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Orient Energy Review Vol 7 No.07 July 2018 1
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Orient Energy Review Vol 7 No.07 July 2018 3
INDUSTRY NEWS
FG Targets 10 Per Cent Global LNG Market, Says Baru … As Nigeria is set to become Regional Gas Hub
On the planned Nigeria-Morocco Gas Pipeline Project, Baru stated that the project would foster regional economic 0integration, reduce desertification, as well as enable accelerated regional electrification. “It will contribute significantly to the overall economic development of the region through the emergence of a wide range of industrial clusters around petrochemical, manufacturing, agro-business and fertilizers among others,” he stated.
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s part of its strategic aspirations to derive maximum value from Nigeria’s abundant natural gas resources, the Federal Government is targeting 10 per cent of the world’s market share in traded Liquefied Natural Gas (LNG). Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, disclosed this Tuesday while addressing the 27th World Gas Conference (WGC) in Washington DC, United States. Speaking at a session on “The Role of Gas in Power Generation” under the theme “Fuelling the Future”, Baru reeled out the enormous potentials of Nigeria’s gas resources and their huge contributions to the nation’s economy, explaining also the gas-topower initiatives as well as the quest for industrialization. “We are focused on jumpstarting and sustaining gas supply to support a rapid growth in power generation, re-positioning Nigeria as the regional hub for gasbased industries such as fertilizer, petrochemicals, methanol, Liquefied Petroleum Gas (LPG), as well as leveraging our enormous reserves position to strengthen our footprints in high value gas export through LNG and regional gas pipelines,” Baru told delegates at the triennial gas gathering.
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He said with emerging gas markets and the need to generate more power across Africa’s Sub-Saharan region, there abound an unprecedented investment opportunity in the gas sector for the country. According to the GMD, Nigeria was focused on expanding its existing 22 million metric tonnes per annum (MTPA) Nigerian LNG plant with additional 8MTPA from its proposed Train 7, a development that will significantly increase global power generation capacity. He further noted that towards achieving these gas aspirations, the Federal Government recently approved three-pronged reforms in the gas sector which included domestic gas supply obligation, gas pricing policy and regulation as well as gas infrastructure blueprint. Dr. Baru stated that as at today, Ni ger i a h ad c omplet e d a nd commissioned about 600km of new gas pipelines, thereby connecting all existing power plants to permanent gas supply pipelines. “We have also kicked off the 614km AjaokutaKaduna-Kano (AKK) pipeline project which, on completion, will deliver gas along these areas, thereby generating additional 3600MW to the national grid,” he stated.
He obser ved that cu r rently, government was completing the construction of the strategic Obiafo/ Obirikon-Oben (OB 3) (East-West) i ntercon nection pipel i ne and doubling the capacity of the existing Escravos to Lagos Pipeline (Western Pipeline System). He said the Federal Government had intervened to drastically reduce gas flare from 25 per cent down to 10 per cent, even as it had stepped up efforts to stimulate gas utilisation and monetization. Baru, who described gas as fast evolving preferred fuel for power generation, added that as an economic energy source, natural gas has, today, transformed the economies of several nations. He said Nigeria’s gas resource base was significant, as its estimated 199TCF has the potential of up to 600TCF in undiscovered resources, a tremendous opportunity to compete favourably with its peers. At the session, panelists also discussed the changing dynamics of global gas market, especially in the wake of the increased international demand and supplies, the huge potentials for gas-to-power initiatives as well as the impact of renewables on the gas sector. The WGC is the most important global gas industry gathering of influential leaders, policy-makers, buyers, sellers and experts on gas. Organised since 1931 by the International Gas Union (IGU), the triennial event aims to raise the profile of natural gas, while offering timely updates on strategic, commercial and technical issues facing the entire gas value-chain.
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INDUSTRY NEWS
Shell Tasks Contractors over Safety, Rewards Champions
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ice President of Shell Companies in Nigeria (SCiN) and Gabon, Peter Costello, has charged contractors working for and with Shell Companies in Nigeria to prioritise safety and be relentless in discussing the challenges and dilemmas. He noted that the international oil giant was poised to help improve safety performance throughout the energy industry. “Safety is our top priority. Everyone who works for us, or with us, has an important part to play in making SCiN a safer place to work. We cannot succeed in isolation and we must share the challenges by building strong partnerships to further improve our safety culture,” Costello said at the 7th edition of annual SPDC JV Contractor CEO Safety Leadership Conference held in Lagos last week. He added: “We expect our staff and contractors to comply with safety rules and regulations relevant to their work; to intervene to prevent unsafe conditions, and to respect fellow workers and the communities in which we work.”
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In his remarks, Managing Director of The Shell Petroleum Development Company of Nigeria Limited (SPDC) and Country Chair, Shell Companies in Nigeria, Osagie Okunbor, described the annual event as an opportunity to share learning and ensure alignment, common ground and shared commitments on Health, Safety and Environment (HSE) in Shell’s joint operations.
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We cannot be too careful with safety issues. Through engagement, we ensure that the right competence is in place and we create opportunities for our staff and contract staff to speak openly about dilemmas. The collaboration must be continually strengthened so as to make Shell a safety model in the Nigerian oil and gas industry.” Okunbor said, adding that SPDC “more than ever before, is committed to delivering energy responsibly and safely, with total prevention of harm to our employees, contractors, local communities and the environment.” While setting the conference scene, the General Manager Safety and Environment of Shell Companies in Nigeria, Chidub Nnene-Anochie, said the two-day conference was informed by SCiN’s mission to
constantly work in partnership with contractors, regulators, industry trade associations and professional bodies to share Shell’s global safety experience, standards and knowledge. She said the conference had over the years helped to increase safety awareness among contractors working for SCiN particularly in the areas of safety hazards that are peculiar to oil exploration and production activities. The highpoint of the conference was the presentation of the 2018 SCiN Safety Leadership Awards to contractors who have distinguished themselves as safety champions in the areas of personal, process and transport safety, among others. The conference was attended by SCiN including the Managing Director, Shell Nigeria Exploration and Production Company (SNEPCo), Mr. Bayo Ojulari; Managing Director of Shell Nigeria Gas, Mr. Ed Ubong; and the CEOs and representatives of over 83 contractor companies.
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INDUSTRY NEWS
CNL Decries The Circulation Of False Recruitment Information By Margaret Nongo-Okojokwu require applicants to make any payments towards processing any job application. Recruitment a d v e r t i s e m e nt s r e q u e s t i n g candidates to pay money, at any point during the recruitment process, are not from CNL.”
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hevron Nigeria Limited, CNL, operator of the NNPC/ CNL Joint Venture, has dissociated itself from such false job recruitment information and offers of employment contracts published in any newspaper, web site, email, poster, handbill or any other medium. CNL did not make
or authorize such publications. Explaining further, Esimaje Brikinn, the general manager, Policy, Government and Public Affairs of CNL, stated that, “Members of the public are hereby notified that Chevron Nigeria Limited does not, and will not
The general manager also explained that CNL does not solicit job applications or initiate recruitment processes through emails, posters, handbills, text messages, social media or phone calls. Brikinn advised job seekers to always check the company’s website at: http:/www.careers.chevron.com and the national newspapers for job advertisements from Chevron Nigeria Limited. Finally, Brikinn explained that CNL would not respond to enquiries about fraudulent advertisements and job offers.
GE to sell Baker Hughes years of observations I’ve had about the company,’ said Chief Executive John Flannery, a GE veteran who took the helm in August with a mandate to revamp the company. Flannery’s comments came on a conference call with investors and analysts. The company will spin off the profitable healthcare unit over the next 12 to 18 months, and sell its Baker Hughes stake over two to three years.
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eneral Electrico said on Tuesday it will spin off its healthcare business and divest its stake in oil-services firm Baker Hughes, effectively breaking up the 126-year-old conglomerate which was once the most valuable U.S. corporation and a global symbol of American business power. 6 Orient Energy Review Vol 7 No.07 July 2018
The slimmed-down company will focus on jet engines, power plants and renewable energy, which GE hopes will reward battered shareholders who have seen the stock lose more than half its value over the past 20 years.
GE will likely either need to hold an initial public offering of Baker Hughes, organise numerous block trades of shares to institutional investors, or find an entirely new investor to acquire its holding since the only two strategic buyers of its stake, Schlumberger and Halliburton, would have major antitrust risks in the oilfield services market, analysts said. *Energypedia.com
‘This is really the culmination of 10 www.orientenergyreview.com
INDUSTRY NEWS
Egina FPSO: Senate Orders Immediate Deportation of Samsung MD By Oge Obi
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he Senate has directed the Nigeria Immigration Service (NIS) to deport the Managing Director of Samsung, Young Ho Jo, back to South Korea for allegedly coming into Nigeria without proper documentation. The Chairman on Ad-hoc Committee probing the $16.35 billion Egina Oil Field Project, Senator Solomon Adeola (APC Lagos West) made this known on Thursday during during an interactive session with major and subcontractors of the project in Abuja. According to the Senator, the resolution for the Samsung boss deportation was adopted by the Senate in line with a recommendation to that effect by the ad-hoc committee in its interim report. The announcement which was made to the hearing of the embattled South Korean and other operators of the Egina oil field project, revealed that the illegality of Young Ho Jo residency in Nigeria came to the fore during scrutiny of his papers. Adeola said, “Mr. Young Ho Jo, who has been working for the past two months in Nigeria as the Managing Director of Samsung
without fulfilling legal requirements for such, told us that he couldn’t complete his documentation as a result of alleged breakdown of machines of the Nigeria Content Development Monitoring Board (NCMDB). “But the NCMBD wrote to us that their machine had never broken down in the period claimed to show that the man has contravened the local content law. Going by recommendations made by this committee to the Senate and resolution adopted, MD Samsung is no longer recognized on account of improper documentation as shown by papers he presented. “To the Senate and this committee, Samsung MD is an illegal immigrant who must be deported by the Nigerian Immigration Services, to which a letter to that effect has been forwarded to the Ministry of Interior. He can, however, come back to the country through proper documentation thereafter,” he said. Speaking further, the committee chairman revealed further that Young Ho Jo, during his illegal residency in Nigeria as Samsung
MD, also violated the Local Content Act by spending $1.6 billion out of the $3.5 billion contract Samsung got from the $16.35 billion Egina Oil Field Project in Goje, South Korea. However, the Managing Director of Total Upstream Nigeria Limited, Nicolas Terraz, stated that as the major operator of the project, it will continue to assist the committee in its investigations adding that its goal is to deliver the project expected produce 200,000 barrels of crude oil per day while its FPSO have a holding capacity of 2 million barrel. The representative of NNPC/ NA PI M S , E n g r. Gb ol a h a n Okesanya, said that it will ensure that maximum cooperation is given to the audit team of the Senate when it commences work adding that the goal of the audit team tallies with that of NNPC/NAPIMS in its regulation of the oil industry. Meanwhile, the second phase of the investigation would be carried out by consultants to be assigned by the Senate for 16 weeks on the spot assessment of the project execution as regards value for money in line with the local content act.
OPEC Returns to 100% DOC Conformity Level to Boost Oil Supply By Oge Obi The OPEC and Non-OPEC members have agreed to return to a 100% compliance level of the Declaration of Cooperation (DOC) to pave way for a boost in oil supply after months of under-production. The decision for members to top their production level was taken after the countries participating in the December 10, 2016 DOC had exceeded the required level of conformity, hitting 147% in May 2018. This was contained in a statement issued by the OPEC secretariat after the 4th OPEC and non-OPEC Ministerial Meeting that held in Vienna, Austria, on Saturday, 23 June 2018.
voluntarily adjusted to 100%, as of 1 July 2018 for the remaining duration of the DOC and for the JMMC to monitor the overall conformity level and report back to the OPEC and non-OPEC Ministerial Meeting.” The Meeting which held in Vienna, Austria, recently was under the CoChairmanship of OPEC’s President, HE Suhail Mohamed Al Mazrouei, Minister of Energy & Industry of the United Arab Emirates and Head of its Delegation, and His Excellency Alexander Novak, Minister of Energy of the Russian Federation.
According to the statement, “ the 4th OPEC and non-OPEC Ministerial Meeting hereby decided that countries will strive to adhere to the overall conformity level,
The Meeting recalled the rights of peoples and nations to permanent sovereignty over their natural wealth and resources. Reaffirming the continued commitment of the participating producing countries
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in the ‘Declaration of Cooperation’ (DOC) to a stable market, the mutual interest of producing nations, the efficient, economic, and secure supply to consumers, and a fair return on invested capital, noting the overall improvement in market conditions and sentiment, and the return of confidence and investment to the oil industry. The Meeting extended its deep appreciation to the JMMC, the Joint Technical Committee (JTC) and the OPEC Secretariat for their constructive and effective engagement in providing the openness required in ensuring that the voluntary productions decisions were implemented in a timely and equitable manner.
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INDUSTRY NEWS
No Oil Found in Bida Basin Yet – Baru By Margaret Nongo-Okojokwu
talk-less of claiming t h at t he oil and gas present is in commercial quantities.
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It is also
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imperative to state that even after commercial discovery of hydrocarbons, it is pertinent that pronouncements be made only after due validation of claims by the Industry Regulator - the Department of Petroleum Resources (DPR),”
Speaking on the topic: “The Role of Inland Basins in Unlocking the Socio-Economic Benefits of a New Nigeria”, he posited that NNPC was desirous of discovery of oil and gas in the frontier basins, stressing however that the corporation was currently at the fourth, out of ten intensive stages, of determining if hydrocarbon has been generated in the basin. The NNPC helmsman averred that upon completion of determination of hydrocarbon generated, the corporation would initiate another six stages of integration of the studies to identify positive hydrocarbon anomalies, acquisition of 2D seismic data over anomalies, acquisition of 3D seismic data to validate identified structures, drilling of exploration wells, drilling of appraisal wells and evaluation of the engineering and economic parameters required. He emphasized that NNPC recognised that the Bida basin exploration was in the fourth stage of these activities, adding that it is important to state that efforts have not advanced to the level of declaring discoveries,
Dr. Baru advised. He expressed the hope that with the clarity provided, all claims and counter claims in respect of the Bida basin hydrocarbon discoveries would be given the befitting rest they deserve, advising that until the conclusion of the current NNPC-led efforts or any other ones in that respect, all claims should be discountenanced. Dr. Baru maintained that the corporation’s foray into the inland basins was to expand its exploration footprint with a view to improving the nation’s oil and gas reserves, increase oil and gas production and spinoff socio-economic activities across the country. According to him, NNPC through its relevant subsidiaries is currently engaged in aggressive exploration campaign at most inland basins with a view to discovering new oil and gas reserves that will boost oil and gas production and the extended economic benefits to the people within those basins and the nation at large. Dr. Baru maintained that NNPC, as the concessionaire of all the blocks in these basins, is committed to working with all stakeholders around the Bida basin and beyond to advance the current efforts to fruition and thereafter follow all the laid down regulations for reporting such discoveries “It is our utmost desire that the success of the ongoing exploration campaign in the Inland Basins will usher in a new
he Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has said that the speculations that oil has been found in commercial quantity in the Bida Basin should be discountenanced, stressing that the search for oil in the basin is still ongoing. Dr. Baru made this submission while delivering his acceptance speech during his conferment with the fellowship award by the Ibrahim Badamasi Babangida (IBB) University, Lapai on Saturday.
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Nigeria. A new Nigeria with balanced resources distribution; diverse economic activities and sustained energy security as we move towards the industrialised economy we all desire,” the GMD said. Dr. Baru applauded President Muhammadu Buhari for giving the corporation the mandate and all the necessary support and encouragement to lead a renewed search for oil in the inland basins, adding that the Niger State Government has been very helpful towards the cause of securing Nigeria’s energy future as exemplified by its support for the NNPC exploration activities in the Bida basin. .He also commended the Ibrahim Badamasi Babangida University with respect to the studies carried out on the characterisation of the Bida basin, stressing that the studies would help NNPC in the ongoing exploration activities in the basin. According to him, the corporation would from time-to-time engage the University for further support in areas relating to the ongoing exploration in Bida basin. “Ours is a symbiotic collaborative relationship with this ivory tower,” he concluded. The State Governor, Alhaji Abubakar Yahaya Bello, expressed gratitude to the NNPC for engaging the University on the basin exploration, saying that the GMD deserves the recognition bestowed on him by the university. On his part, the ProChancellor of the University, Dr. Mohammed Santuraki, gave kudos to Dr. Baru on the efficient way he runs NNPC thereby impacting the lives of Nigerians positively. Earlier, the Vice Chancellor of the University, Prof. Muhammad Nasirudeen Maiturare, thanked Dr. Baru and the NNPC for partnering with the University in the Bida basin exploratory activities, assuring that the University would continue to contribute its quota to the oil search in the basin. Prof. Maiturare averred that the GMD of NNPC was deserving of the fellowship award, given the corporation’s quest to grow the nation’s reserves base and spread the oil exploration map across the country.
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SPECIAL REPORT
Nigeria Set to Lead Africa in Gas Flare Commercialization African nations are currently losing trillions of dollars to gas flaring, in addition to its attendant implications on the environment and health of its citizens. Despite various targets and deadlines set, the flaring continues unabated.This article highlights factors and challenges posed to ending gas flaring and efforts by the Federal Government of Nigeria to end gas flaring.It also underscores Nigeria’s pace-setting role in this regard with the introduction of the Nigerian Gas Flare Commercialisation Programme and the many advantages of this initiative. By Godspower Ike, Margaret Nongo-Okojokwu
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igeria, after losing billions of dollars to gas flaring, is hoping to turn its fortunes around, and has begun moves to convert this lost resource to revenue for the country. The Federal Government had introduced the Nigerian Gas Flare Commercialisation Programme, NGFCP, as part of a strategic approach to the historical problem of flaring, and to convert the wasted resources into dollars. Nigeria currently flares about 10 per cent of its total gas output. Specifically, the country flared 287.58 billion Standard Cubic Feet (SCF) of gas in 2017, accounting for 10.3 per cent of total gas produced in the same year. Prior to that, Nigeria flares about 145 billion cubic meters of gas annually, enough, according to World Bank figures, to produce 750 billion kilowatts per hour (kWh) power, more than the entire power consumption on the African continent. The country was flaring about 75 per cent of its natural gas production pre-1990, however, the Liquefied Natural Gas (LNG) era saw a steep rise in gas production and utilization and the commencement of decline in gas flaring. In 2016, a total of 215 oil producing fields in Nigeria produced a daily average of 4.33 billion SCF of associated gas, a daily average of 771 million SCF per day. About 18 per cent of the produced Associated Gas (AG) is routinely flared. Out of the 215 fields, only 52 fields utilized above 90 per cent of AG produced, with international oil companies www.orientenergyreview.com
(IOC) responsible for over 80 per cent of gas flared in the industry. In general, apart from the economic losses, the exploitation of petroleum resources in the last four decades has resulted in massive injection of greenhouse gases into the atmosphere as well as considerable environmental problems. This, according to the United Nations, had made the Nigerian petroleum industry a critical one in the discussion of anthropogenic induced climate change, its consequences, and the need for mitigation and adaptation measures in the sector. Flaring of gas contributes to climate change and impacts the environment through emission of carbon dioxide (CO2), black carbon and other pollutants. It also released several dangerous toxins and large volumes of other greenhouse gases into the atmosphere, polluting the soil and thereby affecting the health and wellbeing of the inhabitants in the host and nearby communities, exposing the people to an increased risk of respiratory illnesses such as Asthma and cancer and premature death. The UN added that gas flaring also wastes a valuable energy resource that could be used to advance the sustainable development of producing countries mainly in the area of power generation. According to the communiqué issued by Petroleum Technology Association of Nigeria (PETAN) after the recently concluded Offshore Technology Conference (OTC) in Houston, Texas, that Nigeria after loses billions of dollars to gas flaring,
the Association disclosed that there are 189 flare points in the country, with 39 accounting for 85 per cent of the total flares in the country. According to the communiqué, between 300 billion to one trillion cubic of gas is f lared annually translating to $800 million yearly. PETAN explained that Nigeria is currently ranked sixth among gas flaring countries in the world. Continuing, the commun iq ué lamented that globally competitive fiscal policies for gas are not in place in the Nigeria gas industry, while it added that the market is fragment and market to power is not structured with right side of financing and payment In addition, it said there is a perceived disconnect between producer, buyer and user; uncertainty in Price. It said, “Pricing does not make sense. Why will someone invest if gas price is pegged at $2.50. We cannot control price without demand. We must think commercial. Also, market driven policy not in place to develop gas.” Deputy Director, Gas Monitoring & Regulation in the Department Of Petroleum Resources (DPR), Engr. Antigha Ekaluo, identifies the factors responsible for gas flaring to include inadequate infrastructure which has led to increased stranded gas; funding and contractual issues; gas pricing and commercial framework; host communities and security challenges and equipment and reliability issues and vandalisation. He further stated that the gas flare penalty of N10 per 1,000 SCF of gas makes flaring more affordable to operators,
Orient Energy Review Vol 7 No.07 July 2018 9
SPECIAL REPORT who also treats it as operating expenses in their books. Others, according to Ekaluo, include aging facilities and outdated process design; companies focusing on NonAssociated Gas (NAG) for security of supply for projects; lack of integrated development approach for oil and gas; lack of robust commercial, legal and regulatory framework for gas; underdeveloped domestic gas market and its impact on oil revenues. He also listed the challenges to curbing gas f laring to include “aging facilities and integrity issues; insecurity and vandalisation; absence of critical infrastructure; economy dependence on oil revenues; inappropriate fiscal terms for gas; inadequate funding of joint venture projects; under-developed gas market and commercial framework; and low penalty. From economic analysis, it was discovered that harnessing gas from the top 50 flare points would reduce volume of flared gas by 80 per cent, with over 130 flare points collectively flaring about one billion standard cubic feet per day (SCFD) and about 65 per cent of flare points are onshore. In addition, of majority of flared gas volumes, more than 80 per cent can be utilized. Also, pipelines are the most attractive transport option, however, Compressed Natural Gas (CNG) trucks are preferred for security. Furthermore, the Federal Government stated that following its verification of gas f lare sites across the country, it discovered that there are at least 178 sites where gas flaring occurs, as opposed to 140 sites listed in the past. Coordinator of the Nigerian Gas Flare Commercialisation Programme in the Ministry of Petroleum Resources, Mr. Justice Derefaka told Orient that the verification exercise was conducted in conjunction with the World Bank, United States Agency for International Development, USAID, and the Canadian government. He noted that the verification is still ongoing, as only 60 per cent of the expected data had been received, while the rest are being awaited. Derefaka lamented that the country had burnt money that would have been used to generate wealth, create employment and also generate electricity for the people. He explained that the essence of embarking on the verification exercise was to address issues of bankability and the need to attract investors and financiers to the gas flare commercialisation initiative. According to him, the overall idea is that the country must have a credible, measurable, attainable data that 10 Orient Energy Review Vol 7 No.07 July 2018
is bankable, so that it would be an investment-grade data for investors and lenders to put their money. Derefaka noted that by the time investors see that the World Bank had done a lot of studies with the Federal Government, and the remaining sites are verified, they would come in and make investment. He said, “What we know in this country is that we have 139, 140 gas flare sites, but by our verification with our partners, we found out that we have 178. That in itself is not complete, because we are around 60 per cent, 40 per cent data is missing, some of the information is inaccurate. So we are doing a detailed information request in the DPR office in Lagos. So as we send this information and get these things back, then these things might increase. “In this country, right now, we have 178 gas flare sites, of the 16,000 that we have globally in 19 countries. Daily, we flare around 755 million SCF per day; you can imagine how much we lose as a country. The carbon credit we would have gotten from this, the electricity we would have generated, the LPGs and the likes of those, even if they had have to go to any of the LNG trains.” Additionally, the Ministry of Petroleum Resources in a gas utilization report, lamented that gas f lare contributes to health problems such as irregular heartbeat, acute leukaemia, aplastic anaemia, chronic bronchitis, painful breathing, aggravated asthma and premature mortality It added that 17 onshore gas flare points in Bayelsa state are estimated to cause 120,000 asthma attacks, 4,960 respiratory illnesses among children and 49 premature deaths per year in the region. To address this issue, the Federal Government, in December 2016, launched a new gas f lare commercialization programme. The programme was designed as a highpriority strategy for the government in achieving the national mandate for flare-out by 2020. The Nigerian Gas Flare Commercialisation Programme lays out a framework for Government to license gas that would otherwise have been f lared to technically credible and financially sound third party private sector players. To back this up, the Federal Government, through the Nigerian National Petroleum Corporation (NNPC) is reviving the Ajaokuta-Kaduna-Kano (AKK) pipeline project. The AKK pipeline is pipeline with a total length of 614 kilometers and a diameter of 40 inches. It is targeted to transfer gas from gathering stations across Ajaokuta to a terminal station in Kano, while passing through Kaduna.
environment for more gas to be generated by entrepreneurs, as the market would then exist. Also, gas and power projects could be sited along the pipeline areas because of easier access to gas. Other gas projects the Federal Government is pushing in the gas flare commercialization programme include the Escravos – Lagos pipeline; Odidi – Warri pipeline and the Obiafu/Obrikon – Oben (OB3) pipeline. Critical success factors for gas flares out, according to the Federal Government include increased infrastructure investments, such as improving facilities to minimize upset flaring and putting infrastructure in place to link supply with demand centres. The Federal Government said it is also increasing the cost of flaring through the imposition of fines, taxes and social pressures; and is also considering addressing bottlenecks militating against implementation of third party access to gas flare points. Again, according to data obtained from the Federal Government, the Nigerian Gas Flare Commercialisation Programme is expected to create over 300,000 jobs and attract $3 billion capital investments in various projects in the Nigerian economy. The data further stated that Niger Delta communities would benefit from reduced flaring and economic development, while compliant companies would enjoy social license to operate in the region. It also stated that six million households would be given access to clean energy through Liquefied Petroleum Gas (LPG), thereby eliminating 20 million tonnes of carbon dioxide emissions annually. In addition, the Federal Government’s data noted that 600,000 metric tonnes of LPG per year would be unlocked, while 2.5 gigawatts power would be generated from new and existing Independent Power Projects (IPP) because of the expected increase in gas supply. Senior Technical Adviser on Upstream and Gas to the Minister of State for Petroleum Resources, Mr. Adegbite Adeniji, said the Nigeria Gas Flare Commercialisation Programme (NGFCP) would help the Federal Government achieve its target of zero gas flares by 2020 in about four ways. Firstly, Adeniji stated that the NGFCP would fix the market and licensing process, which include introducing open bidding process and award licenses over multiple bid rounds; screen licensees for technical and financial capabilities before participating in commercial bid among others. He said the licensing process involves launch of the NGFCP and invitation for expressions of interest;
This would create an enabling www.orientenergyreview.com
SPECIAL REPORT offer access to data to enable investors to prepare bids for specific locations, share gas flare data, such as location, volume, reservoir, etc; investors submit detailed technical and financial proposals with bids for flared gas price. Another licensing process, he said, involves the allocation of provisional licenses after the announcement of preferred and reserve bidders; preferred bidders pay signature bonus and are allowed time to secure financing and equipment, if needed. After that, he said final licenses would be awarded, ensuring that investors commence operations; sign Gas Connection Agreement with operator and commence operations. Adeniji also disclosed that the NGFCP would improve access to finance and incentives, adding that between $2 billion and $3 billion of financing is required to address gas infrastructure gap in Nigeria. According to him, a broad range of funding instruments, such as concessional debt and risk guarantees are available from potential partners, while government will need to help unlock these sources. He maintained that the NGFCP would improve monitoring and enforcement, by helping collect data from operators and track f lare down progress; enforcing flaring and venting and also closely monitor the NGFCP Strategy. In addition to the NGFCP, the NNPC also announced a three-point smart strategy aimed at ending gas flaring in the nation’s Oil and Gas Industry, while it explained that in the last decade, gas flaring in Nigeria had reduced significantly from 25 per cent to 10 per cent. The NNPC said the multi-pronged approach would ensure a sustainable solution to the historical problem of flaring, thereby turning waste into dollars. The three-point strategy championed by NNPC to arrest the growth in gas flares includes ensuring non-submission of Field Development Plans (FDPs) to the Industry Regulator – the Department Petroleum Resources (DPR), without a viable and executable gas utilization plan, a move aimed at ensuring no new gas flare in current and future projects. The other two strategies, the NNPC added, were a steady reduction of existing flares through a combination of targeted policy interventions in the Gas Master-plan as well as the re-invigoration of the flare penalty through the NGFCP and through legislation, that is, ban on gas flaring via the recent Flare Gas (Prevention of Waste and Pollution) Regulations 2018. This development, www.orientenergyreview.com
the NNPC added, would not only see Nigeria dropping from being the second highest gas flaring nation in the world to seventh, it would also signify a major milestone in its gas commercialization prospects. The NNPC also disclosed that it has embarked on the most aggressive expansion of the gas infrastructure network aimed at creating access to the market. “Today, we have completed and commissioned almost 600km of new gas pipelines thereby connecting all existing power plants to permanent gas supply pipeline. We are also currently completing the construction of the strategic 127km Obiafu-Obrikom-Oben gas pipeline – “OB 3” connecting the Eastern supply to the Western demand centres,” the NNPC added. The NNPC further noted that aside looping EscravosLagos Pipeline System (ELPS 2) gas pipeline projects to increase gas volume capacity to at least two billion cubic feet per day, it has recently signed the contracts to kick off the 614 kilometers Ajaokuta-Kaduna-Kano (AKK) pipeline project, which on completion, would deliver gas to the ongoing power plants in the areas and revive the manufacturing industries in the northern part of the country. It assured that there was evidence that the interventions undertaken by the corporation were working as gas supply to the domestic market is growing at an encouraging rate, having tripled from 500 million cubic feet per day in 2010 to about 1.5 billion cubic feet per day currently. The NNPC explained that the aggressive development of gas infrastructure, pipelines and processing plant, between supply sources and the market would also create a sustainable evacuation route for currently flared gas and other gas sources. Noting that Nigeria offers unique opportunities for investment in exploration, refining, storage, transportation, power, distribution and marketing of petroleum products, the NNPC further observed that the nation’s Gas Reform was anchored on a robust strategic framework that is focused on maximum economic impact through gas. Again, the PETAN communiqué highlighted the need for the enforcement of the gas flare penalty, and stringent penalty for incorrect or incomplete flare gas data, as this protect the environment and prevent the waste of natural resources. The communiqué said, “Gas should be an opportunity in creating a viable economy and vibrant society. It is
our sure way to grow our GDP. Let us not be slave in the ways things are done in the past. Saudi Arabia has positioned their country using Gas. Russia has leveraged enough gas resources. Gas is a great resource base. “Our gas resource base has grown from 192TCF to 199TCF with potential to reach 600 TCF. We are presently ninth in the world in terms of gas reserve. Our current gas supply is 8.4 billion standard cubic feet per day (bcf/d) out of which 44% is exported, 28% is re-injected, 18% is used domestically for power and industries and 10% is flared. “Nigeria has managed to reduce our flared gas from 25% to 10% in few years. However, 800 million (SCF/d) flared daily if harnessed can generate 3.2 gigawatts (GW) of electricity. What a waste in resources. We must monetize gas and eliminate gas flaring both as a source of revenue and also eliminate all the health risks associated with flared gas.” While Speaking to Orient Energy Review team in Houston, Chairman Petroleum Technology Association of Nigeria- PETAN, Mr. Bank Anthony Okoroafor is of the opinion that flare monetization can fix the Power problems of Africa. In his words “ about 75% of the people in Africa do not have access to electricity, can you imagine what will happen if we can harness all the gas we flare and use it to provide Gas to Power Africa? Can you imagine how much money Nigeria would be making? There’s so much waste, we are leaving a lot of money on the table, we can utilize the flares gas, we can sell that power, yet we are flaring Gas which can run through turbines and generate electricity for our people; we are by Potential a rich country but in reality a poor country, Okoroafor said, However, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, insisted that the government has come up with clear policies toward flare gas monetization and flare gas elimination. According to him, this administration had taken a holistic view; providing third parties that have the technical commercial solutions with access to the flares. He noted that attempts to capture some of the gas that is being flared would ensure that it is directed towards power production and industrial use. He said, “In addition, the government has committed in the Paris Climate Change Agreement to Nationally Determined Contributions toward the reduction Cont’d on page 13
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LOCAL CONTENT
NCDMB Invests $10m In Waltersmith’s 5000 Bpd Modular Refinery
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he Niger ia n Content Development and Mon itor i n g Boa rd (NCDMB) on Fr iday in Lagos signed a $10m equity i nve stment ag reement w ith Wa l t e r s m i t h R e f i n i n g & Petrochemical Company Limited for the construction of a 5000 barrels per day modular refinery to be located at Ibigwe, Imo State. The Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote and the Director of Finance and Personnel Management, Mr. Isaac Yalah signed on behalf of the Board while the Chairman of Waltersmith, Mr. Abdulrasaq Isah and the Executive
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Vice-Chairman, Mr. Danjuma Sale signed for the company. Under the Shareholders Agreement and the Share Subscription Agreement, the Board took 30 percent equity in the modular refinery. The Executive Secretar y of NCDMB, Engr. Simbi Wabote said the investment decision was in line with the Board’s vision ‘to be the catalyst for the industrialization of the Nigerian oil and gas industry and its linkage sectors.’ The Board was also keen, he added, to support the Federal Government’s policy on modular refineries and meet the key objectives of the Petroleum Industry’s Seven Big Wins launched
by President Mohammed Buhari in October 2016 and the Economic Recovery and Growth Program (EGRP). According to him, “we have our exit strategy in place to ensure that the refinery reverts back as a fully owned, privately run modular refinery as our role is clearly defined as a catalyst.” He also commended Waltersmith for developing a bankable proposition, stating that “they sorted out the project feasibility, regulatory approvals, and other pertinent details before reaching out to the Board with the value they are bringing to the table and a clear definition of the support they seek.”
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LOCAL CONTENT
Wabote confirmed that NCDMB in line with its mandate in the NOGICD Act 2010 and as part of the Nigerian Content 10-year strategic roadmap would intervene and fund projects and activities directed at increasing Nigerian Content in the Oil & Gas industry, especially those that utilize available resources incountry, add value and create jobs locally. “Establishment of LPG depots, resuscitation of abandoned or establishment of new LPG cylinder manufacturing plants, partnerships on mini-petrochemical plants, and several others fall into the pack of interventions we are willing to look at,” he said. He advised project sponsors and promoters of modular refineries seeking the Board’s support to study the checklist of requirements hosted on the Board’s website. He restated his belief that at least 10 percent of Nigeria’s oil production should be refined using modular refineries, assuring that the Board would be willing to consider proposals that meet the guidelines. Chairman of Waltersmith, Mr. Abdulrasaq Isah explained that
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the modular refinery project was originally conceived to mitigate the incessant vandalism of the company’s crude oil pipelines but feasibility studies later indicated that it could be a viable business because of the significant demand for refined petroleum products. He disclosed that the refinery would be sited close to the firm’s oil field at Ibigwe, Imo State and the refined products would be distributed to consumers within 40 kilometer radius of the plant. He expressed optimism that the project would support the Federal Government’s plan to substitute imported refined petroleum products and as well as the strategy to use the establishment of modular refineries to address the menace of pipeline vandalism, illegal refining and other social challenges prevalent in the oil producing region. He commended the leadership of the NCDMB for supporting the project and assured that the company would do everything within its power to make it a success. “This is landmark in the history of the NCDMB and we pride ourselves as the first beneficiary of this initiative.”
Cont’d from page 11 of greenhouse gases. For the petroleum sector, our commitment is to eliminate gas flares. “To this end, we have designed a comprehensive program called the Nigerian Gas Flare Commercialization Program through which we want to make sure that the flare issue is behind us by 2020.” He added that the Federal Government plans to complete the development of gas tariffs and new legislation for the industry. “We expect to have resolved the network code and tariffs for gas and to increase gas supply. This is the culmination of all the hard work that we have done in the last three years that should start kicking in by the third or fourth quarter of 2018.” With all these, the Federal Government had, today, shown that it had reached a conclusion that a right combination of incentives and penalty, adequate infrastructure; robust legislative, commercial and regulatory framework are critical to ending gas flaring in Nigeria. Hence, most of the erstwhile constraints to ending gas f laring are being addressed by the present administration in a holistic manner by the current gas commercialisation programme and similar initiatives. In essence, the upcoming National Gas Policy, Gas Flare Commercialization Programme and Gas Network Code are key enablers in commercializing gas flares in Nigeria and in charting the country’s path towards gasbased industrialization and economic development.
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LOCAL CONTENT
Aveon Offshore Delivers OLT Buoy for Egina Project …NCDMB says Total pushing boundaries of local content
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veon Offshore has recorded a new Nigerian Content feat with the fabrication of another Of fshore Loading Terminal, OLT, Buoy made in Nigeria and the first to be delivered ahead of schedule and launched on a dedicated slid way. The Executive Secretary, Nigerian C o nt e nt D e ve l opm e nt a n d Monitoring Board, NCDMB, Engr. Simbi Wabote and the Managing Director of Total Exploration and Production Nigeria, Mr. Nicolas Terraz commissioned the buoy
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recently in Port Harcourt, Rivers State. Engr. Simbi Wabote, said at the inauguration ceremony of the buoy at Aveon Fabrication Yard, Rumuolumeni, Port Harcourt that the company had recorded a new Nigerian Content feat with its performance. He noted that the buoy would be used to offload crude oil from the Egina’s Floating Production Storage and Offloading vessel. He commended Aveon Offshore for another sterling execution of a project. “With an assemblage of over 1,300 tonnes of steel for this buoy, I am happy you did not cave in under the weight of
the challenges but you have once again proved your mettle.” He noted that many other Nigerian service companies performed creditably on different scopes of the Egina Deepwater project. He added: “The strategy helped to ensure that Nigerians got maximum Nigerian content scope and compel the EPCI contractors to seek out local service companies with capacities to execute scopes, which were embarked for completion within the country.
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LOCAL CONTENT
“The Board is delighted at the completion of this package by a Nigerian service company; Aveon Offshore. It is another proof of the effectiveness of the strategy we adopted to develop local capacities and capabilities under the Egina project. “What excites me is the success story of some of the things we pushed for. I agree that some bit of problems in certain areas where people have not seen the challenges as opportunity and they fall out. “But I can tell you that on Egina project, all the trials we have done in terms of pushing the boundaries have been extremely successful. “The completion of the OLT buoy is another feather to the cap of Aveon Offshore and I urge you to please keep the flag flying.” He also said the project provided a good opportunity for Nigerian companies to demonstrate their capacity and maturity since the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act in 2010. He further urged Nigerian oil and gas service providers to always deliver on any project they are contacted to do. “It is one thing to win a contract; it is another thing to deliver the contract scope timely and safely,” www.orientenergyreview.com
he cautioned. He also expressed hope that future projects such as Zabazaba, Bonga South-West, Ekike, Owowo and others would utilise the capacities already developed in meeting and exceeding the Nigerian Content targets stipulated in Nigerian Content Act. The Executive Secreta r y com mended Tota l for thei r disposition towards the development of Local Content in the Nigerian oil and gas industry.
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Total remains at the fore-front of pushing the boundaries of the local content practice and we are proud of the various Nigerian Content achievements under the Egina project despite the initial challenges.” Wabote disclosed that the board was working with National Petroleum Investment Management Services (NAPIMS) to bring new projects on stream quickly in order to sustain the capacities that have been developed. In his speech, the Managing Director of Total Exploration and Production Nigeria, Mr Nicolas Terraz said: “This is the first Turret Buoy designed in Nigeria with in-service
replaceable wheel bearing system.” He emphasised that the project achieved approximately two million man-hours with Zero Lost Time Injury (LTI). He added: “For Total, safety is a core value because we believe that nothing can truly and sustainably be achieved in our industry without an unconditional respect for the highest safety standards.” Also speaking at the delivery ceremony, the Chairman of Aveon Offshore, Tein George, stated that executing the project, required a lot of time and manpower, but the brand is proud to have completed the project at the scheduled time. “We at Aveon Offshore continually strive for excellence by delivering top notch services within defined project timelines. “We are a proudly safety conscious company and our amazing safety record which remains uncompromised regardless of the nature of the project we take on and our works are fully compliant with local content requirements and the recently concluded construction of this Egina OLT- BUOY is not an exception,” George stated.
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LOCAL CONTENT
NCDMB Hails NLNG’s Award of LPG Ship Contract to Local Company
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he Niger ia n Content Development and Mon itor i n g Boa rd (NCDMB) has commended Nigeria LNG Limited (NLNG) for awarding the contract for the provision of a new build Liquefied Petroleum Gas (LPG) ship to a fully indigenous company, E.A. Temile Development Company. The vessel will serve as the chartered ship by which the NLNG will deepen the delivery of LPG, commonly known as cooking gas into the domestic market for improved availability and scale. In line with the contract, E.A. Temile Development Company signed an agreement on Friday in London with Hyundai Mipo Dockyard, South Korea for the construction of the new LPG vessel. The Executive Secretary NCDMB, Engr. Simbi Wabote was a guest at the ceremony and described NLNG’s award of contract to the local firm as a confidence building move and a bold endorsement of local capacities and capabilities. He added that the development was a manifestation of the progress that had been made in the local content journey and challenged other industry stakeholders to come up with similar initiatives. “I expect several operators and service providers to get inspirations
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from this milestone event and see the possibilities in our local content practice rather than the difficulties.” He also congratulated E.A. Temile Development Company for clinching the important contract and breaking the stereotyped glass ceiling that had often stopped indigenous companies. He further charged the company to keep within the terms of the contract and deliver safely. S p e a k i n g f u r t he r, Wa b ot e demanded that Hyundai must look seriously at domiciling key aspects of its activities in-country. “There is a lot of repeat business and the opportunity is huge with the massive infrastructural deficits in the LPG values chain. You should partner with local businesses for increased in-country value addition especially in the area of maintenance of vessels. He stressed that NLNG’s efforts to deepen the penetration of cooking gas tallies with NCDMB’s interventions to utilize oil and gas resources to improve the quality of lives of Nigerians. The Executive Secretary regretted that the current level of LPG penetration in the country was still very low, at roughly 1kg per capita consumption compared to
Ghana at 4.7kg, Senegal at 9kg, and Egypt at 85kg. “The addition of this vessel will surely address part of the challenges bedeviling LPG utilization in the country. It is expected that the NLNG market share of domestic LPG will increase significantly from the current level of 40 percent and ultimately lead to stoppage of importation of LPG into the country.” He also stated that NCDMB had commenced discussions with some investors to address challenges around accessibility to LPG. “We are looking at initiatives around bulk storage depots and establishment of LPG cylinders manufacturing companies including provision of support for re-opening of moribund ones.” He noted that one of such in-country facilities have an installed capacity for the production of one million 12.5kg LPG cylinders per annum and 400 gas cookers daily and can provide 1000 jobs at full capacity, yet it was shut down, leading to a deluge of imported cylinders and accessories. “We will play our part to reverse this trend,” he promised.
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LOCAL CONTENT
Addax Celebrates Nigerian Content Achievements, Graduates 11 Trainees
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ddax Petroleum rolled out the drums on Friday in Lagos to celebrate the feats it had recorded in the implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act. This year’s edition of the Nigerian Content awareness day was titled “Building Nigerian Content: Our Collective Assignment”. It also featured the graduation of two geosciences interns and nine trainees under the Addax/Rumoulf HCDT programme. Delivering the opening remarks at the event, Acting Managing Di rector, Addax Petroleum, Mr. Yonghong Chen affirmed the company’s commitment to promoting Nigerian Content in its operations and ensuring compliance with the provisions of the NOGICD Act. He said, “I know we are doing well with Nigerian Content; we have not earned any infraction from the Board and to us this is one thing we are proud of. We have institutionalized Nigerian Content and taken it to the next level by producing NC nuggets that will be displayed on all the desks to serve as reminders to staff.” He appreciated the support of the Nigerian Content www.orientenergyreview.com
Development and Monitoring Board (NCDMB), particularly in granting timely approvals of documents that concern operations and asked that such efforts be intensified. The General Manager, Projects Certification and Authorization Division (PCAD), NCDMB, Engr. Paul Zuhumben represented the Executive Secretary, Engr Simbi Wabote at the event and commended Addax’s tenacity at organizing the Nigerian Content awareness day annually. He said the programme affords Addax the opportunity to showcase positive strides it had made, celebrate achievements, plan towards future opportunities and make the best of the NOGICD Act 2010 to further grow local content. Zuhumben informed that the Board has commenced the implementation of the Nigerian Content 10-year strategic road map which was developed with the intent of deepening Nigerian Content in the oil and gas industry. He stated that a key target of the road map is to increase Nigerian Content from the current level of 28 percent to 70 percent by 2027. He underscored the need for Addax to give Nigerian Content
its deserved attention by ensuring that it is driven by top management. “I implore Addax to structure the NC Department just like HSE or QA/QC. This will give support to the Federal Government’s Executive Order 005 on local content and also strengthen the NC implementation.” The General Manager also congratulated the trainees for successfully completing their programme and pledged that the Board would continue to encourage genuine efforts aimed at developing young talents to become global brands. The Group General Manager, National Petroleum Investment Management Services (NAPIMS), Mr. Roland Ewubare, represented by the General Manager, Production Sharing Contract (PSC), Mr. Jock James reiterated NAPIMS obligation to ensure that Nigerians are given first consideration before any contract is awarded. A representative of the trainees, Mr. Alex Rekede thanked Addax Petroleum and the NCDMB for the opportunity given to them and requested for employment opportunities in the oil and gas industry so they could showcase the knowledge they acquired.
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LOCAL CONTENT
TechnipFMC, NCDMB Celebrate Completion of 44th Subsea Tree for Egina Project
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he Niger ia n Content Development and Mon itor i n g Boa rd (NCDMB) and stakeholders of the oil and gas industry recently celebrated with TechnipFMC on its successful completion of the 44th and last subsea tree for the Total Egina field development project. The subsea trees project was launched in 2016 and it recorded high Nigerian Content attainments as 75 percent of the components were assembled at the TechnipFMC’s Onne support base, Rivers State. The Manager, Projects Certification and Author i zation Div ision (PCAD), NCDMB, Engr. Frank Ibi represented the Executive Secretary, Engr. Simbi Wabote at the event and commended TechnipFMC for the feat, describing it as a further demonstration that major Nigerian Content accomplishments would always be achieved through determination and concerted efforts of stakeholders. He added that the pa r tia l integration of the Egina FPSO topside in-country provided a wonderful opportunity for Nigerian service providers to demonstrate their capacities and assured that the
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Board will push for more patronage and utilization of Nigerian goods and services in upcoming projects. In his remarks, the Assistant Director, Egina Project, TechnipFMC, Mr. Bankole Adesuyi revealed that assembling the subsea trees for Egina was the biggest project the company has delivered in Nigeria and was handled by Nigerians. Adesuyi added that TechnipFMC achieved significant milestones in the implementation and expansion of local content through the project. It afforded the company new skills and technological transfer. A new testing laboratory was also built on the back of the project. In his words, “through the Egina SPS contract, we delivered over 2,400 equipment and materials and in Capacity Development programs we had strategic placement of understudies, skills and knowledge transfer. We successfully had Nigerians take over key roles and responsibilities.”
i n hu m a n c ap a c i t i e s a n d infrastructure. He said the company was ready to boost local content by exporting Nigeria talents to other regions and projects because of their quality and work ethics. The Egina Project Director for Total, Mr. Jean-Michel Guy commended TechnipFMC for delivering the project on time and schedule and helping to retain value in-country. “As we speak, 24 of these Christmas tree are already installed on the wellhead and connected to the respectively subsea manifolds. This is a proof of TUPNI’s commitment to promoting local content in Nigeria.”
T h e C o u nt r y M a n a g e r o f TechnipFMC, Mr. Mario Lagunes also spoke at the event and underscored the importance of getting new projects in order to sustain the massive investment
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LOCAL CONTENT
NCDMB Pledges Support for Kabelmetal’s Venture into Shipboard, Umbilical Cables Manufacturing By Margaret Nongo-Okojokwu, Oge Obi
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h e Ni g e r i a C o nt e nt Development Monitoring Boa rd, NCDMB, has prom i sed to suppor t K a bel met a l Ni ger i a Plc (a Nexans affiliated company), with funds required to manufacture shipboard, umbilical, refineries and petrochemical LV cables in the nation. This extension of Kabelmetal’s new capacity to manufacture shipboard cables and umbilicals for the offshore market has received commendations by the Board, as it has pledged support to boost local ability in the petroleum industry. The Board’s Executive Secretary, S i m b i Wa b o t e , e x p r e s s e d satisfaction over the new capacity during a facility tour of the company recently in Lagos. He noted that many are not aware that the petroleum industry consumes a lot of cables in their business, citing that the number of cables that run through a Floating Production Storage and Offloading (FPSO) can be mind blowing. According to him, contrary to general perception that cables are meant for building alone, a lot of it is used in the oil and gas industry to support instrumentation because all digital process have to pass through signal cables going back and forth. Wabote said with
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their tenacity and foresight to look at the market opportunities in the sector, it behoves on the board to work and encourage them in the industry so that the capacity can be domiciled in country. He however said due to the very high capital intensive and risky nature of the industry, quality and standard, which are among the Board’s objectives won’t be compromised. “But I’m happy you participated in the Egina project, and it shows that you have met the industry’s standard.” The Executive Secretary said that part of what the NCDMB is doing to keep companies like Kabelmetal going is visits like the facility tour with key players in the industry. He noted that often times, it has served as a meeting point for both project team managers and indigenous manufacturing firms. Adding that more often than not times project team managers are amazed by the capacity of some of the indigenous companies. “We have recorded so many successes with this kind of visit where some companies come later to confess that they never knew that such capacity exists, Wabote said. To a large extent, it has been very, very productive. “We will continue to support them also financially with the launch of $200m
Nigerian Content Intervention Fund which of course is open to all contributors to the fund. I am sure that the likes of Kabelmetal are contributors to the fund by virtue of the contract they get from the oil and gas industry. Wabote also noted that the intervention fund was initiated to ease the industry operators of the financial issues that it faces when dealing with the financial institutions. “So, they have the requirement to also take part in applying for that intervention fund which has 8 per cent interest rate, five-year tenure, maximum limit of $10m. That is part of what the Board is doing to support them financially. Because of some of the financial challenges these companies face, the fund was launched to support businesses like this that has the potential to employ Nigerians and to retain the much needed foreign exchange in the country. Encouraging contractors and project managers to always look inward while sourcing for materials, Wabote said that the indigenous companies have the capacity to meet their demands.”It is always very easy when you import. We have always told the companies to say if you argue that the production doesn’t meet your specification,
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LOCAL CONTENT work with the manufacturer and tell them what is required and I am sure any business would want to do what they can to meet the specification of the industry because one of the objective of the local content is that it does not compromise quality and standard because our business is very high capital-intensive and risky and so once standard are lowered then we would lose everything that have been invested. During his presentation, the Chief Executive Officer, Kabelmetal Nigeria Plc, Robert Kretschmer, said the shipboard cables is a specific design no company in the country is prepared to go into its production because of the technicalities and investments. He said the company considered that kind of cable design during the Egina project, “so we used the time and experience of what happened on the Egina project to develop our skills and know-how and with our detailed analysis, we are ready.”
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Kretschmer explained that the logical next step to expand the company’s local content scope from making electrical quads would be to manufacture an economical scope of complete smaller sized umbilicals and flying leads. He added that the electrical quads in the umbilicals can be manufactured at Kabelmetal in line with a detailed know-how transfer and investment plan, developed together with Nexans Norway AS (affiliate company). The Kabelmetal Boss enumerated the various successes the company has made as well as its challenges. Kretschmer who stated that the company is committed to expanding its local content scope, called on the NCDMB’s support, he noted that they have more orders than supply but can only use the money they get to reinvest on material then go gradually to meet up with the finances available. According to him, “The challenge of manufacturing business in Nigeria is not so simple and its known that
manufacturing is probably the most difficult aspect of business in Nigeria because we have the highest exposure in terms of financing because you get your own raw materials, you start producing to sell before you get your money so we are much more exposed to the finance side. “Since the naira devaluation, things are not going like before and banks are barely giving money when you look at financing your business because if you want to buy forex you must put deposit in the bank , you cannot use your over draft or import finance facilities to buy anything. This has brought down the whole economy in Nigeria, oil manufacturing companies are heavily affected”, he said.
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INTERVIEW
‘Oilserv Has the Capacity to Deliver; our quality is better, our speed of delivery is faster’ - Okwuosa
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ilserv, an indigenous Engineering, Procurement and Construction (EPC) company is renowned for the various ground-breaking achievements it has continued to record in the country’s oil and gas industry. In this interview with the MD/CEO, Engr. Emeka Okwuosa told Orient Energy Review during the 2018 Offshore Technology Conference (OTC) in Houston Texas that its success in clinching such projects like the OB3, AKK, among others lies in having the right term sheet, advanced technology, capacity and ability to deliver. Excerpt: I am aware that your company is set to deliver the OB3 project this year, so when is it likely to be completed? T h e O b i a f u - O b r i k om - O b e n project, popularly called the OB3 is currently undergoing pre-commissioning. It has been undergoing pre-commissioning in the past three months. The project of that size is the largest pipeline project existing in Nigeria. It is 48 inch diameter and 67 kilometer. The project is at the terminal end; we are supposed to finish with it by the end of July, 2018. We are still on track as we speak. What technologies have Oilserv adopted that has placed it ahead of its peers, enabling it to clinch jobs like the OB3, AKK among others? Oilserve is not about singing our praises, it’s about facts. You need to know that Oilserve was setup on a sound basis and principle. That is on the basis of sound knowledge of engineering and a clear plan to grow technology and grow the company organically. When we started in 1995, it was a very small company, it was only myself and one other employee, and we slowly built it up. We build it up by reinvesting whatever money we made and
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acquiring latest technology. Now, it is not just about technology acquisition, it is about acquiring knowledge about that technology. By my background, I am a cerebral engineer and I have worked in 12 different countries before I came into Nigeria. Before I came into Nigeria, I was principally focusing on developing engineering capacity. Along the line, we looked out for the best way of achieving the EPC. One of the things we introduced here is the welding works. Welding is at the core of pipeline construction, and the major threat to welding is the traditional welding system, which is the manual welding system. Here you have to use the welders association and some of them are very troublesome. They are not there to work; they are there to create problems. Sometimes, you may not even be able to control the quality of their output. But we have moved up to develop automatic to semi-automatic welding system, where it is like being in a production line in a factory. With this, we train our own staff technically and because it is automatic welding, we are not bound by certain rules. With the automatic welding, we are able to do as much as 25 joints a day. Ordinarily, if you are doing manual welding, we can’t do more than six joints a day. So, you can
see how we increased our speed and better quality. A nother te ch nolog y i s ou r Hor i zont a l D i r e c t D r i l l i n g system,(HDD) and you may realize that in building pipelines, you cross rivers, you cross creeks and all kinds of barriers. We have now developed a system whereby we can now dredge without touching the water. We go underneath the water to the bed of the river. That again gave us some advantage in crossing the roads. Imagine crossing an eight-lane road. We do crossboring system. All we need to do is to go from one end of the road to the other without disturbing vehicular movement on the roads. It speeds up things. The bottom line is that we developed technologies, we train young people from the university; we provide them with the capacity building that other companies don’t have. Of note is our graduate trainee programme, where we train young engineers from the university. Sometimes, we train them for one year. We also have the tanko training programme for welders, for fitters, for operators in the oil and gas industry. This is normal for us in Oilserv, we invest in human capital development, which some companies don’t.
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INTERVIEW That is why our quality is better, our speed of delivery is faster and it is the only reason why we have the AKK. Also, it went through a due process. Beyond the fact that NNPC believes that Oilserv will deliver, in our previous jobs we have shown that we have the capacity to deliver and we have consistently delivered. Oilserv is possibly the only Nigerian company that can deliver such project. I am not saying this just to boast, Oilserv is the first indigenous firm to graduate from a construction company to a full EPC company. Most construction companies in Nigeria are not fully EPC companies. It is expensive to be an EPC company because if you have an engineering arm, you must have engineers and you must keep them with all dedication. So, AKK was given to Oilserve primarily because we got the best bid. Secondly, we won our client’s confidence that we can deliver it. In fact, if you look at the way they divided AKK project into 3, you will realize that we got the first section, which is the most important because if you don’t get the first section, others will not work.
if the pricing is too high, the project may not be economical and that’s how projects fail.
Most project of this nature run into hitches as a result of funding, how do you intend to attract funding for this project?
As a follow-up to the AKK project, I saw that it is Oilserv-Oando consortium; could you explain the Oando role in the consortium?
It is a truism that most oil and gas projects are capital intensive. Let me cite an instance using a recent project, the AKK pipeline construction. The project owners, the Nigerian National Petroleum Corporation (NNPC) won’t be providing funding for this project. And if I may ask, why should we not be able to attract funding for this project since NNPC won’t be providing same? That’s the whole essence of the bid. In the bidding process, every company bidding did actually demonstrate how they can raise the finance and not only that they can do the job. We have already done 80 per cent of that. What we are waiting for is to close the deal with NNPC.
This project is not just an EPC project; it’s a contractor-financed project. Consortium in a nutshell is that Oando is a partner to Oilserv. However, Oilserv is the principal company, it’s the EPC Company. So, I am talking from the point of view of EPC, Oando does not build pipelines. We are in a consortium because it is contractor-financed and it gives us more leverage. Oilserv and Oando have always had concessions from NNPC to develop. They developed for example their gas pipeline from Lagos, through their company Gaslink; they built Eastern Horizon Company, the South-South Company which is from Okanafo through Calabar, which is Ifanoseng which is where you have Unicem cement plant. There are many other projects we have done, but in all of these, Oilserv is the EPC Company.
Mind you, this is gas infrastructure development and there are funds all over the world, for those who really know how to go about it. You just have to have the right term sheet and the right way of providing security for it. If, for example, a bank in America says it can give you a billion dollars, there is more than that money that are chasing projects. The problem is the risk and another is, can one pay back or be trusted to deliver? All these coming together could have effect on the pricing. If your risk is too high, your pricing will be up. And
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But in this case, it’s all balanced. Oilserv being an EPC company of repute has given us advantage because we don’t need to prove ourselves; the financiers know we can deliver. We have the capacity to deliver. We have three financiers eager to give us fund but the biggest challenge in this kind of project is the ability of the Federal Government to provide a guarantee for the fund. We have confidence based on our discussion with NNPC, who is our client that this arrangement will work. NNPC has a system in place with the support of the Federal Government to make sure that it works. We are satisfied with the security they are providing and our banks are also satisfied with that. So the issue of funding is not a problem in anyway. The way it works is that, when the money is ready, it is domiciled in the Joint Venture (JV) account with NNPC. Now comes the EPC, as you work, you are paid from that fund.
On gas monetization, I want to know what Oilserv has in place, for instance we have heard about the issue of carbon credit, the NNPC GMD also talked about gas flaring, what is Oilserv doing to ensure that it participates in this? Primarily, we don’t solve all the problems from the point of view that we have developed into an EPC company. We want to be a company
that focuses on gas utilization and commercialization. Our job is to develop the infrastructure for the client and sometimes they ask us to maintain and operate the system. So, we don’t own them; we build, operate and transfer. On gas commercialization for example, Oilserv came up with a system two years ago. Some of the gases flared are not big enough to warrant building pipeline. If you have a situation where a field is producing 60,000 scuffs a day, you cannot build pipeline for that because it is not a commercial quantity. We devised a way to move the gas and we call it adorial pipeline system. Others like the compressed natural gas, the liquefied natural gas system normally come in big modules like the NLNG. It has been miniaturized, you can build it in such a way that you can transport it by truck; we have a franchise for that. What we are doing this time is to match whatever source we have with the transportation and utilization. You have to tie the take off very well, tie the feed and then you bridge the gap. So, we are at that stage now. It is at this point you will now be looking at the carbon credit and all of that, but we are on it anyway, that is the point I am making. You have been an advocate of gas infrastructure and utilization, do you think the stakeholders and the government are doing enough in the area of infrastructure and level of gas utilization in the country? I won’t say its complex but it requires a comprehensive solution. Let me state here that the FG has done a lot in the past 10 years to change the paradigm. Before now, many policies were not there to enable commercialization of gas It was so difficult to tell the producers to produce gas, when they were being forced to sell gas with less than one dollar for a thousand scuffs. It does not make any sense because the cost of production far outweighs that; that is why they were eager to flare and pay the penalty. Penalty is good but it is not the most efficient way of solving this problem, it is setting up of a system in place to encourage producers to produce this gas and move it. Some of the gases here are inadvertently produced because they are associated gas. So, for you to get the oil, gas must come out, because you don’t have a system in place to move that gas and use it you, have to flush it; because topping the oil means shutting the oil production
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INTERVIEW Today, we know that gas price has gotten to a level where they get 2.5 dollars a scuff and even more. That is a major shift. Now, the wastage is the infrastructure, you must build the system to be able to move that gas as you produce and match it with utilization. If you cannot match it, then it cannot work. So, it requires a comprehensive approach and the off takers. If you do not have the possibility of off takers from industries like the power generation, fertilizer plants, etc, you won’t be able to take and utilize and even when you build the infrastructure. This is where the government comes in. I don’t praise people for the sake of praising them. The current GMD of NNPC is someone who understands gas. He has done a lot of gas business in NNPC, apart from other things he did in the upstream and mainstream. Since he took office, a lot has happened in the past two years - building confidence in the IOCs as well as the producers. Building in them such confidence that enables the off takers to know, “if I know that pipeline is going to bring gas, then I can invest in taking gas, if I do not know that gas is going to come, why should I build off take system”. Nobody does that in business. Taking the AKK for example, we are working on putting a thousand three hundred mega watts in Abuja, that will be an anchor project for this. You see, that is the way it works. Once you get the anchor project going, you may utilize the pipeline, it will be viable commercially, then other users can come in, that is the way it works. The same way there is a plan to do one in Kaduna. If you don’t have all these anchor projects, industries alone will not take anything, how much can they take, if you bring gas, it may take 10 years for industries to grow up. When Lagos and Escravos pipeline were built, it took 10-15 years before it started coming up. The fact is that government has a lot of role to play because it has to fund some of the key infrastructural projects for gas. No business person can go into that because you need a billion dollars to build such a pipeline. Meanwhile, the off take is not there because it cannot go before the pipeline, its like chicken and egg. The pipeline goes before the take off. So, it requires government stepping in through NNPC to coordinate that because if you leave it to the industry whether it is the producer or the utilizing company, they cannot talk to each other easily, that is the basis. At 2.5 dollars per thousand scuffs, can that drive the particular change
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or development you are looking at? It is a starting point, it is positive. Don’t forget that prices are not cast on stone; there is also room for constant review. Don’t also forget that gas pricing like oil goes up and down. So, today, gas price could be three dollars in America but there was a time it was two dollars plus. There was also a time it went up to 8 dollars, it all demands. What is important is the understandings between the producers and NNPC and of course the consumers that this price is such that producers can produce it. Don’t forget that if you take it too high the consumers cannot take it, the price will be too high for them to utilize it. Given the discoveries of gas reserve in Mozambique and Egypt which are already being produced by ENI and its JV partners, where do you place Nigeria in all of this and what is stopping Nigeria from taking her place as a country that has that large oil field? It is about gas policy implementation framework and driving it all the way down. Over years the fact remains that Nigeria has not been that good in policy implementation. More than 10 years ago, we were talking about Brass NLG and some others; we are still talking about it. That is a typical example. So, why is it taking so long? It is purely the way we do things, that is why the new frontiers of government production pose a challenge. No question about that but the fact remains that irrespective of the fact that Egypt is about to produce, Mozambique is about to produce, gas commercialization takes years, Nigeria has already had a head start, to build NLG system, the capacity that Mozambique is about to produce is already here in the past two years, you are talking about 10 Billion dollars to do that. It is a mega project, it takes time. What Nigeria has to do is to add another train, we have advantage over these ones. All we have to do is to now is to focus back and know that competition is already here but we are in a better position, but we also have some weakness and the weakness is that we are far from the Asian market, Egypt is closer, Mozambique is closer, so all those things should ginger us to move and log in ahead of time. Does it have anything to do with the gas Masterplan? No, the gas master plan is a traditional one. One of the things
we have always said about gas masterplan is that by always being a driver, no matter what you want to do and sell your gas overseas to make money, the most important is how you use the gas to develop your country. Gas Masterplan provides the framework to establish the infrastructure to be able to achieve the utilization of gas in Nigeria. Talking about domestic gas utilization and pricing, some stakeholders have called for pricing in local currency, do you see this call as being realistic? Do you price petroleum products in Naira because they are not produced in Naira? Most of the feed, the products you put into producing oil and gas are international and the price is simply in international currency. You don’t sell gas in local currency, it is not possible. It doesn’t make any sense, because local currency can fluctuate. Assuming I sign a contract with you to sell at N700 and then naira goes to 600 per dollar, are going to benchmark it? If you do, it means that you are still selling it in dollars, you understand me, so you do not sell such product in Naira. Anybody saying that is not being realistic! In terms of security, I’ll like to know what is being put in place since you are going to be in ownership for awhile before you finally transfer it and I know you are very conversant with the volatile nature of the environment, what is Oilserv doing in this regards? You know that obviously. But one thing you may also have to bear in mind is that gas pipeline is different from oil pipeline. Sabotage is the only thing you have to tackle in gas pipeline. Nobody goes to gas, any time there is a breach in gas pipeline, it is purely sabotage. Whereas in oil pipeline, people are encourage to go and take the oil, because they can make money from it; that is the fundamentals of gas pipeline. But with the new technology, we built detection systems with the pipelines. So, we use fibre optic system that we laid at the same time such that if you touch those pipelines, you are detected. With the new technology that is being deployed in all the pipelines that we are building now, it gives us a level of security; so, having said that, you cannot secure anything 100 per cent.
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OTC 2018
Ogu Base is Open for Business, ready to deliver – Adebowale Okoro
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debowale Okoro is the bu sin e ss d e ve l opm en t manager for First Marine and Engineering Services Limited. A qualified petroleum engineer and petroleum economist, who is passionate about attracting investment into his company’s newly acquired Ogu Base. He spoke with Margaret NongoOkojokwu, at the Offshore Technology Conference in Houston Texas, on the numerous features of the Base. Excerpt
Can you tell us more about your company’s latest acquisition, the Ogu Base? Ogu Base is a logistic base which First Marine and Engineering Services have acquired in Yenegoa in Bayelsa state. We actually identified that there was a gap with the oil industry with regards to offshore operations. Most of the international oil companies (IOC’s) who have acreages along Bayelsa state do not have an area from which they could launch up their operations offshore. We all realised that offshore operations are done in Deepwater, they need a place where they can stack their equipments, their pipes, they could refuel, they could stay behind if they need to have a crew change and all those things and they could store their equipments like containers, their mud processing units, their mud filtration units and everything. We do realise that there was a very big need for that so we actually decided that, we would acquire Ogu Base and use it for that purpose. So, International Oil companies that have acreages
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offshore, who would want to launch operations offshore and looking for a place to store equipments and all what not can make use of the base at a low charge and then we able to further their operations offshore. There are other Bases that exist around Port Harcourt and Lagos and it has been a cumbersome process for them and actually far much more expensive, even almost about ten times much more expensive from our own estimations to have their own bases at those areas and then move their things. So you can imagine people moving things all the way from Port Harcourt offshore Bayelsa, so that is the reason and the concept behind Could you give us a hint on the general features of the Ogu Base? Ogu Base had generally a total land mass of about 800,000sqms; we have only been able to have development in about 300,000sqms. We have an office space of 750sqms, we have a camp and canteen area of up to 500sqms, we have a storage workshop area of about 10,000sqms, a fabrication workshop both heavy duty and light duty fabrications of 83,750sqms. We also have a jetty which has a capacity of 3,000tons and a ramp capacity of about 2,000tons. The fundamental thing about the Base is that it is along the Birogo River which leads straight to the Escravos terminal; so it makes it a lot easier even when you want to move things out and when you want to move things back into the country or into interland for upstream operations. Is it ongoing? It is currently ongoing, we have developed it at the first stage; we actually set up a set of minimum requirements which we feel should be met before any operations commence and it is a good thing to say that AGIP has actually signified its intention to make use of the Base, we expect that the base will be commissioned by July this year 2018 and they will start their operations, launching their operations from there. The basic requirements which we have for the base is that this base will
operate only in the daylight, in the night time it will operate on call off, emergency or special movement purposes. We have been able to develop areas for the stacking of drilling pipes, we have a storage covering area of about 500sqms, and we have storage tank capacity for diesel and we all know that diesel of one of the fundamental fuel which we make use of in the oil industry for 192,000litres. We have storage tank capacity for PMS of 34,000litres. We have a 70-80 tonnes crane available on site to lift containers and heavy duty equipments; we have a 10tonne forklift and we have also provided security. And it would be a good thing to say that our chairman has actually involved a lot of Niger Delta communities, and he has made use of his experience in trying to ameliorate all the problems which we could encounter with the communities. So basically what we are saying is that we are expecting that all other international oil companies that have acreages within the area will make use of this Base to launch their operations and ultimately increase the productivity of the Nigerian economy. Is this Base connected to the Bayelsa Deep Sea port? It is along the shoreline, so you have other ports; you have Escravos terminals and you have all the other ports along the shoreline to the river. So from the Bayelsa seaport you can always come in to Ogu base, from the Escravos terminal you can come in to Ogu Base, from Port Harcourt you can come in to Ogu base via the riverine. We also have the landed area which we could also make use of haulage trucks to come in but the landed area hasn’t been consolidated yet and that we would do as we get along with the project. So we can also expand, we also have enough room for expansion. If you want us to build a custom facility for your own company specifically we would be willing to do that for you. Looking at the low level of activities in the oil and gas industry at the moment?
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OTC 2018 Well, we wouldn’t say there is a low level of activities in the oil and gas industry, what we would say is that the dynamics of the oil and gas industry is basically regulated by the oil price. Right now when oil prices is beginning to go higher slightly currently between about 72-75 dollars per barrel, you will find out that a lot of companies are beginning to look at their doing operations, who have hickrages within Bayelsa state. So definitely if they have an area that can reduce their operational cost and improve their profitability they would obviously be very willing to go offshore and Ogu Base provides that. How much has your company invested
in the Base? Well, I wouldn’t want to say that at this point in time, as we get along we will make our financial records known to you. So what is your impression of this year’s OTC and is it your first appearance? This is not our first showing at the OTC. Our impression of this year’s OTC is that it has been a good event; we have been able to reach out to a lot of Oil companies both the International Oil Companies at our LOC which is the local oil companies which we happen to be one of. And we hope to say that we shall continue with this process because it furthers
interactions between colleagues and between people of like minds also. I personally I would say that I have met my own other colleagues in the other sections of the industry and this means we have been able to share notes and see exactly what each person is doing and how we intend to develop our industry. How about the number of interest in this year’s OTC, did you have a lot of people indicating interest for your base? Yes, a lot of people have signified interest but we hope to see them actually sending us emails and telling us exactly how that they want to make use of our Base.
PETAN to Deepen Regional Cooperation Using WAIPEC ...Says Nigeria’s participation at OTC remains relevant By Oge Obi
et roleu m Tech nolog y Association of Nigeria (PETAN), has said that it is determined to use the West African International Pe t r ol e u m E x h i bi t i on a nd Conference (WAIPEC) to deepen the much needed regional cooperation among the industry players in the West African oil and gas industry.
f rom the huge m i nera l resources it is endowed with. According to the Conference Chairman who noted that WAIPEC was strategic for the realisation of regional collaboration, he said that PETAN looks forward for a an improved broader and wider participation of the industry players from different parts of the world, especially those within the African region in the WAIPEC 2019 edition. “For the 2019 WAIPEC, we are looking forward to a much wider and broader participation from African brothers and sisters. Our focus is not just on oil and gas producing countries, but also on other related industries to come and leverage on WAIPEC to see how we can collaborate and domestic the industry. If done, this will impact our citizens positively.
The PETAN Conference Chairman, Mr. Chubby Ibe made this known in an exclusive interview with the Orient Energy Review team during the 2018 edition of the Oil Technology Conference (OTC) in Houston Texas, USA. Ibe said that PETAN was committed to ensuring that the region benefits maximally
“Africa has come a long way in the industry, Nigeria has been a member of OPEC alongside some other countries, but we are not seeing that development on the African region. It is time for us to find a way to drive it out so that citizens can benefit from the resources we are endowed with will. We will also find a way to
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reach out to the larger society from oil and gas industry, a resource that is found in most African countries”, Ibe stated. Continuing, Ibe stated that despite Nigeria’s position in the comity of oil producing countries, her participation at the biggest oil and gas event in the world (OTC) remains relevant for the growth and development of the Nigeria’s sector, adding that the country cannot operate in isolation. “We know that OTC is the biggest oil and gas event, Nigeria cannot operate in isolation. Right here, you will see the Chinese, British, Kuwait, Saudi Arabians, and other oil and even non-oil producing countries. We cannot isolate ourselves when we are part of the world. Besides, here is where we get most of the technology we take back home. “So, if we don’t come, how do we get to know the updates in the industry such as the new technology, techniques. This is where we come to interact and network, look at what other people have that are relevant to us and take it back it back home. My ideas of OTC is to come here and take something home and not for the fun of it which”, he said.
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OTC 2018/ PANEL SESSIONS
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PHOTO GALLERY
Orient Energy Review Got some Endorsements
Some Exhibitors
Delegates from Ghana
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Orient Energy Review Vol 7 No.07 July 2018 27
COVER STORY
Egina FPSO: A Nigerian Content Measurable Achievement By Godspower Ike, Margaret Nongo-Okojokwu
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otal has blazed the trail with the Egina FPSO project and has recorded many firsts in the Nigerian petroleum industry. This article highlights the milestones of the Egina project, especially with the recent sail-in of the FPSO into the country, especially in the area of Nigerian Content. The Egina project, especially with
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the successful sail-in of the Floating Production Storage and Offloading (FPSO) unit has proven that the Nigerian petroleum industry is capable of rising above its challenges and given the right environmental circumstances, the industry would become a force to be reckoned with in the global energy landscape. The Egina project is testimony to the fact that large deepwater projects can be developed with a very high
level of in-country activities. The project was also embarked upon at a time of immense uncertainties in the operating, fiscal and regulatory env i ron ment of the Niger ian petroleum i ndustr y, thereby, positioning Egina as a symbol of confidence, commitment and faith in Nigeria by Total Upstream Nigeria Limited (TUPNI) and her partners.
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COVER STORY In general, the Egina field was discovered by Total in 2003 within the Oil Mining License 130 (OML130), 150 kilometres off the coast of the Niger Delta in Nigeria The field is being developed by Total in partnership with NNPC, CNOOC, SAPETRO and PETROBRAS. It is projected to add 200,000 barrels per day to Nigeria’s oil production, approximately 10 per cent of the country’s total oil production. Egina is the largest investment project currently on-going in the oil and gas sector in Nigeria. The overall progress of the project stands at 93percent per cent. Total said the project is expected to be completed in the fourth quarter of 2018, within the initial budget of $16 billion. The Egina oil field, located 150 kilometers off the coast of Nigeria at water depths of 1400 - 1700 meters, is one of Nigeria’s most ambitious ultra-deep offshore projects. Total and its partners began the drilling program on the Egina field in December 2014. The field would be connected using umbilicals and risers to the FPSO which is designed to hold 2.3 million barrels of oil. It is also expected that 24 million man-hours would be worked locally, corresponding to 77 per cent of the total hours planned for the project. The project also saw some 60,000 tons or 35 per cent of equipment produced locally, with infrastructure developed and built in the country, including the 500 meters long quay that would assemble and integrate the in-country built modules onto the FPSO, which would afterwards be available for other industrial projects.
TUPNI, a subsidiary of French multinational Total SA, and her partners took delivery of the Egina FPSO in January 2018, from South Korea. At 330 meters long, it is the largest FPSO ever installed in Nigeria, and currently berthed at the newly built 500-metre FPSO integration quayside at the SHIMCI Yard, LADOL Island, Lagos. Six Topside modules of the gigantic FPSO were fabricated in-country
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and are presently being integrated at the LADOL yard in Lagos. The milestones achieved in the Egina project were firsts for Nigeria, and in fact, for Africa. The integration of the six locally fabricated topside modules at the SHI-MCI Yard before its final sail-away to the Egina field is said to be a game changer as far as the execution of deep offshore oil and gas projects in the country is concerned.
Other key Nigerian Content features of the project include over 560,000 manhours of human capacity development across Egina contracts; construction of several large-scale new fabrication facilities in Nigeria and upgrade of several existing fabrication yards. Being the first major deepwater development project launched after the enactment of the Nigerian Oil & Gas Industry Content Development (NOGICD) Act of 2010, Egina has the highest level of local content of any such project in Nigeria. The project also has the highest number of FPSO topside modules (six) to be fully fabricated and integrated in Nigeria; while the assembly of the Integrated Control and Safety System of the FPSO was fully performed in Nigeria. Egina includes the fabrication of the largest subsea equipment, manifolds, and risers, ever completed in Nigeria, far above what was achieved in previous projects.
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COVER STORY Basic Engineering for the Egina Project was performed in Lagos by three Nigerian Companies NETCO/Batelitwin, CRESTECH and Dover, representing 94 per cent of the total man-hours spent on basic engineering. Total’s Egina Project Management team (PMT) and all the main contractors’ offices are based in Nigeria, a first for a Nigerian FPSO project. Locating these teams in Lagos to carry out project management, engineering and procurement activities had resulted in generating significant employment opportunities for Nigerians at various skill levels, ranging from top level engineers and managers to office administrative staff. Detailed Engineering for the Egina FPSO topsides was executed in Nigeria by Samsung with a consortium of Nigerian engineering companies, such as NETCO, Delta Afrik and International Energy Services Limited (IESL), all based in Lagos, which at the peak employed about 250 Nigerian engineers. In addition, the unprecedented record level of Nigerian Content on all the packages of the Egina project had translated into increased work scopes for several fabrication yards at various locations in Nigeria, in some cases calling for significant facility development and capacity expansion investments by the project. Specifically, as a result of the project, a number of yards were either built or upgraded to support fabrication and integration works of the various components of the Egina project, such as SHl-MCI Yard in Lagos Deep Offshore Logistics Base (LADOL), Lagos - a new fabrication and integration yard. Also, Aveon Yard, Port Harcourt was upgraded and the construction of new facilities was completed under the Subsea Production Systems (SPS) package contract.. FMC Technology’s Base at Onne was upgraded under the SPS package contract. Also Saipem Yard in Port Harcourt became the first Quad-Joint plant in Nigeria enabled to weld four pipe joints together in order to gain efficiency and productivity during the offshore installation phase. Gil Automation Facility, Lagos, was upgraded for the Integrated Control & Safety Systems (ICSS) Panel assembly under the lCSS Package contract. In addition, coating of the 75
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kilometres of oil production, water injection and gas line pipes for the Egina project was fully executed within Nigeria by Pipe Coaters Nigeria Limited (PCNL), while the paint used for the coating of the FPSO was locally made. Highlighting the Nigerian Content milestones of the project, Aveon Offshore Limited successfully completed the fabrication of six Foundation Support Structures and loaded out these components in respect of the Egina SPS project. Aveon also delivered some of the project scope including 16 Umbilical Termination Boxes and subsea tree fabrications (Frames, Permanent Guide Base and Gasmats) between 2015 and 2016. The company also fabricated six Subsea Manifolds together with five Subsea Distribution Modules and 32 multibore production well jumpers. Aveon Offshore Limited, a fully Nigerian owned engineering and fabrication services company was awarded the contract by FMC Technologies for the fabrication and loadout of approximately 5,000 tons of subsea structures including six manifolds with associated Suction piles, various subsea tree frame elements, jumpers and control systems for the Total Upstream Nigeria Limited (TUPNI) Egina Project in 2013. The project was executed by Aveon Offshore at its 300,000 square meters fabrication yard in Rumuolumeni near Port Harcourt. In order to accommodate the workload generated by the project, FMC Technologies and Total made capital expenditure (CAPEX) investment by upgrading Aveon’s site in Rumuolumeni. As a result, a dedicated Carbon Steel workshop, Duplex welding facilities and Painting workshops of over 8,000 square meter, electrical power and distribution and more were added to the yard’s existing infrastructure and existing premises such as Quayside were completely reinforced. The project has generated more than three million productive man hours in the last three years. Energy Work Technology Limited (EWT), a subsidiary of the Obijackson Group, fabricated nine Oil Loading Terminal buoy anchor mooring piles for the Egina project and it also participated in the Egina FPSO scope and fabricated 11 pressure vessels for the FPSO topside and hull compartments through a subcontract from Samsung Heavy
Industries Nigeria. On the part of LADOL, its Managing Director, Ms Amy Jadesimi said, “The arrival of the Egina FPSO is a sea change – no pun intended – because it shows that we can now carry out the most challenging industrial project in the world, in Nigeria. This is not just about the arrival of the FPSO Unit; it is about the building of the yard and the operation of the yard. Nigerians who worked in the yard operated above the average global standard and the results speak for themselves. “The fact that the FPSO was sent here was primarily because we achieved everything that we needed to achieve in the yard. The six modules were built; we were ready to receive the unit ahead of time. And in every way, the arrival of the FPSO and the way the project has been conducted in Nigeria exceeded expectations. “The collaboration and the proof that ease of doing business is working, is also an important milestone. We couldn’t have achieved this without the support of the Nigeria Port Authority (NPA).
“
The NPA went the extra mile – they set up a committee, they coordinated all the stakeholders (both private and public sector). They made sure that the shipping channel was upgraded, brought in extra equipment, and brought in extra tugs.”
The Managing Director, Total Upstream Nigeria, Mr. Nicolas Terraz, had explained that the FPSO had been designed for 25 years of operations and in addition to producing 200,000 barrels of oil per day at plateau, the operations will generate significant activities for local contractors in various sectors and continue to provide avenues for the training and development of Nigerians in various domains. “Being the first project to be launched after the enactment of the Nigerian Oil and Gas Industry Content Development Act in 2010, Egina is advancing Nigerian content to record levels and has by far the highest quantum of local content completed for any oil and gas project in Nigeria, but also for Total’s projects worldwide,” he said.
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COVER STORY
L-R Managing Director of Total E & P, Mr. Nicholas Terraz, Minister of State Petroleum Resources, Dr. Ibe Kachikwu and the Executive Secretary NCDMB, Engr. Simbi Wabote when they visited the Egina FPSO currently being integrated in LADOL Yard, Lagos
In response to controversies surrounding the cost of the project, Terraz, maintained that there had been no upward review of the budgeted costs for the Egina Project since the Final Investment Decision was made in 2013, adding that rather, concerted efforts were made to deliver the project within the budget and even below it. He said, “Specifically, as we have earlier stated, the initial budget established in 2013 for the Egina Project was $16.354 billion and after extensive cost optimization by TUPNI and the project partners, this figure was revised downwards to $15.75 billion in May 2013 and the Final Investment Decision was made on the basis of this reduced budget figure.
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In this respect, it is the highest priority for TUPNI as operator to control the cost of the project during the execution phase and to deliver the project within budget.” Suppor ting this view, Chief Operating Officer, Upstream of the NNPC, Mr. Bello Rabiu, also stated that out of the $16 billion budgeted for the Egina project which started in 2013, $10.7 billion had been disbursed so far. Bello stated that
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at the initial phase, it was agreed that the project would cost $16.35 billion, adding that the cost element of the contract had not changed and still remained $16 billion now that the project is almost completed. Rabiu said the project, which started in 1993 when the oil block was awarded and in 2013 when FPSO project contract was awarded, would hit first oil by December 2018, while he noted that Total, by the terms of the agreement, was expected to undertake the project, provide the finance, recover its cost and later share profit with the NNPC. Speaking in the same vein, Executive Secretary of the Nigerian Content Development Monitoring Board, Mr. Simbi Wabote, commended Total for the milestones achieved in the project, especially for its strict compliance to the local content initiatives. Wabote declared that Egina is the first FPSO project agreement to be signed and undertaken after the Nigerian Oil and Gas Industry Content Development, NOGICD, Act was instituted in 2010. Intrinsically, the arrival of the Egina FPSO at the LADOL Free Zone in Lagos since January 24 has further brought
the Nigerian Content Policy (NCP) to a practical reality. The active participation of the indigenous firms and other local service providers in the project execution has so far delivered the benefits of the Nigerian Local Content Policy in measurable terms and scales. And from available indices, the country’s NCP can be adjudged to be making impressive progress in having its targets met. Considering the degree of local content implementation on this project, it has been described by industry players as a game changer as far as deep offshore oil and gas project execution in the country is concerned. It was in this vein that members of the Senate Committees on Gas and Petroleum (Upstream) commended Total and its partners for the remarkable progress made towards the completion of the Egina FPSO unit. Senator Omotayo Alasoadura, who is chair of the Senate Committee on Petroleum Resources and his Gas Committee counterpart, Senator Barnabas Gemade, led their respective committees on an inspection tour of the 330 metres-long Egina FPSO and expressed delight with the pace of work on the unit and its massive Nigerian content profile.
Orient Energy Review Vol 7 No.07 July 2018 31
COVER STORY “Seeing the Egina FPSO has shown that a good investment has been made to ensure that Nigeria moves deeper and deeper into the sea to exploit its God-given endowment of oil,” stated Alasoadura. “I believe that with Egina going operational very soon, Nigeria will be able to meet its quota not only to OPEC but also will have enough to meet its other commitments. I believe that it is a good project and Total has done a great thing bringing such an FPSO to Nigeria, making it first in Africa. This milestone has brought us to where we should be as the giant of Africa,” he added. On the local content work being done on the project, Senator Alasoadura said: “It is massive development of capacity. You cannot do much for local development without building capacity and that has been done by giving Nigerians the opportunity to build part of what we are seeing here today. I am sure the next time it will take less money and time to build something similar because of developed capacity.” In his own remarks, Senator Gemade who led the Senate committee on Gas said, “We are very excited about the participation of Nigerians that are technically qualified in major and huge projects like Egina. This impact cannot just be swept under the carpet. Those responsible for actualising this project must be commended.” Other senators on the visit were Senators Gershom Bassey, Magnus Abe, Samuel Egwu, Peter Nwaoboshi, Benjamin Uwajumogu, Baba Garbai, Ogola Foster and Ibrahim Kurfi. In his response, Managing Director of Total Upstream Companies in Nigeria, Mr Nicolas Terraz, thanked the senators for taking the time to visit the Egina FPSO saying, “What you are seeing here is a product of the hard work of our staff, many of whom are Nigerians, along with our very supportive partners and Nigerian authorities.” As a result of the successes and milestones recorded in the Egina project thus far, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, had in 2017, hinted that the Federal Government was considering setting a deadline for local fabrication of Floating, Production, Storage, Offloading, FPSO in Nigeria. Kachikwu noted that Nigeria would soon set a benchmark and deadline for vessels operating in the country, ensuring that a certain percentage of the vessels are fabricated in Nigeria. He said, “Specifically, in areas dealing with vessel fabrication and offshore platforms, such as FPSO, we must set a benchmark for
32 Orient Energy Review Vol 7 No.07 July 2018
when we can exit. No country in the world has been able to achieve this by just sitting around and giving contracts. We must be able to see that in 10 years’ time all FPSO in Nigeria would be localized. We must begin to drive that.” Furthermore, in February 2018, Kach i kw u said the Federal Government had also set a target that over the next 10 years, Nigeria would produce an FPSO. Confirming this, Executive Secretary, Nigerian C ont e nt D e ve l opm e nt a n d Monitoring Board (NCDMB), Mr. Simbi Wabote, also set an eightyear timeline for stakeholders in the petroleum industry to strive to develop local capacities to execute full fabrication and integration of FPSO vessels in-country. Wabote who stated this during the inspection of the Egina FPSO in Lagos in February, commended Total E&P for setting high Nigerian Content benchmarks with the Egina project, in engineering, fabrication, testing, coating and integration, stressing that the challenge for forthcoming projects would be how to raise the bar. He said, “Our aim is to stretch the limit to get more for Nigeria. Our aspiration is that come the next seven to eight years, full integration of an FPSO must happen in Nigeria. Already the Board and major operating companies are working towards full domiciliation of FPSOs.”
The NCDMB boss also affirmed that the Egina project has changed the narrative about the capacities and capabilities of oil servicing companies in Nigeria. According to him, the project simply raised the bar in local participation in various scopes covering the wells, subsea production systems, umbilicals, flowlines and risers, FPSO topsides, and off loading buoy. He said, “One of the Nigerian contractors that fabricated the Buoy completed it three months ahead of schedule. The argument often put forward by project promoters is that Nigerian Content is expensive and cannot deliver on schedule. Egina has buried that mindset forever.” He also underscored the need for new projects to sustain the achievements and employments that were created on the Egina project. However, commenting on the company’s plans for the future after the Egina project, Terraz, the Total boss said, “Everybody is asking me this same question. What I tell them is that first, we are not finished
with Egina. We still have lots of work to do in Lagos. We have some module lifting, some integration, then we have to bring the FPSO to the field, do the connection (hookup campaign), start up; all these before the end of year. I can tell you, 2018 for us is a very busy year. My first objective today is to deliver first oil from Egina by the end of 2018. “Now, we are also, of course, working on future projects. We are also studying what future projects would be, particularly, on the side of the joint venture with the NNPC. Today, we are working to generate incremental production. We have two drilling rigs working at the moment. “We are preparing the next project, which is Ikike. It is not as big as Egina, but it would bring 32,000 barrels per day production, plus quite a lot of gas, 3.5 million cubic metre per day of gas. In this project now, we are working with the NNPC and with the Nigerian Content Development Monitoring Board, NCDMB, to be able to take Final Investment Decision, FID, before the end of the year.” Terraz also noted that the company is already working on the projects that would be launched this year, as well as those that would be launched in two, three and four years. He said, “On this for instance, we have a project we know would come after Egina, in the deepwater. We still have two to three years of studies before launching the project. The idea is that this project that would be the one that would come on when Egina starts declining.
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It would come and maintain the production plateau which would help us better utilise the FPSO of Egina and do everything that we have talked before, like decreasing cost among others. We also have two exploration wells planned for this year. It is a Joint Venture. Total will continue to prepare for the future.” The many milestones of the Egina project would continue to reverberate across the Nigerian, African and global petroleum landscape in the years to come and would serve as a benchmark for future projects, and would also showcase the enormous potentials of the Nigerian petroleum industry.
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COVER STORY Host
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34 Orient Energy Review Vol 7 No.07 July 2018
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GHANA REPORT
Ghana’s Tema Oil Refinery Seeks State Bailout after Lenders Say No to Loans for comment. Nana Damoah, a spokesperson for the energy ministry, and Cecilia Akwetey, a spokesperson for the ministry of finance, would not immediately comment when contacted by phone.
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hana’s state-owned oil refinery is seeking credit g uarantees from the government after lenders declined to issue it loans for crude purchases, according to two people familiar with the matter. The Tema Oil Refinery, 29km east of the capital, Accra, halted production on June 21 after running out of crude
stock, said the people, who asked not to be identified because they were not authorised to speak publicly about the matter. The facility asked the finance and energy ministries for $70m in credit guarantees, but had yet to reach an agreement, they said. Kingsley Antwi-Boasiako, a company spokesperson, and MD Isaac Osei did not answer calls
Demand in Ghana is for 65,000 barrels per day, according to the refinery’s website. The funding shortage is the latest setback for the refinery, which has been earmarked for closure by the energy ministry. The plant has been operating at about two-thirds of its capacity of 45,000 barrels per day after a furnace exploded in January 2017. Energy minister Boakye Agyarko said in January the country will start building a new 150,000-barrelper-day refinery in the next four years. Tema Oil Refinery owed banks as much as 950-million cedis ($199m) in August 2016, former CEO Kingsley Awuah-Darko said at the time. *Bloomberg
GHANAIAN COMPANIES DEBUT @ OTC 2018
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f f s h o r e Te c h n o l o g y Conference 2018 had a new exhibiting nation, Ghana. Ghana has been participating in OTC conferences since the commercial discovery of oil for the past 10 years, but for the first time; there were over 250 delegates and exhibitors. The participants were led by Energy Minister Boakye Agyarko, accompanied by two of his deputies — Mohammed Amin Anta and Joseph Cudjoe.
Company, Tullow Ghana Limited, Springfield E&P, the Ministry of Energy (and its agencies), Greenline Logistics, Ecoalpha Services (in partnership with the Aviation Company Seeker), Exceed Well Management Ghana, S eaweld En g i ne er i n g, Advantage Group, Ghana R e v e n u e A u t h o r i t y, Ghana Oil and Gas Service Providers Association, Woodfields Group, I-Neema and Conship.
Also in attendance were most of the agencies under the Energy Ministry along with some private entities. These companies were KOSMOS Energy, Ghana National Petroleum
Orient Energy Review met with some of the participants and below are excerpts from its interview with Alfred
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Fafali Adagbedu, the Managing Director of Seaweld Engineering, an indigenous company which has grown to become a global brand.
Orient Energy Review Vol 7 No.07 July 2018 35
GHANA REPORT
Seaweld Engineering: Indigenous Ghanaian Firm, Impressive Global Footprints What is the range of services you offer? We have a very broad range of services. We call ourselves a onestop shop, and we have engineering, construction, fabrication, vessel repair and maintenance. We also have onshore and offshore laybacks for rigs and FPSOs. Other services include procurement, oil spill response, coating, blasting and painting. We clean the tanks of vessels, refinery tanks, and fuel tanks. We also do scaffolding and rigging. How many other indigenous Ghanaian companies do you have playing in this space with a size like yours?
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ive us a brief introduction on Seaweld Engineering?
Seaweld is a 100 per cent local Ghanaian firm but has footprint in 14 countries all over the world and has been in existence since 2007. It started in Ghana but grew into other countries by referrals from companies who come to work in Ghana. When they go to other countries, they pull us along so that we can provide that onestop-shop service that we are used to providing them. Tell us a little bit about your pedigree and your experience at Seaweld? I started in the maritime as a galley boy. From being a cook, I went through fishing vessels as a fisherman until I ended up as a marine engineering cadet, before studying Marine Engineering. After that, I went to sea, rose gradually and became a Chief Engineer. I have worked on drilling rigs. Starting out as an oiler, I climbed through the ranks until I became a rig mechanic. After that, I decided to go into oil and gas as an entrepreneur.
36 Orient Energy Review Vol 7 No.07 July 2018
These 14 countries where Seaweld is established, are these African countries only? No. We have 10 of them in Africa and 4 outside Africa. We have in the UK, the US, and then we have in Israel and Norway. What is the ownership structure in Norway? Ownership structure is based on a franchise model. We are the principal and majority shareholder while 2 other Norwegians are shareholders. Ok, you want to tell us about your team and their level of exposure? We have a team of marine engineers, captains, marine electricians, and petroleum engineers, professionals in administration, procurement, logistics and accounting. These are highly experienced because in this industry, you need the highest degree of professionalism to be able to execute projects.
Indigenous Ghanaian companies exist, and yes, we have competitors. They might not be doing the same wide range of services like we do. Like I said, we are not just jack of all trade but we are masters of all that we do, because in all the services that we provide, we do it to the highest standard of the industry. We are ISO 9001 certified in quality and ISO 2001 in safety. So we have maintained the standard since inception. In the oil and gas industry, without a good safety record you cannot strive. For all these years, we have not recorded any lost time. Where did your engineers train? Because we want to be local, we take Engineers that are trained in Ghana and then we give them exposures in places where we want to borrow skills. Some are taken to Norway and others to UK. Besides that, we are in partnership with a regional maritime university, which is a foremost university in the country. Now, instead of moving people from all other parts of the world, what we do is bring the trainers to come and train in the university. This model crashes the cost for us. We at Seaweld run the oil and gas training centre of the university and this has grown to an extent where it attracts trainees from other countries.
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GHANA REPORT
Have you enjoyed patronage from international oil companies domiciled in Ghana? Yes we have received very big contracts from international oil companies in Ghana. Most of them who have come to try us at some point have ended up permanently giving us jobs. So, all of the oil companies in Ghana use Seaweld for one or more of the services that we handle. What areas are you looking at building capacity in the nearest future? We keep building capacities in everything. However, there are areas where we are experts, like scaffolding. Now, that’s because we do the design and the building of any type of scaffolding you can ask of offshore. In some areas of engineering, construction and fabrication, we are still building the capacity. When it comes to subsea and other areas, we
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want to come to the point where we can say we built top sides and that it is 100% Ghanaian. And my vision is that we must be the first company in Africa to build a complete rig and an FPSO in Africa. Tell us about financing in Ghana; is there any difference from what we have in other countries and other parts of Africa? Africa is the same story all over except for South Africa. We have interest rates around 25-30% in most of the African countries and accessing the finance is quite herculean a task. In Ghana for instance, you have to provide 120% collateral before you get a loan. So, when it comes to projects of 10 million dollars, where are you going to get that kind of collateral? We often try to get our funding from external countries like the UK and the US where we are registered due to the low interest regimes.
Are your laws in Ghana friendly to potential foreign investors to fledgling Ghanaian companies and to a joint venture between both? I think the law in itself is not bad but whether Ghanaians who want to become shareholders have the capacity to do so financially by buying the shares. Otherwise the Ghanaian firm would end up fronting for the foreign firm. So the law in itself is ok but rather do you have Ghanaians that have the financial wherewithal to take those available shares? Besides, those companies with similar expertise in that line of business could leverage on their skill set and bring it into the partnerships after evaluation. There is a lot of tax exemptions for foreign companies that come in to Ghana, so investors need to know these benefits in partnering with a Ghanaian man. Most of the time they have tax holidays up to about 10 years, which you don’t find elsewhere.
Orient Energy Review Vol 7 No.07 July 2018 37
GHANA REPORT
The Kosmos Social Investment Program Is Focused On Developing the Next Generation of Entrepreneurs - Sarpong
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he Kosmos Innovation Center (KIC) is the flagship social investment programme created by Kosmos Energy Ghana in 2016 to help Ghana build a brighter future by tackling some of the country’s key challenges. The KIC begins its work by choosing an area of focus from one of Ghana’s many different sectors. This year, like the previous, the KIC is focused on agriculture – the largest sector in Ghana’s economy – where it will pursue and nurture the development of market-based solutions that address various development challenges. From a large pool of applicants, businesses with the best ICT and innovation model will receive $50,000 each in seed funding and technical assistance from the KIC, as well as mentorship from the Meltwater Entrepreneurial School of Technology (MEST), to build their ideas into viable businesses. JEROME ONOJA had this discussion with Mr George Sarpong, the Director of Corporate Affairs, Kosmos Energy Ghana, who gave more insights into the social investment programme.
C
an you tell us a little bit about your social investment programme?
The Kosmos social investment program is focused on developing and catalyzing the next generation of entrepreneurs, particularly the Agric value chain. When we go to any country, we become part and parcel of that country and we are particularly interested in the socio-economic development of the country. So, we identify what is key and invest in it. In Ghana, Agriculture is key and the sector’s contribution to GDP averages 20 percent according to PWC. Therefore, we concentrate on developing entrepreneurs into what we call Agro-preneurs. We are focused on bringing solutions and efficiency into the Agric value chain. That is what we do.
Application is open to those who want to be entrepreneurs. For example, we got up to 600 applications th i s yea r a nd we sieved them, called the successful ones for interviews. Once they come for the interview, they become part of the program. It’s a 9-monthprogramme. We apply capacity support, mentoring and training, and inbetween they get a chance to pitch their businesses ideas. In the final pitch, we make investments in the companies that are outstanding and they go for incubation. For example, in 2016 when we launched this programme, we had two companies where we invested in the market place. They are operating well today. We currently have four other companies that are in incubation and by September, they should be out there operating. So again, this is the third cycle of the programme and it’s growing.
What are we going to be expecting in the next phase of this programme? We will continue. This company is going to continue to see that we make a real transformative impact in Ghana and then we may switch to another sector, we have created a template that is multi-sector in approach; it can operate in several other sectors. Tell us about OTC and your take away from here. OTC is the opportunity where companies get to showcase their latest tools, their latest technology; we at Kosmos choose to showcase the Kosmos Innovation Centre, because we believe in it. We have chosen to show what I call the soft side of the company.
Can you give us an insight on how the programme runs?
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LOCAL CONTENT
IOCs May Never Invest in Nigeria’s Research Institutes - Onyekonwu ...As Laser Commissions Multi-Million Dollar Petroleum Research Lab By Jerome Onoja
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This is a private initiative and our modest contribution to the effort of government in establishing research institutions like the R&D arm of the NNPC.”
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aser Engineering, Managing Consultant, Prof. Mike Onyekonw u, has said the only reason why the International Oil Companies, IOCs, have refused to invest in research industries in Nigeria, is due to the fact that they have set up research institutions in their own countries. This is coming as the company commissions a state of art petroleum research laboratory in Port Harcourt, River State. Onyekonwu, further disclosed that, research remains the weakest link in the country’s oil and gas industry, though recognised as the backbone for sustained growth in any industry.
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According to him “IOCs might never deem it fit to invest in research in Nigeria because they have established research institutions in their countries, the NOCs and marginal field owners are still struggling and unable to meet such financial obligation for a research task. He added that, though the project would help in capacity building, there’s barely any Nigerian university that can afford it. He stated that the commissioned laboratory equipment would enhance research in Relative Permeability Studies; Enhanced Oil Recovery; Formation Damage and; Rock and Fluid Compatibility Studies
In addition, He said: “Laser has registered a pioneering status in several notable areas of development in the industry.” He maintained that, Laser was the first to introduce mercury-free PVT Laboratory in the country and in Africa. Again, Laser was the first to introduce Petrel into the country, a reservoir model l i ng tool for reser voi r management. “Laser Petroleum Geoscience School is an arm of the company deliberately opened to impact practical knowledge. Again, they were the first with such novel initiative which equips geoscience students with practical knowledge.” In his keynote address, with the theme: “Oil and Gas Research for Capacity Building” the Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu, who was a guest at the commissioning applauded the management of Laser for the project. He stated that he is very committed to any project in the oil and gas sector, adding: “It creates jobs, provides for personal, family and community responsibilities.
Orient Energy Review Vol 7 No.07 July 2018 39
LOGISTICS & MARITIME
Egina FPSO: Senate Orders Immediate Deportation of Samsung MD By Oge Obi
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he Senate has directed the Nigeria Immigration Service (NIS) to deport the Managing Director of Samsung, Young Ho Jo, back to South Korea for allegedly coming into Nigeria without proper documentation. T he Cha i r ma n on Ad-hoc Committee probing the $16.35 billion Egina Oil Field Project, Senator Solomon Adeola (APC Lagos West) made this known on Thursday during during an interactive session with major and subcontractors of the project in Abuja. According to the Senator, the resolution for the Samsung boss deportation was adopted by the Senate in line with a recommendation to that effect by the ad-hoc committee in its interim report. The announcement which was made to the hearing of the embattled South Korean and other operators of the Egina oil field project, revealed that the illegality of Young Ho Jo residency in Nigeria came to the fore during scrutiny of his papers. Adeola said, “Mr. Young Ho Jo, who has been working for the past two months in Nigeria as the Managing Director of Samsung without fulfilling legal requirements for such, told
40 Orient Energy Review Vol 7 No.07 July 2018
us that he couldn’t complete his documentation as a result of alleged breakdown of machines of the Nigeria Content Development Monitoring Board (NCMDB). “But the NCMBD wrote to us that their machine had never broken down in the period claimed to show that the man has contravened the local content law. Going by recommendations made by this committee to the Senate and resolution adopted, MD Samsung is no longer recognized on account of improper documentation as shown by papers he presented.
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To the Senate and this committee, Samsung MD is an illegal immigrant who must be deported by the Nigerian Immigration Services, to which a letter to that effect has been forwarded to the Ministry of Interior. He can, however, come back to the country through proper documentation thereafter,” he said. Speaking further, the committee chairman revealed further that Young Ho Jo, during his illegal residency in Nigeria as Samsung MD, also violated the Local
Content Act by spending $1.6 billion out of the $3.5 billion contract Samsung got from the $16.35 billion Egina Oil Field Project in Goje, South Korea. However, the Managing Director of Total Upstream Nigeria Limited, Nicolas Terraz, stated that as the major operator of the project, it will continue to assist the committee in its investigations adding that its goal is to deliver the project expected produce 200,000 barrels of crude oil per day while its FPSO have a holding capacity of 2 million barrel. The representative of NNPC/ NA PIMS, En g r. Gbolaha n Okesanya, said that it will ensure that maximum cooperation is given to the audit team of the Senate when it commences work adding that the goal of the audit team tallies with that of NNPC/ NAPIMS in its regulation of the oil industry. Meanwhile, the second phase of the investigation would be carried out by consultants to be assigned by the Senate for 16 weeks on the spot assessment of the project execution as regards value for money in line with the local content act.
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LOGISTICS & MARITIME
Shipping Industry Organisations Call for Progress on Key Sulphur Cap Issues at IMO
The main shipping industry trade organisations say International Maritime Organization (IMO) member states “must make” progress on key issues related to the 2020 sulphur cap. Bimco, the International Chamber of Shipping (ICS), Intertanko and Intercargo have co-sponsored a number of submissions, at the IMO Sub Committee on Pollution Prevention and Response, which meets during the week commencing
9 July, as they seek to ensure the smooth implementation of the global 0.5% sulphur cap without compromising safety or unfairly penalising individual ships. In a joint statement the organ i sation s sa id t he i ndu st r y wa s “fu l ly committed” t o t he s uc c e s sf u l implementaion of the sulphur cap, but that as global regulation it would be far more complex than the introduction of Emission Control Areas.
to be fully compliant to the extent that this is under its control. But safe and successful implementation will necessitate the supply of fuels, in ports around the world, which are compatible as well as legally compliant.” Co-sponsored submissions at the July meeting include – a standard format for a ship specific implementation plan with many actions ships may need to consider for achieving compliance but also a call for a practical and pragmatic approach from IMO Member States when verifying compliance with the 0.50% global sulphur cap.
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Despite a recent flurry in activity from shipowners deciding to fit scrubbers an informal survey by classification society ABS found that 53% of owners surveyed said their fleets were not ready to meet to the sulphur cap
The industry recognises that, in a legal sense, there will be no transitional period after 1 January 2020. But something of this magnitude has never previously been attempted before on a worldwide basis,” they said. “The industry will do its utmost
Shippers’ Council to scrap Uniform Rates for Competitive Port Charges By Oge Obi
The main shipping industry trade organisations say International Maritime Organization (IMO) member states “must make” progress on key issues related to the 2020 sulphur cap. Bimco, the International Chamber of Shipping (ICS), Intertanko and Intercargo have co-sponsored a number of submissions, at the IMO Sub Committee on Pollution Prevention and Response, which meets during the week commencing www.orientenergyreview.com
9 July, as they seek to ensure the smooth implementation of the global 0.5% sulphur cap without compromising safety or unfairly penalising individual ships. In a joint statement the organ isation s said the i ndu st r y wa s “ful ly committed” to t he suc c e s sf u l implementaion of the sulphur cap, but that as global regulation it would be far more complex than the introduction of Emission Control Areas.
“The industry will do its utmost to be fully compliant to the extent that this is under its control. But safe and successful implementation will necessitate the supply of fuels, in ports around the world, which are compatible as well as legally compliant.” Co-sponsored submissions at the July meeting include – a standard format for a ship specific implementation plan with many actions ships may need to consider for achieving compliance but also a call for a practical and pragmatic approach from IMO Member States when verifying compliance with the 0.50% global sulphur cap.
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Despite a recent flurry in activity from shipowners deciding to fit scrubbers an informal survey by classification society ABS found that 53% of owners surveyed said their fleets were not ready to meet to the sulphur cap
The industry recognises that, in a legal sense, there will be no transitional period after 1 January 2020. But something of this magnitude has never previously been attempted before on a worldwide basis,” they said.
Orient Energy Review Vol 7 No.07 July 2018 41
LOGISTICS & MARITIME
Ex-NIMASA DG Raises Alarm over Offshore Vessel Berthing, Says Nigeria loses $300m annually By Oge Obi port users.
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former Director- General, Nigerian Maritime Administration and Safety Agency (NIMASA), Mr. Temisan Omatseye has said that Nigeria is losing about 300 million dollars yearly for berthing five degrees East on Nigerian waters. Omatseye made this disclosure at the 3rd Annual Conference tagged: “A Day with Nigeria Maritime Students 2018’’ organised by Platforms Communications in Lagos recently. He called on the Federal Government to look into the issue to enable Nigerian ports to be cheaper and attractive for
According to him, the foreign ship owners have taken over all the maritime business, while the ship-owners are left with nothing. “Nigerian shippers should be allowed to take charge of their goods as soon as they arrive the country because this is what is applicable all over the world. All the foreign ship owners will not allow Nigerians to get near vessels as soon as they arrive the country, in spite of being the landlord of the ports. “We want government to assist Nigerian ship owners to be in charge because by so doing, they will create more employment for teaming youths. Nigeria will soon be competing with its foreign counterparts with the recent equipment government has provided for the Nigeria National Petroleum
Corporation (NNPC) which is presently having multiplier effect on their operations,’’ Omatseye said. The former NIMASA helmsman com mended N IM A SA for the establishment of the National Seafarer Development Programme (NSDP), which had assisted in the training of some Nigerian youths to the level of Sea Time Training. He, however, advised youths that were yet to acquire the training not to relent, adding that Nigeria need their services because most of the seafarers were ageing and there was the need for replacement. Also speaking, the President, African Women in Maritime (WIMA), Mrs. Jean Chiazor-Anishere, called on the Federal Government to collaborate with private organisations to obtain data of cadets with distinctions. She said that if experienced cadets were employed, it would have positive effect on operations of the maritime industry as well as encourage the other students to work hard
GAS
NNPC Restores Ruptured Gas Pipeline National Control Centre (NCC).
he Transmission Company of Nigeria (TCN) has said gas supply to generating stations had built up gradually after the Nigeria National Petroleum Corporation (NNPC) restored a ruptured pipeline. General Manager, Public Affairs of TCN, Ndidi Mbah, who made this known in a statement on Tuesday in Lagos, said that within a day power supply would be restored to normal.
Mbah said, “TCN wishes to use this opportunity to commend NNPC, especially Nigerian Gas Corporation (NGC) for the quick intervention. “The company also appreciates the Ministry of Power, Generation Companies (GE NC O s) , D i s t r i b u t i o n Compan ies (DISCOs) and electricity customers for their cooperation during the crises period,” she said. According to Mbah, as soon as the gas build-up is completed, the affected generating stations would resume normal generation into the National Grid. She said through the implementation of Transmission Rehabi l itation and Expansion Programme, TCN was building new substations as well as upgrading existing ones and transmission lines all over the country.
She explained that an indication that gas supply had improved was the increase in power generation into the National Grid to 3,876.9 Megawatts as at 17.00hrs on Monday, as reported by
“This is expected to further stabilise the Grid and also put necessary flexibility and redundancy in line with N-1 capacity.
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TCN will continue to count on all Nigerians for support and understanding as it continues to expand the nations’ grid,” she said. TCN had said on June 15, that rupture of a major NGC pipeline had scuttled the delivery of gas to six power plants. It said this led to a drop in power generation by 1,087 megawatts and compelled the company to embark on load-shedding. It stated that the load-shedding was adopted to maintain stability of the national grid, thus avoiding total power system collapse. The affected power stations included Ihovbor, Azura, Omotosho gas, Geregu gas, Olorunsogo gas, Sapele and Egbin Power Station, which has managed to generate 60MW only on each of its units, losing a total of 211MW. Also, Afam VI power station was shut down to enable Shell resolve its gas well issues and commence gas supply to Afam VI power station.
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GAS
Nigeria’s Gas Sector Holds $51 Billion Investment Opportunities Three gas projects ready for completion this year
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bout $51 billion worth of investment opportunities currently exists in Nigeria’s gas sector. This investment could be spread to Free Trade Zones (FTZ), central gas processing facilities, fertilizer plants, gas exploration & production, pipe milling & local fabrication yards. Other available investment areas are virtual pipelines, gas transmission, and power plant projects, flare gas commercialisation initiatives and liquefied petroleum gas plants. Already, three gas transportation infrastructure projects have been scheduled for completion by the end of the fourth quarter of 2018.The projects include Obiafu-Obrikom-Oben (OB3) Pipeline, which is expected to link gas sources in the East to Western and Northern markets; the ELPS II Pipeline expansion project that is to take gas from the source to customers; and the ELPS-Lekki Pipeline project. Stakeholders who spoke at the Nigerian Gas Association (NGA)’s Natural Gas Forum 2018 titled: “Gas Policy, Markets and Regulation: Catalysing Development of Gas Industrial Hubs,” believed that there are potential in the Nigeria’s gas sector that were yet to be harnessed. Speaking at the forum, the General Manager, Commercial, Nigerian Gas Processing and Transportation Company Limited (NGPTC), Justin Ezeala, said there are gas projects, which were nearing completion stages and would add to Nigeria’s gas production capacity by fourth quarter of this month. He stated that development of a robust gas transportation network is critical for the development of gas industrial hubs across the country. He noted
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that the major pipeline projects they are ready for completion and others, were now being developed to achieve effective gas transportation in Nigeria. He said that synergy among stakeholders reduces costs, increases profits, minimizes business risks and serves the customer better. Ezeala added that a robust gas transportation network is required to deliver gas to the existing and proposed industrial hubs. According to him, the presence of gas supply infrastructure supports the development of industrial hubs, bringing cleaner, cheaper and more environmentally friendly fuel to the markets. He noted that one of the main goals of the Gas Master Plan was to develop a backbone gas transportation network to make gas available to existing and potential industrial hubs across the country. Ezeala noted that while this may not have been fully realized, a lot of progress has been made with required modifications to the initial proposal where necessary. The lead presenter at the forum, the Managing Partner, Olaniwun Ajayi, Prof. Konyin Ajayi, said that there is opportunity for $15 billion investment in the country’s gas sector. He listed gas development challenges in Nigeria to include regulatory, governance, slow transition from oil to gas economy, and legislation challenges. Others, according him were sector structure, insecurity, absence of robust gas infrastructure and challenging international climate. He emphasized the need for deliberate and articulate policy for exploration for gas; wholesale market competition with gas pricing set by the market;
and to be an attractive gas-based industrial nation, with a significant presence in national and international markets. He also stressed the need to position Nigeria as Africa’s regional hub for gas based industries such as fertilizer, methanol, petrochemicals; mature key gas infrastructure with liberalised access to infrastructure and gas processing; and adequate supply of gas to meet domestic market demands include power generation as well as developing a significant presence in international markets. Also speaking at the event, President of NGA, Mr. Dada Thomas said that the abundance of gas resources would help to ensure that there is sufficient energy to meet the nation’s power needs. He described gas as the fastest growing fossil fuel in the 21st century, which is expected to emerge as the main hydrocarbon component of a more sustainable mix to power the world’s economy. Dada noted that a lot of people are more focused on the current volatile conditions associated with the gas business, commerciality amid extensive geopolitical and security risks in the country. “We at NGA, we believe these conditions are not simply cyclical ones. To a degree, they are connected to longer-term trends – the restiveness in Niger Delta and pipeline vandalism being some case in point,” he said. He explained that the theme ‘Gas Policy, Markets and Regulations: Catalysing Development of Gas Hubs’ was chosen to draw lessons for Nigeria in developing its domestic competitive gas markets and gas hubs. Courtesy: The Guardian
Orient Energy Review Vol 7 No.07 July 2018 43
GAS
NNPC Sets 2020 Deadline for Zero Gas Flaring Commercialisation, Prospects & Opportunities,” Baru explained that in the last decade, gas flaring had reduced significantly from 25 per cent to 10 per cent. According to him, the multi-pronged approach adopted by the NNPC would ensure a sustainable solution to the historical problem of flaring, thereby turning waste into wealth.
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H E Ni g e r i a n Nat i o n a l Pe t r o l e u m C o r p o r at i o n (NNPC) has set 2020 as the new deadline for zero gas flaring from oil fields. It has also reviewed upwards the penalty for every 1000 standard cubic feet (scf) of flared gas. Its Group Managing Director (GMD), Dr. Maikanti Baru, announced these measures during a panel session organised by the Petroleum Technology Association of Nigeria (PETAN) at the ongoing 50th Offshore Technology Conference (OTC), in Houston, Texas, United States. Dr. Baru insisted that gas should create value, increase the country’s gross domestic product (GDP) and create jobs for Nigerians as it is in other oil producing countries. Baru explained that the new deadline and the fine regime, became imperative to align Nigeria’s oil production with global standards. He said: “Natural gas has the capacity to transform an economy. We have seen successful examples all over the world. Qatar has the world’s highest GDP per capita with its growth anchored on natural gas. Trinidad and Tobago saw transformational changes in its GDP and employment rate as it exploited its modest natural gas resources. “Saudi Arabia apart from being the world’s largest oil producer, has positioned itself as the world’s hub for petrochemicals, creating significant job opportunities and enabling industrialisation of the country. Russia also leveraged its enormous gas resources, transformed its economy and entrenched its global relevance based on the same. Natural gas can do the same for Nigeria.” The NNPC chief also unveiled a threepoint smart strategy aimed at ending gas flaring in the nation’s oil and gas industry. Speaking on: “Nigeria’s Gas Flare
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The three-point strategy include ensuring non-submission of Field Development Plans (FDPs) to the Industry Regulator – the Department Petroleum Resources (DPR), without a viable and executable gas utilisation plan, a move aimed at ensuring no new gas flare in current and future projects. Baru at the 2018 Oloibiri Lecture Series and Energy Forum (OLEF) organised by the Society of Petroleum Engineers (SPE) said Nigeria is currently losing N868 million daily to gas flare, adding that oil and gas firms operating in the country are currently flaring 700 million scf/pd. The other two strategies, Baru added, were a steady reduction of existing flares through a combination of targeted policy interventions in the Gas Masterplan as well as the re-invigoration of the flare penalty through the 2016 Nigeria Gas Flare Commercialisation Programme (NGFCP) and through legislation that bans gas flaring via the Flare Gas (Prevention of Waste and Pollution) Regulations 2018. This development, Baru added, would not only see Nigeria dropping from being the second highest gas flaring nation in the world to seventh, it would also signify a major milestone in its gas commercialisation prospects.
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Total flares have significantly reduced to current levels of about 800mmscfd and in the next 1-2 years we would have completely ensured zero routine flares from all the gas producers,” the GMD stated. According to him, NNPC has embarked on the most aggressive expansion of the gas infrastructure network aimed at creating access to the market. “Today, we have completed and commissioned almost 600km of new gas pipelines thereby connecting all existing power plants to permanent gas supply pipeline. We are also currently completing the construction of the strategic 127km Obiafu-Obrikom-Oben gas pipeline – “OB 3” connecting the Eastern supply
to the Western demand centres,” he added. Baru further noted that aside looping Escravos-Lagos Pipeline System (ELPS 2) gas pipeline projects to increase gas volume capacity to at least 2Bcf/day, NNPC has also signed the contracts to kick-off the 614Km Ajaokuta-Kaduna-Kano (AKK) pipeline project, which on completion, would deliver gas to ongoing power plants in the areas and revive the manufacturing industries in the northern part of the country. He said there was evidence that the interventions undertaken by the corporation were working as gas supply to the domestic market is growing at an encouraging rate, having tripled from 500mmcf/d in 2010 to about 1500mmcf/d currently. He informed that the aggressive development of gas infrastructure (pipelines and processing plant) between supply sources and the market would also create a sustainable evacuation route for currently flared gas and other gas sources. Speaking during a panel session on New Oil & Gas Horizons and Procurement Procurements in Sub-Saharan Africa, Baru had maintained that huge opportunities abound in Nigeria’s gas sector, with the country expecting over $25 billion investments anticipated over the next 10 years. He described the Nigerian petroleum industry as the largest and the most vibrant in sub-Saharan Africa with lots of potentials, especially in the deep water and untapped gas resources. He noted that Nigeria offers unique opportunities for investment in exploration, refining, storage, transportation; power, distribution and marketing of petroleum products, Baru further observed that the nation’s Gas Reform was anchored on a robust strategic framework that is focused on maximum economic impact through gas. Chairman of PETAN Bank Anthony Okoroafor said the theme of the panel discussion was carefully chosen to enable a robust debate on the prospects and hidden opportunities on flared gas in Nigeria and the plan by the Federal Government to commercialise it
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SUSTAINABLE DEVELOPMENT
Dreg Waters Stages Free Cervical Cancer Screening for Women in Lagos
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omen living at Agege c o m mu n i t y a n d i t s environs came out in droves to participate in the free cervical cancer screening which held on Tuesday, May 29, 2018. The event which was sponsored by Dreg Waters Petroleum and Logistics in association with Exquisite Magazine Services Limited was hosted by the management of the Agege Local Government maternity centre, Lagos. While speaking at the event, the Chief Executive Officer of Dreg Waters Petroleum and Logistics, Damilola Owolabi expressed concerns about the rate at which cervical cancer takes the life of women in society. “Most women are unaware that cervical cancer is totally preventable, all they need to do is to check regularly and keep being healthy,” she noted. Owolabi further explained that,
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“At Dreg Waters, we appreciate the value that women add to our community, as such we are delighted to partner with Exquisite Magazine Annual Cancer Event (EMAC) on the “Smearit” project to provide free cervical cancer screening and awareness to the women of Agege, Lagos.” In her remarks, the Founder/CEO of Exquisite Mag0azine Services Limited, Tewa Onasanya, reiterated that at least one woman die of cervical cancer every hour in Nigeria. She stressed that, “It is unacceptable for women to continue to die of a form of cancer that is 100% preventable.” Onasanya said that, “We are so grateful to our sponsors, Dreg Waters, for partnering with us financially to screen over 100 women. We are glad that these women were screened,
they now know their status, and they know that early detection saves lives.” One of the participants at the event, Chief (Mrs.) Aruwajoye, a retiree, explained that, “We were enlightened on the importance of regular checks in order to prevent breast and cervical cancer. And with the screening, we now know our status, and we are properly guided on how to keep fit and healthy. All thanks to the organisers of the event.” Dr. Kelly Maltida, founder of Dr. Kerry Life Foundation, who was a facilitator at the event, noted that cervical cancer is ranked second to breast cancer among cancers that kill women very fast. “Cervical cancer can be prevented, while breast cancer can be removed easily, if detected early,” she explained.
Orient Energy Review Vol 7 No.07 July 2018 45
SUSTAINABLE DEVELOPMENT
WED 2018: Chevron Reinstates Commitment to Environmental Protection By Margaret Nongo-Okojokwu wherever the company operates through its sound environmental management policy that supports environmental stewardship and sustainable development. The Managing Director, CNL, Jeff Ewing, stated that the company was happy to be part of the solution to global environmental issues. According to him, wherever the company operates, through its sound environmental management policy, it supports environmental stewa rdsh ip a nd susta i na ble development. He added, “CNL has in place company-wide operational excellence management systems that deliver industry-leading performance in process safety, personal safety and health, environment, reliability and efficiency.” The CNL has a record of responsible environmental stewardship everywhere it operates and has also established enduring partnerships with governments, non– governmental organisations, business organisations and communities.
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hile commemorating the World Environmental Day (WED), Chevron Nigeria Limited, the operator of the joint venture between the Nigerian National Petroleum and CNL, says it has remained an active agent of sustainable development and strong advocate of partnerships in support of the environment for over 50 years. The CNL made this known in a statement released to mark the World Environment Day held annually on June 5. The World Environment Day (WED) is the biggest event to celebrate and promote environmental awareness and sustainability across the globe. Established by the United Nations General Assembly in 1972, WED aims to raise global awareness and mobilize humans to take positive environmental action to protect nature and the planet Earth. This global event has since become the principal vehicle through which the UN stimulates worldwide awareness
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about the environment. It also gives a human perspective to environmental issues, empowers people to become active agents of susta i nable development and advocates multistakeholder partnerships in support of the environment. From 1973, when the first WED was held, the event has always been marked with different campaign themes and discussions fo c u s i n g o n e nv i r o n m e nt a l stewardship. This year’s theme of the WED, ‘Beat plastic pollution’, urges governments, i ndust r ie s, com mu n itie s a nd individuals to come together in exploring sustainable alternatives to urgently reducing the production and excessive use of single-use plastic polluting the oceans, damaging ma r i ne l i fe a nd th reaten i n g human health. Explaining CNL’s commitment to the environment, the Chairman/Managing Director, Jeff Ewing noted that the company is happy to be part of the solution to the global environmental issues
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The CNL has been supporting a nd s p on s or i n g va r i ou s programmes aimed at preserving the environment. These partnerships and efforts have been recognised and rewarded within and outside the country.” The firm said that its commitment to preserving the environment had left enduring landmarks in the landscape, including the Lekki Conservation Centre, a centre of excellence in environmental research and education reserved as a sanctuary for the rich flora and fauna of the Lekki Peninsula. “This 78-hectare facility is the only one of such in the Lagos area and was established by the CNL in partnership with the Nigerian Conservation Foundation in 1992. The support for the LCC best connects Chevron’s activities to the theme of the WED 2018,” the firm stated.
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SUSTAINABLE DEVELOPMENT CNL’s environmental stewardship process lays the foundation for sound environmental management. The identification, assessment and management of environmental risks runs through the entire project cycle from inception to operations and through decommissioning. CNL recognizes the importance of minimizing our footprints and conserving biodiversity. The NNPC/CNL Joint Venture (JV) strives continually to achieve world class environmental excellence by assessing and reducing its footprints and potential impacts from its operations on the environment. Management of waste is an integral part of CNL’s operations and this is documented by project and operations focused waste management plans. The company states that it effectively manages its third-party waste handling contractors towards ensuring management of waste from cradle to grave (generation, storage, transportation and disposal). Chevron Nigeria’s commitment to preserving the environment has left enduring landmarks in the landscape. The Company established in 1992, the Lekki Conservation Centre (LCC) -- a centre of excellence in environmental research and education, reserved as a sanctuary for the rich flora and fauna of the Lekki Peninsula. The 78-¬hectare facility was set up by the Company in partnership with the Nigerian Conservation Foundation (NCF). The support for the LCC best connects Chevron’s activities to the theme of the WED 2018.The NCF is Nigeria’s foremost non-governmental organization ded icated to env i ron menta l conservation and an affiliate of the World-Wide Fund for Nature. In 2005, Chevron established a yearly postgraduate research scholarship for PhD students in environment and conservation. In addition, Chevron hosts the annual S. L. Edu Memorial Lecture to promote env i ron ment a l ma n a gement awareness. The General Manager, Policy, Government and Public Affairs, CNL, Esimaje Brikinn, said the company would continue to collaborate with all stakeholders to safeguard the environment. “We are continually working to improve our processes to reduce pollution and waste, conserve natural resources, and reduce potentially negative environmental impacts of our activities and operations,” he remaked.
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AITEO Emerges Triple Winner at the Guardian Oil, Gas Awards
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igerian energy giant, Aiteo group has emerged winner in three different categories at the Guardian Oil & Gas Roundtable and Awards, held on June 23, 2018 at the Eko Hotel & Suites, Victoria Island, Lagos. The Guardian Oil and Gas roundtable and awards aims to draw critical stakeholders together to discuss and present resolutions on issues affecting the Nigerian Energy sector. The event also recognises and celebrates institutions, organisations and personalities who have contributed and still contribute immensely to the growth and development of the Nigerian oil and gas industry. The Aiteo group was adjudged and awarded winner in the following categor ie s: Oi l & Gas C SR / Sustainability Company of the Year (Upstream), Oil and Gas Company of the Year (Upstream Indigenous) and Oil and Gas CEO of the Year (Upstream Indigenous). According to Victor Okoronkwo, Aiteo’s Senior Vice President, the awards are a testimony to the organization’s commitment to adding value across the Spectrum of the Nigerian Energy milieu.
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In recent years, our value footprints have become more gla r i n g on the Ni ger ia n energy scene. These include strong commitment to local content, host community engagement, and
Corporate Social Responsibility. We have also been a major active partner of the Nigerian Super Eagles.” With a peak production capacity of 90,000 bpd, Aiteo is often called the largest indigenous oil company in Nigeria. It is the operating partner of the Oil Mining Lease(OML) 29, one of the largest offshore oil blocs in the Eastern Niger Delta. It is also the operating partner of the Nembe Creek Trunk Line(NCTL), a 115km long, 150,000bpd capacity oil delivery pipeline traversing over 100 indigenous autonomous communities between Rivers and Bayelsa States. In the CSR arena, Aiteo has become the foremost financier of football in the country after a string of contributions to the Nigerian Football Federation (NFF). It began with a N2.5 billion 5-year deal with the NFF. To support local football, Aiteo took over the sponsorship of the Federation Cup, Nigeria’s oldest football tournament, now renamed Aiteo Cup. On the continental stage, Aiteo partnered with the Confederation of African Football (CAF) to sponsor the African Football Awards in January this year. Aiteo’s contributions also include incentives for the Super Eagles in form of financial reward of N18 million naira for every goal scored and unresponded by their opponents in the World Cup.
Orient Energy Review Vol 7 No.07 July 2018 47
COMMUNITY REPORT
Bayelsa Community Laments Pollution by Oil Spill from Shell’s Oilfield
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esidents of Agoro Community in Ekeremor Local Government Area of Bayelsa on Monday berated the poor and slow response to an oil spill from shell’s oilfield in the area. They appealed to the Federal and Bayelsa governments to come to their aid over the spill incident and compel Shell Petroleum Development Company (SPDC) to be alive to its responsibility in spill response. The community alleged that several weeks after the spill that destroyed and polluted their farmlands and waterways early in May 2018, Shell had yet to commence clean-up in the impacted areas. The Secretary of Agoro Community Development Committee, Justin Gbagbiri told News Agency of Nigeria (NAN) in an interview that they were still counting the losses incurred as a result of the incident. “The river supports our fishing vocation, and it is one of our major sources of drinking. If we want to cook we use water from the river. “But since the crude oil polluted our
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river, we can no longer use water from the river anymore, we have been in distress. “We cannot use it to bath anymore, just as we cannot use it to clean up after using the toilet. “So, the spill has affected most of our activities here. Fishing which is our major occupation has been adversely affected, as we cannot go to the river again to fish as we used to. “What the company has done so far is that they have come around to do some recovery of spilled crude oil but no other major thing has been done. They have not even sent us relief materials. “What they said was that, it is when the ruptured spots have been brought out and cause of spill identified, they would know if Shell will take responsibility. “Shell also said they would do the needful only if the cause of spill is identified as equipment failure and not third party interference. “So, we are waiting for them to come and expose the pipe for observation but nothing has been done to that
effect.’’ he said.The community alleged that SPDC is deliberately delaying the Joint Investigation (JIV) which would ascertain the cause of the oil leak. Reacting to the development, Dr Alice Aje, Manager, Stakeholder Relations at SPDC said the oil firm was responding to the spill incident and sought the understanding of the community. “We regret the spill because it has adversely affected our operations and business, we have shut operations and stopped the spill and we are in talks with our relevant stakeholders.
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It is our responsibility to clean up the spill and if it was found to be case by equipment failure, we shall pay compensation to those affected, that is our process,” Aje said. She de scr i bed the spi l l as `regrettable and unfortunate’ adding that efforts were underway to convene a joint investigative visit with community representatives to probe the cause of the spill. (NAN)
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COMMUNITY REPORT
Ogoni Clean-Up: Two Communities Pledge Cooperation with HYPREP
Extensive oil spill devastation in Ogoni land.
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he Ken-Khana and NyoKhana kingdoms in Ogoni have pledged to cooperate with the Hydrocarbon Pollution Remediation Project, HYPREP, in the clean-up process in Ogoniland. The Gbenemene of Ken-Khana Kingdom, His Royal Majesty Dr. Melford Eguru, made the pledged while HYPREP officials were being showed land donated by the two communities to the agency to facilitate the clean-up. King Eguru, represented by the Menebua of Kenwigbara, His Royal Majesty Barile Deebom, said the scope of the land donated by the kingdom was unlimited, as the land was big enough to accommodate whatever project that would be sited on it by HYPREP. He also urged the Federal Government to recognised trad itional r u lers i n the cleanup process, explaining
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that monarchs were responsible for the maintenance of peace in the communities. “It is our joy that you are here. Kenkhana championed the Ogoni struggle. Every effort that led to the struggle started from here through Ken Saro-Wiwa. “We will support you so that we will not lose everything. We have lost many of our sons, including Ken. The majesty and this kingdom will give every support that you will need as long as you will follow the right step. “The land is big enough to accommodate any magnitude of project you want to do. You know we have been agitating for the restoration of our land and our livelihoods,” the monarch said. On his part, the Gbenemene of Nyo-Khana Kingdom, His Royal Majesty Suanu Baridam, pledged that his kingdom will cooperate with the Federal Government
on the Ogoni cleanup. King Baridam, however, warned that the Ogoni cleanup exercise should not be used as a political tool by politicians. Re spond i n g, the Project Coordinator of HYPREP, Dr. Marvin Dekil, pledged to carry everyone along in the cleanup process and said plans were underway for the livelihood restoration programme to commence. Represented by HYPREP’s Head of Communication, Mr. Isa Wassa, Dekil commended the traditional rulers of NyoKhana and Ken-Khana for the land donated to HYPREP while urging other communities in Ogoni to follow suit, in other to fast-track the process. Courtesy: Sweetcrudereports,com
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DRILLING, EXPLORATION & PRODUCTION
Eni Announces a New Oil Eland Oil & Gas Completes Discovery Offshore Angola Opuama-9 Well For Production
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ni has announced a new oil discovery in Block 15/06, in the Kalimba exploration prospect, in Angola’s deep offshore. The new discovery is estimated to contain between 230 and 300 million barrels of light oil in place. The Kalimba-1 NFW well, which has led to the discovery, is located at approx. 150 kms off the coast and 50 kms South East from the Armada Olombendo FPSO (East Hub). The well was drilled by the West Gemini drillship in a water depth of 458 meters and reached a total depth of 1901 meters. Kalimba-1 NFW proved a 23 meters net oil pay of high quality oil (33° API) contained in Upper Miocene sandstones with excellent petrophysical properties. The data acquired in Kalimba-1 NFW indicate a production capacity in excess of 5,000 barrels of oil per day. The discovery opens new opportunities for oil exploration in the Southern part of Block 15/06, so far considered mainly gas prone, thus creating new chances for additional potential value in the block. The Joint Venture, composed by Eni (operator, 36.8421%), Sonangol P&P (36.8421%) and SSI Fifteen (26.3158%), will work to appraise the updip of the discovery and will start the studies to fast track its development. Angola is a key Country in the strategy for organic growth of Eni, which has been present in the Country since 1980 and accounts currently an equity production of about 155,000 barrels of oil equivalent per day. In Block 15/06 the two oil development projects, West hub and East Hub, are currently producing about 150.000 barrels of oil per day (100%). Eni is also operator of Cabinda Norte Block, located onshore Angola. The next start-ups in block 15/06 this year will be the Upper Miocene, in the East Hub, and the Subsea Boosting System for the Mpungi field, while the Vandumbu field, that will be connected to the West Hub, will start production at the end of 2018, ahead of plan. These start-ups will add further 30,000 barrels of oil to the overall production from Block 15/06, which in 2019 will exceed 170,000 bopd gross.
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IM-listed Eland Oil & Gas, an oil & gas production and development company operating in West Africa with an initial focus on Nigeria, has announced that its joint-venture subsidiary Elcrest Exploration and Production Nigeria has successfully drilled and completed the Opuama-9 well. The production tree is currently being installed and Opuama-9 well is expected to be handed over to the Opuama field production team in the coming week. The well will then flow test into the production facilities and on to export. Under the regulatory guidelines, the Opuama production team will conduct a Maximum Efficient Rate Test (‘MER Test’) incrementally testing the well at increasing choke sizes. It is expected that, following completion of the MER Test, initial gross production from Opuama-9 will be at the upper end of our guidance of between 4,000 and 6,000 barrels of oil per day (‘bopd’) (1,800 - 2,700 bopd net to Elcrest). On completion of the MER test the Company will announce the initial production rates. Furthermore, following the successful completion of Opuama-9 infill well, the OES Teamwork Rig will mobilise to the Opuama-10 drill site with spudding expected in June. Initial gross production is expected to be between 4,000 and 6,000bopd (1,800 - 2,700 bopd net to Elcrest). George Maxwell, CEO of Eland, commented saying: ‘OP9 has been a challenging well but we are extremely pleased that production is likely to be at the high side of our estimate and simple well payback at current oil prices still predicted to be sub 90 days. We will soon move to and spud OP10 and look forward to a successful drilling program.’
Niger: Savannah Petroleum Reports New Oil Discovery in the Agadem Basin
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n Niger, oi l f i rm Savannah Petroleum has announced that it has seized a large black gold deposit in the Agadem Basin, including the Amdigh-1 well. This is the second drilling and second success of its three-well campaign on the R3 / R4 production sharing contract (PSC). The well, which began work on May 6 and lasted 24 days, reached a depth of 2,469 meters instead of 2,576 meters as predicted by pre-drilling findings. Preliminary results based on the interpretation of all available data indicate that the well encountered a 22 m column of hydrocarbon bearing sandstones in the E1 and E2 reservoirs in the Eocene Sokor alternations. The wireline logs indicate that the
properties of the tank are of excellent quality. With regard to the pressure data, the oil in presence is light, which corresponds to the results of the discoveries recorded along the trend. The well was closed for production testing. After the tests, Savannah will mobilize the necessary equipment for the production of the site. No date has been announced for this purpose. Efforts are currently underway to demobilize the drilling platform to the last well in the campaign, the Kunama-1 exploration well, located 12 km from Amdigh-1. The demobilization should last between 10 and 15 days. Updates will soon be provided for this purpose, according to a company press release. “The two discoveries of our first two exploration wells are clearly encouraging for the future of our project in Niger …I take this opportunity to once again thank our community and government partners as well as our teams. Operations and subsurface and our oil sector partners for the work and support that the company has received to reach this stage. “ said Andrew Knott, CEO of Savannah Petroleum.
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Africa Oil Week 2018 is the meeting place for Africa’s upstream oil and gas markets. The event brings together senior leaders of governments, national oil companies, investors, corporate players, independents and financiers from across Africa and beyond – giving them a place to network, discuss and share knowledge.
Join us to celebrate our 25th Anniversary in November. 5-9 November 2018
Cape Town International Convention Centre Cape Town, South Africa
info.africa@ite-events.com www.africa-oilweek.com
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Orient Energy Review Vol 7 No.07 July 2018 51
With Chevron’s approach to Nigerian Content,
everyone benefits...
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At Chevron Nigeria Limited, ours has been an unwavering commitment to Nigerian Content Development. Ever before the enactment of the NOGICD Act, we have been giving preference to Local Community Contractors, empowering local competencies through training and facilitating partnerships between Nigerian businesses and foreign experts to build capacity. We have also sustained these businesses through work scope reservation. Today, we are happy to see several benefitting Nigerian businesses and thousands of technical professionals thriving in the Oil and Gas industry. This is proof that with CNL, when it comes to Nigeria Content, everyone benefits.
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