NOGintelligence Annual Review 2014

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MIDSTREAM

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Annual Review 2014

2014 ANNUAL REVIEW 2014

LEGAL | LOCAL CONTENT | CSR | ENVIRONMENT | COMMUNITY RELATIONS | HSE

CONTRIBUTORS

Cover photo: Sunset Rig by Seni Williams

Lola Amao, Principal Consultant, Lonadek

Ini Onuk, Lead Consultant/CEO, ThistlePraxis Consulting Limited

Apollonia Okuzu, Principal Consultant, 247 CSS Consulting

Per Magnus Nysveen, Head of Analysis, Rystad Energy

Gbite Adeniji, Chief Consultant, Advisory Legal Consultants

CONTENTS

19

SEPLAT SELECTED AS PREFERRED BIDDER IN CHEVRON DIVESTMENT

A.B.C. Orjiako, Chairman, Seplat

20

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Austin Avuru, CEO, Seplat

OANDO RECEIVED MINISTERIAL APPROVAL FOR LANDMARK CONCOPHILLIPS ACQUISITION

EDITOR’S MESSAGE

33 DOWNSTREAM NEWS

6 EVENTS

38 DOWNSTREAM REVIEW

10 UPSTREAM NEWS

41 DOWNSTREAM FEATURE - Per

Magnus Nysveen, Rystad Energy

18 ACQUISITIONS 24 UPSTREAM FEATURE

- Wood Mackenzie 25 MIDSTREAM NEWS 28 MIDSTREAM REVIEW 31

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MIDSTREAM COMMENTARY Professor Godwin Igwe, Institute of Petroleum Studies, University of Port Harcourt

42 GAS NEWS 44 GAS COMMENTARY

- Gbite Adeniji, Advisory Legal 45 GAS REPORT 47 FINANCIAL NEWS 52 FINANCIAL REPORT - LSE, JSE,

TSX, NSE Compared 54 FINANCIAL REPORT - CBO Capital

CONTENTS

28

MEETING NIGERIA’S REFINED PRODUCTS NEEDS: MODULAR REFINERIES BRING NEW HOPE

91

EMERGING TRENDS IN CORPORATE SOCIAL RESPONSIBILITY

41

100

OIL PRICE SHOCK

INTERVIEW: OANDO ENERGY RESOURCES – MEETING THE HUMAN CAPITAL REQUIREMENTS OF THE CONOCOPHILLIPS ACQUISITION

61 REGULATORY REPORT

90

CSR FEATURE - Apollonia Okuzu, 247 CSS Consulting

62 REGULATORY AGENCIES

93

ENVIRONMENTAL NEWS

68 LEGAL NEWS 72 LEGAL DIRECTORY

95

HUMAN CAPITAL FEATURE - Dr Ibilola Amao, Lonadek

78 LOCAL CONTENT

99

HUMAN CAPITAL NEWS

56 REGULATORY NEWS

82 LOCAL CONTENT REPORT -

100 HUMAN CAPITAL INTERVIEW - Ademola Ogunbanjo, OER

NCDMB: Looking Back - Looking Forward 103 HEALTH AND SAFETY NEWS 86 CSR NEWS 104 MOVERS 88 CSR REPORT

- Ini Onuk, Thistle Praxis Consulting 110 OIL AND GAS CIRCUIT 3

EDITOR’S MESSAGE “WE HAVE WORKED VERY HARD TO ENSURE WE MISS LITTLE OUT AND I HOPE YOU FIND IT GIVES YOU A VALUABLE INSIGHT TO A YEAR THAT BEGAN ON A HIGH BUT ENDED ON A SHOCKING NOTE AS OIL PRICES PLUMMETED TO THE LOWEST THEY HAVE BEEN IN YEARS.” Dear Readers Welcome to our Annual Review 2014. This is our second annual review and we have doubled the size of the magazine to be able to include much more content.

As usual, we have the news of all sectors of the industry where we summarise the news for the year. It is a good snapshot of the year so you can catch up on any news you missed over the course of the year.

Upstream, we have news of all the big acquisitions of 2014 and some of the smaller ones. CBO Capital has done an analysis of the mergers and acquisitions of the year so you can see at a glance what took place.

Midstream, the dire situation with the nation’s refineries continues and we explore in a feature article why Nigeria’s refineries continue to fail.

Downstream, the oil price continued to plummet till the end of the year and much of the journey is detailed in our news review, while Magnus Nysveen of Rystadt looks at the oil price shock from the US perspective.

On the gas front, supply continues to fall short of demand. Gbite Adeniji, a leading commentator on gas issues gives his own views. We have facts and figures from Nigeria Liquefied Natural Gas (LNG), which is responsible for most of the country’s LNG production and exports.

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In the finance section we look at the kind of finance that the industry was able to raise during the year as Nigerian banks continue to back more and more oil and gas projects, most of them for upstream acquisitions and field development. As the Nigerian Stock Exchange continues to try to attract oil and gas companies to list, we have a comparison table between the London Stock Exchange, Toronto Stock Exchange and the Johannesburg Stock Exchange.

In the regulatory section, we have compiled a directory of regulatory agencies that deal with oil and gas related issues. We hope you find this addition useful.

The legal section reviews some of the cases that came to court over the course of the year including, Malabu, which has made international headlines in many countries.

We also have a useful directory of oil and gas law firms in Nigeria.

Local content initiatives are continuing to make an impact and apart from news of local content achievements by Nigerian companies, we also catalogue some of the Nigerian Content Development and Monitoring Board’s achievements in 2014 and we also have some important information about Contractor Finance Schemes.

Under corporate social responsibility we have two practitioners, one reviewing the Corporate Social Responsibilty landscape

in 2014, while the other highlights some international emerging trends in CSR which Nigerian oil companies could learn from.

In the labour and employment section, we hear from OER about how they achieved the human capital requirements of their game changing acquisition of ConocoPhillips Nigerian business.

In industry moves, we catalogue some of the new hires in the industry this year and we say a poignant goodbye to industry stalwart, Rilwan Luqman who died this year. And finally, some of this year’s events are covered in our oil and gas circuit section.

I hope you enjoy reading this bumper review of the year 2014 in the Nigerian oil and gas industry. We have worked very hard to ensure we miss little out and I hope you find it gives you a valuable insight to a year that began on a high but ended on a shocking note as oil prices plummeted to the lowest they have been in years.

Don’t forget to keep up with us on Facebook, Twitter and Linkedin and of course you must visit our website www.NOGintelligence. com for new developments here at NOGintelligence. Do you receive our weekly newsletter? If not, then make sure you sign up on our website www.NOGintelligence.com.

Remi Aiyela Editor-in-Chief/Publisher

EDITOR’S MESSAGE

NOGINTELLIGENCE IS CHANGING After 3 years of consistently delivering quality news and information to you digitally, week after week, we are re-organizing, in order to keep improving what we do and how we do it.

Here’s what’s new: n NOGintelligence digital newsletter will be sent every two weeks rather than weekly from now. However, you don’t need to worry about what you might miss out on, as we will bring you breaking news updates whenever the importance of the news item merits an digital release. n Our weekly NOGintelligence Guardian column, which we have done under the banner, Oil and Gas Weekly will

now be published bi-weekly - every other Wednesday. It will however now be a 4-page pull out and in addition it will carry the NOGintelligence branding, giving us better brand visibility. It will be packed full of news, information, features, interviews, analyses and reports on the Nigerian oil and gas industry intended to appeal to a wider oil and gas-connected audience. This presents a unique opportunity to place your services before that audience through advertising in our Guardian pull out. n The NOGintelligence Quarterly News Review Magazine will be published for 3 quarters (March, June and September) every year, consolidating the news from the three months prior and some feature articles, interviews and other useful information. n The NOGintelligence Annual Review will be published once a year in January. From next year, our Annual Review

will be a bumper edition that will run to nearly 200 pages featuring an in-depth analysis into every aspect of the industry. No stone will be left unturned as we delve into the industry giving you a new perspective on issues and events that mattered that year in the industry.

NOGintelligence is published by: NOGintelligence Limited Suite G5, Regency Suites, 17 Ahmed Onibudo Street, Off Adeola Hopewell Street, Victoria Island, Lagos.

Telephone: +234 805 579 9401; +234 807 839 1416 To subscribe to our newsletter: mailinglist@NOGintelligence.com To advertise in our newsletter, magazine or on our website: advertise@NOGintelligence.com To send your press release: newsdesk@NOGintelligence.com General enquiries: info@NOGintelligence.com Our website: www.NOGintelligence.com

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EVENTS

OIL AND GAS EVENTS JANUARY – DECEMBER 2015 WORLD FUTURE ENERGY SUMMIT

WORLD LNG FUELS CONFERENCE

CORROSION UAE CONFERENCE

Abu Dhabi, United Arab Emirates 19-22 January 2015 www.worldfutureenergysummit.com

Houston TX, USA 2-4 February 2015 www.worldlngfuels.com

Abu Dhabi, United Arab Emirates 8-11 February 2015 www.uaecorrosion.nace.org

OFFSHORE WEST AFRICA CONFERENCE AND EXHIBITION

IADC HEALTH, SAFETY, AND ENVIRONMENT CONFERENCE AND EXHIBITION

Lagos, Nigeria 20-22 January 2015 www.offshorewestafrica.com

OFFSHORE MIDDLE EAST CONFERENCE & EXHIBITION Doha, Qatar, Qatar 26-28 January 2015 www.offshoremiddleeast.com

ASIA-PACIFIC OIL & GAS ASSEMBLY CONFERENCE Singapore, Singapore 27-29 January 2015 www.oilcouncil.com

Houston TX, USA 3-5 February 2015 www.iadc.org

SPE HYDRAULIC FRACTURING TECHNOLOGY CONFERENCE The Woodlands TX, USA 3-5 February 2015 www.spe.org

4TH ANNUAL EAST AFRICA OIL AND GAS SUMMIT 9-10 February 2015 Dar-es- Salaam, Tanzania www.eastafricaogs.com

ENERGY INSTITUTE’S INTERNATIONAL PETROLEUM WEEK London, United Kingdom 10-12 February 2015 www.energyinst.org

METECH MIDDLE EAST 8TH ANNUAL PIPELINE INTEGRITY TECHNOLOGY FORUM MANAGEMENT FORUM Dubal, United Arab Emirates London, United Kingdom 4 February 2015 www.oilgas.flemingeurope.com

www.europetro.com 17-18 February 2015

EUROPEAN UNCONVENTIONAL GAS ANNUAL FLOATING LNG EVENT MIDDLE EAST OIL AND GAS SUMMIT London, United Kingdom Vienna, Austria February 2015 PIPELINE CONFERENCE (MEPIPES) 18-19 27-29 January 2015 www.smi-online.co.uk www.theenergyexchange.co

AFRICA POWER SUMMIT 2015 London, United Kingdom 29 January 2015 www.oliver-kinross.com

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Abu Dhabi, United Arab Emirates 8-11 February 2015 www.theenergyexchange.co.uk

RUSSIA & CIS OIL & GAS EXECUTIVE SUMMIT Dubai, United Arab Emirates 19-20 February 2015 www.europetro.com

EVENTS

IGTC INTERNATIONAL GAS TECHNOLOGY CONFERENCE Dubai, United Arab Emirates 19-20 February 2015 www.europetro.com

THE RED SEA OIL & GAS SUMMIT Dubai, United Arab Emirates 23-24 February 2015 www.redseasummit.com

AFRICA OIL AND GAS LEGAL SUMMIT 2015 Johannesburg, South Africa 24-26 February 2015 www.mgenta-global.com

PETROFORUM AFRICA 2015 Johannesburg, South Africa 02-03 March 2015 www.petroleumafrica.com

ARCTIC REGION OIL AND GAS CONFERENCE Stavanger, Norway 04-05 March 2015 www.ar-oilgas.com

3RD ANNUAL OFFSHORE OFFSHORE SUPPORT VESSELS FORUM 8-11 March 2015 Abu Dhabi, United Arab Emirates www.iqpc.ae

ANNUAL OFFSHORE PRODUCTION TECHNOLOGY SUMMIT London, United Kingdom 09-10 March 2015 http://offshore-summit.com/

ANNUAL GAS TO LIQUIDS NORTH AMERICA EVENT Houston TX, USA 11-12 March 2015 www.smi-online.co.uk

NIGERIA OIL & GAS CONFERENCE & OFFSHORE TECHNOLOGY EXHIBITION CONFERENCE (OTC) Houston TX, USA ABUJA, NIGERIA 04-07 May 2015 16-19 March 2015 www.cwcnog.com

http://2015.otcnet.org/

WORLD HEAVY OIL CONGRESS

NIGERIA CONTENT INVESTMENT FORUM

Edmonton AB, Canada 24-26 March 2015 www.petroleumshow.com

OIL AND GAS TELECOMMUNICATIONS London, United Kingdom 25-26 March 2015 www.oilandgastelecomms.com

AFPM INTERNATIONAL PETROCHEMICAL CONFERENCE San Antonio TX, USA 29-31 March 2015 www.afpm.org/Conferences

ANNUAL MIDDLE EAST PETROLEUM & GAS CONFERENCE Abu Dhabi, United Arab Emirates 19-21 April 2015 www.cconnection.org

6TH GHANA OIL & GAS SUMMIT Accra, Ghana 21-23 April 2015 www.cwcghana.com

BASE OIL & LUBES MIDDLE EAST CONFERENCE Abu Dhabi, United Arab Emirates 22-23 April 2015 www.cconnection.org

Houston TX, USA 04 May 2015 www.ncif.com.ng

INTERNATIONAL DOWNSTREAM TECHNOLOGY & STRATEGY CONFERENCE Istanbul, Turkey 12-13 May 2015 www.europetro.com

7THINTERGAS OIL, GAS AND PETROCHEMICALS 15 May 2015 Cairo, Egypt www.intergas-egypt.com

4TH OIL SPILL CONFERENCE Uyo, Nigeria 18-20 May 2015 www.oilspillconferenceng.com

FPSO VESSEL CONFERENCE London, United Kingdom 20 -21 May 2015 www.wplgroup.com

2ND UGANDAN MINING, ENERGY, OIL AND GAS 20-21 May 2015 Kampala, Uganda www.umec-uganda.com

AFRICA INDEPENDENTS FORUM 27 May 2015 London, United Kingdom www.globalpacificpartners.com

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EVENTS

ANNUAL OFFSHORE PRODUCTION TECHNOLOGY SUMMIT

ANNUAL FLOATING LNG CONFERENCE

SPE BRAZIL OFFSHORE CONFERENCE

SPE EUROPEC CONFERENCE

SPE CANADA HEAVY OIL CONFERENCE

API OFFSHORE SAFE LIFTING CONFERENCE

PIRA LONDON ENERGY CONFERENCE

SPE NIGERIA ANNUAL INTERNATIONAL CONFERENCE & EXHIBITION

London, United Kingdom 01-2 June 2015 www.offshore-summit.com

Madrid, Spain 01-04 June 2015 www.spe.org

WORLD GAS CONFERENCE & EXHIBITION Paris, France 01-05 June 2015 www.wgc2015.org

OPEC INTERNATIONAL SEMINAR Vienna, Austria 3-4 June 2015 www.opecseminar.org

CASPIAN INTERNATIONAL OIL & GAS CONFERENCE Baku, Azerbaijan 03-04 June 2015 www.oilgas-events.com

SPE EUROPEAN FORMATION DAMAGE CONFERENCE Budapest, Hungary 03-05 June 2015 www.spe.org

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London, United Kingdom 8-11 June 2015 www.icbi-events.com

Calgary AB, Canada 09-11 June 2015 www.spe.org

London, United Kingdom 16-17 June 2015 www.pira.com

API EXPLORATION AND PRODUCTION STANDARDS CONFERENCE

San Francisco CA, United States 22-26 June 2015 www.api.org

OIL COUNCIL AFRICA ASSEMBLY Paris, France 23-25 June 2015 www.oilcouncil.com

Macae, Rio De Janeiro, Brazil 23-26 June 2015 www.brasiloffshore.com

Houston TX, United State 14-15 July 2015 www.api.org/events

Lagos, Nigeria 4-6 August 2015 www.spe.org

SPE ASIA PACIFIC ENHANCED OIL RECOVERY CONFERENCE Kuala Lumpur, Malaysia 11-13 August 2015 www.spe.org

SPE OFFSHORE EUROPE CONFERENCE ABERDEEN, SCOTLAND 8-11 September 2015 www.spe.org

EVENTS

SPE RESERVOIR CHARACTERIZATION AND SIMULATION CONFERENCE

Abu Dhabi, United Arab Emirates 14-16 September 2015 www.spe.org

LNG GLOBAL CONGRESS CONFERENCE (LNGGC) London, United Kingdom 22-25 September 2015 www.lnggc.com

IOGCC ANNUAL CONFERENCE Oklahoma City OK, United States 28-30 September 2015 www.iogcc.publishpath.com

SPE ANNUAL TECHNICAL CONFERENCE AND EXHIBITION Houston TX, United States 28-30 September 2015 www.spe.org

SPE INTELLIGENT ENERGY CONFERENCE AND EXHIBITION

3P ARCTIC POLAR PETROLEUM POTENTIAL CONFERENCE & EXHIBITION St. Petersburg, Russia 6-9 October 2015 www.3parctic.com

PIRA NEW YORK ANNUAL CONFERENCE

New York City NY, United States 8-9 October 2015 www.pira.com

OFFSHORE ENERGY EXHIBITION AND CONFERENCE Amsterdam, The Netherlands 13-14 October 2015 www.offshore-energy.biz

PETROTECH INTERNATIONAL OIL AND GAS CONFERENCE New Delhi, India 25-28 October 2015 www.zapaday.com

22ND AFRICA OIL WEEK

Cape Town, South Africa 26-30 October 2015 www.aow.globalpacificpartners.com

OFFSHORE TECHNOLOGY BRAZIL CONFERENCE Rio de Janeiro, Brazil 27-29 October 2015 www.otcbrasil.org

ABU DHABI INTERNATIONAL PETROLEUM EXHIBITION & CONFERENCE (ADIPEC) Abu Dhabi, United Arab Emirates 9-12 November 2015 www.adipec.com

INTERNATIONAL PETROLEUM TECHNOLOGY CONFERENCE Doha, Qatar 7-9 November 2015 www.iptcnet.org

Dubai, United Arab Emirates 5-7 September 2015 www.spe.org

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UPSTREAM NEWS JANUARY - MARCH ENI SHUT TEBIDABABRASS OIL PIPELINE

Italian energy company Eni closed the flow stations on Tebidaba-Brass pipeline following a fire. The fire was believed to have been caused by pipeline sabotage. An Eni spokesman said that the company was losing 3,500 barrels per day of its 20 per cent share of the joint venture.

ELAND OIL STARTED PRODUCTION ON OML 40 Eland Oil and Gas began the year with expectation growing for commencement of production on Opuama Field on oil mining lease (OML) 40. By the beginning of the year it had finished testing the final section of the 12inch export pipeline after successfully rebuilding a flow station tied to the field.

The field had been shut in for more than 7 years.

The company said at the time that it hoped to commence production from the six wells on the field, which it estimated to hold 54.2 million barrels of oil reserves.

Eland commenced production early in February after successfully recommissioning existing infrastructure and re-opening two existing wells.

Starting with an initial production of 1,500 barrels per day (bpd) the company was able, in spite of operational problems including the closure of Shell’s Forcados export terminal and some pipeline breaches, to ramp up production by the end of the year. By September gross production had stabilised at an average rate of over 3,500 barrels of oil per day (bopd).

CAMAC AND ALLIED SECURED $100 MILLION DRILLSHIP FOR OYO FIELD

Houston based independent Camac Energy founded by Nigerian, Kase Lawal, entered into a one-year $100m contract with Oslolisted rig contractor, Northern Offshore to hire the Energy Searcher drillship for the Oyo field located offshore and straddling their oil mining leases (OML) 120 and 121.

SHELL SHUT NEMBE CREEK PIPELINE Shell shut the Nembe Creek Trunk oil pipeline after yet another oil theft attack. The vital trunkline has been targeted incessantly in the last few years. The company did not disclosed how much crude oil had to be deferred as a result.

The Nembe Creek trunkline, located in the Eastern part of the Niger Delta, normally transports 150,000 barrels of crude oil owned by SPDC, but is also used by third-parties.

The 97 kilometre pipeline collects crude oil from 14 oil pumping stations across the Nembe Creek, Krakama, Awoba, Ekulama and San Bartholomew oil fields and transport it to the Cawthorne Channel field and Shell Petroleum Development Company (SPDC) of Nigeria’s Bonny Export Terminal for dehydration and export.

Shell said the pipeline was replaced in December 2010 at a cost of $1.1 billion but has been repeatedly targeted by crude thieves since it was commissioned.

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UPSTREAM NEWS SHELL DECLARED FORCE MAJEURE ON FORCADOS OIL EXPORTS Crude oil exports suffered a major setback as Shell Petroleum Development Company (SPDC) declared force majeure on the export of Forcados grade of crude oil following the shut down of 400,000 barrels per day capacity Forcados export terminal. After the terminal was shut for repairs the company discovered a leak on 48-inch subsea export line at the terminal, which the company spokesperson, Precious Okolobo, said had been sabotaged.

Shell had to defer deliveries of Forcados

grade crude oil as a result, leading to a delay on deliveries of Forcados grade.

Last year, Shell said in its annual report that it lost about $1 billion a month due to oil theft. Shell’s Nigerian oil and gas output averaged 265,000 barrels of oil equivalent per day (bpd) in 2013, down 100,000 bpd from 2012 and equal to about 8 per cent of total supply of 3.2 million bpd.

The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the damage that caused

the leak. MEND is a militant organisation that brought the oil and gas industry to its knees in the early 90’s with unwavering attacks on facilities and oil industry personnel working in the Niger Delta.

The Federal Government reached an amnesty with them in 2009 and some of their group were given security contracts as well. Since then, some disgruntled factions of the group who say they have not benefitted from the amnesty, continue to threaten oil installations with more attacks.

APRIL - JUNE MART RESOURCES RELEASED UMUSADEGE FIELD RESERVES UPDATE

EXXONMOBIL BEGAN 4D SEISMIC ACQUISITION AT USAN FIELD ExxonMobil began 4D seismic acquisition operations in the Usan Field in OML 138 in mid February. 4D seismic has been slow to get off the ground since its inception some 35 years ago.

The technique has now come of age and is being used increasingly on the world stage and now, also in Nigeria, as a valid and valuable reservoir management tool.

The Usan field was discovered in 2002 in water depths of 2,400 feet approximately 62 miles from the coast. Production facilities include a floating production, storage and offloading vessel and ultimately 42 sub-sea wells.

The operator is Total E&P Nigeria Limited, while the partners in the project are Esso E&P Nigeria (Offshore East) Limited (30%), Chevron Petroleum Nigeria Limited (30%), Total E&P Nigeria Limited (20%) and Nexen Petroleum Nigeria Limited (20%).

HERITAGE OIL ACHIEVED 17 PER CENT PRODUCTION INCREASE FROM OML 30 London Stock Exchange listed Heritage Oil gave a production update reporting that its year-todate production from OML 30 had averaged approximately 15,600 barrels of oil per day net to Heritage. This represented a 17 per cent increase on last quarter’s production figures.

TSX listed Mart Resources released the results of its reserves report prepared by leading reserves analysts, RPS. Net 2P reserves to Mart were 16,896 million barrels, down from 17,728 the previous year. Mart has a working interest of 82.5% (before capital recovery) and 50% (after capital recovery) in the Umusadege marginal field, located onshore within Oil Prospecting License (OPL) 283.

FORCADOS OIL TERMINAL REMAINED CLOSED

Seven weeks after it announced the latest closure of the Forcados Oil Terminal, Shell Petroleum Development Corporation (SPDC) Nigeria said the export terminal remained closed, leading to a 9% fall in revenue.

SPDC closed the 400,000 barrels per day terminal in the Western Niger Delta after a sabotage attack on the export line. The closure led to the suspension of SPDC joint venture and third party crude oil exports through the terminal and a force majeure announcement.

At the time of the closure, SPDC said that helicopter over flights showed a slight sheen around the export line, indicating a leak. They immediately launched a joint investigation, conducted by representatives of the host communities, SPDC, regulators and security agencies. They found that a crude theft point had been installed on the line in water depth of about eight metres.

Shell said it was working to repair and reopen the line as soon as possible and that it had mobilised equipment and materials to the site to begin the work.

The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the damage that caused the leak. They said they initially sabotaged the pipeline and then sent divers down to cause further damage to the ongoing repair work. Shell has refused to confirm or deny the allegations.

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UPSTREAM NEWS NNPC SIGNED OPL 281 PRODUCTION SHARING CONTRACT WITH TRANSCORP Shareholders of Transnational Corporation of Nigeria Plc (Transcorp), who saw dividends for the first time since the initial public offering by the company were overjoyed at news of the signing of the long overdue Production Sharing Contract (PSC) in respect of onshore Oil Prospecting Licence (OPL) 281.

OPL 281 was awarded to Transcorp in a mini bid round in 2006. Since then, first, London based, but Nigeria-focused Energy Equity Resources and then, Johannesburg and London’s Alternative Investment Market (AIM) listed SacOil have farmed into the block, subject to Ministerial approval with a 20 per cent share holding each, leaving Transcorp with 60 per cent.

Under the PSC, Phase 1 exploration commitments include the reprocessing of existing 3D seismic data and the drilling of one exploration with a financial commitment of US$30 million. Phase 2 consists of one well plus the acquisition of 3D seismic data over the remaining part of the block without 3D coverage. OPL 281 is said to hold an estimated 104 million barrels of oil reserves, 335 million barrels of probable additional reserves and about 4 trillion cubic feet of gas.

TOTAL EXTENDED CAVERTON LOGISTICS CONTRACT The good fortunes of Caverton Offshore Group, which listed on the Nigerian Stock Exchange (NSE) in May, continued. The logistics company, the first oil services company to list on the NSE, won a 2-year extension of its 3-year support services contract with Total Exploration and Production.

The contract, which it won in 2011 is for the operation of 4 helicopters in Total’s offshore fields.

The company took delivery of a brand new AW139 helicopter, the 7th in its fleet of Agusta Westland helicopters, which was detailed to a Shell contract won in 2010. With this addition to its fleet, Caverton now has the largest fleet in sub-Saharan Africa.

A leading provider of marine, aviation and logistics services company, Caverton listed on the NSE on the 20th of May with a market capitalisation of just under $32 billion (about N196 million) after an initial offering 3.35 billion shares of 50 kobo each.

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CAMAC AWARDED OFFSHORE DEVELOPMENT CONTRACT FOR OYO FIELD New York Stock Exchange listed CAMAC Energy awarded valuable project work to UK subsea umbilicals, risers and flowlines (SURF) specialist, Ceona as it continued developing the Oyo field. Ceona will execute the contract in up to 500 metres water depth, in conjunction with local contractor Marine Platforms Limited, one of a growing band of indigenous companies developing deeper capabilities in the offshore sector.

Oyo field is located on CAMAC’s principal assets, oil mining leases (OMLs) 120 and 121 in deep water, offshore Nigeria.

Oyo was the first deep water discovery in Nigeria and has been in production since December 2009. Drilling operations at the Oyo-7 well commenced in September 2013.

CAMAC hopes to be able to produce about 14,000 barrels of oil per day once Oyo-7 and Oyo-8 are completed

SHELL LIFTED FORCE MAJEURE ON FORCADOS EXPORTS Nearly two months after Shell declared a force majeure on Forcados exports, it re-opened the crucial terminal. The force majeure declaration, was imposed by the Dutch giant, Nigeria’s largest producer, after discovering theft points on the export line on March 4th. It is thought that up to 400,000 barrels of crude oil per day was deferred as a result of the declaration. One of the companies hit by the deferral, Heritage Oil has already announced an 18 per cent drop in production for the first quarter due to the shut in.

Shell has repeatedly called for determined action against what the country chair, Mutiu Sunmonu, called “princes and principalities” to curb the epidemic that experts estimate is losing Nigeria some $6 billion in revenue every year.

CAMAC ENERGY COMMENCED DRILLING OF OYO-8 OFFSHORE WELL Oyo-8 well spudded towards the end of June. Northern Offshore’s Energy Searcher drillship was drilling the well but operations suffered a set back after CAMAC and Northern Offshore parted company amid allegations and counter allegations of breaches on both sides. Northern Offshore is now threatening a $50 million lawsuit and Energy Searcher has been withdrawn from the project.

SHELL DEFERRED 40,000 BARRELS PER DAY FROM EA FIELD Shell Petroleum Development Company of Nigeria Limited (SPDC) announced the deferral of 40,000 barrels of oil per day from its EA field located offshore in oil mining lease (OML) 79. The deferral came after Shell suspended production from the field for the repair of the soft yoke mooring platform (SYMP) which connects the Floating Production Storage and Offloading (FPSO) vessel, Sea Eagle with the mooring platform. As a result, Shell spokesperson Precious Okolobo said in a statement, some 40,000 barrels of oil per day production of the EA blend was deferred.

The EA field lies 15 km off the Niger Delta, south west of Warri in water depths of around 25 metres. Shell discovered the field in 1965 and first oil was achieved on December 14, 2002. They opted for offshore development requiring minimal servicing from onshore facilities, obviating the need for a land-based terminal.

UPSTREAM NEWS JULY - SEPTEMBER SAHARA GROUP DOUBLED 2P RESERVES IN OPL 274 The rising success of Nigerian independents continued with Sahara Group which, completed its third well in onshore Oil Prospecting Licence (OPL) 274 with very encouraging results. The company, which operates OPL 274 through its wholly owned exploration and production subsidiary, Enageed Resources, completed the third of a three-well drilling programme on the block. After testing, the company said it had doubled its certified 2P reserves on the block. The block is operated under a Production Sharing Contract with the Nigerian National Petroleum Corporation.

Sahara Group also has a 26 per cent interest in deep water OPL 286, a 51 per cent interest in Tskelewu marginal field on oil Mining Lease (OML) 40, and Block 5 in the Nigeria-Sao Tome Join Development Zone.

SHELL COMMENCED PRODUCTION FROM BONGA NORTH WEST Shell’s deep-water subsidiary in Nigeria, Shell Nigeria Exploration and Production Company Ltd (SNEPCo) started oil production from the first well at the Bonga North West deep-water development.

The Bonga project, which began producing oil and gas in 2005, was Nigeria’s first deep-water development in water depths over 1,000 metres. Bonga North West represents a significant step forward for the project.

Oil from the Bonga North West sub-sea facilities is transported by a new undersea pipeline to the existing Bonga floating production, storage and offloading (FPSO) export facility. The Bonga FPSO was upgraded to handle the additional oil flow from Bonga North West, which, at peak production, is expected to contribute 40,000 barrels of oil equivalent per day.

The Bonga project is operated by SNEPCo,

which holds a 55% stake. The other project partners are Esso Exploration & Production Nigeria (Deepwater) Limited (20%), Total E&P Nigeria Limited (12.5%) and Nigerian Agip Exploration Limited (12.5%) under a Production Sharing Contract with the Nigerian National Petroleum Corporation.

ENI LOSES OIL PRODUCTION AFTER PIPELINE SABOTAGE

QUA IBO FIELD PROGRESSED TOWARDS PRODUCTION

Eni SpA said it had to shut off some crude production following sabotage on one of its pipelines in the Niger Delta resulting in disruption in supply of 4,000 barrels a day net to Eni representing about 20,000 barrels a day loss to the joint venture.

The shut down was due to sabotage on its pipeline. A local activist suggested the pipeline was blown up after Eni got into a dispute with its former security contractors.

Qua Ibo was awarded to Network E&P in the 2003 marginal fields licensing round, a farm out from OML 13 held by Shell Petroleum Development Company (SPDC) and its joint venture partners. Five wells have been drilled on the field so far. 2 wells (Qua Ibo-1 and Qua Ibo-2) were drilled by SPDC in 1960 and 1971.

Qua Ibo field, located onshore on Oil Mining Lease (OML) 13, being developed by Network Exploration and Production and Oando, continued to make progress and by the end of the year was looking like it could become the next producing marginal field. The joint venture partners were targeting first oil for Q4 of 2014 but failed to achieve that goal.

Mart Resources originally funded the work programme but parted company with Network in 2012, f following which Oando came on board.

OCTOBER - DECEMBER SEADRILL LAUNCHED DRILLSHIP FOR TOTAL’S EGINA DEEP-WATER PROJECT Seadrill Nigeria Limited commissioned the sail away of its sixthgeneration drill ship, the West Jupiter, bound for Nigeria for Total’s Egina project located in deep-water OML 130. The West Jupiter is the latest addition to the Total Upstream Nigeria Limited fleet of ultra-deep water vessels operating in Nigerian waters. The drill ship was expected to arrive in Nigeria in November and drilling on Egina slated to begin in December.

The submersible deep-water drilling rig, built in South Korea by Samsung Heavy Industries for Seadrill Nigeria, has the capacity to operate in 12,000 feet of water. The $1.1 billion contract to operate the ship for an initial 5-year period, was awarded to Seadrill Nigeria

by Total as part of the Egina deep-water project. The drill ship will be operated by Seadrill using a Nigerian crew.

Heirs Holdings is a significant investor in Seadrill Nigeria, and Chairman, Tony Elumelu was present at the ceremony.

EXXONMOBIL AND TENOIL PETROLEUM AGREED TO BEGIN ATA FIELD APPRAISAL Tenoil Petroleum and Energy Services, a subsidiary of Heirs Holdings, reached agreement with Mobil Producing Nigeria Unlimited (MPN), an ExxonMobil subsidiary, to commence drilling on Ata Field. They will drill an appraisal well on Ata Field in order to evaluate whether there is an opportunity to jointly develop the field, the indigenous company said in a statement.

Ata Field, which is located on Oil Mining Lease (OML) 68 in shallow water offshore of the Eastern Niger Delta was discovered by MPN in 1964. MPN is the operator of OML 68, which it owns jointly with the Nigerian National Petroleum Corporation (NNPC). Ata Field straddles the borders of OML 68 and Oil Prospecting Licence (OPL) 2008 also owned by Tenoil.

The agreement means that the field can be developed jointly if found to be commercially viable.

13

UPSTREAM NEWS LAGOS TO BECOME OIL PRODUCING STATE WITH AJE FIELD FID TRELLEBORG WON CONTRACT FOR ERHA NORTH UK company, Trelleborg Group’s offshore operation won a contract to supply its high temperature thermal insulation material for phase two of the Erha North project. Appointed by subsea engineering, construction and services company, Subsea 7, Trelleborg will supply several tonnes of its high temperature advanced silicone insulation solution, Vikotherm S1, to the numerous oil and gas flowlines in the field.

Manufactured using room temperature vulcanization technology, the coating is ideal for the high 300 °F / 149 °C temperature.

The Erha North project located in Oil Mining Lease (OML) 133 had been stalled for several years due to the inability of NNPC and its international oil company partners to reach an agreement on their costs. The Erha North II project, got a boost after the Nigerian National Petroleum Corporation (NNPC) approved the award of the three engineering, procurement and construction (EPC) contracts for the project to Luxembourg-based Subsea 7 SA. Esso Exploration and Production Nigeria Limited (EEPNL), a subsidiary of ExxonMobil operates the block under a Production Sharing Contract. Shell Nigeria Exploration and Production Company Limited (SNEPCO) is a partner in the venture.

Joint venture partners in oil mining lease (OML) 113 took an important step towards turning Lagos State into an oil producing state. The partners took the Final Investment Decision (FID) to begin work on the first phase in the development of the Aje field, situated offshore Lagos.

The partners, which include Vitol, First Hydrocarbons Nigeria (a subsidiary of Afren), Energy Equity Resources, Panoro Energy and Jacka Resources, and the operator, Yinka Folawiyo are aiming for a target production of 10,000 barrels per day from two wells in the field. First they will re-enter Aje-4 well and expect to commence production from that well, whilst drilling of Aje-5 continues.

Activity has progressed rapidly with the

establishment of the project team in Lagos, identification of a floating production, storage and offloading (FPSO) vessel - the Front Puffin in this case - a drilling rig, ordering of key long lead item equipment and tendering for installation services.

OML 113 contains the Aje field as well as a number of exploration prospects. Aje field was discovered in 1997, in water depths ranging from 100-1500m.

In March 2014 the government approved the Aje Field Development Plan (FDP) following which, work progressed towards the FID on the project. The FDP mid-case reserves are 32.4MMbbls with production starting by the end of 2015 at a plateau of 8,000 bbls/day.

MART RESOURCES AND PARTNERS COMPLETED UMUGINI PIPELINE Mart Resources and its partners in Umusadege marginal field, Midwestern Oil and Gas Company (the operator) and SunTrust Oil Company completed the Umugini pipeline tie-in at the Eriemu flow station. Other start-up activities, including the pumping of line fill were completed.

The line fill process required to commence shipment of oil to the Trans-Forcados crude oil export pipeline and onward to the Forcados oil export terminal and the inspection of the Umugini pipeline facilities by the Operator of the Umugini pipeline was successfully completed by the end of September 2014. Accordingly Umugini pipeline was ready for injection of crude into the Trans Forcados crude pipeline and Shell Petroleum Development Company’s (SPDC) pipeline system connected to the Forcados oil export terminal. The pipeline will enable them to fully realize the production potential of Umusadege field.

The Umusadege field is a multiple-horizon hydrocarbon reservoir situated in the North Central area of the Niger Delta basin. The field contains 24 known reservoir sands. Mart Resources farmed into the field in 2006 as the technical and financial partner.

SHELL REVEALED PLANS FOR ADDITIONAL 40,000 BPD FROM EIGHT NEW WELLS IN BONGA FIELD Following the commencement of production from the Bonga North West deepwater development in August, Shell’s deep-water subsidiary in Nigeria, Shell Nigeria Exploration and Production Company Ltd (SNEPCo) announced plans for 8 new wells on Bonga Field from which it will target an additional 40,000 barrels of oil per day (bpd).

The Bonga project, which began producing oil and gas in 2005, was Nigeria’s first deep-water development in water depths of over 1,000 metres. Bonga North West began production in August. This third phase of the Bonga Main development will yield an additional 40,000 barrels of oil equivalent per day through the existing Bonga FPSO facility, which currently produces over 200,000 barrels of oil per day and 150 million standard cubic feet of gas a day. It is an expansion of the existing Bonga Main development and will involve drilling four oil producing and four water injection wells.

Bonga has produced over 500 million barrels of oil to date and drilling for Phase 3 should commence in 2015. Work on Phase 3 will be executed by several contractors including Nigerian companies that have developed deep-water expertise through the provision of similar services for SNEPCo. Bonga FPSO had earlier been upgraded to handle the additional oil flow from Bonga North-west

14

HEIRS HOLDINGS SEALS PACT WITH GE ON OIL, GAS BUSINESS General Electric and Heirs Holdings agreed to expand their existing relationship to jointly pursue opportunities in Nigeria’s oil and gas industry. The companies have previously collaborated on power projects. They did not give any details of the projects they wish to pursue.

UPSTREAM NEWS

MARGINAL FIELDS BID ROUND FAILED TO MATERIALIZE IN 2014 In our first issue in January we announced that unbelievers had been silenced when on the 28th of November 2013, the Minister for Petroleum Resources, Diezani Alison-Madueke, announced the long-awaited marginal fields bid round.

Following that, the Director of Petroleum Resources, George Osahon, embarked on a national roadshow to inform the public about the bid round. This came after many had long speculated that the bid round would not happen under this government after some 3 years of “Will they? Won’t they?” Unfortunately, the unbelievers were proved right after the year went by with no further word on the truncated marginal fields bid round.

The year ended without an explanation about why the bid round ended so suddenly. One thing that is known is that at the time of the announcement of the bid round, the list of the marginal fields to be included was still being agreed with international oil companies (IOCs).

Some IOCs were said to be unhappy with the some of the larger fields that were included in the list of 31 fields that were to have been put up for the bid, particularly as the IOCs have found a lucrative sideline is selling off their marginal fields themselves.

Although no official list of fields for the bid round was ever released, it was obvious from the list seen by NOGintelligence that some of the fields included in the bid round were by no means marginal. One particular field had as much as 50 million barrels of oil in proven reserves. That,

Caption: Minister of Petroleum Resources, Diezani Alison-Madueke and the Director of the Department of Petroleum Resources, George Osahon for most indigenous companies in the upstream game, is not at all marginal.

The changing technological landscape, which today allows for more efficient extraction methods means that what was considered uneconomic 15 or 20 years ago might not be seen in that light today.

While the dispute with IOCs carried on in the background, rumours continued to circulate over discretionary allocations, which the President has the right to make under the Petroleum Act, taking place behind the scenes. By the end of the year, the general public remained uninformed about what had in fact taken place. The whole industry continues

to wait and hope that the marginal fields bid round will take place in 2015 either under this government or a new one. Without regular bid rounds, particularly for marginal fields, with their low entry threshold, it remains difficult for indigenous companies to gain the foothold and experience that the local content initiative is supposed to achieve.

We urge whichever government that is elected in the 2015 elections to embark on the marginal fields bid round immediately. The industry is desperately in need of revitalization and a new bid round will help in no small measure even if, with the depressed oil prices, finance might be a little harder to achieve.

ABOUT THE MARGINAL FIELDS PROGRAMME Marginal fields under the marginal fields programme in Nigeria are fields which have been discovered by IOCs but which they have failed to exploit, usually because they were deemed commercially unviable. In some cases however, these may be fields that are located in areas of tense community relations and deemed by the IOCs to be too difficult, relative to the reserves, to exploit. Ten years after discovery, these unexploited fields can be converted to marginal fields and allocated by the government to indigenous companies under the Marginal Fields Programme. The

16

first bid round was in 2003. Only 9 out of 24 fields awarded in that licensing round are currently producing.

Part of the problem with that bid round, which the former Director of DPR, Osten Olorunshola highlighted at the NOGintelligence official launch, was that some of the fields awarded were “quite frankly unbankable.” He gave the assurance that for the next marginal fields round, care would be taken to ensure that all the fields were “good assets” that would enable awardees to raise finance successfully.

UPSTREAM NEWS

RIG COUNT AFRICA ALGERIA ANGOLA CAMEROON CHAD CONGO EQUITORIAL GUINEA GABON GHANA IVORY COAST KENYA LIBERIA LIBYA MOZAMBIQUE NIGERIA TANZANIA TUNISIA UGANDA TDR CONGO MOROCCO NAMIBIA SIERRA LEONE SOUTH AFRICA TOGO MAURITANIA ETHIOPIA SENEGAL BENIN

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 139 154 132 136 140 123 137 125 117 125 142 138 48 54 44 49 47 42 48 50 45 45 51 49 14 19 14 16 17 14 15 14 14 14 13 14 2 2 2 2 2 2 2 2 2 3 4 4 10 10 10 11 13 12 8 7 7 7 7 7 4 4 4 5 4 4 4 4 4 4 5 7 1 2 2 2 2 1 2 1 1 9 9 7 7 7 6 6 5 6 5 6 7 1 1 2 1 2 1 2 1 1 1 0 1 1 1 1 5 4 11 12 14 13 13 12 11 12 10 12 12 10 1 0 17 17 12 8 12 11 14 4 5 8 9 7 1 1 2 2 2 2 2 1 1 1 1 1 15 18 15 14 12 9 15 14 11 14 19 18 1 1 1 1 1 1 0 1 1 1 1 0 1 0 0 1 1 3 2 2 3 3 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 0 1 1 1 0 1 0

1

0

1

2 1

2 1

1

1 0

Source: Baker Hughes

1 1

0

1

2

2

1

1

1

1

1 1

1 1

1 1

0 2

XX 17

ACQUISITIONS JANUARY - MARCH

OANDO ACQUIRED MEDAL OIL TO GET 100% SHAREHOLDING IN OML 131 Oando Energy Resources (OER) acquired the entire issued share capital of Medal Oil Company Limited, which owned a 5 per cent interest in oil mining lease (OML) 131, for a purchase price of US$5,000,000. The purchase price was to be satisfied by the issuance of an additional 3,491,082 units in its latest private placement on the TSX. Oando chose to acquire Medal Oil’s 5% equity interest in OML 131 so that on closure of the $1.79 billion acquisition of ConocoPhillips assets, it would become the 100 per cent owner of OML 131.

18

DANGOTE DECLARED INTEREST IN ACQUIRING IOC DIVESTED BLOCKS In a move that is likely to have indigenous companies quaking in their boots, Africa’s richest man, Aliko Dangote, was reported to be eyeing up the International Oil Company (IOC) divestments. Dangote group was said to be mulling over increased investment upstream according to Dangote Group’s Group Executive Director, Devakumar Edwin.

Dangote Group has a limited footprint in the upstream sector. They have a 9 % Investment in Block I in Joint Development Zone (JDZ) of Nigeria Sao-Tome along with Chevron Texaco

and Exxon Mobil, a 10 % Investment in Block III in JDZ of Nigeria along with Anadakko as Operator and a 6 % Investment in OPL 315 with Statoil and Petrobas as operators.

Their interest in getting into the sector in a more meaningful way is connected with the plans of the Group to build Nigeria’s largest refinery, doubling the country’s refining capacity. The crude has to come from somewhere and investing in the upstream sector would give it control of its own crude supply.

ACQUISITIONS

SEPLAT SELECTED AS PREFERRED BIDDER FOR CHEVRON DIVESTMENT Chevron was reported to have selected Seplat Petroleum Development as the preferred bidder for its asset put up for sale last year. Unfortunately, before Seplat could publicly be declared winner, Brittania-U which said it was the highest bidder went to

court to get an injunction against any declaration of Seplat as winner and to ask the court to issue an order that it should be declared winner of the bid for the three blocks put up for sale.

The matter is still in court and remains unresolved.

APRIL - JUNE HERITAGE OIL SOLD TO QATAR SOVEREIGN WEALTH FUND

Heritage Oil, the partner of Shoreline Power Company in Shoreline Natural Resources, which owns a 45 per cent interest in (oil mining lease), OML 30,was sold to a Qatar sovereign wealth fund, Al Mirqab Capital.

Heritage Oil is an independent Jersey-based oil and gas exploration and production company. Founded by controversial figure and former mercenary, Tony Buckingham, its activities are currently focused on Africa.

The partnership with Shoreline came under great scrutiny after the $850 million OML 30 acquisition in 2012. There was a media backlash in view of which the House of Representatives launched an investigation into whether Buckingham was fit to be awarded an OML. After Shoreline put up a vigorous defence of their business partner Buckingham who is the CEO of Heritage Oil, the whole matter died down and since then, OML 30 has been delivering great returns for Heritage.

Al Mirqab Capital, a company controlled by Qatar’s royal family, made a cash offer valuing Heritage Oil Plc at $1.55 billion. In view of its good fortunes, owing mainly to its Nigerian oil production, Heritage said it had recommended a 320 pence per share cash offer, which represented a 25 per cent premium to its closing price the day before the approach was announced. Tony Buckingham retains a 20 per cent holding and will serve as an adviser for at least five years.

19

ACQUISITIONS LEKOIL ACQUIRED 40% INTEREST IN GREEN ENERGY’S OTATIKPO MARGINAL FIELD London’s Alternative Investment Market (AIM) listed Lekoil signed a farm in agreement with Green Energy International Ltd under which it acquired a 40 per cent interest in the Otatikpo marginal field.

Otatikpo has 2C reserves estimates of 36 million barrels of oil and 31 billion cubic feet of gas. After its acquisition of a 40 per cent equity interest in the field, Lekoil will have added 14 mmbbl of oil and 12 bcf of gas to its books.

was required to pay a signing bonus of $7 million to Green Energy as well as a production bonus of $4 million. The latter is contingent on production as well as receipt of ministerial consent to the transfer of the participating interest.

Lekoil will acquire the interest through its Nigerian subsidiary, Lekoil Nigeria in which it has a 90 per cent economic interest.

Lekoil enters into the joint venture as Green Energy’s technical partner.

Lekoil Oil also revealed some of the financial details of the transaction. It

Otakikpo is located in oil mining lease (OML) 11, held by joint venture partners,

CHORUS ENERGY SOLD ITS MARGINAL FIELDS STAKE TO SWIFT OIL Chorus Energy Limited concluded its plans to divest its remaining equity in the Matsogo/Amoji/Igbolo marginal fields located in OML 56 in the North-West Niger Delta to Swift Oil. The divestment had been going on quietly, overshadowed by the big IOC divestments, involving Chevron and Shell. Swift Oil, which up till then had mainly been involved in the downstream industry, took Chorus Energy’s 51 per cent stake in the fields in the deal. Chorus had previously farmed out 49 per cent of its interest in the fields to Seven Energy who were said to be looking for buyers of their stake but may yet sell to Swift Oil in a separate deal.

Nigerian National Petroleum Corporation (NNPC), Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited. The field, which is in a swamp location, in the eastern part of the Niger Delta, was expected to be in production within 12-18 months from acquisition.

Lekoil made a giant discovery the year before, with its Ogo exploration well, which turned out to be one of the largest discoveries worldwide for the year.

OANDO RECEIVED MINISTERIAL CONSENT FOR LANDMARK CONOCOPHILLIPS ACQUISITION Oando finally received the consent of the Minister of Petroleum Resources to its acquisition of ConocoPhillips’ Nigerian business. The long-awaited consent made the asset more expensive for Oando as it had to pay to extend the closing date for the $1.65 billion acquisition that would see Oando moving from 4,500 barrels per day of production (bpd) to 50,000 bpd. Final closure of the deal was eventually achieved on the 31st of July.

The company said the acquisition was expected to be a “transformational milestone” that would make Oando the largest indigenous E&P company in Nigeria with 50,000 boepd in production from 6 producing fields, 236 million in 2P reserves and over 500 million in contingent resources.

JULY - SEPTEMBER ELAND ACQUIRED OF A 40 PER CENT INTEREST IN UBIMA FIELD Eland acquired of a 40 per cent interest in Ubima Field located onshore on Shell’s OML 17. 2C resources are estimated at 34 million barrels with significant 3C resource estimate of 66.9 million barrels of oil with an extra 2C resource estimate of 97 billion cubic feet (bcf) of non-associated gas.

Ubima has 3D seismic coverage from 1997 and 4 wells were drilled in the field between the 1960s and 1981. Hydrocarbons were encountered in all four wells. The proposed export pipe-line will be tied into the existing pipeline network and crude is to be exported through the Bonny Terminal.

20

Ubima generated some controversy when it was awarded under a discretional allocation to, Allgrace Energy, said to belong to one of the daughters of former Nigerian Head of State, Olusegun Obasanjo.

Eland acquired the interest using a wholly owned subsidiary, after paying a farm in fee of $7 million with a further production bonus of $3 million to be paid following commencement of production and receipt of Ministerial consent. Eland will fund the work programme and in return will receive and economic interest of 88 per cent from the production cash flow from the Field until cost recovery.

ACQUISITIONS OCTOBER - DECEMBER AITEO-LED CONSORTIUM WON OML 29 IN SHELL DIVESTMENT

SHELL CONCLUDED SALE OF OML 18 TO EROTON CONSORTIUM

An Aiteo led consortium won the bid for Oil Mining Lease (OML) 29 together with the Nembe Creek Trunk Line, two among the assets being divested by Shell and its joint venture partners Aiteo Group owns an 85 per cent stake in the deal, while Tempo Energy Resources has a 10 per cent stake and Taleveras holds a 5 per cent stake in the consortium.

The total cost of the acquisition of OML 29 along with the vital 60-mile Nembe Creek trunkline was $2.562 billion, although the group was expecting to spend $2.7 billion, including working capital.

One of the members of the winning consortium in the bid for Shell’s oil mining lease (OML) 18 confirmed the conclusion of the deal. Toronto Stock Exchange listed Mart Resources is part of the Eroton consortium that includes Midwestern and Suntrust Oil, which won the block after reportedly bidding $1.2 billion for the 21,000 barrels per day producer.

Mart and its partners in the deal, will now take over the 45 per cent interest of Shell Petroleum Development Company, Total E&P Nigeria and Nigerian Agip Oil Company in OML 18. The Nigerian National Petroleum Corporation (NNPC) holds the remaining 55 per cent.

The Aiteo Group consortium emerged winner of the OML 29 in a fiercely contested bid that saw the group beat several other indigenous and international companies to clinch the deal.

CRESTAR WON AND LOST OML 25 Crestar, which is owned by Nigerian oil and gas professionals, including ex-Shell man, Niyi Olaniyan and former Director of the Department of Petroleum Resources, Osten Olorunsola. They won the bid for OML 25 after reportedly bidding $500 million. They paid the full bid price into escrow but the transaction stalled after the Nigerian National Petroleum Corporation (NNPC) exercised a right of preemption over the asset. NNPC has to match the winning bid. Canadian company, James Bay Resources, a shareholder in Crestar has instructed an international law firm over the matter.

SHELL COMPLETED SALE OF OIL MINING LEASE 24 TO NEWCROSS PETROLEUM The Shell Petroleum Development Company of Nigeria Limited (SPDC) confirmed the completion of the assignment of its 30% interest in Oil Mining Lease (OML) 24 and related facilities in the Eastern Niger Delta to Newcross Exploration and Production Limited for $600 million. The relative newcomer, is linked through its shareholders to old stalworth, Pan Ocean, a partner in producing Egbeoma marginal field (formerly Asuokpu/ Umutu) located on OML 38. Newcross also has two production sharing contracts for OPL 283, said to be close to production and OPL 276, still at exploration stage.

This acquisition is clearly a game-changer for Newcross, which now moves into the league of indigenous majors.

TOTAL’S $2.5 BILLION USAN DEEPWATER FIELD WAS BACK ON THE MARKET French oil giant Total said its Usan Deepwater Field located some 100 kilometres offshore in Oil Prospecting Lease (OML) 138 was back on the market after the failure of its 2012 deal with Beijing based Sinopec. Total’s interest in the field was sold to China Petroleum Corporation (Sinopec) for about $2.5 billion and it is expected that Total will be seeking a similar sum in the new sale.

Total appointed BNP Paribas to advise on the sale. With depressed oil prices analysts are saying Total may not be able to achieve that price especially given that Sinopec paid over the market value at the time to secure the assets.

Neither Total nor Sinopec was willing to divulge the reason for the failure of the deal. Analysts are speculating that concern about the unfavourable fiscal provisions in the Petroleum Industry Bill (PIB), which the international oil companies (IOC)’s are worried about if the PIB is passed into law may be behind Sinopec’s decision to pull out. Sinopec may have baulked at the making the kind of expenditure a deepwater development will require with the uncertainty of the PIB hanging over it.

Total’s joint venture partners in the Usan Project are Chevron (30 per cent), ExxonMobil (30 per cent) and Nexen Petroleum, owned by Chinese state company, CNOOC (20 per cent). Total is the operator and proven and probable reserves of Usan are in excess of 500 million barrels of oil.

21

ACQUISITIONS THE SCRAMBLE FOR SHELL’S ONSHORE ASSETS As the process for the sale of Shell’s four onshore oil mining leases (OMLs) 18, 24, 25 began, a frantic scramble began to emerge.

Shell and its joint venture partners are offloading these 4 assets in the latest round of divestments as part of what it calls “the strategic review of SPDC’s onshore portfolio ... in line with the Federal Government of Nigeria’s aim of developing Nigerian companies in the country’s upstream oil and gas business.”

It was revealed that commodities traders Glencore and Mercuria were among those to have submitted final bids for the assets.

Also in the running was the Dangote group who recently announced that they were interested in upping their upstream game in a bid to ensure sufficient production for their in progress $9 billion 400,000 barrels of oil per day (bpd) capacity refinery and petrochemicals plant. Everybody it seemed was in the running, including the usual suspects like Seplat, Amni, Sapetro, Sahara and many more. With no official licensing rounds from the government in years, the international oil company (IOC) divestments remain highly sought after by indigenous exploration companies keen to get into higher stake upstream assets.

22

The four oil mining leases, which together averaged 90,000 barrels oil per day (bpd) and 60 million standard cubic feet of gas per day (scf/d) production were being sold

by Shell and its joint venture partners, Total and Eni, which together owned 45 per cent interest in the assets. The remaining 55 per cent is owned by the Nigerian National Petroleum Corporation (NNPC). The 4 blocks are known to hold reserves of 4.6 billion barrels of oil equivalent. The Nembe Creek Trunk Line (NCTL), which has been the subject of incessant attacks from oil thieves, was included in the sale.

OML 25 has one producing field delivering an output of 33,000 bpd and 2 million scf/d of gas. This block remains under dispute after it was awarded to Crestar who paid the full bid price into escrow before the state-owned Nigerian National Petroleum Corporation (NNPC) decided it was going to acquire the asset itself under a right of pre-emption. The matter is now headed for court. OML 24, which produces 25,000 bpd 8 million scf/d of gas from three 3 fields went to Newcross.

OML 18 with a production of 21,000 bpd and 12 million scf/d of gas from six fields went to Eroton.

Of the four OMLs, 29 was the choice asset with peak production of 62,000 bpd from 5 fields, 40 million scf/d and reserves of 2.2 billion barrels. Analysts say this block alone, holding the Oloibiri, Nembe Creek, Santa Barbara and Odeama Creek fields could fetch up to $2 billion for the partners. Also part of this package was the NCTL, which is said to have hundreds of punctures along its 97-kilometre length. Many analysts think it is more trouble than it is worth and in the past Shell has threatened to shut it permanently.

This block went to the Aiteo-led consortium.

Before this sale, the Shell joint venture had raked in just under $2 billion so far from its Nigerian divestment as international oil companies (IOCs) continue to maintain that they are not leaving Nigeria but only realigning their interests. They see the offshore area as relatively easier to operate in, being free from host community problems.

They are however not making any new final investment decisions offshore as they wait to see what will happen with the stalled Petroleum Industry Bill. The latest sell-off will be the largest by far. The company planned to raise $15 billion from the sale of assets worldwide in 2014.

The other three blocks are smaller producers.

ACQUISITIONS

OANDO ENERGY RESOURCES – POST CONOCOPHILLIPS ACQUISITION

The onshore business acquired by Oando Energy Resources (OER) under the historic deal includes a 20 per cent non-operating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited (NAOC) Joint Venture (NAOC JV). Nigerian National Petroleum Corporation (NNPC) holds a 60 per cent interest in the joint venture, while NAOC, which operates the assets holds 20 per cent.

Through the deal they also acquired a 95 per cent operating interest in OML 131 (and after buying out Medal Oil the 5 per cent shareholder, they now own 100 per cent of the asset) and a 20 per cent non-operating interest in OPL 214. The other partners include ExxonMobil which is the operator with a 20 per cent stake; Chevron, 20 per cent; Svenska, 20 per cent and the Nigerian Petroleum Development Company, 15 per cent, as well as and Sasol, 5per cent.

TSX: OER

C$1.71 Stock Price (as at 21 Nov, 2014

795,419,213 Shares outstanding

C$1,360 Million Market Capitalization

C$1.08 – C$2.29 52 Week Range

OPERATIONAL OVERVIEW

6 230.6

Producing Assets

Mmboe 2P Reserves

47,220 boepd Average Net Production

ASSET OVERVIEW ASSET

W.I.

OPERATOR

OML 60 OML 61 OML 62 OML 63 OML 125 OML 56

20% 20% 20% 20% 15% 42.75%

AGIP AGIP AGIP AGIP ENI Energia

ASSET

W.I.

OPERATOR

OML 90*

40%

Sogenal

OML 13* OML 134 OML 122*

40% 15%

Network E&P ENI

5% oil, 12% gas

Peak

*OER is Technical Partner

ASSET

W.I.

OPERATOR

EEZ 5 EEZ 12

100% N/A

OER TBD

OML 321&323

30% 100% 20%

KNOC OER ExxonMobil

OML 131 OML 145

23

UPSTREAM FEATURE

AFRICA’S UPSTREAM EVENTS TO LOOK OUT FOR IN 2015 Wood Mackenzie’s latest upstream analysis highlights some of key upstream activity to look out for in Africa this year.

Wood Mackenzie’s Sub Saharan and North African Upstream research teams have assessed the most significant events impacting the continent’s oil and gas sector, the collapse of global oil prices and the implications for the high cost African upstream industry, identifying the key areas to watch in 2015.

Gail Anderson, Principal Analyst for Sub Sahara Africa Upstream research at Wood Mackenzie says: “Africa is a global hotspot for capital-intensive deepwater and LNG supply projects, making

it particularly exposed to the type of discretionary spending cutbacks the industry currently faces. The collapse of oil prices has significant implications for the African upstream industry and the big question will be whether a number of projects will achieve final investment decision (FID) this year or not. Shareholder demand for ‘value over volume’ has driven E&P companies to make cuts to exploration and discretionary development spending to protect dividends and although this behaviour was well established before the price crash – it is now forced, rather than strategic.”

E&A SPEND DOWN, BUT BIGGER EXPLORERS COULD BENEFIT

CAPITAL CUT BACKS

Deepwater development costs in Africa are typically US$25-30 per barrel and among the highest globally. This, for many companies, makes the need to defer expenditure by delaying FID and take advantage of falling costs absolutely imperative. Day rates for offshore rigs in the region have fallen 30% in recent months, but other oil services are yet to respond. In more established areas such as Nigeria and Angola, prices will be less responsive to falling demand. Wood Mackenzie expects to see development costs falling by around 15% in 2015 – not as far or fast as other regions. Project economics are also influenced by prices in the long term and in the current environment this is highly uncertain. A US$5-10 lower long-term price could be the difference between a project being economically viable or not.

Wood Mackenzie predicts a 30% reduction in African E&A spend compared to 2014, as expenditure is diverted from high-risk, high-cost wildcats, to appraising discoveries, or proving up additional resources near proposed projects to deliver higher returns to shareholders. Exploration will continue in the deepwater Kwanza basin offshore Angola, with some operators such as BP still planning to drill. After a disappointing year, 2015 should provide more clarity on where the pre-salt fairways extends, with dry holes and relinquishments now surrounding some of the original discoveries. With frontier exploration being scaled back elsewhere, deepwater Nigeria - a proven world-class basin with significant undiscovered reserves - could reclaim attention.

BID ROUND DELAYS, BUT CHEAPER ACREAGE AVAILABLE

A number of bidding rounds have been reported, but until there is more appetite for exploration, Wood Mackenzie expects some will be delayed.

Planned rounds in Angola, Kenya and Tanzania may be deferred, while the deadline for 15 blocks in Mozambique has been extended until the end of April. We expect bid rounds in Egypt and Algeria to proceed later in 2015, and offshore blocks in the Algerian sector of the Mediterranean could be offered for the first time. The improving situation in Somalia is worth watching, with both Federal and Somaliland administrations possibly offering acreage later in the year. Madagascar is expected to offer up to 50 offshore blocks in 2015.

For rounds that do progress in a somewhat challenging environment, less competition should mean lower entry costs and required spend commitments.

M&A IS ON THE WAY

Wood Mackenzie predicts forced sales of assets across Africa this year will drive an increase in activity compared to late 2014, but caution the pool of possible buyers could be limited. Asian NOCs could well take advantage of lower market values, while cash-rich Middle Eastern outfits, including sovereign wealth funds, may also emerge as serious players in Africa. Due to the down-turn, opportunities will abound for larger, financially-stable explorers to negotiate favourable farm-in deals, and cheap acreage. Many explorers have commitment wells in 2015, and those that are financially stretched will farm-down to reduce risk and ease the financial burden. We also expect Majors, such as ExxonMobil and Shell, to secure strategic positions across East African LNG projects.

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SLOW PROGRESS FOR UNCONVENTIONAL DEVELOPMENT

Algeria’s huge shale gas potential will remain in focus this year, especially in the run up to the bid round, but progress towards a commercial development will be limited and production remains a long way off as more pilot holes and appraisal wells are drilled. In Egypt, Shell and Apache are set to begin to appraise tight gas resources within the North East Abu Gharadig block, having negotiated the country’s first unconventional gas agreement at the end of 2014. In South Africa, although improvements have been achieved in the legal and regulatory environment, Wood Mackenzie does not expect to see significant progress with unconventionals in 2015.

MIDSTREAM NEWS JANUARY - MARCH

FEDERAL GOVERNMENT U-TURNED OVER REFINERIES SALE The Federal Government made a dramatic u-turn over the sale of the nation’s refineries, insisting that it had no plans to put the refineries up for sale. This came only a few weeks after the Minister of Petroleum said that the refineries were up for grabs. The Bureau of Public Enterprise also confirmed the proposed sale after the Minister’s revelation that the four refineries, with a combined capacity of 445,000 barrels per day were to be sold following decades of poor management.

Oil workers unions Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of

Petroleum and Natural Gas Workers (NUPENG) threatened to take legal action and the Federal Government backed down.

Now the Federal Government appears to have had a change of mind after a statement from the Presidency revealed that the President had not approved the sale and that the government had no intention of selling the refineries.

The oil workers who were vehemently opposed to the sale were taking credit for the U-turn by the Government over the sale of the refineries.

NNPC TO BUILD TWO NEW REFINERIES In spite of poor management of the nation’s four under performing refineries, the Nigerian National Petroleum Corporation (NNPC) is apparently intending to build 2 new refineries.

Before his removal later in the year, Group Managing Director of NNPC, Andrew Yakubu, disclosed this whilst speaking at a lecture organised by the Society of Petroleum Engineers recently. Engineer Yakubu said the refineries would increase Nigeria’s local refining capacity of petroleum products to 850,000 barrels per day (bpd) by 2020. In addition, he said, the existing 4 refineries were to have a complete overhaul.

APRIL - JUNE BPE BEGAN OIL WORKERS CONSULTATION ON SALE OF REFINERIES Once again talk of privatizing the nation’s refineries began to surface. The Bureau of Public Enterprises (BPD) said it was consulting with labour organisations to ensure support for the sale of the underperforming refineries.

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MIDSTREAM NEWS OGIDIGBEN GAS CITY PROJECT GOT GO AHEAD Governor Emmanuel Uduaghan confirmed that the $16 billion Gas City Project to be sited at Ogidigben in Warri South-West Local Government Area of Delta State would go ahead as planned. Uduaghan made the revelation as he sought to put an end to rumours of the relocation of the project due to community conflicts. He said that President Goodluck Jonathan would attend to perform the groundbreaking ceremony very soon.

The $16 billion project is a public private partnership between the Federal Government through the Ministry of Petroleum Resources, working with private investors and the Delta State Government also being part of the project as the host State of the project. The gas city will initially host three major projects: a gas processing plant, a fertiliser plant and a petrochemical plant. There are other projects that will spring up thereafter.

By the end of the year the ground-breaking ceremony had still not taken place.

DANGOTE SIGNED $139 MILLION EPC CONTRACT WITH EIL FOR REFINERY PROJECT Africa’s richest man, Aliko Dangote’s plans to build a new refinery at the cost of $9 billion took a step forward with news that the Dangote Oil Refining Company of Nigeria had signed a contract worth $139 million with Engineers India Ltd (EIL). EIL will provide Project Management Consultancy (PMC) and Engineering, Procurement and Construction Management (EPCM) as well as commissioning services for the 400,000 BPSD (20 MMTPA) Petroleum Refinery and 600,000 TPA Polypropylene Plant. This project will be the largest single consultancy assignment for Indian firm, EIL. The main facilities of the project comprise of a Crude Distillation Unit, Single train Residue Fluid Catalytic Cracking Unit, Diesel Hydrotreating Unit, CCR unit, Alkylation Unit, Poly-Propylene Unit, Utilities and Offsites including captive power with other enabling infrastructure facilities. Crude and product handing facilities through Single Point Mooring (SPM) will also be integrated with the refinery which is now to be located in the Lekki Free Trade Zone, near Lagos.

The EPC contract award was soon followed by the announcement of a loan of $300 million from the African Development Bank (AfDB). Justifying the loan facility, the Bank said that both projects would produce for consumption in Nigeria and neighbouring African countries.

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GENESIS ELECTRICITY SIGNED CONTRACT TO SUPPLY 75MW GAS TURBINES TO PORT HARCOURT REFINERY Genesis Electricity Ltd signed a Memorandum of Understanding (MOU) with the Nigerian National Petroleum Corporation (NNPC) to supply three 25-mega watt capacity gas turbines to the 49-year old refinery. The three 25-megawatt (MW) trailer-mounted TM2500+ aero-derivative gas turbines will provide base-load and back-up power making it possible for the 210,000 barrels per day refinery to generate uninterrupted power supply.

This installation is one of the Federal Government’s initiatives for the rehabilitation of the nation’s refineries, which have been functioning at far below capacity for many years, mostly it due to inadequate power supply.

JULY - SEPETMBER IPMAN REVEALED PLANS FOR $3 BILLION REFINERIES IN KOGI AND BAYELSA STATES The Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) Bestman Inekwe, had announced plans for two new $3 billion refineries to be located in Kogi and Bayelsa States. Inekwe said that the organisation intends to partner with South American investors from Peru to build the refineries, which will have the capacity to process 200,000 barrels of oil per day and will take two years to complete.

Inekwe who revealed this during a visit to the Kogi State governor said he was hoping that they will get the licence quickly enough to enable them to meet up with their 2 year time frame.

By September, 1,000 hectres of land in the two States had ben acquired and the foreign investors had conducted the feasibility studies in August.

MIDSTREAM NEWS OCTOBER - DECEMBER NNPC SET UP COMMITTEE TO FAST TRACK ABUJA-KADUNAKANO GAS PIPELINE PROJECT Nigerian National Petroleum Corporation (NNPC) set up a Steering Committee for the Abuja-Kaduna-Kano (AKK) Gas Pipeline Project. The Steering Committee was given the mandate to accelerate the delivery of the project.

The AKK project will provide crucial transport of gas for power and manufacturing in the north of the country. The project, which is part of the Gas Master Plan, has already received the approval of the Federal Executive Council.

Group Managing Director (GMD) of NNPC, Dr. Joseph Dawha who had just been appointed at the time said the project was one of the country’s National Priority Projects and was a vital plank of the transformation agenda of the administration of President Goodluck Jonathan. Other projects, which are part of the Gas Master Plan, the OB3 gas pipeline project and the looping of the Escravos Lagos Pipeline System (ELPS) were currently progressing well he said. The Steering Committee for the AKK Project is expected to bring that project, which is lagging behind, up to speed.

SHELL NIGERIA GAS CAMPAIGNED AGAINST BUILDING ON GAS PIPELINES Shell Nigeria Gas (SNG) launched a campaign to alert members of the public of the dangers of encroaching on the pathway of gas pipelines. The campaign targeted its business areas in Ogun, Rivers and Abia States.

NPDC, SEPLAT JV AGREED TO INVEST $200M IN FIRST PHASE OF AZURA POWER PLANT Nigerian Petroleum Development Company (NPDC) and its joint venture partner, dually listed (London and Nigeria) Seplat Petroleum Development Company agreed to invest $200 million in the first phase of the $1billion Azura-Edo Independent Power Plant (IPP). President Jonathan recently flagged-off the first phase of the project,

which was the first fully privately financed IPP in the country. The power plant, which is located in the Ihovbor/Orior Odemwende communities of Edo State, will produce 450 megawatts (mw) of power with 120mmscf/per day of gas supply from the new gas processing facilities at the Oben Gas Plant.

SHELL COMPLETED CENTRAL PROCESSING FACILITIES FOR OTUMARA GAS PLANT Shell Petroleum Development Company (SPDC) completed the fabrication and integration of the Central Processing Facilities (CPF) for the Otumara plant. Upon completion the Otumara Associated Gas Solution Project will utilise 20 million standard cubic feet (20mmscf) of gas to generate six megawatts of electricity daily.

DANGOTE REFINERY COMPLETION PUSHED BACK TO 2018 The Operations Director for Petroleum Refining for Dangote Group, George Nicolaides revealed that the $9 billion refinery’s completion had been pushed back to 2018 from 2016, after admitting that the 2016 date was unrealistic. The project was also upgraded from a capacity of 400,000 barrels of oil per day to 500,000 bpd.

BRASS LNG PARTNERS AGREED TO TAKEOVER CONOCOPHILLIPS SHARE The partners in the Brass Liquefied Natural Gas (LNG) agreed to takeover the shareholding of ConocoPhillips in the project following the withdrawal of ConocoPhillips from Nigeria. The Chairman of the board of Brass LNG, Dr. Jackson Gaius-Obaseki said he was confident that with the renewed commitment of the partners to the development of Brass LNG, the final investment decision (FID) on the two-train $20 billion LNG project could be taken soon.

The Nigerian National Petroleum Corporation (NNPC) holds 49 per cent, while, Eni, the operator of the project, and Total each hold a 17 per cent interest. They now intend to split ConocoPhillip’s interest between them.

NLNG INCREASED PRODUCTION OF LPG The Nigeria Liquefied Natural Gas (NLNG) Limited increased its production of liquefied petroleum gas (LPG) at its Bonny facility in a bid to put an end to the shortage of cooking gas. The company said that the six-train LNG plant was now operating at installed capacity.

In a statement, the Chief Executive Officer of the company, Babs Omotowa confirmed the increased production, and urged the government to intervene in terminal operation and development, distribution and retail, promotion and awareness and incentives for full maturity of the domestic LPG market.

He said that the absence of a functional cylinder, poor transportation network and infrastructure, limited jetty availability and low-priority berthing given to LPG vessels, were responsible for the poor the market in cooking gas.

FEDERAL GOVERNMENT COMMENCED DESIGN OF $5BN TRANS-NIGERIA GAS PIPELINE The Federal Government revealed it had reached an advanced stage in preparations for the construction of the N5 billion Trans-Nigeria Gas Pipeline.

The 1,200-kilometre pipeline will deliver gas to the northern and eastern parts of Nigeria. The Group Executive Director, Gas and Power of the Nigerian National Petroleum Corporation, Dr. David Ige made the disclosure that design of the pipeline has already begun. The contract for the project, which is slated for completion in 2018, is expected to be awarded within the next few months.

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MIDSTREAM NEWS

MEETING NIGERIA’S REFINED PRODUCTS NEEDS: MODULAR REFINERIES BRING NEW HOPE With the announcement that the federal government has approved a new initiative for the licensing of modular refineries, we review Nigeria’s refineries to understand why nothing has worked and whether modular refineries now presents the way forward to satisfying our domestic petroleum products requirements.

Nigeria produces somewhere around 2.2 million barrels of oil per day, most of which is exported because the country does not have the capacity to refine the crude oil. As a result, over 80 per cent of Nigeria’s fuel consumption (about 30 million litres per day of PMS) is imported, feeding a large portion of our deficit. Add to that the drain on the economy from government subsidising the fuel and it seems inconceivable that nothing has been done about the situation for so long.

Now it seems that 12 years after 18 licences were granted to investors to build new refineries, none of which were ever built, the government has found a new way of thinking. They are going to encourage and support the building of modular refineries as a way to save the national coffers from the crippling burden of fuel subsidies.

NUPENG WANTS A STATE OF EMERGENCY ON THE NATIONAL REFINERIES Production at the national refineries are grinding to a halt with only the Port Harcourt Refinery showing any activity in the month of December at just 8.77 per cent of capacity.

The Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) has now called on the Federal Government to declare a state of emergency in respect of the nation’s refineries, stressing that the government’s inability to carry out turnaround maintenance of refineries for over 12 years has grave implication for the survival of oil and gas sector.

NUPENG’s National President, Comrade Igwe Achese said: “We demand that the Federal Government create a state of emergency on the nation’s refineries for Nigerians to benefit from actual price reduction, as we are tired of the successive governments’ empty promises on the over 12 years turnaround maintenance on the four refineries that are not working at full capacity.”

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WHY HAS THE TAM TO THE EXISTING REFINERIES NOT BEEN CARRIED OUT

BY THE GOVERNMENT? The Minister of Petroleum Resources, Diezani Alison-Madueke, recently tried to explain on a radio show why the four national oil refineries have still not undergone the turn-around-maintenance (TAM) that will restore them to their nameplate capacity. She explained that the problem was the level of decay at the plants. She said that when she assumed office in 2007 her tour of the refineries revealed a shocking level of dilapidation. Most of the units were obsolete and were unlikely to be able to produce again. After 20 years of not being maintained or changed she said, a replacement of the equipment was no longer possible because they were by then obsolete.

As a result, the original builders of the refineries were engaged to carry out a complete technical assessment to determine what would have to be done. That was four years ago. She explained that a timetable for the repair work was drawn up. The work was to be completed within 24 months and would take the refineries up to 90 per cent of their nameplate capacity. However, after prolonged negotiations on security, insurance, and labour costs, guarantees and warranties for post-repair maintenance with the Japanese company that built the refineries, it became clear that the cost would be prohibitive. It seems the TAM has now been shelved, at least for now.

MIDSTREAM NEWS WHY ARE THERE NO VIABLE GREENFIELD REFINERY PROJECTS IN NIGERIA? In a recent interview, the Chief Executive Officer of dually listed Seplat, Austin Avuru, gave his own opinion on this issue. The first point he made was about the importance of refining to the entire crude oil value chain. Without the right experience he believes it is almost impossible to succeed. Many of those who have so far received refinery licences, he pointed out do not have that experience.

The second point he made was about the kind of capital needed to set up a refinery. To build a 150,000 barrels of crude oil per day capacity refinery, you would need at least $3 billion. That means you would have need $500 million in equity to be able to get debt of $2.5 billion. No bank, he pointed out, will lend you that sum in a market where your product is controlled by a government fixed price and your only competitors are government refineries.

The only refinery project that he thinks has legs is Dangote’s proposed refinery.

He pointed out that Dangote found it

Austin Avuru, CEO, Seplat easy to raise funds from his existing businesses. However, he believes that once that one is built it will open the door to new refineries. He is hoping that Seplat

will benefit from that open door as they plan to become involved in the whole oil production value chain including gas processing.

ARE MODULAR REFINERIES THE ANSWER? At the end of the year, the federal government announced the establishment of a modular refinery initiative to ease local supply of petroleum products. After the failure of the government to get its refineries functioning and private initiatives for greenfield refineries, the government has now decided that modular refineries is the way forward.

The government has now come to believe that the short project cycle, low cost and flexibility for establishing modular refineries would encourage proper investment in refinery operation and minimise crude oil theft and operation of artisanal refineries. The government has approached several financial institutions to assist in funding operators. Details of the initiative and the criteria for application for licences are yet to be revealed by the regulatory agencies. Modular mini-refineries, from simple diesel production to more sophisticated cracking refineries, are becoming increasingly flexible. As such they provide a cost-effective supply option for crude oil producers and investors. Relatively low capital cost, speed, as well as ease of construction are some of the key advantages of a modular mini-refinery.

They are particularly workable when located in close proximity to crude supply, close to market with easy logistics for product movement and preferential credit

finance terms, possibly from development agencies.

Government incentives will usually come in return for initiatives to support local capacity development.

In a recent interview for This Day, Professor Godwin Igwe, the Director, Centre for Gas, Refining and Petrochemicals, Institute of Petroleum Studies, University of Port Harcourt agreed that simple modular refineries could solve the problem of fuel scarcity.

In the article, he said: “A modular unit specifically targets specific products, e.g., gasoline, kerosene, diesel, etc.

Adding a catalytic cracker unit will enable higher quality processing and profit margin. I think the main economic driver is the cost of buying the crude. It will become profitable if the entrepreneur could crack the bottoms to make more useful products. That’s the only way it could become profitable, in the long run. The addition of a FCCU or a hydrocracker significantly increases the yield of higher-valued products like gasoline and diesel oil from a barrel of crude, allowing a refinery to process cheaper, heavier crude while producing an equivalent or greater volume of high-valued products. In our own case with lighter, sweeter crudes, we might need only primary distillation capacity, which means less capital expenditure.

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MIDSTREAM NEWS

THE NATIONAL REFINERIES The four state-owned refineries in Port Harcourt, Warri and Kaduna have a combined capacity of 450,000 barrels per day. They are:

PORT HARCOURT 1 in 1965 Shell/BP built Port Harcourt I as a topping and reforming refinery with a distillation capacity of 3 million mt/yr (60,000 bpd). Port Harcourt 1, which is located at AlesaEleme near Port Harcourt is the old refinery and it is also known as the Area 5.

It is made up of the Crude Distillation Unit (CDU), the Platform Unit (CRU), the LPG Unit, as well as utilities section.

PORT HARCOURT 2: the second refinery at Port Harcourt was built as a complex refinery with a distillation capacity of 7.5 million mt/yr (150,000 bpd). Also located at Alesa-Eleme, the refinery came on stream in 1989.

It has a Crude Distillation Unit (CDU), a Naphtha Hydrotreating unit (NHU), a Fluid Catalytic Cracking Unit (FCCU), as well as Dimersol, Butamer Isomerisation and Alkylation units.

KADUNA REFINERY: the only refinery in the northern part of the country, the refinery is a complex refinery with a distillation capacity of 5.5 million mt/yr (110,000 bpd). In 1986, the design capacity of the fuels plants of the Refinery was successfully increased from 50,000 BPSD to 60,000 BPSD, bringing the total refinery installed capacity to 110,000 BPSD. In March 1988, the 30,000 MT/Yr. Linear alkyl benzene plant was commissioned.

WARRI REFINERY: located at Warri in Delta State, the Warri Refinery is a complex refinery with a distillation capacity of 6.3 million mt/yr (125,000 bpd). The refinery came on stream in 1978. It is managed jointly with a petrochemicals plant built in 1986 to produce 35,000 mt/yr of polypropylene and 18,000 mt/yr of carbon black.

2002 REFINERY LICENCES In 2002 the government granted licences to the following companies for the establishment of greenfield refineries: Akwa Ibom Refinery and Petrochemicals, Badagry Petroleum Refinery, Clean Water Refinery, IIaje Refinery and Petrochemicals, Niger Delta Refinery and Petrochemicals, NSP Refinery and Oil Services, Ode Ade Refinery, Orient Petroleum Resources Ltd, Owena Oil and Gas, Rivgas Petroleum and Energy,

Sapele Petroleum, Southland Associates, Southwest Refineries and Petrochemicals Company, Starex Petroleum Refinery Ltd, The Chasewood Consortium, Tonwei Refinery, and Total Support Refineries and Union Atlantic Petroleum. Only Niger Delta has managed to develop a refinery.

Niger Delta E&P: the company has a mini refinery at Ogbele with a current slated capacity of 1,000 barrels per day, which

generates revenues of US1m per month, according to the company. It is the first private refinery in Nigeria to receive an operating licence by the Federal Government and has the sole right to sell surplus diesel fuel to the local market.

The refinery is not complex, however, it does produce a range of refined products including diesel, kerosene and marine diesel. The company is planning, as part of a two – five year plan to expand capacity fivefold to 5,000bpd.

PLANNED REFINERIES Some of the refineries that are planned or under construction are the following: Orient Petroleum Resources: they were awarded a licence in 2002 to establish and construct a 55,000 barrels per day capacity refinery in Anambra State. In 2011, the company said it had completed detailed engineering, sourced the modules of its refinery and was planning to complete the refinery installation by the end of 2012. It has not yet been built.

Petroleum Refining and Strategic Reserve Ltd: in 2012, they signed a Memorandum of Understanding with US company, Vulcan Petroleum for the construction of 6 modular refineries at a cost of $4.5 billion. The deal was announced to great fanfare. The six

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refineries were to have a total capacity of 180,000 barrels a day and two of the six refineries were to be built within a year.

The refineries would be built in the US and shipped and re-assembled in Nigeria. Fast forward to 2014 and nothing has been heard of the project since.

Dangote Petroleum Refinery Company: the company which is part of the Dangote Group is planning a 400,000 bpd Green Field Refinery to be located in the Lekki Free Zone in Nigeria. The project includes a refinery, petrochemical and fertiliser plant. The refinery will produce petroleum products including diesel, kerosene and flurry. The petrochemical plant will produce polypropylene, while the fertiliser plant will produce urea and ammonia for use

in agriculture. Dangote said he does not intended to sell his products from the refinery at subsidised prices. He will sell at market price and it will be up to marketers purchasing the products, he said, to apply for and obtain their subsidies from the government. The EPC contract was awarded last year and it appears to be on track to start production in 2018.

IPMAN: towards the end of the year, Independent Petroleum Marketers Association of Nigeria (IPMAN) said they were planning to build two refineries at a cost of $3 billion. They are to be located in Bayelsa and Kogi states. A groundbreaking ceremony was held at the end of the year.

Not much is known however, about how they intend to raise the funding for the project.

MIDSTREAM COMMENTARY

STATE OF THE NIGERIAN REFINERIES Refining is a mature technology. It is governed by standards and specifications.

Nigeria has a nameplate refining capacity of 445,000 BOPD and produced only 95,300 BOPD of products in 2012, and has for years been heavily dependent on imports from outside, specifically Europe.

As far as can be ascertained, nothing has significantly changed since the Report of the National Refineries Special Task Force of August 1, 2012 chaired by Dr. Kalu Idika Kalu. The report concluded that “… the most pivotal of the root causes is that the current ownership structure and business model have failed to adequately provide for the safe and efficient performance of the refineries. They further concluded that the three Nigerian refineries have not been efficiently and safely operated and maintained for more than 15 years. During the same period they have not been able to refine the designed quantities of petroleum products. They have not operated as performance-oriented businesses and are plagued with severe plant maintenance and integrity issues, as well as irregular crude supply and products evacuation.

Furthermore, they are beleaguered by poor governance in a non-commercial operating structure, which is considered unsustainable....”

I have advocated on many platforms (www.profigwe.com) that there will be no development if we do not produce, manufacture, make things, design things, right here in Nigeria. I believe that a simple modular refinery, set up at strategic locations, could be a stop-gap measure to our product demand, hence reducing most of our immediate problem of fuel scarcity, thereby making life better for our people.

The modular unit should specifically target specific products, e.g., gasoline, kerosene, diesel, etc. In our own case with lighter, sweeter crudes, we might need only primary distillation capacity, which means less capital expenditure.

Setting up a modular refinery will enable employment opportunities to be created for our citizens because when you have a job, you could have schools to train your children, have banks, hospitals, grocery stores, carpenters, accountants, lawyers, all kinds of occupations to support a town, all through the manufacturing of a product that provides employment. Oil and gas value chain touches consumers through

To make this to happen, we need to design a strategy and policy to set up an energy bank to provide financing, taxable at low interest rate. My colleagues argue investors should buy crude at competitive market price. I will argue we sell crude oil to them at slightly subsidized price. If you legalize, then you stop bunkering because it becomes unprofitable for their sponsors.

They will become proud “owners” of a business, and kerosene, petrol (gasoline), diesel, will be everywhere, satisfying the demand in the country.

Professor Godwin Igwe thousands of products such as fuels (gasoline, diesel, jet fuel, heating oil and non-fuels (asphalt, lubricants, synthetic rubber, plastics, fertilizers, antifreeze, pesticides, pharmaceuticals, etc.).

Diversifying refined products from fuels only (PMS, AGO, Kero, LPFO) to value added feedstock for domestic manufacturing is vital to link the oil sector to the domestic economy and increase the contribution of the oil industry to GDP growth.

Many natural resource rich countries are diversifying and transforming their economies using the hydrocarbon value chain for wealth creation.

In Nigeria, diversification should include diversifying the energy mix (from oil to gas) and fuels to non-fuels. Diversification will result in wealth creation through employment generation, import substitution and GDP growth. The keys to successful transformation lies in four strategies namely: a) Create national focal point for developing industries beyond fuels; b) Clear fiscal system for midstream oil with fiscal rules of general application; c) Right incentives through price deregulation; d) Industrial parks with pre-investment in infrastructure by the State. An integrated approach to implementing the identified strategies is vital for the expected wealth creation to be realized.

To reduce unemployment, we have to turn the ‘illegal refineries’ into “legal refineries”.

The “illegals” already have the necessary raw production skills. We just need to provide guidance and training. The knowledge gap in distillation processes will be provided on appropriate standards, codes, specifications, and catalysis. This will in turn stop environmental pollution and degradation because all the refining fractions currently poured in rivers (depriving us of safe and reliable drinking water), will be fully utilized in some other process plants. Stopping pollution is very important, because having money is no guarantee of good health. By providing jobs and reducing unemployment, the Federal Government and 36 other states will then have enough money to fund various projects.

The issue here in Nigeria is clear: a) Prioritize and test the idea of modular refineries; b) set up a Refining and Petrochemicals Authority to have a focal point, and c) let illegal refineries become “legal artisanary refineries” by training them. It is sound reasoning. It is practicable. It is demonstratively a true paradigm shift for the good. We have just been given the green light to purchase a modular/pilot plant to use in training future Nigerian gas, refining and petrochemical engineers at the University of Port Harcourt, and we have produced our first batch of engineers (www.cgrpng.org). We expect the Federal and State Governments to use these new highly trained manpower than to look elsewhere for salvation.

Godwin Igwe is Professor and Director, Centre for Gas, Refining & Petrochemicals, Institute of Petroleum Studies, University of Port Harcourt. He is a World Bank McNamara Scholar, Fellow, American Institute of Chemical Engineers, and Fellow, Nigerian Society of Chemical Engineers.

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DOWNSTREAM NEWS JANUARY - MARCH

FUEL SCARCITY GRIPPED THE NATION Soon after the dust from the Christmas break settled, the Nigerian National Petroleum Corporation (NNPC) denied rumours of an impending petrol price hike. NNPC Acting Group General Manager, Group Public Affairs Division, NNPC, Omar Farouk, acted as queues began to from at petrol stations in Abuja and other cities across the nation.

that no one seemed to know exactly why the fuel shortage had occurred and there was no consistent statement from the regulatory agencies with some blaming pipeline breaches, while others blamed hoarding by marketers and marketers themselves blamed the government’s failure to make timely subsidy payments to importers.

In Abuja, stringent monitoring of petrol stations to ensure sales at the official selling price made matters worse as marketers chose not to deliver fuel to Abuja rather than be forced to sell at the official price.

The Petroleum Products Pricing Regulatory Agency, PPPRA also confirmed that there was sufficient stockpile of products.

Unfortunately all of that was not enough to stop the crippling fuel scarcity that gripped the nation by the beginning of March, threatening commercial activities. Motorists queued up in Lagos for about 3 or 4 hours to get petrol which by then was selling at an inflated price of between N100 and N150 per litre, well above the subsidized official price of N97.

The nation’s commercial capital was brought to its knees as mass transport buses went off the roads unable to afford the inflated price of petrol. What was particularly frustrating for motorists was

The fuel queues reduced after a week but by the middle of March, Lagos, Abuja and other capital city residents again began to experience the pain of fuel shortage. After the delivery of 197 truckloads of Premium Motor Spirit (PMS) to the two major cities the situation quietly returned back to normal.

PINNACLE OIL ANNOUNCED PLANS TO CONSTRUCT $250 MILLION MOORING FACILITY AT LEKKI FREE ZONE Lekki Free Zone got a significant boost after Pinnacle Oil announced plans to construct a $250 million mooring facility at Lekki Free Zone. The Single Point Mooring (SPM) and Conventional Buoy Mooring (CBM) facilities will enable tankers to load and offload gas or liquid products. Such moorings provide low-cost facilities for the rapid loading and discharge of crude oil and refined products imports and exports.

The facilities will also be able to accommodate very large crude carriers and will be able to handle 100 metric tonnes of product within 48 hours.

This will be a significant improvement on the 3 months it takes to discharge 100,000 metric tonnes of products.

Pinnacle Oil is constructing the facility in partnership with the China Petroleum Technology Development Corporation (CPTDC).

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DOWNSTREAM NEWS GALP ENERGIA SOLD NLNG CARGO TO PETRONAS Portuguese oil company Galp Energia sold 18 of the 30 Liquefied Natural Gas (LNG) cargoes it won in a recent tender from the Nigeria Liquefied Natural Gas Company (NLNG) to Malaysia’s

Petronas. It will receive 4-6 cargoes every year for 5 years under the term contract. With 18 sold, it means Galp has already sold cargoes for 3 of the 5 years.

Galp Energia’s two refineries in Portugal together account for 88% of Portugal’s annual petroleum product needs. Petronas had been involved in exploration in Nigeria but the project was abandoned in 2006.

APRIL - JUNE

NNPC AWARDED 2014/15 TERM CONTRACTS The results of the long awaited annual term contracts by the Nigerian National Petroleum Corporation (NNPC) were finally revealed, after applications were advertised in 2013. The results, which took effect from June 2014 for a year, were quite startling and showed that indigenous companies were favoured over Swiss trading companies that traditionally got the lion’s share of the awards. The contracts were worth about $40 billion based on oil prices at that time.

Indigenous companies that won the contracts unsurprisingly included Talveras and Aiteo. Aiteo, as part of a consortium, went on to bid for and won one of Shell’s onshore oil mining leases assets turning it from a downstream giant into a major

exploration and production company too.

Among the newcomers were Hyde Energy, Springfield and Barbedos Group. Swiss traders that lost out included Glencore Xstrata, Vitol, Trafigura and Gunvor, which have for many years, always been assured of getting contracts. Mercuria was the only Swiss trader to receive an award. Losers also included more recent recipients, state owned Chinese trader, Unipec, the trading subsidiary of Chinese refiner, Sinopec, as well as Socar, the state oil company of Azerbaijan. Other losers were West African state refineries from Burkina Faso, Ghana, Ivory Coast, Senegal and Sierra Leone.

The government’s determination to award most of the contracts to indigenous

companies means that the traditional buyers of NNPC’s share of Nigeria’s crude have to partner with indigenous companies to get the prized light crude that Nigeria produces. A great many deals were on the cards as trading houses scrambled to find local winners willing to turn over their allocations for a quick profit. The general consensus however was that the award to Nigerian companies was a move in the right direction for local content.

Nigeria normally allocates about 75% of its daily production for sale through term contracts that last for a year. The practice of awarding the lifting contracts to middlemen rather than direct to refineries, as is the case in many countries, has been criticised by some.

OPEC JUNE MEETING LEFT PRODUCTION UNCHANGED AT 30 MILLION BPD OPEC’s 165th Ordinary Meeting concluded in Vienna with the influential organisation, which pumps a third of the world’s oil deciding to leave output unchanged at 30 million barrels per day (bpd). The unanimous decision was largely expected considering the economic backdrop. In particular, the conference considered the projected global economic growth in 2014 to 3.4 per cent revised from 2.9 per cent in 2013.

US STOPPED NIGERIAN CRUDE IMPORTS The death knell finally sounded on the United States of America imports of Nigerian crude following the rise of shale oil and gas, which has the US hurtling towards self-sufficiency in oil and gas production.

The Minister of Petroleum Resources, Diezani Alison-Madueke confirmed that oil exports to the US are now practically at an end and that Nigeria had already begun to search for alternative markets in Asia, particularly India and China. India soon became the largest importer of Nigerian crude with news later in the month that it was importing 750,000 barrels per day, about 30 per cent of Nigeria’s daily production.

US production of oil had risen to about 8 million barrels per day by the end of 2014. It was importing just over 1 million barrels per day in 2005, dropping to about 449,000 in January 2012. Nigeria was the 6th largest supplier to the US in 2012, behind Canada, Saudi Arabia, Mexico, Venezuela and Iraq. At its peak, Nigeria was supplying 1.3 million bpd to the US. Nigeria exported just 51,000 bpd in January 2014 to the US.

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Mirroring this positive economic outlook, the conference also noted that world oil demand was expected to grow by 1.1 mb/d to average 91.2 mb/d in 2014. The bulk of this growth was expected to come from non-OECD countries although non-OPEC oil supply was also anticipated to rise this year by 1.4 mb/d to reach 55.58 mb/d.

The conference also considered oil prices, noting that the OPEC Reference Basket had remained fairly stable over the last two years or so, with annual averages ranging between roughly $105 and $110 per barrel.

In the past half-year, the Basket had averaged above $104 per barrel from January to May. The members agreed that this was a level that was acceptable to both producers and consumers. Little did they know what was coming as as oil prices tumbled to below half of that price by the end of the year.

DOWNSTREAM NEWS TOTAL LAUNCHED FIRST SOLAR-POWERED SERVICE STATION IN WEST AFRICA Total Nigeria Plc launched the first solar powered service station in West Africa at its Onigbagbo service station in Ikeja. The company said that the station came at a time when the world over is looking for ways to meeting increasing energy demands.

Total also announced that an environmental makeover for its services stations with the launch of a new service station concept, T-Air. The company said the makeover involved more energy-efficient sales outlet that blended harmoniously with the environment. The company’s 500 nationwide service stations should get the new look by 2017.

RYSTAD ENERGY PREDICTED OIL SUPPLY TO GROW FASTER THAN DEMAND Independent oil and gas consulting services and business intelligence data firm, Rystad Energy began predicting that oil supply would grow faster than demand. Rystad Energy said it came to that conclusion after comparing the IEA demand outlook in which the IEA revised its supply outlook with supply estimates from the Rystad Energy global upstream database, UCube.

Rystad said its estimates were based on its bottom-up analysis of 30,000 fields and 2,500 oil companies in 150 countries.

Rystad Energy said it forecast North American tight liquids production to pass 10 million barrels before 2020 making North America a net exporter of seaborne crude and petroleum products within three years.

IEA RELEASED OIL MARKET REPORT FOR JUNE The International Energy Agency released its Oil Market Report (OMR) for June. In its highlights of the report for June said non-OPEC production growth of 2.1 mb/d in the year through May compensated for OPEC declines. In addition, accelerating global demand would reach 94 mb/d by end of year.

The report forecast a 1.3 million barrel-per-year (mb/d) rise in global oil demand for this year, to 92.8 mb/d, a modest acceleration on 2013 as the macroeconomic backdrop improved. Global oil demand, the report said, would increase sharply from a low of 91.4 mb/d in the first quarter to a high of 94 mb/d in the fourth. What the report did not seem to predict was the oil glut that was about to send prices crashing over the course of the next few months.

VANDALS TARGETED NNPC PIPELINE AT TARKWA BAY A deadly explosion occurred when vandals ruptured a Nigerian National Petroleum Corporation (NNPC) at popular leisure destination, Tarkwa Bay. Unverified witness reports said that many were killed and inured in the ensuing inferno.

The pipeline in question conveys petroleum products from Atlas Cove at Apapa to Ejigbo and Mosemi depots in Ogun State.

The fire was brought under control after raging from midnight when the incident occurred till about 10am the next morning.

JULY - SEPTEMBER SIRIUS PETROLEUM TERMINATED OFF-TAKE AGREEMENT WITH GLENCORE Nigeria focused oil and gas company, Sirius Petroleum, terminated its exclusive off-take agreement with Glencore even before production had started on its Ororo Field in Ondo State. The London Stock Market Alternative Investment Market (AIM) listed firm, announced that the off-take arrangement with Glencore for its crude was at an end by mutual consent.

Glencore was replaced by BTG Pactual Commodites (UK) for the marketing of crude oil from the offshore Ororo Field its owns in partnership with Ondo State owned Owena Oil and Gas and Guarantee Petroleum Company, as well as other marketable products from other fields owned by Sirius Petroleum.

Sirius said it would now focus on getting to first oil in Q1 of 2015 after entering into a Financial and Technical Services Agreement (FTSA) with Owena Oil and Guarantee Petroleum in the marginal oil field, which is located in Oil Mining Lease 95 in October 2011.

OANDO REVEALED PLANS FOR PARTIAL DIVESTMENT OF DOWNSTREAM BUSINESSS Oando confirmed that it was planning to partially divest from ts downstream business. In the face of speculation that it was divesting to help fund its ConocoPhillips acquisition, the company explained that it partial divestment was a strategy they had looked at many years ago and which had been approved by the board. The company said: “In line with our strategy, we received shareholder approval to partially divest from our downstream business a few years ago and are constantly exploring the best approach to executing this objective.”

Head of Corporate Communications, Ainojie Alex Irune, said: “The Oando Group remains focused on its commitment to continued value creation for its shareholders through its strategic plan to increase its investment in the higher margin upstream, to spur long-term growth for the future of the company.”

In the running for the purchase of the assets was Forte Oil while Aiteo, which has its hands full with the acquisition of Shell’s OML 29 denied being interested in the acquisition of Oando’s downstream business.

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DOWNSTREAM NEWS OCTOBER - DECEMBER NNPC ISSUED WARNING AGAINST FAKE LETTERS OF AUTHORISATION FOR OIL LIFTING The Nigerian National Petroleum Corporation (NNPC) issued a warning to members of the public regarding the proliferation of fake letters of authorisation from NNPC for the lifting of crude oil. In a statement, the Group General Manager, Group Public Affairs Division of the NNPC, Ohi Alegbe, said there were fake letters circulating, in particular one, which referred to contractual arrangements with a Lavi International Corp.

The statement said that Lavi International Corp was not one of the awardees of a term contract for the 2014-15 period and therefore had no such authority.

FG ISSUED SUPPLEMENTARY IMPORT PERMITS TO MARKETERS The Federal Government issued supplementary permits for the import of 600,000 metric tonnes of gasoline in October under the third quarter import program, the Petroleum Products Pricing Regulatory Agency said. This was as stopgap measure as the importers awaited Petroleum Ministry approval for the Q4 allocations.

With these permits, local trading companies Oando, Conoil, Aiteo, NIPCO and Folawiyo Petroleum, each got allocations to import 90,000 mt of gasoline in October. Other smaller fuel marketers got permits to import 45,000 mt of gasoline each.

TRAFIGURA REVEALED COMMITMENT TO TRANSPARENCY AND ACCOUNTABILITY Swiss commodity trader, Trafigura, announced its commitment to a new initiative by the Extractive Industries Transparency Initiative (EITI), which is designed to encourage the disclosure of payments to governments by commodities traders. One of the world’s leading commodity trading firms, Trafigura said it would support EITI’s efforts, as it became the first commodity trading company to join the 90 oil, gas and mining companies already supporting EITI. The new policy commits the company to disclosing Trafigura’s payments to governments in EITI compliant and candidate countries beginning in 2015.

Trafigura’s decision to make these commitments follows engagement with stakeholders, including the Swiss Government.

Trafigura is one of the largest traders of Nigerian crude oil. Last year its reputation took a battering, along with other Swiss commodity traders, when it was accused by an international financial watchdog, the Berne Declaration (BD), of colluding with the Nigerian National Petroleum Corporation (NNPC) to engage in fraudulent practices in the sale of Nigerian crude oil.

PETROLEUM MINISTER PAID MARKETERS’ ARREARS TO AVERT CHRISTMAS FUEL SCARCITY As the Christmas holidays approached, the prospect of another fuel scarcity began to emerge prompting the Minister of Petroleum Resources, Diezani Alison-Madueke, to take action. The Minister revealed that outstanding arrears of over $100 million owed to petroleum marketers would be paid to them before the end of November. She was already in consultation with the Minister of Finance and the Central Bank of Nigeria (CBN) Governor of the Godwin Emiefele, to discuss how to keep the banks from withdrawing credit lines to petroleum marketers on account of the delay in the payment of subsidy arrears.

NIGERIA TOPPED WORLD OIL THEFT LEAGUE TABLE Nigeria was losing 60,000 barrels of oil per day to oil theft according to the Nigeria National Petroleum Corporation (NNPC).

Other sources put the figure much higher and in July, an Oilprice.com report put Nigeria at the top of the oil theft league table for the world with an estimated 400,000 barrels of oil lost to oil theft every day. The oil price website reported that Nigeria was ahead of Mexico, Iraq, Russia and Indonesia, which came second to fifth respectively according to the site. The website pointed out that the staggering level of theft in Nigeria (which equates to about $1.7 billion monthly losses) represented about 7.7 per cent of its GDP. Oil theft in Mexico, which came second was said to have reached between 5,000

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and 10,000 barrels per day after growing 30 per cent annually for a few years. For Indonesia, which came fifth, the problem was around 2,000 to 3,000 barrels per day. All of these oil theft losses pale into insignificance when compared with estimates of daily losses of somewhere between 60,000 and 400,000 per day in Nigeria.

In spite of the worldwide condemnation of the staggering level of oil theft in Nigeria, the government appears not to have either the will or the power to stop the illegal operations. It is a hard battle to fight given the kinds of returns the oil thieves are getting from their illicit activities. With one group admitting that it was netting profits of

$7,000 per day, it is no wonder that the ill equipped Joint Task Force, Nigeria’s frontline agency tasked with curbing oil theft, is nearly powerless to make any impactful gains in the battle with oil thieves. Some members of the JTF have even been accused of being in cahoots with the “princes and principalities” - as Shell Country Chair, Mutiu Sumonu has described them - who control the oil theft activities.

All the foreign assistance that was promised, including from the G8 nations, the European Union, United Kingdom and United States of America, are yet to happen as Nigeria grapples helplessly with the seemingly insurmountable problem.

DOWNSTREAM NEWS

THE OPEC BASKET PRICE IN 2014 Remi Aiyela, Editor-in-Chief of NOGintelligence, traces the decline of the Organisation of Petroleum Exporting Countries (OPEC) basket price over the course of 2014.

OPEC member nations together supply 40 per cent of the world’s oil consumption and together they own about 80 per cent of crude reserves in the world. OPEC production is currently capped at 30 million barrels of oil per day. They meet quarterly to set production caps for their members.

The year began in buoyant mood with the price of OPEC basket of twelve crudes looking like it would remain above $100 for the year. Although there was a continuing downward trend since February the previous year when the basket price achieved $109.35, few were troubled by this trend.

By the end of January, the basket price had climbed to $105 after falling steadily through most of January. The basket price averaged out at $104.71 for January.

In February, the OPEC basket reached $107 as production fell due to a drop in production in Saudi Arabia, the ongoing political conflict in Libya and the oil theft in Nigeria. In the first week of March, OPEC production dropped by 11,000 barrels per day to an average of 29.877 million barrels per day, the lowest it had been since June 2011. The basket price average for the month was $105.38.

In March, on the demand front, OPEC made an upward revision in its demand estimates for the year as economic recovery continued to stoke global fuel consumption. The 12-country organisation, which provides 40 per cent of world oil consumption, said it would have to pump an additional 100,000 barrels per day more than its forecast in last month’s report to satisfy the demand. It seems no one was paying attention to what was happening across the pond in the US. The basket price continued to fall averaging out at $104.15 By the beginning of April, OPEC prices had soared, after Shell’s force majeure declaration on the Forcados blend cut OPEC

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supplies. Although the basket price stood at to $101.57 on the 3rd of April, the cut in supplies enabled prices to hold steady for the month amid a falling trend, averaging $104.27 over the month.

By the end of May, prices were once again seemingly on an upward trajectory. Prices were expected to stay high, buoyed by the International Economic Agency (IEA)’s forecast that demand for oil this year would be slightly higher than expected. The Agency was urging OPEC to raise production sharply to meet what they predicted would be record global demand. Little did they know what was yet to come. Although it reached $107 on the May 22, the basket price averaged at $105.44 for the month.

OPEC oil ministers met on the 11th of June to decide whether to leave output at 30 million per day or increase supply following the International Energy Agency forecast of growing world demand for oil. Prices were staying high as large-scale energy investors predicted that prices would stay above $100. According to new research by RBC Capital Markets, 76 per cent of institutional buyers and energy firms surveyed expect crude oil prices to remain above $100 for at least the next year. This was hot on the heels of the EIA reported that U.S. crude oil supplies were down by about 3.4 million barrels.

No one was yet predicting what was about to happen next month and the basket prices remained high for the month, spiking to $110.26 on the 19th of June as Iraqi crude supplies were threatened by IS fighters.

The growing threat of civil war in Iraq kept oil prices high and the basket price averaged at $107.89 for the month.

After Abdullah Al-Badry OPEC Secretary General, Abdullah Al-Badry moved to quash rumours that Iraq production had declined as a result of the political situation in the

country, oil prices started coming down as nerves were calmed by the assurances.

At the beginning of July, the OPEC basket price stood at $107.17 but by the July 10, it had dropped to $105.16. The drop in price continued a third consecutive week of losses with nearly $4 dollars lost in 3 weeks of trading. The basket price averaged $105.61 for July.

In August was when reality began to hit as the basket price dropped below $100 to $99.94 on the 15th of August, for the first time in over a year. The basket price average for the month was $100.75.

In September, the downward slide continued, with the basket price standing at $95.93 on September 10. There was now rising concern among OPEC member nations about the situation, with many blaming oversupply from the USA and the recovery of supply from Libya, Nigeria and Iran, for the price drop. Not even the geopolitical tensions in the Middle East were able to reverse the downward trend.

For the first time analysts began pointing to a softening in world demand for oil against an oil glut that was driving the trend. China saw its import growth fall for a second month creating some concern among traders, at a time when some 30 million barrels are sitting in floating storage waiting to go somewhere. NOGintelligence predicted at the time that the trend was likely to continue for some time. The basket price average for September was $95.98.

In October, the trend continued as the blame game continued. Meanwhile, OPEC Ministers were continued trying not to show too much concern and certainly, in Nigeria, the worrying trend was being downplayed.

Privately however, everyone was sitting up and taking notice as the basket price stood at $92.31 dollars a barrel on October 1, a 2-year low as Nigeria celebrated its 54th

DOWNSTREAM NEWS year of independence. Nigeria would have to brace itself as we predicted that worse was yet to come. The basket price averaged at $85.06 for the month of October.

As OPEC Ministers prepared for their next meeting scheduled for the 27th of November it seemed the question was not “To cut or not to cut?” but “Exactly how low to go?” OPEC Secretary General Abdalla El-Badri, admitted that a production cut was likely, saying: “I think our target next year will be lower, may be by 500,000 barrels,” although he quickly added that this was an outlook not a decision.

Reuters blamed oversupply from OPEC for the weak oil prices as their survey that showed that OPEC output reached a 2-year high in September, averaging 30.96 million barrels per day (bpd). The boost in OPEC production came mainly from Libya, which saw production rise by 280,000 bpd, whilst Nigeria increased production from 2.006 million barrels per day in August to 2.030 million barrels per day in September. Saudi Arabia, Angola and Iraq also kept production levels up.

To add to the problem, the growth of the United States shale production, which seems to have gone unnoticed for so long, was also being blamed. US production was at its highest in 3 decades while the International Monetary Fund (IMF) lowered its estimates for global economic growth for 2014 and 2015. “Tight oil” production had turned the U.S. into the world’s largest producer of liquid petroleum.

Analysts had changed their tune and were saying that supply had now outstripped the

“IT HAD TURNED INTO A GAME OF CHICKEN. WHO WAS TOUGH ENOUGH TO BRAVE IT OUT? OPEC NATIONS OR THE US TIGHT OIL PRODUCERS?”

demand forecast for OPEC crude. In addition a slowdown in manufacturing in China and Japan, as well as the strong dollar, were said to be helping to keep prices depressed. The International Energy Agency (IEA) estimated that there was about 1 million barrels of worldwide daily oil production in excess of demand currently.

Among OPEC member nations there was some disagreement about what to do next.

Some nations called for an immediate cut in production whilst others wanted to tough it out in the hope that it would soon improve. Saudi Arabia said it would not cut production, having decided on a strategy of gaining market share and along with Kuwait, Iran, Iraq, and the United Arab Emirates, it cut prices sparking fears of a price war that would drive prices down even further.

Venezuela called for an emergency meeting of OPEC to discuss the issue and Iran also joined the voices calling for an immediate production cut.

Generally, however, it was roundly expected that OPEC would cut output at their next scheduled meeting, but if prices continued to tumble they would have to call an emergency meeting before then to consider cutting production sooner.

Member nations continued to hope for a turnaround before their meeting with many refusing to believe that it would hit $80, the point at which many of the petrodollar-reliant nations would begin to find themselves unable to balance their budgets. For Nigeria, as prices slipped towards the budget benchmark of $77.5 a barrel, the country had reason to be seriously worried.

Led by Saudi Arabia, OPEC nations were hoping that the high production cost of tight oils - as much as $90 per barrel as against $10 to $25 per barrel for conventional oil - would make it uneconomic for the level of shale production to continue at current

rates in the US. It had turned into a game of chicken. Who was tough enough to brave it out? OPEC nations or the US tight oil producers?

As producing nations continue to watch the free falling prices, in Nigeria, the Federal Government ruled out borrowing, even though the 22 per cent drop in crude prices over the last four months could erode external reserves by about $4.5 billion. The Federal Government says it was putting contingency plans in place to avert any shocks on the economy from the decline in oil prices.

Throughout November, as the price of oil continued its relentless slump the situation for Nigeria looked dire. The Excess Crude Account (ECA) had been continuously plundered as the government tried to meet its high spending budget in the face of oil prices that were never envisaged when this year’s budget was set. The ECA now stood at about $2 billion after the government took about the same amount out last month to meet its expenses.

Government Ministers continued to speak in optimistic tones. Trade and Investment Minister, Olusegun Aganga said to Bloomberg in an interview: “Through a coordinated approach between the monetary and the fiscal side of things, I think we can wade through this.” Analysts did not agree, calling for a government re-think and some belttightening fiscal measures. Of course, in a pre-election year, the prospect idea was never going to be an attractive one.

So far, Saudi Arabia’s game of chicken with the US hadn’t worked as US production continued to surge, in spite of the low market price for oil.

An uncoordinated approach by OPEC members who supply 40 per cent of the world’s oil requirements was not helping

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DOWNSTREAM NEWS matters. All eyes were on OPEC as the next scheduled meeting on 27 November approached.

Oil prices went into freefall after the shock decision by OPEC at its 166th meeting in Vienna on Thursday to leave production output unchanged at 30 million barrels.

Petro politics was behind the risky game that could backfire badly on some of the members of the group. The decision sent oil prices tumbling, with OPEC basket prices falling nearly $3 from $73.70 the previous day to $70.80..

OPEC member nations had been largely expected to cut production, in an effort to halt the slide, as they had done in the past when oil prices crashed. This time, however, the OPEC gathering, influenced by its largest producer, Saudi Arabia, took a different view, choosing to maintain market share. The decision to maintain production at current levels, taken in a tension filled meeting in which only 4 of the 12 member nations were initially in favour of maintaining production, was a bid to outlast the US, whose shale oil boom was being held partly to blame for over supply in the market. The others were persuaded to go along with the Saudi position, in a bid to maintain a united front.

The OPEC basket price averaged $75.57 for November.

By December, the situation continued to worsen, averaging $59.46 for the month.

This game of chicken was a risky strategy for OPEC, as only those with deep pockets would be able to ride out the storm. Saudi Arabia, for example, had enough funds in its external reserves to keep it going before it woukd start to feel the pinch. That is not the case with many producers who based their budgets on much higher prices. Nigeria and Iran, for example, were in for a bumpy ride, especially as some analysts were predicting that oil prices could fall as low as $60.

invest to meet future demand - were vital for world economic wellbeing.

Externally, however, OPEC was presenting a united front. Although confident that the strategy would play out, there was the option of an emergency meeting in February to reconsider the strategy, if prices continued to go south. If things went according to plan, the member nations of OPEC could expect to have their next meeting in June next year, at which time they would hope that further investment in shale production would be become questionable paving the way for oil prices to begin to stabilise.

At the end of December, the average price of OPEC basket price had tumbled to $59.46.

In a communiqué following the meeting, recording its concern over the rapid decline in oil prices in recent months, the Conference agreed that stable oil prices - at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to

OPEC BASKET PRICE MONTHLY AVERAGE 2014 January February March April May June July August September October November December

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The communiqué continued: “Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011. As always, in taking this decision, Member Countries confirmed their readiness to respond to developments, which could have an adverse impact on the maintenance of an orderly and balanced oil market.”

$104.71 $105.38 $104.15 $104.27 $105.44 $107.89 $105.61 $100.75 $95.98 $85.06 $75.57 $59.46

The OPEC Basket Price Introduced on 16 June 2005, is currently made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

OPEC MEMBERS 2014 EARNINGS THE U.S Energy Information Administration (EIA) released the estimated earnings of Organization of the Petroleum Exporting Countries (OPEC) countries in 2014.

$700 billion

$821 billion

OPEC estimated earnings in 2014 (excluding Iran – sanctions made it difficult to estimate earnings)

OPEC earnings in 2013

$72.24 billion

$84 billion

Nigeria estimated earnings in 2014

Nigeria estimated earnings in 2013

Represents a drop of $121 or 14% over last year

Represents a drop of $11.76 billion or 15% over the last year

DOWNSTREAM NEWS

OIL PRICE SHOCK Per Magnus Nysveen, Head of Analysis, Rystad Energy, makes his predictions for the year 2015, after the oil supply shock of 2014.

2015 WILL BE EXTRAORDINARILY TOUGH FOR OIL COMPANIES From 2011 to 2014, we observed the largest oil supply shock in history: US shale oil production was adding more than 1 MMbbld every year, or more than the growth of global demand for oil. OPEC faced a risk of critical reduction in market share. An initial cut of 2 MMbbld from the collective quota during 2014 and 2015 would be needed to keep oil prices at the 2011-2013 level of 110 USD/bbl. On the other hand, such drastic cuts would obviously support a continuous growth of US shale oil production as less than 5% of shale oil recoverable resources are extracted to date (Rystad Energy estimate).

The pain limit for US shale drillers was reached when US oil prices dropped below 50 USD/bbl. In the first week of 2015, with fresh and down-sized budgets, oil companies reduced horizontal drilling for oil for the first time also in the core plays Bakken, Eagle Ford and Permian where rig count went down from 700 rigs to 675 rigs last week. A minimum of 500 rigs drilling horizontal oil wells on these plays is needed to keep production flat on the plays.

Without the invisible hand of OPEC, how fast will oil supply adjust and what is the new balancing oil price?

Based on our UCube database with 65,000 global fields, acreages, discoveries and prospects, we have looked at several ways to adjust the oil supply by oil companies. Analysis has shown that the three main effects are: 1) Reducing in-fill drilling offshore and onshore, the production effects are significant first at 50 USD/bbl, and up to 1 million barrel per day from offshore mature fields is at risk 2-3 years from now.

Onshore, we expect Iraq will ease the requirements on the oil companies for production growth in 2015, and in Russia oil production could fall by at least 2-3% per year over the next 2-3 years.

2) Reducing rig count and completion activity on shale plays (Fig2: Average WTI breakeven oil price by play). In the US, shale production could still grow with WTI oil prices around 50 USD/bbl and after a 50% cut in capital spending during 2015. Actual spending cuts will be determined by

the reduced cash flows, lower completion unit costs and high-grading of well locations.

We would conclude that US shale may not alone provide the expected floor for oil prices in this bear cycle, but possibly it may provide an effective ceiling in a coming bull cycle (Fig3: Total liquid production from NA shale per month and Brent oil price).

3) Delaying the development of new projects. This should be the most significant effect in the longer term, with 150 BUSD worth of projects at risk from sanctioning delays only during 2015. Already at 80 USD/bbl, we could see 2 million barrels per day at risk from offshore additions by 2020, and one million barrel per day onshore.

The synthesizes of the above analyses indicates a strong resilience of non-OPEC production in the short run, but also that oil prices far below 90 USD/bbl are clearly unsustainable in the long run. So with sustained low oil prices and largely committed capex, we expect 2015 to be an extraordinarily tough year for the international oil companies.

Fig1: Global liquids supply cost curve (Source: Rystad Energy research and analysis)

Fig2: Average WTI breakeven oil price by play (Source: UCube by Rystad Energy, Rystad Energy research and analysis)

Fig3: Total liquid production from NA shale per month and Brent oil price (Source: UCube by Rystad Energy, October 2014)

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GAS NEWS

NLNG RECORDED ITS LANDMARK 3000TH EXPORT CARGO In January, Nigeria LNG Limited (NLNG) exported its 3000th cargo of Liquefied Natural Gas (LNG) from its Bonny Island Terminal in Rivers State. The milestone was achieved on the 7th of January as the cargo bound for Marmara LNG Terminal in Turkey set sail on board LNG Lokoja, one of NLNG’s vessels.

The cargo was for Botas Petroleum Pipeline Corporation.

The first export of LNG cargo from NLNG was on October 9, 1999. Since then, NLNG has grown to become Africa’s largest single private sector industrial investment, supplying about 7 per cent of total world LNG demand.

OANDO ANNOUNCED PLANS TO EXTEND GAS PIPELINE DISTRIBUTION NETWORK IN LAGOS In January, indigenous energy group, Oando Plc, announced that it is to extend the natural gas distribution network of its Greater Lagos Area franchise from Ijora to the Marina Central Business District. The project, which will be executed by one of its subsidiaries, Gaslink Nigeria Limited, in conjunction with Oilserv Limited, will increase Oando’s current gas distribution capacity of 85mmscf/d, of which 55mmscf/d is currently utilized. The pipeline extension project is approximately 8km in length, 12 inches in diameter, and is expected to take approximately 18 months to complete.

OWEL LINKSO SUBSIDIARY ACQUIRED EGBAOMA PLANT In July, an Owel Linkso Group subsidiary acquired Egbaoma Gas Plant thanks to an investment from leading investment firm, African Capital Alliance (ACA). Gas Train Limited (GTL), set up by Owel Linkso Group bought the 30 million scf per day gas processing plant located in the gas-rich Niger Delta region. GTL said it planned to refurbish, optimize and ultimately expand the plant. When completed, the plant will process currently flared associated gas from the Asuokpu/Umutu Field, which is estimated to contain 1P gas reserves of over 150 bcf. The processed output from the plant will be: dry gas (for power generation), Liquefied Petroleum Gas (LPG) (used primarily as cooking gas), Propane (for power generation and absorption chillers) and Natural Gas Liquids (blended with Crude Oil).

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NEW DOMESTIC GAS TARIFF ANNOUNCED In October, the Minister of Petroleum Resources announced the promised upward review of the price for domestic gas. It was to take effect from the 1st of January 2015, bringing the price for domestic gas to $2.5 per thousand cubic feet. The previous price was $1.5 per MCF, making it extremely uneconomical for exploration and production (E&P) companies to invest in the production of gas and its expensive infrastructure.

The new price was announced by the Group Executive Director (GED) of Nigerian National Petroleum Corporation (NNPC), in charge of gas and power, David Ige, after getting approval from the Nigerian Electricity Regulatory Commission (NERC). An increase in gas output is critical for the Federal Government Transformation Agenda’s gas-to-power initiative. This requires a

lot of investment by operators who say they will not produce more than they are obliged to under their domestic gas obligation terms unless the price is right.

The government was hoping that $2.50 would be just about right to encourage an increase in investment in gas production but without making the cost of gas to electricity generation companies so high that they have to pass on the price hike to consumers. It remains to be seen whether operators will find the $2.50 price attractive enough to begin to look at producing for the domestic market. It is certainly a far cry from the $5 to $7 that the same gas will fetch on the US market. So far, the slow price increments, to $1 in 2010, then $1.5 in 2011, and $2 in 2013 have not provided enough of a sweetener to change the mind set of producers.

GAS NEWS DAMAGED NIGERIAN GAS PIPELINE AFFECTED ELECTRICITY SUPPLY IN GHANA In September, a damaged Nigerian gas pipeline brought misery to Ghanaians as the country began load shedding of electricity due to a reduced supply of gas from Nigeria. The Ministry of Energy and Petroleum in Ghana said it had to do so as the problem had affected power generation output. The problem was exacerbated by other internal issues including low levels of water in two of the nation’s dams and maintenance work on some power plants.

Meanwhile, the Nigerian National Petroleum Corporation (NNPC)’s Group Executive Director, Gas and Power, Dr. David Ige explained that major interventions were being implemented to grow supply to meet the full requirements of both West African Gas Pipeline (WAGP) and the domestic power market. He expected that much of the net supply shortages would be addressed within the next 4-5 months.

According to Dr Ige, since 2013, there had

been some supply disruptions affecting gas shipped through the WAGP. These, he said, were largely due to force majeure events like the outage of the Escravos-Lagos pipeline and other secondary pipelines such as the Trans-Forcados pipeline.

NNPC and its joint venture partners were fined $10 million in 2013 for supply shortages to Ghana and it was looking like the fine would be repeated for 2014 given the continung supply shortages.

GAS PRODUCTION IN NIGERIA Nigeria reserves of associated and non-associated gas are estimated to be in excess of 180 Trillion (standard) cubic feet (Tcf). The country is ranked ninth in terms of proven natural gas reserves in the world, with enough reserves to sustain current production rates for over 60 years. However, geologists believe that there is a lot more gas to be found (potentially up to 600 Tcf), but only with deliberate exploration for gas rather than gas found during exploration for oil.

The Nigeria Liquefied Natural Gas six-train plant is the biggest gas consumer and exporter of gas in Nigeria with its current daily consumption of almost 3.5 bcfd, equivalent to the total daily consumption of industrialised countries like the Netherlands. In the period 1999–2013, NLNG converted 119

bcm (billion standard cubic metres) or 4.2 tcf (trillion cubic feet) of Associated Gas (AG) to export products (equivalent to more than 1460 LNG and NGL cargoes) which otherwise would have been flared. The plant is credited with helping Nigeria to reduce gas flaring from over 60% to less than 25%.

Other demands on the use of Nigeria’s gas are domestic power generation, domestic utilities and industries, as well as export NGL and gas projects such as the West African Gas Pipeline Company (WAGPco). In addition there are two new LNG plants planned, the Brass LNG project, which is looking increasingly likely and the OKLNG project. In addition, a 7th train for the NLNG plant is also planned and awaiting the Final Investment Decision (FID).

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GAS COMMENTARY

THE 2014 GAS YEAR Gbite Adeniji, Principal Consultant at Advisory Legal Consultants, an energy lawyer with a strong interest in gas, gives us his thoughts on the year’s gas developments.

“THE EMERGENCE OF A PARALLEL MARKET PROVIDES A GREATER INCENTIVE FOR GAS PRODUCERS TO NOT ONLY MEET THEIR OBLIGATIONS BUT TO NOW SELL THEIR GAS ON THE BASIS OF MARKET LED ARRANGEMENTS”

2014 in gas, closed with a significant gas supply–to-demand gap in Nigeria in spite of the mandatory Domestic Gas Supply Obligations (DGSO) imposed on gas producers by the National Domestic Gas Supply and Pricing Regulations.

Most affected by this supply gap are the several investors who acquired power plants previously owned by the Federal Government and the National Integrated Power Project (NIPP) without ensuring effective gas supply arrangements in place.

Paradoxically, several trillions of cubic feet of gas remain stranded in PSC concessions. The low hanging fruit for Nigeria’s energy crises is the associated gas being routinely flared or re-injected in the PSC blocks with on-going oil production in the face of the huge domestic demand for gas and overwhelming interest by third parties to develop the infrastructure and utilization projects that might harness these wasted resources. A longer – term solution is of course the long awaited Gas Development Agreement that will clarify the terms upon which PSC contractors may participate

in the development of gas resources discovered in PSC concessions. In the prospect of the significant decline in the country’s crude oil revenues upon the crash of global oil prices far below assumed levels vis a vis huge domestic gas demand, the case for an urgent resolution of the gas terms is ever more urgent.

The Minister announced in October 2014 that effective January 1, 2015 gas prices to the power sector will increase to $2:50/ mmbtu while gas transportation tariffs will increase from $0.30/mmbtu to $0.80/ mmbtu.

However, the real news is that a parallel market for gas emerged in 2014. This involves the sale of gas outside the DGSO construct at market-based prices. The emergence of a parallel market provides a greater incentive for gas producers to not only meet their obligations but to now sell their gas on the basis of marketled arrangements. It is definitely a good incentive, and it works for all.

Gbite Adeniji

GAS REPORT

l Petroleum

ri a Nig e

Total LN G

t io n a

15%

49%

l el

25.6%

Cor p o ra ti

Sh

The company has two wholly–owned subsidiaries: Bonny Gas Transport (BGT) Limited and NLNG Ship Management Limited (NSML).

Na

It is owned by four shareholders, namely, the Federal Government of Nigeria,

represented by Nigerian National Petroleum Corporation (49%); Shell (25.6%); Total LNG Nigeria Ltd (15%) and Eni (10.4%).

ian

Nigeria LNG Limited (NLNG) was incorporated as a limited liability company on May 17, 1989 to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export.

10.4%

er

THE COMPANY

Ni g

on

NLNG FACTS AND FIGURES

Eni

d Lt

THE PLANT In November 1995, a Final Investment Decision (FID) was signed by the shareholders to build a Liquefied Natural Gas (LNG) plant in Finima, Bonny Island in Rivers State. n Construction at the plant site commenced in February 1996 n Production of LNG from Train 2 commenced on September 15 1999 n Train 1 came on stream on February 27, 2000. n Train 3 was completed and came into operation in November 2002. n Train 4 came on stream in November 2005 n Train 5 was started up in February 2006. n Train 6 became operational in December 2007.

With six trains currently operational, the entire complex is capable of producing 22 Million Tonnes Per Annum (mtpa) of LNG, and 5 mtpa of NGLs (Liquefied Petroleum Gas (LPG) and Condensate) from 3.5 Billion (standard) cubic feet per day (Bcf/d) of natural gas intake.

Plans for building Train 7 that will lift the total

production capacity to 30 mtpa of LNG are currently progressing with some preliminary early site preparation work initiated. Further work awaits an FID by the shareholders.

NLNG has become a reliable supplier of LNG in the Atlantic Basin, serving the European, North American and Far East markets.

The Plant is built on 2.27 sq.km of largely reclaimed land in Finima, Bonny Island. The main elements of the facilities already in operation are: n Six LNG processing units (trains) with a total nameplate processing capacity of 22 MTPA

n Diversified Gas Supply (Associated Gas & Non-Associated Gas) and six main dedicated gas transmission pipelines with four of them located on-shore n Four LNG storage tanks, each with a capacity of 84,200 cubic metres n A common fractionation plant to process LPG n A common condensate stabilisation plant n Three Condensate storage tanks, each with a capacity of 36,000 cubic metres n Four LPG refrigerated storage tanks, each with a capacity of 65,000 cubic metres (two each for propane and butane) n 10 gas turbine electricity generators with a combined capacity of more than 320 MW n Two LNG export jetties; one of which also exports LPG, and the other also exports Condensate, with a combined capacity of more than 400 loadings per year n 24 LNG ships dedicated to the service of NLNG n A Materials Off-loading Jetty n A Passenger Jetty /terminal n A Residential Area (RA) covering an area of more than two 2 sq.km

CONTRIBUTION TO THE ECONOMY The company’s contributions to the Nigerian economy cannot be overstated.

NLNG has converted about 119 Bcm (billion standard cubic metres) or 4.2 Tcf (trillion cubic feet) of Associated Gas (AG) to exports as LNG and Natural Gas Liquids (NGLs), thus helping to reduce gas flaring by Upstream Companies from over 60 per cent to less than 25 per cent.

NLNG delivered $13 billion in dividends in the last thirteen years and has paid over $18 billion on gas purchases from oil producing companies. Nigeria’s overall earnings from NLNG is now over 70 per cent, comprising

of 49 per cent dividend, 30 per cent CIT, and other taxes. Since it began operations, the company has contributed about 4% of Nigeria’s Gross Domestic Product (GDP).

In 2014 it will pay corporate income tax in excess of N220 billion by far the highest in Nigeria and Sub-Sahara Africa.

NLNG has also provided more than 2,000 jobs each construction year. Overall, the major sub-contractors employed about 18,000 Nigerians in technical jobs in and about 500 expatriates played mainly supervisory roles and were understudied by the Nigerians they worked with.

SOME MILESTONES October 9 1999:

EXPORT OF FIRST LNG CARGO February 4 2001:

EXPORT OF 100TH LNG CARGO June 25 2003:

FIRST SHIPMENT OF LPG October 2010:

EXPORT OF 2000TH LNG CARGO January 2014:

SHIPMENT OF 3000TH LNG CARGO

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We are a West Africa focused Investment Manager that advises on investments, and manages funds on behalf of institutions, private clients, the African diaspora and retail investors.

Track Record

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FINANCIAL NEWS JANUARY - MARCH FHN 26 SECURED $150 MILLION LOAN FROM ACCESS BANK FHN 26’s plans for oil mining lease (OML) 26, which it won in a Shell divestment received a boost after they concluded terms for a $150 million Senior Secured Term Loan from Access Bank. Executive Director and Chief Operating Officer of FHN 26, Femi Bajomo, said the finance would enable it to fund capital expenditure. They are planning to drill new wells with the intention of ramping up production capacity within 18 months.

AFC AGREED TO UNDERWRITE $65 MILLION LOAN FACILITY TO DEPTHWIZE The Africa Finance Corporation reached a deal to underwrite a $65 million loan facility for indigenous drilling contracting company, Depthwize Nigeria Limited. The amount is part of a $100m senior secured term loan facility, which the company said in a statement that it would use for the acquisition and upgrade of swamp rigs. JP Morgan is the comandated lead arranger on the transaction.

Depthwize is a contractor for shallow water and swamp barge drilling rigs and was planning to acquire more rigs with the capacity to drill beyond 30,000 feet depth.

The Managing Director, Depthwize, Mr. Uche Dimiri, said the new rigs would enhance the company’s access to new swamp drilling opportunities in the Niger Delta.

OANDO SECURED $800 MILLION TO COMPLETE CONOCOPHILLIPS ACQUISITION Oando Energy Resources (OER) secured $800 million in loans, which enabled it to complete the acquisition of the choice ConocoPhillips Nigerian business.

Oando was announced as the winner of the competitive bid for the assets in December 2012. It then embarked on a fund raise for the acquisition, which it said would cost a net price of $1.5 billion.

Oando had already put down a deposit of $450 million. They secured: a) a $350 million corporate facility agreement with a syndicate of Nigerian lenders, as well as FBN Capital Ltd and FCMB Capital Markets Ltd as the

GTB INCREASED MART RESOURCES TERM LOAN TO $175 MILLION

Mart Resources said it had been able to secure an increase in its $100 million facility with Guaranty Trust Bank Plc. The company said it had been able to arrange an increase of its existing secured term loan credit facility to US$175 million.

The increased facility was to be used to fund field development activities on the Umusadege field, as well as its commitments in the construction of Umugini pipeline. The company also said it wanted to have some money left over in the kitty to fund new acquisitions.

The secured loan facility has a term of five years and bears interest at 90 days LIBOR plus 4% (floor of 8.25%), which is unchanged from the terms of the Company’s prior facility with Guaranty Trust Bank PLC.

mandated lead arrangers. FBN Capital was the facility agent and financial modelling bank, while FCMB was the technical bank. First Trustees Nigeria acted as security trustee in the deal. The facility is for 72 months from the date of first draw down. Interest rate is LIBOR plus 9.5 per cent for the first 57 months, going up to 10.5 per cent thereafter. b) a $450 million reserves based lending by a group of Nigerian and international banks including Standard Chartered Bank, BNP Paribas and the Standard Bank of South Africa Ltd. Standard Chartered was the facility agent and

security agent in the senior secured facility deal. Interest rate is LIBOR plus 8.5 per cent.

In addition to the funding above, on the 28th of January 2015, Oando announced a private placement on the Toronto Stock Exchange where it is listed. The offering consisted of 35,070,063 common shares of the Company and 17,535,051 common share purchase warrants raising gross proceeds of $50,000,000.

The rest of the funding was to come from a convertible loan from Oando Plc, the 94.6 per cent owner of OER.

SEPLAT ANNOUNCED IT WOULD LIST ON LONDON STOCK EXCHANGE Early in 2014, Nigerian independent, Seplat Petroleum Development Company announced its plans to dually list in London and Nigeria, making it the first indigenous company to do so when the listing was complete. The company, confirmed its intention to proceed with an initial public offer (IPO) of its Ordinary Shares. Seplat said it would apply for admission of its Ordinary Shares to the standard listing segment of the Official List of the London Stock Exchange’s main market and to the Official Trading List of the Nigerian Stock Exchange. The company was expecting to raise $550 million from the IPO. Seplat has been extraordinarily successful.

Formed in 2009, it acquired a 45 per cent participating interest in, and was appointed operator of, a portfolio of three onshore producing oil mining leases

(OMLs) 4, 38 and 41 located in the Niger Delta. In June 2013, via a wholly-owned subsidiary, the Company entered into an agreement for the acquisition of a 40 per cent participating interest in the Umuseti/ Igbuku marginal field located within OPL 283 in the Niger Delta.

In 2013, Seplat averaged a gross 51,300 barrels of oil per day (bpd) in production from its 3 OMLs having grown production from 13,900 bpd in 2010, while gas production in 2013 was 99 million standard cubic feet per day (“mmscfd”).

Seplat is hoping to take production up to 85,000 bpd by the end of 2016. Total working interest oil production for the company was 8.4 million barrels for the year ended 31 December 2013, equivalent to average daily production of 23.1 million bpd.

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FINANCIAL NEWS APRIL - JUNE

SEVEN ENERGY CLOSED $170 MILLION PART FINANCE FOR ACQUISITION OF OANDO GAS COMPANY Seven Energy International Limited sealed a deal with FBN (UK) Ltd and Ecobank Nigeria for a $170 million 5-year facility for its subsidiary Acugas Ltd. The facility was to be used to finance Seven Energy’s whole-scale acquisition of Oando’s East Horizon Gas Company Ltd. East Horizon operates a 128km, 120mmscf, 18-inch natural gas transmission and distribution pipeline (‘the Pipeline’) traversing the AkwaIbom and Cross River States. It also has a gas sales agreement to supply up to 25MMcfpd, increasing to 50MMcfpd in 2016, under a 20 year “take-or-pay” agreement expiring in 2032. They paid a total consideration of up to $250 million.

CAMAC ENERGY RAISED $270 MILLION IN EQUITY FUNDING CAMAC Energy said it was pursuing further additions to its exploration portfolio in East and West Africa after successful raising $270 million in equity investment from South African Stateowned company, the Public Investment Corporation (PIC) representing approximately 30% ownership interest in CAMAC after completion of the transactions. Established in 1911, PIC is one of the largest investment managers in Africa, managing assets of over US$140 billion, and manages funds on behalf of the Government Employees Pension Fund in South Africa.

CAMAC Energy, founded by Nigerian, Dr Kase Lawal, is the operator of OMLs 120 and 121 in which it has a 100 per cent interest. The company is listed on the New York Stock Exchange and recently listed on the Johannesburg Stock Exchange as part of the deal with PIC. Prior to the deal with PIC, CAMAC Energy had entered into an agreement to acquire additional interests in its wholly owned subsidiary, Allied Energy, which enabled it to get a 100 per cent economic interest in the production sharing contracts covering Oil Mining Leases (OML) 120 and 121 offshore Nigeria. To acquire the interests, CAMAC Energy issued 497,454,857 shares of common stock, paid US$170 million in cash and issued a US$50 million convertible subordinated note.

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SEPLAT LISTED IN LONDON WITH MARKET CAPITALISATION OF $1.9 BILLION After many months of preparation, leading Nigerian oil and gas firm Seplat finally listed on the main board of the London Stock Exchange. It sold 143.2 million shares to investors at £2.10 pounds per shares, giving the company a market capitalisation of $1.90 billion. Conditional trading of its shares began in London on the 9th while formal admission and unconditional trading is expected on 14 April.

Seplat chose to list simultaneously on the Nigerian Stock Exchange offering 26.4 per cent of its shares in the combined market debut. The shares are priced at N576 per share. Seplat says its intentions are to raise $500 million dollars on the two markets. Seplat, which was founded in 2009 by business-men, Austin Avuru and A.B.C. Orjiakor, says it has the option to issue an additional 10.33 million shares to investors within 30 days. A leading indigenous producer, the company currently has around 60,000 barrels per day of production.

SEAWOLF OIL SERVICES WENT INTO RECEIVERSHIP The Asset Management Corporation of Nigeria (AMCON) put Seawolf Oil Services into receivership over the company’s debts. Michael Igbokwe, SAN who was appointed as Receiver/Manager of the oil service company issued a Notice of Appointment of Receiver in which he stressed that the company remained a going concern and that there was every intention to ensure its viability.

In 2009, the company took delivery of two rigs built for it at the MIS Sharjah shipyard in Dubai under a $254 million contract. One of the rigs was the first offshore jack-up drilling rig ever built in the Middle East region. The two rigs with the capacity to operate in water depths of up to 92 metres (300 feet) arrived in Nigeria early in 2010 to join their other rig, the Delta Queen, which arrived in Nigeria only the year before.

The new rigs were said at the time of arrival in Nigeria to be valued at $508 million. The Delta Queen went to work for Conoil, while Onome was deployed to Addax. The Oritsetimeyin took part in a number of contract bids and won two of them.

With the rapid purchase of the vessels, many were surprised at how quickly the company was able to raise finance. Formed in 2007, it received a $260 million bridge facility from First Bank, which enabled it to purchase the rigs. Much needed cash flow did not come in time to pay off the facility, and so the bridge loan was converted into a medium term loan repayable in 9 years. Charges were taken over the company’s assets for the new $586 million and N588 medium term loans and N12 billion custom bond. This became the bank’s largest credit exposure representing about 28.45 per cent of shareholder funds.

After AMCON was established in 2010, it was determined that Seawolf’s indebtedness to First Bank, to the tune of N100 billion by then, though “largely performing” would be taken over because “they could potentially pose a risk.” First Bank was compelled to sell the loan to AMCON.

FINANCIAL NEWS CAVERTON LISTED ON THE NIGERIAN STOCK EXCHANGE WITH $196 MILLION CAPITALISATION Caverton Offshore Support Group Plc made history as the first oil services company to list on the Nigerian Stock Exchange (NSE). The service company, which owns two subsidiaries, Caverton Helicopters and Caverton Marine, listed with a market capitalisation of just under N32 billion (about N196 million) after an initial offering 3.35 billion shares of 50 kobo each. The shares

were listed at N9.50 and just after the listing investors traded 5.549 million shares worth N52.734 million in 42 deals.

Caverton’s net income rose to N1.88 billion in 2013 from N1.36 billion the previous year while revenue rose to N18.6 billion from N16.1 billion.

JULY - SEPTEMBER FORTE OIL JOINED THE RANK OF HIGHPRICED STOCKS Forte Oil joined the rank of high-priced stocks, following the latest review of prices of stocks.

The review followed the introduction of a pilot programme for the NSE’s new market structure. Under the programme, which is intended to deepen the market and improve liquidity, brokers no longer need to have a volume of 50,000 shares to move the price of high priced stocks up or down. They now need just 10,000 shares to do so. The programme is now permanent.

Explaining further, the statement said: “These high priced stocks are securities that have traded an average of N100 or more per share in four out of the last six months period.”

The pilot programme commenced with nine stocks: Dangote Cement, Guinness Plc, Nestle Plc, Nigerian Breweries, SIM Capital Fund, Skye Shelter Fund, Nigerian Energy Sector Fund and Total Plc. Lafarge Cement became the 10th stock on the programme.

The strong debut showing of Seplat Petroleum Development Company took it straight in, as it was priced above N100.00 at the time of listing on the Exchange.

Forte Oil Plc was the 12th stock to be added to the programme.

OIL AND GAS SECTOR EXPECTED TO GROW JUST 2.3 PER CENT PER YEAR A report by McKinsey Global Institute, the business and economics research arm of McKinsey, which was established in 1990 to develop a deeper understanding of the evolving global economy, found that Nigeria’s oil and gas sector was expected to grow just 2.3 per cent per annum at best in the period from now till 2030.

With the right reforms in place, said McKinsey, Nigeria could increase production from the current 2.35 million barrels per day (bpd) to 3.14 million bpd - bad news however for the

government, which has been talking for many years of a target of 4 million bpd by 2020. Based on this, analyses, the government target continued to look more and more unrealistic.

The good news however, was the prediction that natural gas could grow as much as 6 per cent per year, adding $13 billion to GDP by 2030.

That means that the oil and gas sector, which McKinsey found was still crucial to the economy, could, in total, contribute $108 billion per year by 2030, up from $73 billion in 2013.

SIRIUS PETROLEUM RAISED $20 MILLION FOR ORORO FIELD DEVELOPMENT Sirius Petroleum, an independent oil company listed on the Alternative Investment Market (AIM) of the London Stock Exchange raised $20 million conditionally. The funding was to be used to finally begin the development of the offshore Ororo marginal field, located in OML 95. The fund raise was achieved by the conditional placing of 63,530,215 Ordinary Shares and Subscription of up to 326,333,333 new Ordinary Shares, being an aggregate of up to 389,863,548 new Ordinary Shares at 3 pence per share to raise up to £11,695,906 (approximately

US$20,000,000) before expenses.

The company said it would use the funding to drill an initial well in the field, which is estimated to cost $25,100,000. The company was therefore also seeking further funding to meet the remaining well cost.

OANDO PLC ANNOUNCED SALE OF 60 MILLION SHARES IN OER Oando Plc put 60 million of its directly and indirectly held 746 million shares in Oando Energy Resources (OER) up for sale. OER, which is listed on the Toronto Stock Exchange (TSX) announced that a wholly-owned subsidiary of Oando Plc had filed the required notice of intention to sell up to 60 million shares of OER through the TSX facilities. Oando said the proposed sales were intended to encourage market liquidity.

Most of Oando’s interest in Nigerian oil production licences are now held

by OER.

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FINANCIAL NEWS

CAMAC CLOSED $100M LOAN FROM ZENITH BANK FOR OYO DEVELOPMENT Johannesburg and New York Stock Exchange listed oil and gas exploration company, CAMAC Energy secured a five-year $100 million loan from Nigeria’s Zenith Bank for the development of its Oyo Field located offshore in Oil Mining Leases (OMLs) 120 and 121.

The facility was a five-year senior secured term loan providing initial borrowing capacity of up to $100 million. U.S. dollar borrowings under the term loan facility will bear interest at the rate of LIBOR plus 7.5%, subject to a floor of 9.5%. The security package for the term loan facility included a legal charge over OMLs 120 and 121 and an assignment of proceeds from oil sales.

Proceeds from the term loan facility will be used for the further expansion and development of OMLs 120 and 121 offshore Nigeria, including the Oyo Field.

CAMAC Energy also listed on the Johannesburg Stock Exchange after entering into a definitive agreement for a $270 million equity investment by South African State-owned company, the Public Investment Corporation (PIC). CAMAC was required to list on the Johannesburg Stock Exchange as part of the deal with PIC. Prior to the deal with PIC, CAMAC Energy had entered into an agreement to acquire additional interests in its wholly owned subsidiary, Allied Energy, which enabled it to get a 100 per cent economic interest in the production sharing contracts covering Oil Mining Leases (OML) 120 and 121 offshore Nigeria. To acquire the interests, CAMAC Energy issued 497,454,857 shares of common stock, paid US$170 million in cash and issued a US$50 million convertible subordinated note.

OIL AND GAS FIRMS’ INDEBTEDNESS TO NIGERIAN BANKS STOOD AT N2.45 TRILLION

The Central Bank of Nigeria (CBN) released its Financial Stability Report, which showed that the indebtedness of oil and gas firm to Nigeria banks stood at N2.644 trillion at the beginning of the year.

The report revealed that total bank loans and advances to the various sectors of the economy grew by 13.9 per cent to N10.043 trillion at the end of December 2013. The oil and gas sector recorded the highest growth rate, with a share of 24.4 per cent, followed by manufacturing at 12.9 per cent and the general sector at 11.6 per cent.

With oil prices in a downward trend, the report warned that the continuing decline in oil revenues as a result could elevate market risks in 2014. The report stated: “Notwithstanding the stable rates, the continued decline of foreign reserves and decrease in oil receipts due to challenges in the oil sector, coupled with possible foreign portfolio investment reversals following the tapering of the US quantitative easing programme, could elevate market risk.”

NSIA TO INVEST $100M IN GAS TO POWER PROJECTS The Nigeria Sovereign Investment Authority (“NSIA”), Nigeria’s sovereign wealth fund, signed a commitment with Seven Energy, to invest at $100 million in gas to power projects. The investment was to be made through NWIA’s Gas to Power Funds managed on behalf of Nigeria’s Debt Management Office (“DMO”). The commitment for an investment of at least $100 million in aggregate principal amount

of senior secured dotes due in 2021 was to be issued and placed privately by Seven Energy Finance Limited.

NIGER DELTA E&P PLANNED $450M CAPITAL RAISE THROUGH PUBLIC OFFER Successful Nigerian independent, Niger Delta Exploration and Production (NDEP) announced plans to raise $450 million through a “public offer or special placement of shares.” The company said it intends to use the funds to redevelop and ramp up production in Ogbele field in OML 54, develop its newly acquired Omerelu gas field in OML 53, increase the capacity of their gas plant on Ogbele, refinance existing debt and look at new projects and acquisitions.

50

The Company’s portfolio includes a 100 per cent interest in Ogbele marginal field; an 18.75% participating interest in the onshore producing OML 34 in 2012; a 100% participating interest in the onshore Omerelu Field located within OML 53 and currently under appraisal; and a 6% participating interest in OPL 227.

Other assets are a 25,000 barrels per day (“Mbopd”) flowstation; a 1,000 bpd mini refinery (Diesel Topping Plant), which

is currently the only privately owned and licensed producing refinery in Nigeria; a 100 MMscf/d gas processing plant (“Ogbele Gas Plant”); and a 20 km 12” gas pipeline built to deliver gas from Ogbele through the NLNG manifold at Rumuiji to the Bonny NLNG plant.

FBN Capital Plc and Chapel Hill Denham were appointed financial advisers for the fundraising, which was to be done on local and international markets.

FINANCIAL NEWS OCTOBER - DECEMBER JACKA RESOURCES GRANTED HALT PENDING NIGERIA UPDATE Australian Stock Exchange (ASX) listed Jacka Resources, which owns a 5 per cent net revenue interest in oil mining lease (OML) 113 on which the Aje field is located was granted a trading halt by the ASX. The trading halt was to remain pending an announcement to the market relating to an update on the Final Investment Decision on the Aje Field, offshore Nigeria (licence OML 113).

Jacka holds a 2.667 per cent participating interest in the licence, a 6.675 per cent contributing interest and a 5.0006 per cent revenue interest in the Aje Field. In August a competent persons report confirmed 23.4 million barrels of gross 2P oil reserves for the Aje Field. This gives Jacka booked net 2P reserves of 1.3 million barrels of oil, with the company looking to book a further 12.1 million barrels of oil equivalent (boe) contingent resources, an increase of 1.6 million boe.

AFREN’S REVIEW FOUND $400M PAYMENTS TO ORIENTAL ENERGY BROKE LISTING RULES Afren’s independent review into certain transactions undertaken by its former chief executive officer, Osman Shahensha concluded that two of the transactions were in breach of the London Stock Exchange listing rules.

Law firm, Willkie Farr & Gallagher (UK) LLP hired by Afren, to look into the payments found that they were in fact loans and as such the transactions should have been disclosed under disclosure rules. Instead they were hidden in the company’s books as transactions in the ordinary course of business.

According to the WFG review, the transactions that breached the rules were a payment of $100 million in 2012 and another of $300 million in 2013 to Oriental Energy Resources, Afren’s partner in the Ebok Field.

Oriental denied that the transactions were loans explaining that it had entered into a Forward Sale of Crude Oil Agreement with Afren in July in prepayment of oil. Oriental had agreed to sell approximately one million barrels of its future oil production to Afren thereby permitting Afren to book those reserves in 2012.

The second payment represented payment in arrears of Oriental’s Profit Oil and the other half of which was the prepayment of approximately four months of Oriental’s Profit Oil through year-end 2013.

Afren said in a statement that it had notified the Financial Conducts Authority (FCA) of the breaches and would make the full report available to the FCA.

RENCAP RATED E&P COMPANIES IN HIGH GROWTH POTENTIAL GROUP Leading international investment banking and research organisation, Renaissance Capital, rated oil exploration and production (E&P) companies in Africa high within companies with growth potentials.

In its report entitled “African Oil and Gas, Think Local, Be Selective” RenCap said there were upside potentials in most of the African E & P companies that should necessitate investment considerations.

LEKOIL DENIED SPECIAL PLACEMENT TO RAISE $37.5M Africa-focused exploration and production company, Lekoil issued a statement denying media reports that it is set to raise $37.5 million through a special placing of 33,000,000 ordinary shares. Various media organisations had reported that the company was hoping to raise the funding for the development of Otakikpo marginal field in which Lekoil acquired a 40 per cent stake earlier this year. The Alternative Investment Market (AIM) listed company, which currently holds interests offshore Nigeria and offshore Namibia, said it had no such plans at that time.

Eight African oil company stocks comprising of Afren, African Oil, Caverton Offshore Support Group Plc, Eland Oil & Gas, Lekoil, Mart Resources,

Oando Energy Resources, Savannah Petroleum and Seplat Petroleum and Development Plc were covered by the report, out of which Seplat and Lekoil whose target prices for the stocks imply 50-100 per cent upside potential, were among the top three.

Lekoil was expected by RenCap to post one the highest returns in the medium term. Seplat was also enjoying prominence, according to the report, because it had the biggest upside risk to its valuation from possible M&A transactions. The report also said the African exploration and production (E&P) universe spanned 27 companies with a combined market cap of $30 billion.

MART RESOURCES INCREASED ITS TERM LOAN WITH GTB TO FUND OML 18 SHARE Mart gave details of how it arranged its own financing for its share of the Shell divested oil mining lease (OML) 18. To fund its share of the closing cash consideration, Mart arranged to increase its existing secured term loan credit facility with Guaranty Trust Bank from $175 million to $232.5 million. The increased secured loan credit facility has a term of five years and bears interest at 90 days LIBOR plus 4% (floor of 8.25%),

which interest rate is unchanged from the terms of the Company’s existing facility with GT Bank.

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FINANCIAL REPORT

OIL & GAS COMPANY IPOs:LSE, The prolific yield from the Niger Delta has got stock markets around the world sitting up and taking notice.

Here, we compare the listing requirements of four of the most popular exchanges where companies are successfully raising funds for Nigerian oil and gas field development.

MAIN BOARDS Listing Listing Requirements Requirements

JSE

LSE

TSX*Mining

NSE

"TSX Non-exempt Exploration and Development Stage"

"TSX Non-exempt Producer"

TSX Exempt

A

B

C

Share Capital

£2.9m

£700 000 and working capital for 12 months

£1,072,780

Adequate funds to bring property into commercial production

Adequate working capital to carry on the business.

Appropriate capital structure.

£10.4m

£11.5m

n/a

Profit History

3 Years (PBT)

3 Years audited financials

Three years of proven and probable reserves

Three years of proven and probable reserves

Three years of proven and probable reserves

3 year operating trade record

3 years or core investor has a minimum of 3 years.

3 years or core investor has a minimum of 3 years.

Pre- Tax Profit

£875k

Historic revenue earning record that supports at least 75% of business

18 months projection of sources and uses

18 months projection of sources and uses

"£160,917 pre-tax earnings. £375,473 pre tax cash flow. "

Cumulative pre-tax profit of at least £1.04m for the last 3 years. A minimum of £347k in two of these years.

£2.01m cumulatively for at least one or two years

No pre-tax profit requirement. Mkt cap of no less than £13.9m on listing (£107m for dual listings), calculated using listing price and issued share capital

Shareholder spread

20%

25%

20%

20%

none

20%

20%

20% (10% for dual listings)

Number of Shareholders

300

n/a

300

300

300

300

300

300

Sponsor/DA

Sponsor

Sponsor

Sponsor

Sponsor

None

None

None

None

Publication in the Press

Voluntary

Voluntary

Voluntary

Voluntary

Voluntary

Yes

Yes

Yes

Number of Transaction categories

2 (Threshold 30%)

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Initial Listing Fees

Min £76 (less than £29 152) and max of £158 463 (more than £2 915m)

Min £7 396 (less than £5m) and max of £427 971 (more than £500m)

"App fees: £5 363 Min of £5 363 (less than £2,681,950) and max of £107,278 ( more than £53,639,000)"

"App fees: £5 363 Min of £5 363 (less than £2,681,950) and max of £107,278 ( more than £53,639,000)"

"App fees: £5 363 Min of £5 363 (less than £2,681,950) and max of £107,278 ( more than £53,639,000)"

App fee: 0.3% of market cap. Listing fee: Graduated, £695 - £14 603.

CSCS Eligibility fee:0.0125% of market cap

App fee: 0.3% of market cap. Listing fee: Graduated, £695 - £14 603.

CSCS Eligibility fee:0.0125% of market cap

App fee: 0.3% of market cap. Listing fee: Graduated, £695 - £14 603.

CSCS Eligibility fee:0.0125% of market cap

Annual Listing Fees

0.04% of average market capitalisation with a minimum of £2 307 and a maximum of £16 034

Minimum of £7,467 and maximum of £23,851

"Minimum of £6,436 Maximum of £59,002"

"Minimum of £6,436 Maximum of £59,002"

"Minimum of £6,436 Maximum of £59,002"

Minimum of £657 and a maximum of £14 603

Minimum of £657 and a maximum of £14 603

Minimum of £657 and a maximum of £14 603

Directors Training

Not required

Not required

Not required

Not required

Not required

Not required

Not required

Not required

WHICH STOCK EXCHANGE?

Exchange rate as at the 26th of January 2015

LONDON STOCK EXCHANGE London Stock Exchange is home to approximately 170 international oil & gas companies, worth a combined £569 billion, including more than half of the top 15 global integrated oil & gas producers, a unique characteristic that sets it apart from other exchanges, which tend to cater predominantly to domestic markets. As a result, London sees much higher average daily trading volumes and London’s deep pool of international liquidity continues to underpin the health of the UK oil & gas sector.

London’s high standards of corporate governance and regulation further support this type of industry, in which companies face complex scenarios

52

working across multiple jurisdictions, regulatory regimes, and local practices that need to be complied with.

2014 saw the first Nigerian company, the independent oil & gas exploration & production business, Seplat, simultaneously dual list equity shares in London and Nigeria, demonstrating the additional strengths and diversity of London’s markets. Our markets saw a surge in listing activity in 2014, with 138 new flotations raising a total of £16.9 billion, a seven year high for IPOs in London and the fourth highest year on record for money raised on AIM, £2.8 billion.

Ibukun Adebayo, Co-Head Emerging Markets, Equity Primary Markets

FINANCIAL REPORT

JSE & TSX, NSE COMPARED JUNIOR BOARDS AltX

AIM

ASeM

TSXV*Mining

JOHANNESBURG STOCK EXCHANGE

TSXV Tier 1

TSXV Tier 2

£117k

NOMAD assesses suitability.

Working capital for 12 months unless investing company, that must raise minimum £3m in cash

n/a

Adequate working capital for 18 months plus 107,278 in unallocated funds.

Adequate working capital for 12 month plus 53,639 in unallocated funds.

None

No trading record but if business less than two years old, strategic shareholders have lock in clause

Two year operating track record

None

None

n/a

n/a

Provide a comprehensive plan of the company's business prospects covering a period of no less than 2 years.

n/a

n/a

10%

NOMAD assesses suitability

15%

20%

20%

100

n/a

51

200

250

DA

NOMAD

DA

Sponsor

Sponsor

Voluntary

Voluntary

Yes

Voluntary

Voluntary

2(Threshold 50%)

n/a

n/a

n/a

n/a

Min £78 (less than £141 860) and max of £1 951 (more than £11m)

Min £7 409 (less than £5m) and max of £83 581 (more than £250m)

App fee: £348. Listing fee: £695 CSCC Eligibility fee:0.0125%

"App fee: £1 340 Min of £4 022 and max of £21 456 "

"App fee: £1 340 Min of £4 022 and max of £21 456 "

£1 870

£5 899

n/a

"Min £2,789 Max £48 275"

"Min £2,789 Max £48 275"

Not required

Not Required

Required

Not required

Not required

We would like to thank Tamsin Freemantle and the Johannesburg Stock Exchange for their assistance in drawing up this comparative chart.

TORONTO STOCK EXCHANGE Why do E&P and oilfield services companies choose to list on TSX or the TSX Venture Exchange? n Canada provides an economically stable, well regulated and knowledgeable market for the sector. n Canada is a major oil province, with the 3rd largest reserves in the world - this creates a huge body of financial, economic and industrial expertise for the sector. n Toronto has more publicly listed oil and gas companies than any exchange in the world (337). Our market share is 30% n Our markets offer oil and gas markets unrivalled access to capital, secondary market liquidity and

global visibility. n Toronto offers industry-specific regulation and multiple entry points, tailored to the requirements of the oil and gas industry n Toronto has more oil industry analysts than any other exchange in the world. n The TSXV is a unique feeder market. 118 oil& gas companies have graduated to the TSX, our senior market.

Oil and gas issuers raised $11 billion on Toronto markets in 2014.

Graham Dallas, Head, Business Development, EMEA

The Johannesburg Stock Exchange (JSE) was founded in 1887. Trading on the JSE covers asset classes including equities, debt, derivatives and futures.

Across these markets, the JSE has grown dramatically since the dawn of our democracy, in 1994.

As an emerging market exchange, there is much foreign trading activity on all of our markets. The capital markets in South Africa are sophisticated, which makes the JSE an attractive destination for Africa -specific emerging market funds. Our investors are looking for exposure on the JSE to other key markets, such as Nigeria.

The percentage of foreign trade on the JSE Equities Market during 2014 was 20%, and 12% on the bond market.

The South African institutional funds available for investment are substantial, amounting to approximately $610 billion (ASISA 2014) Foreign-domiciled companies that list on our Equity Market are treated as domestic for trading purposes, which means that local funds can invest without applying their foreign prudential limits.

The JSE has 2 inward listings of Nigerian oil and gas companies on our Equity Market: Oando Plc, dually listed on NSE with market capitalisation of approximately $865m; and Camac Energy Inc, dually listed on NYSE and the JSE with a market capitalisation of approximately $747m.

The JSE is working closely with other key markets on the continent, including Nigeria and Kenya, in order to grow all of our markets. This includes the cross listing of products such as Exchange Traded Funds as well as dual listing of both equity and debt issues – from Nigeria to South Africa and from South Africa to Nigeria. We recently listed currency futures in currencies including the Nigerian Naira. Activity in the ZAR/ NGN contracts since the contracts were launched at the beginning of October 2014 has amounted to just over $110m USD. The JSE is a proudly African exchange, wishing to participate in the growth story that is our continent, Africa.

Tasmin Freemantle, Business Development Manager, Primary Markets

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FINANCIAL REPORT CBO CAPITAL REVIEWS THE MERGERS AND ACQUISITIONS TRANSACTIONS FOR 2014 High Deal Count, Low Transaction Completion, Rising Transaction Prices Merger & Acquisition activities received a sharp boost in 2014 as Chevron joined the bid to scale back on its Nigerian operations with five (5) assets up for sale.

Shell continued its portfolio optimisation strategy by including Eight (8) new assets worth approximately US$3.9bn in the sale process. This is in addition to US$2.6bn in assets sold between 2010 and 2012.

While there was a high deal count in the course of the year, only One (1) transaction was completed with a price tag of US$1.5bn (ConocoPhillips and OER), with the others pending or awaiting ministerial approval.

Of note in 2014, was the return of a 20% equity stake in OML 138 (Usan field) owned

by Total to the market; this asset is priced at approximately US$2.5bn and will require

significant capital investment which limits buyers of the equity stake in this asset to cash rich Asian NOCs or a consortium of indigenous oil and gas companies.

Auctions dominated asset sales in 2014 skewing the prices in favour of the sellers.

With further details of declining oil prices, it will be interesting to see how many deals will be completed at the original transacted prices.

AUCTION SALE MODEL DRIVING TRANSACTIONS IN 2014 M&A Transactions Review Seller

Acreage

Location

Sale Model

Stake(%)

Chevron

OML52

Onshore

Auction

40%

Chevron

OML 53

Onshore

Auction

40%

Chevron

OML 55

Onshore

Auction

40%

Chevron

OML 83

Shallow water

Auction

40%

2PReserve (Equity stake) (mmbbls)

Average Valuation (US$4.44/2P)

Price

US$ Million

US$Million

188

834

1,600

36

159

100

Chevron

OML 85

Shallow water

Auction

40%

Shell, NAOC, Total

OML 18

Onshore

Auction

45%

76

337

1,200

Shell, NAOC, Total

OML 24

Onshore

Auction

45%

72

319

900

Shell, NAOC, Total

OML 25

Onshore

Auction

45%

38

168

500

Shell, NAOC, Total

OML 29

Onshore

Auction

45%

163

723

2,580

Shell, NAOC, Total

OML 13

Onshore

Auction

45%

93

412

Pending

Shell, NAOC, Total

OML 16

Onshore

Auction

45%

8

35

Pending

Shell, NAOC, Total

OML 71

Shallow water

Auction

45%

N/A

N/A

Pending

Shell, NAOC, Total

OML 72

Shallow water

Auction

45%

105

466

Pending

Total

OML 138

Offshore

Private

20%

100

444

2,500

ConocoPhillips

OMLs 60,61.62,63,131 and OPL 214

Onshore/Offshroe

Auction

20%/100%,20%

230

1021

1,500

921

4924

Total ($M)

*This average valuation includes the completed US$1.5bn OER transaction. Only completed transactions are included in the anal ysis for the average US$/2P cost. It excludes the highly priced private transaction between Petrobras and Banco BTG. **This transaction includes the Nembe creek pipeline ***The Usan deep-water field (OML 138) is back on the market after the 2012 failed sale attempt to Sinopec for a sum of US$2.5billion

DECLINING OIL PRICES – A HINT FOR A CHANGE IN TRANSACTED PRICES? The decline in oil prices by up to 50% in 2014 increases the probability of oil and gas M&A deals. Lower valuations for Nigerian assets will create opportunities for low-cost entry into the Nigerian oil & gas sector. The key question will be whether or not transaction prices that were decided in 2014, will be re-evaluated as a result of the decline in oil prices by up to 60% till date. Will it still be economically viable for the transactions to

54

be completed while maintaining the status quo? A proposed 50% decline in the average dollar per 2P benchmark cost may see asset valuations fall by half.

the fall in prices may have an impact on banks’ deal exposure – causing them to reduce access to new loans, and possibly re-price older loans.

Also, towards the end of 2014, the fall in equity prices punished oil companies causing asset prices to be depressed in 2015. While this presents cheaper market based deals, where debt was used to acquire such assets,

If prices are not reviewed, will financiers be willing to support transaction prices that are almost double asset valuations?

Sources: CBO Research, Rystad Energy - Ucube

REGULATORY NEWS JANUARY - MARCH INTER MINISTERIAL TASK TEAM TOLD TO RECOVER $9.6 BILLION OUTSTANDING REVENUE FROM OIL INDUSTRY The Federal Government inaugurated an Inter Ministerial Task Team (IMTT) charged with the responsibility of recovering $9.6 billion, which the Nigeria Extractive Industries Transparency Initiative (NEITI) audit reports had revealed to be owing to the government by the industry.

NNPC TRIED TO EXPLAIN “MISSING” $10.8 BILLION OIL REVENUE The Nigerian National Petroleum Corporation (NNPC) released a statement to explain the whereabouts of the “missing” $10.8 billion in oil revenue it had been accused of failing to remit to the Federation Account. The former Governor of the Central Bank of Nigeria (CBN), now the Emir of Kano, Sanusi Lamido Sanusi, had, in a letter to the President, which was leaked to the press, accused NNPC of failing to remit $49.8 billion in oil revenue to the Federation Account. After reconciliation exercises between NNPC and CBN, NNPC said the outstanding amount was $10.8 billion and that it was not, in fact, not missing. The Group Executive Director, Finance and Accounts Directorate of NNPC, Bernard Otti explained that the sum alleged to be missing was expenditure incurred on behalf of the Federal Government in relation to subsidy claims, pipeline management and repairs, and strategic stock reserves.

According to a statement released by the Government, the IMTT’s terms of reference were to work closely with NEITI to ensure the prompt recovery of all outstanding revenues due to the Federation from the NEITI audit findings, examine the findings and recommendations in NEITI audit reports and give advice to affected relevant agencies on appropriate steps to address the issues.

FG LIFTED BAN ON BUNKERING IN TERRITORIAL WATERS Bunkering in Nigerian territorial waters was legalized, some thirty years after it was originally banned.

The government announced that it would begin to licence bunkering operators by the end of the month.

The government hoped to net around N250 million annually from licensing bunkering operations.

Operators are to submit applications to the Nigerian Navy, with details of the vessel to be used for bunkering, the location, discharge point, quantity of fuel and the duration of the operations. They are to source their products independently but not from Nigeria. The DPR and the Nigerian Maritime Administration and Safety

Agency (NIMASA) will have to certify the quality of the products and the vessels. Bunkering vessels will not be allowed to leave the Nigerian territorial waters and they must obtain approval to move from one area to another.

Among the petroleum products currently categorised for bunkering operations under the Petroleum Act were Automotive Gas Oil (AGO), Low Pour Oil and Liquefied Natural Gas (LNG).

The guidelines and application forms can be downloaded from the DPR website: https://dpr.gov.ng/index/ license-permit/bunkering-guidelines/

JTF DEPLOYED SWAMP BUGGIES FOR ILLEGAL OIL REFINERIES DESTRUCTION

FG COMMENCED METERING POLICY ON 1ST FEBRUARY The Department of Weights and Measures of the Ministry of Trade and Investments confirmed that the Federal Government’s new metering policy in the oil and gas industry would kick off on the 1st of February. They said the full implementation of legal meterology services in the oil and gas sector would enable stakeholders to conform with the weights and measure regulation.

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The Joint Task Force (JTF) operating in the Niger Delta said it would start using a new method of destruction of illegal oil refineries. The Commanding Officer of 29 Battalion of the 2 Brigade of the Nigerian Army, Port Harcourt, Lt.-Col. Olusegun Oladuntoye, said that they were deploying “swamp buggies” which would be able to crush metal tanks used in the illegal refining process.

The tactic of completely destroying the tanks would make it impossible for the oil thieves to recommence their illegal activities with the same equipment. The JTF said the war against illegal oil bunkering could not be completed without thorough destruction of illegal refineries.

The House of Representatives meanwhile called for an

environmentally sensitive method of destruction and discharge of confiscated petroleum products.

Chairman of the House Committee for the Environment said he was concerned that the indiscriminate destruction of petroleum products confiscated from oil thieves and illegal refineries could be endangering the environment.

REGULATORY NEWS HOUSE OF REPS INVESTIGATED NON-PAYMENT OF BONGA OIL SPILL COMPENSATION The Environmental Committee of the House summoned the Minister of Environment and the National Oil Spill Detection and Response Agency (NOSDRA) over the long running Bonga oil spill matter.

Also to appear before the House Committee were the Department of Petroleum Resources (DPR), the Nigerian Maritime Administration and Safety Agency (NIMASA) and Shell Petroleum Development Company (SPDC. The House wanted them to explain why compensation had still not been paid to the communities affected by the December 2011 oil spill at the Bonga oil field.

RIVERS AND BAYELSA CONTINUED SOKU OIL WELLS DISPUTE The dispute between Rivers State and Bayelsa State over the Soku oil wells, which are located on the boundary of both states, continued in spite of the matter having been ruled on by the Supreme Court.

Rivers State Governor, Amaechi issued a statement through his Chief Press Secretary, Mr. David Iyofor, in which he insisted that Bayelsa State’s claim to the wells were based on the 11th edition of the Administrative Map of Nigeria. He said the 2000 map had erroneously shifted the boundary between Rivers and Bayelsa States from the initial boundary between Kalabari and Nembe, west of the Santa Barbara River, to San Bartholomew River.

The shifting of the boundary put the Soku wells within Bayelsa State. The errors, he said, were acknowledged by the chairman of the National Boundary Commission in a letter dated July 3, 2002, which promised to correct the errors in the 12th edition.

The 12th edition of the map was said to be still under production.

NEITI BEGAN 2012 OIL AND GAS INDUSTRY AUDIT The Nigerian Extractive Industries Transparency Initiative (NEITI) commenced its independent audit of the oil and gas industry to cover the period 2012. The objective of the audit was, among other things, to establish what companies paid to the government and what the government received into the Federation Account.

The audit was also to find out if companies paid what they ought to pay to government and if government received what was due to the Federation Account especially in taxes, royalties, signature bonuses, levies, rents, concessions etc.

CALLS GREW FOR NNPC AUDIT There were growing calls for a full audit of the accounts of the Nigerian National Petroleum Corporation (NNPC) after fresh accusations against NNPC claiming that $20 billion had not been remitted by NNPC to the revenue account.

Industry watchers were saying that a full audit was the only way to properly explain the “missing” funds and achieve transparency. Activist and Lagos-based lawyer, Mr. Femi Falana (SAN), joined the call, saying: “As far as I am concerned, the Minister of Finance and Coordinating Minister of the Economy has no powers under the law to reconcile accounts. It is the constitutional duty of the Auditor-General of the Federation to audit the accounts of the Federal Government and its Ministries, Departments and Agencies.”

HOUSE OF REPS LAUNCHED INVESTIGATION INTO NNPC - SWISS CRUDE TRADERS DEALS The House of Representatives launched an investigation into dealings between Nigerian National Petroleum Corporation (NNPC) and Swiss Traders. The lawmakers were probing the crude oil deals between NNPC and its crude oil trading partners, particularly Vitol and Trafigura. The investigation came after Swiss non governmental organization (NGO), Berne Declaration (BD), accused Swiss traders of colluding with NNPC to defraud the nation of $6.8 billion in oil swap deals, an accusation denied by all the parties fingered by the report.

Giving evidence at the hearing, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Hajiya Zainab Shamsuna Ahmed, demanded full and transparent disclosure of all of the alternative funding arrangements in the audited financial statements (AFS) of NNPC. She said that in the 2009-11 audit, NEITI discovered $22.8 billion of “off balance sheet items” as a result of which the Federation was being exposed to some contingent liabilities that it might not be aware of since these sums are not disclosed in NNPC’s audited financial statements.

These sums were due to third party financing arrangements with banks and modified carry arrangements with NNPC’s joint venture partners which were used to fund NNPC’s share of its joint venture

exploration and production.

In addition, the Executive Secretary said that NNPC diverted $1.73 billion that was earmarked for funding its joint venture (JV) cash calls/operations to non-cash call items meaning that NNPC was unable to fund its JV cash calls.

She also called for the government to review the allocation of oil to the refineries, which though all operating at far below their nameplate capacity, were being allocated 445,000 barrels of oil per day.

The Executive Secretary was also critical of crude oil swap deals in which offshore processing facilities received crude oil in exchange for refined products, which were then imported into the country. Ahmed said the NEITI audit revealed that these arrangements were not economically beneficial when the processing fees, freight and in some cases, demurrage, were taken into account. This arrangement, she said, resulted in the under delivery of petroleum products to the tune of $866 million by companies involved in the swap.

Former group managing director of the NNPC, Andrew Yakubu, in giving evidence called the claims “baseless and without material substance.”

57

REGULATORY NEWS MINISTER OF FINANCE JOINED CALL FOR INDEPENDENT FORENSIC AUDIT OF NNPC ACCOUNTS The Minister of Finance and Coordinating Minister for the Economy Dr. Ngozi Okonjo-Iweala joined the call for an audit of the Nigerian National Petroleum Corporation (NNPC). She said urgent action with regard to an independent forensic audit of conflicting claims of unaccounted funds made by the former Governor of the Central Bank of Nigeria was required.

GMD DEFENDED $11.5 BILLION BUDGET FOR NNPC The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) appeared before the Joint National Assembly Committee on Petroleum Resources Upstream to defend the Corporation’s $11.505 billion 2014 budget. He explained to the Committee that of that amount, $5.5 billion would be spent on operations including the Chad Basin exploration programme. He explained that the programme had been delayed as a result of the insurgence, leaving 10 out of 20 projects with zero performance.

Yakubu confirmed that the exploration programme also included other sedimentary basins, such as Yola, Bida, Sokoto and Dahomey.

ITALIAN AND NIGERIAN NAVY PARTNERED IN TRAINING EXERCISES IN WAR ON OIL THEFT The Italian Navy visited its Nigerian counterpart on a training visit. With a convoy comprising of an aircraft carrier, a supply ship, a frigate and a patrol ship berthed at the Nigerian Ports Authority, Apapa, Lagos, and a crew of 1,200, the Italian Navy was expecting on this visit to help train the Nigerian Navy in the fight against oil theft. The Gulf of Guinea is now seen as one of the most dangerous waterways in the world as growing oil production in the region means that crude oil laden oil tankers are plying the route much more frequently. Their valuable cargo leaves the vessels vulnerable to attacks from pirates.

President Goodluck Jonathan sacked Group Executive Director (GED), Exploration and Production, of the Nigerian National Petroleum Corporation (NNPC), Abiye Membere. The President also used the opportunity to fill four existing vacancies on the NNPC board.

Abiye Membere

Membere had just given a robust speech at the CWC’s Nigeria Oil and Gas Conference in Abuja and had barely left the podium on his way back to the NNPC building when he heard that his sacking had been announced.

Abiye Membere will be remembered for his vigorous defence of the Petroleum Industry Bill (PIB) against sustained criticism from the Oil Producers Trading Section (OPTS) which represents the interests of international oil companies (IOCs) and was then chaired by Mark Ward, Chairman, ExxonMobil Companies Nigeria.

HOUSE ISSUED FINAL INVITATION TO PETROLEUM MINISTER OVER OIL SWAP DEALS INVESTIGATION The Joint Committee of the House of Representatives investigating the allegations of collusion between the Nigerian National Petroleum Corporation (NNPC) and Swiss oil traders issued a final invitation to the Minister of Petroleum Resources, Diezani AlisonMadueke to appear before it.

Justice Committees, were carrying out an investigation into the allegations made by Swiss based Non Governmental Organisation (NGO), Bernes Declaration (BD), which accused NNPC of colluding with Swiss oil traders to deprive Nigeria of billions of dollars in revenue in shady crude oil swap deals.

The Joint Committee, made up of three committees of the House namely the Petroleum Upstream, Petroleum Downstream and

The chair of the Joint Committee, Hon. Muraina Ajibola said the Minister had not responded to their invitation.

58

NNPC GED ABIYE MEMBERE SACKED

Abiye and Ward locked horns on several occasions over the ongoing debate regarding the fiscal provisions in the Petroleum Industry Bill (PIB). The IOCs and OPTS are vehemently opposed to the new fiscal terms and have appeared on numerous panels including the Senate and House of Representative hearings into the PIB to defend their position. On many of these occasions, Membere was the one to speak on the Federal Government’s behalf rubbishing the claims by the IOCs that the fiscal terms would make new investments in Nigeria’s oil industry unfeasible.

Membere had also been at loggerheads with some of NNPC’s joint venture partners. Critics say he had a combatant attitude and could therefore be difficult to deal with. Others however said that he was passionate about his job and discharged his function with great enthusiasm and that his zeal was sometimes misunderstood. Among the NNPC GED positions, the GED, Exploration and Production is generally regarded as the most influential given the area of responsibility over the nation’s oil and gas joint venture oil production.

Dr. Joseph Dawha, who went on to be later appointed Group General Managing Director of NNPC, replaced Membere.

REGULATORY NEWS APRIL - JUNE IKECHUKWU OGUINE APPOINTED NNPC COMPANY SECRETARY The Nigerian National Petroleum Corporation (NNPC) appointed a new Company Secretary. President Goodluck Jonathan approved the appointment of Ikechukwu Oguine as the Coordinator, Legal Services and Company Secretary, NNPC. He replaced Anthony Madichie who was NNPC’s Legal Adviser and Company Secretary.

NEITI SIGNED CONTRACT FOR 2012 OIL AND GAS INDUSTRY AUDIT The Nigeria Extractive Industries Transparency Initiative (NEITI) signed the contract for the audit of the oil and gas industry for the year 2012. The signing ceremony, which took place at the NEITI Secretariat was attended by NEITI Management and representatives of the winners of the contract, the Taju Audu Effectivo consortium, which included two international firms, Baker Tilly International and Resource Consulting Services Limited.

The 2012 oil and gas industry audit is the fifth in NEITI’s cycle of audits of the oil and gas sector since the agency commenced operations in 2004 as a member of the global Extractive Industries Transparency Initiative (EITI). The previous audits covered the periods 1999-2004, 2005, 2006-2008 and 2009-2011.

JULY - SEPTEMBER FINANCE MINISTRY PROCESSED $275 MILLION SUBSIDY CLAIMS Amidst continued complaints of the slow processing of subsidy claims by marketers, the Federal Ministry of Finance announced that it would shortly release another batch of payments to marketers.

The Special Adviser to the Minister of Finance on Media, Paul Nwabuikwu, said that the Ministry was processing N45 billion ($275 million) worth of subsidy claims. The payment followed the last batch of payments of N41 billion to 27 marketers in March 2014.

Nwabuikwu stated that payments had already been made to some marketers who had presented their letters of indemnity. The letters of indemnity were part of a new procedure that the Federal Government instituted to ensure that it was not held liable in any dispute between the marketers and their banks. As a result, marketers submitting their subsidy claims were required to produce a letter of indemnity from their banks in addition to the other verification process that they had to go through before clearance for payment.

Last year, the Ministry of Finance said it had reduced the total subsidy bill by 56 per cent from N2.2 trillion in 2011 to N971 billion after working hard to clean up the process of subsidy payments following on from the Aig-Imoukhuede led committee which uncovered $6 billion worth of oil subsidy fraud.

SENATE FOUND NNPC $49 BILLION “UNREMITTED” NOT MISSING Senate adopted the report of its Finance Committee on the sums of $49 billion and $20 billion alleged by the former governor of the Central Bank of Nigeria (CBN) Mallam Sanusi Lamido Sanusi, now the Emir of Kano, to be missing.

The Finance Committee, led by Senator Ahmed Makarfi, concluded in its Report that the sums, though un-remitted, were not in fact missing. Clarifying the conclusions of the Committee, Senate President, David Marks, said the sums were “funds yet to be remitted or funds yet accounted for.”

NNPC was however ordered by the Senate to pay the sum of $927 million to the Federation Account. These sums represented $447 million for gross lifting on behalf of NPDC, $218 million for gross lifting under third party financing arrangements, and $262 million in expenses that NNPC could not satisfactorily defend regarding strategic stock reserve, pipeline maintenance, management cost and capital expenditure.

NNPC came in for scathing criticism from the Committee over its “poor record keeping and nonchalant work attitude by not rendering returns on subsidy claims on monthly basis from January 2012 to date,” which the Committee said was what contributed largely to the creation of the problem.

DPR COMMENCED ELECTRONIC ISSUANCE OF OIL AND GAS INDUSTRY SERVICE PERMIT The Department of Petroleum Resources (DPR) announced that it was to commence electronic processing and issuance of statutory Oil and Gas Industry Service Permits (OGISP) in its quest to simplify its process for “more enhanced service delivery.” As a result, it advised that applications for new permits and renewal of expiring permits be submitted online.

Companies seeking to render services in the oil and gas industry are required to get the OGISP, which is normally issued in three categories: General, Major and Specialised. The new online system requires applicants to log onto the DPR website http://dprnigeria.org.ng to create a company account. They can complete the requisite application forms online and the application fees of N500, N2,500 and N7,500

for the different categories of services can also be paid online using Verve, Mastercard and Visa credit and debit cards, as well as Quickteller and other payment platforms.

Offshore Safety Permits are still required for companies wishing to provide offshore services and will be required before application for the OGISP.

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REGULATORY NEWS NEW GAS PRICING FRAMEWORK ANNOUNCED The Minister of Petroleum Resources, Diezani Alison-Madueke, announced that a new pricing structure for gas was to emerge within 3-4 months. She said: “We are working with the Nigeria Electricity Regulatory Commission (NERC), the Ministry of Power, and the Nigerian Petroleum Development Company (NPDC), in terms of trying to streamline what we are doing to bring gas to power in the very short and medium term. Central to all this will be the right pricing framework which will hopefully be firmly in place within the next four months or so.”

The Minister added that they were also working with a number of the multinationals, predominantly Shell who have in their acreage the greatest volumes of Nigeria’s gas reserves to ensure that unutilised volumes of gas reserves are made available to the various operators of the independent power plants that have come into play over the last 18 to 24 months.

NIMASA PROSCRIBED 3 MARINE ASSOCIATIONS The Nigerian Maritime Administration and Safety Agency (NIMASA) issued a notice to all ship owners, operators, masters, agents and oil companies to inform them of the proscription of 3 illegal maritime associations.

The notice informed the general public that pursuant to the Federal Republic of Nigeria Official Gazette No 58 on the Dissolution and Proscription of Certain Associations Order, the following associations and bodies had been dissolved and proscribed with effect from the 28th of August 2013: a) Nigerian Maritime Security Agency (NMSA) b) Nigerian Merchant Navy Corps c) Nigerian Merchant Petroleum Security and Safety Corps (NMNPSSC) The general public was warned not to take part or participate in any activities with the proscribed associations.

SENATE LAUNCHED INVESTIGATION INTO MALABU OIL DEAL Senate launched an investigation into the Malabu Oil deal and the role played by the Attorney-General of the Federation and Minister of Justice, Mohammed Adoke. Adoke was said to have written to Global Witness, a London-based corruption watchdog, saying that the House had investigated and cleared him of all wrongdoing in relation to the transaction. The House denied it had done so. The Committee recommended that the licence be revoked saying that the process for the acquisition of the OPL by Eni and Shell was “highly flawed.”

The allegations stem from a 2011 deal in which Eni and Shell acquired the block under controversial circumstances. The purported bribe concerns the purchase by Eni and Shell of the lucrative oil prospecting licence (OPL) 245 oil block in 2011. Eni and Shell insist they paid the Nigerian government directly for the oil block but prosecutors in Milan have launched an investigation into the transaction.

They are investigating whether the money went to a front company believed to be controlled by a former Nigerian oil minister.

OCTOBER - DECEMBER PTDF ANNOUNCED PLANS TO CREATE 6 NEW ZONAL OFFICES The Petroleum Technology Development Fund (PTDF) announced plans to create zonal offices across the country. The new Executive Secretary of the Fund, Femi Ajayi who made the disclosure, said that creating zonal offices across the six geo-political zones of the country would make the organisation more efficient and bring it closer to the people. Ajayi said he intended to put the plan into progress immediately and expected two of the offices to be up and running by the beginning of next year.

Ajayi also revealed details of a new initiative, the Entrepreneurship Development Training Program (EDTP) that would enable participants of the WTCP to acquire robust entrepreneurial skills capable of empowering them with business skills that would make them self sufficient. It would also enable trainees, following the completion of their training, to become employers of labour in the field of welding and fabrication in order to participate in bridging the industry’s gap, and contribute to economic growth and sustainable development.

FIRS RECOVERED $2 MILLION FROM OIL AND GAS FIRMS IN TWO DAY EXERCISE THE Federal Inland Revenue Service (FIRS) recovered around $2 million in unpaid taxes from the oil and gas sector in a two-day tax recovery exercise. The News Agency of Nigeria (NAN) reported that the two-day exercise by the FIRS involved many leading oil and gas firms.

Mrs Olaitan Adediran, the Director, Tax Department, FIRS, vowed that the tax recovery team would continue the exercise to ensure that government received what was due to it through taxes.

FG PROPOSED $78 BENCHMARK IN 2015 BUDGET In spite of rapidly falling oil prices, in October, the Federal Government was proposing $78 per barrel as the benchmark price for crude oil in the 2015 national budget.

The Medium Term Expenditure Framework and Fiscal Strategy Paper which President Jonathan had just submitted to Senate sported a benchmark figure, nearly $4 higher than last year, at a time when oil prices were in free fall.

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As oil prices continued to drop, the government had to keep on revising it downward to $73 and later to $65.

The benchmark is the oil price on which the budget is based and if the market price ends up higher, the excess will accrue to the Excess Crude Account and to be disbursed from there for specified projects.

REGULATORY REPORT

NNPC REPORT SEPTEMBER 2014 REGIME JVC* PSC**/SC*** INDEPENDENT/ MARGINAL FIELDS TOTAL

COMPANY 11,094,591 17,851,140 6,548,552

NNPC EXPORT 15,137,040 9,016,027 0.00

NNPC DOMESTIC 5,651,727 1,918,409 0.00

NNPC TOTAL 20,788,767 10,934,436 0.00

TOTAL 31,883,358 28,785,756 6,548,552

35,494,283

24,153,067

7,570,136

31,723,203

67,217,486

* JVC: Joint Venture Companies **PSC: Production Sharing Contracts ***SC: Service Contracts

ALTERNATIVE FUNDING CRUDE LIFTING Total: 8.59 million barrels

ca afri

44%

24%

europe

asia & far east

11%

V CHE

R ON )

36% 64%

NNPC

COMPANIES (MOB IL & JVC

CRUDE OIL EXPORT BY DESTINATION

PETROLEUM PRODUCTS DISTRIBUTION 6.25%

SOUTH SOUTH 3%

NORTH WEST

36.36 %

14%

NORTH EAST

erica south ameri ca th am nor

34.09%

ABUJA

REFINERY UTILIZATION CAPACITY

SOUTH WEST SOUTH EAST .48% % 4

5.3 3

%

9.89%

8.77%

3.59

10

NORTH CENTRAL

NATURAL GAS PRODUCTION AND UTILIZATION

8

TOTAL PRODUCTION OF NATURAL GAS: 214.63 BSCF

lised i t u

6

13.74% 4

2

PHRC

WRPC

ed lar

KRPC

f

0

86.26% 61

REGULATORY AGENCIES Ministry of Petroleum Resources The Ministry of Petroleum Resources was established to initiate policies and supervise the implementation of approved policies for the Nigerian oil and gas industry. The Ministry has a technical Department of Petroleum Resources that undertakes the regulation of the oil and gas sector as well as agencies and parastatals under the supervision of the Ministry, which also ensure the execution of approved policies for the sector. With a vision of being an internationally competitive oil and gas sector that contributes maximally to the growth and development of the Nigerian economy, the Ministry of Petroleum Resources also ensures effective implementation of Nigeria’s polices on oil and gas exploration, exploitation and utilization in accordance with best international practice.

Minister of Petroleum Resources: Dr. Diezani Alison-Madueke Website: www.mpr.gov.ng

Department of Petroleum Resources (DPR)

Hydrocarbon Pollution Restoration Project (HYPREP) Hydrocarbon Pollution Restoration Project (HYPREP) was established on 20th July 2014 following the recommendation of United Nations Environmental Programme (UNEP) report on Ogoniland, as a specialist Unit under the Federal Ministry of Petroleum Resources and under the direct supervision of the Honorable Minister of Petroleum Resources. HYPREP was established as part of the federal government’s determination to protect the environmental human rights of the people as well as investigate, evaluate and establish other hydrocarbon-impacted sites and make appropriate recommendations.

National Coordinator: Mrs. Joy Nunieh-Okunnu Website: www.hyprep.org

The Department of Petroleum Resources (DPR) was created in March 1988 as the technical arm of the Federal Ministry of Petroleum Resources. The DPR is charged with the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the Nigerian oil and gas Industry and the discharge of these responsibilities involves monitoring of operations at drilling sites, producing wells, production platforms and flowstations, crude oil export terminals, refineries, storage depots, pump stations, retail outlets, any other locations where petroleum is either stored or sold, and all pipelines carrying crude oil, natural gas and petroleum products.

The department is also responsible for supervising all petroleum industry operations being carried out under licences and leases in the country, monitoring of petroleum industry operations to ensure that are in line with national goals and aspirations including those relating to flare down and domestic gas supply obligations, ensuring that health safety & environment regulations conform with national and international best oil field practice, maintaining records on petroleum industry operations, particularly on matters relating to petroleum reserves, production/exports, licences and leases, advising government and relevant government agencies on technical matters and public policies that may have impact on the administration and petroleum activities, processing industry applications for leases, licences and permits, ensure timely and accurate payments of rents, royalties and other revenues due to government and also maintain and administer the national data repository (NDR).

Director: Mr George Osahon Website: www.dprnigeria.org.ng

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REGULATORY AGENCIES Nigerian National Petroleum Corporation (NNPC) Nigerian National Petroleum Corporation (NNPC) was established on April 1, 1977. NNPC by law manages the joint venture between the Nigerian federal government and a number of foreign multinational corporations, which include Royal Dutch Shell, Agip, ExxonMobil, Chevron, and Texaco (now merged with Chevron). Through collaboration with these companies, the Nigerian government conducts petroleum exploration and production activities. In addition to its exploration activities, the Corporation was given powers and operational interests in refining, petrochemicals and products transportation as well as marketing.

NNPC has the sole responsibility for upstream and downstream developments, and is also charged with regulating and supervising the oil industry on behalf of the Nigerian Government. In 1988, the corporation was commercialised into 11 strategic business units, covering the entire spectrum of oil industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments.

The subsidiary companies are: n Duke Oil: a wholly owned international subsidiary of the Nigerian National Petroleum Corporation (NNPC) engaged in direct oil trading activities in the spot market to achieve operating capability, downstream integration and additional profit from oil operations. n Hyson: a joint venture between NNPC and Vitol S.A., a Swiss International crude oil and products trading company, set up to market Nigeria’s excess petroleum

products in the West and Central African sub regions and elsewhere, and to also import various petroleum products (in collaboration with its sister company Calson Bermuda Ltd). n Integrated Data Services Ltd (IDSL): established in 1988 as a subsidiary company of the NNPC, to provide hydrocarbon exploration services in the local and international Oil and Gas industry. n National Engineering and Technical Company Limited National Engineering and Technical Company (NETCO) is Nigeria’s 1st National Engineering Company and is a wholly owned subsidiary of the Nigerian National Petroleum Company (NNPC). n Nigerian Gas Company (NGC): established in 1988 it is charged with the responsibility of developing an efficient gas industry to fully serve Nigeria’s energy and industrial feedstock needs through an integrated gas pipeline network and also to export natural gas and its derivatives to the West African Sub-region.

n Nigerian Petroleum Development Company (NPDC): established in 1988 as a wholly owned subsidiary of the NNPC with responsibility for petroleum exploration and production activities.

NPDC activities cover the spectrum of the upstream oil and gas business from exploration to abandonment. n National Petroleum Investment Management Services (NAPIMS): has the responsibility of managing and supervising the Nigerian government’s investment in the upstream sector of the oil and gas industry to ensure a good margin in its investments through effective supervision of the joint venture, product sharing operation and service contract operations. n The Products and Pipelines Marketing Company (PPMC): ensures the security of supply of petroleum products to the domestic market at low operating costs, market special products competitively in the domestic and international markets, provide excellent customer service by effectively and efficiently transporting crude oil to the refineries and moving petroleum products to the market. n NNPC Retail: operates retail outlets. n NNPC Pensions Limited n The national refineries: n Kaduna Refining and Petrochemical Company n The Port Harcourt Refining Company n Warri Refining and Petrochemical Company The revenue gained from NNPC accounts for about 76% of federal government revenue and 40% of the entire country’s Gross Domestic Product (GDP).

Group Managing Director: Dr Joseph Dawha Website: www.nnpcgroup.com

Nigerian Maritime Administration and Safety Agency (NIMASA) The Nigerian Maritime Administration and Safety Agency was created on 1st August 2006 as the apex regulatory and promotional maritime agency, which was carved out of the merger of National Maritime Authority and Joint Maritime Labour Industrial Council (former parastatals of the Federal Ministry of Transport). Under the act establishing NIMASA, 5% of its annual income is used to support the Maritime Academy of Nigeria (MAN) and 35% of its income is used to develop maritime infrastructure.

NIMASA was established primarily for the administration of maritime safety, seafarers’ standards and security, maritime labour, shipping regulation, promotion of commercial shipping and cobatage activities, pollution prevention and control in the marine environment. The agency also implements domesticated International Maritime Organization (IMO) and International Labour Organization (ILO) Conventions and also undertakes inspections and provides search and rescue services.

Director General/CEO: Ziakede P. Akpobolokemi Website: www.nimasa.gov.ng

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REGULATORY AGENCIES Nigerian Content Development and Monitoring Board (NCDMB) The Nigerian Content Act came into effect on 22nd of April, 2010 following the signing of the Bill into law by President Goodluck Ebele Jonathan, thereby establishing the Nigerian Content Development and Monitoring Board. The Board commenced operations to realize the aspiration of the Federal Government of Nigeria to increase indigenous participation in the oil and gas industry, build local capacity, create linkages to other sectors of the national economy and boost industry contributions to the growth of the country’s National Gross Domestic Product.

With a mission to open the oil and gas industry to accommodate the Nigerian people, the Nigerian Oil and Gas Industry Content Joint Qualification System (NOGIC JQS) was created in line with the NCDMB Act to maintain and operate a joint qualification system (JQS) in consultation with industry stakeholders which shall be administered in accordance with provisions set out in the regulations to be made by the Minister in accordance with the provisions of this Act. The JQS however constitutes an industry databank of available capabilities used for sole system for Nigerian Content registration and pre-qualification of contractors in the industry.

Executive Secretary: Engr. Ernest Nwapa Website: www.ncdmb.gov.ng

Nigeria Extractive Industries Transparency Initiative (NEITI) The Nigeria Extractive Industries Transparency Initiative (NEITI) was created to promote transparency and accountability in the management of Nigeria’s oil, gas and mining revenue. NEITI is the national version of the Extractive Industries Transparency Initiative (EITI), a global movement aimed at ensuring that extractive resources aid sustainable development. NEITI was inaugurated on February 2004, after the setting up of the National Stakeholders Working Group (NSWG) under the leadership of Mrs Obiageli Ezekwesili, The NSWG oversees the activities of NEITI and is made up representatives of government, extractive companies and civil societies.

Its major activities involves the commissioning of the financial, physical and process audits of Nigeria’s petroleum industry, communicating the findings of the audit in a comprehensive and comprehensible manner to various stakeholders; working with government agencies and other stakeholders to remedy the lapses identified by the audit.

Executive Secretary: Ahmed Shamsuna Zainab Website: www.neiti.org.ng

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National Oil Spill Detection & Response The Federal Government of Nigeria established the National Oil Spill Detection and Response Agency as an institutional framework to implement the National Oil Spill Contingency Plan, which was initiated in 2006. The National Oil Spill Contingency Plan is a blueprint/manual for checking oil spill through, containment, recovery, and remediation/restoration. It is a strategy for preventing loss of lives, assets and natural resources.

The agency is charged with the responsibility of maintaintaining surveillance and ensuring compliance with all existing environmental legislation and the detection of spills in petroleum sector, receiving reports of oil spillages and coordination of oil spill response activities throughout Nigeria and coordinating the implementation of the plan for the removal of hazardous substances as may be issued by the Federal Government.

Director General/CEO: Sir Peter Idabor Website: www. nosdra.gov.ng

Petroleum Products Pricing Regulatory Agency (PPPRA) The Petroleum Products Pricing Regulatory Agency (PPPRA) was established in 2003 to monitor and regulate the supply and distribution, and determine the prices of petroleum products in Nigeria. It also regulates the supply and distribution of petroleum products, moderates volatility in petroleum products prices, whilst ensuring reasonable returns to operators. The agency is also responsible for maintaining constant surveillance over all key indices relevant to pricing policy.

Executive Secretary: R.C. Stanley Website: www.pppra-nigeria.org

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Building capacities in Nigeria to support increased investment in the oil and gas industry The Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 was signed into law by His Excellency President Goodluck Ebele Jonathan on 22 April 2010.

This piece of legislation established the Nigerian Content Development and Monitoring Board to superintend over the implementation of the provisions of the NOGICD Act. Over the past three years and half of its establishment, the Board has achieved several feats under the leadership of the Chairman of the Governing Council, Her Excellency Diezani Alison-Madueke, Honourable Minister of Petroleum Resources.

One notable achievement is the establishment of the Nigeria Oil and .HZ PUK\Z[Y` 1VPU[ 8\HSPĂ„JH[PVU :`Z[LT 56.0* 18: HU LSLJ[YVUPJ WSH[MVYT [OH[!

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Q Currently captures more than 16,000 entries of individuals and professionals and their skills and competencies; Q Has more than 5,000 service company portal accounts with details of their capacities; Q Offers oil and gas assets categorisation modules; Q Uses Expatriate Quota Management modules.

The Board has also commenced the development of Oil and Gas Industrial Parks to promote manufacturing and JYLH[L QVIZ ZOVW Ă…VVYZ HUK Z[PT\SH[L the development of linkage sectors.

This is being implemented under the Nigerian Oil and Gas Industrial Parks :JOLTL 56.07: HUK ^PSS PU]VS]L the establishment of the physical infrastructure and create an

enabling environment for low-cost manufacturing, domiciliation of capacity, technology acquisition, training, employment opportunities and structured community participation. :V MHY [^V ZP[LZ VM HIV\[ hectares each have been secured in Bayelsa and Cross River, and development commences in the second quarter of 2014.

The Nigerian Content Development Fund has also grown to more than $300 million and is now being accessed

by Nigerian service companies.

The fund structure earmarks 70 per cent to guarantee loans from Nigerian Banks to service providers to build capacity.

The 30 per cent balance is currently being used to fund direct intervention WYVQLJ[Z Z\JO HZ [OL 56.07: WYVNYHTTL

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pilot pipe mill initiative, training and employment initiatives in geosciences, environmental remediation, construction skills and so on. Below are highlights of some of the achievements.

New and upgraded facilities

Q More than $5 billion worth of investments have been made in the development of new fabrication yards and upgrade of existing yards and facilities; Q Government efforts at maximising in-country fabrication have stimulated the establishment of these facilities to achieve in-country fabrication capacity of about 120,000 tons per annum, and has created jobs for around 10,000 Nigerians.

Human capital development

Q More than 5,000 employment and On the Job Training (OJT) slots have been created for Nigerian engineers and technicians on ongoing oil and gas projects; Q The Board is training about 1,000 geoscientists, environmental scientists and vocational/construction professionals who will be attached to companies and projects to gain expertise.

The Board has commenced the development of Oil and Gas Industrial Parks to promote manufacturing Oil and gas equipment

Construction work has commenced for two steel pipe mills in Bayelsa and Edo states. These mills will produce about 400,000MT per annum of steel pipes for the oil and gas industry by 2016 and create more than 10,000 direct and indirect jobs during the construction and operating phases of the mills.

The Equipment Component Manufacturing Initiative (ECMI), which began in 2011 to develop local capacity for manufacturing of equipment packages and components, has birthed investment commitments of almost $2 billion by Original Equipment Manufacturers and their local reps.

Nigerian-owned and operated marine assets

Today, more than 55 per cent of the offshore support marine vessels used in the oil and gas industry are owned and operated by Nigerians. This has resulted in the retention of about $2.5 billion in Nigeria, out of about $5 billion expended by the industry on marine vessels.

Nigerian companies have mastered land and swamp activities and are now owning and operating jack-up rigs and venturing into deep-water development.

Nigerian Content Development and Monitoring Board Revenue House, Lambert Eradiri Road Onopa Yenagoa, Bayelsa State 560001, Nigeria Email: info@ncdmb.gov.ng www.ncdmb.gov.ng

LEGAL NEWS JANUARY - MARCH NIGERIANS SUED CHEVRON IN US OVER 2012 ENDEAVOUR RIG EXPLOSION

ITALIAN PROSECUTORS LAUNCHED INVESTIGATION INTO ENI CHIEF OVER OPL 245 MALABU DEAL Prosecutors in Milan, Italy launched an investigation of the Italian oil giant Eni over the oil prospecting licence (OPL) 245 oil deal involving Malabu Oil. They were investigating allegations that the company paid a bribe to secure the allocation of the block to it in partnership with Shell. Chief Executive Officer of ENI, Claudio Descalzi and another official of the company, were under investigation. The two denied any wrongdoing.

Nigerian coastal communities filed a $5billion dollar lawsuit in California against American oil giant, Chevron, over the 2012 K.S. Endeavour offshore rig explosion.

In the lawsuit, the communities claimed the rig explosion, which caused a fire that burned for 46 days, poisoned the air and water in the area. The communities alleged negligence on Chevron’s part in the explosion, which killed 2 staff.

BRILLA ENERGY FRAUD PROSECUTION COMMENCED A high profile prosecution by the Economic and Financial Crimes Commission (EFCC) began in earnest at the Ikeja High Court. The EFCC was prosecuting oil marketer yesterday Rowaye Jubril along with his company, Brila Energy, where he is chairman. He was accused of committing fraud by collecting N963.7 million in subsidy payments for petroleum products, which the EFCC says he never imported. The case is being tried at Ikeja High Court before Justice Lateefat Okunnu.

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The bribery allegations concern the purchase by Eni and Shell of the lucrative OPL 245 oil block in 2011. The transaction took place when Descalzi was Eni’s head of exploration and production.

The Malabu Oil deal involved OPL 245, said to hold reserves of up to 9.23 billion barrels of crude oil, which was original awarded to Malabu Oil after paying a $2 million signature bonus. It was revoked and re-awarded to Shell and Eni. Malabu Oil brought a lawsuit against the Federal Government and in the ensuing dispute, a settlement was brokered by the Federal Government.

Following the settlement, Shell and Eni allegedly paid the sum of $1.3 billion to the Federal Government and were allowed to keep OPL 245. Malabu was then paid $1.09 billion out of that sum by the Federal Government, the rest being retained by the government.

The dispute exploded into public view when Emeka Obi, a Nigerian intermediary for Etete, took Malabu to court in London over unpaid fees relating to what he says was his help in brokering the Shell-Eni deal. In the lawsuit a London court held that former Minister of Petroleum, Dan Etete owned and controlled Malabu Oil “at all material times.” Obi won a multi-million dollar damages payout, which was later transferred to Switzerland and then seized by Swiss authorities after a request by Italian prosecutors.

Following the case, the British police were reported to be looking into allegations of money laundering in connection with the transaction.

LEGAL NEWS JULY – SEPTEMBER SPRING BANK GAVE EVIDENCE IN BRILA ENERGY EFCC PROSECUTION Spring Bank Plc gave evidence in the high profile prosecution of Brila Energy and its chairman, Rowaye Jubril, by the Economic and Financial Crimes Commission (EFCC). The bank’s evidence gave an insight into the process of the importation of petroleum products and subsidy claims.

Jubril and his company were prosecuted by the EFCC for fuel subsidy fraud. Jubril was accused of fraudulently claiming N963.7 million in subsidy payments for 13,500 metric tonnes of petroleum products, which the EFCC says was sourced locally rather than imported.

Spring Bank financed the transaction after giving Brila Energy a credit facility of $11.9 million. Called by the prosecution, Spring Bank testified that Jubril followed due process in the importation of 13,500 metric tonnes of PMS for which he was given the subsidy payment.

Mr Uchenna Adobaka, the Deputy Manager, Energy Group of Spring Bank, who gave evidence on the bank’s behalf, said: “As far as the bank is concerned, we have no evidence to show that the product was sourced locally. We (the bank) believe that it was imported.”

Adobaka admitted that the bank did not supervise the transaction itself. The bank relied solely on documents presented for the transaction, which it says is the standard practice. He revealed that General Marine and Oil Services Ltd, which was appointed by the bank to supervise the importation and discharge of the product on its behalf had admitted to the bank that it did not in fact supervise the discharge of the PMS at Obat Tank Farm in Lagos.

SEC SETTLED CUSTOMS BRIBERY TRIAL AGAINST NOBLE NIGERIA EXECUTIVES Securities Exchange Commission’s (SEC) in the US settled the bribery suit against two executives of the Nigerian subsidiary of international offshore drilling contractor, Noble. The SEC filed the enforcement action against Mark Jackson, former Chief Executive officer of Noble Drilling (Nigeria) Ltd and James Ruehlen, a director of the company over the company’s activities in Nigeria.

In the action, the SEC alleged that Noble and Noble-Nigeria authorized a customs agent to pay bribes to Nigerian government officials in order to obtain false documentation which Noble-Nigeria needed to obtain Temporary Import Permits. In addition, the SEC alleged that Noble and Noble-Nigeria, through a customs agent, paid bribes to Nigerian government officials for Temporary Import Permit (TIP) extensions.

The background to the case is that between January 2003 and May 2007, Noble-Nigeria had up to seven drilling rigs that operated offshore in Nigeria.

To operate drilling rigs offshore in Nigeria, the Nigerian laws require the owner of the rig to either pay permanent import duties or obtain a TIP. TIPs allow drilling rigs to operate in Nigerian waters without payment of permanent import duties.

The bank also revealed that the shipping documents submitted by General Marine showed the mother vessel as MT Gabros, while the Union Bank, the correspondent bank of Spring Bank, had the mother vessel down as MT Overseas Lima. The bank said it confirmed from the supplier of the product, Napa Petroleum, that the vessel used for importing the product was the Overseas Lima and so it submitted the documents to the Petroleum Products Pricing and Regulatory Agency (PPPRA) for processing.

Bringing the action, the SEC charged Jackson and Ruehlen with multiple violations of the Foreign Corrupt Practices Act (FCPA), and other federal securities laws in connection with actions they allegedly took to obtain TIPs and TIP extensions in order to avoid paying permanent import duties. These included the approval of numerous “special handling” and “procurement” payments to government officials to obtain false paperwork necessary to secure TIPs or to obtain discretionary TIP extensions. In addition, the SEC alleged that Jackson and Ruehlen allowed these payments repeatedly to be posted on Noble’s books as legitimate operating expenses.

Once the subsidy payment was credited to Brila’s account, the loan was repaid with interest. The case was adjourned.

In 2010, Noble agreed to make a payment of $8 million to resolve the FCPA related civil and criminal charges in the case. Then in 2011 Noble agreed to pay $2.5 million as part of a non-prosecution agreement with the Nigerian government.

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LEGAL NEWS BRITTANIA-U TOOK ITS BATTLE FOR CHEVRON ASSETS TO SUPREME COURT Brittania-U took its battle for Chevron’s oil blocks to the Supreme Court in its bid to be declared winner of the blocks, which Chevron put up for sale last year. Brittania-U was asking the Supreme Court to overrule the Court of Appeal, which had ruled against the extension of the interim orders granted to Brittania-U by a Federal High Court.

The dispute in which Brittania-U claimed specific performance or $10billion damages for wrongful repudiation was over Oil Mining Leases (OMLs) 52, 53 and 55. The Nigerian National Petroleum Corporation (NNPC) and the Minister of Petroleum Resources were joined in the suit against Chevron and Seplat after the Federal High Court in May decided that it

The dispute arose after US oil giant Chevron put up its 40 per cent share of the three OML’s, part of a planned five-asset onshore divestment, for sale. Brittania-U bid $1.6 billion bid for all three assets. It however emerged that Chevron wished to close the deal with Seplat for OML 53, while Amni was said to have bid for OML 52 and Delta State-owned Belema Oil was said to have bid for OML 55.

had jurisdiction to hear the suit. The judge also found that NNPC and the Minister were necessary parties to the lawsuit.

After Chevron failed to declare it winner of the bid, Brittania-U went to court and secured an injunction from the High Court preventing a transfer of the assets. The Court of Appeal overturned the High Court judgment and Brittania-U appealed to the Supreme Court to overturn the decision.

TWO BRITS ARRESTED OVER OIL THEFT PLOT Two British nationals were arrested along with 12 Nigerians after the Joint Task Force (JTF) said they had uncovered a plot to steal oil from a pipeline. The JTF alleged that the Britons had tried to bribe

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a senior commander to turn a blind eye on their theft operations.

JTF commander General Emmanuel Atewe said the two Britons brought along

$120,000, which was to be used in bribing officers and soldiers along the Chanomi Creek. A spokesman for the British High Commission confirmed that two British nationals had been arrested.

LEGAL NEWS JTF REPORTED SUCCESSES IN FIGHT AGAINST OIL THEFT The Joint Task Force (JTF), given the task of fighting the seemingly insurmountable oil theft problem in the Niger Delta under the code-name of Operation Pulo Shield gave an operational update on its recent successes.

The JTF reported the arrest of 12 suspected crude oil thieves.

Some were arrested whilst siphoning crude oil products from a Nigeria National Petroleum Cooperation (NNPC) pipeline at Okwagbude community in the Okpe Local Government Area of Delta State, while the others were arrested at Aziza also in the Okpe Local Government Area of the State.

In another operation, the JTF seized a barge containing an unascertained quantity of crude oil at Mangbiye Creek in Sangana community of Southern Ijaw Local Government Area of Bayelsa State, although the perpetrators managed to escape.

Other troops in Igbematoro in the Southern Ijaw Local Government Area of Bayelsa State destroyed 23 illegal oil distillery camps, 18 illegal oil dumps, and 34 drums filled with stolen crude.

In yet another operation, a ship, MV Gare was arrested and three suspects on board handed over to Interpol by the Navy.

The ship was alleged to have been used to hijack a bigger ship, MV Karela and to siphon about 75 metric tons of Automated Gas Oil (AGO) worth about $10 million from MV Karela, some 200 nautical miles off the coast of Angola.

OCTOBER - DECEMBER RIVAL UK LAW FIRMS IN COURT OVER BODO COMMUNITY SETTLEMENT DEAL WITH SHELL A London High Court blocked a settlement agreement between the oil giant Shell and London law firm CW Law, which claimed to be representing thousands of Nigerians in a dispute over oil spills in Nigeria. Another law firm, Leigh Day had been all along been the solicitor on record representing the Bodo Community in the claim against Shell. Leigh Day claimed that CW Law tried to poach its clients.

Mr Justice Akenhead, the President of the Technological and Construction Court blocked the deal by CW Law and upheld an injunction preventing them from making contact with the people of Bodo in furtherance of a settlement agreement.

The settlement agreement between CW Law and Shell, given as evidence in Court, sought to settle the claims for £150 each with an additional £390 per claimant going into a Trust, a total of £8.96 million. Leigh Day later went on to secure an $80 million settlement for the Bodo Community with Shell.

The substantive case involved two leaks from Shell pipelines in 2008/09, which devastated the environment surrounding the community of Bodo, in Gokana Local Government Area, Rivers State, Nigeria.

Bodo is a fishing town, which sits in the midst of 90 sq km of mangroves swamps and channels, which are the perfect breeding ground for fish and shellfish. The coastal community consists of 31,000 people who live in 35 villages. The majority of its inhabitants are subsistence fishermen and farmers. Until the two 2008 spills Bodo was a relatively prosperous town based on fishing.

According to Leigh Day, the spills have destroyed the fishing industry. Expert

evidence indicated 1,000 hectares of mangroves were destroyed by the spills and a further 5,000 hectares were impacted.

In a preliminary hearing ahead of the trial, which was due to take place in May 2015, but has since been settled, the London high court ruled that Shell’s Nigerian subsidiary could be liable if it were proven that it did not take reasonable steps to protect and maintain the pipeline from thefts, which have plagued the oil industry in Nigeria.

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LEGAL DIRECTORY

DIRECTORY OF NIGERIAN OIL AND GAS LAW FIRMS Nigerian law firms are increasingly doing bigger deals in the oil and gas industry. As a result, many international investors have begun to recognize the capability that exists within Nigerian law firms. They are now choosing to instruct Nigerian firms directly on deals running into hundreds of millions. Due to the drop oil price drop, many E&P companies will be left cash strapped. Those that are cash rich will be looking for takeover deals. This will lead to many mergers and acquisitions and takeovers in 2015. The deal structuring for these transactions require tenacious lawyers that can meticulously deal with complex upstream energy and finance law issues related to the peculiarity of the local licensing regime. One particular law firm advised alone on a $1 billion deal and deals of $500 million are becoming more commonplace. Nigerian law firms have come of age and to celebrate them, we list here some Nigerian law firms with proven oil and gas expertise.

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DIRECTORY LISTINGS

DIRECTORY OF NIGERIAN OIL ADEPETUN CAXTON-MARTINS AGBOR & SEGUN

9th Floor, St. Nicholas House, Catholic Mission Street, Lagos 2nd Floor, Abia House, Michika Street, Central Business District, Abuja Amazing Grace Plaza, 52, Emekuku Street, D-Line, Port Harcourt Telephone: +234-1-4622094, 4622093, 4622480 Email: acas@acas-law.com Web: www.acas-law.com Oil and gas partners and associates: Sola Adepetun, Partner: sadepetun@acas-law.com Felicia Kemi Segun, Partner: ksegun@acas-law.com Taiwo Afonja, Partner: tafonja@acas-law.com Donna Obaseki-Ogunnaike, Partner: dobaseki-ogunnaike@acas-law.com

ADEYEMI-AKISANYA ASSOCIATES

Okoi Arikpo House, (5th Floor), 5 Idowu Taylor Street, Victoria Island, Lagos Telephone: +234.(0)1. 270-0043; +234.(0)809.333-0287 Website: www.adeyemi-akisanya.com Oil and gas partners and associates: Adeyemi Akisanya - Principal: :+234.(0)803.403-0287; yemi@adeyemi-akisanya.com Femi Olaoye - Senior Associate: +234.(0)703.293-5525; femi@adeyemi-akisanya.com Deji Oyetunde - Associate: +234.(0)803.596-4132; deji@adeyemi-akisanya.com.

Vera Okafor - Associate: +234.(0)803.969-9608; yemi@adeyemi-akisanya.com

ADVISORY LEGAL CONSULTANTS

33B Adebayo Doherty Street, (Off Admiralty Way) Lekki Phase 1, Lagos, Nigeria.

Telephone: +234(0)7000 2384 7679 Email: info@advisoryng.com Website: www.advisoryng.com Oil and gas partners and associates: ‘Gbite Adeniji – Chief Consultant Yemisi Awonuga – Senior Consultant Jumoke Fajemirokun – Senior Consultant Pacer Guobadia – Consultant Jumoke Arowolo – Consultant

AELEX

7th Floor Union Marble House, 1, Kingsway Road, Falomo- Ikoyi, Lagos Telephone: (+2341)2793367, 4617321 -3 Facsimile: (+234 1) 4617092 Website: www.aelex.com Oil and gas partners and associates: Soji Awogbade – Partner : sawogbade@aelex.com Sina Sipasi – Partner: osipasi@aelex.com Kofo Bamgbose – Associate: kbamgbose@aelex.com

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DIRECTORY LISTINGS

AND GAS LAW FIRMS AJUMOGOBIA & OKEKE

Sterling Towers (2nd Floor), 20 Marina, Lagos Telephone: +234 (1) 27119368; +234 (1) 271193689 Facsimile: + 234 (1) 27119882; + 234 (1) 4622686 Email: ao@ajumogobiaokeke.com Website: www.ajumogobiaokeke.com Oil and gas partners and associates: H. Odein Ajumogobia (SAN) (Partner) Patrick Osu (Partner) Bello Salihu (Senior Associate) Tope Agbebiyi (Associate) Yemisi Agweye (Associate)

ALUKO & OYEBODE

Lagos Office: Address: 1, Murtala Muhammed Drive (Formerly Bank Road), Ikoyi, Lagos, Nigeria Phone: +234 (1) 462 8360 Fax: +44 207 681 3402 E-mail: ao@aluko-oyebode.com Website: www.aluko-oyebode.com Partners and associates (with designations): Gbenga Oyebode, MFR – Partner Kofo Dosekun – Partner Olubunmi Fayokun – Partner Oghogho Makinde – Partner Reginald Udom - Partner Uche Ugoji – Senior Associate

BANWO & IGHODALO

98 Awolowo Road, Ikoyi, Lagos, Nigeria Email: Banwigho@banwo-ighodalo.com Website: www.banwo-ighodalo.com Oil and gas partners and associates: Ken Etim – Managing Partner Stella Duru – Partner Kehinde Ojuawo – Partner Ayodele Oni – Senior Associate

FEMI OJUMU & CO BARRISTERS AND SOLICITORS

4th Floor, West Wing, Mintydale House, 45 Berkeley Street, Lagos Telephone: +234 (0) 812 430 1433; + 234 (0) 810 508 3893; + 234 (0) 909 837 0032 Email: lawyers@femiojumu.com Website: www.femiojumu.com Oil and gas partners and associates: Partner: Femi D. Ojumu Senior Associate: Tony Aregbe Associates: Natalie Adefowokan; Ifeoluwa Owotomo

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DIRECTORY LISTINGS

JACKSON ETTI & EDU

Address: RCO Court, 3-5 Sinari Daranijo Street, Victoria Island, Lagos Nigeria Tel: 234-1-7736361, 4626841-3 Fax: 234-1-2717889 www:jacksonettiandedu.com Oil and gas partners and associates: Taiwo Adeshina, Managing Associate E-mail: taiwoadeshina@jacksonettiandedu.com Niyi Duale, Senior Associate, E-mail: niyiduale@jacksonettiandedu.com

ODUJINRIN & ADEFULU

Address: CHURCH HOUSE (FIRST FLOOR), 29 MARINA, LAGOS Email address: enquiries@odujinrinadefulu.com Website: www.odujinrinadefulu.com Oil and gas partners and associates: DR. ADEOYE ADEFULU – PARTNER MS. ADEREMI OGUNBANJO – SENIOR ASSOCIATE

OLANIWUN AJAYI LP

Address: The Adunola, Plot L2 Banana Island, Ikoyi, Lagos, Nigeria.

Tel: +234 1 2702551 Fax: +234-1-2642553 Oil and gas partners and associates: Tominiyi Owolabi - Partner: Towolabi@olaniwunajayi.net Yewande Senbore - Senior Associate: ysenbore@olaniwunajayi.net Damilola Salawu - Senior Associate: dsalawu@olaniwunajayi.net Oluwatomi Oluleye - Associate: ooluleye@olaniwunajayi.net Temiloluwa Ojuawo - Associate: tojuawo@olaniwunajayi.net Mayowa Kalesanwo - Associate: mkalesanwo@olaniwunajayi.net

PUNUKA ATTORNEYS & SOLICITORS

Plot 45, Oyibo Adjarho Street, Off Admiralty Way, Lekki Phase 1, Lagos Telephone: +23412704789, 2702791 D/L: +234 8035403030, +234 8023005993 Email: info@punuka.com Website: www.punuka.com Principal Partner: Chief Anthony Idigbe, SAN (a.idigbe@punuka.com) Partner Responsible for Oil & Gas: Mrs. Elizabeth Idigbe (e.idigbe@punuka.com) Associates in Oil & Gas Group: Ebele Enedah; e.enedah@punuka.com Ogoegbunam Okafor; o.okafor@punuka.com Gloria Abiagom; g.abiagom@punuka.com Olawale Adeogun; o.adeogun@punuka.com Emuobonuvie Majemite; e.majemite@punuka.com

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LOCAL CONTENT NEWS The Nigerian content drive continued to yield results in 2014.

In this section we chronicle some of the local content achievements in the oil and gas industry over the course of the year.

JANUARY – MARCH ARCO MARINE ADDED TWO VESSELS TO ITS LOGISTICS FLEET Nigerian local content maritime capability received a boost with the news that indigenous maritime logistics operator, Arco Marine procured two vessels to service upstream oil and gas projects. The two vessels, MV Arco FCB4 and MV Arco FCB5, which cost the firm about $17.5 million were built to specs for the company, a subsidiary of the Arco Group. The commissioning of the vessels took place at the Naval Dock Yard in Lagos.

JULY - SEPTEMBER

APRIL - JUNE GE PLEDGED TO BUILD SKILL AND CAPACITY IN NIGERIA’S OIL & GAS INDUSTRY Customers of GE Oil and Gas, partners and other stakeholders in the Nigerian oil and gas industry gathered at GE Garages for an interactive session on the role of Technology in the Nigerian Oil & Gas Industry. GE Garages is GE’s platform to communicate Advanced Manufacturing stories, bringing together both internal and external partners to enable creativity and innovation on a global scale.

GE explained that it was investing significantly in the training of engineers and technicians in the use of the ever-evolving technology.

Many GE Field Service Engineers and technicians are indigenous Nigerians. This, the company said, was part of GE’s localization strategy in the region.

NCDMB INVITED AGIP AND ARCO TO TALKS OVER DISPUTED GAS PLANT MAINTENANCE CONTRACT The Nigerian Content Development and Monitoring Board (NCDMB) intervened in the dispute between the Nigerian Agip Oil Company and Arco Petrochemical and Engineering Company over the maintenance contract for the Ebocha/ Kwale/Obob gas plants in Delta State. The dispute stems from the award of the contract maintenance of the gas plants by joint venture partners, Agip and the Nigerian National Petroleum Corporation (NNPC). The original 5-year maintenance contract was awarded in 2006 to GE, with Arco, an indigenous company, as its local Technical Partner.

Arco’s allegations of impropriety against Agip included an accusation that when the extension of the contract was granted in 2011, Arco’s role was reduced to that of a subcontractor rather than a technical partner. They say this was in breach of local content laws.

Arco is a wholly indigenous company, which started business as the representatives of an Italian Government owned manufacturer of steam/gas turbines, gas compressors & pumps. It has since developed other partnerships and offers a wider range of services to the industry.

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OBIJACKSON GROUP ANNOUNCED IMPENDING DELIVERY OF NIGERIA’S FIRST FLOATING DRYDOCK The Obijackson Group, parent company of successful oil services company Nestoil, announced that it was shortly to get delivery of a floating dry dock facility. The indigenous company said it ordered the facility, which will be the first in Nigeria, to stem capital flight due to the necessity to take vessels out of Nigeria whenever a dry dock is needed. Most Nigerian-waters operated vessels requiring dry-docking will usually go to Angola, Ghana and Abidjan.

A dry dock is a floating structure that can be partially submerged to enable vessels to be raised for repair particularly when access to the areas of the vessels below the water line is required. The dry dock was due to be in operation by the end of 2014.

LOCAL CONTENT NEWS NCDMB REVISED THE CATEGORISATION MATRIX FOR MARINE VESSELS NCDMB issued a notice that it was revising its categorisation matrix for marine vessels in use in the Nigerian oil and gas industry. The Marine Vessels and Vendor Categorization Scheme was put in place by the Board in 2011 to structure the utilization of indigenous owned marine vessels in the Nigerian Oil and Gas Industry and achieve the short term targets of the Honourable Minister of Petroleum Resources for 60% indigenous ownership of marine vessels operating in the oil and gas industry by 2015.

The implementation model achieved substantial results, driving the indigenous ownership of marine vessels utilized in the industry from about 15% to over 50%. This translates to over $3bn per annum revenue retention in country.

Having implemented the current model for over 3 years, NCDMB felt it was imperative to progress to the next phase of maximizing local value capture by promoting ship building in Nigeria, in order to enhance skills, develop technology and generate employment.

This strategic initiative was underpinned by evidence that there is a common practice where vessel hulls are fabricated in one

shipyard while fit out of topsides in carried out in another yard, including some fit out of topsides done in Nigeria.

Based on these findings and the existence of yards in Nigeria with capacity for aspects of shipbuilding and maintenance, the Board decided that a good starting point was to promote fit out of topsides of hulls in Nigerian shipyards. As a result, NCDMB has revised the marine vessel and vendor categorisation strategy, which took effect from 1st October 2014.

The revised categorization matrix will give priority to in country marine vessel construction and provide better opportunities for vessels that have been part fitted out or constructed in Nigeria in tender opportunities.

The new categorisation is as follows: n Vessels that are wholly built in Nigeria and vessels wholly owned by Nigerians will be given first consideration in all contracts in the oil and gas industry. n Vessels that are 50% and above fitted out or constructed in Nigeria (by tonnage or spend) will be given next co nsideration. n Vessels that are below 50% fitted out or constructed in Nigeria (by tonnage or spend) will be given consideration after exhausting capacities of 1 and 2 above. n These categories will be given higher priority than ownership of vessels fully imported from abroad.

Vessel construction yards were required to upload their vessel construction capabilities in NOGICJQS (http://portal.nogicjqs.com) portal not later than 30th September 2014 The NCDMB is also compiling a demand profile for new built vessels from operators and major contractors. To ensure that their companies were properly captured in the new matrix, marine service providers intending to build new vessels were required to upload the plan in NOGICJQS and demonstrate that Nigerian yards would be engaged for the vessel build, not later than 30th September 2014.

OCTOBER – DECEMBER NCDMB DISCLOSED PLANS TO SPEND $50- $100 MILLION ON OIL AND GAS PARKS The Nigerian Content Development and Monitoring Board (NCDMB) revealed plans to spend up to $100 million developing Nigerian Oil and Gas Parks. The Parks are expected to promote the manufacturing of oil and gas components and provide opportunities for research and development.

NCDMB INAUGURATED CONSULTATIVE FORUM COMMITTEES In a bid to generate new ideas for the development of Nigerian Content in the oil and gas industry, the Nigerian Content Development and Monitoring Board (NCDMB) inaugurated 10 sectorial committees of the Nigerian Content Consultative Forum (NCCF).

The Executive Secretary of the Board, Ernest Nwapa disclosed this at the close out ceremony of the Nigerian Oil and Gas Parks Scheme Training Programme held recently in Yenagoa, Bayelsa State. The training programme was for the training of NCDMB staff that will spearhead the design and operation of the Nigerian Oil and Gas Parks Scheme (NOGAPS).

The NCCF sectorial committees are Fabrication; Finance, Insurance and Legal Services; Shipping and Logistics; Education and Training; Petroleum Technology and Multinationals; Materials and Manufacturing; Information and Communication Technology; Engineering and Essential Services, which covers Medical Services, Health, Safety & Environment, Catering & Hospitality.

Nwapa explained that NCDMB will spend $10 million on each park for phase one, and up to $50 million and $100 million subsequently, depending on the focus of each park. The Board, he said, already had a budget approval of $10m for each of the parks from the Nigerian Content Development Fund (NCDF).

Speaking at the inauguration, the Executive Secretary of the Board, Ernest Nwapa explained that the objective of constituting the NCCF committees was to provide a platform for information sharing on upcoming projects and local capabilities. He said that the committees would also be expected to articulate and recommend strategies for developing Nigerian content.

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LOCAL CONTENT NEWS MARINE PLATFORMS CLINCHED DEAL AS LOCAL PARTNER FOR $30M ENI AND SHELL CONTRACTS Indigenous companies are continuing to benefit from the local content laws after Marine Platforms Limited (MPL), a company offering diverse oil and gas services, including completion and subsea services, won a double contract as local content partner to UK company, Ceona. The contracts from Eni and Shell, together worth $30 million were awarded to Ceona, a subsea umbilicals, risers and flowlines (SURF) services company, which chose MPL as its local partner.

The Eni NAE (Nigerian Agip Exploration Limited) contract is for the Abo12 well completion while the Shell Petroleum Development Company (SPDC) contract is for vessels to provide support for the Sea Eagle Floating Production Storage and Offloading (FPSO) unit.

MPL is expected to put its recent delivery, the African Inspiration to use on the project. The newbuild vessel came from Norwegian ship designers and constructors, Havyard. The vessel is a Havyard 857 Subsea IMR (Inspection Maintenance and Repair) ship that was designed to be used for installation, maintenance and repair work on oil installations on the seabed.

ROYAL NIGER REVEALED PLANS TO BUILD NIGERIA’S FIRST FINISHED UMBILICAL PRODUCTS PLANT Royal Niger Emerging Technologies revealed that it had reached an advanced stage in its plans to build Nigeria’s first facility for the manufacture of finished umbilical products for the local market.

The plant, currently in construction, is expected to begin operations in the 2nd quarter of 2015. When finished it will supply flying leads in Nigeria in the first phase of its facility development. The plant located on 25,000 square metres will be capable of receiving umbilical components from multiple manufacturers in a variety of configurations, lengths and materials.

“The plant will be a key element in ensuring leading manufacturers of umbilical products are able to meet their Nigerian Content compliance requirements by ensuring up to 60% of the equipment tonnage is manufactured in Nigeria while offering benefits in reduced cost in logistics and operations,” the company stated.

The plant, which is expected to have an annual cable output of up to 12km per

annum, will also support aftermarket services including umbilicals repairs, reeler management and splicing. The project is expected to directly employ up 120 people, and later indirectly provide over 500 job opportunities.

The plant will complement the efforts of the Honourable Minister of Petroleum

Resources through the Nigerian Content Development and Monitoring Board (NCDMB) to domicile in the country about 400km of umbilical contracts to be awarded by oil companies operating in Nigeria between 2015 and 2018.

This is expected to limit capital flight of approximately $400m from umbilical supply contracts as a result.

NIGERIAN CONTENT BOSS BAGGED HONORARY DOCTORATE DEGREE FROM FUTO The Executive Director of the Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa, was awarded an Honorary Doctorate Degree by the Federal University of Technology, Owerri (FUTO) at a convocation ceremony in recognition of his outstanding contributions and dedication to the development of Nigerian Content which supports the developmental aspirations of Nigeria.

Speaking after receiving the award from the university’s Vice Chancellor, Prof. Chigozie Asiabaka, the Executive Secretary explained that the implementation of the Nigerian Content Act

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has generated immense benefits for the Nigerian economy and the educational system by encouraging in-country incubation of technology and establishment of facilities where lecturers of oil and gas related disciplines can demonstrate what they teach and students can practice their newly acquired knowledge.

Responding, Nwapa said: “Technology is key for a country like Nigeria with our population. With our hunger for development and growth, we must continue to underpin our developmental effort with education in technology. Today, there are a lot of shop floors either in place or being built because of the Nigerian Content policy.”

LOCAL CONTENT NEWS FMC TECHNOLOGIES SUBSEA EQUIPMENT FOR BONGA NORTHWEST MADE LOCAL CONTENT HISTORY New York Stock Exchange (NYSE) listed FMC Technologies, Inc. commissioned its first subsea production tree built entirely in Nigeria. In a boost for local content, the company said that the equipment, manufactured for Shell Nigeria Exploration and Production Company Ltd. (SNEPCo)’s Bonga Northwest project, marked the company’s first subsea equipment engineered, manufactured, tested, installed and serviced entirely in the country.

Speaking at an event in Lagos to celebrate this achievement, Shelagh Daley, the Area Manager of FMC Technologies Africa Region Subsea said: “We have been working with SNEPCo to supply subsea systems for the Bonga Northwest development since 2010. This local manufacturing of equipment marks a significant milestone for the company and for the country’s energy industry.”

The company said it had responsibility for more than 2,000 jobs in Nigeria, including employees and through their supply chain.

SAMSUNG AND LADOL BEGAN CONSTRUCTION OF N51 BILLION FPSO INTEGRATION FACILITY

GE BEGAN SUBSEA WELLHEADS FABRICATION AT ONNE After investing over $4.5 million in facilities, recruitment and training, GE began fabricating wellheads in Onne, Rivers State in Nigeria. The project, which was 4 years in planning will enable the company to fabricate subsea wellheads in Nigeria for its oil and gas customers. The company provides complete assembly, testing and life cycle service for subsea tree systems, subsea control modules, specialty connectors and pipes at the facility.

The site includes a dedicated on-site training centre and offers broad business development opportunities for local suppliers. The company says it is planning to continue expanding its capabilities.

Following the resolution of the dispute between them, Samsung Heavy Industries (SHI) Nigeria Limited and Lagos Deep Offshore Logistics (LADOL) established a new partnership called SHI-MCI Free Zone Enterprise to build Africa’s first Floating Production Storage Offshore (FPSO) integration and fabrication facility in LADOL free zone in Lagos.

The yard’s first job will involve finalising the integration of the Total’s $3-billion Egina FPSO, a contract Total formally awarded to Samsung in June 2013. The FPSO will be one of the largest in the world, with a storage capacity of 2.3 million barrels of crude oil and a targeted production capacity of 200,000 barrels per day. The facility is set to create 50,000 direct and indirect jobs over the next few years.

The project stalled earlier this year when LADOL dragged Samsung, Total Upstream Nigeria Limited and the Nigerian Content Development and Monitoring Board (NCDMB) before a Federal High Court, alleging a plot to exclude it from the execution of the local component of the Egina FPSO vessel. The parties later settled the matter out-of-court.

The facility is a major milestone for the company’s ambitions in Nigerian. GE said it wants to increase the local capabilities of its operations in Nigeria through ambitious technology programs and human capacity development. As a result of this facility, oil and gas companies operating in Nigeria no longer have to import fabricated wellheads, a development that will reduce costs and improve delivery time.

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LOCAL CONTENT REPORT

ncdmb: K C A B G N I K O O L D R A W R O F G N I LOOK

In April 2010, when the Nigerian Oil and Gas Industry Content Act (NOGIC) was enacted, it marked a new beginning in local participation in the Nigerian oil and gas industry. The Executive Secretary of the Nigerian Content Development and Monitoring Board, Ernest Nwapa, has worked tirelessly for the cause. He is pleased with the success achieved in the implementation of the Act which seeks to create the platform for industrialization through the development of critical facilities and infrastructure and acceleration of development of indigenous capabilities in the oil and gas industry. Here are some of the achievements over four years of Nigerian content development.

From right to left, President Goodluck Jonathan, Diezani Alison-Madueke, Minister of Petroleum Resources, Ernest Nwapa, Executive Secretary, NCDMB

INVESTMENT IN FACILITIES In the five years before NOGIC, investment in facilities was below $1 billion. In the last 4 years, over $5 billion worth of investment has been put into facilities, due to increased opportunities. Among them are investments in heavy fabrication yards, including Nigerdock, Aveon, Saipem and SHI-Ladol. There is a line pipe mill currently producing while 4 others are currently being set up. There are now marine vessels, rigs owned and other assets owned by Nigerians and several maintenance facilities for vessels and rigs have been set up. Original equipment manufacturers (OEMs) have also set up manufacturing facilities whilst several indigenous players have entered the exploration and production (E&P) sector.

Over $10 billion of investment is projected in the next 4 years, with new fabrication and FPSO years planned, 4 pipe mills should begin production. In addition, the construction and outfitting of marine vessels, manufacturing of equipment including umbilicals, manufacturing of gas cylinders ( 5 million by 2015) are projected in that time. Indigenous companies will also be expected to begin venturing into deepwater.

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ENGINEERING

For the period from 2005 to 2010 there was less than 2000 square metres of effective design workspace, with below 250,000 man hours of design capacity and less than 500 workstations. Between 2010 and2014 over 20,000 square metres of effective design workspace had been established including the new Deltaafrik office established to support new EPC projects and also the new state of the art centre opened by CB Geophysicals for geophysical studies.

LOCAL CONTENT REPORT EMPLOYMENT AND TRAINING

Between 2005 and 2010, there were less than 100,000 man-hours of training available. International oil companies (IOCs) tended to train their own staff whilst other training schemes were based on academic qualification. There were insufficient provisions for project-based training. In the period from 2010 to 2014 over 2 million man-hours of training was achieved. Over 5,000 youth have passed through projectbased training and attachment programmes including on the Egina, Erha North 2 and Bonga fields. About 50 per cent of those trained have gone on to secure employment.

A new welding centre of excellence has also been built.

NCDMB direct intervention: n 250 Nigerians trained for OSMERT n 100 youths for vocational training n 50 geoscientists trained and attached to IOCs and petroleum technology companies

MARINE VESSELS SCHEME

The Marine Vessels Scheme, which gives preferential treatment to AAA certified vessels begins in January 2015. Once it takes off, those wishing to be part of the scheme must submit to the NCDMB their plan to acquire or build new vessel. The Board will review the Nigerian and foreign scope. If the Board is satisfied, then construction can commence with the Board tracking its progress. Once construction is completed, the Board will check to see if its scope is fulfilled as agreed. If so, then it will be categorized as AAA (vendor/vessel) and will be given first consideration for any work available.

If the vessel is to be built abroad without NCDMB approval then it will be categorized as an imported vessel and will not be considered for work where there is AAA categorized vessels available.

The vessel build/acquisition plan must indicate: n Vessel type n Vessel duty/capacity n Vessel size n Proposed execution plan (scope to be done in Nigeria and scope to be constructed abroad)

MANUFACTURING:

There was no significant manufacturing activity before and now, between 2010 and 2014, new manufacturing capabilities have been developed including subsea christmas tree assembly at Onne and the GE multimodal facility. Looking forward, Nigeria is expected to achieve full EPC capability by 2018. There will be oil and gas parks that will accommodate over 50 medium manufacturing facilities. GE’s facility will also manufacture components for its equipment.

NIGERIA OIL AND GAS PARK SCHEME

The Nigerian Oil and Gas Industrial Parks Scheme (NOGIPS) is a capacity development initiative to establish physical infrastructure and create an enabling environment for low cost production of goods, domiciliation of capacity, technology acquisition, training, creation of employment opportunities and structured community participation.

The Industrial Parks when established will be a significant milestone in the continued quest for achieving effective participation of the local supply chain in the oil and gas sector. The beneficiaries of the scheme will be operating companies, multinationals, small and medium enterprises (SMEs), original equipment manufacturers (OEMs), and oil producing States. NOGIPS to elevate local SMEs to OEMs The Industrial Parks will provide a direct platform for collaboration with the original equipment manufacturers that are now required to manufacture/ assemble components in Nigeria. The parks will enable them to produce industry standard high tech equipment for the oil and gas industry under a shared service and resource optimisation model.

The aim of these industrial parks is to bring economic gains to the doorstep of oil producing communities.

The Executive Secretary says the Board continues to receive tremendous encouragement from the government and the Ministry of Petroleum Resources in the implementation of this scheme and that they have already received offers for land from States that have keyed into the scheme. Selected SMEs with a strong manufacturing pedigree will be supported to form Joint ventures with international OEMs that are currently supplying equipment to the oil and gas industry. These joint ventures will form the core of business enterprises operating (manufacturing) within the park under a shared services and resource optimisation model.

The oil and gas parks, which will create at least 3,000 jobs per location will be sited in Bayelsa, Imo and Cross Rivers States in the first phase and preliminary construction activities are about to begin. Nwapa said NCDMB would begin engagement with communities where the parks will be situated and advised members of such communities to always see project promoters as development partners. Nwapa said that the Board embarked on the development of the parks to bring Local Content practice closer to the grass roots and integrate oil and gas based entrepreneurs into manufacturing as well as support the growth of Small and Medium Enterprises (SMEs) through mentoring by international Original Equipment Manufacturers (OEMs) and other multinationals.

MANUFACTURERS TARGETED BY NOGIPS: n Rotating equipment n Subsea and static equipment n Production chemicals and drilling fluids n Instrumentation, automation and electrical

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LOCAL CONTENT REPORT

CONTRACTOR FINANCE SCHEMES Vendors and suppliers to oil and gas companies have complained for a long time about the challenges they face over accessibility of funds required for the execution of projects and contracts. These challenges persistently limit the capacity of local vendors and suppliers in the oil and gas industry. In a bid to alleviate these difficulties, many international oil companies (IOCs) have set up contractor finance schemes to help suppliers and vendors. In addition, the Nigerian Content Development and Monitoring Board (NCDMB) is also able to support vendors through the Nigerian Content Development Fund (NCDF). Here are some of the finance initiatives aimed at indigenous vendors and suppliers.

EXXONMOBIL In February ExxonMobil affiliates in Nigeria formally launched the ExxonMobil Nigeria Contractor Finance Scheme (EMNCFS), an initiative in partnership with twelve Nigerian banks - that offers competitive financing options to the company’s business partners in Nigeria. The EMNCFS is targeted at Nigerian vendors seeking access to better funding options to fulfill ExxonMobil awarded contracts and procurement orders.

Contractors participating in the scheme will have access to competitive loan rates from participating banks that would otherwise be unavailable to them. Additionally, loan processing times will also be significantly reduced due to upfront definition of eligibility criteria by the banks.

Since the EMNCFS was introduced in November 2013 at least 24 contractors have been able to access funds under the scheme. About $8.6 billion is available for contractors under the program.

SHELL Shell Exploration and Production Companies in Nigeria started their own scheme in 2012. It is part of its strategies to boost indigenous companies’ participation in the Nigerian oil and gas industry. Shell, together with five reputable banks and an American international financial institution pulled together $6billion (approximately N9.8trillion) as funding commitment for local medium and large scale enterprises desirous of adding internal value to the lucrative industry.

First Bank Nigeria, Access Bank, CITI Bank Nigeria, Fidelity Bank, and Standard Chartered Bank, as well as DLR Integrated Business Services, which provides international financing and procurement services for local content providers, are partnering Shell joint venture to ease indigenous companies’ access to critical funds to finance huge procurement and manufacturing contracts in the oil and gas industry.

TOTAL TOTAL E&P Limited & TOTAL Upstream Nigeria Limited launched the Nigerian Contractors Development Initiative in 2013. The initiative is valued at $7.5Billion and the fund has been made available by participating Nigerian banks, committed to the development of Nigerian Content in the industry. Total said at the launch that they hoped that the initiative would go a long way in addressing the inability of Nigerian service companies to access funds, necessary for them to be competitive and the eventual actualization of localization of procurement of goods and services.

NIGERIAN CONTENT DEVELOPMENT FUND (NCDF) The Nigerian Content Development Fund (NCDF) was established by the Nigerian Oil and Gas Industry Content Act (NOGIC Act), 2010, to address financial and liquidity challenges of the Nigerian companies operating within the Nigeria oil and gas industry.

The Fund represents the sum of 1% from every contract awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity or transaction in the upstream sector. The money is to be deducted at source by contract awarding entities and paid into designated accounts, which are kept with Custodian Banks under the programme.

NCDF has been developed primarily to assist Nigerian companies access cheap and affordable credit towards contract execution and infrastructure development.

Interested Nigerian oil and gas service companies are required to observe the following steps in expressing interest to access the Fund: n Log-in to the website of the NCDMB and locate the NCDF link to access the Operating framework, financing term sheet as well as Frequently Asked Questions (FAQs) on the NCDF. The website address is www.ncdmb.gov.ng n Approach one of the participating Banks as listed on the website to discuss financial needs and commence the loan application process. n Upon acceptance of funding proposal by the participating Bank, notify the financial advisers via an email to confirm the Bank’s engagement. The financial advisers will be required to coordinate the process of securing an offer with the Bank, executing the Loan Agreement as well as issuing the NCDF guarantee.

Details of the financial advisers can be located on the NCDF link on the website. n As soon as the terms of the Loan Agreement are met, the NCDF guarantee will be executed and loan disbursed.

On the 30% cluster, Nigerian oil and gas service companies are encouraged to approach the Fund with definitive infrastructure development opportunities, which NCDMB can part-finance and/or develop. NCDMB also collaborates with the industry, key stakeholders and international oil companies to jointly support strategic initiatives geared towards capacity development.

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CSR NEWS This year, the oil and gas company came out in force to support the fight to contain the Ebola crisis. We have already featured the oil industry’s CSR response in our last edition (the Technology edition) and that is why there is no mention of the Ebola response in this edition. A selection of CSR initiatives during the course of the year by oil and gas companies follows below.

JANUARY – MARCH

SHELL INVITED APPLICATIONS FOR POST-GRADUATE SCHOLARSHIP SCHEME Shell Petroleum Development Company, SPDC, invited applications for its 5th post-graduate scholarship scheme for 2014. The scheme, which was launched four years ago, is aimed at providing opportunities for graduates from Rivers, Bayelsa and Delta states to study courses relevant to the oil and gas industry, including engineering and geosciences.

Under this scheme, SPDC would award 10 scholarships for a one-year Master’s degree in partnership with Imperial College, London, University College, London and the University of Leeds for the academic year commencing September 2014. This was in addition to SPDC’s regular scholarship programme which was introduced in the 1950s through which thousands of Nigerians have been sponsored in diverse fields of study.

APRIL – JUNE

CHEVRON HELD FAIR TO CELEBRATE GLOBAL MOU WITH COMMUNITIES The Chevron joint venture held a Global Memorandum of Understanding (GMoU) Fair and Exhibition to celebrate 9 years of successful operation of the GMoU strategy with communities in Ondo, Delta, Rivers, Bayelsa and Imo States, where it operates. Chevron pioneered a new social performance strategy in 2005 “to support the socio-economic development of communities around its area of operation in the Niger Delta area.” The strategy called the GMoU is hinged on a tripartite agreement with regional development committees (RDCs), representing host communities, the Chevron/NNPC joint venture and the respective governments in the 5 states in which Chevron operates.

Under the GMoU, the communities identify and select the projects they want and use the funds provided by Chevron for the execution of the projects.

NLNG ANNOUNCED INTENTION TO FUND SIX UNIVERSITY ENGINEERING LABORATORIES WITH $12 MILLION The Nigeria Liquefied Natural Gas Limited (NLNG) announced its intention to give $2 million each to six universities for the construction of modern engineering laboratories. The labs will have state of the art facilities, with cutting-edge equipment.

The universities that will receive the donations have been selected from the six geo-political zones. They are: University of Ibadan, University of Ilorin, University Port Harcourt, University of Maiduguri, Ahmadu Bello University, Zaria and University of Nigeria, Nsukka.

ADDAX PETROLEUM LAUNCHED N37 MILLION MICRO CREDIT SCHEME FOR WOMEN

ECOBANK DONATED VANS TO FIGHT PIPELINE VANDALISM

Addax Petroleum launched the first phase of a N37 million micro credit scheme for women in its host communities. By the time the scheme has fully evolved, it would have benefitted 868 million women.

The first phase of the scheme will provide 443 women with access to the micro-credit facilities. The women in this first phase are from the host community of Addax’s sole onshore mining (OML) 124 in which it owns a 100 per cent working interest. The scheme is intended to provide the women with seed funds to engage in and develop small enterprises.

Ecobank Nigeria donated two Hilux vans to the Pipelines and Product Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) to help in the fight against pipeline vandalism.

The bank said it was making the donation to support the efforts of PPMC in its fight against pipeline vandalism.

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ADDAX INVITED APPLICATIONS FOR PETROLEUM TERTIARY SCHOLARSHIP AWARD Addax Petroleum Development Limited invited interested and qualified candidates for its 2013/2014 National Merit University Scholarship Award Scheme. Interested applicants had to be Nigerian and also full time registered 00 level undergraduate in a Nigerian university.

CSR NEWS ABU REVEALED TECHNOLOGY BREAKTHROUGH FOR HEAVY CRUDE REFINING The Petroleum Technology Development Fund has revealed that a team of researchers led by the Chair, PTDF Endowment in Chemical Engineering, Ahmadu Bello University (ABU), Prof Abdulkarim Ahmed had developed a new technology in the local refining of heavy crude for the production of petroleum products using locally sourced materials. After four-years of research on the production of zeolite catalyst using clay, the team discovered that

zeolite catalyst was an essential additive in the conversion and refining of heavy gas oil into usable gasoline and petrochemical products in refineries.

Plans for the design and fabrication of the pilot plants for the production of zeolite catalyst had reached advanced stage with a view to inaugurating a prototype refinery according to the Fund.

NNPC WON 14TH NIGERIA OIL INDUSTRY GAMES The Nigerian National Petroleum Corporation (NNPC) won the 14th edition of the Nigeria Oil & Gas Industry Games (NOGIG) after winning 14 gold, 11 silver and 13 bronze medals. They beat 11 other oil companies that participated in this year’s games.

This year’s NOGIG held in Lagos featured athletics, basketball, chess, football, golf, scrabble, squash, swimming, table tennis, tennis and 8-ball pool. Participants were drawn from Agip, Addax, Chevron, ExxonMobil, DPR, NCDMB, NLNG, NNPC, Oando, Total, PTI and SPDC.

OANDO FOUNDATION APPOINTED TO JUDGING PANEL FOR $1M TEACHER’S PRIZE The Oando Foundation, a charity chaired by Wale Tinubu, CEO of Oando Group, was appointed to join the judging panel for the Varkeys GEMS Foundation Global Teacher Prize, the Nobel Prize of the world of education.

The prestigious Teacher’s Price of $1 million is awarded to a teacher that has made an outstanding contribution to the

JULY – SEPTEMBER NLNG INVITED APPLICATIONS FOR 2014/15 SCHOLARSHIP SCHEME The Nigerian Liquefied Natural Gas (NLNG) Company invited first year undergraduates in Nigerian universities to apply for the 2014/15 NLNG Scholarship Award. The closing date for applications was 31st July 2014.

PTDF RELEASED SHORTLIST OF CANDIDATES FOR OVERSEAS MSC SCHOLARSHIP SCHEME The Petroleum Technology Development Fund (PTDF) released the list of successful candidates for the award of its 2014/15 overseas scholarship MSc. The aptitude test was conducted in December 2013.

profession. The Global Teacher prize winner will have achieved exceptional results in student learning and will have opened up access to quality education for children of all backgrounds, enabling them become “global citizens” who are comfortable with their peers from different ethnic and religious backgrounds.

Nominations are sought from all over the world. President Clinton is the honorary Chairman of the Varkeys GEMS Foundation.

NNPC/SEPLAT LAUNCHED UNDERGRADUATE SCHOLARSHIP SCHEME The Nigerian National Petroleum Development Company and Seplat Petroleum Development Company Joint Venture (JV) announced the launch of their inaugural undergraduate scholarship award.

The scholarship is open to second year undergraduates of Nigerian public universities studying only the prescribed courses. The closing date for applications was the 3rd of August.

PTDF AWARDED 60 SCHOLARSHIPS FOR STUDY IN NORWAY The Petroleum Technology Development Fund (PTDF) awarded 60 scholarships for study in Norway. The scholars, 48 men and 12 women, will study Bachelor of Science programmes in oil related fields at Otsfold University College, Fredrikstad in Norway.

The educational programme was part of the agency’s capacity development mandate for the oil and gas industry and youth development. The programme was part-funded by the United Nations Institute for Training and Research (UNITAR)

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CSR REPORT

CRAWLING JUST BEFORE …CHRONICLING THE NIGERIAN OIL & GAS INDUSTRY IN 2014 The Nigerian oil & gas sector survived the year 2014 through a very unstable economy due to the steady decline in oil prices albeit in more drastic proportions.

Crude oil as the mainstay of the Nigerian economy forms the fundamental benchmark upon which the country’s gross domestic product and revenue forecasts are deduced. In this article, Ini Onuk reviews the sector from a sustainability perspective, taking a critical look at the aspects of the industry that have direct or indirect consequences on corporate social responsibility and sustainability.

1. FALLING OIL PRICES

3 Unresolved Community Development Fund

Global oil prices are reducing, actually falling; and drastically too. The implication of this development is the erosion of our external reserves as a nation, which consumes and imports much more than it produces or even exports. The drop of over $20 per barrel in the three months between August and October raised justifiable fear given our overwhelming dependence on oil and gas exports for over 90% of our country’s foreign exchange earnings. Sustainability refers to the longterm competitive value of a system, which continues to generate value to enhance the system upon which that value depends.

Accordingly, it is no news that our oil & gas sector or industry is far from sustainable.

Although there is still demand for Nigeria’s Bonny Light crude from Asian economies, nobody can guarantee for how long the demand will continue. With the heavy investment on research & development by these economies, just as the US Economy harnessed shale oil; what becomes of our economy should the economies of Asia harness cheaper sources of energy?

The PIB stipulates the suggested framework with which the oil & gas industry will be operated and administered by government. The PIB includes a provision for a Host Community Fund, which is aimed at revenue generation for the development of host communities. This community fund is what the CSR and Sustainability industry is yet to resolve with the Oil Producers Trade Section (OPTS). Who administers, audits and ensures accountability of the Fund? At the moment, many oil producing companies insist they continue to invest in their host communities significantly but the impact is far from commensurate to the funds declared.

2. PIB PENDING The deregulation of the Nigerian oil & gas sector has been work in progress for quite a while with the answer to her many challenges seemingly embedded in one document - the Petroleum Industry Bill (PIB). Interestingly, though the bill is yet to be passed by the Senate; it nevertheless continues to command the trappings of an unaffordable cost, generating a pot-pourri of reactions from stakeholders.

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4. Selling/Takeover of Assess + inheritance of host communities A number of organisations sold off their assets in the course of the past year raising concern of observers about the future prospects of the industry. U.S. Company ConocoPhillips completed the sale of Nigerian oil assets to local player Oando Plc for $1.5 billion. Shell also sold off some productive oil blocks such as OML 29 to a group of local. The implications of these and other similar transactions is that the host communities will be adopted by the new organisations as well as lingering challenges and agreements. For instance, the shut-down of the Erhoike flow station located within the OML 30 operation area in Delta State which belongs to its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC), by youth from the host communities showed that transfer of assets come with attendant risks. Indigenes from the eleven Orogun host communities, who had earlier threatened to disrupt the operations of the NPDC in the area if their demands for patronage and community development projects were not met within fourteen days, shut down the flow station in protest to support their demands. In spite of the many challenges which plagued the sector in 2014, Oando and Total won awards for their impact and investments to various communities as a part of Corporate Social Responsibility,

5. UNEP Workshop & Commencement of Remediation After three years, some work spearheaded by the Federal Government of Nigeria on the United Nations Environment Programme (UNEP) Report on Ogoniland commenced. An estimated 1Billion US Dollars will be required over three (3) decades to clean up the besmirched Niger Delta. A two-day stakeholder meeting which held in Geneva in November 2014 carved a clear path for the implementation of environmental remediation measures proposed by UNEP in the Environmental Assessment of Ogoniland. Convened by Mrs. Diezani Alison-Madueke, Nigeria’s Minister of Petroleum Resources, and facilitated by UNEP and relevant organisations such as: UN Development Programme, UN Office for Project Services, and UN Institute for Training and Research; the meetings marked a pivotal moment for the large-scale clean-up of Ogoniland. The participation of a 16-member Ogoni delegation (including Mr. Legborsi Saro Pyagbara, president of the Movement for the Survival of the Ogoni People), in the meetings in Geneva raised hopes about government’s commitment to clean up and restoration efforts. However, clear targets and timelines are yet to be circulated.

CSR REPORT

THE CROSS ROADS 6. Oil Spills Oil spillage is inevitable and in developed economies, a compensation system and rescue operations are established and heavily invested into. Although there were spills in 2014, the industry continues to exist without a compensation system. The face-off between Amnesty international and Shell over the Bodo Community oil spill served as a turning point in the nation’s history of cleaning up exercises. Similarly, some community youths in

Akwa Ibom State shut down operations of ExxonMobil over her inability to clean up an oil spill. According to Shell Nigeria, oil spills occurred every month from January through October 2014 caused by operational reasons and sabotage. In addition to publishing and reporting incidents of oil spillage, like Shell Nigeria; very little information is made available on their subsequent clean up and compensation to victims of host communities.

7. NLNG

8.Gas Policy

2014 marked ten years after the plan to ‘Nigerianise’ NLNG by ensuring a completely Nigerian workforce. The objective of the scheme was to be achieved by 2013 although the attainment of this milestone is yet to be announced. The NLNG remains one of the most important and lucrative economic projects in the sector and a vital part of the Federal Government’s diversification programme and has already generated significant revenues and foreign exchange for the nation.

Consequently, cooking gas shortages experienced across the country were to become a thing of the past due to the increase in investment by the NLNG.

The new Gas Policy proposed by the Federal Government was a very topical and much debated issue in 2014 because it seeks to compel gas producers to supply to the domestic market at the expense of the lucrative export market in order to check the problem of shortage of gas supply to power plants. Whilst the strategy is commendable, it is not lucrative for the organisations doing business in this field although Government is bent on taking some gas originally meant for the export market and re-channelling the same to the domestic market. Nonetheless, no consideration has been made to the stoppage of gas flaring which has negative consequences on the environment.

9. 2015 Prospects Not much is expected to significantly change in the sector due to the falling oil prices.

However, it provides an opportunity to streamline areas of wastage and corruption by developing a National Strategy on CSR in addition to the PIB passage. This will ensure a uniform standard rather than subjecting vulnerable and often impoverished communities to the individual and varying interpretation of development.

This Strategy will also stand for responsible business practices in the respective company’s actual core business. It is the designation for an integrated corporate concept that encompasses all the social, environmental and economic contributions a company makes as part of its voluntary assumption of social responsibility, which goes beyond compliance with laws and regulations and incorporates interaction with

stakeholders. Countries void of the many challenges Nigeria faces, such as Canada, Denmark, Austria as well as the European Union Commission, have adopted National Strategies.

Also, real action on the UNEP Report is expected this year if the expectations of the Ogoni people will ever be met. Whilst at it, an overhaul of the Niger Delta Regional Development Master Plan should also be carried out to ensure that the reclamation process is not reversed in the near future.

Whilst the proposed Petroleum Industry Bill (PIB) is a good step in the right direction, provisions such as the Petroleum Host Community Fund (PHCF) threaten the success of the bill, which is likely to go the way of previous funds. Allocation of resources without strategic planning never

alleviates issues of poverty and social agitation. And this, in my opinion, will be no different.

Through the previous year, the industry has crawled steadily towards a crossroad.

The passage of the PIB will transform the sector in many ways as it epitomises a long procrastinated crossroad. It is imminent that if nothing is done to leap frog the sector to a more sustainable modus operandi, the potential amassed in the past two (2) decades will not only be erased but irreversible damage will be done to the future prospects of the entire sector as well as our economic future as a country.

Ini Onuk is the Lead Consultant/CEO of ThistlePraxis Consulting Limited (www. thistlepraxisconsulting.com).

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CSR FEATURE

EMERGING TRENDS IN CORPORATE Corporate Social Responsibility (CSR) has become so important globally and such a crucial component of business strategy that corporations are outdoing themselves in a bid to be recognized as leaders in social responsibility. For the companies, it is as much about giving back to the communities in which they operate, as ultimately creating to a better operating environment. In this article, Apollonia Okuzu highlights some emerging trends in CSR.

India become the first country in the world in April 2014 to pass a CSR law mandating companies to spend 2% of net profit on social development. If properly implemented and monitoring is effective, then this new law could ensure that social intervention has a greater impact at grassroots level. Brazil and Indonesia have regulations that ensure the type and level of corporate social investment, along the lines of India’s new CSR Bill.

In spite of the fact that all the International Oil Companies (IOCs) are engaged in various intervention projects and have increased their efforts and further developed their CSI programmes, there is still much to be done. Organisations operating in Nigeria have to explore the changes and trends emerging in CSR globally, in order to come up with innovative programmes that will truly transform their own operating landscape. Some of these changes and trends that are emerging globally offer a way forward for CSR membership organizations in the country, to position themselves to be on the cutting edge of making lasting impact in the communities and the environment in which they operate.

Nigeria is following in their footsteps with the CSR Bill before the National Assembly for the set up of a commission to regulate companies CSR activities. The Bill requires companies to spend 3.5% of their profit before tax on social development activities.

There is a global move by some countries towards regulating or mandating some aspects of CSR by governments. They believe that companies can be compelled to do more through legislation than if left to their conscience or individual company policies. This has seen

CSR AS PART OF EMPLOYMENT CRITERIA A growing number of professionals around the world are becoming more aware of their social responsibilities and their desire to give back to the society and are subsequently making it a part of their corporate profile. Forward thinking employers are therefore keying into this trend to make it part of their employment criteria. As a result, companies are involving employees in formulating company societal investment policy to get well rounded and innovative policies and to foster a greater sense of belonging amongst staff and address their efforts to have direct involvement in social good.

International recruiters have also caught on to this trend and are specializing in CSR jobs and this trend is envisaged to continue to grow. The importance of the trend is further underscored by the fact that business schools abroad have started incorporating social entrepreneurship programs in their curricula because of students’ increasing interest in this area.

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It is critical therefore that multinationals doing business in these areas, pay attention to this emerging trend so as to plan their corporate social investment with this in mind and begin to position themselves to ensure compliance.

In fact the perception that the international Oil companies’ (IOCs) efforts especially in the area of environmental issues and damage to the livelihood of the communities, has not been very effective, may be part of the reasons behind advocating for this type of government regulation, particularly in view of the importance of oil and gas in Nigeria.

GAMIFICATION OF CSR

Gamification is another growing trend that has had tremendous success as a tool, for social good. It is actually an online marketing model of using game rules and rewards for marketing and it is now being successfully utilised as a concept for raising funds for social investment. For the fund raisers there is a sense of satisfaction that they have contributed in some way to making a difference in the lives of others and the prestige reward of nomination as the highest fund raiser also gives them a sense of achievement. Companies could key into this trend and make gamification of social good, work for them by partnering with NGOs and other Not for Profits to develop fund raising channels online for their programs, which they can monitor to ensure proper utilization and accountability. Savvy companies operating in Nigeria could tap into the pool of funds all over the world from Nigerians in the Diaspora to attract donations for worthwhile projects.

ENVIRONMENTAL ISSUES In developed countries, the environment is a top front burner issue, what with climate change, depletion of natural resources and ecological matters. However, in under developed and developing nations, not enough attention is paid to this aspect of social responsibility by companies operating in these areas.

Multi nationals, international and even local companies operating in these regions need to take a cue from this and beef up their social responsibility programmes in the area of the environment, as this will definitely have an adverse effect on their operations in the long run. Companies are looking for more sustainable and less environmentally damaging alternatives, materials and ways of producing. They should not wait for legislation to force them to implement serious globally recognized and lasting solutions to dealing with these issues.

CSR FEATURE

SOCIAL RESPONSIBILITY HUMAN RIGHTS

WOMEN EMPOWERMENT

Women empowerment and access to education for women has gained global recognition as one of the most effective ways of spurring growth in developing nations and dealing with poverty in rural communities. Access to new production methods, equates to new products pushed into the market and will ultimately increase income and raise living standards in those communities. Properly articulated programs for education, training, skills acquisition, exposure to technology, funding etc, which are targeted at women in the villages go a long way to addressing serious issues such as poverty, infant mortality and other problems that come with the territory.

A fair number of the social investment programmes in the country are cosmetic and have not done enough to really address the root causes. Organisations who want to key into this area, as part of their CSR, must develop effective programs, and engage or partner with the serious Not for Profits to ensure that these programs reach the targeted groups and not just the more easily accessible groups in the cities.

Human Rights is another area where companies need to gain traction and keep improving. This is a global issue and the importance has been underscored by the United Nations Human Rights Council agreeing “to establish an open ended inter governmental working group with the mandate to elaborate an international legally binding instrument on Transnational corporations and Other Business Enterprises with respect to Human Rights.” Companies must maintain high levels of human rights responsibilities and their CSR policies must reflect this.

SOCIAL MEDIA

The social media is playing a more powerful role in disseminating information and sharing ideas and knowledge, not just nationally but globally. This trend has the potential to bring about the sharing of diverse and far reaching solutions to solve major issues globally. The potential is enormous and company leaders in CSR are tapping into this for out-of-the-box, innovative, viable and permanent solutions to global social issues.

COLLABORATION Collaboration and partnerships amongst organizations on CSR programmes and efforts is the way to go. In the area of issues of great magnitude such as environmental degradation, it is becoming more imperative for companies to understand that unity of effort, rather than, competition would make the greatest impact. Some issues are too big and cut across regions so that putting aside competition and coming together would work better.

They should therefore explore ways of engaging each other and bringing together their competencies into the mix, to address major issues affecting the countries or regions in which they operate, for the greater good of the people. The International oil companies and the other multi nationals operating in the country must seriously keep this trend in view, to tackle the challenges in their regions of operations.

CSR2.0

There are increasing arguments from CSR gurus such as Wayne Visser that traditional approaches to CSR have failed to deliver lasting, solutions across the globe. They believe the time has come for a paradigm shift in the way organisations approach their CSR responsibilities and the type of programs adopted. It’s a whole new perspective on CSR delivery and Visser in his blog calls it CSR 2.0. This is a set of principles for testing CSR, which are Creativity(C), Scalability(S), Responsiveness (R), Glocality (2), Circularity (O), to ensure deeper, more responsible and tailor made solutions to CSR.

CONCLUSION

Ultimately CSR/CSI has come to stay as a way of doing business in Nigeria. However the challenge is how to get the organizations to increase their investment in social responsibility programmes that really make a difference. Will legislation, as is being proposed by the CSR bill, help to do so? A company that has integrity does not need a law to make it more socially responsible. It is about the company’s shareholders, board of directors, the staff and their continued commitment to doing business the right way. The days of the bottom line being about profit alone are gone and in its place is the triple bottom line of People, Profit and Planet

Apollonia Okuzu is Principal Consultant at 247 CSS Consulting

Both the multinational and international, as well as indigenous companies in Nigeria cannot be left behind in the global quest for more effective and greater efforts to become change agents and address the social and environmental issues in the communities in which they do business. We hope oil companies doing business in Nigeria determine to make the kind of leap it would take to move towards this type of more transformative CSR.

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ENVIRONMENTAL NEWS JANUARY – MARCH NOSDRA TESTED OIL SPILL CONTINGENCY PLAN

ERA/FOEN REPORTED CRUDE OIL DISCHARGE FROM AGIP PIPELINES Environmental action group, Environmental Rights Action/Friends of Earth Nigeria (ERA/FoEN) reported the discharge of crude oil from Agip’s Ikarama oil field in Bayelsa State. They said that the discharge was uncontrolled and posed a great threat to the environment if the situation was not brought under control. According to the group the discharge was due to sabotage on two pipelines by oil thieves.

The National Oil Spill Detection and Response Agency (NOSDRA) conducted a test of its National Oil Spill Contingency Plan (NOSCP). The plan was put to the test in conjunction with Shell Petroleum Company. The NOSCP, said NOSDRA, would enable it to respond promptly and effectively to oil spills in the future.

Meanwhile, militant group, the Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for damaging the pipeline.

All the stakeholders, including the Army, the Police, the Customs and the Immigration were also involved in the successful operation.

Agip was not available to confirm or deny the allegations.

APRIL - JUNE JULY – SEPTEMBER SHELL CEO VISITED NIGERIA OVER OGONI CLEAN UP

Shell CEO, Ben van Beurden, visited Nigeria to look at new clean-up strategies for Ogoni land. Shell had long been accused of dragging its feet over the clean up of the spills that have turned the Bodo Creek area into a desolate wasteland.

Following the damaging report by the United Nations Environmental Programme (UNEP) into the oil spills, which said that $2 billion would be needed to restore the land, Shell said it had set aside hundreds of millions of dollars but the vast sum remains unspent. Beurden was hoping to be able to win local hearts and minds with details of a new initiative after the blistering criticism it received at its AGM over its failure to clean up the area properly.

SHELL ESTIMATED NIGERIA LOST 63.51 MILLION BARRELS OF OIL IN 2013 Mutiu Sumonu, former Managing Director of Shell Petroleum Development Company (SPDC) and Country Chair of Shell Companies in Nigeria, revealed details of estimated losses he said Nigeria was continuing to sustain from oil spillage due to oil theft. Sumonu said Nigeria’s loss from crude oil theft is in the region of 174,000 barrels per day, amounting in 2013, to a total loss of around 63.51 million barrels of crude. Shut ins and force majeure declarations as a result of damage to pipelines also cost the country significant revenue amounting to about $5 billion.

Mutiu Sunmonu

SPDC: ASSA GAS PROJECT EIA WAS IN ACCORDANCE WITH STATUTORY REQUIREMENTS Shell Petroleum Development Company of Nigeria Limited (SPDC) spoke out in defence of its conduct of an environmental impact assessment (EIA) into the Assa North-Ohaji South Gas Development Project in Imo State. SPDC, one of the Shell companies in Nigeria, said that it had conducted the EIA strictly in accordance with the requirements of the Environmental Impact Assessment Act No 86 of 1992 after accusations to the contrary. These allegations had been gathering force, leading SPDC to issue a denial.

KALABA COMMUNITY REPORTED NEW SPILL FROM AGIP PIPELINE The Kalaba Community in Bayelsa State reported that there had been a new spill from an Agip pipeline. The Bayelsa Coordinator of environmental action group Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), Alagoa Morris said he had seen the spill, which he said was spewing crude oil and spreading within the environment. He called on Agip to take prompt action to stop further damage from the spill.

He also called on the regulatory agencies to monitor remedial action being taken by the Agip.

MOBIL SAID RECENT QUA IBOE SPILL WAS 12,000 BARRELS Mobil released a statement to quash rumours circulating about an oil spill in Akwa Ibom State. The international oil company (IOC) in an effort to forestall agitation by the community, moved to quash rumours circulating in the communities that some 600,000 barrels of oil were spilt as a result. Whilst the host community waited for the Department of Petroleum Resources (DPR) to release its finding Mobil confirmed the spill saying that it was approximately 12,000 barrels of oil that was released during the incident and not the rumoured 600,000 barrels.

Mobil said the damage to its pipeline which resulted in the leak was due to lightening.

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ENVIRONMENTAL NEWS OIL SPILL TRANSPARENCY AND ACCOUNTABILITY TOOL WAS NOMINATED FOR AWARD An oil spill and transparency accountability tool, the Nigerian Oil Spill Monitor, was nominated for an award in the Successful Innovations category of the HiiL Innovating Justice Awards.

The tool designed by Stakeholder Democracy Network (SDN) is a digital mapping project that provides open, accessible and interactive mapping and tracking of Nigerian Government oil spill data. SDN’s prototype digital mapping and data visualisation software is used to quickly locate, visualise and gain strategic insight into the data it contains. The system runs in the browser (online and offline) and is designed to work across unreliable mobile data connections. It actively promotes transparency and accountability of oil spills, allowing anyone to analyse the data and take action based on the information.

AGIP ORDERED TO CLOSE FACILITY OVER BAYELSA OIL SPILL Farmers from the Ayarabele and Kalaba Communities in the Okordia Clan of Yenagoa Local Government Area in Bayelsa succeeded in getting their State government to come to their aid over a recent spill from an Agip pipeline. The communities complained to the State Government that the pipeline was continuing to discharge oil and gas at high pressure into the area causing environmental damage and affecting the livelihoods of farmers in the area.

Responding swiftly to the appeal made by the communities, the state government ordered that Agip close the facility immediately to enable an investigative team to go in and tackle the oil spill.

OCTOBER – DECEMBER OIL AND GAS FIRMS TARGETED OIL & GAS METHANE REDUCTION Nigeria was among the major oil producing nations and six oil and gas companies that agreed to partner with the Climate and Clean Air Coalition (CCAC)’s voluntary initiative to reduce methane emissions in the oil and gas sector. Called the CCAC Oil & Gas Methane Partnership, the programme was officially launched at the United Nations Secretary General’s Climate Summit in New York on 23 September 2014. The founding companies were BGGroup, Eni, Pemex, PTT, Southwestern Energy, and Statoil.

The CCAC Oil & Gas Methane Partnership aims to create a global standard in controlling methane emissions in oil and gas systems. CCAC explained that methane is at least 84 times more potent than CO2 over a 20-year time horizon, and the oil and gas industry is the largest man-made emitter of methane after agriculture. The International Energy Agency identified minimizing methane emissions from upstream oil and gas production as one of four key global greenhouse gas mitigation

opportunities, noting that upstream methane reductions could account for nearly 15 per cent of the total greenhouse gas reductions needed by 2020 to keep the world on a 2-degree path.

PETROLEUM MINISTER HOSTED FORUM ON ENVIRONMENTAL RESTORATION OF OGONILAND The Minister of Petroleum Resources, Diezani Alison-Madueke hosted a forum on the Environmental Restoration of Ogoniland, some three years after the report by the United Nations Environmental Programme (UNEP), which said that Ogoniland, ravaged by years of oil pollution and neglect, would require 20 years of restoration work for the harmful effects of the pollution to be reversed.

Alison-Madueke insisted that her mission to clean up Ogoniland was a personal one, describing herself as a daughter of the land.

She was born in Rivers State and had decided to drive the restoration of the Ogoniland area, large swathes of which have been left

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desolate and riddled with pollution, after decades of neglect.

KOLUAMA 2 YOUTH ISSUED ULTIMATUM TO CHEVRON

Three years ago, UNEP released the devastating report, which made a number of recommendations including emergency measures to be undertaken in the restoration of the area. After one and half years in which very little was done, the government constituted an organisation, the Hydrocarbon Pollution Restoration Project (HYPREP) to lead the implementation of the UNEP recommendations. In spite of this move, three years later, not much had been achieved. The Minister was hoping that with her renewed zeal the restoration project would stand a better chance of achieving its goals.

The youth of Koluama 2, one of the communities affected by the K.S Endeavour offshore rig explosion of January 16,2012, gave Chevron Nigeria Limited (CNL) an ultimatum.

The youth said that Chevron must pay compensation for the K.S Endeavour gas disaster before the 15th day of October, 2014 otherwise, they would organize another mass protest at all Chevron fields in their environment including Agbami oilfield which produces about 250,000 barrels per day of crude equivalent.

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THE HUMAN CAPITAL LANDSCAPE IN THE NIGERIAN OIL AND GAS INDUSTRY IN 2014 Dr. Ibilola Amao reviews the human capital landscape in 2014 and makes some predictions of what is to come in 2015.

Whilst the United States Energy Information Administration (EIA) industry states that Nigeria’s proven oil reserves are estimated at between 16 – 22 billion barrels of oil (this is considered to be conservative with 35 bbl considered as more realistic) and natural gas reserves of over 187 trillion ft³ (tcf), Nigeria should boast of her human capital asset and not her hydrocarbon. It is common knowledge that hydrocarbon is a depleting resource and the ups and downs in its pricing have positive and negative impact on economies (spend, materials and employment). To mitigate the impact of oil pricing on a nation like Nigeria, the country needs a paradigm shift from considering herself as a hydrocarbon province into being viewed as a developing nation, which has huge human capital assets as the 7th most populous country in the world.

Nigeria is a developing nation that has the potential to become the energy and food basket in Africa and beyond. The possibility of this happening can only be determined by the quality of our leadership and the strategy deployed to move from the current state of uncoordinated resource optimisation (within the context of the non-existence of a national development plan that is public to the masses) to one of national sufficiency and global competitiveness. There is a need to utilise Nigeria’s hydrocarbon assets, which are being depleted as leverage so that she optimises the opportunities created through hydrocarbon utilisation to develop critical skillsets that would launch Nigeria into a firstworld nation.

To harness human capital is to promote and ensure sustainable development, so there is a need to strategize on the quantity and quality of Nigerian graduates, technicians, artisans and labour are developed through education and empowerment programmes.

Nigeria needs a holistic plan on education, enlightenment, empowerment and

engagement. Transferrable technical and non-technical skills must be developed over time to ensure that infrastructure (health, education and commerce), power, energy and agriculture (the primary challenges that African nations suffer from) are developed pari-passu with hydrocarbon assets. If the five developmental legs of the nation are not managed appropriately, the imbalance caused would result in militancy and/or terrorism which currently plague Nigeria and Nigerians.

In 2014, we had a buzz from local players buying into divestments from the IOCs at a huge cost and loss to Nigeria. The pricing strategy was faulty (as deals were made when oil was on average $100/ barrel without considering the likelihood of more than 50% fall in crude oil prices) and the appropriate regulatory bodies did not introduce measures and processes to ensure that the local players did not buy over priced assets. However, these divestments led to a convergence between the technical oil and gas industry and the professional services industries such as banking, legal, tax etc with each new deal showcasing the surmountable complexities that can be overcome by a formidable team of local and international partners; bringing to bear multidisciplinary and multi-sectorial expertise and competencies. Furthermore, the Petroleum Club, Marginal Field Owners Association, Nigerian Association of Indigenous Petroleum Explorers & Producers (NAIPEC) and Petroleum Technology

Association of Nigeria (PETAN) members seem to have positioned themselves better for cooperation, collaboration and coordination of their resources to become the much awaited independents that Nigeria is yearning for.

The 2014 marginal fields bid round has been suspended while there is a huge possibility that some assets will be available for sale in the near future through divestment or expiration. Without a huge commitment to investment in infrastructure and mass education, Nigeria may never achieve its

A S I A I R “NIGE T A H T N O I AT N G N I P O

O T L DEVEL A I T EN T O P E H T

E H T E HAS M BECO ENERGY AND FOOD BASKET IN AFRICA AND BEYOND”

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HUMAN CAPITAL FEATURE

“2015 WILL BE A GREAT YEAR FOR THOSE WHO CAN CREATE MAXIMUM VALUE IN SPITE OF THE UNCERTAINTY.” full potential as a nation. To date, only 9 (Platform – Egbaoma, Walter SmithPetroman – Ibigwe, Frontier Oil – Uquo, Britannia U – Ajapa, Midwestern Oil and Gas – Umusadege, Pillar Oil – Umusati, Energia – Ebendo, Oriental Energy – Ebok, Niger Delta Petroleum – Ogbele) of the 24 marginal fields awarded to 31 contractors are currently producing since the 2005/6 such marginal fields awarded).

Apart from the top five reasons for the dismal performance of non-producing fields, namely: (1) lack of adequate infrastructure, (2) insecurity and community challenges, (3) ownership and partnership tussle, (4) contracting and procurement issues and (5) technology deployment, the dearth of capacity, capability and competence to define the right business models that can attract the right stakeholder support and funding has produced this very sad report.

Regardless, the year 2014 appears to have been favourable to professionals engaged in the oil and gas sector, with the average annual income of professionals (entry level – senior management) in the sector pegged at NGN10,524,591 (NGN 877, 049.25/ month and NGN43, 852.46/day). This forms part of the upper echelon of income earners in a country where the average citizen lives on less than $2 a day. There was also an increase in the demand for professionals such as Construction Supervisors, Construction Managers, Project Managers, Nigerian Content Advisors/Managers, Cost Engineers, Planners and Schedulers, Discipline Engineers etc.

However, the landscape for recruitment and staff retention in 2015 is likely to

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be different, with reduced revenues for companies operating in the oil and gas sectors, the need to complete projects within budget and time, cuts in operational costs, reduce project commissioning as a result of the delay in the passage of the Petroleum Industry Bill, forced mergers, take-overs and acquisitions (to consolidate efforts and operational costs) and other factors.

The demand for highly skilled experts who require minimal training and supervision is expected to increase this year as needs of our independents (Oando, Seven Energy, Pan Ocean, Seplat, Afren, LekOil etc) are different from those of the IOC’s and marginal field owners. We are beginning to see the emergence of innovative business models with the emergence of various consortia, strategic alliances and special purpose vehicles (SPV’s) in business emerging to bid for the Shell assets in 2014: Dangote/ Dansa, Midwestern/Mart/Notore and Sahara Consortium for Oil Mining Lease (OML) 18; Vertex/Seplat/Maurel & Prom/VP Global, Glencore/Neconde, Transcorp, Aiteo/ Taleveras for OML-29 and Lekoil, Crestar, GreenAcres/CCC/Signet Petroleum, NDPR/ SAPETRO and Essar are for OML-25, Sahara Consortium, PanOcean/Newcross, Shoreline, Aiteo/Taleveras for OML-24 etc.

The six major independent producers in 2014 are: Seplat (26,550BOPD), SAPETRO (21,000BOPD), Shoreline Natural Resources (20,250BOPD), Famfa Oil (15,000BOPD), Amni (11,700BOPD) and Conoil (11,300BOPD). Seplat and ConOil (that are full producers) and other independents will require experienced experts as opposed to new comers whose capability and competence they will have to expend their

limited resources to build.

There is an established direct relationship between human capital development and the economic growth of a country vis-à-vis the GDP. Hence, Nigeria cannot afford to take the back seat by glossing on the reduction in the price of oil. The imperative is to move on and take a cue from the human capital surplus in China largely due to her population and the positive spill over effects it has had so far on the economy of China. Nigeria should look to her diaspora resource base to transform the Nigerian economy through the provision of an enabling environment and long term policies that are favourable to returnees. As operators in the hydrocarbon sector are looking to reduce their Operational Expenditure (OPEX) and with the stringent requirements of the Local Content Act, it is likely that foreign experts and Third Country Nationals who earn higher rates will be replaced with Nigerians with global experience. Thus, this is a good time for Nigerians working in oil and gas colonies, such as UK, USA, Canada, Saudi Arabia, Russia, Qatar, Oman etc who have requisite experience and intend to return to the country to take up the available positions at competitive rates.

The non-technical competencies that will be highly sought-after when recruiting will include: (1) creative thinking, (2) emotional intelligence and excellent people skills, (3) business development acumen, (4) negotiation, (5) team spirit (6) ability to deliver results and (7) ability to work safely and meet tight deadlines. Today, when applying for a job, it is important to communicate to the human resources team and a prospective employer one’s transferable skills and explain to the

HUMAN CAPITAL FEATURE

employing organization why one’s skills are relevant and the value that could be create if engaged.

More than anything, young professionals need to commit to being mentored and coached. Graduates must commit to embarking on personal, professional and career development whilst using the experience and expertise of highly experienced role models as a guide to navigate towards achieving a fruitful and rewarding career as there is also an opportunity to replace the ageing workforce (baby boomers, born post World War II between 1946 and 1964). We also have the analogue to digital conversion for the generations born between 1960 and 1980) and the problem of attracting and keeping the best brains from generation Y (1982 – 1993) and Z (1994 – 2010).

It is also advised that professionals with transferrable skills such as Project Managers, Pipeline engineers, Economists, Contracts Administrators and Analysts, Human Resources Professionals (Technical and Non-Technical), QA/QC experts, Financial Analysts, Asset Managers and Business Analysts, should consider careers in similar industries, such as Power, Agriculture, Manufacturing, Automobile, Infrastructure Development etc as the newly acquired Gencos, Discos and the recently established Automobile Assembly plants are developing speedily and will require persons with their skills and exposure.

Apart from the opportunities that would

emanate from a growing infrastructure and agricultural development programme in a gas optimization regime, there is a need to look at the multiplier effect of setting up trade and industrial parks that have uninterrupted power generated

by IPP plants. Nigeria can optimise her hydrocarbons through domestic processing by constructing refineries and petrochemical plants within the country.

This creates a platform for professionals with entrepreneurial skills to set up small and medium scale enterprises and this will in turn, create opportunities and jobs for the employable.

Contractors and sub-contracting companies as well as professional services providers need to rethink their staff engagement and retention strategies as they are likely to experience increased staff attrition and as their highly skilled workforce are likely to move to the highest bidder irrespective of timing on a project and how critical their services are to the successful completion of a project. Most employees of service companies would rather work for an IOC when income rather than passion is their key driver. It is in the area of work ethics, professionalism and commitment to the success of a project company that most skilled local talent fail. The contract staffing environment is very premature in Nigeria and the labour laws are not rightly crafted to address pension, disengagement, insurance, health, retirement, gratuity etc.

In the recently concluded 19th edition of the Offshore West Africa Conference

and Exhibition which took place in Lagos, the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) stated that the challenge for the country’s oil and gas industry was how to manage major projects through both price and fiscal uncertainties. He also highlighted that a lot of deepwater projects may suffer delays or cancellation, including one in Angola, three in Nigeria and one in Ghana; while in shallow waters, two projects in Angola, one in Nigeria and two in Ghana. More than ever, the degree of certainty in the oil and gas sector is tending towards the negative curve and as such is likely to impact the hydrocarbon labour force adversely.

2015 will be a great year for those who can create maximum value in spite of the uncertainty. Creative and innovative out-of-the-box thinkers will come out tops. Flexibility and transferrable skills will give employees and edge over their peers. The best will seek and find jobs, opportunities and business globally whilst aside from developing marginal fields and divestment assets, oil and gas professionals would branch out into mechanised agriculture, infrastructure, power and energy.

Lola Amao, Principal Consultant, Lonadek

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HUMAN CAPITAL NEWS

NIGERIA JOINED LIST OF HIGHEST PAYING CONTRACT JOBS IN OIL, GAS SECTOR Nigeria was included in the list of highest paying contract jobs in the oil and gas sector worldwide. The Swift Worldwide Resources report into worldwide oil and gas contract jobs pay showed that Nigeria was ranked third and fourth among the ten highest paid contract jobs in the world, with Australia occupying the first and second places.

The report revealed that a Drilling Manager in Nigeria earns up to $2, 844 per day while a Project Services Director earns about $2, 817 (N450, 720) per day. This was the first time that Nigeria featured in the Swift list.

5 7 6

10

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COMPLETION MANAGER IN AUSTRALIA

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DRILLING MANAGER IN AUSTRALIA

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DRILLING MANAGER IN NIGERIA

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PROJECT SERVICES DIRECTOR IN NIGERA

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DRILLING MANAGER IN IRAQ

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COMPLETION MANAGER IN VENEZUELA

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PROJECT MANAGER IN IRAQ

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SUBSEA MANAGER IN AUSTRALIA

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DRILLING MANAGER IN ANGOLA

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COMPLETION MANAGER IN IRAQ

NNPC OIL WORKERS BEGAN NATIONWIDE STRIKE OVER PENSION ISSUES The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) announced that all junior and senior workers of the Nigerian National Petroleum Corporation (NNPC) were on strike after failing to reach agreement with NNPC over a number of issues, principally to do with their pensions and other complaints about refineries. A conciliatory meeting failed to get the union to agree terms for calling off the strike. The strike caused a crippling fuel shortage across the nation as fuel supplies were unable to be delivered to the fuel stations.

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HUMAN CAPITAL INTERVIEW

OER: MEETING THE HUMAN CAPITAL REQUIREMENTS OF THE CONOCOPHILLIPS ACQUISITION In 2014, Oando Energy Resources (OER) pulled off the game-changing acquisition of the ConocoPhillips (CoP) Nigerian business. In this interview, Ademola Ogunbanjo, Head, Human Capital Management at OER talks us through the journey to acquiring the human capital required to support a $1.6billion acquisition.

Q: What kind of people have you had to hire for such a large acquisition?

A: As you already know, we are not the operators of the assets that came with the acquisition of CoP; it’s a NAOC operated JV, and our strategy from the get-go has been to engage the JV as active non-operators.

What this means is that we will actively work with NAOC to provide fresh thoughts and perspectives on how to sweat the assets for maximum value creation.

This requires us to look closely at production optimization, facilities and infrastructure, as well as reserves replacement. Also, the assets are quite prolific gas-wise, and we see a very strong upside for the oil, for which we are looking at the oil volumes growth agenda.

Essentially, what we have done has been to get on-board people, who will deliver these highlighted activities. They are largely geoscientists, petroleum engineers, production engineers and technologists, and the business planning and economics people.

Q: How crucial were your plans for handling the human capital requirements of the acquisition key to securing finance?

who were critical to that continuity - and we did. That was how we began the recruitment process.

A: It is common knowledge that there is a dearth in the supply of human capital for E&P sectors, and this is not a Nigerian problem but a global one. At the time we were closing our financing, the entire E&P industry was in a bullish growth mood and there was severity in the availability of highly skilled geo-technical professionals.

So, this is usually a point of concern for investors in E&P, and our investors are no exception; they asked the questions from very early on in our parley with them, and we were able to give them the confidence they required.

Running parallel to that, was the implementation of our manpower plan for the new organisation we would become, once the transaction closed, with the critical roles filled first; and we had some of the best recruiting companies in the world work with us on this.

First of all, ConocoPhillips had very highly qualified people, who were willing to ‘port’ to Oando once the acquisition was concluded (encouraged by their management), and we were happy to have them. Layered on to that was our ability to tap into an extensive network of Nigerian E&P professionals in the diaspora - an advantage that makes hiring somewhat easy for us.

Q: How did you begin the recruitment process?

The first agenda for any major acquisition from the business operations point of view is continuity, and to that end, we knew we had to get onboard people from ConocoPhillips Nigeria,

“ THE MANAGEMENT OF CONOCOPHILLIPS DID NOT ONLY SUPPORT THE MOVEMENT OF THEIR PEOPLE TO OER, BUT PLAYED A MAJOR PART IN CHAPERONING THE PROCESS” 100

We also made direct recruitment efforts ourselves. We inaugurated an OTC fringe workshop in 2014 called “The Briefing” in Houston. The event presented the platform to intimate the North American E&P world and Nigerians in the diaspora of OER’s achievements and goals, and the industry dynamics in Nigeria. We were able to hire a couple of senior engineers through that platform.

Q: Was ConocoPhillips supportive of your plans to acquire some of their people following the acquisition?

A: I’m not quite sure we ‘acquired’ the people; we only hired them, and we allowed them to move their tenure at ConocoPhillips over to OER. As a caring and responsible organisation that desired for its people to remain in gainful employment, the management of ConocoPhillips did not only support the movement of their people to OER, but played a major part in chaperoning the process, and it was literally seamless. It was a condition CoP had included in the negotiations for the acquisition.

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Q: Which were the most critical teams you had to build?

A: We are continuously strengthening the organisation in the areas we believe are business-critical to our agenda and status as active non-operators, and those are the sub-surface studies and operations teams (geosciences and petroleum engineering), facilities team, as well as production optimization, government relations, and planning & economics.

Q: How did you implement the recruitment process?

A: We have an extensive talent pool across the Oando Group, and we leaned on those internal capabilities where possible. We also have agencies that work with us for sourcing people; both foreign and local.

However, based on the fact that we have now hired a significant number of very senior people from Shell, BG, Gaz de France, Total, Addax, Exxon, etc., and from across the world too, we lean on their robust networks for referrals with regards to the new roles we’re recruiting for - it saves time and has no sourcing costs attached.

Being cost conscious is what we all must do, as a number of people consider the HR department a cost center. In my team, however, we say we are the most profitable center. We hire and retain good quality people, who consistently create and deliver value to the organization. What can be more profitable than that?

Q: What is your hiring strategy?

A: Based on our current business maturity level need, non-operatorship status/ dependence, is our ability to influence our JV partners, and the strategic growth direction of OER. Our near to midterm sourcing philosophy is to actively pursue the sourcing of E&P ‘superstars’ (autonomous technical professionals) Nigerian or non-Nigerians with extensive Niger Delta experience.

Yet, we recognize the fact that home grown talent is usually the most rewarding in the long term, so we are committed to actively nurturing young professionals for autonomy and giving them growth opportunities as future successors to their current superiors.

In 2014 alone, we added about 860 cumulative years of experience to the organisation, and this speaks to the level of skills, we have engaged and continue to engage in order to adequately manage our business agenda. We have hired locally, from Europe, North America, and as far as Brazil, and we continue to seek out the best talents wherever they may be.

Q: What’s OER’s secret to retaining good talent?

A: We do very well with retaining good talent, and there’s no secret to it: we have the most compelling E&P growth story in the industry. When we announce an audacious goal, we follow through with it, and people have come to trust that.

We have been able to merge our people’s

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HUMAN CAPITAL INTERVIEW aspirations with the organisation’s aspirations, and that’s common knowledge. That’s why I say it’s no secret. It’s what organisations across the world must learn to do, irrespective of the industry. When you are part of an organisation that continuously seeks to create and deliver value to all its stakeholders, one that helps its employees grow in tandem with the growth of the business, you find that you have no reason to update your CV. Q: Would you do anything differently if you had to do this recruitment exercise again?

A: Amongst other things, if there’s anything we have mastered through this acquisition, it is our recruitment strategy. We had enough time to plan and reevaluate our plans, so, while waiting for the transaction close, we got busy with perfecting the people strategy.

However, my team mantra is: once you find a better way of doing something, look for a better way. So, we’ll definitely do a review and make sure it’s better next time.

Q: In view of the crash in oil prices will you be laying off any of your new hires?

A: Oil prices have dipped and it’s hurting both the industry and the country. Everyone is reviewing their strategy and cautiously scaling down on the audacity of their work-plans and projects for 2015. We are no different. Yet, our scenario is not exactly the same as other E&P companies that have reached steady

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state of growth. We moved from less than 5,000bpd in July, 2014 to over 50,000 bpd by September - we are clearly building a business right in the heart of a downturn, and we do not only need the people, who have brought us here thus far, we actually need more people to join us in taking the company to its next growth landing.

Q: Is the recruitment exercise continuing or have you drawn a line under future recruitment?

A: No, it’s a continuous exercise. There’s an organisation to build. There are assets to manage.

There’s value to be created. We’re hoping that the price of crude will bounce back soon, but if it doesn’t, there is still a business to build in a paced manner, we are a going concern and people remain the central part of our value chain.

Our current recruitment focus over this first half of 2015 is on sourcing experienced petro-physicists, geologists, reservoir engineers, production technologists, production engineers, geophysicists, drilling engineers, process engineers, cost engineers, and facilities management engineers.

Ademola Ogunbanjo is an Executive Council member and Head of Human Capital Management at Oando Energy Resources, a $2 billion E&P company listed on the Toronto Stock Exchange with people in Toronto, Calgary, London, Port Harcourt, Abuja and headquartered in Lagos, Nigeria.

His role covers the entire spectrum of HR responsibilities from strategy to implementation.

HEALTH & SAFETY NEWS JANUARY - MARCH MEND CLAIMED RESPONSIBILITY FOR ABDUCTION OF OIL WORKERS The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the abduction of two oil workers from a tug boat operated

by Agip Nigerian Oil Company in the Nembe waterways in Bayelsa State.

The boat was attacked and boarded by heavily armed men. Four of the crew members were robbed and released, while the captain and the engineer were taken away by the armed men. It is believed that they were being held for ransom.

FUEL TANKER EXPLOSION KILLED 15 Fifteen people were killed in an inferno after a fuel tanker laden with 33,000 litres of petrol caught fire along the Oshodi-Apapa Expressway.

The tanker crashed and exploded whilst trying to avoid potholes in the road according to eye-witnesses.

Over 50 shops and 20 cars were burnt down in the blaze.

The lack of a proper rail network for freight has meant that petroleum products are transported by road.

The highly hazardous cargo, coupled with bad roads, has given rise to many fire incidents involving tankers.

An efficient rail network would take much of this dangerous cargo off the roads.

APRIL – JUNE

BRISTOW PUMA HELICOPTERS DAMAGED IN HANGAR FIRE Major oil service provider, Bristow Helicopters suffered major damage to two of its helicopters at its base in Port Harcourt. Two of the company’s $18 million Super Puma helicopters were damaged in the blaze. One is said to have been extensively damaged while another helicopter is said to have suffered less damage and is expected to be back in service soon. The fire, which is said to have started in the company’s warehouse also damaged a lot of its spares and consumables.

SHELL AWARDED “SAFETY CONSCIOUS CONTRACTOR OF THE YEAR AWARD” TO CAVERTON Shell Petroleum Development Company (SPDC) of Nigeria awarded Caverton Helicopters its Safety Conscious Contractor of the Year Award in the Medium and High Risk category. They made the award whilst celebrating the achievement of 75 million Lost Time Injury (LTI) free man-hours.

SPDC said in a statement that Caverton won the award because “Caverton Helicopters developed safety programmes to improve staff safety culture and raised the bar on engagement sessions. In addition, the statement said, Caverton’s “Aim for Zero” Campaign as well as its readiness to learn from previous incidents were also taken into account in giving it the award.

SHELL’S FORCADOS TERMINAL ACHIEVED 14-YEAR SAFETY MILESTONE Shell Petroleum Development Company (SPDC) achieved a 14-year safety milestone in its operation of the Forcados Terminal in the Western Niger Delta. The company says that it operated the terminal, which has a storage capacity of 6.3 million barrels, between September 2000 and 2014 without a significant safety incident.

During that time, the company said in a statement released by its Corporate Media Relations Manager, Mr. Precious Okolobo, some 1.25 billion barrels of oil passed through the facility.

The safety milestone translates into a daily average of 300 staff handling nearly two export tankers every week. Activities undertaken at the terminal included high-risk maintenance and engineering activities such as the rehabilitation of crude oil storage tanks, subsea repairs to the tanker loading systems and upgrade of the jetty.

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MOVERS This year, the Nigerian oil and gas industry has seen many people come and go.

In this section, we chronicle some of the important moves over the course of the year.

Nigeria’s Petroleum Minister Appointed OPEC President for 2015 The 166th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC), which was held in Vienna, Austria, on Thursday, 27th November 2014 elected Mrs. Diezani Alison-Madueke CON, Minister of Petroleum Resources of Nigeria and Head of its Delegation, as President of the Conference for one year, with effect from 1st January 2015. Dr. Mohammed Bin Saleh Al Sada, Minister of Energy and Industry of Qatar and Head of its Delegation, was appointed Alternate President, for the same period.

This appointment came after AlisonMadueke’s election as the Alternate President of the December 4, 2013 OPEC Conference.

Back in Nigeria, after the appointment, the whole industry it seemed was keen to be seen to congratulate her. Newspapers were bulging with congratulatory adverts as she was feted all over Abuja, with colleagues clamouring to take photographs with her.

thing, it happened about three and half years ago when I went into a body which is completely male-dominated and mostly Arab-dominated. But I have found that they have come to respect me and respect Nigeria’s voice very well over the last three years in OPEC.”

Mrs. Diezani Alison-Madueke Speaking to the press afterwards, Alison-Madueke was keen to express her gratitude to the President. She said: “It wouldn’t have happened if the President had not had the courage to appoint a woman into the portfolio of Ministry of Petroleum Resources, which meant that I now headed the country’s delegation to OPEC. I must say that that was a daunting

The Minister is keen to use her position to influence the meetings to ensure Nigeria does well out of her presidency.

She said: “Because OPEC Presidency is highly influential and it is in fact a high ranking position to that of the SecretaryGeneral of OPEC. It is the OPEC President that seats as chairman of all OPEC conferences at all times during that year. It is the OPEC President that calls for extraordinary meetings of OPEC which will possibly happen in the next quarter of next year if the downward trend in crude prices continues among other things and responsibilities that the Presidency has today.” That is a card she may very well have to play soon as the year ended with the downward pressure on prices still very much on.

Oil Industry Mourned Loss of Former Petroleum Minister, Rilwanu Lukman The death of former Nigerian Minister of Petroleum, Dr. Rilwanu Lukman in Vienna, Austria at the age of 75 years, following a long period of illness, occurred on the 21st of July 2014. Lukman who served as Secretary General of OPEC (Organization of the Petroleum Exporting Countries) from 01 January 1995 to 31 December 2000 remained an Honorary Advisor on Energy and Strategic Matters to the President of Nigeria.

Born in Zaria Kaduna State on the 26th of August 1938, Dr. Lukman was an engineer with a distinguished career and a string of accolades to his name. Following his studies, Lukman returned to Nigeria in 1964 and was appointed Inspector of Mines, rising to become Assistant Chief Inspector in the Federal Ministry of Mines & Power in Jos, Plateau State. He was later appointed General Manager and Chief Executive Officer of the Nigerian Mining Corporation, Jos. On 18 December 2008, Lukman was appointed Minister of Petroleum Resources

by President Umaru Yar’Adua and he held that office until March 2010.

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Dr Lukman obtained a string of degrees from prestigious institutions including first degrees from Ahmadu Bello University (ABU), Zaria and the Imperial College of Science and Technology, University of London. He received postgraduate qualifications from the University of Mining & Metallurgy, Leoben, Austria, and in Mineral Economics from McGill University, Montreal. Doctorates followed from University of Bologna, Italy, University of Maiduguri. Honours bestowed on him included Knight of the British Empire (KBE) in 1989 and the Legion d’Honneur of France in 1990.

President Jonathan said in a statement: “Nigeria will always owe a huge debt of gratitude to the late Petroleum Minister for his very significant contributions to the development of the country’s oil and gas industry,” while the OPEC Secretariat said: “He was widely recognized and highly regarded in the global petroleum industry; a loyal and dedicated man, who had the best interests of Nigeria and OPEC at heart. His service to OPEC is a very long list.”

Dr. Rilwanu Lukman Senate President David Mark captured the mood of the industry at the time when he said of Dr Lukman’s death: “Nigeria has lost one of her brightest and fertile minds.

He was a man of honour and integrity. We shall miss his deep sense of wisdom and knowledge.”

MOVERS

Other regulatory appointments DR JOSEPH DAWHA, GROUP MANAGING DIRECTOR, NNPC Dr Joseph Dawha was appointed Group Managing Director of the Nigerian National Petroleum Corporation, replacing Andrew Yakubu. He had served previously as the Group Executive Director, Exploration and Production, NNPC. Before that he was Managing Director of Integrated Data Services Ltd (IDSL), a subsidiary of the NNPC. Other board appointments at NNPC were Ms Aisha Mata Abdurrahman as Group Executive Director Commercial and Investment and Dr Attahiru B. Yusuf as Group Executive Director, Business Development.

ANTHONY MUONEKE, MANAGING DIRECTOR, NPDC Anthony Muoneke, was appointed the new Managing Director of the Nigerian Petroleum Development Company (NPDC). Called to the Nigerian Bar in 1985, he has over 29 years experience at both local and international levels in the oil and gas as well as the energy and power sectors, including serving as Executive Director, Finance & Admin, Niger Delta Power Holding Company Ltd. (NDPHC). NPDC is a fully-owned subsidiary of the Nigerian National Petroleum Corporation (NNPC)

FEMI AJAYI, EXECUTIVE SECRETARY, PTDF Femi Ajayi was appointed the 7th Executive Secretary of the Petroleum Technology Development Fund (PTDF) by the Federal Government on Wednesday, June 18, 2014 to replace Dr. Oluwole Oluleye. Until his appointment, he was the Director General of the National Drug Law Enforcement Agency (NDLEA). He came to PTDF with a rich profile of service that spans through the public, private and international sector organizations. His multidisciplinary credentials as biochemist, journalist and international law expert have been tapped in various capacities for the service of the nation and international organizations particularly the United Nations System.

DOROTHY BASSEY, HEAD OF PUBLIC AFFAIRS, DEPARTMENT OF PETROLEUM RESOURCES Dorothy Bassey, was appointed to the role of Head of Public Affairs of the Department of Petroleum Resources (DPR) in May, replacing Mrs Osibodu who has now retired. Ms Bassey was promoted from within and was previously Assistant Director at DPR in charge of all HSE issues. Before that she had been in charge of waste management and permits for independent service providers.

KECHUKWU OGUINE, NNPC COMPANY SECRETARY The Nigerian National Petroleum Corporation (NNPC) appointed Ikechukwu Oguine as Coordinator, Legal Services and Company Secretary. He replaced Anthony Madichie who was NNPC’s Legal Adviser and Company Secretary. Ike, as he likes to be known, was Chief Consultant at specialist boutique law firm, Advisory Legal Consultants, based in Lagos, which provides bespoke transactional, regulatory and legal advisory services to businesses and projects in Nigeria’s energy, resources and infrastructure sectors. He has more than 25 years of experience in the oil and gas industry during which he became General Counsel for Chevron’s Nigeria and Mid-Africa Business. Ike took early retirement from Chevron at the end of April 2012 and was with Advisory Legal Consultants until his appointment to NNPC.

MARTIN AGWAI, CHAIRMAN OF SURE-P The Federal Government appointed retired general, Martin Luther Agwai, as the chairman of the Subsidy Reinvestment and Empowerment Programme (SURE-P) following the resignation of Dr Christopher Kolade, the former chairman. Tanwa Olusi was appointed as deputy chairman. SURE-P was constituted following the partial removal of fuel subsidies in 2012. The government said the programme would take the money saved as a result of the partial removal of subsidies and reinvest it into infrastructure, health and educational projects.

The programme came under scrutiny for appearing to be funding projects that the Federal Government was already funding.

The programme had already received $2.5 billion for projects and a further payment of $1.6 billion was due to it this year.

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MOVERS

company appointments AMNI INTERNATIONAL TUNDE AFOLABI, CHAIRMAN Chief Tunde Afolabi executed a major boardroom move to takeover the chairmanship of indigenous major, Amni International Petroleum and Development Company one of the most successful indigenous upstream players.

Retired army colonel, Sanni Bello was chairman and Professor Edozien was vice chairman. Both shareholders were bought out leaving Chief Afolabi as Chairman of the board.

Chief Afolabi is a professional Geologist with over 30 years of oil and gas exploration and production experience from international companies. He is a past President of the Nigerian Association of Petroleum Explorationists (NAPE).

Amni is producing from its interests in two oil mining leases. Oil mining lease (OML) 112, the former OPL 469, located in the Eastern Niger Delta and covering 437 sq km, was granted in 1993 to the company on a sole risk basis just after its formation. OML 117 (formerly OPL 237) also in the Eastern Niger Delta and covering just 50 sq km was awarded to Amni in 1994.

ELAND OIL AND GAS GEORGE MAXWELL, CEO Les Blair, founder of Eland, stepped down as Chief Executive Officer (CEO), making way for George Maxwell, formerly Chief Financial Officer of Eland and a founder director of the company. Blair will remain on board as Strategic Advisor to the company, providing support to the CEO in specific strategic objectives.

Maxwell has over 20 years’ oil industry experience in both the producing and service/manufacturing arena. He joined Addax in 2004 and held the General Manager’s position in Nigeria, responsible for finance, fiscal and commercial activities.

MIDWESTERN OIL AND GAS CHARLES CHIEDU ODITA, MANAGING DIRECTOR/CEO Charles Odita joined Midwestern Oil & Gas Company as Managing Director/Chief Executive Officer in July. He had been a Non-Executive Director of Midwestern Oil & Gas Company Limited since 2005.

Between 1988 and 2007, Odita worked with Shell Petroleum Development Company of Nigeria Limited (SPDC), with 41/2 years of cross-posting with Netherlands Aardoile Maatschappij (NAM) in Assen, Netherlands (the local Dutch oil producing company) and Shell Research in Rijswijk, Netherlands.

Odita is a member of the Society of Petroleum Engineers (SPE) and a Fellow of the Nigerian Society of Chemical Engineers (FNSchE). He has written various technical papers in the area of Well Engineering and has attended different technical and management programmes in Nigeria, Netherlands, UK, and US.

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MOVERS NIGER DELTA EXPLORATION & PRODUCTION OLORUNSOLA JOINED THE BOARD Former Director of the Department of Petroleum Resources (DPR) Osten Olorunsola was appointed to the board of Niger Delta Exploration & Production Plc (NDEP). Also appointed to the Board of the company was Ede Osayande, Former Managing Director of Cooperative Development Bank, Equitorial Trust Bank and Devcom Merchant Bank.

Olorunsola commenced his career at Agip-ENI and moved on to Shell Petroleum Development Company of Nigeria Limited where he served in several positions before retiring as Vice President (Gas). Mr Olorunsola was later appointed as Director, Department of Petroleum Resources (DPR), drawing on his previous experience as adviser to two Ministers of Petroleum Resources.

NDEP is the operator of the Ogbelle marginal field, located on OML 54, and through its wholly owned subsidiary, Niger Delta Petroleum Resources (NDPR) also has interests in Omerelu field in OML 53 as well as a 6 per cent interest in OPL 227. It is also part of ND Western, which has a 45 per cent interest in OML 34.

OANDO ENERGY RESOURCES The Oando Energy Resources acquisition of ConocoPhillips assets meant it had to make some significant additions to its human capital. Some of the key OER hires in 2014 to position the company for its role as a $2 billion company inlcuded:

YANNIS KORAKAKIS Yannis joined Oando in September 2014, and brings over 27 years of international E&P experience.

He began his career with Shell where he held various technical and commercial roles in the UK, The Netherlands and Nigeria. Yannis’s moved to Nigeria in 1995 where he was part of the founding Shell Deepwater team that discovered and developed the Bonga deep water field.

He remained in Nigeria to become one of the founding managers of Addax Petroleum, and as Deputy Managing Director led its Nigerian operations during a time of rapid corporate growth, culminating in its public listing and subsequent sale to Sinopec.

Prior to joining Oando, he was the COO for Atlantic Energy, overseeing the redevelopment of a portfolio of mature assets in the Niger Delta.

SEUN SOLANKE: PRINCIPAL RESERVOIR ENGINEER Oluseun Solanke is the Principal Reservoir Engineer, Oando Energy Resources, and brings over 12 years of work experience as a Reservoir Engineer.

Oluseun has experience in all stages of oil and gas field evaluation, development and production. She commenced her career with Shell UK, followed by 6 years stint with GDF Suez E&P, where she served as a Subsurface Team Lead and as Reserves Manager.

OLAMIDE JEGEDE: PRINCIPAL PETROPHYSICIST Olamide Jegede has over 20 years’ Post Graduate experience spanning Operations Geology, Formation Evaluation, Field Development and Reservoir Management working for different multi-national oil company such as Esso Exploration, Shell Petroleum Development Company and Chevron Nigeria Limited and BG Exploration and Production Nigeria Limited.

Prior to joining Oando, he was with BG international on expat assignment to Trinidad and Tobago as Principal/Petrophysics Discipline Lead with responsibilities to look at the functional aspects of Poinsettia Gas field development and Dolphin field Phase 2 development amongst others.

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MOVERS AFREN PLC EGBERT IMOMOH, EXECUTIVE CHAIRMAN After the sackings that followed the scandal of unauthorized payments, Afren Plc elevated Egbert Imomoh, Chairman, to an executive position. Toby Hayward was apointed Interim Chief Executive Officer.

Mr Egbert Imomoh was one of the founders of Afren, and was previously its Managing Director. The Society of Petroleum Engineers named him President in 2013 and he has served on its board as Regional Director for Africa. Imomoh served as Deputy Managing Director of Shell Petroleum Development Company (Nigeria) prior to establishing Afren’s Nigerian subsidiary.

TOBY HAYWARD Toby Hayward was appointed Interim Chief Executive Officer in the wake of the sacking of Osman Shahenshah. A qualified chartered accountant, Mr Hayward has held a number of senior equity capital market positions in London.

He was Head of Oil and Gas Equity Capital Markets at Canaccord Adams, before joining Jefferies International Limited as Managing Director and Head of Corporate Broking, where he was responsible for all international equity and equity linked transactions together with corporate broking and Nomad responsibilities.

Mr Hayward has extensive expertise in the equity capital markets, as well as bringing financial and accountancy experience to the Board.

stepping down FIRST HYDROCARBON NIGERIA (FHN) LAYI OGUNBIYI Constantine ‘Labi Ogunbiyi, founding chief executive officer (CEO) of independent indigenous upstream player, First Hydrocarbon Nigeria (FHN), stepped down from his role as CEO. He had been CEO of the company since its inception in 2011. He also stepped down from the board of Afren Plc from where he was instrumental in setting up FHN, a subsidiary of Afren, and leading the fund raising effort for the acquisition of oil mining leases (OMLs) 26 and 113 by FHN. Labi rose through the ranks of Afren to become general counsel, then associate director and finally, executive director in charge of business development. From there he went on to become the founding CEO of FHN.

CRESTAR FORMER DPR DIRECTOR OLORUNSOLA RESIGNED AS CHAIRMAN OF CRESTAR Former director of the Department of Petroleum Resources, Osten Olorunsola resigned his position as chairman of Crestar, the company that won the bid for oil mining lease (OML) 25 in Shell’s latest onshore divestment exercise.

Crestar won the block with a bid of $450 million. However, after Shell and Crestar signed the Sales Purchase Agreement (SPA) the Nigerian National Petroleum Corporation (NNPC) decided to exercise its right of pre-emption to purchase the block itself. As a result, Olorunsola resigned as chairman in a bid to try and reverse the decision of NNPC. As we went to press, NNPC had not reversed its decision.

AFREN OSMAN SHAHENSHAH, FORMER CEO, AFREN PLC Former Chief Executive Officer, Osman Shahenshah, and the Chief Operating Officer, Shahid Ullah of Afren Plc were sacked by Afren following the stunning revelations of unauthorized payments to the two, which sent the company’s shares into a downward spiral. Other casualties of the scandal were Associate Directors Iain Wright and Galib Virani who admitted to receiving monies linked to the unauthorised payments for the benefit of the CEO and COO.

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OIL & GAS CIRCUIT CONVOCATION CEREMONY AT FEDERAL UNIVERSITY OF TECHNOLOGY, OWERRI Executive Secretary, Nigerian Content Development and Monitoring Board, Engr. Ernest Chu Nwapa (FNSE) received Honorary Doctorate Degree of Management Technology from FUTO.

From L to R: Mrs. Adaobi Nwapa, Engr. Ernest Chu Nwapa (FNSE) and Prof Chigozie Asiabaka, Vice Chancellor, Federal University of Technology Owerri

From L to R: Mr Gbolly Osibodu, Engr. Ernest Chu Nwapa (FNSE), Engr. Funsho Kupolokun

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OIL & GAS CIRCUIT PETROLEUM CLUB NOVEMBER LUNCH MEETING SPONSORED BY OANDO PLC

From L- R: Otunba Funso Lawal, Mr. Wale Tinubu, Mr. Egbert Imomoh

From L to R: Chief Tunde Afolabi and Mr Wale Tinubu

From L to R: Chief Sena Anthony and Dr. Imo Itsueli

From L to R: Chief Tunde Afolabi and Mr Egbert Imomoh

From L to R: Dr. Godswill Ihetu, Mr. Egbert Imomoh, Mr. Adeyemi Akisanya

From L to R: Mr Soji Awogbade, Mr Wale Tinubu

From L to R: Senator Daisy Danjuma, Mr Godswill Ihetu

The Sponsors, Oando Plc. From left, Mr Pade Durotoye, Chief Executive, Oando Energy Resources. Mr Wale Tinubu, Group Chief Executive, Oando Plc. Mr. Omamofe Boyo, Group Deputy Chief Executive, Oando Plc

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OIL & GAS CIRCUIT OIL TECHNOLOGY CONFERENCE 2014

Remi Aiyela, Editor-in-Chief, NOGintellgience, with US delegate

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Remi Aiyela, Editor-in-Chief, NOGintelligence with David Harper, Whassan Nigeria Ltd

OIL & GAS CIRCUIT OIL TECHNOLOGY CONFERENCE 2014 OTC 2014 continued to attract record numbers of exhibitors and attendees from Nigeria. All the exhibitors in the ever popular Nigerian Pavilion, said they had found the exhibition very useful, while attendees said they had all made good contacts during the event. Here are some photographs from the Nigerian Pavilion at OTC 2014

PETAN Stand

NNPC Stand

Other exhibitors and attendees at the Nigerian Pavillion:

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OIL & GAS CIRCUIT OIL TRADING AND LOGISTICS CONFERENCE

(L-R), Captain Labinjo (Current President, Indigenous Shipowners Association of Nigeria) and delegates at the OTL Conference

(L-R), Prof. Godwin Igwe (Dir., Centre of Gas and Petroleum Policy, University of Port-Harcourt) with his wife having a discussion with a delegate at the OTL Award/Dinner

Dr. Oluwole Oluleye (pioneer Executive Secretary, PPPRA and former Executive Secretary PTDF), flanked by friends after he received a Life Time Achievement Award

(R-L), Shiraz Gany (CEO, Petrocam Trading) with a delegate at the Dinner

(L-R): Mrs. Winifred Akpani, CEO, Northwest Petroleum and Gas Ltd.; Hon. Dakuku Peterside, Chairman, House Committee on Petroleum (Downstream); Mr. Oliver Okparajiaku, Mr. Teddy Okonkwo (representing Mr. Farouk Ahmed of PPPPRA), Mr. Emeka Akabogu (Chairman, OTL Africa) and Mrs. Regina Iyabode Obasa (Per. Secretary, Ministry of Energy and Mineral Resources, Lagos)

Network session at the conference

Mr. Abayomi Oyetunji of Bovas & Company Limited receives a Return Business Class Ticket to New York from Ibiyemi Odusi (Co-operate Sales Manager, Arik Air) and Mr. Trevour Henry (Asst. Vice President, Nobles sales and distribution, Arik Air)

Masters Energy Oil & Gas (Masters Group) team exhibiting and showcasing their products to the special guests.

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Hauwa Alfa of Setana Energy wins an iphone 6 Apple phone at the Award/Dinner night

OIL & GAS CIRCUIT OIL TRADING AND LOGISTICS CONFERENCE (L-R), Hon. Dakuku Peterside (Chairman, House Committee on Petroleum Downstream), Simon Warren (Vitol SA), Mrs. Winifred Akpani (MD/CEO, Northwest Petroleum & Gas Company Ltd) and Mr. James Gooder (Argus Media Limited)

Mr. Ian Brown of Vitol SA and also the MD of Navgas Limited

(L-R), Mr. Teddy Okonkwo (representing Mr. Farouk Ahmed of PPPPRA), Mr. Femi Sotunde (Group Executive Corporate Strategy and Budget Implementation, Masters Group), Mr. Akin Cole Onitiri (Supply Manager, Oando Plc), Mr. Adetunji Oyebanji (MD, Mobil Oil Nig. Plc), Mr. Tunji Rabiu (Head, Business Operations, Forte Oil & Gas Plc) and Mr. Jeff Nnamani (GM, Strategy of Total Nigeria Plc.)

A cross section of delegates at the OTL Conference (L-R), Mr. Frank Amego (Executive Director, Commercial NNPC) and Hajia Safia Hamisu [Community Relations, Public Affairs Dept., National Petroleum Investment Management Services (NAPIMS)]

(L-R), A representative from Standards Organisation of Nigeria (SON), A representative from Department of Petroleum Resources (DPR), George Nicolaides (Director, Refining Operations, Dangote Group) and Mr. Gabriel Ogbechie (Managing Director, Rainoil Limited)

(L-R), Engr. Iduoye, Mr. Fredrick, both from Nigerian Maritime Administration and Safety Agency (NIMASA) with the chairman of OTL, Mr. Emeka Akabogu

(L-R), Captain A. O. Ayobanjo (Fleet Admin Officer, HQ Western Fleet, Naval Base), A Speaker, Engr. Iduoye (Dir., Maritime Safety, Nigerian Maritime Administration and Safety Agency)

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An ant is only as strong as its colony. A company only as strong as its people.

Our vision, resilience, and teamwork has uniquely positioned us as Nigeria’s leading indigenous producer.

Through our commitment to further expanding our portfolio of assets we continue to offer immense growth and investment opportunities within the sector.

We are Oando. We are proudly African.