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Orient Energy Review Vol 6 No.11 November 2017 1
7 - 8 February 2018
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Eko Convention Centre, Lagos At the Heart of West Africa’s Exploration & Production Community
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MEETING WEST AFRICA'S POTENTIAL Emeka Ene, CEO, Oildata Energy Group
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Ahmadu-Kida Musa, Deputy Managing Director, TOTAL Exploration and Production Geoff Onuoha, Vice Chairman, Petroleum Technology Engineers Association of Nigeria (PETAN) Dr. Mazadu Bako, Nigerian National Petroleum Company (NNPC)
Bank Anthony Okoroafor, Chairman, Petroleum Technology Engineers Association of Nigeria (PETAN)
Austin Ojunekwu Avuru, Chief Executive Officer, SEPLAT Petroleum Development Company
Bayo Ojulari, Managing Director, The Shell Nigeria Exploration and Production Company (SNEPCo)
Mordecai Ladan, Director Department of Petroleum Resources
Engr. Simbi Kesiye Wabote, Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB)
Ranti Omole, Chairman, Conferences Committee PETAN
Tony Attah, Managing Director, Nigeria LNG
Gbite Adenji, Senior Technical Advisor on Upstream & Gas to Hon. Minister of State for Petroleum Resources
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Contact the organising committee today for full participation details and join the following companies already involved with WAIPEC; Associated Oil and Gas Services Catobi Chevron Daroots Dorman Long Emval Group First Exploration & Production Company South African Oil & Gas Group Frandrick International Limited Future Concerns Geoplex Drilling Technologies Global Process & Pipeline Services Limited
Hangzhou Fortune Gas
PE Energy Limited
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Radial Circle Group
National Petroleum Investment
SEPLAT Petroleum Development Company
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Slot Engineering Nigeria
Nigerian Content Development and
The Shell Nigeria Exploration and Production
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2 Orient Energy Review Vol 6 No.11 November 2017
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EDITOR’S NOTE Decades after crude oil and gas exploration began in Africa, it has been tales of mixed fortunes. Africa used to be regarded as the Dark Continent, but over the years, the narrative has changed, especially with the exploits of the continent in the global economic landscape and the petroleum industry. But where lies the future of this great industry in the midst of these uncertainties about future Energy demands and identified skills gaps and shortages? Read through our cover story for answers. As The monumental Egina Floating, Production, Storage and Offload (FPSO) sails away from Geoje Korea to Nigeria, Mr. Frank Ejizu, Chief Operating Officer of the Samsung Heavy Industries Nigeria Limited (SHIN) tells us more about the level of preparedness of his company to receive and integrate the FPSO at the Lagos Deep Offshore Logistics (LADOL) yard. Turn to our Talking Point column to read more. Our goal to keep you informed on Local Content Developments across Africa takes us to Cape Town South Africa at the 5th Local Content Forum of the Africa Oil Week; where Local Content Coordinators from Nigeria, Liberia, Uganda and Egypt talked about shaping the Local Content Policy and its implementation in Africa. In this edition, we bring you just a brief report from that panel; as Nigeria takes the lead on Local Content Implementation in Africa. A full report will come in our next edition.
PUBLISHER/EDITOR-IN-CHIEF: Nneka Ezeemo
Meanwhile, there are loads of other interesting stories to read Meanwhil in this power-packed edition just for you.
EDITOR: Margaret Nongo-Okojokwu
But remember to send us your feedback, you know we always love to hear from you.
PRODUCTION: Chiamaka Umeh
Enjoy the read!
CORRESPONDENTS: Oge Obi (Lagos) Dirisu Yakubu (Associate Editor) Vivian Osuji Isreal (Head,South South Bureau,Port Harcourt) Jerome Onoja (Lagos) Gilbert Boyefio (Ghana Correspondent) Godspower Ike (Port Harcourt) Obinene Mike Margaret Ahiakwo (Houston Texas, USA)
Cheers!
Margaret Nongo Okojokwu Editor, Mobile +234 8170334471 m.okojokwu@orientenergyreview.com
CONTENTS 4
GM Business Development Jerome Onoja
INDUSTRY NEWS
......................................................
47 Nigerian Oil Block Licences to Expire in 2019
Business Development Executive: Arit Asuquo Dan Ruth Muo (South Africa) Stanley Etim CRE CREATIVE: DEE GRAPHICS (dennilsone@gmail.com) CIRCULATION MANAGER : Ajayi Kayode LONDON OFFICE: Charity Place, Unit 1 Thurrock Pack Way Thurrock Parck Ind. Estate Tilbury,Essex Rm !87Hz. +447974199137 GHANA OFFICE: +0243915206 orientenergyreviewgh@gmail.com ORIENT ENERGY REVIEW has emerged to be the platform and voice for the growing local content policy across the world.It is a monthly publication of Orient Magazine,Newspaper and Communications Limited 5, Dipo Dina Drive, Abule Oshun,Badagry Express Way Lagos www.orientenergyreview.com email: info@orientenergyreview.com
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POWER
Schneider Electric Launches EnergyEfficient Speed Drives in LAGOS
24
6
COVER STORY
18
INTERVIEW Negotiating Africa’s Oil and Gas Future: Role of Offshore, Deepwater and Human ‘Our Host Communities Are Critical Capital Development Stakeholders in the Work We Do’ - Avuru
LOCAL CONTENT
34 GHANA REPORTS
Orient Energy Review Awarded Best Local Content Magazine
8
NCDMB Set to Launch Research & Development Council for Nigeria’s Oil Industry Local Content is not CSR, it is Business; Wabote Tells African Leaders
LOGITICS & MARITIME Axxela Submits Feasibility Study for Lagos-Jebba Pipeline to NNPC
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Orient Energy Review Vol 6 No.11 November 2017 3
INDUSTRY NEWS
47 Nigerian Oil Block Licences to Expire in 2019
Oando Rebrands to Axxela By Margaret Nongo-okojokwu
By Oge Obi
Forty-seven oil block licenses in the country will expire by 2019 findings by Orient Energy Review reveals. According to a source from the Department of Petroleum Resources (DPR) who preferred to remain anonymous, said that the licenses will be due for renewal or relinquished in 2019. According to him, the two types of licences issued in Nigeria - Oil Prospecting License (OPL) and the Oil Mining Lease (OML) will expire in 2019. The Oil Prospecting License (OPL) which confers exclusive rights of surface and subsurface exploration for the production of petroleum in an area not more than 2,590 square kilometres (1,000 square miles). The OPL licence lasts for three years with an option of renewal for maximum of two years. On the other hand, the Oil Mining Lease (OML) is granted to holder of OPL to commence production after discovery of crude oil in commercial quantity of at least 10,000 barrels per day. The duration of the license is for 10 years with option of renewal for another 10 years. In its 2017 Service Requirements release, the DPR said that oil companies seeking to renew their oil licenses or leases would be expected to pay a statutory application fee of $2 million. It was also learnt that conversion from an oil mining licence to lease is fixed at $1 million, while statutory application fees for marginal oil field at $2,500; Oil Prospecting License, OPL, at $5,000; and Oil Mining Lease, OML, at $10,000. Further investigations revealed that 19 out of the 47 licenses are OMLs while 28 are OPLs. Also, out of the 19 OMLs, 17 are Niger Delta onshore concessions belonging to the Shell Petroleum Development Company of Nigeria Limited, SPDC. Shell who has in recent times been engaged in divestment of its assets has been silent on whether or not it will renew or relinquish the licenses.
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O
ando Gas & Power Limited (“OGP”), the erstwhile midstream business subsidiary of Oando PLC (“Oando”), has formally announced the change of its corporate identity and branding to Axxela Limited (“Axxela”). The rebranding effort follows the recent US$115.8million acquisition of a 75 percent equity stake in the business by Helios Investment Partners LLP (“Helios”), a premier Africa-focused private investment firm. Speaking on the rebrand initiative, Bolaji Osunsanya, Axxela Chief Executive Officer said: “This is a reaffirmation of our operational independence as we become sub-Saharan Africa’s preferred and fast-growing gas & power portfolio company. It enables us leverage strategic partnerships to deliver value adding energy solutions to our customers, whilst facilitating sustainable economic development in our chosen markets. The change in our corporate identity also gives us the opportunity to re-introduce our business to the market while humanizing the far-reaching impact of our operations.” In a world of constant re-invention, Axxela, which is coined from ‘accelerate’ and excellence’, focuses
on developing innovative solutions to bridge sub-Saharan Africa’s energy gap. This illustrates its determination to be an indispensable energy player via its insights-driven approach and inventive team ethos. Axxela is the pioneer developer of Nigeria’s foremost natural gas distribution network and has subsequently grown to become the largest private sector natural gas distributor in Nigeria, delivering at peak, 70 million standard cubic feet per day (“mmscf/d”) to over 175 industrial and commercial customers via a vast network of gas infrastructure. With over 260km in gas pipeline infrastructure built, Axxela provides unique energy solutions primarily through its subsidiaries: Gaslink Nigeria Limited (“Gaslink”), Gas Network Services Limited (“GNSL”), and Central Horizon Gas Company (“CHGC”). Oando Plc is one of Africa’s leading and largest integrated energy solutions providers. It has a primary listing on the Nigeria Stock Exchange and a secondary listing on the Johannesburg Stock Exchange.
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INDUSTRY NEWS
US to Assist Nigeria Develop New Technologies in Oil Production Expresses willingness to encourage more investments in Nigeria
OPEC Records 120% Conformity, As Nigeria Predicts Capping Production in 2018 By Oge Obi
By Margaret Nongo-okojokwu
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he United States has offered to help Nigeria develop her skills in new technologies that could help her grow her oil and gas production. US Secretary of Energy, Mr. Rick Perry, made this offer to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, at the sidelines of the 24th Africa Oil Week in Cape Town, South Africa as part of his ongoing investment focused international Oil and Gas engagements. While speaking at the meeting, The Secretary of Energy of the United States of America, Mr. Rick Perry commended Nigeria on the significant steps taken in the Oil and Gas Industry, and stated that the key message and thrust of the United States administration is to be strategic partners with Nigeria. Reiterating this message he further stated that the United States Government has a high level of respect for the people of Nigeria and pledged willingness to continue to encourage US companies to invest in Nigeria’s oil sector. The landmark meeting which is the first of its kind between the two leaders of the energy sector in both countries since the inauguration of the new administration in the United States comes as a follow up to an earlier meeting that was hosted by the Office of the Secretary of Energy earlier in May 2017 at the United States Departments of State and Energy in Washington D.C. at the sidelines of the Offshore Technology Conference (OTC). The Honourable Minister of State while responding to the comments and feedback given by Mr. Rick Perry said the Federal Government of Nigeria under the leadership of President Buhari has clearly set out the choices that have to be made as nation over the next 4 years and have also taken significant steps in achieving this through the continuous implementation of the 7BigWins – the Nigerian Petroleum roadmap; which focuses on stabilizing the business environment, enshrining openness and transparency, and developing and entrenching new policies and regulations. These laudable
achievements have contributed greatly in helping Nigeria claw back from recession. Dr. Ibe Kachikwu restated the positive role the Government has played through the instituting of the Joint Venture cash call payment agreement, ensuring adherence to due process in the sector, promoting accountability, encouraging sanctity of contracts and reviewing the Fiscal Policy to provide incentives for investment in the sector while optimizing revenues for the Government. He also hinted that plans are in place to reduce Government’s role in the sector in order to increase private sector participation. While discussing issues relating to infrastructural development in the sector, Dr. Kachikwu noted that a comprehensive and holistic infrastructural map which is being developed by the Ministry of Petroleum Resources would be launched in December 2017. Also, Dr. Kachikwu in the same vein highlighted the local content growth which the Nigeria Oil & Gas sector has experienced; it has moved from 5% at the inception of this Administration to about 40% local content compliance currently. Finally, Mr. Rick Perry, in his closing remarks at the meeting informed the Honorable Minister of State, that the United States Government would be willing to assist Nigeria with access to newer technology and skill set training to deepen Nigerian participation and production in Oil and Gas. He further extended an invitation to the Honorable Minister of State, Petroleum Resources to come to the United States to take a look at the Department of Energy sector laboratories which specifically develop new technologies being currently deployed in Oil and Gas. Dr. Kachikwu also used the opportunity to invite the Secretary of Energy and his team to participate in the forthcoming maiden edition of the Nigerian International Petroleum Summit (NIPS) scheduled to hold in February, 2018 in Abuja, Nigeria.
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he OPEC-Non-OPEC producing countries’ Joint Ministerial Monitoring Committee (JMMC) has stated that based on the report of its Joint Technical Committee (JTC) for the month of September 2017, OPEC and participating Non-OPEC producing countries have achieved a record high conformity of 120 per cent. The September 2017 120 percent conformity level is the highest since the start of the voluntary production adjustment Declaration of Cooperation since January 2017. This again underscores the resolute commitment of participating producing countries to cooperate towards the rebalancing of the market. The Nigerian government as part of its commitment towards achieving a rebalanced oil market has promised to cap its production as soon as its production hits the benchmark of 1.8 million barrels. And speaking with journalists at the 24th Africa Oil Week in Cape Town, South Africa recently, the Minister for state Petroleum Resources, Dr. Ibe Kachikwu predicted Nigeria oil production hitting the 1.8 million barrels benchmark by the first quarter of 2018. Limited earlier by unrest in the country’s oil-producing region, Nigeria was exempted from the production cap deal. But as the country’s production recovers, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu OPEC has restated Nigeria’s commitment to cap output at 1.8 million bpd. Asked when Nigeria would reach the output level of 1.8 million barrels, the Minister said that Nigeria’s oil production has been hovering around the average of 1.6 and 1.7 million barrels. And that if a 300,000bd capacity Exxon Mobil’s field presently constrained resumes production in early January 2018, Nigeria was sure of hitting the1.8 million in the first quarter of the year. “If that succeeds in coming back early in January, then up, we will go. This month, we ended with an average of 1.7 million. Speaking on what to expect from the OPEC’s Vienna meeting in November, the Minister said he expects the convergence of ideas and review of statistics. “The market is balancing fast through the obvious good efforts of OPEC but also through the happenstances of the market itself.” Commending Saudi Arabia for its leading role in the market recovery process, urged other countries to emulate the oil giant’s selfless role in returning the global oil market to the path of recovery. Kachikwu who supported the extension of the cap deal, said it is necessary to firm up the attained results. “I think we need to keep it anyway; to continue to firm up the result. And Saudi Arabia has shown very strong leadership. And all of us have to follow that example, he said. And for OPEC to sustain the success so far attained in dealing with the three-year oil glut, Kachikwu said, “We need to see more cuts” and to attain sustained improved oil price. The next JMMC Meeting is scheduled to be held in Vienna, on 29 November 2017.
Orient Energy Review Vol 6 No.11 November 2017 5
POWER
Schneider Electric Launches Energy-Efficient Speed Drives in LAGOS
Opportunity to Build Gas Power Plant Exists in Akwa Ibom — Udoh
“…we are very proud of the robust nature and broad spectrum for application.” - Anthony Pickering Schneider Electric recently launched a range of speed drives into the Nigerian and West African market in Lagos. These energy efficient drives are targeted at four market segments, which include: Building, Industry, Information Technology; and Infrastructure. Addressing Orient Energy Review’s team after the launch, the Vice President for Middle East & Africa, Anthony Pickering said, “The Activator Process is the flagship product and we are very proud of its robust nature and broad spectrum for application.” He went on, “these range of products gulped some huge investments; because, as a practice we spend 5% of the company’s revenue on Research &Development annually.” Aware of today’s evolving technological demands of industries, Pickering further added that Schneider’s research team has some Tested, Validated, and Documented Architectures (TDVA) solutions which could be picked off the shelf and specially integrated into some specific applications for deployment in the oil and gas industry. This is in addition to its M-580, which monitors fluid movement, already unveiled at the launch. Beside the oil and gas industry, reception of these range of products is expected to be huge in the Building segment. Again, he added that the speed drives solve the issues of connectivity as they are able to “integrate into the entire ecostructure of facilities, run diagnosis, generate data and predict system failures in order to avoid downtime which stems largely from the usual speculative approach”. On being asked how existing, mere mechanical systems, perhaps manufactured by a different original equipment manufacturer (OEM) could function with these new drives; the Vice President hinted on the special features of the products, which includes the OPC that enables easy migration thus making such equipment(s) “intelligent” and able to communicate. Also speaking at the launch, Ana Santos, the Vice President of Process Automation, Northern Europe and sub-Saharan Africa stated that 95% of its engineering integrators are Nigerians. Confirming that all resources are trained to Schneider’s global standard without any disparity, such that the human resources based in Nigeria has the same skillset as the UK-based. She added, “This was achieved because, over the years, the company has planned to have execution centres in different regions, and Nigeria happens to be one. That process has witnessed international training of indigenous Nigerian engineers as a drive towards local content value addition”. Ms Viviane Mike-Eze (Marketing Communications Manager) was quick to aver that the inclusive model of the company makes room for the training of local vendor system integrators. Its West African Lead Solution Architect, Ibitayo Balogun, also pointed to the early days of the electricity distribution companies in Nigeria; how specialized solutions deployed by Schneider helped some of these companies manage their revenue. Adding that similar solutions are available for efficient power consumption and auditing to companies, because “energy saved is energy generated”. He also stated that the average return on investment for users of these product ranges is often a year, at most two. Schneider Electric a leading digital transformation energy management and automation company worth over 25billion Euros with its headquarters in France.
6 Orient Energy Review Vol 6 No.11 November 2017
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he Commissioner for Information, Akwa Ibom State, Mr. Charles Udoh, has disclosed that the state government is putting in place infrastructure to attract foreign investors as opportunity exists to build a gas fired thermal power plant in the state. In a chat with a National Daily, in Lagos, Udoh said, “There is an opportunity to build a gas fired thermal power plant designed to generate 500 megawatts of electricity into the national grid. Akwa Ibom State has the largest reserves of oil and gas in Nigeria. Any power generated is guaranteed to be purchased by the Federal Government. It is also possible to generate for a secluded area (captive power). The gas required to power the plants in abundance.” While noting that there were abundant rubber trees in the Akwa Ibom/Cross River belt, he said, “currently, all vehicle tyres used in Nigeria are imported. With a population of over 180 million, vehicles plying Nigeria roads are estimated to be in the region of 30 million, conservatively. Accordingly, an opportunity exists for the setting up of a tire manufacturing plant.” On the performance of Governor Udom Emmanuel, the commissioner said, “In just two years in office, Governor Emmanuel has implemented several people oriented socio-economic programmes and projects which have catapulted Akwa Ibom State into the premier league of states in Nigeria. Building on the foundation laid by his predecessors, Emmanuel is leading the state on the path of economic prosperity anchored on sustainable development. The cardinal objective is to transform the state into an industrial hub, a preferred destination for tourism
and a major food basket. The success level so far recorded was accentuated in a recent report of the Nigeria’s National Bureau of Statistics that listed Akwa Ibom as the second best Foreign Direct Investment, FDI destination in the country for the year 2016.” “Today, there are several visible footprints of industrialisation across the length and breadth of the state. In addition to the resuscitation of the Peacock Paint Industry and establishment of the Pencil & Toothpick Factories, two major factories; Electric Metering and Syringe Factories has been commissioned. The syringe factory, which is the largest in Africa, has a production capacity of 400 million syringes per annum, expandable to 1 billion syringes. It is noteworthy to add that the State Governor recently flagged off the construction of a Flour Mills and Coconut Refinery while ensuring the sustainable operations of the Akwa Prime Hatchery” Udoh said. Meanwhile, the Nigerian Electricity Regulatory Commission (NERC) has concluded plans to increase electricity tariff by 51 per cent. The commission indicated that it was awaiting the approval of the government before the implementation of the plan. It explained that the appropriate tariff for one kilowatt-hour of power should be N51, instead of the current N31.58. Mrs. Aisha Mahmud, NERC’s Principal Manager, Tariff, and Rates, who disclosed this in Abuja, added that the N51/KWH was arrived at based on the economic fundamentals considered when carrying out minor tariff reviews. Source: vanguard.ng
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ENERGY FINANCING
ALTERNATIVE ENERGY
Siemens-Led Consortium to Power Cross River State
Angola: Sonangol Achieves $ 1.7 Billion Savings in Three Years
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igeria’s Cross River state signed an agreement with a consortium led by Siemens to build a 750-MW power plant. The gas-based infrastructure will consist of 42 turbines manufactured by Siemens. Local authorities said in a statement that the contract would have a turnaround time of 18 months. But in the meantime, 40 MW will be delivered within the next three months. According to Ben Ayade, the governor of the state, this agreement is a dream come true. “I am pleased that the implementation of this project does not incur any initial costs for us. The main objective is to provide continuous energy to the people and soon Cross River will be part of the states
Ghana Gets 100M Grant from Germany for Its Renewable Energy Sector
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ermany has signed with Ghana a memorandum of understanding providing the West African nation €100 million to develop its renewable energy sector. The provision of these funds fall under the G-20 Compact programme which aims to ensure Africa’s sustainable development. The convention which looks at developing renewables and promoting energy efficiency also involves technical training. “Germany and Ghana are focused on strengthening competition on power generation and make the renewable energy sector a shining example, to reduce the cost of power generation, introduce open and competitive bidding and get best value for money from investors,” said Germany’s ambassador to Ghana, Christoph Retzlaff . The diplomat has added that his country was gradually moving from fossil to renewable energy, in regards to its environmental and economic advantages. For its part, Ghana recently announced that it wishes to produce 850MW of additional energy, leveraging on hybrid power stations, knowingly by integrating solar to its hydropower plants.
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onangol, a public oil company in Angola, saved $ 1.7 billion in spending cuts, which began in 2014 when oil prices began to fall till this day. The announcement was made via communiqué by its financial operations department. This performance of Sonangol is also attributable to the efforts of the new management, in place since June 2016, whose businesswoman Isabel dos Santos holds the reins. Between that date and today, it has put in place a program that has reduced the cost of producing a barrel of oil by 14 to 10 dollars. This alone saved more than $ 200 million, just 10 months after the new executive was installed. Sonangol, which has lowered
its production costs, hopes to attract more companies into the hydrocarbon exploitation of the country to increase production in order to cushion the shock on government revenues. To accomplish this, last week it undertook changes in its leadership, including, among others, Ivan de Almeida, the head of operations of Exxon Mobil in Angola, heading its E & P department. With a production of 1.5 million barrels per day, Angola is the second largest producer of oil in Africa.
BNP Paribas Commits To No Longer Funding the Oil and Gas Industry
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rench banking group, BNP Paribas has announced that it will no longer support companies whose main activity is the exploration, production, distribution, marketing of oil and gas from shale or tar sands. In addition, the bank will stop supporting projects related to the transportation or export of oil and gas, such as LNG terminals and pipeline lines, as well as those related to the exploration or production of hydrocarbons in the the Arctic region. This was made known in a statement issued on Wednesday, 11th October Cette décision, précise-t-elle, est conforme au scénario de l’Agence internationale de l’énergie (AIE), qui vise à maintenir le réchauffement de la planète en dessous de 2°C, d’ici 2100, afin de lutter efficacement contre le réchauffement climatique et soutenir la transition énergétique. “We are a long-time partner in the
energy sector and we are committed to supporting the transition to a more sustainable world. As an international bank, our role is to contribute to the energy transition and contribute to the decarbonisation of the economy. As we have announced, we are committed to working with energy partners who have made environmental issues a central part of their trade policies. “ Said Jean-Laurent Bonnafé, Managing Director of BNP Paribas. This situation is expected to have serious consequences for several oil and gas development projects around the world. It will exacerbate the difficulties faced by companies in the sector in obtaining financing, especially in this period marked by low oil prices and a gloomy market. The Bank has integrated environmental, social and governance factors in risk management for all of its financing and investment activities since 2010. It has budgeted $ 15 billion to finance energy projects renewables by 2020. In addition, $ 100 million is expected to be invested in start-ups specializing in energy transition. Courtesy: Ecofin Agency
Orient Energy Review Vol 6 No.11 November 2017 7
OIL & GAS PEOPLE
Bruce Burrows is Aiteo’s New GCFO
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iteo has announced the appointment of Bruce Burrows as Global Group Chief Financial Officer (CFO). Bruce brings a wealth of experience from different parts of the world in the oil & gas, power, mining, manufacturing, consumer products, finance and public service sectors. Most recently, he held CFO roles at Lekoil and Seven Energy respectively. Both are oil and gas exploration and production companies with a focus on Nigeria and West Africa. Prior to those roles, Bruce was for 14 years the Finance Director of JKX Oil & Gas Plc, a London-listed exploration and production company with interests in Ukraine and Central/Eastern Europe. Whilst with Ernst & Young in both Wellington (New Zealand) and London, Bruce focused on strategic advice and external audit across the energy, primary industries, manufacturing, consumer products and public service sectors. Bruce has also served on the Board of three further publicly listed natural resources companies including European Goldfields Limited, a resource company involved in the exploration, mining and development of mineral properties in Greece, Romania, and South – East Europe (the Company was listed on the AIM market of the London Stock Exchange and the Toronto Stock Exchange, before being acquired in 2012 by Eldorado Gold for approx. $2.4bn). His appointment takes effect from 18 November 2017. He will report to the Executive Vice-Chairman, Global Group Aiteo.
8 Orient Energy Review Vol 6 No.11 November 2017
South Africa Gets New Energy Minister
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even months after the latest ministerial reshuffle, South African President Jacob Zuma is once again changing the energy minister. In a statement issued by the Presidency, President Zuma announced that the department of energy will now be headed by David Mahlobo, axing Mmamaloko Kubayi. In reaction to the news, the DA leader Mmusi Maimane said the appointment of Mahlobo is a thinly-veiled attempt to get the controversial, multi-billion rand Russian nuclear deal back on track. Mahlobo was previously the state security minister. Cabinet reshuffle In justifying the reshuffling, Zuma said after careful consideration he decided to make the following changes to the National Executive: – Hlengiwe Mkhize has been appointed as the Minister of Higher Education and Training – Ayanda Dlodlo is the Minister of Home Affairs – Mmamaloko Kubayi is the
Minister of Communications – David Mahlobo is the Minister of Energy – Bongani Thomas Bongo is the Minister of State Security – Buti Manamela is the Deputy Minister of Higher Education and Training The ANC also commented on the shocking announcement, insisting that the organisation’s top six were also in on the decision. “I thank the former members of the National Executive for good service in their previous portfolios. I wish the members who are assuming new portfolios all the best in their new responsibilities,” said the President. While the President’s decision is final, this announcement has left many abuzz and social media buzzing with different views on the matter. This announcement comes hot on the heals of Eskom obtaining environmental approval to construct the Nuclear-1 Power Station and associated infrastructure at the Duynefontein site in the Western Cape.
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LOCAL CONTENT
NCDMB Set to Launch Research & Development Council for Nigeria’s Oil Industry By Margaret Nongo-okojokwu
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research and development council will be constituted for the oil and gas industry and it will integrate research initiatives of stakeholders and steer them towards achieving tangible and beneficial outcomes, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has said. He disclosed this in Lagos at the maiden Nigerian Oil and Gas Research and Development Fair and Conference, organised by the NCDMB, adding that members of the council will include representatives of operating and service companies, relevant agencies of government, the academia, Nigerian University Commission and top research centres in the country. According to the Executive Secretary, research and development (R&D) efforts by stakeholders needs to offer real value and relevance to the oil and gas industry so that companies would support and fund them. He said the Board would change the framework of executing and funding research in the industry, noting that R&D would henceforth form part of deliverables on projects. “R&D
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will be treated like capacity building initiatives and we will close gaps. The Board will fund good research projects; companies could also be asked to take up research ideas and fund. We want quick wins and such research must solve problems and get to deployment stage.” He assured that oil industry’s research interventions would be very focussed and devoid of distractions. “We will deal with this the same way the oil and gas industry deals with its business.” Speaking further, Wabote said “the Board will establish research clusters covering engineering studies, geological and physical studies, local material substitution and technology adaptation in four universities in Nigeria. He added, “we will utilise Fairs like this to identify top-5 research presentations for development finance consideration by the operators and other government agencies. Already, we have selected five foremost researchers in the oil and gas sector that shall be awarded a pilot grant of N56million. This will assist in developing their inventions further to commercially acceptable standard products.” The Executive Secretary identified R&D as one of the key elements
needed for an enduring Local Content development, listing other elements to include the existence of regulatory framework and capacity building. Other elements are structured capacity building, periodic gap analysis and provision of funding and incentives. He regretted that Nigeria currently face many pressing R&D challenges, including inadequate facilities and infrastructure, weak framework for protection of intellectual property; lack of funding and low technological development and inadequate educational infrastructure and curriculum to support and foster innovation in our higher institutions. Other challenges include inability to retain most of the best brains in-country and inability to employ or re-integrate those sponsored by government on scholarships to apply knowledge acquired. In his speech, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, represented by his Senior Technical Adviser, Mr. Gbite Adeniji, stated that the Nigerian Oil and Gas Industry had operated for about 60 years but adequate attention was previously not paid to developing local research capabilities. He commended the Board for taking steps to implement aspects of the Nigerian Content Act that have do with R&D. “This is important because of the huge importance of R&D in any growing economy; the amount of capital flight from the R&D activities and enormous benefits of domesticating industry research and the impact on other critical sectors of the economy,” he said. Chairman Senate Committee on Upstream, Senator Tayo Alasoadura, who represented the President of the Senate, Dr. Bukola Saraki, stated that developments in the global oil and gas industry in the past three years made it imperative for stakeholders to indigenize research and development capabilities.
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LOCAL CONTENT In his goodwill message, Meanwhile, the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCo), Mr. Bayo Ojulari, while commending the NCDMB for taking the bold step emphasised the need to take R&D one step further, by moving from Research and Development to Research to-Deployment. He further opined that until technology is being deployed and utilized, it will create no meaningful impact. “we need to take this a step further, from Research and Development to Research to Deployment, Let’s move from research to deployment, whereby all those who have invested talent, energy and resources in return can get value into that investment; until that technology that we developed can be deployed, there’s really no value added and there’s no traction”. “Let’s make a difference moving forward, lets amplify on actions, enough of the talks and complains,” The SNEPCo Boss stressed. Speaking in the same vein, the Managing Director of Schlumberger and Secretary of the Petroleum Contractors Trade Section (PCTS), Mr. Ifeanyi Nwagbogu explained that R&D initiatives globally had been extended to include demonstration and deployment. He stressed the need to demonstrate and deploy most of the research that had been conducted in the Nigerian oil and gas industry. “We need to convert our R&D to tangibles that can be useful in the market.” He said Schlumberger collaborates with the R&D Division of the Nigerian National Petroleum Corporation (NNPC), adding that his company took two samples to the NNPC’s Laboratory for analysis, two months ago, rather than taking them abroad.
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LOCAL CONTENT
Local Content is not CSR, it is Business; Wabote Tells African Leaders Nigeria to lead Drive for Local Content in Africa By Margaret Nongo-okojokwu
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he Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Kesiye Wabote, has advised African countries to see local content as business and not as Corporate Social Responsibility (CSR) of companies, if they intend to achieve success in the initiative. Speaking at the 5th Africa Local Content Forum on sidelines of the 24th Africa Oil Week held recently in Cape Town, South Africa, Wabote insisted that local content is critical in driving growth and development in an economy and should be seen as purely business and not CSR. He said, “Local Content is not CSR, it is business, in the sense that if you demand local participation in a business, whoever is giving you that opportunity must get value from that demand he has made. It is business, they would expect reward out of it. “CSR is what companies do without necessarily expecting reward. They do it to benefit the lives of the people; to give back to them., but in this instance, because local content, whoever is giving it to you, expect huge benefits out of it, it is not CSR, it is purely business. “That is the message I also want to pass to my various colleagues in sub-Saharan African as a whole, to realise it as a business. Once you real-
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ize it as a business, the rate at which you would succeed is enormous. But once you see it as CSR, the likelihood of success is not there.” To give vent to this, Wabote further stated that Nigeria is planning to organise a forum for heads of local content programmes in sub-Saharan Africa to highlight opportunities inherent in the adoption of local content. “It might not be a conference. We might start with just a meeting of the heads of local content of those countries and to develop a strategic pathway forward, before we start to talk about conference. Though it would not be a conference, it would be a deliberate meeting of the heads of those agencies and through that meeting we would be able to fashion out what the next steps are to be able to embrace the policies of local contents,” he noted. Wabote argued that local content is an existential imperative for oil-producing nations, adding that the benefits of local content supersedes the boundaries of Africa, He averred that efforts must be geared towards using African resources for the benefits of Africans; hence the need to develop local capacity in every sector of the economies of Africa, a point Nigeria is poised to help prove in the continent.
He said, “That is why the drive in Nigeria, and most African countries have seen the successes we have made in Nigeria and they are eager to learn from our successes and challenges in order to perfect their system, because there is no point in reinventing the wheel if there is a process already in place. “We want to take the initiative as Nigeria to drive this agenda, to get ourselves together in a very small group and help all these other countries that want to focus on local content, by showing them a sustainable local content process. “Like I always say, Local content is not a ‘one size fit all’; it is also not a sprint, it is a marathon. It is important to learn from people who have started the journey to see how you can build on their successes to move the local content agenda.” Wabote added that following the achievements Nigeria had recorded in local content; it had set for itself a strategic target over the next 10 years and intends to see through the programme. He said, “Part of my agenda is to foster that African integration in terms of pushing for local content to benefit local people, particularly in the oil and gas sector. And like I also know in Nigeria, we want to extend local content successes to other sector of the economy. Recently, the government issued some executive orders in terms of local content and procurement. “These are all geared towards ensuring that Nigerians participate and benefit from their natural resources and also create employment for our people, which is very key. We have teeming youths in Nigeria, most of them are unemployed. The strategy is how do we get them engaged? How do we retain the much-needed foreign exchange to move ahead, to move our economy forward? “This present administration led by President Muhammadu Buhari, is set to ensure that we create that employment base through diversification of the economy beyond oil and gas,” Wabote emphasised
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LOCAL CONTENT
Aveon Offshore Boost Local Content with New 257 Tons Egina Facility By Jolly Adjevwe – Port Harcourt
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VEON Offshore has unveiled its 257 tons Egina Subsea Production Manifold in Port Harcourt, Rivers state; the company has also been upgraded from a sub – contractor status to that of a full EPC contractor, earning it a place in the league of the big players in the oil and gas industry. The success which Aveon Offshore limited has made in the fabrication and load – out of the subsea structures which include six manifolds with associated suction piles, various subsea tree frame elements, jumpers and control system of Egina SPS module, shows the reasonableness of the decision to have supported FMC’s sub-contracting the project to Aveon Offshore Limited, adding that, the local sub-contractor that fabricated the Egina Manifold which is about 40% of the SPS scope has been ahead of time in respect to compliance with the provision of the Nigeria content Act, By this, the Egina Project has the highest level of Nigerian content.
Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Dr Maikanti Baru said the development has reaffirmed the commitment of the company to the implementation of Nigerian Content Act. Oil Pipe He said the six manifolds constructed by Aveon Offshore
with each weighing 257tons were the heaviest so far built in Africa. “The Egina 6 slots production manifolds are the first of its in Nigeria. Subsea production manifold deployed for previous deep water projects has maximum 4 slots. “By today’s event, we have reaffirmed our commitment to the Nigerian Content Act. We celebrate today a clear demonstration of the growing efficacy of the Nigerian content act.’’ Dr Baru said it was heart warming to note that despite the over four million man hour on the project, there was no loss time injury and the fabrication firm worked within the limit of the budget. He further commended the Department of Petroleum Resources, Nigerian Content Development Monitoring Board, NCDMB, National Petroleum Investment Management Services, NAPIMS and other stakeholders for the support to the fabrication firm to achieve the feat. Earlier, Chairman of Aveon Offshore limited, Mr George Tein said his company has proved those who initially doubted if they could handle the construction wrong, adding that it was a major
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success that they delivered the project on schedule. Also Speaking at the ceremony, Engr. Simbi Kesiye Wabote Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), commended the efforts of Aveon Offshore for the giant strides it has made in its operations, and as regards the expansion to meet the demands of the oil and gas industry. In his words, “the company can now be counted among the heavy fabrication yards in Nigeria with a fabrication capacity of 10,000 tonnage per annum and staff strength of over 600. It is gratifying that the company was given the opportunity and it did not let us down”.
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LOCAL CONTENT
He stressed, “I want to also appreciate the IOC’s for their support in the successful implementation of the Nigeria content and encourage them and other oil and gas service providers to remain resolute, have continuous faith in the ability of local companies to deliver as at when due”. Pointing out that, the board will soon embark on the categorization of fabrication yards and other major services Companies for specific work scope in a way
that will facilitate contract opportunities that would enhance transparency and further boost investors’ confidence and to shorten contracting cycles. Also speaking at the event, the Managing Director, Total E&P Nigeria Ltd. Mr. Nicolas Terraz said that Total is proud of the achievements of Aveon Offshore. The MD who was also represented by Mr. Ahmadu Musa Kida, emphasised that these
achievements are also similar to other Nigerian service companies on different scopes of the Egina Deepwater project, adding that, the “Egina project has provided us a good opportunity to demonstrate our capacity and maturity since the enactment of the Nigerian oil and Gas industry content development Act; with this great fact, Total is now on its way to increase Nigeria’s oil production next year”. Ms Christen Anderson, Managing Director, TechnipFMC Technologies Norway, said that, “the Egina project is the biggest manifold project the Company has ever delivered, while the life time of the manifold is about 25 years. In the construction of the manifold, we never compromise quality and in the 5.5 million man hours spent, no one was lost, safety and quality delivery is our watch word and today we are celebrating the good work of this laudable mile stone noting that, 81.2 percent of the engineering work for the project was done in Nigeria in collaboration with all parties, Total, Aveon off shore limited, Petro bras, CNOOC, there by adhering to the full provision of the Nigeria content Act, while over 1,000 employees of the company are from Nigeria.
Eterna Oil Plc Secures Exclusive Right to Produce and Distribute Castrol Lubricants
- Invests N3bn on Nigerian Plant By Margaret Nongo-okojokwu
From L- R: Nnamdi Obiagwu, Head of Lubricants - Eterna Plc, Irene Quero, Regional Marketing Director Europe and Africa - Castrol, Stan Dewing, Regional Sales Manager Africa - Castrol, Mahmud Tukur, Managing Director - Eterna Plc, Rob Bowen, Head of Technology Africa - Castrol, Akosua Acheaw, Marketing Manager Castrol and Matteo Antonelli, Sales Manager - Castrol www.orientenergyreview.com
Orient Energy Review Vol 6 No.11 November 2017 13
LOCAL CONTENT In its drive to promote local content policy in the nation’s oil and gas industry, Eterna Oil Plc recently secured the exclusive right to blend and distribute Castrol Automobile and industrial lubricants at its Sagamu, Ogun State facility. The franchise, a step further in the business relationship between the two companies is said to have culminated from its long-term business dealings, especially from the 2015 distribution agreement with Castrol. Speaking at the official launch of the made-in-Nigeria Castrol lubricant, the Company’s Managing Director, Mr. Mahmud Tukur, said that the Nigeria’s local content drive in the oil and gas sector received a major boost as the company succeeds with its business expansion to produce variants of Castrol oil thereby bringing an end to the importation of the variants into the country. And that the new Castrol GTX variant was developed in response to specific market requirements for Nigeria and is positioned as an affordable brand that meets manufacturer engine specifications. According to him, the Castrol Automobile lubricant which comprises of four products - Castrol GTX Essential, Castrol MAGNATEC, Castrol EDGE and an entry-level engine oil Castrol Motor Oil is selected to serve a wide spectrum of Nigerian consumers. The Managing Director said, “We, at Eterna plc, are extremely proud to be the exclusive and authorized distributor of Castrol Lubricants. A key milestone is the production of Castrol GTX Essential at our plant. This completes the robust engine lubricant portfolio suitable for use across Nigeria’s vast range of cars both old and new, and to suit our variable fuel and road conditions. “In August 2017, the latest member of the Castrol GTX family “Castrol GTX Essential” was produced in Nigeria. This Engine oil was developed in response to specific market requirements in Nigeria/Africa and is an example of how globally developed technology is brought to bear in ways that address local conditions, meet engine manufacturer’s specifications whilst remaining affordable. The managing Director also disclosed that the company has invested over N3 billion to further expand its lubricant oil plants operations, he said that Eterna oil expands its investment in the sector to boost production of variants of Castrol oil which was hitherto imported. He said that Eterna was importing
and distributing Castrol lubricants in Nigeria, a relationship that later developed into Eterna becoming Castrol’s authorized distributor for Marine, Energy & Chemicals products. Then the company it set up a robust marketing structure with increased market sales, which culminated in the manufacturing of the lubricants locally through a third-party facility on an interim basis. The Eterna boss said that the company has now commenced local production of Castrol oil in Nigeria, adding that the aim was always for the company to own its blending facility. According to him, our dream became a reality when we secured 940,000 dollars loan from the International Finance Corporation (IFC) in 1995 to construct what was to eventually become one of the best and most modern lubricant manufacturing plants in Africa. “Castrol designed the plant and provided the required technical support during construction ensuring that the plant met global standards”. Eterna currently operates a 15,000, metric tons, MT, capacity state-ofthe-art lubricant manufacturing plant, which is fully owned through its subsidiary Eterna Industries Limited, which is one of the only 3 Castrol accredited blending plants in Africa. “The company has invested over N3 billion to further expand lubricant oil plants operations in Nigeria as part of President Muhammadu Buhari’s agenda to promote the local content initiative,’’ he said. According to him, leveraging the relationship, Eterna established a strong brand presence and later built its 45,000MT Capacity Lube Oil blending plant in Sagamu in 1997. “This new facility enabled Eterna to locally blend select Marine lubricants in drums. “In 2015, Castrol and Eterna commenced discussions on the inclusion of the Automotive and Industrial range of Lubricants as part of an extended offer to the Nigerian market. Now in 2017, Eterna is the authorized distributor of all Castrol Lubricants grades in Nigeria across Automo-
tive, Industrial, Marine and Energy. According to the MD, Castro believes in finding opportunities to collaborate and build partnerships in countries to achieve success. Adding that the long relationship with Eterna as an established distributor for marine and energy grades gave Castrol the confidence to appoint them as distributors for the Automotive range as well. “Castrol brings world-class lubricants to the market to help provide superior vehicle protection to motorists, reducing downtime. The toll blending, distribution and selling would create job opportunities. “We are also encouraging small entrepreneurs to set-up kiosks selling lubricants. We will also be training mechanics to enhance their skills and deliver better service to their customers, he said. Eterna’s official market entry for Castrol commenced with a launch on Friday, 6 October 2017. The marketing team started with hosting a series of mechanic road shows targeted at local mechanics and designed to familiarize them with the range of Castrol products. This is in addition to Eterna service stations and Castrol-branded kiosks will be instrumental in reinforcing the partnership.
Mahmud Tukur, Managing Director - Eterna Plc 14 Orient Energy Review Vol 6 No.11 November 2017
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EXPLORATION &PRODUCTION
Cote d’Ivoire: Tullow Acquires 90% Stake In Four Onshore Exploration Blocks
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ritish Tullow Oil announced the acquisition of a 90% interest in the CI 518, CI519, CI301 and CI302 Ivorian onshore blocks covering a total area of 5,035 km 2 , west coast of Abidjan. Petroci, the Ivorian oil
and Gas Company, controls the rest of the shares on these perimeters. In a statement, the company said it plans to launch exploration work early next year. And to emphasize that these blocks are located in a proven oil
system with multiple deposits of hydrocarbons that have previously been exploited, especially in the Eboinda region. “If commercial discoveries are made in the area, they will lead to a relatively short and inexpensive production process but above all they will contribute to the maturation of the Ivory Coast’s oil industry, “ the statement said. With this acquisition, Tullow is strengthening its positions on oil and gas resources, which abound in the Ivorian sedimentary basin, which remains under-exploited. The company is already present on the Espoir oil field, operated by Canadian Natural Resources (CNR). Côte d’Ivoire seeks to increase its oil production from 45,000 to 200,000 barrels per day by 2020, and Tullow’s ambitions for these blocks are expected to play a crucial role in achieving this goal. In addition, Energy Minister Thierry Tanoh is committed to attracting exploration investors to boost the sector in the short term.
Total Enters Hydrocarbon Exploration Sector in Guinea-Conakry
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rench oil tanker Total and the National Office of Petroleum of Guinea (ONEP) have just signed a Technical Assessment Agreement (TEA) covering an area of approximately 55,000 m 2 in deep water at off of Guinea, reports a statement www.orientenergyreview.com
from the French group on 9th October. Under the terms of the agreement, Total has one year to carry out an assessment of the real potential of the area on the basis of existing data. It will then be able to select three licenses to undertake an exploration
program. In addition, it will strengthen the technical capacity of NAPO by training its officers to develop their technical skills in E & P. “By taking a position on a new, little-explored area, Total is pursuing its exploration strategy for deep offshore potential pools,” said Kevin McLachlan, Director of Total Exploration-Production. It should be noted that in the MSGBC basin (Mauritania-Senegal-Guinea-Bissau-Conakry), this is the second major incursion of the French oil tanker in less than a year, after that of Mauritania where it acquired 90% on block C-7 last May. It is also present in Senegalese waters. As a reminder, Total is the leading distributor of petroleum products in Guinea with a network of 150 service stations.
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EXPLORATION &PRODUCTION
NAPE Seeks Road Map for Oil Industry at NAICE 2017 oil price, dwindling oil revenue, there have been strident calls for the nation to diversify her economy from the monolithic economy and absolute dependence on oil into other areas to sustain the nation in terms of revenue generation.”
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he Nigerian Association of Petroleum Explorationists has said it will focus on a road map for the nation’s oil and gas industry at its 35th Annual International Conference and Exhibition as the government’s continued efforts to diversify the economy. NAPE said the conference would also throw its searchlight on survival strategies for petroleum exploration and exploitation in a challenging environment and examine the effectiveness in the existing policies to drive growth in the industry so as to come up with initiatives for the development of road maps and new policy initiatives. The President, NAPE, Mr.
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Abiodun Adesanya, said at a briefing in Lagos that the major critical issues in the Nigerian energy industry would be discussed during the conference, scheduled to hold in Lagos from November 19 to 23, 2017. He said, “Nigeria currently maintains an economically unstable negative net energy trade balance, in which the nation exports virtually all the crude oil produced and imports a substantial part of its refined petroleum products needs while under-utilising other energy sources such as bitumen, coal, lignite, and shale oil, thereby leading to a mono commodity economy that is largely dependent on crude oil export. “Against the backdrop of low
Giving details of NAPE’s 35th International Conference and Exhibition, Adesanya said Nigeria should diversify its economy to agriculture as well as the Mining Sector; as food is a basic necessity of life and the mining industry has some similarities with the Oil and gas industry. According to him, “the Conference also throws its searchlight on survival strategies for petroleum exploration and exploitation in a challenging environment and also examine the effectiveness in the existing policies to drive growth in the oil and gas industry so as to come up with initiatives for the development of road maps and new policy initiatives. Adesanya also said that Ibe Kachikwu, Minister of State for Petroleum Resources, Kayode Fayemi, Minister of Solid Minerals Development, Peter Obi, former governor of Anambra State, Jeffrey Ewing, Chairman/ Managing Director of Chevron Nigeria Limited and Maikanti Baru, Group Managing Director, Nigerian National Petroleum Corporation, NNPC, are some of the speakers at the event.
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Orient Energy Review Vol 6 No.11 November 2017 17
INTERVIEW
‘Our Host Communities Are Critical Stakeholders in the Work We Do’ - Avuru developed those assets which are currently producing over 70,000 barrels of oil and about 300million standard cubic feet of gas a day. Tell us about trans-forcados. We heard that it just came up on stream after the vandalization. Now that the pipeline is up and running, how badly were you hit and what are your projections with this recent developments?
A
ustin Avuru is an outstanding professional with more than three decades experience at top management level in the Oil and Gas Industry. Currently, Chief Executive Officer (CEO) of Seplat Petroleum Development Company PLC; he spent 12 years at the Nigerian National Petroleum Corporation, NNPC and held various responsibilities as well-site geologist, production seismologist and reservoir engineer. In this interview with Orient Energy Review-OER’s Editor, MARGARET NONGO-OKOJOKWU on the sidelines of the 24th Africa Oil Week, held in Cape Town South Africa; the former Exploration and Technical Manager at Allied Energy Resources speaks on developments in the petroleum industry, the Gas Master Plan, petroleum pricing and sundry issues. It is OER’s exclusive. Excerpts! Just by way of introduction, can you just tell us about yourself briefly? My name is Austin Avuru. I am the CEO of Seplat. I have been CEO since we founded Seplat in 2009. And as you know, Seplat started out with assets acquired from Shell, Total and ENI back in 2010 and we have
We were badly hit, about 17months of highly restricted production and it showed in our results. So our full year 2016 was a huge loss for us and even up to the third quarter of 2017. We are just recovering from the accumulated losses of the previous year. As you saw in our third quarter results, even though in the third quarter, we made a profit and overall we are still at a modest loss situation; all of that is an accumulated impact of almost non production for about 17months. So it took a very big hit on us. Would you be making alternative plans in the future? Yes. One of the biggest lessons from that incident is the fact that as part of our internal plans now, it doesn’t matter which field we develop, we must create redundancy in evacuation. So in the West apart from Trans-Forcados, we are working hard to finalize and commission the Escravos pipeline. And we are also building the facility that enables us to badge out of the Warri refinery. So when all of these are in place, it will mean that at any point in time, we will have at least two evacuation options and that is what we will do even in our development in the East in OML53. From day one, we will make sure that we create redundancy in evacuation because that has turned out to be highest risk in our business. We are no longer where we used to be in terms of gas reserve because it has
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depleted and there is even more pressure for LPG consumption in our homes besides our obligations to LNG contracts and power generation. What is your advice to the government on new discoveries? I think with the prevailing domestic price for gas and combined with LNG opportunities, there is a connection case now for gas discoveries, exploration and development. Before now, nobody paid any attention to any gas discoveries. Today gas assets that come with sizable gas volumes are even attractive to us as a company. So we are beginning to get into a pricing regime where there will be deliberate exploration and development of gas resources. Again the lesson from this is that all the former policies that emphasize punishment for gas flaring yielded very little result.. But now that a commercial case is being made for gas development, you are going to see efforts to increase our gas reserves. How is this different from the Gas Master Plan? This is part of the Gas Master Plan; the Gas Master Plan was to develop processing capacity for gas and then supply gas into the domestic market. It hasn’t quite work out in the sense of having CPF- Central processing facilities. At Seplat, we have developed substantial capacity to process gas. Again, like I said, it is driven by the fact that the pricing regime for gas today makes a commercial case for such things. So in a way, the Gas Master Plan will eventually play out to the extent that you will be seeing people making commercial development for gas and sending them into the domestic market. The LNG Act and the move by the legislature to tinker with it due to huge budget deficit as well as the request from the Niger Delta communities would impact on the industry for good. Can you throw more light on this? I think government regulation on pricing is falling away gradually. Most of our gas contracts are willing buyers and willing sellers. www.orientenergyreview.com
INTERVIEW That is not our territory; our entire gas business is focused on domestic gas supply. So the LNG and the few issues that they have with the National Assembly and NIMASA, we try not to delve into that. Price of gas here compared to international market is huge. How is Seplat getting round the disparity and government regulation on pricing? It is really the domestic supply obligation that comes under the government regulated price of $2.50. And even at that, the DSO prices are supposed to gradually phase into a willing buyer, willing seller regime. It is this pricing regime which emphasizes a commercial structure rather than a regulated price that is driving some of the investments you are seeing in gas development and I hope that will continue. Nigerian infrastructure in terms of gas development still lags behind; what happens to the Gas Master Plan and how best do you think we can achieve the desired end? And what is your take on the virtual pipeline and the recent modular structure that is being talked about? The pipeline infrastructure for gas development is not that bad. If you tie in the OB3 which is under construction and would probably be ready mid next year and the ELPS loop that would increase that volume from 1BCF to 2BCF, then we would be capable of delivering about 3BCF of gas into the critical areas of demand, which is not bad and the rest would be to tie in ancillary pipelines into that to deliver volumes. The real emphasis would be how to manage the pipelines in future. . The question is always asked whether the NNPC subsidiary has the capacity to manage that entire complex infrastructure. Virtual pipeline would always be there. If you compress gas or if you freeze it in the case of LNG, it can deliver substantial volumes by trucking to areas where they are needed and a few companies are doing that. But usually, virtual pipelines cannot deliver the kind of volumes that pipelines deliver. So they are only meant to supplement the pipeline infrastructure and deliver gas to places that are remote from pipelines. Is Seplat utilising virtual pipelines? No, virtual pipelines owners are our customers; they take gas from us and deliver to customers. So the issue of pipeline vandalism doesn’t affect, you. Obviously you have structures in place. How do you ensure security? Vandalism of gas pipelines has also been quite minimal. Crude oil pipelines are the ones most vandalized. . But also the real pipeline network for distributing gas is not part of our infrastructure; we sell our gas at our gates and customers have to negotiate with Nigeria Gas Company that practically runs the backbone pipeline infrastructure t to deliver the gas to them and that is the way the structure is.
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Do you really see us moving to gas-driven automobile in Nigeria? We have to be careful. A lot of things that can work very smoothly in Europe and in the United States may not work here. We have to be careful because of infrastructure deficit in our place. You look at electric cars and the ease with which people can plug in and charge their cars; you need to have that level of infrastructure here in Nigeria for such things to work. We have been talking about gas driven cars, CNG cars and so on. We have to have enough stations where people can go in and recharge their gas. It is a lot easier for people to just buy gasoline at petrol stations. It is about infrastructural development and making sure that those things can run smoothly in Nigeria and we are not there yet.
Are you saying Seplat’s community engagement or stakeholder’s involvement is very critical to the success of oil and gas businesses? It is the failure of that over a long period of time that resulted in the crises you are seeing now in the Niger Delta. If those engagements had been genuine over the past 50years and if those communities actually saw their future, saw any hope in the success of the oil and gas industry in their environment, then you won’t have the crises you have now. Does it relate to the Petroleum Industry Bill regulations that have been passed?
So with the gas reserve we have in Nigeria, don’t you think if we put CNG driven cars on the motion, it will encourage more of exploration activities in terms of gas discoveries?
It doesn’t matter what the laws are; the laws, even the petroleum Act of 1969 always made reference to how you treat the communities, it is about the implementation, it is about how honest all of us are at every level from the government to the operators, how honest are we in really integrating those communities into the business we do. If you move around those communities, you’ll ask yourself, do these communities look like communities that have seen 60years of oil production and a lot of wealth generation? They don’t. So it is taking a long time for the impact to hit all of us but it is never too late to go back to the drawing board and make the engagement more meaningful which is what we do at our individual levels.
There is enough domestic demand for gas now even just power and the other industries that we are not meeting the demand. So that is what I am saying. I don’t see what would be driving us into CNG cars; it is not such a top priority. There is no reason to focus on that so much now.
Seplat is one of the independent companies in Africa that is seen as one of the champions of both local content and how independents are succeeding in Africa. So what would you say is that magic wand that Seplat has been using to ride on over the years?
How have you managed to stay immune to direct impact from community restiveness and what has been that winning strategy?
There is no magic. We set up a company from one day with emphasis on proper governance, so it wasn’t by chance that we were listed on the London Stock Exchange just less than 4years after we set up the company, and being listed at the main board in London stock exchange comes with the big challenge of running a company properly to international standards. So those were our aspirations from the beginning and those are the things we have done over the past 7years to build a company that is here in the long haul. Whatever you see happening with Seplat wasn’t some kind of magic wand, that was the plan from the beginning and it is still work in progress.
How soon can we get there? I don’t know. I don’t even know if there is a race to get there .We still have to develop the basic infrastructure in which just to drive gasoline cars; so we are not at the point where we have to be racing to get there now.
Our community relations policy from day one has always been a win-win policy and so we are at peace with our community because they see themselves as stakeholders in our business. That is the way we designed it from the beginning. We are already well set up in Sapele with our base office before this whole talk of about companies moving to the areas where they are operating. So we have not built our policies on tokenism. We have built our policies on genuine desires to make the communities our stakeholders and that has worked for us. That has been our strategy. What is the strategy? That is what I said that they have always been stakeholders in our business; that is the way we designed it from the beginning; it is not tokenism; do one or two things just to make a point, No. And when they are stakeholders in your business and they see the benefits of your continued business in their lives, they won’t attack you and that is what has worked for us.
What is your advice to smaller companies who are looking up to your company for direction? It is all about governance and governance takes a lot of discipline; it takes a lot of sacrifice. It is easier to cut corners; it is easier to make money by cutting corners. When you set out not to cut corners but to set the proper governance structure, in the long term, you will reap the benefits.
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DOWNSTREAM
Glencore Set to Buy $973m worth of Assets from Chevron
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ining giant, Glencore has entered into an agreement to purchase 75 percent interest in Chevron South Africa, as well as a 100 percent stake in Chevron Botswana at a cost of $973 million. The deal, comprises of interest in Chevron Group’s manufacturing, retail and industrial supply business in South Africa and Botswana, a release by Glencore said. It will also include Chevron’s refineries, pipelines and petrol stations in
the two southern African countries, which made a combined pre-tax profits of $138millliuion, last year. The remainder of the business in South Africa will continue to be held by its current owner, Off The Shelf Investments Fifty Six (OTS), a group that was encouraged to buy up assets under South Africa’s economic empowerment rules designed to support historically impoverished communities. “Glencore believes the assets provide
an attractive downstream opportunity for its oilbusiness. The acquisition will include undertakings to retain the local management team and workforce,” the statement said. The consideration will be payable in cash on closing and will be funded from Glencore‘s own cash resources, it added. It added that, Glencore intends to manage its overall oil asset portfolio to ensure that, including this transaction, net additional capital investment is limited to less than US$500-million over the next 12 months, consistent with the group’s conservative financialframework targets. Chevron in 2016 announced plans to sell its stake in Chevron South Africa, which operates a 110 000 bl/d refinery in Cape Town. It agreed, in March 2017, to sell its stake in the South African and Botswana assets to China’s Sinopec for nearly US$1-billion. However, OTS has since exercised its pre-emptive right to acquire the assets from Chevron. Glencore will support OTS as a technical and financial partner during the acquisition process. The remaining 25 percent interest in Chevron South Africa is held by an empowerment partner.
Nigeria to Conclude Refineries Repair Processes by 2018 - Kachikwu ...Country to Attain Self Sufficiency in 2019
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igeria’s Federal Government has disclosed that it would conclude the selection processes and announce the chosen private companies for the repairs, revamp and maintenance of the country’s three refineries in the first quarter of 2018. And that with the joint capacity of 450bd of the three refineries along with Dangote refinery which is expected to come on stream with between 150 to 200bd in the last quarter of 2019, Nigeria will attain self-sufficiency in refined petroleum for domestic consumption. Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had at the Offshore Technology Conference (OTC) in Houston,
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Texas, hinted that the government would in September 2017 reveal the new investors that will put in private money to revamp the refineries in Port Harcourt, Warri and Kaduna. “When we came on board, the refineries were not working but as we speak, we have sizeable investment portfolio for them to an extent that we don’t know who to partner with for the investment. By September, we will unveil the investors for the refineries,” the minister said. However, speaking at the 24th Africa Oil Week in Cape Town, South Africa recently, the minister said that government was yet to conclude the selection process, but that it hopes to announce the selected companies by January or February 2018. “We are almost at the threshold of finalizing the selection. The response of private investors is enormous. As at today, about 26 companies have shown interest to refurbish the refineries “Presently, we are reasonably close. First, Dangote refinery is moving on very steadily and should be on stream by last quarter of 2019. That is enough to meet local needs. The other three refineries have the capacity of 450 barrels.” Recall that Nigerian National Petroleum Corporation (NNPC) had on April 19, 2016 issued tender seeking investors to jointly fund the repairs and the operations of the refineries. This step however ran into a hitch when the House of Representatives called for a halt to the process stating that government’s privatisation agency, the Bureau of Public Enterprises (BPE), was not involved. Thereafter, the problem was said to have been resolved after and was followed with a presidential approval, granting NNPC in October 2016 to engage credible financiers to repair, revamp and maintain the three refineries.
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Vitol Says Oil Deal with Noble Group is ‘Complicated‘
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itol Group’s negotiations to buy Noble Group Ltd.’s oil trading unit are “very complicated” and may not end in a deal, the chief executive officer of Vitol said, adding to pressure on his Hong Kong-based rival. The sale of the oil business is crucial to the survival of Noble Group, once Asia’s largest commodity trader. It is rushing to sell the unit in order to pay back about $1 billion of debt under its secured credit facilities, of which the largest matures in mid-January. “We’re engaged; we have been talking to Noble,” Ian Taylor told Bloomberg TV on Wednesday in the first public confirmation by the world’s largest independent oil trader that it is bidding for its rival’s business. But he warned that the talks may not end in an agreement. “It’s a very, very complicated deal. There are some technicalities,” he said. “It’s very difficult to know exactly how that’s going to end, I’m afraid.” Asked whether the stumbling block was price, he replied that it was “more the overall terms and conditions” of the deal. A spokeswoman for Noble Group in London declined to comment. Recently, its shares were unchanged at 38.5 Singapore cents at 9:26 a.m. in the city-state. The stock has lost 77 percent in 2017, extending a two-year slide. Bloomberg reported last week that Vitol was in advanced talks to buy the business, which trades about 2.5 million barrels a day of crude and refined products. Stumbling Blocks But the talks have been complicated by issues including how much of the sale price should be paid into an escrow account, according to people familiar with the matter. An earlier deal to sell Noble’s smaller gas- and power-trading unit to
Mercuria Energy Group Ltd. reaped less than anticipated as Mercuria paid 45 percent of the total sale consideration into an escrow account. Noble’s negotiations with its lenders have also complicated the oil sale, the people said. The trader has a covenant waiver on a $1.1 billion credit facility that will expire at the end of this week unless Noble can secure an agreement to extend it. What’s more, while Vitol is keen to acquire some parts of Noble’s business, such as a long-term contract for shipping via the Colonial pipeline, it is less interested in other loss-making businesses that would probably have to be shut down or sold, the people said. Noble is insisting on selling the unit as a whole. “They’ve got lots of businesses,” Taylor said. “They obviously are looking for a clean deal.” Initially, Noble Group had said it was aiming to announce an agreement by the end of September. Noble Group has been under increasing pressure since May, when a surprise trading loss compounded a long-running crisis that saw its market value collapse by more than 90 percent and its bonds tumble to less than 50 cents on the dollar. The company warned of the risk of bankruptcy at two of its major subsidiaries in audited accounts filed in recent weeks in the U.K. and Singapore. In particular, it highlighted in a filing by subsidiary Noble Resources U.K. Holdings Ltd. that its ability to meet its obligations was dependent on factors including “asset monetization plans being carried out successfully. Source: Bloomberg By Jack Farchy, Javier Blas and Manus Cranny
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PHOTO GALLERY
Faces at the NCDMB Research and Development fair, Eko Expo and Conventional Centre,Lagos
Team Seplat 22 Orient Energy Review Vol 6 No.11 November 2017
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PHOTO GALLERY
24TH AFRICA OIL WEEK, CAPE TOWN SOUTH AFRICA
Ministerial Panel Session
H.E Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbon, Equitorial Guinea
H.E Jean- Marc Thystere-Tchicaya, Minister of Hydrocarbons, People’s Republic of the Congo
H.E Thierry Tanoh, Minister of Energy Cote d’Ivoire
Hon. Obeth Kandjoze, Minister of Mines & Energy, Namibia
Hon Dr. Emmanuel Ibe Kachikwu, Minister of State, Petroleum Resources, Nigeria
Pr Tiemoko Sangare, Minister of Mines, Mali
Hon. Boakye Agyarko, Minister of Energy, Ghana
Schneider Electric Product Launch
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Orient Energy Review Vol 6 No.11 November 2017 23
Negotiating Africa’s Oil and Gas Future: Role of Offshore, Deepwater and Human Capital Development By Jerome Onoja Godspower Ike
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frica used to be regarded as the Dark Continent, but over the years, the narrative has changed, especially with the exploits of the continent in the global economic landscape and the petroleum industry. This article highlights the future of the African oil and gas industry and the major roles offshore, deepwater exploration, as well as local human capacity development, would play in the prospect of the industry. It also seeks to explore the strategy for the growth and development of the industry.
Decades after crude oil and gas exploration began in Africa, it had been
tales of mixed fortunes. In the early years of oil hydrocarbon exploration, the continent’s oil and gas industry had struggled initially, with international oil companies dominating and setting the pace in exploration and production activities.Over the years, multinational oil companies continued to dominate and dictate the pace of the industry, with the exception of a few countries that had taken up the gauntlet and had developed the capacity of their local companies to effectively compete and control their petroleum industries. In another aspect, Africa struggled to grow its crude oil output to significant levels to enable it contribute meaningfully to global crude oil output. Specifically, data obtained from British Petroleum’s (BP) policy notes showed that in 1965, Africa’s oil output stood
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at an average of 5.09 million barrels per day (mbpd), accounting for 11.68 per cent of global crude oil output of 43.63 million. In 1980, Africa’s contribution to global crude oil output dropped to 9.88 per cent, with an average of 6.22 million barrels of crude oil per day, compared to global average of 62.95mbpd. In 2000, Africa’s contribution to global crude oil output rose slightly to 10.37 per cent, with an average of 7.77mbpd compared to global output of 74.93 million. As at 2016, Africa’s share of global crude oil output dropped sharply to 8.56 per cent, with an average of 7.89mbpd, compared to global output of 92.15mbpd.
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COVER STORY
Notwithstanding the not-too-impressive fortunes of Africa’s oil output, analysts are of the view that the continent still presents enormous potentials and might become a hotspot and a major hub of crude oil exploration. Energy analysts argue that for years, Africa’s abundant natural resources have been playing a central part in the economic development of many of its constituent nations, stating that increased exploration activity by the global oil and gas sector had generated a raft of major hydrocarbon discoveries both offshore and onshore.
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The International Energy Agency, IEA, had a few months ago, stated that almost a third of all oil and gas discoveries, especially deepwater discoveries, in the last five years across the world, were made in sub-Saharan Africa, a trend that analysts said was set to continue for the foreseeable future. The analysts were also of the view that African oil and gas hotspots are becoming increasingly attractive to global investors and exploration companies. Ernst & Young stated that the growth of resource exploration and production in Africa, especially in offshore and deepwater, had been the largest single magnet for much-needed foreign direct investment (FDI) in Africa over the last decade or more, with coal, oil and gas projects accounting for 40% of Foreign Direct Investment (FDI) capital between 2003 and 2010. In addition, a report by a law firm, Berwin Leighton Paisner (BLP), pointed out that about half of the $1 billion raised in London’s mid-market oil and gas sector in 2013, had been destined for projects in Africa. BLP’s report noted that all of London’s mid-market fundraising for South American oil and gas projects was carried out at greater than a 10 per cent discount, a clear concession to perceptions of heightened geographical risk, while only half of fundraising efforts for African projects required the same discount. Head of Africa Programme for Chatham House, Mr. Alex Vines, declared that oil and gas potential in Africa, as well as global awareness of that potential, is at an all-time high. Vines stated that although finding oil and gas in Africa can still be low cost, developing it needs deep financial investment and long-term commitment. He explained that African governments that manage better their regulatory and business environment are more likely to attract this type of investment that is needed to unlock their natural resource endowments, which in turn can generate revenue.
Describing Africa as a vast territory of untapped potential, Mr Adepetun Sola of ACAS Law believes the regulations and legal framework of the Nigerian oil and gas industry are quite robust enough to regulate its operations. Lamenting the overly ambitious plan to piece all legislations into one document as the PIB; Adepetun advised potential investors to take that plunge. “He asserted that the existing laws governing the industry have been tested and tried for over 50 years. Thus they’re reliable!” A couple of other African countries are collaborating with Nigeria to replicate these proven frameworks. In addition, other energy experts are of the view that steadily rising foreign investment in African offshore deepwater is a reassuring indication that geographical risk on the continent is becoming less of an issue for many investors and exploration companies. One of Shell’s policy briefs stated that, in the past decade, industry-wide production from deepwater fields had added more than 800,000 barrels per day to Nigeria’s total oil output. It noted that the Federal Government of Nigeria via its short and medium term priorities aimed at the development of Nigeria’s oil and gas sector, termed the ‘7 Big Wins’, had set ambitious targets to increase total oil production in the next few years with a plan to significantly increasing deep-water exploration and production. In addition, in its review of the African petroleum industry, PricewaterHouse Coopers, PWC, disclosed that Africa is the last true oil and gas frontier with more than 4,200 oil and gas blocks identified, while almost half of these blocks are open, subject to force majeure or in the application phase. In the report titled, ‘From promise to performance,’ PWC noted that more than 80% of the 1,300 blocks in North Africa are licensed, while in sub-Saharan Africa it is estimated that only about 30% of 2,900 blocks are licensed. It argued that in the sub-Saharan regions it is evident that many new opportunities still exist, especially for exploration and production (E&P) companies involved in deepwater activities and the like, that are willing to take risks. It said, “There are many key opportunities within Africa due to: new exploration blocks being opened for competitive bidding; port development and management; pipeline engineering and construction, both subsea and onshore; onshore and offshore maintenance;
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COVER STORY
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At the same time, uncertain regulatory frameworks, political intervention and the nationalisation of resources will be key issues that will affect the oil and gas industry in the coming years.”
LNG plant engineering and construction; carbon dioxide (CO2) reduction and gas-powered electricity generation.” Other opportunities, PWC said, exists in gas monetisation projects for local use, methanol, fertilisers, urea; stability of supply and security of supply with a reduction in exports; foreign exchange inflows; distribution of wealth – a benefit for all citizens; infrastructure development mega projects; and new refinery development or upgrades. PWC disclosed that the booming oil and gas industry is seeing greater interest in all regions, including frontier states such as Namibia, Togo, Liberia and areas where exploration and production had been diminishing over the last few years. This, it said, includes countries such as Ghana, Côte d’Ivoire and South Sudan, and the new players on the east coast, particularly Mozambique and Tanzania. It maintained that Africa is seeing continued growth, with East Africa emerging as a new source of gas and oil, stating that significant gas finds in excess of 127 trillion cubic feet (TCF) in Mozambique have created the potential for another African super player. According to the report, with further exploration and development, it is expected that Mozambique could overtake Nigeria and Algeria as the African country with the largest gas reserves and the country is expected to become the second-largest exporter of Liquefied natural gas (LNG) by 2025, as the country steps up production from 10 million tonnes per annum (Mtpa) in 2017 to an envisaged 50Mtpa. It further stated that access to the lucrative Asian LNG market has significant economic benefits for the East African region and could act as a catalyst for meaningful economic development. 26 Orient Energy Review Vol 6 No.11 November 2017
It added that developments in Ghana have demonstrated the possibilities within Africa to the world, stating that the Jubilee field was hailed as the fastest ever deepwater development, taking just 24 months from development to production. “With growing interest and investment from India, China and international oil companies operating in Africa, there has been increased competition for exploration acreage in recent years. “As some of the traditional multinationals divest from areas in Africa, opportunities for new independents will emerge, causing the trading mix and diversity of the companies trading in Africa to change. This will cause established energy companies to become more agile in order to respond to greater competition and emerging trends. “African nations and consumers are starting to focus more and more on securing adequate supplies of crude oil and liquid fuels to satisfy growing local demand. The pressure on governments will cause changes to pricing structures and regulatory frameworks as some countries move to a more deregulated trading environment.” In addition, PWC said, “Other countries are enacting regulations to increase tax revenue and foreign exchange inflows. Although this may be achieved in the short term, there is a possibility that such measures will cause a decrease in investment with long-term implications. “Exploration and refining capacity in Africa will continue to increase, in contrast to what is happening in the developing world, as countries strive to have a greater security of supply and increase export earnings from the sale of refined products. “At the same time, uncertain regulatory frameworks, political intervention and the nationalisation of resources will be key issues that will affect the oil and gas industry in the coming years.” Again, in its overview of the African deepwater terrain, Haliburton stated that deepwater and offshore developments in Africa date back to the 1960s, adding that today, it ranks as one of the most significant deepwater provinces in the world with Nigeria and Angola leading the region with the largest number of proven reserves, estimated at over 45 billion barrels. “In addition to Africa’s West coast activity, the East coast is gaining momentum and visibility by operators both large and small pursuing exploration activity. Areas most
revered are countries, such as Kenya, Tanzania, Mozambique, and Madagascar,” it noted. Furthermore, the International Energy Agency, argued that Western and Central Africa is one of the most active offshore petroleum fields in the world and is by far, the world’s most active deepwater sector. “Biggest players include Nigeria, Angola and Ghana, but almost all the marine waters off Africa’s Atlantic coasts are currently divided into blocks open for oil and gas exploration or exploitation,” it explained. In its analysis of the African deepwater petroleum sector, Deloitte stated that in terms of supply, Africa had become a significant player in the industry over the last 10 years with research showing that the continent’s contribution to global crude production had trended between 9.4% and 12.1% over the last 5 years with an increase of 2.1 million b/d from 2013 to 2014. Similarly, in a report titled, ‘Localisation in Africa’s oil and gas industry’, Analysts at Deloitte, further stated that Africa’s share of global gas production has been between 6% and 7% over the same period with an slight decrease of 0.1 trillion cubic feet (Tcf) year on year to 2014.It said the most significant growth in oil and gas investment on the continent had occurred in East Africa with discoveries in Kenya, Uganda, Ethiopia, Madagascar, Mozambique and Tanzania. On its country-by-country analysis of East Africa activities, Deloitte stated that significant oil discoveries in Kenya show estimated oil reserves in this basin amounting to 600 million barrels, adding that the overall potential for the basin would be fully assessed over the next two years through a large programme of exploration and onshore and offshore appraisal wells, expected to be in excess of one billion barrels of oil. The report said exploration interest in Kenya had surged since the announcements of significant first oil strike discoveries in the past three years, resulting in a rush by international oil and gas companies to snap up what remains of Kenya’s 46 exploration licences. In the case of Uganda, the report stated that the exploration programme in Uganda’s Lake Albert Rift Basin has delivered successful well appraisals that had boosted Uganda’s proven reserves from zero in 2010 to 6.5 billion barrels of oil and 0.5 trillion cubic feet (Tcf) of non-associated gas.
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COVER STORY Uganda’s Cabinet, the report noted had recently approved plans to open up six exploration blocks in the oil-rich Albertine Basin for licensing in the country’s first competitive bidding. As a result, Deloitte disclosed that Uganda and Kenya were on track to becoming oil exporters by late 2018 or early 2019. However, the report declared that in Ethiopia, there was currently, no commercial production of hydrocarbons, though there had been significant natural gas discoveries with an initial estimate of 4 Tcf deposits. “Hydrocarbon shows in the South Omo basin wells have given the indication of a working petroleum system, and therefore the acreage in southern Ethiopia remains prospective,” it argued. In the case of Madagascar, the report said, “Oil and gas exploration in Madagascar has been ongoing for over 100 years. The country’s most promising asset, the Tsimiroro oil field, has a current estimate of 1.7 billion barrels contingent resource base. There are plans to build an export terminal on site, a pipeline to transport the oil to the coast, a marine terminal and an offshore mooring facility. “The offshore Morondava basin is believed to contain large untapped deposits of hydrocarbons with estimates of undiscovered technically recoverable resources of 10.8 billion barrels of oil, 167 Tcf of natural gas, and five billion barrels of natural gas liquids.” The report said there is significant further opportunity for exploration, as Madagascar has a total 249 exploration blocks, of which 24 have so far been licensed to exploration companies. Mozambique, the report added has a proven natural gas reserves greater than 100 Tcf, and is set to rank as the fourth-largest exporter of Liquefied Natural Gas (LNG) in the world. The final investment decision, the report noted, is expected during 2015 for its giant LNG project, with plans to construct a five-train LNG plant with a 25-million-tonne-peryear capacity. “Due to the large reserves and geographic proximity to Asian markets, Mozambican natural gas is expected to have a promising future,” it averred. Going further south, the report said South Africa had also been identified
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as a country with significant shale gas potential, and had attracted increased attention from international oil companies (IOCs) since the Karoo Basin’s shale gas potential was first identified as comprising 600 000 square kilometres of thick, organic-rich shales. South Africa, the report noted, is thought to hold 390 Tcf of technically recoverable shale gas resources. However, the report said shale gas development has been met with significant opposition from anti-fracking organizations due to the perceived risk of groundwater contamination, which led to a moratorium on shale development between 2011 and 2012. “This has subsequently been lifted. There has also been much activity off-shore, with state-owned electricity utility Eskom announcing that it will enter into commercial negotiations for the supply of natural gas from the Ibubesi field off South Africa’s west coast for power generation purposes,” it argued. Confirming Deloitte’s claims, analysts at Gulf Intelligence, in a special report on the global petroleum industry, disclosed that East Africa is elbowing its way under the spotlight and will change Africa’s energy map in the years ahead – a move easily justified by its wealth of oil and gas assets. For example, the report said Tanzania hopes to use its 55 trillion cubic feet of natural gas reserves to become a LNG exporter by 2025, while Tullow and Canada’s Africa Oil have identified 600 million barrels of oil reserves in Kenya’s South Lokichar basin. However, to reap the huge benefits inherent in the future, PwC is of the view that National Oil Companies (NOC) across Africa have an enormous opportunity to secure a more sustainable future by transforming into ‘national energy companies’ (‘NECs’), escaping the economic trap of a lower oil price and embracing the disruptive forces unleashed by climate change and a low carbon world. According to the global consulting firm, a new era of lower oil prices is challenging business models that have long relied largely on exploration and production of hydrocarbons, particularly ‘black gold’ oil, adding that this is likely to prompt African countries that have for decades depended on their NOC as a key source of revenue to rethink the ‘nation-building’ role that their
NOCs have played. PWC emphasised that the sustainability of NOCs would depend on their ability to transform into NECs, responding to the demands placed on them by consumers, governments and non-governmental organizations (NGOs) to respond to climate change and a new energy future. Chris Bredenhann, PwC Africa Advisory Oil & Gas Leader, said: “Globally, the energy sector is experiencing significant change and upheaval. Whether it is in oil & gas or utilities, we are witnessing tectonic shifts in strategies, business models and ways of working. “Whether we are talking about fledgling NOCs with limited hydrocarbon resources or established NOCs sitting on large reserves, all of these companies will need to work out how to seize the opportunities emerging from this disruption.” Again, regardless of size, these operators would need a drastic shift in operations model to stay sustainable and to efficiently transform to NEC, the use of cutting edge technologies.
“
Biggest players include Nigeria, Angola and Ghana, but almost all the marine waters off Africa’s Atlantic coasts are currently divided into blocks open for oil and gas exploration or exploitation,”
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COVER STORY Mr Sam Olotu, the Chief Technical Officer of Lekoil believes reliance on technology is central to unlocking the wealth offshore and deep offshore Africa. Narrating the Lekoil experience, he explained that improved technology was deployed right from Seismic data acquisition, to re-entry of the Otakikpo well, and the subsequent evacuation activities in Niger Delta, Nigeria. “At the moment production has ramped up from about 5,000 bpd to 7,400 bpd, still with 10,000 bpd as a target; relying strongly on the use of modern technologies.” In the area of local and human capacity development in the continent, multinational companies had been struggling to transfer knowledge from various projects to indigenous companies and individuals, with little success. Shell said, by bringing in outside experience, its Nigerian subsidiary, SNEPCO, had helped created the first generation of Nigerian deepwater oil and gas engineers. It disclosed that the Bonga North West oil and gas field is not only unlocking new energy resources in Nigeria, it is also unlocking new skills. “Today, 96% of SNEPCo’s staff is Nigerian, with significant levels of Nigerian staff trained or going on assignments overseas, further increasing local capacity for the future. SNEPCo has also provided specialised training for semi-skilled Nigerians to work in the energy industry, for example, as welders and scaffolders,” it stated. It added that Bonga also stimulated the growth of support industries vital to deepwater projects, noting that these benefit the wider Nigerian economy by boosting demand for a range of goods and services including offshore vessels and platforms, materials, floating hotels, helicopters and manpower, creating jobs and providing a range of training and maintenance services to the industry locally. Shell also declared that Bonga had the first, largest and most technologically advanced polyester moored deep-water buoy to be built in Nigeria. “The SPM buoy that was installed at Nigerdock in Nigeria is one of the world’s largest. With the fabrication and installation of this SPM buoy, Shell demonstrated that its logistics base in Nigeria can support other
deepwater developments in other regions,” it added. However, Ghana’s Tullow Oil stated that due to the capital and technology intensive nature of the petroleum industry, only a relatively small number of highly technical and specialised personnel are needed by our operations. Despite the challenge, Tullow Oil said it has a commitment to hiring locally and have set internal targets for increasing the proportion of our staff represented by the nationals of our host countries. It added that there are also employment opportunities in its supply chain, particularly in its onshore operations. The company said, “We try to maximise these by requiring our international suppliers to employ and source goods and services locally, as part of their contract with us. We also work closely with our host governments to ensure that their expectations around skills localisation are balanced with operational and labour market realities. “We maximise opportunities for local businesses and our local content strategy helps local businesses to develop so they can secure work from the wider industry. We reinforce this work through our contracting strategy by requiring international suppliers to set out in their tender documents their commitment to developing local companies within their own supply chains.” Despite the efforts of a few indigenous companies, a major concern in the African petroleum industry is the aging workforce, and with the rising youth unemployment, only a few young people are currently being employed into the sector, thereby creating a huge skill gap. Fears among stakeholders in the industry is that if this skills gap is not addressed urgently, in the future, when the aging workforce eventually retires, the individuals to take over their duties would be ill-equipped and ill-prepared to drive the growth of the industry. Speaking to Orient Energy Review in Cape Town recently, Dr Danisa Baloyi, first female President of Black Business Council, South Africa, frowned at the level of effort put into human resource development of indigenes by multinational compa-
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nies. She opined that the attitude of Africans should be: “nothing happens for us without us getting involved.” Decrying the continued capital flight and exploitation of Africa’s natural resources, she demands that all foreign-owned businesses in African countries should be inclusive in their plans, making room for the deliberate capacity development of youths and women …considering the fact that the youth age range amounts for over 60% of its population, the African continent should be more intentional in its approach towards the youth”, she said. Mr. Claudine Sigam, Project Officer for Optimization of Natural Resources Management in Africa for the United Nations Conference on Trade and Development (UNCTAD), argued that human capital under-development may be one of the root causes of poor performance of resource-rich economies in developing countries, particularly in Africa He added that capturing more value in the local economy should be a priority for resource-rich developing countries in their quest for leveraging natural resources for development objectives. He stated that in many resource-rich developing countries, particularly in sub-Saharan Africa, less than 20 per cent of total transnational corporations’ (TNCs) investments in the mineral sector remain in the host country.
Dr Danisa Baloyi
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COVER STORY “In Nigeria, for example, an estimated $15 billion is spent annually on servicing operations in the oil and gas industry. However, only very little proportion of this amount and the accruable profit is available to indigenous oil servicing firms or spent in developing Nigeria’s industrial base. “As a consequence, the sustained rise in mineral commodity prices has led to record profits for the energy and mining industries without commensurate reduction of poverty in host countries,” he maintained. He recommended that the capacities of resource-rich developing countries needed to be strengthened while mineral wealth should be invested in the creation of knowledge for economic innovation, and in human, social and physical capital formation, including infrastructure for development. According to Sigam, a quick human capital formation can occur through vocational training programmes, adding that as part of their corporate social responsibility, companies can emphasise human capital formation areas where they have comparative advantages. He said policy strategies to achieve higher local content can be achieved by consciously building local capability development, noting that this strategy would involve considerable undertakings from the oil companies such as providing direct and prolonged assistance to indigenous firms to improve their quality and reliability. Sigam further noted that evidence from several resource-rich countries – Angola, Botswana, Brazil, Chile, Equatorial Guinea, Nigeria and Trinidad and Tobago suggested that addressing the skills shortage in the industry would entail creating an educational base, to support development in the long run, and by improving the direct participation of the local workers with companies in the industry value chain. “With regard to the educational base, the training of personnel, the provision of relevant education, the development of Research and Development (R&D) programmes, and the collaboration between major companies, local universities and training institutes is paramount to design programmes with an appropriate syllabus to meet the skills www.orientenergyreview.com
requirements of the industry. “In Chile, the government created an environment that generated positive synergies between the government, universities, mining firms and local companies, which resulted in mining clusters,” he explained. Continuing, Sigam said, “The introduction of local content provisions for training and hiring national workforce, and the creation of industry linkages and extensive supplier development programmes, including training, product development, testing and factory auditing are some of the ways governments can involve local workers in the value chains. “Several resource-rich countries have applied hiring quotas or targets for training of local workers. Countries like Nigeria and Angola have even set targets of participation, to increase local staffing in oil companies. “However, companies have encountered difficulties in achieving these targets, especially for more specialised staff. These policies are more effective when complemented with training programmes supported by the extractive industries and intended to ensure the availability of skilled workers, in accordance with the sector’s changing requirements.” Furthermore, making a case for local and human capacity development in Africa, Deloitte said a localised supply chain has the benefit of improved security of supply, allowing for ease of procurement and reduction of lead times for specialised part ordering and machine downtime resulting from component breakdowns. It added that with local and human capacity development, local service would also significantly be more efficient and cost effective than long-distance support and would bring about improved responsiveness with better communication and agility of supply, resulting in lower stock level requirements. It noted that lower costs are achieved due to lower logistics costs, cheaper building of capital equipment and government incentives aimed at stimulating local manufacturing, adding that it would bring about additional competition in the local market and reduction on foreign exchange exposure will result in more cost-effective procurement for oil and gas companies. Deloitte argued that business development in Africa would improve
company perceptions of the continent, resulting in increased foreign direct investment (FDI). It also stated that other African countries will also see the benefits of localisation, and they will wish to imitate the same in their own economies, thereby setting a precedent on the continent for further local content initiatives. Other benefits, it said include, “Investments will realise great economic rewards for the host countries, with benefits and added value significantly exceeding costs; upliftment of local industrial capabilities that benefit the host country and the value chain required by the oil and gas companies. “Greater availability of sought-after skills in country for oil and gas projects, research and development and support of operations; self-sufficient local industries that can support the oil and gas sector and the host country’s economy as a whole. “Improvement of local community environments, through reduced unemployment levels due to higher economic activity and opportunities – A move from unskilled to semi-skilled workforce will lead to better productivity and increased diversity in work, resulting in skills retention.” From the foregoing, it is obvious that the offshore and deepwater potential of the African petroleum industry is enormous and though, it is presently struggling to find its foot, it is the next frontier for the global oil and gas landscape. Given the immense potential that the African oil and gas industry holds, it is critical that all stakeholders be committed to sustainable local content development. Analysts were unanimous in their views that localisation offers such an opportunity, adding that with the nature of the oil and gas industry, namely the long-term high capital expenditure (CAPEX) spend projects, offers the opportunity to explore local manufacturing capabilities (enterprise and supplier development) by leveraging on the forecasted spend. Therefore, it is agreed that the future for the industry is brighter, now, more than ever before, and businesses and individuals that would benefit from the industry in the long run, are those that would start taking position today.
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WOMEN IN ENERGY
‘‘We Need an Ecosystem that Educates, Enlightens, Empowers, Engages and Creates Entrepreneurs (5Es) - Dr. Amao Tell us about your plans for the Nigerian Universities and what informed this noble gesture at a time like this? In July 2016, Africa Prime News published an article titled, “No Nigerian University Makes The 2016 World’s 1000 Top Universities List” [1].This was shocking as far as I was concerned. The Centre for World University Rankings (CWUR) released its 2016 ranking of universities around the world based on eight objectives and robust indicators to rank the world’s top 1,000 universities, and listed them as follows:
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r. Ibilola Amao is the Principal Consultant of Lonadek. She is an alumnus of Manchester Business School, Bradford University and Queen Mary College, University of London. A member of the Governing Council of the Energy Institute (EI), UK, Board of New Partnership for Africa’s Development (NEPAD) business group, PennWell Offshore West Africa Conference, Engineering Practice and Resource Development, Nigerian Society of Engineers (NSE) and Chairperson of the Lagos State Technical and Vocational Education Board – Industry Advisory Team. Ibilola is a Vital Voices VV GROW, VV 100 Fellow, VV Global Ambassador Programme (GAP) 2017 Mentee, WeConnect International Fellow, IWEC Awardee, Energy Institute Energy Champion 2016 and Access Bank “W” 100 Awardee. Ibilola is very passionate about grooming young professionals and encouraging them to pursue routes to international chartership. She is committed to promoting Science, Technology, Engineering and Mathematics (STEM) in Energy, Power, Infrastructure, Oil, Gas and High-Technology Industries. She estabwww.orientenergyreview.com
lished Lonadek Nigeria Limited in 1991 and Lonadek UK in 2007 to implement state-of-the-art Engineering/IT solutions and bridge technological gaps in emerging economies. As a committed change agent she invests her time and effort in career counselling, industry awareness and youth empowerment hence the formation of “The Vision 2020: Youth Empowerment & Restoration Initiative” in May 2006 (See: www.vision2020-ng.org). To nurture the leaders of tomorrow, Ibilola set up a STEM hub to develop professionals and entrepreneurs. (See: www.thecedarcentre. org). She is passionate about leaving a legacy of having touched the lives of at least 100,000 youths in a very significant manner. She is a Vital Voices fellow and WeConnect International certified member. She is involved in Women empowerment activities with WimBiz and a firm believer who pays it forward for national development and socio-economic transformation. In this interview with Jerome Onoja, Dr Amao speaks about the 5Es of National Development and Socio-Economic Transformation. Excepts.
Having attended three African Network of Scientific and Technological Institutions (ANSTI) meetings in Ghana, South Africa and Enugu, Nigeria where Vice Chancellors, Provosts and Deans of STEM-focused faculties gather to discuss strategies for repositioning African Universities, I realised we needed to crucially supplement talk with action. With such a colossal problem, it is my firm belief that action in the form of strategic partnerships should be the bedrock of the transformation process. It is imperative that the gap between industry and academia, for-profit businesses, social impact initiatives and Corporate Social Responsibility (CSR) projects be bridged with Human Capital Development (HCD) efforts by all stakeholders for societal transformation to be of utmost priority. Would this put an end to the unfortunate trend where the oil/gas industry is unable to hire our fresh graduates?
Orient Energy Review Vol 6 No.11 November 2017 31
WOMEN IN ENERGY Not quite. The problem is multi-faceted and multi-dimensional. We need to hire the best brains to teach in schools and impart knowledge at lecturer level. The best of these brains must lead the best students in innovative projects, course works, and case studies involving research and development. The laboratories need to be equipped with state-of-the-art technology to stimulate ingenious solutions to the problem of power generation at reduced costs, generating cheaper alternative sources of energy, processing methodologies to harness our natural and mineral resources and so on. The Oil and Gas industry must find higher learning institutions as a go-to place for Consultants and solution providers. A collaborative synergy must exist between industry and academia. AVEVA, one of the leading technologies for Plant Design and Management Systems (PDMS) evolved from Cambridge University. In essence, businesses must evolve from course works, class works, projects, and R&D driven case studies in our Universities. When we have a transformed system, the graduates would be industry-relevant because they would have served as Interns, Student Industrial Work Experience Scheme (SIWES); Apprentices in the industry etc. while studying. Students in the class grade JSS3 and above can get jobs on the back of their work ethics, and then go to evening/ night school to graduate and create value for their employers. HNDs do not need to go to University to get a B.Sc., M.Sc. or Ph.D. to get a job because they are so well schooled in entrepreneurship that they graduate to become employers of Ph.D.’s M.Sc.’s and B.Sc.’s. Can you point to other developed climes where this has worked? Centres of Excellence (CoE), Science and Technology Parks and Innovation Hubs are the future. Quite a lot of contraptions claim to be CoE these days. If industry, academia and venture capitalists are not generating ideas, proffering solutions, creating value and transforming societies with business spin-offs, can we really call these schools or institutes a CoE? I guess we are still far from understanding the educational ecosystem for multiparty and multi-stakeholder symbiotic value creation and revenue generation, so we call well- equipped academic environments CoE’s. What are the immediate and futuristic goals you’ve set in this regard? An ecosystem that educates, enlightens, empowers, engages and creates entrepreneurs (5E’s) of national devel32 Orient Energy Review Vol 6 No.11 November 2017
opment and socio-economic transformation is what I am aiming for. You do not need a degree to be successful or make millions in ForEx. You simply need a good brain, team work having identified and discovered your potential, talent and passion. I want value creators to unleash their full potential in the Energy, Power, Infrastructure, Mining, Oil, Gas, Agriculture and Technology sectors of resource rich emerging economies so that we create wealth and jobs for our teeming youth. Do you have organisations and organs of government with you in this pursuit? What’s the place of PTDF and the NCDMB? I really like to start off with an idea, a template from God on what He sees as a possible solution that He can trust me with and then I start a discussion with friends, family, colleagues and clients. Fortunately, PTDF, Multinationals and IOCs are our clients at Lonadek and NCDMB works with practically all the IOCs. We are fortunate that Chevron has persistently made human capital development her priority. About ten years ago we were involved in upgrading the 400 and 500 level curricula to include entrepreneurship at UNILAG. Chevron then invested in an AutoCAD facility at YabaTech. It took us over 5 years to get a Memorandum of Agreement (MoA) signed at YabaTech because they did not quite understand how we planned to create value through grants and donations. Now, after Lonadek commenced the Royal Academy of Engineering UK (RaeUK) and Energy Institute (EI) Graduate Engineering Training Scheme (GETS) Phase I, they do. Long term strategic initiatives and programmes are not quite popular in Nigeria. I am hoping that people would begin to appreciate the value they bring when the products of our initiatives become the strategic thinkers and game changers. The Minister of State is trying to resolve the duplicity of roles between the PTDF and NCDMB, so I am not qualified to speak on this matter now. All I can say is there is too much work to be done and enough to be shared between NCDMB and PTDF without one getting in the way of another. Would you be seeking any legislation to strengthen this platform? I work actively through Lonadek, an asset sustainability consulting company. Lonadek is a member of Petroleum Technology Association of Nigeria (PETAN) and Oil and Gas Trainers Association of Nigeria (OGTAN). I believe these bodies, as associations
are best positioned to seek legislative backing on a consensus of requirements of their members. It would be too untidy at this stage to work outside a consensus that stimulates strategic partnerships and alliances. What we need most is collaboration, cooperation and coordination of resources, assets and competencies to build capacity, capability and competence. Only then can we compete and win nationally, regionally and globally. We have enough local champions in Nigeria. We need to see the big picture to play globally. How d’you plan to integrate the experienced but retired hands in the oil and gas industry? Collaboration, Cooperation and Coordination of resources. I would like to see PTDF take charge of Oil and Gas human capital assets leveraging the multitude of overseas scholars that they have invested in over the years. I am not sure if NCDMB or PTDF would have the first mover’s advantage as I have proposed to both Executive Secretaries (ESs) the ripeness of the time now to harmonise scholars, fellows etc. to create value through Alumni. We have PTDF OSS Scholars, Chevening Scholars, Fulbright Scholars, Mandela Washington YALI Fellows, IOC Local Undergraduate Scholars (some of whom have had foreign scholarships). Furthermore, we have Nigerians retired from IOCs who have had multiple cross-postings and Nigerians-in-diaspora who are working in Houston, Texas; Calgary, Canada; Aberdeen, Scotland etc. I am hoping that we look at these assets as the most precious investment that Nigeria has. Any plans for the highly resourceful professional Nigerians in the North Sea? Through Hcdi@lonadek.com we are already getting emails from those who are interested in returning to give back, on contract or want to set up something for themselves or with others. I am hoping that the body language of government and speech would be in line with the recent signing of a law that establishes the Federal University of Petroleum Resources (FUPRE), Effurun. These are very interesting times in Nigeria. I am privileged to be a part of it. References [1]http://africaprimenews.com/no-nigeria-university-makes-the-2016-worlds1000-top-universities-list/
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Orient Energy Review Vol 6 No.11 November 2017 33
GHANA REPORTS
Orient Energy Review Awarded Best Local Content Magazine By Gilbert Borketey Boyefio
Orient Energy Review magazine, Africa’s most widely read energy publication on local content development across Africa, has been awarded by the Sekondi-Takoradi Chamber of Commerce and Industry (STCCI) in Ghana for its contribution towards the promotion of local content in Africa. With a strong presence at all major oil and gas conferences and exhibitions across the globe with specific focus on delivering insight into the African emerging market, Orient Energy Review magazine provides the most up to date and down to earth report on development issues in the areas of alternative energy, maritime, exploration, logistics, and the power sectors. While receiving the award, Orient Energy Review magazine’s Publisher, Mrs. Nneka Ezeemo, on behalf of the management, expressed gratitude to the Executives of the STCCI for honouring the publication with the Local Content Award and promised to continue pushing the message of Local Content forward. Orient Energy Review received the award during the Local Content Awards gala dinner at the Ghana Extractive Industry Safety Conference (GEISCon) 2017 organised by the STCCI.
34 Orient Energy Review Vol 6 No.11 November 2017
The STCCI has been organizing the annual Ghana Extractive Industry Safety since 2015 with Orient Energy Review magazine as a major media partner. This year’s conference, which is the third since its inception, was on the theme: Emergency Response and Disaster Management in the Corporate Environment. The STCCI is a business association seeking to build required capacities to promote businesses in the Western and Central regions of Ghana, and Ghana as a whole, to facilitate the creation of a world-class corporate safety system in Ghana. Some of the thematic areas that were touched on during the two-day conference were: Safety in Crises- a Compelling Case for change; Equipment Safety and Management in Ghana; Identifying Environmental Hazards; Making Safety the success factor at the work place; and Insurance and HSE Compliance. This year’s conference attracted a lot of participants and exhibitors from Ghana, Nigeria, Hamburg and Trinidad and Tobago, with partnership from the Ministry of Employment and Labour Relations, Ghana; the International Labour Organisation (ILO); the Energy Chamber of Trinidad and Tobago and the Hamburg Chamber of Commerce. In an interview with Orient Energy Review, Mr. Taiwo Folorunsho, Operations Manager, Hybrid-DGM, an exhibitor and a participant at
the safety conference, underscored the need to take issues of safety serious at the workplace. He was full of praise for the foresight of the organizers of the conference. Hybrid-DGM Ghana Limited is devoted to providing holistic services around occupational health, safety and dangerous goods management such as packing, storage and transport, consulting and professional training in the field of moving dangerous goods. Hybrid-DGM expanded its scope of services to assist air carriers: for technical assistance, cargo inspections, repack and re-document shipments in transit, or to prepare new sets of Shipper’s Declarations for Dangerous Goods by Air, under DGM’s responsibility. The company has an accredited training centre for Chartered Institute of Environmental Health (CIEH), UK; Institute of Safety and Health (IOSH), UK, National Examination Board of Occupational Safety and health (NEBOSH) UK, and Project Management Institute (PMI), USA. Hybrid-DGM is a firm of safety and project management consultants and risks managers dedicated to prevention of losses and promotion of occupational health, safety, security, environment and project management methodologies.
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GHANA REPORTS
Ghana’s Local Content Fund Still Empty … To retain $14bn industry spend, create 300,000 jobs By Gilbert Borketey Boyefio
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nformation gathered by the Orient Energy Review indicates that contractors operating in Ghana’s oil and gas sector are holding in trust monies meant to be paid into the Local Content Fund, which is established to provide financial support for indigenous SMEs to competitively participate in the country’s oil and gas sector. So far, the contractors, who are mainly foreign companies, have not paid a single pesewa into the Local Content Fund, which was established by Ghana’s Petroleum (Exploration and Production) Act, 2016, Act 919,to provide an enabling environment for local and indigenous SMEs to competitively compete with their foreign counterparts in the country’s nascent oil and gas sector. According to Article 66 (1a, b, c and d) of the E&P Law, “The sources of money for the Fund include: contributions from a contractor as agreed in a petroleum agreement; contributions from a sub-contractor of the sum of one percent of the total consideration payable by the contractor or licensee for every contract; moneys approved by Parliament; and grants.” The law came into effect on August19,2016, and the Petroleum Commission wrote to the contractors in January 2017 to informed them to start the deductions of the one percent of all tenders and contracts awarded and pay same into the Local Content Fund. Some of the contractors were of the
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view that the one percent deduction into the Fund was not from them but rather their sub-contractors; a position the Commission agreed with them on, but was however of the view that it is easier if the contractors deduct the one percent at source rather than the Commission chasing individual sub-contractor for payment. Both parties finally agreed to this position. In principle the contractors were supposed to have started the deduction of the one percent to be paid into the Fund immediately after the Commission wrote to them. So Where Is The Money? However, months after the communication from the Commission, they are yet to start receiving monies from contractors and sub- contractors into the Fund. Unfortunately, the Commission cannot also tell whether the contractors have started deducting the one percent from contracts awarded to sub-contractors. As things stands now, the contractors are expected to be holding the deducted monies, if any, in trust
for the Commission; though no firm decision was taken on this matter. “We do not know how much money is being held in trust for us. But we have to sit down with them to look at how many contracts have commenced since we communicated with them and reconcile the figures. Though there is a moratorium that you are not paying today, after the reconciliation all monies due to the Fund has to be paid into it,” disclosed Mr. Vincent Yankey, Director of Finance, Human Capital and Administration at the Petroleum Commission. Further information gathered by Orient Energy Review revealed that as at the time of writing to the companies, the Commission has not even opened the bank account for the Fund in which to pay the deducted one percent.
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GHANA REPORTS
“
We do not know how much money is being held in trust for us. But we have to sit down with them to look at how many contracts have commenced since we communicated with them and reconcile the figures. Though there is a moratorium that you are not paying today, after the reconciliation all monies due to the Fund has to be paid into it,” This Mr. Kwaku Boateng, Director, in charge of Special Services, explained was as a result of the absence of a board for the Commission, a key statutory requirement for the establishment of the Local Content Fund and opening of an account for the Fund. Article 66 clauses 2 and 3 of the E&P Law specify the important role the board of the Petroleum Commission plays in the establishment of the Fund and all its activities. Mr. Yankey however pointed out that in June, 2017, with the help of the old board and approval of the Controller and Accountant General’s Department, the Commission has been able to open a Cedi bank account for the Fund; and is working on opening a dollar accounts with the approval from the Ministry of Finance, but pointed out that “this should not hinder people from paying the Cedi equivalent of the one percent into the Cedi accounts”. He explained that the Board of the Commission is yet to decide whether the monies being held in trust by the contractors, if any, should attract an interest payment or not. Are we not hungry enough?
36 Orient Energy Review Vol 6 No.11 November 2017
For the purpose of achieving the object of the Local Content Fund, the E&P Law provides that moneys from the Fund shall be applied to: education, training, research and development in petroleum activities for Ghanaian citizens, indigenous Ghanaian companies and Ghanaian institutions of learning; and loans on a competitive basis to Small and Medium Scale Enterprises to support their participation in petroleum activities. According to Mr. Yankey, tentatively, the Local Content Fund is expected to be operational by the end of this year; after the new Petroleum Commission board that was inaugurated in August 11, 2017, agrees on the draft guidelines and the sector minister approves it. Considering that the two major challenges inhibiting indigenous players, lack of capacity and financing, from effectively and competitively participating in the country’s oil and gas sector are addressed by the establishing of the Local Content Fund, one would have thought Ghana’s authority will have attached some urgency to its realization. In August this year, Ghana’s neighbour, the Nigerian government, launched a $200 million Nigerian Content Intervention Fund, NCIF, to guarantee financing at single digit interest rates for local operators handling projects in the oil and gas industry.
gas sector, noting that, ‘Interest rates from the banks are as high as 30-35percent’, making local borrowing unbearable. Mr. NuerteyAdzeman, who is the Executive Secretary of the Ghana Oil and Gas Service Providers Association (GOGSPA), was of the view that this situation is choking the local companies from actively participating and being competitive in the sector as envision be the local content law. “Foreign companies are coming to do business in Ghana with single digit interest rates from their banks. So from the word go, they already have a huge advantage over the local companies,” he pointed out. Sharing in the excitement of the Local Content Fund, Mr. Kwaku Enin, Chief Executive Officer, Zeal Environmental Technologies Limited, agreed that Fund will definitely be a game changer for local SMEs who stand to benefit from accessing funding at a very low and reasonable rate as compared to the banks or financial sector. He proposed that as part of the modalities to accessing the Fund there should be a risk assessment of prospective applicants.
Absence Of The Fund Is Hurting According to Mr. Nuertey Adzeman, the high interest rates at which local companies are assessing financing in the country is making it difficult to do business in the oil and
Mr Nuertey Adzeman
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GHANA REPORTS
Ghana’s Parliament Divided Over AMERI as Abrogation Of Contract Looms By Gilbert Borketey Boyefio
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he controversy surrounding the Build, Own, Operate and Transfer (BOOT) agreement between the Government of Ghana and Africa and Middle East Resources Investment Group LLC (AMERI Energy) seems not to be ending anytime soon as Ghana’s Parliament rekindle the discussion on the matter with the minority members of the Mines and Energy Committee threatening not to participate in any deliberation concerning it. The AMERI deal was for the installation of 10 GE TM2,500+ aero derivative gas turbines, operate, maintain, transfer and provision of support services, and was approved by the previous Parliament on March 20, 2015.The 300MW emergency power contract was secured by the John Mahama administration to fix severe power challenges at the time. Following a publication by a Norwegian newspaper about the deal, it was condemned for its $510 million price tag as analysts say Ghana could have secured the same deal at $150 million less. The AMERI deal was among some of the numerous contracts that the current government, whiles in opposition, expressed grave concerns about and indicated their intentions of revoking when they assume power because they described it as not being in the interest of Ghana. The ruling government’s intentions was given impetus when in early August 2017, the Member of Parliament
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(MP) for Adansi Asokwa, Kwabena Tahir Hammond, moved an urgent motion for the House to rescind its decision for the approval of the controversial BOOT Agreement between AMERI and the government of Ghana by the previous Parliament, which was subsequently referred to the Mines and Energy Committee of Parliament by the Speaker. However, the minority members of the Mines and Energy Committee, have decided upon careful consideration of the relevant facts, not to take part in the deliberations of the Committee in respect of the urgent motion filed by Hon. K.T Hammond requesting that the House rescinds the decision it gave in approving the Build, Own, Operate and Transfer (BOOT) agreement between the Government of Ghana and Africa and Middle East Resources Investment Group LLC (AMERI Energy) on grounds of gross misrepresentation. According to the minority, “It must be noted that, though Parliament has a constitutional role in the approval of International Economic or Financial Agreements to which the Government is a party, Parliament becomes FUNCTUS OFFICIO after approving such agreements. Once approved, the agreements are now in the domain of the parties thereto which, in this case, the Executive Arm of Government and AMERI Energy. If there is anything untoward about the agreement, it is for the parties to say so and take the nec-
essary action within the framework of the agreement to vindicate their rights and not for any other person”. In a press release issued by Hon. Adam Mutawakilu, Member of Parliament for Damongo, and the Minority Spokesperson on Mines and Energy, the terms of the agreement contain dispute resolution mechanisms including resort to court action; and therefore urged Hon. K.T Hammond to make his evidence of gross misrepresentation available to the government which is a party to the agreement for the appropriate action to be taken. He noted that the government has every right to review past contracts and to correct every wrong therein in the interest of the people of Ghana, but take the view that this must be done in the right way and through the right means and not through the subterfuge of a motion for rescission. To Hon Mutawakilu, though the minority members of the Committee are ever ready and willing to listen to, enquire into and deliberate on any issue appropriately brought before the Committee, they do not “Want to be part of any bad precedent as far as parliamentary practice is concerned. Parliament as an arm of Government conducts its business on the dictates of the standing orders as stipulated under Article 110 (1) of the 1992 Constitution of Ghana. In other words, any action or move taken by any Member of the House has to be within the remit of the Constitution and the Standing Orders. It is worthy to note that there is no part, section or rule of the Standing Orders that allows for a motion to be referred to a committee after it has been moved and seconded to without any deliberations by the House. This cannot be found in the current Standing Orders or any Standing Orders of the Parliament of Ghana since Independence.” To them, Hon. K.T Hammond, who was not a party to the agreement is requesting Parliament to rescind its decision on the basis of gross misrepresentation and questioned his locus standi in this matter.
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LOGISTICS & MARITIME
Axxela Submits Feasibility Study for Lagos-Jebba Pipeline to NNPC
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xxela Limited, a sub-Saharan gas & power portfolio company, has completed and submitted a feasibility study to the Nigerian Gas Processing and Transportation Company (“NGPTC”), a subsidiary of the Nigerian National Petroleum Company (“NNPC”), to build a 510 Km ELPS-IbadanIlorin-Jebba (EIIJ) pipeline network across the Western and Central states of Nigeria, Orient Energy Review reports.
The study was compiled by world-renowned US-based consultant agency, Worley Parsons, and supported by counterpart funding from the United States Trade and Development Authority (USTDA). Speaking during the handover ceremony, Engr. Saidu Mohammed, NNPC Group Executive Director and Chief Operating Officer Gas & Power said: “This is a project we defined a long time ago and one we wish to implement. Now, it’s key we don’t lose sight of the low-hanging fruits, as we seek to provide gas to the country in keeping with the national plan.” The proposed pipeline project was conceived as part of the Nigeria Gas Master Plan to improve pow-
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‘High Cost of Doing Business in Nigerian Maritime Corridor Behind Cargo Diversion’ – Rev. Nicol By Oge Obi
er generation and distribution to major cities within Nigeria’s South-Western region. The pipeline is expected to commence in Ibadan, Oyo and run through the towns of Osogbo, Ogbomoso, Ilorin, Ado-Ekiti, and terminate in Jebba located in Kwara. Also commenting during the submission ceremony. Axxela’s CEO, Bolaji Osunsanya said: “The impetus for power-driven initiatives is underscored by the significance of this project, and its impact and scope are parallel with the Federal Government’s aspirations to improve the power situation. Ultimately, major demand centres will require more electricity to cater to the growing power requirements of industrial and commercial clusters.” Engr. Babatunde Bakare, Managing Director, NGPTC, also remarked: “This fits in with our overall vision, and we are aligned with the recommendations put forth. We eagerly anticipate the positive impact this project would have on the region.” Axxela is currently expanding its natural gas pipeline grid in Port Harcourt, as well as in the Greater Lagos area.
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he unfriendly business climate at the nation’s maritime environment is believed to have given rise to the massive diversion of cargoes by importers to ports of neighbouring countries. This ugly trend worries the President, Shippers Association of Lagos State, Rev. Jonathan Nicol. Speaking with Orient Energy Review’s maritime Correspondent, Oge Obi, Nicol said that government’s unwillingness to cut down the cost of doing business in her maritime environment has unwittingly opened the door for other countries to share in Nigeria’s wealth. Diversion of cargoes that ordinarily should have Nigerian seaports as its destination to ports of neighbouring countries has remained a recurring decimal in the Nigerian maritime industry. A situation many believe it is being propelled by government’s policies, high tariffs, inefficient system, unconducive business environment, among others. Some stakeholders’ determination and resolve to maintain Nigerian seaports as their first choice for consignments has also been deflated by steady infrastructural decay, operational delays, high tariffs, and lack of access roads in and out of the country’s various seaports, Orient Energy Review has learned. To these stakeholders, cargo diversion is neither beneficial to the country nor the citizens. Industry observers have also noted that it does not only take jobs away with it but it also ‘transfers’ revenue and development to neighbouring countries.
Orient Energy Review Vol 6 No.11 November 2017 39
LOGISTICS & MARITIME
It is said that importers, shippers, and some other stakeholders, consistently faced with the various challenges at the nation’s maritime corridor and the need to remain in business, have not only seen cargo diversion as a way out but have also relocated out of the country with their families. Industry players like shippers, importers, clearing agents among others who moved their businesses to countries like Ghana, Benin Republic and other ports they consider convenient are said to have moved out with their families. The government on its part has not relented in its efforts geared towards institutionalizing a robust maritime environment. In recent times, it has engaged in policy reviews and enactment of some new ones such as the executive order on ease of doing business; through which it moved to achieve 24hour cargo clearance. The policies are not only aimed at making Nigerian maritime corridor attractive to importers and various stakeholders in the country but also to the international community, especially as it will aid her quest of becoming a maritime hub in West and Central Africa. Commending government efforts, the President, Shippers Association of Lagos State (SALS), Rev. Jonathan Nicol said that government’s trade facilitation must be matched with the willingness to end unnecessary bureaucratic bottlenecks, effect changes where necessary, commitment to good policy implementation, and provision of necessary infrastructures at the ports. He said that government cannot claim to be facilitating business while maintaining some “Stringent Customs rules affecting cargoes.” According to him, people want a situation where they will trade in a very conducive environment. And where the environment is not favourable, people will be forced to go to other ports “where they are welcomed.” And for Nicol, these countries are out for business. Without necessarily comprising their trade rules, they pay attention to importers and are careful to meet their needs, “because
the money is needed for their development. And our people think they can get the money by force without changing some unprofitable policies, he wondered. Stating that Nigerian seaports remain one of the most expensive ports in the world, Nicol said that government policies as well as enabling environment are major attractions to investors. According to the SALS President, government’s unwillingness to cut down the cost of doing business in its maritime environment has unwittingly become a magic wand ferrying Nigerian wealth to her neighbouring countries. “We are traders, if they don’t accept us; we will go to other places that will accept us and our goods. “Nigeria has not even reduced one of its tariff items, they remain the same. In Cotonou, you have tariff relief. They have reduced as much as 35 per cent. So, what is really wrong with our people? Instead of going to Nigeria, importers go to Cotonu where the tariff is appreciably low. They pay the duty their and ferry their goods into Nigeria. “You can’t attract them when your environment is hostile. Is it not money they are spending? Meanwhile, here, they are accused of false declaration. How will they declare the right thing when you take all their money in the port? We don’t have problems with the shipment, we have problems here with local expenses that are terribly high, he said. Speaking further, SALS president said that suggestions and presentations made by his association to the government on the need to create a more friendly business environment do not seem to have changed anything. And in what he thinks should be the way forward, Nicol said that nothing much can be said but that for the government to go back to what has been suggested to them. “They should change their review and change some of their policies. It is not all about making money; we are talking about trade facilitation. And we are trying to help government but they do not want to listen to us. We can’t really force them, it is what they want to do they will do.” On the impact of the terrible conditions of the port roads, Nicol said that government is not immune to the dwindling income that has become the lot of businesses in and around Apapa. According to him, if government agencies like NPA, NIMASA among others are posting
40 Orient Energy Review Vol 6 No.11 November 2017
appreciable income, “it is because we are trying to patronize our own country under a very difficult situation and that it doesn’t mean that they are making any changes in their import policies.” Asked if government’s efforts at facilitating trade have not brought about some positive changes, Nicol said until concerned government agencies sit down and bring down the cost of doing business in a way tariff reduction, the desired changes may not be attained. “I know that they have set an inter-ministerial committee.” Calling on the government to reduce the bureaucratic bottlenecks in cargo clearing processes, Nicol said there are certain government agencies that don’t have appreciable input to the money they are collecting from shippers. “For example, SON has what is called SONCAP and that certificate is supposed to be for export and when you talk to them, they will tell you that everybody must register their goods and most of the goods coming into this country have ISO standard. So, what certificate are you then issuing? Between International Standard Organisation and Nigeria Standard Organisation, which one is greater? “So, all these are bottlenecks, we don’t need them. And then you charge so much from shippers. Even if you are collecting N3, 000 per container and you have up to one million containers; calculate how much that will give you. That also goes with NAFDAC. “NAFDAC says it is fast-tracking and they are not Customs, their duty is just to facilitate clearing of the goods. And when you say you are fast-tracking and you don’t have the facility to fast-track any cargo and you are charging importers, is that not a rip-off? And then when the importers complain, you begin to intimidate them in the port. Is that the kind of environment we want, Nicol asked. Stating that government agencies have remained a clog on the wheel of progress in Nigerian maritime industry, the SALS president said that while recent reports have that importers are complying “because you have now shown the world that government agencies are indeed a clog to the progress of import reviews coupled with the investigation being conducted by the Senate on importers, shippers, shipping lines, put together. Then, there is an appreciable income, which means what we are saying is true. So, if everybody does what is right, I don’t think we will be in this kind of situation. “We feel so bad about what we are talking about. You can’t even go to Apapa or Tin-Can port with a good vehicle because it won’t come back the same, Nicol said.
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LOGISTICS & MARITIME
PIND, MADE to Champion Niger Delta Development Agenda
T
he Foundation for Partnership Initiatives in the Niger Delta (PIND) and the Market Development Project in the Niger Delta (MADE) has partnered with the Nigerian Economic Summit’s Sustainability Policy Commission to sponsor a breakout session at the Transcorp Hilton, recently in Abuja. The breakout session looked at, “Low Carbon Investment Opportunities for Economic Recovery and Growth Plan (ERGP) in Niger Delta Communities” as part the key focus in the 2017 edition of the annual Nigerian Economic Summit. The Summit with a theme, “Opportunities, Productivity, and Employment: Actualizing the Economic Recovery and Growth Plan” is said to be a direct response to government’s plan to strengthen and diversify the nation’s economy. According to the organisers, it was expected that the ten policy breakout sessions will generate short, medium and long-term plans that will address the challenges of economic inclusion, access to capital, legislation, skills building, and local production. The 2017 edition was said to be unique, as it marked the first time Nigerian Economic Summit will hold a session on Niger Delta development agenda. And that the action plans drawn up in different sections will be harmonized and shared with all private and public-sector stakeholders. “It is expected that the Federal Government will review and adopt the plans as part of policy guidance towards improvements in the diversification of the Nigerian economy.” And that given the strategic position
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the region occupies in the nation’s socio-economic development, it has become expedient that issues on Niger Delta development are discussed by key stakeholders. According to them, “about 32 million Nigerians representing over 40 different ethnic groups live in the Niger Delta. Although the oil-rich region is the source of 75 per cent of Nigeria’s foreign exchange earnings, more than 70 per cent of the population in the region lives on an average of less than US$ 2 a day. “The region is faced with diverse development challenges. With so much attention and demand on the region and its oil, ironically, the sector provides only 0.01% of Nigeria’s total jobs. Agriculture is still being hampered by low productivity and land-based conflicts in the Niger Delta. Yet, agriculture remains a key sector for unlocking growth for both the region and the whole country, employing approximately 45% of the workforce”. According to PIND’s Deputy Executive Director Mr. Tunji Idowu, “It is no coincidence that this panel is happening this year, following one of the worst economic recessions that Nigeria has seen. “The Nigerian government’s Economic Recovery and Growth Plan (ERGP) is designed to put us back on the path of sustained economic growth, presents a unique opportunity for non-oil sector development in the Niger Delta. This will tackle both youth restiveness and employment. We can only ensure the sustainability of the Nigerian economy by focusing on sectors with high-growth potential. That is why agriculture is so
important,” Idowu said. In his remarks, the Director of Special Duties at the Niger Delta Development Commission (NDDC), Dr. Princewill Ekanim, spoke on the Commission’s work and willingness to partner with the private sector on notable projects. The Country Chair, Shell Petroleum Development Company of Nigeria Ltd (SPDC), Mr. Osagie Okunbor praised the session and the organizers, following the discussions. “I have been listened to the different group sessions and was very impressed with the quality of the recommendations. This was top notch, and I give credit to PIND and MADE for organizing this worthwhile session.” Speaking also, the Union Bank’s Unit Head of Corporate Agriculture, Eze Wakanma, discussed plans to improve farmers’ access to improved technologies and set up Agricultural Finance Centers and locally-based agency banks in farming communities. The external Relations Communications Manager for Shell Petroleum, Sola Abulu noted that the event further brought to fore the problem of access to energy and the need for it to be fixed with homegrown solutions. “It is all about innovation and coming together to deliver value.” The event also engendered collaboration and partnerships. Among the outcomes of the session, were NDDC and Union Bank agreeing to work together on agricultural development in the Niger Delta. It was also noted that the Niger Delta-focused organizations at the session expressed pleasure at the outcome of the event and hoped that it will begin a larger effort to mainstream the region into the national conversation on economic diversification. According to Fidelis Ekom, Advocacy Manager for MADE, “The Niger Delta is crucial to Nigeria’s development, and not just because of oil. Partnerships like ours with PIND and now NESG are important because no organization can address the development challenges facing the Niger Delta alone.” Present at the events were representatives from energy companies such as Oando; Royal Dutch Shell’s All On; agribusiness firms like Syngenta and Olam; the German development organization, Heinrich Boell Foundation; and States and Federal government representatives from Rural Electrification Agency, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), the Presidency and Ministry of Environment, among many others.
Orient Energy Review Vol 6 No.11 November 2017 41
LOGISTICS & MARITIME
INTELS Contract Termination and Matters Arising Senate to Probe contract Termination Intels Threatens legal Action against OGFZA By Oge Obi
The termination of the Pilotage Monitoring and Supervision Agreement between Nigerian Ports Authority (NPA) and Integrated Logistics Services Nigeria Limited (INTELS) on the ground that the said agreement was void ab initio has continued to generate reactions from different quarters. The Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami, had relayed the government’s decision to the Managing Director of Nigerian Ports Authority, Hadiza Bala Usman, in a letter dated September 27. The AGF in a letter titled “Request for Clarification of Conflict Between Executed Agreement and Federal Government Treasury Single Account Policy’ said the agreement, which had allowed Intels to receive revenue on behalf of NPA for 17 years, violates sections 80(1) and 162(1) and (10) of the constitution. Reacting to the issue, the House of Representatives members insisted that the Federal Government did not follow due process in terminating the contract between Nigerian Ports Authority (NPA) and INTELS. Following a motion moved by Diri Douye (PDP, Bayelsa), the members of the lower chamber debated whether the Attorney General of Nigeria has the legal authority to unilaterally terminate the contract. Douye urged the House to investigate the process of terminating the ports management agreement/contract entered into by the Federal Government and INTELS Nigeria Limited 17 years ago. Douye said, “It’s known that INTELS Nigeria has over 7,000 Nigerians in its employment and these Nigerians have other dependents. And if we allow these
people to lose their jobs, the economy will suffer further blow and setbacks. “Terminating contracts of this nature, where the company had taken foreign loans to the tune of $900 million to build up the ports, must be given serious and thorough considerations. And we must also as a House, insist that in taking such decisions, the Nigerian Local Content Act and due process must be followed.” Supporting the motion, Sergius Ogun (PDP, Edo), told the House that workers affected by the contract termination were already protesting. “How can an agreement that has existed for years and showing the world that concessioning works in Nigeria be cancelled in one day, he queried. Opposing the motion, a lawmaker from Lagos, Rotimi Agunsoye, said that the issue is for the judiciary and the House has no business looking into it. “If they have any problem with government, they should go to court. The motion should not come here, Agunsoye said.
42 Orient Energy Review Vol 6 No.11 November 2017
In his reaction, the founder and majority shareholder of INTELS Nigeria Limited, Gabriele Volpi who said that he was not personally involved in the negotiations with NPA apologized to the Federal Government and the NPA over the dispute that led to the termination of his company’s pilotage agency agreement with NPA. Regretting the misunderstanding that had taken place, Volpi said he would ensure that INTELS undertakes a reconciliation process with NPA. And that as a law abiding organisation, INTELS was ready to comply with the Federal Government policy on Treasury Single Account (TSA). “We want to apologise to the FG and NPA over this disagreement with INTELS. I was not personally involved in the negotiations with NPA, but we apologise for what has happened. Speaking further, Volpi said that INTELS remained committed to the development of the country’s maritime sector, including the construction of the Badagry deep seaport. “We are committed to co-operating with the government and NPA in the development of Nigeria’s maritime sector and this includes the Badagry deep seaport. “The Badagry deep seaport is a massive undertaking which will cost billions of dollars and will be the biggest in Africa and would turn Nigeria into a regional hub for ships bringing goods to the continent. “It will also help to move a lot of shipping activities at the Apapa and Tin-Can Island ports and help to decongest Apapa. So, we are serious about our investments in Nigeria, Volpi said. In what seems like an endless stream of trouble and when observers had thought that INTELS and NPA should be in reconciliatory mood, Oil and Gas Export Free Zone Authority (OGFZA) struck another fire accusing INTELS of breach rules. In a letter signed by OGFZA Managing Director, Umana Okon Umana, INTELS Nigeria Limited and her affiliate companies were accused of having “transferred and sold off their assets” imported into the free zone under the zero duty regime, which only free zone companies are entitled to. The OGFZA MD said that the company allegedly did so “without the approval and consent of the Authority,” in contravention of Section 12(6)(a-b) of the Oil and Gas Export Free Zone Act.
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LOGISTICS & MARITIME
INTELS was also accused of failing to submit its records, warehouses and equipment imported under the zero duty regime of the free zone for inspection in compliance with the OGFZA Act. Subsequently, an order for a comprehensive compliance audit was reportedly issued by OGFZA on INTELS’ operations in the last 10 years as well as alleged breaches of laws and regulations governing the free zone operations. The management of Integrated Logistics Services (INTELS) Nigeria Limited in reactions has threatened a legal against the Managing Director, Oil and Gas Export Free Zone Authority (OGFZA), Umana Okon Umana, for making “false and malicious allegations” against the company and its management. INTELS which described the allegations as being spurious said that it is injurious to the business interest as well as the reputation of the company. INTELS stated that it was compiling the losses being suffered by the organisation as result of Umana’s actions both in his official and private capacity. “We have no doubt that as these are deliberate actions, you are well aware of the consequences as these are clearly crude, irresponsible and off-limits. At the appropriate time, we will initiate necessary legal measures to ventilate this
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grievance,” INTELS said. INTELS listed some of the contentious issues between the two companies to include the refusal of OGFZA to renew the 2017 Operating License for INTELS Nigeria Limited (INL); the imposition of land charges by OGFZA; nullification of INTELS’ Industry Wide Standard Tariff (IWST) and other port related charges by OGFZA. INTELS also frowned at Umana’s “penchant for conveying messages to government agencies and clients injurious to INL business interest and reputation; non-payment for INTELS’ premises occupied by OGFZA at Onne and Heliconia Park Estate. The logistics giant said it had engaged OGFZA in discussions with a view to resolving the matters amicably, in line with its conviction that a harmonious working relationship will be of mutual benefit to the two organizations and will be in the overall interest of both parties. “However, it has now become imperative to formally address the various issues on both the law and facts with the hope that OGFZA will be better guided to retrace its ill-advised actions. “OGFZA has refused to release INL licence for 2017 on the ground that INL has to pay all charges and fees demanded by the OGFZA notwithstanding that
INL have paid in full the renewal fee for the licence.” “In the circumstance, we demand that OGFZA should forthwith issue INL licence for 2017.” According to INTELS, OGFZA’s position is misconceived and ill-advised, stating that OGFZA “seems to be suffering from a confused interpretation of what could be described as free zone related activities as against other port or NPA related activities”. “We are aware that there are few cases of overlap, but those are easily traceable to transactions involving free zone cargoes and in those instances the role of the OGFZA is clearly defined along with aspects of the transaction for which it is entitled to charge fees. Still, such fees do not extend to the rates covered by NPA related activities,” it stated. INTELS went further to demand for the payment of debts owed it by OGFZA. These include OGFZA’s indebtedness in the sum of $27,548.85 and N24, 912,510.42 for the various services provided by Intels to OGFZA as well as the sum of $1,719,246.28 for use of INL’s facilities by OGFZA at various locations including Onne, Heliconia Park Estate, Aba Road Estate both in Port Harcourt, Rivers State and Warri, Delta State.
Orient Energy Review Vol 6 No.11 November 2017 43
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COMMUNITY REPORTS
Osinbajo flags off construction of N120bn Bonny-Bodo Road
N
igeria’s Vice President Yemi Osinbajo, on Thursday October 12th, in Bonny flagged off the construction of the N120 billion Bonny-Bodo road to be jointly funded by the Nigeria LNG Limited (NLNG) and the Federal Government, through the Federal Ministry of Power, Works and Housing. Nigeria LNG is contributing the sum of N60 billion to the project. At the ceremony, Professor Osinbajo said “the idea behind Bonny-Bodo road project is almost 40 years old but up till now, it has remained mainly an idea. “This is a public-private partnership arrangement in which the Federal Government and Nigeria LNG Limited will each bear 50% of the N120 billion that it will cost to construct the road. This is the latest in the series of similarly transformational infrastructure partnerships going on across the country. Our gratitude goes to NLNG for their enthusiasm and their cooperation and for putting their money towards this landmark project. I hope other companies and corporation will emulate them in this regard.” Managing Director and Chief Executive Officer of NLNG, Tony Attah, remarked that “the success of this project, for all that it will cost the Federal Government and Nigeria LNG as co-financiers and Julius Berger Nigeria as the project executor, will definitely be the highest and most remarkable accomplishment from a collaboration that is novel to our nation’s infrastructural development.” “Besides, we believe this project effectively re sets the tone for infrastructure development in the Niger Delta and Nigeria as a whole. It is also a significant symbol of the impact that public-private sector collaboration can have on the nation’s overall develop-
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ment. “The provision of this road aligns with the company’s aspiration to support the improvement of social amenities and human capital development. Our greater joy is that the road will ease the plight of residents in Bonny Island, the community that has hosted the Nigeria LNG Plant and other oil and gas operations for decades. Above all, our support for this road project is in fulfilment of our commitment to the development of our host communities in the Niger Delta region,” he added. The Chief Host at the ceremony, Governor of Rivers State, Chief Nyesom Ezenwo Wike, represented by the Deputy Governor of Rivers State, Dr Ipalibo Harry Banigo, said: “The Rivers State government is happy to partner with the Federal Government of Nigeria, NLNG and other development partners to carry out programmes, policies and projects that positively impact on the lives of our citizenry. This is why we regard today’s programme as highly commendable. I urge NLNG to proceed with good speed on the kick-off of Train 7.” In his remarks, the Royal Father of the day, the Amanyanabo of Ancient Grand Bonny Kingdom, King Edward Asimini William Dappa Pepple III, said: “I want to appreciate NLNG for remaining steadfast and standing firmly with us to ensure that this project is supported to the tune of N60 billion, which is half of the entire cost of the project. In the face of obvious delays, NLNG remained steadfast with us. NLNG persisted and the company has demonstrated their commitment to the development of this kingdom. We signed an agreement on sustainable development and that agreement can’t be successful without some critical factors of which are the reasons why this road project is very important.” Describing the road, the Minister of Power, Works and Housing, Barrister Babatunde Fashola, said: “This
is a 40 kilometre road from Bodo to Bonny Island. In between it are three bridges – a 1000 metre bridge across the Opobo creek, a 640 metre bridge against the Nanabie Creek and a 550 metre bridge against the Afa Creek. This will ultimately connect all of the communities and hopefully in a time not too far away, we can drive to Bonny Island from Bodo.” Other dignitaries who graced the event are NLNG’s Deputy Managing Director, Sadeeq Mai-Bornu; Chairman, Senate Committee on Works, Senator Kabiru Gaya; Chairman House Committee on Works, Honourable Toby Okechukwu; Senator Magnus Abe; Chairman, House Committee on Gas Resources, Honourable Fredrick Agbedi; the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside; Julius Berger Managing Director; Wolfgang Goetsch; Chief Operating Officer, Corporate Services at the Nigerian National Petroleum Corporate and former Deputy Managing Director of NLNG, Isa Inuwa, among others. The ceremony comes a month after NLNG signed a tripartite agreement in Abuja with the Federal Government, represented by the Ministry of Power, Works and Housing, and Julius Berger Nigeria Plc to construct the road connecting several communities in Rivers State. The 34 kilometre road is expected to open up great opportunities for rapid socio-economic development of the area and impact on lives of the millions of Nigerians, mainly from the Niger Delta, living on Bonny Island, as well other Niger Delta communities like Ogoni, Okrika, Eleme, Andoni, etc. The road project has been on the drawing board since the 1970s. NLNG’s financial contributions to Nigeria and the Niger Delta have been significant. It has generated more than $90 billion in revenues as at 2015, paid $5.7 billion in taxes and committed more than $200 million to corporate social responsibility projects in the Niger Delta especially in the areas of capacity building and infrastructure development. The company also recently signed a Memorandum of Understanding with Bonny Kingdom for the economic development of the Kingdom over a 25-year period. In that MOU, NLNG committed N3 Billion per annum which cumulatively, is N75bn in 25 years to the sustainable development of Bonny.
Orient Energy Review Vol 6 No.11 November 2017 45
TALKING POINT
‘The Egina EPSO Project offers a unique opportunity for knowledge sharing and transfer in all the technological disciplines’ - Ejizu
F
rank Ejizu is the Chief Operating Officer, Samsung Heavy Industries Nigeria Ltd (SHIN), he’s equally the highest ranking Nigerian in the employment of the vessel making giant. Speaking to Orient Energy Review at the recently held Nigeria Oil and Gas Industry Research and Development Fair and Conference 2017, organized by the Nigerian Content Development and Monitoring Board (NCDMB), held at The Convention Centre, Eko Hotel, Lagos, with the theme: Enhancing Value Creation, Technology Development and Economic Growth through Research and Development; Mr Ejizu laid emphasis on his company’s biggest feat in Nigeria so far, which is the Egina FPSO Project, billed to arrive the country very soon; he also spoke on his company’s efforts in ensuring adequate technology transfer. But besides the ongoing EGINA project, SHIN works for NLNG, and has eyes for both the Zabazaba and Bonga South-West projects. He says his company is in Nigeria to stay and also that they plan to keep up the momentum in capacity development while also looking to increase the level
46 Orient Energy Review Vol 6 No.11 November 2017
of Nigerian Content in their activities. Excerpt, How ready is your company for the arrival of the Egina FPSO and partial in-country integration? We are ready to receive the FPSO. Our readiness is demonstrated in the state- of -the- art integration and fabrication facility we have completed at our SHI-MCI FZE yard. And in order to enable the mooring, integration and assembly of the hull and top- side modules of the FSPO upon its arrival into the country, we have also completed a 502m long quay wall at our SHI-MCI-FZE Yard and obtained all statutory approvals and permits for its operation. We have further dredged the quayside to a water depth of 11.5m to berth the FSPO and concluded arrangement for all related towage activities including simulation test for Lagos Channel passage. Above all, we have a formidable team of well trained and motivated personnel ready to commence the integration works. What are your company’s plans to expand the size of its fabrication yard at Tarkwa Bay? Currently our yard can handle 10,000MT of fabrication annually. However, during the design of the facilities, provisions were made for potential increase in capacity as project exigencies dictates. We are hopeful this will be the case in view of the current awareness with respect to the Nigeria Oil and Gas Industry Content Development (NOGICD) Act. How much technology has SHIN transferred to Nigeria through this project? Specialized Projects like the Egina EPSO Project offers a unique opportunity for knowledge sharing and transfer in all the technological disciplines involved. Technology transfer has been in the forefront of our policy in carrying out this project. To this end, we formed SHI-MCI-FZE and constructed the state of the art fabrication and integration yard, which is exactly modelled on what is obtainable in our world class facilities in Geoje yard [South Korea]. In
the course of work, we have utilized specialized technological software uniquely developed by Samsung Heavy Industries and brought in world class experts in construction of deep offshore facilities, who have passed on their skills and experiences to thousands of Nigerians that have been placed to understudy them. Furthermore, in aligning with the Board’s mandate and the desire of the government to increase capacity and competencies of the Nigerian engineers and the applicable workforce through targeted trainings aimed at transferring knowledge, Samsung Heavy Industries Nigeria, through its National Human Capacity Development Initiatives, trained and is currently training Nigerians on the back of the project. During the detailed engineering phase of the project, 33 Nigerian engineers participated in a one year training programme across nine (9) engineering disciplines (mechanical, process, structural, piping, electrical, quality, assurance, project controls, interface and instrumentation). The trainees evolved from zero level to acquiring skills that qualified them to participate significantly and actively in the Egina FPSO detail engineering and design Currently in tandem with the construction phase of the project, 100 Nigerians are being trained in construction related disciplines. The skill sets and competencies that have been acquired with international certifications include but not limited to: Non- destructive testing, project planning, coating inspection, welding engineering and inspection, lifting operation, cost control, welding, machining, fitting, etc. Also, more than 300 welders have been trained and certified in various advanced welding and certified in various advanced welding processes in our state of the art Welders Training and Qualification Centre (WTQC). We have also trained and certified Nigerians in specialized jointing techniques like GRE (Glass reinforced Epoxy ) pipe bonding. Most of the above have been and are still currently engaged in the execution of the project.
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TALKING POINT
How many jobs did Egina FPSO create in your facility and what are the chances they would be retained at the end of the project? The Egina EPSO project has created an exponential number of jobs running into an estimated 20,000 positions judging by its cascading effect outside our facility. But to restrict the answer to our SHIMCI-FZE facility, the project has created more than 1,200 direct jobs for Nigerians. This is spread across many disciplines including but not limited to: project management, welding, fitting, logistics and other support services. It is our hope that this state of the art facility would be maximally utilized through continuous patronage by all stakeholders, which would in turn ensure the retention of personnel.
lenging to get Nigerian engineers with requisite experience and expertise to undertake this segment of the work. We however appreciate the effort put in by the consortium of the Nigerian engineering firms contracted to execute these works and the innovative ways they employed to achieve completion. Obstacles were also encountered in the development of our fabrication and integration facilities, as amongst other challenges we had to convert a green field swamp into a state of the art fabrication facility. However, with our international experience and commitment, we were able to sur-
mount these challenges. The Egina project, particularly the FSPO Integration, has become the benchmark for future deep-water projects. What new things can your company do on forthcoming deep-water projects? The fabrication and integration facility is of course now fully functional. We have demonstrated that we can handle complex engineering and fabrication jobs in-country. The immediate benefit accruable is that a greater scope of any future FSPO topside modules and other offshore related facilities can be executed by us in- country.
This is the first EPSO project post the NOGICD Act. What have been the unique challenges you have grappled with? The Egina EPSO is highly specialized and the NOGICD Act prescribe that a minimum of 80 percent of the man hours to be expended on Detailed Engineering in Deep Offshore facilities- Hull and Topside were to be expended in-country. It was extremely chal-
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Orient Energy Review Vol 6 No.11 November 2017 47
With Chevron’s approach to Nigerian Content,
Everyone Benefits...
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 benetting Nigerian businesses and thousands of technical professionals thriving in the Oil and Gas industry. Proof that with CNL, when it comes to Nigeria Content, everyone benets.
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