Orient Energy Review, May 2016 by Orient Energy Review

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

Vol. 5 No. 05 May, 2016

Oil and Gas Investment: Nigeria’s Opportunities Still Outweighs Her Risk * LOCAL CONTENT CHAMPIONS *

Pg16 * Alfred I. Okoigun

Pg22 * Dr. Amy Jadesimi

Pg20

Pg18

* Dr. Timi Austen-Peters * Bank-Anthony Okoroafor

‘In the last 8-10 years we have not added any significant discoveries to our oil and gas reserve, this is very worrisome’ – Omorodion, NAPE President

PUBLISHER/EDITOR-IN-CHIEF: Nneka Ezeemo EDITOR: Margaret Nongo-Okojokwu PRODUCTION: Pita Ochai CORRESPONDENTS: Shola Akingboye (Abuja Bureau Chief) Vivian Osuji Isreal (Head, South-South Bureau, Port Harcourt) Pita Ochai (Lagos) Gilbert Boyefio (Ghana Correspondent) Business Development Executive: Uche Ezea Ruth Muo (South Africa) CREATIVE: EtimSkill CIRCULATION MANAGER: Ajayi Kayode

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CONTENT

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

Welcome!

he Nigerian petroleum industry and the economy, in general, is currently plagued with innumerable challenges that have affected the way the country is viewed in the global economic landscape. Despite the many challenges confronting it over the last couple of months, the Petroleum sector still has numerous potentials and vast opportunities for growth and investment. This is the view of stakeholders in the global petroleum industry, who are also unanimous in their observation that a lot still has to be done to reposition the industry to enable it compete effectively among its peers globally. We take a look at this seemingly ironical position of the Country, as we seek to ascertain her vast potentials and resilience to fall under the weight of these economic challenges. Also in this edition, we bring you our famous series, the Local Content Champions, where we try to showcase indigenous companies and umbrella associations, thriving and doing exploits amidst all the challenges. In this OTC focused edition, we bring you the likes of LADOL, ARCO, PETAN AND DORMAN LONG; we learn from them what makes them thick. Read along with us and you might learn one or two things to help your business as well. This series will continue in all our subsequent editions, so if you have a story to tell, please feel free to contact the Editor. There are other exciting stories to read inside, so go ahead, read, but don’t forget to send me your feedback; you know I love to hear from you...as always. So drop me a line using the email address below. Do have a great read and here’s wishing all delegates at the Offshore Technology Conference a wonderful conference and deliberations. Cheers!

Margaret Nongo-Okojokwu Editor, Mobile +234-8136329948

POWER 6 10 COVER 16-23 TALKING POINT 24 - 25 PHOTO GALLERY THE 27 FROM NIGER-DELTA 28 INTERVIEW 33 GHANA REPORT

37 39 45

EDITOR’S NOTE

MARITIME/LOGISTIC

LOCAL CONTENT EXPLORATION / DRILLING

38 Orient Energy Review May, 2016

POWER

Fashola: Power Sector Regulatory Agencies To Hold Operators Accountable T

he Minister of Power, Works and Housing, Mr. Babatunde Fashola, SAN, has reiterated the resolve of the ministry to hold power sector operators accountable to service commitments through its regulatory agencies , even as he enumerated the benefits of the Multi-Year Tariff Order to electricity consumers. Fashola, who spoke at the Mabushi Headquarters of the ministry, while hosting the Director General of the Consumer Protection Council (CPC), Mrs. Dupe Atoki, also promised to raise standards in the housing sector, saying the ministry would ensure that when a house is built either by government or private investors “it stays built”. The minister said although the role of his ministry is not to take sides, the new tariff regime has been made to protect the consumer as the ministry ensures that Discos and Gencos perform their responsibilities well and that they are held to their service levels adding that the ministry also stands between them and consumers to ensure that they do not profiteer against consumers. He told the Director General: “I

think that this last tariff seeks to achieve much for consumers in my opinion and I will tell you why people were complaining about fixed charge and people were saying why they will take my money; but this last tariff stopped fixed charge, that’s a consumer sensitive charge.” “What the last tariff also did was to say how do we stand to address the metering gap between the consumers and the DisCos.

It also tried to address the issue of estimated billing so that if you dispute your last bill because you don’t have a meter you cannot refuse to pay, pay what you believe you have consumed and you cannot be disconnected”, the Minister said. According to Fashola, the onus is on the Discos to prove that a consumer has used the power they seek payment for

Power Crisis: Nigeria Lacks Gas to Generate 7,000MW —Osinbajo T he Vice President of Nigeria, Mr. Yemi Osinbajo, recently lamented that the country does not have sufficient gas to fire the country’s power plants to generate up to 7,000 megawatts (MW) of electricity. This was even as the President of the Nigerian Association for Energy Economics, NAEE, Mr. Wumi Iledare, stated that in line with the current realities in the global petroleum industry and the foreign exchange rate, the price of Premium Motor Spirit, PMS, also known as petrol, in the country should be about N120 per litre. Osinbajo, who was speaking at the NAEE/International Association for Energy Economics, Annual International Conference 2016 in Abuja, expressed his disappointment in the fact that despite Nigeria’s enormous natural gas reserves of over 185 tril6

Orient Energy Review May, 2016

Vice President of Nigeria, Mr. Yemi Osinbajo

lion cubic feet, the country is still faced with huge energy supply problems. Osinbajo, who was represented by his Senior Special Assistant (Power and Pri-

vatisation), Chiedu Ugbo, said: “In fact, it is an irony, that we do not have sufficient gas to fire our power plants up to 7,000MW, yet in energy industry circles, Nigeria is described as more of a gas territory than an oil territory.” He pointed out that presently, the country has over 12,500MW of installed electricity generating capacity, consisting of gas thermal and hydropower plants, stating of that capacity, about 7,000MW is available to be generated if the required fuel is available. He, however, disclosed that in spite of the available capacity, power plants in the country, over the last couple of weeks, distributed less than 4,000MW of electricity to consumers across the country.

POWER and they cannot prove that the consumer used power without measuring it “and they cannot measure the power without metering it and this was a way to incentivize metering”. He noted, however, that consumers seem not to fully understand the benefits of the tariff hence the present controversy. Elucidating more on the reason for the new tariff, the Minister, who maintained that it is more friendly for the consumers ultimately added that it also sought to balance the interest of the DisCos because, according to him, “You cannot sell below your production price and if the price of gas has gone up, for instance, you must factor that into your price”. Still on the benefits of the new tariff, the Minister who noted that 5000MW was not enough for over 100 million people added, “We cannot improve on quality without having more power and one of the things that this tariff seeks to address is that private organizations can provide power and this is to ensure that if anyone who wants to pay for premium power can leave the public power space for people who want to stay there”. “The law provides for it so you can leave the pay-as-you-go for the premium power. These are some of the consumer beneficial deliveries that are involved and I think I can’t begrudge people this and there is a lot of emotions”, he said. Also identifying the Credited

Advance Payment for Metering Initiative (CAPMI) as one of the challenges that should be resolved soon, the Minister declared, “you cannot take peoples’ money without providing the service for which they have paid. I was uncomfortable with that”. He said the Ministry has ordered that that scheme is wound down so that people could get what they have paid for adding that it is the responsibility of the Discos’ to provide meters for their consumers and so wind down what they have collected. “We must bring mutual trust in the provision of power and those are some of the emerging issues again and if people have paid for something they deserve to have it and if you can’t do it wind down the scheme. Let’s hold you now fully responsible, you have a market tariff you go and meter. All of these things are happening at our monthly meetings and we are also holding the Discos now to their committed timelines for metering and we are also asking them to file returns”, he said. In the words of the Minister: “We ask them ‘who have you metered? We want to see the details if you tell us you have metered XYZ’. This will be an ongoing exercise until we finish, we also need to be fair because if since 1960 that we started public power and we have not metered everybody when our population was not as much as this , do we honestly think this can happen in five months? “But ultimately this will happen because there is a business end to it and for those who are bringing in the meters they also need to bring in high-quality meters be-

Osinbajo blamed the development on inadequate investment on gas facilities, gas flaring, inadequate gas infrastructure and vandalism among others. He said, “We have limited gas molecules to supply to the power plants. This is a result of many years of under-investment in gas gathering and processing for domestic consumption and also many years of gas flaring. Nigeria alone flares about half of the 40 billion cubic meters of associated gas estimated to be flared in Africa annually. To address the situation, Osinbajo disclosed that the Federal Government is aware that there is no alternative to electric energy for energizing and powering Nigeria’s economic growth and development; hence it is determined to resolve the challenges to achieving sustainable energy supply in the country. “We are working tirelessly towards resolving the gas-to-power challenge, ensuring that the needed investment will be made in gas gathering and processing for domestic

consumption especially for power plants and at the same time working to ensure sustainability of supply of existing gas volumes,” he noted. Also speaking, Iledare stated that he does not see the low oil price as a disaster for Nigeria, stating that it offers the country the opportunity to adopt fiscal responsibility practices and reduce fiscal irresponsibility. He further stated the low oil price allows the country to take advantage of the situation to allow prices in the sector to be determined at current international market price, while he recommended a PMS’ price of N120 per litre, stating that the Federal Government had no business regulating the sector. He said managing the petroleum sector has become elusive, adding that regulators should be autonomous and any regulation put forward should have the backing of the law. He warned that it is fool-hardy for the country to perpetually develop oil and gas resources for cash, instead of for the basis of satisfying the country’s energy needs.

cause they have a duty to protect both the consumers and the Discos”, Fashola said. We can’t meter one million customers yearly – Discos Electricity distribution companies have said the deadline given to them by the Federal Government to meter one million electricity consumers annually is not realistic. According to the Discos, the cap on their capital expenditure is a major challenge to meeting the deadline. The chief executive officers of the 11 Discos stated this during an interactive session with the Acting Director-General, Bureau of Public Enterprises, Dr. Vincent Akpotaire, at the bureau’s office in Abuja. The bureau, in a statement issued on Wednesday by its Head, Public Communications, Mr. Alex Okoh, stated that the meeting also had heads of power generation companies in attendance. Speaking on behalf of the successor power companies, the Managing Director, Ibadan Electricity Distribution Company, Mr. John Donnachie, said the Discos and Gencos had benefited from efforts of the government in the sector through the National Integrated Power Project, the Niger Delta Power Holding Company, the Nigerian Bulk Electricity Trading Plc and the Central Bank of Nigeria’s N213bn intervention fund. Donnachie, however, called for additional intervention through the bureau to secure more investment from the Federal Government by financing the 40 per cent equity held in trust by the BPE for the government. On the implementation of a cost-reflective tariff, he said it was a step in the right direction but that the deadline by the Federal Government to the Discos to meter one million customers within a year was not realistic. He explained that the cap on the Discos’ capital expenditure was a hindrance to meeting the deadline. The IBEDC boss stated that metering was a capital-intensive venture and a key component in implementing the new tariff. In his address, the BPE DG said that continuous interactions as well as the commitment of the power operators and the political will of the Federal Government were critical to resolving the challenges in the sector. Akpotaire called for enhanced synergy between the successor companies of the defunct Power Holding Company of Nigeria and the bureau to boost efforts towards actualising the full objectives of the power sector privatisation. While acknowledging that there were fundamental challenges within the sector, he stated that they were not insurmountable if given time, inter-agencies collaboration and adequate investment. – Punch

*Vanguard Orient Energy Review May, 2016

COVER

Oil and Gas Investment: Nigeriaâ&#x20AC;&#x2122;s Opportunities Still Outweighs Her Risk By Margaret Nongo-Okojokw u, Godspower Ike

he Nigerian petroleum ind ustry and the economy, in general, is currently plague challenges that have affect d with innumerable ed the way the country is viewed in the global econom spite the many challenges ic landscape. Deconfronting it over the las t couple of months, the Pet numerous potentials and roleum sector still has vast opportunities for gro wth and investment. This in the global petroleum ind is the view of stakeholders ustry, who are also unanimo us in their observation tha done to reposition the ind t a lot still has to be ustry to enable it compete effectively among its peers seeks to highlight the nume globally. This write-up rous opportunities in the Nigerian petroleum indust ducing countries, and how ry, ditto other oil-prothe much-needed foreign direct investment can be to help further its growth attracted into the industry and that of the economy in general, while also gua on investment for investors ranteeing positive return .

he Nigeria petroleum industry, though blighted in the not-too-distant past by issues ranging from divestment, suspension of investments in the upstream sector, and poor fuel supply, pipeline vandalism, 10

Orient Energy Review May, 2016

theft and fuel scarcity in the downstream sector. Also, the restructuring of the Nigerian National Petroleum Corporation, NNPC, the re-presented Petroleum Industry Bill (PIB) by the National Assembly, strikes, indebtedness of industry operators and discontent by operators

were the major issues the industry had to contend with over the last couple of days. In particular, the Minister of State for Petroleum Resources and Group Managing Director of the Nigerian

COVER STORY

The restructuring exercise triggered a strike action by labour groups in the NNPC, who protested that they were not consulted before the decisions were taken. The crisis was later resolved, but not without causing Nigerians untold hardship in the area of fuel scarcity. Also, a new version of the PIB, titled, Petroleum Industry Governance Bill, PIGB, was presented by the National Assembly. The Bill made no mention of the Host Community Development Fund, contained in the initial versions of the PIB, while it also proposed the scrapping of the NNPC, replacing it with a body to be known as the National Petroleum Company (NPC); while it also proposed the creation of the Nigeria Petroleum Assets Management Company, not only to manage commercial operations of the petroleum industry but also the assets and liabilities of the countryâ&#x20AC;&#x2122;s oil and gas sector of the economy. As expected, there were oppositions to certain sections of the PIGB and it is expected that the real fireworks would commence when deliberations on the new Bill is kick-started by both chambers of the National Assembly. In addition, the low oil price took its toll on the industry, with International Oil Companies suspending major oil projects, while a number of them undertook cost-cutting measures, which saw them laying off their workers, while other undertook a review of their operations.

T National Petroleum Corporation, NNPC, Mr. Ibe Kachikwu, had in March, announced the restructuring of the NNPC into five business and two services components, while he converted the Group Executive Directors (GED) to Chief Operating Officers (COO), and redeployed them to the various business components.

achikwu said the restructuring were parts of strategy to ensure that each of the former GEDs pushed what used to be the former divisions in the group to profitability.

he spate of pipeline vandalism and sabotage increased significantly, hampering crude oil and gas supply, as well as export of the commodities, thereby putting a constrain on revenue accruable to the country as evident in the depleting foreign reserves and decline in the value of the countryâ&#x20AC;&#x2122;s currency against major international currencies. All these problems send negative signals to the international investing community, with majority of the investors looking elsewhere. Regardless of these, energy experts and analysts are still optimistic of the country, projecting that over $200 billion, would be spent in deep offshore projects in Nigeria and other West Africa countries in the next couple of months.

Specifically, the Nigerian National Petroleum Corporation (NNPC) listed opportunities in the Nigeriaâ&#x20AC;&#x2122;s upstream petroleum sector to include: surveying - tropical and planimetric and sea bottom survey; civil works mud pit construction, concrete works at rig sites; seismic data acquisition and interpretation; drilling operations, pipelining; crude oil transportation and storage; exploration and production of oil and gas products.

thers are: manufacturing of consumable materials in exploration such as explosives, detonators, steel casting, magnetic tapes; search for development of local substitutes for items such as medium pressure valves, pumps, shallow drilling equipment, drilling mud, bits fittings, drilling cement among others. In the downstream, the NNPC identified investment opportunities in the sector to include: domestic production and marketing of Liquefied Natural Gas (LPG); domestic manufacturing of LPG cylinders, valves and regulators, installation of filling plants, retail distribution and development of simple, flexible and less expensive gas burners to encourage the use of gas instead of wood. Other opportunities are the establishment of processing plants and industries for the production of refined mineral oil, petroleum jelly and grease; bituminous based water / damp proof building materials, such as roofing sheets, floor tiles, tarpaulin, and the building of asphalt storage, packaging and blending that

Equity is scarce, most oil and gas funding has concentrated to North America where opportunities are numerous and country risk low. West African companies need to find funds to de-leverage and invest at a time where valuations are at their lowest.

Orient Energy Review May, 2016

COVER STORY may export these products.

lso opportunity abounds in the establishment of chemical industries, such as distillation units for the production of Naphtha and other special boiling point solvents used in food processing; Linear Alkyl Benzene, Carbon Black and Polypropylene producing industries. The NNPC further stated that investment opportunity abounds in the NLNG projects and in the small-scale production of chemicals and solvents, such as chlorinated methane, Formaldehyde, Acetylene among others, from natural gas. There is also opportunity for investment in products transportation and marketing, while the NNPC explained that associated with products distribution and marketing is a chain of manufacturing and maintenance businesses, such as lubricating oil reprocessing, LPG bottles and accessories, oil cans reconditioning among others. The NNPC also stated that investment opportunities abound in crude oil refining with efficient export facilities, adding that companies with the technology can undertake turn around maintenance of refineries. According to the NNPC, there is a tremendous scope for smallscale joint venture manufacturing concerns with foreign technical partners especially as such ventures can start warehousing arrangements that will ensure continuity of supply at competitive prices.

eanwhile, a Wall Street Journal (WSJ) report titled ‘Frontier Market Sentiment Index’ has revealed that Nigeria emerged the number one frontier-market economy in terms of attracting the most attention from European and American multinationals, “We collect data about which countries the companies are watching for potential future investment. Over time, that gives us a clear picture of their market priorities—which countries are they including in their future plans and which they are dropping,” said Matt Lasov,

Orient Energy Review May, 2016

global head of advisory and analytics of Frontiers Strategy Group (FSG), the US-based advisory firm that created the index for WSJ. Countries in sub-Saharan Africa dominate the list, with nine from the region making part of the 11 from Africa in the list of 20 countries. Kenya ranked 5th on the list, making it the second African country with 23.17 percent corporate sentiment rate, following Nigeria’s 29.57 percent. Rising insurgency in both countries apparently has not discouraged multinationals from venturing into business dealings as opportunities in the countries probably outweigh security risk. In addition, Chief Investment Officer of the International Finance Corporation, IFC, a subsidiary of the World Bank Group, Mr. Olivier Mussat, said half of the estimated financing needs for infrastructure in Nigeria and other developing countries are unmet. According to him, currently, developing countries spend $1 trillion annually on infrastructure, but the need for investment is estimated to double annually over the next decade, with Sub-Saharan Africa requiring about $50-$150 billion compared to other regions. He disclosed that Nigeria is the worst hit from the oil price as it needs continuous investment in fields which are maturing. According to him, up to $3 billion of capital expenditure (CAPEX) had been cancelled and the NNPC is increasingly struggling to finance its Joint Venture (JV) assets with International Oil Com-

panies (IOC).

e said, “Nigerian local banks are overstretched as they aggressively supported oil sector with highly levered debt facilities on $80 per barrel calculations which are now coming up for redetermination or refinancing. Bond market has also closed for Africa oil and gas. “Equity is scarce, most oil and gas funding has concentrated to North America where opportunities are numerous and country risk low. West African companies need to find funds to de-leverage and invest at a time where valuations are at their lowest.” All these challenges, especially with the low price of crude oil in the international market, analysts said, present an ideal opportunity for capacity development and renewed investment in Nigeria as well as other sub-Saharan African countries.

or Dr. Amy Jadesimi, Managing Director, Lagos Deep Offshore Logistics Base (LADOL), the development of growth markets in Nigeria and other African countries could be possible mainly through local content in the petroleum sector. She identified the advantages of local content in the oil and gas sector to include engendering lower costs and creating globally competitive facilities and suppliers; boost local industrialization; create linkages

COVER STORY between the oil and gas sector and other sector and also ensure that growth economies become engines of the world. She, however, listed challenges to private investment in the petroleum sector in Nigeria and other growth markets to include the absence of deep water terminals, lack of adequate berthing capacity, lack of an integrated land distribution system, particularly for transit traffic and lack of essential supporting infrastructure, such as rail networks. Other challenges, according to her, include congested road network, bureaucratic bottle necks, high maritime and freight charges and contracting and procurement processes/ strategies that do not guarantee contracts to support investments. She further stated that certain countries have sufficient oil and gas such that internal markets can justify the development of world class facilities, noting, however, that such facilities are currently lacking in many growth market. She also stated that there is a time-limited opportunity for these facilities to be developed in these countries, adding that proliferation of local content laws means that only international companies with local partners will be permitted to provide such services for many countries.

lso commenting on the development, Mrs. Donna Obaseki-Ogunnaike, Partner, Adepetun, Caxton-Martins, Agbor & Segun (ACAS-Law), a law firm that specialises in Energy, stated that there are numerous opportunities in the Nigerian gas sector, ranging from investment in Liquefied Natural Gas, LNG, independent power plants, gas to liquid conversion, natural gas liquids (NGL) and methanol. Domestically, she explained that the NNPC, through its subsidiary, the Nigerian Gas Company, supplies gas to the local market for power generation either as a source of fuel or as feedstock to cement and fertilizer plants, glass, food and beverages,

Dr. Amy Jadesimi

manufacturing industries, among others. She expressed support for the restructuring of the NNPC, stating that the corporation is due for vigorous re-organisation in order to enhance its efficiency, curb corruption and leakages, and properly position the corporation and its subsidiaries as a profitable entity that can compete favourably with the national oil companies of other countries, such as Aramco of Saudi Arabia, Petrobras of Brazil, and Petronas of Malaysia.

n his own view, Mr. Soji Awogbade, Partner, Aelex legal Practitioners and Arbitrators, lamented that investing in Nigeria, as well as some other African countries is challenging, adding that this situation has been worsened by the volatility in the price of crude oil, which had further served as a disincentive to investment in the oil and gas sector. According to him, the onerous consent procedures further dis-incentivise investment by increasing risk, cost and timeframe for consummation of acreage transactions. He also disclosed that the onerous consent procedures are not in the economic interest of Nigeria and Ghana in light of current economic realities, adding therefore, that the guidelines should be reviewed to reduce the scope of transactions and conditions requiring consent. He said, “Some of the conditions for consent in the guidelines, such as payment

of money in escrow account and pre-approval of the Department of Petroleum Resources (DPR), should be reviewed to enhance quick and smooth consummation of acreage transactions. “Timeframe within which a decision for consent will be issued should be provided to aid transaction structuring and planning.” Also, Mr. Danziba Patrick Obah, Acting Executive Secretary, Nigerian Content Development And Monitoring Board (NCDMB), in his own submission, maintained that long term financing, between five and 10 years, is required to support development of the local supply chain in the areas of asset acquisition, infrastructure development, manufacturing, contract execution and skills acquisition, while special grants for Research and Development and technology development should be created. As a way out of the quagmire the industry is confronted with, Obah advocated sustained domiciliation activities to keep Nigerian jobs, with increased focus on in-country manufacturing and fabrication, engineering. He also called for the promotion of regional synergy to maximize economies of scale and also the development of a robust local supply chain to deliver service at lower cost. In addition, he said, “Provide access to competitively priced funding from the Nigerian Content Development Fund (NCDF) and international sources; develop power and transport infrastructure; attract investment in R&D to develop technology locally and expand scope of local content to other economic sectors, such as power, telecommunication and construction.” Others, he said, include, “Invest in skills acquisition; promote alliances/ partnership amongst service compaOrient Energy Review May, 2016

COVER STORY turnkey/EPC projects to provide more opportunities for local players with capacity and reduce cost layers.” Also, Mr. Babs Omotowa, Managing Director, Nigeria Liquefied Natural Gas (NLNG) disclosed that now is the time to invest in Nigeria and other oil-producing African countries, especially in the gas sector. According to him, gas can play a big role in the development of Africa, adding however, that this requires huge investment and a conducive environment. Despite the bleak economic landscape, President Muhammadu Buhari’s recent visit to China had further buoyed interest in critical sectors of the Nigeria economy. The interest in the country was given the necessary fillip with the currency swap agreement between both countries.

he president’s visit to China generated investments in various infrastructure projects in Nigeria valued at about $6 billion. The investment was for project in the energy sector, transportation and manufacturing sector among others. The visit and agreement is expected to boost investment in the Nigerian petroleum industry, encouraging Chinese firms to partner with indigenous oil and gas firms or investing directly in the petroleum industry. Some of the subsisting agreements which were concluded during the visit included the $478 million dollars 300 Mega Watts solar power project in Shiroro, Niger State. The agreement was signed between North South Power Company Limited and SinoHydro Corporation Limited. There was also a $200million agreement for the construction of two 500 metric tonne per day floating gas facilities at the Ogun-Guangdong Free Trade Zone. Granite and Marble Nigeria Limited and Shanghai Shibang signed an agreement valued at $55 million for the construction and equipping of

Orient Energy Review May, 2016

granite mining plant in Nigeria, while an agreement between Infrastructure Bank and Sinohydro Corporation Limited, was consummated which would see a total of $1 billion invested in the development of a greenfield expressway for Abuja-Ibadan-Lagos.

thers included a $250 million deal to develop an ultra modern 27-storey high rise complex and a $2.5 billion agreement for the development of the Lagos Metro Rail Transit Red Line project; a $1 billion facility for the establishment of a Hi-tech industrial park in Ogun-Guangdong Free Trade Zone in Igbesa, Ogun State; and CNG (Nigeria) Investment Limited, and a $363 million deal for the establishment of a comprehensive farm and downstream industrial park in Kogi State. There were also agreements undergoing negotiations, which include a $500 million project for the provision of television broadcast equipment and a $25 million facility for production of pre-paid smart meters between Mojec International Limited and Microstar Company Limited. On the currency swap agreement, Mr. Joe Uwaleke, an Associate Professor of Finance, Head of Banking & Finance Department and Deputy Director of Research, Nassarawa State University Keffi, in a write-up circulated recently, said it is safe to conclude that the swap arrangement is being established in the context of the rapidly growing bilateral trade between China and Nigeria. According to him, the currency swap would boost trade between China and Nigeria, adding that it is also expected to bolster Nigeria’s foreign exchange reserves at a time weak export revenues, occasioned by the drastic fall in oil price, has put the country’s foreign reserves under intense pressure. He said Nigeria had converted about one tenth of its reserves into yuan a few years ago and plans to increase the stock of yuan this year from panda bonds proceeds. Uwaleke explained that other factors being equal; the currency swap deal is also expected to strengthen the naira since Nigerian traders, who import mainly from China, can now conclude their transactions in the yuan instead of

the dollar. “And from China’s point of view, the currency swap will increase the demand for the yuan as it marches towards establishing its currency as a reserve currency in the future,” he noted. To this end, stakeholders are unanimous in their views that despite the challenges and negative perception of the country created by the Central Bank of Nigeria’s (CBN) foreign exchange control mechanisms, volatility in the price of crude oil and slowdown in the petroleum industry, Nigeria’s oil and gas industry still present a positive return of investment and remains an attractive investment destinations.

t remains a fact, according to the stakeholders, that the Nigerian petroleum industry remains an investment destination of choice and would always bounce back to reckoning irrespective of challenges perceived crisis.

We collect data about which countries the companies are watching for potential future investment. Over time, that gives us a clear picture of their market priorities—which countries are they including in their future plans and which they are dropping,

TALKING POINT

LOCAL CONTENT CHAMPIONS

‘This company was founded with N3000 borrowed from Union Bank; built on a high level of integrity, transparency, and commitment to work - Arco Boss, Okoigun

ou have come a long way with 36 years of manning this industry, you have seen the rough, tough, and the good old days of the industry, can you tell us how you have fared in the Nigerian oil and gas industry?

ell, within these 36 years we have had 10 presidents and the present president should be the 11th since I started business, and not to talk of the ministers in the petroleum industry, so there have been a lot of notions in the oil and gas industry. Above that, it calls for change of policies and whenever there is change in policy it affects business, sometimes positive, other times negative. But my hope is that with where we are now and current oil price guiding us to be focused and do the right thing, I think we have a president who is renowned for his integrity, my believe is that all the honest and hardworking people this should be their opportunity, if they get themselves established within this period then they will continue to move on, because over the years we haven’t had president who was quite focus and through their policies we got lifted up, we also have some that through their policies it didn’t work well for us. Because we have chosen business and the dream of Arco is to outgrow anybody that will work in Arco, that is the real dream and we 16

Orient Energy Review May, 2016

are trying to live it. So how has Arco managed to survive throughout these years with the policies somersault that the industry has gone through, how have you been able to make it to this point? I am told that Arco’s story is being used in the Lagos Business School in the last 13 years or so, it is being used as a case study there, it is not that we have too much money, but what stands out for us is that this is a company

lfred I. Okoigun, founded and serves as Chief Executive Officer and Group Managing Director of Arco Petrochemical Engineering Company Limited. Mr. Okoigun worked as a Pioneer Staff of the Nigerian National Petroleum Corporation. Mr. Okoigun’s business experience has been greatly enhanced by several executive training programmes in Nigeria and his stint at the International Institute for Management Development (IMD), Lausanne, Switzerland. He serves as Director of Arco Petrochemical Engineering Company Limited. A fellow of both PTI (his Alma Mater) and the Nigerian Society of Chemical Engineers. He is an Alumnus of the Petroleum Training Institute, PTI, Warri. His training is in mechanical engineering. After a one-year industrial training with Snap Progetti of ENI in Italy in 1978, Mr. Okoigun joined the NNPC as a Material Management Officer in the Warri Refinery and Petrochemical Company (WRPC); he served in that capacity from 1978 to 1980. A visionary entrepreneur, Mr. Okoigun resigned his appointment in 1980 and established ARCO Petrochemical Engineering Company Limited, to provide maintenance engineering and consultancy services to the Nigerian Oil and Gas industry. He was granted agency representation by Nuovo Pignone – a 100% owned subsidiary of the ENI Group (now owned by General Electric) when he was only 25. Mr. Okoigun is a strong believer in the development of engineering services in Nigeria. Through ARCO, he has sponsored over 40 engineers, technocrats and energy correspondents for training programs and facility visits to Oil and Gas equipment manufacturing firms and to exhibitions and seminars on energy matters in Italy, Switzerland, USA, Brazil and Argentina. In recognition of his contributions to the Nigerian Oil & Gas sector, Alfred has been honoured by his professional colleagues and his alma mater; among these awards are the conferment of a Fellowship on him by the Petroleum Training Institute, Effurun at the age of 43, designation as a role model by the Engineering Society, University of Lagos and the conferment of Fellowship on him by the Nigerian Society of Chemical Engineers.

built on a high level of integrity, transparency, and commitment to work. When you understand that this company was founded with N3000 borrowed from Union Bank, then you can say that we are just ready to work and make something out of nothing and this is what

LOCAL CONTENT CHAMPIONS we have been doing. And so whenever we have challenges – the somersaulting one you talked about, we just keep our head low knowing that our own is not just today, we are looking beyond today and that has helped us. We just heard a presentation about value addition in the Nigerian oil industry through local content; can you relate that to the story of Arco so far? Well, presently we have over 400 workers with us How many people did you start with? One, which was just me, then later we started increasing. Gradually we were increasing our customer base and over the years we diversified, we started by being an agent, maintenance organisation in rotating equipment, and later on dwell in logistics support providing vessels, now we have Arco integrity for inspection, this is how we have moved over the years, I must tell you it’s been easy, but like I use to tell people, if you believe in what you are doing and you are focused, the sky is the limit, there can all kinds of challenges but just believe in your goal. You have experienced the industry in the days when there was no law enforcing local content and now that the Local Content law is in place, how has it helped or supported your business, and at the same time what is the difference between these two periods? When there was no Act, companies could do anything and go away with it because there was nobody, no agency

to direct your complain to, now that the Act is there it helps you to at least shout, and when you are not satisfied you go to court, how many people would like to do that? So they may have no choice than to begin to respect the law. It is a good development but we indigenes should try to develop our capability. You just unveiled an ISO certification for your company, what does it mean to you and the company? I will give you one example, some four years ago we wanted to work with a company for maintenance activity, but this company have the technology and we wanted to partner with them, they sent us a list of their requirements to be considered, we looked at it and discovered that there was no way we can be qualified if we follow all that was needed, all we did was to just step it down that we were not ready, and that was a message that this was what this international organisation wants in order to partner with us, so we now invited PWC, and through them, midwife the process that we needed to put in place that will get us to that level. We don’t really need to use PWC, but we used PWC because of a number of other things that we were doing. We have started that process a year and few months ago, what it means is that International Standard Organisation Certification, that is, they evaluated and established that our processes are right, we can use this process to compete with other companies of the world, so that is what it is and for us it is a great achievement and cheerful news for us. You started 36 years ago where the situations were quite different, having garner much experiences what will be your advice to younger ones who may want to tow the

TALKING POINT same line? First and for most, the person should have personal integrity, he should be transparent, you should know what you want which means you have gone to school so you should know what really interest you in life, what you want to pursue, stick to it and make efforts in different ways because the people who are successful are not the most brilliant ones, they are not, they are just people who try and try, so don’t give up. If you meet somebody and he is not able to help you then go to another person, continue until you get that result that you want.

What you want to pursue, stick to it and make efforts in different ways because the people who are successful are not the most brilliant ones, they are not, they are just people who try and try, so don’t give up. If you meet somebody and he is not able to help you then go to another person, continue until you get that result that you want.

Orient Energy Review May, 2016

TALKING POINT

LOCAL CONTENT CHAMPIONS

‘In order to develop our country, we have to Value our own existing in-country capacity not patronage’ - Okoroafor Bank-Anthony Okoroafor

Meet PETAN’s New Boss

ank-Anthony Okoroafor is the Chairman of Petroleum Technology Association of Nigeria (PETAN). PETAN is an association of leading Nigerian indigenous technical service companies in the upstream and downstream 18

Orient Energy Review May, 2016

sectors of the oil and gas industry. PETAN’s vision is to domesticate petroleum technology in Nigeria and her membership is drawn from all parts of the country. Bank-Anthony is also the Managing Director of CB Geophysical Solutions Ltd, a seismic data acquisition, processing and interpretation company based in Port Harcourt, Nigeria. He

is also the managing director of Vhelbherg. A company involved in Oil & Gas Pipeline/Flowline Leak Repairs, Early Production Facilities (EPF), Operation/ Maintenance of Oil Fields and Marine Vessels. He is very passionate about Nigerian Content development and empowerment of competent Nigerians with ca-

LOCAL CONTENT CHAMPIONS

pacity, to excel in the oil and gas industry. Bank Anthony worked with Schlumberger as an international staff for fifteen years in Algeria, Tunisia, Kasakhstan, Russia, France, USA, UK and Nigeria before setting up his companies in Nigeria. Bank-Anthony Okoroafor is a member of NAPE, SPE, COREN and NSE. He has participated in several oil and gas fora and has contributed immensely to the development of the industry. Bank- Anthony has a B.Eng. (Mechanical Engineering) degree and an MBA. He has attended several courses and programs at Harvard University. What does Local Content mean to PETAN? Local Content means the quantum of composite value added to, or created in the Nigeria economy through a deliberate utilization of Nigerian entrepreneurship in the upstream and downstream sectors of the Nigeria Petroleum Industry, which includes all activities connected with the exploration, development, exploitation, processing, transportation and sales of Nigerian crude oil and gas resources, without compromising quality, health, safety and environmental standards Briefly tell us your impression of this Stakeholder Nigerian Content Workshop? This is a great workshop because it is the first time that Policy makers (National Assembly) are really sitting down and listening to the actual oil & Gas entrepreneurs, captains of industry and practitioners. They deserve our commendation on this. The chairman of Petroleum Up-

TALKING POINT

No other country will develop Nigeria for us, In order to develop our country, we have to Value our own existing in-country capacity not patronage, Leverage proven Nigerian (PETAN) companies. stream in the senate and their committee members have demonstrated that they are ready to learn in order to re-position our oil and Gas industry especially at this point in term . At the workshop, you presented a paper tagged Value added Local Content, how value addition reduces cost. Can you shed more light on that? No other country will develop Nigeria for us, In order to develop our country, we have to Value our own existing in-country capacity not patronage, Leverage proven Nigerian (PETAN) companies. We must not compromise on capacity building. In your opinion do you think we have the capacity to practice this value added local content, as being promulgated by PETAN? Yes. PETAN companies have built capacity and competence in the entire value chain of well delivery from Exploration to tank farm. This is Value added local content. The Nigerian Content Act is now in its 6th year as a law in Nigeria; do you think we have consolidated on its

gains? What are those significant achievements of the Act so far? We have started on the right path. What we must continue to push is for more enforcement. The Nigerian Content Act signed by the president is clear on its objectives, The NCDMB and the oil companies must adhere to the act. It should be a criminal offence when the act is not obeyed. Nigerians now own drilling Rigs, Ocean going Vessels, What is the role of PETAN in capacity building and development in the oil and gas sector? PETAN companies are passionate about capacity building, Have built a lot of in-country capacity in the entire well delivery value chain from Exploration to tank farm that was why we fought for the Local content to create more Nigerian entrepreneurs. We have also built a lot of competences. PETAN companies are the first in a lot of start-ups in Nigeria in building capacities to satisfactory standards of quality and quantity. PETAN companies believe in Nigeria. It is PETAN companies that kept production going during the days of militancy. Most PETAN CEOâ&#x20AC;&#x2122;s worked in most multinational companies all over the world before coming back home to help develop our country. We must not giveup on our great country. We must belief in ourselves and shed off the colonial mentality. We are all blessed with great academic acumen and the spirit of enterprise.

Orient Energy Review May, 2016

TALKING POINT

LOCAL CONTENT CHAMPIONS

‘Dorman Long is proof that Local Content is doable’ – Dr Timi Austen-Peters

r. Timi Austen-Peters is a Notary Public of the Federal Republic of Nigeria having qualified as a Barrister and Solicitor of the Supreme Court of Nigeria in 1986. He is a published author of many articles in the UK and Nigeria, with a book in the UK on the custody of financial assets published by Oxford University Press. His academic qualifications include a doctorate in law from the University of Oxford, an LL.M. from the University of Cambridge and an LL.B. from the London School of Economics (LSE). He has worked as a lawyer for the United Nations Office at Geneva, Switzerland, and for a leading commercial law firm in Lagos. He has

Orient Energy Review May, 2016

LOCAL CONTENT CHAMPIONS

also worked as a Legal Consultant to the African Development Bank in Abidjan, Cote de Ivoire. In 1999, he set up Austen-Peters & Co, which is now one of the leading law firms in Nigeria, and has established itself as a niche provider of high caliber legal services in banking, securities and capital markets. As a businessman, Timi Austen-Peters has interests that span financial services, real estate development and country representation for major multinationals. He recently acquired a controlling stake in Dorman Long Engineering Nigeria Limited, a 65 year old leading EPC firm specialising in Oilfield Equipment, Structural Steel and Marine Structures Engineering and Fabrication in Nigeria. In this brief interview with Orient Energy Review Editor, Margaret Nongo-Okojokwu at the just concluded Nigerian Content Workshop in Calabar, Dr. Timi speaks about his passion for Local content and its impact on is business at Dorman Long Engineering company. Excerpts. We know Dorman Long to be a very huge supporter of this event; the Nigerian Content Workshop. What are your thoughts about the event so far? Well I am very impressed for the mere fact that it is organized by Nigerians. I am very happy; I am a product of local content so I would like to see that expand to other areas of service delivery. Proof that it has been successful is demonstrated by the kind of people that have come, the quality of the discussions showing how we can move all our various industries forward, etc. When it holds again I will certainly support it. Do you think we are getting it right in terms local content, I

INTERVIEW

mean looking at all the issues being placed on the front burner of this workshop?

they don’t think we are able to take over the jobs. Do you think we are ready?

Local content is not easy; it can’t be easy because by definition you are trying to change things, you are going against entrenched interests and positions but I think we are getting it right; we are moving in the right direction. Like I said, we are a product of it in many respects. People like Marine platforms, yes I know they were doing very well, but it is local content policy that took them the extra mile and there are many of such examples, so I think it is a fantastic initiative.

Dorman Long is an example, we have done it. I mean we are responsible for maintaining a FPSO that produces 200,000 barrels a day, the Bonga FPSO; and it has never been declassified, that is proof. If we can do everything that is needed to provide this support service without any hiccup and without Shell shouting that there is a major problem, then I think we are in good shape.

I know Dorman long to be one of the key proponents in the pursuit of the Nigerian Content Act and since 1949 when the company was formed, till date, you have been there and practising local content. Can you tell us how this Act has impacted on your business? Most clearly we have a very significant contract with Shell which without local content we won’t have today. Those contracts were previously executed by expatriates and offshore companies but because of local content we were invited to come and scale up, get properly trained and then take over those contracts and then we have now been reducing the number of expatriates to the extent that from the initial work force of 200, we are now down to about 20 expats. What areas do you think need to be improved upon in the Nigerian Content Act? Well it is not so much in the Act; it is the implementation that needs improvement. The two things that would most promote this include, increased training for Nigerians and greater access to capital. People need to know what they are doing and they need the capacity to execute, which is training and money.

Nigerian content versus the falling oil price; some schools of thought have it that the falling oil price is an opportunity to grow local capacity for local content. Do you agree with this assertion? Absolutely! Because there are many things, like I said, that used to happen with expatriates at many thousands of dollars per day and you can employ similarly qualified Nigerians for thousands of naira per day. So in fact the reduced oil price is perfectly consistent with increased local content. Some people suggest that local content is necessarily more expensive but I would beg to differ; I think it should actually be cheaper because you train Nigerian people to work; you avoid all the cost of travels, the expatriate allowances, the housing, the family travel allowances and all the other things that are involved in bringing in expatriates. So I think it is a fantastic thing and it gives us a greater opportunity to demonstrate that we can do quality work and for little cost. Any word for the organisers of this workshop? Fantastic job, keep it up!

People don’t trust our capacity enough; Orient Energy Review May, 2016

TALKING POINT

LOCAL CONTENT CHAMPIONS

‘The facilities we have in LADOL make it possible to do things in Nigeria which you cannot do anywhere in West Africa and in most cases in the whole of Africa’ - Jadesimi

ould you take us through some of your operations and what you stand for?

r. Amy Jadesimi received her first degree from Oxford University, where she earned a BA in Physiological Sciences. She then attended Oxford University Medical School, from which she graduated as a medical doctor (MD).   After Oxford, Dr. Jadesimi joined Goldman Sachs International in London as part of the Investment Banking Division, specializing in corporate finance and mergers and acquisitions. She then attended Stanford Business School, from which she earned her MBA in Business Administration. While at Stanford, Amy completed an internship with Brait Private Equity in Johannesburg, South Africa, where she worked as a transaction executive in Private Equity.   After graduating from business school Amy moved to Nigeria where she set up a financial consultancy firm before joining the Management Team of LiLe as Managing Director. Dr Amy spoke with the Editor, Margaret Nongo-Okojokwu at the recently held African Producers Congress, held on 14th -17th March in Abuja

Orient Energy Review May, 2016

ADOL is actually an Industrial Free Zone, the services we offer range from logistics support, that is drilling and offshore support for deep offshore and near shore Lagos oil and gas, we offer rig and ship repairs, and through our vessel integration and fabrication yard we can now do new steel fabrication which is like the Topsides of FPSO, is for the rail sector, we can even build the structure for hospitals, bridges, any big structure can actually be fabricated and assembled in our facility, and just as importantly, fabrications that takes place across the country, if you are fabricating in the Aveon yard in Port Harcourt,

you can build the model there and that can be brought to LADOL to make it into the larger whole, that is a really important point. Because what it means is that the integration facilities is creating jobs all over Nigeria by increasing the demand for made in Nigeria fabrication and engineering. One of the reasons LADOL has been able to change the way business is done is because the oil price has fallen and has now stabilised around $40. At a lower oil price, people make rational decisions, the rational decision for offshore drilling and production support is to use facilities like LADOL because we have been doing that support in-country, that’s because it’s not just about LADOL, it is important because when international companies are making decisions about where to do their jobs, if they look at Nigeria as a high cost destination then they are not going to invest here, they are not going to work here.

LOCAL CONTENT CHAMPIONS So what facilities like LADOL do is to make Nigeria a more attractive investment destination, the facilities we have in LADOL makes it possible to do things in Nigeria which you cannot do anywhere in West Africa, and in most cases in the whole of Africa. What that does is to make Nigeria a hub, and I think that is why when this conference opened, His Excellency, Muhammedu Buhari mentioned specifically that LADOL is a strategic investment hub which other people should emulate and support. Where do you source your raw materials from? It depends on what it is, for example one of the things I talked about is the local effects of being able to build ships in LADOL is the stimulation of relative industries like the steel manufacturing industry. Right now, our steel manufacturing industry is somehow moribund, why? Because there isn’t enough local demand for new steel fabrication, what we have done in LADOL is to increase the local demand for steel and make it more attractive for private sector to investment in steel manufacturing, and that will revitalise that sector of the economy. Have you encountered any challenges in the course of doing your business in Nigeria? We have encountered many challenges, am smiling because am trying to keep the worst once. There are many challenges we all face doing business in Nigeria but we will stay here because when you overcome those challenges and I know we will overcome them, the return you get on your investment is very important whether you are a foreign or local investor, but if you are local, overcoming those challenges is imperative. Yes, we face challenges because when you are changing the game in a sector where there are a lot of rent seeking, a lot of government funded monopoly, people are fighting you because they don’t want transparency, they don’t

want Nigerians to benefit, they don’t want the market to grow because if the market grows it will be harder for them to maintain their rent seeking activities, it will be harder for them to maintain the type of ill-gotten gains that they have enjoyed. And of course, we always knew we are going to face opposition but I always knew that these oppositions will not prevail, number one because of the Nigerian people. I have to say that doing this business have really shown me that Nigerians are very decent people. People have gone above to risk their jobs to ensure that LADOL succeeds, not because of LADOL but they believe in doing the right thing, and when they see a Nigerian that is investing in infrastructure they just want to do the right thing. I learnt that Nigerians are good decent people, they will work hard and they will succeed and because we have seen that this is a fantastic place to do business, there are barriers to entry but the market opportunity is there, when you add value, and build a facility that changes the game in a positive way, you get the return on your investment. Local content development and local collaboration, how do this link up with demand driven development? Where we are right now is a critical stage in our development, historically we haven’t had enough capacity development by locals, we have had locals competing for a very small pie and that consist of agency fees and money you get through procurement and that kind of a thing that doesn’t generate jobs. With real local development, when you start to talk about capacity development, then you look at development clusters, for example for LADOL to get full returns on investment we need more fabrication in-country. It shouldn’t be the case that other fabrication in-country should be looking at what we are doing at LADOL as a threat, they should see it as an opportunity because we are doing integration in Nigeria, these other in-country facilities will have more work, so we should be talking to each other, talking to government together so that we can make sure that the existing rules and regulations are applied, we should also open a dialogue with government so that government will know what we can do, we should let them know what private

TALKING POINT

sector is capable of and more of what we are willing to do with more enabling environment. Where do you see LADOL by the year 2030? We are hoping that by 2020 there will be many more LADOLs across the country, not necessarily owned by us but such facilities that are owned by indigenous Nigerians. I see us having a kind of renaissance not just in the oil and gas industry, but the different diversified sector in Nigeria, from Agriculture where one of the projects that LADOL is looking at is agricultural processing for export. We used to be cocoa exporters, one of my Great Grand fathers was the largest palm oil producer and trader in the world at a time until the British stopped him, we are going towards renaissance of a widely diversified industrialised country and I see LADOL contributing to that the way we have always done, that is building infrastructure by operating a world class facilities that enable international and local people to compete on this global scale. What is your relationship with other African producing countries? We are in discussion with our neighbouring countries right now about FPSO refurbishment particularly countries to our right who are in the habit of refurbishing FPSOs instead of building new ones, and it has always been of advantage to them

One of the reasons LADOL has been able to change the way business is done is because the oil price has fallen and has now stabilised around $40. Orient Energy Review May, 2016

PHOTO GALLERY THE NIGERIAN CONTENT WORKSHOP (NCW 2016)

Senators and stakeholders in the industry pose for a group shot after a panel session.

takeholders in the Nigerian oil and gas industry gathered at the Calabar International Convention Centre (CICC), Calabar, Cross River State for a three-day interactive workshop on Nigerian local content policy. Midwife by the Senate Committee on Petroleum Resources (Upstream) headed by Senator Tayo Alasoadura in collaboration with the Ministry of Petroleum

Deputy Governor of Cross river state, Represented the Governor, Sen. Ben Ayade

SEN. Geshom Bassey, Vice chairman House C’tee on petroleum Resources, Upstream

Sen. Raji, Chairman house C’tee on Trade and investment.

Sen. Alasoadura, Chairman Hse C’tee on Petroleum Resources, Upstream

Sen, Adeyeye, chief whip, House of Senate

Sen. Akpan Bassey, Chairman House C’ttee on Gas

Orient Energy Review May, 2016

NCDMB chiefs, Mallam Halilu and Mr. Adelana having a quick chat.

PHOTO GALLERY FLASH BACK FROM AFIRCA OIL WEEK 2015, CAPE TOWN SOUTH AFRICA

LOCAL CONTENT FORUM where Orient Energy Review was given the platform to contribute to the Local Content Discourse

Margaret Nongo-Okojokwu, Editor, Orient Energy Review, speaking at the Local content Forum

DISTINGUISHED SENATORS: Members of the Senate played host to this impactful workshop

Orient Energy Review May, 2016

FROM THE NIGER DELTA

Ogoni CleanUp Begins June 2

he Federal government will on June 2 launch the kick-off of Ogoni clean-up programme as contained in the United Nations Environment Programme Report,

UNEP. The Minister of Environment, Mrs Amina Muhammed, said this recently in Port Harcourt during a visit to Governor Nyesom Wike of Rivers State.

Represented by Minister of State for Environment, Ibrahim Usman, she said the visit was to seek the collaboration of all stakeholders in the exercise. She said: “The programme is expected to be launched on June 2. It has been designed to be driven by all stakeholders in the region. The essence of this is to ensure that the people of Ogoni and the region at large benefitted from the process.” • Vanguard

Etche Communities Demand Improved Power Supply By Jolly Adjevwe, Port Harcourt

he epileptic power supply from Port Harcourt Electricity Distribution Company, PHED, has tilted the company against communities in Etche local government areas of Rivers state. Recently, residents of Umuebulu and Ikwere-Ngwo communities in the local government area halted business activities in the areas with a peaceful protest to press home their demands for improve power supply and end to outrageous billings from PHED. For more than 3 hours of the day, business activities were obstructed as both the entrance and exits gates of the company were locked and customers were turned back. The protesters wielded placards that read: “Billing Without Services is Corruption”, give us prepaid meter or flat rate of N2,000”, “Mr. President proscribe PHED”, we will not pay for darkness”, and PHED 5 minutes on. One week off not acceptable”. According to Gift Amaka, one of the protesters; residents only have power for few days in a month but at

the end of the month a resident occupying just a room could be billed as much as N15,000. This is happening despite the fact that the communities provided transformers, cables, ladders and bought 200 poles for connections done by PHED. Bright Jeremiah, chairman of the group, said meeting arranged by management of the company and representatives of the protesters that lasted for over two and half hours ended in deadlock. “The meeting is inconclusive because our demands were not carefully looked into. We want our bills

to be slashed to N2, 000 per month, release of transformers to us and provision of prepaid meters to address the issue of outrageous bills. But the management said we should pay 50 percent while they look into the extra,” he said Mr. Jonah Iboma, PHED manager of corporate communications, confirmed that the meetings between the management and protesting communities ended in deadlock but efforts are being made to resolve differences between the two parties. Orient Energy Review May, 2016

INTERVIEW

‘In the last 8-10 years we have not added any significant discoveries to our oil and gas reserve, this is very worrisome’ – Omorodion, NAPE President

osa Omorodion, the president of National Association of Petroleum Explorationists, NAPE, is best described by those who know him as a passionate geoscientist, dogged, determine and a goal getter. His experiences in the oil and gas industry has been of immerse benefit to the association as well as the entire industry, a former secretary of the association which is the largest umbrella body of geoscientist. He is also the pioneer Secretary-General/ Treasurer of the American Association of Petroleum Geologist, AAPG, which NAPE is an affiliate. He also represents the African region in the AAPG council. In this interview with Orient Energy Review, Omorodion bares his mind on his vision for NAPE and the Nigerian oil and gas industry.

not match our rate of depletion which is a major concern to me as a geologist, we are producing but we are not replacing it, in the last 8-10 years we have not added any significant discoveries to our oil and gas sector in Nigeria, that is very worrisome. The last major discoveries we had were the deep waters, the Abo, Gbonga and what have you, and we have been producing on average of 2.5 million barrels per day consistently year in year but we are not replacing them, it is worrisome because it will affect out GDP, our ability to borrow, and affects our stator as a major oil and gas producing nation. As a geologist I will tell you that despite the fact that we have been pro-

ould you tell us what are your plans are for NAPE as its new president?

asically my plan won’t be any different; it is to build on the gains that have been made and efforts of my predecessors. Is all about institutionalising professionalism and then using the reality and circumstances of today to equally see how we can position NAPE to continue, not just in relevance but to remain the premium in Africa oil and gas industry. We will continue to provide the platform and forums for cross pollination of ideas, we will continue to promote capacity building within the oil and gas sector, we will continue to draw meeting between governments to make sure we do not kill exploration. What this country has had in the last ten years is that our rate of production does 28

Orient Energy Review May, 2016

ducing

for close to 60 years, the Niger Delta is still under explored. How is the Niger-Delta still under explored? That means that we have not been doing much of exploration, there is still much to be explored in the Niger Delta, and then we are now equally discovering that there is huge gas reserves in the country, which is just the Niger-Delta. Then beyond the Niger-Delta we have other basins as well, the Anambra basins, the Chad basins which are equally under explored, every progress that has been made in the area of exploration is not by sheer planning but by coincidence, accidents or reactions. We started moving from land swamps as a result of community issues, we started encouraging indigenous companies and marginal producers because the big boys were getting tired of continuing to explore small fields and now we are moving towards divestment

INTERVIEW because the big boys are now very uncomfortable with the ‘un-encouraging’ fiscal regime in the country. So they will rather sell off their assets and move on, so there have never been concerted plans by government to say over a period of time that phase 1, 2, 3 has been explored. Peradventure these coincidence and accidents have been working out to the benefit of the industry but no government sits down and see things from that view. The truth is that in terms of exploration we can do more than we are doing, in terms of ability to encourage more fiscal terms we can do better than we are doing, and in terms of government’s intake from this sector it can be better than what we have today. That takes me to the next phase of funding; the industry is at an instalment today because of government’s inadequacy to meet major parts of its cash obligations due to JV. There have been several schools of thought, many have come out to advocate that it doesn’t make sense, it used to be 100 percent then down to 70 but now 60 percent, you hold 60 percent and you are unable to fund it while don’t you divest part of it. Then have huge sum of money that you can plough back to addressing some of the gaps in the local industries or come with a creative funding arrangement that will take into cognisance your fear of lost of control and address the fear of your partner’s financial independence. How do some of these implementations impact on the gas master plan and how does it help with gas issues on ground? The gas is relatively a new market, it is unfolding, and the recent policy of decentralisation has helped a lot. There are lots of gases out there and there are issues that should be addressed from infrastructures to making this gas available to the end consumers. Users need to come up with some form of monetisation scheme whereby you can make money from this gas, and the fact that you now have so many power generating plants out there that have the capacity, like I told you they want gas but they cannot access gas. Why can’t they access the gas? It is because there are no infrastructures to take the gas to them. One of the commendable outcomes of the recent restructuring of the NNPC is the creation of what is called the Nigerian Gas Marketing Company that will go out and source for this gas and help to market them, hopefully with this restructuring some

of these will be addressed. President Mohammed Buhari, during his speech at the CAPE VI congress, mentioned that oil exploration will soon resume in the Chad basin, what does this mean for NAPE? Basically what it means is that it increases the prospect of us finding more hydrocarbons. For a long time the issue of the search for hydrocarbon in the north has been politicised. One thing you should know is that this industry should never be a game; it should not be because A is doing it then automatically B is going to do it. Before you go into any sector there have to be a very good market survey and analysis, in the past not much of that was in place but in the last few years NNPC through NAPE has committed a lot in doing a lot of studies, recording signs and the public folders are now with all these improved solutions to go out there and do more informative drilling. The whole idea is that we want to improve our hydrocarbon reserve base whether oil or gas, if you can get it then go for it. Does it solve the issue of exploration funding? It still has nothing to do with funding because this is 100 percent federal government venture and is FES, Frontier Exploration Services of NAPE. I guess that role has been transferred to RED (the Renewable Energy Division) I think it is a laudable idea, the point is that we need to take the politics out of it, we need to go there as oil finders and not to go there with the pre-notion that simply because there have been some production on the other floor of the Chad Basin then it has to be here as well, so you have to do some very thorough reservoir study to be able to specify if there was a fault in the gap comparing it with being able to establish and match the trough on the other side. Is NAPE involved in this? NAPE is not an exploration and drilling company, it is an association but NAPE members are involved. NAPE members cut across the entire oil and gas value chain. There are NAPE members that work in FES, my vice president is the general manager of FES, he is actually the one pioneering this effort. My treasurer is the deputy manager in FES as well, there are quite a number of members so we have members cut across. NAPE celebrated 40 years last year, what has been the contribution of the association to the development of the oil and gas industry, the study of geosciences, and

contributions towards framing policies in the industry? It’s been 40 years where we have to look back and do some stock taking. It’s been a very eventful 40 years of contributing in no small measure to the growth and evolution of the oil and gas sector in the industry. NAPE membership cut across all cadres, the young geoscientists, the young school leaver undergraduates up to the Chief executives of the big oil and gas companies, we have had past ministers, past Group Managing Directors, a couple of the GEDs today, many GMs and MDs, virtually all the MDs of all the independents are all members of NAPE. By virtue of that it tells you that any resolution we make is bound to impart and be taken by members. But NAPE as an organisation in the last 40 years we have done a lot, not only have we played significant part in helping to promote ideas that find oil, we are actually oil finders, every oil finder in the country is a member of NAPE. We are working assiduously to bridge the gap, identify gaps between the industry and universities, and promoting them. We are working to fill the gap we have seen in the industry in terms of training, we bring this to their door steps, we organise training and capacity building programme both locally and abroad that everybody can have access to and even the IOCs benefits from it. Over and above that we have learnt over the years that as successful oil finder/geoscientist you need to take a little bit steps and look beyond your technical strength. We have gone a little bit further in taking a look at the policies that affects our future and our profession. What do I mean by that? We provide platforms and we come up with communiqués which are marshalled upward for resolution and implementation and by virtue of having members cut across, we try to follow it to its fruition. We work with government in formulating policies, decrees and Acts that have affected this industry. We were the engine room that led to a number of game changing industry’s revolutionary Act like the marginal fields, the gas master plan; we have been playing key parts in all of these in encouraging discussions on pipeline vandalisation and how to address it. In the last NAPE conference, we had complete one or two days dedicated to issues around funding, increasing hydrocarbon reserves in the country and there were discussants from all Orient Energy Review May, 2016

INTERVIEW over putting heads together, those conversations are priceless and what we think we are doing this year is that i just commission an editorial team of NAPE members to work towards delivering what I call a business publication/Compendia that will become a reference and will talk about issues of funding to increasing reserve base, to hydrocarbon accounting and pipe line vandalisation – these issues that will never go away but keep on being reported every day. We are working on publishing a book that will be launched just before the NAPE conference this year. We want to leave our name in the sands of time.

that was first class, then what we are trying to do is to replicate that as well for students. We have this conference organised for students, supported by the industry, delivered for students, if students come in there, we companies see what they exhibit, every company’s HR goes there to see what they will be exhibiting and look out for the best, students come there and they present and deliver papers, we encourage them, we have awards night where we give awards to the best student, we call it a mini conference, it is a 3 days event and this year it will be at the university of Ibadan.

We care about our members; we worry about the well-being of our members, for you to be a first class hydrocarbon finder you need to be healthy. This industry is going through a transition now, we have a work force that is aging rapidly, we have a workforce that is young and upcoming, and we have the middle, so the aging workforce as they retire from their comfort zones, they go back to their private zone. So we want to make available to these individuals some of the things they used to enjoy that make them first class hydrocarbon finders. In that regard, so NAPE will be working with 1 or 2 HMO providers to launch what we call NAPE insurance, and we are going to have various categories for allies’ professions like you journalists and other friends as well. What we are doing is to use our membership of over 7, 000 members to negotiate some very deep premiums, and is available to all, anybody can buy and have access to do the health care.

Ibadan conference is just an event, we do it every year, this year we do mini conference, the following year we do leadership summit which bring many university professors and those in the industry together to define what the issues are and try to see how you can bridge the gap. In also providing assistant on issues around their curriculum, how the university lecturers can become better trained, have access to the newest technology and use the forum to see which working assistant we can provide for them as well in terms of sponsoring the lecturers. So one of the things we are going to be providing as well is that by end of this year we would have identified one university in each geopolitical zone and we endow a cheque in each of those university. We cannot solve the problem of the world, we can only do the bit that we can and hopefully other society can take a clue from that.

Besides keeping them healthy, how do you plan to replace the aging workforce? It is through training, and continuous education programme. How do you integrate the young ones who are trained into the industry? NAPE cannot solve every problem, we can only do what we can to equip people to be able to compete, and we do provide platform for that every year. In June this year, NAPE will pioneer what we call student conference in this country, the first one was held around the year 2000 also in Federal University of Technology, Akure, after that we analysed it, you have attended our conference before, If you thought 30

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Is this conference at Ibadan going to be the kick starter?

Do you have plans to expand what you are doing further? Expand it to where? We are doing that every year; one of the things we are doing this year is to revamp NAPE foundation which is supposed to be a funding dedicated to providing scholarship to identified Nigerians. We already have what we call a NAPE grant where we adopt students from universities and provide scholarships; we are just few individuals, so we would continue to encourage that. We will try and see how we can immortalise some individuals. Is NAPE charting the course for the construction of modular refineries? A major problem basically as a nation is that we need to get our refineries to work. It does not make sense that you are the giant of Africa, you produce oil and you don’t have the refining capacity. One of my most embarrassing moment as a Nigerian was a while back somewhere in the UK when I listened to a conversation to some ministers from some of those African countries saying that they were going to build a refinery and

the target audience was Nigeria. It is a country I don’t want to mention, the country is not an oil producing country but we currently go to that country to refine, and that country saw the need to build a refinery and built some mega refineries targeting Nigeria, that speaks volumes. NNPC have refineries in every geopolitical zone, but they are not producing at their optimum capacity. People have come up with the idea that government should go away from the building of refineries, others have come to say refineries should be commercialised, however, the one that is indispensable is the fact that we need to improve on our refining capacity as a nation, so NAPE has been at the forefront of advocating the need to do this, so we have NAPE members actually the first company moving to own its refineries – Niger-Delta Petroleum Resources, they have their refinery, other companies are taking queue so we have been at the forefront in advocating for that. Modular refineries are some immediate initiatives to address the gap, if actually what i read in the press that Dangote is coming up with a mega refinery as well that will help address the refining capacity, then I think we are taking the right steps in the right direction. Can you tell us more about AAPG and how it relates to NAPE? It is the biggest umbrella body for geologist all over the world. It started several years ago and there are several international local bodies affiliated to it. The concept between AAPG, NAPE and SPE is that SPE have one identity all over the world, you have SPE everywhere in the world except for Angola and Canada. It is only in these two countries that you have AAPG locally. NAPE is a Nigerian need, it is a child of circumstances that was motivated by some senior colleagues that attended SPE meeting, but came back and saw the need to establish a platform where geoscientists can come together and cross pollinate ideas, discuss issues, technologies, policies that affects our practice and our profession. Like I said NAPE is affiliated to AAPG, it is a sister society, we walk hand in hand, we share same mutual goal and objectives that is to imbibe, instil, institutionalise, encourage, and promote professionalism, provide platform and avenue where we can discuss issues of common interest that affects the practice of our profession. And take interest in things around our environment and politics as well because we are beginning to learn fast that for you

INTERVIEW to be a successful geologist you need to be interested in decisions taken around you that affects your practice, well being, and your future. Tell us about NAPE 2016 and what you plan to do differently this year? Then as Director of Independents in Schlumberger, what do you think our local content Act has achieved so far? We promise to build on the gains of last year in this year’s conference, so this year we are looking at ‘the current realities in the oil and gas industry, today’s situation demand that you look at how you do stuff and if there is need for you to adjust. So that is the theme for this year. On the other side, my role was pioneer GM for Nigerian content for Slumberger company in West Africa so let me put your answer in one word, the nation cannot

restitute for the so called negligence of the past 16 years in 1 or 2 years. The Nigerian Content Act is one of the laudable and one of the game- changing Act and best thing to happen in this country but the overzealousness with which the regulatory body try to go and enforce get really worrisome, there are quite some portion of the Nigerian content Acts that its interpretation needs to be tested, right now is Act the whips and caprices of its interpretation, so until it is tested to see the true interpretation we will continue to be in such situation. It is one of the good things to happen to the country, it has opened the doors for more Nigerians to come into the oil and gas industry. My only regret is that it has also opened a sense of entitlements for some Nigerians who think ‘it’s my right, everything should be mine’. What that means is that it has killed the zeal of some Nigerians to go out and compete; but am a proponent of the Nigerian content Act, we need it.

Modular refineries are some immediate initiatives to address the gap, if actually what I read in the press that Dangote is coming up with a mega refinery as well that will help address the refining capacity, then I think we are taking the right steps in the right direction.

GHANA REPORTS

Ghana Gets Exciting As TEN Project Comes On Stream

By Gilbert Boyefio The exciting word on the mouth of many players in the oil and gas sector in Ghana today is the TEN project, which is expected to come on stream in August 2016. The project is currently on course with the FPSO Prof John Evans Attah Mills, which is named after the late President of Ghana, undergoing installation for hook up to the TEN field and later commissioning. This process is expected to be completed in four months time when first oil is expected. The TEN field lies just 20 kilometres from the Jubilee field. It is also operated by Tullow. The project takes its name from the three offshore fields under development – Tweneboa, Enyenra and Ntomme –which are situated in the Deepwater Tano block, around 60 kilometres offshore Western Ghana. The TEN Plan of Development was approved by the Government of Ghana in May 2013, and by mid 2015 the project was over 65% complete. All 10 pre-first oil wells were drilled ahead of schedule. For players in the industry, one of the major reasons why the TEN project excite them is the fact that the project has progress despite the fall in crude oil prices on the international market, which has affected a lot of projects all over the world. Many planned projects in the upstream sector in a lot of countries have been put on hold. The good news about TEN is that the operators in spite of the current market down turn continued

with their commitment to carry on with the project. “In fact the scope was rather changed by the operator to ensure that Ghana take advantage of the fall in the cost of construction, installations and other allied services. The other thing about the TEN project is that it has added on to the number of fields Ghana is currently producing from. This changes Ghana’s status from a single field producer,” Mr. Kwaku Boateng, Director of Special Services, Petroleum Commission, said. According to Charles Darku, Tullow Ghana General Manager, “The TEN Project is of huge strategic importance to both Ghana and Tullow, so it is pleasing to see it making good progress towards first oil in mid-2016.” So far, since the installation and tie-in of the FPSO Prof John Evans Attah Mills to the TEN field started about a month ago, there has not been any reported incident; it has been running smooth. “It is our anticipation that the few months ahead to complete the process will be incident free. But since this is a very technical engineering work that is being undertaken, there can be so many unanticipated challenges such as natural challenges among others,” Mr. Boateng hoped. Local content According to Tullow, the TEN Project is committed to maximising opportunities for Ghanaian businesses, and all major contractors were required to submit local content plans in their tenders. The TEN Project has built on the achievements of the Jubilee development to increase the amount of work undertaken in-country and achieve a

number for firsts for Ghana. TEN is Ghana’s first oil and gas project where important FPSO components have been fabricated in-country. The FPSO’s module support stools, which attach modules to the deck of the vessel, were fabricated in Tema and Takoradi by indigenous Ghanaian firms, Seaweld Engineering Ltd and Orsam Ltd. The FPSO’s nine suction piles, which will anchor the vessel to the seabed, are being fabricated at a new facility in Sekondi, in Ghana. Vital subsea production equipment is also being fabricated in Ghana. Harlequin International Ghana Ltd is making the subsea mud mats, and Subsea7 has constructed a new fabrication base in Sekondi where it is fabricating anchor piles for the subsea manifolds. The subsea christmas trees for the project will be assembled and tested by FMC Technologies at their state-of-the-art facility in Takoradi. In addition, Hydra Offshore Group is supplying Ghanaian engineers for the project. Hydra Offshore Group is a Ghanaian-owned offshore and subsea engineering services company. The group, which was founded two years ago, has been engaged by TEN Project engineering services contractor, Wood Group Kenny, to provide engineers for the development. Ghanaian engineers from Hydra are now working with Wood Group Kenny in their London and Houston offices, enabling the knowledge transfer that will see Hydra engineers working on all stages of the TEN Project. Harlequin International Ghana Ltd has been engaged by TEN Project subsea contractor FMC Technologies to manufacture subsea mud mats for the development. The mud mats will sit on the seabed in the TEN fields, supporting subsea production equipment. Following the award of the TEN Project contract, Harlequin has opened a new fabrication base in Takoradi to supplement its modern workshop facility in Tema. The award of the contract has also enabled Harlequin to send some of its staff to South Africa to gain internationally recognised welding qualifications. “I am delighted that the TEN Project remains on track and is delivering benefits to Ghana. I visited the FPSO last year and it was fantastic to see Orient Energy Review May, 2016

GHANA REPORTS components made in Ghana installed on the deck of the vessel. I was also able to meet three employees of the Ghana National Petroleum Corporation who are on secondment in Singapore, learning how the vessel will operate. Earlier this year I was able to see for myself the capacity building that is ongoing when I visited the new fabrication facilities in Sekondi-Takoradi and I am optimistic for the future of our young oil industry in Ghana,” Hon Emmanuel Armah-Kofi Buah, Minister for Petroleum. “In terms of employment with TEN, we had an extensive discussion with Tullow whereby we review all the expatriate positions that are needed on the TEN FPSO and we would look at the ones that we think we have in-country capacity to be occupied by Ghanaians. Those that we do not have the in-country capacity and therefore has to be occupied by expatriate in the interim, we agree on a comprehensive succession plan and training program to develop Ghanaian capacity to fill that position,” Mr. Boateng indicated. Tema Shipyard As part of plans to maximize local content and in-country spend, the Petroleum Commission has been eyeing the Tema Dry Dock to see how to rehabilitate the place which has been left to deteriorate for use again. During the Jubilee FPSO construction there was an attempt by Tullow to find out what aspect of the fabrication work can be done at the shipyard. Unfortunately, this move was misunderstood by the workers at the shipyard due to lack of communication on the matter, and eventually led to the abandoning of the idea. According to Mr. Boateng, the strategic positioning of the shipyard is very crucial to the growing oil and gas industry. “If revamp the shipyard can be used for ship repairs, FPSO repairs and even later for vessel construction. Last year we started engaging the Tema Dry Dock as to how we can rehabilitate the shipyard, especially to benefit from the OCTP development. The shipyard does not have the resources to undertake the rehabilitation on their own. We need to raise those funds from the public or private sector. It later came to our notice that the Ministry of Transport is also trying to revamp the place through a public private sector partnership. We have been informed that there is a tender made by various companies to that effect.” 34

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Available figures indicates that between 2010 and 2015 out of over US$7.5billion of contracts awarded, more than US$1billion went to indigenous Ghanaian companies. And in the last year alone of the total contracts awarded, 22% went to indigenous Ghanaian companies through the supply chain. In terms of employment, the Petroleum Commission says localization is around 72%. “We are very confident that in subsequent development we would achieve greater success rate than this,” Mr. Boateng said. More opportunities abound The opportunities in Ghana’s oil and gas industry abound. As the TEN field is set to come on stream, the OCTP development is expected to start earnestly. It is also anticipated that that the HES development will also follows after the OCTP. Currently there is an ongoing discussion among the Jubilee partners for the Great-

er Jubilee development. Tullow is working on the Plan of Development (PoD). GNPC is earnestly working on opening up the country’s onshore basin, the voltarian basin, which is the largest of all the sedimentary basins in Ghana and covers almost third of the land in the country. GNPC is in the last stages of getting some companies to come in to collect seismic data. “All these present great investment opportunities for International Oil Companies, Service Providers and indigenous Ghanaian companies,”

The BOGA Theory: Finding African Solutions to African Problems By Gilbert Boyefio

he need for Africa to find locally tailored solutions for the continents many challenges was the focus at the just concluded second edition of the Sub Saharan Africa Upstream Oil and Gas Summit and Exhibition in Accra, Ghana. The conference which was on the tagged, “Unlocking potentials in Sub Sahara Africa oil and gas” brought together key industry players from across Africa and beyond. “Until Africa domesticates strategies that have been adopted abroad in the Americas and Europe to dominate Africa, till we domesticate these ideas back home we will be subjecting ourselves to the whims and caprices of the multi nationals. We all know what Wall Street is. Wall Street is a major shareholder in all the big companies in the world. If Wall Street crashes today a lot of economies all over the world, especially in Africa, are going to crush. We do not have to allow that to happen. We need to have shock absorbers and that is why I came up with the BOGA theory”, said Dr. Anthony F Dowell Mirin, Executive Director, Deeptechnical International. BOGA stands for Bank for Oil and Gas Africa. The BOGA concept is to open up bespoke globally acceptable strategy for Sub-Sahara

African Oil and Gas Project Financing Industry, with aims in support the building of a huge Oil and Gas Bank Financial Institution, as BOGA (Bank of Oil and Gas Africa) for handling Oil and Gas based Infrastructures, Energy, Technology and base Project Financing in Sub-Sahara Africa. The BOGA initiative strategy and framework is tailored to gainer support from prospective African energy producing countries and others. The Strategy aims at also enumerating the anathema of financial success of the Asian Giants, the Middle East Giant, the IMF and the OECD Country Financial Strategy, as against the Sub Sahara Africa Oil and Gas Financial Prowess. The BOGA Strategy and Framework is engineered to stimulating Bespoke Single-Window Financial and Investment Framework Sustainability, and Regional Dominance. The BOGA Financial Theory and the African Oil and Gas Developing Nations, currently needs a clinical inside out solution in developing and financing key and relevant onshore, offshore and Deep offshore energy Infrastructures, using inside out financing from collation of African investing nations and investing corporate organizations.

GHANA REPORTS The BOGA Bank theory as strategy is conceived to represent the first oil and bank Single-Window Investment Bank for multilateral energy development in 21st century financial world. The Strategy aims at developing frameworks for a participatory “Sub-Sahara African Country” participating process, for founding members. It is also focused to enumerating the framework and strategy implementation for Africa. “The papers discuss the strategy for Oil and Gas producing nations in Africa participatory structure and lean, with a small efficient management team and highly skilled management system. The paper marries the Asian AIIB (Asian International Investment Bank) frameworks, strategy, structure and major benefit to the Asian country and global industrialist nations. The BOGA Theory for Africa strategy is tailored to be a modern knowledge-based institution by framework, focusing on developing infrastructure, easing financial constraints, increasing and other productive energy sectors in Africa including power, transportation and telecommunications, and cross country logistics, within Sub-Sahara Africa, etc,” Mr. Mirin enumerated. Critically, the BOGA strategy opens up a global door for Africa partnership, with other developed nations in areas of Oil and Gas, Energy, Power, and Cross Country Logistics Infrastructure development. In addition to tradition to other financial source for Africa countries the BOGA Investment Bank creates a financing techniques, for fund sourcing, infrastructure project base implementation, PPP (Public Private Partnership) and NTNP (Nation to Nation Partnership) through new financial structuring offers from the BOGA Investment Banking which allows and ensures sufficient and efficient funding for oil and gas projects. According to Mr. Mirin, “If Ghana wants to build a refinery, it can approach Nigeria to give it the needed qualified human resource and pay Nigeria for its services in crude or cash. You and I know that the cost for Nigeria’s human resource and that of a foreign human resource from the UK or other European Country are not going to be the same. Africa has a lot of seasoned and well qualified craftsmen. We need to come together as a continent to patronize

each other’s products and services. Whether we like it or not, truth be told, it is high time we stop being an appendage to our colonial fathers. We have long gone beyond that period of colonialism. Where we are now is the level we need to display what we have. We have all the resources to succeed on our own. The BOGA concept is going to support a lot of infrastructure growth in Africa. It is going to enable so many companies in Africa to grow fast because the lending rate is going to be at a single digit.” He however acknowledges that the success of the BOGA theory largely depend on the buy in of African leaders and therefore challenged them to “Stand up and do their job because it is not a luxury to be a leader.” On his part, Adesola Adebawo, Maneger-Communications Policy, Government and Public Affairs, Chevron Nigeria-Mid Africa Strategic Business Unit, indicated that “Africa is one of the richest continents in the world with vast potential mineral deposit. The opportunities to exploit these minerals exist and therefore it is time for Africa to wake to its full potential. We should not only exploit these minerals and let others take it away as raw material but we should add value to these resources and then let the rest buy from us value added products rather than just allow our resources to be taken away and we buy it back in expensive value from those who obtained it cheaply from us.” He pointed out that there are best practices as to how to efficiently manage ones resources. “There are countries that have exploited their resources and have made mistakes and successes that the rest of Sub Sahara Africa can learn from. From the presentations we have received from this conference it is obvious that we do not have to make the same mistakes before we learn from it. Sharing Chevrons experience in building strong partnership with the communities in which they operate at the conference, Mr. Adebawo noted that “Chevron is a conscientious busy organization which means that we are a company that seeks to be admired for our people partnership and performance. What we have presented in this conference is the product of that value. We work with people and our concern for the people around our areas of operations makes us work with them as partners rather than beneficiaries of our goodwill. We gain more in collaboration than in competition. Collaboration for development will always deliver value to all parties and every segment of stakeholders, as against competition. When we competes we talk passes

each other but when we collaborate we engage.” Speaking on the theme “Preparing for the Challenges of changing times”, His Royal Majesty Oba Michael Adedotun Gbadebo, the Alake of Egbaland, noted that the summit provides a unique platform for African oil and gas key decision makers to discuss recent developments, opportunities, challenges and embrace innovative solutions, fresh ideas and best in class strategies to improve on overall business performance and investment. “This year, we are focusing on the emerging issues, recent development affecting the oil and gas sector and the way forward, especially with the current pricing level of crude in the international market. Efforts have been made to draw speakers from different parts of Africa to share their peculiar experiences. We cannot afford to lose to the current challenges facing the oil and gas sector. We have to be prepared for better tomorrow as we believe the future is bright for all stakeholders,” he observed. Hilary Joseph Akpan, General Manager, National Petroleum Investment Management Services (NAPIMS) was full of praise for the organizers of the conference. “I am very impressed that we can do this locally at our level. We have been attending other events organized by expatriates for some time now. I am very impressed and look forward to the next event. Africa has a great potential to diversify it natural resources, but unfortunately the continent over focuses on crude oil; especially in this dwindling oil prices. If you stake your revenue base on just oil you will be disappointed. So it is very good that Africa look at other options. This conference focused on integration, resource sharing, cost management and efficiency in operations. This conference is very relevant especially during this time of falling crude oil prices. We need to focus more on gas because as a continent we need more gas to power our industries to create jobs. Gas should be at the forefront of our development drive. Over the years Africa has not done well with crude oil. We only sell it as a commodity. It is about time we start adding value to our crude to generate more revenue to develop our continent.” Orient Energy Review May, 2016

GHANA REPORTS

The GMOU - Chevrons’ strategy to mitigate conflict amongst host communities

ilitancy activities in the oil rich Niger Delta region in Nigeria have been raging on for decades now. The militants claim to expose exploitation and oppression of the people of the Niger Delta and devastation of the natural environment by public-private partnerships between the Federal Government of Nigeria and corporations involved in the production of oil in the Niger Delta. They insist that local people had not gained from the riches under the ground and the region’s creeks and swamps. However, according to a report by Protection Group International (PGI), sabotaging of oil installations, theft of oil from pipelines and bombings of onshore oil facilities has decreased drastically. This could be attributed to the strong stance taken by the Nigerian Government and the willingness of the International Oil Companies (IOCs) to work together with the people to find lasting solution to this age long problem. Since October 2015 there has been a notable increase in recorded kidnappings at sea in the Gulf of Guinea, as regional militant gangs move away from oil theft as their preferred source of revenue. According to PGI, since mid-January there has been a notable uptick in reported incidents of piracy in the Gulf of Guinea, with many of the incidents involving the kidnap of crew. PGI recorded four attacks on ships at sea that involved successful kidnappings in January, compared to one per month from October to December 2015. During the same period (October 2015 - February 2016) there were no major oil cargo thefts, in what represents a continuation of a long-term decline in hijackings for the purposes of oil theft in the Gulf of Guinea over the past 18 months. So in effect, though the militancy activities in the region seem to be on the ascendency, the focus and target has shifted from the oil and gas industry. So the question is what is causing this new change? In an exclusive interview with Orient Energy Review, Adesola Adebawo, Manager-Communications Policy, Government and Public Affairs, Chevron Nigeria-Mid Africa Strategic Business Unit, explained that the community people are less antagonizing when there is transparency and accountability.

Orient Energy Review May, 2016

He noted that community engagement thrives on the bases of conflict mitigation through grievance management; it thrives on the bases of capacity building for investment in local businesses, local content and peace building. “So we thought it is important to move away from the mentality of entitlement and benefits into partnership were everybody brings value to the table and derive value from the relationship. This is what we are selling to the rest of Sub Sahara Africa. When you make people partners they become part of your business and not we versus them. It rather becomes “Us together everybody wins”. Development is more sustainable that way. Also another principle that has worked in our experience successfully is the participatory partnership were those who benefit from development programs are themselves in the driving seat. That brings sense of ownership and sustainability,” Mr. Adebawo observed. According to him, when people competes they talk passes each other but when they collaborate, they engage. The result Chevron has achieved now is monumental. Within the last ten years (2005-2015) since the deployment of the new paradigm for community engagement and development, Chevron has spent over US$100million in social investment in communities around its operations. This has benefitted over 600,000 people in over 400 communities. These are social investment in the areas of health, education and economic development. These are huge result, awesome outcomes that are driven by a sense of partnership between community stakeholders and Chevron. This experience is hinged on the Global Memorandum of Understanding (GMoU) – the participatory community-driven development model pioneered by the NNPC and Chevron Joint Venture in 2005. Prior to the introduction of the GMOU in 2005, the NNPC and Chevron Joint Venture were dealing with multiple individual communities on development issues. MoUs were signed separately with various neighboring

communities However, the communities did not really own projects – they were referred to as “Chevron projects”. But with the GMoU, the communities now own their own development process. Projects and programs are scoped, budgeted for and funded by Chevron and NNPC as part of the Joint Venture (JV) expectations for social investment in communities where CNL operates. The GMOUs are highly regarded by the communities and state governments. Stakeholders have suggested this approach for use in other areas. The GMOU model involves a broad set of communities with homogenous ethnic affiliations. Originally eight Regional Development Committees (RDCs) with strong governance and accountability processes – now reduced to five RDCs following asset divestments. Participatory partnerships with multiple stakeholders, Ministry of Niger Delta Affairs, States and Local governments, Niger Delta Development Commission (NDDC), NGOs, Community empowerment and ownership of projects. According to Mr. Adebawo, Chevron has been practicing community involvement in their business before the Nigerian Local Content Act 2010 came into existence, noting that, “For us the involvement of local businesses in what we do is not just compliance with the law but it is our core business principle. And we would recommend that to any player also.” The next phase of the GMoU is to help the people to develop the ability to manage businesses, explore opportunities to derive value from the environment. It also involved sourcing third party partnership outside Chevron. This will enable the community to engage independent development funds and partner for projects with or without Chevron.

LOGISTICS/ MARITIME

NLNG in Fresh Bid to Settle Tax Dispute with NIMASA T

here are fresh plans to settle the tax dispute between the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigeria Liquefied Natural Gas Limited (NLNG). The issue has lingered since 2013. NLNG Managing Director/Chief Executive Officer, Babs Omotowa told journalists that the company plans to urge the Transportation Minister Rotimi Amaechi and NIMASA Director-General Dakuku Peterside to engage the lawyers handling the case to fast-track it so that the court will give its judgment and end the feud. “We have met with the Minister of Transportation, Rotimi Amaechi and explained the situation to him. He was keen to see how he can work and get NIMASA to work with us to get the case resolved because for us, the more important thing is to resolve the case. “Whatever the court says will stand. If the court says we are right, we do it, and if it says we are wrong, so be it but at least let there be a legal decision on it. “Amaechi was supportive of trying to work with us to be able to get the lawyers to let the case be heard and that way it will be followed up. Now that there is a new director-general in NIMASA, we plan to meet with him and the minister to get all the lawyers to let the case be heard and not just continue to linger,” Babs Omotowa

said. NLNG and NIMASA had been locked in legal battle since 2013 over the issue of non-payment of certain statutory levies and charges which NIMASA claims are due to it from the NLNG. NIMASA wants to be collecting the three per cent of gross freight earnings or any other sums further to section 15(a) of NIMASA Act 2007 on all of NLNG’s international inbound or outbound cargo ships. The NLNG (fiscal incentives, guarantees and assurances) Act gave a pioneer status to the Company and Section 2 gave it a tax relief period of 10 years. As stated, “Notwithstanding the provisions of section 10 of the Industrial Development (Income Tax Relief) Act, the tax relief period of the company shall commence on the production day of the company and shall continue for a period of 10 year. However, the tax relief period shall terminate when the cumulative average sales price of liquefied natural gas reaches $3 per Million Metric British Thermal Units as calculated in the First Schedule to this Act in accordance with which such calculation shall only be made annually at each anniversary date.” The NLNG Act further states, “Without prejudice to any other provision contained herein, neither the Company nor its shareholders in their capacity as shareholders in the Company, shall in any way be subject to new laws, regulations, taxes, duties, imposts or charges of whatever nature which are not applicable generally to companies incorporated in Nigeria or to shareholders in companies incorporated in Nigeria.”

The Act establishing NIMASA – that is NIMASA Act 17 of 2007 merged the National Maritime Authority and the Joint Maritime Labour Industrial Council (JOMALIC). Section 2 (1) of the Act states: “This Act shall apply to ships, small ships and crafts registered in Nigeria and extend to ships, small ships and crafts flying a foreign flag in the exclusive economic zone, territorial and inland seas, inland waterways and in the ports of the Federal Republic of Nigeria. But it further said that, “This Act does not extend to warships and military patrol ships,” which are the only ships exempted from NIMASA’s jurisdiction. On funding of NIMASA, the Act provides that the organisation “shall be funded by monies accruing to it from three per cent of gross freight on all international inbound and outbound cargo from ships or shipping companies operating in Nigeria among others.”

Nigeria Cannot Be a Dumping Ground for Vessels, Says NIMASA

he Director General of Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku

Peterside has reiterated Nigeria’s commitment to continue to set high standards for vessels and oil platforms operating within Nigeria’s territorial waters in line with the Safety of Life at Sea (SOLAS) convention. Peterside said this during an engagement he had with officials of the American Bureau of Shipping (ABS) Asia Pacific region led by Derek Novak in Singapore. He said Nigeria cannot be a dumping ground for substandard vessels and therefore solicited the support and cooperation of classification societies to establish and maintain high technical standards for construction and maintenance of vessels and other maritime structures. He said the maritime sector, which is the facilitator of the national economy in Nigeria, is growing at a rapid rate and therefore needs all the support it can get.

He advocated regular ship survey to ensure compliance with set standards and assured the delegation that it is one of the priorities of the new administration in NIMASA. Novak said ABS has been working with Nigeria for a long time and that the organisation would continue to maintain high standards for which the ABS is known. He promised to work with his counterpart in West and Central Africa so that NIMASA can benefit from some of the training opportunities ABS offers. Novak expressed optimism that Nigeria is properly positioned to emerge as the shipping powerhouse of West and Central Africa if the country puts its house in order and build on its infrastructural and human capacity. He also identified Singapore as a great maritime nation from which Nigeria should seek closer ties. Orient Energy Review May, 2016

LOGISTICS/ MARITIME

Nigerian Ports Are Very Competitive, Only Smugglers Import Through Cotonou - Abdullahi By Pita Ochai

allam Habib Abdullahi, the Managing Director of Nigerian Ports Authority (NPA), has declared the nation’s port concession exercise executed in 2006 by the Federal Government and private terminal operators, otherwise known as concessionaires, as a huge success. He also said that Nigerian ports are highly competitive, describing those who prefer to import through neighbouring Cotonou port as “smugglers” who are trying to evade government’s import policy or short-change the

nation of its legitimate revenues. He said, “Those who are importing through Cotonou are simply smuggling. It is ridiculous. People are complaining that this port is congested which means there is a lot of business. And at the same time, there are other factors that work against bringing in goods through the country. “The economy itself encourages smuggling. People smuggle because of some of the economic policies. Some people say that the port is expensive but compare it with other places in the world. People do not even know how much it costs to import. But people are just

SON DG Begs FG to Return to Ports; Needs 10,000 Staff To Execute Mandate

aul Angya, the Acting Director-General, Standards Organisation of Nigeria (SON), has appealed to the Federal Government to return the agency to the seaport to stop importation of sub-standard goods into the country. The former Minister of Finance, Ngozi Okonjo Iweala had in 2011 sacked about nine agencies including SON from the port. According to Angya, there is need for SON officials to be at the port as it would go a long way in minimizing the importation of substandard goods. He said the Minister of Trade and Investment, Okechukwu Enelemah had directed the agency to work towards reducing the spate of sub-standard products into the country. “The problem of substandard products is so alarming that it is diverting government priority from present challenges and there is need to

Orient Energy Review May, 2016

stem the tide and the only way to do that is to speak the truth to ourselves,” he said He noted that the Standard Organisation of Nigeria Conformity Assessment Programme (SONCAP) certificate programme put in place to regularise the standard of importation of goods is being abused by importers. He warned that any importer who imports without SONCAP certification by July 2016 would be charged for a fine of 20 per cent of the value of goods imported, adding that even if the goods had been cleared by the importer, SON would go after such goods, destroy it and charge the importer for the destruction. “All stakeholders involved in the importation of SON regulated products should go back to certifying their products offshore before bringing them in. “The SONCAP certification of your product before imports has advantage for your business and national economy at large. “You are assured of the quality of the goods you are importing and you will also give the consumers of your goods value for their money,” he said. Angya said the agency would need additional 10,000 staff to fight substandard products in the country. He said that if more staff were employed, they would be able to go far places in the country to check substandard products. “We have just 1,500 staff at hand and there is no how they can cover the market places in the country. “It was recommended in 1993 by government officials that SON needed 10, 000 staff for its operations,” he said.

peddling rumours that it is cheaper to import through Cotonou ports. “But it is actually because it is cheaper to smuggle goods through the Cotonou ports as they dodge the fee they are supposed to pay. So the issue is not necessarily what people think. Our port is relatively competitive and if you ask the terminal operators, a lot of people are making money; otherwise there would not be so many applications for people wanting to set up the seaports in Nigeria. So it is not because the other ports are cheaper, but smuggling is going on but I think with the seriousness of Customs now, all that will change very soon.” Abdullahi said port concession has affected NPA revenue positively, over the past ten years. “The port operation has become more efficient and we are assigned to take our own kind of responsibilities. The volume has increased; the concessionaires themselves now have to go out to look for market, which increase the volume of business. “If you compare all that to our annual report, for instance at 7 and 6 percent or 7 and 5 percent, and what we have earned between 7 and 15 percent, the difference is clear. I have said it everywhere that when people say that the concession is not working, it is not a success; I disagree with them. The port concession is a success and I think there are challenges which I believe could be much better,” he stated. He said current Central Bank of Nigeria (CBN) foreign exchange policy, which restricts access to forex by importers of some select 41 items, has affected volumes handled at the port. Abdullahi said, “The maritime sector is dependent on import and export of goods. So definitely, there is less business now in the ports. Less business means less revenue for us. That in itself is a very big challenge.”

LOCAL CONTENT

Support, Don’t Suppress Indigenous Businesses, Operators Advice FG, Lawmakers

takeholders in the Nigeria oil and gas industry have advised the Federal Government and lawmakers to encourage indigenous businesses and enable them thrive, as these are one of the numerous ways that would help drive increased indigenous participation in the industry and also help attain the goals of the Local Content initiative. Speaking at the just concluded Nigerian Content Workshop in Calabar, Mr. Dada Thomas, Chief Executive Officer, Frontier Oil, said the Federal Government and the National Assembly must do everything within their powers to unlock the ease of doing business in Nigeria. According to him, Nigeria is rated below Egypt and South Africa in terms of ease of doing business, adding that in actual fact; Nigeria is one of the worst countries in terms of the ease of doing business in the world. He said, “We have to do something about that, because money has choice. We don’t have to fool ourselves that Nigeria is the haven for investors; it isn’t. The man who owns the cash has the choice of deciding where he has to put his cash to work. And if we don’t make it easier for investment to come here and flourish then we will have a real problem with truly unlocking the Nigerian economy.” Also speaking, Mr. Tonye Cole, Executive Director, Sahara Group, said businesses in Nigeria are capable of achieving great success, if they trust themselves enough to recognize that if they add and combine their entrepreneurial spirit and intellectual capacity, they can actually achieve a lot. He, however called on the authorities not to stifle entrepreneurs, stating that do so amounts to killing their opportunity to create jobs. “Do not stifle them, encourage them. Do not begrudge them because they make money. That is what they do. They are creators of wealth that is what they do. They make money and make profit as well,” he pleaded. He said efforts should be made the authorities to encourage investors to interact with them in area of policies, since the businesses are the implementers of such policies.

According to him, don’t begrudge them, even when they see in the policies that exist, that there are new ways to make it better. He said, “It is another thing that they do. It is called innovation. Innovate and then a policy and law can come afterwards, it happens. It doesn’t mean you have played pranks. Allow innovation, embrace it. “Finally, don’t berate them for testing policies and questioning areas that hamper their businesses. They are the implementers of every policy that you make. Please do not berate them for it. We will question, we will test polices; if it doesn’t work we will tell you it is not working. If you insist that it must stay, then we will go into stagnation. They are the implementers of every policy that concerns our sector. “Right now we are at unprecedented times. But in these times, we have one of the best windows that is available to us as Nigerians to craft a success story for our nation. Why? Most people are lamenting about the state of the economy, most people know that we are in a crisis, but in every crisis, there are most people that rise up and become heroes. It is not everybody that comes out in every crisis. “Because of this tough economic situation, we have one thing, low oil price, no money, and corruption in the system, but it has led to one thing, for the first time in a long while, I’m actually seeing governments that are sitting down and are willing to listen, coming and saying where do we find solutions? In the past, it never used to happen. We just sit down and something would hit us, then we start fighting afterwards. Now they are listening. “Senators here today that have created this, is a testament of that fact that we are interacting, we are listening, we are speaking, we are able to tell where the problems are and hopefully, we will see that by saying so, there is a reaction to what ensure that those things that we say are problems, that we have a solution, because

you are the ones that makes the laws and create the policies that we help implement. “By the actions we take today, we can either be at the forefront of ushering a better Nigeria that would thrive on the strength of its people, or we can just remain victims. We can endlessly complain about how unfair live is or we can continue to wait for someone somewhere, that messiah somewhere that would come and save us. The choice is ultimately yours and mine.” Speaking in the same vein, Gershom Bassey, Senator Representing Cross River State, said the National Assembly is focused on ensuring that more people participate in the Nigerian oil and gas industry essentially and also highlight the issues concerning the non-participation of indigenes in the oil and gas industry and domestication of the oil and gas industry in Nigeria. According to him, for 60 years since we discovered oil and gas in Nigeria, we are still less than 10 per cent local content participation. H, however, stated that increased indigenous participation is not something that happens over night, adding that since the National Assembly passed the local content law in 2010, it has become a catalyst or a springboard for indigenes to participate more fully in the sector. Continuing, he said, “We need ramp it up; we need to get to 20, 30, 40, 50 per cent; like most countries have over 50 per cent local content participation, we need to get there. Nothing is perfect. We think that the law that we have, first should be enforced. That law is not been enforced and followed as intended. The first thing is to ensure compliance, after that we can tweak the law where we see grey areas. For now, I think compliance is the first thing.” Orient Energy Review May, 2016

LOCAL CONTENT

Nigeria Drilled Highest Number Of Exploration Wells In 1967 – PETAN • No new addition of reserves in over 10 years

Bank- Anthony Okoroafor

he new Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Bank-Anthony Okoroafor has raised the alarm on the depleting crude oil reserves in Nigeria, saying that no new addition was recorded in the last 10 years, while the country drilled the highest number of exploration wells as far back as 1967. Okoroafor told journalists in Lagos recently that over the years, reserves target was set without commensurate actions to encourage exploration.

“The Federal Government should encourage more oil exploration activities, so that what happened to us with the refineries will not happen with oil production as well. We had four refineries and we failed to maintain them as and when due until they gave up,” Okoroafor explained. “For every volume of crude produced, Nigeria should set aside some quantity to build our reserves. Nigeria will benefit more from this when oil prices rise again as they will surely do in the future,” he added. With the current slump in crude oil prices, Okoroafor said the time was ripe for aggressive exploratory activities to be encouraged adding that about 77 exploratory wells were drilled in 1967, while only less than 20 were drilled in the last 10 years. According to him, if the country had continued with the aggressive exploratory activities of 1967, the federal government would have achieved more than the four million barrels daily and 40 billion reserves targets set in 2010, which are yet to be achieved in 2016. Okoroafor charged the government to encourage more investments in oil explo-

ration activities so that the country’s production and reserves targets would not be unrealisable like the local refining target. Okoroafor said for this to be achieved, the fiscal regime should be stablised and uncertainty removed to guarantee the future of investments. He noted that the fiscal regime was the most contentious issue that stalled the passage of the previous versions of the Petroleum Industry Bill (PIB). The newly-elected PETAN chairman stressed that to achieve the desired fiscal stability that would incentivise investments; the government should pay off joint venture cash calls, and also make it a first line charge. Okoroafor argued that the federal government should create an environment that would attract foreign direct investment, stressing that “investment money now has choices because it can be taken to any country; even in Africa, practically every country has found oil”. Nigeria’s depleting reserves addition has been hinged on lack of exploration activities due to the uncertainty created by the non-passage of PIB. The administration of former President Olusegun Obasanjo had set a production target of four million barrels per day and reserves of 40 billion barrels by 2010 but these were not achieved. Sweet Crude Reports

NCDMB, IOCs Endorse LADOL’s Integration Facility By Margaret Nongo-Okojokwu

fficials of the Nigerian Content Development and Monitoring Board, (NCDMB) and international operating companies have endorsed the vessel fabrication and integration facility being set up by the Lagos Deep Offshore Logistics Company (LADOL) and Samsung Heavy Industry (SHI) with a promise to support the facility. A delegation led by the Acting Executive Secretary of NCDMB, Mr. Patrick Daziba Obah in company with Nigerian Content General Managers of the international oil companies and other stakeholders of the oil and gas industry recently toured the facilities of LADOL which is located in Apapa, Lagos State. Welcoming the delegation, Chairman of LADOL, Mr. Ladi Jadesimi explained that LADOL and SHI formed a joint venture named SHI-MCI Free Zone Enterprise and were investing in the first deep water fabrication and integration yard in Africa. The facility will be used primarily for the Egina Floating Production Storage and Offloading Vessel project.

Orient Energy Review May, 2016

According to him, the facility which would gulp about $300 million (about N51 billion) has a quay length of approximately 520 meters, depth of 13.5 meters and heavy lifting area of 5,000 metric tons. It also has a total area space of 121,000 square meters consisting of an assembling area, a painting shop, utility and warehouse area with a production capacity of 10, 000 metric tons. The company had also accessed a loan of $15m from the Nigerian Content Development Fund (NCDF) in furtherance of the project. Speaking further, Mr. Jadesimi expressed satisfaction that the project would contribute significantly to the advancement of Nigerian Content and generate 50,000 direct and indirect jobs in Nigeria. In his remarks, the Acting Executive Secretary of NCDMB, Mr. Patrick Daziba Obah explained that the visit was geared to get Nigerian Content managers appreciate the investment made by SHI-MCI

Free Zone Enterprise, noting that the Board was insisting on the domiciliation of industry work scopes and extracting legacies from major projects, adding that the vessel fabrication and integration facility was the culmination of the Board’s efforts. In their separate comments, the Nigerian Content General Managers commended LADOL and SHI for the strides they had recorded, pledging to support the facility.

L-R: Managing Director of Samsung Nigeria, Wang Kim; Executive Chairman, Lagos Deep Offshore Logistics Base (LADOL), Mr. Ladi Jadesimi; Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Patrick Obah and the Deputy Managing Director of Total Nigeria, Engr, Musa Kida when a team of the NCDMB and international oil companies visited the Egina FPSO project site at LADOL base in Apapa, Lagos.

LOCAL CONTENT

Oil Price Slump Frustrating Attainment Of NOGICD Objectives — Shell

anaging Director of the SPDC and Country Chair, Shell Companies, Nigeria, Mr. Osagie Okunbor, has disclosed that the attainment of the objectives of the Nigerian Oil and Gas Industry Content Development Act (NOGICD) is currently been frustrated by the decline in the prices of crude oil in the international market. In his presentation at a Stakeholders’ Interactive Workshop in Calabar, tagged Nigerian Content Workshop 2016, Okunbor who was represented by NCD Manager, Mr. Austin Uzoka, stated that to tackle this challenge among others, efforts should be made to speed up the passage of the NOGICD 2010 Amendment Bill which seeks to address the shortcomings of the previous Act. Below is a copy of his speech: In just 10 days, it will be exactly 6 years since the Nigerian content development act was enacted. We should be proud of the progress that has been made since the birth of the Act as reflected in the changing mind set from that which saw nothing good in “made in Nigeria” to one which now consciously seeks the right opportunities to develop and use Nigerian goods and services in the execution of major projects. It is therefore appropriate to start by celebrating Nigerian content achievements. Shell Exploration & Production Companies in Nigeria are major contributors to the Nigerian economy, not only through the energy we produce and the revenues we generate for the country, but also through our supply chain and social investments. We have a long-term and continuing commitment to Nigeria, its people and the economy. We remain committed to supporting the Government’s aspirations to increase Nigerian content and the utilisation of Nigerian goods and services in our business. This commitment is manifested in the actions we continue to take to develop and support Nigerian content development. For example, over a number of years, we supported a local company, Caverton Helicopters through audits and reviews to develop operating standards that meet Shell’s requirements and global best practices. So, in 2010, we awarded an aviation services contract to Caverton. In addition, have helped the company to expand its fleet by providing funding supportwith which the itto the companyto purchased six Augusto Westland 139 helicopters. Today, Caverton hasbecome the single-largest provider of aviation services to the oil and gas sector in the West African shelf and has evolved

into a public limited liability company listed on the Nigerian Stock Exchange,thus providing an opportunity for all interested Nigerians to share in its success. Another example is Egba Clamps Nigeria Limited identified during “Nigerian Content Day”, an exhibition organised by Shell Exploration & Production Companies in Nigeria as a platform to promote Nigerian content development and identify new opportunities to increase Nigerian content. Through hydro and pressure testing, Shell supported the manufacturer to improve the quality of the clamps as well as facilitating ISO 9001, Standard Organisation of Nigerian (SON) and Bureau Veritas (BV) product certifications. Today, we order these clamps for use in our operations. A similar feat has also been achieved using the same strategy to develop local sources for the manufacture of stud bolts and nuts. This was achieved working with another local vendor, Nigerian Machine Tools Company in Oshogbo. Contractor funding is another example. Many contractors find it very challenging to secure funding and credit facilities required to execute projects to develop new capabilities at low interest rates. In this regard, Shell, in collaboration with four Nigerian banks, established the Shell Kobo Fund and subsequently the Shell Contractor Support Fund to enable local contractors to access financing at reduced interest rates, relaxed collateral requirements and reduced loan processing time. To date, over US$1 billion has been disbursed under these schemes by the banks to more than 200 contractors. These are just a few examples. There are so many more at both individual stakeholder and industry levels through other IOCs with support from NAPIMS. Under the leadership of the Nigerian Content Development and Monitoring Board (NCDMB), the industry has evolved a practical framework for the implementation of the NOGICD Act. We have successfully reviewed the NOGICD Act and agreed areas in need of improvement. Further legislative action is now re-

quired to pass the amendment bill into law. The oil and gas industry has also successfully aggregated funds for strategic capacity development interventions under Nigerian Content Development Fund (NCDF) managed by the Board which runs into some hundreds of millions of dollars. These achievements and many more too numerous to mention call for celebrations. Despite these achievements, there are still a number of challenges confronting Nigerian content development in the Oil and Gas Industry. For instance, there is still need to address the Significant in-country capacity gap between where we stand today in Nigeria content development and the target set in the NOGICD Act. The gap, combined with the expired moratorium window, reduces the number of economically viable projects which means few opportunities for Nigerian content development; limitations in the ability of the local supply chain to develop products and services at reasonable and competitive prices; inadequate infrastructure across key sectors – particularly power which is the bedrock of industrial development; limited access to funding by local investors particularly long-term financing for capital asset acquisition; poor local capacity for strategic industry inputs such as steel production, power, offshore rigs etc., required to drive industrialisation; lack of a viable market for several industry inputs (thus limiting the business case for localised production); inadequate industry funding; long industry contracting cycles; and security concerns. These challenges are made worse by the strong headwinds facing the industry with the decline in oil prices especially since Nigerian projects need to compete for limited capital with other projects around the globe. As a result, there are few projects thus less opportunities for Nigerian content development. In conclusion, while significant progress has been made, there are a number of challenges ahead. We must come together to tackle these challenges collaboratively starting with the passage of the Nigerian Oil and Gas Industry Content Development Act, 2010 amendment bill which seeks to address some of the shortcomings in the 2010 Act. Government will need to take the lead in addressing security and infrastructure challenges as well as creating incentives to encourage and attract more foreign investments into Nigeria. On this note, I sincerely appreciate the opportunity to share these perspectives and I thank you all for your kind Orient Energy Review May, 2016

LOCAL CONTENT

Maritime Stakeholders Urge FG to Review Cabotage Act Of 2003 By Jolly Adjerewe – Port Harcourt

he federal government have been called upon to review the current Cabotage law so as to make it inclusive, attractive, positive, and supportive and to serve as a pedestal for acceleration of national and regional trade growth. Barr. Danladi Ibrahim, Ag Managing Director, National Inland Waterways Authority Lokoja, kogi state made these observation at the one day Cabotage Roundtable conference title “the cabotage Act 2003; a critique” in portharcourt said that the current act is obnoxious, over-indulgent, evasive, divisive and un-implementable, it therefore requires to be abolished and re-enacted. He stressed that the Nigeria version of the Cabotage law in the maritime industry; coastal and shipping act is long overdue for abrogation and re-enactment for purposeful and meaningful impact on coastal inland shipping transportation in Nigeria. Barr Danladi was of the view that before the cabotage law can affect the different sectors in the maritime industry, stakeholders’ role must be well defined in the new Act. NIMASA must let go a lot of inland water transport regulatory function and concentrate more on its very vital roles of port state control, flag state control, provision of security and universal national maritime communication control platform, search and rescue operations. He pointed out that the main purpose of the cabotage Act was primarily to simulate indigenous expertise and access to profit accrual from the maritime industry 42

Orient Energy Review May, 2016

especially within Nigeria territorial waters but unfortunately this has not been so over the years, adding that “to achieve the intent and purpose of the cabotage act, there must be honesty of purpose and political will to do the right thing so that the nation can move in the right direction as the maritime industry is concerned. Also speaking at the Roundtable conference, Mr Greg Ogbeifun, president ship Owners Association of Nigeria (SOAN) said that the provision of the coastal and inland shipping (cabotage) act 2003 to be effective there must be total adherence to the provision of the act by all those involved in the maritime industry Mr Greg Ogbaifun who spoke on the topic, “ the challenges of cabotage trade in Nigeria; said the waivers given to foreigners must be for a defined finite period during which capacity must be built, stressing that “there must be a mandatory review of the performance

of the act at stipulated intervals to ensure that its objectives are ultimately achieved if the challenges to emanated from the implementation of the cabotage law are met in line with the law and policy of the regime, the envisaged benefit of the cabotage act would be enormous to this nation” He therefore called for the development of indigenous ship acquisition capacity so as to stimulate investment due to the availability of cargo and passengers occasioned by the restriction of cabotage to only Nigerian – own ships will cause increment in domestic fleet / tonnage in seagoing vessels, adding that this would also lead to the restriction of the local shipping industry from incapacitation, due to the domination of carriage within Nigeria waters by foreign vessels and protection from unhealthy competition by highly subsidized foreign vessels.

LOCAL CONTENT

NCDMB, Imperial College Collaborate On Research for Oil and Gas Industry

framework for developing world class research for the Nigerian Oil and Gas Industry is being forged through the collaboration of the Nigerian Content Development and Monitoring Board (NCDMB), the Nigerian National Petroleum Corporation (NNPC), the Imperial College of London and four leading universities in Nigeria. This collaboration which is spearheaded by the NCDMB seeks to establish a Centre of Excellence (CoE) for Oil and Gas Research at the Federal Universities of Technology Minna, Niger State, Federal Universities of Technology, Akure, Ondo State, Federal Universities of Technology, Owerri, Imo State and the Niger Delta University Yenagoa, Bayelsa State. The aim is to solve oil and gas industry problems in Nigerian universities and local research centers thereby growing local research capacities and retaining huge spend which stakeholders normally spend on research overseas. Speaking at the Needs Assessment Workshop on the Board’s CoE initiative held at Imperial College London recently, the Acting Executive Secretary of the NCDMB, Mr. Patrick Daziba Obah explained that the Board conceived the policy to galvanise the development of home grown research and technology in the oil and gas industry. He listed other objectives to include developing a pool of capable researchers and world class research centers, linking the oil and gas industry to academia and local supply chain through research programs and creating employment and training opportunities for Nigerians on the back 44

Orient Energy Review May, 2016

of research projects domiciled in-country. He noted that the Imperial College had an enviable track record in research capabilities and collaboration with the oil and gas industry and would be expected to provide technical support to the Research Centers of Excellence being promoted by the Board. Speaking further, the Acting Executive Secretary who was represented by the General Manager, Zonal Coordination and Board’s Projects, Dr. Ginah O. Ginah noted that the Board invited the NNPC to participate in the CoE initiative because of the corporation’s leadership role and enormous influence in enforcing Federal Government’s policy in the oil and gas industry. In his presentation, the Head of Department for Earth Science and Engineering, Imperial College, Prof Mark Sephton confirmed that the Institute had supported a number of countries on similar initiatives and was currently collaborating with Petrobras of Brazil to develop its Sustainable Gas Institute, a world class Research and Development Institute for Gas. He discussed various models for CoE and highlighted the need to develop the required infrastructure and adopt the right recruitment plan for the CoE. He promised that the institution would assist the Board with strategies for investment, funding models and as well as help distill identified research areas into specific scopes.

In his comments, the Chairman, House of Representatives Committee on Local Content, Hon Emmanuel Ekon confirmed that the legislature’s participation in the workshop had offered them an opportunity to understand the workings of NCDMB and strategy for implementing Nigerian Content. He charged other agencies to engage the National Assembly in their activities so as to reduce executive/ legislature friction over government initiatives. Hon. Ekon assured that the House of Reps will support NCDMB in its quest to establish Centers of Excellence for Research and Development as well as on other initiatives. The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had while delivering a speech at a recent workshop on Nigerian Content Policy in Calabar, Cross Rivers State confirmed that the oil and gas industry would encourage Research and Development to drive the development of home grown technology, innovation and enhance production processes in the industry. The road map for the setting up of the R & D Centres of Excellence is to be developed into Short term, Medium term and Long term goals with the Board, Imperial College and universities expected to work on specific responsibilities.

DRILLING/ PRODUCTION/ EXPLORATION

chlumberger has entered into an agreement to acquire the coiled tubing drilling and coiled tubing units from Xtreme Drilling and Coil Services Corp, a Calgary-based provider of international land drilling and coiled tubing drilling services. Xtreme currently owns a fleet of 11 coiled tubing units located in Saudi Arabia and the United States. The transaction is subject to customary closing conditions and is expected to close in the third quarter. ‘With the addition of Xtreme’s coiled tubing assets, we continue our pursuit of advancing overall drilling and well intervention efficiency through technology integration to help our customers improve production at a lower cost per barrel,’ said Sherif Foda, president, Production Group, Schlumberger. ‘The combination of our existing technology portfolio with Xtreme’s proprietary technology will result in a step change in operational performance.’ Tom Wood, CEO, Xtreme, added, ‘The purchase of Xtreme’s industry leading, advanced AC-electric coiled tubing technology validates our long-term vision to develop the most automated and advanced coiled tubing system in the world. This complements Schlumberger’s focus on operational ef-

Schlumberger to Acquire Coiled Tubing Drilling Units from Xtreme ficiency and market expansion through automation and integration.’ The Schlumberger technology integration approach is evolving engineering of the drilling system from a simple combination of discrete services to optimized systems that are customized through extensive design and modeling capabilities for specific customer requirements. The addition of Xtreme’s coiled tubing technology to the Schlumberger portfolio will be a key enabler for further advances in drilling efficiency, especially in challenging land-based environments. Established in 2005, Xtreme operates in two segments, Drilling Services (XDR) and Coil Services (XSR). It designs, builds, owns and operates a fleet of high specification drilling rigs and coiled tubing well service units featuring proprietary technology,

including AC high-capacity coil injectors, deep re-entry drilling capability, modular transportation systems, and continuous integration of in-house advances in methodologies. The company has contracts with oil and natural gas exploration and production companies, and integrated oilfield service providers in Canada, the United States, the Kingdom of Saudi Arabia, India and internationally. *Source: Schlumberger

GE Brings Digital Solutions to Nondestructive Testing (NDT) Industry Mentor UT™ Improves Productivity with the Power of Apps and Live Wireless Collaboration

olatile oil prices, global competitive pressure, and the costs and challenges associated with corrosion and erosion mean that oil & gas production and refining operations need to operate more reliably than ever and at lower costs. GE Oil & Gas is introducing Mentor UT (www.mentorut.com), a new digital solution to improve asset reliability, reduce maintenance costs and downtime. Mentor UT and other nondestructive testing (NDT) products, software and techniques provide inspection professionals the solutions needed to properly inspect and evaluate the properties of critical industrial materials. Today’s NDT and inspection managers face a complex

and ever-changing environment, including: – Increasing complexity of inspections – Loss of domain expertise from departing or retiring inspection experts – More demanding codes and standards – Constant drive for improved detection and productivity – Pressure to reduce asset downtime The Mentor platform of connected NDT portables from GE features the latest developments in flaw detection, user interface and wireless connectivity. Today, asset owners and inspection companies can choose from a variety of digitally optimized GE instruments to meet their ultrasonic (UT), electromagnetic (EM) and visual inspection (RVI)needs. The most recent product innovation from GE is Mentor UT (www.mentorut.com), an ultrasonic array flaw detector optimized for corrosion and erosion mapping of process piping, tanks and vessels in the field. Mentor UT allows users to customize and download inspection applications (“Apps”) that guide users through inspection procedures, much like a smartphone app. Tools such as Mentor UT will help the industry improve inspection productivity, reduce training costs, and provide excellent probability of detection, which reduces inspection time and helps get assets back online faster. Like GE’s other Mentor products the interface is an

intuitive touch screen which makes it easier to adopt/get started with for the new generation of NDT inspectors. “Corrosion and erosion are costly problems for Oil & Gas and Power Generation companies,” said Tim Humphrey, senior product line manager for portable inspection. “Mentor UT addresses this issue by providing a complete digital corrosion mapping solution for this application.” Mentor UT provides excellent ultrasonic performance with the power of array corrosion mapping and a conventional UT channel. Guided inspection apps and the touch-screen interface improve inspector productivity, lower training costs and get new inspectors on-the-job faster. Mentor UT will be on display at Control 2016 in Stuggart, April 26 – 29, at the Offshore Technology Conference (OTC) in Houston on May 2 (booth 3765), at Corrosion Technology Day in Houston on May 5, and at the World NDT Conference on June 13, 2016 (booth B96). Mentor UT is field-ready out of the box with inspection workflows already installed or available for wireless download from the Inspection Works Store. *Source: GE

Orient Energy Review May, 2016

DRILLING/ PRODUCTION/ EXPLORATION

Nigeria: Eland Oil & Gas announces Gbetiokun-1 Reserves and Resources update

IM-listed Eland Oil & Gas, an oil & gas production and development company operating in West Africa with an initial focus on Nigeria, has announced the results of a Reserves and Resources evaluation onGbetiokun-1, OML 40, provided by Netherland, Sewell & Associates Inc. (‘NSAI’) as at 31 March 2016. Following the successful re-entry of Opuama-3 announced on 25 April 2016, Eland, through its joint-venture subsidiary Elcrest Exploration and Production Nigeria, together with NPDC, its co-venture on OML 40, intend next to initiate production by means of an Early Production System (EPS) on the Gbetiokun field in the second half of 2016. This is the initial stage of a planned phased development of the Gbetiokun field. The capex associated with this initial phase is estimated by Eland at $14.5m (Net: $6.5 million) which is roughly equally split between re-entry and facilities costs. Eland’s joint-venture subsidiary Elcrest Exploration and Production Nigeria Ltd holds 45% equity in the OML 40 license. The oil reserves and future net revenue to Eland allocated to Gbetiokun-1 EPS as of March 31, 2016, are as follows:

Furthermore, in this 31 March 2016 Report, NSAI estimates STOIIP in the E2000 and E6000 reservoirs in OML 40 to be 25.87 and 12.77 MMstb respectively, increases of 73% and 45% compared to its previously announced 30 June 2014 evaluation. (NSAI’s previous estimates of Gbetiokun STOIIP in OML 40 were 14.91 MMstb in the E2000 reservoir and 8.79 MMstb in the E6000 reservoir.) In its previous evaluation, NSAI estimated STOIIP in Gbetiokun, within OML 40, to be 81.16 MMstb, with gross Reserves of 4.7 (1P) - 25.8 (2P) - 32.3 (3P) MMstb. Given that NSAI has significantly increased its estimate of STOIIP in the E2000 and E6000 reservoirs in its March 2016 Report, Eland expects its estimate of full field STOIIP and Reserves to also increase when NSAI updates its assessment of Gbetiokun as a whole later this year.

Financial and management update As at 31 March 2016, the Company had a cash balance of $5.7m, with the last crude oil sale taking place at the end of January 2016. The amount drawn under the debt facility with Standard Chartered Bank remains at $15m. The Company’s borrowing base, of its committed $35 million facility, currently stands at $25.4m (previously $35m and re-determined downward on a lower oil price deck) and will be re-determined next in June 2016 where, based on current oil prices, it is expected to improve. This is further enhanced where the lenders can have regard to the higher flow rates from Opuama-3 workover and to the improved reserves base pursuant to the Gbetiokun CPR and the planned Gbetiokun-1 well mentioned in this announcement. Upon completion of this re-determination the Company intends to continue, in conjunction with Standard Chartered Bank, with the syndication of the facility up to $75 million. George Maxwell, CEO of Eland, commented: ‘Following the recent success of the Opuama-3 re-entry well on licence OML 40, we are now keen to accelerate the first phase of development of the Gbetiokun field with Gbetiokun-1 being an excellent candidate to continue our strategy of cased hole workovers. We believe that we can commence production before the end of the year, with the Competent Person’s Report predicting initial oil flow rates of 7,800 bopd on a gross basis. We are highly encouraged that NSAI calculate a Present Worth net to Eland of almost $44 million for the first phase alone, from an investment of only $6.5 million. Alongside our recently announced CPR for the Ubima field, we believe we are well positioned to materially accelerate oil production and cash flows over the coming twelve months.’ *Energypedia.com

Jubilee Turret Issues Continue T

ullow Oil, in its AGM Trading Update revealed that the technical investigation of the Jubilee FPSO turret bearing has confirmed that it is no longer able to rotate as originally designed leading to new operating procedures being implemented. The procedures being investigated include the vessel being put on “heading control” which requires the use of tugs to minimize vessel rotation and revised offtake procedures, including the use of a dynamically positioned shuttle tanker

Orient Energy Review May, 2016

and a storage tanker. Revised operating procedures are being implemented at the Jubilee field with new equipment and approvals in place. Tullow said that sea water injection resumed on April 23 and offtake is expected to re-commence in the next few days with production to follow shortly thereafter. These activities and the two-week planned maintenance shutdown have impacted gross production from the Jubilee field which averaged 80,300 bpd (gross), for Q1. A project team has been established to

review the root cause of the problem and determine the optimum design of the permanent solution of the Jubilee turret issue. A decision on the solution is expected in the next few months. On the financial end, Tullow has a comprehensive package of insurances in place including Hull and Machinery insurance, procured on behalf of the JV which covers relevant operating and capital costs associated with damage to the FPSO, and Business Interruption insurance which covers consequent loss of production and revenue. Claims under both policies have been notified to our insurers.