Orient Energy Review Vol 9 No.03 by Orient Energy Review

rientEnergy Review www.orientenergyreview.com

VOL.9 No.03

COVERING LOCAL CONTENT IN THE ENERGY SECTOR

N1000 10Ghc US$5.00

Offshore petroleum opportunities:

Nigeria, Africa looking to the future with optimism OTC, for the seriousminded!

NCDMB showcases Nigeriaâ&#x20AC;&#x2122;s oil and gas investment catalogue

Ghana buoys its oil discoveries with Free Trade Zone

ORIENT ENERGY REVIEW Vol.9 No. 03

CONTENTS

rientEnergy Review ...driving local content development

NNPC set to reduce contracting cycle from 2yrs to 6 months

Re-elected APPO President, promises better deal for members

Customs, NNPC, DPR set up joint c’ttee against petrol theft

Local content exceptional achievers honoured at 2019 NOGOF

Gowon, Wabote harp on human capital development for national transformation

Stakeholders harp on benefits of LPG to Nigeria

Angola’s Sonangol moves to focus on core business

Sound biz principles made GGI one-stop shop for drilling chemicals

Nigerian, Qatari cargoes head for UK

Sustaining Africa’s maritime industry

OTC, for the seriousminded!

We produce our gunboats to boost local content’

Ghana buoys its oil discoveries with Free Trade Zone

ORIENT ENERGY REVIEW Vol.9 No. 03

EDITOR’S NOTE

Publisher/ Editor-in-Chief Nneka Ezeemo

bviously, the train of the 2019 global oil and gas industry which took off on a somewhat worrisome note has against all odds continued to sail on safe waters. Emerging events in the industry have unwittingly strengthened the notion that the oil and gas business environment is unpredictable. However, industry experts and analysts have advised stakeholders to continue to pay close attention to geopolitics, sustainability and technology as they have been identified to wield strong influence on the future of the global oil and gas industry. From Europe, Middle East, Russia to Africa, the focus at different fora have been the need to re-engineer operating models that will lead to improved capacity, better impact on people and environment, collaboration among others. In our usual manner of putting our best foot forward in the business of providing our readers with educative, information, and reliable news reports, the content of this edition has been so carefully selected to satisfy every reader’s quest for balanced reportage of events both in the national and international arena of the oil industry. Starting from Nigeria, our Local Content stories bring to fore unique and strategic efforts by the Nigerian government through Nigerian Content Development and Monitoring Board, NCDMB to further deepen local content impact on Nigeria’s oil and gas industry. In our commitment to join forces with the NCDMB in realizing its mandate as well as the Board’s 10-year strategic action plan, we have intentionally produced here a catalogue of opportunities in Nigeria’s oil and gas industry for the benefit of industry players, intending investors and other stakeholders as was shared during the just concluded 2019 Nigerian Oil and Gas Opportunity Fair (NOGOF) that held in Yenagoa, Bayelsa State. We are set to participate in the 2019 Offshore Technology Conference in Houston. Our investigation on the impact and relevance of this conference that will attract over 60,000 professionals from more than 100 countries with about 500,000 square feet of exhibit space, more than 350 peer-selected technical presentations reveal that OTC is meant for serious-minded people. Our cover story for this edition, “Offshore petroleum opportunities: Nigeria, Africa looking to the future with optimism” is a well-researched article that reviews the Nigerian as well as African petroleum industry in the next 50 years. It highlights the opportunities in the industry and issues that would determine the dynamics of the industry in the coming decades. Enjoy our Ghana report as we bring to you Ghanaian government’s effort to attract and boost investment into her oil industry with Free Trade Zone facility. This is a loaded edition! Every page promises a worthwhile return on investment of your time and resources. We remain that global brand in the reportage of the energy sector value chain. Please do use our various channels to send us your feedback. We look forward to hearing from you. Happy reading!

Peace Obi

Mobile line: +234 8036979049 peace.obi@orientenergyreview.com

Editorial Advisory Engr.Andy Olotu Victor Eromosele Stanley Egbochuku Editor Peace Obi Correspondence Dirisu Yakubu (Associate Editor) Chibisi Ohaka (Abuja Office) Vivian Israel ( Head South-South Bureau, PortHaracourt) Gilbert Boyefio (Ghana Correspondent) Godspower Ike (PortHarcourt) Kenechukwu Obiajuru (Bayelsa) Business Development Executive Catherine Saunt ( UK ) Designs Kelechi Okoro Admin/Finance Chiamaka Okeke Circulation Manager Ajayi Kayode London Office 15 Goss Avenue, Waddesdon, Aylesbury, Bucks, HP18 0LY +447974199137 Ghana Office Second Church Lane, Okpoi Gonno, Speintex Road. Tel: 0243915206. Email: gilbert@orientenergyreview.com orientenergyreviewgh@gmail.com

rientEnergy Review ...driving local content development

Orient Energy Review has emerged to be the platform and voice for the growing local content policy across the world. It is a bi-monthly publication of Orient Magazine, Newspaper and Communications Limited, 5, Dipo Dina Drive, Abule Oshun, Badagry Expressway, Lagos. www.orientenergyreview.com email: info@orientenergyreview.com ©2019 allrights reserved ISSN: 2315 908 -1

ORIENT ENERGY REVIEW Vol.9 No. 03

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INDUSTRY NEWS

FG rules out removal of fuel subsidy …Nigeria still searching for workable formula Chibisi Ohakah, Abuja

he Federal Ministry of Finance has said once again that despite speculations in various quarters, there are no plans by the Federal Government to remove fuel subsidy. In a statement issued by the Minister of finance, Mrs Zainab Ahmed yesterday, she said the current subsidy arrangement which was in the form of under-recovery by the Nigerian National Petroleum Corporation (NNPC) was far better than what was obtainable when oil marketers were paid directly for fuel subsidy. “NNPC is the sole importer of petroleum products, and so when they import it is the cost of business they deduct before they remit the little money to the federation account. So, that is completely different. It is more cost effective, it is cheaper and what is being done now is easier to monitor what transpired. “We are not there yet and we discuss this periodically under the Economic Management Team. But we have not found a formula that works for Nigeria and you know Nigeria is unique because what works in Ghana may not work in here. So, it is still work in progress and so there is no intention to remove fuel subsidy at this time,” Ahmed said She also said that Nigeria’s debt which currently stands at about N24.3 trillion is still within sustainable limit. According to her, the country’s debt, which is about 19%

of the gross domestic product (GDP), was still low compared to Ghana, Brazil, South Africa, Egypt and Angola. “In borrowing, we are still at 19% to GDP; our borrowing is still low. What is allowed by our Fiscal Responsibility Act is the maximum of 25% of our GDP compared to other countries like Ghana, Egypt, South Africa, Angola and Brazil and we are the lowest in terms of borrowing.” In the area of revenue generation, she said that while the country had revenue

ORIENT ENERGY REVIEW Vol.9 No. 03

challenges, efforts were currently being made to shore revenue. She said, “What we have is revenue problem and when revenues perform at the aggregate rate of 55%, it hinders the ability to operate in our budget. So, it hinders our ability to service all categories of expenditures including salaries, allowances, capitals as well as debts,” she said. Adding that what the ministry is currently doing is concentrating on enhancing revenue and collection capacities.

INDUSTRY NEWS

Asian demand strengthens Nigerian oil exports Chibisi Ohaka with agency report

omparable grades of Nigerian oil has been largely swept away and put under pressure in Europe by the rising tide of light U.S. shale oil from American shores. However, steady Indian and Indonesian demand has helped lift price indications for two of Nigeria’s top grades to near five-year highs, according to traders and shipping data, Reuters reported yesterday. “It’s only because India’s economy has been growing, and to a lesser extent Indonesia, that there remains decent demand for Nigerian crude. Without those two countries, the European buyers would have dragged the market much lower,” the global news partner quoted one seller. A projected rise in buying from European refineries, which supply fuel to the United States, is offering some support for now. Light Nigerian oil is easily processed into higher octane gasoline increasingly used in the United States, where the summer driving season looms. As a result, sellers of Bonny Light and Qua Iboe crude are offering at and above a premium of $2.00 a barrel compared to Brent, the benchmark North Sea crude.

But European refiners are also driving a hard bargain, baulking at higher Nigerian prices when one trader said the market was flooded by “a sea of cheap U.S. oil.” “We have many options that mean Nigerian won’t work for us at these prices,” another trader said, adding that in addition to U.S. oil, European refiners could turn to the North Sea and Caspian Pipeline Consortium (CPC) crudes. CPC oil “costs us 50 cents less a barrel compared to the prices being asked for Nigerian, given the freight costs and market structure,” he said. Sellers of Nigerian crude are still learning to live with the surge in U.S. shale output, which has turned the United States into the world’s top crude producer and dampened demand imports in what had been a reliable market for Nigeria. “Nigerian crude has taken a beating for the last 10 years ever since the U.S. scaled back buying,” the seller added. Nigerian exports of crude and petroleum products to the United States plunged from 36.4 million barrels in July 2010 to just 5.6 million barrels in January 2019, according to the U.S. Energy Information Administration.

After Washington lifted a four-decade ban on exports of U.S. oil in 2015, shipments to Europe hit an all-time high of 25 million barrels in March 2019 from just 2 million barrels in February 2016, Definitive Eikon data showed. This has put a squeeze on a prime Nigerian market. U.S. oil is also heading to India, where it is increasingly competing with Nigerian crude. Indian Oil Corp, the country’s top refiner, signed its first annual deal to buy U.S. oil in February, paying about $1.5 billion for 60,000 barrels a day up to March 2020. Despite the pressure from U.S. barrels, Nigerian exports to Europe, India and Indonesia have held generally steady so far. Consistent tenders from state buyers in India and Indonesia ensure these remain major destinations for Nigerian oil. But one Asian buyer said Indian tenders were largely finished for the month, and that Nigerian cargo for April and May would soon need to find buyers in Europe instead. “Nigerian is facing stiff competition almost everywhere,” a trading source said. “Sooner or later Nigerian oil is going to need to expand into new markets

ORIENT ENERGY REVIEW Vol.9 No. 02

INDUSTRY NEWS

NNPC set to reduce contracting cycle from 2yrs to 6 months Chibisi Ohakah, Abuja

igerian National Petroleum Corporation (NNPC), has said that it has fast-tracked contracting cycle for upstream operations of oil and gas activities from two years to 9 months. Adding that there are also plans also to further reduce the process to less than six months. Dropping the hint at a presentation during the 12th annual international conference of the Nigerian Association for Energy Economics/International Association for Energy Economics (NAEE/IAEE), the Group Managing Director of NNPC, Dr Baru Maikanti said the process would allow for the free flow of investments into the industry. Baru who was represented by the Corporation chief operating officer (COO), Ventures, Dr Victor Babatunde Adeniran, stated that NNPC has automated crude oil marketing process in the country. “This process has helped to evaporate the mystery around the management and sale of Nigeria’s crude oil grades with the

Baru introduction of innovative solutions triggering an ambience of transparency and stakeholders’ confidence in the operations of the COMD. I can state without equivocation that, today at a click of a button, we can tell you how much crude is sold, at what price, who bought it and where it has gone to,” he said. He also said that the Corporation has

achieved transparency and accountability, increased crude oil production, improved nationwide fuel supply, joint venture cash call exit, renewed frontiers exploration and revamp of critical downstream infrastructure in the last couple of years Others, he said, included sustained gas supply to power which led to stable domestic gas supply capacity of 17000 million standard cubic feet of gas per day (mmscf/d) with an average of 1.3 billion standard cubic feet per day (bscf/d) supply to the domestic market. Within the last three and a half years, he said the Corporation adopted a cocktail of practical approaches at achieving sustainable cost reduction in everyday business anchored on penetrating reforms across the entire value chain of its operations. Baru harped on synchronizing energy efficiency and sustainable development, and spoke on the need to always strike the delicate balance between commitment to social development and economic growth to achieve a win-win scenario.

Expert calls for adoption of uniform

n expert, Tope Shonubi, has said the existence of a fragmented petroleum products market with different product specifications, sulphur content and emission requirements remains a huge stumbling block to accessing the benefits that can accrue from intra-regional trade in the sector. Sonubi who is the Executive Director of Sahara Group said the adoption of unified standards across Africa will create a bigger and more effective regional market that will enhance the continent’s competitive positioning in global energy markets. Addressing stakeholders at the African

Refiners Association (ARA) meeting in Cape Town, Sonubi said, “the adoption of similar specifications and standards have been achieved across Europe and most of North America, creating a single larger market for petroleum trade.” According to him, while gas-oil specifications remain fragmented across Africa, jet fuel specifications are almost completely unified across the world. This similarity, he explained, has improved the ease of trading jet fuel across borders, ensured access to a wider market and enhanced competitiveness in the aviation industry. He urged all stakeholders to embrace the AFRI-4 standards which were

ORIENT ENERGY REVIEW Vol.9 No. 03

the outcome of a partnership between ARA and the World Bank to promote the adoption of a single standard for cleaner fuels. “The adoption of the Afri-4 Specifications will guarantee unified product standard across the region, ease of intra-regional petroleum product trade, reduction in bulk transportation costs and optimization of regional infrastructure. This will ultimately make Africa a more influential economic block,” he said The Sahara Group boss added that unified standards would de-fragment African markets resulting in favourable economies of scale in intra-regional trade, regional

INDUSTRY NEWS

Re-elected APPO President, promises better deal for members

igeria’s Minister of State for Petroleum Resources, Dr Ibe Kachikwu has promised to reposition the African Petroleum Producers’ Organization (APPO) as a global force to reckon with. Kachikwu, who was recently re-elected as the President of the organization for two consecutive years now also affirmed his commitment to making deep and sustained reforms that will not only guide its members to make the best returns in its energy business. The reelection of Dr Kachikwu took place during the 36th Ordinary Session of the Council of Ministers of the APPO which held in Malabo, Equatorial Guinea under the high patronage of H.E. Obiang Nguema Mbasogo, the President of the Republic of Equatorial Guinea. The ministerial session had in attendance, APPO Ministers drawn from thirteen member countries; namely, Algeria, Angola, Benin, Cameroon, Congo, Chad, Côte d’Ivo-

ire, Egypt, Equatorial Guinea, Gabon, Libya, Niger, and Nigeria. Under Kachikwu’s Presidency of APPO in 2015-2016, the Organization embarked on a major reform aimed to sharpen the focus of the Organization, enhancing professionalism and strengthening the capacity of the APPO secretariat to conduct studies that will enhance the productivity of the African oil and gas industry, especially investing in trans-national infrastructure like pipelines and refineries and the development of local content. Besides reforming APPO, Dr Kachikwu was also mandated to reform and recapitalize the Cotonou-based APPO Fund for Technical Development. In this connection, Kachikwu submitted far-reaching proposals to the Ministerial Council, which unanimously approved its implementation. Among the major changes approved by the ministerial council was a change in the

name of APPO Fund to AEICORP, African Energy Investment Corporation. Unlike APPO whose shareholders were limited to sovereign governments, AEICORP shall be open to sovereigns as well as institutional and private investors. AEICORP targets one US$1 billion in investment capital to fund energy infrastructure on the African continent. This recent reelection will see Kachikwu complete the ongoing reforms that will emplace APPO towards leaving a lasting legacy that will ensure that Africans benefit from the continent’s hydrocarbon resources. Meanwhile, in Baku, the Republic of Azerbaijan, Ministers of the 24 Nation Declaration of Cooperation, DoC, comprising 14 OPEC and 10 Non-OPEC Oil Producing Countries announced the appointment of Nigeria as a Member of the Joint Technical Committee (JTC) and Joint Ministerial Monitoring Committee (JMMC) of the Member Countries of the DoC.

m petroleum products standards harmonization of taxes and excise duties, reduction in smuggling and adulteration of products, improved local refining capacity, reduced landing costs of petroleum products, joint infrastructure projects as well as export diversification and access to a larger customer base. Africa, he said, must accord the prospects of intra-regional trade the urgency it deserves to ensure accelerated economic development. “In line with the vision of a harmonized Africa, Sahara Group is building an integrated energy business across Middle Africa to harness the potential of intra-regional trade. We are delighted to be one of the first African companies to

carry out full cycle crude and product trade transactions using only African resources within the continent. All transactions were carried out by Africans for Africans using African resources. The future of our business depends on how well we can work together across Africa.” He urged ARA members and other stakeholders in Africa’s energy sector to work towards developing a competitive African Brand. “Africa countries cannot hope to shape globalization or even retain marginal relevance individually. It is only by working together that we have the weigh to influence the big picture.”

The adoption of the Afri-4 Specifications will guarantee unified product standard across the region, ease of intraregional petroleum product trade, reduction in bulk transportation costs and optimization of regional infrastructure.

ORIENT ENERGY REVIEW Vol.9 No. 03

INDUSTRY NEWS

Customs, NNPC, DPR set up joint c’ttee against petrol theft Chibisi Ohakah, Abuja

igeria Customs Service (NCS), the Department of Petroleum Resources (DPR), and the Nigerian National Petroleum Corporation (NNPC) has agreed to inaugurate a joint committee to tackle the menace petroleum products theft in the country. This was part of the resolutions of a strategy meeting attended at the Customs House in Abuja yesterday by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, the Comptroller General of Nigeria Customs Service (NCS), Col. Hammed Ali (rtd.) and the Director of the DPR, Mr Mordecai Ladan. The meeting considered the rising incidence of smuggling of petroleum products across the nation’s borders, and noted that it was causing the serious loss to the nation’s revenue generation drive, in addition to subverting government’s efforts to ensure an adequate supply of petroleum products in all parts of the country. The meeting also noted that the malaise also denied Nigerians the full benefits of the goodwill of the current administration. “The negative economic impact of smuggling is that it is undermining Nigeria’s economic growth as a huge amount of money is spent in terms of under-recovery. This huge loss is draining the treasury. Remember, these are monies that could be used to develop several critical sectors of the economy,” said the group managing director of NNPC, Dr Maikanti He said while the corporation had not relented on its efforts to flood the nation’s petroleum products market and avoid shortages at all times, the activities of unscrupulous marketers remained a major

concern as diversion and smuggling seem to continue unabated. According to the GMD, available records showed that there was an upsurge in incidents of petroleum products smuggling across Nigeria’s borders in recent months, which is incentivized by a high rate of arbitrage, especially considering the high price of petrol in Nigeria’s neighbouring countries. He called for stiffer punitive measures against unscrupulous marketers found diverting and smuggling petroleum products and charged the Customs Service to intensify surveillance along the identified border communities and other suspected areas to check the activities of petroleum products smugglers. In his own comments, the CG of Customs, Col. Hameed Ali (rtd), said the joint committee was necessary in order for the three organizations to collaborate and find a lasting solution towards halting smuggling of petroleum products. Ali said working with information on a

ORIENT ENERGY REVIEW Vol.9 No. 03

real-time basis, the Service would leave no stone unturned to ensure that smugglers of petroleum products are stopped in their tracks. “We have enough men and resources that can manage the nation’s 4,070km border-line and address this menace once and for all. What we need however is information on a real-time basis,” the Customs boss stated. Also speaking, the Director of DPR, Mordecai Ladan, said the Department was open to collaborations with sister government agencies towards addressing the menace of smuggling. Ladan, who attributed the surge in smuggling to high arbitrage and culpability of unlicensed filling stations, said his organisation would not hesitate to name and shame the perpetrators in the nearby future. “As the industry regulator, we are only aware of 1,900 licensed filling stations. We will, however, continue to provide more information for this joint committee to succeed,” Ladan stated.

INDUSTRY NEWS

Chevron reaffirms commitment to protecting people, environment Peace Obi

hevron Nigeria Limited has reiterated its commitment to the safety of the communities and the environment in its areas of operation. Confirming a recent fire outbreak at its Ojumole Well No.1 at about 10:00 p.m. on Thursday, April 18, 2019, said that appropriate measures are being taken to address the situation, adding that CNL carries out its operations with the utmost consideration for protection of people and the environment. Chevron Nigeria Limited, operator of the joint venture (JV) between the Nigerian National Petroleum Corporation (NNPC) in a statement by its General Manager, Policy Government & Public

Affairs, Esimaje Brikinn said that the affected facility, Ojumole Well No. 1, was an idle and plugged well with no flowline connected to it. The field, NNPC/CNL Joint Venture is located in the Western Niger Delta area of operations. The statement read, “CNL conducted an overflight to evaluate the fire and also mobilised emergency responders to assess the site to contain the fire and boom the area. In addition, CNL notified community stakeholders about the incident and also reported it to the Department of Petroleum Resources (DPR), the National Oil Spill Detection and Response Agency (NOSDRA) and other regulatory and security authorities.”

It further stated that a Joint Investigation Visit (JIV) to the site of the incident on Saturday, April 20, 2019, by a team made up of regulatory agencies, community stakeholders revealed that the fire incident was caused by third-party interference. It, however, noted that there was no impact on any of the neighbouring communities. “CNL is currently working with contractors to safely put out the fire as quickly as possible. We remain committed to the safety of the communities and the environment in its areas of operation. We continue to conduct our operations safely, reliably and efficiently, with the utmost consideration for the protection of people and the environment,” it reassured.

CNL is currently working with contractors to safely put out the fire as quickly as possible. We remain committed to the safety of the communities and the environment in its areas of operation

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LOCAL CONTENT

Local content exceptional achievers honoured at 2019 NOGOF

he 2019 Nigerian Oil and Gas Opportunity Fair (NOGOF) was a resounding success that the various programmes and activities put together by the organisers of the Fair certainly left participants with a great taste of satisfaction and pleasant memories. One of the programmes that will keep memories of 2019 NOGOF ever fresh in the minds of participants was the dinner and awards night that held on the 4th of April, 2019 at the Royal Tulip Castle, Government House, Yenogoa. It was an evening of glitz and glamour that kept attendees lost in the beauty of the event hosted in a serene and carefully decorated venue with cool, beautiful colours. With enough delectable delicacies and assorted wine to wash it down, guests were further switched from the day’s hustling and settled to savour the evening with an irresistible live performance by some of Nigeria’s finest entertainers, Flavor and Omawunmi, respectively. It was another night of serious business as stakeholders in the various subsectors in Nigeria’s oil and gas industry who had

made some remarkable contributions towards the growth of Nigerian content from 2017 to 2019 were celebrated and nudged on for greater achievements The first category of the awards was “Opportunity Presenters’ Awards” went to 11 companies which include Chevron Nigeria Limited, ExxonMobil Nigeria; Shell Petroleum Development Company; Nigeria National Petroleum Company; Dangote Group among others. The Nigerian National Petroleum Corporation (NNPC) emerged the most impactful Local Content development Initiative award; Shell clinched the award for International Upstream Operating Company with the most impactful Local Content Development Initiative, while Seplat grabbed the Indigenous Upstream Operating Company on the same category, thereby leaving the first and second runner up to – FIRST E& P and AMNI, respectively. Other winners included Dangote Group which was honoured with the award of ‘Downstream Operating Company’ with the most impactful Local Content Development Initiative. Other champions who emerged winners at their different

ORIENT ENERGY REVIEW Vol.9 No. 03

categories include NLNG, Samsung Heavy Industries Nigeria Ltd, Marine Platform, while the Award to Most Supportive Financial Institution to Local Content went to United Bank of Africa (UBA). This is in addition to other companies who finished in either in first or second runner up. Themed, ‘Maximizing investments in the oil and gas industry for the benefit of the Nigerian people’, the objective was to bring together major players across the upstream, midstream and downstream sectors as well as the government and industry regulators to showcase opportunities in the Nigerian oil and gas industry and present available in-country opportunities. Nigerian Content Development Management Board’s commitment to deepening Nigerian content in the nation’s oil and gas industry was further demonstrated by assigning an indigenous company – Jake Riley Nigeria Ltd as the event coordinator whose outstanding performance has continued to attract commendation from different quarters in the industry.

LOCAL CONTENT

NCDMB showcases Nigeria’s oil and gas investment catalogue Peace Obi

igerian oil and gas industry is a globally known fertile business ground for investment. It is also rich in diverse opportunities ranging from upstream, midstream to downstream. The Federal Government of Nigeria through its ministry of petroleum resources and other relevant agencies has remained committed to creating a conducive environment for both local and foreign investors in the country’s oil and gas industry. During the recently concluded second edition of the Nigerian Oil and Gas Opportunity Fair (NOGOF), in Bayelsa State, the Federal Government, through the Nigerian Content and Development and Monitoring Board (NCDMB), distributed compendium of opportunities in the nation’s oil and gas space to over 1,000 delegates at the Fair. The theme for Fair was, “Maximising Investments in the OIl and Gas Industry for the benefit of the Nigerian People”. Industry players noted that the production and distribution of the compendium of opportunities to stakeholders remains one of the outstanding and strategic steps the Nigerian government has taken in recent times in

its efforts to attract more investments as well as in its drive to deepen Nigerian content in the nation’s oil and gas industry. Presenting the compendium, the NCDMB Executive Secretary, Engr Simbi Wabote said that it was aimed at providing indigenous companies and Nigerian businesses with timely and adequate information on existing opportunities so as to deal with the notion that Nigerian companies cannot perform. Wabote said that the document serves as a major take away pack participants at the fair will take back to their offices to enable them to sit on the table to say “what are the opportunities to pursue?” He disclosed that the opportunities shared at the maiden edition as well as the 2019 NOGOF are all contained in the compendium. He noted that the documentation of the opportunities would also help anyone who may wish to measure the progress and achievements on the listed opportunities from time to time. In his comments, the NCDMB director, monitoring and evaluation, Mr Akintunde Adelana said the move was aimed at helping local, indigenous and potential investors to prepare and improve their capacities and

capabilities to participate in available and upcoming contracts/projects. According to him, the NCDMB’s compendium of opportunities is the agency’s attempt to create a database of opportunities covering the upstream, midstream and downstream sectors of the Nigerian oil and gas, The compendium contains detailed information on different projects, and also provided highlights of the projects according to their categories. In this report, Orient Energy Review in its usual culture of providing her esteemed readers with exclusive information provides an overview of the opportunities as showcased by the companies during 2019 NOGOF.

In the Upstream Sector 1. AMNI has the following projects:

OML52 Tubu Field Development Plan and OML 112/117 Langley Faculty Upgrade.

2. Chevron Nigeria Ltd:

Okan GGCP Debottlenecking; Keji GGCP Debottlenecking; Abiteye NAG Development Project; Escravos Export System Project;

ORIENT ENERGY REVIEW Vol.9 No. 03

LOCAL CONTENT other ongoing projects; Escravos Produced Water Disposal; Escravos Material Diesel Tank; Tank 2 & 8 Repair and Upgrade Project; Future projects; Tank Repair and upgrade (4,6,7, & 8) project and Agbami Gas Project.

3. Exxon Mobil: Usari Alternate Development Project; IBOT Wellhead platform Project; Riser Repair Program; Idoho BP Restoration Project; BOP SPM Integrity Restoration Project; Ubit PP Restoration Project; Asabo Flare Pipeline Replacement Project; Bosi Phase 1 Integrated Oil and Gas Development Project; Owowo Phase 1 Development; QIT Infrastructure Upgrade project.

4. First E & P:

OML 34; OML 83 & OML 85 (Anyala and Madu Integrated Development); OML 71 & OML 72; EWOGGSS (East-West Offshore Gas Gathering System).

5. Midwestern Oil & Gas: Tank Farm Expansion; Water Injection Facility Expansion; Gas Lift Facility; Flood Control, Landscaping at Facility. 6. NAOC: NAOC JV Okpai Phase

2; Zabazaba and Etan Project; NAOC JV-Unitized Field; NAE – OML 125 Infilling Campaign.

7. Shell: Bonga Infill Projects; HI; HAHB Gas; E-Block; Soku Compression 2; Bonny Projects; Forcados Projects; SSAGS Projects; Assa North; AMOR; Okoloma Compression; Afam Gas Supply 2; Iseni Early H/U; Okpokunou Cluster; EDG Agbada NAG; Re-Completion and Brass Fertiliser. 8. Total Upstream: Preowei Development (tie-back to Egina FPSO); Ikike Development.

In the Downstream and Midstream 1. DPR: Gas Flare Commercialisation

Project.

2. Greenville LNG: Construction of

Three Tran Modular LNG Plants in Rumuji, Emohua LGA, Rivers State; Construction of six LNG Retail Stations in the following locations: Benin, Edo State; Gwagwalada, FCT; Kakau, Kaduna State; Koton-Karfi, Kogi State; Rumuji, rivers State and Shagamu, Ogun State; Construction of LNG Fleet Maintenance Workshop in Kaduna and Rumuji and Implementation of GE Oil and Gas Design of Modular LNG Plant.

3. Nigerian Gas Company Ltd:

TNGP Phase 1 (Obigbo – Umuahia-Enugu-Ajaokuta Early Gas Phase (EGP) of the Trans-Nigeria Gas Pipeline (TNGP); Escravos – Ibadan-Ilorin-Jebba (EIJ) Gas Pipeline New Egbin Metering Station; Upgrade of Sapele, Oben, Delta IV and Ajaokuta Metering Stations; Odidi-Warri Expansion Pipeline (OWEP); Ajaokuta-Abuja-Kaduna-Kano Gas (AKK) Pipeline Project.

4. Pinnacle Oil & Gas: Lekki Free Trade Zone Bulk Storage Terminal and Mooring Facility. 5. Seven Energy: Expansion of

Central Production Facility (CPF) at Stubb Creek to about 10,000blpb production capacity; Construction of Spur line to enable gas supply to boost the production capacity of industries around Calabar, Cross River State; Ukanafun-Oma Power plant pipeline construction project meant to supply gas to Oma Power plant in Abia State.

Refineries

Dangote Refinery: Large single train

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petroleum refinery in the world – 650,000 barrels per day; Two of the world’s largest fertilizer trains – 3 million tones per annum; Largest sub-sea pipeline infrastructure in any country in the world – 1,100 KMS to handle 3 billion scf of gas per day; 400 MV power plant in refinery; Large petrochemical complex and Large gas treatment station.

Nigerian National Petroleum Corporation (NNPC) Refineries: Refineries rehabilitation.

While final investment decisions have been taken a number of the listed projects, yet a good number of them are still awaiting FIDs like Total’s Preowei and Ikike, Shell’s Bonga South West; Train 7, The Brass LNG and Olokola LNG, among others. The executive secretary of NCDMB, Engr Simbi Wabote Simbi Wabote at the launch of the Compendium of Opportunities had explained that the over 80 oil and gas opportunities would be developed by major international and indigenous operating companies in the short and long term, with the estimated cumulative value of the projects exceeding $100 billion. It was further revealed that the midstream and downstream sector alone has investment opportunities worth $51 billion to support the growth phase of Nigeria, while about $35.4 billion investment opportunities are domiciled in gas exploration and production activities, power plant projects, fertilizer plants, virtual pipelines and flare gas commercialization initiatives as well as $16 billion investment opportunities in the Free Trade Zone (FTZ).

LOCAL CONTENT

Gowon, Wabote harp on human capital development for national transformation

takeholders from various sectors including the former Military President, General Yakubu Gowon called for increased development of human capacities as the driver for national development. Gowon made this known during the second edition of Oil and Gas Trainers’ Association, OGTAN’s Annual Conference and Exhibition in Lagos. The former President who was the chairman of the event said that efforts must be geared at developing human capabilities in leadership and entrepreneurial skills. Adding that for the nation to be able to achieve economic competitiveness at the regional and global stage, it is important to place a premium on human capital development. He reiterated that the domestic values of the oil and gas can be retained only if there is continuous growth of the indigenous capacities. In his words, “as you know, globalisation and the knowledge economy are no longer matters of debate rather, they have become matters of existential considerations for nations and organizations alike. It is imperative that we place a pivotal premium on human capital development.” The Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu in his remarks stressed the need to set appropriate timelines to unlock the potentials that can make the oil sector drive itself in a way that will provide more opportunities for Nigerians. “We must begin to focus on how to unlock potentials in this field that will enable us to fix the peculiarities that are facing our industry. Our thoughts should be channelled to how do we fix powers, our ageing pipelines and get gas to become a clean energy efficiency country with less of

Gowon government resources and more of private sector resources.” The Executive Secretary, Nigerian Content Development and Monitoring Board, Engr Simbi Wabote in his keynote address themed ‘Human capital development as a driver for national transformation: Issues And Possibilities’ called for the need to speedily tackle the issue of human capacity development in the country. Stating that the government remained committed to meeting the demand for education and training of her populace, Wabote noted that government could not completely tackle it all alone, hence the need for greater involvement of the private sector. “A look at the Federal Government’s 2019 budget shows that N621billion is allocated to the Education sector with only N34billion or 5% of it set aside for capital expenditure. Despite our view about this budget provision, it cannot be compared to a scenario in which the 79 private universities were to be among those that the government had to cater for in its yearly budget. It is thus important that the government starts looking at passing over about 20% of the schools to private or

religious organizations within the next 5 years in order to lessen its burden.” Wabote pointed. Wabote highlighted the capacity building strides of the Board which has impacted positively on human, material and economic resources of Nigerians. He said, “We have taken specific steps to train maritime cadets, secondary school teachers, agricultural entrepreneurs, pilots, technicians, engineers, and environmentalists with over 6 million training manhours delivered” While commending OGTAN members for their efforts towards addressing human capital development need of the oil sector, Wabote charged the group to aim at being a top-notch training provider so as to reduce capital flight. The President of OGTAN, Dr Mayowa Afe in his welcome address noted that training and acquisition of necessary skills is a prerequisite for socio-economic transformation. He said, “Our wealth is not oil and gas but the human capital that we are endowed with by God”. While acknowledging the gains of the NOGICD Act as one of the best things that have happened to the country, Afe called for more opportunities to be given to indigenous trainers and involvement of OGTAN in the Board of various agencies of government. This year’s edition of the conference witnessed the conferment of award on the Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu as the Oil and Gas Man of the year and Engr Simbi Wabote awarded for his innovations in the local content development. Other awards were presented to the Group Managing Director, NNPC, Dr Maikanti Baru among others.

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LOCAL CONTENT

OTC, for the serious-minded! Peace Obi

ffshore Technology Conference (OTC) is renowned as the largest oil and gas industry trade show in the world that provides excellent opportunities for global sharing of technology, expertise, products, and best practices as it brings together industry leaders, investors, buyers and entrepreneurs to develop markets and business partnerships. Since the premier edition at its founding city of Houston in1969, the Conference has continued to evolve both in its impact, influence and relevance. Kicking off with 2,797 registrants, 112 paper presentations and 368 exhibition spaces on May 19-21, 1969, OTC’s subsequent editions have continued to record remarkable growth in acceptance, size and worldwide participation. In 2018, which marked the 50th anniversary of OTC had more than 61,000 attendees from more than 100 countries gathered at the NRG Park, the venue of the annual conference, while the exhibition covered more than 585,000 net square feet, including outdoor exhibits. like manner, over 60,000 professionals from more than 100 countries are set to attend the 2019 edition. According to the organisers, the conference would include more than 500,000 square feet of exhibit space with more than 350 peer-selected

technical presentations covering topics from the wellbore to topsides. Typical attendants include engineers, technicians, top executives, operators, scientists and managers in the offshore energy sector. True to its commitment to foster the exchange of technical knowledge relevant for the development of offshore energy resources, primarily for oil and gas natural resources, every edition showcases the latest and most advanced hardware and software technologies that are leading the industry into the future. This, it does through the “Annual Spotlight on New Technology Awards” which recognises the latest discoveries in technologies as awards are given based on such criteria as new and innovative, proven broad interest for the industry and significant impact beyond existing technologies. According to the Spotlight Award Committee Chair Paul Jones, the advancements in technology allow the oil and gas industry to operate more safely, sustainably and efficiently. Commenting on the 2018 edition, Jones said, “As OTC celebrates its 50th edition, we reflect on the innovations that have been achieved throughout the past five decades. We can never forget that it is companies like the 2018 Spotlight Award winners that are driving the technological advancements necessary to propel our industry for the next 50 years.”

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Opinions about OTC Speaking on the impact of OTC on global oil and gas industry, the Chairman and CEO of Total, Patrick Pouyanné said that it gives participants “access to leading-edge technical information, the industry’s largest equipment exhibition, and valuable new professional contacts from around the world. “Its large international participation provides excellent opportunities for global sharing of technology, expertise, products, and best practices. OTC brings together industry leaders, investors, buyers, and entrepreneurs to develop markets and business partnerships. “For 50 years, OTC has encouraged scientists and engineers to develop innovative technologies that have unleashed the potential of offshore energy sources needed for global growth and progress.” And to the former President of Port Harcourt Chamber of Commerce Industry, Mines and Agriculture, and currently the President, Forum of South-South Chambers of Commerce, Industry, Mines and Agriculture (FOSSCIMA), Prince Billy Harry, OTC is nothing but a jamboree for government officials who are more concerned with the fun of making the international trip and getting estacodes. He insisted that the government’s spending on OTC through sponsorship of

LOCAL CONTENT

its delegation to the annual trade event has not brought a commensurate impact on the country’s conduct of its oil and gas business. According to him, the positive impact is rather felt among the private sector participants, who he said have tapped into different opportunities the forum offers to advance their businesses. He described government’s expenditure on OTC as “a colossal waste, there is no evidence that the Nigerian government, through its ministerial delegations, the NNPC (Nigerian National Petroleum Corporation and the various chambers of commerce attend the Offshore Technology Conference every year. “For all the years various federal delegations attended the OTC, I have not seen a report of the business conducted there, in view of international investments. If ever there is any report, it will be those supporting the retirements of the huge foreign exchange voted for the trips. “I have attended the OTC over 10 times, and I know that at the individual firm level, the OTC has been helpful to Nigerians, especially those seeking collaborations and partnerships, but at the government level, nothing. Sending government delegations with money from the federal treasury is a complete waste,” Harry said. For the Principal Consultant, Lonadek Inc., Dr Ibilola Amao, the Offshore Technology Conference is about technology and innovation. Discountenancing the description of OTC as a jamboree in some quarters, Amao said, “it is a conference a lot of serious business owners make a lot of sacrifices to

attend because they want to learn, meet the right people and develop long-lasting relationships that oftentimes translate to business insight and opportunities. Technology and Innovation is a key success driver and is the bedrock of our business at Lonadek Inc. It is serious business! Stating that while different marketing gimmicks may be adopted by some participants which may seem as a jamboree the human resource expert said, “I think some persons celebrate at OTC to pull a crowd or grow their network but this is neither the focus nor the norm for most Nigerians, government officials or otherwise. With the current exchange rate and awareness created by NCDMB, whereby Nigerians can enjoy a right of first refusal for any oil or gas related opportunity in Nigeria, serious-minded Nigerians now think of return on investment before considering a trip to Houston. A lot can be achieved by Skype or teleconference.” Speaking on some of the visible impacts, the international conference speaker said, “Petroleum Technology Association of Nigeria (PETAN) has made a significant impact by hosting serious minded technology focused Nigerian companies at the Nigerian pavilion. They should be commended for the hard work they invest to put together a good show. I must admit mit that they have raised aised the bar and d challenge more Nigerians to take an outing at the OTC more seriously.” Speaking further,, she said that at good reason n such as the attraction of Foreign Direct Investment, an opportunity for one-on-one engagements with top officials who one might not have direct access to or may not be opportune to spend quality time with locally, among others. At the end of the day, everyone has to make a personal or business decision based on return on investment.” The former Chairman of PETAN, Mr Emeka Ene, said that many companies have derived tremendous value from exhibiting at

the OTC over the years. “I know of at least two PETAN companies who have secured export orders at the OTC for products they manufacture in Nigeria. “Many other companies schedule regular meetings with clients and suppliers during the OTC week. Some of our members operate in places like Mauritania, Angola, Yemen, Venezuela, South Sudan and many other oil provinces because of their exposure at the OTC. The OTC gives the opportunity to meet up with all these important stakeholders in one venue and raise Nigeria’s profile in the process. It is an effort that is far from being a jamboree.” PETAN Publicity Secretary, Mr Ranti Omole, in a statement said the misconception that trails OTC stems from the fact that “We have not fully explored all the opportunities it offers, understand the intricacies and why the global oil and gas businesses would go to the OTC to exhibit their services, use the platform for global business expansion and seek to forge relationships with reputable regional and international service companies. He said, “PETAN is committed to the promotion and the development of the oil and gas industry in Nigeria, through the organisation of and participation in conferences, seminars and workshops, as well as for Nigerian oil and creating opportunities oppor companies to develop, in a highly gas comp competitive environment.” compe Confirming Association C attendance at the 2019 OTC, at Omole said the Nigerian O Pavilion organised by PETAN along with 22 other national pavilions at this year’s event. These National Pavilions include Canada, Scotland, USA, Norway, Japan, Brazil, Germany, France, China, South Korea, Singapore and many others. m ““We are also expecting oil and d gas ggaas contingents from other It is an event that African n co ccountries. ou strategic and forward-looking organisations must not miss. PETAN has been organising and hosting the Nigerian pavilion at the OTC Houston, Texas since 2005, and we also organise annually discussion panels at the event. “Join us at the Crown Plaza Hotel on the 7th May 2019 for discussions on the business opportunities in Nigeria and on the 8th May 2019 for the African Regional Technical Workshop.”

ORIENT ENERGY REVIEW Vol.9 No. 03

Oil &Gas

Techno Oil commences commercial production of gas cylinders ...partners Nigerian Army LPG Welfare Scheme Chibisi Ohakah, Abuja

igerian Army has confirmed receipt of LPG cylinders manufactured by Techno’s newly built manufacturing plant in Lagos, which started rolling out cylinders earlier this year. The cylinders are for the flag off of Nigerian Army LPG Welfare Scheme, aimed at promoting LPG adoption among its officers and men. TecnoGas cylinders, which have secured certifications by various agencies including the Standards Organisation of Nigeria (SON), are also being produced in commercial quantities for Nigeria and overseas markets. Speaking on the business engagement with the army, the Executive Vice-Chairman of the Techno Oil Group, Mrs Nkechi Obi, said the interest shown by the army in LPG adoption was pivotal in the campaign to promote the use of cleaner energy. According to her, the Techno Oil cylinder manufacturing plant has the capacity to produce up to five million LPG cylinders annually to meet domestic and export needs. She noted that Techno Oil Group had positioned adequately to meet Nigeria’s cylinder needs with the commencement of commercial production of high-quality cylinders at the company’s LPG manufacturing plant. Obi said that Techno Oil could supply any quantity of cylinders desired at the army’s micro-distribution centres, which were established to make officers and men have easy access to LPG facilities. She decried what she described as the high level of sub-standard and used cylinders being imported into the country by un-

scrupulous businessmen. Obi said that her plant had been producing different sizes of cylinders and that the plant was built with complete production facilities with a modern laboratory as well as testing equipment. The industrialist expressed her excitement on the interest shown by the army in the LPG adoption drive, saying that the development would stimulate LPG interest among other key national institutions. “We are calling on other government agencies, ministries and departments to emulate the army’s gesture of patronising locally-made cylinders and accessories. “We are ever ready to collaborate with any agency or institution in our bid to deepen LPG adoption in Nigeria,’’ she said. She, however, appealed for government’s support and incentives to encourage affordability of cylinders to sustain the country’s LPG adoption programme. Obi also called on the government to put stringent measures in place

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to check the importation of LPG cylinders to discourage capital flight. The Nigerian Army inaugurated its scheme by Welfare Guarantee Ltd., on April 11, and followed up with the inauguration of a Liquefied Petroleum Gas (LPG) plant at the Mambilla Barracks in Abuja. The event was witnessed by the minister of state for petroleum resources, Mr Ibe Kachikwu, who directed that filling stations would henceforth, host LPG plants as part of efforts to deepen cooking gas usage in Nigeria. Techno Oil blazed the trail a few years ago by embarking on local manufacturing of LPG cylinders as part of measures to deepen LPG adoption in the country. The company has after securing SON certification, obtained the agency’s compulsory MANCAP certification. The certification was given after the company successfully completed SON’s Mandatory Conformity Assessment Programme.

Oil &Gas

Stakeholders harp on benefits of LPG to Nigeria Ngozi Egenuka

takeholders at the just concluded 3-day 2019 Liquified Petroleum Gas, LPG West Africa Forum and Exhibition held in Eko Convention Center, Lagos has called on the public and private sectors to invest in Liquified Petroleum Gas (LPG), stating that it benefits both the economy and the environment. The President of the Nigerian Gas Association Mrs Audrey N. Joe-Ezigbo said LPG was a core part of Nigeria gas agenda encapsulated in the Nigeria gas policy, where a whole segment was dedicated to the development of the LPG sector for the economic, health and environmental benefits. Themed: “Building LPG Business in West Africa”, Joe-Ezigbo said the objective of the forum was aimed at creating a platform for the business community to share, network and exchange information and ideas, in order to promote LPG in the region.“We gather experts in the field to discuss the economic and environmental benefits of LPG.” Speaking on investment opportunities, Joe-

Ezigbo said, “Investment opportunities now exist around the development of various storage and delivery facilities across the country. Hence the need to make sure LPG is available all over Nigeria, such that it can be deployed beyond cooking. There is also room for LPG utilization even in power and various types of industries and this is where the investment comes in,” she said. While noting that there were issues around education and awareness in Nigeria on LPG usage, she, however, said that some private and government agencies were already addressing it. “We are dealing with issues like importation of cylinders, unfortunately, most are substandard and the key constraints are also around the storage, distribution facilities and cylinders. We, therefore, call on the government to put in place regulations and physical incentives that would encourage the development of LPG in Nigeria”, she added. Speaking also, Chairman Planning Committee, Gas Academy, Jeffrey Leung explained there is a partnership agreement between

World LPG and a non-profit organization to help governments and other users. He noted that the Academy has been working with the government of Cameroon, Kenya, Ghana, Rwanda and Senegal. The Chairman, The Global LPG Partnership, Renzo Ezio Bee, said that based on the experience of the developed market around the world, that availability of cylinders is key to the widespread of LPG across the country. His words, “There should be greater investment in cylinders to ensure accessibility and this can be done through a network of outlet for sales.” Adding that awareness and safety guidelines on how to deal with LPG for cooking is obviously important, “Before you talk about affordability, you first need to have the infrastructure and the cylinders are part of the infrastructure if you don’t have the cylinders in the streets, there is no need for big terminals. “To invest in cylinders, you need to know who is going to be responsible for what, when there is a scarcity of refill, price abuse, injury, in the central role of this”, he said.

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Oil &Gas

Nigerian, Qatari cargoes head for UK Peace Obi with agency report

wo liquefied natural gas terminals located at the United Kingdom’s Milford Haven waterway are set to receive a cargo each from Nigeria and Qatari. The Dragon LNG terminal is scheduled to receive a cargo from Nigeria transported onboard the 141,000 cubic meters LNG Akwa Ibom liquefied natural gas carrier. The UK Dragon LNG terminal According to Milford Haven shipping on LNG terminal at Waterston, Milford data, the second cargo, Q-Max LNG carriHaven in Pembrokeshire, is owned by er Al Mayeda, transporting a Qatari cargo Shell (50 per cent) and Petronas (50 per is headed to the South Hook liquefied cent). And that the facility has a maxinatural gas terminal. mum gas send out rate to the NTS of 7.6 Findings by OER showed that the Dragbillion cubic meters of gas per annum.

The terminal can supply up to 10 per cent of the UK’s energy needs. Also, the South Hook LNG terminal is owned by Qatar Petroleum, ExxonMobil and Total, it can provide around 20 per cent of Britain’s natural gas requirements.

ExxonMobil signs 20-year LNG agreement with Zhejiang Energy

xxonMobil said that it signed a sales and purchase agreement with Zhejiang Provincial Energy Group for liquefied natural gas (LNG) supply. Under the agreement, Zhejiang Energy is expected to receive 1 million metric tons per annum of LNG over 20 years. “This sales and purchase agreement represents an important milestone and provides a solid foundation for our strategic partnership with Zhejiang Provincial Energy Group,” said Peter Clarke, senior V.P. LNG at ExxonMobil. “ExxonMobil shares Zhejiang Energy’s vision in developing a major LNG gateway in the Ningbo-Zhoushan region,” Clarke said. “We look forward to continuing our support for Zhejiang Energy during the construction, commissioning and operation of its Wenzhou LNG receiving terminal.” ExxonMobil has been actively re-engaged in China’s energy industry since the late 1970s. With a long-term commitment

to China, ExxonMobil expects to help meet China’s energy needs through its products, technologies, partnerships and

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investments. LNG World News

POWER

‘Renewable energy deserves better policy framework’ Peace Obi

s the global energy demand increasingly tilts along renewable energy sources, the need for Nigeria to adopt a more friendly policy framework that will enable improved awareness and adoption of cleaner energy sources amongst Nigerians have been harped. Stating that renewable energy is one of the biggest things to happen in the world’s energy chain, human health and environment, the President, Council for Renewable Energy (CRE) in Nigeria, Mrs Nana Okuribido said that government must be deliberate in its support for the adoption of renewable energy sources in Nigeria for it to thrive. Okuribido said that renewable energy such as solar, wind, hydropower among others is also important in tackling the problem of rural electrification, particularly in generating electricity for communities that are off-grid. According to her, “it is possible to go into the 774 local governments of Nigeria and give every Nigerian access to electricity through renewable energy sources.” Okuribido, how-

ever, said that the high cost of installation of renewable energy sources has remained a major constraint in its deployment. She said, “Renewable energy has continued to face a lot of challenges. It is capital intensive and we still have a lot of people who don’t believe in it. Another challenge is the policy framework. The policy framework is not friendly enough. If the government can allocate about 30 to 40 per cent of the energy budget to renewable, it will go a long way to grow the sector.” She explained that in 2015, the current administration drafted the Nigerian Renewable Energy and Energy Efficiency Policy (NREEEP), which focused on harnessing alternative energies such as hydro, solar, wind and biomass. Stating that despite these plans, there has been no significant addition of renewable energy to the Nigerian energy mix. Okuribido called on the government and other agencies to make efforts in implementing policies that have been drafted. Calling for more participation of women in the sector, Okuribido said, “Women participation in this sector has been low, although, there has been a little improvement in the last five years as more women are

beginning to show interest because about 20 years ago, I was the lone voice in the space for women. However, there is a lot of ground to cover as to be at par with the global renewable space “Women in renewable energy in Canada is over 400 in contrast to about 30 in Nigeria with only about a good percentage very passionate about implementing and deploying renewable energy as well as capacity building and empowerment programmes.”

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POWER

Renewable energy now accounts for a third of global power Peace Obi with agency report

he decade-long trend of strong growth in renewable energy capacity continued last year with global additions of 171 gigawatts (GW), according to new data released by the International Renewable Energy Agency (IRENA). The annual increase of 7.9 per cent was bolstered by new additions from solar and wind energy, which accounted for 84 per cent of the growth. A third of global power capacity is now based on renewable energy. According to IRENA’s annual Renewable Capacity Statistics, 2019, which indicated growth in all regions of the world at varying speeds showed that Asia accounted for 61 per cent of total new renewable energy installations. Adding that the installed renewable capacity grew by 11.4 per cent – the fastest in Oceania that witnessed a 17.7 per cent rise in 2018. This, left Africa’s 8.4 per cent growth in the third place, just behind Asia. And that nearly two-thirds of all new power generation capacity added in 2018 was from renewable, led by emerging and developing economies. “Through its compelling business case, renewable energy has established itself as the technology of choice for new power generation capacity. The strong growth in 2018 continues the remarkable trend of the last five years, which reflects an ongoing shift towards renewable power as the driver of global energy transformation “Renewable energy deployment needs

to grow even faster, however, to ensure that we can achieve the global climate objectives and Sustainable Development Goals. Countries taking full advantage of their renewables potential will benefit from a host of socioeconomic benefits in addition to decarbonising their economies,” said IRENA Director-General Adnan Z. Amin. IRENA’s analysis also compared the growth in generation capacity of renewables versus non-renewable energy, mainly fossil-fuels and nuclear. While non-renewable generation capacity has decreased in Europe, North America and Oceania by about 85 GW since 2010, it has increased in both Asia and the Middle East over the same period. Since 2000, non-renewable generation capacity has expanded by about 115 GW per year (on average), with no discernible trend upwards or downwards. Highlights by technology: Hydropower: Growth in hydro continued to slow in 2018, with only China adding a significant amount of new capacity in 2018 (+8.5 GW). Wind energy: Global wind energy capacity increased by 49 GW in 2017. China and the USA continued to account for the greatest share of wind energy expansion, with increases of 20 GW and 7 GW respectively. Other countries expanding by more than 1 GW were: Brazil; France; Germany; India; and the UK Bioenergy: Three countries accounted for over half of the relatively low level of

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bioenergy capacity expansion in 2018. China increased capacity by 2 GW and India by 700 MW. Capacity also increased in the UK by 900 MW Solar energy: Solar energy capacity increased by 94 GW last year (+ 24 per cent). Asia continued to dominate global growth with a 64 GW increase (about 70% of the global expansion in 2018). Maintaining the trend from last year, China, India, Japan and Republic of Korea accounted for most of this. Other major increases were in the USA (+8.4 GW), Australia (+3.8 GW) and Germany (+3.6 GW). Other countries with significant expansions in 2018 included: Brazil; Egypt; Pakistan; Mexico, Turkey and the Netherlands. Geothermal energy: Geothermal energy increased by 539 MW in 2018, with most of the expansion taking place in Turkey (+219 MW) and Indonesia (+137 MW), followed by the USA, Mexico and New Zealand. Globally, total renewable energy generation capacity reached 2,351 GW at the end of last year – around a third of total installed electricity capacity. Hydropower accounts for the largest share with an installed capacity of 1 172 GW – around half of the total. Wind and solar energy account for most of the remainder with capacities of 564 GW and 480 GW respectively. Other renewables included 121 GW of bioenergy, 13 GW of geothermal energy and 500 MW of marine energy (tide, wave and ocean energy).

SPECIALREPORTS

How beneficial is rise in oil price to Nigeria? Pita Ochai

s oil price return to $70/bbl, exporting countries are on the jubilation side. Production cuts by the Organisation of Petroleum Exporting Countries, OPEC, and its partners, a coalition that pumps about half of the world’s oil, has rallied crude to a four-month high, a strategy they previously deployed in 2017 – but whereas that effort initially struggled, this time the impact has been almost immediate. By cutting supply, OPEC and its allies prevented the re-emergence of a surplus due to booming U.S. shale output and a slowing global economy. As a result, oil prices climbed 27 per cent in the first quarter, their strongest in almost a decade. At about $70/bbl, crude is approaching the levels the Saudis and other OPEC members need to cover government spending. Ordinarily, consistent rise in the crude

oil price should be a blessing to Nigeria considering the revenue that should accrue to the federation account. However, the country spends a lot of money to subsidise the consumption of petroleum products especially petroleum motor spirit. According to the US EIA, member countries of the OPEC earned about $567 billion in net oil export revenues (unadjusted for inflation) in 2017. It said the 2017 net oil export revenues increased by 29 per cent from the $441 billion earned in 2016. Yet, subsidy on petrol appears to have denied Nigeria the benefits from the oil price rise. Petrol supply figures recently indicated that the amount of financial subsidy Nigeria currently absorbs to keep the pump price of petrol at N145 per litre instead of the expected open market price may have gone up to N65.60. Based on the oil price rise, the land-

ing cost of petrol into the country had increased. It is reported that from operators in Nigeria’s downstream petroleum sector that the landing cost of a litre of petrol had gone up to N196.30 per litre. Based on this, it added the N14.30 distribution margin approved in the last pricing template for petrol by the Petroleum Products Pricing Regulatory Agency, PPPRA, – an agency of the federal government responsible for periodically calculating and approving products’ pricing for the market – to the N196.30 landing cost, and arrived at N210.60, which should be the current open market price of a litre of petrol in the country. Following from this, it then calculated the difference between N210.60 (actual market price per litre) and N145 (government price per litre) and arrived at N65.60, which is the subsidy or under-recovery

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SPECIALREPORTS recorded over every litre of petrol supplied by the Nigerian National Petroleum Corporation (NNPC), which has since October 2017 reportedly became the sole importer of petrol in Nigeria. Further to this, multiplied the N65.60 by 46.54 million litres the ministry of petroleum resources disclosed was the daily petrol consumption level of the country in August and arrived at N3, 053,024,000, which was the figure the country may have incurred daily as subsidy on petrol consumption. Additionally, for a period of 31 days, the calculation indicated that N94, 643,744,000 could have been absorbed as subsidy by the NNPC to keep the pump price at N145 per litre. Though the NNPC did not confirm the figures, its Group General Manager, Public Affairs, Mr Ndu Ughamadu, however, explained that it has the financial capacity to absorb any gap between the landing costs and the pump price of petrol in the country. Ughamadu equally stated that the NNPC would continue to shoulder such a burden to keep petrol supplies stable for all Nige-

rians. As it stands, the NNPC is currently playing the role of a ‘social supplier’ with reference to PMS. The NNPC has the financial capacity to absorb any gap between the landing cost and prevailing pump price of PMS,” said Ughamadu. He added: “The Corporation, therefore, will continue to shoulder associated losses in order to ensure an adequate and robust supply of petroleum products to consumers and all Nigerians.” In December 2017, when oil price was $64.37 per barrel, the NNPC’s Group Managing Director, Dr Maikanti Baru, disclosed to journalists that the landing cost of petrol was N171.40 and that a metric tonne cost $620. Similarly, Baru explained that NNPC’s crude for product swap programme – the Direct Sales Direct Purchases (DSDP) – was under pressure and unable to satisfy increased petrol consumption in the country because it was originally programmed to meet the country’s 35 million litres daily consumption level. He particularly stated then that: “The landing cost goes with the CIF (Cost,

Strong laws, poor implementation, bane of African resource-rich countries – research

ountries across resource-rich sub-Saharan Africa are failing to reap the benefits from their wealth of endowments of oil and minerals due to an “implementation gap” between the laws that govern extractive industries and the practices, in reality, new

“The Corporation, therefore, will continue to shoulder associated losses in order to ensure an adequate and robust supply of petroleum products to consumers and all Nigerians.”

Silas Olan’g, Africa Co-Director for the Natural Resource Governance Institute.

research has stated. An analysis by the Natural Resource Governance Institute of the extractive industries in 28 sub-Saharan African countries reveals that all but two – Botswana and Zambia – are failing to deliver the standards laid down in their laws.

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Insurance and Freight) price of PMS. “The government has consistently indicated that the N145 per litre is the price and to do that, it has mandated the NNPC to keep the equivalent depot price of N133.28 per litre, which will keep a cap of N145 per litre, there is a lot of profit in-between after taking the transportation cost of N7 off, so there is sufficient margin for the marketers in that PPPRA template at the price cap.”

Researchers using data from the Resource Governance Index found that in this respect the region performs worse than any other in the world. “If countries in sub-Saharan Africa closed the ‘implementation gap’ and fully implemented their own laws, they could

SPECIALREPORTS generate greater income from natural resources. They could also better combat the negative human and environmental impacts of extraction,” said Silas Olan’g, Africa Co-Director for the Natural Resource Governance Institute. Africa is abundant in natural resources and is home to 30 per cent of the world’s oil, gas and mineral reserves. More than half the exports of many countries in sub-Saharan Africa come from natural resources and as much as 90 per cent in the most oil-dependent countries. Mineral reserves represent a large share of government revenues across the region and have the potential to become even more important in countries with recent discoveries, such as oil and gas in Tanzania and Uganda, and large reserves of strategic minerals such as cobalt in the Democratic Republic of Congo. The biggest implementation challenges faced by resource-rich societies in sub-Saharan Africa are fulfilling the legal requirements to transfer revenues collected from oil, gas and mining to local authorities, and publicly disclosing information on social and environmental impacts. Half of the 28 countries studied do not disclose environmental and social impact assessments, even though this is a legal requirement in many countries. “Trust in government and companies erodes when legal reform is not followed and citizens are left in the dark. Closing the ‘implementation gap’ is in everyone’s interests because ultimately it enables countries to reap the benefits that their mineral wealth should offer,” said Olan’g. But commodity booms and busts have fuelled public spending in resource-rich African countries, resulting in budget imbalances and high public debt. Many countries that have a fiscal rule to stabilize public finances failed to comply with it, raising the question of whether the government had established appropriate monitoring mechanisms or the rules were fit for purpose. Sub-Saharan Africa lags behind other parts of the world in governing stateowned mining and oil companies and natural resource funds, which manage billions of dollars of resource revenues in countries like Angola and Gabon.

Governments tend not to respect rules for managing assets held in natural resource funds and for disclosing conflicts of interest, particularly where corruption is poorly controlled—a reality in most of the countries surveyed. “Building capacity and allowing space for independent oversight is critical for holding government institutions accountable in resource-rich countries. Official audit bodies and non-state actors like the media play an important role here,” said Olan’g. Supported by the Africa Mining Vision and the Extractive Industries Transparency Initiative, countries in sub-Saharan Africa have widely reformed and modernized laws governing the extractive industries, with more reforms underway across the region. The resulting legal frameworks currently have stronger transparency and accountability rules than most other parts of the world, even though there are shortcomings in implementation. “It is unsurprising but sobering to find that the more recent the reform, the larger the gap in implementation. It serves to illustrate that legal reforms can make headlines but it is the implementation that will ultimately deliver benefits to citizens,” said Olan’g. “If managed well, natural resources offer the potential for driving economic

development. Governments in sub-Saharan Africa are well-placed to build on the strong laws they have developed, but this review of the index shows how they now need to turn greater attention to implementation.”

Building capacity and allowing space for independent oversight is critical for holding government institutions accountable in resourcerich countries. Official audit bodies and nonstate actors like the media play an important role here,” said Olan’g.

ORIENT ENERGY REVIEW Vol.9 No. 03

INTERVIEW

Sound biz principles made GGI one-stop shop for drilling chemicals ...NOGICD Act has changed the face of oil and gas business Dr Innocent Akuvue is the Chairman, CEO, GGI International Nigeria Limited, an indigenous company that blends and produces chemicals in-country and handles oil treatment, among other services. In this interview with Peace Obi on the sideline of 2019 Nigerian Oil and Gas Opportunity Fair in Yenagoa, Bayelsa State, Akuvue said that NOGICD Act has changed the dynamics of oil and gas business in Nigeria and that GGI is well of today with strong business principles. According to him, with the enabling law, and leveraging on government’s support programmes, companies that have their act together, won’t necessarily ﬁnd funding as their major challenge, among other sundry issues. Let’s get to know you and the activities of your company. My name is Dr Innocent Akuvue, Chairman, CEO, GGI International Nigeria Limited. I am an engineer by profession. GGI is a Nigerian company but an international company by practice. We are into oil treatment and services. We blend and produce chemicals in-country; we also import a variety of treatment chemicals. Presently, we work with such companies like Baker Hughes GE and some others in commodity chemicals. We were incorporated in 1991 but we effectively started business in 1996. What was business like before the advent of the NOGICD Act and how has it impacted your business? It was predominantly importation. But today, it is a different story as the Act has reshaped business activities in the nation’s oil and gas industry. Also, through NCDMB it empowers

ORIENT ENERGY REVIEW Vol.9 No. 03

INTERVIEW and encourages local production and value retention in-country. For example, on the 9th and 10th April, we will be exhibiting in a programme organised by Agip in Abuja which is mainly for promoting research and development of in-country products and services. So, we will be there and that’s what the NOGICD Act has enabled to happen in the Nigerian oil and gas industry. Nigerian businesses are beginning to think home and many of us are deeply committed to research towards sourcing materials that could be used for production in-country. The Act has impacted our business very positively because it has helped us to build in-country capacities. For most indigenous companies, it ushered us into a new era of total reorientation in what we do. For GGI, our efforts are directed on how much chemicals we can blend or produce in-country. So, I can say that the NOGICD Act has changed the dynamics in the way businesses are done in Nigeria especially in oil and gas. Lack of funding has always been blamed for indigenous companies’ inability to build adequate and strategic capabilities as well as take up available opportunities in the Nigeria oil and gas industry, is it any different with GGI? I want to say that there is no company that wouldn’t build capacity because of lack of finances. I say this because I am aware of different programmes designed by the government which are aimed at strengthening indigenous companies’ active participation in the nation’s oil and gas industry. Also, if you have the right concept, the banks are there, the NCDMB is also partnering with the Bank of Industry to make funds available at a reasonable interest rate. Also, the essence of a conference and exhibition like this is for us to hear more of what could be done just like the second technical session – finance and investment addressed. Here, you will be able to discover different solutions available for your funding need and garner knowledge from a whole lot of quality information that is put out at participants’ disposal during the event. Just like Ms Nike Kolawole told attendees how a particular contractor won a contract and couldn’t fund the project eventually sourced funds from foreign firms and some Nigerian banks. And I think funding is not necessarily an issue now, rather, it is your business model. If you are able to think right and put your paperwork right and the banks are convinced that you have a good project, then they will deal with it. What is the perception of your product and

The challenges have always been building capacities as we mentioned earlier and of course, a typical Nigerian businessman will start by doing everything and along the line, it begins to cut a niche. So, raising fund was an issue before but then, we realised that we were the one holding ourselves because we were not making the right contacts. services in the country? We are well accepted and recognised in the sector. If you look over there, you will see that we are not just doing things but that we are doing things based on standards. Our company is ISO 9001 certified which is quality management. We are environmentally 14001 and in safety, we are also 18001. So, our products are perceived as one of the best anywhere in the world. Before attaining your present height, what are some of the challenges you faced? The challenges have always been building capacities as we mentioned earlier and of course, a typical Nigerian businessman will start by doing everything and along the line, it begins to cut a niche. So, raising fund was an issue before but then, we realised that we were the one holding ourselves because we were not making the right contacts. When we started making the right contacts and knowing what to do, those initial challenges gave way. Where do you see GGI in the next five years, are you planning to go into E&P soonest? In the next five years, GGI would have grown into a much specialised company in the upstream sector, treatment and applications. Anyway, we are not overly ambitious so, we just want to continue to perfect and improve on our services in the oil and gas industry. We are not thinking of going into

production and exploration for now. What are your dreamed companies in global oil and gas space? The likes of Halliburton, Baker Hughes and Schlumberger, these are the companies we want to be like, someday in the future even though we are having some kind of collaboration with some of them but the whole idea about GGI is to become a global brand in the oil service industry. What are some of the practical steps you’ve taken in recent times to improve the status of this company? Standardization! I just rolled out a number of certificates we have. Those are international certifications recognised anywhere in the world and that means the bar is high on our side. Our staff go through a lot of training as we strive to remain international both in capacity and products. Are you aware Project 100 and is your company keying into it? Very well! And we are on it. What are the steps you are taking or have taken to see that these opportunities are grabbed and then make the best out of it by your company? One of them is creating visibility. In this country, if you mention the top five oil service companies, GGI will certainly drop in. That is the extent of the visibility we’ve created and now by subscribing to your magazine, Orient Energy Review we are also creating more visibility, especially among your readers in the local and international world. What is your advice to upcoming investors in this line of business? Patience and Integrity are all that is required. You just have to be patient and build integrity along the line; your yes must be yes and your product must be right. Patience comes into play because it’s not a one day or two days thing. So, you must be patient, insist on quality and of course, you must be focused and know where you’re going. What’s the best way of describing GGI? We are a one-stop shop for all drilling and production chemicals in the oil and gas industry. With GGI built on sound business principles in addition to continuous capacity building of its staffers, the establishment is better described as an international brand as these qualities have left this business of over 20 years as a one-stop shop for drilling and production chemicals.

ORIENT ENERGY REVIEW Vol.9 No. 03

MARITIME

Sustaining Africa’s maritime industry Pita Ochai

ith more than 90% of all imports and exports trade being facilitated by sea through ports, Africa’s maritime transport sector remains relatively undeveloped. The continent also has some of the most important global sea lanes passing through its waterways; major routes navigate the Cape of Good Hope between the Atlantic and Indian Oceans, through the Red Sea and east-west through the Mediterranean Sea. The growth of African’s maritime industry highlights the potential for positive impacts on its socio-economic development, especially of coastal states, but it also comes with some challenges. As Africa’s maritime sector grows, with increasing marine traffic and cargo volumes through its ports, so

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does the potential for heavier environmental and social impacts. With more than 75% of the planet covered by water, marine pollution is one of the most intractable global environmental challenges and one the world will face for many generations to come. And shipping now accounts for the majority of the world’s trade transportation with the volume of freight being transported means that a certain level of marine pollution is inevitable. Although the shipping sector has recognised its role in environmental and social protection and has made great strides in preventing and reacting to oil spills—which are a visible environmental impact of shipping—mitigating risks to the oceans remains a concern. Another environmental

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MARITIME Possible shortterm measures identified include the development of technical and operational energy efficiency measures for ships; encouraging national action plans for GHG emissions from international shipping; encouraging port developments to reduce GHG emissions, including ship and shore renewable power supplies and infrastructure to support low-carbon fuels; and providing incentives to develop and adopt new technologies impact of shipping and maritime activities is the generation of hazardous wastes and other marine pollutants from ships at sea. During normal operations, crews and

passengers aboard ships produce sewage and wastewater. Historically, the typical method of disposing of waste generated on board a ship was to discharge it directly into the sea. Bilgewater (i.e., any water that does not drain over the sides of the ship) may be contaminated with oil, human waste, detergents, pitch and other chemicals that may be harmful to the environment. To address this issue, the International Convention for the Prevention of Pollution from Ships (MARPOL) was adopted. Since its inception in 1973, numerous annexes have addressed operational and accidental causes of ship-based pollution. For example, Annex V of MARPOL prohibits ocean dumping (other than limited wastes such as food waste). However, pollution at sea is notoriously difficult to police, and international monitoring indicates that dumping at sea persists at very significant levels. Pollution from ships is not restricted to the marine environment. Fuel used in the shipping industry is typically a heavy fuel oil that, when combusted, produces carbon dioxide (CO2), sulphur oxides (SOX) and nitrogen oxides (NOX). According to the IMO, global shipping accounts for approximately 1 billion tons of CO2 annually, representing 2.6 percent of global greenhouse gas (GHG) emissions. With the rise of global trade and increased fuel consumption in the shipping industry that accompanies it, air emissions from shipping continue to rise. In May 2005, Annex VI of MARPOL took effect to address the negative impacts of air emissions from ships (from SOX, NOX, ozone-depleting substances and volatile organic compounds from shipboard incineration) and includes mandatory energy-efficiency measures to reduce GHG emissions. Tighter emissions limits were introduced in July 2010 and, in its efforts to make shipping “cleaner and greener,” in December 2017, the IMO committed to a “Respond to Climate Change Strategy” to reduce carbon emissions from ships. It has adopted a strategy for 50 per cent reduction in GHG emissions by 2050 compared to 2008, looking to reach net zero emissions as quickly as possible. In April 2018, the IMO’s Marine Environment Protection Committee (MEPC) adopted the Initial IMO Strategy on reduction of GHG emissions from ships (the Strategy). All ships are required “to give full and complete effect, regardless of flag, to implementing mandatory measures to ensure the effective implementation” of the Strategy. Possible short-term measures identified

include the development of technical and operational energy efficiency measures for ships; encouraging national action plans for GHG emissions from international shipping; encouraging port developments to reduce GHG emissions, including ship and shore renewable power supplies and infrastructure to support low-carbon fuels; and providing incentives to develop and adopt new technologies. All new ships must be built with a GHG emissions reduction of 30 per cent by 2025, compared with 2014. By 2050, DNV GL predicts that 39 per cent of shipping energy will be supplied by carbon-neutral fuels and that marine gas oil and other liquid fossil fuels, such as heavy fuel oil, will supply 33 per cent of the energy used. Improvements in fuel sources will also impact carbon intensity. DNV GL expects, based on projections of demand for maritime transport work that CO2 emissions for international shipping will decrease by 52 per cent compared with 2008. Sulphur Oxide is considered one of the most harmful by-products of the combustion of ship fuel. High SOX concentrations are well recognised as a dangerous atmospheric pollutant. Consequently, IMO has also introduced regulations to reduce SOX emissions from ships. These regulations, which took effect in 2005, have become increasingly stringent over time; for example, a proposed reduction of the global sulphur cap from 3.50 per cent to 0.50 per cent will be effective January 1, 2020 (the 2020 Limit). Under the MARPOL amendments, the carriage of non-compliant fuel oil (for combustion for propulsion or operation) is prohibited unless the ship is fitted with a scrubber system for exhaust gas cleaning. Scrubber installation is an accepted way to meet the sulphur limit requirement. Although the sulphur cap will apply globally, since the beginning of 2015, designated sulphur emission control areas have further restriction of a lower limit of 0.10 per cent. With the rapid expansion of the African maritime industry, African countries have an opportunity to become world-class leaders in sustainable shipping practices. One means of ensuring the development of Africa’s maritime industry is by increasing resources and capacity-building to strengthen institutions responsible for policing environmental and social legislation. Protecting marine and coastal ecosystems in Africa is essential for achieving the international commitments that African countries have made and for protecting the health and welfare of coastal populations, biodiversity and for socioeconomic progress.

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MARITIME

Cabotage law is retrogressive — stakeholders …insist that foreigners still dominate Nigeria’s maritime space Elizabeth Uwandu

takeholders in the maritime industry have complained that the Coastal and Shipping Act, also known as Cabotage Law, has continued to remain retrogressive than progressive. At the Conference on Stakeholders’ Consultative on the Cessation of Cabotage Waivers, experts in the industry said Nigeria has not made any serious progress with the law since inception. At the event organised by the Nigerian Maritime Administration and Safety Agency (NIMASA), Mr Mike Igbokwe, a Maritime Lawyer and Senior Advocate of Nigeria (SAN), explained that 15 years after the Act was passed, no meaningful impact has been achieved as foreigners still dominate the maritime sector. “Waivers are supposed to be temporary, for 15 years we have been on the same spot. Cabotage waiver was meant to build capacity and replace the foreign element that dominates Cabotage trade and with time compete internationally,” he stated. On her part, Mrs Rollens Macfoy, Executive Director, Ocean Services explained that the inability of NIMASA, to regularise waiver application due to lack of data was another factor limiting the actualisation of the Act. “The same vessel that applied for waivers two years ago can come again and apply for another waiver without looking at the value such applicant has brought to the table to help grow the capacity of local players in the industry”. However, the Assistant Comptroller General of Customs in charge of Zone ‘A’ of the Nigeria Customs Service, Mrs Kaycee Ekekezie, applauded NIMASA for its plans to stop the issuance of waiver, adding that Nigeria has lost trillions of Naira to waivers issuance. She reiterated, “We all know that Nigeria is an import-based economy, all these waivers that are being granted here and there affect our revenue

Mrs Rollens Macfoy and we in the Customs will be very glad when a stop is put to these waivers. “There could be other incentives for investors but not outright waivers like that. Let us start thinking of generating employment, and we will have something we will call our own”. She further explained that the agency cannot stop waiver because it is only a revenue collecting agency for the government adding that there is a limit to their function as an agency. She also said that any vessel operating within the nation’s coastal waters without a Nigerian flag will be arrested. Meanwhile, NEXIM Bank has advocated for alternative funding for vessel acquisition. The bank noted that the Cabotage Vessel Financing Fund [CVFF], alone cannot meet the asset demands of indigenous shipping firms operating in the nation’s coastal trade. Mr Abubakar Bello, Managing Director and Chief Executive of NEXIM Bank at the Conference stated that the maritime sector plays a key role in the country’s trade and economy. According to him, there was a strong correlation between the increase in growth of gross domestic

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product (GDP) per capita and the closing of infrastructure (quantity and quality) gap; shipping was also instrumental in the development of the external sector of the economy. Bello who was represented by his special assistant, Mr Hope Yongo, stated that maritime facilitates and promotes trade connectivity and market linkage just as it also promotes competitiveness and enhances market diversification. He informed that NEXIM’s role in the maritime industry particularly the shipping sub-sector involves support to the maritime sector through either its developmental role in the regional Sealink Project and various funding supportive roles, such as financial advisory/structured trade and project finance, export credit agencies financing arrangements/lines of credits window, syndication/joint financing arrangements and provision of risk mitigation instruments. “National Bureau of Statistical data shows that the annual GDP contribution of the transportation sector was less than two per cent with the shipping sector contributing less than 0.1%. There are diversified sources and types of funding to finance ship acquisitions and/or any maritime assets, some of which include bank loans, asset acquisition, structured project finance, co-financing, syndication, guarantees/syndicated guarantees and forfeiting arrangement. “Others include export credit agencies financing arrangements like buyer’s credit, seller’s credit and export credit insurance are options local players can take advantage of to grow their business. The NEXIM boss, however, warned that commercial bank Loans may be attractive if funding would be for a long period or through a concessional line of credit and/ or loan syndication arrangements.

ORIENT ENERGY REVIEW Vol.9 No. 03

MARITIME

We produce our gunboats to boost local content’ Elizabeth Uwandu

he government of Nigeria has been called to promote the production of functional gunboats in order to promote local content act, and increase the revenue of the country. This was the submission of Bayelsa state Deputy Governor, Retired Rear Admiral Gboribiogha Jonah. The Deputy Governor who was in Lagos for the Rear Admiral G.J Jonah boat race of the Navy Sailing Club, Navy Town said the production of locally gunboats will enable the effective patrol of the maritime environment. “If we are able to produce gunboats, even if they are not as sophisticated as the ones abroad, even if the aesthetics are not as what we have, even if the amount of money used in producing is slightly higher, so long as they are functional, it would be better for us to build them locally as it would contribute to our own economy.” Rear Admiral Jonah said. Calling on naval officers to develop the skills to drive all kind of boats, the Bayelsa Deputy Governor reiterated his decision to continue sponsoring the Admiral G. J. Jonah Boat Race, whether in or out of office.“ As a naval officer, you must

understand the tide, the wind and be able to drive all forms of boat before you can succeed as a midshipman. “However, as I congratulate the various winners in the competitive aquatic sports, I want to assure you that I will continue to sponsor the Admiral G. J. Jonah Boat Race, whether in or out of office,” he promised. The event which saw the presentation of prizes to the sponsor, Retired Rear Admiral Gboribiogha John Jonah, Deputy Governor of Bayelsa state; Rear Admiral Oladele Daji. FOC, Western Naval Command ; as well as Winners in the various categories, had dignitaries present such as Retired Admiral Goddy Ombo, Mrs Daji, wife of the FOC, West and Maj. Gen. Enendu, Deputy Commandant, Armed Forces Resettlement Centre, Oshodi, amongst others. In his remarks, Rear Admiral Oladele Daji, Flag Officer Commanding, Western Naval Command, who noted that water constitutes 70% of the entire earth surface and the maritime environment is the mainstay of Nigeria ‘s economy added that the Nigerian Navy was saddled with the responsibility of defending the riverine territorial

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integrity of the country. The Western Naval Command who praised Rear Admiral Jonah for sponsoring the boat race for two consecutive times said, “I am elated that the Navy Sailing Club that came into existence in 1985, after 33 years, the Club was still afloat, strong and training athletes in water sports. Earlier in his welcome remarks, Navy Captain M. M. Braimah, the current Commodore of the Club said that the Navy Sailing Club was a Recreational Centre as well as a place where people enhance their competences in aquatic sports. According to him, the Club was also a place where they try to catch them young by training children and young adults in aquatic sports, noting that the various categories for this year’s competition include; open water swimming for children, boys and girls; kayak for children and adults, male and female and Laser Sailing for men. He also stated that he was not surprised that 10 years after retiring from service, Rear Admiral Gboribiogha John Jonah was still very much interested in the wellbeing of the Club as he was the Sixth Commodore of the Club when he was a Navy aptain in the Nigerian Navy.

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ORIENT ENERGY REVIEW Vol.9 No. 03

COVER

Offshore petroleum opportunities:

Nigeria, Africa looking to the future with optimism Godspower Ike

Since the discovery of crude oil in Nigeria at Oloibiri, Bayelsa State several decades ago, the Nigerian petroleum industry had achieved significant milestones and had helped in one way or the other in nurturing the African petroleum landscape. This article reviews the Nigerian as well as the African petroleum industry in the next 50 years, highlights the opportunities in the industry and issues that would determine the dynamics of the industry in the coming decades. 34

ORIENT ENERGY REVIEW Vol.9 No. 03

COVER

he global oil and gas industry is currently enjoying some semblance of stability after a period of volatility and uncertainty recorded over the last two years. Crude oil price is currently hovering at an average of $68 per barrel and oil majors, the world over, are considering expansion and fresh investments across all major sectors of the petroleum industry. The last 50 years of the offshore petroleum industry, especially in Nigeria and the rest of Africa had witnessed slow growth, but investors and stakeholders are highly optimistic of what the industry holds in the next 50 years. Nigeria and other oil producing countries in Africa, are currently recording an increase in offshore oil and gas activities and the trend is expected in the coming years and decades, especially with more countries in the continent discovering hydrocarbons and renewed interest in petroleum exploration across Africa. This is in the face of changing and advancing technology, which is redefining the exploration of crude oil and gas across the globe. This is in spite of the quest for the shift from fossil fuels to cleaner sources of energy. According to Ian Lewis in Africa Business

According to Ian Lewis in Africa Business Magazine, with the oil price back at levels last seen in late 2014, Africaâ&#x20AC;&#x2122;s leading hydrocarbons producers are hopeful that they can draw investment back to the continentâ&#x20AC;&#x2122;s upstream oil and gas sector after some lean years. ORIENT ENERGY REVIEW Vol.9 No. 03

COVER

Lewis noted that prospects also seem brighter for Shell’s delayed expansion of the Bonga deepwater oil field, which had been mired in legal wrangles between Shell and the Nigerian National Petroleum Corporation (NNPC) over the terms of the field’s Production Sharing Contract.

Magazine, with the oil price back at levels last seen in late 2014, Africa’s leading hydrocarbons producers are hopeful that they can draw investment back to the continent’s upstream oil and gas sector after some lean years. He noted that Nigeria and Angola – Africa’s largest oil producers were already finding it tough to launch large offshore oil developments before the oil price nosedived from over $110 a barrel in mid2014 to below $30 per barrels early in the following year. He stated that in August 2018, Nigerian crude production averaged around 1.85 million barrels a day (b/d), while Angola’s averaged 1.38 million b/d, according to Opec data, adding that both countries are producing less than past peaks – over two million b/d for Nigeria and around 1.8

million b/d for Angola. He said, “Nigeria’s failure to nail down new legislative and financial frameworks for exploration and production agreements, along with the ever-uncertain security situation in the oil-rich Niger Delta had already prompted some of the majors to scale down operations in the country. “Meanwhile, Angola’s state energy firm Sonangol was finding it hard to stimulate sufficient fresh exploration to replace fast-depleting reserves of existing developments, because of the high cost of operating there. “Both countries’ oil sectors were also tainted by a lack of transparency and the impact of oil sector-related corruption scandals. In the last few months, both nations have been trying to heal their relationships with foreign investors by pushing

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ahead with plans for industry restructuring, though it remains to be seen how successful they will be in implementing meaningful change.” Lewis, however, added that despite the continued uncertainty, the uptick in interest in costly deepwater investments, which look more attractive with today’s higher oil price, has moved some big projects forward in both countries. Specifically, in Nigeria, Total is considering expanding the scope of its new Egina deepwater project, whose floating production storage and offloading facility (FPSO) started operations late 2018, producing 200,000 barrels per day of oil from the Egina main field, with an estimated reserve of 570 million barrels. Total had stated that it was now considering connecting its near-

COVER

by Preowei discovery to the Egina FPSO, after a third appraisal well was successfully drilled there in late 2017. All these would drive activity in Nigeria’s offshore petroleum sector in the years ahead, while positioning the country as a veritable investment destination. Lewis noted that prospects also seem brighter for Shell’s delayed expansion of the Bonga deepwater oil field, which had been mired in legal wrangles between Shell and the Nigerian National Petroleum Corporation (NNPC) over the terms of the field’s Production Sharing Contract. Shell Nigeria, had in a statement noted that timetable for a final investment decision would be announced after commercial discussions with the government were concluded. The $10 billion Bonga Southwest project

could add as much as 175,000 barrels per day to the field’s output. On gas, Lewis said, “Of course, it’s not just about oil anymore. With the era of peak oil fast approaching, many international oil companies (IOCs) are ploughing more money into gas export projects, whose shelf life could be longer. Nigeria remains the kingpin of Africa liquefied natural gas (LNG) exports, but is facing stiff competition not only globally, but also from within the continent, as up to three LNG projects in Mozambique move closer to fruition. “Talk of expanding export capacity from the current 22 million tonnes a year (t/y) – all of it from the Nigeria LNG (NLNG) facility on Bonny Island – has been around for years, without progress. But, with the current global LNG supply glut due to turn into a shortfall in the early 2020s, NLNG’s IOC owners have embarked on efforts to raise finance to build a new production train at the site to add to the existing six. NLNG is owned by Shell (25.6%), Total (15%) and Eni (10.4%), with NNPC holding the other 49%. “They are seeking some $7 billion to cover the cost of building Train 7 and another $5 billion for upstream investment in gas

On gas, Lewis said, “Of course, it’s not just about oil anymore. With the era of peak oil fast approaching, many international oil companies (IOCs) are ploughing more money into gas export projects, whose shelf life could be longer. Nigeria remains the kingpin of Africa liquefied natural gas (LNG) exports, but is facing stiff competition not only globally, but also from within the continent, as up to three LNG projects in Mozambique move closer to fruition.

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COVER supply. The expansion would add 8 million tonnes per year to Nigerian export capacity, bringing it to around 30 million per year. That would make the country the world’s third largest exporter, behind Australia and Qatar, based on current production data.” The Brass LNG and Olokola LNG projects are still lying fallow and are both awaiting final investment decisions. It is expected that attention would shift to these two projects in the coming years, as the country and investors awaits final investment decision on these projects. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru had also stated that in the next couple of years, over $48 billion investment opportunities are scheduled to come up within Nigeria’s oil and gas industry. Baru, who was addressing participants at the 2019 International Petroleum Week Conference in London, said the continent’s energy outlook was looking positive amid difficult operating and economic headwinds. He explained that over 41 billion barrels of oil and 319 trillion cubic feet of gas were yet to be discovered in sub-Saharan Africa alone, while between 2008 and 2017, exploratory success in the sub-region was at least 45 per cent. According to him, there has been a surge in the capital expenditure (CAPEX) across Africa’s oil and gas sector, with close to $194 billion earmarked to be spent between 2018 and 2025 on 93 upcoming oil and gas fields in Africa. “Out of this $194 billion, Nigeria accounts for $48.04 billion (over 24.8%) of the total CAPEX coming into upcoming projects in Africa within 2018 to 2025, with over 20 planned projects,” Baru stated. He observed that 23.8% of the CAPEX in Africa would be spent in Mozambique, 11.3% in Angola while about 29.2% would be spent in Tanzania, Senegal, Mauritania, Uganda, Egypt, Algeria and Kenya combined. Baru added that with over 14 oil-producing countries, Africa currently accounts for 7.5% (126.5Billion barrels of crude oil) and 7.1% (488 Tcf of gas) of global proven oil and gas reserves respectively. He maintained that in terms of produc-

tion, the continent accounted for 8.7% (8.1 million barrels per day) of global oil production and 6.1% (21.8 billion standard cubic feet per day, scfd) of global gas production, even as it consumed four million barrels of oil per day and 13.7 bscfd of gas (equivalent to 4.1% and 3.9% of global oil and consumption respectively). Shedding more light on investment opportunities in Nigeria, Baru observed that the NNPC’s Frontier Exploration Service was currently drilling the Kolmani River-2 Well where desktop estimates revealed that about 400 billion SCF of gas is expected to be encountered. He stressed that several new frontiers for exploration opportunities abound in Nigeria, even as offshore discoveries in the country have mostly been limited to between 1,000 - 1,500 metres of water depth. “Beyond these water depths, the new frontiers of ultra-deep waters need to be tested. And that is where we need the investors,” Baru said.

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He harped on the need for the continent to resolve issues relating to regulatory uncertainties, lack of infrastructure, skilled manpower shortage, transparency and accountability amongst others. Also, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, had also declared that $25 billion worth of investment opportunities are underway in the country over the next two years. Wabote also added that within the past two years, the NCDMB had pushed investment opportunities worth about $20 billion into the Nigeria oil and gas industry, some of which, according to him, resulted in high profile projects. He said, “Within the past two years, I can comfortably say that we have pushed opportunities to up to about $20 billion into the oil and gas sector, through these opportunities that we share. And I think, also in the next two years, we also look forward to another $25 billion in the oil and gas sector going by

COVER they have taken FID on – Abo is ongoing. You are looking at about $1.5 billion. I don’t want to talk about the brand field opportunities that bring $100 million to a billion dollars that are also ongoing.”

the opportunities we have identified that we want to also share.” He noted that there had been substantial progress in the oil and gas sector, especially with the resolution of some of the cashcall challenges faced by the joint venture operators. He said, “Since that was resolved a lot of opportunities are springing up in all the joint venture operations that we have. I am sure, the other day, you also saw NPDC commissioning a significant project almost about $200 million, also adding value to the oil and gas industry. “We also know that Total is also looking at their Preowel project, which will come on stream. They will also take FID on it within the next couple of months, and that in itself, is significant. Two years ago, we also shared the Train 7 opportunity by NLNG. As I speak to you, we are very optimistic that all things being equal before the end of the year, we hope that we will take FID on the Train 7 project; that, you

are looking at almost $5 billion. So, things are looking up; instruments are coming, they are not drying up, and I believe that this will only improve.” Wabote who also highlighted some of the projects without high local content impact, said the SPDC had taken Final Investment Decision (FID) on Asa North Project, which he said worth $2 billion in terms of value addition. According to him, Total will take FID on the $2 billion Ikike Project within the next couple of weeks, noting that Exxon Mobil will also take FID on the $1billion Iboe Project same period. He added, “We also highlighted the potentials in the Bonga South West/Aparo (BSWA) deepwater project of SNEPCO. I am happy to tell you that the tenders have been issued, and you are looking at an opportunity of almost $10 billion that is coming into the country. “We then highlighted the Nigerian Agip Oil Company (NAOC) Abo project, which

In the face of these opportunities, James Larnder, Managing Director, Aquaterra Energy, disclosed that the future of the oil and gas industry, would be driven by smart drilling, and would require a combination of technology and thinking that re-imagines how firms manage and execute a more harmonised approach to early well life. He said, “The key is ensuring that design, analysis, equipment selection and implementation are all aligned and buttressed by operational expertise. Where companies lack the expertise or resource, initiation specialists will fill the void. “As drilling projects grow in ambition, smarter equals faster. By combining integration and intelligence through specialist providers in the initiation phase with best-in-class technology, ‘smart drilling’ promises to give projects the solid footing needed to keep the industry running for decades to come.” For Simon Tucker, Head of Energy and Commodities, Infosys Consulting, one technology set to transform the Nigerian and African oil and gas sector is blockchain. According to him, the blockchain revolution is starting here and now, adding that the real task for the oil and gas sector was how quickly it can move to take advantage of the many opportunities that blockchain will bring. He said, “For oil and gas businesses, data has gone from an asset to a burden. Companies are drowning in data and urgently need a way to control and authenticate information. Blockchain has enormous potential to reduce the risk of fraud, error, and invalid transactions in energy trading, make financial transactions more efficient, facilitate regulatory reporting requirements and enable interoperability. “Blockchain will have huge benefits both upstream and downstream. From scheduling equipment maintenance to managing exploration acreage records, blockchain offers a single, unalterable record of transactions and documentation between

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COVER

numerous parties. Distributed ledgers also create more efficient and transparent downstream activities, such as exchanging products, secondary distribution delivery documentation, demurrage, and claims management. Mid-stream, it will revolutionise joint ventures, risk management, contracting, and regulatory compliance. “The possibilities of blockchain in oil and gas have few limits – and we’re yet to see more than a glimpse of its full capabilities.” For Michael Martella, Chief Executive Officer, Anergy noted that in the future liquid fuels would be difficult to replace, while their reliance will be reduced as they get supplemented by biofuel and electrical energy sources, it will be a number of decades before they are phased out completely. He said, “The prices of oil and gas will be perpetually lower for the foreseeable future as fracking will gradually open up more sources of cheap production, while demand slowly falls with the adoption of more renewables. “Better renewable energy technology and sources will eventually replace the use of oil as a combustible fuel but this will free it and other sources such as coal to be used to produce more sophisticated carbon products, hydrocarbons and polymers making it a

feedstock rather than a fuel. “Finally, the ability to chemically synthesise oil and gas from more types of natural materials will blur the line between renewable and fossil fuels to the extent where it becomes a forgotten issue. The ability to synthesise these products will mean that even fossil fuels can be readily replaced so the market will drive the source again.” In his own contribution on the future of the offshore petroleum industry, Terry Noble, Lead Consultant for the Energy and Utilities Practice, Odgers Interim, said, “Despite the market’s challenging period, there won’t be a Kodak moment. Oil and gas isn’t going anywhere and the reality is that the transition to 100% renewable energy use in the UK won’t happen in our lifetimes. “Globally, emerging countries will also want to capitalise on their oil reserves – providing, literally and figuratively, a pipeline of growth for the future. “The industry will also become more collaborative. The billions of pounds spent on exploration and building platforms in new oil fields will be shared amongst multiple industry backers. As a whole, the oil and gas industry will become significantly more risk-averse, with companies working on joint ventures in order to avoid another big

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downturn. “The aversion to risk will filter into the organisational culture, with companies looking at how they can run leaner and meaner operations. Having project teams sitting around waiting in the wings for a new assignment will no longer exist. The industry will rely more and more on flexible workers to be brought in for specific projects. Expect the ‘gig economy’ to come to the oil and gas industry. “Technology will be a facilitator in the transformation of organisations. The future of oil and gas is unmanned platforms, with workers transitioning from offshore to onshore office-based roles. Generalist manager roles will die out as the demand for short-term, niche skill sets to implement IT systems and bring oil fields ‘online’ grow.” With Nigeria yet to fully exploit its immense crude oil and gas potentials, especially with the Government yet to award a number of deep offshore oil blocks, experts are unanimous in the view that the Nigerian offshore petroleum sector still holds huge opportunities for investors and would continue to whet appetite well into the next five decades.

ANGOLA REPORT

Angola’s Sonangol moves to focus on core business

ngola’s state oil company Sonangol plans to divest 52 joint ventures, reduce staff and focus on its core business, part of an ongoing reorganization and package of reforms designed to lure back investors, its chairman said on Friday. “We are going to sell, close or put out of our group a lot companies,” Carlos Saturnino told an oil conference in Paris. “Last year, we identified 52 joint ventures in which we want to sell our equity.” “Instead of investing in Australia, United States etc, Sonangol wants to become an oil company of reference in the African continent. This is major change for us,” he said, adding the objective was to make Sonangol more robust and agile.

Oil accounts for 95 percent of exports and around 70 percent of government revenues in Africa’s second-largest producer. Production has been in steep decline due to maturing fields and lack of investments, which Saturnino also attributed to lack of efficiency in decision-making by the previous administration. Angola’s oil production fell to 1.478 million barrels per day (bpd) in 2018 from 1.632 million bpd in 2017. Industry veteran Saturnino was brought back by Angolan President Joao Lourenco in September 2017 to help turn around Sonangol and reform the sector. “Lack of efficiency in approving projects led to a backlog of around $5 billion in projects between 2015 and 2017,” Sat-

urnino said, adding the logjam had been mostly cleared and the number of projects gaining approval was rising. He said Angola had put in place reforms to relaunch exploration and attract oil majors to invest. Sonangol has carried out analysis on oil blocks with Total and ENI, and has held talks and signed initial agreements with Exxon Mobil. Most recently, it met with Shell to try to lure it back to Angola, Saturnino said. “We have 10 to 12 potential blocks up for exploration in Angola, so the potential is there,” he said. Reuters

Angola: Sonangol Yields USD 2.8 Billion in First Quarter

ngola’s State-owned oil company Sonangol has announced that it generated USD 2.8 billion in the first quarter of 2019, with the sale of 45.1 million barrels of oil at the average price of USD 63,131. The data were released by the company’s chairperson of Executive Committee for International Marketing, Luis Manuel, who cited a revenue decline of USD 211.2 million compared to the same period of 2018. He said that the firm collected USD 3.38 billion with the sale of 45.1 million barrels in 2018. Data provided in a forum on the performance of the first quarter of 2019, attrib-

uted the decrease to the difference in the average sales price influenced by the average Brent price (reference oil for Angola), which was at USD 60,171. With 12 destinations, compared to 10 in the fourth quarter of 2018, China remains the main destination of the Angola with 55.87% against 72.28% (2018), followed by India with 15.70% against 10.23 %.

Spain (7.5%) against 2.16 %, South Africa (2.05%), US (1.96%), South Korea (1.95%), while, France, Italy, Israel and Uruguay, with less than two percent.

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ANGOLA REPORT

Angola looks to benefit from surge in oil prices

ngola plans to auction nine blocks this year and is seeking to build new refineries as Africa’s second-biggest oil producer looks to benefit from a surge in crude prices that could boost companies’ appetite for investments. The tenders for the offshore areas are part of efforts to lure back global explorers that cut spending after crude crashed in 2014, driving down output in the oil-dependent nation. The nine blocks are located in the Namibe basin, Angolan Oil Minister Diamantino Azevedo said, and are part of 55 that local newspaper Expansão has reported are expected to go under the hammer until 2025. The government is offering tax concessions for companies developing smaller fields, cutting bureaucracy and selling parts of state-owned oil company Sonangol to attract foreign companies. Some of the efforts are bearing fruit as French major Total and Italy’s Eni began pumping from new areas in the past year and other blocks are set to start or resume this year, Azevedo said. “International oil companies are carrying out efforts to increase oil production,” Azevedo said in response to questions. “They’ve invested in the recovery of active

fields and in the development of new exploration and production projects.” Angola’s output has declined in recent years due to lower investments in new projects and as ageing fields deplete. The drop has put a strain on an economy that depends on oil for more than 90percent of its exports. President João Lourenço, who came to

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power in 2017, is trying to revive finances by attracting foreign investment, tackling corruption and selling assets. Angola’s crude output is forecast to fall to 1.434 million barrels a day this year from 1.479 million barrels a day last year, Azevedo said. Bloomberg

GHANAREPORT

Ghanaian Companies secure $799 million upstream contract

hana’s Local Content drive has recorded a further boost as a total of $799 million worth of contracts in the upstream petroleum industry was awarded to indigenous Ghanaian companies and joint ventures last year in accordance with the Local Content and Local Participation law. Out of the amount, $453 million worth of contracts was awarded to Ghanaian firms whilst $346 million awarded to joint venture companies. Additionally, Aker Energy has awarded contracts valued at 40.3 million dollars to Joint Venture companies in accordance with its local content obligations. Mr John Peter Amewu, Minister for Energy, who made this known to journalists when he took his turn at the Meet-thePress series in Accra on Tuesday, said over 75 per cent of people currently working in the upstream petroleum industry were Ghanaians. He said with government’s aggressive implementation of the Petroleum Local Content and Local Participation Regulation, 2013 (L.I 2204), a significant number of Ghanaian companies had registered with the Petroleum Commission to participate in the upstream petroleum industry. Mr Amewu said the rigorous promotion

of joint ventures in accordance with Regulation 43(1) of L.I 2204 had also enhanced participation of indigenous companies in the industry. “As at the end of September 2018, about 600 indigenous Ghanaian companies had registered with the Petroleum Commission providing goods and services to companies in the oil and gas industry,” Mr Amewu said. The Minister said in February last year, the Petroleum Commission launched the Petroleum Register, a register of petroleum agreements, licences, permits and authorisations to ensure fairness, transparency and predictability in the sector. Consequently, it would enable civil society organisations and the citizens alike to be on a single platform to monitor all upstream petroleum activities and demand accountability from government. The move, he said, would afford the country the opportunity to attract reputable oil and gas companies with the requisite capital and technical capabilities worldwide to invest in the country’s geological basins. Mr Amewu noted that in the quest to boost the competitiveness of indigenous companies and provide education, training, research and development in the oil

and gas activities, the Petroleum Commission had opened the Local Content Fund Account in accordance with Section 64 of the Petroleum Act, 2016, (Act 919). Additionally, a Secretariat had been established to manage the Fund’s implementation this year, whilst modalities for managing and administering the Fund and its guidelines had been developed and awaiting approval. The Minister said the Fund would provide financial resources to indigenous Ghanaian small and medium scale enterprises to aid their participation in oil and gas activities. More so, the Petroleum Commission had been tasked to develop an electronic portal system (e-portal) to bridge the information asymmetry bias against Ghanaian companies. “Our objective with this portal is to have an open and more accessible platform for companies, especially local companies to participate in the tendering process in the industry,” Mr Amewu said. “The Portal will provide registered companies with the Commission easy access to procurement plans and real-time notification on tenders.” Source: GNA

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GHANAREPORT

Ghana buoys its oil discoveries with Free Trade Zone Ghana has said that it intends to buoy its oil and gas industry with the introduction of a free trade zone. The free trade zone will attract international oil exploration companies, local and international oil service, the supermajors, and allied business concerns with the requisite resources, technology and experience to invest in the country. In this interview with Orient Energy Review’s Gilbert Boyefio, the chief executive officer of the Ghana Free Zones Authority (GFZA), Mr Michael Okyere Baafi, said one of the ways to achieve that is through the Free Zone concept that offers a lot of incentives and tax breaks to investors. He also spoke about the numerous opportunities, the GFZA offers to the oil and gas industry in Ghana. 44

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GHANAREPORT What is the motive behind the setting up the â&#x20AC;&#x2DC;Oil and Gas Unitâ&#x20AC;&#x2122; at the secretariat? Ghana is an emerging oil and gas producer with enormous potentials, and with over five years of commercial production. The Oil and Gas Unit was set up to promote and facilitate the investment opportunities available in the downstream, export-oriented oil and gas related activities. In 2007, Ghana made its first discovery of oil deposits in the Jubilee Oil Field, with an estimated three billion barrels (480,000,000 m3). Since then, the country has made more discoveries along its western coast. With the growing demand for oil and gas, and its ancillary products, as well as benefits in the form of foreign exchange, the Authority set out to establish an oil and gas unit to explore and take maximum benefits and potentials of the sector in order to attract export-oriented manufacturing, oil and gas project and service providers in the sector. The idea of an oil and gas unit within the structure of Ghana Free Zones Authority is a well-developed strategy of creating tax incentives for foreign and indigenous oil and gas service companies. This is intended to attract foreign direct investment as well as encourage local participation. The Unit came with the primary focus on production, value addition and exportation of services and petroleum products to foreign countries. The free zone regime also affords the investors the flexibility to sell 30% within the national customs territory. What are the exact mandates of the unit? The mandate of the Unit is to attract companies that manufacture petroleum products, oil and gas projects and service companies into the free zone regime. The Authority is creating an enabling environment for the development of local content and enhance the long term objectives for export oriented oil and gas projects. What is the relationship of the GFTZA with other agencies of the government in the oil sector? The Secretariat collaborates with Ghana National Petroleum Commission (GNPC), National Petroleum Authority (NPA), Ministry of Energy, Ghana Association of Oil Field Service Providers, Environmental Protection Agency and Ghana Revenue Authority.

Has there been any effort to firm up the enabling laws for the oil and gas sector, even with the establishment of the GFTZA? GFZA operates assiduously within its own mandate as well as other regulations that have direct bearing on the operation of FZEs such as the GRA etc., to ensure that operators are not able to exploit the system. For this reason, the Authority has tried as much as possible not to leave grey areas for any way to exploit. Therefore, we constantly comply, consult and refer to Acts and Regulations of other stakeholders when necessary. A typical example is the PETROLEUM (LOCAL CONTENT AND LOCAL PARTICIPATION REGULATIONS 2013, (L.I 2204) which was promulgated to inter alia promote maximisation of value-addition and job creation through the use of local expertise, goods and services business, financing in the petroleum industry value chain and their retention in Ghana. The Local Content Committee established by the Board of the Commission is required to oversee the implementation of LI2204. The Free Zone programme mandates all free zone enterprises to use 5% of their annual salary and wage bill to train Ghanaians. The rationale for this is to enhance the technical and managerial skills/expertise of Ghanaians. Apart from this, there is the inevitable need of job training in most companies since their production processes are often new. There has

The Unit came with the primary focus on production, value addition and exportation of services and petroleum products to foreign countries. The free zone regime also affords the investors the flexibility to sell 30% within the national customs territory.

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GHANAREPORT also been diversification of exports from the traditional export to include other services such as fabricated metal products, helicopter services, test and calibrations, condition monitoring, and flow and process technology. On the localization bit, one of the important objectives of implementing the free zones regime in the country is the provision of business opportunities for both foreign and local investors to undertake joint ventures. Although, the emphasis may be geared towards the attraction of foreign direct investment, because we realize that local companies do not have all the finance to establish huge factories. It was expected that the programme would cause a ripple effect in the economy and gradually Ghanaian oil and gas businesses would dominate the free zones as has happened in many countries such as Nigeria and UAE. We should not also forget that oil and gas companies that set up in the free zones, be it a local or foreign, there are opportunities created along the value chain for other auxiliary companies. For instance, if a company sets up an assembling plant for electric generators for exports, the company may require other support service company for the end product. The original company may be a foreign company however; these auxiliary companies in the value chain could be local companies. Companies in the downstream oil and gas sector are allowed to operate under the free zones based on section 42 of the NPA Act, 2005 (Act 691). What are some of the challenges confronting indigenous companies in Ghana? The problem has been for local companies to position themselves to take advantage of the enormous opportunities the sector has to offer. Oil and gas free zone enterprises are export-oriented and must adhere to strict timelines and quality. Therefore companies who wish to partner some of these services must also adhere to strict supply schedules and quality. A lot of local companies fall short in this regard, the result being that if the foreign companies cannot find a local service company that meets their requirements, they import the inputs or bring in another foreign company (consultants) to provide

the service. Our local/indigenous companies are therefore left out and the objective of creating local business giants is defeated. Are there other opportunities for non-free zones companies/businesses? The linkage is not unique to the free zones and actually pertains to all companies setting up in Ghana. With regards to the FZEs, supply to them is considered as an indirect export and therefore local companies can apply for duty drawbacks on imports. The non-free zone businesses are therefore able to reduce cost and expand. How generous are the FGZAâ&#x20AC;&#x2122;s incentives? To attract investors into the free zones programme and to create a viable and sustainable business environment, the GFZA offers extensive and generous incentives to potential investors interested in developing and operating free zone enclaves and single-factory free zones in Ghana. The monetary incentives offered include 100% exemption from payment of direct and indirect duties and levies on all imports for production and exports from free zones; 100% exemption from payment of income tax on profits for 10 years and thereafter the payment of corporate tax which will not exceed 15%. Other incentives are total exemption from payment of withholding taxes from dividends arising out of free zone investments; relief from double taxation for foreign investors and employees where Ghana has a double taxation agreement with the country

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of the investors or employees The non-monetary incentives include, zero import licensing requirements; minimal customs formalities; 100% ownership of shares by any investor - foreign or national - in a free zone enterprise is allowed; no conditions or restrictions on repatriation of dividends or net profit; payments for foreign loan servicing; payments of fees and charges for technology transfer agreements; and remittance of proceeds from the sale of any interest in a free zone investment. Others are, free zone investors are permitted to operate foreign currency accounts with banks in Ghana; investments are also guaranteed against nationalization and expropriation The implementing regulations also make it possible for free zone developers and operators to lease land on a long-term basis from the Free Zones Authority, or propose properties they already own for the creation, development and operation of free zones. Who is qualified to access the free zones incentives? Section 12 of the Free Zone Act, 1995 (Act 504) clearly defines the qualification as; (1) A person shall not carry on a trade, business or industry within a free zone unless it is registered under (a) The Companies Act, 1963 (Act 179), or {b} The Incorporated Private Partnerships Act, 1962 (Act 152), and is the holder of an incorporated licence authorising the carrying on that trade, business or industry under this Act. (2) A company or partnership qualified under subsection (1) and licensed under section 16 is a free zone enterprise. Potential investors should note that before a company can access the free zone incentives; they first fulfil the requirements above. Are there plans in place for potential investors regarding the industry-specific FZ enclaves (Sekondi and Shama EPZ)? The Authority intends to build a state of the art Export Processing Zones (EPZ) and multipurpose industrial parks which are expected to support light and heavy industrial oil and gas specific businesses. Currently, two Industry-dedicated sites have been allocated for these projects. They are Shama (Yabiw) EPZ and Sekondi EPZ close to the Takoradi port. The rationale for such projects is to house the anchor clients targeted for the industry

GHANAREPORT

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WOMEN in Oil&Gas

Women are taking over the oil and gas industry The oil and gas sector is not a popular turf for women. Yet in recent times, quite a number of women are coming up in the sector and showcasing a combination of intelligence and leadership. At the just concluded 2nd edition of Nigeria Oil and Gas Opportunity Fair (NOGOF NOGOF), a handful of women came up with formidable contributions to reckon with. One of the Amazons of the oil and gas sector, who is the Group General Manager, Finance, Nigerian National Petroleum Corporation (NNPC), Nike Kolawole, spoke to Peace Obi, on her experiences in the male-dominated industry. She also spoke on a number of topical issues, especially the just concluded NOGOF, talks about the journey so far as a woman in the industry. Excerpts:

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WOMEN in Oil&Gas In the just concluded NOGOF, you were a leading female voice to reckon with. How does it feel taking this role in a male-dominated endeavour? My organisation, the NNPC, is very proactive in gender issues. It is an equal level, gender-based, organisation. We have quite a lot of women in our organisation. So, I would say I come from a background of gender diversity and we are making conscious gender inclusive efforts. I am proud to be at the forefront of NNPC at this conference where we have been able to showcase that there is a role for women to play in our organisation. Is it really true that the oil and gas sector is a male-dominated one? It comes to people as a perception, especially as the lead-discipline is engineering. If you are looking at engineers, typically, even before coming into employment, there are not enough women studying engineering; there are more men in that field. There is a natural disadvantage, but when you look at other aspects of the oil and gas industry, it is not just restricted to the engineers. We have the support system such as the finance department, public affairs, system controls, marketing etc, which are not core engineering departments. Naturally, we have more women who take up financing studies. So, you see that there is a skill between engineers that is lacking in women and vice versa. There is a steady balance at the NNPC, and we are trying to strike a steady balance. We are making a conscious effort to make sure there is a gender balance in all areas of our operations. As the theme of this year’s international women’s day was ‘Balance For Better’, would you say the sector is a balanced one? I wouldn’t say we are not being left out. There has been a realisation that perhaps there has not been enough women representation. Having recognised this, the NNPC is making a conscious effort to achieve a balance. That is why you see women like myself at the forefront but I can guarantee you that you would see a lot more women in the nearest future. There are a lot of women coming up behind and we are going to groom them in terms of

our succession planning. What are some of the practical steps that can be taken by Nigeria as a country to encourage women, especially the girl child in the study of Science, Technology, Engineering, and Mathematics (STEM), and taking up areas that are male-dominated? My advice is that no woman should feel there is something she cannot achieve. Of course, it is hard work, when you expect a level playing field, you shouldn’t sit back and say, I am a woman. You have to prove yourself; be as equally competent as the men. Women now rise solely because of their technical competence. My advice to the young ones is, do not let your gender be a setback for you. Once you prove yourself in an Industry, you would be seen as an expert in the field, not just as a woman. We are mothers and wives but we want to be seen and we are increasingly being seen as entities that can play a role alongside the men. Can you tell us how it was like from your early career years to this point? I started my career in the finance industry; in investment banking, which globally is dominated by men. I found myself as one of the few women in that sector. But for me, it has been about focus, hard work, mixed with a bit of luck. It is also about being able to identify opportunities and take them as they happen. I would say it has been a very rewarding experience. It involves patience and hard work, but at the end of the day, you get there but the important thing is as you move forward, you have to stretch your hand backwards and pull up other women, so that when you exit, they pull up other women, so we can close the gap in that fashion. Are you involved in any advocacy or program that encourages young women coming into the oil and gas industry or getting women prepared for the future? I don’t have a formal group that I work with but as an individual, it is very important to mentor, not just women but the younger ones. So, I have an unofficial wide range of young people that I mentor and hope to see them rise. I try to be a facilitator of other women rising instead of being a gating issue to their rising. What is your word to the young girls out there?

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I think you mustn’t be constrained by your background. What is important is to look around you and make something better from what you have. No one determines how and the circumstances they are born into, but for the young poor people, I will say education, focus and mentorship are the key. So you can move from the learning stage to a stage where you evolve. All along, continuously try to seek mentorship from positive women. NOGOF 2019 is talking about exposing opportunities that are in the oil and gas sector for the people and the benefit of the economy. What do you say about it? If you look at NOGOF, you will realise where it evolved from, which is NNPC. The local content was a little division that metamorphosed into the NCDMB and I think across the whole value chain, what we try to do, is to ensure sufficient but credible local content players in the industry from our procurement processes. From the scoping of our projects, project participants, we are looking more to fabricate and grow the industry in Nigeria rather than go out there and seek foreign partnership. The important thing is, for the indigenous companies to be credible and willing to invest in its self and do business in a proper and accountable fashion. Given the fact that financing has been a major problem for the indigenous companies, what are the necessary steps to take in order to get funding for their businesses? To get funding for your business, if it is a small and medium enterprise, you must have a very robust governance structure, you must have gotten into the habit of running the business as efficiently as possible in terms of working capital so you have a history of success that you take to your lending entity. When they take a view on lending to you, they are also taking a view on you as an indigenous company. If you have run your operations efficiently and effectively, then the other gating issues around raising funding can be dealt with. You have to be a disciplined, company, focused and show a track record of growth in an accountable fashion.

WOMEN in Oil&Gas

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PHOTOGALLERY

ORIENT ENERGY REVIEW Vol.9 No. 03

PHOTOGALLERY

ORIENT ENERGY REVIEW Vol.9 No. 03

PHOTOGALLERY

ORIENT ENERGY REVIEW Vol.9 No. 03

Orient Energy Review Vol 9 No.03

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