Oer December 2016 by Orient Energy Review

Covering Local Content in Energy Oil & Gas N500 7.0Ghc US $3.00 2.5

Vol. 5 No. 12 December, 2016

Funding Nigerian content Eyeing OPEC’s $4.4bn OFID

‘We are beginning to see the positive impact of the Local Content Act in Nigeria’ – H.E Mohammed Sanusi Barkindo, Secretary General, Organisation of Petroleum Exporting Countries (OPEC)

Impending Tariff Review: ‘Operators are Mindful of the Country’s Recession’-Akah

Ghana’s Election: Seven Extractives Governance Recommendations for the Next Government

‘Funding And Community Restiveness Are Mitigating Local Content Achievements In Nigeria’ – MD Topline Limited.

PUBLISHER/EDITOR-IN-CHIEF: Nneka Ezeemo EDITOR: Margaret Nongo-Okojokwu PRODUCTION: Chiamaka Umeh CORRESPONDENTS: Shola Akingboye (Abuja Bureau Chief) Vivian Osuji Isreal (Head, South-South Bureau, Port Harcourt) Jerome Onoja (Lagos) Gilbert Boyefio (Ghana Correspondent) Business Development Executive: Jerome Onoja Arit Asuquo Dan Ruth Muo (South Africa) CREATIVE: EtimSkill CIRCULATION MANAGER: Ajayi Kayode LONDON OFFICE: Charity Place, Unit 1 Thurrock Park Way Thurrock Park Ind. Estate Tilbury, Essex Rm 18 7Hz. +447974199137

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

CONTENT

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

OIL AND GAS PEOPLE 5 POWER 6 TALKING POINT 8 10 COVER INTERVIEW 17 20 - 21 PHOTO GALLERY

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Welcome!

EDITOR’S NOTE

he growth of local content in the Nigerian petroleum industry has over the years been stunted by funding challenges and lack of genuine commitment, both on the part of government, international oil companies and other practitioners in the industry In response to this, Nigeria’s Federal Government set up the Nigerian Content Development Fund, NCDF. The NCDF was established by the Nigerian Oil and gas Industry Content Act, NOGICD Act, 2010, to address financial and liquidity challenges of the Nigerian companies who operate within the oil and gas industry. However, despite the setting up of the NCDF, funding challenges still persist, especially with issues surrounding interest rates and the reluctance of Nigerian banks to lend to the petroleum industry following the volatility in the industry globally. To this end, operators in the industry are now forced to look elsewhere for funds, turning their attention to international financial markets and institutions for cheaper source of funding, which is where the Organisation of the Petroleum Exporting Countries, OPEC, plays a major role. Orient Energy Review’s team spoke Exclusively with the Secretary General of The Organization of the Petroleum Exporting Countries (OPEC) His Excellency Mohammed Sanusi Barkindo, revealed that the OPEC Fund for International Development, OFID, can be explored by Nigeria as well as other countries facing similar challenges like Nigeria, to grow indigenous capacity and pursue development. Once again on our Power series, our Abuja Correspondent, Shola Adegboye spoke with Dr. Anthony Akah, Acting Chairman, Nigerian Electricity Regulatory Commission (NERC. Dr. Anthony Akah who is an authority in power matters, having already carved a niche for himself in various aspect of the electricity chain, spoke on sundry issues in the power sector, including the market’s growing illiquidity, the metering plans by Distribution Companies (DisCos), as well as the impending tariff review, which in his words, would take into consideration the current economic recession and consumers’ ability to pay. This edition is surely loaded for you as we explore these and many other interesting stories in this final edition for the year 2016. Here’s is wishing all our wonderful readers a wonderful Christmas celebration and a prosperous New Year in 2017 Do send us your feedback using the email addresses below. Merry Christmas! Margaret Nongo-Okojokwu Editor, Mobile +234-8136329948 m.okojokwu@orientenergyreview.com info@orientenergyreview.com orientenergyreview@gmail.com

THE POWER ROUND TABLE LOCAL CONTENT DRILLING/ EXPLORATION

ALTERNATIVE ENERGY

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Orient Energy Review December, 2016

OIL AND GAS PEOPLE

Trump Picks Exxon CEO Rex Tillerson as US Secretary Of State when it was speculated that he would consider the offer “due to his sense of patriotic duty and because he is set to retire from the company next year.” Tillerson’s appointment would introduce the potential for sticky conflicts of interest because of his financial stake in Exxon: he owns Exxon shares worth $151 million, according to recent securities filings.

n a move that is certain to infuriate those who see Trump as nothing more than a puppet of the Kremlin, moments ago NBC reported that Rex Tillerson, CEO of Exxon Mobil and late entrant into the SecState race after his first meeting with the president elect this past Tuesday at the Trump Tower, has been picked by Trump to serve as his next Secretary of State. As NBC adds, Tillerson met recently with Trump at Trump Tower in New York, the president-elect’s spokesperson confirmed. The selection of Tillerson comes after Trump and his transition team spent weeks searching for someone to fill the post of the top U.S. diplomat. Former Republican presidential candidate Mitt Romney and former New York City Mayor Rudy Giuliani were reportedly in the running. Giuliani said Friday he had taken his name out of consideration. The 64-year-old Texas oilman, whose friends describe as a staunch conservative, emerged as a Secretary of State contender only last week following a meeting with Trump,

A quick biographical sketch of Tillerson courtesy of the WSJ: The son of a local Boy Scouts administrator, Tillerson was born in Wichita Falls, Texas. He attended the University of Texas, where he studied civil engineering, was a drummer in the Longhorn band and participated in a community service-oriented fraternity. He joined Exxon in 1975 and has spent his entire career at the company. For most of his adult life, he has also been closely involved with the Boy Scouts of America, even occasionally incorporating the Scout Law and Scout Oath into his speeches. Mr. Tillerson played an instrumental role in leading the organization to change its policy to allow gay youth to participate in 2013, Mr. Hamre said. Former Defense Secretary Robert Gates subsequently moved to lift the organization’s ban on gay adult leaders as Boy Scouts president in 2015. “Most of the reason that organizations fail at change is pretty simple: People don’t understand why,” Mr. Tillerson said in a speech after the 2013 decision, urging leaders to communicate about the policy to help make it successful. “We’re going to serve kids and make the leaders of tomorrow.” However it is not his Boy Scout exploits that will be the key talking point for pundits in the coming days, but rather his close relationship with Russian president Vladimir Putin.

According to the WSJ, few U.S. citizens are closer to Mr. Putin than Mr. Tillerson, a recipient of Russia’s Order of Friendship (bestowed by the president), who has known Putin since he represented Exxon’s interests in Russia during the regime of Boris Yeltsin. “He has had more interactive time with Vladimir Putin than probably any other American with the exception of Henry Kissinger,” said John Hamre, a former deputy defense secretary during the Clinton administration and president of the Center for Strategic and International Studies, a Washington think tank where Mr. Tillerson is a board member. Exxon CEO Rex Tillerson with Vladimir Putin, then Russia’s prime minister, at a signing ceremony in the Black Sea resort of Sochi in August 2011. In 2011, Mr. Tillerson struck a deal giving Exxon access to prized Arctic resources in Russia as well as allowing Russia’s state oil company, OAO Rosneft, to invest in Exxon concessions all over the world. The following year, the Kremlin bestowed the country’s Order of Friendship decoration on Mr. Tillerson. The deal would have been transformative for Exxon. Mr. Putin at the time called it one of the most important involving Russia and the U.S., forecasting that the partnership could eventually spend $500 billion. But it was subsequently blocked by sanctions on Russia that the U.S. and its allies imposed two years ago after the country’s invasion of Crimea and conflicts with Ukraine. Tillerson spoke against the sanctions at the company’s annual meeting in 2014. “We always encourage the people who are making those decisions to consider the very broad collateral damage of who are they really harming with sanctions,” he said. As such, many have speculated that under his regime, the State Department may quietly drop any existing sactions against Russia.

Esimaje Brikinn Now General Manager, PGPA Chevron Nigeria Ltd ...As Deji Haastrup Retires

hevron Nigeria Limited (“CNL”), operator of the joint venture between the Nigerian National Petroleum Corporation (NNPC) and CNL (the NNPC/CNL JV), has announced the appointment of Mr. Esimaje Brikinn to the position of General Manager, Policy, Government and Public Affairs (PGPA). Mr. Brikinn replaces Mr. Deji Haas-

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trup, who recently retired from the company after 21 years of distinguished service to CNL and Chevron Corporation. Brikinn has since resumed work in his new position. Mr. Brikinn received his Bachelor of Engineering degree in Agricultural Engineering from the Federal University of Technology Akure in 1989 and a Master’s degree in Production Engineering (Industrial Engineering option) from the University of Benin in 1993. He also holds a certificate in Sustainable Environmental Management from the College of Natural Resources of the University of California, Berkeley. He joined Chevron Nigeria on April 1, 1996 as an Operator Trainee for the Escravos Gas Project and moved to the Policy, Government and Public Affairs (PGPA) department in year 2000 as a Field Public Affairs Representative, interfacing with community stakeholders in support of field operations and capital projects. Within PGPA, he has held numerous positions

of increasing responsibility in Nigeria and the United States in the course of his career. These include: Community Engagement Representative, Government Affairs Representative, Community Engagement Coordinator, Social Performance Advisor, Manager Social Performance & Planning and Area Manager, PGPA West. As Area Manager, he provided leadership in planning and executing Company’s strategies for stakeholder engagement, social investment and social issues plus risk management in support of Chevron’s operations and capital projects in the Niger Delta. According to Mr. Clay Neff, Chairman & Managing Director, CNL, Esimaje was appointed to the position based on his “demonstrated leadership, breadth of experience and proven ability to build effective relationships with our key stakeholders.”

Orient Energy Review December, 2016

POWER

Nigeria: Elec- Firm to Power 75,000 Housetricity Revenue holds, SMEs In Northern Nigeria Shortfall to Hit N809b in December T

he Nigerian electricity market revenue shortfall has been projected to hit N809 billion by December 2016. This was revealed by the Association of Nigerian Electricity Distributors, ANED to news reporters in Lagos. ANED Executive Director for Research and Advocacy, Mr. Sunday Oduntan said the current challenges bedeviling Nigerian Electricity Supply Industry, NESI three year after it was privatized led to the shortfall stating that none-cost recovery nature of the tariff had a direct impact. “The current electricity market revenue shortfall is projected at N809 billion by December 2016 caused by a direct impact of the non-cost recovery nature of the tariff,” Oduntan said. He disclosed that under the Performance Agreement for the sector, the Federal Government stated that there would be cost reflective tariffs from the beginning which never happened as Residence Tow, R2 customer class were politically frozen in 2015 resulting in a loss of over N300 billion in December same period. Oduntan added that the delay in reflecting costs in the power sector means a growing increase in deficits for investors stressing that the sector is no longer bankable as banks are unwilling to lend Distribution and Generation companies to inject critical capital investment. “Banking sector is exposed to oil, gas and the power sector to the tune of over three trillion Naira,” he said. Other challenges bedeviling the sector according to Oduntan, includes regulatory uncertainty, gas supply, vandalism of gas pipeline, neglect of aging turbines, limited transmission capacity, none payment of electricity bills by customers and government agencies, energy theft, and limited access to finance. He therefore urged the Federal Government to implement total cost recovery, improve transmission capacity, increase funding in the sector, assist in curbing energy theft, access to forex and uninterrupted gas supply as requisite to improve the current state of the power sector.

In a bid to alleviate the country’s significant electricity deficit, Dutch firm, Nova-Lumos is set to roll out a 10 megawatt (mw) offgrid system for 75,000 households and Small Medium Enterprises, SMEs in northern part of the country. In a report made available to press, by the Africa Corporate Data on its Nigeria off-grid solar overview for third quarter of 2016, the firm received $15 million in the past twelve months from the US Overseas Private Investment Corporation and a $218,000 grant from the Department for International Developments (DFID’s) Solar Nigeria Programme. According to the report, “high capital costs for solar equipment and installation have traditionally limited the sustainability of off-grid systems in many parts of Africa, but increasingly, providers are targeting Pay As You Go (PAYG) schemes to help reduce the hurdles for lower-income clients. “The off-grid equipment from Nova-lumos will be leased rather than sold, for example, the usage of a PAYG scheme is similar to a prepaid mobile subscription. The company is collaborating with mobile provider MTN Nigeria, which will allow consumers to pay using mobile wallets,” part of the report reads. The report further stated: “Nigeria’s government has targeted a 20 percent contribution from renewables by 2030, of which more than 5300 mega watt (mw) should come from solar alone,” adding that the authorities have already signed power purchase agreements for a number of larger solar facilities. These facilities according to the report, includes: Pan Africa Solar 75mw plant, and

Orient Energy Review December, 2016

Nova Scotia plant 100 mw, both located in Katsina State, Nigerian Solar Capital Partners 100mw plant in Bauchi State, and Anjeed Innova Group 100mw plant. The report stated that much of the increased capacity will be coming from off-grid projects. “In spite of the ambitious plans currently underway, Nigeria’s off-grid solar industry is hopeful as findings reveal that between H2 2014 to H1 2015; only 130,000 solar products were sold. The PAYG schemes for off-grid equipment are crucial for the provider cash flow, given that the bulk of potential clients in Nigeria, according to Bloomberg New Energy Finance, live on less than $2 a day. While off-grid PV electricity is far cheaper than diesel generators – at N35 to N53/kilowatt hour (kwh) versus N40 to N70/kwh usage is likely to remain modest, with Bloomberg estimating that the maximum average spend on lighting for off-grid Nigerians would be $144 annually,” the report stated. In July 2016, Nigeria’s Bank of Industry disbursed the sum of N75.8 million to partner Schneider Electric, ARNERGY and GVE Projects Limited for the pilot scheme of off-grid solar systems in Anambra, Delta, Niger, Osun, Kaduna, and Gombe states respectfully. A handful of communities in each state have been selected for the scheme, which will consist of 2km long 230VAC minigrid networks that connect roughly 200 households in each area. Similarly, ARNERGY in June this year announced that it would focus solely on the PAYG model including for its six-state collaboration with GVE and Schneider Electric while British firm, BBOXX, has also announced its intention to establish a franchise in Nigeria before the end of the year.

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TALKING POINT

‘At Combifloat, we can cut down the overall CAPEX and OPEX of marginal fields in the range of 25 – 30% using our C-2000 class of Jack-Up’ - Bas De Jong

ombifloat Systems B.V. is the exclusive supplier of the modular Combifloat® pontoons. A wide variety of clients in the offshore and marine construction industry are using this flexible modular floating and elevating construction system, eminently suitable for coastal and inland waters. By means of a special but simple coupling and locking system, the units can be assembled to any project-specific configuration. The company recently completed the design, including Bureau Veritas class notation, of its latest development: the C-1500 and C-2000. This monohull design will be capable of operating in approx. 65 mtrs water-depth with an approx. 2000 mt deckload and will also be available in a semi-modular version. Orient Energy Review caught up with MR. BAS DE JONG, the Managing Director at the 23rd Africa Oil Week in Cape Town, South Africa, where he spent time telling us more about Combifloat’s capabilities. Excerpts. Could you please tell us a bit about yourself and position in Combifloat? I am the Managing Director and the major shareholder in the company. I started my career way back in the mid 70’s with an American engineering company called Fluor then I went to a heavy lift operator called Wijsmuller Transport which eventually merged into Dockwise where I was the commercial director for quite a few years. There after I ran a ship yard in Norway for about a year and then I took off with Combifloat in 1999 and have been running it since then. How long has Combifloat been in existence and what is your expertise? Combifloat has been around for about six decades. Our expertise is supplying marine equipment in the shallow water areas. That means water of maximum 60, 65 metres not only coastal areas but inland lakes. The essence of the system is that it is a module system so we can easily truck it, ship it and (air) lift it. We can turn all those little modules into a big

self elevated platform that can take up to about 1,000 tonnes. We do this worldwide, we do 95 percent export. Our head office is based in Rotterdam and we have an office in Dubai, an operation facility in the Middle East, as well as in Poland. We have been focusing quite intensely on the African continent for the last couple of years. We are seeing a lot of opportunities here for our products and the gulf of Guinea is an obvious example. We are also on the East coast of Africa and we are hoping to be busy in Tunisia (North Africa) in shallow water drilling activities. Not only oil and gas related projects but also port development and building of new harbours and jetty(s) are of our interest. In addition, we are focusing on the inland water lakes like lakeAlbert, Lake Tangayika. We can be used for all sorts of marine activities. With your expertise in building of harbours do you have intention of looking at free trade zones across Africa? We will certainly be willing to take a look at that as a base for our further growth in Africa. Initially we would focus on the free trade zones from a perspective of helping to build the free trade zones and helping to build and develop the harbours that come around with the free trade zones. I also want to find out if there has been any innovative technology deployed in your

Orient Energy Review December, 2016

operations recently? Yes we have just done our presentation here at the African Oil Week earlier, yesterday, where we introduced a new concept to develop marginal oil fields into a water depth of up to 65 metres. We are focussing on marginal fields with a capacity up to a maximum of about 10,000 barrels a day and a life cycle of about 10 – 12 years. Using our C-2000 class of Jack Up, we can cut down the overall CAPEX and OPEX in the range of 25 – 30 percent .So I think, that is a very interesting concept for the African continent which will hopefully trickle in actual developments even when the oil prices are low. Have you deployed this technology anywhere and what has been the result? Since it is a new development it hasn’t been put to work yet but as we speak we are generating quite a bit of interest. To deploy it from scratch will take approximately 12 – 14 months. What are some of your major clients that you have worked for? In recent times on the African continent we have been working for

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TALKING POINT PETRONAS in Sudan, Shell in Gabon, Sonagol in Angola, and a few companies in Nigeria. We have done studies for Tullow oil, DNO, and a couple of others. Outside Africa we worked for varieties of oil companies in the Caspian Sea, which is another targeted area for us and also in the Middle East, South East Asia, South America and Australia.

or register companies to carry out the work? Since we haven’t established a permanent base in Africa yet we mobilize our equipment from the Middle East and after project completion we demobilize the equipment either to the next job in Africa or go back to base in the Middle East.

What’s your model in the African continent? Do you have JVs

‘Vandalism in the Niger Delta is causing us untold hardship’ – NAPE Scribe

Dr Anthony Enebeke Ofoma

r Anthony Enebeke Ofoma is the current General Secretary of the Nigerian Association of Petroleum Explorationists (NAPE) and also the Account Manager of Halliburton (Landmark) Nigeria. He spoke with Orient Energy Review on the sideline of the Africa Oil Week in Cape Town, South Africa; on the need for increased exploration activities in Nigeria, while commenting on the spate of bombing of pipelines in the Niger Delta region of Nigeria. Excerpts. How are NAPE members coping with the fall and drop in this oil price? Well it is really biting because the fall in oil price is a roller

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coaster effect. It has really hit our members; we have some of our members that have been retrenched or downsized or outrightly made redundant in these organisations due to this. We understand what is happening in the industry at the moment; oil prices are down, the total down turn in the industry and of course downsizing of members by companies, these are parts of problems we are being faced with. We have to tackle our realities based on these happenings in the industry. However, this is really not good for our members, it poses a great danger for us, it is unfortunate but my thinking here is that it won’t last forever, it isn’t going to take too long before we get over this. I appeal to the companies to find a way to cushion these effects, maintain our members, perhaps maintain the experienced ones they have so that when things pick up they won’t have problem trying to hire experienced hands which might be double the price they would pay at that time. What are some policies you think government can put in place to assist your members in their work places? I know we have a lot of policies set out by government. We have some of the Acts that have been in existence for years. I think government in their wisdom should be able to invest more especially at this time to invest more in exploration. They need to find these reserves so that when things pick up they can go into drilling, invest more in exploration I understand that going into drilling now would be very expensive, but they should channel their energy into more exploration activities to discovery more reserves.

What do you have to say about the spate of pipeline vandalism that has been on-going in the Niger Delta? Vandalism in the Niger Delta is sickening, it is dangerous. We have had people vandalise government property especially when it comes to public property like the pipelines, it is really not good, it causes inflation in the economy, sabotaging the efforts of government and the operators as well. Usually, once these pipelines are vandalised, one has to repair them, if they get busted and subsequently result to fire outbreaks, we would have to put off the fire, purchase another one and then lay it again with another round of labour and payment. So it is like doing a double job for something we have done before, it encroaches into our finances especially our revenue in the country. So I think invariably the vandalism in the Niger Delta is causing us untold hardship and I want to appeal to the youths in the country to look at this from a different perspective, vandalism of pipeline is not the solution; constructive discussion with the government can see us through. We have to dialogue that is why we are human beings. When we destroy these properties, let’s realise that this is our property, it is not only for the government and when we say government who is government; it is you and I. So when we destroy these pipelines we are invariably destroying our own collective wealth. So I would appeal them to discontinue these acts, allow things to move and then engage government on constructive discussions rather than taking laws into their hands.

Orient Energy Review December, 2016

COVER

Funding Nigerian content Eyeing OPEC’s $4.4bln OFID

leum Exporting Countries (OPEC) a Nigerian, H.E. Mohammed Barkindo, who revealed that the OPEC Fund for International Development, OFID, can be explored by Nigeria as well as other countries facing similar challenges like Nigeria, to grow indigenous capacity and pursue development. One major challenge that has hindered the growth of local content in Nigeria is the difficulty in assessing finance. Government, as well as critical stakeholders in the industry had also

OFID and WPC lead launch of “Oil and Gas Industry Energy Access Platform” to support universal energy access by 2030

Orient Energy Review December, 2016

not shown genuine commitment to promoting local content. Due to funding challenges, the Federal Government set up the Nigerian Content Development Fund, NCDF. The NCDF was established by the Nigerian Oil and gas Industry Content Act, NOGICD Act, 2010, to address financial and liquidity challenges of the Nigerian companies who operate within the oil and gas industry.

espite the setting up of the NCDF, funding challenges still persist, especially with issues surrounding interest rates and the reluctance of Nigerian banks to lend to the petroleum industry following the volatility in the industry globally. To this end, operators in the industry are now forced to look elsewhere for funds, turning their attention to international financial markets and institutions for cheaper source of funding, which is where the Organisation of the Petroleum Exporting Countries, OPEC, plays a major role. OPEC, was primarily

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COVER STORY

set up at the Baghdad Conference, between September 10 to September 14, 1960, primarily to coordinate and unify the petroleum policies of its member countries and also to protect the interest of its members. This, according to the OPEC’s objectives, is in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry. Over the years, the institution, amid disagreement among its members over certain issues and interests, had played that role effectively, and it has played a major role in bringing some level of stability in the price of crude oil until recently. In addition to promoting the interests of its members, the member countries established the OPEC Fund for International Development (OFID).

FID was conceived at the Summit of the Sovereigns and Heads of State of the OPEC Member Countries (MCs) held in the Algerian capital, Algiers, in March 1975. The Solemn Declaration, issued by the Summit, ‘reaffirmed the natural solidarity which unites OPEC www.orientenergyreview.com

Member Countries with other developing countries in their struggle to overcome under-development, and called for measures to strengthen cooperation with these countries. In this spirit, the OFID was established as a collective financial facility to consolidate the assistance extended by its Member Countries namely Algeria, Ecuador, Gabon, Indonesia, Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. OFID’s resources are additional to those already made available by OPEC MCs through a number of bilateral and multilateral channels. The resources of OFID consist mainly of voluntary contributions by OPEC MCs and income derived from OFID’s investments and loans.

he fund was established by the member states of OPEC in 1976 as a collective channel of aid to the developing countries, working in cooperation with developing country partners and the international donor community to stimulate economic growth and alleviate poverty in all disadvantaged regions of the world. According to OPEC, OFID does this by providing financing to build essential infrastructure, strengthen social services delivery and promote productivity, competitiveness and trade. OFID’s work is people-centered, focusing on projects that meet basic needs — such as food, energy, clean water and sanitation, healthcare and education — with the aim of encouraging self-reliance and inspiring hope for the future. Key objectives of the OFID include promoting cooperation between OPEC member countries and other developing countries as an expression of SouthSouth solidarity; to help particularly the poorer, low-income countries in pursuit of their social and economic advancement. OFID does these by extending concessionary financial assistance in

the form of loans for development projects and programs and for balance of payments support and trade financing; by contributing to the resources of other development institutions whose work benefits developing countries and by serving as an agent of OPEC Member Countries in the international financial arena whenever collective action is deemed appropriate. OFID’s resources consist of voluntary contributions made by OPEC member countries and the accumulated reserves derived from its various operations. At the close of the year 2015, contributions pledged by OPEC member countries totalled $4.433 billion, out of which $3.462 billion was direct contributions to OFID. Its Reserve Account stood at $2.603 billion. OFID’s operations were launched with initial resources of about US$800m. This amount has since then been replenished four times. The last replenishment of US$1b was approved by the Ministerial Council in June 2011 as a direct response to the increasing needs of developing countries and the negative impact of the financial crisis on their economies All non-OPEC developing countries are, in principle, eligible for OFID assistance. However, the least developed and other low-income countries are accorded priority and, therefore, receive a larger share. Over the years, OFID has spread its financing to 134 countries, of which 53 are in Africa, 43 in Asia, 31 in Latin America and the Caribbean, and seven in Europe. OFID’s total approved commitments distributed through its four financing mechanisms and contributions to other institutions stood at US$19,665m as of the end of June 2016.

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COVER STORY

In the public sector, OFID has implemented 18 lending programs since its inception. The 19th Lending Program, approved for a three-year duration, became effective 1 January 2014. As of January 1, 2016 close to two-thirds of the outstanding loans were with Low Income Countries and half of all commitments were to Africa. Under the Private Sector Facility established in 1998, 245 operations have been approved in support of private entities in Africa, Asia, Latin America and Europe. By the end of June 2016, US$2,725m had been committed and US$1,667m disbursed. In 2006, a Trade Financing Facility was launched. By the end of June 2016, US$2,571m in term loans had been committed and US$2,358m had been disbursed. In addition, US$1,950m in risk-sharing guarantee programs had been approved.

n the framework of grants, assistance is extended to social and humanitarian aid and social development operations through six grant programs; Technical Assistance, Research and Similar Activities, Emergency Relief Aid, Special Health Program, Energy Poverty and the Palestine Program. OFID has also established a special grant account to respond to specific global needs — such as the grants for the establishment of the Common Fund for Commodities and the International Fund for Agricultural Development (IFAD). By the end of June 2016, 1,713 grants amounting to US$622m had been extended. In addition, OFID channelled $972m to two international institutions: it has channeled OPEC Members’ contributions to the

initial capital and first replenishment of IFAD’s resources and made irrevocable transfers in the name of seven OPEC Members to the Trust Fund of the IMF.

ocus on energy poverty: In November 2007 during the OPEC Summit in Saudi Arabia, OFID was mandated to align its programs with energy poverty eradication. In 2008 OFID, in implementing the above mandate, started action on the “Energy for the Poor” initiative. To enhance these efforts the OFID Ministerial Council, in its June 2012 Declaration, committed a minimum of a revolving US$1b, which was announced by OFID management at Rio +20 As stated above, these funds are available for developmental projects in disadvantaged countries and Nigeria can tap into this fund to pursue its local content agenda, to grow indigenous capacity in the petroleum industry. In an interview with Orient Energy Review, during the launch of the World Oil Outlook for 2016, at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) in November 2016, the Secretary General of OPEC, H.E Mohammad Barkindo, confirmed that funding has been a challenge in Nigeria, as well as with all of its member countries. “I have been visiting them, I just came back from Kuwait; all our member countries are facing a variety of funding issues and this is just a phase that we shall all together overcome,”

I am very glad that the industry in Nigeria has responded well and we have started to see the positive impact of the Local Content Act

Orient Energy Review December, 2016

he explained. He affirmed that local content is very important, adding that during his time at the NNPC (Nigerian National Petroleum Corporation), the NNPC championed local content NNPC, and worked with the National Assembly to enact the Local Content Act. “I am very glad that the industry in Nigeria has responded well and we have started to see the positive impact of the Local Content Act,” he noted. Barkindo stated that the OFID has grown in terms of size and its portfolio of investment, adding that it was principally set up to assist countries complement the efforts of their government in combating energy poverty and to achieve suitable development goals. According to him, OFID has a large portfolio and it is very active in pursuing developmental efforts in Africa. Giving an analysis of the Nigerian Content Act six years after, Barkindo said, “It is a process, and the fundamental part of it was to have put the legislation in place, this also has been made possible after so many years. Putting in place a legislation that took into account, the interests of all the stakeholders, not only the national oil company, but also the Joint Venture (JV) partners and the government, shows we are getting it right. However, this is a gradual process; we would get it right eventually’ he opined. In addition to comments on how Nigeria can tap into the opportunities presented by OFID to grow local content, Barkindo also talked about the exemptions granted Nigeria and a few other countries regarding crude oil production freeze.

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COVER STORY

‘We are beginning to see the positive impact of the Local Content Act in Nigeria’ – H.E Mohammed Sanusi Barkindo, Secretary General, Organisation of Petroleum Exporting Countries (OPEC)

.E. Mohammed Sanusi Barkindo is the 28th and incumbent Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), an accomplished oil technocrat and veteran of OPEC possessing a wealth of experience in the oil and gas industry, both in Nigeria and internationally. From 2009 to 2010, he was Group Managing Director of the Nigerian National Petroleum Corporation (NNPC). Previous to that, he served as Deputy Managing Director of Nigerian Liquefied Natural Gas, a joint venture between NNPC, Shell, Total and Eni. Earlier in his career, he was Special Assistant to former Minister of Petroleum Resources and OPEC Secretary General, HE Dr Rilwanu Lukman. Dr. Barkindo also worked in several key roles at OPEC between 1986 and 2010. In 1986, he was appointed to Nigeria’s delegation to OPEC, and from 1993 to 2008, served as Nigeria’s National Representative on the

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Organization’s Economic Commission Board. In 2006, he served as Acting Secretary General of OPEC, and represented Nigeria on OPEC’s Board of Governors from 2009 to 2010. He has also helped produce the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto protocol as the leader of Nigeria’s technical delegation to the UN ne-

gotiations since 1991. He also served as Vice President of COP15 in 2010, when he chaired the opening session in Copenhagen attended by more than 100 heads of state and government. He is the longest serving member of the country’s delegation to the UNFCCC. He also served as Chairman of the OPEC Task Force of the United Nations Commission on Sustainable Development for the 15th session. After earning a bachelor’s degree in political science from Ahmadu Bello University in Zaria, Mr. Barkindo went on to achieve a postgraduate diploma in petroleum economics and management from the College of Petroleum Studies at Oxford University and a master’s degree in business administration from Southeastern University in Washington, DC. He is also a holder of an Honorable Doctorate Degree in Science from Modibbo Adama, Federal University of Technology, Yola, Nigeria. He is a fellow member of various international petroleum institutions such as the Institute of Petroleum, London. Dr. Barkindo spoke with Orient Energy Review’s team exclusively, on the sidelines of the Abu Dhabi International Petroleum Exhibition

Orient Energy Review December, 2016

COVER STORY

Dr. Barkindo, on his desk

and Conference, (ADIPEC) where the OPEC team officially launched the World Oil Outlook for 2016; speaking passionately on the progress of the Local Content Act in Nigeria, bringing to bare the aspects of funding and how Nigeria can tap into OPEC’s OFID, while highlighting the future of Africa in the World Oil outlook presentation. Excerpts. What is your take on the Local Content Act in Nigeria?

ocal content is very important. We championed local content at NNPC for many years and we worked with the National Assembly to enact the Local Content Act and I am very glad that the industry in Nigeria has responded and we are beginning to see the positive impact of the local content Act. Six years after, do you think we are getting it right? It is a process and the fundamental part of it is to put the legislation in place and this we did after some many years also, to get a legislation that took into account the interests of all the stakeholders, not only the national oil companies, but also the Joint Venture (JV) partners and the government. Gradually we will get there, but it is a process.

Some people complained about the funding process of the Act, I don’t know if you are aware of that? Funding has been a challenge not only in Nigeria but with all our member countries also. I have been visiting them, as a matter of fact I just came back from Kuwait; all our member countries are facing a variety of funding issues and this is just a phase that we shall all overcome together. We would like to find out what provision OPEC has for African member countries considering the huge development gaps between Africa and the rest of the world? OPEC has a sister organisation; the OPEC fund for International Development, (OFID) which was set up as far back as 1975 and this organisation has grown in terms of size and its portfolio of investment. Principally it was set up to assist developing countries that have no oil resources to complement the efforts of their government in combating energy poverty and to achieve suitable developmental goals. They have a very large portfolio and they are very active in Africa. There has been an imbalance that happened with the recent oil price clash. What is OPEC putting in place to curtail a future clash probably because of shale gas and Russia supply demand? What we are trying to do now is to restore this balance first, and once we are able

Orient Energy Review December, 2016

to achieve that, and then will begin to look at the medium and long term issues. We have set up a committee in Algiers that will work out a permanent frame work for collaboration between OPEC and non-OPEC on sustainable bases to avoid future occurrence. The industry has always been going in cycles — boom and bust — and each time we go in a cycle such as this one everybody loses; not only OPEC but oil producers loses including consumers as well. So our effort is to bring all our producers including those who are outside OPEC on a continuous basis to meet and collaborate on how to, at least if not avoid the cycle, but minimize its impact. This one we are in now, struggling to get out, has been very severe and everybody has lost. So this is what we have been preoccupied with and we thank God that here in ADIPEC, it has become almost a chorus for the producers, the consumers, the IOCs, the service companies, the financial institutions, all are now converging on the need to restore stability but on a sustainable basis. And as OPEC Secretary General Sir, what are your plans in addressing this supply glut?

hen I took up my position as OPEC Secretary General at the beginning of August, I was under no illusions of the scope of the tasks and challenges in front of me. Oil market instability and volatility, crude prices struggling to maintain levels deemed fair and reasonable and posing a real threat to future investment, crude oil production outstripping demand, coupled with excessively high stocks all of which has resulted in dwindling revenues and huge manpower layoffs throughout the entire industry chain. It is quite a list. But I think that out of all these prevailing conditions, which have combined to put the oil and gas sector under extreme pressure, I feel it is the restoration of oil market stability that I would most want to achieve in the period you specify. That is because without stability none of the other market distortions can be rectified. Stability is necessary in order for us to plan for the future with relative certainty. We need stability for investments and for future petroleum output expansion to flourish. We also need stability for economies around

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COVER STORY the world to grow and especially to provide access to modern energy services for those currently without them. And most importantly for us in OPEC, we need stability to give producers a fair return from the exploitation of their exhaustible natural resources. Without question, stability is the key to a sustainable global energy future for us all. In saying that, I have indeed been very fortunate in just my first few weeks in office to have been part of the historic agreement reached by OPEC in Algiers in September. The landmark decision taken at the 170th (Extraordinary) Meeting of the OPEC Conference came after many rounds of consultative meetings and intensive talks. Not only did this breakthrough highlight the unity of the Organization, it also underlined the commitment of OPEC’s 14 Member Countries to establishing lasting ‘sustainable stability’ in the oil markets, for the mutual interests of producing nations, consumers, and the industry at large. And in answer to your question on inventories, the Conference decision to opt for an OPEC-14 production target ranging between 32.5 and 33 million barrels a day is actually focused on the need to accelerate the ongoing drawdown of the crude stock overhang and bring the rebalancing of the market forward. Why is now the right time to get a deal done with OPEC and non-OPEC? I think it is a collective decision, not only of the OPEC 14 that met in Algiers to restore a production ceiling for all member countries. I think it is also a collective view of all producers, including our friends in nonOPEC, that this current cycle that has been driven mainly by supplies from our non-OPEC friends, particularly the tight oil producers in North America in the last couple of years, which led to unprecedented buildup in inventories, which in effect led to the imbalance in the market, which has also persisted for too long with all the attended conse-

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quences of volatilities, rising uncertainties that have all impacted on the much-needed investments to keep current production not only going on, but to also prepare for future supplies. I am quite satisfied that enough global consensus, as you have heard here in ADIPEC, is timely and they all welcomed the decision of OPEC and they have largely asked OPEC to proceed with its implementation. In the past, markets suffered during a cycle that was influenced by supplies being precariously close to matching demand, with little spare capacity as a cushion. That caused prices to spike, which was also not good for the industry as a whole. But the downturn in prices we have witnessed since July 2014 has been primarily driven by oversupply at a time of generally weakening demand. Actually, the extent of the excess production, mostly coming from non-OPEC countries, has without question contributed greatly to the situation we find ourselves in today. As for today’s low-price environment, yes it may take some time before this changes to what we consider would be a more acceptable level, but I do not feel that low oil prices are here to stay. The staggering future oil demand requirements, especially in the non-OECD area and developing countries, would suggest otherwise. We are aware of the challenges and uncertainties we will face going forward, but there are also tremendous opportunities – and they all equate to growing demand. Looking at our projections, it is easy to appreciate why.

n the period to 2040, the global economy is estimated to more than double in size, while the population of the planet is set to reach over 9 billion, a rise of over 1.7 billion from today’s level. And we should not forget that around 2.7 billion people still rely on biomass for their basic needs, while some 1.3 billion have no access to electricity. All these people will be seeking modern energy services to fuel their socioeconomic development. The future potential for energy providers is huge. Little wonder then that we, like many analysts, believe that the world will require all forms of energy in the future to meet the burgeoning demand levels – that is oil, gas, renewables, coal and nuclear. Now all our member countries are committed to the implementation of this accord

based on fairness, equity and transparency in order to ensure that this rebalancing process of the market that has taken now, very unprecedented, should be brought forward on a timely basis so that we can begin to restore stability. A country like Nigeria is one of those countries that have over time, because of its internal conflicts, caused disruption in the industry and is one of those countries that have pleaded a special case including Libya and Iran. What has Nigeria pledged to do as part of this accord, looking at this issue critically?

et me first of all disabuse or correct the perception of some member countries pleading for exceptions or what have you. OPEC is a very unique organisation. All the member countries in Algiers, in the deliberations, the marathon meeting that lasted seven hours nonstop that produced this accord, all agreed on their own to give special consideration to three of our member countries which includes Nigeria, Libya and Republic of Iran, who have been undergoing certain challenges, difficulties which impacted on their production capacity including the production and export, that this implementation of the accord should take into account those special circumstances. So it is a collective effort of all the member countries, it is not the issue of responding to a plea by any member country and this is unique and vintage OPEC. What are the challenges facing OPEC at the moment and perhaps the entire Oil and Gas Value chain, and what solutions can you proffer? They are quite considerable but perhaps the one that concerns us the most right now, which comes as part and parcel with restoring market stability, is investment – making sure that there are sufficient supplies to meet the expected

Orient Energy Review December, 2016

COVER STORY tion and use. For this reason, it not only takes part in all the important environmental debates that take place, but also welcomes coordinated action with the industry and through various research and development platforms. With changing markets, can you share with us your opinion on what the future holds for OPEC?

D rise in demand. And right now this issue is worrying. The fall in crude oil prices over the past two years has led to a significant decline in investments and capacity expansion projects, which are being cancelled or at best put on hold. For example, our calculations show that global exploration and production spending fell by around 26 per cent in 2015, and a further 22 per cent drop is anticipated in 2016. Combined, this amounts to more than $300 billion. Moreover, according to industry sources, in 2015 explorers discovered only about one-tenth as much oil as they have annually on average since 1960. Just 2.7 billion barrels of new supply was discovered last year, the smallest amount since 1947. This is a major concern for an industry that needs to comply with timely and adequate level of investments to provide the necessary supply in the medium- and longer terms. Fast forward to 2040 when OPEC sees demand for oil increasing by around 17 million barrels a day from today’s levels, and one can appreciate the extent of the problem. Naturally, to meet the forecast expansion in demand will require huge investments. And we also need to appreciate that new oil barrels are not only needed to boost output capacity, but to supplement the decline rates from existing fields. Oil related investment requirements up to 2040 are estimated at around $10 trillion. The solution lies in oil prices which will have to go up from today’s levels if adequate investment in the extra capacity required is to make a return to the market. Another major issue that will have an important bearing on OPEC and its activities in the years ahead is the threat posed by

climate change to our environment. OPEC is concerned about the state of the planet and was the first to welcome last year’s COP 21 agreement in Paris. In fact, our Member Countries played a role in drafting the landmark agreement. More importantly, they will also play a role in helping to implement it. OPEC is fully cognisant of the fact that just as the world will need more of its energy resources, the Organization needs to use these resources more efficiently. That is why it is committed to continually look to develop, evolve and adopt cleaner energy technologies. For OPEC it is a double-sided coin - ensuring there is enough supply to meet expected future demand growth and achieving this growth in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment. I cannot emphasize enough that OPEC recognises the importance of continually looking to advance the environmental credentials of oil, both in produc-

Orient Energy Review December, 2016

OPEC has a sister organisation; the OPEC fund for International Development, (OFID) which was set up as far back as 1975 and this organisation has grown in terms of size and its portfolio of investment. Principally it was set up to assist developing countries that have no oil resources to complement the efforts of their government in combating energy poverty and to achieve suitable developmental goals. They have a very large portfolio and they are very active in Africa.

espite the changing face of the international energy markets, I have no doubt that OPEC in the future will continue to apply itself in the same manner as it has since its inception in 1960. That is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilisation of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers; a steady income to producers; and a fair return on capital for those investing in the petroleum industry. This is something that is enshrined in the Organization’s Statute which is as relevant to Member Countries today as it was when it was first penned. It is just that in the ever-demanding 21st century the landscape in which we operate is forever changing and the challenges and uncertainties we face are becoming perhaps more acute and different in nature. We remain optimistic, however, that, just as in the past, OPEC will overcome all the challenges it faces with the oil industry in general emerging as a stronger force in the process. As OPEC’s Member Countries showed with their unified stance at the Algiers Meeting, they are committed to doing all in their power to restore oil market stability and bring about conditions that will serve the interests of all stakeholders, producers, consumers and investors alike. Through its policy initiatives and coordinated actions, the Organization will continue to pursue its ultimate goals of stability of oil supply and demand and prosperity for its Member Countries. But OPEC also needs the help of others outside the Organization to support its initiatives. Non-OPEC producers and the consumers also have their part to play. That is why OPEC continues to call for cooperation among the main parties involved in the industry. Such a concerted joint approach remains vital going forward if the orderly, stable and sustainable oil markets we all seek and can benefit from are to be realised.

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INTERVIEW

external, Hot tap, Pigging, cleaning, and de-scaling of pipelines. We also offer cathodic protection of pipelines, Nitrogen-leak test, auxiliary pumping, pipeline flooding, pre-commissioning and decommissioning of pipelines, as well as de-oiling. It’s best to describe us as a one-stop shop for pipeline services.; Incorporated since 1982 in Nigeria, our major clients include Nigerian LNG, Shell, Chevron, and Total. Here in Abu Dhabi, our clients are Takreer, the largest refinery in Abu Dhabi; Al Hosn gas, one of the ADNOC’s (Abu Dhabi National Oil Company) subsidiaries. Nigeria is celebrating six years since the Passage of the NOGICT Act. What’s your take on the Nigerian Content Act so far?

‘Funding And Community Restiveness Are Mitigating Local Content Achievements In Nigeria’ – MD Topline Limited.

r. Chinedu Maduakoh is the Managing Director of TOPLINE limited, one of Nigeria’s foremost Pipeline and process engineering firms, with expertise in the areas of Pipeline construction and maintenance, Pipeline cleaning and Descaling, Pipeline Integrity survey and Inspection, Cathodic services and many more. He spoke with Orient Energy Review, at the sidelines of the Abu Dhabi International Petroleum and Exhibition and Conference (ADIPEC) in November 2016, taking a cursory look at the Nigerian Content Act six years after. Excerpts. Tell us briefly about Topline’s Operations?

e have offices in Nigeria and Abu Dhabi. Basically the Abu Dhabi operations started 3 years ago and we offer total pipeline solutions: construction, maintenance, and integrity assessment - both internal and

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I think the Nigerian local content Act was a good step in the right direction by the Nigerian oil and gas industry, but as you know there is always room for improvement. Local Content has helped indigenous companies in Nigeria. Following a clear mandate by the federal government and NNPC to ensure that local content is implemented across board in the oil and gas industry, I know all the international and local operating companies in Nigeria have local content departments, to ensure that they meet the expectation of the local content act. It is a good step in the right direction as there are a lot of indigenous services companies with proven capacities. Schlumberger, Halliburton, and Baker Hughes have been in Nigeria for quite a number of years and they have trained many Nigerians who have invariably, set up their own outfits. But, I must add that the single most important challenge that we have in embracing local content capacity building in Nigeria is availability of funds. Most of the operators in Nigeria, even the marginal, indigenous exploration companies lack the financial capacity to actually operate. The available funds come at very high interest rates, making it difficult for businesses to have reasonable Returns-On-Investment. There are hardly any funds available to buy equipment for capacity building in terms of plants and machinery and all. Secondly; training. Despite the high hopes for an in increase in intellectual capacity development, the exposure to new technology is a herculean challenge for indigenous companies. The pursuit for local content is a worthy gesture but how well have we fared?

Orient Energy Review December, 2016

INTERVIEW What is the clear road map for local content in Nigeria? These are just some of the challenges I see. Thirdly; the current model for handling restiveness in communities. One thing I know for sure is that the community youths and militants are Nigerians like you and I. The current approach shows a lack of will to engage and alludes to the fact that government is far from the communities. Local, State and the Federal governments believe that the disruptive behaviour of the youths in the communities is the operating companies’ problem! They believe the operating company has the responsibility to handle and engage the youths in the host community; but it shouldn’t be the case. While the operators come to operate, the government should make the place conducive by engaging the youths and the communities. They should explain to the youths, that with increased oil and gas activities in the area, the government will develop the community. There should be a clear, practicable road map so everyone can actually monitor implementation. It is only when this happens that we can verify if we are making measureable progress.

nfortunately these issues are not being addressed. Instead of paying lip services to these issues, and hosting events like conferences, seminars in city centres, these meetings should be held within the communities. If the president wants to engage the Niger Delta chiefs or their representatives, he shouldn’t do it in Aso Rock; he should hold such meetings within their communities. Let there be town hall meetings held within the communities, so they can actually dialogue. That’s when I’ll know that there is a clear commitment to address militancy and community restiveness. Unless that is done, I don’t think we would make much progress. These challenges exist yet you have attained the status of an international, though Nigerian indigenous, Service Company. How did you manage to get this far? I would want you to know that it is professionalism, focus, hard work and being able to stay on the path that we have set out for ourselves as a company. Our breakthrough in Abu Dhabi came via our sponsors who actually approached us during Offshore Europe conference and exhibition, requesting that we paid them a visit in Abu Dhabi. They presented potential opportunities that a company offering our services would have here in Abu Dha-

ly gives you the needed support by opening the doors for you to go deliver your presentations. Basically, that is the kind of support we have here. You don’t have any other clear government support, If you embrace professionalism and capitalism, here you can succeed; there are equal opportunities here.

L-R MD Topline Limited with a delegate and his Topline Abu Dhabi staff Ali Slim (right) at ADIPEC 2016

bi. They encouraged us to register, assisted us with process in the national oil company. We made presentations and subsequently, secured work in Abu Dhabi. In Nigeria, it is similar. After we set up as a company, we embarked on registration as a service vendor in Shell, NAOC, NLNG Chevron and Total. Also, we participated in bids. After a while of being consistent, we started getting opportunities, winning contracts and started executions. But I must emphasis here. When we started bidding for our very first project, they made calls and sent emails to Nigeria to confirm our claims on previously executed jobs with the IOC’s. They called Shell and Chevron to actually verify that we executed and completed projects for them. Coming down to the issue of local content here in Abu Dhabi, how has it been for you, comparing it to the practice in Nigeria; how easy or difficult is it for a Nigerian company to thrive in Abu Dhabi?

hey value professionalism and your skin colour is secondary. It doesn’t matter if you are red, blue or white; it is not about who you know but about technical and financial capability to execute projects. They ask: do you have the capacity and capability to deliver the work? That’s how we have been able to operate in AD. We have operated as a professional company. We have done some projects in this place and have good recommendations, which we now use as referrals. That is how we have gotten to where we are now. What support do you get from the UAE Government? In terms of support to operate here you must have a sponsor. That sponsor essential-

Orient Energy Review December, 2016

How about support from Financial Institutions here?

t was a challenge for us to open a bank account; it was a very big problem because we tried the international banks like Standard Chartered and HSBC. They were reluctant; obviously because of the country we were coming from. But luckily for us, our sponsors stepped in and guaranteed us, which then enabled us open an account with a local bank. What will you tell an average Nigerian or African company wanting to follow your footsteps? As you can see, we are exhibiting here (ADIPEC2016). You need to put your brand out there, take your company out there for people to see and know you. The easiest way you can do that is to attend trade fairs, exhibitions and conferences. When you are out there, people see you, check you out and then you take the relationship to the next level. There is no way you can sit down in Nigeria and expect a country from Europe or the Middle East to come and contact you. You need to expose yourself and that is what I encourage indigenous companies to do. Did you say they went and checked you out- a case of confirmed integrity? Yes indeed! Integrity is quite important Do they have such local content law in Abu Dhabi and if they do how have you been able to manage it? Yes there is a local content law here but it is not as stringent as the one we have in Nigeria. The one here in Abu Dhabi makes it compulsory for you as a foreigner to have a sponsor in order to operate in the country. The local company registers you within the country

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INTERVIEW through the ministry of economic affairs and you get an operating licence which is renewed yearly. That is the kind of local content they have here. Going forward, your local sponsor company takes a percentage which is negotiable of either profit or the overall value of your project. This model actually is what obtains here. The percentage rate is flexible and if youâ&#x20AC;&#x2122;re fortunate to have a very active and aggressive local partner, they actually open doors for you to succeed. Having seen these two sides, what is your advice for our own government?

y advice to the Nigerian government is to pay more attention in resolving the challenges that the local companies continuously face in Nigeria. I think our laws are good, our laws are clearly implementable but we should have that will-power to implement and

L-R Mr. Emeka Njoku, MD Frigate Upstream & Energy Services and MD Topline Limited, Mr. Chinedu Maduakoh at his exhibition booth at ADIPEC 2016

sustain the local content law. Beyond Abu Dhabi, What should we be expecting to see from Topline in the next five to ten years?

oday, we are here in the biggest oil and gas exhibition and conference in the Middle East, we are also getting enquires

from Libya, Tunisia, Saudi Arabia; and as a matter of fact, we hope to visit Saudi Arabia during the first quarter of 2017. We have been approached by some operators in Oman to come in and do work there. Opportunities abound everywhere and we are looking forward to a better 2017 within the Middle East.

PHOTO GALLERY Africa Oil Week, Cape Town, South Africa, October 2016

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Orient Energy Review December, 2016

PHOTO GALLERY SIGHTS AND SCENES FROM THE ABU DHABI INTERNATIONAL PETROLEUM EXIBITION AND CONFERENCE, ADIPEC 2016

OPEC secretary General, H.E Mohammed Barkindo, joined by his team, launched the World Oil Outlook at ADIPEC 2016

CEO of Oildata Xenergi, Engr. Emeka Ene in a chat with a delegate

Cross section of participants at the session

OPEC Team during the Executive dialogue program

World Oil Outlook 2016 explained

OER Editor in a pose with the OPEC Sec. Gen, H.E Barkindo

Nigeria fully represented by NIPEX at ADIPEC 2016

Mr. Chinedu Maduakoh, MD/CEO Topline Limited, a Nigerian Company thriving in Abu Dhabi (With his Abu Dhabi staff)

Chairman and CEO of US oil and gas corporation ExxonMobil, Rex Tillerson, speaks during ADIPEC, November 7, 2016

NIPEX Officials at their exhibition booth

Nigerian female engineers working with ADNOC

Topline Exhibition booth, one of the busiest at ADIPEC 2016.

Orient Energy Review December, 2016

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PHOTO GALLERY NAPE International Conference and Exhibition, Nov. 2016, Eko Hotel, Lagos

The Newly Elected Executives of NAPE Group photograph with the GMD NNPC Maikanti Kacalla Baru (in the middle) with Senior Members of NAPE

Dr. Maikanti Kacalla Baru, FNSE, GMD NNPC Panel session Honoured with NAPE Honourary Award

Dr. Joseph Ejedawe, honoured with the NAPE Aret Adams Award

NAPE President-Elect, Abiodun Adesanya, FNAPE giving his Vote of Thanks

Dr. Baru and the outgoing NAPE President, Nosa Omorodion

Cross section of participants

OER editor, in a chat with MD GL Dynamic solutions Limited

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Team GACN

The TechDaer Team

Orient Energy Review December, 2016

PHOTO GALLERY Faces at the 6th Annual Practical Nigerian Content Forum, Abuja 2016

L-R: Immediate Past Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzel Amagbe Kentebe, Executive Secretary, Engr. Simbi Kesiye Wabote and Pioneer Executive Secretary, Engr. Ernest Nwapa at the just concluded 2016 Practical Nigerian Content Conference in Abuja

Some executives of the NCDMB, Jeff, Abosede and Ejiro

Executive Secretary NCDMB, Engr. Simbi Kesiye wabote

Engr Ernest Nwapa, pioneer Executive Secretary, NCDMB

Representative of the Honourable Minister Of state for Petroleum Resources, Dr. Ibe Kachikwu giving his Ministerial address during the Official Opening.

Pushing Nigerian Content forward L-R President, Ship Owners Association of Nigeria, Mr. Ogbeifun, President of PETAN, Bank Anthony Okoroafor, Immediate Past Executive Secretary, NCDMB, Mr. Denzel Amagbe Kentebe, Executive Secretary, Engr. Simbi Kesiye Wabote , Pioneer Executive Secretary, Engr. Ernest Nwapa, a foreign delegate and MD/CEO, Marrine Platforms, Taofik Adegbite

IOCs Panel session Tour of the Showcase Arena

Senior Executives of NCDMB

Charles Osezua, chairman Vallourec Nigeria Ltd

ES NCDMB, Engr. Wabote in a chat with MD Tolmann Allied Ltd, Mr. Emmanuel Onyekwena

At the GE Booth Nipex Booth

Orient Energy Review December, 2016

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Impending Tariff Review: ‘Operators are Mindful of the Country’s Recession’-Akah

inter-agency committee headed by the permanent secretary in the ministry of power, and within the commission, we are looking at our processes to ensure that distribution companies improve on their collection efficiency. As mandated by law, we are supposed to do a minor review of the electricity tariff and the commission is already taking care of that. There are proposals that are waiting for the consideration of the political decision makers, but those that are regulatory; we are taking care of them. Will you be willing to disclose some of these regulatory actions and proposals you are taking?

Dr. Anthony Akah

cting Chairman, Nigerian Electricity Regulatory Commission (NERC), Dr. Anthony Akah, is an authority in power matters, having already carved a niche for himself in various aspect of the electricity chain. In this interview with Orient Energy Review (OER), the NERC boss spoke on sundry issues in the power sector, including the market’s growing illiquidity, the metering plans by Distribution Companies, DisCos, as well as the impending tariff review, which in his words, would take into consideration the current economic recession and consumers’ ability to pay. Excerpts! From your angle as a regulator, what does the N809billion power sector financial shortfall

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mean? There is clearly a major issue or constrain which has to do with the liquidity in the power sector right now. And a combination of factors contributed to this liquidity gap, some of which include MDAs debts, volumetric risks and exposure and freezing of the tariff last year, as well as right pricing of electricity tariff, poor collection of revenue by the distribution companies, and also the non-compliance to the market rules. As the sector regulator, we are working with the various industry players, and the minister of power has equally set up a team to look into that so that issues that involve political decisions can be taken care of and those that involve regulatory interventions can also be taken care of by the Regulator. A number of proposals have also been put forward on this. We are confident that we will get over this issue. We have submitted our proposal on this to the

There is no doubt that the collection inefficiency is very high in the market at the moment, the Regulator is also constrained at this moment because of the very many court cases some distribution companies filed against the introduction of the Transition Electricity Market (TEM) that would have provided an end-to-end contract based electricity market. The issue of collection inefficiency wouldn’t have become a problem with the TEM because if you don’t remit the money required, your letters of credit can be called upon and the value chain contracts would not have been facing these problems. Like in any jurisdiction where such a comprehensive reform was done, there is always these teething problems for three to five years, and after which there are steady increase in the quality and quantity of power supplies when these teething problems are taken care of. We are however not waiting for this long time, we are addressing these challenges and expect that

Orient Energy Review December, 2016

the MDA debts will be cleared up, after which a framework to ensure that all MDA debts are paid or deducted from source. We hope that the ongoing discussion initiated by some of the distribution companies to have the case settled out of court will yield positive results soon so that we can take off the restraining order and allow the market to play. Will it be right to say that this restraining order contributed to the market shortfall? Well, essentially, it limits the extent that we can enforce high collection efficiency in the sector because the letters of credit of the distribution companies cannot be called upon under the circumstances, but we are challenging it in court and confident it will be overturned. But in the interim, the discussions with our solicitors and that of some of the distribution companies to get it out is ongoing. Regardless of that restraining order, we have the ample power, being mindful of the restraining order, to come up with some other regulatory interventions to bring about discipline in the market and we are already doing that. These proposals – the regulatory and inter-agency committee, what are their characters and contents? Essentially, they are geared towards taking away all the liquidity challenges. At this point in time, they are before the decision makers within the political space and it will be unethical to disclose their contents but what is fundamental is that the root causes of the growing illiquidity are being addressed head-on. We are confident that we will be able to get over this hurdle. Of course, it is clear that electricity must be rightly priced and there are changes in the variables, how that will be done is what we are looking at so that there won’t be a rates shock and that it will trigger the desired improvements in the sector. 24

Are you part of the fresh N100 billion stimulus being negotiated by the NBET and CBN for the sector? Yes, we are as a regulator, and feel it is something that will be good for the sector because even if we don’t allow that and the operators borrow money from the commercial banks, the interest rates will impact heavily on the end tariff for consumers, but when such bond is available on friendly terms, it will be tied to areas that will enable the sector improve in its quality and the regulator will monitor this. We should understand that all inputs to production of power must be recovered through the tariff and if you have a cheaper fund or financial intervention like the bond, it means that increment in tariff will be minimal, but if they have to source for the money through commercial banks which regrettably their books are not good enough now for the banks to give them good money, their interests will also go back to the tariff. We are working with operators to ensure that such stimulus will not be a waste when it eventually comes into the sector. You’ll soon do a minor tariff review, and indices like FOREX and inflation are high now, what will be the likely outplay? The minor review has to do with review of such indices – FOREX, inflation rates, gas price, and capacity. In any other business enterprise, those factors are adjusted as changes in the market and we have to get these processes through dynamism. We have to accept that electricity is a product and treat it as one, and also ensure that consumers get value for money, but if we have to see electricity as a social commodity while all other sectors adjust their prices in line with the economics, then we are not serious. We have to face the realities. As a regulator, we are coming up with energy efficiency plans to help Nigerians to mitigate tariff increase and save energy because we are wasting electricity. We are also about to operationalise the Power Consumers Fund that will take care of the low income earners to reduce their consumption of power. Most importantly, we are

Orient Energy Review December, 2016

working to come up with a scheme that will rapidly close the metering gap. We will meet the sector players to deliberate on how to implement that. Have you started the minor review process for the tariff now? Yes, we have started the process. We are doing the verifications of the data that are needed and the publication of the notice for tariff will be out soon. However, the sector operators are extremely mindful of the recession in the country. They are also mindful of the ability of consumers to pay and are on the same page with us to find a way to ensure that it will not have a rate shock on Nigerians and also help them solve their liquidity problems. It is not as if NERC is instigating the sector players to rush and increase power price. Would you mind talking about the new metering scheme, given claims by the Discos that their metering plans may be impacted by the shortfall? Mindful of that, we are coming up with the proposal but as a regulator, we cannot announce

We gave 40 per cent discount across board to those that wrote back and those that didn’t, we asked that they will pay that including the five per cent interest that runs with the fine for as long as they fail to pay. www.orientenergyreview.com

a regulatory policy without their inputs even if we may not totally accept their inputs. The scheme will relieve them of that burden and encourage investment in the sector and accelerate metering. Have you concluded the audit of the sector player’s books and what is it looking like? We have finished some of them. We are still doing some and there are some issues of concern to us, which we have written to them in line with our processes so that we are sure that our findings are based on verified grounds. We are yet to complete some of them because there is a need to have a holistic process and make a comprehensive pronouncement, but very soon, we will have a holistic picture and be able to provide authoritative information. Generally, there are some areas of concern to the commission and we have written them to explain. Your enforcement actions seem to have being stepped up, have you cashed-in the financial penalties, what is the total sum now? Well, our enforcement has increased and that has also led to increased compliance rates by the operator. Where there is infringement, we commence action immediately. We have sanctioned a lot of Discos for not obeying our regulations especially on issues bothering on customers’ complaints and even the TCN and GenCos. We have gotten some payments from the GenCos, some Discos wrote to ask for reconsideration. Most of them accepted that they violated the commission’s regulations and asked for mercy. We have given some of them who wrote

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to us discounts while others didn’t write and we wrote back to inform them of our intention to take additional enforcement actions on them. We are not unmindful of the fact that any regulated industry where the regulator imposes sanction and they are neglected, it is as good as not having a regulator at all. The commission has resolved in this regard to protect jealously the powers of the regulator and strictly enforce these sanctions. All the DisCos and other defaulters will see further stronger actions if they fail to heed our enforcement notice. How many per cent discount did you grant to those that wrote you back? We gave 40 per cent discount across board to those that wrote back and those that didn’t, we asked that they will pay that including the five per cent interest that runs with the fine for as long as they fail to pay. The commission’s regulations will not be treated with levity notwithstanding their liquidity challenges which we have gone even beyond regulatory mandates to help them out. The GenCos are of the opinion that the DisCos are not totally honest to the market because they take power from them and still don’t remit half the value of what they take and want to sell directly to high demand customers, do you share this opinion? I must say their concerns are valid on face value. They have the capacity to generate and some of them have stranded power. We are already having an inhouse discussion on how to solve this issue and we will call the sector players to have a discussion on all the issues that are affecting the sector. The law allows for eligibility and the minister of power has to declare this so that the GenCos can sell to willing customers, but we are also looking within our regulations on how we can have some stranded powers to productive places so that the GenCos can recover their costs. What is the outcome of your investigation into the electrocution in Lugbe part of Abuja?

The Lugbe incident is an accident that reflects the generally poor distribution network in Nigeria. The network, upon investigation is totally at variance with the distribution code and all other regulations bothering on safe delivery of power. Ordinarily, by now, we would have concluded the enforcement action on Abuja DisCo if found guilty. We have done our preliminary investigation which shows that Abuja DisCo is culpable by delivering power via a distribution network that is significantly at variance with the distribution code. Necessary sanctions would have been taken by the commission including compensations but as we speak, we regrettably have more than 10 lawyers with multiple court cases claiming to represent the victims and community and in some instance to the disagreement of the victims and communities. When these cases go to court, the commission takes a back seat because we won’t go against the court proceedings. We however appeal to Nigerians on this, that when incidents like this happen, lawyers should stay away because there is already a commission with the ample power to impose sanctions and resolve these issues. The communities that get lawyers create problems because the commission will stay back and allow the DisCos defend themselves in the court for as long as it will take them in court. The lawyers are not helping the communities. We treated the case in Lagos without unnecessary court cases or payments to any lawyer. There are precedents to show that the commission is up to its task in protecting consumers from bad practices of operators. The regulator does these free of charge, and so people don’t need lawyers to get their claims rectified.

Orient Energy Review December, 2016

ranklin Ajaegbu is the Program Manager, Energy Efficiency with the Port Harcourt Electricity Distribution Company. One of the resource persons at the recently-concluded West African Power Industry Convention in Lagos, Ajaegbu fielded questions from Orient Energy Review (OER) on issues relating to energy use and conservation. Excerpt!

Electricity Consumers Should Learn to Conserve Power Franklin Ajaegbu ances that are not in use whether you are at home or not. Although metered customers know the implication of this, the unmetered ones are the guiltier. Let me say this, I have heard people say that the refrigerator should be perpetually switched on but if the contents are cold enough to the taste of the owner, why not just switch the appliance off? Some people make use of the remote controls to do this but we equally advise that the wall switch should be used too because if not, a slow running is going on, though the consumer may not know.

Sir, what is this energy efficiency you talked about for close to thirty minutes to quite a number of people earlier this afternoon?

nergy efficiency and conservation are key elements in the business aspect of the electricity value chain. You see, little details cost us huge amount of money sometimes due largely to ignorance or carelessness. In this era of economic recession, the need to spend wisely and get maximum value for money is a key strategy to survival for the individual, household or a business conglomerate. Again, consumers need to be aware of the efficiency of the services they are paying for. So basically, this is what we are trying to sensitize the people about. Are you saying electricity supply differs from one Distribution Company to another? Are there no sanctions in place for erring companies in the event of the establishment of breaches? Of course, there are penalties but before then, it is important for the consumer paying for services to be knowledgeable about the quality of the services he is getting. The Distribution Companies must

put on its thinking cap in ensuring that cases of complaints by the consumers are few and largely inconsequential. At the Port-Harcourt Distribution Company, we developed a system that ensure that services rendered to the people are at par with the best anywhere in the world. Once you set such standard, you have to make sure it is sustained or you risk losing the confidence of your customers. You also talked about energy conservation. Whatâ&#x20AC;&#x2122;s that all about? This is a simple way of telling the people to minimize the quantum of energy often lost as a result of carelessness. Whether you are on grid or off-grid, we are advising that you switch off appli-

Orient Energy Review December, 2016

So, are there no energy-saving electrical equipments you can recommend for the use of your customers, rather than waiting for a conference of this nature to sell the idea? We have done enough in this regard to sensitize the people but I will repeat it here for the benefit of those who with due respect, may not know this. The more the watt of an electric bulb for instance, the more energy it consumes. If you go to the homes of most rich people today, you find out that they make use of low-intensity electrical bulbs but reverse is the case with the poor. In their own case, they for the bulbs with higher watts, not knowing in essence that they automatically pay more for that choice they make as their units get finished quicker than it would have been. www.orientenergyreview.com

‘TCN IS ‘WHEELING’ AND ABLE’ – Mrs. Osin What are you wheeling out now? Whatever we are getting from the power generating companies is what we wheel out. It differs in a day. Power is not something you can store. They generate sometimes within 3,000MW and 4,000. The highest generated in Nigeria till date is about 5,500MW and that was in June 2015 and we easily evacuated it. What is the role of TCN in curbing the power challenges in Nigeria?

rs. Celestina Osin, is the Regional Public Relations Officer, Transmission Company of Nigeria –TCN. In this interview with the Editor at the recently held Power Nigeria Conference in Lagos, she speaks about effort of the TCN to ensure adequate transmission of power to homes, while raising some business concerns in the country Excerpt. Briefly, tell us about the transmitting capacity of the TCN

CN has the capacity to transmit, at the very minimum between 5,000 to 6,000 megawatts, and we are trying to build on the fact that by December this year, we would be sure of 6,000MW. The highest generation in Nigeria so far, has not been more than 5,500 megawatt. So we are ready. If we generate electricity at the maximum today, TCN can easily evacuate it. We can wheel it. That is the role of TCN. We all know that power is a very sensitive issue, until we see light in our house on a 24-hours basis or on a higher number of hours in a day; we do not believe people are working. But people are actually working, and there are lots of factors that affect the power sector today.

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I do not understand what you mean by power menace. We know we have a shortage of electricity. Nigeria is a country of almost a population of 170 million people, we should be having much more than what we are generating at the moment. TCN’s role is easily spelt out for it. We are like a conduit. We will transmit what the generating companies give us. Our challenge now is to be better than what we already are. I am telling you now that we are ready. If Nigeria generates at its capacity, TCN can wheel it. We are not stopping at that, we are moving forward to say, okay, just in case something happens, and Nigeria is able to generate 10,000MW in one year, would TCN be able to wheel it? That is our own personal challenge and that is what we are taking up. We have now decided that we want to be ready, we want to be always above the curve, so that anytime generation is increasing, TCN would want to be able to evacuate it to the distribution companies. We are doing training, we are working on the grid; we are massively improving the grid. We are building new lines; and the ones already there for a very long time, we are overhauling them, we are working on them. People try to equate the power sector privatization with what happened in the telecommunication sector, but they are not the same thing. Power equipments are not something you pick up the shelf. People have to book for them, they have to pay. Sometimes it takes between 18 months and 24 months to get equipment. Sometimes, there are other factors. Like now generation is being affected by vandalism. I can’t talk for generation companies, but because it is what they generate that we wheel, that is how it affects us.

They are so many issues that the government is working on in the power sector, because it is when power improves and more people get electricity that we get more money. Will the present management do better? When you say new management, you mean Manitoba Hydro- the contractors have left. But even when they were there, they had Nigerian counterparts, because when they came, they were appointed alongside their Nigerian counterparts which some of you might call understudies. But whatever it is, they were like shadows to them, and we were all working together. In the terms of the agreement of Manitoba Hydro, the Nigerian counterpart would have to take over when they leave and that is why they were appointed alongside them so that in any case anytime their contract expires, we take over. What it is they are going to impact at that time, they have impacted. Nigerians were the ones managing the power sector since it was established, so it is not as if they came and brought something magical. These were the Nigerians engineers still doing the work. There were just management contractors. They were not the one doing the real work there. So it is not like anything would really change or that heaven would collapse if or when Manitoba left. What about the Nigerian factor in issues of management? The power sector is a very technical sector and you cannot do ‘Nigerian anything’ with it. It is either it works or it does not work. Since Manitoba left, we have not had any system collapse, we have not have any major technical issue, so, it is not like they left and we do not know what to do. These were people that grew up in the system and the new ones that were brought in, were people who have achieved a lot in their sectors too. The new management knows what it is doing and is very capable of taking TCN to new heights.

Orient Energy Review December, 2016

LOCAL CONTENT

Driving Local Content: Solewant Group Opens Africa’s Largest Pipe Coating Plant for Business ...As NCDMB seek Patronage for the $15 million Pipe/ Metal Coating Plant

GMD NNPC, Dr. Maikanti Baru and Chairman of Niger Dock, Mr. Anwar Jarmakani, As NCDMB Drums up support and Patronage of the Plant

By Margaret Nongo-Okojokwu

riday, November 25, 2016, witnessed the official commissioning of Solewant Group’s Multi-Layer pipe coating plant which held at the company’s pipe coating, storage and preservation centre, at Alode-Eleme, Rivers State, by His Excellency, The Executive Governor of Rivers State, Nyesom Wike, The Executive Secretary of the NCDMB, Engr. Simbi Wabote, NNPC, IOCs and other Captains of the Oil and Gas industry. Amidst falling oil price, continuous reduction in revenue, adversely rising cost of getting foreign services, and the ultimate one - the recession, indigenous operators like Solewant Nigeria Limited are insisting that building local capacity in the country is the way forward. With the commissioning of its pipe/metals coating facility in Port Harcourt, the country will be able to retain over N50 billion that would have been spent to get foreign services, thereby boosting local content and developing in-country capacity for the sector. Speaking at the event, the Rivers State Governor, Nyesom Wike, assured of his administration’s

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commitment to make the state an investor friendly environment, adding that the state government has been supporting oil and gas investment as part of efforts to attract interested companies. He noted that his administration is committed to pursuing with great vigour; concerted efforts aimed at improving the lives of the people and create jobs. Wike who was represented by the Commissioner for Energy and Natural Resources, Chukwu Shedrack, explained that the state is peaceful and safe for investments, while calling on youths of Alode-Eleme-Onne community to shun violence and embrace peace, “presently, the state government has extended the olive branch to cult groups in the state in order for them to shun violence. He expressed confidence that the project was conceptualised to save pipeline owners and provide jobs for the youths that are unemployed in the state, adding that the investment is an assurance that private investors can invest in the state. In the same vein, the Executive Secretary of the Nigerian Content Development and Monitoring Board, (NCDMB), Egnr. Simbi Kesiye Wabote has charged International Oil Companies (IOCs), the Nigerian independents and National Oil Companies to patronise the $15 million facility rated as the largest coating plant in Africa in order to develop local capacity and reduce costs of projects in the oil and gas industry. The Executive Secretary, said the inauguration of the plant was a landmark in the annals of the local content drive under the

Nigerian Oil and Gas Development Content Development ( NOGICD) Act as the facility offers multi-layered high technology coating solution with awesome capacities like high speed coating, wide diameter coverage, remote maintenance capability, 3 LPE, 3 LPP and 5 LPP coating system, single and double layer fusion bonded epoxy anti-corrosion coating system and the capacity to coat all pipeline sizes from 3inch – 56inch to the oil and gas industry at a time that operators and the other stakeholders are in dire need of innovative and efficient pipe coating systems to mitigate the high incidence of pipeline failures due to ageing, corrosion, mechanical defects, pressure surges, and stress and third party intrusions. Wabote argued that most of the pipelines in Nigeria need outright replacement or more innovative coating solutions to enhance their integrity and prolong their design lifespan, adding that most of them were installed either in the 1960s or 1970s even though the lifespan of a pipeline by gas and oil pipeline standard (GOST) in Nigeria is 33 years. He explained that the nation’s pipelines are part of the critical national asset and requires coating to prevent corrosion. “Corrosion prevention is a way to guarantee smooth and uninterrupted flow of oil and gas to the locations, where they get exchanged for money. Coating saves billions of dollars spent on corrosion control and management,” he said. “We would like to see more plants spring up in Nigeria to manufacture or assemble vital oil and gas equipment components in Nigeria. This is the very essence of the local Content Law. It will be very fulfilling see to the commissioning of other plants like this very one because this is the only way we can help government at various levels to create jobs to tackle the acute youth unemployment in the country,” he explained. Chairman of Solewant Nigeria Limited, Prof. Sylvanus Ebohon, cited backward integration as one of the solutions to the challenges facing the nation in the oil and gas sector, adding

Orient Energy Review December, 2016

LOCAL CONTENT that if the nation aspires to drive excellence, there is need to prove value addition in gas project. He explained that the inauguration is a crystallization of the immense support of the Hon. Minister of State for Petroleum, Dr. Ibe Kachukwu, who encouraged the company to be a key player in the oil and gas sector with its latest technology in pipe coating engineering. Ebohon stressed that the desire of the company to take a leadership role in the critical aspect of high-grade pipe coating of international standard which it started in 2004, adding that the concept was given life with technical collaboration with Kema Coating of Canada; therefore the drive for excellence has been deliberate. He added: “This plant is the product of the Local content philosophy of the Federal Government and the new driving principle in the Oil and Gas Sector. We intend to prove that value – addition in the well-being of our economy is a task that must be done through this world – class project. We, therefore, invite the international oil companies and other construction

firms to take advantage of the unique and world-class technology that Solewant Pipe Coating Plant offers the Nigerian industrial environment.” Also speaking, the Managing Director of Solewant Nigeria Limited, Mr. Solomon Ewanehi disclosed that over $15million was spent on the coating plant. According to him, the facility is situated on a wide expansive land of 7,000 acres of land of over 7000 square metres and storage area of 132,000 square meters of space. He added that the plant is capable of engaging 500 to 1,200 employees on operation to reduce unemployment in the Niger Delta. He expressed his appreciation to the leadership of Alode Community, where the plant is located, for ensuring peace and cordial relationship with the company. He called for the support of the company by youths of the host community so that the company will help to reduce the cost of pipeline coating at a time that the industry is faced with the challenge of operators going to China, India and several other parts of the world to bring in coated pipes. “As I speak with you right now, several hundreds of kilometers of pipes are still being coated outside the shores of Nigeria, making the value of the Dollar to be a chal-

Some shots from the Commisioning of Solewant Multi-layer Pipe coating plant. Group photograph, after touring the coating plant.

lenge to Nigerian economy,” Ewanehi said. “We are trying to use this plant as a pilot scheme to be able to ensure that there is transfer of technology. It is also to ensure that local content is not increasing cost but decreasing cost because there will be job availability and these foreign companies will be able to transfer technology to the country.” The Chairman, Petroleum Technology Association of Nigeria ( PETAN) Mr Bank- Anthony Okoroafor said that the completion of the largest coating plant had provided another good example that indigenous companies will do better if given the opportunity to handle projects being executed outside Nigeria. “This project is another testimony that PETAN members are committed to development and innovations that will help to domesticate projects needed to firm up the value of Nigeria’s currency,” he said. The Head, Regional Business South Directorate of Diamond Bank Mr Chris Ofikulu who represented the Managing Director of Diamond Bank Plc, Uzoma Dozie, commended the management of Solewant for utilising the fund approved and released by the bank solely for executing the coating plant project. “The company complied with all rules of our bank which will further encourage the management to do more for the Solewant Group and other firms in the oil and gas industry since the management believes in promoting genuine business of investors in the sector,” he assured

L-R Commissioner for Energy and Natural Resources, Chukwu Shedrack, Representing the Rivers state Governor, Nyesom Wike; Executive Secretary NCDMB, Engr. Simbi Wabote, Chairman Solewant Nigeria Ltd., Prof. Sylvanus Ebohon

ES NCDMB, Engr. Simbi Wabote, PETAN chairman, Bank Anthony delivering his keynote address Okoroafor Mrs. Ewanehi, Wife of Solewant’s MD/CEO

Chairman PETAN, Bank Anthony in a chat with MD/CEO Solewant Nig. Ltd Mr. Solomon Ewanehi

MD/CEO Solewant Nig. Ltd. Mr. Solomon Ewanehi fielding questions from Journalists after the commissioning

Representative from Diamond Bank Representative from Seplat

Orient Energy Review December, 2016

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LOCAL CONTENT

Local Content Cuts Costs of Projects - ES NCDMB …Board, industry to organise projects fair, gap analysis By Margaret Nongo-Okojokwu

ffective implementation of Local Content by operating and service companies in the oil and gas industry will lower the costs of their projects, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has said. Speaking recently when he led Nigerian Content General Managers of international operating companies and some service companies on visits to the facilities of Lagos Deep Offshore Logistics Base (LADOL), Nigerdock and Dormanlong in Lagos, the Executive Secretary explained that Local Content implementation might attract huge investments costs but would ultimately make the projects cheaper in the long run. According to him, “Local Content guarantees security of supply which reduces costs significantly. All over the world, Local Content reduces costs if you do it correctly and stay the course. You are assured of the security of your facility if you involve the locals.” On plans for the industry, the Executive Secretary announced that the Board would collaborate with international operating companies to conduct fairs on upcoming industry projects and their capacity requirements so that stakeholders can prepare effectively to participate in them. He added that the Board would conduct skill gap analysis in the industry to understand the capacity gaps that needs to be filled in existing and forthcoming projects. He further assured that the Board will work with international and indigenous operational companies to kick start projects which are necessary to keep Nigerians employed and grow Nigerian Content. He also commended LADOL and SAMSUNG for their quality of work on the Total Egina’s FPSO project, noting that it meets international standards. He affirmed that the investments at LADOL’s facility illustrated the Board’s policies of domiciling industry operations, creating job

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opportunities for Nigerians and extracting legacies from major industry projects. He promised that the Board would galvanize the industry to patronize such facilities to justify the investments. Speaking further, Wabote revealed that the development of the integration yard was made possible because the Board insisted that the Egina FPSO project must be partially integrated and fabricated in Nigeria. The Board also supported LADOL through the Nigerian Content Development Fund (NCDF) by providing it with $15m partial guarantee on a facility it accessed from GTB. As part of the package, the Board granted 50 per cent rebate on the facility, whereby the NCDF would pay half of the loan if it performs. The implication is that $7m is provided over the life of the loan, bringing the total exposure of the NCDF on the project to $22m. Speaking when he visited Nigerdock, the Executive Secretary praised the company for employing over 1000 Nigerians and providing several others with qualitative training despite the challenges facing the industry. He explained that he decided to visit the

Capacity Building: Embee Jay Expands Training Complex By Vivian Osuji Israel, Port Harcourt

he Nigerian Content Development Monitoring Board, NCDMB, has described Embee Jay Global Services Limited training complex expansion as a success story for the Board, Oil and Gas Trainers Association. Born in response to yearnings for an organization that could deliver global results in numerous training, human capacity development and entrepreneurship programs, Embee Jay Global Services was incorporated in December, 2004, and commenced active business in June, 2013. Speaking during the official opening of Embee Jay training complex recently in Port Harcourt, NCDMB Executive Secretary Engr. Simbi Kesiye Wabote , congratulated Embee Jay for the success recorded. He noted that the success achieved by Embee Jay is also the mandate of the NCDMB to ensure that they domicile training and reduce training overseas. The Executive Secretary, who was represented by Mrs Michelle Aiyegbusi, Manager, Human Capital Development, Capacity Building Divi-

facilities in company with Nigerian Content General Managers to enable them appreciate capacities that exist in local

service companies. He stressed that Nigerian Content was not about indigenization but domiciliation and domestication, noting that the quality of fabrication in the company was comparable to what was obtained in China and Brazil. Speaking earlier, Chairman of LADOL, Mr. Ladi Jadesimi applauded Total for committing to the EGINA FPSO project despite the uncertainties surrounding the 2015 general elections, the Petroleum Industry Bill and fall in crude oil prices. He assured that the project will be completed according to schedule. Also speaking, Chairman of Nigerdock, Mr. Anwar Jamarkani solicited the support of the NCDMB in ensuring that the company got new contracts to enable it keep its employees and maintain its equipment.

sion, NCDMB, further assured trainees of a world class training program since Embee Jay is a member of the Oil and Gas trainers Association of Nigeria. Also congratulating Embee Jay, Chairman, Oil and Gas Trainers Association of Nigeria, Prof. Mike Onyekonwu explained that OGTAN have special interest to ensure that the human capital of the country is truly entrepreneurial, to solve a peculiar problem and advised Embee Jay Global to maintain OGTAN excellent standard in order for it clients not to be diminished. Engr. Iwhiwhu Maurice who represented Engr. Chiedu Oba, General Manager Nigerian Content Development, Shell Petroleum Development Company encouraged Embee Jay to maintain quality standard in training for attracting more trainees. In his speech, The Chief Executive Officer, Embee Jay Global Services Limited, Engr. Fred Eje, acknowledge Nigerian content Development Monitoring Board, Oil and Gas Trainers Association of Nigeria, International Oil Companies, clients for their positive roles and support within it short period of existence. Engr Eje disclosed that Embee Jay is a major beneficiary of the Nigerian Content Act.

Orient Energy Review December, 2016

LOCAL CONTENT

Guidelines to Easy Access of Nigerian Content Fund Underway-NCDMB Y

earnings by oil and gas industry stakeholders for easy access to the Nigerian Content Development Fund (NCDF) will soon be addressed by the new guidelines to be released by the Nigerian Content Development and Monitoring Board (NCDMB). This was part of the outcomes of the 6th Practical Nigerian Content Conference which ended in Abuja Thursday. The conference was organised by the NCDMB in collaboration with the CWC group, London and it drew nearly two hundred stakeholders from operating and service companies, National Assembly, Ministries, Departments and Agencies and Non-Governmental Organisations. The Executive Secretary of the NCDMB, Engr. Simbi Wabote confirmed that the Board would come up with a transparent guideline on the application and utilization of the Fund that will give comfort to the stakeholders and ensure that the. NCDF was established by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 for the purpose of increasing Nigerian Content in the Oil and gas Industry by addressing the paucity of funding faced by manufacturers, service providers and other key players.The Fund is pooled from one per cent of every contract awarded in the upstream sector of the industry and is managed by the

Faces of Nigerian Content: L-R: Immediate Past Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzel Amagbe Kentebe, Executive Secretary, Engr. Simbi Kesiye Wabote and Pioneer Executive Secretary, Engr. Ernest Nwapa at the just concluded 2016 Practical Nigerian Content Conference in Abuja.

Board. Other resolutions of the conference included the commitment of the NCDMB to set timelines for responding to documents referred to it as part of strategies to shorten the contracting cycle. The Board also announced that it will expand its operations to the midstream and downstream sectors of the Oil and Gas industry in line with Section 106 of the Nigerian Content Act. The NCDMB also pledged to support efforts to implement Local Content across other sectors of the economy, including Power, ICT and Construction. Operators of the sectors were challenged to develop and use bespoke regulations to guide the implementation of Local Content in their industries pending the development of statutes. Participants also stressed the need for collaboration between the Board, operators and the academia to enhance Research and Development and charged the Board to pursue the adoption of select institutions under Adopt a Faculty Initiative. Speaking at the opening ceremony, the Executive Secretary of the NCDMB, Engr. Simbi Wabote indicated that the Board would soon unveil a 5-year road map that will chart a new Nigerian Content implementation path that will increase value addition in the industry

Orient Energy Review December, 2016

and bring tangible benefits to Nigerians. He confirmed that the Board is reinvigorating the development of the Nigerian Oil and Gas Parks Scheme (NOGAPS) as part of efforts to domicile manufacturing of oil and gas components close to oil fields and involve local businesses in operations of the industry. According to him, the identified sites for the parks have been acquired and paid for by the Board, while detailed design will soon begin.â&#x20AC;&#x153;We have set a timeline for every milestone we intend to achieve in the next couple of months; at least we should have one up and running to test the benefits before we replicate,â&#x20AC;? he said. The Executive Secretary also confirmed that 2017 edition of the Practical Nigerian Conference will hold in Uyo, Akwa Ibom State and the event will be rotated across oil producing states. The Conference was held in Yenagoa, Bayelsa State between 2012 and 2015. The 2016 PNC conference featured presentations and panel discussions by several subject matter experts on Nigerian Content, Oil and Gas and Information Communication Technology.

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LOCAL CONTENT

Senate Committee tasks Ministry of Petroleum on local content …As Kachikwu urges haste on PIB

* Nigeria’s Senate chamber

he Senate Committee on Petroleum (Upstream) has tasked the Ministry of Petroleum Resources to take advantage of the local content in its effort to deliver on its mandate.

The Chairman of the Committee, Sen. Tayo Alasoadura, who stated this recently while on an oversight function at the ministry headquarters, Abuja, noted the need for the oil sector to use local content than relying on foreign machinery and import, he regretted the non-utilisation of local content in the oil sector which is in large quantity in the country. Alasoadura said the committee was at the ministry as part of its oversight function to ascertain the level of compliance of the 2015 budget implementation, adding that the exercise was not to witch-hunt anybody, but to assist the ministry to deliver on its mandate.

Sen. Alasoadura further noted that efforts are being made to pass the Petroleum Industry Bill (PIB), even as he urged the ministry to develop a strategy to resolve the Niger Delta crisis, which it said have adversely affected oil production in the region. The committee asked the petroleum ministry to take advantage of the availability of bitumen in some parts of the country. Fielding questions from the members of the committee, Minister of State for Petroleum, Dr Emmanuel Ibe Kachukwu who reeled out some of the challenges of the ministry urged the senate to hasten the consideration of the PIB. On the Niger Delta crisis, the minister stated that the ministry is doing everything possible to resolve the crisis as it had met with the leaders of the region on the way forward.

Local Content to Boost Defence Sector – NCDMB T he Nigerian defence community has been advised to adopt the Local Content Policy in their operations, particularly in the manufacturing and maintenance of security equipment and development of software. Executive Secretary, Nigerian Content Development and Monitoring Board, (NCDMB), Engr. Simbi Wabote gave the advice recently in Abuja when he delivered a lecture to participants of the Nigerian Defence College, Course 25. Speaking on the topic, “Local Content Policies and National Security: An Assessment of the Oil & Gas Sector,” Wabote charged military authorities to also consider adopting Local Content in the production of security clothing, construction of security vessels and include the policy in other security contracts, especially in offshore locations and maritime facilities. The Executive Secretary pledged the support of the Board to the Defence Community in developing a unique local content policy that would fit its operations. According to him, the implementation of Nigerian Content in the oil and gas industry has yielded enormous achievements, including employment generation for thousands of Nigerians, skills acquisition, local manufacturing and asset ownership and prompted sectors like power, telecommunications, and construction to adopt the policy, adding

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that countries such as Ghana, Kenya, Gabon and Oman have also adopted some of the local content models implemented in Nigeria. Wabote described Nigerian Content as a national security imperative, noting that the Nigerian oil and gas industry must depend on Nigerian owned assets and personnel to avoid a scenario where the sector is forced to shut down because foreign owned assets or expatriates have to be withdrawn due to insecurity in the Gulf of Guinea Region, diplomatic tensions or outbreak of an epidemic in the country. He further explained that NCDMB is implementing the Nigerian Content Act using a four pronged approach that focused on Manufacturing and Infrastructure, Human Capital and Technology, Supplier Development and Funding and Asset Ownership. The scribe expressed satisfaction that the Board’s participation at the Defence College event in 2015 resulted in the partnership the military has forged with Oildata Wireline Services – an indigenous service company. The two parties, he said, collaborated in the deployment of fiber optic technology for pipeline monitoring and protection between Ugheli and Kwale, Delta State in 2015 and set up Oilfield shaped charge manufacturing facility in Nigeria in partnership with the Defence Industry Corporation of Nigeria (DICON). Responding to questions from the participants, Wabote explained that the Board was collaborating with the Nigerian Maritime Administration and Safety Agency (NIMASA) to implement the Cabotage Act as it pertains to the oil and gas industry. He noted that the number of Nigerian vessel owners in the oil and gas industry have

Simbi Wabote

increased to about 60 per cent of the total operators – a marked improvement on what obtained in 2010 when the Act was enacted. He also explained that the Board’s Expatriate Quota Policy regulates the participation of expatriates in the Nigerian Oil and Gas industry through the issuance of biometric cards after confirmation that such skills are not available locally. The policy also assists the Board to electronically track their length of stay, compliance with provided succession plans and expected date of exit. In his comments, the Deputy Commandant and Director of Studies, Nigerian Defence College, Major General EG Ode underscored the need for effective collaboration between the Defence Industry and the oil and gas industry and called for the development of local capacity across the industry value chain.

Orient Energy Review December, 2016

DRILLING/ EXPLORATION/ PRODUCTION

Nigeria: Lekoil Angola: BP’s Grande Plutonio Field Flows Oil from Reaches New Production MileOtakikpo stone Of 500Mmbo Marginal Field B to Onshore Storage Tanks

ekoil in its operational update, announced that oil is flowing at the Otakikpo marginal field in Nigeria to onshore storage tanks, where it will later be transferred upon completion of the offshore pipeline. According to Lekoil, all onshore facilities have been fully commissioned and approved by the regulators, and the offshore pipeline which runs from the storage tanks to the tanker offloading manifold is 80% complete. When completed, the joint venture partners hopes to commence transportation to the export terminal and afterwards, be able to slowly increase production to 10,000 bopd, Offshore Energy Today reports. “We’re delighted to announce this key milestone from the Otakikpo field. I would like to thank the entire team that has worked so hard on this project, our partners Green Energy, investors, debt financiers, our host communities and our government regulators for their continued support,” Lekan Akinyanmi, Lekoil CEO said. The Otakikpo marginal field is operated by Green Energy International with 60 percent interest while Lekoil is a technical and financial partner in the field with the remaining 40 percent interest.

P Angola has announced that the Grande Plutonio production field in Block 18 offshore Angola has achieved a new production milestone of 500 million barrels of oil. The field, with an estimated gross production of 160,000 barrels of oil per day, is shared equally by Sonangol Sinopec International and BP Angola. Grande Plutonio is 310 metres long and has a storage capacity of 1.77 million barrels, 24 production wells, 22 active water and three gas injection wells and an installed production capacity of 144,000 barrels of oil per day. BP has been in Angola since the 1970s. The Grande Plutonio, which became operational in October 2007, was the first field operated by the British company in the country and includes five distinct fields found between 1999 and 2001. The fields

are; Gálio, Crómio, Paládio, Plutónio and Cobalto. BP Angola has interests in eight blocks in deep and ultra-deep waters and is one of the largest international investors in Angola, with more than $29 billion invested by the end of 2015. That same year, total net production from main fields was 221,000 barrels of oil per day, Macauhub reports. Source: Ecofin Agency

Angola: FPSO Armada Olombendo Arrives At Eni’s Block 15/06

talian Eni’s floating production storage and offloading (FPSO) vessel, Armada Olombendo, has arrived and received at its final destination on Block 15/06 offshore Angola. This vessel was constructed by Keppel’s shipyard in Singapore and leased to the Eni who named the FPSO built to operate offshore Angola for the East Hub Development Project, in mid-October this year. According to a spokesperson for Eni, the FPSO arrived at its offshore location on Sunday, December 11 after entering Angolan waters on Friday December 9, 2016. The East Hub Development Project covers nine subsea wells, five producers and four water injectors, in water depths between 450 and 550 meters. The hydrocarbons produced from these wells are to be transported through a pipeline system to the FPSO to be preserved and stored before export, Offshore Energy Today reports. First oil from the wells is expected within the first half of 2017, the Eni spokesperson added.

Orient Energy Review December, 2016

The FPSO Armada Olombendo is capable of handle crude oil production capacity of 80,000 bopd, 120,000 bpd of water injection, 120 Mmscf of gas handling and a net storage capacity of 1.7 million barrels. Eni operates the Block with a 36.84% stake alongside Sonangol Pesquisa e Produção with 36.84% and SSI Fifteen Limited with 26.32%.

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ALTERNATIVE ENERGY

Renewable Energy Association of Nigeria Reveals Way Forward The REAN’s executives said: “We must

EAN has been established to see renewable energy including solar, hydro, biomass and wind contributing 40% of the Nigeria’s national energy mix by 2030. However, for this ambitious target to come into realisation, there has to be a scheme that will push for its success. South Africa’s renewable energy independent power producer procurement programme (REIPPPP) has set an example in this regard. In correspondence with ESI Africa, the association’s President Segun Adaju and executive secretary, Godwin Aigbokhan, unpacked how REAN intends to implement its set goal. Renewable Energy Association to follow suit The association’s officials stated that Nigeria will follow in the footsteps of South Africa’s REIPPPP, “The next round of award of power purchase agreements (PPAs) for solar independent power producers (IPPs) will be through a competitive procurement/tender process.” The REAN’s executives stated that

government believes that it has a role to protect the interest of Nigerians and that through the auction route it can get the best tariffs, attract investment, protect consumers and improve the availability of electricity. The officials revealed to ESI Africa that a tariff rate of $0.06 is being targeted as a result of the IFC backed project in Zambia, where a low $0.06 tariff was agreed. “But will such a tariff be realistic, achievable and sustainable in Nigeria where costs for investors are different to those in Zambia? “As Nigerian electricity consumers, we would be very happy if the tariff is $0.06 but as realists and investors are unsure if such a target will be attractive enough to investors given the cost of doing business in Nigeria,” they said. According to Adaju and Aigbokhan, Zambia consistently ranks better than Nigeria on indices like the World Bank’s Ease of Doing Business Ranking and the World Economic Forum’s Global Competitiveness Index. “That said, we wish the government of Nigeria and the Bulk Trader the best of luck in the competitive tender process, and hope that if an investor does win a competitive procurement bid at $0.06-0.10, they will not seek a revision afterwards.” Supportive policies With regards to supportive policies and regulation from government to ensuring the uptake of renewable energy projects by IPPs in Nigeria.

give this current government credit. It is the first Nigerian government to take renewable energy (RE) as a serious component of the energy mix, and it has included clear targets under the RE Action plan for 30% of the nation’s energy mix to come from RE by 2030.” In October, the Nigerian Electricity Regulatory Commission announced its approval for the draft mini-grid policy, which is currently undergoing a series of reviews with stakeholders. Investments On the question of investment in the renewables sector in the country, due to the absence of a projects database in the country and diversity of the sector, REAN could not state the exact figure at the moment. However, this is the kind of the information gaps that the association is hoping to bridge. “In the on-grid RE segment of our sector, we estimate that investments made by 14 project owners for the development stages of their projects are between $3-5 million. “In total, $2-2.5 billion in investment is expected in the engineering, procurement and construction stage, and the next stage of competitive procurement should see significantly larger investments in the sector,” they concluded.

Nigeria to generate 10, 325mw with renewables Dirisu Yakubu, Abuja, FCT

he Federal Government is projecting a diversified grid of 10, 325mw of electricity in 2019, and 45 per cent renewable energy grid contribution before by 2030. A new energy policy document earlier launched in July 2016 indicates the possibility of the attainment of this lofty projection, if things go on as envisaged. Minister of Power, Works and Housing, Babatunde Fashola stated in policy document that the need to look in the direction of renewable to boost power supply had become all the more necessary given the unstable nature of gas supply in the country. “From conception in January 2016 and conclusion in June in 2016, our vulnerability to over dependence on gas had become apparent,” the Minister stated way back in June, adding that “23 out of the 26 power plants in the country depend on gas.” Fashola who equally decried the activities of militants in the Niger Delta region further stated that it had become incumbent on government to think outside the box to proffer a solution to the perennial challenge of epileptic power supply. “Between February 14 and June2, 2016, there have been 14 incidents of oil and gas pipeline vandalisms. Therefore, this document is also a solution to that vulnerability on the roadmap to energy diversity and security,” Fashola had said. Orient Energy Review gathered

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government is increasingly working towards the gradual implementation of the policy targets, given the importance of reliable power supply to the change agenda of President Muhammadu Buhari. Last week, Director of Energy Resources at the ministry, Engineer Emmanuel Ajayi at a renewable energy workshop in Abuja stated that the document, “The Nigewrian Power Sector Investment Opportunities and Guidelines,” clearly indicated the breakdown of how the goals would be attained, stressing: “It shows that 10 per cent would come from solar power, 12 per cent of Large Hydro Power (LHP), two per cent of Small Hydro Power (SHP), and one per cent of Coal.” As it were, the 2030 target will help solve the challenge of the present overdependence on gasto-power which today accounts for 86 per cent of power generation so far, with LHP contributing a paltry 14 per cent. The policy, which supports huge private sector investments target an energy mix of 55 per cent gas-to-power. The renewable sources are four per cent SHP, four per cent from Biomass, and three per cent from wind. Current energy demand for Nigeria is over 12, 000mw but power generation has averaged 3, 500mw in November, statistics from the Nigeria System Operator reveals. A study carried out recently by the German International Agency and the Ministry of Power revealed that over 60 per cent of the 170 million Nigerians are unconnected the national grid. The study identified 174 million population that ought to be connected, adding that 34, 446 clusters with 51.2 million people should be assigned to the grid while the other 13, 043 clusters of 116. 8 million people should be electrified with renewable energy. Another 7, 210 clusters with 2.8 million people resident in rural settings should be electrified using Solar Home System, the study

concluded. To attain these targets, the construction of over 10 solar-based power plants worth $1.775 billion would begin next year while about 1, 127mw of electricity would be added to the grid in 2018 upon completion. An investor and Managing Director, Pan Africa Solar, Marcus Heal stated: “Our plan is to supply electricity to millions of Nigerians by developing large scale solar technology. The investment of $1.75 billion is the largest so far in the country. Most of them are bound to come on stream from 2017.” The plants would be sited in Jigawa, Plateau, Sokoto, Katsina, Bauchi, Enugu and the Federal Capital Territory. Managing Director, Niger Delta Power Holding Company (NDPHC), Chiedu Ugbo two weeks ago, stated that his company has got a presidential directive to provide 20, 000 SHS to underserved rural communities with no connection to the national grid as part of the renewable energy application process. Ugbo noted that the project would be deployed within 21 months as it has partnered an indigenous firm, Azuri Solar Limited. With the incessant rising cost of electricity to power businesses, an industry expert, Justice Ekeke has called for more investment in solar power as a way of cutting cost to about 50 per cent. Ekeke who is the Managing Director, Solar King Industries stated recently that new solar power packages now goes for just N250, 000, and small businesses could be powered with three solar panels, an inverter, the charge controllers and other accessories. “While it is a bit high to acquire initially, it is cost-effective power source for homes and small business in the long run,” Ekeke said.

Orient Energy Review December, 2016

GHANA REPORT

GNPC, Explorco to Farm-In On Distressed Blocks …Ghana’s Oil Output To Hit 240,000 Barrels By 2020

By Gilbert Boyefio Accra, Ghana

t is no secret that some of the international oil companies that have secured exploration rights to offshore blocks in Ghana have not performed as expected in view of the prevailing industry conditions and other factors. Ghana’s nascent industry has suffered as a result of the reduction in the hitherto aggressive exploration activities. Since 2007 when the Mahogany discovery was made, more than 23 oil and gas discoveries have been made offshore Ghana. Most of these discoveries are clustered within the Western Basin. The majority of these discoveries are in water depths of more than 800 meters where development cost is high and also technically challenging. The discoveries are fraught with varied subsurface risks and there is no existing development infrastructures close by to tie them to. This is compounded by the relatively small sizes of the fields making stand-alone development economically unattractive for many upstream operators in these water depths. In 2012 when oil was selling above $100 a barrel, the focus was on barrels rather than margins. This has changed since the slump started in late 2014, and now with oil below $50 per barrel, the focus is now on the barrels with the best margins - and being able to produce those barrels as competitively as possible. According to Michael N. A. Aryeetey, Chief Operating Officer, GNPC Exploration and Production Company Ltd (Explorco), “In order to ensure that we return to the previous state of affairs, GNPC and Explorco are working to attract credible, technically and financially

endowed companies to partner with us and or farm-in into some of these ‘distressed’ blocks. Such partnerships if successful will lead to continuous acquisition of data and exploration drilling, which will in effect lead to a higher probability of success”. Explorco is a subsidiary of GNPC, established to enter into joint ventures and joint operating company arrangements with strategic partners to jointly operate in some selected license areas. Already, Explorco has acquired commercial interests in selected upstream assets exclusive of the ‘initial’ and ‘additional’ interests of GNPC, which have carried components. This commercial interest constitutes a full equity position, and therefore contribution by Explorco for costs begins from exploration, through development to production. It involves measured risk, but this effectively increases the overall State take in the venture in the case of success. The goal is to achieve a high Return On Investment (ROI) while minimizing risk through a process which includes taking stakes in high-impact projects that have high probabilities of success Speaking at the 7th College of Basic and Applied Sciences Lecture on the topic: Introduction to Ghana’s oil industry: history and future trends”, Mr. Aryeetey pointed out that it is expected that Ghana’s daily oil production will reach 240,000 barrels by 2020 when the current three operational fields will all be at peak production. However, he observed that this trend will not last if (1) investment into the industry stalls, (2) pace of exploration reduces, (3) Ghana does not find more oil and gas, and (4) Ghana does not commercialize its oil finds. Production Hub Approach On the other hand, Mr. Aryeetey disclosed that the GNPC is seriously advocating for the

Orient Energy Review December, 2016

production Hub approach for smaller sized fields such as Akasa, Mahogany East, Odum, Banda, Teak, Beech, Hickory, Paradise, Cob, Almond and Ebony, which require innovation in order to create transformation. The production hub development approach has been successfully employed in other oil producing jurisdictions particularly in the US Gulf of Mexico for multiple “small sized fields”. GNPC has evaluated the challenges facing most of the undeveloped deep-water discoveries and will be working with operators and the Petroleum Commission to find solutions that will allow the development of fields across different contract areas efficiently. With this concept, one Facility will not only service fields within the same licensed area but will be optimally positioned to service fields from different contract areas. This provides improved field development economics by allowing different contractors to share infrastructure costs and would enable the production of the country’s hard to develop hydrocarbon resources as well as facilitate the continuous inflow of investment into the upstream industry in Ghana, noting that, “Currently about 50% of Ghana’s sedimentary basin offshore is open with very little activity”. Maritime Boarder Dispute There is no doubt that the maritime boarder dispute with La Cote D’Ivoire has also effected exploration and production activities offshore Ghana due to the fact that six of Ghana’s most prospective blocks have all been affected by the dispute with the ‘no drilling’ order by the ITLOS Court. Mr. Aryeetey indicated that it is GNPC’s expectation that even though oil prices generally continue their downward pressure in response to higher supply against lower demand, when the dispute is resolved in Ghana’s favor, the country will continue to attract serious and well established oil companies who will work with GNPC and Explorco to ensure sustain and aggressive exploration and development activities in Ghana’s basins. “This is key for us because increased exploration, development and production activities will lead to increased work load and demand for local participation and use of local goods and services. Increased industry activities in Ghana also present opportunities for improving infrastructure and facilitate continuous operations thereby ensuring that our government revenues are sustained and citizens remain in jobs to promote economic growth”, he pointed out.

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GHANA REPORT

Nana Akufo-Addo, Ghana’s president -elect

hana’s 2016 elections are an important opportunity for political parties to share their key priorities in the extractive sector with citizens. Despite significant improvements, Ghana continues to struggle to effectively manage its natural resources, with planning challenges and inconsistent implementation of policies still the norm. Despite the fall in commodity prices, it is likely that the next government will oversee further growth in petroleum revenues. The new Tweneboah, Enyenra, Ntomme (TEN) field, which started producing last August, and the Sankofa gas project, also expected to begin production in 2017, will likely lead to a doubling in oil and gas production. Beyond these, developments in the industry look much less certain. Mining revenues will remain an important source of revenue and economic activity but its overall contribution to Ghana’s economy has been on a decline relative to oil and gas. Organizations such as the Africa Centre for Energy Policy (ACEP), Civil Society Platform on Oil and gas (CSPOG), IMANI Ghana, and various media outlets are undertaking pre-election analyses of the feasibility, potential gaps and mismatch of the various political parties’ manifestoes. To complement these efforts, this election brief

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Ghana’s Election: Seven Extractives Governance Recommendations for the Next Government provides more targeted recommendations on the extractive sector for the next government. It recommends that Ghana: Develop an extractive sector vision and plan. A clear and coordinated vision for the extractive sector guides governments to develop a strategy that is comprehensive and inclusive. Ensure the Petroleum Revenue Management Act (PRMA) is consistent with Ghana’s overall fiscal framework. The PRMA’s strength is in the detailed levels of transparency it requires on projects funded by petroleum revenues. Deliver fiscal responsibility for the long term. Overspending, particularly during election years, has led to a doubling of Ghana’s budgeted fiscal deficit and placed the country on a track of increasing vulnerability to external economic shocks, including commodity price volatility. Ensure efficient and transparent exploration and production operations that generate optimum benefit for citizens. Having a strong legal framework to guide the management of the sector is vital if Ghanaians wish to optimally benefit from their resources while minimizing the risks

of corruption and negative impacts. Strengthen the work of internal and external oversight actors in extractives. The next government must commit to strengthening institutional oversight as a core approach to tackling corruption and mismanagement in the sector. Shape a vision for the Ghana National Petroleum Corporation (GNPC) and undertake legislative reform. GNPC reporting practices and the associated transparency obligations should also be defined in law. Ensure Ghanaians get their fair share by investing the capacity of the tax administration. The government must now invest in the capacity and coordination of agencies to prevent transfer mispricing in the extractive sector—a major challenge facing many resource-rich developing countries. Courtesy: ReportingOiland gas ghana.com

Orient Energy Review December, 2016

GAS

Tanzania and Dangote Cement Reach Deal on Natural Gas Supply

Aliko Dangote

anzanian President, John Magufuli (photo), has announced that the country and Nigeria’s Dangote Cement have strike a deal on the supply of natural gas to the latter’s

manufacturing plant. The President after meeting the company’s chairman, Aliko Dangote, accused unnamed middlemen of meddling with supply plans and said the issue has now been resolved and gas supplies will be sold at a reasonable tariff. Dangote’s $500 million cement factory in the southeastern Tanzanian town of Mtwara, runs on expensive diesel generators and had sought government support to reduce costs. But the talks had been delayed, with the state-run Tanzania Petroleum Development Corporation (TPDC) saying that the company was seeking at-the-well prices, Reuters reports. “They (Dangote Cement) will now buy natural gas directly from the state-run TPDC instead of going through middle-

John Magufuli

men,” Magufuli said after the meeting not giving further details on the new tariff. Tanzania in February, announced that it had discovered a further 2.17 trillion cubic feet (tcf) of possible natural gas deposits in an onshore field, thereby increasing its total estimated recoverable natural gas reserves to over 57 tcf. *Source: Reuters

Egypt: Eni to complete Phase 1 of Zohr gas treatment plant in 2017

ni plans to complete the first phase of its gas treatment plant for Egypt’s Zohr field’s production by October 2017, a source from Eni revealed. This is coming after Eni’s CEO, Claudio Descalzi, announced that the company was in negotiations with several parties to cut its stake in Egypt’s Zohr field to 50% operating interest. According to the source, Phase 1 represents about 24% of the facility with a treatment capacity at 650mcf/d

of gas. The source added that Eni estimates that the entire investments needed to complete the entire treatment plant as well as all development phases, will reach $ 4billion. When completed, the facility will be able to process 2.7bcf/d of gas, Egypt Oil & Gas reports. Eni finished drilling 6 wells prior to the planned deadline and plans to connect the production of these wells to the gas treatment plant by the end of 2017, the source stated.

By 2017-ending or early 2018, the Italian company intends to increase Egypt’s gas production by connecting 900mcf/d of output from Zohr. The field’s production capacity is estimated to reach 2.7bcf by 2020

Nigeria and Morocco sign deal to construct gas pipeline to connect Africa to Europe

igeria and Morocco have entered into a joint venture agreement to build a gas pipeline that will link the two countries and some other African countries to

Europe. According to Nigeria’s minister of foreign affairs, Geoffrey Onyema (photo), the agreement was signed during a visit by the Morocco’s King Mohammed to Nigeria. He said the planned pipeline project would be designed with the involvement of all stakeholders. “In this agreement both countries agreed to study and take concrete steps toward the promotion of a regional gas pipeline project that will connect Nigeria’s gas resources, those of several West African countries and Morocco,” Onyema said. The foreign minister added that the project is aimed at creating a competitive regional electricity market with the possibility of being connected to the European energy markets, but gave no timeline as to when construction

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works will begin and how much it will cost. Nigeria, which has abundant of hydrocarbons, produces little electricity, as its economy is now facing a recession caused by the fall in crude oil prices and attacks on oil facilities by militants demanding for a bigger share of Nigeria’s oil wealth in the Niger Delta region, Reuters reports. “Nigeria and the Kingdom of Morocco also agreed to develop integrated industrial clusters in the sub-region in sectors such as manufacturing, Agro-business and fertilizers to attract foreign capital and improve export competitiveness,” Onyema added.