He thus called for laws to guarantee Nigerian workers room for ventilation. “In Nigeria, the Government is both the regulator and the highest employer of labour. This is a dual and conflicting position and history has shown that the neutrality of Government in regulating labour relations in Nigeria cannot be taken for granted.”

Gas flaring in the Niger Delta

Luka BINNIYAT

avid Ugolor Executive Director African N e t w o r k f o r Environment and Economic Justice (ANEEJ) based in Benin Edo state spoke to Vanguard on what oil communities would want to see added to the PIB What is your going to be your input as community member of an oil producing area, as an NGO into the Petroleum Industry Bill? First of all, I want to say that I am happy that this Bill is being presented by the executive arm of government. And I am happy that the National Assembly deems it fit to organise this Public Hearing. However, we are insisting, that first and foremost that the Nigerian Oil and Gas industry be transparent. This law must open the industry for all to see what is going on there. There is too much opacity and wuruwuru going there to the disadvantage of the country, and especially to the Niger Delta. The next most important issue that we affected communities want is that of equity participation in the business. Because we are the ones that bear the brunt of oil exploration and exploitation. You need to see the effect of gas flaring on our communities. We want some degree of ownership in both the upstream and down stream oil sector. This will go a long way in

Host communities want

50%

equity share in oil investments

sustaining the peace process that the Federal Government is embarking on. This will also secure the investment of oil companies there. But, that cannot be achieved without some legal backing, and this is the avenue to push this desire. Besides that, the issue of the investment of the Petroleum Training Institute Efurun and the relocation statement by the Federal Government is not good for the peace process at all. Because you will agree with me that there was crisis of unprecedented proportion in some part of the Niger Delta. And that kind of statement is not in the interest of peace. But, I am happy that government is now reversing its stand. And this public hearing is another area we hope to contribute to making more peace as long as we are guaranteed justice in the law. Do you think that your demand is the average demand for all oil producing communites? I cannot assert my views on them. I believe that every

community has its parcilar problem and demand. That I why I would want tis Bill to be taken to areas of oil producing communities to get the feeling of other communities. It is not enough to sit in Abuja and propose laws. Because as you have heard of the outcome of the meeting of the South-South Governors , it is a reflection of the people of the South-South. And I want the National Assembly to take the stand of our governors very strongly when reviewing the law And the most important aspect is that of ownership. And as you know, are asking for 50% ownership. Are talking of 50% equity participation, or 50% derivative, which will mean adjusting the constitution? Well, we want both. But, for now, and for the purpose of this Bill, we want 50% equity participation in all oil and gas investment in our communities. This is even in the best interest of the oil firms, because it would secure their investments. And we

hope to push that into the propose law. Oil and gas business takes huge money to invest. Where are these poor communities going to raise money to finance there equity? You don't have to worry about that. Let the law be approved first. But, I want to tell you that the State and Local Government can raise that equity.. It is not a new thing I an suggesting. The State and Local Government can raise that money and hold the profit in trust for the communities. And this was buttress by the outcome of the South-South Governors meeting in Asaba. They have agree to have what they call a Sovereign Wealth Fund. That can be used as the vehicle for funding such ventures for the communities. And once that is achieved, all communities will know that each pipeline that passes through their backyard is secured. Because it is their investment too. This will lead to the natural death of militancy in the region.

MILITANCY: PTDF, ministry to train youths Oscarline ONWUEMENYI

Radio Station

SPDC sponsors radio programme on small scale business development

s part of its contributions towards the e c o n o m i c development of the Niger Delta, The Shell Petroleum Development Company of Nigeria (SPDC) is sponsoring a series of radio programmes on small scale business development for entrepreneurs in its Eastern and Western areas of operations. The 30 minute 'The Small Business Today Radio Show' starts airing August 13 2009, and will run for one year on two radio stations in Port Harcourt and Warri. Social Performance Manager

programme will be down_to_earth and give people invaluable tips on business development and management. We are pleased to contribute to wealth creation, poverty reduction and sustainable development in our areas of operation.” Some 52 episodes of the programme will run on the two stations which cover Rivers, Bayelsa, Abia, Imo, and Akwa Ibom, Delta and Edo states. Charles Nwahiwe, a consultant on small business enterprise development, is hosting the programme with the goal to coach and mentor on sustainable business principles and management skills,

and create a forum for successful entrepreneurs to share experience and learning. Listeners would be able to participate by short text messages during live broadcast, or b y e m a i l (smallbusinesstoday@yahoo.com) . Some 26 topics have been identified for discussion, ranging from identifying and starting small scale businesses and financial planning and budgeting to business ethics and building an effective organisational structure. Charles said: “Radio is a medium for the masses, and presents a good platform to reach people at the grassroots on how they can manage

their own businesses. We will constantly review the topics to meet the needs of listeners.” SPDC, operator of the NNPC/Shell/Total/Agip Joint Venture has been in the forefront of encouraging the growth of small businesses in the Niger Delta through many initiatives such as LiveWIRE, Telecommunications Self Employment Programme (TELSEP) micro_credit, agriculture as well as land and marine transport schemes. These and other efforts have led to the establishment of numerous small businesses. However, many of these budding entrepreneurs and other operators of small businesses lack the basic knowledge, skills and attitudes for the effective and sustainable operations of small businesses. It is hoped the radio programme will help to address this need and significantly improve the quality of operations of small scale businesses in the Niger Delta.

BUJA -THE P e t r o l e u m Te c h n o l o g y Development Fund has disclosed that it would artner the Ministry of Niger Delta Affairs and the Rivers State Government to develop a skills training and development centre to be sited in Port Harcourt , Rivers State . The Executive Secretary of PTDF, Alhaji Muttaqha Rabe Darma, who made the disclosure on Tuesday while making a presentation to the Minister of Niger Delta Affairs, Mr. Ufot Ekaette in Abuja , noted that the centre was conceived in December 2008 to develop the skills of Nigerians who may not have any formal education and background. Darma explained that the vision of the centre was to become the best skill centre in the West African region, capable of meeting current and emerging needs in the oil and gas industry. According to him, the beneficiaries of the centre will be imbued with specialised skills, to enable them provide vital services in the oil and gas centre in Nigeria , thereby making them less attracted to militancy and other violent conducts. He further stated that PTDF submitted the budget for the centre as part of its 2009 Budget to President Umaru Yar' Adua in January 2009 and it was one of the major projects approved for the year. He stated that the fund commenced the design of the centre in March 2009, adding that the Rivers State government had pledged to donate a land at the Greater Port Harcourt where the skill center will be sited. PTDF will establish the center and equip it with the necessary equipments to have a world class status and after completion, hand it over to the Ministry of Niger Delta, Darma added. Some of the units that will be housed in the Skill Development Centre, he explained, will include the continuing education centre, computer centre and business/managerial skills centre. There will also be training on beauty and hair dressing, and on telecommunication tools. He added, “The school will also have labouratories for training students on bakery, beverages and food making, soap and detergent making, tailoring and designing, carpentry, leathering and shoe making, plumbing, creative design, painting and similar professions.

The Question

The draft PIB & the road to 2013

lta ger De

e Ni t in th n o r f r l wate Typica

Ethnic colouration stalls demolition of PH water fronts Jimitota ONOYUME

LANS by the Rivers state government to demolish water fronts in Port Harcourt has become a very topical issue in the state . It would be recalled that this issue first gained currency in the state under the administration of deposed governor Celestine Omehia. Omehia had adduced security reasons then for why he wanted slum settlements and shack houses in these water fronts removed and replaced with what then he styled descent accommodation. As soon as he came up with the idea the media became awash with calls and appeals on the government to beat a retreat on the plan. Opponents maintained that water fronts contrary to the view of the government was not the only hiding place for hoodlums and miscreants, that the government only came up with the excuse to conceal its hidden agenda. Debate on the issue over heated the body politic then to the extent that it was almost reduced to a matter between the Ijaws of the state and the government. It is now left to speculation if the government would have had the courage to go ahead with the idea because a Supreme Court judgment aborted the live of that administration and installed a new political leadership in the state with Chibuike Rotimi Amaechi as g o v e r n o r . For many one of the first steps Amaechi took to endear his administration to the Ijaws of the state was to halt the

planned demolition. And this was received with wild jubilation in all the water fronts. Almost two years after the suspension the government is back to the issue of demolition again. This time the administration says it wants to replace shanties in the water fronts with modern structures and make the place better habitable. Besides being part of its urban renewal programme for the state the government has also given security reasons for the p l a n n e d e x e r c i s e . The same arguments against the position of government have started coming up. And led by the same Rivers Ijaws, mainly of the O k r i k a s t o c k . Recently, the premises of the Federal High court in Port Harcourt was jam parked by hundreds of Okrikans and other rivers Ijaws that thronged the place to witness a case on the issue. Fifty four Okrikans representing Okrika Ijaw community had dragged the state government, the police, chiefs of army, naval and air staff to the court over the planned demolition. Among other things the applicants sought the court to perpetually restrain the government from going ahead with the exercise, describing the waterfronts as their ancestral s e t t l e m e n t s . They also sought for a resettlement plan that would enable Okrikans in these areas retain their identity and common heritage if the government must demolish. They said the planed demolition without the foregoing programme would amount to fragrant abuse of the rights of this ethnic group and their â&#x20AC;&#x153;descendant from their homesâ&#x20AC;?. They also asked the court to restrain the government from using

assistance of security operatives like the police, army, navy or air force to enforce the planned demolition. The matter was adjourned to October 13 for hearing with the government told to stay action on the planned demolition for now. It would also be determined whether the court has jurisdiction to hear the matter at the resumed date. Chairman Okrika Divisional Council of Chiefs, Senator Dari James Sekibo, Odo Abaji, the 18th of Okrika summarized the reasons why they dragged the issue to court in a chat with the Vanguard when he said that the

Opponents maintained that water fronts contrary to the view of the government was not the only hiding place for hoodlums and miscreants community was in court to ask the government to do what was right. According to him, payment of compensation to landlords was different from resettlement of the people. And they were in court to pursue issues of resettlement. He said all they wanted was for the government to reclaim lands and resettle the people in the reclaimed areas. He said if the government was allowed to go ahead with the demolition the way it planned the people would be homeless mainly because there are no land spaces for the riverine people in the state. â&#x20AC;&#x153;People have remained in these

settlements for decades.

t is no longer news that Nigeria is a failing state. Some years ago it was just a theory propounded by the Central Intelligence Agency (CIA) of the United States. When the news of this theory hit the streets of Nigeria, there was nervousness in Abuja, the capital city of the corruption, pretences and insincerity that constitute Nigeria, patriotic indignation and anger in Lagos, the undisputed centre of nationalism, the base of Nigeria's nationalist activists and unfortunately for them, the attractive piece of real estate in which they have invested life and future but alas, there was ill suppressed joy in the glades and creeks of the Niger Delta, the butt of the Nigerian joke. This is a very serious matter for where the CIA predicted a dateline of 2015, the African High Command and other intelligence agencies have reduced the dateline to 2013! Discussing with friends at the Bar (NBA) Centre in Port Harcourt we came to the presumptuous conclusion that the managers of the Nigerian State would quickly take preventive action by fixing the ailing state and thereby, frustrate and forestall the CIA's negative prediction. Our expectations, though lofty and legitimate, were truly presumptuous. Years after we have not managed to pass a viable Electoral Law that can command the confidence of the mass of Nigerians, the one piece of legislation that can provide a level platform for the rich and poor to determine their future even if mutually exclusive. The thinking in many circles is that the federal government would hastily fix the Niger Delta Question, the first index in the CIA's list of indices. The Niger Delta has been in flames for years over issues that revolve around environmental degradation, resource appropriation and control as well as the uneven rules of political engagement currently operating in the country. Events in the Niger Delta are the most eloquent testimony that Nigeria is at the brink of collapse. The Niger Delta peoples are at pains to understand a country in which the laws that regulate petroleum grant the federal government absolute ownership of oil and gas resources while granting host and 'owner' communities of solid minerals rights to ratify the federal government's commitments to companies, firms and individuals that acquire concessions from the federal government. The Nigerian National Petroleum Corporation (NNPC) is Nigeria's alter ego in oil and gas matters. She is the regulator and pretentious operator of the industry. While many may agree that the NNPC regulates the industry to a limited extent, none would accept that the NNPC has ever operated the oil and gas

industry, operating through unconscionable foreign proxies that have bled Nigeria remorselessly. In official and unofficial quarters, the NNPC is blamed for the losses that have accrued to the country through the industry; many have in consequence called for the scrapping of the body. It is in this backdrop that the NNPC prepared and submitted to the National Assembly, a draft Petroleum Industry Bill (PIB). Keep in mind that the Oil & Gas Industry Committee (OGIC) had submitted t o l e r a b l y d e b a t e d recommendations vide reports dated 2004 and 2007, and that the Presidency had submitted its own PIB to the National Assembly. This recent PIB is the NNPC's brainchild, her stroke of genius by which she would mutate from NNPC to a National Oil Corporation (NOC) with more defined reach, powers and subsidiaries. The draft PIB is a monstrosity, a modern day legislative mistake which unpretentiously excluded the input of the folk that matter the most: stakeholders. After all, na wetin concern a rapist with pre-coital lubrication?! Unable to initiate its own PIB, the National Assembly cannot be trusted to do the proper thing: chuck it and initiate a more credible and a more inclusive process. But it is too much to hope that the present members of the National Assembly, whose docile omissions and acts of betrayal are club-card points of loyalty to the ruling Peoples Democratic Party in the party's assessment of members 'return' potential, would torpedo a draft bill which boldly supplants one submitted by the presidency. For the records, the problem is not with who initiated the process or submitted the bill for debate but the nature of the process that birthed it and the corrective content and quality of the draft. As it is now, the folk who would be impacted by the PIB see it as a sham, a self-serving effort and an open agenda by operatives of the industry to maintain and improve on the status quo at the expense of the people. The problem is that all these are taking place when all hands should be on deck to save the country from disintegration. But perhaps this is the way to go; perhaps these manipulations and insincere acts of the trustees of our commonwealth are the Glasnost and Perestroika this unsteady ship of state would require to steer itself to the precipice of its destruction and into the hands of the undertakers-inwaiting. John Iyene Owubokiri is a Port Harcourt based lawyer and national coordinator of the Initiative for Non-Violent Change I n the Niger Delta. He has an engaging interest in the affairs of the Niger Delta, which people think are Nigerian, but are actually global.