November Edition 2016

OPEC aims for rancour-free November 30 conference P/08

Pipeline vandalism drops by 28% - NNPC P/25 P/25

A Review Of The Nigerian Energy Industry facebook.com/sweetcrudereports November, 2016

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Three years after, power sector investors count losses Owed N781bn by govt agencies, others Regular power supply still a mirage Gencos, Discos reel under heavy debt burden

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Contracting cycle: Nigerian Content Board to introduce timelines for approvals

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he Nigerian Content Development and Monitoring Board, NCDMB, has announced that review of tenders and other approval will now be executed on strict timelines as part of new measures to shorten the protracted contracting cycle in the oil and gas industry and revitalise the implementation of Nigerian Content.

The Executive Secretary, Engr. Simbi Wabote, who stated this in Abuja at the Nigerian Gas Association’s 2016 International Gas Conference and Exhibition, hinted that the Board would introduce speed and simplicity into its approval processes to ensure that Nigerian Content reviews and approvals do not delay the execution of projects and not escalate the cost of crude oil production.

He added that, “We will strike a balance; we will not

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Multiple regulations, militancy threaten NLNG operations P/18

Electricity market revenue shortfall P/23 to hit N1tr in December

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2016 November, SweetcrudeReports

Editor’s note

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his month is an important one for the Organisation of the Petroleum Exporting Countries, OPEC. Its ministers would be converging on Vienna, Austria for the 171st Ministerial Council meeting. And top on the agenda would be the implementation of the decision reached at an emergency meeting in Algeria in September to reduce production to a range of 32.5 million to 33 million barrels per day.

Having reached this agreement in Algiers, the Algerian capital, OPEC ministers left the delicate issue of how much each of the 14 members will produce to a 'high-level committee' that would be submitting its report to the larger house at the Vienna meeting.

How far the organisation would be able to ensure a hitch-free allocation of new output quotas to its respective members at the meeting would determine what happens to the delicate oil market, long awaiting recovery from months of poor prices.

Will OPEC be able to ensure a rancour-free conference on November 30? That is the question observers are asking and which only OPEC can answer. The industry surely awaits OPEC with bated breath.

Back home in Nigeria, investors in the power sector are counting their losses three years after the government handed over the sector to private hands in a privatisation programme conducted by the Bureau of Public Enterprises.

From their inability to achieve steady power supply to a staggering debt figure of N781 billion owed the electricity industry operators mainly by government agencies and the massive indebtedness of the industry operators to local and international banks, the privatisation exercise may be on the verge of failure.

But what is the way out? Industry experts and the operators themselves proffer solutions in this edition of SweetcrudeReports.

Also in this edition, the House of Representatives Committee on Maritime paid a working visit to West Africa’s leading indigenous engineering and fabrication company, Nigerdock, commending the facilities in place at the company.

We also present you the good news that pipeline vandalism has dropped by 28 percent due to government's engagement with the Niger Delta militants.

It is our hope that the outcome of the meeting between President Muhammadu Buhari and the militants and Niger Delta leaders, which held in Aso Rock as we went to press, will further sustain the relative peace in the Delta region to pave the way for increased oil production and sale, and improved revenue to fund this year's budget and the economy.

Welcome to November.

4 COVER 8 OIL 16 FOCUS 18 GAS 22 POWER 26 FINANCE 30 LABOUR 31 SOLID MINERAL 33 FREIGHT 38 MOTORING

Three years after, power sector investors count losses

OPEC aims for rancour-free November 30 conference

North Sea oil flood expected as OPEC plans output curbs

Multiple regulations, militancy threaten NLNG operations

EU to spend 150m euros on Nigeria’s power sector

Banks face increasing risk over power sector indebtedness NLNG train 7 expansion to create 18,000 new jobs

N30bn mining fund will aid diversification of economy - Fayemi

Senate Committee on Maritime commends facilities at Nigerdock

Least reliable new cars

40 43

TECHNOLOGY Energy storage systems and technology

COMMUNITY

509 students benefit from SPDC scholarship award

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Cover Story

2016 November, SweetcrudeReports

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Egbin power plant

Three years after, power sector investors count losses Owed N781bn by govt agencies, others Regular power supply still a mirage Gencos, Discos reel under heavy debt burden CHUKS ISIWU & KUNLE KALEJAYE

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investors in Nigeria’s power s e c t o r a r e counting their losses rather than gains three years after the sector was handed over to them by the Federal Government in a privatisation programme that saw the investors taking over assets of the defunct state power monopoly, Power Holding Company of Nigeria, PHCN. The move was aimed at moving the sector away from the cycle of non-performance,

which the PHCN represented, to the efficiency of private sector operators, by so doing, ensuring improved and sustainable power generation, distribution and revenue collection that were absent under PHCN. The government officially turned over the power sector to the private operators on November 1, 2013, with the exception of the transmission segment which government retained under the Transmission Company of Nigeria, TCN, with the Canadian company Manitoba as the managing contractors.

Assets and beneficiaries Up for sale under the privatisation programme conducted by the Bureau of Public Enterprises, BPE, were the 11 PHCN distribution companies, namely Abuja, Benin, Eko (Lagos), Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt and Yola Discos. Six power generation companies were also put up for sale - Afam Power Plc, Egbin Power Plc, Kainji Hydro Electric, Sapele Power, Shiroro Hydro Electric and Ughelli Power Plc. And the beneficiary companies includes KANN

Consortium, which acquired Abuja Distribution Company or Abuja Disco; Vigeo Limited, which acquired Benin Electricity Distribution Company; West Power and Gas, which bought over Eko Disco; NEDC/KEPCO bought Ikeja Electric while Sahelian Power SPV got the Kano Electricity Company. Also, Integrated Energy Distribution and Marketing Company acquired both Ibadan and Yola Discos, Interstate Electrics got Enugu; Aura Energy got the Jos Disco while four power consortium, comprising Bayelsa, Rivers, Cross River

and Akwa Ibom state governments acquired the Port Harcourt Disco.

In the generation segment, Femi Otedola's Amperion Ltd acquired Geregu I Generation C o m p a n y , Tr a n s c o r p / Wo o d r o c k Consortium bought over Ughelli Power firm while Mainstream Energy Solutions got Kainji and Jebba Generation Company.

North South Power acquired the Shiroro generation plant and Sahara Energy Resources acquired the Egbin Power Station in Lagos.

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2016 November, SweetcrudeReports

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Power sub-station

Three years after, power sector investors count losses CONTINUED FROM PAGE 4 Failed objective/Power supply mirage Despite the successful privatisation of the power sector, the aim of the move which is to bring efficiency to bear in the running of the sector and the generation, transmission and supply of quality electricity nationwide appears to have been defeated.

Power generation has failed to reach the national installed capacity of 6,000 megawatts, transmission has been largely unimpressive while distribution or supply has failed to meet the aspiration of consumers. In fact, the dream for steady power supply has become a mirage.

Amid these, the power companies are complaining of several challenges, that, according to them, have made attainment of set targets impossible.

Observers say the power firms have failed to make necessary investment in

facilities to upgrade their operations and ensure improved power generation, transmission and distribution.

The power companies, however, argue that they have been battling with financial losses as a result of pipeline vandalism, poor capacity utilisation, non-cost recovery tariff, among others.

Privatised problems Three years postprivatisation, the power generation and distribution companies claim they are being owed billions in debt by customers, rendering them incapable of meaningful progress. Chief Executive O f f i c e r, A s s o c i a t i o n o f Nigerian Electricity Distributors, an umbrella body for the Discos, Mr. Azu Obiaya, said that as at July this year, the Discos were being owed a total N568 billion by private homes, businesses and government ministries, departments and

agencies.

Obiaya also stated that Discos now record an average monthly revenue shortfall of N38 billion because of the debts owed them by consumers, including the government ministries and departments, as well as a tariff regime that is not cost reflective.

According to Obiaya also, the electricity market’s revenue shortfall had risen to N809 billion and has been projected to hit N1 trillion by the end of the year.

ANED Executive Director for Research and Advocacy, Mr Sunday Oduntan, on his part, maintained that the challenges bedevilling the Nigerian Electricity Supply Industry, NESI, three year after privatisation led to the shortfall in market revenue, stating that non-cost recovery nature of the tariff had a direct impact.

He explained that under the performance agreement for the sector, the Federal

Government agreed to a cost reflective tariff from the beginning which never happened as Residence Two, R2, customer class were politically frozen in 2015, leading to a loss of over N300 billion to the Discos in December same period.

“The current electricity market revenue shortfall is projected at N1 trillion by December 2016 caused by a direct impact of the non-cost recovery nature of the tariff,” Oduntan said.

Oduntan added that the delay in reflecting costs in the power sector meant a growing increase in deficits for investors and that the sector was no longer bankable as banks were unwilling to lend the Discos and Gencos funds to inject in critical capital assets. “Banking sector is over exposed to oil, gas and power sector to the tune of over three trillion naira,” he said.

Other challenges bedevilling the sector, according to

Oduntan, include regulatory uncertainty, inadequate gas supply to generating plants, vandalism of gas pipeline, neglect of aging turbines, limited transmission capacity, non-payment of electricity bills by customers and government agencies, energy theft, and limited access to finance.

He urged the Federal Government to implement total cost recovery, improve t r a n s m i s s i o n c a p a c i t y, increase funding in the sector, assist in curbing energy theft, ensure access to forex and uninterrupted gas supply as requisites to improve the current state of the power sector.

Catalogue of losses The Eko Electricity Distribution Company Plc, EKEDC, has spent over N1.44 billion on projects expansion to boost electricity supply to customers in the last three years.

“Over N1.44 billion has been spent on various projects expansion within the company to boost electricity supply to customers in the last three years,’’ EKEDC Chief Executive Officer, Mr Oladele Amoda, said.

But, Amoda stated that the company currently had a funding gap of N900 billion due to high rate of foreign exchange as he lamented that

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2016 November, SweetcrudeReports

Three years after, power sector investors count losses CONTINUED FROM PAGE 5 government's policies on foreign exchange have made international lenders sceptical about extending credit to the power industry in the country.

He also disclosed that as at July this year, Federal Government Ministries, Departments and Agencies, MDAs, owed the company over N 11 b i l l i o n i n u n p a i d electricity bills.

He also estimates that his company was losing about N2.5 billion monthly to the inability of the generation companies to produce enough electricity to supple his company in addition to over N50 million being lost monthly due to electricity equipment vandalism within its network.

The Kano Electricity Distribution Company Plc, KEDCO, said it has lost equipment valued at N108.83 million to vandals in its franchise area on a monthly basis.

The Benin Electricity Distribution Company, BEDC, revealed recently that it was being owed N1.8 billion in unpaid electricity bills by customers while Ibadan Electricity Distribution Company, IBEDC, said it was owed N5.9 billion by customers, especially the military and government’s MDAs. Regarding energy theft, the Enugu Electricity Distribution Company, EEDC, loses as much as N2 billion monthly while Port Harcourt Electricity Distribution Company, PHED, said it has so far lost over seven million kilowatt-hours of electricity to direct power theft, an equivalent of over N238 billion.

According to Senior Communications Manager at t h e Yo l a E l e c t r i c i t y Distribution Company, YEDC, Adamawa State, Mr Kingsley Nkemneme, the company was losing over N150 million monthly due to Boko Haram insurgency in the Northeastern region of the country.

Expressing concern over malicious damage to its

Afam power plant equipment, Ikeja Electric declared recently that damage to its transformers, installations and other equipment has cost it N11 million in the last 18 months.

Gencos and govt debt Government's exclusion from the generation and distribution chain in the power sector, being operated by private investors implies that the sector should be profit driven. However, government and it agencies now owe these operators hundreds of billions of naira. It specifically owes the generation companies through the Nigerian Bulk Electricity Trader, NBET, which purchases power from them (the generation companies).

The GENCOs are being owed N213 billion by the government, covering the period November 1, 2013 to

January 31, 2015, while a second segment of debt is the shortfall during the transition electricity market, TEM, between February 1, 2015 to date, which is yet to be disclosed by NBET. Commenting on the huge debt, Managing Director and Chief Executive Officer of Egbin Plc Mr. Dallas Peavey, Jr said: “We (Egbin) are owed over N86 billion by the Federal Government; we have been producing but we haven’t been paid for almost six months. The last amount of money that we got was about 16 per cent of the total bill for the power that we generated for the month.

“We can’t continue to operate simply because we don’t have the money to pay for materials. We don’t have the money to pay for repairs and we can’t continue to pay our employers simply because we are owed so much money. We

have gone out to banks and different financial entities to borrow the money to continue to do maintenance. You know for banks, the limit is only so much and we have reached that limit.”

Beside government debt, Mr. Peavey said supply of gas and the weak transmission system are major challenges the power sector is going through.

He explained that Egbin generation capacity is about 1,320MW but are currently able to generate doing about 425MW, representing only 30 percent of their installed capacity due to shortage of gas supply Pipeline vandalism Pipeline vandalism remains a major problem for electricity generating companies as it has in the past three years prevented the plants from operating at full capacity,

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ensuring they are unable to make adequate power available to the transmission company and ultimately to the distribution companies. This has also robbed the Gencos of adequate income, making it impossible for them to make profit.

Indeed, attacks on gas pipelines have left most power generation plants lying fallow or operating far below installed capacity. This is the direct effect for the six power generation firms in Egbin Power Limited, Transcorp Power, Shiroro, Geregu, Sapele and Kainji/Jebba.

For the nation, however, whenever an attack occurs on a gas pipeline, the effect is total blackout for a couple of days or weeks, depending on the magnitude and impact of the attack.

Challenge of repeated system collapse Experts say the second quarter of this year remains the worst period for power generation, transmission and supply in the country in the last three years. The period saw the nation witnessing repeated system collapse, thereby grinding power supply to a virtual halt.

Specifically, in June, there were five instances of total system collapses and three incidents of partial system collapse, due to generation limitations.

According to the Independent System Operation, SO, “the grid witnessed six instances of total system collapses and one incident of partial system collapse, essentially due to generation limitations. Total generation again went down by 19.23 percent compared with energy generated in May”. It added that Afam I-V, Gbarain, AES, Rivers IPP and Omoku Power Stations operated at zero levels.

Gencos, Discos reel under heavy debt burden Many of the power sector operators obtained loans from local banks to purchase the assets of the defunct Power Holding Company of Nigeria during the privatisation exercise. They are still indebted to the banks. Some also drew from the N213 billion Central Bank of Nigeria, CBN's, Power Intervention Fund. As at the time the CBN suspended disbursement of the fund earlier in the year, N57.8 billion had been released to some of the 11 distribution companies.

Beside loans from the local

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2016 November, SweetcrudeReports

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Sub-station

Three years after, power sector investors count losses CONTINUED FROM PAGE 6 banks and funds from the CBN, some of the power firms are alleged to be exposed to international banks.

Already, economists and power industry experts have expressed concern over the rising level of indebtedness to banks by the power sector players.

According to a Professor of Economics and Director, Centre for Petroleum, Energy E c o n o m i c s a n d L a w, University of Ibadan, Adeola Adenikinju, the nation's financial sector is currently exposed to mounting risks due to the huge indebtedness of power firms.

The implication of this, SweetcrudeReports was told, is that liquidity squeeze and general hardship is being forced on the banks in this time of national economic recession.

But, the Executive Director, Centre for Social Justice, CSJ, Mr. Eze Onyekpere, said power sector players should be

able to provide for themselves and that there was no reason for them to owe the banks.

“There is no reason for a liquidity crisis in the sector if all stakeholders play by the rules," he said.

Continuing, Adenikinju said, “Most of these power companies are indebted to the banking sector, thereby exposing the financial system to high risk. A restructuring programme that could include a well-structured bail-out plan for the Discos should also not be ruled out".

Adenikinju lamented the impact of the Niger Delta crisis on the energy sector, particularly on the activities of the power generation and distribution companies, saying that apart from increasing the risk premium for petroleum companies working in the region, because of kidnapping incidence and the constant threat from the militants, the crisis has badly hit gas supply to the power generating plants.

This, according to him, has brought liquidity problems on the power firms since they do not have adequate power that would ordinarily translate to increased revenue and ability to pay back to the banks.

Metering problem and o r d e a l o f l o c a l manufacturers Due to the huge metering deficit in the power sector after privatisation, electricity meter manufacturers in the country saw the need to fill the metering gap, especially for prepaid meters, in the system.

However, these investors have had their own share of challenges in the power sector.

Three years after privatisation, meter manufacturers in the country complain about low patronage from Discos despite the fact that 80 percent of electricity consumers remain unmetered.

According to the Electricity Meter Manufacturers Association of Nigeria, EMMAN, only Ibadan, Eko

and Abuja distribution companies patronise its members, out of the 11 Discos.

EMMAN Executive Secretary, Mr. Muyideen Ibrahim, said owing to a lack of sales, most of its members had been forced to retrench staff.

He urged the DISCOs to stop importing meters, noting that by importing, they were boosting and developing the economies of foreign countries at Nigeria’s expense.

“The Federal Government needs to intervene in order to prevent the metering industry from collapse. Government can compel the Discos to buy meters from us, the local manufacturers, because we produce quality meters.

“By doing this, the government will be promoting local content initiatives introduced to promote the growth of indigenous business operators. At the same time, government will be helping to conserve foreign exchange,’’ Ibrahim said Managing Director and Chief Executive Officer, Mojec

International Limited, a m e t e r m a n u f a c t u r e r, Chantelle Abdul, said: “One of the critical issues at the moment is the lack of access to foreign exchange. A lot of our manufacturing inputs come from abroad. My goal as a manufacturer is to produce as much of my manufacturing input here in Nigeria.”

She noted that financing still remains a big challenge for meter manufacturers, adding that borrowing at double digit rate will automatically increase the price of meters.

“Already, Nigerians are struggling to buy the meters, even the electricity distribution companies themselves. So, imagine doubling the price of the meter that already costs between N40,000 and N65,000; it means that we will not be able to bridge the metering gap that already exists in the country,” she said.N40,000 and N65,000; it means that we will not be able to bridge the metering gap that already exists in the country,” she said.

Oil

2016 November, SweetcrudeReports

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OPEC headquarters, Vienna, Austria

OPEC aims for rancour-free November 30 conference HECTOR IGBIKIOWUBO

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head of its 171st meeting in Vienna, Austria later this month, the Organisation of the Petroleum Exporting Countries, OPEC, is working hard to ensure a rancour-free deliberation and assignment of production quotas to members in accordance with a recent agreement to slash output.

Meeting late September in Algiers, the Algerian capital, in an emergency meeting to discuss the global oil market situation, OPEC agreed to limit supply to support prices, its first such decision since 2008.

The output cut would be implemented with members getting fresh quotas at the November 30 meeting in Vienna.

Nigeria, haemorrhaging from continued attacks on oil and gas installations by Niger Delta militants and the output cut it has caused, would likely be unaffected in the OPEC production cut and new quotas that would be assigned to members.

OPEC Secretary-General, Dr. Mohammed Sanusi Barkindo, confirmed the 14-member body was working at ensuring it reaches a deal on the output cut

decided in Algiers without rancour when its ministers meet on November 30.

"OPEC should be able to reach a deal to limit oil production without too much disagreement about individual countries' output levels", Barkindo said at an oil and money conference in London.

All the building blocks for the implementation of the output cut will be in place in a timely fashion, he further assured.

On reaching the agreement to reduce production to a range of 32.5 million to 33 million barrels per day in Algiers, OPEC ministers left the delicate issue of how much each of the 14 members will produce, handing the matter to what the group termed a 'high-level committee'.

But, the deal faces potential setbacks from Iraq's questioning of secondary sources' output estimates on which OPEC bases its production decisions, and from countries including Iran, Libya and Nigeria whose output has been hit by sanctions or conflict.

The decision of the 'high-level committee' would have to be ratified at the meeting in Vienna.

Explaining the basis for the production cut, Barkindo said

the agreement was driven by supply fundamentals.

He maintained that the Algiers agreement was specifically driven by the high level of inventories that had built up in recent years on the back of excess supply, often from high-cost

regions.

He also said the agreement was helping to restore balance and sustainability to the oil market.

Evaluating the current oil m a r k e t e n v i r o n m e n t , D r.

Barkindo said it was vital to see a continued drawdown in stocks

and to quicken the market rebalancing process.

Barkindo also said it was vital to restore investments in a sustainable manner, adding that OPEC’s latest World Oil Outlook sees oil-related investments requirements of $10 trillion in the period to 2040.

NNPC laments continued attacks on oil facilities Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr Maikanti Baru, has lamented continued attacks on oil and gas facilities, the latest being last week's attack on a Chevron gas pipeline in Delta State.

He said the continued attacks were taking a toll on the national budget with massive shortfalls in revenue as well as huge losses in petroleum products, environmental degradation, refineries shutdown and loss of lives.

Baru spoke when he visited the Inspector General of Police, IGP, Mr. Ibrahim Idris, at the Force Headquarters in Abuja, during which the two organisations pledged to work more closely together to tackle the incessant attacks on oil and gas facilities.

Calling on the police boss to deploy police personnel to all oil and gas facilities, the NNPC boss said the corporation was ready to provide whatever support needed for enhanced security.

The IGP, on his part, stated that the police have enjoyed long-standing cooperation with NNPC

and expressed optimism that such collaboration would continue.

He said the police was working on a number of strategies to build capacity for effective policing of the difficult terrain where some of the oil and gas facilities are located.

Oil facility on fire

2016 November, SweetcrudeReports

Oil

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Oil rig and storage facility

Nigeria’s oil production 'nearly back to normal’ …We're at 2.2 million b/d, says Minister

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igeria’s oil production is nearly back to normal following a sharp drop earlier this year due to rebels attacking pipelines, according to Minister of State for Petroleum Resources, Dr. Emmanuel Kachikwu.

Speaking at the end of a meeting between the Federal Government and some elders from the Niger Delta, in Abuja, Kachikwu said: “The reality is that as of today (November 1) and this morning, we are at 2.1 million barrels production.

That’s substantial”.

Nigeria normally produces around 2.2 million barrels per day, b/d, but output dropped to a low of 1.4 b/d this year due to rebels attacks.

Addressing the press after a meeting between Nigerian President Muhammadu Buhari and representatives from the oilproducing Niger delta region, Kachikwu said “a lot of behind the scene engagements” were paying off.

“Part of the expectations by 2017 is to target zero shutdowns as a result of militancy,” Kachikwu said, describing the talks as “fairly good, fairly civilised dialogue.”

Without peace in the Niger delta, which produces the bulk of Nigeria’s oil, Buhari will struggle get the funds needed to kick-start the Nigerian economy out of its worst slowdown in years.

Then there is the issue of rival militant groups threatening any agreement.

The Petroleum Ministry had late October reported that oil production had risen to 1.9 million b/d.

“We have built capacity of up to 2.4 million b/d, but we are currently producing about 1.9 million b/d,” Dr. Omar Farouk, the special adviser on international energy relations to Minister of State for Petroleum Resources, Dr. Emmanuel Kachikwu, said on the ministry’s twitter handle.

Farouk said Nigeria was in urgent need of new investments to increase its reserve base and output.

“Nigeria has produced over 10 billion barrels of oil since the year 2000. However, we have not discovered this much in the same period,” he said.

Nigerian oil output plummeted to near 30-year lows of around 1.5 million-1.6 million b/d in August, according to government estimates, from 2.2 million b/d earlier in the year as attacks on oil facilities in the Niger Delta rose at an alarming pace amid resurgent militancy.

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he sharp drop in oil production has severely hurt Nigeria’s economy, already exacerbated by the slump in global oil prices.

Militant group Niger Delta Avengers, responsible for most of

Part of the expectations by 2017 is to target zero shutdowns as a result of militancy,” Kachikwu said, describing the talks as “fairly good, fairly civilised dialogue

the attacks on oil facilities that cut Nigerian production by more than 700,000 b/d, said late in September it was abandoning its ceasefire announced September 2 over what it said was the Nigerian government’s failure to respond to its peace overtures.

Some other militant groups, including the self-styled Greenland Justice Mandate, have been carrying out pockets of attacks on pipelines operated by state-owned Nigerian National Petroleum Corp.

The government commenced on October 31 talks with “all stakeholders in the Niger Delta region,” including community leaders and youth organisations, to end the attacks on oil installations.

The militants and Niger Delta leaders made 16 demands to the Nigerian government, including revamping an amnesty programme for ex-militants,

reducing the military presence in the region and cleaning up pollution.

The demands borrow heavily from the militant group, Niger Delta Avengers, who demand a greater share of oil revenue and also want the government to finish construction of a university.

ExxonMobil to drill first Liberia well

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xxon Mobil Corporation will start drilling its first exploratory well off the coast of Liberia this month, the world's largest publicly traded oil company has said.

"ExxonMobil Exploration and Production Liberia Limited, an affiliate of ExxonMobil, plans to drill a deepwater exploration well on the Liberia-13 Block, located about 50 miles offshore Liberia, beginning in November 2016," a spokeswoman said.

Matthew Scharf, Exxon regional public and government affairs adviser, told Reuters it was not known how much drilling would cost or how long it would take.

Liberia does not produce oil unlike its eastern neighbour, Ivory Coast, which produces about 53,000 barrels a day, and Ghana, the next country along the West African coast, which pumps about 100,000 bpd.

"This project will create jobs for Liberians and help the economy .... if they can find oil of commercial quality," said Clarence Moniba, deputy chief of staff to Liberia's president.

Oil

2016 November, SweetcrudeReports

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Pipeline vandalism drops by 28% - NNPC ...As Corporation loses N11.22bn in one month

Vandalised oil pipeline OSCARLINE ONWUEMENYI, Abuja

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he Nigerian National P e t r o l e u m Corporation, NNPC, has said that pipeline vandalism across the country had reduced by about 28 percent.

The corporation made this known in its 13th publication of Monthly Financial and Operations Report released on its website.

The report said that the spate of pipeline vandalism has reduced following the Federal G o v e r n m e n t a n d N N P C ’s sustained engagements with Niger Delta militants.

He said, “In August 2016, there was 28.94 percent drop in the number of pipelines vandalised points relative to July 2016 which had up to 311 vandalised points.”

On natural gas supply to power plants, the report stated that it edged up to 469 million standard cubic feet per day, mmscfd, which equalled about 2,083 megawatts of electricity generation in August 2016.

On refineries’ operations, its report said that the combined value of output by the three refineries “at import parity price’’ for August 2016 was N50.19 billion.

It said, “Associated crude plus freight cost was N39.77 billion, giving a surplus of N709.21m after an overhead of N9.71 billion.”

The report said that this was made possible in spite of the challenges of irregular crude supply and pipeline vandalism to

the refineries.

On naira payments to the Federation Account, NNPC said that it transferred N35.05bn into the account in September from the net domestic crude oil receipt and another N1.80bn from gas receipts.

It added that its instalment repayment of debt to the Federation Account was also done with N6.33bn remitted as the 25th instance in the process.

It said, “The domestic crude oil and gas receipt during the month amounted to N96.15 billion, consisting of N1.80 billion from domestic gas and the sum of N88.01bn from domestic crude oil.

“Of the N88.01bn receipt from crude oil, the sum of N52.96bn (about $268.83m) was transferred to Joint Venture Cash Call, JVCC, being a first line charge.

“It also guarantees a continuous flow of revenue stream to Federation Account.”

Meanwhile, NNPC has again reported a month-end trading deficit of N11.22bn in August.

The figure was obtained on the NNPC website detailing its monthly financial and operations report released in Abuja.

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he corporation had posted a trading deficit of N24.18 billion loss in its July report.

NNPC, however, indicated that it was able to cut down on its loss-making by N12.96 billion when compared with its deficits in previous months.

The deficits were recorded even though two of its subsidiaries – the Pipeline and Products

Marketing Company and Nigerian Petroleum Development Company – had a good operational outing during the month.

The report also said crude oil production in Nigeria for the period averaged 1.65 million b a r r e l s p e r d a y, m b p d , representing a 6.47 percent production decrease from the

previous month.

The corporation in May, reported a profit of N273.74 million, thus reversing its reported average monthly losses of N35 billion.

It has, however, failed to sustain the profit-making streak, and has in the last two months, recorded deficits.

This indicates a trading deficit

of N11.22 billion as against the reported July 2016 deficit figure of N24.18 billion.

It said, “This remarkable improvement in August 2016 was largely due to increase in PPMC coastal sales and the significant improvement in NPDC’s revenue for the month under review’’.

Saudi former minister says OPEC can't cut output by itself

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he Organisation of the Petroleum Exporting Countries, OPEC, can’t cut oil production alone to stabilise the market, according to the former Saudi Arabian energy minister who masterminded the pump-at-will policy the group adopted two years ago.

“I don’t think OPEC by itself should cut,” Ali Al-Naimi, who for two decades was arguably the world’s most influential oil official until he retired in May, told a Chatham House event in London. While Al-Naimi stood by the November 2014 decision when Saudi Arabia led OPEC to keep pumping, triggering a price collapse, he said the situation has changed somewhat as other producers, including Russia, are talking to the group about coordinated cuts.

“Other producers now are thinking about cooperating,” said Al-Naimi, 81, who is in the U.K. promoting his memoir. “That’s great. If they cooperate and deliver, it’s good.”

OPEC, which pumps about 40 percent of the world’s oil, meets on Nov. 30 in Vienna to try to implement its first cuts in eight years after agreeing to trim output in Algiers at the end of September. Two years ago Saudi Arabia faced an impasse, Al-Naimi said, commenting on OPEC’s decision to pump without limits.

“We tried hard to get everybody to cooperate,” said Al-Naimi. “They didn’t. Then, I remember asking every OPEC minister: “Will you cut? will you cut? will you cut?” All the

answers were “no,”” he said, explaining that then Saudi Arabia, the world’s largest oil exporter, refused to go it alone. “I think that was and still is the right decision,” he said.

Saudi Arabia and other members of OPEC

Al-Naimi

boosted production, sending oil prices to a 12year low of less than $30 a barrel, down from more than $100 in mid-2014. The price crash reverberated across the energy industry forcing companies to cut cost and reduce investments - and wrecked the economies of oilrich countries from Nigeria to Russia.

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Nigeria’s Senate in session

Senate seeks near completion of PIB essentials by year end

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he Nigerian Senate will nearly complete work by year end on two major areas of long-delayed legislation to tackle problems in managing the nation's oil wealth, according to Senate President Bukola Saraki.

The Petroleum Industry Bill, PIB, stuck in the National Assembly for close to a decade, aims to tackle everything from an overhaul of state oil company NNPC to taxes on upstream projects in a sector riddled with corruption.

The Senate recently gave initial approval in the second reading to a draft plan to overhaul the state oil industry, a procedural move that allows the bill to move forward.

"For many years now the PIB has been stalled at different stages for one reason or the o t h e r, " S a r a k i s a i d i n a statement.

"At this point, the Senate is ready and willing to do everything that it takes to get Nigeria's economy out of this recession - and the efficient and effective management of our oil resources is a key component of this."

The part of the bill debated on the floor of the Senate dealt with "a governance and institutional framework for the petroleum industry," Saraki said as Nigeria seeks to restructure state oil firm

NNPC. In a draft seen by our correspondent in April, the Federal Government planned to split NNPC into two to help ease a planned stake sale in the coming years.

Saraki said the Senate should next work out rules for communities hosting oil firms -one of the most contentious aspects as militants and villages in the impoverished Niger Delta demand a greater share of the oil revenues it generates and a cleanup of oil spills.

Saraki said the Senate should next work out rules for communities hosting oil firms -- one of the most contentious aspects as militants and villages in the impoverished Niger Delta demand a greater share of the oil revenues it generates and a cleanup of oil spills

NNPC assures of availability of petroleum products The Nigerian National Petroleum Corporation, NNPC, has assured of an interrupted flow of petroleum products, saying it does not anticipate any shortage of products "not now, not in the nearest future".

"The possibility that there is going to be any shortage does not even exist, not now and not in the nearest future. People should relax; there is no need to panic.

"As of this moment, there is absolutely no plan to do that and no need for that, because we have more than enough supply. We have very robust stock of product in our custody. In addition to that, we also have long term procurement contract with our suppliers," NNPC chief spokesman, Mr. Garba-Deen Mohammed stated.

On the state of local refineries, he said they were back and working. According to him, the

Port Harcourt and Kaduna refineries had been producing.

He however pointed out that challenges would always come because the refineries had been working for a long time, and noted that long term repairs were also in the making.

"You know about the plans to co-locate some new refineries within the existing ones and upgrade these ones. By the time these ones are done, which would probably be by 2018, then, the refineries would be producing at optimal capacity. Now it is an on and off thing; they are producing, but not to the capacity that is expected," he stated.

On the purported plan for a fuel hike attributed to the group's general manager, Crude Oil Marketing Division, Mr Mele Kyari, Garba-Deen, clarified the statement, saying it did not refer to downstream operations.

"Work on the passage of the two key bills will be nearing completion stage before the end of the year," Saraki said.

The next step is for parliamentary committees to provide a report within four weeks after which the Senate will go clause by clause through the final version, lawmakers said.

Saraki and Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, have repeatedly said the bill would be split to speed up approval but not given details yet of the bill, central to President Muhammadu Buhari's reform of the sector.

The inability to pass the bill and uncertainty around taxation and government funds during a slump in oil revenue has stunted investment, particularly in deep-water oil and gas fields.

Nigeria's oil output has risen to 2.1 million barrels a day, Kachikwu said on Tuesday, after plunging due to militant attacks to 1.37 million barrels per day in May, the lowest level since July 1988, according to the International Energy Agency.

Seeking to pacify the region, Buhari recently met Niger Delta leaders who presented a list of 16 demands, such as making oil firms move their country headquarters to the southern region and an army withdrawal from the area.

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Kachikwu says JV review will lead to oil investment boom OSCARLINE ONWUEMENYI, Abuja

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inister of State for Petroleum, D r .

I b e Kachikwu, s a y s investments in Nigeria’s oil and gas sector, which took a plunge in recent years, would pick up soon following the conclusion of a review of the country’s Joint Ve n t u r e , J V, c a s h c a l l framework.

According to him, this would be the impact of the new Roadmap for the Petroleum Industry launched last week in Abuja by President Muhammadu Buhari.

Kachikwu stated that following the review, many oil and gas investors were set to return and invest heavily in the country’s oil and gas sector, stressing that there would be an explosion of investment in the sector soon.? Kachikwu also announced plans by the government to review the mechanism for providing security for oil and gas installations in the country to meet with standards in other oil and gas producing countries.

The newly-launched Oil and Gas industry roadmap, tagged ‘The 7 Big Wins," covers policy

and regulation, business environment and investment drive, gas revolution, refineries and local production capacity, Niger Delta and security, transparency, and e f f i c i e n c y, a s w e l l a s stakeholder management and international co-ordination.

“On the issue of JV cash call, we have done a yeoman’s job.

We are nearing completion of those negotiations, it would go to the FEC and it does not require a law," he said.

He added: "Those things are basically MoUs…We are going to structure the MoUs to enable them to find the funding they require.

"There is even a budgeting process in terms of what we approved should be done, but how you now sequence the distribution of the funding is where the catch is.”

Emphasising that the Federal Government had made appreciable progress on funding, Kachikwu stated that the government would be saving over $1.2 billion in the process.? At the launch of the Oil and Gas industry roadmap last week in Abuja, Kachikwu also announced plans for a $10 billion infrastructure development fund for the Niger Delta region.

Kachikwu

We are launching $10 billion infrastructural rebirth investment programmes in the Niger Delta region. This is not money that is going to come strictly from the federal government.

“We are launching $10 billion infrastructural rebirth investment programmes in the Niger Delta region. This is not money that is going to come strictly from the federal government.

"It is going to come from investors, individuals who are ready to do private sector infrastructure, obviously states and federal governments as the case may be and international organisations who have shown interest to help,” he stated.

European oil, gas firms looking to cut costs further

Gas controlling valve

European oil and gas firms Eni S.p.A, Total S.A and Statoil ASA all revealed in their latest financial results that they are looking to cut costs due to the continued low oil price environment.

Italian energy company Eni stated that it expects to carry out a number of initiatives intended to reduce capital spending, in order to cope with the slump in crude oil prices, including re-phasing and rescheduling capital projects, being more selective with exploration plays and

renegotiating contracts for the supply of capital goods. Eni forecasts a 20 percent reduction in spending for the full year as a result of these changes.

Oil and gas analysts at investment bank Jefferies stated that Eni is increasingly relying on divestitures in order to prevent a dividend cut, adding that the company expects to make more than $7 billion worth of divestments from 2016 to 2019. The majority of asset sales should come from upstream,

according to Jefferies, with equity in Area 4 offshore Mozambique likely to get sold first.

French integrated oil and gas firm Total echoed Eni’s stance and vowed to lower its breakeven price, stating that it expects the market to remain volatile. Total is currently in the middle of a cost reduction program which it said was ahead of schedule.

The program is aiming to achieve $4 billion in savings by 2018.

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Oil facility

Nigeria should target 4mb/d production to grow economy - NAEE ...Says 2.5mb/d production not enough

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he Nigerian Association of E n e r g y Economics, NAEE, says the country should target 4 million barrels oil production per day if it must grow its economy and catch up with the rest of the developing world.

President of the association, Prof. Wumi Iledare, said this in an interview as part of activities to mark the World Energy Day 2016.

Nigeria produces between 2.2 and 2.5 million barrels oil per day with over 70 percent of it exported, except when there are militant attacks and force majeure.

But Iledare said had Nigeria's economy been actually growing the way it is supposed to, 2.5m barrels oil production per day should only be used to service the local economy.

He said, "I give the

example of the US with 300 million people. They are consuming in their economy 16 to 18 million barrels per day. We cannot use our oil for money, we should use our oil for power and 2.5 million barrels per day cannot generate the electricity that we need to grow our economy."

The World Energy Day was celebrated on October 22.

NAEE said it was investing heavily to create awareness on access to energy in the country.

Speaking on the importance of access to energy, Iledare said Nigeria was a good example of a country that produced energy but did not consume enough of it and the more reason its economy was not expanding.

He advised the government to provide the policy tools that would attract investment that will grow the economy.

"Does Energy Commission

Speaking on the importance of access to energy, Iledare said Nigeria was a good example of a country that produced energy but did not consume enough of it and the more reason its economy was not expanding

of Nigeria really belong to the Ministry of Science and Technology? I don't know," he said, adding that, "If we are going to be thinking about energy access we have got to be thinking about the positioning of our institutions to make sure they deliver the mandate.�

Congo to launch new shallow water hydrocarbon round The Republic of Congo expects to launch a new shallow-water licensing round for 2017/18 after its last round closes at the end of March when winning bidders are expected to be announced, the oil minister s revealed.

Jean-Marc Thystere Tchicaya said the new licensing round would consider pre-salt and postsalt plays close offshore of the west African nation.

Last year Congo launched its 2016 license rounds for eight deep and ultra-deep offshore blocks and five onshore blocks in the Coastal and Cuvette basins.

Oil rig

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Refineries to be fixed before sale, Nigerian govt insists

Port Harcourt Refinery

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he Nigerian government has said it will consider the sale of the country's four refineries only after they have been rehabilitated to work efficiently.

The Minister of Petroleum Resources, Ibe Kachikwu, who disclosed this at a public presentation of short and medium-term priorities to grow Nigeria's oil and gas industry, tagged '7BigWins', in Abuja, noted that no investor would offer serious money for the refineries in their present state.

There have been suggestions recently by prominent Nigerians for key assets, including the refineries, to be sold to raise seriously needed funds to reflate the economy.

"The feeling of the Federal Executive Council (FEC) and the President is that we should first get the refineries to be efficient before we talk about privatisation, otherwise we will be selling scraps," the minister said, adding that union-related issues would also have to be addressed.

He said President Muhammadu Buhari would meet leaders of the Niger Delta in Abuja next week in an attempt to end the insurgency in the oil-producing region.

"This planned meeting shows

the level of interest the president has to ensure peace in the area," he said.

Kachikwu told participants at the event that Nigeria's oil output stood at 1.8 million barrels a day, adding that the government hoped to get back to 2.2 million b/d next year - the level seen at the start of 2016.

He further stated that the country would ensure that it found every oil that is available in every part of the country, with increased private sector participation, and to raise $5 billion and $20 billion in the short and long term respectively, for the federal government In addition, Kachikwu stated that the government planned to set up a fund of about $10 billion for the development of critical infrastructure in the Niger Delta and also for the growth of the region.

"The whole idea is to set up a fund that is not tied to budgeting. Find international organisations and identify their willingness to put in money into the Niger Delta; be able to negotiate with state governments some percentage of what they have to put into this fund," the minister reiterated.

He said the Presidency had approved a roadmap that would transfer the responsibility of ensuring security in the Niger

He further stated that the country would ensure that it found every oil that is available in every part of the country, with increased private sector participation, and to raise $5 billion and $20 billion in the short and long term respectively, for the federal government

Delta region from the military and other security agencies to oil companies operating in the region.

He also stated that the federal government was considering stripping states of some of the proceeds of the 13 per cent derivation funds to be used in the development of oilproducing communities.

Shell commences drilling programme in Tanzania Royal Dutch Shell Plc, along with its joint venture partners Pavilion Energy and Ophir Energy, has announced the start of a drilling programme covering two wells, in Block 1 and 4, in the Mafia Deep basin off Tanzania.

Drilling operations will be taking place in waters up to 7,545 feet deep and the joint venture partners will be investing close to $80 million into the well drilling programs.

The two wells will meet the remaining exploration requirements as per the exploration licenses issued by the Ministry of Energy and Minerals, MEM. Shell became the operator of the two blocks in February 2016, after its combination with BG Group, and has been working closely with the Tanzania

Oil rig workers Petroleum Development Corporation, TPDC, and MEM to deliver these wells safely.

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Indigenous engineers at work

Nigerian Content, a national security imperative - NCDMB boss

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he Nigerian d e f e n c e community has been advised to adopt the Local Content Policy in their operations, particularly in the manufacturing and maintenance of security equipment and development of software.

The Executive Secretary, Nigerian Content Development and Monitoring Board, (NCDMB), Engr.

Simbi Wabote gave the advice on Wednesday in Abuja when he delivered a lecture to participants of the Nigerian Defence College, Course 25.

Speaking on the topic, 'Local Content Policies and National Security: An Assessment of the Oil & Gas Sector', Wabote charged military authorities to also consider adopting Local Content in the production of security clothing, construction of security vessels and include the policy in other security contracts, especially in offshore locations and maritime facilities.

The Executive Secretary pledged the support of the Board to the Defence

Community in developing a unique local content policy that would fit its operations.

According to him, the implementation of Nigerian Content in the oil and gas industry has yielded enormous achievements, including employment generation for thousands of Nigerians, skills acquisition, local manufacturing and asset ownership and prompted sectors like power, telecommunications, and construction to adopt the policy.

He added that countries such as Ghana, Kenya, Gabon and Oman have also adopted some of the local content models implemented in Nigeria.

Wabote described Nigerian Content as a national security imperative, noting that the Nigerian oil and gas industry must depend on Nigerian owned assets and personnel to avoid a scenario where the sector is forced to shut down because foreign owned assets or expatriates have to be withdrawn due to insecurity in the Gulf of Guinea Region, diplomatic tensions or outbreak of an epidemic in the country.

He added that countries such as Ghana, Kenya, Gabon and Oman have also adopted some of the local content models implemented in Nigeria

He stated that spending on p r o c u r e m e n t o f manufactured goods gulps over 50 per cent of contracts budgets, much more than other elements like fabrication, construction and engineering.

Recession: National Assembly to legalise Excess Crude Account

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he National Assembly is seeking to provide legal backing to the Excess Crude Account, ECA, to enable the country save revenue windfalls and stabilise government expenditure during the financial crisis.

This is part of the recommendations by a technical committee set up by the Senate President, Dr. Bukola Saraki in July to examine the budget reform process in Nigeria.

The panel, chaired by Senate Leader Ali Ndume (APC, Borno), while presenting its report on the floor of the upper chamber, also recommended an amendment to the Fiscal Responsibility Act, FRA, to mandate all government agencies to deposit at least 25 percent of their revenue into the federation's account instead of the 80 percent of their operating surplus.

The panel further sought an amendment to the constitution that will compel the president to present budget to the National Assembly by

the first week of September, considered and passed by the legislature by November 30 and signed by the president by the second week of December.

The Federal Government, in a bid to attain robust external reserves, has said it is planning to increase the amount in the Excess Crude Account from the current balance of $2.25bn to $3.95bn next year.

It is also targeting fresh private sector investment of $1.5bn (N315.2bn) in infrastructure within the 2016 fiscal period.

These figures are contained in the Medium Term Plan 2016-20120 prepared by the National Planning Commission and submitted to Ministries, Departments and Agencies of government for validation.

The monetary estimates for the 2016 budget are still being worked out by the respective MDAs and may be ready by mid-November, according to the timeline stipulated in the document.

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North Sea oil flood expected as OPEC plans output curbs

North Sea oil operation

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il producers in the North Sea, home to one of the world’s key crude-price benchmarks, are poised to ship the most crude in more than four years. The surge takes place just as the Organisation of the Petroleum Exporting Countries, OPEC, tries to contain a global surplus with coordinated output cuts.

Shipments of North Sea grades will increase 10 percent month-on-month to about 2.16 million barrels a day in December, according to data compiled by Bloomberg.

If all the cargoes load as planned it would mark the most crude oil shipments from the region since May 2012.

The increase just from September, when there was field maintenance, would be almost 360,000 barrels a day.

The surge poses yet another challenge to OPEC as it seeks to curb production to steady

markets in a world with plenty of oil. OPEC ministers will meet in Vienna on November 30 to decide how to trim output to a range of 32.5 million to 33 million barrels a day. Libya, Nigeria and Iran are claiming exemption from cuts because of their own circumstances, and Iraq has contested how its output has been measured.

“Rebalancing the market is going to be an uphill task,” in part because North Sea supplies are adding to the surplus, Ehsan Ul-Haq, senior market consultant KBC Energy Economics, said by phone. “If OPEC is really interested in reducing stocks and bringing the market into balance, they’ll have to make deeper cuts than promised before.”

Brent crude fell extending its slide to a sixth day. It was down 7 cents at $46.28 a barrel at 8:41 a.m. in London.

While supplies from some nations outside of OPEC are

Rebalancing the market is going to be an uphill task,” in part because North Sea supplies are adding to the surplus, Ehsan UlHaq, senior market consultant KBC Energy Economics, said by phone. “If OPEC is really interested in reducing stocks and bringing the market into balance, they’ll have to make deeper cuts than promised before

indeed falling, non-members boosting their crude output include Kazakhstan, Brazil and Russia, which last month pumped oil at a post-Soviet era high. OPEC itself increased production to a record 34.02 million barrels a day in October, according to a Bloomberg survey of analysts, oil companies and ship-tracking data. In addition, the U.S. is now freely shipping its oil across the globe, following the removal of export restrictions last year.

Forties, Grane increase The wave of North Sea crude will come just as a pile-up of tankers storing or transferring oil in the region dwindles, clearing out a previous surplus. Only one supertanker, Front Ariake, remains floating with North Sea crude off the coast of England. This compares with as many as five Very Large CONTINUES ON PAGE 17

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North Sea oil activities

North Sea oil flood expected as OPEC plans output curbs CONTINUED FROM PAGE 15 development of the Trestakk field. Lower-than-expected Crude Carriers last month costs and a low-risk operating which were holding crude, or environment are providing a preparing to receive it via “window of opportunity” for ship-to-ship transfers. more investment in the CONTINUED FROM PAGE 1 While shipments of Brent region, analysts at BMI crude are expected to slow in Research, a unit of Fitch stop reviewing tenders but we D e c e m b e r - - d u e t o Group Incorporated, said in a will also ensure that projects m a i n t e n a n c e a t t h e note to clients.

Cormorant Alpha platform north of Scotland, scheduled to begin later this month -exports of other grades are set to increase. Loading plans are subject to significant change and reorganisation.

At least 25 shipments from the UK’s Forties field are now scheduled for December, the most since February 2011.

Loadings from Norway’s Grane field next month are set to rise to 10, the most since Bloomberg began tracking the grade in 2010. The programmes show December exports of 483,871 barrels a day for Forties and 193,548 for Grane.

Further new North Sea oil production may be on the way.

Statoil ASA this week submitted to the Norwegian government its plan for Local oil workers

Contracting cycle: Nigerian Content Board to introduce timelines for approvals are executed speedily, Nigerians benefit and there are in-country value additions.”

While commending past Executive Secretaries of the Board for the achievements they recorded while on the saddle, Wabote stated that NCDMB would begin to review its performance since the enactment of the Nigerian Content Act in 2010 and to set agenda for local content value addition in the next five years.

He noted that the Board would adopt a pragmatic approach adding that “our strategy will take into account the current realities in the industry, the job creation drive of the Federal Government and national aspirations for the oil and gas industry provided in the 7 Big wins document launched by Mr. President.”

Wabote charged industry stakeholders, local service providers, particularly members of the Petroleum Technology Association of Nigeria, PETAN, to embrace proposals for longer contract tenure of at least five years to support the reduction of

the contracting cycle, capacity building and asset acquisition.

He challenged PETAN to articulate a sustainable Community Content Strategy that would facilitate the participation of genuine community contractors in oil and gas projects so as to promote peace and tranquility in oil producing communities.

According to him, Nigerian Content activities must go beyond the project phase and extend through the life cycle of projects. On the part of the Board, he also pledged develop a policy on Community Content to integrate community contractors in ancillary activities supporting the oil and gas industry.

Other speakers at the event including a former Managing Director of Nigeria Liquefied Natural Company, NLNG, Mr. Chima Ibeneche, also reinforced the message that a properly articulated and executed Local Content policy would lead to cost reduction for operating companies.

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Niger Delta militants

Multiple regulations, militancy threaten NLNG operations KUNLE KALEJAYE

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perational activities of the N i g e r i a Liquefied Natural Gas, NLNG, is currently under threat by multiple taxes from multiple government regulatory agencies and repeated militant attacks on its pipeline facilities.

This was made known by the Managing Director and Chief Executive Officer of Nigeria LNG Limited, Mr. Tony Attah, during the visit of the Senate Committee on Gas to the Bonny Island facility of the company.

Mr. Attah said Nigeria LNG has recorded 19 cases of pipeline disruptions by the militants this year.

He also alluded to the problem of double taxation, which is capable of impacting t h e c o m p a n y ’ s competitiveness and compromising its ability to maintain its position as the world’s 4th global largest gas supplier.

According to him, the situation, if not checked, could lead to unfavourable consequences, including loss

of revenue for the Federal Government, potential loss of jobs and loss of status as an inspirational business model and number one indigenous company in the country.

Commenting on Liquefied Petroleum Gas, LPG, supply to the domestic market, the NLNG managing director said the structure is threatened, as the system encourages tax-free importation of LPG while NLNG supply is subjected to Value Added Tax, thereby frustrating the company’s effort to support and grow the local LPG market for which it already sets aside 250,000 metric tonnes annually.

The visiting senators repeatedly recognised and expressed support for Nigeria LNG operations and successes so far. They assured that they would do all in their power to support the good work at NLNG by taking a serious look at the issues raised, to enable the company and the nation remain successful.

The Committee agreed that from what they saw, there is strong evidence that the company is well run. They

They, however, expressed the need for the company to help the nation achieve zero gas flaring while also indicating their concern about how to sustain the aging plant, expedite the train 7 project and maintain the successful NLNG model.

also observed with satisfaction that the plant from which this success story has been created is operated byNigerians.

They, however, expressed the need for the company to help the nation achieve zero gas flaring while also indicating their concern about how to sustain the aging plant, expedite the train 7 project and maintain the successful NLNG model.

Qatargas, Petronas sign five-year LNG deal

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atargas - the world's leading liquefied natural gas, LNG, company - has signed a new five-year LNG sale and purchase agreement, SPA, with Petronas LNG UK Limited, PLUK. The gas giant, will under the terms of the agreement, deliver LNG to PLUK until December 31, 2023. The new agreement marks an extension of the company’s current contract, which is due to expire on December 31, 2018.

Qatargas will deliver 1.1 mtpa of LNG under the new agreement.

Commenting on the deal, Chief Executive Officer of Qatargas, Khalid Bin Khalifa AlThani, said, “Qatargas continues to win new business, and I am very pleased to extend our relationship with Petronas. At Qatargas, we are focused on building strong, long-term relationships with our customers, and

reinforcin g our reputatio n for being the most reliable and flexible supplier

LNG vessel

of LNG in the marketplace.”

The LNG will be supplied from Qatargas 4 (Train 7), a joint venture between Qatar Petroleum and Shell, and will be delivered on board Q-Flex LNG vessels to the Dragon LNG terminal at Milford Haven, UK. Petronas UK is the Atlantic basin-focused LNG trading subsidiary of Petronas, the national oil and gas company of Malaysia.

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Govt to fully commercialise flared gas

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he Federal Government has announced plans to commercialise the gas currently being flared in the country while also stating that it intends to raise about $25 billion through investments in the oil and gas sector.

Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, stated this in a document titled, ‘Short and Medium Term Priorities to Grow Nigeria’s Oil and Gas Industry (2015 To 2019)’, also called the tagged the ‘7BigWins’.

According to the document, the roadmap has seven key focus areas, namely: Policy and Regulation ; Business Environment and Investment Drive ; Gas Revolution ; Refineries and Local Production Capacity; Niger Delta and Security; Transparency and Efficiency ; a n d S t a k e h o l d e r M a n a g e m e n t a n d

International Coordination.

Under gas revolution, Kachikwu disclosed that the abundant gas resources in Nigeria will be harnessed to generate wealth and save the environment by converting gas flares to power.

To achieve this, Kachikwu explained that an investorled gas infrastructure development would be promoted to ease the burden of funding on the government, while domestic gas utilisation for power and households will also be promoted to support threefold increase in the nation’s power generation capacity by 2019.

In addition, he noted that the Federal Government would open up commercial gas flare opportunities and drive Compressed Natural Gas. CNG; Liquefied Natural Gas, LNG, and Liquefied Petroleum Gas, LPG, programmes through incentives.

In addition, he noted that the Federal Government would open up commercial gas flare opportunities and drive Compressed Natural Gas. CNG; Liquefied Natural Gas, LNG, and Liquefied Petroleum Gas, LPG, programmes through incentives He further stated that the business and investment drive is primarily aimed at increasing income streams to support infrastructural development, economic diversification including agriculture among others.

According to him, the focus would be on increasing government income streams; raising bulk funds for the Federal Government through successful leveraging of some of the country’s assets and raising investments through

investments and positive policy mixes.

In addition, he said, “Opening all sectors to greater private sector participation and funding; while our key targets is to raise $5 billion in the short term, within one year, and $15 to $20 billion in the midterm, between two to three years.

“Our target also includes cutting contract approval times from two years to between three and six months, while we also hope to

reduce strangle hold on oil sector by the government and cut down over supervision.”

In the area of refineries and local refined products capacity, Kachikwu said, “The objective is to improve our domestic capacity for local petroleum products production. This will entail the injection of private sector investments and expertise in revamping the existing r e f i n e r i e s a n d implementation of modular refineries in the oil producing region.”

He further explained that the Federal Government aims to achieve 100 per cent local refining capacity by 2020; reduce fuel importation by 60 per cent by end 2018; focus on policy to process majority of our crude; refurbish all refineries in two years with private capital and license specialty based refineries, modular refineries and colocated refineries.

Interpipe focuses on quality key part of nterpipe considers quality control as a ,exceeding the activities to manufacture products lemented at imp customer needs.Quality control is ing from all stages of production process -start i mill and up to min e s u o h continuous casting at the in d pipe ends and nondestructive testing of pipe body an shipping to customers. pliance with The Company has been certified for com andards: nal st requirements of national and internatio

I

U ISO 9001, Quality Management System acc.to DST ISO 9001,and API Specification Q1; c.to ISO 14001 Environmental Management System ac standard; and ent System Occupational Health and Safety Managem acc.to OHSAS 18001 standard; s products have been certified for Company’ nal and compliance with requirements of natio , IN) 5L,EN D( international standards:API 5CT,API GOST,and TU; gas companies.

Company is prequalified by major oil &

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Ghana's new gas policy to provide transparent regulatory framework

On board the FPSO Ghana

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hana is working on a new gas policy that will point direction f o r t h e development of that country's gas sub-sector, Minister for Petroleum, Mr. Kofi Armah Buah, has revealed.

The minister disclosed in Accra that his ministry had begun work on the development of the new gas policy and gas law, said the policy and law, when in place, will provide a transparent regulatory framework for the g a s i n d u s t r y It will also address infrastructure requirement, funding and institutional mandates for gas sector agencies, he further said.

Buah added that the new policy will also provide a revised gas pricing policy reflecting the developmental priorities of the country.

G h a n a ’s p r o b a b l e g a s reserves are estimated at approximately five trillion cubic feet, TCF, the bulk of which came from the discovery over seven years ago of the

giant offshore Jubilee gas field, which is producing about 120 million cubic feet of g a s p e r d a y .

The country has since seen other gas discoveries, including the deep water South Tano basin find in 2015 with an estimated 1.5 trillion cubic feet of gas and 500 million barrels of oil reserves.

But the country has not yet begun production of gas in s u b s t a n t i a l q u a n t i t y, prompting massive importation of gas from Nigeria through the West African Gas Pipeline scheme supplying gas to the country for electricity generation.

The agreement, under this arrangement, was for Nigeria to supply Ghana about 120 million standard cubic feet of gas per day, MMscf/d, but imports of Nigerian gas via the West African Gas Pipeline has stalled around 50MMscf/d for two years due to production challenges associated with the militancy in the Niger Delta which has substantially cut Nigeria's oil and gas production.

Mozambique expects Eni decision on LNG investment this year

Fuel pump Eni LNG Mozambique Italy's Eni should make a final investment decision on its first offshore deep-water Liquefied Natural Gas project in Mozambique by the end of this year, Energy Minister Lleticia da Silva Klemens has said.

US company Anadarko is expected to make its own investment decision on a separate LNG project next year, da Silva Klemens said.

Mozambique has some 85 trillion cubic feet of gas reserves - enough to supply Germany, Britain, France and Italy for nearly two decades. It is likely to take at least five years after final investment decisions before gas production begins.

Experts say Mozambique's economy is being

transformed by natural gas finds off the coast.

Liquefied Natural Gas is projected to add $39 billion to the Mozambican economy over the next 20 years.

The natural gas industry will help create over 700,000 jobs by 2035.

But these benefits could take time to materialise, as indications are that first gas from Mozambique LNG would likely happen in 2019 or 2020. This timeline could be extended after major floods affected thousands of people in central and northern regions in early January, and left over 100 people dead.

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Power

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EU to spend 150m euros on Nigeria's power sector

Power substation

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he European Union, EU, has announced it would spend € 150 million (N50 billion) on the development of the power sector in Nigeria.

Mr. Michel Arrion, the Ambassador and Head of EU Delegation to Nigeria, disclosed this in Abuja, announcing also that the EU was collaborating with the National Power Training Institute of Nigeria, NAPTIN, to inject young engineers into the sector.

Arrion, who made this known at the 5th Edition of EU-Nigeria Business Forum, EUNIBF, pre-event news conference, added that the grant would be used mainly for the training of young engineers and funding of some technical aspects of the sector.

He described energy sector as an important aspect of the Nigerian economy, saying that nothing would work well if the sector was not adequately funded.

He said, “The EU is already financing a transmission project in Katsina State and we have spent over five million Euro, about N1.6 billion, on it.”

Arrion said that the forthcoming business forum would focus on creating opportunities for EU and Nigerian Small and Medium Enterprises to create their businesses through the Enterprise Europe Network.

He said, “We want to identify opportunities in the textile value chain and proffer options for accessing long term finance for the critical power sector in Nigeria.

“The 5th EUNIBF has been designed to discuss business opportunities and address bottlenecks to investments, particularly in the power sector.

“We will focus on diversification of the economy through SMEs.” The Counsellor, Head of Trade and Economics Section of EU, Mr. Filippo Amato, said that EU has granted

over € 750m to Nigeria between 2008 and 2013.

Amato said that € 512m had been spent from 2015 to date.

He said that 2016 business forum would take place in Lagos from Nov.10 to 11 with the theme: “Harnessing N i g e r i a ’s P o t e n t i a l f o r Economic Growth.”

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mato further disclosed that key speakers lined up for the event include Gov. Akinwumi Ambode of Lagos State and Gov. Nasir ElRufai of Kaduna State.

Others are President of the African Development Bank, Mr. Akinwumi Adesina, Minister of Industry, Trade a n d I n v e s t m e n t , M r.

Okechukwu Enelamah, and Minister of Works, Housing and Land, Mr. Babatunde Fashola.

He said that the Minister of Budget and National Planning, Sen. Udoma Udo Udoma and the State S e c r e t a r y, M i n i s t r y o f Foreign and European Affairs, Slovak Republic, Lukas Parizek, would attend the forum.

Govt to shed 40% stake in power firms The Bureau of Public Enterprise, BPE, says the Federal Government will soon shed its 40 per cent stake in the power generation and distribution companies to allow other private investors buy into the power assets.

Acting Director General of BPE, Dr. Vincent Akpotaire, stated when he kicked off the roll-out of large power users’, LPU, meters which the Abuja Electricity Distribution Company, AEDC, procured for deployment to its about 4,000 maximum demand customers.

Akpotaire, who did not give further details on the plan by the government to sell its stake in the power companies, took time to respond to a call on the federal government by the President of Dangote Group, Aliko Dangote, to reverse the power sector privatisation on the basis that it was a failure.

The BPE boss said it was too early to condemn the process as a failure, adding that the agreement signed with the investors upon their acquisition of the power assets allows that they take at least five years to invest in and stabilise their networks.

He explained that based on that, Dangote’s claim of the exercise’s failure was not factual.

“My take is that we need to evaluate statements before we make them. That is the point I think we should put across to Nigerians. We have put only about three years since the handover of the power sector to private investors.

“Before that, the power sector had existed for well over 50 years and in those 50 years, hardly much was achieved due to several factors and the decision to private was a well thought-out decision,” Akpotaire said.

He added that “In three years, the measurement of their performance is based on a five-year index which is under their agreements and that measurement is not dependent only on the activities of the private investors alone but also the tariff structure".

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Power plant

Electricity market revenue shortfall to hit N1tr in December KUNLE KALEJAYE

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he Nigerian electricity market revenue shortfall h a s b e e n projected to hit N1 trillion by December this year.

According to the Association of Nigerian Electricity Distributors, ANED, the current challenges bedevilling the Nigerian Electricity Supply Industry, NESI, three years after it was privatised has heavily impacted the industry, a major fall out of the challenges being massive revenue shortfall.

Revealing this to newsmen in Lagos, ANED Executive Director for Research and A d v o c a c y, M r S u n d a y Oduntan, said: “The current electricity market revenue shortfall is projected at N809 billion by December 2016 caused by a direct impact of the non-cost recovery nature of the tariff”.

He explained that under the performance agreement for the power sector, the Federal Government had assured

that there would be cost reflective tariffs from the beginning for investors, adding that this never happened.

Oduntan added that the delay in reflecting costs in the power sector means a growing increase in deficits for investors, maintaining that the sector was no longer bankable as banks were unwilling to lend distribution and generation companies funds to inject critical capital investment in their operations.

“The Banking sector is over exposed to oil, gas and power sector to the tune of over three trillion naira,” he said.

Other challenges bedevilling the sector, according to him, were regulatory uncertainty, poor gas supply, vandalism of gas pipelines, neglect of ageing turbines, limited transmission capacity, nonpayment of electricity bills by customers and government agencies, energy theft, and limited access to finance.

Oduntan urged the Federal Government to implement total cost recovery, improve t r a n s m i s s i o n c a p a c i t y,

The current challenges bedevilling the Nigerian Electricity Supply Industry, NESI, three years after it was privatised has heavily impacted the industry, a major fall out of the challenges being massive revenue shortfall

increase funding in the sector, assist in curbing energy theft, help operators with access to forex and uninterrupted gas supply, saying these were requisites for improving the current state of the power sector.

Eko Electric spends N1.4bn to boost power supply The Eko Electricity Distribution Company Plc, EKEDC, says it has spent over N1.44 billion on projects expansion to boost electricity supply to customers in the last three years.

EKEDC Chief Executive Officer, Mr Oladele Amoda, disclosed this in Lagos at an event to mark three years of post privatisation and government's handing over of distribution companies to private companies.

Amoda said his company had embarked on massive rehabilitation and reinforcement of dilapidation of its network within the three years, adding that over 400 transformers have been installed in various locations to reduce load shedding.

“Over N1.44 billion had been spent on

various projects expansion within the company to boost electricity supply to customers in the last three years,’’ he said.

He stated that the company also constructed five new injector substations within its network to beef up supply to major areas of the state.

These, he said, would be completed in the third quarter of 2017.

According to him, “We have commenced construction of five 33/11KVA injection substations in Surulere, Ikoyi and Ajah axis which cost the company over N1 billion.”

The EKEDC boss said that over N 53 billion would be required for effective metering of customers within its network and that over N 5 billion has been spent on metering of maximum demand and non-maximum demand customers to date.

Power

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Power plant at night

PHED loses N2.3bn to energy wastage MKPOIKANA UDOMA, Port Harcourt

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he Port Harcourt Electricity Distribution C o m p a n y, PHED, has lamented that it loses N2.3billion monthly across the four states of its operational areas due to energy wastage.

Chief Executive Officer of PHED, Mr. Jay McCosky, disclosed this said the firm is embarking on education and sensitization of its customers across its operation area on the importance of energy efficiency management, with a view to reducing complaints from customers on billing issues.

McCosky said efficient use of energy would lead to lower bills and increased productivity as well as enhanced profit margin for commercial and industrial customers, explaining that to get knowledge about energy usage and ability to manage the consumption level would lower operating and production cost for commercial and industrial customers.

According to him, "PHED in its strategic plans has lined up series of enlightenment on energy efficiency in primary,

secondary and tertiary institutions in Rivers, Akwa Ibom, Bayelsa and Cross River State.

"Communities are not left out in the enlightenment programme aimed at promoting energy saving culture and provision of energy efficient products," he said.

In the meantime, PHEDC has also introduced online payment in its determined efforts to improve service delivery.

The Chief Executive Officer of PHED, Jay McCoskey while unveiling the online payment system at the weekend, said the platform was introduced to reduce the amount of time customers use in paying their bills.

McCoskey noted that the online platform which is powered by GPayment solutions allows PHED customers to pay their electricity bills anytime and anywhere using the platform.

He noted that the online payment complements other channels of payment, adding that it is very easy and convenient for her customers to pay their bills any time and anywhere.

The PHED boss further explained that the online payment would also address

Communities are not left out in the enlightenment programme aimed at promoting energy saving culture and provision of energy efficient products," he said

hiccups experienced by some of the company’s customers especially those on prepaid who ran out of units during weekends or at night when the officers are closed. ‘’It is part of efforts PHED is putting in place to enhance customers satisfaction. The problem of looking for where to vend is completely solved as you can do this at the comfort of your house at any period of the day’’, he added.

AfDB approves €900m for Algeria's industrial, energy support The African Development Bank, AfDB, has approved a € 900-million loan to Algeria to finance the country's Industrial and Energy Competitiveness Support Programme, PACIE. PACIE aims to help create conditions conducive to inclusive growth in Algeria through implementation of economic reforms to (i) ensure fiscal consolidation through improved domestic revenue mobilisation and rationalisation of budgetary expenditure; (ii) improve the investment climate, opening up the economy to improving framework for private economic initiative and activities, foreign as well as local; and (iii) improving efficiency of the energy sector and promoting renewable energy.

With declining oil revenues, Algeria's overriding economic challenges call for a vigorous policy response built on fiscal consolidation through broadening and strengthening the revenue side, rationalising and reducing expenditures,

Solar power, Algeria enhancing the efficiency of capital expenditure to ensure long-term budget sustainability; as well as structural transformation centred on diversification, away from hydrocarbon, and strengthened competitiveness and job creation.

PACIE is in line with the New Economic Growth Model, NMCE, 2016-2030 adopted on July 26, 2016, and addresses Algeria's need to enhance the resilience and competitiveness of its economy and, hence, lay a solid foundation for sustainable growth that creates jobs and wealth.

The PACIE is the first lending operation of the new strategic framework highlighting the cooperation between the Bank and Algeria for the period of 2016-2018.

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World Bank sending specialist power finance team to Nigeria -Adeosun

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he World Bank plans to send a specialists power finance team to see how it could proffer financial solutions to the challenges of power in Nigeria, Finance Minister, Mrs. Kemi Adeosun, has revealed.

This is the outcome of discussions with the Bank officials during its recent annual meeting.

"We also met with JICA, the Japan International Cooperation Agency at the last concluded IMF/ World Bank Annual meeting and we secured their commitment to facilitate trade and investment in Nigeria, specifically they have agreed to make investments in agriculture, fisheries sector and we have made progress on the Jebba hydro projects which is also a power project," Adeosun told newsmen in Abuja.

She disclosed this as she

announced that the Federal Government and private sector operators in the power sector would meet this month in Abuja with the officials of World Bank to address some key financial challenges that are currently facing the country's power sector.

The meeting which is fixed for November would be attended by the World Bank Group, International Finance Corporation, IFC, and Multilateral Investment Guarantee Agency, MIGA, which provided partial risk guarantees.

Other participants include the Ministry of Power, Ministry of Finance, the Central Bank of Nigeria, Nigerian National Petroleum Corporation, NNPC, for the gas perspective, the electricity generating companies or Gencos, and distribution companies or Discos, including other stakeholders in the power sector.

Mrs. Adeosun

Port Harcourt Disco winds down CAPMI scheme install meters at their homes and then get rebates in form of electricity units from the Discos.

A statement by the Team Lead, Corporate Communications of PHEDC, Mr. John Onyi, advised customers in Akwa Ibom, Bayelsa, Cross River and Rivers States, to stop processing applications under the scheme at any PHEDC office or through

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n line with the directives of the Nigerian Electricity Regulatory Commission, NERC, the management of Port Harcourt Electricity Distribution C o m p a n y, P H E D C , h a s announced that the Credit Advance Payment for Metering Implementation, CAPMI, would end on October 31 in its area of

authority covering four states Akwa Ibom, Bayelsa, Cross River and Rivers.

Recall that CAPMI was introduced by NERC in 2014 to help electricity distribution companies or Discos bridge extant gap in electricity metering by making consumers advance funds to the Discos to

proxy, as the company has since stopped collecting payments.

Onyi explained that the distribution company has rolled out another robust metering plan to meter all its customers as a replacement for the CAPMI scheme.

"PHED has embarked on deployment of meters to all customers who have paid under

Onyi explained that the distribution company has rolled out another robust metering plan to meter all its customers as a replacement for the CAPMI scheme

the CAPMI scheme, and wishes to further inform those who are yet to be metered, to exercise patience as they would be metered within the period.

"Subsequently, the CAPMI scheme which was earlier put in place for quick deployment of meters to willing customers is being replaced by PHEDC metering plan.

"PHEDC has rolled out robust metering plan to meter all its customers, based on phased (area by area) programme within her operational area," the statement said.

Minister of Power, Works and H o u s i n g , M r. B a b a t u n d e Fashola, had earlier in April this year directed NERC to wind down CAPMI scheme, citing instances of contractual distrust between electricity consumers and the 11 electricity distribution companies in the country.