Sweetcrude march Edition by Sweetcrude reports

ExxonMobil reports 103% reserves replacement for 2013P/6

'Gas offers best option for Nigeria for energy generation' P/19

A Review Of The Nigerian Energy Industry March, 2014

VOL 02 N0. 13

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

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Ethiopia: Humanitarian crisis looms near oil fields

ddis Ababa — New allegations of scorched earth evictions of the Ogaden people have raised concerns that a lack of benefit sharing could escalate instability in the region and reinforce separatist tensions as foreign energy companies prepare to extract oil and gas from troubled southeastern Ethiopia. "The resources in this region will make Ethiopia rich but will keep us impoverished. A settlement is all we can hope for to protect our claim to some of the economic advantages of our natural resources," Ogaden National Liberation Front (ONLF) founder Abdirahman Mahdi told IPS. The demise of Ethiopian dictator Hailemariam Mengistu in 1994 triggered a two-decade conflict between the government of Ethiopia and the ONLF.

$20bn Missing Revenue:

Sanusi’s allegations could undermine oil sector investment –Experts Development renews call for PIB passage Increased transparency needed in management of oil resources P/23 Nigeria needs $900bn to develop energy sector in 30yrs, says Jonathan

Contents

2014 March, SweetcrudeReports

Editor’s note

ne issue has clearly dominated national discourse in the last one and half months: Central Bank of Nigeria governor Sanusi Lamido Sanusi's weighty allegation of a missing $20 billion oil revenue and the shock suspension handed to him by President Goodluck Jonathan. A nervy oil and gas sector is still reeling from the impact of the revelations and the controversy arising therefrom. A clear message emanating from all this, however, is the lack or inadequacy of transparency in the management of the nation's oil resources. With this in mind, we join Mr. Ledum Mitee, chairman of the board of the Nigerian Extractive Industries Transparency Initiative, NEITI, in his call for an immediate passage by the National Assembly of the Petroleum Industry Bill, PIB, as he spoke with us on telephone in the process of our gathering materials for our cover story for this edition. We agree with him that the PIB - the original version packaged by industry stakeholders - will bring transparency to bear on the industry and help in addressing other loopholes in the system. Mitee is one of the many experts who spoke to us on the repercussions of the latest development on an oil and gas industry where fears of possible

4 6 12 14 21 25 30 33 36 40 42 45

undermining of investment are very much up in the air. Just as we hit the market weeks back with our February edition which we packaged specially for the Nigerian Oil and Gas Conference, NOG, 2014 in Abuja, we were confronted by a rather rude information on the postponement of the conference. A message from the organisers simply stated that they have been asked by the Federal Government to reschedule the conference as the planned venue for the event would be hosting the nation's centenary celebration billed for the same period. For an event that has grown in stature to become perhaps the most important gathering of oil and gas industry stakeholders in this part of the world, the Federal Government order was most inappropriate. It does not speak well of a nation that wants to be seen as serious, especially one where oil and gas constitutes the most important sector of the economy. As industry stakeholders prepare to gather in Abuja later this month for the rescheduled conference, it is our hope and prayers that it would eventually hold this time around. We have again packaged yet another special edition for this allimportant event. That's exactly what you have in your hands. Happy reading.

COVER

Sanusi’s allegations could undermine oil sector investment –Experts

OIL ExxonMobil reports 103% reserves replacement for 2013

FOCUS Destroying illegal refineries in Niger Delta region & the idea of modular refineries

GAS Trans-Sahara project: Nigeria ready with own segment in 2018 - Jonathan

POWER

Gas supply remains a challenge to power stations

FINANCE

No provision in CBN Law for suspending governor - Sanusi

LABOUR Oil workers confront Govt over new payroll system SOLID MINERAL

Nigeria losing lives, billions to illegal mining - Expert

FREIGHT NPA adopts e-payment to improve revenue base

MOTORING VW makes $9.2bn offer for rest of truckmaker Scania

TECHNOLOGY Wind turbine technology

COMMUNITY

Peace still on exile at Ugborodo community

EDITOR-IN-CHIEF Hector IGBIKIOWUBO EDITOR Chuks ISIWU ASSISTANT EDITORS Yemie ADEOYE Toju VINCENT Eluonye KOYEGWUAEHI

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2014 March, SweetcrudeReports

Cover Story

2014 March, SweetcrudeReports

Sanusi’s allegations could undermine oil sector investment –Experts

An oil worker OSCARLINE ONWUEMENYI & YEMIE ADEOYE

he recent sack of Central Bank of Nigeria, CBN, governor, Mallam Sanusi Lamido Sanusi, marked the climax in what has become a riveting episode in the nation’s oil and gas industry. His shock dismissal was undoubtedly linked to his allegations of a multibillion-dollar subsidy racket inside the Nigerian National Petroleum Corporation, NNPC, which may partly explain the huge shortfalls in what the nation is earning from its crude. Sanusi accuses the national oil company of not accounting for $20 billion of oil revenue, although President Jonathan says the CBN governor was only asked to step aside to allow for proper investigation into issues raised by the Financial Reporting Council on the bank's 2012 audit report. “All that we have said as Central Bank, and I think that

there is no disagreement – is that NNPC shipped $67 billion worth of crude. They have repatriated or we have established that $47 billion has come back to the federation. There is $20 billion that has not come back,” Sanusi had noted in his memo to the Senate Committee on Finance investigating the matter. The CBN governor may have been ousted from his position – and facing investigations and possible legal action – but experts are worrying about the repercussions of his revelations and the controversy they have thrown up for the oil and gas sector, many fearing that they could undermine investment in the sector. There are also calls for increased transparency in the management of the nation's oil resources. "The Petroleum Industry Bill has to be passed into law if the industry is to move forward from its current state as it also addresses some of these loopholes in the

system," Mr. Ledum Mitee, chairman of the Nigerian Extractive Industries Transparency Initiative, NEITI, board, said in a telephone interview with SweetcrudeReports. “We can pass this Bill faster by considering the less controversial parts and pass them in bits while we keep deliberating and negotiating on the controversial parts at least, so we can proceed with oil sector operations in an appropriate manner,” Mitee suggested. Abuja-based political consultant, Fabian Ihekweme, on his part, calls for "a new law" that would make Nigeria's oil and gas sector more transparent as he emphasised that "Sanusi was not suspended because the accusations he made are untrue, but because they are dangerous and coming from the Central Bank governor, rather than a politician or an NGO". “Any allegations he makes, any statement he makes is capable of creating

All that we have said as Central Bank, and I think that there is no disagreement – is that NNPC shipped $67 billion worth of crude. They have repatriated or we have established that $47 billion has come back to the federation panic in the stock market," said Ihekweme on the repercussions of the CBN governor's allegations on the economy. Huge shortfalls in oil revenues, which typically account for more than 70 per cent of government income, have periodically come to light in Nigeria. However, the sums involved in the governor’s allegations dwarf previous controversies and come as the broader economy is drawing unprecedented attention from global

investors. Despite consistently high international prices, Nigeria’s income from oil has been declining sharply, putting pressure on state finances, foreign reserves and the naira, the local currency. The scale of resulting shortfalls is only partially explained by fluctuations in oil production and direct theft from pipelines. In making his claims to the Senate Committee on Finance, Sanusi provided hundreds of pages of data, expert and legal CONTINUES ON PAGE 5

Cover Story

2014 March, SweetcrudeReports

An oil worker

‘Sanusi’s allegations could undermine oil sector investment’ CONTINUED FROM PAGE 4 opinion, and evidence in the form of contracts to support his allegations in a memo, which w a s o b t a i n e d b y SweetcrudeReports. Mr Sanusi, in the memo, pointed to possible losses of $20 billion in a 19-month period between January 2012 and July 2013 by questioning three main areas in which he alleges that the state has been short-changed. The most glaring anomaly the memo details is in the allocation of fuel subsidies. At meetings aimed at reconciling the numbers last December, the NNPC claimed it had spent $8.49 billion on subsidies that were deducted at source by the corporation. These included subsidy on kerosene.

owever, annexes to Mr Sanusi’s memo show that the kerosene subsidy was eliminated in 2009 by a directive of the late president Umaru Yar’Adua. Further evidence, in the form of official data from across Nigeria, shows that nowhere in the country is kerosene sold at a subsidised rate. It is bought by the NNPC at N150, sold to marketers at N40-N50, but

retails at N170-N250. Mr Sanusi estimates that $100 million goes astray this way each month. “The margin of 300-500 per cent over purchase price is economic rent, which never got to the man on the street. In dollar terms every vessel of kerosene imported by NNPC with federation money cost about $30m and it was sold at $10 or $11m generating rent of $20m per vessel to the syndicate,” he writes. Mr Sanusi also questions the legality of billions of dollars of deductions for petrol subsidies allegedly funded outside the legal budgetary framework. He says the figures the corporation has provided imply that it is importing up to twice as much fuel as the country consumes. In reality, he says, private marketers, who in prior investigations have taken the brunt of blame for alleged fraud, supply half the market. Sanusi calls on the NNPC to provide evidence that the fuel it claims to have imported actually arrived. He also raises questions over the value Nigeria is getting from crude oil swaps with international and local

The most glaring anomaly the memo details is in the allocation of fuel subsidies. At meetings aimed at reconciling the numbers last December, the NNPC claimed it had spent $8.49 billion on subsidies that were deducted at source by the corporation. traders, in which oil is exchanged for refined fuel imports without cash changing hands.

he expert analysis he attaches lists several ways in which these opaque arrangements, covering an estimated 200,000 to 220,000 barrels per day of Nigeria’s total crude production, which fluctuates between two million and 2.2 million per day, could be costing the state. One such contract, dating from 2011, contains a clause permitting the destruction of related documents a year after

contract termination, highlighting potential difficulties in ascertaining the true value of swaps. Finally, Mr Sanusi delves into an equally complex arrangement whereby the Nigerian Petroleum Development Corporation, NPDC, a subsidiary of the NNPC, entered into “strategic alliance agreements” to finance and manage oilfields in which Royal Dutch Shell had sold off its stake. Three law firms consulted by the Central Bank said these agreements contravened the constitution by effectively transferring control of

revenues and profits on stateowned assets to private companies. Mr. Sanusi noted that of a total of $7 billion in crude shipped under this arrangement, the Federation received only $400 million in taxes from the NPDC during the period he examined. As expected, Sanusi’s revelations prompted a furious rebuttal from Andrew Yakubu, the NNPC’s group managing director, who accused him of failing to understand “the technicalities of the oil industry.” “CBN is not an auditing outfit. But what it is doing is now auditing. We have no problem with auditing, but let the professionals, the certified bodies and agencies do i t , ” h e s a i d . In response to questions from our correspondent, the main companies involved in the NPDC deal – Atlantic Energy and Seven Energy – defended both the legality and commercial rationale of what they said were standard service contracts. They said contractually, it was up to the NPDC to pay the state its dues after deductions, according to a revenue-sharing formula.

Oil

2014 March, SweetcrudeReports

ExxonMobil reports 103% reserves replacement for 2013 Reserves additions total 1.6boe

xxonMobil Corporation, the world's the largest publiclyt r a d e d international oil and gas company, says it replaced 103 percent of its 2013 production by adding proved oil and gas reserves totaling 1.6 billion oil-equivalent barrels, including a 153 per cent replacement ratio for crude oil and other liquids. It is the 20th consecutive year the US company's reserves replacement would exceed 100 per cent. “Our industry-leading record of long-term reserves replacement demonstrates the success of our global strategy to identify, evaluate, pursue and capture highquality opportunities,” said Rex W. Tillerson, chairman and chief executive officer of the company. “The size and diversity of ExxonMobil's global resource base, the largest held by an international oil company, provide us with unequaled investment flexibility to profitably develop new supplies of energy to meet future demand,” he added. At year-end 2013, ExxonMobil's proved reserves totalled 25.2 billion oilequivalent barrels, which was made up of 53 per cent liquids,

up from 51 per cent in 2012, and 47 per cent natural gas. Liquid additions during 2013 totalled 1.2 billion barrels, or 153 percent of production, and natural gas additions totalled 400 million oil-equivalent barrels for a 52 percent replacement ratio. Excluding the impact of asset sales, reserves additions during 2013 replaced 106 per cent of production. Exxon Mob il expressed satisfaction that the 2013 results marks the 20th consecutive year it replaced more than 100 per cent of its production. The average replacement ratio over the past 10 years - considered a better indicator of reserves performance due to the longterm nature of the industry was 120 per cent. Liquids replacement over the period averaged 104 per cent and natural gas replacement averaged 141 per cent.

he reserves additions made over the 10-year period comprise a diverse range of resource types and have broad geographical representation. ExxonMobil's reserves life at current production rates is 16 years. The company said reserves additions in 2013 reflectd new developments with significant funding

ExxonMobil headquarters

commitments as well as revisions and extensions of existing fields resulting from drilling, studies and analysis of reservoir performance. The annual reporting of

in all reserves bookings. Resource Base During 2013, according to ExxonMobil, it added 6.6 billion oil-equivalent barrels to its resource base, driven

The average replacement ratio over the past 10 years considered a better indicator of reserves performance due to the long-term nature of the industry - was 120 per cent.

proved reserves is the product of the corporation's longstanding, rigorous process that ensures consistency and management accountability

primarily by resource additions in Canada, Argentina, Tanzania, the United Arab Emirates and the United States.

Additions include continued success in by-the-bit exploration discoveries, undeveloped resource additions and strategic acquisitions. ExxonMobil's by-the-bit conventional exploration success in 2013 included discoveries in Tanzania, Nigeria and Australia. In addition, discovery and delineation of North American unconventional assets contributed to the resource base. Overall, the corporation's resource base totalled nearly 91 billion oil-equivalent barrels at year-end 2013, taking into account field revisions, production, and asset sales. The resource base includes proved reserves, plus other discovered resources that are expected to be ultimately recovered.

Oil

2014 March, SweetcrudeReports

best practices. “In this regard, NNPC contracted the University of Maiduguri to undertake an Environmental Baseline Studies (EBS) and Environmental Impact Assessment (EIA) which will be a guide in the current and future exploration activities in the region. “As a responsible corporate citizen, NNPC has embarked on sustainable developmental projects for her host communities in the areas of infrastructure, health and education. NNPC has also undertaken projects such as provision of potable water through sinking of boreholes as well as refurbishing of classroom blocks in primary schools in the area.

Chad Basin

Govt committed to oil search in Chad Basin, says NNPC

he commitment of the Federal Government to oil and gas exploration in the Chad Basin is unwavering, the Nigerian National Petroleum Corporation, NNPC, has said. It said its corporate services unit, the National Petroleum Investment Management Services, NAPIMS, has continued with seismic acquisition activities in the Chad Basin frontier area despite the security challenges currently being experienced in the area. A statement by Dr Kennie Obateru, on behalf of the Group General Manager of NAPIMS, said the acquisition project being handled by Integrated Data Services Limited, a subsidiary of NNPC, in partnership with BGP, a subsidiary of the China National Petroleum Corporation, is a part of a 12phased 3D seismic data acquisition programme covering 3,550 square kilometres, of which Phase 5, covering 252 square kilometres, has just been concluded. Currently, Phase 6 of seismic acquisition programme covering 266sq. km has commenced. From Phase 1 to date, a total of 1,437 sq.km of seismic data has been acquired. Of this,

1,096 sq.km of seismic data has been duly processed and is ready for interpretation. Preliminary seismic data interpretation has produced some leads that will be further investigated to establish drillable prospects, the statement said. It added that the seismic acquisition activities were carried out with due regard to environmental protection and in accordance with international standards and

NAPIMS has continued with seismic acquisition activities in the Chad Basin frontier area despite the security challenges currently being experienced in the area

“NNPC will continue to carry out community-oriented projects as the programme progresses with a view to positively touching the lives of the host communities. Meanwhile, over two thousand youths and local contractors have been actively engaged to provide various services including provision of boat and canoes in swampy terrains,’ the statement further said. It would be recalled that the current exploration activities in the Chad Basin started over three years ago and has covered five seismic acquisition phases. Our current strategy is to continue Phase 6-12 to enable us complete acquisition & interprete prior to further drilling activities in the area. The statement added that effort was being intensified “to complete interpretation of the acquired aeromagnetic surveys across the 6 inland basins as part of the aggressive exploration agenda for increasing our country’s reserve base.”

Kenya’s first licensing round not expected till Q4 2014

enya’s first licensing round has been postponed due to a new proposed national energy bill and energy policy, which will bring significant changes to the fiscal and regulatory environment of the country’s oil and gas industry, according to research and consulting firm GlobalData. The company’s latest report states that Kenya’s first licensing round was originally scheduled for June 2013 and was to offer eight blocks for bidding, but plans have now stalled pending the passage of the new energy bill, expected in June this year. Under the proposed bill, the current regime is expected to be altered to add royalties and provide gas-sharing

terms and windfall profits. Although the details of the royalty have not yet been outlined, GlobalData believes that the introduction of such an upfront payment would undoubtedly represent a setback in the relative attractiveness of the regime. Another significant change is the introduction of licensing rounds for hydrocarbon blocks. John Sisa, GlobalData’s analyst covering Upstream Oil & Gas in the Sub-Saharan region, says: “The emergence of direct competition for oil and gas blocks should strengthen the link between the level of industry interest in the area and the severity of the fiscal regime, since production sharing terms are likely to be part of

the bidding criteria. Therefore, if more discoveries are made, this could probably result in the introduction of licensing rounds with a tougher fiscal regime for new entrants.” Additionally, the regulatory climate is also expected to tighten under the new terms. The draft energy bill sets out a framework of environmental and other regulations for upstream oil and gas activities, and proposes that these should be enforced by the Cabinet Secretary under advisement by a new body, the National Fossil Fuels Advisory Committee. Furthermore, more stringent local content requirements are expected to be placed on exploration and production companies, which will potentially increase costs.

Oil

2014 March, SweetcrudeReports

Sapetro, SkyVision in 5-year data services contract

Sapetro Towers on Victoria Island, Lagos

outh Atlantic Petroleum or Sapetro has awarded a fiveyear contract to SkyVision Global Networks Limited for the installation and management of its corporate voice and data services. SkyVision, a leading global communications provider, recently announced the successful implementation of the project with SAPETRO, a leading Nigerian oil and gas provider. SkyVision said the contract with Sapetro, one of Nigeria’s major oil and gas upstream companies with new operations in Benin, includes the installation of a full suite of SkyVision connectivity solutions in Benin and the ongoing management of the project.

The contract consists of an end-to-end voice and data managed solution, based on multiple technologies, integration and professional services, creating unique value to customer operations. According to the company, the project includes mesh VSAT and wireless point to multipoint connections for Sapetro’s offices and operational sites, mobile terrestrial units and vessels, coupled with the integration of SkyVision services, including Voice and Telephony over IP, two-way radios, mobile satellite phones, managed firewall and WiFi. Sapetro prides itself as an indigenous Nigerian oil and gas exploration and production company, focused on creating value in the

Also in West Africa, we have a 100% operating interest in the Block 1 concession including the Sèmè oilfield, offshore the Republic of Benin pursuit of rewarding exploration, development and production opportunities in Africa. "We have a balanced portfolio of assets which provide a strong platform for growth. In Nigeria, we are interest holders in deepwater OML 130 and OPL 246, where the outstanding Akpo field has produced over 200 million barrels of condensate to date. The block’s second multi-billion dollar deep water project

Egina, is expected to come on-stream in 2017," the company said on its website. It added: "Also in West Africa, we have a 100% operating interest in the Block 1 concession including the Sèmè oilfield, offshore the Republic of Benin. Sèmè field is a brownfield and has a long and proven production history stretching back 30 years. This is complemented by Block 1, in deeper water, which contains strong

exploration prospects and resource potentials. Redevelopment works are current on-going with first oil expected in 2014. "In East Africa we have majority operating interests in two contiguous deep-water blocks in the Mozambique Channel: the Juan de Nova permit area located in a French overseas territory, and Belo Profond in Madagascar. We are currently the second largest operated acreage holder in all offshore East and Southern Africa and are well placed to play a leading role in one of the world’s major emerging hydrocarbon provinces". The company said it remains focused on continued strategic growth in subSaharan Africa while building lasting and beneficial partnerships.

Oil

2014 March, SweetcrudeReports

Opuama adds 2,500 barrels to Nigeria's daily oil output

Oil exploration

he Opuama oil field, a joint v e n t u r e between the N i g e r i a n Petroleum Development Company, NPDC, and London-listed Eland Oil & Gas, has added 2,500 barrels of crude oil to Nigeria's daily oil output. This is sequel to the reopening of two existing wells in the OML 40 license, following successful completion of restoration work, testing and commissioning of the production and export facilities. Crude produced is being delivered to the Shell Forcados export terminal through a recentlycommissioned flowstation and export pipelines. The field has gross recoverable proven and probably reserves of 52.4 million barrels. NPDC is the operator of the field and holds a 55% interest, while Eland's joint venture company, Elcrest Exploration and Production, holds the remaining 45%. Production from the field was delayed late last year, sending Eland shares plummeting.

The partners had expected production to begin by the end of 2013, after pushing back the start date from the end of last year's first q u a r t e r . The Opuama facility had been shut down for seven years, with the company originally expected to complete restoration of the facility and export pipelines in October, last year. Eland said failure of the completion of the restoration work then was because it was taking place in a challenging environment. The restoration work involved replacement of corroded infield flowlines, refurbishment of the production flowstation and repair of the oil export pipeline as well as replacement of all corroded and damaged sections. Eland also said in October last year that once production commences, output would be in excess of 2,500 barrels of oil a day from two existing wells in the field while it expected output to increase by about 3,000 barrels a day for each subsequent new well drilled during 2014. Said Andrew McGeary at Northland Capital Partners:

“Management remains a key attraction to Eland and its patience is likely to be rewarded with further opportunities in country.”We expect the pace to pick up this year. First, production will

trigger the drawdown of the company's US$22 million debt facility to enable development drilling that will also be supplemented by reinvestment of production cash flow. “The company may take a

cautious approach to drilling back to back deviated wells and this may also take longer given the pace so far demonstrated by the national operator NPDC. Even so, we expect Eland to exit this year with significant production volumes”.

Stanley out, Ahmed in at PPPRA

fter 35 years in service, executive secretary of the Petroleum Product Pricing Regulatory Agency, PPPRA, Reginald Chika Stanley, proceeded on retirement last month with the Federal Government appointing Mr. Farouk A. Ahmed in his stead. Stanley, from Abia State, was appointed to the position in November 2011, following his 32 years in the oil and gas sector, during which he has served as Marketing Manager, Nigerian Liquefied Natural Gas, NLNG; Executive Director, Duke Oil Company, UK; Executive Director (Commercial), Pipelines and Products Marketing Company, PPMC; Managing Director, PPMC; and Managing Director, Hyson Limited. He was the Group General Manager in charge of the Nigerian National Petroleum Corporation’s New Business Development Division at the point he was appointed as executive secretary of PPPRA to replace Mr. Goody Chike Egbuji. In a statement announcing the appointment of Ahmed, Special Adviser to President Goodluck Jonathan on Media and Publicity, Dr. Reuben Abati, said: “He comes to his new job at the PPPRA with over 28

years’ experience in the oil and gas industry and a sound commercial and trading background having held senior positions in the downstream sector of the oil and gas industry including Manager, Crude Oil Programming, Nominations, and Shipping and Terminals. “Mr. Ahmed has also served as Executive Director (Commercial), Pipelines and Products Marketing Company Limited (PPMC)”. The new executive secretary, who hails from Sokoto State, was until his appointment Managing Director of Nidas Marine Limited, a subsidiary of the NNPC.

Oil

2014 March, SweetcrudeReports

NIGERIA CONTENT INITIATIVE Dr. Ibilola Amao

Local Content, Accountability and Transparency

Queue at a filling station

Reforms: National fuel consumption drops by 20.54m litres - PPPRA

he Petroleum Products Pricing Regulatory Agency, PPPRA, says its reforms in the nation's fuel supply scheme has seen the quantity of petrol consumed in the country daily drop from 60.20 million in 2012, to 39.66 million in 2013. “Our reform initiatives have led to the elimination of petroleum products wastages, scarcity and other malpractices in the supply chains, resulting in the reduction in quantity of petrol consumed from 60.20 million in 2012, to 39.66 million in 2013," former executive secretary of the agency, Mr Reginald Stanley said shortly before he was removed from office. According to him, the reforms also led to savings amounting to about N409 billion in subsidy claims in 2012. “We have also been able to achieve and sustain transparency, while deepening local content promotion in the industry through the restriction of participation to only owners of coastal discharge/depot facilities,” Stanley told members of the International Association of Energy Economics, IAEE, pledging the commitment of his agency to sustaining the reform initiatives in the fuel supply scheme as well as in guaranteeing adequate supply of products nationwide. Members of the House of Representatives recently applauded the PPPRA for its ability in saving N409 billion subsidy claims in 2012. Chairman, House Committee on Petroleum Resources

(Downstream), Mr. Dakuku Peterside, who made the commendation in Abuja, also applauded the agency for the reduction in the volume of petroleum products consumed in the country from 60.20 million litres a day in 2012 to 39.66 million litres in 2013. “We can clearly see that the agency has put its efficiency to work to save such enormous amount in one year and this is

deeply commendable. Our prayer is that you sustain the tempo. It is good to ensure that Nigeria enjoys maximum gain from the subsidy we pay,” Peterside said. But, he added: “As we commend you, we say we are not still satisfied; we are not where we ought to be. There is still more work to be done to ensure that we bring subsidy to the best that it is supposed to be.”

Proust is first female CEO of IOC in Nigeria

rench oil giant Total, has appointed Elisabeth Proust as new managing director and chief executive officer for its Nigerian unit and subsidiaries, making her the company’s first female head in its 50 years of operation in Nigeria. She is also the first female CEO of an international oil company, IOC, in the country. Proust, who succeeded former CEO Guy Maurice, is expected to oversee the activities of Total E&P Nigeria Ltd, Total Upstream Nigeria Ltd and other subsidiaries operating in Nigeria. “We have great confidence in the ability of Proust to steer the ship of the upstream companies in Nigeria at this critical period in the Group’s activities in the country,” said YvesLouis Darricarrere, Total Upstream President South Africa. With Nigeria’s target of 40 billion barrels reserves and 4 million barrel of daily output by 2020, Proust’s ability to maintain Total’s position as a leading oil and gas operator is paramount, more critically with the present volatility being experienced in the country’s oil market. Proust previously occupied the position of president director of France`s Total E&P Indonesie and head of the Indonesian Petroleum Association, IPA. Present in Nigeria since 1962, Total is among the three topranked international companies operating in the country. The group operates four out of the 52 licenses in which it holds a participating interest and five exploration licenses out of eight. In 2005, its production share reached 250,000 barrels of oil equivalent per day, boe/d, compared with 271,000boe/d in 2004.

or a country that ranks 144 out of 175 in Transparency International’s 2013 Corruption Perception Index (CPI) and recently got scared by reports of inappropriate accounting practice, Nigeria could have a serious image crisis as a nation if she does not take cognizance of the effect of unfavourable news on the her ability to attract Foreign Direct Investment (FDI) and implement Nigerian Content. After the Occupy Nigeria socio-political protests in January 2012, which was in response to the removal of fuel subsidy by the Federal Government of President Goodluck Jonathan, the Minister of Petroleum Resources setup three special Presidential task forces to tackle the problem. Almost two years after the set up to review and advise on issues that relate to funds misappropriation and fuel subsidy there has been little change in the modus operandi of the sale of crude oil and importation of finished products. Also, the recommendations from these committees are yet to be publicized and strategies for correcting the anomalies yet to be implemented. Why is Nigeria not very transparent about her hydrocarbon resources, clandestine in her award of contracts, unprocedural about the execution of due process and uncommitted to creating and maximizing value? Besides the decoy of activities listed in the brief issued when committees are being set up, it is most infuriating when the members who are chosen to carry out function (e.g. design a template for key production/management, provide critical performance indicators to be tracked on a periodic basis for ministerial review, review all licenses issued for new refineries in Nigeria and assess their operational, technical, and financial readiness etc), conclude their activities, submit reports then discover that nothing transformational occurs after they have put in hard work. The committee on verification and reconciliation of fuel subsidy payment was set up to investigate subsidy claims by oil marketers. They came out with mind boggling findings and discovered huge amounts of money fraudulently collected by oil marketers as subsidy since 2009. Years afterwards and five months after the Central Bank announced that $50 billion in revenues from oil exports from January 2012 to July 2013 had not been remitted to the federation account, the Finance Ministry is requesting for a forensic audit of Nigeria’s Federation account. To cap all these unclear processes there is now a further credibility issue because the Ministry of Petroleum, Finance and the Nigerian masses are uncertain about the true facts of how value is being created by Nigeria’s hydrocarbon resources. If our generation is to avoid being labeled as wasteful and irresponsible by Nigerians yet unborn, we must empower watch dogs to monitor value created and utilized in the Nigerian hydrocarbon industry. Monitoring and reporting from bodies like the Nigerian Extractive Industries Transparency Initiative (NEITI), Facility for Oil Sector Transparency in Nigeria (FOSTER) and Transparency International (TI) is required. These are the bodies that should validate the forensic audit if and when one is produced. With Nigerian Content being all about value creation, it is advisable that rather than award contracts to third-party companies, NNPC and the Federal Government of Nigeria (being accountable to the Central Bank of Nigeria and 170 million plus Nigerians) should trade products directly on the spot market. For NNPC to determine and apply a price (“NNPC’s Official Selling Price (OSP)”) to a barrel of Oil is sacrilegious!!!!. The need to pass the Petroleum Industry Bill into law, deregulate the downstream of the Nigerian economy and build our refining capacity rather than export crude cannot be overemphasized. Nigeria has a huge image laundering assignment ahead of her in her centenary year. The NEITI report shows that subsidy disbursements spiraled from US $1.3 billion in 2009 to $5 billion in 2011 or 380% over three years. Several modular refineries or a couple of refineries could have been built at this cost if a single-digit loan guarantee was put up by government in support of ownership of commercially viable refineries and petrochemical plants. The current dispute about the practice of deducting subsidies from what NNPC should have paid to the government and the illegality of spending money that should have been budgeted, accounted for and processed through the Central bank is a major concern which has been raised, is yet to be tackled but must be addressed urgently.

2014 March, SweetcrudeReports

Focus

2014 March, SweetcrudeReports

Destroying illegal refineries in Niger Delta region & the idea of modular refineries

A modular refinery

CHIJIOKE NWAOZUZU

llegal oil refineries in Nigeria thrive on illegal oil bunkering, stolen crude oil, and vandalism of oil pipelines and other installations. Without a doubt, these illegal oil operations are reprehensible and should not be condoned for a number of reasons. Firstly, it is improper for citizens of this country to destroy oil installations in their bid to steal crude oil as feedstock for illegal refineries. Secondly, it is lawless to set up any kind of refinery without going through the licensing process with the relevant government agency (Department of Petroleum Resources, DPR). Thirdly, it is most inappropriate for anybody, Nigerians or foreigners, to steal crude oil belonging to the Nigerian State with impunity. Finally, and perhaps the most

worrisome is what the illegal oil refiners do with the residue (black oil) from crude oil distillation process. There are serious environmental issues involved regardless of whether they dump the ‘black stuff’ into the river or simply incinerate it. I recently had a thoughtprovoking discussion on the issue of illegal refineries with Prof Goddy Igwe, the Director Centre for Gas, Refining & Petrochemicals, University of Port Harcourt. However, on further reflection I realized that there may be a few positive lessons to be learnt from these illegal oil operations. First lesson: there is a significant imbalance between our projected refining capacity and existing capacity, such that it has become very tempting to boil crude oil in drums knowing that there is a guaranteed market for the petroleum products (which they usually sell as diesel,

AGO). Second lesson: smallscale (modular) refineries could be profitably sited close to oil flow stations and terminals. So, I thought that it may be unwise for government to ‘throw out the baby with the dirty bath water’. BIG CAPACITY REFINERIES VERSUS MODULAR REFINING FORMAT The capital outlay for any 100,000 barrel per day (bpd) refinery is about $1.5 billion, while a 24,000 bpd modular refinery is roughly $250m. Therefore, it is easier to access funds for the modular refining modules (through US Ex-IM Bank). The manufacturing time for plant, equipment and machinery for a plant of 100,000 bpd capacity is within the range of 3-4 years. Start-up for modular refineries of 24,000 bpd is within 18-20 months. The

The manufacturing time for plant, equipment and machinery for a plant of 100,000 bpd capacity is within the range of 3-4 years. Start-up for modular refineries of 24,000 bpd is within 18-20 months

modular system allows the plant to be expanded to 100,000 bpd capacity in structured increments. The increments can be funded with the cash flows from phase 1 and additional phases, and so the refinery will not incur additional debt for the expansion. The expansion of the modular plant capacity can be done without shutting down production from existing equipment and plants. This is not the case with big

capacity refineries. Revenue streams and payback periods are faster with the modular refining format, than with the larger capacity refineries. The major shortcoming with modular refineries are that the plants are semi-automated and less labor-intensive, i.e. not many jobs can be created directly. For instance, 20 to 30 personnel can operate a 24,000 bpd modular refinery. Most of the spin-off jobs CONTINUES ON PAGE 13

Focus

2014 March, SweetcrudeReports

Modular refinery

Destroying illegal refineries in Niger Delta region & the idea of modular refineries CONTINUED FROM PAGE 12 created are of a secondary nature, and based on the location of the site. In summary, modular refineries are simple, efficient and fast to start up. Such refineries usually operate at optimal capacity at all times. The relatively small investment cost allows for private investors to enter the refining business much easier. It also enables government to build the bigger capacity refineries using the modular format, but in incremental stages. However, governmentbuilt modular refineries should have full conversion facilities (i.e. catalytic reformers and naphtha hydrotreaters) to enable the refineries produce PMS. A NATIONAL OIL REFINING MODEL WORTH CONSIDERING There is a current overreliance on governmentowned refineries. Nigeria can

also adopt a refining model that relies on modular refineries (built and operated by private investors) that will produce all refined products with the exception of petrol (PMS). The implication is that the modular refinery operators will not have to invest in catalytic converters and naphtha hydrotreaters that are required to convert naphtha to petrol. These equipments are capital intensive and complex. Therefore, the exclusion of such facilities in a modular refinery plant will further reduce the cost of set-up. This will enable the modular refiners to focus on producing diesel, marine diesel, dual purpose kerosene (DPK), aviation turbine kerosene (ATK), and low-pour fuel oil (LPFO). On the other hand, NNPC refineries can focus on PMS production and become essentially transformed into PMS complexes instead of full conversion refineries. In this case, NNPC refineries will buy all the naphtha

Governmentbuilt modular refineries should have full conversion facilities (i.e. catalytic reformers and naphtha hydrotreaters) to enable the refineries produce PMS.

refineries can produce will include fuel oil, bitumen, asphalt, and petrochemicals. Based on 60% capacity utilization, NNPC refineries have the capability to process 20.3 million litres of PMS per day. These national refineries can add another 13.8 million litres per day if they are converted into PMS complexes, and thus satisfy the nationâ&#x20AC;&#x2122;s immediate PMS production needs. Once this target is met, the national refineries can be prepared for privatization to enhance further growth. The major downside to this proposed model of refining is the transport cost of moving naphtha from each modular refinery to the NNPC PMS complexes. To mitigate the transport costs, modular refineries can be strategically located near the source of crude oil feedstock and the NNPC PMS complexes.

ROLE OF GOVERNMENT feedstock from the modular The Federal Government of r e f i n e r y o p e r a t o r s a n d Nigeria can ensure success in convert these to PMS. Other the following ways: products that NNPC

1. Guarantee feedstock modular operator for years.

crude oil to each refinery at least 10

2. Guarantee a domestic crude oil price for local refining that is indexed to benchmarked price of crude oil for the yearly budgets. 3. Invest in PMS process equipment at the ailing national refineries to enable the refineries process naphtha into petrol. 4. Guarantee to purchase all naphtha feedstock from each modular refinery, and refine as much PMS at NNPC refineries as possible. 5. The business of crude oil distillation should be privatized as soon as possible, because the importation of refined petroleum products for local consumption is too paradoxical to say the least. Dr Nwaozuzu is senior lecturer at the University of Port Harcourt

Gas

2014 March, SweetcrudeReports

Trans-Sahara project: Nigeria ready with own segment in 2018 - Jonathan Gas pipeline SAM IKEOTUONYE

igeria will be ready with work on its own segment of the Trans-Sahara gas project in 2018, President Goodluck Jonathan has said. The project is a transnational pipeline venture across the Sahara Desert designed to transport gas from Nigeria, Niger and Algeria to markets in Europe. The gas pipeline when completed would be operated by the Nigerian National Petroleum Corporation, NNPC, and Sonatrach, the Algerian state-oil firm, both of which will hold 90 percent shares of the equities of the project. The national oil company of Niger Republic, SONIDEP, will hold ten per cent equity. According to President Jonathan, Nigeria has already raised $450 million in Eurobonds and an additional direct equity contribution of about $250 million required for the project. “We have raised $450 million in Eurobonds and an additional

direct equity contribution of about $250m in support of this project. “The NNPC, which is the executor of this project has completed the concept design for the pipeline, which is an important milestone since I last provided an update on this project to the committee,” the president told the 30th meeting of the NEPAD Heads of State and Government Orientation Committee as he presented a status report on project. Represented by the Acting Minister of Foreign Affairs, Prof Viola Onwuliri, Jonthan renewed the special commitment of Nigeria to jump start the project, which has an estimated cost of 20 billion dollars. He said the immediate focus for Nigeria was to connect major gas supply sources in the Niger Delta region through pipeline infrastructure that traverses the northern half of the country and delivers gas to the Nigeria/Niger border. “We have raised $450 million in Eurobonds and an additional direct equity

contribution of about $250m in support of this project. “The NNPC, which is the executor of this project has completed the concept design for the pipeline, which is an important milestone since I last provided an update on this project to the committee”. The report by the president noted that work had begun in the acquisition of Rights of Way survey of key segments of the pipeline, while work on the environmental impact assessment study of the pipeline would soon commence.

onathan informed the NEPAD meeting, chaired by President Macky Sall of Senegal, that the front end design of the pipeline would be completed by the end of the third quarter of 2014. “This will be followed closely by major construction activities on the Trans-Nigeria segment. “It is our expectation and aspiration that work on the Trans-Nigeria segment will be completed, as planned, by 2018”. Specifically, the $20 billion

Specifically, the $20 billion transsaharan project, when completed will transport about 30 billion cubic metres of natural gas from Nigeria through Niger Republic to Algeria and to Spain and other parts of Europe trans-saharan project, when completed will transport about 30 billion cubic metres of natural gas from Nigeria through Niger Republic to Algeria and to Spain and other parts of Europe. Jonathan also told the committee that NNPC, SONATRACH, SONIDEP, have engaged a reputable consultant to carry out the revalidation of the 2006 feasibility study of the project. This, he said, was necessitated by recent developments in the environment and the study would be concluded by March. “This study is part of our

collective determination to ensure that robust gas supply sources and gas marked windows still exist for the project. “Preliminary results indicate some uncertainty around the market opportunities in Europe and this is due mainly to possible intra-European gas pipeline projects from Russia that may compete with supplies from Africa”. The project is intended to integrate the economies of the region in line with NEPAD's vision to boost GDP of participating countries, create wealth and improve the living standards of people in the region.

2014 March, SweetcrudeReports

Gas

Gas plant

Domestic gas price to go up 50% CHUKS ISIWU

he Federal Government may have concluded plans to raise the domestic price of natural gas to $1.5 per 1,000 standard cubic feet as it aims to ensure efficient supply of abundant natural gas to thermal power stations nationwide, representing a 50 per cent increase in the current $1 price for gas to power plants. Group Managing Director of the Nigeria national Petroleum corporation, NNPC, Andrew Yakubu disclosed this recently in Abuja, saying the move is aimed at encouraging more gas supplies/sales to power plants This is as against the current situation whereby they (suppliers) complain about what they describe as the “uneconomic price” of the resource. Indications are that the development may result in an increase in electricity tariff with power producers trying to recover cost incurred. Currently, fertiliser companies pay 90 cents for 1,000 cubic feet of gas while industrial users purchase 1,000 cubic feet of the product for

above $2.50. The price for power producers, who account for about 80 per cent of the domestic gas consumption, was increased about two years ago from $0.1 to $1.0 by the government for the same purpose of encouraging suppliers to sell to power plants. These prices are, however, below the international market price for gas, which is about $3 per 1,000 standard cubic feet. A staff at a major gas producer who did not want her name in print said the proposed rate is below what they would consider “economic as it does not necessarily cover the cost of production”. Indeed, there have been strong concern that inappropriate pricing for gas as seen with the existing price regime might frustrate the Federal Government's efforts at stabilising power supply in the country. This, experts said, was already happening as producers were shunning the power plants in favour of industries, thereby negating the government's intention for the power sector. Financial experts, who blamed the problem of gas

Indeed, there has been strong concern that inappropriate pricing for gas as seen with the existing price regime might frustrate the Federal Government's efforts at stabilising power supply in the country. scarcity on unrealistic pricing regime, had advocated a special financing mechanism for the power industry, which is what the government may have done by pegging the new price below the cost for industrial users. Minister of Power, Prof. Chinedu Nebo, also referenced

the move to raise the price when he stated that appropriate pricing of gas was a necessary factor that would guarantee improved power supply in the country. Nebo, who spoke of the disparity in price between gas supply to the power industry

and the industrial sector, also cited the inability of the defunct Power Holding Company of Nigeria, PHCN, to promptly meet its financial obligations to gas suppliers as a major reason why gas supply to power plants had been erratic, negatively affecting power supply nationwide. “If you were a gas supplier you will first consider supplying gas to the person who pays better and pays on time than the person who pays you much less and still owes you. That has been the picture all along. The power plants were getting gas at very cheap rates because they were owned by government,” the minister said at the occasion.

New Age discovers oil, gas in Elkuran-3

he British Oil company prospecting for oil in the Ogaden basin, New Age, has noted oil and gas flow in its appraisal well Elkuran-3. New Age started drilling the appraisal well last October, with a targeted depth of 2,850 meters. Reliable sources told The Reporter that a crew was drilling the well when it noted oil

and gas flow at a depth of 1200 meters on February 12, 2014. "Oil and gas shows were noted throughout the intervals," the source said. The results are similar to that of Tenneco, the American company that drilled the first exploration well in the Elkuran locality in the 1970s. "Tenneco's drilling crew encountered similar results in 1972," the source said.

2014 2014 March, SweetcrudeReports

Gas

Gas sector reform ongoing, says NNPC

A refinery

he Nigerian N a t i o n a l P e t r o l e u m Corporation, NNPC, says despite short term challenges being experienced as a result of deliberate pipeline sabotage, the gas sector reform launched by the Federal Government is ongoing and on course. It said in a statement in Abuja that as part of the successes of the reform, over 400 kilometres of new gas pipelines have been completed in the country in the last three years while expansion of capacity and enhancement of connectivity were being pursued vigoriosly. The statement was issued in the background of increasing level of vandalism of gas pipelines, which have led to a cut in gas supply to power generating stations, ultimately affecting power supply situation nationwide. “The Minister of Petroleum Resources, Mrs. DiezaniAlisonMadueke directed an

accelerated implementation of the Nigerian Gas master-plan and this has resulted in an aggressive infrastructure development drive and major reforms of the commercial framework for gas in Nigeria. "In the last 3 years alone, over 400km of new gas pipelines have been completed and we are expanding pipeline capacity and enhancing connectivity between various gas supply sources,” NNPC spokesman and acting Group General Manager, Group Public Affairs Division, Dr. Omar Farouk Ibrahim, said in the statement. The NNPC recently announced that power generation has received a significant boost following its completion of repair works on the sections of the sabotaged Escravos-Lagos Gas Pipeline network, ELPS. The corporation said the repair works which has ended almost seven months of gas supply outage caused by

willful hacking of the pipeline in Delta State, would enable the re-injection of almost 200 million cubic feet per day (mmcf/d) of gas into the grid, the equivalent of about 700 Megawatts of electricity. NNPC also completed repair works on the pulverised Trans-Forcados Pipeline which accounts for 230 mmcf/d of gas the equivalent of 805

Megawatts of electricity. With the latest successful repair of the ELPS, the NNPC within the last one week is injecting a total of 430 mmcf/d of gas into the grid which translates to 1, 505 Megawatts of electricity every day. Dr. Ibrahim also stated that an additional 60mmcf/d is expected within three weeks

Many projects are being progressed to assure realisation of this objective. Before the end of the year, about 200mmcf/d new gas will be added to the grid as some projects are billed for completion in June and September.

when ongoing repair works at the Utorogu gas plant is projected for completion. He enthused that Nigerians should expect steady improvement in power availability through the course of the year. He noted that despite short term challenges being experienced as a result of deliberate pipeline sabotage, the gas sector reform is ongoing and on course. “The Minister of Petroleum Resources, Mrs. DiezaniAlisonMadueke directed an accelerated implementation of the Nigerian Gas master-plan and this has resulted in an aggressive infrastructure development drive and major reforms of the commercial framework for gas in Nigeria. In the last 3 years alone, over 400km of new gas pipelines have been completed and we are expanding pipeline capacity and enhancing connectivity between various gas supply sources,” the NNPC Spokesman said. He informed that all PHCN and NIPP power plants are now connected to gas pipeline infrastructure while an additional 450km are under construction currently, of which 340km is due to for completion by the end of 2014 and the balance by 2016. “The ongoing gas infrastructure work is the most extensive the nation has ever seen, with many new kilometers of pipeline being added every day. Gas production and supply has also grown to an all-time high of 1500mmcf/d from less than 500mmcf/d four years ago. A major part of this new supply is being directed to the power sector, whilst the non-power sector such as cement, manufacturing etc. have seen double increase in supply within the same period. Unfortunately, challenges of pipeline attack continue to undermine the impact of these great efforts,” he said. Dr. Ibrahim noted that supply growth remains the priority of the NNPC and its Joint Venture partners. “Many projects are being progressed to assure realization of this objective. Before the end of the year, about 200mmcf/d new gas will be added to the grid as some projects are billed for completion in June and September. The trend is

Gas

2014 March, SweetcrudeReports

1 7

A gas plant

ExxonMobil awards first license for remote gas detection system

xxonMobil U p s t r e a m R e s e a r c h Company has awarded the first commercial license for its innovative InteliRed remote gas detection system to co-developer Providence Photonics. The InteliRed system is designed to improve process safety and environmental performance at oil refineries, chemical plants, liquefied natural gas, LNG, facilities and other gas processing facilities. This new, state-of-the-art system employs a specially developed computer algorithm to autonomously analyse infrared camera images to detect escaping hydrocarbon gases. The InteliRed system provides an early warning alert of hydrocarbon leaks with minimal false alarms, ExxonMobil said. Providence Photonics is an affiliate of Providence Engineering headquartered in Baton Rouge, La, United States. Scientists from the two companies co-developed the InteliRed system over a four-

year period culminating in field tests of the system that began last year at an LNG liquefaction plant in Qatar. “The InteliRed system is the latest example of ExxonMobil’s continuous focus on process safety and environmental protection,” said Sara N. Ortwein,

president of ExxonMobil Upstream Research Company. “Our collaboration with the imaging experts at Providence Photonics has resulted in a remote gas detection system that is very accurate and, with its robust design, is capable of

operating in the harsh environments of many different oil and gas processing facilities around the world,” Ortwein added. “ T h i s s y s t e m automatically and relentlessly scans for hydrocarbon gas leaks from process equipment and

notifies operators to take action before the leak can become a hazard,” said Yousheng Zeng, Providence managing partner. “Our global license from ExxonMobil enables Providence to bring this unique process safety technology to our customers around the world.”

Shale gas, a game changer, says President Zuma

hale gas exploration in the Karoo in South Africa will be a game changer for the region, as well as for the South African economy, South Africa President Jacob Zuma said. “The development of petroleum, especially shale gas, will be a game changer for the Karoo region and the South African economy. Having evaluated the risks and opportunities, the final regulations will be released soon and will be followed by the processing and granting of licences,” said President Zuma in his State of the Nation Address. Speaking at the Mining Indaba earlier last month, Mineral Resources Minister Susan Shabangu announced that the country will soon start fracking (a method of gas extraction) in the

Karoo. Shabungu’s department had published the technical regulations for the development of shale gas for public comment. Delivering the state of the nation address in a year in which the country celebrates 20 years of democracy, Zuma said that construction of new power stations, namely Medupi in Limpopo and Kusile in Mpumalanga, as well as Ingula near Ladysmith, was continuing. “We continue to explore other sources of energy, in line with the Integrated Resource Plan for Energy,” he said.

electricity supply and demand.

The Integrated Resource Plan (IRP 2010), which is administered by the Department of Energy, DoE, is a 20-year projection on

Government is looking at the various aspects involved in the rolling out of nuclear energy, says the DoE.

President Zuma

2014 March, SweetcrudeReports

Gas

'Gas offers best option for Nigeria for energy generation'

An industrial plant

i g e r i a ' s abundant natural gas resources offers the best option for Nigeria to generate energy, chairman of the Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi has said. Nigeria is endowed with over 180 trillion cubic feet of gas reserves, a considerable volume of which is being flared in the absence of a proper gas utilisation programme. Amadi says Nigeria is doing the right thing in utilising the gas for power generation, stressing that gas-powered turbines remained the best option in the country's quest to build a strong load base. According to Amadi, while it is imperative to diversify the nation's energy sources, gas resources are very handy in solving immediate energy need. He disclosed that the Ministry of Power had recently concluded a national power policy on renewables which articulates a framework of gradually increasing the portfolio of renewable energy. He, however, explained that

at this stage where the country was still trying to build a strong load base, gas remained the best options, pointing out that although the Multi-Year Tariff Order, MYTO, modelled 10 per cent

of grid power to be based on renewable, there was presently no renewable power on the grid. “The challenge over gas seems to suggest that focusing on renewable will be

a strategic idea. But, we are trying to build a strong load base and renewable will not in the short term be a strong load base for industrial take off. Gas is still the best option. “There's investment going

on in coal. We have licensed over 2000mw of coal power, but in the short term focus on hydro and gas is Nigeria's more strategic future,” Amadi stated.

US clears sixth LNG project

egulators at the US Department of Energy have approved Sempra Energy’s plan to export liquefied natural gas to non-free trade agreement countries, the sixth such project cleared by the US. The facility in coastal Louisiana would have capacity of 12 million tonnes per annum comprised of three 4 million tpa trains. Shares of Sempra were up nearly 1% in New York. “Today’s authorisation by the DOE represents a critical milestone in the development of our export facilities,” Sempra chief executive Debra Reed said. “Exporting natural gas will lead to the creation of thousands of new jobs and economic growth here in the US and enable our partners to deliver domestically produced natural gas to our allies abroad and to the world marketplace.” Sempra must still clear multiple other permits including approval from the US Federal Energy Regulatory Commission (FERC), but the latest

approval signals willingness by US to allow exports of abundant US shale gas that has driven down commodity prices. The decision brings the total US export capacity authorised to 8.5 billion cubic feet of natural gas per day, according to Reuters data. Sempra last May signed a trio of 20year tolling agreements from the terminal, in which GDF Suez of France and Mitsubishi and Mitsui of Japan each agreed to take 4 mpta of LNG from the facility. The three foreign companies had previously agreed to help Sempra “fund all development expenses, including

design, permitting and engineering” of the project. Construction to convert the import terminal could begin as soon as 2014 with the first phase forecast to go online in 2017 and full operations in 2019. US Louisiana Senator Mary Landrieu, an advocate for the project, lauded the approval. “With the ability to safely export LNG, Sempra’s expansion will bring thousands of jobs to our region and be a major economic player throughout the entire state,” she said. “When complete, Louisiana will be able to compete with foreign companies in the battle for the huge international LNG market.”

2014 March, SweetcrudeReports

Gas

Shale gas drilling

Shale gas, a risk for Nigeria - KPMG

he discovery and exploitation of shale gas and oil in the United S t a t e s o f America, is a major threat to Nigeria and its economy, according to Mr. Michael Soeting, the global chairman for energy and natural resources at KPMG. Soeting, who spoke in Lagos, said the discovery of shale has opened up various options for international oil companies, IOCs, just as it h a s t h r o w n u p unprecedented competition among crude oil producing countries of which Nigeria is one. He revealed that with shale discovery, long-term contracts for Liquefied Natural Gas, LNG, are now being put on hold as buyers anticipate a fall in price. According to him, Nigeria’s chances of attracting investments to its petroleum sector would be reduced as the IOCs resort to increased scrutiny before committing funds to projects, stressing that the shale discovery and exploration would also see

capital expenditure levels of companies reduce. Said he: “Nigeria and other resource-rich countries should realise that if they look at the investment inflow, they will know that there is a threat to investment. Secondly, there is increased scrutiny by the stakeholders of the International Oil Companies (IOCs) of their capital expenditure (CAPEX) level. "You have seen in the fourth quarter 2013 announcements that most of the IOCs are talking about reducing their CAPEX because they are not having enough returns”. “A couple of IOCs have pulled out from Iraq because they said the environment is not sustainable and they cannot sell project economics to their investors. So, it is not that there is limitation on where they can make investments; there is no limitation,” he added. Mr. Victor Onyenkpa, the head, Tax, Regulatory and People Services at KPMG, who also spoke on the issue, said there were two key

problems confronting Nigeria with the advent of the shale revolution. “The first one is that one of our key markets, the United States, is becoming more selfdependent and we have to look elsewhere to sell Nigeria’s crude. The second issue is that we are seeing more countries becoming energy players as well. So, investors have more opportunities to make choice in terms of where they will put their money,” he said. Onyenkpa warned Nigeria on the possible, continued divestment of the IOCs of their assets in the country as he harped on the importance of favourable policies.

ccording to him, in the face of the shale threat and given the various opportunities it had thrown up, the IOCs could be forced to abandon Nigeria for friendlier havens if the country's policies are viewed as unfavourable. “Stable power supply is critical to the quest to diversify the Nigerian

The first one is that one of our key markets, the United States, is becoming more selfdependent and we have to look elsewhere to sell Nigeria’s crude. The second issue is that we are seeing more countries becoming energy players as well

economy. If the country fixes power, business, especially micro, medium and small scale enterprises will do well and be in a position to contribute meaningfully to Nigeria’s economic growth and development,” he said. But to achieve steady power supply, Onyenkpa said the country must also achieve interrupted gas flow to power generating stations, which require natural gas for churning out power. “Building refineries will increase the sale of Nigeria’s crude oil products, both within and outside the country. We will be able to supply our African neighbours. If we do not move in fast and capture the African market, other countries will do it, and this will be disastrous for Nigeria. “Private investments will be required to get the country’s refineries to the level we want. That is why Aliko Dangote’s decision to invest in such huge refinery is a welcome development. If he succeeds, a lot more private investors will come on stream,” he added.

Power

2014 March, SweetcrudeReports

Sapele power plant

Gas supply remains a challenge to power stations

espite the repair work concluded on vandalised gas pipelines, especially in the EscravosWestern axis and retoration of gas supply to electricity generation companies, GENCOs, inadequacy of gas supply remains a challenge to the power stations and the government's already commissioned National Integrated Power Plants, NIPPs. According to Dr Sam Amadi, chairman of Nigerian Electricity Regulatory Commission, NERC, inadequate gas supply is responsible for the shutting down of some of already commissioned NIPPs. He stated that despite commissioning the plants, gas supply remained a serious challenge as he maintained that the situation was so as gas supply had in the past been neglected. Total power generation available for national consumption is still below 4,000 megawatts, mw, SweetcrudeReports gathered. The total maximum amount of power capacity available in

the national grid stood at 4,151mw while minimum capacity evacuation was 3,703mw as at February 13, according to figures from the National Control Centre, NCC, in Osogbo, Osun State. Due to the problem of inadequate gas supply, NERC was recently forced to defer the official commencement of the Transitional Electricity Market, TEM. NERC said in Abuja, after the February monthly meeting with the chief executive officers of the defunct Power Holding Company of Nigeria, PHCN, successor generation and distribution companies, that the move to defer the commencement of TEM was the decision of the entire market players. Amadi cited as the major reasons for the decision, the gas supply challenges confronting the sector. He said: “Let me say that the CEOs agreed with NERC's submission that it will not be realistic to declare TEM next month because of the fact that some of the market condition precedents are yet to be finally resolved. “Particularly, the issue of

losses that is being reviewed by the CEOs and their company and the issue of tariff review that is being projected. So we have agreed to go to the minister and tell him that NERC will review the interim rules and get back to the CEOs at the next meeting and we will amend the interim rules, but the TEM should not be declared until we have met the c o n d i t i o n s ” .

He continued: “There are two categories of the condition precedents, one is market rule based condition precedents and as at today out of the 13 of them, only two are not fully achieved. “On the full automation of system operation processes and market operation processes, we are about 80 to 90 per cent complete on most of those. SCADA system to

have real time communication on gencos and discos and the TCN and we expect to have that complete by April. “The other is not a marketbased rule and that is primarily the issue of gas. We want to make sure that the structural issue about that, commerciality and getting proper briefing from the gas supplier is a condition we want to achieve".

Angola may become clean energy exporter

ngola may become an exporter of electricity based on the clean energy if the regional interconnection is developed. Norway's ambassador to Angola, Ingrid Ofstad, said of the potentials of the country at a conference in Luanda: “In Angola, the huge power of clean energy can be used in order to improve the living conditions of the population, with industrial project of small and big dimension”. The improvement of the electricity supply is one of the millennium development goals and may be a key point for solving some important challenges that Angola faces, like the fight against

poverty and diversifying the economy. On the other hand, the head of department of legal regulation of Electrical Sector, Augusta Rodrigues, who addressed the topic, 'The Revision of Electrical General Law,' said the revision will allow development of electricity in the country. Augusta Rodriguez said the programme intends to electrify the rural areas so lighting these areas and give access to all citizens. The official also said that with this renewable energy programme will be spread up the rural electrification of the country aimed to respond the real needs of the country.

2014 2014 March, SweetcrudeReports

Power

Govt targets power sector players with 'cheap funds'

he Federal Government says its recentlyestablished Power Sector Investment Fund is aimed at making cheap funds available to players in the industry as part of plans to achieve long-term power development in the country. Making the disclosure at the opening ceremony of the International Conference on Power Sector and Infrastructure Financing at the State House, Abuja, President Goodluck Jonathan, represented by Vice President Mohammed Namadi Sambo, said only 55% of the Nigerian population currently has access to electricity. This, according to him, arises mainly from the fact that Nigeria's per capita electricity generation is relatively one of the lowest in the world. The financial resources for the special fund, the president said, would be pooled from the Federal Government's Development Financial Institutions, FDIs, as well as local, global and financial partners. Jonathan, who also averred that electricity supply from the national grid was still as low as 50%, stated that in order to meet the strategic national economic growth and developmental goals contained in the Vision 20:2020 and the Transformation Agenda, decisive and courageous measures needed to be taken towards achieving the 40,000 megawatt target in the years ahead. “To provide avoidable refinancing and unending services to the power sector, the Federal Government will make initial deposits of N300 billion to the Power Sector Intervention Fund and participants should join hands towards making the endeavour a success,” he said. The president also disclosed that his government was making new investments in coal-to-power and renewable energy such as solar, wind and hydro-power plants as well as major gas infrastructure; indicating that huge investments have been

engaged in other sectors of the economy like the construction of road networks, telecommunications, railways, water resources, aviation and agriculture. “It is obvious that government alone cannot fund the infrastructural deficit in Nigeria, especially given the trend in the global economy. Therefore, the conference has come at an appropriate time as opportunities abound in the country, making it obviously the destination of priority for Foreign Direct Investments,” he added. C o m m e n d i n g t h e participation of the Nigerian private sector whose efforts have galvanised over US$2.5

President Jonathan

The financial resources for the special fund, the president said, would be pooled from the Federal Government's Development Financial Institutions, FDIs, as well as local, global and financial partners million, President Jonathan said the government would persist on working with the private sector as drivers of economic growth. He disclosed that under the National Integrated Infrastructure Master Plan, the government requires about US$2.9 trillion for infrastructural development

in the next thirty years (2014 – 2045) and the energy sector needs US$900 billion during the period. The power sector, he explained needs US$10 billion for capital expenditure generation and distribution in the next few years, in order to add 5,000 megawatts and the transmission network needs

US$1.5 billion in the next five years. Minister of Power, Chinedu Nebo, who spoke earlier, said that the conference was aimed at spring up financing frameworks for gaining the financial policy and requirements for the sector, adding that there was a transition from the monopoly of government to a vibrant participation with a transparent but regulated market in the private sector. In her contribution, Minister of Finance, Ngozi Okonjo-Iweala recalled Nigeria's economic growth processes and assured that the returns in 2014 would be greater than that of 2013. The minister stated that the country's economic fundamental is stronger and good for the investor,

especially with 7.9 growth from the non-oil sector, single digit inflation and efforts by government to diversify the economy from oil. Minister of Trade and Investment, Olusegun Aganga, spoke on the expectations of investors from the huge market in the country and its strong regulatory body – the National Electricity Regulatory Commission, NERC, as well as opportunities from gas, oil, coal and solid minerals, among others. Goodwill messages came from the heads of delegations from the African Development Bank and the United States of America. Head of the United States delegation stated that Nigeria is a strategic partner with his country, adding that the US will continue to invest in Nigeria.

Dangote set to expand business empire to Liberia

lans multi-million dollar power plant, cement factory there Africa’s richest man, billionaire Alhaji Aliko Dangote, was in Liberia recently to put further touches to his plan to expand his business empire to the West African country. Dangote, who is ranked by Forbes Magazine as the 43rd richest person in the world, and the richest man in Africa, plans several investments in that country,

including the establishment of a cement and power plants. The Nigerian, during the visit, discussed with President Ellen Johnson Sirleaf arrangements for the cement plant to be built by Dangote Cement Liberia Limited as well as plans for a coal-based power plant that would greatly reduce the cost of, and access to, electricity in the country. The president of the Dangote Group of Companies informed the Liberian

president that seven acres of land have been identified at the Freeport of Monrovia for the construction of the cement plant band a jetty. After a three-year delay, it was time to move ahead with the project, he said. He assured that the limestone needed for the cement - which Liberia does not produce - would be brought in, and crushed and ground for the manufacture of cement locally.

Power

2014 March, SweetcrudeReports

Power plants

Nigeria needs $900bn to develop energy sector in 30yrs, says Jonathan OSCARLINE ONWUEMENYI

resident Goodluck Jonathan has revealed that Nigeria needs about $900 billion in the next 30 years to develop its energy sector. Jonathan, who spoke in Abuja at the Nigeria Power Sector Investors Conference, also assured both local and international investors that the Federal Government was committed to the growth of a private led power sector. The President who was represented by Vice President Namadi Sambo used the opportunity to call on the new operators of the sector to redouble their efforts in ensuring the stabilization of power supply in the months ahead. He noted that “under our National Integrated National Infrastructure Master Plan, we need a total of US$2.9 trillion for our infrastructure developmental efforts in the next 30 years, that is 2014 – 2045. The Energy Sector alone needs an infusion of about US$900 billion during the period. Of this, a significant percentage is expected to come from the private sector.” He added that the Power Sector alone needs about

US$10billion for CAPEX of Generation and Distribution Companies in the next few years in enabling us add additional 5,000mw. “Similarly, our transmission network continues to attract serious attention. The transmission grid requires an annual investment of about US$1.5billion for the next 5 years to ensure its reliability and stability. The Transmission Company of Nigeria (TCN) has commenced t h e a g g r e s s i v e implementation of the expansion blueprint funded by a mix of Appropriation and funds from financial and multilateral institutions. “Government is also making new investments in coal to power as well as in renewable such as solar, wind and hydro power plants and major gas infrastructure. This infusion of resources from other sources will therefore go a long way in fully realising these efforts. In the rest of the economy, we are also making huge investments in other sectors including our r o a d n e t w o r k , telecommunications, railways, water resources, aviation and agriculture,” the president added. He explained that to assist operators of the sector have access to cheap – long term

funds, government was setting up a Power Sector Intervention Fund with initial deposit of N300 billion. “The financial resources for this special fund will be pooled from the Federal Government, Development Financial Institutions (DFIs) as well as local and global and financial partners. The Coordinating Minister of Economy will give details of the operational structure of the Fund. But, will essentially, provide avoidable refinancing and unlending services to the Sector. On its part the Federal Government will make initial deposit of N300billion and I call on all participants to join hand towards the success of this endeavour. That is why it is expected that today’s event will come up with practical funding strategies and help to facilitate the unlocking of the much needed capital for our infrastructural development,” he added.

n his part, the Managing Director of Diamond Bank, Alex Oti stated that local banks have so far invested about N750b into the power sector since the reforms s t a r t e d . While commending government for creating the needed environment for

In the rest of the economy, we are also making huge investments in other sectors including our road network, telecommunications, railways, water resources, aviation and agriculture.

shifting toward energy access investors to put their money to the poor and vulnerable in in the sector, he assured that the society, especially in parts Nigerian banks were ready to of Asia and Africa. do more business in the sector. “Clearly we know that the Also speaking, US Deputy future markets in power are in Assistant Secretary of State the emerging countries and for Energy Transformation, Africa is going to be one of the Dr. Robert Ichord, who led a leaders in that process and a 50-man delegation to the very important market for conference, applauded the investment in the future Nigerian government pulling because 80 per cent of the through the privatization electricity market in the future is coming from the continent. process in the sector. So these opportunities are He however warned that enormous.” attention in the world is

Power

2014 March, SweetcrudeReports

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

Shiroro hydro power plant OSCARLINE ONWUEMENYI

he Federal government is insisting that despite having a base cost of $1.85million per installed mega watt, the 700mw Zungeru Hydro Project remains one of the cheapest in the world. The project which was awarded to CNEEC/Sinohydro Consortium in 2012 for $1.3billion was flagged off in May last year by President Goodluck Jonathan. According to the terms of the agreement, the Chinese Exim Bank is to undertake 75 percent of the cost while the Federal government is providing the remaining 25 percent as counterpart funding. Minister of Power, Prof. Chinedu Nebo who dismissed insinuations that the project was too expensive compared to similar projects in other parts of the world, noted that the average cost of constructing hydro project ranges from $1.05m to $7.65m per installed mega watt.

Nebo, stated this in Abuja at the inauguration of the Zungeru Community Relation Committee that would handle compensation and resettlement issues, further disclosed that it has been established that 22,100 persons, 15,958 farmlands and 6,762 properties located in 98 communities would be impacted by the projects. He noted that, “This is not unexpected in a project of this magnitude. The ministry has accordingly developed a strategy of ensuring that the environmental and social risks of the project are managed in accordance with Equator Principles as adopted by the international community. “In arriving at the valuation figures, the estate surveyors have adopted the rates used by the Niger State Ministry of Lands and Housing as applicable to various types of buildings, structures, crops, and economic trees. The compensation for buildings and structures was based on World Bank guidelines on compensations for lost assets and replacement cost.

“The determination of compensation for crops and economic trees were based on the ‘rates in use’ as obtained from the Niger State Ministry of Lands and Housing," he explained. While assuring that the ministry has secured an excellent value in terms of construction cost, he said the project will be completed in the next 48 months.

ccording to him, “The Zungeru project has a benchmark cost of US$1.85m per installed mega watt; this is very competitive price relative to similar projects worldwide. The international Renewable Agency (IRENA), an intergovernmental organization supporting countries in the development of sustainable energy future, indicates that the 2012 levelised investment cost for large hydropower is in the range of US$1.05m to US$7.65m per mega watt." Nebo further charged the committee chaired by Isa Jubrin to liaise with the three Emirate Councils where the affected communities are

This is not unexpected in a project of this magnitude. The ministry has accordingly developed a strategy of ensuring that the environmental and social risks of the project are managed in accordance with Equator Principles as adopted by the international community

located to ensure quick compensations for the timely realization of the projects. In his response, Jubrin thanked the government for giving them the opportunity to serve the country, assuring that they will do their best to achieve the aims of government.

The Zungeru hydro project was initiated in 1982 when its feasibility studies were initially conducted and submitted to the government by a United States firm, Chas T. Main International and later reviewed in 2008 by French firm, Coyne etBellier.

Finance

2014 March, SweetcrudeReports

No provision in CBN Law for suspending Governor —Sanusi

he last may yet to have been heard on the suspension of Central Bank of Nigeria governor, Sanusi Lamido Sanusi, by President Goodluck Jonathan, given Sanusi's claim that there was no provision in the CBN Law for the suspension of its governor and his resolve to challenge the suspension in court. Said Sanusi, whose tenure would end in June: “It has never been my desire to hold on to a job. However, I believe if the CBN governor cannot be removed from office, then he cannot be suspended. He can be queried, but the exercise of the arbitrary decision to remove him must be challenged”. The former CBN governor was in Niamey, capital of Niger Republic, attending the conference of the West African currency zone with other governors of the Central Banks in West African when news of his suspension broke. He hurriedly left the venue

Sanusi of the meeting shortly after the Nigerian Ambassador to Niger confirmed to him the directive by the presidency to inform him of the suspension. But, in spite of his decision to challenge the decision in

court “to establish once and for all if the President has the powers to do what he has done,” Sanusi said he has resolved not to return to the job, as it was never his desire to hold on to any office.

'Cost of managing Naira drops to N35bn’

h e c o s t o f managing the country’s currency dropped to N35 billion in 2013, according to suspended Central Bank of Nigeria, CBN, governor, Malam Lamido Sanusi. Sanusi, who disclosed this in Lagos shortly before his suspension last month by President Goodluck Jonathan, said the cost dropped from the N49 billion spent in 2009. According to him, the cost of managing the currency would further drop to N30 million in 2014. But, it is, however uncertain whether this would still happen given Sanusi's ouster from the CBN post. The CBN governor said the bank had, since he

assumed office in 2009, been spending less funds on the printing, transportation and management of the currency, attributing the development to the bank's adoption of "centralised cash module". Sanusi, who disclosed that there might be another upward review of the Cash Reserve Requirement, CRR, on public sector deposit from the current 75 per cent to 100 per cent, said "the review can arise if the prevailing percentage by the Monetary Policy Committee (MPC), aimed at ensuring stability in the fiscal system, did not yield the expected result on the nation’s economy". He was of the view that the bank might also raise the CRR on private sector deposit from 12 per cent to 15 per

cent, saying this was because the biggest problem in the macro economy at the moment was the threat to the exchange rate. Sanusi disclosed also that government’s daily spending had increased. "The excess crude account has fallen from 11.5 billion dollars (about N1.79 trillion) to 2.5 billion dollars (about N390 billion) in one year," he said. Maintaining that there was the need for the country to ensure the stability of its currency, he said it was necessary to block all leakages in the oil sector in order to build up the country’s external reserve.

According to him, his major concern was for the financial system, particularly the negative impact of the decision on the Nigerian economy and the need to protect the interest of the

It has never been my desire to hold on to a job. However, I believe if the CBN governor cannot be removed from office, then he cannot be suspended. He can be queried, but the exercise of the arbitrary decision to remove him must be challenged

CBN. Listing the legacies of his tenure at the CBN, he said these included slow inflation rate, stable exchange rate, well governed banking system, robust reserves, independent Central Bank and financial inclusion, and maintained that he was satisfied with the service he rendered. Speaking on the allegations by the Presidency that his suspension was based on the report received from the Financial Reporting Council of Nigeria, FRCN, and other investigating agencies about various acts of financial misconduct during his tenure, Sanusi said he looked forward to see in what the allegation were. He said the only thing he was aware of, which are not new, were the questions asked by FRCN about the published CBN audited account, which he had since sent a response to the President about. But the Presidency reacted to Sanusi's allegation as to the illegality of his suspension, saying even if the president did not have the power to remove the CBN governor, he has the powers to suspend him. “People who talk about illegality, they are referring to Section 11 (2) of the CBN Act. Now under that provision, the reference is to the removal of the CBN governor by the President and there is a qualification there saying that provided that removal is supported by two-thirds majority of the Senate. “But what the President has done is not removal, it is suspension. You know you do not read the provisions in isolation, you read them together and the interpretation Act. If you read all of these provisions together, the trite point is that he who hires can also have the power to suspend. “So if you have the power to appoint, you also have the power to suspend. What has happened is not removal, it is suspension and that is perfectly within the purview of the law,” Dr Reuben Abati, the president's spokesman, said of Sanusi's claims.

2014 March, SweetcrudeReports

Finance

ando Plc is e a g e r l y a w a i t i n g ministerial approval to finally seal its acquisition of ConocoPhillips assets in Nigeria and launch itself as the largest indigenous oil producer in the country. The company has so far met all financial obligations for the acquisition of the ConocoPhillips assets, the company's group chief executive officer, according to Mr Wale Tinubu. “All we require now is the consent of the minister, which is the legal requirement. The transaction will not be fully consummated until the minister consent is received," Tinubu stated as he assured that the necessary ministerial approval was expected to come soon. Through its upstream oil unit, Oando Energy Resources, Oando Plc had in 2012, entered into an a g r e e m e n t w i t h ConocoPhillips with the aim of acquiring the latter's assets in Nigeria at a total $1.55 billion cost. An initial deposit of $450 million was paid and a combination of equity and debt was raised to offset the remaining funding. Tinubu further said of the ConocoPhillips deal: “Oando embodies a multifaceted approach in spite of our origins as a predominantly downstream company; and the successful acquisition of COP Nigerian assets is part of our diversification

ConocoPhillips worker on site

Oando awaits ministerial approval on ConocoPhillips acquisition strategy into the higher margin upstream. "We aim to maintain our dominant positioning in the mid-stream and downstream sectors but see this acquisition

as holding unprecedented opportunities for the business.” According to the chief executive officer, the new deal was a game changer for

Oando as it will immediately position the company as the largest indigenous oil producer in Nigeria. Oando Energy Resources currently produces 4,500

barrels of crude oil per day from two producing fields, but, the new acquisition will push its production to about 50,000 barrels per day from six producing fields.

CBN's cashless policy yielding results —Lemo The CBN was inundated with complaints from customers that unauthorised people were getting access to their accounts and were making unauthorised withdrawals, through ATM cards

r. Tunde Lemo, former deputy governor of the Central Bank of Nigeria, CBN, has said the apex bank's cashless policy was yielding result as only 22 per cent of over 134 billion bulk money transactions were done by physical cash and by cheques compared to 78 by electronic payment. Lemo, who retired recently from service as deputy governor in charge of operations at the CBN, said a further evidence that the cashless was achieving desired result is in the fact that Nigeria has been able to achieve a 96 per cent drop in identity fraud as a result of the introduction of the electronic payment system in the country. The retired CBN deputy governor stated that having achieved 96 drop in 96 per cent drop in identity fraud,

the plan is that this would be further improved to 99 per cent before the end of this year. Explaining how this achievement came about, he said: "The CBN was inundated with complaints from customers that unauthorised people were getting access to their accounts and were making unauthorised withdrawals, through ATM cards. "We investigated the matter and discovered that some of them were releasing the ATM PIN to their wives, housemaids and mistresses, that in turn go round to make the unauthorised withdrawals. "We also discovered that some fraudsters actually stood from a distance and watch other people carryout financial transactions with their ATM cards and they were able to get the PIN in

the process, and after the rightful transactions were concluded, they will use the PIN to carryout unauthorised transactions, thereby defrauding the rightful owners of the accounts." Lemo stated that to find a solution to the problem, the CBN, in collaboration with electronic funds forum, discovered that magnetic stripe cards then in use in the country were vulnerable to identity fraud. It was therefore, decided that the nation moved from the magnetic stripe cards to EMV compliant chip and pin cards, and this was done,he said, adding that the later system was not even in use in the United States at that time. In this process, according to him, Nigeria became ahead of the United States, which, he said, was uptill

moment still using the magnetic stripe. He stated that the CBN has since gone ahead to introduce the token and the second level authentication, both of which he stated had further gone to improve on the level of identity fraud in the system.

Lemo

2014 March, SweetcrudeReports

Finance

BOI to begin disbursement of AfDB $500m fund soon

The Bank of Industry

he Bank of Industry, BOI, has announced that it would soon commence the disbursement of the African Development Bank’s 500 million dollars fund to industrialists in Nigeria. Chairman of the bank’s Shareholders Committee, Mr Muhammed Dikwa, announced the plan at the 53rd Annual General Meeting of the bank in Abuja. Dikwa said that the Federal Government facilitated the acquisition of the fund in order to deepen the bank’s credit delivery process and funding of the industrial sector at concessionary rates. “As soon as BOI complies with the disbursement process which has reached an advanced stage, the Nigeria industrialists will start

benefiting from the incentivebacked facility,” he said. Aside from the AfDB’s funds, he said that there were other existing development fund initiatives under the bank’s management, including the five billion naira BOI/Dangote SmallScale Businesses Development Fund. Other available funds are N100 billion Cotton, Textile and Garment, CTG, Fund, National Automotive Counci, NAC, Fund, NFRA Rice Processing Intervention Fund, Cement Fund, Dikwa said, adding that Cottage Industries Fund and SmallScale Processing Fund and National Sugar Development Fund were also available. Dikwa also stated that the bank recorded increment in fund disbursement by five per cent from N218.8 billion in

2011 to N229.18 billion in 2012 and that the number of beneficiaries also increased from 498 in 2011 to 534 in 2012. According to him, BOI’s schemes have generated indirect employment with the cumulative turnover of the obligators increasing from N503.17 billion per annum before intervention, to N659.15 billion after. “Direct employment by beneficiaries increased from an average of 62,097 before intervention to 76, 581 after intervention, representing an increase of 23 per cent,” he said. The chairman also said that total fund disbursed under the N300-billion Power and Aviation Fund (PAIF) increased by 23 per cent from N147 billion in 2011 to N181 billion in 2012.

As soon as BOI complies with the disbursement process which has reached an advanced stage, the Nigeria industrialists will start benefiting from the incentive-backed facility

He claimed that the beneficiaries under the PAIF scheme had been able to increase their investments in assets and revenue base as a result of lower obligations that they were given on the loan. “The PAIF scheme has

helped in promoting the development of long-term bank credits for infrastructure financing and institutional capacity building for financing power projects within the banking sector,” he said.

2014 March, SweetcrudeReports

Finance

resident, Chartered Institute of Taxation of Nigeria, Mr Mark-Anthony Dike, has said the removal of Value Added Tax, VAT, and stamp duty on capital market activities would affect government revenue. Dike said in an interview that government’s plan to remove VAT would equally affect provisions on capital goods and services. It would be recalled that the Coordinating Minister for the Economy, Dr OkonjoIweala had in December 2012 announced the removal of Stamp Duty and VAT from capital market activities. According to her, the move was part of government’s policy aimed at revamping the nation’s capital market. But, in spite of government pronouncements, the capital market waivers have not been implemented. Dike said that the key element of tax was for government to moderate economic development as well as raise money to provide for capital goods and services. "Government either imposed high tax to dissuade an activity or reduce tax to encourage an economic activity as was the case with VAT and stamp duty on capital market," he said, adding that the removal of VAT and stamp duty on capital market transaction would encourage investors to raise funds at a cheaper rate. He further stated: "The key issue essentially is to remove or minimise cost of doing business and encourage people to go to the capital market to raise funds at a cheaper cost

Ghana Stock Exchange

Tax calculation

Tax expert decries planned removal of VAT, Stamp Duty "What government is trying to do is to use taxation to stimulate economic activity within the country. "If wavering tax will spore more people to the capital market and create some level of stability and confidence in the Nigeria economy then, I support it".

He also described the payment of VAT and stamp duty on the same transactions as double taxation that should not be encouraged. "We have to make up our minds which one we want to impose because we cannot have VAT and stamp duty

b e i n g i m p o s e d simultaneously on the same transaction," he also said. On recapitalisation of the stockbroking firms, he said it was a welcome development that would engender market confidence and investors protection. " T h e i s s u e o f

recapitalisation is key, otherwise the ability of the business to payback in the case of financial difficulty becomes a problem when they have a low capital base," he said.

CBN inaugurates bank verification number

CBN head office in Abuja

he Central Bank of Nigeria, CBN, has inaugurated Bank Verification Number, BVN, to revolutionise banking and payment systems in

the country. The BVN is a biometric authentication of bank customers using Point of Sale, PoS, and Automated Teller Machines, ATMs.

T h e b i o m e t r i c authentication is meant to address the safety of customers’ funds and avoid losses through compromise of Personal Identification Numbers, PIN. The CBN said banks would have captured biometric details of all customers nationwide within the next 18 months and that it has begun to issue circulars to banks to inform their customers to come in and register for the biometric authentication. The CBN said the platform already rolled out

nationwide attracts no charges and would allow banks to enroll and verify the identity of each customer from any point of transaction device. Mr Ade Shonubi, Managing Director of the Nigeria InterBank Settlement System, NIBSS, whose company provides the connectivity service, lauded the initiative. Shonubi said that the initiative represented a major landmark in the Bankers Committee’s efforts at promoting financial inclusion drive and prevent money laundering in the system and that the bankers’

committee’s initiative would also allow banks to give their customers unique identities. Mr Godwin Emefiele, Managing Director of Zenith Bank and Chairman, SubCommittee on Biometric in bankers’ committee, said he was happy that the group met the deadline. Emefiele also congratulated the CBN on the launch of the project, adding that it would open up more consumers banking services.

2014 March, SweetcrudeReports

Labour

2014 March, SweetcrudeReports

Oil workers confront Govt over new payroll system ELUONYE KONYEGWUAEHI

m a j o r confrontation is in the offing between the F e d e r a l Government and oil workers o v e r p l a n n e d implementation of the Integrated Personnel Payroll Information System, IPPIS, in the oil and gas sector. To avert the confrontation, disturbed oil workers have advised the government to halt the planned implementation of the IPPIS in the sector, saying the system was not in conformity with the peculiar nature of the industry. Speaking against the backdrop of a deadline issued by the Office of the Accountant General of the Federation to some agencies in the oil and gas industry, the workers under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, warned that if the government insisted on forcing the IPPIS and its negative effects on the personnel records and payroll system in the oil and gas industry, it could lead to an industrial crisis. They insisted that any deadline given by the Office of the Accountant General of the Federation to enforce the implementation of the new system or to cut the funding of the agencies would be resisted. Speaking in Lagos, both the President and the National Public Relations Officer of PENGASSAN, Comrade Babatunde Ogun and Comrade Seyi Gambo, said government agencies in the oil and gas sectors were currently operating under a very efficient, transparent International Financial Reporting System, IFRS, and there was, therefore, no need to introduce a new system that could drag the industry payroll system back. Ogun argued that the current system operated in agencies in the industry adequately supported easy extraction of data for national budgeting processes and equally made auditing of personnel records easy to be accomplished.

Oil workers He said: “We, PENGASSAN, have written to the Ministers of Petroleum Resources, and Labour and Productivity, as well as the Accountant General of the Federation on our reservations about the planned implementation of the IPPIS policy in our industry. We are against our industry being used as guinea pig to try all forms of policies that are not working in other

industries.” On his part, Gambo explained that the new personnel payroll system did not factored in the ongoing reforms in the industry, especially the Petroleum Industry Bill (PIB), noting that “the IPPIS does not include allowances that are pre-determined because of their technical nature.” He maintained that IPPIS

was implemented and failed in the education sector because it was rigid in nature and did not support time-bound remunerations, calling on the government to shelve the planned implementation of the new system so as not to throw the oil and gas sector into an avoidable industrial crisis. In the same vain, PENGASSAN General Secretary, Comrade Bayo

Olowoshile, argued that instead of introducing the IPPIS policy that could bug down the industry with unnecessary bureaucratic bottleneck, the government should task agencies in the industry to evolve p r a g m a t i s m a n d professionalism required of technocrats worldwide.

NUPENG threatens "sudden" shut down of oil sector …Chides govt over insecurity ELUONYE KONYEGWUAEHI

il industry workers, under the umbrella of the Nigerian Union of Petroleum and Natural Gas Workers, NUPENG, have warned of an impending strike two months after calling off such action. According to NUPENG, it will embark on unannounced indefinite industrial action over alleged unfair labour practices and other “nefarious” activities by major oil marketers and multinational oil companies in the country. Such activities, the union claimed, amounted to economic sabotage. NUPENG President, Achese Igwe, who disclosed this, warned that if issues of alleged unfair labour practices by the multinationals were not addressed by President Goodluck

Jonathan and the National Assembly, the union would resort to an indefinite strike to register the displeasure of oil workers. “NUPENG has watched with great concern the activities of oil majors and multinationals in the industry and warns of imminent fuel scarcity if their nefarious activities are not checked by embarking on nation-wide strike without n o t i c e , ” I g w e stated. “The new drive of the oil majors and multinationals amounts to sabotage and if not controlled will lead to an

unhealthy atmosphere in the sector. We call on President, Dr. Goodluck Jonathan, the Minister of Labour and the National Assembly to quickly intervene before the bubble bursts.” The union president also threatened to stop fuel distribution and shut down the nation’s oil sector to press home its demands. With an annual production of more than 800 million barrels per day, Nigeria is the continent’s biggest oil producer.

2014 March, SweetcrudeReports

Labour

Oil workers

Labour worries over 'massive' job loss, worker-casualisation in oil sector …Says players gradually phasing out pension, gratuity

rganised labour has raised the alarm over increasing job losses in the oil sector and other development that is increasingly threatening the well being of workers in the sector. It said divestment by international oil companies, IOCs, was causing massive job loss in the sector while oil companies' increasing preference for casual workers was another cause for concern. Added to these, according to Labour, is the fact that some players were gradual phasing out pension and gratuity in their system. C o n f i r m i n g t h e development, Lagos Zonal chairman of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Folorunsho Oginni, said Labour was holding the Federal Government responsible for the increasing divestment of assets by multinational oil companies as it has not been able to create the right environment for operators. In support of his case, Oginni cited, for example,

government's alleged failure to address the problems of kidnappings, oil theft, illegal bunkering, piracy, destruction of gas assets in the Niger Delta, and the non-passage of the Petroleum Industry Bill, PIB. The labour leader also lamented that downstream

operators were increasingly casualising their workers without plans for life after work. Pointing particularly to Forte Oil and Conoil, he said they were in the fore-front of a new employment policy, where pension and gratuity are not guaranteed for

workers. “Prior to this time, there were closed pension funds and that is what most of the international oil companies, including NNPC, operated. Most of the workers in the companies, with the advent of the new contributory pension scheme, have

migrated their money to the PFAs (Pension Fund Administrators). The companies no longer handle pension contributions. It’s the PFAs (that do that)," Oginni said. he added: "What they (oil companies) have now are casual workers.

Nigeria making N41.2bn daily from oil sales —PENGASSAN SAM IKEOTUONYE

i g e r i a i s currently making about N41.2 billion daily from crude oil sales, according to the chairman Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Lagos Zone, Mr Funsho Oginni. Mr Oginni, who said Nigeria was producing not less than 2.4 million barrels of crude oil per day, calculated that at the prevailing international market price of $108 per

barrel, the nation's daily production was yielding for it N41.2 billion on a daily basis. The PENGASSAN chairman made the revelation in the backdrop of the current high prices for the commodity and the inability of the nation to use the oil proceeds to achieve a major turn around in its economy. "We produce not less than 2.4 million barrel of crude oil on a daily basis and we sell at $108, which is the price all over the world. Going by that calculation, we are

making about N41.2 billion daily,” he said. He added: The question is, if you are making over N41 billion daily, why is poverty still ravaging the country? where is this money going? When you look at our roads, it is nothing to write home about. "In the issue of Education, you are living witnesses to when lecturers went on strike for over five months. Electricity; we do not have and infrastructure generally, in every ramification, you cannot equate us with ordinary

Ghana". Lamenting the inability of Nigeria to build a functional refinery despite the huge oil revenue, Oginni cited the example of an Asian country, saying: “Singapore is a country that does not have crude oil, they import, yet they have about 62 refineries. They buy the crude, refine and make huge profit. Why is that Nigeria, that has the crude and the manpower is wasting because we cannot build refineries.” On what labour expected the Federal Government to do with the ailing national refineries, the labour leader said:

2014 March, SweetcrudeReports

Labour

Oshiomhole wades into Labour, BEDC dispute â&#x20AC;ŚUnion says it will tackle all anti-union companies ELUONYE KONYEGWUAEHI

overnor Adams Oshiomhole of Edo State has waded into the industrial dispute between the National Union of Electricity Employees, NUEE and the Benin Electricity Distribution Company, BEDC, over alleged antiunion policy of the company. Leaders of the union said but for the intervention of the renowned former labour leader and ex-President of the Nigeria Labour Congress, NLC, the operations of BEDC which supplies electricity to Edo State and its environs would have since been disrupted. General Secretary of NUEE, Comrade Joseph Ajaero, who disclosed this, said the governor pleaded with the union to give him time to meet with the management of BEDC on the matter. Maintaining that the union's patience was running out with the management of BEDC, Ajaero lamented that it was becoming obvious that BEDC was not ready to recognise union and the rights of workers. According to him, "The private sector is not under one umbrella. There are some of the operators that are antiunion, while some are union-

Oshiomhole friendly. As we talk, we are locked up with some on issues, but some others are not giving us problems. We were informed that there was a meeting in December with Minister of Power, Minister of Labour, Nigeria Employers

Consultative Association, NECA, and the investors where issues were discussed. "We were not at the meeting. But, we gathered that they were told that they cannot violate the law of the

land and that if they think they can do without union, it will not be in the electricity sector. This is because when the problem of labour starts, it will affects the economy and everybody. All these were said to have been

FMBN refinances N32bn mortgages for FCT workers

he Federal Mortgage Bank of Nigeria, FMBN, says it had refinanced more than N32 billion mortgages for workers to buy houses in Abuja. Mr Gimba Kumo, the Managing Director of the bank, stated this in an interview, saying the amount was invested to assist workers to buy the non-essential residential Federal Government houses in Abuja. Kumo said that the houses were financed by Mortgage-Backed Bonds, MBB.

"The FMBN arranged the MBB as part of its capital market operations, with the support of the Federal Ministry of Finance," he said, adding: "The amount helped about 13,750 workers in the FCT to buy and own their houses in Abuja. "The first series of the MBB was floated in 2006. Then, the second and third series were done in 2012". The managing director said the bank had embarked on a Ministerial Housing Pilot Project, to deliver affordable houses for Nigerian workers. According to him, this is in collaboration with the Federal

Ministry of Lands, Housing and Urban Development. He said that the allocation of the houses, when completed, would be targeted at Nigerian workers. Kumo said that so far, 28 states and the FCT were contributing to the National Housing Fund (NHF) scheme. He said that it was necessary for more workers, both in the formal and informal sectors, to join the scheme. According to him, the NHF is working and there is transparency and

accountability in its operations. He said that the success of the ministerial housing pilot projects would help the apex mortgage bank to go for another series of MBBs in the capital market. T h e N H F w a s established in 1992 and started the first loan disbursement to beneficiaries in 1997. The contributor is entitled to a loan of up to N15 million at six per cent interest rate, with about 30 years repayment period.

discussed at the meeting. This is a sector that is highly unioniSed. We now have 18 successor companies. We are going to deal with them on individual company level." "If it is Benin Electricity Company we are dealing with, we face only Benin. We can't because Benin is giving problems, we now go to disturb may be Ikeja (Electricity Company) that is working with us. I must tell you that beyond using Benin as an example, the person managing Benin has a pedigree from Union Bank for being anti-union. We are aware of that and we have written one or two letters. We are moving to Benin before long. That is clear. "The same thing is applicable to the man managing Ughelli from Transcorp. These people have this pedigree. You know in union, what is happening elsewhere, you get information about". Still on the problem with the Benin Company, Ajaero stated: "Before now, we have reported her to the governor of Edo State that we are going to put Edo off. He said no and that we should give him time. Just like all of them that are misbehaving, we have reported them to those who can talk to them". Noting that it was not the governor but the people that will suffer if the union decided to paralyse the operations of the Benin Electricity Company, the union leader also disclosed that NUEE would be tackling other anti-union companies in the power sector soon. "Whether that brings any effect on power situation in the country will not be our business. We have given them time to stabilise, but not to distabilise the workers or to enslave them,â&#x20AC;? he said.

The private sector is not under one umbrella. There are some of the operators that are anti-union, while some are unionfriendly. As we talk, we are locked up with some on issues, but some others are not giving us problems

Solid Mineral

2014 March, SweetcrudeReports

Illegal miners

Nigeria losing lives, billions of naira to illegal mining â&#x20AC;&#x201D;Expert

f o r m e r Permanent Secretary, Ministry of Mines and Steel Development, Mr. Linus Awute, says Nigeria is losing both lives and revenue worth billions of naira to illegal mining activities across the country. Awute, who stated that over 400 lives were lost in Zamfara State alone since 2010, also revealed that the country has lost about $50 billion to illegal mining and export of unprocessed gold within the last two years. The ex-Permanent Secretary, who has a been redeployed to the Office of the Secretary to the Government of the Federation, spoke at the recently held NigerianBrazil Investment forum in Abuja. "What the country loses to illegal mining is tremendous. The amount of gold that left this country because of the illegal mining activities is more than $50 billion in the last two years. "The amount of unprocessed gold that has

What the country loses to illegal mining is tremendous. The amount of gold that left this country because of the illegal mining activities is more than $50 billion in the last two years. The amount of unprocessed gold that has left this country through the neighbouring countries, Ghana in particular, and being processed in Ashanti gold is enormous left this country through the neighbouring countries, Ghana in particular, and being processed in Ashanti gold is enormous," Awute stated. According to estimates, over 10,000 illegal miners are in operation in Zamfara State, exploiting the gold in the area, with their activities causing lead poisoning that has been responsible for pollution of the environment and deaths.

Worried by the the level of illegal mining and the effect on the economy, the Federal Government recently warned illegal miners across the country to desist from the act but to rather, organise themselves into cooperative societies as a way of legitimising their operations. A Ministerial Task Force from the Department of

Mines Inspectorate in the Ministry of Mines and Steel Development issued the directive as the members visit the Mailumba-Garin Gabas gold mining site in Rafi Local Government Council of Niger State. The Task Force, led by Engineer Frank Odoom, ordered immediate suspension of activities in the area due to the operations of illegal miners. Odoom stated that in announcing the suspension of the mining activities, the task force was acting in line with the Minerals and Mining Act and the 2011 Mining Regulations. He said his team was in the area to inspect the mining activities and carry out sensitisation on illegal mining as he maintained that informal miners would be barred from operation until they regularised their activities. According to him, the miners had been exploiting the gold and processing it without obtaining mineral title in the area while also using mercury and the dry

milling process for the gold ore, without regard to the health implications of this practice. Odoom, who disclosed the readiness of the ministry to help informal miners regularise their activities, also said security agencies had been directed to arrest illegal miners and their sponsors. According to him, the ministry would facilitate the processing of the applications of the miners to help them legalise their operations. Nigeria is endowed with various solid minerals, ranging from precious metals to stones and industrial minerals such as barytes, gypsum, kaolin and marble. Much of these are, however, yet to be tapped. Other mineral resources that are present in Nigeria but which are yet to be fully exploited include bitumen, coal, columbite, silver, tin, iron ore, limestone, niobium, zinc, glass sands, lead, clays, graphite, asbestos, among others.

2014 March, SweetcrudeReports

Solid Mineral

Minister highlights Nigeria's solid minerals potentials

inister of Mines and S t e e l Developme nt, Mr. Musa Sada, has stressed Nigeria's endowment in solid minerals, saying over two billion tonnes of iron ore deposits occur in various locations across the country. The minister, who said steel would remain the most important engineering material in the world for a long time to come, also stated that one trillion tonnes of coal resources were available in 13 states of the federation. According to the minister, these potentials added to the huge domestic market and markets in neighbouring West African countries have created strong opportunities for Nigeria’s steel and metal industry. Sada added: “There are several private foundry companies operating at low capacity, cold rolled steel mills that depends on the use of imported hot rolled coils as feed stock showing the huge gap that exist in the nation’s steel industry”. But, the ministers warned of possible inability by the nation to attain the projected target of producing yearly 15 million tonnes of local steel production by 2020 in view of low level of operation by private companies and continued importation of about 17 million tonnes of steel products into the country every year.

Solid mineral Besides, the minister harped on the problem of quality affecting the local products. Problem of cheap imports and unfavourable

government policies have also led to the shutting down of most of the privatised steel rolling mills in the country.

S'Africa wants tougher action against illegal mining Illegal mining has economic implications and long-term S rehabilitation implications,

outh Africa's Mineral Resources Minister, Susan Shabangu, has called for more sustainable methods to ensure the closure of open holes, shafts and underground tunnels to prevent illegal miners from reopening sealed access points. "Illegal mining has economic implications and long-term rehabilitation implications, and this is why we must continue to fight it from all angles," the minister said. Her call follows rescue operations to remove miners who were recently trapped

underground in the now defunct New Kleinfointein Gold Mine no. 6 shaft. No less than 25 illegal miners were later rescued from the mine. The Department of Mineral Resource, DMR, through the Council for Geoscience, has sealed 130 holes and shafts since they have been identified, with the remaining 51 sealed by mines operating in the area. "As more holes and open shafts are discovered, they are sealed. But we need better, more sustainable methods which will close these openings permanently," the minister said as she addressed

the Gauteng Illegal Mining Stakeholders' Forum. A number of hotspots have been identified by the forum and are receiving attention. Measures against illegal mining would includes tougher charges and sentencing for illegal miners who have been arrested. The department said it would continue to work with the security cluster of government to enforce this. The forum was established by the minister in 2012 to address challenges faced by the mining industry in respect of illegal mining. It is chaired by the DMR and

and this is why we must continue to fight it from all angles reports to the National Coordination Strategic Management Team on illegal mining, led by the Directorate for Priority Crimes and Investigations the Hawks. The forum comprises the

Departments of Mineral Resources and Home Affairs; South African Police Service; National Prosecuting Authority; mining companies; local government; organised labour and liquidators.

2014 March, SweetcrudeReports

Solid Mineral

Bars of gold

Gold expected from Otjikoto mine this year

he construction of the Otjikoto mine by B2Gold Namibia is said t o b e o n schedule for the production of gold this year. The Otjikoto project is expected to inject nearly US$400 million of investment into the country's economy over its present envisaged life of 12 years. B2Gold Namibia's public relations officer, Gretha du Plessis, said the excavation at the mill area is complete and a concrete batch plant is in continuous use to assist with the pouring of foundations. A total of about 15 000 cubic metres of concrete will be poured during the construction of the project, and a total of 10 500 cubic metres of concrete has been poured to date. Du Plessis added that the mill and mining offices have already been completed by an Otavi contractor, and the construction of all the other administration buildings are progressing well. Most of the equipment and supplies to build the mill area have been purchased and are arriving daily at site. Mill construction activities are progressing well too and 7 500 cubic metres of concrete has been poured in this area, and four leach tanks and three carbon in pulp tanks have been erected. The tailings facility is materially complete, this project encompassed 1.5 million cubic meters of earth

A total of about 15 000 cubic metres of concrete will be poured during the construction of the project, and a total of 10 500 cubic metres of concrete has been poured to date. Du Plessis added that the mill and mining offices have already been completed by an Otavi contractor, and the construction of all the other administration buildings are progressing well movement, and included the placement of an impermeable liner to protect the environment. The project team is busy with final quality checks for approval by the engineering team and the project is capturing water to use during start-up of the mill. To date, the pit area has been de-bushed and stripped. The stripped topsoil from the mine and waste dump is stockpiled so that these areas can be re-vegetated after mine closure. The total volume of material moved from the pit area to date is approximately 4.7 million tonnes. A construction camp about two kilometres northeast of the mine is operational to accommodate construction workers at the Otjikoto site. It can house up to 800 workers, although a large percentage of the workforce comes from Otavi and Otjiwarongo and

are bussed to the site on a daily basis. This camp will only be operational during the construction phase. The Otjikoto gold project is located approximately 300 kilometres north of Windhoek between Otjiwarongo and Otavi and is owned 90 percent by B2Gold and 10 percent by EVI Mining, a Namibian empowerment group. The life of the open pit mine, based on the probable reserves, is estimated to be 12 years, with annual forecast gold production of approximately 141 000 ounces gold per year for the first five years and for the life of mine approximately 112 000 ounces of gold per year. During production, the site will require around 480 full-time workers.

Zimbabwe slashes fees for diamond polishers

he Zimbabwean Ministry of Mines and Mining Development has reduced the licensing fee for diamond polishing companies from U S $ 1 0 0 , 0 0 0 t o US$20,000, at the same time extending the license life span from one year to 10 years. Nearly 70 of the diamond cutting and polishing firms have closed shop over the past three years, with the country's diamond cutting licensing policy being described by industry experts as restrictive. The policy includes a US$100,000 licensing fee that is renewed annually and an additional 15 percent sales tax which is levied on any company that buys diamonds from the producing companies for cutting and polishing on the domestic market. "We would reduce the license fee from US$100,000 to US$20,000 ... You don't bring equipment to Zimbabwe and say I will make money in one year; no you do so over 10 or 15 year periods," the minister of Mines and Mining Development

Walter Chidhakwa said. He added: "We said let the licence be a ten-year licence so you don't have to come here all the time and I can look at you and I say you didn't give me my bribe next year you will be here I will get it from you." Chidhakwa, who was addressing journalists during a press briefing for the mineral beneficiation conference to be held next week, said his ministry intends to build a viable mining industry. "We want to build an industry. We are not in the business of selling licenses. We are in the business of creating industries. That industry then gives everybody jobs, everybody income by way of taxes by way of profits," Chidhakwa said. According to Centre for Natural Resource Governance (CNRG), Zimbabwe has the potential to generate over US$8 billion and create over 200,000 jobs annually, if the government introduces mineral beneficiation which would allow a percentage of the country's rough diamonds to be cut and polished locally.

Freight

2014 March, SweetcrudeReports

NPA adopts e-payment to improve revenue base TOJU VINCENT

he Nigerian P o r t s Authority, NPA, and its trading publics have agreed to adopt the electronic payment system with a view to improving the company's revenue base. Disclosing this in Lagos, Managing Director of NPA, Malam Habib Abdulahi, said it had become imperative for the company's management to seek ways of improving the revenue of the authority without compromising efficiency and comfort for customers. He explained that the epayment process would combat the challenges faced by stakeholders in making payments for business dealings and address complaints of delay in payment confirmation, leading to vessels delays. “Nigerian Ports Authority acknowledges the problems our customers and other stakeholders have encountered in making payments for business dealings with us. Complaints of delays in payments confirmation leading to vessel delays and other harrowing experiences are common place. “ We have therefore responded with a solution that guarantees multiple payment channels and reduces reconciliation challenges to the barest minimum”, he said. The NPA boss listed the benefits of the e-transaction system to include instant payment confirmation, faster and efficient service delivery, improved vessel turn-around time, cost reduction and identification and blockage of revenue leakages. Giving a background to the introduction of the scheme, the Executive Director, Finance & Administration of the agency, Mr. Olumide Oduntan, disclosed that the management on assumption of office identified three pillars critical to transformation in the maritime industry, particularly in port operations, as human resources, technology and

E-payment machines process. He added that previously, it took between three to four days to confirm payments, saying this was so because evidence of such payments had to be taken to the NPA headquarters by customers and the headquarters would then it by courier to the ports. He, however stated that the new system would eliminate

that long process as payments would now be confirmed as soon as they are made, on same day. Mr Oduntan announced that Interswitch Nigeria Limited is providing a platform that would facilitate the operation and t h a t n e c e s s a r y infrastructure that would guarantee the efficiency of

the process had been provided at all port locations while port managers and accountants had been adequately trained for the system. Stakeholders at the launch in Lagos described the introduction of the system as a landmark development for the maritime industry and

c o m m e n d e d t h e management of NPA for evolving the system that is designed to deepen port reforms. Highlight of the occasion was the stimulation and demonstration of the epayment process by shipping agents, port managers, port accountants and officials of Interswitch Nigeria Limited.

Shippers Council to operators: Hike in port charges illegal

he Nigerian S h i p p e r s Council, NCS, has warned shipping companies and terminal operators against unilateral hike in charges without consultation with the council and approval by t h e F e d e r a l Government. According to it, such increases are illegal and are bound to attract sanctions for the erring companies from the government. "It is absolutely illegal for any terminal operator to unilaterally

effect any increase or take action on charges without recourse to negotiations with the Council who is statutorily empowered to negotiate all reviews and increases of port tariffs and rates paid by importers and exporters at all terminals,” the NCS said in a directive sent out to shipping companies and terminal operators. “It is absolutely illegal for any shipping company to unilaterally review or moderate its charges without going through due process," the directive signed by the NSC executive secretary and chief

executive officer, Mr. Hassan Bello, said. The NSC also warned that “any shipping company who contravenes any of the provisions in the regulation is guilty of an offence and will be sanctioned accordingly”. It will be recalled that some shipping companies had some time ago hiked shipping charges without due approval from the Federal Government through the council. The directive asked the companies involved to immediately return to the old charges with an advice that they study and take

note of the regulation guiding local shipping charges on imports and exports, and abide by it. “Any shipping company who contravenes any of the provisions in the regulation is guilty of an offence and will be sanctioned accordingly”, the directive further warned. Concerning terminal operators, the NSC said the companies which took over the operations of the ports from the Nigerian Ports Authority, NPA, following the 2006 concession of the ports, raised charges without due consultation.

2014 March, SweetcrudeReports

Freight

Nigeria Customs officers on parade

Customs' Apapa, FCT Commands generate N21bn revenue

he Apapa Area 1 Command of the Nigeria C u s t o m s Service, NCS, in Lagos generated N19 billion revenue in January, comptroller of the command, Mr Charles Edike, has disclosed. In Abuja, the Customs FCT Area Command also disclosed that it collected N2.05 billion revenue in 2013 against N2.7 billion collected in 2012. The revenue collected by the Command in 2013 was N688.8 million less than that of 2012. Edike said the revenue generated by the Apapa Command in January dropped from the N20.2 billion realised in December, 2013, adding that revenue collected for the Federation Account was N9.3 billion, while N9.5 billion was collected for the nonFederation Account in January. He said that the revenue was realised from levy on iron, seven per cent port levy, duty on imported sugar, wheat grain, wheat flour, and other taxes. According to him, the 20 per cent duty collected on rice importation during the period was N30.9 million against N1 million

generated from the source in December, 2013. He said N235 million was generated from the Negotiable Duty Credit Certificate, NDCC, during the period, while N10 million was realised from the seven per cent charge on NDCC. The NDCC is a payment document for the importation of raw materials.

The revenue generated by the FCT Command came from duties, fees and levies made up of the amount remitted to the federation account and non-federation account. The Command reported that N1.3 billion was collected on import duties, N4.3 million from Common External Tariff (CET) levy and N10.3 million was collected from fees and penalties

and N10.3 million was collected from fees and penalties. It said that N461.1 million came from the five per cent Value Added Tax (VAT), N91.3 million from the seven per cent port levy and N160,959 came from Iron levy. Some special levies, according to the statement

by the Command, included Comprehensive Import Supervision Scheme and E C O W A S T r a d e Liberalisation Scheme which accounted for N175 million. A further breakdown showed that N1.3 billion was remitted into the federation account, while N728.5 was remitted to non-federation account.

Inflation taking a toll on cost of cargo clearance â&#x20AC;&#x201D;Terminal Operators

hairman of the Seaport Terminal O p e r a t o r s Association of Nigeria, STOAN, Princess Vicky Hastrupp, says inflation is taking a serious toll on cost of cargo clearance at Nigerian ports. Hastrupp, who spoke in Lagos, also attributed high cost of business at Nigerian ports to multiple taxation and high duty on cargoes as well as various levies by government agencies, which, according to her, were not applicable in neighbouring countries. These are apart from the high cost of running terminals, she stated, adding that besides storage and cargo handling charges

collected by terminal operators from importers and agents, they (importers and agents) are made to pay levies and duties by other agencies. "While the duty on rice in Nigeria is put at 110 percent, it is seven percent in Benin Republic and zero percent in Cameroon," Hastrupp stated, as she stressed that it was this situation that has orchestrated smuggling across the Nigerian borders. She added: â&#x20AC;&#x153;It is actually much more expensive to run terminals in Nigeria than in other countries. Let me say it loud and clear here that the concessionaires are not increasing cost, you have double taxation and all sort of levies, even the

industrialist can attest to this". The STOAN boss, who r e c o u n t e d t h e achievements of terminal operators, said they have been adding value to the system, maintaining that the ports had become more efficient than they were 8 years ago. According to her also, the efficiency operators had brought about at the terminals has resulted in increased cargo volume and ship traffic in the country. On challenges confronting operators, Hastrupp cited congestion of the access roads to the ports, which she said delays delivery of cargoes.

2014 March, SweetcrudeReports

Freight

Navy intercepts hijacked Greek merchant tanker TOJU VINCENT

fter about two weeks of her disappearance a n d t h e subsequent accusations and denials between her owners and the Angolan government, the Nigerian Navy intercepted the Greek-owned merchant tanker, MT KERALA, purportedly hijacked off the coast of Luanda in Angola. The arrest was achieved using the Nigerian Navy’s remote surveillance system and search patrols by her ships. Announcing the arrest of the ship, Director of Naval Information; Commodore Kabir Aliyu, confirmed that MT KERALA was under Ghanaian custody in the Port of Tema while Interpol o p e r a t i v e s w e r e investigating the circumstances of her hijack. Sharp disagreement over the actual fate that befell the Liberian-flagged tanker had peaked a week after the disappearance of the vessel, which was reportedly hijacked by pirates suspected to be Nigerians on January 18, 2014. The Greek owners of the oil tanker had claimed that pirates hijacked the vessel and stole a large quantity of the cargo, contradicting the Angolan Navy’s denial that such an assault took place. The company said in a statement that the cargo was taken off the vessel via a ship-to-ship transfer, adding that, the pirates thereafter disembarked. But the Angolan navy had alleged that the crew turnedo f f t h e s h i p ’ s communications to fake a pirate attack. But giving an insight into how it got involved in the search, the Nigerian Navy said in a statement that on January 23, it received a report from the International Maritime Bureau, IMB, that MT KERALA had been hijacked off Luanda in Angola. “Subsequent report from IMB on January 25 located her about 50nm South West of Pennington Oil Terminal in Nigeria. In a swift response, three patrol vessels were deployed to search for MT KERALA. “Two other vessels, MT ITRI and a tug boat GARE

Merchant tanker were reportedly in the vicinity of MT KERALA, allegedly conducting ship-to-ship transfer of products with KERALA in gross violation of existing regulations in Nigeria,” the Nigerian Navy said. It stated that MT ITRI was tracked to the Lagos Area and was arrested by a team of

Nigerian Navy and Nigerian Maritime Administration and Safety Agency, NIMASA, personnel. T h e s u c c e s s f u l interception demonstrated the efficacy of inter-navy cooperation between Ghana and Nigeria as well as the effectiveness of the

Nigerian Navy’s remote surveillance capability. The Navy said that the reported conduct of illegal ship-to-ship transfer, if proven, constituted a violation of existing regulations in Nigeria. It further stated that the uncooperative attitude of the ship’s crew and owners after

the pirates released the ship as claimed,left much to be desired. The navy said it was awaiting the outcome of the investigation by Interpol, Nigeria’s High Commission in Ghana as well as the Angola and Ghana Navies.

Delay in cargo clearance hampering business —LCCI

he Lagos Chamber of Commerce and Industry, LCCI, has identified delay in cargo clearance as one of the factors hampering smooth operations of business in Nigeria. “One of the major shortcomings of the investment environment in Nigeria is the speed of cargo clearance at the ports; the 48-hour target set by government is far from being achieved,” LCCI president, Mr. Remi Bello, said in Lagos. He said in a statement that this problem was one of the factors that is contributory to the high cost of doing business in Nigeria, expressing worry also about corruption at the ports. Bello noted the side effect of the delay in cargo clearance to include high demurrage, disruption of production

schedules as raw materials are delivered on time to factories, high risk of corruption at the ports, increased inflation and high cost of borrowed funds by importers. He maintained that delays in the positioning of cargo at the port terminals are caused by inadequate equipment for cargo handling; high incidence of cargo block-stacking; poor access roads to the ports; and poor road network within the ports. It is also caused by frequent breakdown of the server of

the Nigeria Customs Service, delays in cargo release from shipping lines and tight deadlines for cargo examination booking, he said. "The rail system designed to evacuate cargo from the Lagos ports need to be resuscitated as a matter of utmost urgency. The menace of trucks, trailers and tankers on Lagos roads, in particular, and the national road network in general, has assumed an unbearable dimension,” Bello also said.

2014 March, SweetcrudeReports

Motoring

2014 March, SweetcrudeReports

VW makes $9.2bn offer for rest of truckmaker Scania single overhead camshafts. It is fueled by 100-octane E10 fuel, but like many racing engines, exact power figures have not been released. Starworks has had a close relationship with Honda

since it won the LMP2 class at the 24 Hours of Le Mans and in the FIA World Endurance Championship in 2012 with a Honda Performance Development ARX-03b chassis and Honda engine. We can't wait to see

this new mill hit the track, and see how it fairs against Chip Ganassi Racing's EcoBoost-powered Riley. Scroll down to read the press release for the full details.

Top Rated SUVs - 2014 Vehicle Dependability Study Scania truck

olkswagen owns or has controlling interests in t h r e e commercial truck operations: besides its own, VW began buying shares in Sweden's Scania in 2000 and now controls 89.2 percent of its shares and 62.6 percent of its capital, then bought into Germany's Man in 2006 - in order to prevent Man from trying to take over Scania and now owns 75 percent of it. The car company has managed to work out 200 million euros in savings, but believes it can unlock a total of 650 million euros in savings if it takes outright control of Scania and can spread more common parts among the three divisions. It has proposed a 6.7billion-euro ($9.2 billion) buyout, but according to a Bloomberg report, Scania's minority investors don't appear inclined to the deal. Although effectively controlled by VW, Scania is an independently-listed Swedish company, and a profitable one at that: in the January-September 2013 period its operating profit was 9.4 percent compared to Man's 0.4 percent. Some of the other shareholders believe that Scania is better off on its own and will not approve the deal, some have asked an auditor to look into the potential conflict of interest between VW and Man, while some are willing to examine the deal and "make an evaluation based on what a long-term owner finds is good," which might not be just "the stock market price plus a few percent." The

buyout will only be official assuming VW can reach the 90-percent share threshold that Swedish law mandates for a squeeze-out. Many of the arguments against boil down to investors believing that Scania's Swedishness and unique offerings are what keep it profitable, and ownership by the German car company will kill that. (Have we heard that somewhere before?) If Volkswagen can buy that additional 0.8-percent share in Scania, perhaps its buyout wrangling with Man will give it an idea of what it's in for: "dozens" of minority investors in the German truckmaker have filed cases against VW, seeking higher prices for their shares. It is likely only to delay the inevitable, though. If VW is really going to compete with Daimler and Volvo in the truck market, it has to get the size, clout and savings to do so. Honda unveils new 3.5-liter racing engine Honda is following Ford's lead and debuting the second twin-turbocharged V6 to be used by Daytona Prototypes in the United Sports Car Championship. The wait won't be long to see it on track because the new engine will debut with the Starworks Motorsport team in a Riley Gen3 prototype chassis at the 12 Hours of Sebring from March 12-15. The new HR35TT engine is based on Honda's J35 production V6 found in a variety of its models, including the current Accord. The racing version benefits from dry sump lubrication, but is still similar to the production version with an aluminum block, direct injection and

2011 Honda SUV Top rated compact CUVs 2011 Honda CR-V SUV Overview

he Honda CR-V, which is a compact four-door SUV, has been in production since 1995. The 2011 model, now in the fifth year of its current-generation body style, was changed only slightly from last year. New for 2011 is the SE trim level, which sits in the range above the entry-level LX models, but below the range-topping EX models. The SE package includes alloy wheels, upgraded audio system, and rear privacy glass.Honda's CR-V is offered in four trim levels. Standard LX models have cloth upholstery, air conditioning, power windows, and power mirrors. The new SE models are upgraded with alloy wheels, six-speaker stereo (with 6-disc changer CD player), and rear privacy windows. The EX trim levels add a power moonroof, automatic headlights, and body-color exterior trim (among other things). Under the hood of the fivepassenger SUV is a standard 2.4-liter, 4-cylinder engine

rated at 180 horsepower. The standard driveline is frontwheel drive, but Honda's "Real Time 4WD 2011 Toyota FJ Cruiser SUV Overview The Toyota FJ Cruiser is a mid-size sport utility vehicle with retro design cues. Introduced as a concept at the 2003 Chicago Auto Show, it went into production for the 2007 model year. Still in its first generation, the vehicle receives minor updates for the 2011 model year. These include improved access to the second row, an upgraded audio system, and folding rear head restraints. There is also a new Trail Teams Special Edition model.

The FJ Cruiser is offered in one trim level, divided into three distinct models based on powertrain configuration. The base, or 4x2 AT, is rear-wheel drive with an automatic transmission. It is configured with waterresistant fabric upholstery, air conditioning, full power accessories, six-speaker audio system, and 17-inch steel wheels. The 4x4 MT model features four-wheel drive and a manual transmission, while the 4x4 AT is four-wheel drive with an automatic transmission. Major options include lightweight 17-inch alloy CONTINUES ON PAGE 41

2011 Toyota FJ Cruiser SUV

2014 March, SweetcrudeReports

Motoring

Top Rated SUVs - 2014 Vehicle Dependability Study CONTINUED FROM PAGE 40 wheels, upgraded JBL audio package, daytime running lights, and an electronically-controlled locking rear differential this last item is standard on the 4x4 AT model. Toyota fits its FJ Cruiser with a standard 4.0-liter, six-cylinder engine that is rated at 260 horsepower. A five-speed manual gearbox is standard on 4x4 MT models, while the 4x2 AT and 4x4 AT models receive a five-speed electronicallycontrolled automatic transmission. The EPA rates the fuel

Under the hood is a standard 2.5-liter, 4-cylinder engine rated at 179 horsepower. However, Toyota also offers a 3.5-liter V6 with 269 horsepower, on all trim levels. The standard powertrain is front-wheel drive, but fourwheel drive is also offered. The EPA rates the 2011 Toyota RAV4 fuel economy between 19 mpg city, and 28 mpg highway, depending on engine and driveline. The 2011 Toyota RAV4 2WD 4-cylinder starts with a base price of about $22,500 and

2011 Toyota RAV4 SUV economy of the 2011 Toyota FJ Cruiser between 15 mpg city, and 22 mpg highway, depending on driveline. The 2011 Toyota FJ Cruiser 4x2 AT starts with a base price of about $26,000 and tops out with the FJ Cruiser 4x4 AT model, which starts around $27,500. 2011 Toyota RAV4 SUV Overview The Toyota RAV4 is a compact four-door SUV which has been on sale in North America since 1996. The 2011 model is in its third-generation and was last redesigned for the 2006 model year. In 2009, the RAV4 received a mid-cycle refresh, with a new engine and updated cosmetics. The 2011 model is essentially a carryover from last year. Toyota's RAV4 is offered in three different trim levels. The standard model is simply called the Base. Standard equipment includes air conditioning, cloth upholstery with 6way adjustable driver's seat, cruise control, remote keyless entry, and 16-inch wheels. The Sport model is upgraded with fog lamps, cosmetic enhancements, sport-tuned suspension, 18-inch alloy wheels, and more. The range-topping Limited model features equipment such as leather upholstery, automatic climate control, automatic headlamps, and 17-inch alloy wheels.

tops out with the Limited 4WD V6 model, which starts around $29,000. 2011 Acura RDX SUV Overview The Acura RDX is a compact crossover that was first introduced for the 2007 model year. Small than the MDX, the RDX is designed for consumers that are looking for a sporty crossover - the RDX is fitted with Acura's first turbocharged engine. In 2009, Acura refreshed the exterior and added a front-wheel drive model. The 2011 Acura RDX is a carryover from last year. The RDX is offered in four different trim levels, with each upgraded variant building upon the one below it. The standard RDX is equipped with front-wheel drive, leather upholstery, full power accessories, 10-way power driver's seat, heated front seats, a seven-speaker audio system, 18-inch alloy wheels, and more. The RDX SH-AWD adds the automaker's "Super Handling All-Wheel Drive" system, which is designed to improve grip and traction during

both inclement weather and spirited driving. The RDX with Technology Package front-wheel drive - is bundled with navigation system and a 410-watt tenspeaker audio system, steering wheel-mounted audio controls, rearview camera, and more. The RDX SH-AWD with Technology Package adds all-wheel drive. Under the hood is a standard turbocharged 2.3liter, four-cylinder, rated at 240 horsepower. It is mated to a standard fives p e e d automatic transmission. F r o n t w h e e l drive is standard, with allw h e e l d r i v e optional. The EPA rates the f u e l economy of the 2011 Acura RDX between 17 mpg city, and 24 mpg highway, depending on driveline. The 2011 Acura RDX starts with a base price of about $33,000 and tops out with the RDX SH-AWD with Technology Package model, which starts around $38,000 2011 Mercedes-Benz GLK-Class SUV Overview The Mercedes-Benz GLKClass is a compact luxury crossover that sits to below the ML-Class and the larger GL-Class in the Mercedes lineup. The GLK-Class was introduced in 2009 as an allnew model, sharing platform components with the C-Class sedan. Changes are minor for 2011, with the automaker adding a driver's knee airbag and lower front seat airbags. There is also a new AMG Sport package on the options list.The GLKClass is available in only one trim level, called the GLK350, but features a long list of available accessories and two drivelines. In base trim, the GLK350 is fitted with vinyl upholstery (MB

2011 Acura RDX SUV

Tex, as Mercedes brands it), full power accessories, cruise control, automatic headlamps, eight-way power front seats, dual-zone climate control, 19-inch alloy wheels, and more. Popular equipment packages include full leather upholstery, bi-xenon headlamps, COMAND infotainment system, panoramic sunroof, power tailgate, rain-sensing wipers, and auto-dimming mirrors. An AMG Sport Package adds 20-inch wheels, roof rails, and unique bumper fascias. Under the hood is a standard 3.5-liter, sixcylinder, rated at 268 horsepower. A seven-speed automatic transmission is

the only gearbox offered, but customers are offered a choice between rear-wheel drive and optional permanent all-wheel drive-which the automaker calls 4MATIC. The EPA rates the fuel economy of the 2011 Mercedes-Benz GLK-Class between 16 mpg city, and 23 mpg highway, depending on driveline. The 2011 Mercedes-Benz GLK350 starts with a base price of about $36,000. The 4MATIC model is based at $38,000. Note that popular options or option groups will likely add to those base prices.

2011 Mercedes-Benz GLK-Class SUV

Most common repairs required of newer vehicles

ome consumers buy a new vehicle to enjoy a t r o u b l e - f r e e ownership experience and the benefits of a factory warranty. However, just because a vehicle is new and covered by a warranty doesn't mean that components are impervious to wear or will not require repair. As a part of its annual Vehicle Dependability Study (VDS), J.D. Power asks original owners of threeyear-old vehicles about the vehicle components they needed to replace or repair in the 12 months prior to taking the survey. According to the 2014 VDS, the following 11 components most frequently required repair or replacement during that period of time, when the vehicles were between two and three years old. They are listed below in order of the rate of failure, starting with the one that most frequently r e q u i r e d replacement. 1. Battery According to the 2014 V e h i c l e Dependability Study, 5.9% of vehicle owners needed to replace a

battery on their vehicle during the specified period of time, representing a slight improvement from the previous year. 2. Exterior Lighting Not including headlight components, 3.4% of vehicle owners indicated they needed to change a taillight, brake light, or a turn signal lamp. This represents the largest year-over-year improvement among any of the most commonly replaced components. 3. Windshield A total of 2.7% of vehicle owners replaced a windshield during the 12 months prior to completing the survey, which is a slight improvement from the previous year. 4. Brake Rotors The second-largest improvement in component replacement pertains to brake rotors, with 2.4% of vehicle owners reporting that they needed to replace them. This is a 1.2% improvement from the previous year. 5 . H e a d l i g h t Components (tie) A total of 1.8% of vehicle owners indicated they needed to replace headlight components during the 12 months prior to completing the survey, which is the same percentage as in 2013.

Technology A Wind turbine

2014 March, SweetcrudeReports

wind turbine is a device that c o n v e r t s kinetic energy from the wind into electrical power. A wind turbine used for charging batteries may be referred to as a wind charger. The result of over a millennium of windmill development and modern engineering, today’s wind turbines are manufactured in a wide range of vertical and horizontal axis types. The smallest turbines are used for applications such as battery charging for auxiliary power for boats or caravans or to power traffic warning signs. Slightly larger turbines can be used for making small contributions to a domestic power supply while selling unused power back to the utility supplier via the electrical grid. Arrays of large turbines, known as wind farms, are becoming an increasingly important source of renewable energy and are used by many countries as part of a strategy to reduce their reliance on fossil fuels.

technology

organizing of owners into associations and cooperatives lead to the lobbying of the government and utilities, which incentivized larger turbines throughout the 1980s and afterwards. Local activists in Germany, nascent turbine manufacturers in Spain, and large investors in the U.S. in the early 1990s then lobbied for policies which stimulated the industry in those countries. Later companies formed in India and China. As of 2012, Danish company Vestas is the world’s biggest wind-turbine manufacturer.

Resources

History Windmills were used in Persia (present-day Iran) as early as 200 B.C. The windwheel of Heron of Alexandria marks one of the first known instances of wind powering a machine in history. However, the first known practical windmills were built in Sistan, an Eastern province of Iran, from the 7th century. These “Panemone” were vertical axle windmills, which had long vertical driveshafts with rectangular blades. Made of six to twelve sails covered in reed matting or cloth material, these windmills were used to grind grain or draw up water, and were used in the gristmilling and sugarcane industries. Windmills first appeared in Europe during the middle ages. The first historical records of their use in England date to the 11th or 12th centuries and there are reports of German crusaders taking their windmillmaking skills to Syria around 1190. By the 14th century, Dutch windmills were in use to drain areas of the Rhine delta. The first electricitygenerating wind turbine was a battery charging machine installed in July 1887 by Scottish academic James Blyth to light his holiday home in Marykirk, Scotland. Some months later American

Charles F. Brush's 60 foot, 80,000 pound turbine that supplied 12kW of power

inventor Charles F Brush built the first automatically operated wind turbine for electricity production in Cleveland, Ohio. Although Blyth’s turbine was considered uneconomical in the United Kingdom electricity generation by wind turbines was more cost effective in countries with widely scattered populations In Denmark by 1900, there were about 2500 windmills for mechanical loads such as pumps and mills, producing an estimated combined peak power of about 30 MW. The largest machines were on 24meter (79 ft) towers with fourbladed 23-meter (75 ft) diameter rotors. By 1908 there were 72 wind-driven electric generators operating in the US from 5 kW to 25 kW. Around the time of World War I, American windmill makers were producing 100,000 farm

windmills each year, mostly for water-pumping. By the 1930s, wind generators for electricity were common on farms, mostly in the United States where distribution systems had not yet been installed. In this period, high-tensile steel was cheap, and the generators were placed atop prefabricated open steel lattice towers. A forerunner of modern horizontal-axis wind generators was in service at Yalta, USSR in 1931. This was a 100 kW generator on a 30-meter (98 ft) tower, connected to the local 6.3 kV distribution system. It was reported to have an annual capacity factor of 32 per cent, not much different from current wind machines. In the fall of 1941, the first megawatt-class

wind turbine was synchronized to a utility grid in Vermont. The SmithPutnam wind turbine only ran for 1,100 hours before suffering a critical failure. The unit was not repaired because of shortage of materials during the war. The first utility gridconnected wind turbine to operate in the UK was built by John Brown & Company in 1951 in the Orkney Islands. Despite these diverse d e v e l o p m e n t s , developments in fossil fuel systems almost entirely eliminated any wind turbine systems larger than supermicro size. In the early 1970s, however, antinuclear protests in Denmark spurred artisan mechanics to develop microturbines of 22 kW. The

A quantitative measure of the wind energy available at any location is called the Wind Power Density (WPD) It is a calculation of the mean annual power available per square meter of swept area of a turbine, and is tabulated for different heights above ground. Calculation of wind power density includes the effect of wind velocity and air density. Color-coded maps are prepared for a particular area described, for example, as “Mean Annual Power Density at 50 Metres”. In the United States, the results of the above calculation are included in an index developed by the National Renewable Energy Laboratory and referred to as “NREL CLASS”. The larger the WPD calculation, the higher it is rated by class. Classes range from Class 1 (200 watts per square meter or less at 50 m altitude) to Class 7 (800 to 2000 watts per square m). Commercial wind farms generally are sited in Class 3 or higher areas, although isolated points in an otherwise Class 1 area may be practical to exploit. Wind turbines are classified by the wind speed they are designed for, from class I to class IV, with A or B referring to the turbulence.

Efficiency Not all the energy of blowing wind can be harvested, since conservation of mass requires that as much mass of air exits the turbine as enters it. Betz’ law gives the maximal achievable extraction of wind power by a wind turbine as 59% of the total kinetic energy of the air flowing through the turbine. Further inefficiencies, such as rotor blade friction and drag, gearbox losses, generator and converter losses, reduce the power CONTINUES ON PAGE 43

2014 March, SweetcrudeReports

Technology

Straight, V, or curved blades may be used.

Wind turbine technology CONTINUED FROM PAGE 42

delivered by a wind turbine. Commercial utility-connected turbines deliver about 75% of the Betz limit of power extractable from the wind, at rated operating speed. Efficiency can decrease slightly over time due to wear. Analysis of 3128 wind turbines older than 10 years in Denmark showed that half of the turbines had no decrease, while the other half saw a production decrease of 1.2% per year.

Types

damage at high wind speeds, by feathering the blades into the wind which ceases their rotation, supplemented by brakes.

The three primary types: VAWT Savonius, HAWT towered; VAWT Darrieus as they appear in operation Wind turbines can rotate about either a horizontal or a vertical axis, the former being both older and more common

A vertical axis Twisted Savonius type turbine.

Horizontal axis Horizontal-axis wind turbines (HAWT) have the main rotor shaft and electrical generator at the top of a tower, and must be pointed into the wind. Small turbines are pointed by a simple wind vane, while large turbines generally use a wind sensor coupled with a servo motor. Most have a gearbox, which turns the slow rotation of the blades into a quicker rotation that is more suitable to drive an electrical generator.[17] Since a tower produces turbulence behind it, the turbine is usually positioned upwind of its supporting tower. Turbine blades are made stiff to prevent the blades from being pushed into the tower by high winds. Additionally, the blades are placed a considerable distance in front of the tower and are sometimes tilted forward into the wind a small amount. Downwind machines have been built, despite the problem of turbulence (mast wake), because they don’t need an additional mechanism for keeping them in line with the wind, and because in high winds the blades can be allowed to bend which reduces their swept area and thus their wind resistance. Since cyclical (that is repetitive) turbulence may lead to fatigue failures, most HAWTs are of upwind design. Turbines used in wind

farms for commercial production of electric power are usually three-bladed and pointed into the wind by computer-controlled motors. These have high tip speeds of over 320 km/h (200 mph), high efficiency, and low torque ripple, which contribute to good reliability. The blades are usually colored white for daytime visibility by aircraft and range in length from 20 to 40 meters (66 to 131 ft) or more. The tubular steel towers range from 60 to 90 meters (200 to 300 ft) tall. The blades rotate at 10 to 22 revolutions per minute. At 22 rotations per minute the tip speed exceeds 90 meters per second (300 ft/s).[18][19] A gear box is commonly used for stepping up the speed of the generator, although designs may also use direct drive of an annular generator. Some models operate at constant speed, but more energy can be collected by variable-speed turbines which use a solid-state power converter to interface to the transmission system. All turbines are equipped with protective features to avoid

Vertical-axis wind turbines (or VAWTs) have the main rotor shaft arranged vertically. One advantage of this arrangement is that the turbine does not need to be pointed into the wind to be effective, which is an advantage on a site where the wind direction is highly variable, for example when the turbine is integrated into a building. Also, the generator and gearbox can be placed near the ground, using a direct drive from the rotor assembly to the ground-based gearbox, improving accessibility for maintenance. The key disadvantages include the relatively low rotational speed with the consequential higher torque and hence higher cost of the drive train, the inherently lower power coefficient, the 360 degree rotation of the aerofoil within the wind flow during each cycle and hence the highly dynamic loading on the blade, the pulsating torque generated by some rotor designs on the drive train, and the difficulty of modelling the wind flow accurately and hence the challenges of analysing and designing the rotor prior to fabricating a prototype. When a turbine is mounted on a rooftop the building generally redirects wind over the roof and this can double the wind speed at the turbine. If the height of a rooftop mounted turbine tower is approximately 50%

of the building height it is near the optimum for maximum wind energy and minimum wind turbulence. Wind speeds within the built environment are generally much lower than at exposed rural sites, noise may be a concern and an existing structure may not adequately resist the additional stress. Subtypes of the vertical axis design include: Darrieus wind turbine “Eggbeater” turbines, or Darrieus turbines, were named after the French inventor, Georges Darrieus. They have good efficiency, but produce large torque ripple and cyclical stress on the tower, which contributes to poor reliability. They also generally require some external power source, or an additional Savonius rotor to start turning, because the  starting torque is very low. The torque ripple is reduced by using three or more blades which results in greater solidity of the rotor. Solidity is measured by blade area divided by the rotor area. Newer Darrieus type turbines are not held up by guy-wires but have an external superstructure connected to the top bearing. Giromill A subtype of Darrieus turbine with straight, as opposed to curved, blades. The cycloturbine variety has variable pitch to reduce the torque pulsation and is selfstarting. The advantages of variable pitch are: high starting torque; a wide, relatively flat torque curve; a higher coefficient of performance; more efficient operation in turbulent winds; and a lower blade speed ratio which lowers blade bending stresses.

Savonius wind turbine These are drag-type devices with two (or more) scoops that are used in anemometers, Flettnervents (commonly seen on bus and van roofs), and in some highreliability low-efficiency power turbines. They are always self-starting if there are at least three scoops. Twisted Savonius Twisted Savonius is a modified savonius, with long helical scoops to provide smooth torque. This is often used as a rooftop windturbine and has even been adapted for ships. Another type of vertical axis is the Parallel turbine, which is similar to the crossflow fan or centrifugal fan. It uses the ground effect. Vertical axis turbines of this type have been tried for many years: a unit producing 10 kW was built by Israeli wind pioneer Bruce Brill in the 1980s.

Design & Construction Wind turbines are designed to exploit the wind energy that exists at a location. Aerodynamic modelling is used to determine the optimum tower height, control systems, number of blades and blade shape. Wind turbines convert wind energy to electricity for distribution. Conventional horizontal axis turbines can be divided into three components: *The rotor component, which is approximately 20% of the wind turbine cost, includes the blades for converting wind energy to low speed rotational energy. *The generator component, which is approximately 34% of the wind turbine cost, includes the electrical generator, the control electronics, and most likely a gearbox (e.g. planetary gearbox), adjustable-speed drive or continuously variable transmission component for converting the low speed incoming rotation to high speed rotation suitable for generating electricity. *The structural support component, which is approximately 15% of the wind turbine cost, includes the tower and rotor yaw mechanism. A 1.5 MW wind turbine of a type frequently seen in the United States has a tower 80 meters (260 ft) high. The rotor assembly (blades and hub) weighs 22,000 kilograms (48,000 lb). The nacelle, which contains the generator component, weighs 52,000 kilograms (115,000 lb).

2014 March, SweetcrudeReports

Community

2014 March, SweetcrudeReports

Ugborodo youths

Peace still on exile at Ugborodo community CHUKS ISIWU

ll is still not w e l l a t Ugborodo, the o i l - r i c h community in Warri South-West Local Government Area of Delta State, where peace has since taken a flight following a leadership tussle over who should chair the Ugborodo Community Trust. Despite the intervention of government in an effort to resolve the lingering crisis in the community between the camps of Mr David Tonwe and Mr Thomas Eriyitomi, a resolution still appears far off. A final resolution expected from a Federal Government intervention in the matter has severally been aborted, meaning that the community continues to be dogged by the crisis, which is already threatening the execution of the $16 billion

Federal Government Gas City project earmarked for construction in the area. “The two parties involve in the leadership tussle, Mr David Tonwe and Mr Thomas Eriyitomi, have been summoned by the National Security Adviser to Abuja”, said Delta State Governor, Dr Emmanuel Uduaghan, as he tried to explain the root of the crisis, which began in 2013. Uduaghan said the disagreement was about which group would look after the $16 billion Gas City project. “There are people who do not want the project to succeed but no one is bigger than the government. My interest is to ensure peace reigns in Ugborodo. It (project) is not just an Ugborodo project but a national project. “When the project is completed, it will boost economic activities in the community and Delta in general,” he added as he

disclosed that the government had also approved the establishment of a naval base in Ugborodo to ensure adequate security of life and property in the community. Earlier, in the first week of this year, the crisis had heightened, with reported shooting and killings by armed groups in the community. There was confusion, however, over the casualty figure. While a source close to a prominent Itsekiri chief confirmed the shooting and the death of two persons in the clash, another source said four persons lost their lives in the shoot-out. Many were allegedly wounded. The latest effort late February by the Federal Government at resolving the crisis were aborted, as the Alex Ideh/Tonwe faction allegedly boycotted the Abuja meeting. At an earlier meeting in the same Abuja,

the Ideh/Tonwe faction was said to have asked the Inspector General of Police/Chief of Naval Staff Peace Committee mediating in the crisis to shift the final resolution by one week, when it failed to come along with its 10 nominees for the reconstituted, contentious Ugborodo Interface Committee for the Export Processing Zone, EPZ, in Ogidigben. At the rescheduled meeting, the final resolution was further scuttled when the Ideh/Tonwe faction stayed away, rather sending its lawyer, Mr. Festus Keyamo, to represent it. Keyamo told the mediation team and the Eriyitomi faction that his clients have lost confidence in the mediation and did not wish to partake at the peace meetings any more. According to Keyamo, they would rather go to court to sought out matters. Given

There are people who do not want the project to succeed but no one is bigger than the government. My interest is to ensure peace reigns in Ugborodo. It (project) is not just an Ugborodo project but a national project this stance, which Keyamo stressed with all seriousness, an early resolution of the crisis, indeed, appears far-fetched.

2014 March, SweetcrudeReports

Community

Road construction

Contractor set to return to abandoned NDDC projects in Delta

ollowing the r e c e n t resolution of the feud between the contractor handling the 11-kilometre Otokutu-Owevwe-Opherin road project in Ughelli North Local Government Area, Delta State, and the beneficiary communities, the contractor is set to remobilise at site. The crisis surrounding the road project awarded by the Niger Delta Delta Development Commission, NDDC, had seen the matter going to court, stalling further work on the project. The contractor, S.O. Olotu and Sons Limited, and the communities, have now resolved their differences, with the contractor promising to withdraw the suit instituted against the communities in court. The NDDC, therefore, directed the contractor to return to work. The directive was conveyed by the commissioner representing the state on the board of NDDC, Chief Tom Amioku, after a peace meeting

between the feuding parties. A t t h e m e e t i n g , representatives of the three affected communities apologised to the company and its management over allegations against them, which the contractor deemed libellous. The contractor had taken the

communities to court due to the alleged libel which is in connection with the N80 million compensation for the road project. Chief Liaison Officer of the three communities, Mr. Prosper Ogbaise and the adviser to the three communities, Chief Igbe

Abubakar, apologised on behalf of the communities to the company. They also commended the NDDC Commissioner for his intervention, leading to the resolution of the crisis, maintaining that when the road is completed, it would enhance the socio-economic

lives of the people. The commissioner, thereafter, directed the communities to collectively write a letter to the court, asking to withdraw the case after which the contractor would complete the withdrawal process.

NDE trains 600 youths on skill acquisition in Borno

lhaji Wakil Kalanga, Borno Coordinator of the National Directorate of Employment, NDE, says the directorate has trained 600 persons in various skills in the state. Wakil said in Maiduguri that the beneficiaries were trained under different schemes of the directorate in 2013, adding that 86 physically challenged persons drawn from Bayo Local Government Area benefited from six months training under the directorate's Skill Acquisition for People with Special Needs. According to him, 300 persons, including youths, women and vulnerable groups, especially those affected by the insurgency in the area, were currently undergoing skill acquisition training in various trades. He explained that the participants were drawn

from the 27 local government areas and were trained under the directorateâ&#x20AC;&#x2122;s Basic N a t i o n a l O p e n Apprenticeship Scheme Wakil stated that some of the beneficiaries were trained in tailoring, knitting, plumbing, carpentry, leather work, soap, beads making, auto mechanic, motorcycle and GSM phone repair. According to him also, the beneficiaries were also trained in welding, interlock making, fish and poultry farming, among others,

while, under the B-NOAS scheme, 150 youths were trained in technical skill acquisition. "The participants were trained on modern technical skills in automechanics, carpentry and refrigeration," he said as he further stated that each of the trainees received a monthly allowance of N2, 000 while the programme lasted. He said that each of the trainees also received N40,000 as settlement package to enable them start their own businesses.

2014 March, SweetcrudeReports

E-mail: johniyene@yahoo.com

NNPC’S “Missing Billions” & Sanusi Lamido’s Misperceived Brief

SURE-P trainees

2014: SURE-P targets grassroots with programmes

he chairman of Subsidy Reinvestment and Empowerment Programme, SURE-P, Gen. Martin Luther Agwai (Rtd), has said the major focus of the programme in 2014 would be to partner with the states and local governments to ensure effective implementation of the scheme at the two tiers. "We have had our annual retreat and one of the things we marked in looking forward to what we will do in 2014 is how do we partner with all the states, the local governments, and other organisations that are into delivering especially the social safety net services in Nigeria. "And based on that, we are so happy that even before we reached out, ALGON has come to us wanting us to discuss how we can partner together," the chairman said. He added: "Our main effort is to see how we will reach the poorest of the poor in Nigeria. That is our target and slogan in this place. How do we cushion the effect to the least privileged Nigerian after the sacrifice they have given on the fuel subsidy," adding that the "poorest of the poor" in the country were mostly residents of the local government areas. Agwai, who spoke after a meeting with officials of the Association of Local Governments in Nigeria, ALGON, said his agency would partner with the

association in the area of social safety net programmes, infrastructure, graduate internship programme, community service, women and youth empowerment and public works. "These are mainly in local government areas. So, we are working and partnering with them to make sure that the grassroots is rich as well as to make sure that they (residents) enjoy the services of their sacrifice in the subsidy," he said. ALGON chairman, Mr OzoNwabueze Okafor, earlier expressed the wish of his association to partner with SURE-P to ensure effective implementation of the programme at the grassroots.

These are mainly in local government areas. So, we are working and partnering with them to make sure that the grassroots is rich as well as to make sure that they (residents) enjoy the services of their sacrifice in the subsidy

The Chairman of the association, Mr OzoNwabueze Okafor said this when he briefed newsmen after a meeting with the management of SURE-P in Abuja on Wednesday. "The essence of the meeting is to collaborate and give support to the committee in ensuring that t hey liv e up t o t heir mandate. "And as an association that represents the local governments, the grassroots in the country, we are equally concerned and worried about the gap in the implementation of the projects. "We are worried that some of the original intentions of the programme is not getting to the people. So, we have come to offer our support in ensuring that those social safety net programmes get to the people," he said. According to him, the association would like people at the grassroots to be better empowered as the major people that bear the brunt of subsidy removal. He said with the collaboration, the implementation of the programme at the grassroots would improve drastically. "We believe that SURE-P, as an interventionist fund, should be deployed to the people, who need such programmes to fill the gap that originally lead to the situation," he added.

n t i l h i s suspension by the President last week, Sanusi Lamido was the only unelected governor in Nigeria; he was appointed governor of Nigeria’s Central Bank in 2010 for a four year term. By virtue of his official job description, Mr. Lamido became a civil servant attached to the executive arm of government when he accepted to serve as Central Bank Governor. Apart from the sacred policy of confidentiality which all civil servants are expected to abide by Mr. Lamido had the added obligation of managing his office in such a manner as to attract and sustain investor confidence in the fiscal fundamentals that Nigeria’s economy stands on. His is not just an accountant’s or an auditor’s brief, he was allowed a measure of latitude to stoke, tweak and calibrate the economy through the many powers granted his office by the constitution. Apart from being the governor of the Central Bank, Sanusi Lamido is also a prince of the Emirate of Kano, he is a muslim and a devout believer in the primacy of the Northern half of Nigeria in the politics of Nigeria. All of these qualities influenced his handling of his office such that the office gradually took the posture of a critical wine tester managing a vineyard. He once famously donated N100m of public money to victims of a social crisis in his home state of Kano. A few months after the American defence contractor, Edward Snowden went rogue with information he had stolen from his employers in direct breach of the terms of his employment, Sanusi Lamido announced to the world that the NNPC had failed to remit about $49b to the federation account. This was an important piece of information if it was verifiable but the cadre of men and women in and out of government who spend their lives making Nigeria a new investor friendly brand, went into shock. The reason was that

information of that nature should never be distilled to the public except where every effort to trace the funds had proved abortive and when the system had acquired full information of the particulars of the transaction, culprits, modus operandi, et al. Even at such a point it is not the CBN governor’s brief to make such public pronouncements or to do anything that has the potential of eroding investor confidence. Let me say with clarity that I have no confidence in the abilities, if any, of the NNPC. I am one Nigerian that believes the Federal Inland Revenue Services would have sufficed in the place of both the NNPC and the Federal Ministry of

I am one Nigerian that believes the Federal Inland Revenue Services would have sufficed in the place of both the NNPC and the Federal Ministry of Petroleum Resources Petroleum Resources. Let me also say that the handling of the matter of the alleged missing billions was very questionable. At a point the NNPC released a statement that the sum of $10.89b unaccounted for in the adjustment exercises carried out between the CBN and the NNPC had been spent on strategic petroleum reserves! Who appropriated the money they spent? From which budget did they pull off such an item of expenditure? Yes, the NNPC is a useless organisation that costs Nigerians the opportunity to develop wholesomely but it is not Alhaji Lamido’s job to tell the world that. Let us hope that from the suspension and possible dismissal Malam Lamido would learn useful lessons that would serve him if he gets the top job in the Kano Emirate Council.

2014 March, SweetcrudeReports