Oer june 2016

3 Orient Energy Review June 2016

INDUSTRY NEWS

WED 2016: Chevron Reinstates Commitment To Wild Life Protection

By Margaret Nongo-Okojokwu

C

hevron Nigeria Limited (CNL) has renewed its commitment to the protection of wildlife, some of which are facing series of extinction today.

CNL, the operator of the NNPC/CNL Joint Venture, recently in commemoration of the World Environment Day (WED) 2016 said it remained an active agent of sustainable development and strong advocate of partnerships in support of the environment.

WED is celebrated globally each year on June 5 to stimulate awareness of the environment and encourage political attention and action.

The theme for 2016, which was celebrated few days ago, was on the illegal trade in wildlife under the slogan ‘Go Wild for Life’ Zero Tolerance For The Illegal Wildlife Trade According to the statement by the company, it has been over 50 years been supporting and sponsoring various programmes aimed at preserving the environment.

Mr. Clay Neff, Chairman and Managing Director, Chevron Nigeria Limited, explained that the company’s ES Process is supported by the Natural Resources Environmental Performance Standard that sets minimum standards for managing environmental footprints, and consequently the ecosystem that supports wildlife, which he said are done in accordance with the company’s Corporate Biodiversity Statement.

“The interaction between our capital projects and Wildlife is regularly assessed and monitored. We ensure that appropriate mitigation steps are taken, where necessary, as part of the expectations of our Environmental, Social and Health Impact Assessment (ESHIA) Process.

“The ESHIA, or local Environmental Impact Assessment (EIA), involves broad participation by the regulators, local communities and other relevant stakeholders. The process ensures that our projects are carried out with due consideration to human health and for environmental protection – including wildlife. For Deepwater seismic activities, we have an established process for protecting marine life by utilizing the services of Marine Mammal Observer (MMO),” he said.

Further explaining CNL’s commitment to the environment, Neff noted that Chevron is always glad to be part of the solution to global environmental issues, wherever the company operates, through its sound environmental management policy that supports environmental stewardship and sustainable development.

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Chevron’s commitment to wildlife conservation is also demonstrated by its continued support for the enduring landmark known as the Lekki Conservation Centre, which is reserved as a sanctuary for diverse wildlife and rich flora of the Lekki Peninsula.

The 78-hectare facility was established by the company in partnership with the Nigerian Conservation Foundation (NCF), Nigeria’s foremost non-governmental organization and an affiliate of the World Wide Fund for Nature. NCF is dedicated to the preservation of the full range of Nigeria’s biodiversity and promotion of sustainable use of natural resources for the benefit of the present and future generations. The Foundation has served as a center for wildlife research over the years and has hosted students from different institutions, including researchers.

The growing illegal trade in wildlife not only has adverse effects on biodiversity but is also valued billions of dollars according to World Wildlife Fund. According to United Nations Environmental Protection (UNEP), the booming illegal trade in wildlife products is eroding the Earth’s precious biodiversity, robbing humans of their natural heritage and driving whole species to the brink of extinction while the killing and smuggling is also undermining economies and ecosystems, fueling organized crime, and feeding corruption and insecurity across the globe.

INDUSTRY NEWS As noted by the Nigerian Environment Society (NES), Nigeria’s wildlife has increasingly been threatened and endangered over the years as result of deforestation, increased poaching, development activities, and weak enforcement of national and international regulations/conventions.

Over 50 years, CNL has been supporting and sponsoring various programmes aimed at preserving the environment.

The efforts, according to the company are in line with its commitment to Operational Excellence and Environmental Stewardship (ES) process.

The Company says it’s Operational Excellence and ES Process helps it to identify, assess and manage environmental issues/concerns in a sustainable manner and ensure Chevron conducts its operations in a way that will ensure protection of human health and the environment – including wildlife and other natural resources.

The Foundation has served as a center for wildlife research over the years and has hosted students from different institutions, including researchers.

Chevron’s commitment to environmental protection is also evidenced in the following initiatives:

Nature Conservation and Education In 2005, CNL established a yearly postgraduate research scholarship for PhD students in environment and conservation. In addition, the company hosts the annual S. L. Edu Memorial Lecture to promote environmental management awareness. The company is also working with the NCF to evaluate the possibility of establishing the Niger Delta Conservation Centre.

Chevron’s efforts in environmental conservation were applauded by various stakeholders during the commissioning of a 401 meters Canopy Walk in the Family Park at Lekki Conservation Centre.

At the occasion, former Governor of Lagos State, Babatunde Raji Fashola commended the company saying; “The whole purpose of this gathering today is environmental sustainability and we agreed to follow in the footsteps of partners like Chevron because we understand that Nature doesn’t need people, rather it is people that need Nature.”

In the same vein, the President of the Nigerian Conservation Foundation, Izoma Philip Asiodu also expressed appreciation to Chevron Nigeria Limited for its financial support to the Lekk

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Orient Energy Review June 2016

Conservation Centre since 1992.

Assessment of Environmental, Social and Health Risks CNL has developed and is implementing processes to identify, assess, mitigate and manage potential risks to human health and the environment (including natural resources) associated with existing operations and capital projects. The company’s natural resources requirements also highlight the need to manage land and water from its operations.

Zero-flare In response to global initiatives against climate change, CNL has developed and is implementing a strategy towards eliminating flared gas. The strategy, includes the execution of the three-phased Escravos Gas Project (EGP), the Escravos Gas-to-Liquids project (EGTL) and the West African Gas Pipeline project (WAGP) - all aimed at ending routine gas flaring in its operations, while delivering other important values for Nigeria, NNPC, and for CNL. The Agbami project was also developed for zero routine flare.

Old Land Drill Sites CNL, with an inventory of its legacy sites that are no longer in use, embarked on priority decommissioning and restoration activities to return the sites to their initial states and subsequently transferred such restored sites to their original owners for sustainable uses.

Putting Back: Restoring the Mangrove CNL has developed, and applied expertise in mangrove restoration through a combination of modern afforestation techniques, including natural recovery and direct planting of mangroves. The company commenced the regeneration of the mangrove vegetation with a pilot scheme involving the planting of mangrove seedlings of different species at three selected sites along the Abiteye-Escravos right-of-way.

Renewed efforts are also ongoing for further restoration utilizing Nigerian consultants with expertise in mangrove restoration.

GAS -TO- POWER

LPG-to-Power: General Electric Unveils Power Generation Alternative

By Sola Akingboye Statistics have revealed that Nigeria spends over $1bn per annum on Kerosene subsidy and faces increasing environmental challenges with continuous deforestation as over 50% household still rely on firewood as cooking fuel; even the endless PMS scarcity in recent time is unconnected to increasing demand for petrol as the main source of domesticated energy usage. In this special report, our Abuja Bureau chief, Sola Akingboye who monitored the recent unveiling of LPG to power generation by General Electric company in partnership with Vitol UK in Abuja, examines the potentials of Liquefied Propane Gas as an alternative to other traditional source of energy such as PMS, Diesel and other green-house hazards that contributes to global emission.

T

he quest for optimal utilization of Liquefied Petroleum Gas (LPG) in the country may have received a boost as General Electric company, in partnership with the global energy partner, Vitol UK recently unveiled its LPG to power project in Abuja; an initiative designed to tackle electricity generation challenges in Nigeria with a focus on medium and small scale enterprises , and more importantly in the Northern parts of the country where hydro system or the use of diesel has remained the priority,“but with LPG technology, we have capability to set up power plants in those regions using LPG,” GE - Vitol spokesperson, Guillaume Quiver, noted at the event.

The one day seminar though identified various challenges associated with tradition industrial energy source in the absence of stable electricity in the country; the event however undergirds the development of the Liquefied Petroleum Gas (LPG) sector, as well as providing strategic support to investors who are willing to tap into GE-Vitol LPG gas-based industrialization project.

Guillaume Quiver, who is also the Senior Investment Manager, Vitol Group of Companies, while expatiating on the significant of the company’s partnership with the Nigerian energy firm, General

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Electric, described Liquefied Petroleum Gas (LPG) as an option designed by his firm to reduce horrendous challenges confronting Nigerian local investors both in terms of environmental advantage, safe and cost effective method as being anchored by the indigenous firm General Electric in Nigeria.

“It is about introducing alternative fuel for small power facilities. Nigerian has been blessed with availability of natural gas for its power utilities; we then realized the need to bring it to the table to meet the power need of the people.

While General Electric provides the engine for the power generation, we (Vitol) cover the field.” Quiver opined. On what exactly the partnership stand to generate in view of the fact that Nigeria is a haven for abundant natural gas, Quiviger explains further, citing the need for Nigeria to embrace Vitol LPG plans, saying products are channelled towards meeting the energy demand of small and medium cadre of businesses in the country.

GAS -TO-POWER “When you look at price of gas compared to diesel, you will realize that it is more expensive than gas, which is exactly what our LPG engine to power generation is here to address.”

“Of course, competition is a game, and our effort is to create a demand for the product by putting in place the entire power generation engine. The beauty behind our value is that Nigerians will buy local products manufactured in the land rather than imports, and that will contribute to the infrastructure development in Nigeria.”

“On made in Nigeria products, we will rely on local production; there are dozens of local investors who already are prepared and today are using the same product to develop equipment, once the demand is there, there are people on ground to make the product available and we are here to produce that man.”

Whether the prototype of LPG designed engines will be made available for Nigerians to have a glimpse of what GE-Vitol is proposing, and more importantly the possibilities of converting diesel engine, (which many Nigerians are already accustomed to) to LPG based generators.

“We are actually trying to put that in place by next year, but we are looking for a volunteer, each volunteer have to be on LPG, which is not Brutane but Propane based as far as we can; we can today provide the product, and guarantee the supply”.

“On conversion however, we have discovered that the so called diesel engines do pack up easily, and for those who want a better alternative, they are the reasons why we are introducing LPG powered generators for replacements. So all you need do is to change the engine to LPG power, which is environmental friendly and maintenance cost effective.” He stressed.

Fielding more questions on Local Content policy of the federal government of Nigeria, Quiver identified their supply chain as being policy driven which he said Vitol is ever ready to comply.

“All our supply chain will be Nigerians, though certain things have to be brought from outside such that the engines are not manufactured in Nigeria yet, this is due to the fact that we are committed to bringing in so many fashion of LPG power generating equipment, but the maintenance and servicing of the engine will be done by Nigerians.” He added.

Lending his voice at the occasion, Engr.

Dogara, a General Manager at the Pipelines and Product Marketing Company, PPMC , a subsidiary and strategic busi-

8 Orient Energy Review June 2016

ness unit of the Nigerian National Petroleum Corporation (NNPC); was more elaborate on why Nigerians should fully embrace LPG as a way of life, he urged energy users in the country to eschew fears associated with gas usage among locals, especially in the rural communities, saying LPG being the safest source of energy generation, has come to stay.

He speaks: “Nigeria is blessed with more of gas than oil; we have about 187tr CMT of gas in this country. Our sources of LPG in Ngeria came from our refineries in Kaduna, Port Harcourt and Warri refineries.”

“We have another source of LPG via Nigeria LNG and other joint ventures such as Exxon Mobil and others. Our focal point is to meet up domestic market; which is reason why the Federal government declared that all companies producing LPG should reserve LPG for domestic consumption. As at 2015, our maximum consumption stood at 400,000 MT, so we still have outstanding metric tonnes unused.”

“Our strategic focus is that, there is

“When you look at price of gas compared to diesel, you will realize that it is more expensive than gas, which is exactly what our LPG engine to power generation is here to address.” nothing anyone will do without government’s involvement, we are strategizing to be sure that the eight LPG plants we have in the country are functional, and I am proud to tell you that all the eight LPG plants are selling. Part of our plan for this month is to commission Gusau, which takes care of Katsina, Gusau and other places in the North between 13th and 17th of this month, though they are already selling.”

“In doing this, we want the federal government to know the benefits accrue in the LPG market, otherwise they cannot come to our aid, because if anything involved fund that is where you will start having problems, bureaucracy will come in.” He declared.

Dogara also spoke on the green-revolution advantage of LPG and the Federal government plans: “On the green revolution effect, we have already sent our own people to see how we can completely migrate from the use of firewood, kerosene and so on in domestic houses to LPG completely. To forestall deforestation, we plan to distribute LPG cylinder and all other accessories, especially in the villages where they cannot afford to buy those things, including ‘Mama-puts’ where there are high level

of firewood consumption.”

“Indonesia has adopted a system that is working and we plan doing the same thing. Apart from that, we have also concluded the plan that LPG can also be used in our generators, I have already had one in my house, my 12.5kg generator was connected with LPG and we are using it. Due to issue of finance, we are partnering with some companies like Banner Energy, they have facilities all over Nigeria and they also want to use our own facilities all over the country to see how they can generate electricity using LPG.” “Though these facilities are running, we have agreed with Nigeria LNG to partner with them by making sure the facilities are rehabilitated and upgraded.”

On LPG availability and auto-gas vehicles, Dogara reveals government plans: “We also have planned to go into vehicles with auto-gas; we cannot wait for three hours on queue for PMS before we continue our businesses.”

“Banner Energy have those facilities, we were in Lagos and also at their Abuja branch where we observed their facilities as being intact, including Kaduna. Our plan is to make use of Banner Energy’s facilities to see how Nigerians can have options, either to still join long queues for PMS or go for the LPG alternative; it is cleaner and much cheaper.”

“Our own interventions at governmental level is to make sure that LPG is available, affordable and without tears. This is our position for now; even those who want to go into bulk purchase agreement and TUC agreement, we use this opportunity to tell them that we have the facilities.”

“We have ordered our private investors to chop-out their products in such occasions, without the need to go to Apapa in Lagos, Port-Harcourt and Warri, but for easy access in such locals such as Apapa, Warri, Ilorin, Enugu, Gusau. We have visited Ibadan with Banner Energy to see how suitable the location will be.”

“I am here to tell you that there is nothing not doable, especially since General Electric has agreed to finance the entire project, even if Discos does not have the facilities of meeting up with the Nigeria electricity need, we have provided an alternative via LPG to power generation.”

GAS –TO-POWER “We have position our staffs, especially against the backdrop of

• Produces 33% less CO2 emissions than petrol.

fears our people have developed over the years on domestic usage

• Produces up to 82% less Nitrogen Oxide pollutants than petrol.

of LPG, including industrial and otherwise. We are also bringing

• 63% less Carbon Monoxide.

on board our safety personnel to lecture Nigerians on what to do,

• 40% less Hydrocarbons than petrol.

so that LPG is not something anyone should be afraid of.” He

• 50% less particulates than petrol and 98% less than diesel.

assured.

However, participants at the GE-Vitol LPG seminar have called

However, Liquefied Petroleum Gas (LPG) has been described

on the government and stakeholders, to expedite more actions

primarily as a mix of hydrocarbon gases, Propane and Butane,

on awareness generation, particularly in the rural communities.

which is often used as a fuel source by households and light in-

Though, a recent report shows appreciable increase in domestic

dustry Main sources of LPG. Available report reveals that, it has

LPG usage in Nigeria, but despite its second largest Natural

Natural gas processing of 67 percent with Crude oil refining of

gas deposit in Africa and eight in the world, Nigeria still ranked

33%. But besides localizing LPG potentials to power generation

among the lowest LPG compliance country to forestall global

and alternative energy source for industrial usage; available statics

emission (greenhouse effect), both in Africa and the world.

have revealed the benefits of LPG over other source of energy

Government at all levels should place more priority on campaign

generation.

for LPG; while educating Nigerians on the benefits of using LPG as a clean and environmental friendly fuel to power generators and

For instance, the cost of LPG is now about the same with Petrol.

other industrial

The case for LPG over other fuels is compelling. The benefits for

machines, the need for emphasis against environmental pollution,

the environment are underpinned by Government initiatives (i.e.

degradation is now. Hazard of inhaling carbon monoxide as a re-

reduced import duty, taxes and charges). There is also reduced

sult of smoke emissions from vehicular exhausts and other power

wear and tear on the engine.

generating equipments has become inevitable.

Not few experts have highlighted the following significant benefits of LPG as energy source to make the change.

Even not few among energy experts at the GE-Vitol conference

In contrast to diesel engines, cold starting of LPG engines poses

affirmed the use of LPG, as a measure to forestall air pollution,

no challenges on the fact that engine performance is similar to

environmental degradation, Global warming, Climate Change,

petrol.

sudden death and sicknesses as a result of constant inhaling of carbon monoxide from power generating facilities and auto-en-

• Exhaust emissions contain less harmful substances when com-

gines. They all agreed it is time for Nigeria to go Green via LPG.

pared to petrol.

There will be no spilling of LPG when filling engine sets with little possibility of theft or pilfering of substance.

• Engine noise is reduced.

• LPG reaches the engine in gas form leading to improved combustion.

• No additives are required to guarantee high quality.

• The engine life is prolonged because of the absence of acids and carbon deposits.

As for Autogas vehicles, which are currently gaining momentum

“We have ordered our private investors to chop-out their products in such occasions, without the need to go to Apapa in Lagos, Port-Harcourt and Warri, but for easy access in such locals such as Apapa, Warri, Ilorin, Enugu, Gusau. We have visited Ibadan with Banner Energy to see how suitable the location will be.”

in some parts of developed countries, the gain from the use of Autogas for vehicles makes LPG undeniably environment-friendly.

• The ignition of Autogas is smoother as a result of the higher octane content.

• Autogas contains no lead and is therefore cleaner.

Environmental Benefits of LPG: The Energy Savings Trust indicates that road transport, industrial pollutions and the use of home and commercial related power generating sets are responsible for nearly 80% of smog forming pollutants. But the modern LPG-based technologies are designed to create a zero carbon footprint for engines. This will involve assessment of annual usage by users.

LPG-equipment, according to the proponents will make an equal contribution to ensure that early period of usage is carbon zero.

Other report indicates that LPG is a cleaner fuel that specifically:

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President and CEO of General Electric Nigeria, Dr Lazarus Angbazo

POWER

Frontier Oil Contributing 20% to Power Supply In Nigeria — Thomas He said, “The crisis of power shortage in Nigeria today is the common issue of a number of problems and challenges, some of which has been for more than 40 years and others of a more recent nature which was allowed to fester unchecked and has grown into a monster.

“Let’s take pricing. Gas prices have been relatively low compared to markets around the world, for more than 40 years, making the gas business unattractive compared to the oil business especially for the International Oil Companies (IOC).

“I remembered as far back as 1980s when I bought my first gas plant, which was a gas plant in Shell Nigeria operations. If you go to Port Harcourt today it is still there.”

He further stated that Gas to power in Nigeria today, is a very sick value chain and he blamed the electricity distribution companies (DISCO) and consumers for the problems in the sector.

Engr. Dada Thomas

C

hief Executive officer of Frontier Oil Limited, Engr.

Dada Thomas has disclosed that the company is currently contributing 20 per cent of electricity generated in the country.

Addressing newsmen in Lagos, Thomas stated that in spite of the recent spate of pipeline bombings, which had disrupted gas supply to power plants across the country, the company is currently supplying gas to at least three power plants to generate electricity.

He said, “The end users of our gas are Ibom Power, Calabar power plant, Alaoj power plant and when I checked, they are all taking gas. In addition we are supplying to about five factories in Calabar. We are helping to bring down the cost of construction in Nigeria.”

Thomas further stated that the in addition to gas potential, the company and its partner operate a common facility with the ability to combine 35,000 barrels of oil and inject it into the Qua Iboe terminal (QIT) for export.

He said the company is making significant contribution to the Nigerian economy by powering the economy and by also helping to earn import proceeds by producing oil which is exported.

Furthermore, he identified pricing, huge indebtedness to gas producing companies and inadequate infrastructure as some of the challenges negatively affecting the country’s power sector.

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He said, “Where does this sickness originate from? The DISCOs and from you and I, because people are not paying for the electricity consumed. More than 46 percent of the electricity supplied to the DISCOs is lost. They record these losses because they are inefficient. Because they have refused to put meters which they ought to, they keep on doing estimated bills so they have their own problems.

“The other problems are from us, where people bypass meters and are directly stealing electricity and all those kind of things. When the DISCOs can’t collect sufficient money from what they are distributing they can’t pay the transmission company, they can’t pay the generation companies and they can’t pay the gas suppliers.

“The gas supplier value chain is a very sick value chain in Nigeria. It isn’t going to die because death is not an option.

If it dies, we will be in perpetual darkness in this country, and I think the good thing is that the government is listening and trying to address the problem.

“The solution is for the gas transaction to be based on a willing buyer, willing seller market driven platform with government removed from regulating commercial transactions between profit making entities and the other solution is for the sanctity and enforcement of contracts. That was why TEM, the Transaction Electricity Market was kicked into action in February, but still the government keeps having cold feet about these things.

“If two people have a commercial arrangement then they must honour it, they must honour it. If you take a product you must pay for it.”

COVER STORY

Back To The Creeks:

Nigeria On The Precipice Over Renewed Attacks On Oil Assets

By Godspower Ike Margret Nongo-Okojokwu

T

he resumption of hostilities in the Niger Delta region, with the attack on oil installations by a group known as the Niger Delta Avengers had put the Nigerian economy in dire straits.

Though the attacks have helped in curtailing global crude oil supply, leading to a gradual rebound in the price of crude oil, the impact on the Nigerian economy has been everything but positive, ranging from declining revenue, power blackouts, environmental degradation and other social and economic problems among others. This article seeks to explore the impact of the crisis on the global oil industry, the Nigerian petroleum industry and the political and economic issues thrown up by the attacks.

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COVER STORY

T

he recent spate of crude oil and gas pipeline bombings in the Niger delta region had impacted positively on the global crude oil market, by helping in bringing about a drastic reduction in the glut in global crude oil supply, thereby forcing a gradual rebound in the price of crude oil, but it has also helped in no small measure in plunging Nigeria closer to an economic crisis of unimaginable proportion.

The bombings, allegedly carried out by the Niger Delta Avengers, NDA, had brought about a sharp decline in Nigeria’s crude oil export; a massive dip in the country’s oil revenue and a reduction in gas to power plants, leading to a significant reduction in power supply across the country.

The National Bureau of Statistics, NBS, latest Gross Domestic Product’s (GDP) report for the first quarter of 2016 had pointed out that the crude oil component of the country’s total trade decreased by N716.7 billion or 46.6 per cent against the level recorded in fourth quarter 2015.

In addition to the loss in revenue to the country, power supply is gradually inching closer to zero, as the attacks have crippled almost all of the country’s power plant.

Currently, power supply is put at about 2,800 megawatts (MW), dropping to as low as 650MW within the week, from a high of 5,074MW recorded in February. The Nigerian Electricity Regulation Commission, NERC, had also stated that the country had recorded six system collapses within the last month.

Few days ago, the price of Brent crude oil, spurred by tightening supplies occasioned by the attacks on oil assets in Nigeria, appreciated by 63 cents to $50.27 a barrel, while the United States crude futures, were up 60 cents at $49.22 a barrel.

Oil traders claimed the prices were propped up by attacks on oil infrastructures in Nigeria, which had already sent the country’s output to more than 20-year lows.

So far, supply cuts like those in Nigeria or Libya, have been met by rising output in the Middle East, especially Iran, which has ramped up output since the end of international sanctions against it in January.

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Reuters reported that the damage done by the militants had helped tipped Nigeria’s economy toward recession, and had cost Nigeria its position as the continent’s top oil producer—a distinction inherited by Angola.

The report claimed that the lost production helped push crude prices above $50 a barrel recently for the first time since November.

It noted that roughly 96 million barrels of crude oil are produced globally every day, but supply exceeded demand by around 1.4 million barrels a day in the first quarter, adding that the lost Nigerian production is almost as large as the excess daily output that has weighed down prices.

The bombings had led to a dip in Nigeria’s crude oil production from 2.2 million barrels per day to below 1.0 million barrels per day, according to sources in the Nigerian National Petroleum Corporation, NNPC.

Economic Sabotage Analysts are of the view that if Nigeria’s oil production falls to zero, as is the aim of the militants, the cascading effects would be felt around the world, adding that the global supply outage would hit an all-time high of 4.5 million barrels per day.

“However, given the consideration that majority of the one million barrels per day left in production is offshore; we think the likelihood of NDA disrupting it to be low. Now, if there is a disruption, the impact could be more prolonged than any onshore disruption,”

COVER STORY Specifically, analysts at the United States’ Oil Exchange Traded Fund said the so-called supply overhang will all of a sudden turn into a massive deficit, adding that even if Canadian oil production comes back online, the outage would still be around 3.5 million barrels per day.

“If the oversupply was truly 1.6 million barrels per day, the net effect would be a deficit of 1.9 million barrels per day. Global over-storage is around 400 million barrels, so the overhang would be completely wiped out in 200 days. If one anticipates that the situation in Nigeria is structural rather than temporary, then the impact on the global oil markets will be felt.

“However, given the consideration that majority of the one million barrels per day left in production is offshore; we think the likelihood of NDA disrupting it to be low. Now, if there is a disruption, the impact could be more prolonged than any onshore disruption,” the analysts explained.

In their monthly economic analysis, analysts at Financial Derivative Company, said the continuous attack on oil and gas assets in the Niger Delta is seriously constraining growth.

Specifically, they said the attacks had led to poor power supply from the national grid, with electricity output dropping to 2,023.3 megawatts, from 3,593 megawatts, while oil production had recorded significant decline.

Dallas Peavey, Chief Executive Officer of Egbin Power Plc, stated that the company’s power generating capacity had dropped to less than 10 per cent of its 1,320 megawatts capacity.

“We are just sitting idle here,” he told newsmen.

In addition, he stated that until the violence ends and gas supplies resume unhindered, the company has suspended plans to double the capacity of power plant, saying that “We cannot double the capacity if we cannot find fuel.”

Desmond Ogba, Managing Counsel and Head of Energy Projects at Templars, a Nigerian law firm, also warned that if the vandalism is not addressed urgently and comprehensively, electricity will continue to deteriorate and the government’s aspiration to significantly increase power generation by 2019 would be a mirage.

On their own part, the Manufacturers Association of Nigeria, MAN, said the bombings would negatively affect the efforts of the government to increase power generation in the country and is already taking its toll on businesses.

Regional Chairman of MAN, Mr. Azubuike Okafor, stated that the actions of the militants had caused the closure of many industries because of the non-availability of diesel and gas to power industries.

He said that though manufacturers were pleased with efforts being made by the government to tackle the country’s electricity challenges, such efforts were being hindered by the militants.

He explained that militants were disrupting efforts being made by government to improve and sustain electricity generation and increase oil production.

He, however, advised the government to dialogue with the militants and persuades them to support its effort.

Also speaking, Minister of State for Petroleum Resources and Group Managing Director, NNPC, Mr. Ibe Kachikwu, said the

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attacks had forced Nigerian crude oil output to 1.3 million barrels per day, while it is negatively affecting crude oil exploration and production.

He said, “In terms of exports, you know that usually, we tend to have a 60-40 per cent Joint Venture (JV). The 1.6 million barrels crude oil output is a mixture of Production Sharing Contract (PSC) and JV production.

“The first is the 445,000 barrels which goes into our local production for the refined petroleum products that we see. If you take that out, we are probably at less than 1.3 million barrels in the export volume and we all treasure that 1.3 million and it affects Nigeria in 60-40 relationship business.”

“I can’t tell you for sure about the impact on the country, but one message is that the volume of oil available to the federation is dwindling substantially; no doubt about that and all of us must be interested in making sure we get them back because the 2016 budget is critically dependent on that.”

He also warned that the survival of the oil sector is dependent on activism; because if the sector is not active, it would lose rigs, work profiles and staff among others.

“What is important is that once we find the peace; which I am sure we will; the very nature of Nigerians is a lot of peaceful people at the end of the day. Eventually, we will have to sit down and talk and find solutions. And once we do, hopefully, they would be enough time for us to ramp up and recover some parts of the losses,” he explained.

Reacting to the bombings, Acting Director-General of the proposed Maritime Security Agency (MASECA), Mr. Jacob Ovweghre, said the actions of the Niger Delta Avengers, NDA and other militant groups would wreak the Nigerian economy and cause even greater pain to the people of Niger Delta, who would bear the direct burden of the crisis and not the government.

According to him, the destruction of the pipelines in the Niger Delta will reduce the states’ revenue bases and bleed the nation’s economy, increase environmental degradation, pollution, poverty, hunger, school drop-out, unrest, insecurity, under-development and economic loss.

He called on the NDA and other militant groups to desist from bombing crude oil facilities in the Niger Delta and from engaging in other acts of economic sabotage.

Ovweghre advised the NDA to have a rethink of their action and use intellectual agitation within the ambit of the law to pursue their demands, so as to gain credibility.

“The first is the 445,000 barrels which goes into our local production for the refined petroleum products that we see. If you take that out, we are probably at less than 1.3 million barrels in the export volume and we all treasure that 1.3 million and it affects Nigeria in 60-40 relationship business.”

COVER STORY Ovweghre called on all state governors, politicians, elder statesmen and other stakeholders in the region, to “synergize and collectively form a common front and call the NDA to order to down their tools and follow the right path to build an evergreen peaceful Niger Delta that will be the center of the economic growth and prosperity of Nigeria in the year 2020.”

Continuing, he said, “I am giving this advise without fear or favour but in good faith to trade the recent re-occurrence of restiveness and militancy in the Niger Delta for peace, development, both human and infrastructure, and solace of the region for the following reasons: “The Dangote Group is building a mega refinery in Lagos State; The NNPC and other multinational organizations are planning drilling crude oil in the Lake Chad in north east Nigeria; while the Federal Government through the military will resist the wanton destructions of pipelines in

Ledum Mitee technical report that was left untreated.

“I strongly believe with time judging from President Buhari’s Petroleum Trust Fund’s (PTF) achievements, the president will attend to all the reports and do justice to them. This will be done quickly and better when there is peace in the region.”

Economic analysts are of the view that the bombings portend a bleak future for the Nigerian economy, while the country’s current woes had been further worsened, especially with the low oil price, as revenue accruable to the Federation would drop drastically, especially with the dwindling allocations to the Federal, state and local government, had over the months been dwindling.

These analysts are of the view that even with the slight rebound recorded in the price of crude oil in the last couple of days, the country would still be at a disadvantaged, as its low oil output would further worsen the situation.

the region which might snowball to conflict/war.

Threat To National Unity In its most recent statement, the NDA has joined the IPOB in the call for self-determination or cessation.

The NDA said ‘Finally, we are calling on the international community, to come and support the restoration of our right to peaceful self-determination from this tragedy of 1914 that has expired since 2014.”

The IPOB in the south east said “We will pursue for the actualisation of the sovereign state of Biafra using the International law, many other great nations in time past tolled the same part, a perfect example of this is the United Kingdom where the Scots, Welsh, Irish and the Anglo-Saxons maintain their indigenous identities as different people but of the British citizenship. In the same way, the indigenous people of Biafra are Nigeria by citizenship but Biafra by indigenous identity”.

“This is because no sovereign nation will sit back and allow a part of its territory to be occupied by militants that pose serious threat to her unity and economic well being. This means we are going back to the dark days of war in the Niger Delta region. War is no one friend, it only leave us with loss of properties, sorrows, pains, tears, casualties and death.

“I hope this NDA claimed struggle is not politically motivated. I hope it is a just course to draw government attention to our plight. Please, Niger Delta Avengers let nobody instigate you or use you against this government. Down your tools and make peace with the government. President Buhari inherited a lot of problems/challenging including 15 Orient Energy Review June 2016

The IPOB, NDA, MEND and others like them, are only the louder voices in the cry for self-determination in Nigeria.

Smaller groups within the southern parts of the northeast, have similar desires, while some in the North Central believe self determination would serve their lot better than a united Nigeria.

“I strongly believe with time judging from President Buhari’s Petroleum Trust Fund’s (PTF) achievements, the president will attend to all the reports and do justice to them. This will be done quickly and better when there is peace in the region.”

COVER STORY Buhari Begs Militants In God’s Name

“The technology being deployed by the militants to destroy oil installations is high-tech, the way they can go on high

Meanwhile Nigeria’s President Muhammadu Buhari has

sea and international waters and target oil installations is a

appealed to the leadership of his political party, the All

national problem. It is affecting development.

Progressives Congress (APC) to help him beg the Niger Del-

“No insurance company will want to insure installations

ta Avengers (NDA) and other militant groups in the region

that will end up being blown up and no banks will want to

to sheath their sword.

finance such installations.

The militants, particularly the NDA, have in the past

“Those of you who have friends among the leadership or

months destroyed oil installations in the oil-rich region.

even the militants themselves should plead with them in

Lamenting the effect of the attacks on oil facilities, Buhari

the name of God Almighty to take it easy.

said

“We are in a very difficult time, so we have to organise ourselves. Anybody that says he has any other country than Nigeria should go out and see.”

Stakeholders who gathered at the Learning Managers of Oil and Gas and Allied Companies workshop organised by the Petroleum Training Institute (PTI) in Abuja, believed that to effectively curtail losses due to pipeline vandalism, Nigeria must overcome the toxic and explosive relationship between the government, corporate establishment and their host communities.

The workshop identified the PTI as a veritable agency for mediation between government, corporate bodies and host communities to achieve lasting industrial and host community harmony thereby curbing incessant attacks on pipelines.

Clearly communities feel marginalised and neglected. Issues from as far back as the 1960s have not been resolved and the amnesty programme did not come with any concrete plans to improve residents’ daily lives. High unemployment, particularly among young Nigerians, has driven some people to turn to crime and violence. This is their only means of survival and an expression of their anger at the situation. Experts has opined that a withdrawal from any

Buhari: Those of you who have friends among the leadership or even the militants themselves should plead with them in the name of God Almighty to take it easy.

of the battle fronts, could see the threat in the abandoned area escalate.

the country does not need such a distraction at this point in

To this end, it has become imperative for the Federal

time. He said the militants, who operate with sophisticated

Government to address the crisis before it cripples the

equipment, are difficult to relate with because they are in

Nigerian economy. The government should pursue efforts towards dialoguing with the militants to a logical conclu-

several groups unlike the Boko Haram sect which has one

sion, and where it fails, other means should be utilized to

faction.Buhari stated this on Friday, June 24, at the break-

bring the crisis to an end.

ing of fast dinner with the APC leadership at the presidential villa in Abuja.

“I honestly don’t know how many factions the militants are in the Niger Delta compared to the north-east where you have the Boko Haram,” he said.

16 Orient Energy Review June 2016

“We are in a very difficult time, so we have to organise ourselves. Anybody that says he has any other country than Nigeria should go out and see.”

TALKING POINT

DOZZY GROUP:

Our LPG project is aimed at discouraging domestic use of kerosene and firewood which is not environmentally friendly - Isiguzo

The conference theme says “Repositioning African Industries for Value Addition” we are trying to survive the oil price slump right now, how do you think we can add value to our own people and survive at this time?

M

r. Isaac Isiguzo, is the General Manager, operations for Dozzy Group. He spoke with Orient Energy Review Editor, MARGARET NONGO-OKOJOKWU, on the sideline of the African Petroleum Producers Association’s conference, APPA, Conference, also known as CAPE VI in Abuja; on sundry issues touching oil price regime and the Oil industry Nigeria and Africa as a whole, while highlighting the role of his company. Excerpts.

As a key participant in the APPA conference for the year 2016, also known as CAPE VI, Kindly tell us what motivated your company to take in the conference, at a time as this?

We are here at the APPA (African Petroleum Producers Association) conference because we share in the theme of the conference.

As it stands, reliance on oil is now a challenge. The current situation in the oil industry which is global is a challenge to everyone locally, and I am sure people are gathering at various levels of expertise to see what they can do even in the face of what is happening. People are bringing in all manner of technologies that has been there and even new ones that are coming in, the aim is to see how do we add value in the process of exploration, the only way you add value is to see how you can reduce your cost of production, and it is technology that will help you to do so, it is also the know-how that will help you achieve this because in the face of dwindling oil prices the way to stay afloat is to make sure you are enjoying the least marginal cost. If you continue to bear a lot of cost in the way you produce, then you are not going to be competitive, so produce as lean as possible in terms of cost then whatever the price is, then you continue to remain afloat. That is what this conference is all about.

18 Orient Energy Review June 2016

We can Look at it from different directions or angles depending on what we understand from the theme, but I believe actually that going by what is happening with the current situation in the oil industry, we should see it as a blessing even in the country, because before now, so much emphasis has been placed on oil revenue in Nigeria, I don’t think that is good enough. There are so many other sources of funding that is available. Before oil Nigeria used to be known for something, unless we are saying we are not known for anything. Before oil, we used to fund our budgets, if you ask a man who is 50 years old and above he will always tell you that yester-years were better than now. In those yester-years there was no oil so there is something that has happened to us after venturing into oil, maybe this price is telling us to look back and see how we can return to those yester-years. So how do we reposition? The position is that apart from oil, there are other sources of revenue, the world does not start and end with oil, and after oil Nigeria will still exist. And of course, so many people are inventing several other sources of energy supply that are cleaner, healthier to the environment, we should also take note of that, as far as these inventions are coming on there will be less dependence on oil. And as long as there is less dependence on oil, it will reflect on the price, and it will reflect on what you are going to earn as a government, that should be a message that we should take home and begin to look at other revenue generation sources like Agriculture that we used to have that used to give us so much, like other minerals with which God has so much endowed this country which we have neglected, even with the skill sets available, there are so many countries that depend even on technology, even on tourism, this country is blessed with so many sites that we can develop and attract a lot of investment on tourism, attract a lot of visitors and attract a lot of foreign exchange that has become scarce. So for me, my take away is that this challenge throws us a lot of opportunities that we can go back home and think of what to do with other available revenue sources that have remained untapped before now.

Do you think the Nigerian local content Act will survive this oil price fall?

Well, it should survive, what did the Act set out to achieve in the first place? If you look at it from the point of view of what it set out to achieve then there is no reason why it should not survive.

It is set up to encourage indigenous participation in that industry because before now they were not there; it was as if they had no expertise. All they need to do is to continue to create for them the enabling environment like sources of funding that is affordable since the other guys can access funds from their own countries that are single digits to the extent that we can help to encourage banks also to lend in single digits, then there is no reason why local content will not survive the current situation that we are in.

TALKING POINT

Tell us about Dozzy Oil? Dozzy Group is an indigenous conglomerate which started as a vision of a very hardworking, resilience and dynamic business mogul (Sir Daniel N. Chukwudozie) who went into business in 1982 as a trader. The trade metamorphosed into a company under the name of Dozzy Nigeria Limited – dealing in belt and general goods imported from Europe and Asia. Today, the Company has grown it business into virtually every major sectors of the economy – Oil and Gas, Manufacturing, Commerce/Logistics, Real Estate and Hospitality.

Coming down to the oil and gas, we are in the downstream distribution segment of the market. Our Oil and Gas sector has one of the largest concentrations of Petroleum storage facilities in the country with a capacity of over 120 million metric tons located in Calabar, Lagos, Port Harcourt and Onitsha. We are there because we know it has always been a challenge distributing petroleum products to all the nooks and crannies of the country. We are there because we know that even the storage of the products even when they arrive here is a problem and that is why we have invested a lot in storage facilities through our subsidiary companies. We have so many of them, we have Ever oil and gas; Ogoana Oil, Specialty Oil, Dozzy oil, Tempo gate and all these have their own storage facilities. We have about a total combined storage capacity of 220 million litres spread. This we put at the disposal of government to make sure that through us fuel distribution and other products will be seamless. Apart from that we also have a blending plant in Onitsha where we blend high grade lubricants that are API classified which is also available to motorists. We have also ventured into LPG plants, we have put in so much money in that plant and that is to encourage the domestic use of LPG instead of relying on domestic use of kerosene and firewood which is not very friendly to the environment and they have their own dangers. It is our strong conviction that both our short and long term business will largely depend on finding environmentally and socially responsible ways to satisfy the nation’s energy needs.

The Group is a non discriminatory employer of labour, employing over 300 workforce of different tribes/ ethnic and religious groups in Nigeria as well as expatriates.

It manufactures the Powerflo range of lubricants (for automotive and Industrial use), specialized, automotive and household plastics products, Industrial and Medical oxygen, LPG gases as well as Acetylene. The Group is also into the food, hospitality and real estate business.

The Industrial arms producing above products were not grown to its present level without some set of initial setbacks. With the strategic embankment on intensive training and retraining of its workforce, employment of professionals, consultants and partnership with expatriates, these helped us to consolidate on all our operations.

We have remained very vibrant and quite progressive through innovations, aggressive marketing, hard work, resilience workforce and our belief in quality.

So how has the Nigerian content Act helped your business operations?

Well, it directs us in such a way as to position ourselves, not that we have benefited from the fund in any way, but in the sense that it guides us even in the way we recruit our staff. We are conscious of the fact that with or without the Act, we are 100 percent Nigerian content and that guides us in everything we do. Even in the contracting of our construction facilities they are all 100 percent Nigerian driven, even in staffing, we are all 100 percent Nigerians that is the extent which we’ve allowed the trend to rub off on us.

19

Orient Energy Review June 2016

What are the challenges you are facing as an indigenous company and in what ways do you think the smaller African companies can position themselves to be more productive especially in this period?

The challenges are almost the same anywhere you go and no matter what business you are in. One of the challenges is funding, you just talked about interest rates, what they are and how they affect your business, the interest rates are not friendly at all, so it is a daily challenge. You are almost confronted with interest rate that is almost crippling to your business.

The second challenge we are facing is accessing Forex, you have to bring in components to do your production, here we bring in base oil for instance, you bid for foreign exchange and is not available so you have difficulty in meeting contractual obligations as far as supply is concern. Some elements of government policies here and there that needs to stay consistent, if they give you the go ahead and do some certain things then this policy should stay to enable you reap from the benefit of the investment. We all know in this part of the world that government policies shift even when you are still taking decision based on the other one that has been done. For African countries, I think there should be a better coming together, if APPA is the forum, fine, and so be it. I learnt they have been around for 18 years, but I think they need to do more, their impact have to be felt more, what they do as a body should affect what these companies in their countries.

What advice will you give to others especially to indigenous companies who are looking forward to what you are doing?

The advice is just the same advice you will give to anybody who want to venture into anything. They should know that it is not easy, they have to persevere, they should know that there is a time for sowing, the person must have that in his template, not a template that will give you immediate profit because if you cast that type of template you will get disappointed on the way, it takes time for this thing to materialise.

INTERVIEW

‘Marine Platforms will be respected not just because of Nigerian content but truly because we deliver based on global best practices’ - Adegbite Adegbite as the Chief Executive Officer of Marine Platforms is charged with the overall responsibility of strategy T aofik formulation, performance monitoring and improvement for the company. Prior to his assumption of the role of Chief

Executive Officer, he was the Director of Strategy and Business Development.

He holds a B.Sc. (Hons.) in Computer Science from the University of Ibadan, a certificate in Strategy & Organization Management from the London School of Economics and he is a graduate of Harvard Business School OPM 44.

Taofik started his career with Agricultural Project Monitoring & Evaluation Unit, (World Bank Project). He later proceeded to the UK where he bagged his Cisco certification and worked on contract with NHS (Hammersmith Hospital) as an IT Engineer.In this brief chat Orient Energy Review at the just concluded Nigerian Content Worksop in Calabar, he speaks vibrantly about is company and the progress of the Nigerian Content Act so far.

You gave a brilliant presentation at this Nigerian Content Workshop and thus have opened our eyes to see a lot of things why the Nigerian content policy should work irrespective of anything. Kindly give us a brief overview of Marine Platforms and how you have been able to survive to where you are now?

M

arine platforms is a fully indigenous company promoted by Nigerians. We set out in 2001, opened shop in 2002, but it has been God’s grace so far, and we grew our company on clear strategic plans and like I said they are built on 5 yearly plans. It gives us some sort of fore planning modalities and it enables us to defer gratification because we already anticipated what we already wanted to do with money, so when the money comes you channel it to capacity building. Based on this we have been able to build the company’s capacity and over the years that has sustained the business. When we started, we rented equipments, the profitability we made we clawed back into 20 Orient Energy Review June 2016

the business which we used to buy our own equipments so the moment you own equipments, you take control of your business and that is what helped us till today.

On the local human capacity, we had the expats’ 100 percent working with us, but gradually we started training Nigerians and we planned 5 – 10 years. Now most of the Nigerians we trained are now taking senior positions; project managers, ROV supervisors, etc. So it is that kind of planning that we aren’t in a haste to get to the destination, those were the things that helped us. The headwind is very strong now, that is the economic situation, so we are trying to sit with our banks to see if we can restructure, trying to talk to our clients to see whether there are any financial modalities we could come to terms with. We are now focusing internally, looking at professional efficiency and cost efficiency where we can reduce our cost of service without compromising quality and safety.

INTERVIEW Marine Platforms has become a force to be reckoned with in the Nigerian Oil industry, but could you please tell us how the Local Content Act has impacted on your business?

Without a shadow of doubt like I kept telling people everywhere, we are actually Nigerian content through and through; from the days of the Nigerian content initiative, the Nigerian content directive and the Act; but after the Act it became illegal for the IOCs not to do what was right.

Prior to the Act it wasn’t illegal if they do not, even though of course they were doing it in all fairness, yet they weren’t doing it because they must and have to; and that is the difference. So from my own platform, the Act has given us confidence and comfort to really and truly invest in the very high oil assets which are the vessels because we could lobby on the Act to say you know what we must be give a right of first refusal even though it isn’t clearly written in the act as such but in interpretation the Act supported us and we have benefitted from the strength of that; African vision is working with Shell on the Bonga, African inspiration is working with Chevron on the Agbami FPSO. So those are the kind of fall out of the Act which has really and truly allowed us to do genuine investment and it has really translated into value creation.

What type of value creation?

Value creation essentially you can see the vessels, you can see the ROVs, you can see the brand exemplified yesterday and that is value. Value is now what is giving us all the opportunities for employment generation, human capacity building and even wealth creation for the people. We have supply chain; tonnes of Nigerian companies are our suppliers, so you are seeing the multiplier effect.

Do you think we still have some issues in the Nigerian Content Act that needs to be addressed?

Absolutely! Just like the Customs Assistant Comptroller General (ACG) said yesterday we need to amend the various laws that are either out of date and are working across purposes with the intendment with the Nigerian content Act. The Act in itself needs a lot of modification, to make it more robust and to make it more definitive, there are some things that are not clearly stated so it is causing interpretation issues.

However what concerns me most is even as the law sets, we have a lot of policies and laws that are really not working in tandem to further propel us in the right direction where the law wants to take us and those are the laws I think the NCDMB should start looking into. Like I said, the Customs and Excise law does not allow you to export any equipment that is in full duty paid, meaning a ship cannot sail to go and work elsewhere to generate foreign exchange.

The intention of that Act of course at the time is not conforming to the present day reality. Those are the kind of things I am talking about, just for an example there are some lose ends in this Act that I have seen.

Now that you have said that do you think some companies won’t just go and take advantage because that is what I get from abroad. People just want to front that because of 21 Orient Energy Review June 2016

local content act you have to give me meanwhile they don’t have cash?

Absolutely! And that is what we faced and that is an unfortunate thing, they will have that and there is no way not to have that but with time you will be discovered because you can only link me to local content act perhaps as a foot in the door, to just open the door but Nigerian content will not make you do the job and in this industry there is no room and space for mediocre, safety is key, quality is key and no one will compromise that, the act doesn’t tell you that you compromise that so the moment that opens the door for you I can assure that there are there to prove yourself otherwise.

And how do you manage with Finance?

It is a critical issue just as we all know but I think we have to start looking at very creative ways of rising finance, of restructuring harmonies, working closer with the banks, that is important and critically I think Government have to start looking at support systems. Where you see viable businesses how can government give guarantees behind banks to support such? It is not as such as we see in bank loans in ... but at least giving comfort to the banks and then now linking the banks to the borrowers and I think that will really stimulate because government can say ok you have borrowed X amount for this equipment to that company so we can guarantee you by event we will bail you out 70 percent to 80 percent. It gives the bank succour and it gives them the well with all to lend to the sector as we want it but if you just tell them to lend truly speaking they are profit centric company and the depositors money they have to move to less risk by returns and somebody needs to de-risk and that is government.

Rumour has it that your company is not tribally diversified of tribal sentiments. Can you address that?

It is just very ridiculous but you know it is a Nigerian thing. I have been a victim of various assumptions, there must be fronting for some wealthy Nigerians, they must be fronting for government, they must be fronting for minister, they must be fronting for the executive secretary of NNPC; all those things but them aside, my platform is very multi cultural. I tell even my expatriates we are not going to be a black company or a white company, we will continually recruit expatriates where necessary because this industry is very multi cultural. You must continually move on to share experiences with other cultures, clients, technology and all; that is even experts in Nigeria.

Now within the Nigerian context because I am a Yoruba man the expectation would be it is a Yoruba company.

Some of us are fully detribalised and that is true. We have advertised in papers and put in there that being origin of the Niger Delta is an added advantage but if you don’t get the CVs there is nothing we can do. So we decide to even go after people and I can tell you the strategic position in my own platform actually eastern; Igbos you will be so surprised.

INTERVIEW I have George Oduko who is now the project manager in SNEPCo, Carol Agbaroji our exhibitions, but maybe it’s because they bear their English names, so we will start telling them to bearing their traditional names now because when you hear George and Carol you will think they are Yorubas.

So my own platform is Emeka Orji who co ordinates on air, the gauge manager. So we have tonnes and tonnes of them. When we were going to take people that didn’t have the work requisite qualifications Chinonso Ogbonna,

merge with another company? Do you need to diversify? And those are questions that you truly can answer, do you need to downsize and do you need to change your lifestyle? If you haven’t been clustering profitability to build your foundation well perhaps there is opportunity to do that now. So those are the things and I think you don’t use a ‘one cap fits all’ arrangement, because this will not last forever.

It is only sad that in Nigeria when our local content is just about budding that is when we are hit with this global phenomenon but that is a trend in the oil and gas industry that you see coming back after like 5, 6, 7, 8 years but I think at the end of the day we weather the storms and by the time we get out of this we will all be strong for it because we would have been experienced and we would have known that headwinds, turbulence will come and we will be better prepared in the future.

Tell us about your vision for your company, I mean is this all about Marine platforms?

Chinonso was a boy we just thought needed to be given a chance and also Asuquo Edmond is the IT coordinators; Adeyemi is a Yoruba boy and it is not because he is a Yoruba boy that he is doing the job.

What we are even doing now is going up North to encourage northerners, so we are getting people from Bauchi because that is what I believe actually. Some of us actually are really detribalised, where you come from doesn’t matter it is what you know.

You know the falling oil price is making a lot of companies go under. What do you have to say to companies that are struggling, like giving them some sort of inspiration?

I think the most important thing in life is being sincere with yourself, I have read a lot of books but one of the most important books I have read is what you ask the person in the mirror and that is yourself. So in the realities of the times how is it affecting you? Do you need to 22

Orient Energy Review June 2016

Sadly we just stopped the construction of the African pride which is the new vessel that is supposed to be bigger than this (African Inspiration) and it is actually to the reaction of the reality of the times and that is a vessel that would have been more sophisticated than the African inspiration.

We are looking at moving with the technology trend, doing things either being done by wedges or vessels.

So we are looking at building another vessel that would be versatile in nature where we can do stuffs like topple drilling, we can do more well stimulations and well support jobs. So in a kind of technological observation, we are looking at taking the company to the next level. In areas of diversification we are looking at financial strategies; what do we do? At what point do we IPO? Those are the kind of things we are looking at.

The company should really and truly be an oil field service company that will be respected not because of Nigerian content but respected truly because we can deliver based on global practises.

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Orient Energy Review June 2016

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GHANA REPORT

By Gilbert Boyefio

Mines And Energy Committee Confident Of Passing E&P Bill This Year -Amidst Civil Society’s Doubts

By Gilbert Boyefio Mines and Energy Committee of Parliament is very T heconfident that the Petroleum (Exploration and

Production) Bill, popularly referred to as the E and P Bill, which is before parliament, can be passed by this Sixth Parliament before the end of this year.

According to Vice Chairman of the Committee, Hon Mutawakilu Adam, the Committee and Parliament as a whole attach so much importance to the E and P Bill and are ready to get it passed before the close of the year.

The E and P Bill was laid in parliament in 2014 and is currently at headed for the Consideration Stage.

However, not everyone shares in this optimism.

For Dr Steve Manteaw, Chairman, Civil Society Platform on Oil and Gas, and Co-Chair of the Ghana Extractive Industry Transparency Initiative, considering the packed agenda of Parliament coupled with a general election approaching on November 7, the House may not be able to pass the Bill into Law. Parliament resumes sittings today and is likely to be sitting until September when the House goes on recess again.

The misgiving of Civil Society and many Parliamentary watchers is that as the general elections draws closer, Members of Parliament (MPs) may lose focus of their lawmaking responsibilities as they campaign to be re-elected to the House. They fear that if the Bill has to be passed, it may be rushed through the parliamentary procedures.

But Hon Adam strongly disagrees with this assertion. He argues that the current House has two more Meetings before it is dissolved, and MPs will have enough time to take the Bill through the rigorous process of law making.

27 Orient Energy Review June 2016

However, he noted that per parliamentary procedures, anything could happen on the floor of parliament during the discussion stage to delay its passage; as new amendments may be suggested by Members and the Committee directed by the Speaker to go and effect those changes.

Nevertheless, he was confident that the Bill will be passed into law.

Background The E and P Bill when passed will be the parent legislation to regulate Ghana’s oil and gas sector. It is a crucial legislation within the petroleum sector which is hoped to bring outmost benefit from the sector.

It was first laid in parliament on 6th July 2010, but was withdrawn for further consultations. It was then re-laid on the floor of Parliament on November 12, 2014.

The object of the current bill is to provide for and to ensure secure, sustainable and efficient petroleum activities in order to achieve optimum long term petroleum resources exploration for the benefit and welfare of the people of Ghana.

The bill when passed into law is expected to replace PNDC law 84 (1984) which is now obsolete considering the current dynamics of the sector.

The bill which contained 95 Clauses covered among other things, Licensing of blocks, Exploration, Development, Decommissioning , Local Content, Domestic Supply Obligations, Health and Safety, Environment and Fiscal Regime to adopt (like, Award of blocks, Royalties, Taxes, Bonuses and other oil entitlements).

GHANA REPORT

Power Minister Summoned To Parliament Over Electricity Hike And Over Billing In Ghana

By Gilbert Boyefio

P

arliament is to invite the Minister of Power to brief the House on concrete steps he intends to take to prevent the recurrence of the overbilling by the Electricity Company of Ghana (ECG). This follows a submission made to the speaker of parliament by the Majority Chief Whip, Hon Muntanka Mubarak, when he made a statement of the overbilling crisis on the floor of parliament.

Hon. Muntanka, who is also the MP for Asawase Constituency, on account of the ongoing crisis recommended the following, “ That the ECG should take immediate steps to correct the technical errors associated with the meters; the Public Utility Regulatory Commission (PURC) should work with the ECG to review the fault and restore the life-line state for the under-privileged; and ECG should take urgent steps to give individual household a meter instead of a compound house with a meter or two; hence not benefitting from the lifeline subsidy for the poor”.

According to him, in cases where consumers are overbilled arrangements be made for the ECG to either refund the excess payment or credit the accounts of consumers so affected.

In recent times, several electricity consumers have complained about the unnecessary high electricity bills resulting from tariff adjustments made by the Electricity Company of Ghana. The complaints have come from both life-line consumers and other categories of consumers. Reports suggest that in several cases, the cost of consumption has more than double and this has imposed undue hardship on virtually all Ghanaians, especially on the ordinary masses.

This situation has led to government requesting the Public Utilities Regulatory Commission to investigate with urgency the complaints from consumers on suspected anomalies in electricity billing. In a statement signed and issued on May 23, by the Minister of Communications, Dr Edward K. Omane Boamah, government agrees with the complainants that the reported anomalies are affecting the income and operating costs of consumers and must be urgently looked into.

It therefore asked the PURC to ensure that the ECG rectifies the billing system to reflect the tariffs approved by the Commission.

Consequently on May 24, 2016, the PURC directed the ECG to suspend their new billing software.

However, the Africa Centre for Energy Policy has indicated that the directive of the PURC to the ECG is too late, noting that, “Implementing the directives will have chaotic consequences”

28 Orient Energy Review June 2016

“The Africa Centre for Energy Policy has been following the renewed discussion on the electricity tariffs occasioned by a software malfunction at ECG. However, ACEP believes that implementing this directive will be very chaotic to the extent that ECG will have to completely uninstall the new software and install their old one, if PURC agrees that power should be sold between the time of the suspension and when the challenges with the new software are rectified.

PURC therefore failed to analyze the consequences of their directive. A freeze on billing on the other hand, will cut power to many consumers, particular prepaid consumers, until the software is corrected,” a press release signed by Dr. Mohammed Amin Adam, Executive Director, ACEP, emphasised.

According to ACEP, by ordering the suspension of the software PURC is agreeing that consumers have been over-billed. But PURC failed to apply the full strength of the Act that sets it up.

They argued that the suspension of the software is not enough.

“PURC should compel ECG to comply with the section of the PURC Act which requires the utility to adjust consumers’ next bill with the excess amount or pay cash to them (Sec 27). Failure

by ECG to comply is also an offense and punishable by a fine or imprisonment (Sec 38h). We agree with PURC that steps should be taken to reconnect consumers who have wrongfully been disconnected by the ECG. PURC should step up their sanctions to urge ECG to compensate all customers who have been overbilled or wrongfully disconnected.

Those who think they have been over-billed due to non-issuance of monthly bills by ECG have other options for remedying their situation. PURC Act Obligates a Public Utility to give every consumer at the end of every calendar month a bill (Sec 26) and Failure to do so is an offense punishable by a fine or imprisonment (Sec 38g),” the press release stated.

ACEP further encouraged consumers to begin using the court system if PURC is not protecting them as required by law.

“We believe that these billing challenges have been ongoing for a long time and consumers are now being taken for granted. ACEP will therefore begin a campaign to educate consumers about remedies available so that the Regulator/ECG does not abuse the contract between the utilities and the consumer. We further ask ECG to publish the Customer Charter as required by law so that customers have basis to evaluate its service.

The above billing problems have added to the burden of higher levels of tariffs already,” ACEP warns.

LOGISTICS/ MARITIME

Nigerian Government Launches SON,PSSP To Curb Corruption In Maritime Industry N

igeria’s Federal Government has launched the Standard Operating Procedure, (SOP) and the Port Service Support Portal (PSSP) a means of curbing corrupt practices and improving efficiency in the maritime industry.

The SOP and the PSSP is to be domiciled in the Nigerian Shippers Council for implementation was conceived by the Federal Ministry of Transportation to ensure customer satisfaction and eliminate the incidences of corruption, especially through human contact in port service delivery system.

The two portals created by the ministry of transportation were launched by Vice President of the Federal Republic of Nigeria, Professor Yemi Osinbajo, GCON in Abuja on Thursday.

The Vice President stated that the project will not only redefine ports activities, but will also take Nigeria to the next level for greater economic performance and accountability in the ports.

He noted that the launch of the SOP and PSSP is part of the Administration’s commitment to the eradication of corruption in all areas and the enthronement of a better business culture in Nigeria.

While welcoming guests to the event, the Minister of Transportation Rt. Hon. Chibuike Rotimi Amaechi noted that the cardinal goal of this project is to fight corruption and make the ports more viable for economic activities.

The Director General of the Nigerian Maritime Administration and Safety Agency, (NIMASA) Dr. Dakuku Peterside in his good will message disclosed that the SON and the PSSP will enhance efficiency in the maritime sector.

The DG also stated that the new initiatives will further promote excellence and service delivery that will make the nation’s ports a place of reference.

He further expressed the readiness of the Agency to key into the reform process of the Federal Ministry of Transportation, which according to him, is in line with the Digital Transformation Strategy of NIMASA. Peterside also used the opportunity to call on sister agencies in the industry and other relevant stakeholders to collaborate in the mission of bringing the desired changes to the sector and Nigeria as a whole.

29 Orient Energy Review June 2016

Nigeria Loses $2bn to Foreign Shippers of the Ministerial Committee on Chairman Modalities for the Establishment of Nigeria

Fleet, Engr. Ola Akinsoji, has said the country lost over $2 billion to foreign ships in 2014.

Akinsoji spoke while presenting the report of the committee to the Minister of Transportation, Mr. Chibuike Amaechi, in Abuja, yesterday, adding “if 50 percent of the 5,000 ships were owned by Nigeria, at least 20 Nigerian captains would have each earned $3,000 that year, apart from the freight that was accruable.”

On the report presented to the minister, he said the committee recommended three options: a large holding company with technical management for subsidiaries in all the areas of maritime transportation, an independent company in each of the identified areas of shipping or for existing companies to organise themselves to form a Nigerian fleet. He said any of the three options might be considered as acceptable and supported, provided the criteria for establishment are followed in accordance with relevant laws.

LOGISTICS/ MARITIME

NIMASA Seeks Partnership with the United States Government

From right: Dr. Dakuku Peterside, Director General of Nigerian Maritime Administration and Safety Agency (NIMASA) presenting literature to Mr. John Bray, Consul General of the United States Embassy in Lagos when the envoy visited the Agency at the Maritime House in Lagos.

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n continuation of the drive to re-position the Agency and establish partnerships for the sustainable growth and development of the Nigerian maritime industry, the Nigerian Maritime Administration and Safety Agency (NIMASA) has called on the United States Government to partner the Agency in the area of capacity building.

The Director General of the Agency, Dr. Dakuku Peterside made this request when he received the Consul General of the United States in Lagos, Mr. John Bray at the Agency’s Head Office.

Dr. Peterside, who acknowledged the long standing relationship between the two countries and other existing bilateral agreements, said that the Nigerian government will surely need the assistance of the United States government in the area of technology driven security surveillance as well as human capacity building.

A statement signed by Hajia Lami Tumaka, head of public relations of NIMASA, noted that the DG said that the business of shipping is global and having done so well for them in this area, Nigeria can benefit from the experiences of the Americans in order to harness the potentials in the nation’s maritime domain.

“The need for sharing ideas cannot be overstated, because shipping is a global business that links economies of the world together and Nigeria can learn from the experience of

30 Orient Energy Review June 2016

the United States. We are currently repositioning the maritime industry and our dream is to be the hub of maritime activities in Africa,” the DG said.

The NIMASA helmsman also used the opportunity to appeal to the United States representative to assist in the area of training and recruiting of the Nigeria Seafarers Development Programme (NSDP) cadets to the USA marine Navy in order to enhance their competency and skills.

Earlier in his remarks, the Consul General, Mr. John Bray disclosed that they are interested in the status of the co-operation between the two countries and also opportunities available in collaborating together.

While also responding to the Director General’s requests, Mr. Bray expressed the readiness of the United States to leverage on the already existing Memorandum of Understanding (MoU) between both countries to collaborate with the Agency and Nigeria at large towards achieving a vibrant and business friendly maritime environment.

The envoy who was accompanied by the Political Adviser in the Consulate Mr. Nicholas D. Austin commended the Director General for his efforts so far in the Agency and promised to continue to engage the Agency for a mutually beneficial relationship.

LOCAL CONTENT

NCDMB, NNPC, NIMASA Agree To Grow Nigerian Content In Crude Oil Lifting

By Margaret Nongo-Okojokwu

C

ontracts for lifting Nigerian crude oil will begin to yield tangible benefits for the Nigerian economy going by the renewed commitment by the Nigerian Content Development and Monitoring Board (NCDMB), the Nigerian National Petroleum Corporation (NNPC), the Nigerian Maritime Administration and Safety Agency (NIMASA) and other stakeholders in the oil and gas industry.

The Board estimated in 2013 that the Nigerian economy lost over $100bn in five decades by allowing its crude oil to be carried exclusively by foreign owned tankers But rising from a recent workshop convened by the Board in Lagos on ‘Crude Oil Off-takers Nigerian Content Deliverables’, the agencies and other stakeholders pledged to grow the quantum of Nigerian Content in the lifting of Nigerian crude oil by working with Nigerian shipping stakeholders to develop in-country assets capacity that meets international standards. They also agreed to ensure that companies that have invested in ownership of crude oil lifting vessels are given first consideration in line with the provisions of the Nigerian Oil Industry Content Development (NOGICD) Act. NCDMB, NNPC and NIMASA also committed to explore the possibility of a joint fund as part of waiver mechanism which can be used to purchase or finance the building a Nigerian owned Crude Oil Lifting Tankers. Another decision taken at the workshop was to properly define what constitutes “spend” in crude oil lifting contracts for the purpose of complying with the target of 90 per cent industry spend within the Nigerian economy set for Very Large Crude Carriers (VLCCs)by the NOGICD Act. In his opening remarks at the workshop, the Acting Executive Secretary of the NCDMB, Mr. Patrick Daziba Obah described crude oil lifting and marketing as a major activity in the oil and gas value chain, despite the fact that Very Large Crude Carriers were highly capital intensive to acquire.

He however, stressed that Nigeria will remain a major oil producer and not a major oil business value adding nation if the citizens do not own VLCCs. While identifying opportunities for growing Nigerian Content in crude lifting, Obah noted that VLCCs require manning by certified crew while crude oil lifting attracts opportunities for financial, insurance, inspection and other services.

Other spend points in the value chain include the use of lubes and maintenance of VLCCs. Obah who was represented by the Director, Monitoring and Evaluation, Mr. Tunde Adelana explained that the Board introduced Nigerian Content requirements for crude oil lifting in 2013 so as to maximize the value retention opportunities.

According to him, Nigerian Content requirements for crude lifting contracts required that tankers/vessels that are 32 Orient Energy Review June 2016

selected to lift Nigerian crude would grow Nigerian Equity Ownership, create sea time attachment for five Nigerian cadets and create employment and training opportunities and utilisation of Nigerian service providers such as financial, insurance, legal and inspection services.

He underscored the collaboration of NNPC in introducing the Nigerian Content requirements for crude lifting; assuring that the Board would intensify its monitoring of companies that secured Crude Oil Term Lifting Contracts to ensure their compliance with the requirements.

Speaking further, Adelana explained that the workshop was convened to harness the views of stakeholders and secure their collaboration towards deepening Nigerian Content implementation in crude oil lifting.

In his presentation, the General Manager, Crude Oil Marketing Division (COMD) of the NNPC, Mr. Adokiye Tombomieye pledged the determination of NNPC to enhance Nigerian participation and maximize Nigerian Content in the lifting of Nigerian crude oil and charged Nigerian firms desirous of participating in the business to comply with the requisite standards with regards to the vessels they put forward in the tenders.

He confirmed that the utilisation of Nigerian service providers by firms selected to lift Nigerian crude had increased from 50 per cent in 2010 to 75 per cent in 2015 and has helped to reduce capital flight, increased in-country spend and created job opportunities for Nigerians.

On the requirement to attach at least five Nigerian cadets per cargo for the purpose of obtaining requisite sea time experience and international certification, Tombomieye noted that Nigerian crude was sold Free on Board (FOB) hence marketers do not own the vessels and are often unable to secure slots for the cadets. Also speaking at the event, an Assistant Director at NIMASA, Mr. Victor Egejuru confirmed that the agency was collaborating with the Board and NNPC to grow local participation in the marine sector of the oil and gas industry.

While noting that inadequate sea time experience and certification were hindering locally trained seafarers from getting hired by sea going vessels, Egejuru said NIMASA was now addressing the challenges by making it mandatory for vessels operating in Nigerian waters to give a specified number of Nigerians opportunity for sea time experience. He noted that this new requirement was now a condition for obtaining waiver renewals from NIMASA. The workshop was attended by stakeholders from different segments of the oil and gas and maritime sectors.

LOCAL CONTENT

FG Saving N1.4 Trillion Per Annum From Subsidy -Kachikwu …wants NCDMB to build collaborations

By Margaret Nongo-Okojokwu

Kachikwu also stated that the corporate restructuring initiated in the Nigerian National Petroleum Corporation (NNPC) has reduced the average monthly loss recorded by the corporation from N40billionin the recent past toN3billion while efforts remained on target to achieve profitability before the end of 2016, a feat that had not been recorded in 20years.

He expressed gladness that the achievements were being recorded by staff of the NNPC who had previously given up hope in the system.

T

he recent removal of subsidy from the pump price of premium motor spirit is saving the Federal Government over N1.4 trillion that would have been expended on subsidy claims per annum, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said.

Speaking recently when he visited the Nigerian Content Development and Monitoring Board (NCDMB) in Yenagoa, Bayelsa State, the Minister explained that the deregulation policy has also re-awakened the downstream sector and will help the nation become a net exporter of petroleum products in a few years.

According to him “we now have a lot of people who are interested in investing in our refineries and building more refineries and we will remain committed to the goal which is to reduce importation of petroleum products by 60 per cent by the end of 2018 and become a net exporter of petroleum products by 2019.”

Responding to comments from staff of the NCDMB, the Minister hailed the contributions of various trade unions in the oil and gas industry to the successful introduction of the deregulation policy, stressing that “the success of the policy was only possible because of the unity that was provided by PENGASSAN, NUPENG, NARTO and every active participant in the oil sector. My role was to be the professor, explaining why we had to do it.”

He also announced plans to carry out infrastructural re-graphing of Nigeria’s petroleum sector, adding that plans were afoot to review Nigeria’s aging pipelines, depots and gas infrastructure and begin the process of replacing them.

With regards to gas flaring, the Minister stated that the new thinking was to move away from a penalty based gas regulation which had largely failed over the years to a zero tolerance gas flaring regulation with year 2020 as the new target deadline.

Admitting that the entire spectrum of petroleum industry required strategic intervention, Kachikwu harped on the need to see the challenges as opportunities to transform the sub sectors into income earners for the populace. According to him, “anywhere you look, you see that the oil and gas sector is populated by a need. We have to translate those needs to economic models that are beneficial to the citizenry. The drop in oil price should motivate us into going into parallel income streams.”

He described NCDMB as a critical agency in the petroleum industry and expressed delight that the Board had the right personnel to deliver on its mandate. He recalled the Board’s lofty achievements in the last six years of existence, noting that every Nigerian appreciated the good work that it has achieved. He further pledged to provide the right support and encouragement for the Board to deliver on its targets.

With the fall in crude oil prices and reduced investment in the sector, the Minister charged the NCDMB to re-strategize and transit from its role of just propagating local content and local participation to one of finding commonality with industry stakeholders to encourage investment. The new focus of the Board, he said, “affects how quickly you process things, it affects the rigidity of some of the terms you ask for as people enter into transactions and the need for increased collaborative relationships.”

33 Orient Energy Review June 2016

L - R Director Monitoring and Evaluation, NCDMB, Mr. Tunde Adelana; the Acting Executive Secretary, NCDMB, Mr. Patrick Obah and Minister of State, Petroleum Resources, Dr. Ibe Kachikwu

LOCAL CONTENT

Sahara Power pledges more investment in capacity building The company and its technical partner, Korea Electric Corporation, are currently implementing a transformation plan across these power entities that is shoring up power generation and distribution in Nigeria

management of Sahara Power has restated its T hecommitment to sustained human capital development investment in Nigeria’s power sector to ensure enhanced productivity and seamless skill transfer.

Managing Director, Sahara Power, Kola Adesina stated this at a strategy session tagged “Human Capital Development in Nigeria’s power Sector”.

He said positive outcomes from the firm’s Graduate Engineering Programme has set the foundation for increased funding to drive sundry capacity building initiatives in the organisation.

An affiliate of Sahara Group, a leading African energy conglomerate, Sahara Power comprises Egbin Power Plc, Ikeja Electric (IE) and First Independent Power Limited (FIPL).

The company and its technical partner, Korea Electric Corporation (KEPCO) are currently implementing a transformation plan across these power entities that is shoring up power generation and distribution in Nigeria.

Adesina noted that the programme would help address the gulf created by an ageing workforce in the sector. Industry experts say the dearth of young engineers and technical staff remains a huge challenge for the sector that needs about 50,000 young skilled engineers, craftsmen and fitters to replace the ageing workforce – according to a recent report released by the National Power Training Institute of Nigeria (NAPTIN).The GEP currently has 100 young graduate engineers spread across Egbin Power, IE 34 Orient Energy Review June 2016

and FIPL. These engineers are being trained by seasoned Nigerian and foreign professionals under the scheme which also involves local and overseas exchange programmes.

Adesina said Sahara Power‘s management had set aside substantial funds to drive a holistic human capital policy that will cater to the specific needs of all employees within the organisation. He explained that the unfolding “people success story” at Sahara Power is predicated on strategic re-engineering and re-orientation activities designed to enhance capacity and efficiency.

This he said is also backed by a change management process that has continued to fuel a performance driven culture among the legacy and new employees across the group.

“We are quite pleased with the impact of our policy on the work ethic and professional drive of our staff across the organisation. The legacy staff and new employees are bound by an unwavering desire to light up Nigeria by working harder and smarter in line with recent global trends. We will definitely set aside more funds for capacity building as we see Sahara Power as the future hub of power sector experts on the continent,” he said.

LOCAL CONTENT

OTC 2016

Industry Skills: NNPC, PETAN To Certify Nigerian Competences

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fforts are in top gear to check the rising incidence of companies without experiences executing contracts they do not have competences for in Nigeria’s petroleum industry through certification of skills. Such certifications will be done through collaboration between the Nigerian National Petroleum Corporation, NNPC, and Petroleum Technology Association of Nigeria, PETAN. This was disclosed by the PETAN Chairman, Mr.Bank-Anthony Okoroafor, during a press conference on the sidelines of the ongoing Offshore Technology Conference, OTC, which opened Monday, in Houston Texas.

Okoroafor said the move is also a part of the industry’s low cost strategies to deliver quality services, adding that “without the PETAN seal of quality and competence the industry cannot move forward.” He argued that, “With this low oil price regime, we don’t want people to be making mistakes at the job sites, so the PETAN seal of quality and competence is to make sure that when you say you are a service provider, you have competence in terms of services; you have competence in terms of personnel and you can deliver that service satisfactorily with the highest level of safety, quality and quantity.” Explaining the rationale behind the proposed skills certification,

Mr.Bank-Anthony Okoroafor PETAN Chairman,

35 Orient Energy Review June 2016

Okoroafor said: “PETAN came up with this seal of competence and quality as a way of qualifying service providers in-country because with the cash squeeze, access to capital is to tight, investments are low, projects are being deferred.

“So the best way to move the industry forward to is to make sure that competent Nigerians are doing the services to ensure that the little reserves we have in terms of foreign exchange are not taken offshore, but are being retained in-country to create jobs for our teeming population.” Certification objective Okoroafor also said that the main objective of the skills certification is to ensure that: “We leverage on proven Nigerian companies in terms of services. We are not asking for patronage; and we don’t want patronage. We just want the proven and competent Nigerian companies to be given the jobs to do. When you have competent Nigerian companies who can do the job but you give the jobs out then it is criminal.

“In PETAN, we have companies that can deliver values from the wellheads to the tank farms and the entire value chain.

So we are not lacking in capacity or capability, it is our responsibility to ensure jobs are given to proven in-country capabilities and capacities because the days of giving contracts to briefcase companies are over.

“Once this happens, it will translate to a lot of jobs creation for our teaming population, it will create a lot of entrepreneurs in-country and that is the best way to fast track development in Nigeria.” He argued further that “PETAN members are very serious companies, who borrowed money, trained personnel, bought equipment and we will keep on pushing the bars, which is why PETAN is embarking on certifying companies in Nigeria.

“So once you have the PETAN seal, you can work anywhere in the world because you will meet all international standards to deliver that service – whether logging, engineering, fabrication, pipelines, seismic etc. once you have that seal, you can deliver that service.” Criteria for certification Okoroafor explained that the criteria for the seal of certification are being worked out between National Petroleum INVESTMENTS MANAGEMENT Services, NAPIMS, the investments arm of the NNPC and PETAN. “We are going to publish the criteria for all to see. For instance, if you are delivering wire logging, the criteria for certification will be for equipment, personnel. So the issue of briefcase companies winning contracts they never bided for is over,” he said.

He added that NAPIMS is desirous to grow in-country capacity, “but to grow the right capacities with proven Nigerian companies.”

LOCAL CONTENT

NAPIMS, NCDMB commend Nigerdock over delivery of Ofon 2 platforms Anwar Jarmakani Dafe Stephen Sejebor Jagal Group Lost Time Injury NAPIMS NCDMB Nicolas Terraz Nigerdock NNPC/Total joint venture Ofon platforms Patrick Daziba Obah Snake Island Integrated Free Zone Total Upstream Companies in Nigeria

I

t was praises galore for the management and workers of Nigerdock, an indigenous oil services company and member of Jagal Group, following the company’s successful completion and load-out of the Ofon platforms fabricated entirely by the company for the NNPC/Total joint venture.

“As we mark the successful completion and sail away of Ofon OFD5 and OFD3 topsides fully engineered, constructed and commissioned by Nigerdock, it is remarkable to note that this is the first project of such magnitude in complexity, technical requirements, scope and cost awarded to a Nigerian company.

“It has taken a lot for Nigerdock to achieve this in consideration of the context of technical requirements for such complex topside.

“I must salute the doggedness, vision and the dynamism of the staff and management of Nigerdock and the Jagal Group. You should be proud of yourselves and proud of the example you have set for the industry,” he said.

Acting Executive Secretary of NCDMB, Mr. Patrick Daziba Obah, also commended Nigerdock workers for achieving over five million man-hours of productivity and over three million man-hours without a LTI.

*Load-out of the Ofon bridge from Nigerdock yard on Snake Island Integrated Free Zone, Lagos The platforms are part of facilities being put in place by the joint venture for the Ofon 2 project, expected to raise Total and Nigeria’s crude oil production by 40,000 barrels per day and deliver more gas to the Nigerian liquefied natural gas, LNG, plant in Bonny, Rivers State.

They were built by Nigerdock under the Engineering, Procurement and Construction, EPC, contract awarded to the company by the NNPC/Total joint venture, the first ever EPC contract to be awarded to an indigenous Nigerian contractor.

The National Petroleum Investment Management Services, NAPIMS – an NNPC subsidiary – and the Nigeria Content Development and Monitoring Board, NCDMB, commended the management and staff of the company for their efficient handling and delivery of “a highly technical and sophisticated project”.

Managing Director/Chief Executive of Total Upstream Companies in Nigeria, Mr. Nicolas Terraz, also commended the over 3,000 workers who took part in the project, saying their achievement of over five million man-hours of work completed with zero Lost Time Injury during the construction of the facilities did not come by chance.

Speaking during the commissioning and sail-away of the project at Nigerdock’s Snake Island Integrated Free Zone in Lagos, Group General Manager, NAPIMS, Mr. Dafe Stephen Sejebor, said the over five million manhours of engineering for the project which was done in-country reflected government’s policy on Local Content Development.

36 Orient Energy Review June 2016

Mr. Obah, who was represented by the Director, Monitoring and Evaluation, Mr. Adetunde Adelana, promised Nigerdock and its workers of more projects to keep Snake Island Integrated Free Zone up and running.

In his speech, the Managing Director/Chief Executive of Total Upstream Companies in Nigeria, Mr. Nicolas Terraz, commended the over 3, 000 Nigerians employed during the construction of the project.

He said the over five million man-hours of work completed with zero Lost Time Injury during the construction did not come by chance.

“It is the result of a continuous commitment of all, day after day, to the safety of activities. It is a result that both Total and Nigerdock can be proud of.

“Safety is a core value, not just a priority. This core value, we make sure that we share with our contractors, working hand in hand to ensure the highest safety standards in our operations and projects,” Terraz said.

Also speaking on the success of the project, the chairman, Nigerdock, Mr. Anwar Jarmakani, said it is a celebration of another milestone in the oil and gas sector.

Jarmakani stated that the company achieved achieved a landmark record of about 3.2 million man-hours without Lost Time Incident, LTI, during the construction of the Ofon 2 platform and completed more than five million manhours overall on the project, equivalent to 22,000 people employed for one year.

He revealed that at the peak of the project, Nigerdock had 5,000 highly trained professional working on the project.

EXPLORATION/ DRILLING

How DPR Undervalued NNPC’s 8 Oil Blocks – NEITI Secretary of the Nigeria Extractive IndusT hetriesExecutive Transparency Initiative (NEITI), Mr. Waziri Adio

has explained how the Department of Petroleum Resources (DPR) undervalued eight Oil Mining Leases (OMLs) belonging to the Nigerian National Petroleum Corporation (NNPC).

Speaking recently when he visited the Corporate Head Office of THISDAY in Lagos, Adio said DPR valued NNPC’s 55 per cent stake in the eight OMLs at $1.8 billion, while Shell, Total and Agip valued their 45 per cent stake in the eight OMLs at over $2 billion.

According to him, if DPR had used the same valuation, which Shell had used to value their 45 per cent stake, the value of the 55 per cent stake would have been much higher than the $1.8 billion.

As part of the divestment of their onshore assets, Shell, Total and Nigerian Agip Oil Company had divested their 45 per cent stake in OMLs – 4, 26, 30, 34, 38, 40, 41 and 42.

Shell Petroleum Development Company (SPDC) in 2010 opened the floodgates of assets sale by the International Oil Companies (IOCs) when it announced the transfer of its 30 per cent interest in Oil Mining Leases (OMLs) 4, 38 and 41 to Seplat Petroleum Development Company Plc. Total with 10 per cent and Eni with five per cent subsequently sold their stakes in the three leases to Seplat, thus raising the operator’s equity to 45 per cent.

In 2011, Neconde Energy paid $585 million to Shell, Total and Eni to acquire their 45 per cent stake in OML 42.

Shoreline Energy Resources paid $850 million to Shell and its partners for their 45 per cent stake in OML 30; Eland Oil paid $154 million for Shell, Total and Eni’s 45 per cent stake in OML 40; ND Western paid $600 million for OML 34; while First Hydrocarbon Nigeria, partly owned by Afren paid $98 million to acquire Shell’s 30 per cent interest in OML 26.

NNPC retained 55 per cent in the eight OMLs, which it later transferred to its producing arm, the Nigerian Petroleum Development Company (NPDC) between 2010 and 2011 at a cost of $1.8 billion.

“Eight assets that belong to the Federation – eight Oil Mining Leases (OMLs) were valued at $1.8 billion. We believe those assets were undervalued but that is not the point. Out of the $1.8 billion, NPDC paid only $100 million. So, there is an outstanding of $1.7 billion,” Adio explained.

Adio further revealed that even the $100 million part-payment was made after two years, precisely in April 2014, while NPDC continued to enjoy the proceeds from the eight leases, without remitting any money to the government.

NEITI audit also discovered that NNPC assigned four OMLs – 60, 61, 62 and 63 from the Agip joint venture to NPDC in December 2012 but no amount had been paid on these four OMLs as at the conclusion of the 2013 audit, neither was the value of the consideration stated in the deed of assignment.

The reported further noted that the NNPC provided no justification for these transactions except that it was within the powers of the Minister of Petroleum to do so to support NPDC to develop capacity. *This Day

Nigeria’s Oil Output Rises To 1.9 Million Bpd Due To Repairs –NNPC Oil production in Nigeria has risen to about 1.9 million barrels per day (bpd), from 1.6 million bpd, due to repairs and more than a week having passed since a major pipeline attack in the Niger Delta, a state oil company spokesman said on Monday.

Militants who say they want a greater share of Nigeria’s oil wealth to go to the impoverished Delta region have carried out a spate of attacks on pipelines in the last few months.

Nigeria, an OPEC member that was Africa’s top oil producer until the attacks pushed it behind Angola, has seen production fall from 2.2 million bpd at the start of the year. Oil Minister Emmanuel Ibe

38 Orient Energy Review June 2016

Kachikwu said in early June that output had fallen to around 1.6 million bpd.

But recently, Garba Deen Muhammad, a spokesman for the Nigerian National Petroleum Corporation (NNPC), said oil production had risen to around 1.9 million bdp since last week.

“Production has increased because we are making repairs to damaged pipelines and installations. And we have not had any major attacks in recent times,” he said.

The Niger Delta Avengers, the group that has claimed responsibility for most of the recent attacks on oil and gas installations last said it blew up a pipeline on June 16.

Only recently, the petroleum ministry officials said the government had agreed a one-month ceasefire with militants, but the Avengers said they had not agreed to a truce.

Muhammad also said Kachikwu was in China for a roadshow, which began on Sunday, aimed at raising around $50 billion of investment for Nigeria’s oil industry.

By Alexis Akwagyiram

EXPLORATION/ DRILLING

Mozambique Approves Appraisal Plan for Tembo Discovery

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entworth has announced that the Government of Mozambique has approved the two-year appraisal period for the Tembo gas discovery the company made in December 2014.

Under the plan, Wentworth becomes the Operator of the Rovuma Onshore Concession and increases its participation interest in the Concession from 11.59% to 85%. State owned EmpresaNacional de Hidrocarbonetos (“ENH”) retains a 15% participation interest as a carried partner through to the commencement of commercial operations.

In addition, ENH has the right to acquire a further 15% participation interest in the Concession from Wentworth within 18 months from the date of submission for a development plan for consideration equal to the proportionate share of past costs incurred.

“Tembo-1 was a milestone well for the Rovuma basin and an extensive amount of pertinent geologic data was collected which will have a significant impact on future exploration efforts in the basin. Further analysis of the geologic and petro physical data has led to the identification of additional zones of potential bypassed pay. These zones and the tested gas bearing sands will be subject to further evaluation with additional seismic and drilling. The agreed appraisal area, located around the Tembo-1 discovery onshore, measures approximately 2,500 km2 providing the necessary running room to develop this potentially world class play fairway”.

The company says it will start implementing a work programme in 2016 with the reprocessing of approximately 1,000 km of existing seismic data, the cost of which will be funded from internally generated cash flow. Commencing the second half 2017, the Company plans to acquire a minimum of 500 km of new onshore 2D seismic data. The drilling of an appraisal well is anticipated to occur in 2018 after the identification of a suitable drilling location based on the evaluation and integration of the new and existing seismic data.

The Tembo-1 well was drilled to a total depth of 4,553 metres into rocks of Upper Jurassic age. Natural gas and some condensate was recovered by modular formation dynamics testing (“MDT”) confirming the petro physical analysis of 11 meters of pay in sands of Cretaceous age.

Tanzania Extends Aminex Licence A minex Plc has received an approval of the one year extension of its licence term for the Mtwara Licence of the Ruvuma Production Sharing Agreement that was due to expire in December 2016. commenced on 4 April 2016.

The Company continues to be the sole producer to the TPDC gas processing plant during the commissioning process and is expected to reach production levels of up to 30mmcfd.

Aminex is an independent oil and gas production and development company premium-listed on the London Stock Exchange and primary-listed on the Irish Stock Exchange with operations in Tanzania.

According to Aminex statement, the one-year extension has been approved by the Tanzanian Petroleum Development Corporation

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(TPDC), which is processing the extension for Ministerial approval and signature.

Similarly, the Company has completed discussions with the TPDC with regards to transferring the drilling obligations in the northern Lindi Licence covered by the Ruvuma PSA into the southern Mtwara Licence, which includes the appraisal area for the Ntorya discovery.

With the support of the TPDC, the transfer of the Lindi drilling obligations to the Mtwara licence area is also being processed for Ministerial approval and signing.

Thereafter, the Company intends to drill the Ntorya-2 well to satisfy the appraisal drilling obligation and then to apply for a 25-year development licence subject to its success.

The Company also announces that its lender has granted an 18-month extension until 31st January 2018 to the repayment date of its corporate loan facility on existing terms.

As recently announced the power generation system and other auxiliary facilities at Kiliwani North have been completed and commissioning of the gas plant and sub-sea pipeline

*Tanzania Daily News

GAS

‘Nigeria’s Gas Sector Worth $55bn Of Investment Opportunities’- NGA

Bolaji Osunsanya, President, Nigeria Gas Association, NGA

The President of Nigeria Gas Association (NGA), Mr. Bolaji

cant interest in exploring for and/or developing a local natural gas industry in Nigeria; there will be wider environmental benefits for the country if that increased gas use displaces some elements o

ing, supply,and distribution.

of coal-fired energy generation; the Nigerian economy will benefit from gas developments through increased energy security; and increased availability of natural gas will enable Nigeria to maintain its drive in the gas-to-liquids sector,” he explained.

Osunsanya has stated that the Nigeria’s gas sector has over $55 billion worth of investment opportunities, thus indicating great potentials for extremely growth in the economy and in key areas such as exploration and production, process-

peaking on the association’s 2016 Business Forum that S will hold this week in Lagos, Osunsanya told journalists in Lagos at the weekend that turning natural gas into a profit-making venture would require huge investments in infrastructure to address the five component areas of gas availability, gas affordability, deliverability, funding, and legal and regulatory framework.

Osunsanya acknowledged that the government has taken some positive steps to develop gas including the Gas Master Plan rolled out in 2008 along with partial privatisation of the power sector over the last two to three years.

Osunsanya disclosed that at the beginning of 2016, the association held separate engagement sessions with the Senate and House Committees on Gas to present the association’s view on gas policy framework required to spur sector diversification, power generation, and subsequent economic growth.

According to him, this has led to a significant increase in the price for natural gas supplied for power generation to around $2.50 per thousand standard cubic feet with further increases requested by producers.

He noted that the government and operators alike recognise that the first step is to provide a legal and regulatory framework that will enable the removal of persistent obstacles.

Osunsanya said with 1,000 MW of independent power plant capacity idle due to a lack of gas delivery, indigenous players were making significant strategic investments in gas and virtual pipelines to power IPPs and industrial customers.

To this end, he said the association had scheduled a follow-up “Also, the gradual movement of the market towards the conroundtable with the Senate and House Committees on Gas cept of “willing buyer, willing seller”, and the government’s for later in the year. willingness to ensure an investment-friendly environment, bode well for Nigeria’s long term gas development,” he added.

According to him, while the global debate about hydraulic fracturing for shale gas continues to grab the spotlight, He stated that the association believes that Nigeria’s gas closer to home, the discourse about the role of gas in Africa’s reserves could potentially be as high as 16.8 trillion cubic energy mix, particularly Nigeria, needs to continue. meters, “With this in mind, the NGA continues to probe at the current state of the natural gas industry in Nigeria in addition to evaluating the potential for its future development,” he said.

“Feedback from our members suggests that: There is signifi-

40 Orient Energy Review June 2016

compared to the current proven level of 5.2 trillion cubic meters, if deliberate measures are taken to explore for gas as opposed to coincidental discovery during oil exploration. *This Day