Feb sweet crude report by Sweetcrude reports

Transparency, accountability in oil and gas production, at last? P/6

Bulk Trader’s PPA frees FG from Olorunsogo, Omotosho loan repayment P/21

A Review Of The Nigerian Energy Industry February, 2014

VOL 02 N0. 12

U P DAT E S MONTHLY BASKET PRICE JAN-14 DEC-13 NOV-13 OCT-13 SEP-13 AUG-13 JUL-13 JUN-13 MAY-13 APR-13 MAR-13

104.71 107.67 104.97 106.69 108.73 107.52 104.45 101.03 100.65 101.05 106.41

FEB-13 JAN-13

112.75 109.28

Daily | Weekly | Monthly | Yearly

104.67 U$

114 112 110

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‘Constant electricity’ remains a mirage for millions of Nigerians Inadequate gas supply hampering smooth-operation of power plants 30% of gas supply capacity lost to pipeline vandalism

108 106 104 102 100 Jan13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-13

At $1.8m per MW, Zungeru Hydro is cheap —Govt

BUJA - The F e d e r a l government on Monday insisted that despite having a base cost of $1.85million per installed mega watt, the 700mw Zungeru Hydro Project remains one of the cheapest in the world. The project which was a w a r d e d t o CNEEC/Sinohydro Consortium in 2012 for $1.3billion was flagged off in May last year by President Goodluck Jonathan. According to the terms of the agreement, the Chinese Exim Bank is to undertake 75 percent of the cost while the Federal government is providing the remaining 25 percent as counterpart funding.

P/30

Govt has violated all agreement with electricity workers, NUEEE alleges

Contents

2014 February, SweetcrudeReports

Editor’s note

t has been one more year of hectic operation in the vibrant energy sector as we strove to offer you, our reader, a most informative, educational and inciting energy publication. We dare say it has also been a year full of accomplishments on our side, going by the overwhelming response to our presence, the intense interest and concerns our stories and articles have generated in and outside our sector, and the legion of readership and 'followership' we command across our four platforms: SweetcrudeReports Monthly, SweetcrudeReports in The Guardian, our e-newsletter and SweetcrudeReports Online (www.sweetcrudereports.com). We say thanks to everyone as we look forward to widening our frontiers and scope in order to serve you better. This month also marks another edition of the annual Nigeria Oil & Gas Conference, NOG, offering Nigeria fresh opportunity to showcase itself and potentials to the world. We expect all the operators and services providers in the nation's oil and gas sector to be there at the conference - from the Minister to heads of government agencies and parastatals, leadership of operating companies and the rest. Sadly though, what we see as we try to look at what Nigeria could possibly present to the world is a mixed bag, with

4 6 14 16 21 25 30 33 36 39 42 44

the ugly far outweighing the beautiful. Yes, the country has made some progress with Nigerian Content development; controls a sizeable chunk of the global LNG trade, and is now trying to enforce transparency and accountability in the process of oil and gas production through efficient weights and measures application processes. On the reverse side, however, the nation's oil and gas sector remains in reverse gear, it continues to suffer from suspended investment by the IOCs, PIB is still locked up in the National Assembly, the nation's four local refineries remain comatose, worse still is their uncertain future; fuel importation with attendant funding of corruption is still the order of the day, vandals have resorted to use of dynamites to gain access to the contents of gas pipelines, 30% of national gas supply capacity lost to pipeline vandalism, inadequate gas supply hampering smooth-operation of power stations reigns while ‘regular electricity’ remains a mirage for millions of Nigerians. This is the ugly situation confronting the nation, not to add the monster called oil theft, which reigns unabated in the Niger Delta. Will discussions at the NOG, which kicks off February 24 in Abuja, help find a solution to all these? We earnestly pray so.

COVER

Constant electricity remains a mirage for millions of Nigerians

OIL Transparency, accountability in oil and gas production, at last?

FOCUS There are threats to Nigeria’s dependence on oil—Dr, Nwaozuzu

GAS

How ‘challenges with external stakeholders’ derailed NLNG’s export plan

POWER

Bulk Trader’s PPA frees FG from Olorunsogo, Omotosho loan repayment

FINANCE

Eu’s 500m Euro supports Nigeria’s development

LABOUR Govt has violated all agreement with electricity workers, NUEE alleges SOLID MINERAL

Ministerial intervention, greed may cripple premier Mining Institute

FREIGHT Unstable system hampering cargo clearance—NCMDLCA

MOTORING 8 most impressive new cars right now

TECHNOLOGY

How does well logging work?

COMMUNITY

Soku Oil War: David West joins the fray

EDITORS Hector IGBIKIOWUBO Chuks ISIWU ASSISTANT EDITORS Yemie ADEOYE Toju VINCENT Eluonye KOYEGWUAEHI

GM, Marketing SNR. CORRESPONDENTS Oscarline ONWUEMENYI Nkem IGBIKIOWUBO Chima UGWUANYI +234 08060249746

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2014 February, SweetcrudeReports

Cover Story

2014 February, SweetcrudeReports

‘Constant electricity’ remains a mirage for millions of Nigerians

CHUKS ISIWU & OSCARLINE ONWUEMENYI

t is no longer a surprise that the Federal Government came out to forcefully deny it ever promised to provide ‘constant electricity’ to Nigerians by the middle of the year. What is shocking to many Nigerians, especially keen observers of the official rigmarole in what is otherwise touted as the most important sector of the nation’s economy, is the vehemence of the Federal Government’s denial that it promised “constant electricity” to Nigerians. Indeed, after several years of talking about improved power supply, and billions of dollars spent with little to show for it, the government does not seem confident to tell the millions of Nigerians who have been deprived of adequate electricity that their dreams of constant electricity supply would ever emerge in this generation. While some may see the government’s dial-back as rooted in honest assessment of the reality of power generation, distribution and transmission in the country, what is baffling was that the Federal Government may have soft-pedalled on its directive to managers of the recently privatised power firms to ensure that there is visible improvement in electricity supply across the country by June this year. The truth, however, is that

inadequate gas supply to gaspowered power stations for the past few months has grossly affected power supply nationwide, SweetcrudeReports learnt. As at the middle of January, about 480 million cubic feet per day, amounting to about 30 per cent of the nation's gas supply capacity, was lost due to pipeline vandalism, a development that contributed in worsening an already bad power supply situation. Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr Andrew Yakubu, who confirmed this, said the 480 million cubic feet per day of gas lost through vandalism was the equivalent of the gas requirement to generate about 1,600 megawatts of electricity. At the same time last month, the Egbin Power Station in Lagos, which delivers 1,080mw when gas is available, was delivering 600 megawatts due to the same issue of inadequate gas supply to its five units that were then available. Shortage of gas had earlier in December forced the level of power generation at the plant to drop to 300 megawatts, before rising to 600mw. “Gas is not coming, and without this, the power plant cannot operate optimally. Gas supply is very important to the Nigerian power sector because almost 80 per cent of the power plants in the country are gas-

fired. “Inadequate gas supply is a big problem for Nigeria. Even with the private sector investment, if there is no enough gas supply, there will still be problems,” said Mr. Gyoo Chull-Yeom, managing director, Korea Electric Power Nigeria Limited, technical partner and managers of the Egbin Power Station as he confirmed that the power plant was generating 600 megawatts of its available capacity. Nigeria is aiming for an installed capacity of 10,396mw

power supply. He said he would rather give an assurance of improved power supply until the goal of constant electricity in the country was eventually achieved. Earlier in the year, the Federal Government gave an ultimatum to the power investors and key operators in the sector to, as a matter of urgency, ensure that there was visible improvement in power supply in the country within six months. The directive,

As at the middle of January, about 480 million cubic feet per day, amounting to about 30 per cent of the nation's gas supply capacity, was lost due to pipeline vandalism, a development that contributed in worsening an already bad power supply situation while available capacity stands at 6,056mw, but, actual generation and supply has been oscillating between 2,000 and 4,200mw in the last 24 months. The Minister of Power, Prof. Chinedu Nebo, agrees that a lot more work needed to be done to meet the expectation of constant

which came from the President, was disclosed by Nebo. When our correspondent enquired if the latest announcement by the government was an admission of failure to achieve regular power supply, the Minister insisted that the six months nationwide power supply stability order issued by President Goodluck Jonathan last month to managers of the country’s electricity system will not be changed for whatever reasons. He further stressed that nothing would be left undone in meeting up with the president’s desire to ensure adequate electricity supply to all Nigerians. He added that the government has gone ahead to complement its efforts in improving on-grid power generation with the initiation of off-grid power supply sources within the “Operation Light Up Rural Nigeria” programme of the ministry. While admitting that a lot more still needed be done to meet up with this expectation, the minister assured Nigerians of continued improved electricity supply until government’s aspirations for constant power eventually come to reality. He said government’s immediate goal was for those already getting 12 hours of electricity supply to move up to 14 hours, others with 14 to enjoy between 16 and 18, while major cities like

CONTINUES ON PAGE 5

Cover Story

2014 February, SweetcrudeReports

A city in darkness

‘Constant electricity’ remains a mirage CONTINUED FROM PAGE 4 Lagos and Abuja will get between 22 and 23 hours supply daily. According to the minister, the target would be achieved within a few months time, noting that the ultimate goal was for Nigerians to get 24 hours of daily power supply. He, however, did not specify the target date for the visible improvement in supply of electricity, noted that the ultimate goal of this vision was for Nigerians to get 24 hours daily supply eventually. Admitting that the goal of stable electricity in the country would take some time to achieve, the minister said it would be realised because of the foundation already laid by the government for increased generation and enhanced transmission and distribution. Meanwhile, private sector investors in the power generation and distribution companies had disclosed to Sweetcrude that the President’s ultimatum was being threatened by the inefficiency of the Transmission Company of Nigeria, TCN, and inadequate supply of gas to the thermal power generation plants. Recent polls on the state of electricity supply in the country have also called into question government’s position that majority of Nigerians in the cities get up to 12 hours of power

in a day. The average daily power supply to homes and businesses in the country is about six hours, these polls claim. Nebo said the ambitious project, Operation Light-Up Rural Nigeria, OLRN, was targeted at providing power to individuals in the rural areas, who were not connected to the national grid. He said, “Mr. President gave us a marching order. He said he wants electricity to be taken to even places not connected to the national grid. Of course, before this administration, nobody was talking about that. You had to just wait until there was national grid before you had electricity. Now, the game has changed.” While condemning activities of saboteurs, who he said had upped their ante in a bid to suppress the progress made in the industry so far, Nebo said: “For instance, it was unthinkable for any Nigerian, for whatever reason to go underground into the deep sea and blow up gas pipelines to stop gas flow to electricity generating plants, such as recently happened in the Escravos-Warri axis, where more than 20 holes blasted with dynamites were discovered in such pipelines buried under the sea.” According to him, the level of expertise employed by the perpetrators, suggested the

amount of work and the highprofile nature of their operation and wondered why Nigerians would decide to punish themselves and their families in that manner. Nebo justified the initiation of the OLRN, which he said is currently being commissioned across the country at intervals, noting that the vision of President Jonathan does not stop at giving electricity to city dwellers, but to ensure that it got to all the nooks and crannies of the country where residents never dreamt of seeing electricity in decades. “Mr. President gave us a marching order. He said he wants electricity to even be taken to places not connected to the national grid. Of course, before this administration nobody was talking about that. You had to just wait until there was national grid before you had electricity. Now, the game has changed,” Nebo said. The Operation Light-up Rural Nigeria, according to Nebo, is 100 per cent solar-driven and provides energy hubs in the benefiting rural communities. “So, at the end of the day, you have a situation where even communities, which are not connected to the national grid, will get electricity. By so doing, medium and small scale enterprises will thrive.” Amid all these, the Nigerian Electricity Regulatory

Recent polls on the state of electricity supply in the country have also called into question government’s position that majority of Nigerians in the cities get up to 12 hours of power in a day

Commission, NERC, said it expected generation and distribution of electricity to reach about 7,000mw this year. According to it, the expected increase will come as various power projects under the National Integrated Power Projects, NIPP, come into operation. A statement from the agency quoted its chairman, Dr. Sam Amadi, as saying at a presentation in London: "Power supply is expected to hit 7,000mw by the end of this year as increased capacities are expected from the NIPPs coming on stream, while generation benchmark is set at 20,000mw by 2017." He stated that the 7,000mw supply target set by the government for 2013 could not be realised because of inadequate supply of gas to power, saying the problem would be addressed with the

coming of the much-anticipated Oil Industry Law. Amadi said: "At the end of 2013, we had expected to hit 7,000mw and that would have been possible if there were enough gas to fire the plants as the NIPPS come on board. "By end of 2014, we will definitely cross 7,000mw because of the NIPPs; if you put all the capacity together, you will get over 4,000, and the existing 4,000mw. The benchmark is that by 2017, we expect that the Nigeria electricity market will have over 20,000mw trading then". According to him, "PIB is critical to move forward on gas to power; the law should be passed as soon as possible, although the debate over it is big but we want the matter to be resolved in a way that makes gas to power commercially viable and bankable.

Oil

2014 February, SweetcrudeReports

Transparency, accountability in oil and gas production, at last?

Oil tank farm

SAM IKEOTUONYE

ith effect from this m o n t h , Nigeria w o u l d , hopefully, begin to establish exactly how much volume of oil and gas that is produced in its vast oil and gas fields. This follows announcement by the Ministry of Industry, Trade and Investment that the full implementation of the Weights and Measures Act on the measuring instruments utilised in the oil and gas sector of the economy will start on February 1, 2014. If this happens, it would put to rest continued allegations that the nation did not know exactly the volume of oil and gas being pumped by the producing companies, mainly the multinationals, which are often accused of shortchanging the government and the country in the process of oil and gas production. “We are going to look at the metering system of the operators for accuracy, equity, fairness and conformity. We will take into

c o n s i d e r a t i o n internationally acceptable error margins to bring fairness and justice to the trading devices in use by operators,” Director of Weights and Measures in the ministry, Oluyinka Joseph Sikuade, said in Abuja. According to Sikuade, the government had selected this year for the implementation of the legal metrology services in the oil and gas sector to enable stakeholders conform their activities to Section 7 (2) and 30 (b) of the Weights and Measures Regulation 25, Vol. 99 of 16th April, 2012.

h e N i g e r i a n constitution requires the Ministry’s Weights and Measures Department to be the custodian of the national primary standards to which other standards in Nigeria must be traced to. And the directors says the Ministry has the expertise that would enable the sector perform its statutory duty efficiently as the sector is very vital to the Nigerian economy. "The measuring instrument used for trade in this sector must

be within the maximum permissible error margin which the law recognises," he said. Henceforth, calibrators and testing laboratories in Nigeria must first obtain certificates from the Weights and Measures Department before the calibration certificates issued by them would be recognised, Sikuade also said, adding that the interest of oil and gas operators was paramount to government and that as such, they should patronised only those calibrators who have obtained the Department’s certification for the calibration of their instruments. The director further inferred that all the instruments used in Nigeria are subjected to control by the Department, noting that the Department’s activity conforms to international best practices. Sikuade urged the co-operation of operators in the implementation of the measure as he noted that such co-operation would ensure a stress-free implementation process.

Sikuade added, adding that the interest of oil and gas operators was paramount to government and that as such, they should patronised only those calibrators who have obtained the Department’s The consultant to the certification for Ministry on Weights and Measures, Yusuf Yabagi the calibration of Sani, who also spoke on the planned introduction of the their instruments. measure, listed the levels of legal metrology controls to be implemented as the measuring instruments in trade comprise to include registration, conformity assessment (pattern approval), verification and inspection as well as calibration and testing certification.

ani maintained that the records of transaction would be maintained on the www.wmdnigeria.com web portal by the Department

while appropriate certificates would be issued to devices owners. He further stressed that the control requirements are purposed to provide a reliable database of instruments utilised for trade; ascertaining the integrity and fitness of instruments for use; maintenance of instrument accuracy and consistency as well as traceability of instruments utilised for trade transactions.

Oil

2014 February, SweetcrudeReports

Bomb blast

Shell continues to worry over insecurity in Nigeria

he Anglo-Dutch oil giant, Shell says insecurity has continued to a f f e c t i t s operations in Nigeria as it announced that fourth quarter 2013 current cost of supplies, CCS, earnings are expected to be approximately $2.2 billion, and full year 2013 CCS earnings are expected to be approximately $16.8 billion. Chief Executive Officer Ben van Beurden, raised fresh concern over insecurity in the country as he presented the company’s unaudited financial results for the fourth quarter of 2013. “Compared with the fourth quarter 2012, upstream earnings excluding identified items were impacted by higher exploration expenses and lower volumes.

“A high level of maintenance activity during the fourth quarter 2013 affected high value oil and gas production volumes, including gas-to-liquids, as well as LNG sales volumes. Earnings were also impacted by the weakening of the Australian dollar. Upstream Americas continued to incur a loss. The security situation in Nigeria remained challenging,” he said. Overall, Shell’s fourth quarter 2013 earnings on a current cost of supplies basis, excluding identified items, are expected to be approximately $2.9 billion and were impacted by weak industry conditions in downstream oil products, higher exploration expenses and lower upstream volumes. “Our 2013 performance

Upstream Americas continued to incur a loss. The security situation in Nigeria remained challenging.

was not what I expect from Shell. Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery,” said van

Beurden. The company was billed to announce its audited results on January 30. Besides losing billions to crude oil theft, pipeline vandalism and the repair of vandalised equipment, Shell is also reported to be spending millions of dollars a year on Nigerian security forces to guard its

installations and staff in the Niger delta.

ccording to leaked internal financial data quoted last year in a report, the oil giant also maintains a 1,200-strong internal police force in Nigeria, plus a network of plainclothes informants. The documents show that nearly 40% of Shell's total security expenditure over three year period (2007 to 2009) – $383 million (£244 million) – was spent on protecting its staff and installations in Nigeria's volatile Niger delta region. In 2009, $65 million was spent on Nigerian government forces and $75 million on "other" security costs – believed to be a mixture of private security firms and payments to individuals.

2014 February, SweetcrudeReports

Oil

2014 February, SweetcrudeReports

Nigerians protesting fuel subsidy removal in Lagos

62% of Nigerians against fuel subsidy removal - Poll 23% buy fuel above official price OSCARLINE ONWUEMENYI

BUJA - About 23 per cent of Nigerians still p u r c h a s e petroleum products above the official pump price, according to a new poll, which also found that 62 per cent of Nigerians are against the removal of fuel subsidy. Results of the survey conducted by NOI Polls Limited, a local affiliate of Gallup Polls USA, revealed that the 77% of Nigerians purchased petrol at the official price of N97 in Fourth Quarter, Q4. This was followed by 13% who purchased at N100. However, in total, 23% of Nigerians bought petrol above the official price in the quarter. According to the Q4 results for the Petrol Price Monitoring Polls conducted by NOIPolls, majority of Nigerians (77%) purchased petrol at the official price of N97 and typically buy petrol from major marketer filling stations (69%). In addition, the majority use petrol for both their cars and

generators (46%). The results also show that the majority of the respondents (62%) are not in support of the subsidy removal while 38% are in support. According to the organisers, "Quarterly results show that there hasnâ&#x20AC;&#x2122;t been any significant change in the stance of Nigerians about removal of the fuel subsidy. The majority are not in support of the decision to remove the subsidy." In January 2012, the Petroleum Products Pricing Regulatory Agency, PPPRA, along with government announced an increase in the price of petrol from N65 to N141 as a result of the removal of subsidy because over a trillion naira was spent in 2011 on the payment of subsidies. After days of protest by Nigerians led by organised labour and civil societies, who were unhappy about the perceived hardship the action would cause Nigerians and the lack of notice by the government to carry out such plans, the government, as a

stop-gap measure, partially removed the subsidy on petrol, thereby bringing the official pump price of the product to N97. The purpose of the poll, according to the organisers, is to monitor and analyse the current price and uses of petrol in Nigeria, as well as to measure the perception of Nigerians towards the petrol price differences at various points of sale and the removal of fuel subsidy. Over 6,000 respondents were interviewed from January-December 2013 and respondents were asked the same ten questions for each monthly poll. With the aim of identifying the main petrol distributors that Nigerians patronise, respondents to the poll were asked: Where do you mainly buy petrol from? Results reveal that in Q4 the majority (69%) bought petrol from major marketer filling stations. This is followed by 24% who mainly purchase from independent marketer filling stations and 7% who buy from petrol hawkers. Analysis of the results by geo-political zones shows

The purpose of the poll, according to the organisers, is to monitor and analyse the current price and uses of petrol in Nigeria, as well as to measure the perception of Nigerians towards the petrol price differences at various points of sale

that the South-West has the highest percentage of people (78%) purchasing petrol from major marketer filling stations. The South-East zone has the highest percentage purchasing from independent marketer filling stations with 39%, while the North West and North-East zones have the highest percentage of people purchasing from the hawkers with 16% and 15% respectively. Further analysis by geo-

political zones shows that the South-West, NorthCentral, North East and South-East zones have the highest amount of respondents who bought petrol at N97 with 81% and 80% for the three other zones respectively. A cumulative look at the prices paid for fuel in the fourth quarter shows that the proportion of respondents that bought at CONTINUES ON PAGE 10

Oil

2014 February, SweetcrudeReports

Halliburton profit falls 19% in 2013

S services giant Halliburton has seen its annual net income fall by 19% year-on-year in 2013 as a $1 billion contingency for the Macondo disaster swallowed much of the company’s earnings. T h e H o u s t o n headquartered company booked $2.13 billion in net income for the year, down from the $2.64 billion earned in 2012. Annual revenues rose 3% over 2012 to $29.4 billion for the full year. For the fourth quarter, Halliburton raised net income to $795 million from the year-ago period’s $672 million on revenues of $7.63 billion. While overall annual revenues rose, operating incomes tumbled by a quarter compared to 2012, mainly due to a $1 billion pre-tax charge for an estimated loss contingency for Macondo as well as pricing pressure in North America. Chief executive Dave Lesar highlighted the operational performance behind the figures, which he said had seen record annual revenues as well as “revenue records in every international region and in both divisions”.

NIGERIA CONTENT INITIATIVE Dr. Ibilola Amao

Are we serious about optimising Nigeria’s hydrocarbon assets?

“From an operating income perspective, we achieved record operating income in our Middle East/Asia region as well as six of our 13 product lines,” Lesar said. Lesar also vowed to improve margins in North America, where revenues slipped in the fourth quarter, and admitted Latin America remained “a challenging market” with a flat result for the last three months of 2013. Equity research firm Cowen and Company said

that Halliburton’s reported adjusted earnings per share of $0.93 for the fourth quarter had beaten its $0.90 estimate and the consensus forecast of $0.89, but cautioned it excluded $0.03 after-tax worth of restructuring charges. The New York-based researchers said that lower tax rates had added $0.05 to EPS and lower corporate expenses another $0.01 after adjustments, partially offset by weaker than anticipated r e s u l t s i n t h e Europe/Africa/CIS region.

62% of Nigerians against fuel subsidy removal - Poll CONTINUED FROM PAGE 9 the official price of N97 was highest in November (83%) and this dropped to 75% in December. When Q4 results are compared with Q3; there was no substantial change; only a 1% decrease in the proportion of respondents that purchases petrol at the official pump price. This indicates that the farreaching improvement in the availability of petrol first observed in Q3 was sustained in Q4. With the aim of exploring the perception of Nigerians about the causes of price differences of petrol at the points of sale, the respondents to the poll were asked: What do you think is responsible for the difference in the pump price of petrol across filling stations? The

results show that majority (53%) of the respondents blamed the disparity in petrol price on the lack of monitoring of the petrol stations by governments. Furthermore, 27% of the respondents were of the opinion that the petrol stations are hoarding the product and exploiting the public, while 20% felt that it is because the cost of importing petrol is not the same for all marketers. Analysis by geo-political zones shows that the NorthWest and North-Central zones (both 60%) have the highest proportion of respondents who blamed the government for not monitoring the filling stations, while the NorthEast zone (43%) accounts for the highest proportion of

respondents that feel the petrol stations are exploiting people. The South-East has the highest proportion of respondents (31%) that blame the price disparity on the varying cost of importation of petrol. The monthly results for Q4 show that there was a sharp 15-point decline in November in the proportion of respondents who blamed the government for price disparity and corresponding 13-point increase in those that blame the actual stations for hoarding fuel. Furthermore, in December there was a 15-point increase in the proportion of respondents that think the price disparity observed is because the cost of importation petrol is not the same for all marketers.

Frost & Sullivan report revealed that the Nigerian petrochemical market was worth $14.03 billion in 2008 and is likely to be valued at $29.7 billion by 2015. We can infer from this that over $70 billion would be spent on imported goods and finished products that utilize petrochemicals as a component part of production in the next seven years. With Nigeria struggling to deliver 4,200MW of electricity to a population of about 170 million, it is evident why Nigeria has a very immature processing and manufacturing climate and fails to deliver employment, wealth and the type of well-being that one would expect in a hydrocarbon province. An audit of where Nigeria is in terms of her production per capita of processed hydrocarbon is a major embarrassment and cause for concern. Nigeria’s rent seeking approach to resource sharing has resulted in an underdeveloped nation that cannot implement her master plans because of corruption and self-interest. It is most embarrassing that fuel subsidy in Nigeria is running into the trillion-naira mark and monies which could have better been invested in the development of society, secure pipelines; refineries, petrochemical and gas processing facilities are being paid out to the select few companies that enjoy government patronage. The need to collaborate with proprietors of technology with secured foreign direct investment for national development through value creation is a choice that one would have expected from a people-focused government. The Minister of Petroleum Resources started well by signing the Nigerian Oil and Gas Industry Development (NOGICD) Act upon assumption of her position in 2010. It would be interesting to see how Nigerian Content is tied to the proposed Marginal Field bid round and if first oil and integrated petroleum companies would result from a credible marginal field award process before 2020. The test of value creation and leadership’s choice of those consortiums that have the technical and financial muscle rather than political muscle would reveal how seriously our leadership is about transformation. Can our leadership take a cue from leaders in the UAE who have leveraged their national assets through strategic alliances with world-renowned companies who are committed to building a transformed economy?. Can we focus on developing our nation so we do not have to escape to Dubai, London, Paris, Rome, New York, Cape Town etc. to enjoy some sanity? When would our system, become meritocratic enough to stimulate positive changes? Can we focus on how to maximize the value created from Nigeria’s hydrocarbon asset through a more holistic than the individualistic strategy? Can we achieve the projected MINT nation status? Is our leadership committed to sustainable development that is in the best interest of 170 million people? To think that the Federal Government of Nigeria in May 2002 granted preliminary approval and in June 2002 issued License to Establish (LTE) to eighteen private companies for the establishment of private refineries in Nigeria, in February and 2003 awarded marginal fields to 24 indigenous E&P companies after a keenly contested bid process. Today we can count on our finger the producing assets; in October 2004 issued Approval to Construct (ATC) to the licensed companies and 12 years later there has been no significant improvement in our in-country refining, petrochemicals or gas utilisation is such a shame. Whilst pushing the envelope of R&D in our Universities can stimulate optimization of local resources, the main route that can guarantee us deliverance from dependency of importing finished products is developing meritocratic initiatives, programmes and businesses that engages proven and tested local players collaborating with the proprietors of world-class technologies such as: UOP (Aromatics from Hydrocarbon Mixtures); Phillips Petroleum (Carbon Black); Phillips Petroleum Co (Styrene-Butadiene Rubber, Polyethylene); Zimmer (Nylon 6); Shell Dev. Co (Ethylene Glycols, Ethylene Oxide ); ARCO (Linear Alkyl Benzene) etc. in a credible manner. Until our leaders recognize that strategy is key to nation building Nigeria would continue to suffer from poverty, unemployment and youth restiveness. The intent of Aliko Dangote to spend $8billion of his own money on a refinery, petrochemical and fertilizer plant in Nigeria’s Atlantic coast may be futile except risks such as (a) the deregulation of the downstream of Nigeria’s petroleum sector (b) the delayed passage of the Petroleum Industry Bill (PIB), (c) pipeline vandalisation (d) poor infrastructure (e) inadequate domestic gas supply (f) leadership issues and (g) power supply are tackled in a timely manner. Dr. Ibilola Amao is the Principal Consultant with Lonadek Oil and Gas Consultants Limited, a firm of technical consultants with their core competence in the area of Local Content and Vendor Development. For more information or to reach Dr. Amao you can email her at lolaamao@lonadek.com or visit www.lonadek.com.

2014 February, SweetcrudeReports

Focus

2014 February, SweetcrudeReports

There are threats to Nigeria’s dependence on oil – Dr. Nwaozuzu

r. Chijioke Nwaozuzu is a former British Chevening scholar and Petroleum Technology Development Fund, PTDF, doctoral scholar. He was recently awarded an honorary Doctor of Science, DSc, by the Victoria Global University, VGU, Island of Turks & Caicos (UK Territory). Nwaozuzu was also recently appointed a Senior Lecturer at the Emerald Energy Institute (for Petroleum & Energy Economics & Policy), University of Port-Harcourt. In this interview he speaks on a number of issues affecting the Nigerian oil and gas industry.

Excerpts: What is your assessment of the industry as at 2013, with regard to exploration and production, refineries, importation of petroleum products, etc. Did we fare well? Could we have fared better? First and foremost, the Nigerian Petroleum Industry is still evolving and the time is ripe to transform it. The passage of the Petroleum Industry Bill (PIB) by the National Assembly holds the key to further restructuring of the industry. Presently, Nigeria is the largest producer of oil in Africa; the 11th largest producer of oil in the world; and the 8th largest exporter of crude oil. Nigeria’s oil is mainly classified as ‘sweet crude’ or ‘light crude’ and has very low sulphur content. Nigeria is also the largest producer of ‘sweet crude’ among OPEC (Organisation of Petroleum Exporting Countries) countries. Nigeria’s oil production hovers between 1.9 million barrels per day (bpd) and 2.5 million bpd. Pipeline vandalism and crude theft currently are responsible for marring production, which could have been increased to 4 million bpd by 2010 in the absence of such constraints. There were 37.2 billion barrels of proved oil reserves as of 2011. Nearly 43% of Nigeria’s exports go to the US, and this volume is threatened as the US is investing heavily in the production of shale oil, solar and wind energies as well as hybrid and electric vehicles. With a speedy passage of the Petroleum Industry Bill (PIB),

NNPC along with her jointventure partners can possibly achieve the goal of improving known crude reserves from the current 36 billion barrels as at 2013 to 40 billion by 2015. The national target is to achieve 40 billion barrels of oil reserves and a daily production of 4 million barrels of oil (bpd), including condensates, as envisioned in the Vision 20: 2020. To ensure that other prospective basins are reasonably explored, the Ministry of Petroleum Resources has ramped up exploration activities in the entire inland basins of Chad, Anambra, Benue, and the Bida / Sokoto / Dahomey basin. There are increased exploration activities in the offshore, onshore and inland basins leading to the drilling of a total of 19 exploration wells in 2012. Within the period 2011-13, 93 development wells under joint-venture (JV), 38 under PSC, and 33 workover wells were drilled. The Nigerian petroleum industry has recorded significant progress in its upstream petroleum and gas developments, but the same cannot be said of the downstream sector. Much still needs to be done in terms of repairing and privatising existing refineries with a combined name-plate capacity of 445,000 barrels of oil per day; construction of new small, medium and large refineries, petrochemical plants, fertiliser and ammonia plants, Gas to Liquid (GTL) plants; and development of renewable sources of energy. These industries will help the

The Nigerian petroleum industry has recorded significant progress in its upstream petroleum and gas developments, but the same cannot be said of the downstream sector.

country withstand shocks from projected lesser demand for fossil fuels in the future. What can Nigeria do better in 2014? The focus for 2014 would be to sustain the momentum in upstream petroleum and gas development, enforce security of petroleum operations in the Niger Delta, and lunch a fullscale attack on crude oil theft and pipeline vandalism. Apart from the use of natural gas for domestic, power, and manufacturing purposes government should also consider putting policies and incentives in place to encourage the construction of plants that utilise natural gas as feedstock, e.g. gas to liquid plants, fertiliser and ammonia

plants, etc. Much needs to be done to move the downstream subsector ‘northwards’. The planned privatisation of existing refineries will open up this sub-sector. Postprivatisation, we will be faced with an oligopoly. The worst threat we can possibly face in the downstream sub-sector is for this privatization exercise to translate to a movement from public sector monopoly (as represented by NNPC’s ownership of all existing refineries) to a private – sector monopoly It is expected that the government will start to implement its plans to construct three new refineries (Lagos, Bayelsa, Lokoja, etc), and to create

incentives for the construction of new private refineries. Considering the high capital intensity of constructing large refineries (150,000 bpd to 1 million bpd), government is expected to take the lead in such projects in concert with multinational oil companies or international independent oil firms. Of course, the multinational oil companies will act as the operators (i.e. adopting the NLNG model of shareholdings and operatorship). On full construction, government can off-load bulk of its shareholding to local oil companies (upstream and downstream players included). I also expect that in 2014, government will start to take the threat presented by shale oil development in the US seriously and begin to invest in renewable sources of energy (biofuels, solar, wind, tidal forms of energy). President Barrack Obama made these a part of his presidential campaign promises and he has never looked back since then. It is also expected that the National Assembly will pass the PIB early on in 2014. As regards the upstream, for how long can we survive

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2014 February, SweetcrudeReports

CONTINUED FROM PAGE 12 the lack of investment, as the IOCs have not been investing in last few years? This question takes us back to the PIB. The IOCs are not investing much because of uncertainty, which the passage of the PIB is supposed to clear up. There is fundamental interdependence between Host Countries and the Multinational Oil Companies in the development of natural resources, but the interests of these two parties differ much but only converge on resource production- sharing. Two other major stake holders are the National Oil Companies and the Host Communities. The fact that oil and gas resources are vested in the Federal Government of Nigeria does not exclude the Host Communities as major stakeholders. These communities bear the brunt of environmental degradation (acid rain, oil spillage, foul air and water) that usually attends resource extraction and refining processes. Speaking of, the need for environmental remediation in Host Communities and environmental justice for those that bear the brunt! A successful negotiation of the PIB will take into account of these interests, which I will briefly narrate here. Let us commence with the Host Country’s interests. Nigeria is characterized by high population growth, excessive unemployment, low per capital income, a low level of economic development (reflected in a lack of social services and resources), a low quality of education, and short life expectancies). Given this setting, the critical concern of government should be economic growth. As a major oil exporter, oil E & P activities should secure a reasonable tax base for the government, revenue from the world oil market, capital for economic expansion, and employment and income for individual workers. There are other economic, social, and political factors of interest to the Host Country. These include acquisition of technology and expertise from foreign oil companies, increasing local content in supplies and other forms of contracting, access to foreign markets, infrastructure development in the course of E & P activities, such as roads, communications, port facilities, etc. Few developing countries have the capital, technology and trained personnel necessary to develop oil reserves, and so must rely to varying degrees on foreign investment by the MNOCs. The FDI offered by the MNOCs provide the Host Country with

Oil facility

‘There are threats to Nigeria’s dependence on oil’ technology, managerial and technical expertise, and a reduced vulnerability to downturns in the world’s economy, and with capital. FDI also provides the opportunity to shift the responsibility of building and maintaining the requisite support services and infrastructure facilities to the MNOCs. Therefore, it is in the interest of Host Countries to maintain this historical interdependence with the MNOCs. The MNOCs interests are principally driven by the characteristics of petroleum E & P operations. There is a considerable lag between an investment in a petroleum prospect and the realization of any profit from the enterprise. E & P operations is capital – intensive and frequently entails the creation of a robust infrastructure before actual extraction can take place. These operations are also high- risk in nature (the existence, extent and quality of oil reserves; production costs; and world crude oil prices are all difficult to determine well in advance). Therefore profitability is never assured. Generally, most

MNOCs tend to improve their profitability by improving the crude oil which accounts for why they get involved in the entire value chain of the industry. Also hydrocarbon reserves are finite, so MNOCs must continually acquire new

of national oil reserves, but also must deal with the political and legal hazards associated with extracting the reserves that in most cases is the Host Country’s major source of revenue. The primary interest of the

These interests and risks have to be factored into the PIB debate and negotiations to ensure the MNOCs are not discouraged from making further investments in the Host Country reserves which again are capital – intensive. The fiscal incentives available in different oil producing countries tend to determine where the MNOCs sink their oil rigs. MNOCs are compelled to be far more concerned about government policies and regulations than most other businesses. These companies have to deal directly with the government (through their agencies) being the custodian

MNOCs as with any other business are maximization of profits and minimization of risks or at least ensuring that unavoidable risk are factored into the potential ‘upside’ of the enterprise. For the MNOCs the principal risks are geological, economic, and political. Political risks include a sudden increase in taxes, unfavorable alteration of the production- sharing ratio, government instability, agency – in-fighting, outright

confiscation of production, and nationalization of foreign oil assets. These interests and risks have to be factored into the PIB debate and negotiations to ensure the MNOCs are not discouraged from making further investments in the Host Country. Else, they would be encouraged to move away and invest in other countries with more stable and better fiscal regimes.

The government said it would conduct a bid round of the marginal fields. Will it bring the succour that the government is seeking? Giving details of the licensing round, Mrs. Alison-Madueke stated that a total of 31 fields are on offer with sixteen (16) of them located onshore, while the remaining fifteen (15) are located in the continental shelf. It is vital that potential investors understand the relationship between recoverable oil (in million standard barrels, mmstb) and the terrain of the oil field. Marginal oil fields in Nigeria can be categorized into five based on surface terrain and the typical range of minimal recoverable reserves required for profitable production as follows: onshore land (2-5 mmstb); onshore swamp (7-20 mmstb); coastal offshore (12-25 mmstb); continental shelf offshore (20-45 mmstb); and deep offshore (>40 mmstb). This indicates that the deeper into water the higher the minimal recoverable reserves. In providing an update on the

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2014 February, SweetcrudeReports

Threats to Nigeria’s dependence on oil CONTINUED FROM PAGE 15 last marginal fields bid round which held in 2001, the Minister disclosed that of the 24 fields that were allocated to 31 indigenous oil companies in that exercise, 8 were already producing while the others are at various stages of development. Mrs Diezani Alison-Madueke noted that the marginal field operators (who currently account for about 1% of the nation’s production) have also recorded huge discoveries in excess of 100 million barrels to the nation’s reserve base, adding that of the eight assets that have so far been divested by the International Oil Companies (IOCs), at least four are held by active marginal field operators, who have continued to demonstrate remarkable technical ability in operating significantly larger assets. The government in awarding these marginal fields to indigenous operators hoped to increase oil production by about 1 billion barrels. Some progress has been made in marginal fields’ development as 8 out of the 24 operators have taken their fields to first oil. However, more still needs to be done, and six factors have constrained the activities of marginal field operators. The main factors relate to the lack of funding and the marginality of the fields. Other factors are: inadequate technical expertise, government policies on royalties and petroleum taxes, board / partnership wrangling in some cases, and in other cases the presence of s i g n i f i c a n t a n t i entrepreneurial mentality among the operators. Funding constraints is the main reason cited by the growing number of Nigerian E & P companies for inability to progress on projects, as well as the necessity to invite foreign technical partners. The need to invite foreign partners has become inevitable given that most local banks have not cooperated with marginal field operators in putting these fields into production. However, such invitations run contrary to the core moral concept and principles of the marginal fields’ licensing exercise. What best approach do you think the government should take to see to the passage of the PIB? I have previously identified the four major stakeholders in

is about 3 years old now. So far has it achieved the objective for which it was established? The fundamental objectives of the Local Content Initiative are to increase indigenous participation in our oil and gas supply chain (goods, services, and manufacturing activities), to encourage local manufacturing of basic tools and equipment used in the oil industry, and to ensure that foreign oil companies partner with indigenous players in all aspects of the oil industry, and that local people are equitably represented in senior management placements and board appointments. Under the effective leadership of the first Executive Secretary of the Local Content Agency, Engr Ernest Nwapa, a strong foundation has been laid in regard to these objectives. I listened to his presentation on the achievements of the Agency at the meeting of the Society of Engineers in Abuja, and was impressed at the highlights of the significant achievements already made by this agency.

An oil worker

petroleum development in our country, and indeed in any other oil producing country. These are the Host Country, the Foreign Oil Companies, the National Oil Corporation, and Host Communities. These interest groups have different motivations and a reconciliation of these interests will bring about a speedy passage of the PIB. In Nigeria, as previously stated, the ownership rights to oil and gas are vested in the Federal Government of Nigeria. However, it would be a mistake in the course of negotiations to subsume the interests of Host Communities under those of the Host Country just because the latter

The government in awarding these marginal fields to indigenous operators hoped to increase oil production by about 1 billion barrels. Some progress has been made in marginal fields’ development as 8 out of the 24 operators have taken their fields to first oil holds the ownership rights. The social costs of oil extraction and processing are not equally felt across the country. The concept of environmental justice is applicable here. My best advice is for the National Assembly to

pass the bill in its current form. Modifications can be m a d e a l o n g t h e implementation route, as common sense would dictate that such changes may be necessary in the interest of all stakeholders. The local content initiative

Crude oil theft assumed an alarming rate in 2013. How best do you think it could be minimized in 2014? You mean the reported 400,000 barrels of oil per day loss to thieves? This loss translates to a crude oil cargo of 1 million barrels every two and a half days (i.e. $100 million every two and a half days, assuming a price of $100 per barrel). It is befuddling to hear that such volumes can go missing on a daily basis. The question is: are these numbers real, or imagined? If it’s really true, I cannot begin to imagine the collaboration and networks required to ‘pull off this Houdini’. You are talking here about very powerful interests, with ‘brass-balls’ and serious ‘cohunes’! Let us yet believe that we are talking about much smaller volumes (like 10,000 bpd), in which case the Petroleum Minister has introduced a Crude Oil Fingerprinting Initiative and there is a Joint Task Force (JTF) of the armed forces operating within the Niger Delta area. In my opinion, the JTF should include representatives of all arms of the national security organizations, including wellpaid local and foreign spies. Call in the ‘Isreali Mossad Agency’ if necessary! The situation is unacceptable.

2014 February, SweetcrudeReports

Gas

2014 February, SweetcrudeReports

LNG vessel

'How ‘challenges with external stakeholders’ derailed NLNG's export plan CHUKS ISIWU

n 2013, Nigeria LNG Limited, NLNG, had the lofty plan of exporting 325 cargoes of liquefied natural gas, LNG, to the international market. This was part of its overall business plan for the year aimed at boosting its balance sheet and ensuring return on investment for itself and its shareholders. But, this did not happen. A combination of factors, according to Mr. Emmanuel Nnabuife, head of Gas Supply at NLNG, conspired to ensure the pioneer Nigerian LNG company was unable to achieve its dream. "In 2013, we started with a plan to do 325 cargoes. But we ended up with 280 cargoes because of the challenges we had with some of our external stakeholders, one of them, as you know, is the NIMASA issue we had in June, which led to the loss of about 25 cargoes off our production plan. "Also, we suffered gas supply constraints because of the challenges we have in the Niger Delta today. People go in and drill into the pipelines and

what that creates is that we have to shut down to repair the lines. For any of those interventions, production suffers. But by and large, we closed the year with 280 cargoes, which is about 45 cargoes below the target, hoping that this year, we will do close to 325,” Nnabuife stated. During a dispute, which arose over alleged nonpayment of statutory levy to NIMASA by NLNG, the former blocked NLNG's export channel in Bonny, Rivers State, stopping it from exporting 45 cargoes of gas worth over $1.35billion based on the current international market price of gas. NLNG was to pay the maritime agency $140 million before it lifted the blockade on the Bonny Channel. The case is, however, still in court and NIMASA spokesman, Mr. Isichei Osamgbi said he would not comment on the matter for this reason. "Any comment we make on that matter will be prejudicial,” he said. For this year, NLNG has again set for itself the target of

exporting 325 cargoes, a target, Nnabuife said, would be met barring any unforeseen hitch. According to him, the company sets a target for itself every year, based on best practices around the world, to track how it performs and to enable it maintain and improve on its share of the global LNG market. Nnabuife stated that in 2012, the company performed very well, relative to its targets. The plant’s availability that year was 94 per cent just like last year, but Nnabuife stated that unlike last year, the company achieved cargo production of 333 in 2012, the highest in NLNG’s history. The plant’s utilisation was, however, less because of feedstock issues.

he NLNG top officer also disclosed that it had started a process of securing additional six new ships to replace old ones, as part of its asset rejuvenation programme to secure its long-term contracts. “All these are geared towards ensuring that we continuously sustain and control our share in the

According to him, the company sets a target for itself every year, based on best practices around the world, to track how it performs and to enable it maintain and improve on its share of the global LNG market

market,” he said. The six new vessels are to be built between last year and 2016, with financing being arranged in two programmes, the first being a $308 six-year Additional Programme Debt, APD, and the other, a $11 billion 12-year New Vessel Debt, NVD. The NLNG recently exported its 3,000th cargo of LNG to its European and Asian customers from its Bonny Island terminal in Rivers State. Chief Executive Officer and Managing Director of the company, Mr. Babs Omotowa said the

milestone cargo’s destination was Marmara LNG Terminal for Botas Petroleum Pipeline Corporation in Turkey. The cargo was shipped onboard LNG Lokoja, one of the 24 vessels in the NLNG fleet. From the export of its first cargo on October 9, 1999, which was delivered to Montoir LNG Terminal in France, the Nigeria LNG has grown to become Africa’s largest single private sector industrial investment, safely and reliably supplying about seven per cent of total world LNG demand.

2014 February, SweetcrudeReports

Gas

Vandalism: 20 points attacked on Escravos-Lagos gas pipeline NNPC to spend N800m on repairs

Pipeline OSCARLINE ONWUEMENYI

bout 20 points on the 56-kilometre Escravos-to-Lagos pipeline were attacked with dynamites by vandals in the last six months, according to Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr. Andrew Yakubu. The Federal Government has, meanwhile, described attacks on pipelines conveying gas to power plants across the country as acts of sabotage, maintaining that this has led to the loss of about 1,600 megawatts, mw, of power. Yakubu who put the cost of repairing the damaged points on the pipeline at N800 million, noted that unlike crude pipelines which are targeted by oil thieves for commercial motive, it was difficult to understand why gas pipelines are being attacked when the product cannot be stolen. He explained that over 30 per cent (480 million standard cubic feet per day) of the installed gas supply capacity was out due mainly to vandalism, attributing the low supply of gas to power plants on faulty equipment at the

We have since effected repair of these new points and recommenced commissioning activities. The cumulative effect of the above interruptions is a real degradation of power supply to Nigerians

Utorogu gas plant in Delta State. According to him, when the first incident occurred in June last year, initial assessment placed the cost of repairs at N200 million but subsequent attacks have now escalated the cost. He listed the pipelines involved to include the Escravos-Warri stretch of the Escravos-Lagos Pipeline System (ELPS) which accounts for (190mmcf/d), the TransForcados crude pipeline (230mmcf/d). “When the initial assessment was done before we realised that there were many other

points, the assessment was set at about N200m. But as we speak today because of the multi ruptures that were discovered later, I hear that it is about N800million. And before the close of the contract, if we pressure test and the lines are okay and we are able to flow gas then we will sit down and assess the total cost of the repairs and we will now demobilise the contractor," he noted. Yakubu further disclosed that “at the last count, 20 ruptured points have been identified, all due to deliberate dynamite explosion. NGC (Nigerian Gas Company)

completed repairs in November and on commissioning in December, rapid pressure loss was experienced indicating further rupture in weakened locations. "We have since effected repair of these new points and re-commenced commissioning activities. The cumulative effect of the above interruptions is a real degradation of power supply to Nigerians". According to him, the Ministry of Petroleum and the Nigerian National Petroleum Corporation, NNPC, have continued to make effort to assure gas supply in a difficult environment while it is expected that a major improvement in power supply should be achieved in the weeks ahead as the various repairs are completed. He assured that normal gas supply would resume in the next three to five weeks, adding that beyond the ongoing repair works, many projects are ongoing to bring in additional supply to bridge the growing demand by the power sector. “By the end of Q2/Q3 2014, additional 200mmcf/d of gas is expected from two NPDC (Nigerian Petroleum

Development Company) projects at Utorogu and Oredo. In addition, with the planned completion of the Omoku and Alaoji NIPP power plants, further boost in generation is expected as both plants have gas supply available awaiting completion of the power plants," Yakubu said. He stated that in 2015, many other projects are expected to mature progressively and by 2016 when the East-West pipeline is completed, a major boost in supply will be attained as over 250mmcf/d of gas stranded in the East will be diverted to meet the growing Power demand. He warned, however, that “if the occurrence of pipeline attacks is arrested, we expect nothing but a continuous and steady upward growth in gas supply to power from the end of this month, with a noticeable increase in electricity seen by Nigerians." He also disclosed that as part of effort to encourage more gas suppliers to sell gas to power plants, plans are afoot to increase the price per cubic feet of gas to $1.5. The price of gas supply to power was increased two years ago from $0.1 to $1.0 by the government to encourage suppliers to sell to power plants.

2014 February, SweetcrudeReports

Gas

Shale gas drillIing

Shale gas not a threat to Nigeria - NLNG Boss CHUKS ISIWU

anaging Director of Nigeria LNG Limited, Mr. B a b s Omotowa, is of the view that the discovery and exploitation of shale gas in parts of the world did not pose a threat to Nigeria's gas and the nation's aspiration for continued export of the product to the international market. This is so, according to Omotowa, as only two companies have so far been licensed to export shale gas from the United States. Nigeria controls 8 per cent of the international liquefied natural gas, LNG, trade through Nigeria LNG Limited, NLNG, which has been exporting the product to markets in Europe and America since 1999. The NLNG boss made the disclosure as his company recorded the successful loading of its 3,000th cargo for export. The historic 3,000th LNG cargo will be delivered on January 19, 2014 to Botas in Turkey by one of NLNG's

vessels, the LNG Lokoja. “Nigeria LNG has today successfully recorded the loading of its 3,000th cargo for export, a commendable milestone that is worthy of celebration. “Added to this feat is the fact that this historic 3,000th LNG cargo will be delivered, come January 19 2014, to Botas in Turkey by one of our company’s vessels, the LNG Lokoja," Omotowa said at the ceremony to mark the historic event on Bonny Island, Rivers State. Disclosing that the vessel is manned by a workforce which is about 95% Nigerian, in line with NLNG's aggressive pursuit of technology transfer and its “Nigerianisation” policy, the managing director revealed that the next phase of the company's expansion programme was the building of an additional train for the LNG plant. He said: “Part of the next phase of our company’s growth programme is the addition of a seventh train to the existing six train NLNG infrastructure. When achieved, this will enable

Before the commencement of operations, 75% of the 2.6 billion cubic feet of associated gas produced by oil companies operating in Nigeria was flared NLNG add some eight million metric tonnes to its current production capacity, and increase annual output to 30 million metric tonnes. “This is potentially capable of mopping up and exporting some more of the currently flared gas, and yielding an estimated $2.5 billion in revenues. “On balance, it is clear to us at NLNG that Train 7 is an enterprise which all shareholders and stakeholders should support and pursue with vigour, for the simple reason that its outcome will be good for Nigeria and good for our business”. The NLNG has helped Nigeria's effort at diversifying its revenue base in addition to monetising its vast natural

gas resources, that is flared in the process of crude oil production. The company was incorporated in 1989 with the Nigerian National Petroleum Corporation, NNPC, Shell, Elf, and Agip as shareholders. Omotowa said of the company's achievements over the years: "With a net worth of more than $24

billion dollars, Nigeria LNG Limited remains the single biggest private sector investment in Sub-Saharan Africa. “We are proud to note that the investment, since the commencement of full operations in 1999, generated over $53 billion dollars to its shareholders within the first ten years. The Federal Government also earned more than nine billion dollars as dividends, during the period. “Before the commencement of operations, 75% of the 2.6 billion cubic feet of associated gas produced by oil companies operating in Nigeria was flared. “This trend has changed. Nigeria LNG Limited currently converts over four trillion cubic feet of associated gas to liquefied natural gas (LNG) and natural gas liquids (NGLs) for both export and domestic uses. “In doing this, the company has positively impacted on the country’s gas flaring status, thereby helping to improve the environment whilst converting a previously wasted resource into wealth for the nation".

2014 February, SweetcrudeReports

Gas

Gas Flaring: NOSDRA counsels oil firms on use of scrubbers

Gas flaring SAM IKEOTUONYE

irector-General of the National O i l S p i l l Detection and R e s p o n s e Agency, NOSDRA, Mr. Peter Idabor, has urged oil and gas exploration and producing companies operating in the country to use scrubbers to filter raw gas coming from their plants in order to reduce gas flaring in the country. Idabor, who described scrubbers as a diverse group of air pollution control devices that can be used to remove some particulates and gases from industrial exhaust streams, said the scrubber would help to filter raw gas causing environmental pollution. “My recommendation has always been that they (oil and gas companies) should attach what is called scrubber, enough scrubbers not to allow the crude gas coming out from the ground to just burn with so much smoke. “There are some chemical products that are associated with those gases; so if they put scrubber at the mouth, they will filter it and (the gas will) burn in a better way. What we are saying is that oxide of carbon, oxide of sulphur, oxide

of nitrogen are being spilled into the environment and this could cause acid rain; so it is a problem,“ the director general said as he hinted of plans to further cut down on the level of gas flaring in the country. According to him, the expected reduction in gas flaring will follow from a planned amendment of the NOSDRA Act that would empower the agency to

address the problem of gas flaring in the country. He stated that the amendment to the NOSDRA Act was underway, maintaining that the problem with gas flaring in the country was that oil and gas companies always looked at the cost implication of tackling the problem especially since gas could be harnessed to generate electricity.

NOSDRA was established by Act No. 15 of 2006 by the Federal Government, to address environmental degradation and devastation of the coastal ecosystem, especially in the oil-producing areas of the Niger-Delta region. It is statutorily empowered to coordinate oil spill management and ensure the implementation of the National Oil Spill

Contingency Plan, NOSCP, for Nigeria - a blueprint for checking oil spills through containment, recovery and remediation/restoration. The implementation of NOSCP, which was drafted in 1981 but reviewed in 1997, 2000 and 2006, must comply with the International Convention on Oil Pollution Preparedness, Response and Co-operation, OPRC, 1990, which Nigeria has ratified.

CNOOC, Gas Group invest $50m in Nigeria …To create 5,000 rig jobs

he China National Offshore Oil Corporation, CNOOC, and another company, Gas Group, have invested $50 million in development oil field-related tools in Nigeria. They also plan another $150 million spend on downhole tools, machine shops, logistic trucks and rig assembly plant in Port Harcourt, the Rivers State capital. Revealing this in Port Harcourt, Mr. Gliffeth Wonuigwe, group chief executive officer of the Gas Group, said the plan for the joint investment follows a strategic integrated agreement signed between CNOOC and his company in Tiangin China in 2012. He signed the agreement on behalf of his company while the chief executive officer, CNOOC Energy Group, Mr. Nan Shan, was represented by the company's director, in charge of international operations.

Wonuigwe said the agreement provides for investment of over $200 million within the next 10 years in such areas as downhole tools stocking, logistics, well completion and fishing. Having already invested $50 million, he stated that the second part of the agreement involves the investment of $150 million in rig assembly plant at Kidney Island in Port Harcourt, adding that US companies, IDE and Loadcraft, had been selected to handle the services. Maintaining that the investment would help to empower Nigerians through the creation of over 5,000 jobs in rig assembly and other oil field services, he said: “We have invested over $50 million in the first phase. We took a delivery of $10 million worth of tools and trucks and another shipment of $40 million will arrive Nigerian port at the end of March”.

Power

2014 February, SweetcrudeReports

Omotosho power plant

Bulk Trader’s PPA frees FG from Olorunsogo, Omotosho loan repayment OSCARLINE ONWUEMENYI

he Nigerian Bulk Electricity Trading Plc, NBET, has signed Power P u r c h a s e Agreements, PPAs, with the operators of the 335-megawatts Olorunsogo and 335megawatts Omotosho power plants. By this agreement, the Federal Government is to formally stop its repayment of the 60 per cent worth of financial loans partly used in the construction of both plants by a Chinese consortium beginning with the Olorunsogo plant. Government had in line with its ongoing power sector diversification programme ceded both plants, which are located in Olorunsogo, Ogun state and Okitipupa, Ondo state respectively to the Chinese consortia of Sepco Electric Power Construction Corporation of China for

Olorunsogo and China National Machinery and Equipment Import and Export Corporation, CMEC, for Omotosho. Both consortia are in partnership with indigenous company, Pacific Energy. The consortia was d esignated a s preferred bidders for the plants following their agreement to convert the loan into equity for the purchase of the companies and also in consideration that the 60 per cent Chinese loan for the construction of the plants was provided through them as contractors for the projects. Managing Director of NBET, Mr. Rumundaka Wonodi, explained at the signing of the PPA with Olorunsogo power plant in Abuja, that the PPA now grants the government the freedom from repayment of interests on the loan. Wonodi who also explained that the signing ceremony was overseen by the Minister of Power, Chinedu Nebo and Permanent Secretary in the

ministry, Godknows Igali, noted that the final process now grants the Bureau of Public Enterprises, BPE, the freedom to conclude its sale of the plants and escrow about $10.1 million of proceeds from the sales to a designated bank for the operation of the PPAs. He said: “The Federal government made investment in two power plants built with equity of 40 per cent respectively in the Omotosho and Olorunsogo power plants while 60 per cent loan was from the Chinese. In the last couple of years, the federal government decided to divest from this assets by having the Chinese convert their loan to equity and at the same time pipe down the government’s contribution. “The net effect is that the Chinese is paying for the balance of what government had invested less some certain costs; some of those costs are related to the transmission infrastructure because transmission cannot be held

The Federal Government made investment in two power plants built with equity of 40 per cent respectively in the Omotosho and Olorunsogo power plants while 60 per cent loan was from the Chinese within the power plant, any investment in transmission is handed to the Transmission Company of Nigeria (TCN). “As part of that transaction, there needs to be a power purchase agreement to be put in place, also a gas supply agreement which was executed when all the other industry agreements were executed, the outstanding one is the PPAs. “With the PPA signed, it will allow the investors led by Pacific Energy with Sepco in

Olorunsogo and Pacific Energy with CMEC for Omotosho to go ahead with the rest of the transaction. “The tariff has been approved by the regulator as well as the PPA and this allows us to conclude it and allow BPE to conclude the transaction for the balance of payment to be made to the government; also the loan stops to run because if we don’t conclude the PPA, we have to continue to make

CONTINUES ON PAGE 22

2014 February, SweetcrudeReports

Power

2014 February, SweetcrudeReports

Early Power Content Law will avert oil sector mistakes - NERC Boss

House of Representatives OSCARLINE ONWUEMENYI

igeria is aiming to avoid the mistake from its oil industry in the power sector with an early enactment of law to guide local content development in the power sector. The Nigerian Electricity Regulatory Commission, NERC, said the power sector local content regulation will become local content law before the end of February. NERC chairman, Dr. Sam Amadi, who made the disclosure while making a presentation at a session in Chatham House, London, disclosed that the power sector local content law in this early stage of the transition is intended to avoid the mistakes made in the oil and gas sector where it is still dominated by expatriates 50 years after. According to him, “We have a local content regulation that by February should become law, we don’t want what happened in the oil and gas sector where after 50 years Nigeria is still importing technology. We have come up with a local content regulation that provides a framework for every company to begin to localise both

technology, and services. “For example a meter provider should within the next five years set up a factory in Nigeria. This is to ensure that the spill off from electricity reform goes to enhance the economy of the nation”, he added. Amadi explained that power supply is expected to hit 7,000mw by the end of this year as increased capacities are expected from the NIPPs coming on stream, while

generation benchmark is set at 20,000mw by 2017. Amadi who noted that early passage of the Petroleum Industry Bill (PIB) was critical to achieving the set targets, disclosed that the 7,000mw target set for 2013 could not be realised because of inadequate supply of gas to power, which the PIB can help reverse. “PIB is critical to move forward on gas to power, the law should be passed as soon as possible, although the debate

over it is huge but we want the matter to be resolved in a way that makes gas to power commercially viable and bankable. At the end of 2013 we had expected to hit 7000mw and that would have been possible if there were enough gas to fire the plants and the NIPPS come on board. “By end of 2014 we will definitely cross 7,000mw because of the NIPPs; if you put all the capacity together you will get over 4,000, and

the existing 4000Mw. The benchmark is that by 2017 we expect that Nigeria electricity market will have over 20,000mw trading then. “The PIB is critical to us because the constraint of the sector now is gas to power and except you have a very intelligible, practical and commercial framework over gas in Nigeria you might not have sustainable solution to the crisis,” he said.

Bulk Trader’s PPA frees FG from Olorunsogo, Omotosho loan repayments CONTINUED FROM PAGE 21 interests payments but once we conclude this, everything freezes and they make the supplementary payment". Wonodi stressed that the PPAs “allows us to get closer to the declaration of Transitional Electricity Market (TEM) because all electricity supplied must come under a contract. The board of the Bulk Trader has also approved the PPA and its signing. “One of the things you can count on from this is the availability of capacity as it is required; with the PPA, the company can commit better to gas

supply and usually what happened was that things were done on best endeavour basis but with this, the power plant has a back-to-back gas supply reliability which it can also trigger and there will be more reliability of power supplied from these power plants. “One other component of this agreement is that part of the money that will be paid by the investors, about $10.1 million will be escrowed in a bank to support the PPA just like it is done in the privatisation where parts of proceeds from the sale was escrowed in

favour of the generation companies, this was the model that was proposed by the BPE for liquidity of the market. “It is a negotiated PPA as opposed to the one that was signed in the privatisation; in this case, there are payments that needed to be made, valuation of assets and ancillaries; there was also the need to cut out transmission and put the gas supply firmly in place. The financial structure is slightly different because what it is turning out to now is that you are converting debt into equity, it is an all equity arrangement," he added

2014 February, SweetcrudeReports

NIGERIAN CONTENT DEVELOPMENT AND MONITORING BOARD (NCDMB) The Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 was signed into law by His Excellency, President Goodluck Ebele Jonathan on the 22nd of April, 2010.

Construction work has commenced for two steel pipe mills in Bayelsa and Edo states. These mills will produce about 400,000MT per annum of steel pipes for the Oil and Gas industry by 2016 and create over 10000 direct and indirect jobs during the construction and operating phase of the mills.

This piece of legislation established the Nigerian Content Development and Monitoring Board to superintend over the implementation of the provisions of the NOGICD Act.

Equipment Component Manufacturing Initiative (ECMI) which began in 2011 to develop local capacity for manufacturing of equipment packages and components has birthed investment commitments of almost $2billion by Original Equipment Manufacturers and their local reps.

Over the past 3 years and half of its establishment, the Board has achieved several feats under the leadership of the Chairman of the Governing Council, Her Excellency Mrs. Diezani Alison-Madueke (Honourable Minister of Petroleum Resources) notably: The establishment of the Nigeria Oil and Gas industry Joint Qualification System (NOGIC JQS), an electronic platform that Currently captures over 16,000 entries of individuals and professionals and their skills and competencies. Over 5000 service company portal accounts with details of their capacities. Oil and Gas assets categorization modules Expatriate Quota Management modules. The Board has also commenced the development of Oil and Gas industrial Parks to promote manufacturing and create jobs, shop floors and stimulate development of linkage sectors. This is being implemented under the Nigerian Oil and Gas Industrial Parks Scheme (NOGIPS) and will involve establishment of the physical infrastructure, create enabling environment for low cost manufacturing, domiciliation of capacity, technology acquisition, training, employment opportunities and structured community participation. Currently two sites have been secured in Bayelsa and Cross River (about 20 hectares each) and development commences in the 2nd quarter of 2014 . The Nigerian Content Development Fund has also grown to over $300m and is now being accessed by Nigerian service companies. The Fund structures earmarks 70% to guarantee loans from Nigerian Banks to service providers to build capacity. The Balance 30% is currently being used to fund direct intervention projects such as the NOGIPS program, pilot pipe mill initiative, training and employment initiatives in Geosciences, environmental remediation, constructions skills etc. Below are highlights of some of the achievements:

HUMAN CAPITAL DEVELOPMENT Over 5000 employment and On the Job Training (OJT) slots have been created for Nigerian engineers and technicians on ongoing oil and gas projects The Board is training about 1000 Geoscientists, environmental scientists and vocational/ construction professionals who will be attached to companies and projects to gain expertise.

NIGERIAN OWNED & OPERATED MARINE ASSETS Over 55% of the offshore support marine vessels used in the oil and gas industry are now owned by Nigerians. This has resulted in the retention of about $2.5 billion in Nigeria out of about $5 billion expended by the industry on marine vessels. Nigerian companies have mastered land and swamp activities and are now owning and operating jack up rigs and venturing into deep water development

NEW & UPGRADED FACILITIES IN NIGERIA

Presented by The Executive Secretary, NCDMB

Over $5bn worth of investments have been made in the development of new fabrication yards and upgrade of existing yards and facilities

ENGR. ERNEST NWAPA, FNSE. DEC, 2013.

Government efforts at maximizing in-country fabrication has stimulated establishment of these facilities to achieve in-country fabrication capacity of about 120,000 Tons per annum and employment of about 10,000 Nigerians

Revenue House, Lambert Eradiri Road, Onopa Yenagoa, Bayelsa State, 560001,Nigeria Email: info@ncdmb.gov.ng Www.ncdmb.gov.ng

MANUFACTURING OF O & G EQPT IN NIGERIA

NCDMB Building capacities in Nigeria to support increased investment in the industry

2014 February, SweetcrudeReports

This piece of legislation established the Nigerian Content Development and Monitoring Board to superintend over the implementation of the provisions of the NOGICD Act.

NEW & UPGRADED FACILITIES IN NIGERIA

Presented by The Executive Secretary, NCDMB

Over $5bn worth of investments have been made in the development of new fabrication yards and upgrade of existing yards and facilities

ENGR. ERNEST NWAPA, FNSE. DEC, 2013.

Revenue House, Lambert Eradiri Road, Onopa Yenagoa, Bayelsa State, 560001,Nigeria Email: info@ncdmb.gov.ng Www.ncdmb.gov.ng

MANUFACTURING OF O & G EQPT IN NIGERIA

NCDMB Building capacities in Nigeria to support increased investment in the industry

Finance

2014 February, SweetcrudeReports

EU's 500m Euro supports Nigeria's development

he EU has approved 500 million euro budget for Nigeria from 2014 to 2020. The money is in support of Nigeria's development, EU's top official for Africa, Dr Nicholas Wescot, said. According to him, the EU development programme in Nigeria for the next seven years would be targeted at poverty reduction, particularly in northern Nigeria. The EU official said the fund was approved under the 11th European Union Development Fund, EDF, from 2014 to 2020. It shows a reduction of 17.7 per cent compared with the 677 million euros appropriated to Nigeria under the 10th EDF from 2008 to 2013. Wescot, however, described Nigeria as a significant development partner to EU, citing strong trade relations. "The EU imports 33 billion euros of goods from Nigeria; we exported in 2012 11.4 billion euro goods to Nigeria. "We have the biggest stock of investment built up over many years in Nigeria and many EU investors are still keen to come and invest in the country. "We also remain a significant development partner and have just agreed that over the next seven years we will contribute 500 million euros in development systems to Nigeria," he said. According to him also, the EU and prospective investors from the bloc would target investments in the agriculture sector to provide

Wescot jobs for the unemployed people in Nigeria, particularly in the rural areas. Wescot reiterated the EU’s

commitment to assist Nigeria in addressing its security challenges including the fight against

Boko Haram and the piracy in the Gulf of Guinea. "We are keen to provide

support and from our instrument for stability we have just agreed an additional 10 million euros to help support the Nigeria security apparatus to develop its capability of solving some of these challenges," he said. The EU official also said he had earlier met with Nigeria’s Minister of Trade Olusegun Aganga and they held discussions on the EU Economic Partnership Agreement, EPA, with West Africa countries. He said negotiations on the EPA had made "good progress", describing ECOWAS member-countries commitment to a common external tariff as a "significant step forward." He said: "There are still outstanding issues to be resolved, but my conversation with the minister was encouraging and these are problems that can be overcome in the weeks ahead." He also used the occasion to announce that the EU-Africa summit would hold in Brussels on April 2 to April 3 this year, disclosing that all AU countries and Morocco have been invited for the summit which has a session for Heads of State and Governments. The meeting will address the theme "Investing in People, Prosperity and Peace".

NSE investors' net worth rose by 6.19% in December

The EU official said the fund was approved under the 11th European Union Development Fund, EDF, from 2014 to 2020. It shows a reduction of 17.7 per cent compared with the 677 million euros appropriated to Nigeria under the 10th EDF from 2008 to 2013

nvestors’ net worth on the Nigerian Stock Exchange, NSE, appreciated by 6.19 per cent in the month of December from the 3.45 per cent achieved in November. Official statistics provided by NSE showed that the All-Share Index rose by 2408.34 points to close the year at 41,329.19 from the 38,920.85 achieved in November. T h e m a r k e t capitalisation grew by N778 billion to close at N13.226 trillion compared

with N12.448 trillion recorded in November while the volume of shares traded also grew by 5.57 per cent with 10.04 billion shares worth N71.12 billion traded in 90,765 deals. This was against the 9.51 billion shares worth N95.40 billion traded in 104,233 deals in November. The financial services sector emerged the toast of investors in December with 6.99 billion shares worth N26.1 billion traded in 45,560 deals. Some stakeholders attributed the steady growth

of the market, in spite of the festive period, to renewed confidence of foreign and local investors in the market. They said in separate interviews in Lagos that foreign investors’ increased exposure to emerging markets contributed to the growth. Alhaji Rasheed Yussuf, the immediate past President, Association of Stockbroking Houses of Nigeria (ASHON), said that the growth in economies in the West rubbed off on the nation.

2014 February, SweetcrudeReports

Finance

he Central Bank of Nigeria, CBN, governor, Sanusi Lamido Sanusi, has ruled out further devaluation of the naira, saying the bank would continue to pursue a stable exchange rate policy as long as the foreign reserves can support. The CBN governor, who stated this in an interview with Reuters Global Markets Forum, warned in another interview with Bloomberg that Nigeria's economy would be greatly endangered if the independence of the the CBN was no longer guaranteed. “Any undermining of the CBN’s independence may hurt the economy. If anyone tampers with it, the markets would punish the economy. “The CBN is a very strong institution that needs a strong leader and I think one of the things we have achieved over the last four or five years is to show that we can have an independent Central Bank in Africa. “It is extremely important from the fiscal side, it is extremely important from the governance side, that the governor of the Central Bank is able to speak independently of political authority and raise an alarm and concerns, and give constructive criticism and advice,” Sanusi said. He further expressed concern about Nigeria’s dwindling Excess Crude Account, ECA, saying that its ability to successfully protect the naira will be based on the amount in the Excess Crude Account and the Foreign Exchange Reserve. According to him, a stable

the reserves and monetary conditions can support this.”Sanusi said he has no fears of tightening monetary policy further to keep inflation down and to stabilise the currency, noting that, if needed, the CBN will increase its Monetary Policy Rate from 12 per cent and the Cash Reserve Requirement on public sector funds to 100 per cent. He added that: “I don’t think we are at the end of possible tightening cycles, but I do think that the scope for further tightening is getting narrower and narrower. We do need to rely more on other instruments.” He said the CBN will maintain inflation within a band of six per cent to nine per cent this year, controlled majorly by monetary conditions.He said, “Government spending has not been huge, the real challenge has been on the revenue side and on the foreign exchange side. I see no reason why from 2015, Nigeria cannot move to within the range of South Africa’s three percent to six percent, or four percent to seven percent for inflation.”

Sanusi

Sanusi rules out further devaluation of Naira currency is absolutely critical for price stability and financial stability in general, adding that it is not in the interest of the country to devalue the naira, because it will not have impact on the country’s current account

balance, given the highly inelastic nature of imports and the dominance of oil. Sanusi stated that the ECA had now fallen to just $2.5 billion, compared with $11.5 billion a year ago, noting that until it is

Dangote keen on South American market A

frica’s largest cement company, Dangote Cement, is keen on expanding its business into the South American market and has agreed a preliminary joint venture with an undisclosed firm. The company’s CEO, Devakumar Edwin, said the cement producer has earmarked three countries for entry, saying: “The countries we’re looking at have huge natural resources and growth”. He, however, declined to name the countries. Despite significantly large

operators such as Colombian manufacturer Argos – the largest in-country – backed with financial and market capabilities to out-muscle or crush new entry, Dangote is fairly confident it can carve a niche for itself. “There are many large players in that region” that “may easily try to shut down entry to new players, but there’s still large scope of doing business,” said Edwin in interview. South America’s cement market offers great prospects for a potential entry. Cement industry growth over the last few years have staggered

around 6-7% with construction market booming in several countries including Peru, which expanded by 18% in 2013, while Chile steadied at 5.2%. This growth has been backed by fledging real estate sector across the region and an economic growth that should provide adequate demand for construction materials for an new entrant. Dangote’s cement is Nigeria’s largest cement manufacturer and the largest listed company on the stock exchange with market cap of $15 billion and

replenished there would be little room for a reduction in the Monetary Policy Rate, MPR, below the current 12 per cent benchmark. He sa id : “ We should continue to seek a stable exchange rate for as long as

annual revenue reaching $1.8 billion. Despite this feat, it is keen to shore up its international business in a bid to become a significant global player in the construction industry. Founded by Africa’s richest man, Aliko Dangote, the cement giant recently announced a $16 billion investment plan to drive its global expansion programme. Part of that included more than $2.5 billion in building manufacturing plants and import terminals across Africa. It also made strides in expanding into Asia, with $800 million reserved for a cement plant in Nepal.

The CBN is a very strong institution that needs a strong leader and I think one of the things we have achieved over the last four or five years is to show that we can have an independe nt Central Bank in Africa

2014 February, SweetcrudeReports

Finance

Ghana Stock Exchange

Tullow performs poorly on Ghana Stock Exchange Bashir Yuguda

Nigeria urges global action against illicit financial flows Yuguda

igeria has advocated stringent international action against capital flight from Africa, also known as illicit financial flows, which experts put at about $50 billion yearly in Africa. Making the call in Abuja, supervising Minister of National Planning, Ambassador Bashir Yuguda, said Nigeria was making the call knowing that Africa was losing about $50 billion every year to the menace. “The leading group should collaborate with the panel and other relevant organisations in addressing this threat because of its damaging impact on

development as statistics indicate that illicit financial flows from Africa alone is estimated at around USD 50 billion annually, twice the amount of Official Development Assistance (ODA), that is extended to the continent in one year,” the minister said as he presided over the 12th plenary session of the Leading Group on Innovative Financing for Development, which Nigeria hosted under its tenure as President. Yuguda, who also advocated the development of partnership between the public and the private sector, said this will help mobilise more financial resources for development. He stated that the leading

group would require to focus more attention on the imperative of strengthening measures against illicit capital flight and tax avoidance, especially now that the world seem to be paying more attention to the menace with the setting up of the High Panel on Illicit financial flows from Africa under the chairmanship of former president of South Africa, Mr Thabo Mbeki. Nigeria, through the National Planning Commission, was elected to the presidency of the Leading Group at the end of the 11th Plenary held in Helsinki, Finland, in February 2013.

K's Tullow Oil has been named by Ghana Stock Exchange, GSE, as one of the worst equities in performance on the local bourse in terms of returns to investors. The independent oil exploration firm with considerable operations across Africa and which produces oil and gas in commercial quantities on Ghana's Jubilee field, returned 08.07 percent to persons who invested in the local stock from January to December, 2013. This revelation is contained in the GSE's 2013 report on the performance of the exchange released in Accra. Other companies which also performed badly as announced by the Managing Director of the GSE, Mr. Kofi Yamoah, included the Trust Bank Ltd of The Gambia, African Champions Ltd, and Transactions Ghana Limited. PZ Cussons, Enterprise Group Ltd, and CAL Bank emerged as the best performing equities on the GSE in terms of returns to investors last year. The companies returned 339 per cent, 291.67 percent, and 155.26 percent respectively to persons who invested in the stock during the period. These securities performed above the GSE's Composite Index of 78 percent which was driven mainly by the primary listings, according to the MD. Shares of HFC appear to

have led the stock market in terms of number of stocks traded, while Total had the highest in terms of value. Yamoah was quick to note that 313 million shares exchanged hands for last year. The Ghana Stock Exchange is now worth a little over GH¢ 61 billion, while the number of companies listed is put at 34. Total value traded was 465 million Ghana Cedis. He told the journalists that the local bourse was expecting six listings on both its main market and the expected SME market popularly called GAX this year. Three of the listings are expected on the main market. These include agricultural development bank (adb), Ghana leading agric and development financier, and Vanguard Assurance. Whilst Intravenous Infusions, Process Food and Spices and Meridian Marshalls are among the potential SME listings. The managers of the capital market are optimistic that the market which was ranked the best performing market in Africa in dollar terms in 2013 will continue its trend this year. This is on the back of expected active participation of the 2nd Tier Private Pension Fund Managers. Yamoah and his team therefore urged the remaining Ghanaian companies which are not on the stock to do so because they have a lot to gain from it.

2014 February, SweetcrudeReports

Labour

2014 February, SweetcrudeReports

Govt has violated all agreement with electricity workers, NUEE alleges ...BPE says 43,375 PHCN workers paid ELUONYE KONYEGWUAEHI

he National U n i o n o f Electricity Employees, NUEE, has a l l e g e d F e d e r a l Government's violation of collective agreements it entered into with labour in the power sector, as it further claimed that over 10,000 former workers of the defunct Power Holding Company of Nigeria, PHCN, were yet to be paid their severance entitlement. "All the collective agreements entered into by the union with government in the power sector have all been violated. Over 10,000 workers in the power sector have not been paid a dime as their severance entitlement. Over 25,000 workers have not received their pension components. "Over 5,000 workers who retired statutorily are yet to be paid their gratuity. The death benefit of over 1,000 people who died in active service are yet to be paid to their families," NUEE general secretary, Mr. Joe Ajaero said. But in a swift reaction, the Bureau of Public Enterprises, BPE, stated that it had settled the gratuity and pension of 43, 375 former workers of the PHCN. Head, Public Communications, Mr Chigbo Anichebe, said in a statement that the beneficiaries were among 47,913 workers presented to the government at the beginning of the privatisation process. Ajaero disclosed Labour's side of the argument in Lagos, saying NUEE is asking for the payment of the terminal benefits of all PHCN employees disengaged or retired following last year's sale of 15 PHCN generating and distribution companies to private investors. The NUEE general secretary recalled that on December 20, 2013, the union issued a 14-day ultimatum to government to address its grievances especially series of human and trade union rights abuses in the sector,

Electricity workers including non-payment of terminal benefits to defunct PHCN workers. He explained that though the ultimatum expired long ago, the union did not want to discomfort Nigerians during the festive period with an industrial action. Ajaero alleged that no employee of the defunct PHCN had been fully paid his

The pension deductions of about 48,000 workers between July 2012 to date have not been effected. The entitlements of over 48,000 staff covering July 2012 have not been paid

or her terminal benefits, challenging Nigerians to demand that the government told the public where the money released for the payment of the benefits was being kept. He added: "The pension deductions of about 48,000 workers between July 2012 to date have not been effected. The entitlements of

over 48,000 staff covering July 2012 have not been paid. Over 50% of the workers have been wrongly and illegally disengaged. About 3,000 verified casual staff have been verbally sent out of the industry without remuneration. "Union rights are flagrantly abused with impunity. Deduction of union

dues without remittance have become the norm. Diversion of money meant for productivity bonus, leave grant, and bulk rent have also become the order of the day. "Introduction of casual/contract appointment seemed to have been institutionalised in the sector.

There're over 100 Indian firms creating jobs in Nigeria —Envoy SAM IKEOTUONYE

rs Rani Malick, t h e F i r s t Secretary in High Commission of India in Lagos, says there were over 100 Indian companies with cumulative investments as well as creating jobs in Nigeria. Malick made this known as she disclosed that trade volume between India and Nigeria reached 16.67 billion dollars (N2.7 trillion) in 2013. She said at the opening ceremony of a three-day "Indian Products and

Services Exhibition" held at the Commission’s office in Victoria Island, Lagos, that the trade relation between the two countries was favourable to Nigeria. "India has long been Nigeria’s privileged business partner in various sectors and our engagement is expanding by the day. "India is today Nigeria’s largest trading partner. During the past few years, bilateral trade has doubled and Indian exports to Nigeria have tripled. "Today, Nigeria is India’s largest trading partner in Africa with 16.67 billion

dollars in direct bilateral trade in 2013," she said. Malick, however, said that both countries had yet to adequately harness the bilateral trade potential. The first secretary said that the exhibition was organised to showcase some leading products in Nigeria and promote its country’s small and medium businesses. Dr Justus Itsueli, the President, Nigeria-India Chamber of Commerce and Industry, NICCI, said the exhibition would sustain interaction among Nigeria and India businessmen and women.

2014 February, SweetcrudeReports

Interview

Nigeria can become hub for offshore industry —Dr. Jadesimi

Dr. Jadesimi

r. Amy Jadesimi is chief executive officer, Ladol. She speaks to SweetcrudeReports on the activities of the company and the larger oil and gas industry. What are the main drivers for growth in demand for offshore support services? Having an enabling environment in Nigeria that gives local and international companies secure, reliable and access to the market and most importantly the freedom to choose which service providers and facilities they use. In addition, full enforcement of the Local Content Act and the swift passage of the Petroleum Industry Bill (PIB) will be a major drivers because they will ensure that the pent up and new investments planned for West Africa will be invested in Nigeria. Local content rules alone aren’t enough, Nigeria must be more competitive. If we can increase the volume of work we do we can lower prices in some areas where we are more expensive. We should not force people to use local content rather we want to be more practical about finding ways to make Nigeria the destination of choice. Who are Nigeria’s main competitors when it comes to servicing the offshore industry in West Africa? Nigeria could easily become the hub for the offshore industry in West Africa, if we address the points I raised above. However we are in serious danger of losing this position to a number of other West African countries,

who are building new capacity quicker. Nigeria has the largest oil and gas reserves in Africa and the longest history of developing them. The level of investment coming into Nigeria should be 10 times that which is going to other areas. However, we are actually seeing the opposite happen, that is Nigeria gets only close to, or in some case less, investment and local content that its neighbours and that is very dangerous for us. We need to better understand what the dynamics are in West Africa and reduce our bureaucracy and prices. To what extent has the uncertainty over the PIB affected operations offshore? The Honourable Minister of Petroleum Resources Diezani K. Alison-Madueke, has been able to decrease the uncertainty associated with the PIB by modifying it. The Honourable Minister has also given indigenes, such as LADOL, access to the market for the first time by passing the Local Content Act. Also certain IOCs, such as Total and CNOOC, have gone ahead and made significant investments despite the PIB not being passed. Nonetheless there is no doubt that Nigeria is still not seeing the level of investment need to develop and grow the industry, passing the PIB seems like one of the critical steps needed to address this lack of investment. Is the offshore services market in Nigeria saturated? The market in Nigeria is very under-served. We do not have enough facilities to service our own market, let alone the West African market. We have

demonstrated that indigenous participation is the key to success. Paying foreign companies to come and build facilities themselves as part of their contracts, as has previously been attempted in Nigeria, does not work. Not because there is anything wrong with the foreign companies but because their stakeholders are not Nigerians and are not in Nigeria – therefore their interests and ours are not aligned. To satisfy their stakeholders, they will cut corners and the types of facilities they build here will not ultimately serve the purpose of increasing local content. Indigenous investors and players have the ability and the will to make long-term investments, which will lead to sustainable GDP growth and job creation. ABOUT LADOL LADOL Free Zone in Lagos, Nigeria is the location of the Nigeria’s only operational deep offshore logistics base. The base has been custom designed and built to create a fully integrated independent maritime, oil and gas logistics support base within LADOL Free Zone. LADOL Free Zone has land available now next to the logistics base for new investors to co- locate and set-up independent facilities. The Zone Management will provide all the infrastructure required for secure 24 hour operations, including utilities, roads etc... living investors free to focus on developing their projects in the Zone. Investors can also rent space

within the logistics facilities provided by LADOL. State of the Art, Customized Deep Offshore Logistics Support Facilities • 200 m quay wall (being extended to 1200m) |8.5 m draft, servicing up to 6 supply vessels simultaneously; 25 ton/m2 heavy load bearing area, highest load bearing capacity in Lagos; Covered and open storage, modern warehouse/workshops, and laydown areas; Water and bulk MGO plants delivering products to vessels via pipes built into quay at rates up to 100 m3 per hour (MGO facility coming Q3 2009); Hotel (96 rooms) with recreational areas including a pool & bar (from January 2009); Offices complexes all fully serviced; Utilities, 24 hour light, power, water and other utilities for round the clock work and play; Highly secured ISPS certified port Ideal Investment Location LADOL’s location, infrastructure & expert management have already attracted multinational investors: Located on peninsula next to harbour entrance – fast turnaround of vessels; Significant cost savings compared with competitive and transparent pricing for all services; Highly secured in a peaceful area at the heart of Nigeria’s commercial capital;

Extensive developed land available for investors to build independent operations; International airport access by helicopter or ferry; Safe, stress free living conditions for staff and management; Free Zone with all the government authorities present. Tax Free, Hassel Free, Free Zone As a Free Zone LADOL offers investors several advantages including: Exemptions from Federal State and Local Government Taxes; Duty free importation; Permission to sell 100% of manufactured/processed goods into domestic market; 100% foreign ownership of investment and repatriation of capital, profits and dividends; No expatriate quotas; Limited bureaucracy and increased efficiency – one stop shop for all transactions LADOL Free Zone - An ultimate one stop hub for logistics services to the oil and gas industry and a wide range of other investors across West Africa. LADOL Free Zone - An ultimate one stop hub for logistics services to the oil and gas industry and a wide range of other investors across West Africa. www.ladol.com | Tel: +234 1 279 0684; 461 9711 | Fax: +234 1 279 0685 | Email: ladol@ladol.com

2014 February, SweetcrudeReports

Solid Mineral

he drama unfolding at the nation’s premier minerals and mining training Institute, the Nigerian Institute of Mining and Geosciences, NIMG, occasioned by unnecessary intervention by officials of the Ministry of Mines and Steel Development in the operations of the Institute is threatening to derail the original vision of creating an Institute of training for mining professionals. Several staff of the Institute who spoke to SweetcruderReports have disclosed that the unwarranted influence peddling by officials of the Ministry, coupled with growing instability in the management of the Institute, may affect its ability to attract quality teaching staff, as well as hamper its admission process. At the centre of the controversy are issues regarding the title of top management positions, including the Institute’s head, which has been changed from ‘Provost’ to ‘Director/Chief Executive Officer’ due to the Ministry’s vehement refusal to associate the Institute with any regular training or educational platform. Further controversy has arisen over the Ministry’s recent regularisation exercise within the Institute, which had led to the blatant demotion of several principal staff, ostensibly, to make way for “Minister’s men” at the helm. As expected, numerous staff of the Institute who were unduly affected by the recent “demotion” exercise have protested loudly, citing bias and unfair treatment. A top official of the Ministry, who spoke on the condition of anonymity to our correspondent, noted that the current chaotic state of affairs within the management of the Institute had led to non-admission of students for the present academic session. According to him, “It is unfortunate and heartbreaking that certain individuals would allow their greed for power and money to becloud their judgment about what is important for the development of the nation’s mineral resources. With regard to the situation at NIMG, it is the students who suffer most because they may be denied an opportunity to get the kind of training for which the NIMG

2014 February, SweetcrudeReports

Ministerial intervention, greed may cripple premier Mining Institute

In search of mineral

was created. “The Ministry’s insistence on removing the titles of ‘Provost’ and ‘Registrar’ from the management positions and replacing them with ‘Directors’ is not a wise decision, because it will

institutions of mining in Ghana, India and the United Kingdom had gone ahead to become “fullfledged, independent Universities for the training of experts in the mining industry, while the NIMG

The Ministry’s insistence on removing the titles of ‘Provost’ and ‘Registrar’ from the management positions and replacing them with ‘Directors’ is not a wise decision, because it will hamper the educational prospects of the Institute at best, and reduce it to a mere department within the Ministry, at worst hamper the educational prospects of the Institute at best, and reduce it to a mere department within the Ministry, at worst,” he added. He noted that contemporary

has become enmeshed in politics, nepotism and corruption.” He added that, “The situation at the NIMG is one that should attract the

attention of the Presidency, if indeed the government is serious about reviving the mining and minerals sector as it has proclaimed in the past.” The current crisis of confidence that has engulfed the Institute is truly depressing when one considers that it only recently won acclaim from the World Bank for the efficient way it has carried out its mandate of training professionals and driving the revolution in the nation’s mining sector since it came into existence about four years ago. It is worth recalling that the NIMG came about as a product of recent Federal government’s determination to turn around the fortunes of mining education in Nigeria, aided by the World Bank’s $120 million Sustainable Management of Mineral Resources Project (SMMRP) for the revitalization of Nigeria’s minerals and metal sector. Upon the completion of the project last year, the

Bank with all it's meticulous vetting and assessment of its programmes and projects in developing countries unabashedly praised Nigeria's shot at a mining renaissance three decades after the demise of the sector. The commendation was largely anchored on what the Bank regards as the prudent and judicious use of a $120 million grant it had extended to Nigeria as an incentive to resuscitating Nigeria's solid minerals sector. Officials of the World Bank who had visited the NIMG prior to the completion of the project for an assessment had declared as satisfactory the implementation of its mandate, especially the d e v e l o p m e n t o f infrastructure and a conducive environment for training of mining professionals from the country and beyond. From a humble beginning four years ago, the Nigerian Institute of Mining and Geosciences (NIMG), located CONTINUES ON PAGE 34

2014 February, SweetcrudeReports

Solid Mineral

our foreign companies would begin mining of gold and iron ore in Nigeria this year, according to Malam Mohammad Amate, the DirectorGeneral, Nigerian Cadastre Office, Abuja. Amate said in Abuja that the companies would carry out their mining activities in three states - Kebbi, Osun and Kogi. He added that Mines Geotechniques Nig. Ltd., an Australian firm, and Northern Numero Resources Ltd. from the UK were granted licences to mine gold in Kebbi. Two other Australian companies, Segilola Nigeria Ltd. and KCM Mining Ltd, according to the director general, would mine gold in Osun and iron ore in Kogi, respectively. The companies had completed exploration programmes in areas approved for them and they would commence actual mining this year, he noted. He explained that KCM Mining Ltd., which started exploration activities about four years ago in Kogi, completed the exercise last year and had delineated about 500 million tonnes of iron ore. Segilola Nigeria Ltd., also an Australian company, would operate in Osun, and had concluded exploration programmes and had delineated more than one million ounces of gold there.

Mining site

UK firm, three others to mine Nigeria’s gold, iron ore The director-general said the four firms that would commence mining activities this year were among 20 foreign companies granted mining exploration licences by the Federal Government.

Aside from Australia, he said, other firms from Canada, UK, Italy, China, Niger, India, South Africa and Ukraine had indicated intention to mine mineral resources in Nigeria, noting

that some of the firms were at various levels of exploration. “The companies have to conduct exploration first before mining to ensure that the area is rich in minerals or

Ministerial intervention, greed may cripple premier Mining Institute CONTINUED FROM PAGE 33 in Jos, Plateau State had grown to become a boulder for the mining industry in the country, and a reference point for practical and research-based mining and mineral engineering education for both students and operators in the industry. The Institute was established by the Federal Government to be the Centre of Excellence of international standard that would attract students for training and research in Mining and Geosciences from within and outside the country. The Institute is uniquely designed to provide an opportunity for manpower training and institutional capacity building for the mining sector, from which practically oriented and capable management cadre of manpower will be produced to plan and

manage the development activities in the nation’s mining sector. The concept of a Training Institute for mining in the country dates back to 1923 when the Mines Department was created with mostly expatriate mining professionals. There immediately arose a need to train local technical staff to assist the expatriates in the mines. For this purpose, the School of Mines was established in Jos in presentday Plateau State in 1952. This was upgraded in 1958 to include mining technology in general with a Diploma Certificate issued to graduating students. With the revised policy on mining and exploration in 1971, the Federal government, among other things, decided to establish the Nigerian Mining Institute as a distinct, independent project under the Third National Development Plan (1975-1980). In 1995, a

Committee of eminent persons set up by government to produce a Solid Minerals Policy for the country recommended that the Institute should engage in training higher level manpower by addressing the gap left in the training of mining engineers in the universities and polytechnics, and that it should run courses not usually covered in the routine curricula of the higher institutions. The NIMG has in the past four years embarked on capacity building through intensive, practical-oriented and highly diversified programmes, aimed at grooming well-rounded and highly professional mining engineers and geoscientists for the growing sector. Admission for the pioneer students began in 2010 even as more recruitment of administrative and technical staff has continued

over the years leading to recent recruitment of about 30 more qualitative and experienced staff members to bring the number of staff so far to about 118. The objective of the Institute is to produce a new class of highly trained and professional mining e n g i n e e r s a n d geoscientists with practical exposure and technical skills required to prepare them adequately for the new developments in Nigeria’s Mining Industry. It also emphasises the provision of practical laboratory and field exposures to university lecturers and postgraduate students in mining and geosciences. Also, all admitted students will be required to undergo practical training at surface and underground mines within and outside Nigeria.

not and to know the types of minerals therein,’’ he explained. Amate said the Ministry of Mines and Steel Development had put necessary policies in place to encourage investment in the solid minerals sector, adding that investors had started showing interest in the sector, with most of them coming from outside the country. “You can see the number of foreign companies that are coming to take exploration licences and have even carried out exploration programmes. We are now getting foreign mining companies that are coming to invest in Nigeria and it is a good thing for the industry. “Mining is a major sector that employs a lot of labour and with the coming of the mining companies, many Nigerians will be employed," he said He, however, added that “we insist that any company that wants to pick up a licence must employ qualified Nigerians and the companies are complying.’’ He said Nigeria was the only country in Africa that had 100 per cent geological data generated through airborne geophysical survey, which was done through sustainable management of mineral resources programmes.

2014 February, SweetcrudeReports

Solid Mineral

Mr Orya

Local miners

Govt warns illegal miners, urges formation of co-operatives

he Federal Government has warned illegal miners across the country to desist from the act but to organise themselves into cooperative societies as a way of legitimising their operations. During its recent visit to the Mailumba-Garin Gabas gold mining site in Rafi Local Government Council of Niger State, the Ministerial Task Force from the Department of Mines Inspectorate in the Ministry of Mines and Steel Development ordered immediate suspension of activities in the area due to the operations of illegal miners. Engineer Frank Odoom, leader of the task force, stated that in announcing the suspension of the mining activities, the task force was acting in line with the Minerals and Mining Act and the 2011 Mining Regulations. He said his team was in the area to inspect the mining activities and carry out sensitisation on illegal

mining as he maintained that informal miners would be barred from operation until they regularised their activities. According to him, the miners had been exploiting the gold

and processing it without obtaining mineral title in the area while also using mercury and the dry milling process for the gold ore, without regard to the health implications of this practice.

Odoom, who disclosed the readiness of the ministry to help informal miners regularise their activities, also said security agencies had been directed to arrest illegal miners and their

sponsors. According to him, the ministry would facilitate the processing of the applications of the miners to help them legalise their operations.

Nigeria issues 4,000 mineral titles in three years

a l a m Moham m a d A m a t e , t h e Director-General, Nigerian Mining Cadastre Office, said in Abuja that the office had issued more than 4,000 mineral titles since 2011. Amate told the News Agency of Nigeria that the titles were issued on reconnaissance

permits, exploration license, mining leases, small scale mining lease, water use permits and quarry leases. He said the agency revoked 680 licences in 2011 while more than 590 licences were cancelled in 2012 and 1,600 companies were issued notice in 2013. "If within a certain period they do not remedy the default, the agency would recommended to the minister for the revocation of these licences based on the provisions of the law.

"Again when we issue these licences, we monitor what you are doing. We have the slogan - if you are issued a licence you either use it or lose it. "You lose it if you are not performing. If somebody loses a licence we have followed what the law said because we do not have the discretion. The Mines Inspectorate Department of the ministry carries out regular inspection of these mining sites. "Once the department

reports to us that a company issued a mining lease had not started operation for more than four years, we would commence the process of revocation. We then give notice of 30 days and if nothing is done, we commence the procedure of revocation," he said. Amate stated that the office issued on the average between 600 and 1,000 licences annually, adding that over 1,000 titles would be issued in 2014 going by its projections.

Freight

2014 February, SweetcrudeReports

Unstable system hampering cargo clearance —NCMDLCA Smuggling: Seme Customs boss reads riot act to officers TOJU VINCENT

Cargo discharge at the port

r. Lucky Amiwero, president o f t h e National Council of Managing Directors of Licensed Customs Agents, NCMDLCA, says unstable facilities in the nation's ports as seen in recent times has negatively impacted on cargo clearance. Speaking in reference to frequent breakdown of the information technology system of the Nigerian Customs Service, Amiwero held that the development was taking a serious toll on cargo clearance, the operations of players in the industry and the entire economy. The information technology system, which inter-connects the Abuja office of the Nigerian Customs to the zonal headquarters in Yaba and the various commands in the Lagos ports, has allegedly

been operating fitfully, hampering smooth clearance and release of cargoes, and denying Customs vital revenue. Alleging that the system is down, sometimes for days, Amiwero said this amounted to a total collapse of the system.

"If the system fluctuates for 30 minutes to one hour, this is understandable. But, for this to happen for three to six days, then it is total system collapse," he stated, adding: “Web Fontaine has been powering the Custom system for about six years and should have tested the

integrity of the system they have been using all this while.“Even the Pre-Arrival Assessment Report (PAAR) is foreign to us in Nigeria. This PARR project should have been experimented with before implementing in Nigeria”.

95 vessels at Lagos ports mid-January to Feb. 8 —NPA

he Nigerian Ports Authority, NPA, says it is expecting 95 vessels to arrive the Lagos ports between the middle of January and February 8. NPA said in its daily publication, “The Shipping Position”, that the vessels began arriving at the ports on January 17.

The publication said 19 of the expected vessels would sail in with petroleum products including kerosene, diesel, petrol and aviation fuel. 25 others would arrive at different terminals with containers. The NPA also said that 18 vessels would arrive at the ports with vehicles, while 17 others with rice, cocoa bean,

frozen fish, wheat and sugar. The publication said the remaining 16 vessels would sail in with general cargo including soda ash. The vessels would berth at the following terminals Tin-can Island Container terminal, 5 Star, Fishery Wharf and the Single Buoy Mooring terminal.

n order to ensure smugglers are not given a chance to ply their trade in and around the Seme border post, the Customs Area Comptroller of Seme, Willy Egbudin has read the riot act to officers at check points in the area. Speaking to officers and men of the Service during an unscheduled visit to Owode Border Station and Gbaji Check Point, Egbudin said the visit was to enable him get first hand view of the operational environment of the officers and to help improve on the surveillance and interdiction capability of the men and to help effectively plan improved strategies to prevent loss of government revenue. Egbudin reiterated the Comptroller General of Customs, CGC’s, zerotolerance to smuggling. He warned that it would not be business as usual for anyone, urging Customs operatives at the border post to embrace change and keep abreast of the ong o i n g C u s t o m s modernisation process. He told the officers that he would not operate an armchair management style as he was ready to personally lead operations as, according to him, the fight against smuggling is total. ''The CGC expects us to be good ambassadors of the service all the time. I want to assure you that we will be seeing you from time to time, the field here is also a place to meet and I want your morale for this job to remain at the top because together we are building a better Nigeria," he said. He reiterated the Command's resolve to continue in its avowed duty to suppress smuggling by stepping up its vigilance over the borders.

2014 February, SweetcrudeReports

Freight

Nigeria Customs Service at work

r e a Comptroller, Seme Border Command of the Nigeria Customs Service, Mr Willy Egbudin, says the command generated N8.48 billion between January and December, 2013. Egbudin told a news conference at the Seme border town, near Badagry, Lagos, that the figure was, however, N4.5billion less than the N13 billion target set for 2013. “The total revenue collected i n 2 0 1 3 w a s N8,482,231,289.81 billion, which represents about 65 per cent of the annual target. “We will definitely improve on our revenue target this year because we have been brainstorming to identify and block all perceived sources of revenue leakage. “We are also discussing with our Beninoise counterparts to address the problem of appropriate transit of imported vehicles from Republic of Benin to Nigeria," he said. He said that the command made 1,102 seizures with Duty Paid Value (DPV) of N548.3m during the period, adding that the figure was an improvement on the seizures

Customs rake in N8.48bn at Seme Border made in 2012. “In 2012, 480 seizures were made with a Duty Paid Value of N227,035,726.00. This figure shows that there is a significant improvement and we shall do more this year, "he said. The Comptroller said that 29 suspects arrested within the period were at various stages of investigation and prosecution. He said that goods seized included vehicles, textiles,

rice, vegetable oil, second hand clothes, shoes, bags and artefacts. Egbudin also said that the Federal Government lost N1.9billion to the ECOWAS Trade Liberalisation Scheme, ETLS. “During the period under review, ETLS complaint goods with a CIF value of N6.821,862,901 were cleared through the command”, he said. Egbudin revealed that the

export section generated N10.8billion during the year under review, adding that the total Nigeria Export Supervision Scheme collection stood at N53.8 million. He decried the incidence of multiple checkpoints on the Seme/Badagry expressway by various security agencies, and noted that the command was collaborating with other agencies to address the situation.

“Also, the marshy and swampy nature of vast land area of the command tends to retard the movement of our patrol vehicles in the hinterland. “Ignorance by some members of the public about government fiscal policies and the unwillingness by some members of the public to embrace change is not helping matters," he said.

Abia govt to build seaport through PPP

overnor Theodore Orji of Abia State has said a planned seaport and Umuahia Airport would be constructed through the P u b l i c - P r i v a t e Partnership, PPP, initiative. Orji made the disclosure in Umuahia while fielding questions from newsmen

after presenting the state’s 2014 Appropriation Bill to the House of Assembly. The lawmakers had asked Orji to explain how the government intended to fund the projects, as they were not captured in the budget estimates. The governor said “we will source the funds from PPP,” adding that the state

government would partner with investors who indicated interest to partner with it. He added that the process of funding the projects would be articulated in the m e m o r a n d u m o f understanding to be signed between the government and the investors. “My intention is just to start the projects. I will not

tell you that I must complete them because they are capital intensive but the two projects are vital to the economy of the state and I know that the incoming government will not abandon them. “The important thing is for me to commence them because they are important to the state,” he said.

2014 February, SweetcrudeReports

Motoring

2014 February, SweetcrudeReports

Audi Allroad

Audi-A6

Chevrolet Corvette Z06

Ford Fiesta ST

8 most impressive new cars right now

s industry analysts and executives converged on Detroit, United States recently for the annual car show, we asked several which of the current or coming vehicles they are most impressed with. Not necessarily the nicest or most expensive rides—just the more As industry analysts and executives converged on Detroit this week for the annual car show, we asked several which of the current or coming vehicles they are most impressed with. Not necessarily the nicest or most expensive rides—just the ones that handily beat expectations. (And we made sure that the folks working for car companies called out a competitor.) Here’s what they chose. Audi S8 (Tony Nicolosi, North American chief executive officer at Volvo): “Audi scares me a little, because people seem to think they are the cool thing now. But when I get in one, I always think: ‘Man, our cars are just as good or better.” Chevrolet Corvette Z06 (Kevin Tynan, Analyst at Bloomberg Industries): “You are asking the wrong guy. I love every car. But I think the new Corvette is incredible; 625horsepower from the factory is

awesome.” Audi Allroad Shooting Brake Concept (Bill Visnic, senior analyst at Edmunds.com)”The ‘shooting brake’ body style—essentially a melding of coupe and station wagon—can be fabulous when executed properly. … What I like equally is Audi’s ongoing interpretation of hybrid and electric blending in this car’s driveline. It’s the sort of cutting-edge technology exploration that’s become an Audi watchword.”

Ford fusion

Ford Fiesta ST (Daniel Gray, founder of MPGomatic.com): “For that amount of money, you can’t find a more fun car to drive.” Audi A6 (Scott Tobin, Head of product development at Lincoln): “We respect all of our competitors. There isn’t anybody bad, and I mean that sincerely. But I think the Audi guys have got a pretty interesting product line. They’re investing in China, and that’s somebody we’d target.”

Jeep Cherokee

Jeep Cherokee (Xavier Mosquet, senior partner at Boston Consulting Group): “It’s a true child of both Chrysler and Fiat. And it’s a product that by size is in a place where a few years ago the U.S. companies wouldn’t have competed. It’s going to be a global success.”

Toyota Corolla

2014 February, SweetcrudeReports

Motoring

A car dealer’s scientific guide to the 10 worst used vehicles

STEVEN LANG

u a l i t y i s something we all want when it comes to cars, especially older used ones. But how do we get it? I have been studying this question in one form or another for nearly 14 years now. I began my automotive career as a car dealer, buying and selling hundreds of vehicles a year. As time went on, I became an auto auctioneer, a remarketing manager and a part-owner of a wholesale auto auction. I saw thousands of cars come and go through the auction block during the course of each year, and as my worked changed, so did my understanding of quality. The overwhelming majority of the time, cars a nd t rucks co nsi d e re d reliable in their early days would draw the strongest bids. But it wasn’t always true; I observed some models experience costly transmission failure just as the odometer rolled past the 100,000-mile mark, while others would exhibit everything from blown head gaskets, to chronic rust issues to inoperative battery packs for hybrid vehicles. W e l l - r e s p e c t e d publications such as Consumer Reports and J.D. Power & Associates do an outstanding job finding defect trends among new and slightly used vehicles.

However, once that specific vehicle is sold by the survey participant, there’s no access to the history of the vehicle. As the average car owner over the last decade has typically kept their vehicle for approximately five to six years, a lot of data has disappeared. Because there is no tracking service covering the problems in these vehicles, the 10-yearold vehicle that everyone assumed had great reliability will at times have terrible issues. Who knew? No one really. Consumer Reports’ database goes back 10 years, but the average car and truck is now 11.4 years old. So I decided to test my guesses about used vehicles by using data from auto auctions and the problems dealers themselves disclose. As a frequent buyer and seller, I started my study with what I consider the key quality question for most car owners: “At what point does my car become so undesirable that I am willing to accept a wholesale used price for my vehicle?” Trade-ins are a great measurement of that emotional question. Most consumers who trade their vehicle will get a price hundreds to thousands of dollars less than retail. Car dealers not only know the wholesale market, they know the retail market as well, and are often able to get cars repaired for a lot less than most car owners. This isn’t always the case. Clean cars can sometimes be

which negatively impacted the overall powertrain and electronics.) 7. Jaguar S-Type (Extensive transmission and engine issues on all V-6 and V-8 models. Along with Limited edition models with ungodly replacement costs.) 6. Lincoln LS (Same basic powertrain as the Jaguar SType with nearly identical results.) 5. Mazda Millenia (Engine issues, transmission issues and cheap interiors that just don’t wear well.) 4. Land Rover Discovery (Expensive parts. Expensive powertrains. Electronics that are apparently the spawn of Beelzebub.) 3. Mini Cooper (Bad transmissions that are unusually expensive to replace. Cheap interior parts. Cheap hydraulics.) 2 . L a n d R o v e r Freelander (A cost-cutting exercise that went way past the bone.) And a true shocker, the single worst used vehicle at the wholesale auctions when it comes to overall defect rate at trade-in time is....

1 traded-in at a retail price, and then financed to a subprime car buyer for even more money. Dealers who specialize in a given car brand are usually more effective in marketing and selling that specific name, and they also get a greater share of trade-ins from the brand — along with a better selection of clean vehicles. To remove this bias, I decided to gather data on trade-ins sent to wholesale auctions by large used-car retailers such as Carmax, J.D. Byrider, Drivetime, and other regional used-car retailers that don’t cater to a single automaker. This way there wouldn’t be an overrepresentation of a given brand. I also employed the help of Nick Lariviere, a statistician capable of creating visuals that would make all this real-world used car data easy to understand. One year and nearly 300,000 vehicles later, we have developed a new

quality index that you can find. For now, we are focusing on brands and models. As the study continues to pool more vehicles, we’ll gradually introduce specific model year data, and even powertrain combinations, so that used car buyers can figure out where to find that older used vehicle that has truly earned its quality reputation. So what out there is truly low quality? As far as those cars with the highest defect level at trade-in time, here are the 10 worst: 10. Volkswagen New Beetle (automatic transmission issues and cheap interior components; diesel models with 5-speed manuals are by far the best powertrain option.) 9. Mazda 626 (automatic transmission issues, all models.) 8. Lincoln Aviator (a gussied-up, unpopular Ford Explorer that had unique sensor and software issues

1. Mazda CX-7 (Engine issues on these vehicles are legion with nearly a third of these vehicles sold with “Engine needs service” announcements at the auctions.) No list can be perfect, and it wouldn’t be right if I didn’t offer at least a couple of important caveats here. There are cars out there that are worth so little money now that they go straight to the junkyards instead of the wholesale auctions: Older Chryslers with defective 2.7liter engines, older Suzukis and Kias, and the aquatic late ‘90’s Ford Tauruses sometimes fall straight into the crusher once a major problem takes hold. Also, if the vehicle appeared to have reliability issues, but didn’t have enough of a sample size at this point (for example: Mercury Mystique, Isuzu Axiom, Suzuki Forenza), I have kept it off the list for right now. Finally some models, like the VW New Beetle, may have a pearl of quality in a specific engine/transmission combination within the overall swamp of trouble. This is one of the reasons why we are going to delve deeper as this study continues to take shape. In the meantime, if you want to know the top ten models in terms of longterm quality.

2014 February, SweetcrudeReports

Technology

2014 February, SweetcrudeReports

How does well logging work?

Density LogSource: Geoline Services

ell logging chronicles the depths, subsurface formations and events encountered while drilling. Well logs can include visual observations or be made by instruments lowered into the well during drilling. Tradition holds that the term “well logs” is borrowed from ship nomenclature. Similar to a ship’s log that tracks the events aboard the vessel, a well log tracks the events of drilling, but instead of being plotted in a timeline, a well log is recorded by depth drilled. In the early 1800s, well loggers scaled the oilfield derricks and simply wrote down what happened at certain depths, including problems, types of formations encountered, speed of drilling and, of course, oil or gas flows. In the early 1900s, Conrad Schlumberger envisioned the concept of using electrical measurements to map subsurface formations; and in 1927, he and his brother Marcel performed the world’s first electrical resistivity well log in France. (Resistivity is the measurement of the level of difficulty an electric current has passing through a formation.) Well logging today means anything recorded having to do with the drilling versus the depth of the well at that moment, many times represented by a graph and corresponding notes. Logging tools are inserted into the well to measure the electrical, acoustic, radioactive and electromagnetic properties of the subsurface formations. Sometimes the logging tools are incorporated into the drilling tool, and sometimes the drilling tools are lowered into the well at regular intervals to collect data. Engineers and drillers use well logs to  measure depths of formation tops, thickness of formations, porosity, water saturation, temperature, types of formations encountered, presence of oil and/or gas, estimated permeability, reservoir pressures and formation dip — ultimately determining whether a well is commercially viable or not and whether casing, cementing and completion should be run on a well. It’s not only a journal of what is perforated below the surface, but also a predictor of success.

Reading a Well Log The well log includes the header, which provides specific information about the well, such as the operating company, well information and type of log run; as well as the main log section, or the graph. The graph charts vertically the depth reached, and the horizontal scale is the measurement scale, which can be represented linearly and/or by logarithms. Inserts are found throughout the graph at Electric field near borehole generated by a galvanic resistivity logging tool.

CONTINUES ON PAGE 43

Technology

2014 February, SweetcrudeReports

How does well logging work? CONTINUED FROM PAGE 42

each major section of the log, identifying each curve. Curves on the log, also called traces, readings or measurements, can be represented by solid, long-dashed, shortdashed or dotted lines to decipher between the different measurements represented on the log. The final part of the log includes the tool calibrations for before and after the log was conducted, ensuring that the log is accurate.

Types of Well Logs

Calibration LogSource: Central Geological Survey

As the technology of well logging has improved over the decades, myriad types of well logs have emerged. From Gamma Ray (GR) Logs that measure radioactivity of the rocks to determine the amount of shale in a formation to Sonic (or Borehole Compensated) Logs that measure porosity by measuring how fast sound waves travel through rocks, different tools are used to determine different subsurface characteristics. As previously mentioned, Resistivity Logs measure how electricity travels through rocks and sediments. This determines what types of fluids are present because oil and fresh water are poor conductors of electricity, while formation waters are salty and easily conduct electricity. Induction Logs are used in wells that do not use mud or water, but oil-based drilling fluids or air, which are nonconductive and, therefore, cannot use electric logs. Induction uses the interaction of magnetism and electricity to determine Resistivity. Spontaneous Potential (SP) Logs show the permeability of the rocks in the well by calculating the electrical currents generated between the drilling fluids and formation water held in the pore spaces. SP is used many times to determine between shale and sandstone.

Methods of Well Logging

Well logging equipment

Mud Logs refers to the drilling mud, or drilling fluid, used to provide buoyancy to the drill, as well as remove cuttings from the well. Information from a mud logger supplements the drillerâ&#x20AC;&#x2122;s log, cuttings log and evaluation log, and is used along with logs of nearby wells to determine the commerciality of a well. Additionally, mud logs monitor the wellbore to help prevent blowouts. For many years, well logging tools were lowered into the well at regular intervals while drilling to retrieve data. With the advent of directional drilling, well logging had to develop to be able to log a well that was no longer vertical. Logging While Drilling and Measurement-While-Drilling (or MWD) place the logging tools on the end of the drilling column. That way, drillers can use the information immediately to determine the direction and future of the well. Well logs of today use Computer-Generated Logs to immediately interpret information gathered while drilling. In addition to keeping measurements, these sophisticated logs can notify drillers of a potential hazard and transmit data via satellite to computers offsite.

Community

2014 February, SweetcrudeReports

SOKU OIL WAR:

David West joins the fray

o r m e r Petroleum Minister, Prof. Tam DavidWest, has joined in the lingering war between Rivers and Bayelsa states over ownership of the Soku oil wells. David-West believes President Goodluck Jonathan was unduly bringing his influence into the matter, asking the president to leave the contentious oil wells in Rivers State, where, according to him, Soku community historically belongs. Lamenting the ceding of the oil wells to Bayelsa State by the Federal Government, the former minister maintained that Soku as part of the Kalabari Kingdom belongs to Rivers State. The Kalabari Oceanic communities of Idama, Kula, Soku, had been in existence for over 300 years of Kalabari history in Rivers State, he said. “I learnt of a new word for the Oceanic communities in the Kalabari Kingdom, those are the original Kalabari settlements. So, the Oceanic communities are older than, Buguma, Abonnema and Degema. The communities called, Oceanic communities have been existing for over 300 years of Kalabari history, and over the years, our forefathers fought to maintain the integrity of the Kalabari kingdom. "And, any one that is dismantling it now, whether from Borno, Kaduna, Sokoto or Bayelsa State, will never succeed. Our ancestors fought also with canon guns to protect these territories,

David-West but, at this time, we have other implements to fight the struggle,” he said during a visit by a delegation of traditional rulers, elders, youths and other representatives of the Oceanic communities of Akuku-Toru Local Government Area of Rivers State to Rivers State Governor Chibuike Amaechi in Port Harcourt. He continued: “Truth only has one version, all the time they are shifting the boundaries to their favour with some Kalabari chiefs who

were secretly approached to sign documents to cede all these territories to Bayelsa State. But, they cannot change the fact that the controversial oil well territories belong to the Kalabari people. “This is because, if you plan evil or attempt to ruin the Kalabari land of its natural resources, the gods, our ancestors will not allow you. Bayelsa State was created in 1996, and the boundary was created between us at the Santa

Barbara River. It has now been moved to the San Bartholomew River. If they allow that, then, Abonnema and Idama will be in Bayelsa State. “This is what is coming and I tell you stop it now, because God will not allow it to happen. We must go back to the colonial boundary which was impartial. If you rig election to be in office, tomorrow, you may not be there, but these records will be there forever. And, it is left to us Kalabari sons and

daughters to support all those fighting for our cause; with all that we have to stop this nonsense. It is nonsense and I owe no apology to it because, it is nonsense. Any person who wakes up any morning that he is going to acquire territory owned by people by fiat is nonsense. This is because; they can never get it, even with their pen. One oil well is a billion naira, and we are talking about 41 oil wells.”

Oil spill: Ogoni insist on getting N80.3bn compensation from Shell

he Ogoni people in Rivers State are insisting on getting N80.3 billion compensation from Shell Petroleum Development Company of Nigeria, SPDC, over an oil spill which occurred 20 years ago at Ebubu village in Eleme Local Government Area. A Federal High Court in Port Harcourt had ordered SPDC to pay N80.3billion to Ogoni community as compensation for damages caused by the oil spill. Some members of the Ogoni community recently picketed the First Bank Area Office in Port Harcourt in respect of the money. No fewer than 1,000 protesters converged on the bank, disrupting transactions by customers. "Our protest is in respect of N80.3 billion judgment against Shell and its guarantor - First Bank. The money was supposed to be paid by Shell Petroleum

Development Company in connection with the oil spill in the area," Chief Simeon Monokpo, the leader of the group, said. Monokpo said the money was expected to be deposited with the bank by SPDC while its appeal went on, but the appeal failed. "So, we are demanding that the guarantor should pay us the money," he stated, adding: "We are saying that First Bank should wire that money into Barrister Henry Nwaosu, our client’s bank account number. The court order we got on Thursday directed First Bank to pay us forthwith’’. Monokpo emphasised that the picketing would not only

continue, but would be extended to all the branches of the bank in Rivers if the money was not paid immediately. "We shall extend this protest to all First Bank branches in the state if we are not paid; they will not operate until they pay us’’, he said. The protesters deposited a white coffin bearing live chick and a bottle of Fanta on top, signifying burial. The bank's locked gates were sealed with fresh palm fronds. Monokpo said the gods in the community were annoyed with SPDC’s conduct in Ogoni land.

2014 February, SweetcrudeReports

Community

Road under construction

NDDC to engage consultants to monitor projects

he Niger Delta Development Commission, NDDC, plans to e n g a g e professional consultant to monitor and evaluate the state of work done on the sites of all the projects, new chairman of the NDDC board, Senator Bassey Ewa Henshaw, has revealed. Senator Henshaw, who spoke in Calabar, said the move is aimed at helping the commission get first-hand information on its projects. Henshaw, while receiving the Cross River State representative on the board, Mr. Paul Adah, in his office, said the commission was owing its contractors N1trillion but re-assured that contractors whose projects met the necessary specifications would be paid. “We will follow the president’s directive on, 'no award of new contracts. Part of the reasons that was responsible for the inability of contractors to do their jobs was lack of monitoring and proper evaluation of work done. “To solve this problem, we will engage professional consultant to monitor and

We will follow the president’s directive on, 'no award of new contracts. Part of the reasons that was responsible for the inability of contractors to do their jobs was lack of monitoring and proper evaluation of work done evaluate the state of work done on the sites of all the projects in order to enable us get first-hand information. The state of abandoned projects is worrisome. “We are also worried about the debt incurred by the commission. We may not have funds to pay the debt which is over N1trillion but all the contractors whose jobs are certified in line with the specification of the commission will be paid,”

Henshaw said. The chairman also promised that NDDC would embark on legacy projects that would have long lasting effect on the people. During an earlier inspection tour of NDDC projects in the state, Adah urged contractors to work round the clock in order to complete their jobs on time and according to specifications. He had inspected the 10kilometre Adiabor-Eseku Road in Odukpani Local Government Area as well as the 10-kilometre Ikot-Okon,

Ikot-Ansa and Ikot-Eyo Road in Akpabuyo Local Government Area being handled by Stonework Engineering Limited and Pearl HPW Limited in the state. The former House of Representatives member explained that timely completion of the AdiaborEseku Road would ease traffic on the Calabar-Itu Highway as commuters entering the state from Akwa Ibom State and other neighbouring states in the South-south and South-east regions can easily divert to

the new road. Adah, who expressed worry over NDDC's high debt profile, said it was embarrassing to hear that contractors were being owed over a long period of time. Adah had earlier met with staff of the commission in Cross River State and also paid working visit to the Paramount Ruler of Bakassi, Etim Okon Edet. He criticised some staff of the commission over their attitude towards work, saying the mandate of the new board was to quickly key into the transformation agenda of the president.

Delta oil producing areas receive N179.4bn in 6 years

he Delta State government disbursed N179.4 billion to the Delta State Oil Producing Areas Development Commission, DESOPADEC, between 2007 and 2013, the state commissioner for Finance, Chief Kenneth Okpara, has said. Okpara, who disclosed this in Asaba, the Delta State capital, said the fund

was meant for the development of oil producing communities in the state and that it was part of the 13 per cent derivation funds that accrued to the state from the federation account. Okpara said the funds were released annually to the commission for the development of the areas and improvement on the living standard of the people dwelling mainly in rural

areas. According to the commissioner, out of the amount, N10.5 billion was released to DESOPADEC in 2007, while in 2008 the commission got N29.4 billion. Okpara also said that in 2009 the commission was given N27.8 billion, while in 2010 it received N19.8 billion.

2014 February, SweetcrudeReports

Community Shell postgraduate scholarship scheme targets 21-28-year olds

hell Petroleum Development Company, SPDC, has opened entries for the 2014 Niger Delta Postgraduate Scholarship Scheme, inviting applications from those between ages 21 and 28. According to the company, applicants must have obtained a university degree at Second Class Upper Division in addition to displaying intellectual ability and l eadership potential. The scholarship scheme, now in its 5th edition, is aimed at providing opportunities for graduates from Rivers, Bayelsa and Delta states to study courses relevant to the oil and gas industry, including engineering and geosciences. SPDC's general manager in charge of Nigerian Content Development, Igo Weli, said the "the feedback in the four years since the programme was launched has been impressive," adding: "Many of the students have been employed by SPDC and other companies. In fact, one student was retained by the University of Leeds for a doctoral programme due to scholarly excellence. The Niger- Delta Postgraduate Scholarship Scheme is sowing the seeds for a greater Nigerian oil and gas industry." According to him, the Niger-Delta Postgraduate Scholarship Scheme of the SPDC-operated Joint Venture has given opportunities to more candidates to acquire higher education in three top universities in the UK. The company will be awarding 10 scholarships for a one-year Master's degree programme in partnership with Imperial College, London, University College, London and the University of Leeds for the academic year commencing September 2014. Weli stated that the postgraduate scheme was in addition to SPDC's regular scholarship programme which was introduced in the 1950s through which thousands of Nigerians have been sponsored in diverse fields of study. "Support for education by Shell Companies in Nigeria involve innovative

scholarship programmes and the promotion of educational excellence and academic achievement through science fairs and quiz competitions," he added. He added: "SPDC has also endowed eight University Professorial Chairs in selected disciplines for teaching and research and sponsored the establishment of two Centres of Excellence in two Nigerian universities with the mandate to promote educational advancement and the pursuit of excellence in the area of Geosciences, Petroleum Engineering and Environmental Management and Control. These efforts have been acknowledged by various organisations. Shell emerged Best Company in Education at the 2013 edition of the annual Social Enterprise Report Awards (SERAs)".

Students in the classroom

2014 February, SweetcrudeReports

E-mail: johniyene@yahoo.com

AFTER OIL & GAS

Students in the classroom

Niger govt spends N5bn on SURE-P

h e N i g e r Government says it spent N5 billion under the Subsidy Reinvestment Programme, SURE-P, in 2013. The Director-General in charge of the programme in the state, Alhaji Hassan Nuhu, said this in Minna while fielding questions from n e w s m e n o n t h e achievements of the programme. He said the programme had engaged 4,000 youths last year, adding that the money was spent on youth empowerment and institutional upgrade. Nuhu said the state government would spend

Oil exploration

another N5 billion this year on the upgrade of some facilities in agriculture, transport, education and other sectors of the economy. He said the state government had purchased buses, cars and tricycle to boost the transport sub-sector and engage unemployed youths in the state.

He said the government had also renovated the schools of agriculture at Tegina, Kuta and Mokwa, to train youths on farming. Nuhu said a three-star hotel was being constructed near Legbo Kutigi Conference Centre, Minna, while the General Hospital, Minna, was being expanded.

Uganda: Nebbi residents get oil money

he oil exploration firm Total E&P has compensated residents of Nebbi in Uganda for land trampled on during

exploration activities. Residents, including those in Nyamutagana village in Panyimur sub-county, got Shs 3m per acre plus Shs 250,000 per month in rent, with a 40 per cent increment every passing year. Residents said their crops were destroyed in November 2012, as Total explored for oil at Omuka drill pad. They accepted compensation after meeting the chief government valuer last November. Christopher Ocowun, the Total E&P area spokesperson, said the delay in payment w a s d u e t o disagreements over compensation rates.

he idea behind subsidising oil and gas projects was a laudable one as it was directed at breaching the gaping inequities in our society and making a local commodity affordable within the locale. The implication however was that in some ways, production, budgeting analysis, competitiveness in the international domain and the autonomy of the industry, Nigeria was undermined by our subsidy system, again and again. I believe like many other Nigerians that our governments at all levels should subsidise aspects of our existence because of the predominance of poverty, illiteracy, the consequential high mortality rate and the continuous vicious circle that carries them like viruses from generation to generation. The idea we preached to the policy makers in the industry was to take or subsidise some aspects of the production costs of products sold within Nigerian borders. Unknown to us, we were writing a script for the unscrupulous public servants who are the conveyers of the policy of subsidies. What the believers of oil and gas subsidies suggested to the Petroleum Authorities was re-scripted so that the federal government, perpetually fishing for areas of patronage within the policy to stabilise the politics in accordance with their ambitions, now jettisoned local production but pay huge sums to importers and marketers of petroleum products. What they are subsidising at the petroleum ministry, the NNPC and the PPPRA are the production efforts of foreign companies. The common man on the street benefits only to the extent that he pays less for each product than his peers in say England, Holland and the USA but in real economic terms, Nigerians pay dearly in opportunity costs for the monumental loss to our economy. The figures are so staggering it does not require a Nostradamus to predict that oil and gas in Nigeria would soon become so expensive to exploit and deploy that it would be left underground for others with very accomplished and sneaky technologies to exploit from far away. Petroleum subsidy payments in 2011 amounted to a whopping N2.6 Trillion. Between 2012 and 2013, over N1.9 trillion was spent on subsidies. Subsidy payments in 2011 took over 42% of the entire budget; 28% in 2012 and about 25% in 2013. The federal governmentâ&#x20AC;&#x2122;s investigations revealed monumental fraud in the subsidy system. Who has been prosecuted and who has been imprisoned? Were all those indicted innocent? Who committed the fraud? This is how we allow the brazen rape of our collective patrimony, the destruction of our future. Why canâ&#x20AC;&#x2122;t we hold someone or an institution responsible? Does the buck of responsibility have no roots and no points of emanation? Why should we wait till we have run out of oil and gas or the incentive to exploit it ourselves? Already, the wisdom in the industry is that it is more cost effective to import products than to refine our own crude in local refineries. In less than 50 years of existence as a nation, we have set the poorest set of examples and principles to govern our lives when by the loss of this valuable resource or its strategic importance in economic affairs worldwide, we shall be compelled to live more prudently. We can still re-draw our priorities and put in place better structures for probity and accountability in the public space. The management of oil and gas was one litmus test. Our politics is so volatile, so unpredictable and so macabre that no decent set of principles can emanate from its practitioners. We must change our style of politics too. I fear, for our country, I pray for positive change while hoping that we all shall grab the moment to re-order our plummeting fortunes.

2014 February, SweetcrudeReports