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VOL.9 No.05

COVERING LOCAL CONTENT IN THE ENERGY SECTOR

No compromise on quality, standards in Nigerian content drive – Wabote

Ghana to boost power supply with major LNG projects by 2020

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Appropriate pricing, deregulation will address Nigeria’s electricity challenge - Prof. Ezigbo

Future of oil industry in the face of AI, big data

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CONTENTS

rientEnergy Review ...driving local content development

NNPC’s N15.5bn Expenditure on Oil Pipelines Maintenance Unsettles FAAC Meeting

NNPC not in competition with Dangote Refinery – Kyari

Tranos partners Toyota in producing LNG-run generators

Expatriates’ participation in Nigeria’s oil industry reduced to 20% NCDMB

18 20 43

Losing benefits of blue economy to lack of Synergy

Discos’ Recapitalisation: Is It The Way Out Of Nigeria’s Epileptic Power Supply? Ghana’s 2019 halfyear revenue hits $434.5m

Appropriate pricing, deregulation will address Nigeria’s electricity challenge - Prof. Ezigbo

Local Content: NCDMB Mentors African oil and gas operators to achieve regional collaboration

Wabote, NCDMB receive business leadership awards NCDMB declares support for Yenagoa New City Project NCDMB Supports Operation of Notore industrial complex

Providing reliable and affordable power for Africa -The Karpowership way

ORIENT ENERGY REVIEW Vol.9 No. 05

EDITOR’S NOTE

Publisher/ Editor-in-Chief Nneka Ezeemo

ear readers,

Here comes another edition of your favourite wholesome energy report loaded with up to date industry news, interviews, in-depth analysis of issues and events across the energy value chain. In our last edition, we brought you a cover story, “Second chance for Nigeria’s oil industry reforms” to herald President Mohammed Buhari’s second term in office as we remained true to our agenda-setting role. In this vein, OER Team welcomes on board, the newly appointed Minister of State for Petroleum, Chief Timipre Sylva; the Minister of Power, Sale Mamman; Minister of Transportation, Rotimi Amaechi among others. We wish them a successful and impactful tenure in office. Again, stakeholders’ call for reform in the nation’s energy sector resonates with the ministers’ assumption of office. Against this backdrop, a number of articles have also expressed our readers’ expectation from the government and its cabinet in the next four years. The reoccurrence of such topic as digitalization, big data, Internet of Things – the adoption of advanced technology in the exploration, production and other activities in the sector has left us with a burden to keep our readers abreast with the changing trend in the industry. And this edition we have captured that with a cover story in this edition, “Future of Nigeria’s oil industry in face of AI, big data”. Also, in this edition, we bring you a comprehensively balanced report on every sector in the energy value chain. Worthy of note is the special effort of OER team to join forces with the government, investors and other concerned Nigerians in resolving the electricity challenge facing the country as we bring you special reports on this sector. And a must read is the Prof. Joe Ezigbo’s interview where he gave his professional opinion on the way out of Nigeria’s perennial energy power crises. Our Local Content stories are elaborately used to carefully project the unique and strategic efforts and achievements the Nigerian government through her agency – Nigerian Content Development and Monitoring Board (NCDMB) is making as it leads the way for greater capital retention and a truly transformed oil gas industry in Africa. For NCDMB under the ably leadership of Engineer Simbi Kesiye Wabote, it has been loads of achievements with laurels trickling in from different quarters in praise and appreciation of his purposeful leadership. And Orient Energy Review management and staff celebrate Wabote’s purposeful leadership especially on his award of “Transformational Business Leader in Public Sector in 2019” by the BusinessDay Nigerian Business Leadership Awards. This edition is uniquely packaged to serve as a complete dose for your information need in the entire energy value chain. We remain resolute in our mission to keep you updated with factual and timely report of events as they unfold. This edition is deliberately packaged to satisfy every reader’s quest for a balanced reportage of the industry within Nigeria and across the globe. OER team continues to attend national and international events and has captured them in news and photo reports. Read to meet Amma Boateng, one of the African young female professionals whose impact in the male-dominated oil and gas industry leaves her standing tall in the industry. It is another loaded edition. 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

rientEnergy Review

Editorial Advisory Engr.Andy Olotu Victor Eromosele Stanley Egbochuku Editor Peace Obi Correspondents Chibisi Ohaka(Associate Editor) Vivian Israel ( Head South-South Bureau, PortHaracourt) Gilbert Boyefio (Ghana Correspondent) Godspower Ike (PortHarcourt) Kenechukwu Obiajuru (Bayelsa) Dirisu Yakubu (Abuja) Business Development Manager Mike Omeife Business Development Executive Catherine Saunt ( UK ) Designs Kelechi Okoro Admin/Finance Chiamaka Okeke Circulation Manager Ajayi Kayode UK 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

...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. 05

INDUSTRY NEWS

NNPC’s N15.5bn Expenditure on Oil Pipelines Maintenance Unsettles FAAC Meeting Chibisi Ohakah

he discovery that the Nigerian National Petroleum Corporation (NNPC) spent over N15 billion to maintain and repair oil pipelines in November 2018 is raising concern among state governments, whose opinion is that the figure can be reduced if necessary steps were taken. In the report submitted by the NNPC to the Federation Account Allocation Committee (FAAC), the national oil corporation said during the period in review, it spent N1,556,985,671.03 on security and maintenance of pipelines; N154,293,264.32 on pipeline and other facility repairs, N8,746,257,727.19 on marine distribution, N3,353,698,696.33 on pipeline management and another N1,724,039,089.22 on “strategic holding”. An impeccable source said that at a recent FAAC meeting, some state governors were miffed by the NNPC report, pointing out that the cost of these repairs and maintenance were being deducted from revenue that ordinarily should have accrued to the Federation Account. The NNPC report had listed some of the issues that affected production in the month of October 2018 (which in turn necessitated the need for the repair and maintenance of the pipelines). They include Bonny Terminal that suffered a loss of 710,000 barrels of crude; Forcados that suffered a loss of 1,085,000; Agbami that lost 157,000 barrels; Akpo

ORIENT ENERGY REVIEW Vol.9 No. 05

terminal that lost 162,000 barrels; Brass, 360,000 barrels; Qua Ibo terminal, 165,000barrels; Oyo (not the state) 155,000 barrels; Tulja 682,000 and Erha terminal lost 10,000 barrels. Total of barrels lost during the period in review amounted to 3,607,000 barrels, or about $183,957,000 or N56,106,885,000 lost in one month, by currents estimates The FAAC report said Nigeria suffered crude oil pipeline losses of N88,422,130.82 basically from the pipeline segment of CNL- WRPC where 700,344 barrels were pumped,

but only 695,535 barrels was received. The report further said that the pipeline at A/Cove-Mosimi and A/CoveIdimu- Satellite from where 192,590 cubic metres of Premium Motor Spirit (PMS) was pumped but only 170,482 cubic metre of PMS was received resulting in a loss of 22,108 cubic metres or N2,946,554,240. Another loss of N1,366,919,680 was recorded from the Mosimi-Ibadan pipeline while the Port Harcourt- Aba pipeline suffered a loss of N58,201,777, all amounting to N4,371,675,696.64 loss to the federation account.

INDUSTRY NEWS

NNPC not in competition with Dangote Refinery – Kyari Peace Obi

roup Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said that the national oil company is not in contest for market share with the coming Dangote Refinery. According to the GMD, the national oil company is rather committed to providing support to the promoters of the project to boost in-country refining capacity. Speaking while receiving the President and Chief Executive Officer of the Dangote Group, Alhaji Aliko Dangote, in Abuja, Kyari explained that as the chief enabler of the Nigerian economy, the NNPC had a duty to rally industry players like Dangote Group to achieve the long-held target of making Nigeria a net exporter of petroleum products. He said that the NNPC ultimate goal was to enhance in-country production to the point of self-sufficiency and ultimately for

export, the GMD said the same level of support would be provided to other promoters of refineries in the country. Speaking earlier, the President and Chief Executive Officer of the Dangote Group,

Alhaji Dangote noted that the business approach of the Dangote Refinery was to see NNPC as a collaborator rather than a competitor. Dangote said that the refinery would rely heavily on the Corporation’s invaluable knowledge of the refining business in Nigeria to achieve its central objective. Dangote aligned his company with the Federal Government’s aspiration to ensure adequate in-country refining capacity, adding that upon completion, the refinery would dedicate 53 per cent of its projected 650,000 barrels per day refining capacity for the production of petrol. “The most important thing for us is to see how we can partner with NNPC, it is not to see how we can compete with NNPC. We would like NNPC to be part of us and we also want to be part of NNPC. I think that is the only way we can achieve a win-win situation,” he said.

Successful C-Kore deployment on GGA area

-Kore Systems have completed another successful deployment in the North Sea, on the Greater Guillemot Area field, with the help of the C-Kore subsea testing tools. Faulty elements in the subsea network were diagnosed and replaced within 24 hours of the start of the fault-finding campaign. The GGA area is operated by Dana Petroleum with partner Tailwind.

C-Kore’s compact Cable Monitor Units are used on fault-finding operations and installation campaigns to test the health of electrical lines by measuring the insulation resistance and electrical continuity. With their Subsea TDR units, faults can be localised with an accuracy of 10cm in the cables. C-Kore has recently brought out their new Sensor Monitor that can read subsea wellhead gauges and other subsea sensors directly without a control

module or datalink present. Greg Smith, General Manager of C-Kore Systems added, “We have invested considerable time designing our units to be versatile while remaining very easy to operate. Before work even begins, we work closely with our customers to ensure the tools and testing methodology are optimised for their work scope, with the aim of ensuring testing is as efficient and effective as possible.”

ORIENT ENERGY REVIEW Vol.9 No. 05

INDUSTRY NEWS

Tranos partners Toyota in producing LNG-run generators Chibisi Ohakah

Shell, Sahara win bids for Bonny Light by Turkish firm Chibisi Ohakah

ORIENT ENERGY REVIEW Vol.9 No. 05

hell and Sahara have been awarded a tender by Turkeyâ&#x20AC;&#x2122;s Tupras with a cargo of Bonny Light each, though prices did not immediately emerge. At least 30 cargoes of Nigerian crude were still available for September loading, Reuters said on Thursday. Indiaâ&#x20AC;&#x2122;s IOC appears to have stepped up its imports of West African oil this week, with Glencore set to send a Very Large Crude Carrier (VLCC) of Escravos for mid-September loading. Sellers were attempting to capitalize on the clearing of surplus barrels for August export and raising price offerings for September cargoes, with major grade Qua Iboe being marketed for $2.60 above dated Brent compared to $2 for late August. An uptick in U.S. gasoline demand may also provide a boon to lighter Nigerian grades which have seen exports to the United States fall as U.S. consumption of domestic crude ramps up. Marathon Oil Corp is scheduled to take a cargo of Nigerian Forcados crude loading later this month for arrival at its Long Beach refinery and is becoming one of the most consistent U.S. buyers of Nigerian oil.

INDUSTRY NEWS

reat relief is coming the way of telecom firms as Tranos, Nigeria’s enclosure manufacturing firm hints about the manufacture of generators that run on liquefied natural gas. The invention, which is in collaboration with Toyota Motors will power telecom base stations nationwide and eliminate the theft of diesel, a common product that is easily stolen at communication mast sites. Speaking in Lagos recently, the Managing Director of Tranos, Mr Jude Abalaka said with regards to the security of telecoms equipment at their over 20,000 base stations across the country, Tranos has come up with innovations that will solve theft challenges. The specified Tranos generators that run on LPG will eliminate the use of diesel completely. The second stage of the innovation was ongoing and full production was expected in Q3, 2019. Partnering with Toyota in this regard, Tranos had ordered for the first set of production engines from Toyota.

Tranos said it was also designing battery cabinets that would include some security features that would make it difficult for anyone to steal the items. This technology would replace what is being currently used where huge pillars and bars were built around batteries to protect them. The report said that with this technology, stealing batteries at telecom sites would be greatly minimised, if not completely eliminated. “We became aware that the telecoms operators were having certain challenges around their mast sites. So we decided to design a product that will address those challenges,” Abalaka said. He pointed out that by this development, telecom companies would not have to incur losses arising from the stealing of diesel at their various sites across the country. “With this, people can no longer bring jerry can in and steal gas the way they steal diesel,” he assured. For the past four years, Tranos has been making products for the telecom companies to address those challenges. Currently,

about 12% of telecom sites in Nigeria are being run on generating sets from Tranos Company. There are three LPG generating sets currently running on different sites to test-run the efficacy of the products. If the test proves successful, Abalaka hoped that in the nearest future, those running on LPG would replace all the diesel engines running at various telecom sites.

ORIENT ENERGY REVIEW Vol.9 No. 04

LOCAL CONTENT WATCH

Wabote, NCDMB receive business leadership awards

Expatriates’ participation in Nigeria’s oil industry reduced to 20% - NCDMB

Chibisi Ohakah, Abuja

n the last decade, Nigeria has reduced the number of expatriates in the petroleum industry by 80%, being part of the achievements of the local content policy introduced since 2010. Confirming this development in Abuja during the 3rd quarter media engagement, the Executive Secretary of the Nigerian Content Development and Monitoring Board, Engr Simbi Wabote, said “Nigerians now occupy key positions and deliver critical services in the industry”. Wabote who presented his scorecard at a press briefing said before theBoard started implementing the Nigerian Oil and Gas Industry Content Development, (NOGICD) Act, oil welding activities was done outside the country. “Nigeria did not have world-class welding facilities. Today, we are able to fabricate about 60,000 metric tonnes per annum in Nigeria, which never existed

before. We have about five world-class welding yards as we speak today. These welding facilities can compete with any of its peers outside this country. “Today, 95% of service companies in the oil and gas sector, be it onshore and swamp drilling activities; well intervention facilities, well simulation activities and all that, are been done by Nigerians. These were the exclusive preserve of multinational companies like Schlumberger, Haliburton and what have you; but Nigerians have taken all those responsibilities in the land and swamp areas in terms of drilling. “When we talk about operations of the upstream sector; in the past it was the multinationals that were operating all the fields that we have. Today, we have truly Nigerians who are now operating those fields. Today, they account for almost about 25% to 30% of oil production in the country, not to talk about domestic gas production. Today, marginal fields are also being produced by

ORIENT ENERGY REVIEW Vol.9 No. 05

LOCAL CONTENT WATCH

xecutive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Kesiye Wabote has been honoured with the Transformational Business Leader in Public Sector in 2019 award organised by the BusinessDay Nigerian Business Leadership Awards. The NCDMB was also recognised as the Government Agency of the Year for Enabling Business. According to the awards review committee, the award was in recognition of the outstanding leadership Wabote brought to bear on the Nigerian Content Development and Monitoring Board, NCDMB, especially for spearheading several initiatives that are helping to create conducive environment for the private sector to thrive in Nigeria. The committee noted that the award celebrates “a public officer under whose inspirational leadership new opportunities for domestic prosperity are being unlocked.”

Nigerian companies, adding molecules to oil production. Still on his scorecard, Wabote said NCDMB has intervened in the face-off between the Lagos Deep Offshore Logistics Base (LADOL) and Samsung Heavy Indus-

Receiving the awards, Wabote thanked the management of BusinessDay and the Awards Committee for the recognition, stating that “the media and populace fully appreciate our efforts in using Nigerian Content to create employment opportunities and to promote the growth of the local economy.” The NCDMB ES who dedicated the awards to his family and staff of the NCDMB, said, “I have succeeded in this role simply because I have the full support of the management and staff of the NCDMB, their commitment and dedication to duty is second to none.” He also thanked President Muhammadu Buhari for the opportunity to serve as the Executive Secretary of the NCDMB and underscored the support received from the Presidency to deliver on the mandates contained in the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.

try (SHI), assuring that the conflict will be resolved before September ends. LADOL, who is the operator of the LADOL Free Zone in Lagos, had in September 2018 sent SHI packing from the Free Zone upon the allegation that the latter’s license to operate in the zone had expired. LADOL also claimed that SHI did not meet the minimum requirement for its licence to be renewed Infuriated as it were, SHI headed to court challenging LADOL’s action. Ever since the matter had lingered with none of the parties willing to shift ground. Orient Energy Review gathered that even the intervention of Ministry of Industry, Trade and Investment and other stakeholders yielded no results. Engr. Simbi Wabote said the Board is currently driving the reconciliation process and was hoping to resolve the issue within the next month. “Currently we are working to resolve the conflict and NCDMB is on the driving seat. Until we achieve that, I will not be able to say what is being done currently. In the next one month, we will at least know where we are on that issue. We have been the fulcrum in being able to resolve that

Speaking on some of the board’s efforts in executing its mandate, Wabote said that the board pushed a few new ideas in the last two and half years, including equity investments in strategic third party projects, introduction of Service Level Agreements (SLAs) with international and indigenous operating companies to enhance the Ease of Doing Business, creation of the US$200m Nigerian Content Intervention Fund to provide affordable and accessible credit for local oil service companies, progression of industrial parks to domesticate oil and gas components manufacturing and construction of the board’s headquarters building in Yenagoa, Bayelsa state. “We feel highly elated that our modest ideas and efforts are making the desired impacts and have attracted recognitions. These awards will reenergise us to do more for our country,” he said

issue and I believe it would be resolved very soon,” he said He further explained that the NCDMB was working to ensure that payments were made promptly to indigenous companies for services delivered to big firms, noting that over the last two years, the situation had improved. He blamed the delay in payment to local firms to the challenges recorded in the settlement of Joint Venture Cash Calls, which hampered the ability of JV partners to pay their contractors. Since the resolution of the JV Cash Call issue and the adoption of a new model for settlement of the cash calls, he opined, payments to local firms and contractors had improved significantly.

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LOCAL CONTENT WATCH

No compromise on quality, standards in Nigerian content drive – Wabote Peace Obi

xecutive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has said that despite government’s drive for Nigerian content, quality and standards must be upheld by players in the Nigerian oil, gas industry as well as the manufacturing firms. Speaking during a recent visit to Tranos Nigeria Limited in Lagos in company of some management of NCDMB and senior representatives of select oil and gas companies, Wabote said that the industry will not compromise quality and urged local firms to meet the required standards so that they could be added to the operating companies’ approved vendors’ lists. Charging Nigerian oil and gas service companies and manufacturing firms to strive to meet the standards set by the international oil companies, the NCDMB’sExecutive Secretary said they would attract patronage by doing so. He also charged international oil companies to support local companies in their quest to meet their standards and specifications. He assured Nigerian companies investing in servicing and manufacturing facilities of theFederal Government’s support in getting patronage to enable them to employ more Nigerians. “For every one person employed, 10 lives are affected by association. We have to build our manufacturing base alongside agriculture because they are the major employers of labour,” Wabote said. He commended Tranos for its investments, noting that the size of its facility was bigger than many foreign yards that produce components imported for the Nigerian oil and gas industry. Earlier in his presentation, the managing director of Tranos, Mr Jude Abalaka

noted that his company manufactures products that meet international standards. He listed Tranos’ product line to include cable trays and ladders used for both onshore and offshore, various generator canopies, enclosures that can be utilised for various electrical power purposes, cover for mechanical and rotating equipment and cabinet for various electrical and telecommunication equipment. He also stated that the company produces various skids and modules for onshore and offshore oil and gas applications, switches and sockets, engineering and fabrication as well as maintenance of oil and gas facilities. Speaking further, Abalaka disclosed that Tranos was currently expanding its capacity for manufacturing of cable trays and ladders adding that it targets to grow from the current capacity of 200m per day to 7200m per day with the target market demand from greenfield and brownfield oil and gas projects as well as demand in the industrial sector.

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The facility will start production in September 2020 assured that all the cable tray and ladder needs of Nigeria will be met, with the possibility of exporting to other African countries. According to Abalaka, no Nigerian company manufactures gaskets locally, despite it being a major requirement in the oil and gas and petrochemical industries. “We have started placing orders for gasket manufacturing equipment and we will begin the local manufacture of semi-metallic spiral wound and soft cut gaskets in February/March 2020.” He solicited for the board’s support and said, ”for the procurement of Tranos’ products for upcoming oil and gas projects, like Bonga(BSWA), NLNG Train 7, Ikike Project, Ibot Wellhead Project and other EPCI projects.” He also sought assistance with products qualification, certifications and acceptance into approved vendors’ lists of operating companies and inclusion in the NCDMB’s research and development initiatives on the basis of its proven capacity to innovate creative productions in-country.

LOCAL CONTENT WATCH

NCDMB declares support for Yenagoa New City Project Peace Obi

igerian Content Development and Monitoring Board (NCDMB) has reiterated its commitment to work harmoniously with Bayelsa State Government to achieve its developmental programmes. Declaring the Board’s support for the New Yenagoa City Project – an ongoing development project in the state capital of Yenagoa, the Board said it would continue to support the developmental aspirations of the state. Executive Secretary NCDMB, Engr. Simbi Wabote made the commitment while delivering a goodwill message at the launch of the New Yenagoa City in the Bayelsa State capital, recently. Wabote who described the Board as a key developmental partner of the state, promised to support the current administration realise the developmental

projects it has started. The ES noted that the Board which was established under former President Goodluck Jonathan’s administration was presently the only key federal establishment with its headquarters in the state. He disclosed that the state would soon witness the inauguration of Yenagoa skyline – a 17-storey NCDMB headquarter building, which he said would be commissioned before the end of 2019, adding that the building would stand as the tallest edifice in southern Nigeria. The Executive Secretary commended the State Government for embarking on such a huge project and reiterated that the Board would work with the administration to realize the New Yenagoa City project. Present at the event were the former Head

of State, His Excellency, Gen. Abdulsalam Abubakar, the former President, His Excellency, Dr Goodluck Ebele Jonathan, former Military Governors of old Rivers State, Brig. Gen. Anthony Ukpo and HRM King Alfred Diete-Spiff and a host of other dignitaries. The New Yenagoa City spans over 600 hectares of land allocated for pilot development with over 350 hectares of prime greenfield land dedicated to 1000 housing unit Government Reservation Area earmarked for construction by public private partnership, an 18-hole PGA Golf Course, a planned Golf Estate, Polo grounds, hotels and a heliport to offer an attractive mix of residential and commercial development in the Niger Delta area. The first phase of the project is expected to be completed by the last quarter of 2019.

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LOCAL CONTENT LOCAL CONTENT WATCH

NCDMB Supports Operation of Notore industrial complex Peace Obi

he Nigerian Content Development and Monitoring Board, NCDMB, is to support the operation of Notore Chemical Industries Plc, an agro-allied, petrochemical and power company. Eng. Simbi Kesiye Wabote, the Executive Secretary, revealed this during a recent visit to the company’s complex located at Eleme, Rivers State. The chemical industry plans to fully develop its complex to provide integrated services to oil and gas. This according to the company will have a multiplier benefit to both the agricultural and infrastructural sectors of the economy. According to Wabote, Notore has huge potentials in the oil and gas, agriculture and power sector of the economy. The company generates its own electricity and had recently been granted free trade zone status by the federal government. He added that the company’s ample landmass and other natural assets also positioned the complex perfectly for hosting allied industries and serving as a logistics base for key oil and gas operations. He said, “This facility is just 15 kilometres to NLNG in Bonny, so there is potential to

participate in the NLNG Train 7 project. There is vast land here, so you can also have accommodation for other projects. This location could become a staging ground for most of the NLNG constructions in the offing,” Wabote said adding that Notore Industrial complex could also be considered for the execution of SNEPCo’s Bonga-South West Aparo’s deepwater project. Mr. Onajite Okoloko, the Managing Director of Notore, said that the company is also engaging various stakeholders with the view of optimizing the Notore complex. This to him, will create a significant amount of industrialization which is key to the economic growth of the country. He said that the company was determined to build an industrial city and commercialize some of its assets, which includes the 560 hectares of land and two kilometres of waterfront. According to him, the larger picture from one of Notore’s subsidiaries, Notore Industrial City is to create an industrial chemical estate. “Our free trade zone is rated number one by PricewaterhouseCoopers in the sense that it has a deep river port, 10.5 meters of tradable

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draft, with direct access to the ocean. We also have 560 hectares of land and is the only free trade zone in the country that has gas and power,” he said. He stressed that at the company’s estate, one can have fertilizer plants and petrochemicals because the company has gas infrastructure and that it can be used as raw material. “At the same time, we have a logistics base that can support the oil and gas industry. So we have the logistics on one hand and the commercialization of gas which is being flared in the country, so this becomes a gas hub.”

Maritime

Why Indigenous ship owners are hurting – SOAN president ...Calls for reforms on NPA Dr MK George Onyung, president of Shipowners Association of Nigeria, SOAN was at the 5th Anniversary of Platforms Communications, held recently in Lagos with the theme: “A day with maritime students.” He spoke with ELIZABETH UWANDU on sundry issues affecting the maritime industry. Excerpt: You were at the recently held 5th Anniversary of Platforms Communications as chairman of the programme, what do you think the students stand to benefit from the event? Well, they (students) invited us, and with the theme of the programme “beyond sea time,” first is that it is maritime-related. Ideally, these students after their training should be driving the affairs of this industry in the next 30 years. So, the programme created an avenue to present some opportunities and challenges to them. There is a saying that “if you have an old generation, then the nation has a past, and if you have a young generation, then the nation has a future.”

Do you think the Nigeria Maritime Institute is prepared to produce the manpower for the industry? Well, I am not a policymaker, but I know that if there are not enough trained manpower, it will affect the expansion of the industry. In Nigeria as we all know, planning has been a problem. However, the truth is that if we look at innovations, and look at ourselves, where we are, then we will want to understand where we are going. Actually, what we have is not enough, as the growing population of seafarers require more institutions for proper training. Of course, not everybody will benefit from university education, and since shipping is 90 per cent global trade,

ORIENT ENERGY REVIEW Vol.9 No. 05

I believe that if we harness the resources, the energy of the youths in this sector, the economy of this the country will bloom again. The immediate past minister of transport halted the overseas National Seafarers Development Programme (NSDP), do you think it was a good decision for the industry? The then Minister knows why he didn’t approve it. Overseas training for Seafarers isn’t new; Nigeria has been training students abroad for many years now. So, if someone has thought it wise to stop it and think of developing institutions in Nigeria to take care of that need, I think it is a good step. I am just saying that we should

Maritime have had it years back. Considering the role of the Nigerian National Petroleum Corporationâ&#x20AC;&#x2122;s (NNPC) in the downstream sector of the oil and gas, and the issue of few jobs for ship owners, what is the prospect of employment for trained manpower in the maritime sector? Well, NNPC is trying to meet a need. The challenge is that we do not have so many vessels â&#x20AC;&#x201C; like the VLCCs, that is, very large crude carrier. They are trying to cover a gap. However, you see that gap that they are trying to cover will have to start somewhere. For the downstream, as you said, there is need for them to hire Nigerian ships. I will plan to get my team to seat and try to see innovative ways we will use to solve this problem. It is not an insurmountable problem, it is something I feel we will try our best to correct having invested money in shipping and also considering that we owe our banks. We are training students, and it does not make sense that we are not harnessing the resources in a cohesive, collaborative manner. NNPC cannot be veering this tangent. NIMASA, and other institutions are training other students, these trainees end up on the streets. Therefore, there must be a meeting point. We plan to have an issue-focused group that will engage NNPC. We have been meeting with them, familiarizing our executive with them and have written to them. We hope to have meaningful dialogue in a collaborative non-confrontational manner to address this issue. What are your plans as the new SOAN president? My plan will soon be unfolded. I am going into a consultative phase now. When I am done with consultation, I will call you people together and we will talk about it. I believe I will do my best in my tenure. I will try to give a face-lift to the Nigeria shipping industry. We are planning a major event. It will be a very inclusive innovative dialogue with all industry players. As you know, the human body is the most complex equipment you can deal with in the universe, so ships are the next big thing, and definitely, we are going to make something out of the industry that everybody will be happy about.

The gridlock leading to the nationâ&#x20AC;&#x2122;s sea port in Apapa has been a major source of worry even with the Presidential directives that the trucks and trailers should vacate the roads, what do you think should be the proper channel to address the situation? I think the solution is planning. The President can give orders, he is the Commander-In-Chief of the Armed Forces of the Federal Republic of Nigeria and we have to obey him. The government gave Orders and the roads are a bit free now. It is like water dredging, you push sand into the water, it flows to another place and causes flooding in areas you never can imagine. We have plans to talk with the management of NPA as ships that bring containers into the country are increasing. I understand that so many containers are trapped in the ports, so we need to have a more organised plan about the ports. From my experience, nobody builds a port in a city. The Apapa and Tin Can ports are now in the city. If you look around the world, cities are far away from the port. If you remember, the nearest town or city to Ikeja Airport was Surulere many years ago. And if the Airport authority did not mark out the Airport land, by now Mafoluku would have been in the airport. Ajegunle is at the seaport, and people are living in the seaport more or less. I think something needs to be done in the development of the ports. A lot of reforms need to come into play at the

ports. This is big business, as 90 per cent of global trade is shipping. Shipping involves everything. We are trying to engage the government properly to understand that this is a critical area for economic growth, and we cannot be excluded from so many things.

I think the solution is planning. The President can give orders, he is the Commander-InChief of the Armed Forces of the Federal Republic of Nigeria and we have to obey him

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Maritime

Losing benefits of blue economy to lack of Synergy Pita Ochai

ith a vast ocean body that borders most parts of the Nigerian southern states, the country is yet to gain full benefits of its vast blue economy. It is estimated that the country has about 852 km bordering the Atlantic Ocean in the Gulf of Guinea and a maritime area of 46,000 km square, as well as diverse marine resources. Globally, the blue economy has inherent multi-billion dollars opportunities. In China and the United States of America (USA), it is reported that its blue economy contributes about 10 per cent to Gross Domestic Product (GDP) and annual revenue of $962 billion. In 2014, the blue economy of China created about 9 million jobs. In the USA, its blue economy is valued at about $258 billion in 2010, contributing 1.8 per cent to the country’s GDP. According to Dakuku Peterside, the Director-General, Nigerian Maritime Administration and Safety Agency (NIMASA), the potential of the Nigerian blue economy is huge and remain largely untapped for the benefit of the country. To him, Nigeria can achieve accelerated economic growth and development through the regulation, exploitation and protection of her maritime sector through a comprehensive and articulated approach. At the beginning of this year, NIMASA projected a 2.5 per cent growth in the Nigerian maritime sector. This has created expectations among stakeholders who are expecting to see the impact of the growth on the economy. “The maritime sector has the potential of contributing at least 10 per cent of Nigeria’s GDP in no distant future, as Nigeria has the biggest market in Africa; and generates about 65-67 per

cent of cargo throughput in West Africa, and 65 per cent of all cargo heading for these regions will most likely end up in the Nigerian market,” the DG said. To facilitate growth, the apex maritime body also assured investors of incentives as a means of encouragement. “We have been engaging with government at the highest level to push for special intervention fund, special interest rate and other incentives that will drive optimal performance in the sector. We shall not relent in our drive to put the right framework to-

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gether to help beneficiaries and investors have a good return on investment. The country is also making huge investments in human capacity development in the sector, which means that more Nigerians will get involved in shipping, especially, in shipping operations,” Dakuku stated. He also highlighted some other key drivers of the sector in the year as a geographic factor, availability of skilled labour force, an efficient and effective regulatory environment, manpower and human capacity development, maritime

Maritime infrastructural development, globalisation and new technology, among others. Presently, the maritime sector is the propeller in the exploitation, distribution and exportation of the nation’s ocean resources, with a total annual freight cost estimated at between $5 billion and $6 billion annually. The maritime component of the Nigerian oil and gas industry is estimated to worth about $8 billion, which further reflected the prominence of maritime to the Nigerian economy. “As a regulator, we are driven by values and commitments, as these are the only ways that investors can be attracted to harness the great potential in our maritime sector. On our part, we will continue to work out incentives and maritime sector-specific interventions to attract investments,” Peterside said. With a prospect to generate over $8 billion yearly, the maritime sector has the resources to propel the desired growth in the nation’s economy, stakeholders have said. To fully optimise the industry capacity, they stressed the need for the Federal Government to fully exploit the potential through well-synchronised policies, electronic operations and synergy among government agencies. In his opinion, the Chairman, Ports Consultative Council, Kunle Folarin, said

that Nigerian government needs to reform the maritime industry to unlock the untapped fortunes of the blue economy. Expressing worry that there is currently a lack of focus in the industry, Folarin called for greater cooperation among government agencies to ensure a viable and competitive maritime sector. He attributed the under-performance of the sector to factors such as; lack of synergy in conception and execution of projects; conflict in directives; and ego, as agencies flex muscles on superiority, among others. According to Folarin these constitute major hindrances to collaboration on projects and the consequences of such are that many projects are delayed or abandoned to the detriment of the citizenry. He insisted that inter-agency collaboration would offer opportunities for learning and to have a competitive edge in the region. “It would also boost compliance level, increase in revenue, trigger zero tolerance for inefficiency among others,” he said. He identified sensitive agencies in the ports system to include: Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Navy (NN), Nigeria Customs Service (NCS), Nigerian Shippers Council (NSC) among others. He said

the agencies’ boards and chief executive officers must earn respect and create a fresh synergy that can propel a new order in the industry. According to Layinka Adagun, the need for relevant government agencies to work in true partnership with each other in unlocking the huge economic accruable to Nigeria through her maritime corridor has become pertinent more than ever. Stating that Nigeria’s shift of focus to oil and gas resources led to the neglect of other sectors of economy Adagun said the maritime sector must be repositioned for Nigeria to tap from her blue economy. He said, “The oil industry has always been seen as the nation’s major revenue earner, but this sector lags behind the maritime industry that has earned its pre-eminence in Nigerian economy since the pre-colonial era when the Trans-Atlantic slave trade thrived on the coastal waters of what later became Nigeria. “The strategic importance of the Nigerian maritime sector to the growth and stability of the nation’s economy is attested to by its value in the upstream sector of the oil industry. This is further stressed by the Ministry of Transport, which estimated a total of about $8 billion freight cost yearly for the industry,” he said.

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POWER

Discos’ Recapitalisation: Is It The Way Out Of Nigeria’s Epileptic Power Supply? Chibisi Ohakah, Abuja The proposed recapitalisation of all the 11 Nigerian Electricity Distribution Companies (DisCos) has received the nod of lawmakers in the National Assembly. They also advised that the 40% shares held by the Federal Government in the Discos be divested from and sold to investors with technical competence, adding that it would be more beneficial to Nigeria, as well as the Power sector. Addressing the management team of the Transmission Company of Nigeria (TCN) at the National Assembly, Senate President, Ahmed Lawan, said it was not in the interest of the Government to continually disburse bailout funds to the Power DisCos

without commensurate improvement in electricity supply. He said experts in the field should be availed the opportunity to invest in the sector and assured that the Senate would continue to support the TCN in its execution of the Transmission Rehabilitation and Expansion Programme (TREP) planned to rehabilitate, stabilise and provide the necessary flexibility in the country’s transmission grid. Coming after lack of access to finance, epileptic power supply is identified as the second biggest obstacle to business investment in Nigeria. The International Monetary Fund (IMF) estimates that the same

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epileptic power supply costs Nigeria an estimated $29 billion annually. A report said that Nigerians spend about $14 billion annually on the acquisition and use of power generators. Throwing light on the power crises in Nigeria, the Executive Secretary, Association of Power Generation Companies (APGC) – an umbrella body for power generators in Nigeria, Joy Ogaji, blames the regulatory agencies in part. According to her, their failure to steer performance and efficiency towards optimal utilisation leads all computation for a full return on investment effort thrown into chaos. “So the solution is in developing and im-

POWER plementing a sanction regime for poor performance for all participants in the power sector,” she said. She informed that findings by APGC showed that power distributors could not account for up to 75% of the power they distribute to end-users in terms of revenue remitted to the Nigerian Bulk Electricity Trading (NBET) Company, an agency of the Federal Government of Nigeria that collects revenue from the DisCos on behalf of other operators in the sector. Ogaji stated that the inability of the DisCos to make the right revenue collections was also compounding the losses of power generation companies (GenCos), as they were losing over 6,000mw of energy, because they make no revenue from that quantum of power. She explained that the technical and operational inefficiencies by these operators (TCN and DisCos) negatively affect the GenCos in different ways. With a total available generation capacity of more than 7,500mw and maximum (TCN) wheeling capacity of not more than 5,500mw, there will always be a recurring instance of about 2,000mw idle generation, she said. Idle generation represents capital investment not being able to yield revenue that will influence the ability of the GenCos to support efficient operations and service loans used in developing power plants. “Out of the meagre 5,500mw of transmission wheeling capacity, the DisCos have not proven to be able to distribute more than 4,500mw continuously, leaving yet another 1,000mw of generation capacity unutilised.” In total, due to the combined technical incapacitation of TCN and the Discos, the GenCos are unable to deploy a total of 3,000mw of capacity that would ensure sustainable and profitable operations. The APGC secretary informed further that the DisCos have been operating around 3,500mw or below. This figure, she explained, escalates to 4,000mw of idle capacity. In addition to the issues of incapacity, the Discos as mentioned before are unable to account for up to 75% of the power they have distributed to end-users in terms of revenue remitted to the bulk electricity trader. “In real terms, factoring the impact of poor revenue remittance, the issues facing the GenCos are those of 4,000mw idle generation and 2,625mw of stranded power (0.75 multiplied by 3,500mw). In effect,

the GenCos are not able to deploy a total of 4,000mw of idle power, and out of the 3,500mw wheeled by TCN on demand by DisCos, the DisCos only remit about 25% (875mw) of this power as revenue to bulk trader, making a total of 6,625mw generation capacity not yielding revenue for the GenCos,” Ogaji said While this epileptic power supply persisted, the 11 power distribution companies (DisCos) in Nigeria insist they are not breaking even, mostly because of problems encountered with securing meters, and getting customers to pay for electricity services rendered. These DisCos collect payments from electricity consumers on behalf of other operators in the sector. TCN transmits the power generated by electricity generation companies (GenCos) to power distributors (DisCos), who then distribute the product to final consumers. However, the TCN Managing Director, Usman Mohammed, at a press briefing in Abuja, said the indebtedness of the power distributors to TCN alone had grown to about N270 billion. Mohammed, at the briefing, called for the outright recapitalisation of the sector. “It has become vital to correct the error that was done when the sector was privatised, to forestall the persistent shortfall in the power market,” the TCN boss said. He explained that most of the Power assets divested from the defunct PHCN ended up with investors that lacked the capacity for long-term investments and that this in turn has created serious liquidity strain in the power market. “They don’t have the capacity. Now, Nigerian banks got involved and the DisCos went there to collect money. These monies were short term in nature, very expensive and not ideal for this kind of investment and has become one of the major problems that we are facing in the sector right now,” he said. However, there seem to be some respite, given the announcement a fortnight ago by the TCN to forego the N270 billion debt. He said this decision, as a way out, is to enable the DisCos to have the respite to recapitalise. Nevertheless, observations from the Power sector players and stakeholders seem to suggest that forego-

ing the N270 billion may not be enough. Commenting on the recapitalisation request from the TCN, the Chief Executive Officer, Association of Nigerian Electricity Distributors (ANED), Mr. Azu Obiaya said the recapitalisation canvassed by the TCN would happen when investors in the DisCos see a pathway of recovering their investments. Addressing participants at a two-day seminar for the preparation of Performance Improvement Plans (PIP) by Nigerian DisCos, Obiaya posited that rational investors would need to see how they would recoup their investments before they could go ahead to recapitalise the firms. Commenting about the PIP guidelines issued by the Nigerian Electricity Regulatory Commission (NERC), the DisCos said it was necessary to organise the PIP seminars held in June to bring together the Board members, Operators and other critical stakeholders. Obiaya said the PIP reviewed three central and recurring themes, including extensive stakeholder consultation, robustness of process and outcomes in the context of efficiency. According to him, the PIP guidelines, if implemented faithfully, efficiently and consistently, will provide this pathway, as necessary to re-orientate the sector towards commercial viability and sustainability for the Power sector. According to experts, the major challenge of power generation in the country is the heavy reliance on gas-fired and hydropower stations. With the pronouncement from the TCN over the debts owed to it by the Discos, offering the leeway for the proposed recapitalisation of the sector, what are the new hopes for the power sector in Nigeria?

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POWER

Abuja Disco commences distribution of meters to customers Chibisi Ohakah

buja Electricity Distribution Company (AEDC) has commenced doorstep delivery of meters to customer, tagged, mobile Meter Asset Provider (The MAP). AEDC’s General Manager, Corporate Communications, Mr Oyebode Fadipe, confirmed this to newsmen in Abuja yesterday. The Nigerian Electricity Regulatory Commission (NERC) had approved the Meter Asset Provider Scheme (MAP) to ensure that electricity customers only pay for what they consumed. According to Oyebode, mobile MAP metering project is a One-Stop shop where customers are registered and verified. The AEDC spokesman said that the

project would help increase the level of metering, especially for customers who were reluctant to go to AEDC offices. “We will create an office with a caravan around the location so that everybody who wants meters and is finding it difficult to go online could be easily attended to. It is almost like getting your meter in one day or 24 hours,’’ he said. According to him, customers under the project would pay for their meter and be metered immediately by the AEDC team. “The team will then follow the applicant/customer to meter his house, shop, or office as the case may be. The team will also go to towns and villages to engage in this next level metering programme,” he said.

Nigerian renewable energy solutions provider, Arnergy closes Series A financing …says new capital will enable energy reliability

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igerian distributed utility company, Arnergy, has raised $9 Million in a Series A round of funding led by Breakthrough Energy Ventures with participation from the Norwegian Investment Fund for Developing Countries (Norfund), EDFI ElectriFI and All On. Arnergy is a distributed utility company that provides energy solutions tailored towards energy reliability in emerging markets. Its energy solutions empower businesses and residential customers through the design, sale and installation of affordable and reliable, distributed energy systems. The distributed utility company harnesses a combination of solar power, superior storage solutions and proprietary remote management technologies to deliver scalable, reliable and affordable energy solutions that are tailored to tackle issues related to intermittency and grid unreliability. Since launch, it has delivered over 2MW of installed capacity and over 5MWh of storage capacity to

business and residential clients across Nigeria.

Arnergy’s market scaling ambitions is fueled by the influx of new capital, will include new business models and partnership opportunities, as well as consumer financing and channel expansion activities. Targeted verticals for the

POWER

FG installs solar hybrid power plant at Alex Ekwueme University Chibisi Ohakah

igeria’s first-ever hybrid solar power plant was commissioned at the Alex Ekwueme Federal University, Ebonyi state. The plant with a capacity of 2.8 MW, was built as part of the Energising Education Programme (EEP). It is the first of its kind in the country and will be powered by solar panels supported by diesel-powered electric generators. The system will provide electrical power to the 7700 students and 1,819 members of the university’s administration. The director of the Rural Electrification Agency, Damilola Ogunbiyi, said the installation of this plant could have a positive impact on the quality of academic results. In an interview with the local press at the inauguration ceremony, he assured that “this programme will undoubtedly improve the quality of education, research and health services in Nigeria’s universities and teaching hospitals”. The hybrid

plant has a significant environmental impact, as it will allow the 1.54 MW gasoline and diesel generators that used to supply electricity to be disconnected. The hybrid power plant was built as part of the Energising Education Programme (EEP). The initiative was set up by the Nigerian federal government in collaboration with the Rural Electrification Agency and the National Universities Commission (NUC). The installation itself was carried out by Sterling and Wilson, a local

company’s 5KW modular systems will include small businesses, healthcare, hospitality, financial services, agribusiness and education. The Founder and CEO of Arnergy, Femi Adeyemo said, “We are excited to enter this next phase in Arnergy’s development with investors that share our vision of tackling the most pressing energy challenges across emerging market economies, starting with Nigeria. We believe that energy needs in Nigeria have surpassed rudimentary requirements of low power utilization and our product offerings are solving for reliability and not just access. Speaking also, Carmichael Roberts of Breakthrough Energy Ventures said, “Arnergy inherently understands the West African

market and its need for power reliability.” Adding that Creating accessibility to reliable renewable energy sources is paramount to economic growth in this region. “With Arnergy’s technology, we can significantly decrease carbon emissions and it’s a model that can be replicated all over the developing world,” he said. “Access to clean and stable energy is a prerequisite for job creation and development. Norfund is proud to support the expansion of Arnergy which will provide Nigerian households and businesses on a weak-grid connection with a cheaper, cleaner and more reliable power solution to meet their daily needs,” said Mark Davis, EVP Clean Energy from Norfund. “ElectriFI, a EU-funded access to energy impact facility, is thrilled to join such a strong group of investors backing visionary entrepreneurs who will positively impact thousands of local businesses in Nigeria,” said Dominiek Deconinck, ElectriFI Fund Manager.

company specialising in the supply of energy solutions. This programme will equip 37 federal universities and seven university hospitals with autonomous power generation units. It will also involve the rehabilitation of existing infrastructure. Above all, the project involves related aspects such as the installation of solar streetlights on some 7.5 km of road to guarantee safety, as well as the opening of a world-class renewable energy training centre.

Speaking on the investment, Wiebe Boer, CEO of Shell funded All On, “This is a deal that is particularly exciting to us at All On as a Nigerian impact investor because it reinforces our belief that local energy companies like Arnergy with innovative Nigerian technology and business models can attract investments from global giants like Breakthrough Energy Ventures, Norfund and ElectriFI, and are ready and able to compete on a global stage.” According to Damilola Ogunbiyi, the CEO of the Rural Electrification Agency (REA), “I am delighted that Arnergy, a home grown company and one of the market leaders for off grid energy in Nigeria, has reached this milestone to raise capital from such an impressive group of local and international investors. It is a validation of all the hard work the REA and all of our partners are doing to create an enabling environment for off grid development.”

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POWER

ORIENT ENERGY REVIEW Vol.9 No. 05

POWER

FG partners Germany, Siemens to achieve 7,000 megawatts power supply Elizabeth Uwandu

igerians are set to enjoy reliable power supply going by a roadmap the Federal Government signed on Monday with the German government and Siemens AG to boost power supply to 7,000 megawatts come 2021. According to President Muhammadu Buhari, who met with the president of Siemens AG, Joe Kaeser, the partnership will improve power supply to 7,000 megawatts by 2021 and 11,000 megawatts by 2023”. Currently, Nigeria produces about 10,000 megawatts; however, only about 4,000 megawatts get across to customers. President Buhari said, “Our intention is to ensure that our cooperation is structured under a government-to-government framework. No middlemen will be

involved so that we can achieve value for money for Nigerians.” He also hinted that although, the measure would not fully tackle the power

issue facing the country but noted that it has the potential of addressing a significant amount of the electricity challenges Nigeria has faced for decades.

Egypt beats South Africa, tops the continent’s electricity producers

he North African country, Egypt has reached installed capacity of 55,000 Megawatts of electricity per day. The figure is about 3,000MW higher than what South Africa produces, going by Egypt’s own official figures. Experts say however that in terms of infrastructure in Africa, megawatt capacity doesn’t always translate to actual delivery. “Starting from 2014 up till the end of 2018, the total capacity added to the network was 25,426 Megawatts”, Africa Oil + Gas Report quoted Mohammed Shaker, Egypt’s Minister of Electricity and Renewable Energy yesterday. He explained that the 25,426MW was approximately the maximum load the country could supply during 2014, which means they have already doubled what they had at that time. The report said South Africa doesn’t have

that kind of story to tell, as the state power utility grapples with a debt load of about $30Billion, borrowing money on shortterm contracts to help it meet its commitments to its long-term loans. But whereas Eskom is a clear corporate entity, it is difficult to differentiate the Egyptian Electricity Holding company from the Egyptian state

itself. “The installed capacity in Egypt is almost exceeding 55 Gigawatts although our consumption is less than that, but we are trying to depend on the operations of high-efficiency generators, combined cycle and because of these, we could manage to reduce the consumption of fuel to a great extent and this will be reflected on the cost of tariff ”, says the minister, a former Professor of Electrical Power Engineering at the Cairo University. “Almost 60-65% of the cost of tariff is as a result of the fuel, if we have savings in fuel consumption, it makes a difference for the costing of electricity”, he said

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SPECIAL REPORT

Nigeria’s Gas development: The Chevron Nigeria Limited’s success story

he development of Nigeria’s vast gas resources has been one of the major policy thrusts of successive governments in Nigeria. It is worthy of note that Nigeria is blessed with resources for growth and global competition in gas. According to the Department of Petroleum Resources (DPR), Nigeria has the largest gas reserves in Africa and is ranked 9th globally - Current estimates put its proven reserves at about 200 (Tcf) and 600Tcf unproven. Nigeria has a robust and rapidly evolving demand base. Through the National Gas Policy (NGP) and the Nigerian Gas Master Plan, the FGN continues to focus its efforts to unlock the vast gas resources through reducing gas flaring, increasing

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domestic supply and utilization, while diversifying Nigeria’s economy. In Nigeria, Chevron Nigeria Limited (CNL), the operator of the joint venture between the Nigerian National Petroleum Corporation (NNPC) and CNL ranks high among some corporate bodies that play leading role in gas development in the country.CNL has continued to receive accolades for its contributions to gas development in support of the Government’s gas development objectives. In February 2018, at the Nigerian International Petroleum Summit (NIPS) in Abuja, Chevron received an award as the greatest contributor of domestic gas in Nigeria. Chairman/Managing Director of CNL, Mr. Jeff Ewing explained that CNL has contributed immensely to the Nigerian government’s gas master plan through

SPECIAL REPORT

the various gas projects it has embarked on and that the company is the highest contributor of high quality gas to the domestic market in Nigeria. Also, according to the Department of Petroleum Resources (DPR), CNL supplies about 40% of Nigeria’s domestic gas consumption and the company is one of the highest contributors of high quality domestic gas in Nigeria. Jeff noted that through investments in gathering and processing of associated gas, routine flaring has been reduced by over 90% in the last ten years in CNL’s operations. According to him, “amidst the growing global trend in gas production

and utilization, the expectations for the gas sector in Nigeria remains high and provide opportunities for investment in the sector. The opportunities include: Transitioning from an oil-based economy to a more integrated oil and gas economy and end routine gas flaring; Deliberate exploration for non-associated gas to support the Nigeria Gas Master Plan, with a focus on high liquid yield non-associated gas resources to optimize the gas development project economics. Other opportunities include: Removing constraints in the gas to power value chain to increase investor

confidence, and Supporting and enabling competitive (“Willing Buyer – Willing Seller”) gas pricing model across the chain to enable stakeholders cover their costs and be guaranteed a return on investment. CNL’s Chairman/Managing Director explained that the company’s gas story began with the implementation of different phases of the Escravos Gas Project (EGP), with four phases of development over the years. He stated that the EGP gas gathering and processing facilities placed CNL as one of the pioneers in creating a practical and economic solution for gas flaring in the Nigerian oil and gas industry. Also CNL’s Sonam Field development facility is designed to process natural gas through the EGP and is expected to deliver a total of 300 million cubic feet of natural gas per day to the domestic gas market and produce over 30,000 barrels of combined Liquefied Petroleum Gas (LPG) and condensate per day. The strategy, the Chairman/Managing Director said includes: ending routine gas flaring; boosting domestic supply diversifying and commercializing gas resources through Gas-Based Industries such as its Escravos Gas-to-Liquid (EGTL) Plant. CNL works very closely with our JV partner (NNPC), pertinent government agencies and industry stakeholders to advance domestic gas supply. Very notable are the Gas Sale and Aggregation Agreement (GSAA) with Egbin Power Plc and, more recently with Dangote Fertilizer Limited, Ibeju-Lekki. Chevron is also supportive of Nigeria’s leadership in West Africa through our partnership with the NNPC in developing and operating the West African Gas Pipeline (WAGP), a 678 km pipeline that supplies gas to Benin, Togo, and Ghana as part of a broader initiative to develop the energy sector in the region. CNL is optimistic about the future of oil and gas business in Nigeria as the opportunities are enormous. As the Chairman/ Managing Director emphasized, “Chevron has a long commitment to Nigeria. The company has been making significant investments in the country for over 50 years and it expects to do so for many more years to come. With the right policies, the enormous potential of Nigeria’s oil and gas sector can yield even greater benefits.”

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INTERVIEW

Local Content: NCDMB Mentors African oil and gas operators to achieve regional collaboration As Nigeria’s success story on local content law implementation echoes around the globe, many African oil-producing countries have found the initiative a worthy model to follow. This has seen the Nigerian Content Development and Monitoring Board (NCDMB) playing a ‘big brother role’ in mentoring other African countries on their local content development process. In this interview with Peace Obi, the General Manager, Research, Statistics and Development, NCDMB, Abdulmalik Halilu X-rays efforts made so far to achieve regional collaboration as well the progress the Board is making on Project 100 among others. Excerpts 28

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INTERVIEW

Remember when Ghana wanted to develop their own local content law, they also came to Nigeria. We provided them with insights and then you can see the law in Ghana mirrors the NOGICD Act. That is the kind of African brotherliness we are bringing to local content.

While Nigeria’s success story on local content law implementation echoes around the globe, the influence of NCDMB is also spreading across Africa where the Board has been playing mentorship role to some countries like Ghana, Uganda, Senegal in the development of their local content laws, what does that mean to Nigeria? It means that Nigeria has something to offer in terms of knowledge, in terms of leading practise. It also means that we are very transparent as a country by allowing other countries based on a peer review mechanism to share our experience with them. We are very open and happy to bring our brothers in Africa up to speed in terms of what we have achieved. Those engagements also enable us to validate our processes because when somebody tells you, “this thing you have put in place, I am going to model it.” It means that you are on track. That is the kind of insights and excitement that this kind of interventions brings about. Remember when Ghana wanted to develop their own local content law, they also came to Nigeria. We provided them with insights and then you can see the law in Ghana

mirrors the NOGICD Act. That is the kind of African brotherliness we are bringing to local content. For Nigeria, are these engagements deliberately geared towards strengthening the much talked about regional collaboration, especially among African oil-producing countries? Of course, in these conversations, we keep highlighting the importance of regional synergy. The last time we had an engagement with Ghana, we reiterated the fact that we have a Floating Production Storage and Offloading (FPSO) integration yard in Nigeria and because FPSO is not something we continue to build, countries that want to go into field development should take note of the capacities that exist in Nigeria. And I believe that when that message is resonating across Africa, most African countries will find out that there is actually no need for them to replicate having an integration yard; they will leverage what we have in Lagos and you can imagine the traffic that will be coming from other

African countries. So, that is the essence of those engagements and we are happy to continuously share our experience, to advertise opportunities and capacities that have been built in Nigeria. It is also to validate our own models for us to take new insights because no matter how emerging a country is, they must have something valuable to add. So, those contributions that they make are also part of the insights. Beyond sharing our experiences with African countries, we also go to countries that are even more advanced than us. A benchmark study is an integral part of our policy formulation framework. So, we go to countries like Brazil and look at how they are developing a particular sector in Brazil and see if we can adapt it into our situation. Does this lead Africa into regional content development where Nigerian with an abundance of skills and capabilities are able to transfer skills

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INTERVIEW to countries in the region without feeling like expatriates? I happen to be the NCDMB nominee on the ECOWAS policy on hydrocarbon and also the African Petroleum Producers’ Organization (APPO) policy on local content. What you have just said now speaks to the kind of policy framework that we are thinking about. Under the ECOWAS arrangements, we have identified that markets shouldn’t be defined based on country. It should be defined based on regions. We also believe that the cross border movement of skills should be encouraged. We also said that, under the APPO policy, we said that African countries should be treated as a continental market. The advantage of those kinds of things is that the demand for materials within Nigeria might be like 60 per cent but when you add that to the demand from other African countries, you will get a larger tie. So, if investors will see Africa as the market and not just a Nigerian market, they will rather invest here because Africa as a region has this volume of demands. For example some years back some companies wanted to invest in umbilicals but did not because they said the demand for umbilicals in Nigeria was not encouraging enough for them to set up here. But If we had thought about this, then, we would have taken them through the African demand. It is not really a bad case because we later discovered that Angola has an umbilical facility which is still fine. So, we should leverage capacities that exist in other countries. Is regional collaboration truly achievable? Why I think it is achievable because it is taken at the policy level. It’s not a company to company discussion. At the policy level, like the ECOWAS policy on hydrocarbon, I think we are at the stage where it’s going to be presented to the ministerial council before the council of Heads of State. Now, once it is adopted as ECOWAS policy, countries will key into it. It takes time! I think we gave ourselves a target of 2021 or so. It will happen! APPO policy for local content speaks to

all the petroleum-producing countries in Africa. So, you can imagine if they adopt that under the APPO Council of Ministers, then countries will adopt it because it is implementable. The benefits far outweigh the limitations. The limitations are where small countries feel not fully covered but the economy of scale can never go wrong any day, anytime. What were some of the things NCDMB looked out for during the selection process for the first of Project 100 Companies? We looked out for their compliance with the provisions of the NOGICD Act, their compliance with the regulatory requirements, their business offerings, among others. Questions were also asked around their priority in terms of developmental aspirations as well as where

ORIENT ENERGY REVIEW Vol.9 No. 05

they want to be in the next five years. We screened the companies and came up with 60 companies that met our criteria. The outcome of that exercise gave us some insights into where to focus on in terms of intervention. It is important to note that countries that want to grow their local supply chain take deliberate efforts to identify companies that are already on their feet, they will come up with specific interventions that will take them to the next level. What is the NCDMB doing to ensure that the various needs of these companies are met? What we have done now is to compartmentalise the interventions into financial and non-financial interventions. The financial intervention is where you facil-

INTERVIEW itate access to capital at a single-digit interest, while the non-financial is where you look at the business needs. There are situations where some companies will identify certain government policies they think are inimical to their growth. So, we will look at those policies by working with the Ministry of Petroleum Resources to drive policy recommendations so that we can begin to bring the desired changes. There are also companies that identified capacity building as their own problem. In fact, we have discovered that not many companies invest in staff in terms of training. And training is very, very important. Most of the companies have that deficiency while some don’t have the state of the art technology that will enable them to compete in the industry. Yet, for some, it is about the process, while there is also the business insight angle – where you don’t even know where the opportunities are so that you can begin to shape your investments in capacity around those opportunities. So, we needed to also, create that platform where people begin to see a five-year horizon in terms of the opportunities. Another one is the need for access to markets. We needed to create a framework where NCDMB, NNPC and the operators will work together to come up with a framework that will facilitate access to markets for companies that have prospects of doing well in terms of quality and pricing. So, these are the interventions we have put together under Project 100. We have about 60 companies enlisted so far. We are also going to roll out the bespoke interventions sometime in August because we just completed the rapid diagnostic survey of the companies. We went round all the 60 companies to revalidate their needs and also to cross-check their profile and their offerings. So, we are putting together the reports and thereafter, we roll out bespoke interventions. We have a monitoring and evaluation system to track their progress. Progress will be measured in terms of volumes

There are also companies that identified capacity building as their own problem. In fact, we have discovered that not many companies invest in staff in terms of training. And training is very, very important of transactions they’re able to generate as a result of the interventions that we’re going to put in place. So, we expect the companies to grow from the current level of turn over to a higher level. Our aspiration is for them to go beyond N500million which is the definition of large enterprises in Nigeria. Our aspiration is to see that they create more employments for our youths; have the latest technology that is required by the industry and proper documentation system. We also realise that documentation was an issue and we need them to present themselves very well. The fact is that we are projecting these companies to the global space, exposing them to international companies. So, these companies need to document their profile in a manner that it makes easier for any international player that wants to form an alliance with them to carry out some business will do so comfortably because you’re presentable and that your profile speaks about who you are. All that is part of what we’re going to do under project 100 and the communication will be very continuous in terms of what we have achieved and companies that have grown. Hopefully, in December, we’re to open up the platform again so that companies that are interested will still apply and then by Jan-

uary we launch the additional 40 companies. The whole idea is to have Nigerian companies that can compete any day, anytime with international companies. The whole idea is to develop our own large enterprises in Nigeria through the instrumentality of Project 100. How soon is the local content policy going to be extended to other sectors like manufacturing as well as the amendment? I know that the 8th Assembly tried it but by the procedures of National Assembly, I think they have to start all over again. But the government is pushing the agenda even Executive Order Five tried to create a separate local content law but we were quick to intervene to say it is better to leverage the NOGICD Act and expand it. I think that is being considered because recently, I was in a programme organised by the Ministry of Science and Technology, it was re-echoed as part of the communiqué. So, I think it is a function of how the Legislative and the Executive are able to deal with the situation. I won’t be able to say this is the time but we are hopeful because it keeps reoccurring and people have been talking about it. It is going to be sooner than later. The amendment of the NOGICD Act is also part of it.

ORIENT ENERGY REVIEW Vol.9 No. 05

Oil &Gas

Why Nigeria is withholding ‘Ambitious’ Joint Venture Agreements

…FG plans to sell its stakes to less than 40%

Chibisi Ohakah

igeria has put on hold, for now, some proposals, regarded as ‘ambitious,’ including selling down government stakes in joint-venture agreements changing the way it pays Nigeria National Petroleum Corporation’s (NNPC) portion of the bills owed under those deals. In a chat with Reuters, the Group Managing Director of the nation’s oil corporation (NNPC), Mallam Mele Kolo Kyari, informed that the Nigerian government intends to sell its stakes to less than 40%. He said however that there is currently no framework in place for the sales. The NNPC boss explained that top officials of the Corporation are in talks with all operating partners to improve commercial terms, but little progress is being made due to the lingering Petroleum Industry Bill (PIB) which is still on

assembly. According to Kyari, the long-delayed legislation that will overhaul the oil sector needed to be passed into law quickly to spur critical investment into the sector. “There are investment decisions that cannot be made now because the investors are wary of the fiscal environment,” he told the agency. The PIB, which experts say covers everything from fiscal terms to Niger Delta community engagement has been in the works for over a decade. But Kyari said the current government, with the legislature controlled by the party of President Muhammadu Buhari, could pass it. “This time around, you have the best alignment. And I’m sure getting it passed will not be difficult,” he said. the desks of lawmakers in the national

2019 and beyond: Reports speaks of Africa’s mega finds in oil & gas, deep offshore exploration Peace Obi

ORIENT ENERGY REVIEW Vol.9 No. 05

n oil and gas outlook for Africa report has shown that in 2019 and beyond, the continent will witness deep offshore exploration and mega gas finds, with the development of trans-continental pipelines, gas-topower initiatives and refining potentials. In the report by Africa Oil Week and Menas Associates, titled, “Africa Oil and Gas Outlook for 2019”, the continent will experience an array of opportunities across the whole oil and gas value chain – an event to offer exclusive insight into national hydrocarbon strategies and bidding rounds. It stated that on balance the continent’s

Oil &Gas

US-China trade war lowers global oil demand Chibisi Ohakah

he International Energy Agency [IEA] has said that the noticeable economic slowdown and a ratcheting up of the U.S.-China trade war have caused global oil demand to grow at its slowest pace since the financial crisis of 2008. In its recent monthly report, the agency said the situation is becoming even more uncertain “Global oil demand growth has been very sluggish in the first half of 2019,” Reuters quoted IEA recent report. The Paris-based agency said that compared with the same month in 2018, global demand fell by 160,000 barrels per day (bpd) in May – the second year-on-year fall of 2019. From January to May, oil demand

increased by 520,000 bpd, marking the lowest rise for that period since 2008. “The prospects for a political agreement between China and the United States on trade have worsened. This could lead to reduced trade activity and less oil demand growth,” the IEA monthly report said Lowering its global demand growth forecasts for 2019 and 2020 to 1.1 million and 1.3 million bpd, respectively, the IEA cited China as the only major source of growth at 500,000 bpd for the first half of this year. Demand growth in the United States and India was just 100,000 bpd from January to June, it said. “The outlook is fragile with a greater likelihood of a downward revision than an upward one,” the report said.

According to Reuters, supply curbs by the Organization of the Petroleum Exporting Countries [OPEC] and its allies, meanwhile, had tightened the oil market, helped by slower non-OPEC production. But the IEA said that balance would be temporary as it forecast robust nonOPEC production growth in 2020 at 2.2 million bpd, predicting the global oil market would be “well supplied”. The IEA said economic concerns were overshadowing geopolitics, but the oil market continued to watch closely the tensions between the United States and Iran in the Gulf. U.S. sanctions drove down Tehran’s July exports of crude oil by 130,000 bpd to 400,000 bpd, the lowest since the 1980s, the report said.

economic performance is promising, particularly as global oil markets finally recover from their 2015-2016 lows. Africa’s proven oil and gas reserves respectively account for 7.5% and 7.1% of global totals. The report delves into major trends for 2019, including political transitions and regional integration through the African Continental Free Trade Agreement (ACFTA) which promises to reduce barriers to intra-African trade, facilitate the movement of people and strengthening Africa’s prominence on the world stage. A rosy picture is painted for natural gas as global consumption rises. Africa’s

gas production grew by 8% between 2017 and 2018 – largely out of Egypt. In terms of opportunities, sub-Saharan Africa’s two largest producers of oil – Nigeria and Angola – are expected to launch bidding rounds this year. Equatorial Guinea, Uganda, Gabon and Congo Brazzaville have ongoing rounds. Ghana launched its first licensing round at the 2018 edition of Africa Oil Week while Madagascar is hoped to offer a number of blocks this year. Africa Oil Week will feature two days dedicated to national showcases and bidding rounds at their upcoming event with 16 countries – including Côte d’Ivoire, Equatorial Guin-

ea and Mozambique -presenting their national hydrocarbon sector to Africa Oil Week’s audience.

ORIENT ENERGY REVIEW Vol.9 No. 05

Oil &Gas

Kenya’s first commercial crude oil sells at $60pb Chibisi Ohakah

ollowing the confirmation last weekend that Kenya has joined the league of global oil-exporting countries, reports say the country’s commercial oil prospects have received a boost from the recent pricing of the first batch of crude oil at an optimal ($60) per barrel. According to agency reports, investors have from the purchase of the estimated 200,000 barrels of crude, warmed up to opportunities presented by the nearly 600 million barrels of oil reserves in Turkana as the pricing of the premier batch matches up to world-leading crude classifications. An elated President Uhuru Kenyatta has confirmed last weekend that Kenya’s first deal was indeed concluded with 200,000 barrels sold at a price of 12 million US dollars. “We did not have to yield to a heavy discount from the sale. Other countries who have pioneered early oil have unlike ourselves discounted their prices by nearly Ksh.1036 ($10) per barrel,” a source close to the transaction said. The appraisal of Kenya’s black gold at current market prices sits behind only the premium valued Brent Crude and well ahead of the medium ranked West Texas

Intermediate (WTI). Both Brent and the WTI crude component benefited from the rebounding crude prices in the week to rise by 1.39 and 1.71% by close of trade on Friday to Ksh.6412 ($61.89) and Ksh.5766 ($55.66) respectively. Like Brent, the Turkana based Kenyan crude has been described as sweet and light, its light attribute describing its low relatively low density as the sweet sentiment underpins the crude’s low sulphur content. The significant transaction by the Kenyan government is expected to provide impetus to the country’s drive towards full commercial production ahead of the final invest-

ment decision (FID) by the British based exploration and production firm Tullow. Kenya’s Ministry of Petroleum and Mining has, despite the good tidings held its grave silence on the details of the oil’s buyer(s), shrugging off the majority of media queries. Citizen Digital request for commentary on the first oil sale from the Petroleum State Department went largely unanswered. Kenya seeks to output crude at a rate of 60,000-100000 barrels per day (bpd) upon full commercial development putting the life of the Turkana crude reserves at between 15 and 26 years.

Nigeria reaffirms commitment to OPEC+ production cut agreement

igeria has reaffirmed its unwavering commitment to production adjustments agreed upon under the Declaration of Cooperation (DoC) by the Organization of the Petroleum Exporting Countries (OPEC) members and non-OPEC members at the last ministerial meeting of what is known as OPEC Plus, held on July 2, 2019, Vienna, Austria. Nigeria’s representative on the OPEC, Economic Commission Board, and the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, who made this known

Elizabeth Uwandu in Abuja said Nigeria is totally committed to full compliance with the agreement reached by the parties to the DoC. “Right now we are not only committed to the agreement but we have elevated our attitude towards it to the point of complete devotion to the adjustments and we urge other parties to follow suit,” the OPEC representative stated. Kyari expressed strong optimism that the momentary and artificially induced bearish trends would naturally correct itself based on the strong market fundamentals which have remained steadfast despite the price slid.

ORIENT ENERGY REVIEW Vol.9 No. 05

He enthused that with a visible steady decline in commercial stock overhang propelled by healthy demand, it is only logical for all advocates of oil price stability like the OPEC Plus allies to comply strictly with the agreed production adjustments. He concluded that with the increasing volatility of the oil market, it has become commonsensical for Nigeria and all other parties to the agreement to entrench an attitude of unwavering devotion to the deal anchored on full and timely conformity to their obligations.

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SPECIAL REPORT

Providing reliable and affordable power for Africa

-The Karpowership way Gilbert Borketey Boyefio

ccording to the ADB Africa Energy Sector Outlook Analysis, 1.4 billion of the world’s population lack access to electricity; of this population, 585million live in sub Saharan Africa. This present a huge market opportunity for power generation supply in Africa. However, the challenge of Africa is not only power generation supply but also reliable and affordable power supply. And one company with the solutions to all these challenges is Karpowership. Karpower is playing a very important role in Africa, where the company has more than 400megawatts power plants in and around West Africa. These are floating power generation ships. It has provided 60% of power to Gambia, 26% to Ghana, 100% to Guinea Bissau, 10% for Mozambique, 80% for Sierra Leone and 16% for Zambia. Speaking at the LNG Western Africa Conference 2019 in Accra, Ghana, Mr. Ali Hjaiej, Business Development and Sales, Vice President, disclosed that Karpowership’s mission is delivering reliable or sustainable power that can support and is suitable for development, noting that, “It is not just putting electricity on the grid, but making electricity as reliable to boost develop.” Karpowership believes that a reliable power supply helps to develop a country’s industry, healthcare, education, society amongst others. “The second thing needed in Africa is good price for electricity. Though there are different types of solutions, if these comes with a high price it can kill industry

and the development of a country. So for Karpowership, after delivering reliable power, the next thing is cost efficiency. In this case, we decided to offer high efficient engines but with improvised solutions, what we call the combine cycle engine, so with these two options we can deliver reliable power with gas engine or HFO engine, and with the combine cycle we can deliver the lowest price of electricity,” Mr. Hjaiej explined. Karpowership’s mission is to facilitate and accelerate the migration to cleaner fuels and LNG for all of its host countries and continuously improve the environmental baseline via the Powership and LNG fleet. It Powerships are designed and engineered in-house and constructed in 5 shipyards in Turkey. Karpowership’s own shipyard Karmarine is the engineering, logistics, marine operations and construction management center for all Power ships. During

construction, the company establish strategic cooperation with world’s leading OEMs and suppliers. All Powerships are equipped with state-of-the-art engines and ancillaries that ensure ISO and IFC certifications, grid stability and protection and top-notch electricity quality. The unique preposition of Karpowership is that it owns and operates the world’s only floating power plant fleet. It Powerships can operate on both Natural Gas/LNG and Heavy Fuel Oil. Powerships deliver the most competitive all-in cost of electricity. It can be delivered in 1 – 6 months ready to generate electricity. It has 22 completed Powerships with an installed capacity exceeding 3,500 MW, operating across Middle East, Asia, Africa, Caribbean and the Mediterranean; with 5,000 MW in the construction pipeline as new Powerships with capacities ranging between 30 – 620 MW.

ORIENT ENERGY REVIEW Vol.9 No. 05

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COVER

Future of oil industry in face of AI, big data Concerns have over the years, been raised about the future of the Nigerian petroleum industry, going by recent advancement in technology and happenings in the global energy industry. While it is feared that crude oil would become extinct with the rise in the usage of renewable energy and deployment of electric vehicles globally, most experts are unanimous in their view that changing technology would not affect the petroleum industry adversely, but would impact it positively. This article highlights the future of the Nigerian petroleum industry and how it would be impacted by globalisation, technological advancement and artificial intelligence. Godspower Ike writes

LOBALLY, the advancement in information and communication technology is changing the face and fortunes of businesses; the petroleum industry inclusive. To some school of thought, advancement in technology would negatively impact the petroleum industry, bringing about a decline in crude oil demand, especially with the increased deployment of renewable energy and increasing production of electric cars. To some other experts, the advancement in information and communication technology would impact the petroleum industry positively, as it would force down the cost of crude oil production and bring about cost-effective means of crude oil production. It is argued that advancement in technology would also make the internal combus-

ORIENT ENERGY REVIEW Vol.9 No. 05

COVER

Big data, the researchers argue, includes unstructured, not organised and text-heavy, and multi-structured data, including different data formats resulting from people/machines interactions.

tion engines of today’s vehicles to become more efficient; make oil producers become more efficient and ensure that oil prices stay low. In a presentation, titled, ‘Big Data analytics in oil and gas industry: An emerging trend,’ researchers Mehidi Mohammadpoor and Farshid Torabi, noted that recent technological improvements have resulted in daily generation of massive datasets in oil and gas exploration and production industries. According to them, managing these datasets is a major concern among oil and gas companies. Big data, they said, refers to the new technologies in handling and processing these massive datasets, noting that these datasets are recorded in different varieties and generated in large volume in various operations of upstream and downstream oil and gas industry.

The Challenge of management, analysis and application

Big data, the researchers argue, includes unstructured, not organised and text-heavy, and multi-structured data, including different data formats resulting from people/machines interactions. Moreover, in most cases, they noted that if processed efficiently, big data could reveal important underlying governing equations

ORIENT ENERGY REVIEW Vol.9 No. 05

behind sophisticated engineering problems. Mohammadpoor and Torabi are of the view that many companies are dealing with huge volume of data in their archives; however, they do not have the capability of processing these data. They noted that the main application of big data was to provide processing and analysis tools for the increasing amounts of data, adding that the characteristic of big data can be seen in various sectors of oil and gas industry, such as exploration, drilling, and production. The researchers argued that one of the major challenges of big data’s application in any industry including oil and gas industry is the cost associated with managing the data recording, storage, and analysis, adding that with the recent technological improvements, fog computing, cloud computing, and Internet of Things (IoT) have become available to fix the issues regarding data storage and computations. In his own submission, technology expert with TatvaSoft, Dhrumit Shukla, disclosed that oil and gas organisations have dealt with huge amounts of data for decades in their quest to learn what lies below the surface, adding that big data makes it possible to gather and transmit information more effectively.

Big data to analyse seismic drilling

COVER

cent.”

AI in Nigerian oil industry

He added that companies with better Big Data capabilities are twice as likely to be on top of financial performance and are five times more likely to make faster decisions than their peers. According to him, oil and gas companies could leverage Big Data technologies to collect, manage and rapidly analyze seismic drilling and production data, as well as acquire new insights that help improve drilling and production performance. He said, “The decisions and processes that relate to exploration of oil and natural gas, developing and producing acquire big data amounts. The data volume grows on a daily basis. “With the acquisition of new data, storage and processing solutions and developing new devices for tracking a wider array of machinery, reservoir and personnel performance, total data nowadays is predicted to double in the next couple of years. The oil industry acknowledges that imminent breakthroughs and power could be found in data by using it in faster, smarter ways. “Big Data analytics could be new to some industries; however, oil and gas companies have dealt with large amounts of data for decades in their search to learn what lies below the surface. “With the advanced analytic capabilities and new tools, producers of oil and gas could capture more detailed real-time data at lower costs, which could help them boost oilfield and plant performance by six to eight per

Coming home, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, disclosed that the emergence of Artificial Intelligence (AI) has altered the dynamics of operations in the Nigerian petroleum industry by providing quicker processes and interventions in the conduct of petroleum operations. According to him, this also was on the back of Big Data that provides the platform for an effective AI system. Kyari noted that the combination of AI and big data are complemented further by mobile technology that enables real-time access to information and the execution of apparently complicated operation from remote locations. He said, “Today, single data platforms exist that link large amount of information to create robust decision support across a variety of industry operations: to grow reserves; increase production at the lowest possible unit technical cost (UTC); compete for market with emerging alternative production sources and to take a market position in renewable energy.” He noted that technology advancement would address the challenges posed by regional security issues; market volatility; activities of vandals and saboteurs; oil thieves and pirates. $1trn oil industry share of globalization value In a presentation, titled, ‘Digital Transformation & Emerging Trends in Artificial Intelligence: Implications for the Energy Sector & Future Outlook’, Managing Director, Shell Nigeria Exploration and Production Company (SNEPCo), Mr Bayo Ojulari stated that digital technology is one of the megatrends reshaping the energy system. According to him, exponential growth in technology, data and capability is enabling unprecedented transformation in the petro-

leum industry. Ojulari noted that massive investment in oil and gas had over the years, generated enormous data which we can leverage to transform operations and create new business models. He explained that the oil and gas industry share of global digitalisation value will be over $1 trillion by 2025. According to him, advanced technology had brought about increased business value growth rate; improved operational efficiency; predictability of business operations and financial outlook; integrated and insightful decision-making process; improved governance and safer operations. He identified digital technologies as a significant safety and environment value contributor.

Technology disrupting oil industry

Also speaking, Vice-President of Product, Progress DataRPM, Ruban Phukan, stated that like most industries today, the oil and gas industry has been disrupted by technology and has taken steps to ensure it adapts to the new reality. He said, “The large amounts of data that are constantly generated from oil and natural gas upstream, midstream and downstream processes can be quickly processed and analysed to reveal new insights to prevent equipment malfunctioning and improve operational efficiency. “For example, by integrating the Internet of Things (IoT) into offshore equipment, employees can track and monitor lifespan and other elements that can affect production, such as wave heights, temperature, and humidity. “With this knowledge, employees can effectively maintain an offshore platform through predictive maintenance, helping detect equipment breakdown before it occurs. This leads not only to enhanced productivity but also improved results in an improvement

ORIENT ENERGY REVIEW Vol.9 No. 05

COVER

to the bottom line.”

Expected rise in AI in oil industry

In her presentation at an energy forum in Lagos, Permanent Secretary, Ministry of Petroleum Resources, Dr. Folasade Yemi-Esan, noted that the AI market in the oil and gas industry was estimated to reach approximately $2.85 billion by 2032, with a compound annual growth rate of 12.66 per cent. She added that the growth was due to the adaptation of big data technology hence, artificial intelligence requires big data for efficiency.” She said: “On changing the future of the energy industry, AI most certainly will impact on the sector in numerous ways. Therefore, the proliferation of AI in the oil and gas industry will lead to the development and revolutionary transformation of application and task such as decision draining, reduction optimisation, reservoir management, inspection and oil and gas station monitoring, among others. “Beyond all these benefits of AI, there is a need for capacity building in respect of this technology both to understand and to enhance the application in the oil and gas industry. “I will like the national oil companies (NOCs) and the international oil companies (IOCs) and also the ministries, departments and parastatals (MDAs) of government to collaborate to bridge this skill gap required for effective utilisation of AI, especially at the policy and regulatory level. “On its part, the Ministry of Petroleum Resources will look towards developing pol-

icies for the mainstreaming of AI into the oil and gas operations in the country in a way that is fully sensitive to its likely impact on the labour market, and clearly defining the role that AI will bring to current and future jobs.”

Mobile technology

In his own submission, Executive Operations Director at Seplat Petroleum Development Company Plc, Mr Effiong Okon, argued that the right adoption of contemporary technologies like AI, big data and mobile technology would not only drive planning and forecast in the Nigerian oil industry, but would help in addressing risks associated with the business. Okon stated that leveraging cloud computing and big data promotes accurate forecast of oil production for planning, which in turn drives operational excellence, production optimisation and asset performance. According to him, the use of predictive and data-driven maintenance for production and cost efficiency has helped to reduce Mean Time To Repair (MTTR), and increase Mean Time Before Failure (MTBF) in the industry. He said, “For drilling, operators can get predictive analysis through smart drilling; guarantee early identification of drilling anomalies, hazards to well control problems; develop more Enhanced Oil Recovery (EOR) techniques; and real-time data through Logging While Drilling (LWD) and Measurement While Drilling (MWD).” He added that in the area of exploration and appraisal, technology had made it

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possible to obtain big data from sensors attached to equipment used during exploration/appraisal activities (seismic, wells), which would further help in improving subsurface mapping and new well delivery performance through micro-seismic 3D imaging. Technology aiding oil exploration He said, “With the right technology, we can identify rock and fluid properties through Magnetic Resonance Imaging (MRI); locate new oil fields through Wide azimuth towed streamer (WATS) Acquisition, and analyse big data through Ground Penetrating Radar (GPR) for cost-efficiency. “It also applies to oil/gas transportation while connecting pipelines, sensors, leak detection, alarms and emergency shutdowns; using drone technology for pipeline surveillance. “Internet of Things (IoT) is revolutionising midstream pipeline operations through Supervisory Control and Data Acquisition (SCADA)-based applications.” Okon further stated that in the area of refining, operators can now analyse economic indicators and weather patterns for forecasting demand, pricing and resource allocation while optimising integrated refineries and leveraging machine learning for predictive analysis and self-diagnosis by refineries. Future of oil He said, “These technologies have a huge role to play in the future of the oil and gas industry. The need for smart, cost-efficient ways to access unconventional reservoirs is undoubted.”

GHANAREPORT

Ghana’s 2019 half-year revenue hits $434.5m Chibisi Ohakah

hana’s 2019 half-year performance published by the Central Bank of Ghana (CBG) shows that the county made US$434.5 million from oil sale from its three oil fields as well as in other fees and taxes. In the publication of the first-half performance of Ghana Petroleum Funds, the CBG revealed that oil sale from Tweneboa, Enyenra, Ntomme, Jubilee and Sankofa fields fetched the state an amount of US$311.2 million. Corporate taxes from the various operators of the three oil fields amounted to US$121.3 million and the surface rentals paid by some 7 companies was a little above US$595,000, the CBG report said. The publication by the Bank of Ghana is in line with section 28 of the Petroleum Revenue Management Act, 2011 (815). Out of the total revenues realised, the central bank revealed that US$99.7 million was allocated to the Ghana Stabilization Fund and the Ghana Heritage Fund. Two years ago, top officials of the West African country made it clear that the government was banking its hopes on the Tweneboa-Enyenra-Ntomme (TEN)

and the Sankofa-Gye-Nyame oil fields to achieve its annual growth targets. A member of the Budget Committee, Mr Kojo Oppong Nkrumah, addressing students of the Methodist University at a post-budget programme organised by Radio Gold early in 2017, said although the government’s growth target of 6.3% was a bit ambitious, it was confident of meeting it due to an expected increase in oil and gas production which would come as a result of higher production from the TEN fields and the introduction of crude oil and gas production from the Sankofa Field. The official said the country’s growth in the preceding year suffered due to the challenges with the Jubilee Field which was expected to produce about 106,000

barrels of oil but ended up producing just about 88,000 barrels. “This year, the Jubilee Field is even expected to produce less which is about 66,000. However, ramped-up production from the TEN Field and a relatively low crude oil production from the Sankofa Field will be more than enough to compensate for the expected production decline in the Jubilee Field,” he stated. These Tweneboa, Enyenra, Ntomme, Jubilee and Sankofa fields are expected to take the average production to 123,416 bopd, up from 88,487 bopd in 2016. Out of this, Ghanaian government is expected to make an amount of GH¢2,358.2 million, representing a 231.2% increase over the outturn in 2016. This amount represents an estimated 1.2% of GDP.

GHANAREPORT

Ghana to boost power supply with major LNG projects by 2020 Gilbert Borketey Boyefio

hana is expected to boost its power generation by 2020 with the introduction of two LNG projects, namely, the Tama LNG Terminal Project and a small-scale virtual LNG pipeline project. The Tema LNG Terminal project consists of a Floating Storage, Regasification Unit (FSRU) with expected capacity of 250 mmscfd expected to be completed in 2020. The initial contracted supply amount is about 180 mmscfd. The project is controlled by Helios investments who have signed an agreement with China Harbour Engineering Company for the construction of the FSRU. GNPC has signed a-12-year agreement with Rosneft of Russia for the supply of the LNG. GNPC earlier in 2017 signed an agreement with a private company, Quantum Power for the latter to construct and operate a 500 mmscfd floating LNG storage, regasification and delivery facility moored offshore Tema. The US$550 million facility which was supposed to be operational this year apparently fell through and has been replaced with the Rosneft facility. The small-scale virtual LNG is a virtual pipeline project to supply gas to SunonAsogli and Trojan power plants. It would comprise seventeen ’52-cubic-metre’ LNG trucks ferrying LNG from small scale LNG ships berthed at the TemaPort; eight trucks at the loading gantry at a time and additional eight trucks moving every night to deliver the fuel to the 560 MW gas fired SunonAsogli Power Plant thermal plants. Loading is estimated to take an average of an hour. Initial contract quantity is said to be 60 mmscfd. The source of LNG for the small-scale project is the LNG2Africa initiative; an Equatorial Guinea initiative to sell small scale LNG for utilisation in Africa. This was disclosed by Mrs. Mavis Sika Okyere, a Pipeline Integrity Engineer, Ghana National Gas Company, during a presentation at the LNG West Africa conference 2019 in Accra, Ghana. According to her, current gas demand in Ghana is primarily for power generation and is focused around power plants at Aboadze and Tema. Industrial demand is also concentrated in these areas. Future power generation plans include expansion and new projects at

these sites and also new projects at Atuabo, Esiama and Domunli. The tables below demonstrate the need for additional feed gasfor gas fired power generation in Ghana between 2016 and 2025 beyond supplies from local production (TEN, Sankofa, Jubilee) and West African Gas Pipeline (WAGP) gas supply. “The Jubilee Field produces 120 mmscfd TEN Field 60 mmscfd and Sankofa 180 mmscf totaling 360 MMscfd. Considering this current production, the Atuabo gas plant has the capacity to produce 150mmscf as against the estimated 560 mmscf of natural gas demand by the country daily. Eni have constructed an Onshore Receiving Facility (ORF). Ghana National Gas Company together with Eni has constructed a tie in to GNGC pipeline and has increased daily production to 405 mmscf. However, there is still deficit of 155 mmscf in Gas supplied for power generation,” she pointed out. She however noted that the estimated deficit of about 155 mmscfd is within the break-

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even point for a typical 200-250 mmscfd LNG regasification facility. Therefore, to improve the overall power supply in the country, she proposed “Investments in liquefied natural gas as an alternative gas supply to augment the limited local and unreliable gas from the West Africa Gas Pipeline from Nigeria should be pursued.” LNG supply option however would be relatively expensive compared to local or the WAGP gas but cheaper than crude oil. LNG imports would supplement domestic gas to make up adequate supplies both for power and industry requirement such as for the anticipated production of fertilizers (urea), alcohol (methanol) and other petrochemicals. However, according to the Commercial Manager, Tullow Ghana Limited, Mr John McLaughlin, noted that Ghana has significant domestic gas offshore, enough for the next decade, and therefore does not need to import LNG. He noted that the TEN and Jubilee oil production increases with increasing gas demand, adding that, “A robust Ghana gas market will also support further investment in offshore exploration.” Stating that LNG is more expensive than domestic gas, McLaughlin said the government of Ghana benefits from a far higher share of value from domestic gas production compared to LNG. “LNG import “shuts the door” on offshore gas development for years. TEN and Jubilee oil production increases with increasing domestic gas offstage,” he indicated.

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ORIENT ENERGY REVIEW Vol.9 No. 05

WOMEN in Energy

Meet Amma Boateng, Managing Director of Ghanaian budding Destra Energy Group Gilbert BorketeyBoyefio

estra Energy Group is a budding and fully indigenous Ghanaian company providing ancillary services to key players in the oil and gas industry and also delivers power solutions through the application of renewable energy technology. Destra though a young enterprise has within the short period of being launched into the Ghanaian oil and gas industry made its mark in terms of quality service delivery. Geographically located in Accra, yet, Destra Energy Group can be found on the global oil and gas map. This is especially so as the company joined over 2,300 exhibitors at the 2019 Offshore Technology Conference (OTC) in Houston at its booth, 8031. Destra is founded by a 29-year old enterprising Ghanaian woman, Amma Boateng with an ambitious plan to become a vessel

owner in the next five years to support her core business as an offshore support service company, expand into other African countries and in the long term and work towards becoming an operator. She represents the growing wave of vibrant African professional women deploying their expertise in the development and transformation of the African continent. Amma, as she is fondly called, founded Destra Energy Group with her partner about three years ago, and since then the company has worked with reputable and trusted international and local brands such as Maersk Drilling, Technip FMC, ION Geophysical, Geoex Limited, SVS Offshore, Petra Energy, Colebrook Offshore, Rederij Groen, DH Energy, Energem, amongst others. She holds a Bachelor’s degree in Petroleum Engineering from KNUST in Ghana and a triple Master’s degree in Strategic Project

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Management from Scotland, Italy and Sweden. Prior to setting up Destra Energy Group, she worked with Shell, Hydrocol Ltd – an offshore support service company as a Project Manager.

Women in a male-dominated industry

As one of the few women that finds herself in a male-dominated industry, Amma doesn’t think gender should really matter, rather, the focus should be on the value one brings on board. “It is interesting to work in a male-dominated industry. It does have its own challenges but at the end of the day, it all comes down to your value addition. So, as far as you are able to demonstrate the value you bring on board as a person in whatever industry you find yourself, people will work with you and doors will open for you.” For the female executive, people, especially

WOMEN in Energy

women should be encouraged to pursue their dreams in whatever field they want, warning that it should be done without sentiment. “We should create awareness of all the opportunities that exist in the industry but never force people to do what they don’t have any interest in, simply to increase the female to male ratio. “I am a feminist but a responsible one as such and so I see nothing wrong with preference. If women prefer to be on a particular side of the industry and not in the other, I believe that is not a problem. We should, however, educate them to generate more interest in the opportunities that they may not be exploring.” Admitting that there is the need to attract more women into the oil and gas industry, the social entrepreneur insisted that women should not be pushed into fields or profession they are not prepared for or lack the interest and competence. She said, “I know excellent

Well Engineers who happen to be women that work with international oil and gas companies. They have worked in very harsh conditions on the FPSOs, demonstrated their value and have been promoted several times. And I am proud to know them. For me seeing these women succeed in the industry is very inspiring.” Speaking on the Destra Energy Group’s female-male employment ratio, Amma disclosed that her company has about 80 per cent onshore female workforce and 100 per cent offshore male workforce. Stating that her company considers itself as an equal opportunity employer said, “Our male and female ratio is purely coincidence. It just happens that more females apply for administrative and managerial roles and almost 100 per cent of applicants for technical roles are male.” According to Amma, the focus should not just be on having women employed but that more efforts should be geared towards creating awareness for available opportunities in the industry to pave for interest, the development of the right skills set and competencies. “I think more women should be made to be aware of all the opportunities in the industry to allow those that are interested in building a career in the industry to acquire the technical skills and deep appreciation of QHSE standards and procedures, to participate. I do not think there should be a deliberate effort

to employ more women or anyone else, if the competence, interest and safety consciousness is lacking.”

Mentorship

As a social entrepreneur who is committed to impacting her generation and generations to come, Amma has accepted an offer from Plug-in Ghana to be a mentor for six months. She said, “I have been assigned a mentee to build a personal and professional relationship with and I am very excited about that. She is a Well Engineer with a desire to achieve great heights in her career. I am ready to hear about her goals and help her get closer to achieving them. I strongly believe in individualism, as each person has unique abilities. I, therefore, intend to get to know her and customize my mentorship approach for the best outcome. I hope this mentorship goes well and look forward to doing more of that”. Amma has also founded an NGO called ‘FreeLunch Ghana’ – a reading club for children that has been running for more than three years now. FreeLunch Ghana partners with libraries in underprivileged and remote areas where it provides complimentary lunch to the kids in exchange for a one-hour reading session. The programme is for both male and female children. “I love to read and I want to inculcate the habit of reading in as many children in Ghana as possible. Thank-

ORIENT ENERGY REVIEW Vol.9 No. 05

WOMEN in Energy

Fortunately for Destra Energy Group, we have had partners that have worked in Africa previously and have already overcome some of these challenges and so they have a good appreciation of what the law requires and this makes it easier for us to work with them.

fully, we have seen great improvement with the kids which is very encouraging, the social entrepreneur said.”

Destra Energy Group’s CSR

Destra Energy Group is working on a CSR initiative that the company hopes to implement next year. The company intends to focus its CSR initiative on women empowerment. “We realize that our work can affect the livelihood of fisherfolk in the areas we operate and therefore we are thinking along the lines of ways to support the wives and children of the fisherfolks to get different sources of income to supplement their livelihood.”

Local Content

Destra Energy Group understands the full benefits of the local content law and has been positioned to take advantage of these benefits. The company has implemented best-in-kind standards and procedures and pursues the right partnerships and opportunities to allow them to be at par with their international counterparts. The top Executive Officer noted that their company’s vision is to grow beyond being a service provider.

Speaking further, on the local content implementation, Amma identified “fronting” as one of the major challenges, local content implementation is faced with in Ghana. Expressing concern over the situation where indigenous companies existing as representatives of foreign companies, Amma said it was high time Ghanaian companies unite and appreciate the fact that “we need to learn, we need real participation in joint ventures to facilitate knowledge and technology transfer. We must insist on this so that any foreign company that approaches a local company for partnership will fully comply with the law.” “Fortunately for Destra Energy Group, we have had partners that have worked in Africa previously and have already overcome some of these challenges and so they have a good appreciation of what the law requires and this makes it easier for us to work with them. But it has not been always the case. We have had potential partners that have proposed fronting, which does not create any real value for local companies.” “In all, it has not been too bad. I believe we are better off as a country now than when we started in 2007. I believe if we comply with

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the regulations as it stands now, we will reap the advantages designed for local companies.” “The regulator is aware of a lot of our frustrations and I have seen deliberate attempts to rectify some of these issues. Generally, there seems to be an improvement,” she observed. Speaking further, Amma advocated for stronger collaboration and partnerships among the indigenous companies to take full advantage of the country’s local content law. According to her, indigenous companies should jettison the idea of standing in silos and pull their resources together to effectively take advantage of the various opportunities in the industry. She, said, “I think we should collaborate more. It is something that we as local companies have not really looked into. We have different strengths and may have limited resources but if we can collaborate and pull resources together, we can achieve more than we are capable of individually. Destra Energy Group has collaborated with a few like-minded companies with the same goal and it has been fantastic. “I think this is what real local content is about,” she enthused.

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PHOTOGALLERY

ORIENT ENERGY REVIEW Vol.9 No. 05

NOG

PHOTOGALLERY

ORIENT ENERGY REVIEW Vol.9 No. 05

INTERVIEW

Appropriate pricing, deregulation will address Nigeriaâ&#x20AC;&#x2122;s electricity challenge- Prof. Ezigbo The perennial electricity problem that has negatively impacted Nigeriaâ&#x20AC;&#x2122;s economy as well as her citizenry certainly is not insurmountable. The Managing Director of Falcon Corporation Limited, Prof. Joe Ezigbo, in this interview with OER Team shared his experience, opined that government involvement in the sector impedes actual solution and insisted that complete deregulation of the power and appropriate pricing of electricity will attract investors to the sector. Excerpts What is your candid evaluation of Nigeriaâ&#x20AC;&#x2122;s power situation?

The power situation in Nigeria is quite distressing for a nation of our size and with the various challenges mitigating against our development and industrialization. Of primary concern is that fact that our focus as a country over the past few years has been how best to diversify our revenue base out of the mono-product oil-revenue driven economy that we have been. Power is that one singular element that can propel this diversification agenda, but we have just not gotten it right in this regard. There are challenges with generation, with transmission and distribution. We still have too much government involvement in the sector, whereas by now we should have been in a fully private sector-led play, with government remaining in the realm of regulation. I firmly believe if the private sector was running the power value chain fully, we would have seen a lot of independence from the grid and a more robust and efficient power landscape in Nigeria. I recall for instance, that when Fashola was the governor of Lagos state, we had proposed solutions to him that would have resulted in the removal of Lagos State from the grid. This is the kind of thinking that private sector brings to the table.

How did you intend to achieve that then?

Our proposal was to layout 5MW gas stations in about 10 locations distributed evenly and strategically across Ikorodu, because we have gas in Ikorodu as operators of the Ikorodu gas distribution zone. The intention was

ORIENT ENERGY REVIEW Vol.9 No. 05

INTERVIEW

Ordinarily, power consumption should be guided by the principle of ‘willing seller willing buyer’. This is not a Nigerian concept; it is based on general rules of economics.

to pipe gas to those power stations, generate electricity and feed this directly into the distribution lines, without going into the grid. By doing so, we would have been able to remove Ikorodu from the grid. We proposed that if the other Local Distribution Companies did the same in their respective zones, there would be power supply in Lagos 24 hours, seven days in a week! The idea was well-received, however, before it could move forward, the privatization exercise saw the emergence of the GenCos and DisCos. Painfully, the DisCos came in to find that the premises for their investments were very different from what they found on ground. And we are familiar with some of the challenges they have since faced; as much as we are familiar with those challenges, it would seem they are the cause of it. Essentially, the emergence of the DisCos halted the proposals to the governor of Lagos State as at that time. Imagine if that had worked! It would have become a template project that could then have been replicated across Lagos, from Agbara and Otta to other areas of Ogun State, and then all the states in the South which are connected by gas pipelines could create local plants that will feed off the gas supply and generate independent power for them. As large as America is – a federal republic with 50 states, it doesn’t have one central grid; rather they have hundreds of private transmission stations. One thing we need to ask ourselves in Nigeria is what our government is

doing in transmission, why they have retained control of Transmission Company of Nigeria (TCN)? We should have private transmission companies that have specific mandates to operate across each of our geopolitical zones. This would make for a much more efficient system across the country which is what we need. Government should not be in charge of such a critical part of the value chain, especially at this point in time when they do not have the resources to maintain and grow the in-country transmission capacity as rapidly as is required.

How best can Nigeria adopt gas in resolving her power challenges, as well as for the country’s industrial revolution?

First, synergy is key! We must begin to look at how best to optimize our different competencies, areas of competitive advantages, technologies and the like, to take on broader projects in a more timely manner. Rather than several discrete projects being put up all over the place, we need to start looking at things like co-location, synergistic partnerships that create comparative advantages for entire states or regions. We need to be looking at this issue from an industrial revolution perspective, and when you talk of revolutions radical thinking and new strategies must be the norm. Take the South East for example, we see what Greenville LNG is doing. They have set up a huge LNG infrastructure project there. They should not be the ones hustling to build the market of one customer at a time. My advice

would rather be for all the state governments in that part of the country to come together and see how to take advantage of gas availability via the Greenville project, to fast-track gas-based industrialization in their states using shared assets and resources. They can evolve a strategic long-term gas-based industrialization plan that will outlive their tenures as Governors and continue to attract investments into their states and give value to the citizenry of their States for years to come. Transportation is another important factor that must be put into consideration in driving such a regional gas agenda. Railways are ideal for transporting gas. Combined efforts of the states mean that the rail lines from Port Harcourt to Enugu will not cost too much to revamp. The Greenville LNG project is an immediate term avenue for them to get gas into their states, but by the time the rail lines become functional, they will have an alternate mechanism to get gas to existing industries. In my view, if this is done and it is properly managed, in the next five years, we will have billions of dollars’ worth of investments flowing in and out of the South East from these efforts and of course the gas can be sold in other zones. Gas is such a low hanging fruit! When we think about how best to activate and reactivate our industries. We should be making concerted efforts to make this a reality and not just the rhetoric. Enugu is building an industrial park in Udi, Anambra is also looking at doing something similar. If these become realities, imagine

ORIENT ENERGY REVIEW Vol.9 No. 05

INTERVIEW our people in Nnewi, Oba, Obosi and Onitsha now competing on a more level playing field with people in Lagos that have been using gas for the past 15 to 18 years. Where an industry that uses about N100m worth of diesel begins to use gas, they will end up with savings of about N60 million per month. Can you see just how much more competitive the industries in the South East will become if they also begin to enjoy such cost advantages? These are the kinds of things we can achieve when we apply synergistic thinking also in the areas of gas development.

While popular opinion favours decentralization of power generation in resolving Nigeria’s electricity crises, do you not think that government’s regulation of electricity price cushions the cost of electricity for her poor masses?

That is the popular narrative we have sold for years, even knowing that it doesn’t quite hold water when you test it against the realities on the ground. For years, as a nation, we created a ‘national cake’ type of thinking about critical government infrastructure. Yes, it is the place of government to provide basic infrastructure, but it is not without cost, and certainly not an unreal cost. We have made it such that the man on the street thinks he should pay less than the appropriate price or any power that is supplied by the government through the grid, but the same man on the street is willing to spend two or three times as much to generate independent power, buying fuel to run their small generators; indeed they don’t even factor in the cost of repairs and maintenance for their generating set, or the environmental pollution which affects them directly. It doesn’t make any sense and we need to correct this narrative. We have also long since gone past the days when the government had the resources to subsidize the true cost of power. The sector is breaking down, investors are pulling away and the situation is becoming even more dismal for the man on the street that the government is trying to protect by keeping the prices artificially low. Ordinarily, power consumption should be guided by the principle of ‘willing seller willing buyer’. This is not a Nigerian concept; it is based on general rules of economics. Nigerians will eventually find out that if electricity is well priced, with time, investors will be attracted into power sector, and then competitive forces will naturally bring down the end cost of the product; not to mention that each customer will then have alternatives they can choose from and manage how they use what they choose to pay for. We saw this

We need to tell ourselves the truth. Look at fuel, till today our government is still subsidizing fuel and this is the primary reason why the refineries in Nigeria will never work. The subsidies or ‘under-recoveries’ are simply avenues for siphoning money. That is the truth! It is unnecessary.

happen in the telecommunication industry. We all witnessed it when a Sim card was sold for as much as N30,000 but today, same goes for almost free and the power of choice is in the hands of the consumers. We need to tell ourselves the truth. Look at fuel, till today our government is still subsidizing fuel and this is the primary reason why the refineries in Nigeria will never work. The subsidies or ‘under-recoveries’ are simply avenues for siphoning money. That is the truth! It is s unnecessary. Who tells you that you must sell fuel in Lagos for N145 and same price in Maiduguri? Where is it done? At whose expense is the equalization money paid? As a country, we need to wake up and recognize that this is unsustainable, and it is destroying our today and future. If we are considering the masses truly, we need to bear the short to medium-term pains of reworking our economy, so we create the right operational frameworks for the kind of economy we want to see. Adequate power supply is an unavoidable prerequisite for any nation’s development, can Nigerians truly afford electricity under ‘willing buyer, willing seller’ pricing model? Yes, we can! It might be difficult to start with, but we need to retrain ourselves to use power efficiently the same way we want to see it supplied efficiently. When you travel overseas, you are very careful about how you use power because you know you are paying

ORIENT ENERGY REVIEW Vol.9 No. 05

for it. No light on where it is not required; no air-conditioner on while you are out of the house. Even the small businesses know how to power down during their off-peak hours and power-up during peak period. Here, we just want bright lights on at all hours of the day. This is a behavioural challenge with all classes of Nigerians. If we re-educate ourselves about power utilization efficiency, then people will begin to manage their costs. We already see this happening with prepaid meters and in some estates where independent power is provided and metered according to how each customer uses it. Why do we think we cannot teach the masses this? The ‘Willing Buyer, Willing Seller’ framework is what will bring in investors because their numbers must make sense or they will not invest. Remember I just talked about the telecommunications example. Today, even beggars have phones and they manage their credit according to what they can afford. Power is even in a more critical space in which we need to see this happen. There is so much inefficiency with power utilization, even today that we barely generate enough power. If the government can be bold enough to fully liberalize this critical sector, allow private sector the leeway to invest at market-reflective prices, then, before you know it, there will be power lines across every nook and cranny of Nigeria. I promise you that such a scenario will ultimately bring down the cost of power in the long run.

Are you proposing that government hands off transmission and allow for complete deregulation of the power sector?

Yes, I am proposing for complete deregulation of the power sector. As an investor in gas, I want you to know that if someone in Warri needs my gas, I will have the leeway to make the investment in the infrastructure required to get that gas to Warri, and that my investment will make sense. If I am an investor in the power space, I want to know that my investment will make sense and not be constrained by over-regulation and undue interference, by the changing of earlier contracted terms. One thing I know is this, there are enough of us Nigerians who are willing to take on the risks of making the investments in the country to address the gas to power challenges, but we cannot continue to do so in the face of some of the persisting constraints impinging on existing investments. Once we deal with full deregulation and appropriate pricing, just see how that space opens up and ensures national transformation. We really just have to get serious about changing our power narrative as a country.

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ORIENT ENERGY REVIEW Vol.9 No. 05