Sweetcrude March 2013 edition

PIB: FG grants special incentives for gas

FG to begin inspection of power projects

… Grants 5yr tax holiday, production allowance

… Only 40 of 491 projects completed

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A Vanguard Monthly Review Of The Energy Industry VOL 03

N0. 46

MARCH, 2013

UPDATES MONTHLY BASKET PRICE

Feb-13 Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12 Jun-12

112.75 109.28 106.55 106.86 108.36 110.67 109.52 99.55 93.98

May-12 Apr-12 Mar-12 Feb-12

108.07 118.18 122.97 117.48

Daily | Weekly | Monthly | Yearly

108.62 US

124 120 116 112 108 104 100 98

Energy firms owe Nigerian banks N1.5trn

92 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13

… Sector’s non-performing loans stands at N32bn

Banks disown NNPC’s $1.56bn facility

ea k p s s e r u g i Th e f

C

ontroversy surrounding the planned procurement of $1.56 billion forward sales agreement package by the Management of the Nigerian National Petroleum Corporation, NNPC, to offset debt obligation was laid to rest on Thursday by representative of the consortium of Nigerian banks said to have facilitated the agreement.

In a presentation at the renewed Hearing of the Joint Committee of the House of Representatives on the alleged transaction, Mr. Ade Adeola, Managing Director, Project and Export Finance of Standard

CONTINUES ON PAGE 4

10 banks d e w o n io ll i N1.5 tr performing n o n e r a n m N32 billio oil & gas fir y b d e w o n o N29.21 billi m by power fir d e w o n o li il N2.44b nts 2013 accou n i e is r y a Figures m xposure Top banks e n as, N1.471b g l& i o n b 3 8 UBA- N1

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Derivation: Mexico encourages higher wealth distribution

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Contents 4 6 10 11 12 14 19 20 22 23 25 27 29

COVER Energy firms owe Nigerian banks N1.5trn

OIL ABREC, USAID sign MDC on clean energy financing

GAS

PIB: FG grants special incentives for gas

Feedback

Transparency accountability issues in derivation

FOCUS

Bad book keeping mar oil audit

POWER

NERC inducts members into complaints forum

FINANCE Nigeria loses over $40bn investment in 2 years

TECHOLOGY

Understanding oil and shale extraction

SOLID MINERAL Beaming the light on small scale mining

LABOUR

PIB: TUC queries discretionary power to president, minister

INSURANCE

Will oil majors adhere to premium no cover regime?

MARITIME

FG moves to harness sea ports for economic development

COMMUNITY

Community halts Shell gas project

Sweetcrude is a publication of Vanguard Media Limited

THE TEAM Ag. EDITOR Clara Nwachukwu CORRESPONDENTS Victor AHIUMA-YOUNG Godwin ORITSE Jimitota ONOYUME Samuel OYANDOGHA Oscarline Onwuemenyi Emma Arubi Michael Eboh Rosemary ONUOHA Sebastine OBASI MANAGER, MARKETING Ubong NELSON PAGE LAYOUT/DESIGN

Francis AYO & Johnbull OMOREGBEE

Enquiries Call: 08098051103

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Vanguard Avenue, Kirikiri Canal, P.M.B. 1007, Apapa.

All correspondence: P.M.B 1007, Apapa, Lagos.

I

t's already a quarter into the year, but the economy ha s not made muc h p ro gr es s b e c a u se of t h e lo gj am between the Presid ency & the Natio nal Assembly over th e budget, which was recently resolved with the Presid ent s i g n i n g t h e b u d g e t .

At the just-conclud ed NOG 2013, on e of the recurrent issu es discussed, wa s the slow pace of doing business in the cou ntry.

Consequently, sp eaker after spea ke r spoke of the need to fast track the pa ssage of the PIB in orde r to hasten oil an d gas development, on which the budge t is b e n c h m a r k e d .

Budget is all ab out funds, and in t hi s edition Sweetcrud e as usual unveils the quantum of bad de bts Nigerian banks are exposed to; little wonder that banks can barely finance any business no matte r how small. So we are ba ck to the era of cap ital flight, as most busin esses turn offshore to borrow money to run their operati ons.

Accordingly, in every section of this edition, Oil, Gas , Finance, Techn ology, Power, Solid Mine rals, Labour, Insura nce, Maritime and Co mmunity, there ar e new developments that our readers need to k n o w a b o u t .

In our Focus secti on, we bring to yo u the edited version of Ex xonMobil's Mark Wa rd paper, delivered at the Annual Aret Ad ams lecture series. He took a global look at the oil and gas indu stry and the need for Nigeria to catch on if it wants to rem ain internationa lly competit ive.

It's a must read!

Nog Photos Ad

Cover Story

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Energy firms owe Nigerian banks N1.5trn ...Sector’s non-performing loans stands at N32bn MichaeL EBOH

E

nergy industry firms, including those operating in the power and oil and gas sectors owe banks in Nigeria over N1.544 trillion, while the total bad debts profile of the firms stand at N31.65 billion.

Sweetcrude gathered the figures from the year end, December 31, 2011 financial statements of the banks released to investors and others stakeholders last year.

Although the 2012 financial statements of the banks are still being expected, but it is expected that banks will begin to release the results from the end of March, with analysts projecting that the figures will rise.

A breakdown of the total non-performing loans shows that the bad debts of oil and gas firms currently stands at over N29.214 billion, while those from the power sector stands at N2.44 billion.

These debts, recorded in the books of 10 of the commercial banks in Nigeria, were classified as NonPerforming Loans, NPL, and might see the banks transferring the loans to the Asset Management Corporation of Nigeria, AMCON. Despite the high nonperforming loans and the challenges faced by the banks in lending to firms in the energy sector in the last couple of years, the banks still gave out loans totaling N1.544 trillion to oil and gas

Broad Street

Banks disown NNPC’s $1.56bn facility CONTINUES ON PAGE 1 A breakdown of the total nonperforming loans shows that the bad debts of oil and gas firms currently stands at over N29.214 billion, while those from the power sector stands at N2.44 billion.

and power firms during the period in review.

Chartered Bank, who spoke on behalf of the Consortium of banks restated the fact that the said $1.56 billion facility is not a loan but forward sale of crude oil with advance deposits to be made to the Corporation on standard NNPC sale terms at ruling market prices.

Before now, the Honourable Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke and the Group Managing Director of the NNPC, Engr. Andrew Yakubu had in separate presentations to the House Committee explained that the $1.56billion instrument was not a loan but a proposed forward sales agreement to enable the NNPC settle outstanding debt obligations.

Lending credence to this position, Mr. Adeola explained that the sales agreement which is being brokered by four Nigerian banks namely First Bank, UBA, Eco Bank and Standard Chartered Bank is designed to enable NNPC reduce the debts accruing from petroleum products imports. ``The key idea is to enable NNPC immediately raise the sum of US$1.5 billion to pay down outstanding debts.

Cover Story

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CONTINUED FROM PAGE4

Non-performing loans and exposures The table below shows exposures to the banks as well as the bad debts:

EXOSURE (N)

NON-PERFORMING LOANS (N) Power

Oil & Gas Bank

2011

2010

2011

Oil & Gas 2010

2011

2010

8.6bn

14.23bn

First Bank 386.93bn

266.62bn

GT Bank

168.9bn

164.27bn

Zenith Bank

153.49bn

123.238bn

22bn

35.6bn 1.117.6bn

759m

UBA

151.3bn

110.72bn

8.79bn

5.05bn

183M

1.86m

FCMB

97.45bn

66.92bn

5.53bn

38m

3.373bn

1.125bn

Sterling Bank

44.43bn

18.41bn

2.43m

1.08bn

2.32bn

Fidelity Bank

24.54bn

22.06m

Wema Bank

8.7bn

8.17bn

Diamond Bank

78.16m

63.27m

Unity Bank

4.75m

6.57bn

27.9m

0.085m

4.4bn

27.7m

14.59bn

3.03bn

4.19bn

11.83bn

17.46bn

0.2743m

Power 2011

2010

1m

1.47bn

3.79bn

1.74m

2.13m

965.9m

0.05m Source: Financial Statement

However, a number of banks refused to disclose their exposures in their reports. They are Access Bank Plc, Union Bank Nigeria Plc and Skye Bank Plc, which made no mention of loans extended to oil and gas firms in their 2011 financial statements, while the financial statements of Standard Chartered Bank and Citibank could not be accessed, as they are not listed on the Nigerian Stock Exchange.

Also, the financial statements of Keystone Bank, Mainstreet Bank and Enterprise Bank could not be accessed due to the fact that they are not public companies.

An analyst who spoke on the condition of anonymity, said Access Bank, Union Bank and Skye Bank inability to give out loans to energy firms in their 2011 financial year, may be as a result of fear and weak risk management structure.

The analyst is of the view that the banks, coming out from the crisis in the sector without been swallowed, might decide to tread cautiously in advancing loans, so as to avoid a repeat.

The analysts further stated that most of the banks are yet to put in place a strong and

The CBN said the troubled banks had huge portfolio of non-performing loans, far above the figures allowed by law, in addition to other irregularities recorded in the banks

effective risk management structure, a factor which might affect their advancement of loans to certain high-risk sector of the economy.

AMCON bars banks from loaning to chronic debtors The CBN and AMCON late last year ordered banks to stop giving out loans to i n d i v i d u a l s a n d organisations who are indebted to banks to the tune of N5 billion and above.

In the list released by the CBN and AMCON, 20 oil and gas firms were credited with N705.885 billion while five power fir ms owed N114.928 billion.

It is expected that a significant reduction will be recorded in the banks’

lending to oil firms, when their 2012 financial statements are released.

The impending reduction in local banks’ exposure to oil and gas, and power firms has raised concerns about how these firms will finance their operations.

Analysts are of the view that the oil firms might have to resort to offshore financial institutions or multilateral financial agencies to finance their operations, and if the issue is not addressed soon, Nigeria’s oil output and local supply of petroleum products w i l l l i ke l y b e a f f e c t e d negatively.

Already, the Nigerian Association of Petroleum Explorationists, NAPE, had declared that Nigeria’s potential of generating about

2.26 million metric tonnes of liquefied petroleum gas, LPG, annually will not be achieved, unless the country addressed the issue of infrastructure deficit and lack of access to finance by players in the oil and gas sector.

In a presentation by Mr. Mustapha Jibrin, at one of its conferences, NAPE maintained that financing is critical, especially as it is evident that the country’s Vision 20:2020 objective can only be achieved with a stable power supply, with gas production playing a critical role.

He stated that recent gas discoveries in other parts of Africa were already affecting Nigeria’s natural gas potential and its global competitiveness, adding that increased access to finance and infrastructure development will help reverse this trend.

H e s a i d , “ T h e competitiveness of Nigeria’s natural gas and the numerous opportunities to monetise it would be impacted by recent discoveries of large reserves of gas in other parts of Africa, especially offshore East Africa, as well as huge exploitations of shale gas in different parts of the world.”

Also speaking, Mr. David Adonri, an economic expert, expressed concerns over the huge exposure of the banks to energy firms in their current financial statement.

He said the Nigerian petroleum industry is not viable, especially due to the delay in the deregulation of the sector and government control of the sector.

He added that financing power and oil and gas projects with bank loans is a mismatch, due to the long term nature of such projects and the short term nature of bank loans. “It is disturbing to hear that banks are still exposing themselves to the petroleum industry in such a manner that could threaten their existence.

“Those affected have failed to learn from the past. Any bank over-exposing itself to the petroleum industry does so at its peril because government’s control of that sector is a recipe for commercial failure.

“The petroleum sector can only become viable when it is completely deregulated and privatised. If the balance sheet of any bank is damaged as a result of excessive risk taking, CBN and NDIC

should liquidate it and the management made to pay for their recklessness.

“Considering the short maturity profile of banks’ deposit liabilities in Nigeria, it is inconceivable that they will venture into financing Electric Power projects which by nature are long term. The mismatch in financing will definitely result in bad debt.

Electric Power infrastructure rehabilitation and development requires medium to long term funds which are obtainable from the Capital Market and Development Finance institutions.”

CBN’s intervention The challenges faced by the banks between 2009 and 2011, when the CBN sacked the management of five banks and nationalised three of the banks were brought about by the inability of the oil firms to pay their debts following the crash in the prices of crude oil in the international market. This was in the wake of the global financial crisis and the credit crunch in the global economy.

The CBN said the troubled banks had huge portfolio of non-performing loans, far above the figures allowed by law, in addition to other irregularities recorded in the banks.

The industry regulator also said the banks had difficulties in meeting their obligations to customers and other stakeholders and were constantly on ‘life support’, continuously accessing the Expanded Discount Window, EDW, for funding.

When the CBN moved against the five banks, August 2009, it said the total loan portfolio of the five banks was N2.802 trillion.

Margin loans amounted to N456.28 billion and exposure to Oil and Gas was N487.02 billion, while aggregate non-performing loans stood at Nl.143 trillion representing 40.81 per cent.

The CBN said from information at its disposal, it is evident that the five banks a c c o u n t e d f o r a disproportionate component of the total exposure to capital market and oil and gas, thus reflecting heavy concentration to high risk areas relative to other banks in the industry.

After the CBN’s efforts at sanitizing the banks and cleaning up their books, the banks have resumed lending to the energy sector, however, with extreme caution.

Oil ABREC, USAID sign MoC on clean energy financing

A

Oil &

FELIX ANYANROUH

The Challenges of the Nigerian Electric Power Sector Reform (2)

Clara NWACHUKWU

frican Biofuel and Renewable E n e r g y C o m p a n y, ABREC, and Nexant Inc., a United States Agency for International Development, USAID initiative, have signed a M e m o r a n d u m o f Cooperation, MoC , for the promotion of Clean Energy Financing in West Africa.

A USAID statement made available to Sweetcrude last week indicated that the MoC was signed on January 18, 2013, adding that the two bodies will be responsible for implementing the Regional Clean Energy Investment Initiative, RCEII, in the subregion.

Under the terms of the cooperation, which was signed by the Chief Executive Officer, ABREC, Mr. Thierno Bocar Tall, and Vice President, USAID’s Nexant, Dr. Peter du Pont, the two organisations will be responsible for: ?

Creating a regional base of support for Private Financing Advisory Network, PFAN, in West Africa, and will contribute to the development of a PFAN network of partners and other interested stakeholders; ?

Supporting the development of a pipeline of clean energy projects for consideration by investors in West Africa region through a Call for Proposals, CFPs; ?

O r g a n i s i n g , promoting and hosting the West African Forum for Clean Energy Financing, WAFCEF, this October in Accra, Ghana, where projects selected for the CFPs will be presented by their respective developers to investors and financiers; ?

Mentoring selected projects by offering preWAFCEF introductions to investors, and post – WAFCEF deal-flow sessions.

Selected projects will be offered technical assistance to develop financially viable business plans, which will be

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presented at the WAFCEF; and, ?

P r o m o t i n g discussions on clean energy policy and knowledge sharing.

The clean energy investment initiative is a key part of USAID’s global effort to promote low emissions development strategies.

According to the promoters, the RCEII is a three year programme designed “to support the expansion and strengthening of PFAN in West Africa,” adding that it “applies the methodology of identifying early stage projects suitable for private sector finance and by providing mentoring and advisory services to help guide these projects for financial closure.”

The Lome, Togo-based, ABREC is an initiative of the World Bank; the ECOWAS Bank for Investment and Development, EBID; Nigeria’s International Energy Insurance, IEI; the ECOBANK Development Corporation EDC; the “Fonds African de Garantie et de Cooperation Economique”, FAGACE; the Nigerian Export-Import Bank, NEXIM; and a host of other donor partners to promote renewable energy and low carbon industry in Africa.

The company also manages the Africa Clean Energy Technical Assistance Facility, and engages regularly with governments and other stakeholders to encourage renewable energy and policy development and policy harmonisation.

USAID on the other hand, supports programmes that reduce greenhouse gas, GHG, emissions and achieve multiple national development objectives, including enhancing energy s e c u r i t y, i n c r e a s i n g industrial competitiveness, expanding private sector investment, supporting economic growth, and alleviating poverty.

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art one of this article reviewed the history of liberalization of Nigeria’s electric power sector from 1896 to the present, noting that the capacity shortage nevertheless remains pervasive.

Nigeria like many countries of the world provides subsidies for the electricity power sector explicitly or implicitly, to producers and consumers. Justifications for their use vary from social welfare protection, job creation, the encouragement of new sources of energy supply, and economic development to energy security. Consequently, the government is faced with formulating a tariff structure to incentivize power generation and distribution on the one hand and social implication of market determine by subsidies for those at an economic disadvantage position on the other.

The government should be concerned with the effect of subsidies to increase of output capacity, and the encouragement of private participation. It is undeniable that with the revised 2012 tariff structure, Nigeria has one of the median electricity rates in the world. In mid 2012, NERC increased electricity tariff at a rate of N11 and N12 for middle class consumers. Highest income consumers living in areas designated as R3 and R4 paid higher rates – as much as N23.71/kwh with fixed meter charges of N21,256.30 and N118,830.56 respectively. This cost-reflective tariff regime is crucial to the recovery of expansion and efficiency in the sector - get market signals right so that prices can reflect the true cost of producing and consuming power.

Preferred bidders for distribution companies was carried out and awarded late last year. There were allegations of misdeeds in the bidding process. It was alleged that political brinkmanship was exercised in the process - past political and military leaders were the beneficiary of the process. It was also alleged that the process was not transparent. Prof. Bart Nnaji – then Minister for power lost his job in the process.

The issues of transparency and political will were also raised on the contracting of transmission rights. The deal is reported to have been contracted to a Canadian firm Manitoba Hydro Power at a cost of about $ 23.7million or N 3.7billion. The company was expected to have formally assumed control of the Transmission Company of Nigeria operations on Monday, July 30. Although there were some roadblocks to the execution of the contract, Manitoba is set to take over control of transmission in Nigeria It is axiomatic (and supported by the empirical evidence) that corruption discourages private investment, retards growth and inhibits poverty reduction efforts. In the energy sector for example, the delivery of energy moves from generation to transmission, to wholesale distribution and finally to retail distribution. Corruption can occur anywhere along the line. In generation, for example, it can occur in the licensing stage – where government officials might be tempted to ask for kickbacks in the issuance and renewal of generation licenses. Also, contracting for Power Purchase Agreements with state entity including payments for power generation can attract corrupt practices.

Furthermore, management of public finance is crucial to sector performance. For this reason, there are frequent attempts to explore vulnerabilities on both the expenditure and revenue sides of public finance. Due to the intricacies involved, budget management is frequently afflicted with inefficiencies and corruption. This can take the form of diversion of budgetary allocations towards activities that have greater potential for kickbacks, bribery, and fraud or theft. In the energy sector for example, this can occur in both the legislative and executive arm of government – budgetary approval process for the electricity power sector in the allocation of subsidies, procurement etc.

A close examination of Nigerian electricity sector reforms suggests that corruption was a major factor in the cycle of failure, inefficiencies and capacity shortage. It is a public fact that the Nigerian society is plagued with serious corruption, hence the creation of the Economic and the Financial Crimes Commission (“EFCC”) and the Independent Corrupt Practices and Other Related Offences Commission (“ICPC”) to fight this vice. The EFCC until recently was very effective in fighting graft and financial crime in Nigeria.

The liberalization of an electricity power sector can be a cumbersome process whose impact can be viewed as both short-term as well as long-term in nature. At the same time, the success or failure can only be measured by past mistakes and corrective measures. The concerns about the liberalization process in capacity-short countries have centered on the process followed, the transition management and the final destination of the reform process.

As will be readily apparent from the foregoing discussions, a tremendous amount of effort and resources - both institutional and regulatory - have been brought to bear on liberalization as a panacea for a capacity deficient electricity power sector. Yet, the problems persist. The question, then, is why? It is the author’s opinion that at every stage of the liberalization process a constant theme is the issue of corruption. To advance the liberalization process towards its laudable objectives, this author offers the following recommendations: ?

A robust and radical reform in the sector demonstrating changes to improve and strengthen both the regulatory and institutional framework to enhance accountability and minimize corruption; ?

Adequate incentives for investors and a climate of predictability, through consistency in formulation and execution of policy. ?

The country should immediately establish a permanent, special unit of the EFCC - dedicated to the Petroleum and Electricity Power sector, with independent powers of investigation, arrest, and prosecution in all instances of corruption in the sector, without recourse to the Ministry of Justice. Such a draconian approach is justified: after all, this sector is the lifeblood of the nation. felix.ayanruohlaw@gmail.com

Oil

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Mexicans

Derivation: Mexico encourages higher wealth distribution Clara NWACHUKWU

O

ne of the fallouts of the just-concluded 13th Annual Nigeria Oil and Gas, NOG International Conference and Exhibitions is the issue of derivation, with Mexico, a top oil producer advocating for higher derivation to resource rich areas.

A former Undersecretary for Hydrocarbons, Republic of Mexico, Mr. Mario Gabriel Budebo, who was the speaker for the Leading Light Session sponsored by ExxonMobil Companies in Nigeria, told the audience that derivation to host communities in his country is between 30 and 35 percent of the total oil revenues.

Budebo, in response to a question on how the oil wealth is distributed in Mexico in order to compare notes with Nigeria, said, “With regard to wealth distribution between 30 and 35 percent goes to the oil producing states and the remaining 65 percent is distributed among all the municipals based on the size of the population.”

He added the figures may go even higher, as currently discussions were ongoing in Mexico, as to how to distribute

the new productions recorded in the recent times.

His response attracted a loud ovation from the audience, especially as the issue of derivation has remained a knotty one in the Nigerian polity, with the Northern region complaining that the current 13 percent allotted to the Niger Delta states had placed these states above them, thereby creating not just uneven distribution of resources but also impeding general pace of development of the regions in the country.

Indeed, one of the main objections against the Petroleum Industry Bill, PIB, undergoing scrutiny at the National Assembly, is the proposal to establish additional 10 percent equity fund to the oil communities, a move the Northern states have sworn they will not support.

Shared experience In his introduction of the s p e a k e r, t h e C o u n t r y Chair/Managing Director, ExxonMobil Companies in Nigeria, Mr. Mark Ward, explained that the purpose of the session, “… is to bring greater perspectives on how to make Nigeria’s oil and gas industry more globally competitive, and to determine

what it takes to become globally competitive.”

He added that Mexico, also a developing country, had also gone through similar oil exploration and exploitation experiences like Nigeria, and to see what possible lessons that could be learnt from these experiences.

These, Ward said, would help Nigeria tremendously, especially now as the petroleum industry in undergoing major reforms, which could make or break it globally.

Mexican oil and gas reforms Budebo, who spoke on, “Oil and Gas in Mexico: Evolution, Legal Changes and Future Opportunities,” took a historical detour of petroleum development in his country, saying that oil production had gone on for well over 70 years before reforms began in 2008.

He added that before it came, the process took about two years of fine-tuning before it became acceptable.

He recalled: “Mexico ’s petroleum history dates from the beginning of the twentieth century. At the time, concessions were given to international companies to explore the territory and produce petroleum: First under the ownership of the landowner, and after 1917, under the ownership of the Nation,

paying a special tax.

“During the fir st quarter of the 20th century, oil production in Mexico increased significantly.

By 1921, Mexico was the second largest producer in the world, contributing with 14% of total world production; with approximately half a million barrels a day.”

Budebo further observed that the period was “the first time in Mexico that a public forum was created by Congress to discuss a reform<’ adding that it was accompanied with “A very

petroleum industry, which were based on four main broad objectives with a view to making the industry more market oriented: ?

New corporate governance - Integration of independent non executives directors and new attributions to the Board. ?

A l i g n m e n t o f incentives - Mandate for value creation; defining responsibilities; payroll linked to performance; greater public informative requirements, and citizen bonds. ?

Execution capacity New contracting scheme for greater participation of the private sector. More risk oriented contracts, and, ?

M a n a g e m e n t autonomy - Application of excess revenues, approval of budget adjustments and freedom for internal structural organisation.

He concluded that for the reforms to be as successful as expected there was the need for the state oil company, Pemex to demonstrate greater market discipline, which echoes Nigerians desire for the Nigerian National Petroleum Corporation, NNPC, while also emphasising the need to improve transparency and best acquisition practices and a host of others.

He maintained: “The new reform should include deeper changes that allow more open conditions for the participation of private companies, as well as more autonomy to Pemex, under a market discipline scheme that gives the company a larger set of tools to perform in this new environment.

“Such changes would boost investment in the sector, bringing employment and economic growth to the country.

A new petroleum reform under these lines, would result in higher operating efficiency,

“Mexico’s petroleum history dates from the beginning of the twentieth century. At the time, concessions were given to international companies to explore the territory and produce petroleum: First under the ownership of the landowner, and after 1917, under the ownership of the Nation, paying a special tax

through media campaign.”

According to the former Mexican Hydrocarbon boss, the reforms brought about stronger regulatory policies for the

lower costs, faster incorporation of new technologies and, as a result, increased economic rent for the benefit of the country.”

Oil

8

PCMN manufactures protective coating for vessels, others … Calls for support to enhance capacity Clara NWACHUKWU

I

ndigenous company, Paints and Coatings Manufacturers Nigeria Plc, said it has been awarded the sole manufacturing rights for the manufacture of protective coatings by International Paints in Nigeria.

I n t e r n a t i o n a l Pa i n t s i s reputed as the biggest manufacturer of oil and gas, and marine paints in the world.

Speaking on the development on the sidelines of the recently concluded Nigeria Oil and Gas Conference in Abuja, the company’s Chief Executive Officer, Mr. Mike Thompson, told Sweetcrude that with this feat, the company’s staff strength has increased from 13 at inception to current 130.

Only five of these are expatriate staff.

Thompson also revealed that the Nigerian Stock E xc h a n g e , N S E - q u o t e d company now manufacturers about 95 percent of such paints used for corrosion protection and only complements it with about five percent imports The protective paints are used for the covering of floating production storage and offloading, FPSO vessels, platforms, buoys, other vessels, tanks, refineries and a host of others, while also carrying out facilities upgrade.

He said that getting quoted on the NSE meant that the company moved up from 60 percent foreign ownership to now 70 percent Nigerian ownership since it got listed on November 2, 2010.

He further disclosed that the company is also involved in project management, technical support by undertaking inspections throughout the tenure of the project, procurement services relating to plants, tools, equipment and consumables for coating projects as well as training.

Thompson explained that with regard to training, PCMC “offers formal training and certification of application personnel in the fields of coatings, painting, blast-cleaning and supervision,” adding that all

its courses are globally certified by the UK’s Industrial Coatings Applicator Training Scheme, ICATS. He said that PCMN in October 2011, became the first training centre for ICATS in Africa. “We are also Oil and Gas Trainers Association of Nigeria, OGTAN-registered, a n d w i t h o u r I C AT S certification, anyone trained by our company can work in the United Kingdom, UK,” he added.

Growth challenges Speaking on the operating environment challenges, the company’s Chairman, Chief Sylverius Okoli, said all that the company needed to enhance capacity utilisation still as low as 20 percent is greater support from the Federal Government and the International Oil Companies, IOCs. He said the locally manufactured paints are at a disadvantage because of the imported cheaper paints. He argued that if government could impose higher duty on these imported protective coatings, the locally manufactured ones would be able to compete more favourably.

In addition, Okoli noted that if the IOCs, in line with the Nigerian content policy are able to source their protective coating locally for their various operational equipments, it will go a long way in boosting indigenous capacity.

He noted that all the protective coating used by

Marine line 784 was recently used to coat the fuel oil tanks on the new Vicem Mega-Yacht

flight from the economy but also exporting huge employment opportunities.

He said, “Government can raise duty on oil and gas paint products from the current 20 percent to about 80 or even 100 percent duty to create a level playing field for all

The protective paints are used for the covering of floating production storage and offloading, FPSO vessels, platforms, buoys, other vessels, tanks, refineries and a host of others, while also carrying out facilities upgrade the IOCs for the buoys, platforms, FPSOs and other vessels are all imported, mainly from the Asian tigers, who build these facilities, thereby increasing capital

operators. If this happens, we not only will be able to generate hundreds of more employment opportunities, but also we will be able to compete globally. Beyond

these, we can even export not just our expertise but also our products to the sub-region and beyond.

To q u a n t i t y w h a t government and IOC support can do for the company, the chairman noted that last year, PCMN was the largest growing stock on the NSE. “We went from 52kobo per share to N1.91k at the close of trading in 2012.”

With such high prospects, he said the company wants “to focus more on providing all the protective coatings required for the oil and gas industry including FPSOs, and LNG vessels .” He added that despite the high cost of the locally manufactured products, the value addition is higher in terms of “payment of taxes, employment generation and in-country capacity building.”

Besides, he noted that the pay back for the additional costs is less than a year because of the spiral effects in the economy.

Oil

9

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he Nigerian C o n t e n t Development and Monitoring Board (NCDMB) and the Presidential Amnesty Programme have begun to work together towards creating employment opportunities in the Oil and Gas Industry for ex-militants who have undergone specialized training programmes.

The Executive Secretary, N C D M B , E n g r. E r n e s t Nwapa and the Chairman of the Presidential Amnesty Programme, Mr. Kingsley Kuku confirmed this in Abuja while speaking at the just concluded Nigerian Oil and Gas Conference. Mr. Kuku was represented at the event by his Special Assistant, Mr. Lawrence Pepple Over 1,498 ex-militants underwent various training programmes in foreign locations such as South Africa, Ghana, Cypr us, Dubai, with some of them specializing in practical Oil and Gas disciplines.

C o n f i r m i n g t h e collaboration, the Executive Secretary said the Board is working with all stakeholders of the industry under the strong leadership of the Honourable Minister of Petroleum Resources, Mrs. Deziani Alison-Madueke to domicile more work incountry and deepen the capacity of the local supply chain to execute complex industr y work, thereby creating more opportunities for employment of qualified Nigerians.

Nwapa stated that major operating companies, including the Nigerian National Petroleum Corporation cannot employ more than 50,000 Nigerians as they had outsourced most of their operations, adding however that the industry was capable of creating thousands of jobs through the execution of its jobs incountry.

“We are pulling the industry together because they have capacity to create new shop floors and it is only where there are jobs that training can thrive and succeed,” he said.

He identified the manufacturing of components of various equipment used by the industry as the segment that will unlock thousands of productive job opportunities for young Nigerians, including ex-militants.

The Executive Secretary further advised that “When

Communities infringe on Warri Refinery land *Govt wades in, suspends further sales Emma Amaize

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NCDMB, Amnesty collaborate on employment of ex-militants the ex-militants come back, they should not be kept together. Instead, we will take them in twos or threes and inject them into projects as ordinary Nigerians, without them having tags as ex-militants.

Nwapa also counseled the Amnesty Office to manage the expectations of the exmilitants about the Oil and Gas industry, indicating that “contracts in the Oil and Gas industry run for 18 to 20 months, after which companies start disengaging workers who will be expected to seek fresh employment in companies that have got new projects.”

“We need to increase shop floor space and encourage manufacturing through the help of the international operating companies. We also need to educate the exmilitants that their employment lies in the manufacturing facilities.”

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ccording to the Executive Secretary, the ex-militants and other young Nigerians would also benefit from the Capacity Building Internship Programme, which the Board had begun with the Pe t r o l e u m Te c h n o l o g y Association of Nigeria (PETAN).

Under the programme, PETAN will recruit qualified Nigerians and expose them to various training and skills development workshops and on-the-job training to

prepare them to work in the course of contracts and gain employment.

PETAN companies will then absorb the trainees once they win the contracts and retain them after the internship phase based on their performance.

In his comments, Mr. Lawrence Pepple harped on the need to provide employment opportunities for the ex-militants after their training, to ensure that they do not slip back into nefarious activities.

He warned that if the militants were not properly engaged, the next phase of

can be made to learn on the job and become better. If you don’t give them jobs when they return, they will be more sophisticated and this will be a very serious problem.”

Admitting the guidance they receive from the Executive Secretary, Pepple pleaded with the industry to guide the Amnesty Office on what is required to meet their standards.

He also confirmed that the Amnesty Office had uploaded the database of trained ex-militants unto the Nigerian Content Joint Qualification System.

“When the ex-militants come back, they should not be kept together. Instead, we will take them in twos or threes and inject them into projects as ordinary Nigerians, without them having tags as ex-militants.

militancy will be fused with intellect and skills because the ex-militants are being trained in the best facilities on shipbuilding and maintenance, welding and fabrication etc.

He said, “Although they may not be properly certified, they

ARRI Refining and Petrochemical Company, WRPC, Warri, Delta State, has complained about alleged encroachment on its property

by Ifiekporo and Ijalla communities to the Delta State Government.

A source said part of the land in question have even been sold by some persons in the communities, a development that made the state governor, Dr. Emmanuel Uduaghan, to direct the Commissioner for Oil and Gas, Hon. Mofe Pirah to step into the matter and report back urgently to him. At a meeting with leaders of the communities, Hon Pirah warned that government would not condone infringement on government lands by communities. He told them government received a petition from WRPC, a subsidiary of NNPC that Ijalla and Ifiekporo communities have encroached on their acquired land.

Pirah said the Ministry of Land had been directed to survey the land based on available land documents of the area and determine the actual boundary. The commissioner asked the communities to inform those that bought the disputed land to attend the next meeting to be informed of the development. He said information at his disposal showed that WRPC decided not to fence the landed area because the matter was pending in court and wondered why the communities were selling part of the land.

Government, therefore, ordered suspension of activities on the land until the next meeting when the Ministry of Lands was expected to have completed its assignment on the boundary between WRPC and the communities.

Mrs. Pauline Avose, who represented the Ministry of Lands at the meeting, said the ministry would comply by the resolution, while the leader of Ifiekporo Community, Mr. Monday Akpeyi said WRPC did not inform the community that it was encroaching on its property. He, however, said the community was prepared to abide by government’s directive.

Gas

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PIB: FG grants special incentives for gas

… Grants 5yr tax holiday, production allowance

Gas plant

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ven as the executive and legislature struggle to harmonise some contentious fiscal issues and other grey areas in the Petroleum Industry Bill, PIB, the development of the nation’s gas resources as being proposed in the bill will remain nonnegotiable.

Government is also willing to grant a five-year tax holiday as an added incentive for domestic gas production as well as a production allowance worth up to 100 percent of prevailing gas prices in order to fast-track the development of Nigeria’s natural gas resources, which reserves are put at about 187 trillion cubic feet.

A member of the PIB technical C o m m i t t e e , M r. A b i y e Membere, who made the clarification in one of the sessions at the just-concluded Nigeria Oil and Gas, NOG 2013 International Conference and Exhibition in Abuja, noted that before now, gas development

was almost non-existent.

This is because in the past, the discovery of gas was treated as an incidental, and no conscious effort was made to exploit the natural resource, despite the millions of dollars doled out by government to the international oil companies, IOCs, to do so.

The development led to the continued flaring of gas with no end in sight, as opposed to global initiatives to make the environment less contaminated.

Membere, who is also the Group Executive Director, Exploration and Production, Nigerian National Petroleum Corporation, NNPC, however maintained that this will no longer be the practice in the current dispensation.

More incentives for gas producers Reacting to the clamour for more incentives by the IOCs, Membere: “Today, we hear the incentives are not enough. In the past, we were giving out money as an incentive for gas development. We gave out cheques to people just for them

to develop gas, but where are we today? We have changed the deadline for gas flare out many times. Even before you finished your gas project, you have collected your money for gas.

Government was dishing out money free to those who wanted to develop gas.”

Explaining the wisdom in higher tax and lower royalty, he said:”Nigerian gas, based on what we have today, is not that bad with respect to liquid. All we are trying to do is to compensate the increase in tax with decrease in royalty. Royalty is a front line action; it has a long way of gapping the equivalent tax you pay. So, we reduce royalty to compensate for that gas. Addition to that, for domestic gas production, there is a five year tax holiday. Five years are typical years where projects are being amortised. If you have a project that you spent $100 million, it is expected that you amortise it in five years, which is $20 million each year. You will have that as a tax holiday.

“In addition to that, we

introduced production allowance. For you to produce gas, there is an amount of money that the government will give to you back. In some cases, depending on the type of production, you get 100 per cent, more or less, the price of gas.

Take for instance for smaller field, you get a production allowance of up to $2 per 1,000 cubic feet. It is for you to get that drive to supply gas to the domestic market. With the combination of these incentives to the fiscal regime, we strongly believe that gas projects will get minimum rate of return that may encourage investors to come.

Harmonising issues Membere said part of the plan is to harmonise oil and gas development, saying, “One of those things, which are gaps currently in the Petroleum Act the separation of oil from gas.

Over the years, gas development was actually not in existence.

People just take the oil and leave the gas, which is why we are where we are today.

“So, the current thinking is to

harmonise the tax regime for oil and gas so that when somebody is looking for oil and knowing that the oil does not flow alone but it comes with the gas, he has to plan for the gas. So, in a situation where you are having development, it has to be an integrated oil and gas development strategy and no longer oil strategy, which used to happen. Because it used to be different in the Petroleum Act, we had to give separate incentives for gas development.

Wi t h h a r m o n i s a t i o n , h e argued that operators will begin to treat gas finds more seriously than they had previously, while also distinguishing between associated gas and nona s s o c i a t e d g a s . “O n t h e associated gas, you can leverage on the oil. On the nonassociated gas, you do not have anything to leverage on, especially when the gas is dry.

When the gas is wet, the liquid is actually dried for sustainability.

“We fully understand that one of the key drawbacks in gas development is lack of infrastructure. Government has taken a bold step in ensuring that key infrastructures like trunk line, Ob/Ob-Oben East West gas pipeline, which is going to link the gas between the east and the west, is in place.

The Ajaokuta-Kano-Katsina line, which is another major key infrastructure that is going towards the north, is also in place.”

Other incentives Membere further disclosed that part of the special incentives for gas development as being proposed in the granting of open access to infrastructures, especially for the small producers.

“One additional aspect of this is the open access policy in gas, where small producers that are lacking all these infrastructures do not go back in developing high cost and high value types of infrastructures before they can produce gas.

Irrespective of what the price of gas is at the international market, which is determined by USA, he argued that gas producers will not run at a loss as long as the domestic market is adequately supplied. He said that this will among others, “ensure that there is constant, reliable and sustainable power in this country. That is going to stimulate the gas feed industrialisation that we are talking about.”

Fee dback

Feedback

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Transparency, accountability issues in derivation

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he last has not been heard concerning the agitation by several groups, to have direct control of the 13% derivation, paid to state gover nments of oilproducing areas, with the aim of developing oil-bearing communities.

In Delta State, where most of the exploration of oil & gas is onshore, the agitation is now a m o n g s t - f a m i l y, v i l l a g e , community, clan, ethnic and other interest groups.

Prince Emmanuel O.Oyibo, C o m m a n d e r, E t h n i c C o m m u n i t i e s S e c u r i t y, a member of Federal Ethnic Council of Nigeria, is appealing to all Security Agencies to ensure that they do not allow themselves to be used by the corrupt politicians to sabotage the efforts of President Goodluck Jonathan for sustainable peace and development and to keep their eyes watching for them not to run away from the country.

Prince Onyibo is making this plea, so that, public office holders to can an account for the funds including the 13% derivation funds, received by Delta State as well as other oil States to the people of Oil Communities at the grass root level through the ethnic council.

The council wants the presidency to ensure probe of the funds starts immediately before the end of March 2013, and ethnic communities’ security to unite, ensuring accountability and payment of the funds requested at July 2012 for the ethnic communities’ security outfits. The federal Government should also make the release of the monthly 250m from the 50% of the 13% derivation funds, while discussing the derivation and the (P.I.B).

“The 50% of the total allocation coming to Delta State monthly from the Federation account which is supposed to be for the Oil Producing Communities is what we are talking about first, while other discussion concerning the 13% derivation

setting up the Board when it will come to conclusion,” Prince Onyibo added.

But, the Governor of Delta State has spoken strongly against the agitation for the remaining 50% of the 13% Derivation, paid to the state, which he avers is being used in developing other areas of the state, advising anyone who is not satisfied with arrangement, to approach the proper court of law.

The council, represented by Prince Onyibo, wants the total allocation to the Oil producing States to be managed by members of the council representing their ethnic nationalities but not the Oil Commission created by the state government.

The council therefore demanded Chief Willington Okirika and his team to give account of their stewardship, following allegations of a missing N79billion, adding that until they do, “They should not parade themselves as leaders on the issues of 13% derivation and the PIB. Failure to do so will be penalized by the Ethnic Communities Security and handed over to the Presidency.”

Strategy for sustained competitive advantage

In order to address the need to enhance the leadership capacity of African senior executives, These Young Minds and Aston Business School have partnered to offer a four-day executive education programme on strategy for a sustainable competitive advantage.

The organisers in a statement made available to Sweetcrude said the the programme, http://theseyoungminds.co.uk/st rategy-for-sustainedcompetitive-advantage, is unique in that it is specially customised for African senior executives from the public and private sector, ensuring it reflects contextual nuances and adds immense measurable value for participants and their organisations.

The Executive Education Director, Aston Business School, Mr. Paul Butler, was quoted as saying: “We have developed this programme to provide participants with a great opportunity to enhance their capacities as strategic leaders.”

Also speaking about the programme, Founding Executive Director of These Young Minds, Mr. Alim Abubakre, said: “The programme Strategy for Sustained Competitive Advantage combines tuition in

In order to address the need to enhance the leadership capacity of African senior executives, These Young Minds and Aston Business School have partnered to offer a four-day executive education programme on strategy for a sustainable competitive advantage management that reflects the contextual nuances of a developing country with a platform for senior executives to shape their organisational vision while challenging their assumptions. Through this programme senior executives would broaden their horizons, enhance their ability to provide strategic leadership, improve their capability to anticipate and manage the future and present risks involved and maximise their potential to harness opportunities for their organisation in a sustainable way”.

The statement also explained that the bespoke programme will offer attendees the tools to build their own successful and sustainable strategies. It will also

explore ways of mitigating potential risks to the market position of the attendees’ organisations. Participants will also benefit from insights into the current motivations and future behaviour of competitors.

An exclusive working visit to a high-profile global organisation in Birmingham will also be included.

The Sustained Competitive Advantage programme will run from June 10th to 13th, 2013. It will take place at the Aston Business School, in Birmingham, UK, which is amongst the top business schools worldwide with triple accreditation from EQUIS, AMBA and AACSB (only 50 Universities globally have attained this feat).

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Focus

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NRC officials give the St. Lucie Nuclear Power Plant good safety ratings

World Energy Outlook and Potential Impact on Nigeria’s Petroleum Industry

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eing a text presented by the C h a i r m a n / M a n a g i n g D i r e c t o r , ExxonMobil Companies in Nigeria, Mr Mark Ward, at the 10th Aret Adams Annual Lecture Series, organized by the Aret Adams Foundation. Excerpt: Mobil Producing Nigeria is honored to join the Aret Adams Foundation for what has become a very important date in the industry speaking calendar. I commend the Board of the Foundation for sustaining its founding vision, and providing this platform that brings industry leaders together to address critical issues associated with our industry.

Our topic, “World Energy Outlook and Potential Impact on Nigeria’s Petroleum Industry”, is probably as relevant as it will ever be to Nigeria’s energy industry, and all of us sitting in this room.

ExxonMobil’s Outlook is a comprehensive and detailed assessment of the energy landscape over decades. It is part of the foundation on which we have built our business. The Outlook to 2040, as with past analyses, is based upon a combination of public and proprietary data covering more than 100 countries.

Global outlook We look at world demand, the types of energy needed to meet that demand and other factors that might impact energy supply and demand on a global, regional and national level.

These include things like expanding prosperity among a growing world population, the cost and availability of various f o r m s o f e n e r g y, t h e development and use of new technologies, and government policies and regulations.

More recently, we have shared it beyond our Board Room to public audiences around the world to broaden understanding of the energy challenges and opportunities all of us face in the years ahead. This is even more important for an energy rich, and energy dependent - nation such as Nigeria.

It is important to understand the links between population growth, economic progress and the amount and type of energy used around the world. Growing populations advance economically over time and seek better living standards, which in general leads to increased energy use.

We expect that by 2040, global population will reach 8.7 billion, and the Non OECD will make up 85 percent. Global GDP is expected to increase at about 2.9 percent a year from 2010 to 2040,

It is important to understand the links between population growth, economic progress and the amount and type of energy used around the world led by the rapidly expanding economies of the Non OECD. Energy demand The point here is that energy demand, projected to grow significantly through 2040, will be driven mainly by population and economic growth in the Non OECD. Since 2010, demand for energy from the United States, Europe and other OECD members is being moderated as their economies reach a plateau. Total demand increases around 35 percent from 2010 to 2040, or about 1 percent per year on average.

Looking at trends by energy type: Oil remains the largest single source of energy. Its use will grow around 25 percent.

Oil, natural gas and coal

provide approximately 80 [82% 2010, 77% 2040] percent of total supplies.

The most significant shift occurs as natural gas displaces coal as the second-largest fuel by 2025. Gas will grow faster than the other major fuels, with demand up 65 percent by 2040.

This is important for an oil and gas resource-rich country like Nigeria and provides continuous incentive to implement competitive policy regimes.

By 2040, we expect Asia Pacific market will account for close to 45 percent of demand, up from just 20 percent in 1980.

Here is some perspective on how the recent surge in North America’s domestic production of oil and gas might impact the global market.

Through expanding application of horizontal drilling

and hydraulic fracturing, the US is tapping “unconventional” oil and natural gas found in shale and other “tight” formations, leading to a dramatic shift in North America’s demand and supply outlook over the period.

We expect North America oil demand to fall, primarily as a result of improved efficiency in transportation. This trend, coupled with increases in liquid supplies being developed in the U.S. and Canada today, is expected to lead to a significant decline in net import requirements (shown in the dark green-hatched area). In fact, around the year 2030, we expect North America to go from a net importer to potentially a net exporter of oil and oil-based products. The point here is that on balance, North America is likely to move from a net import position to a net export position by about 2025.

Impact on Nigeria In 2011, Nigeria exported about 2.3 million bbl/d of crude oil. The US is the biggest importer of Nigeria’s crude, with 34% of export volume. Europe (30 percent) and Asia (17 percent) follow closely.

However, exports to the US from Nigeria have declined in recent times, in favor of domestically-produced crude.

In 2011, US import of Nigerian crude decreased in volume overall, with the trend sustained in 2012. Reported shipping schedules for this year show that Nigeria cut exports in February to 67 cargoes (about 2.19 million bpd), compared with 75 cargoes for January 2013.

So, will the changing supply

CONTINUES ON PAGE 13

Focus

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World Energy Outlook and Potential Impact on Nigeria’s Petroleum Industry

Going forward Nigeria must recognise that a significant resource shift has turned a key trade region into possibly a direct competitor, and avoid creating barriers with potential to make her industry uncompetitive for investments.

Coupled with the emergence of other resource basins in East, Central and South African countries, Nigeria must work to maintain her place as a key contributor to global energy supply.

The Government’s focus on restructuring the industry through the Petroleum Industry Bill (PIB) is therefore timely, but it must be designed and implemented correctly.

Shiroro dam

CONTINUED FROM PAGE 12

dynamics in North America impact Nigeria’s production? Is the supply market constricting?

Not necessarily, as demand remains strong in China and India. But we expect competition will tighten as exporters, including Nigeria, seek new markets outside of the US. H o w e v e r, a s w e n o t e d previously, the US is projected to be one of the world’s largest producers by 2020; driven by faster than expected development of shale oil in North America According to the EIA, US oil production in 2012 exceeded seven million barrels a day - the first time since 1993.

US oil imports are expected to fall by more than 4MBD, compared to current 10MBD imports. The US will be a net exporter of oil by 2030 In view of this emerging scenario, where potentially, the U.S. competes for the same export market, with cheaper shale oil, the obvious question we should ask is, “‘ what should Nigeria be doing today”?

This is important, as the oil and gas sector currently accounts for over 95 percent of Nigeria’s export earnings and about 40 percent of total revenues.

N a t u r a l g a s d i s c o v e r y, consumption Let’s take a look at natural gas, where North America’s shale boom has had a more dramatic global impact.

The remaining global natural

gas resources and projected demand, as estimated by the International Energy Agency is more than 28,000 Trillion Cubic Feet (TCF). But gas is an abundant, wide-spread resource.

The gas resource is split into c o n v e n t i o n a l a n d unconventional gas, with unconventional gas making up about half the estimated remaining resource. In North America, it is higher – about twothirds of the remaining resource.

Access to North America’s unconventional gas has shifted global LNG market dynamics, with new technology spurring domestic production at significantly cheaper rates. This will almost eliminate the need for imports into North America, and make more LNG available to Europe and Asia Pacific.

We note also that global consumption - shown in blue bars – is projected to increase by over 50 percent from 2005 through 2030. This demand will be mainly in Asia, which takes over the top spot from North America. Non-OECD countries are expected to account for more than 70 percent of total consumption growth and production of natural gas over the forecast period.

One fact is now evident: the US will likely not import LNG over the next decade. According to data from the EIA, this is equivalent to losing about 23% of projected global LNG market.

We’ll discuss why this insight should be of interest to Nigeria in the next slide.

Let’s review some interesting data from the Energy

Infor mation Administration (EIA).

According to EIA, Nigeria exported 17.97 million metric tons of LNG in 2010, making Nigeria the 5th largest LNG exporter in the world and the largest LNG exporter in the Atlantic Basin.

Europe, with 67 percent, is Nigeria’s biggest export market.

The U.S. imported 0.86 million metric tons of Nigerian LNG (5%), or only 1 percent of total U.S. LNG imports.

So, while we see that the U.S. is not a significant export market for Nigerian LNG, the real danger to Nigeria lies in potential U.S. export of her shale gas to global LNG market.

Indeed in 2011, the impact of the U.S. shale gas boom was not felt by Nigeria because more of the country’s LNG exports went to Japan, where Nigerian exports tripled due to increased LNG demand following the Fukushima nuclear accident.

However, we know that quite a few countries (notably Australia and China) are interested in applying the technology which has allowed North America to unlock unconventional gas.

Will these countries achieve the same success as the U.S.?

While current forecast is that similar commercial production remains some years away, the point to note is that interest in unconventional production is growing, even in Europe, Nigeria’s biggest LNG market.

It is worth pointing out that Nigeria’s share of global LNG market dropped in 2011, from 10 percent to 7 percent, mainly due to lack of recent capacity increase and rising production from Qatar

a n d Au s t r a l i a . N i g e r i a ’ s estimated LNG production capacity is currently 22 million metric tons per year, and no major increase is expected to come online before 2015.

With Nigeria’s proven natural gas reserves put at an estimated 180 trillion cubic feet as of end 2011 - the ninth largest in the world – the country needs to open up her market and focus on being a competitive, low-cost, high-reliability supplier to the global market.

Global changer It would be worthwhile examining a number of factors that have contributed to what could possibly be a global game changer in our industry: First, there was availability of a huge prime resource base.

Second, there was expanded access to this resource, with clear resource rights to investors. This allowed for investment in, and application of appropriate technology.

Third, you had a system that tried to avoid arbitrary and punitive tax policies Fourth, clear regulator y system that not only supported safe development and production, but responded to industry push to expedite the permitting and construction of pipelines and other infrastructure necessary to get these new energy supplies to market.

These conditions, mostly absent in other places, came together at the right time and created what we are witnessing today.

This means: ?

Globally competitive fiscal terms, to attract capital ?

Stable and fair business investment climate with appropriate protections ?

Ensuring that fundamental issues such as funding limitations and operations inefficiencies are addressed. ?

D e v e l o p i n g a completely thought-through transition, to avoid major disruptions.

In conclusion, I would like to leave you with a summary of our thoughts: Population and economic growth in non OECD countries, projected to grow significantly through 2040, will drive energy demand/use.

Oil and natural gas will remain the largest single source of energy in the foreseeable future.

The recent boom in North America’s domestic production of unconventional oil and gas has changed global supply and demand market; other countries are seeking to apply the technology Nigeria needs to develop clear regulatory and competitive policies and make plans around a potential scenario where the U.S. and new players from Africa compete for the same export market.

Competition is global and requires more than resource to attract and maintain investment.

We hope that by sharing this Outlook, we can all help contribute to making informed decisions about the nation’s energy future.

Distinguished participants, ladies and gentlemen, once again, I thank you all for your kind attention.

Power

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FG to begin inspection of power projects … Only 40 of 491 projects completed

Delta tackles Asaba power crisis with 262 transformers Emma AMAIZE

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Ughelli power station

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he Federal Government is to b e g i n a n inspection of all power projects site across the country from this March, warning that it might sanction contractors found to be delaying in the delivery of their projects.

This follows the poor execution and delivery rates of power projects by contractors, as only about 40 out of 491 contracts so far awarded had been completed.

To this end, Vice President Namadi Sambo, said he will send out a crack team of project monitoring group by from this month, to ascertain the level of work at the sites and to take far-reaching decisions if necessary, Mr. James Olotu, the Managing Director, Niger D e l t a Po w e r H o l d i n g Company Limited, NDPHC, promoters of the National Independent Power projects, NIPP, disclosed this during the commissioning of three new 15 MVA sub-stations and switchgears panel in Yaba, Orile-Coker and Kirikiri substations in Lagos.

He said there are currently about 491 power projects across the country, while

about 40 of the projects had been completed.

He however added that some of the others yet to be completed have reached advanced stages of completion and would be completed before the end of the year.

He disclosed that the Federal Government set a target of June this year for the completion of all distribution projects, while all transmission projects and about 99 per cent of all generation projects are expected to be completed by

He, however, noted that the government is not compromising quality for speed, saying that while emphasis is placed on speedy completion, it is also ensuring that the projects are done to international standards.

H

e said, “While doing this, we are aware that it is also important that the delivery should be known to be actually effective and qualitative, not delivery that is fast and then as we move back and go away after commissioning, they say

the government is not compromising quality for speed, saying that while emphasis is placed on speedy completion, it is also ensuring that the projects are done to international standards the end of the year.

Accordingly, he said the project monitoring team will visit all the projects sites, so that actions can be taken on the spot if we find that the contractors are not meeting up with target given to them.

something has broken down.

That is fraud. We want the contractors to deliver quality work.

“But the time for delay is over. No more delay again on this project. Every contractor has no excuse on why they

should not deliver on their project.”

On the issue of supply of gas to the power stations, Olotu said all stakeholders in the power sector are working together to ensure that the challenges facing steady power supply, especially availability of gas, is dealt with.

Also speaking, Mr. Oladele Amoda, Chief Operating Officer, Eko Electricity Distribution Company, said with the addition of the new 15 MVA 33KVA/11 KVA substations at New Yaba, OrileCoker and Kirkiri substations, the total capacity at Yaba has improved to 45 M VA , O r i l e - C o ke r h a s improved to 30 MVA 11 KVA while Kirikiri has risen to 30 MVA 33KVA. He said the installation of the sub-stations and switchgears will help minimize load shedding and tackle the issue of epileptic power supply.

He said the new equipments were strategic, especially as they cater for the need of strategic areas of the state, areas, adding that the benefiting communities have started feeling the impact of the projects in terms of improved power supply.

ELTA State Government has acquired 262 electricity distribution transformers of various capacities to surmount the epileptic electricity supply in Asaba, the state capital and environs. Governor Emmanuel Uduaghan, who disclosed this in Asaba said with the acquisition of the transformers, work would commence shortly on the 150 MVA Step Down Sub-Station in Asaba. He explained that when completed, the project would lead to a remarkable improvement in electricity to Asaba and environs, as Asaba would no longer depend on the Obosi Sub-Station.

Governor Uduaghan said the transformers would be deployed in areas of need to strengthen the distribution network. He disclosed that the state hosts four functional Power plants situated at Ughelli, Okpai and Sapele and promised to patronise the Akwa-lbom based Transformer Producing Company in the procurement of the next batch of transformers.

In his words” We got to know of the indigenous transformer production company in Akwa Ibom after we have placed orders for these transformers from SIEMENS. We will patronize them in our next procurement.”

Power

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that what we are selling is the best.

Powercell to invest $2m in power backups

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he Managing D i r e c t o r, Po w e r c e l l L i m i t e d , M r.

Tayo Balogun, in this interview with Sebastine Obasi, speaks about the use of Uninterrupted Power Supply, UPS and Inverter systems to promote sustainable energy supply.

Te l l u s m o r e a b o u t Powercell and its business?

Powercell was incorporated to take care of renewable energy. We are the sole partners to ABB of Switzerland. We are their only representative both in Nigeria and West Africa.

Renewable energy is energy that comes from natural sources like the sun, wind, wastes. The one we are actually into deals with the sun and the wind. You know every day the sun must come out and the wind must blow.

These things are used as sources of energy worldwide.

That is why we embraced it.

Why did you decide to go for this type of business?

We looked at the energy sources in Nigeria about three years ago vis-Ă -vis the prevailing power challenges and thought of how we could help in alleviating the power problem. We started by bringing in inverter from the United States of America, and then battery, as a backup. Then, we went further to ex p l o r e t h e r e n e w a b l e energy aspect. The world is focusing more on the wind and the sun as sources of energy. We felt therefore that Nigeria should not be left behind. We have been in the back-up business, that is inverter and UPS, for three years now, but we have been in the renewable energy business for five years.

Can you explain the partnership with ABB/Newave?

Newave Energy is one of the leading manufacturers of UPS in Europe. It is based in Switzerland. In June 2012, the company was bought over

by ABB. All over the world, mergers and acquisitions are common these days. The marriage between ABB and Newave came into being on June 2, 2012. We signed our partnership as sole representative of the ABB UPS on September 24, 2012.

Newave is a member of the ABB Group. We opted to market ABB brand of UPS in Nigeria because the company is well known in Nigeria. It has been around for a long time.

Do you have the capacity for the business?

One of the things ABB is known for is training and retraining. We were involved in their various trainings after which we were certified by the company. We have also sent our engineers and some other staff to Switzerland for their training. The reason for all these is that we are looking at a wide customer base, such that our staff would be able to serve them satisfactorily.

How much are you then investing in the business?

We are investing about $2million in the next 13 months. That is not going to be all we will invest. We are going to surpass it, going by the feelers we are getting from our prospective customers. We brought in some UPS last year and did some demonstrations for our customers. Since then, we have been getting a lot of enquiries. By the first week in March, the first batch of our consignment would have hit

How affordable are your products?

Our products are affordable. If you compare them with the others in their class, you find out that they are the cheapest.

When you are entering the m a r k e t n e w l y, y o u consider the price of your products. We want to get to as many customers as possible, that is why we made our prices affordable. From reports worldwide, the rate of failure of Newave products is less than one percent.

Traxxas Power Cell batterys the market. We have been doing aggressive marketing and we are expectant that the result will be beneficial. Many companies have been making enquiries about our products.

They include; oil companies, banks, steel companies, pharmaceutical companies, even individuals who are tired

of using brands that are not durable. Because ABB is a well known brand, we give two years warranty to our customers. We are the only company marketing UPS that gives that duration of warranty. That shows we know what we are selling. We can beat our chest and say

What are your plans for the future?

I want to see Powercell, in partnership with ABB, as a leader in the back-up system in Nigeria. I want to see Powercell as a company people can rely on. We have a reputation that we cannot allow to be dragged on the mud. So in the next five years, I want to see Powercell/ABB products as household names in Nigeria.

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Power

18

Delta tackles Asaba power crisis with 262 transformers Emma ARUBI

D

Electric bulbs

NERC inducts members into complaints forum Kunle KALEJAYE

I

n exercise of its mandate, the Nigerian Electricity R e g u l a t o r y Commission, NERC, recently developed a customer complaints forum to redress the mechanism for handling such complaints.

The Commission also inducted a 25 man members for the forum’s unit in Abuja, to oversee such complaints and effectively tackle them.

Members of the Forum were drawn from different walks of life and organizations, including the Manufacturer Association of Nigeria (MAN); Consumer Protection Council (CPC); Non-Governmental Organisations (NGOs); Nigerian Society of Engineers (NSE); and the Nigerian Association of Chambers of Commerce,

I n d u s t r y, M i n e s & Agriculture (NACCIMA).

Those representing MAN are: Mr. Segun Ajayi, Engr.

Nzewi Chukuemeka, Ali Madugu, Mr. Vincent Okuku and Dr. Babajide Taiwo., while Engr. Shamm Titus Kolo, Barr. Nwakwo Njideka, Abubakar Ahmed, Erema Ransome Daka, and Barr.

Oseni Yinka represented the CPC in the forum.

Other members included Engr. Solomon Nyagba, Mr. Chukuemeka Okereke, Sulieman Bello, Engr. Emeka U n a c h u k w u a n d E n g r.

Ismaila Olatunde Alapa, all from NACCIMA, while Ahaji Hashim Dikko, Mr. Juddy Okere, Naseer kwa ja’ afaru, Mr. Chisom Dike, Mrs. Eniola Oyedele represented the NGOs. Members of the NSE in the for um are Engr. Jacob Fa d u p i n , E n g r. S t e v e n Uzoechina, Engr. Ibrahim

Idris Daho, Engr. Christopher Ahiakwo, and Engr. Oluyemi Akindiji.

The Forum, which is akin to an appellate court, is to handle complaints emanating f r o m t h e D I S C O. A n y dissatisfied customer who still feels that they have not gotten the desired attention, or are dissatisfied with the outcome as addressed by the DISCO, can then appeal to the Forum, being the next level of redress in the system.

In addition, Standard and Procedures provides for the establishment of Customer Complaints Units (CCUs).

The CCU is the dispute resolution platform set up by the Distribution Licensee (DISCO). The DISCO ‘s CCU represents the first stage of addressing customer complaints.

NERC therefore mandated that every DISCO to establish a CCU within its premises,

which shall be responsible for receiving and resolving customer complaints.

According to NERC Chairman, Dr. Sam Amadi, all further appeals from the Forum are to be made to the Commission for further actions. But where the consumer still feels dissatisfied with the Judgment, he reiterated that he or she is free to move the case to the conventional courts.

Other steps taken by NERC to ensure that customers complaint are addressed include the establishment of Connections and Disconnections Procedures for Electricity Services that seeks to provides customers with electricity at their homes or business places. It also explained the procedures for obtaining such a supply and the documentation required.

E LTA S t a t e Government has acquired 262 electricity distribution transformers of various capacities to surmount the epileptic electricity supply in Asaba, the state capital and environs. Governor Emmanuel Uduaghan, who disclosed this in Asaba said with the acquisition of the transformers, work would commence shortly on the 150 MVA Step Down SubStation in Asaba.

He explained that when completed, the project would lead to a remarkable improvement in electricity to Asaba and environs, as Asaba would no longer depend on the Obosi Sub-Station.

Governor Uduaghan said the transformers would be deployed in areas of need to strengthen the distribution network.

Power tussle: Group seeks clarification over tenure Kunle KALEJAYE

I

jaw Oil and Gas P r o d u c i n g Communities Executive Forum and Idjerhe Enhancement Group have gone to court for interpretation of the Law on Tenure of the Chairman of Delta State O i l Pr o d u c i n g A r e a s Development Commission (DESOPADEC).

In a summons brought pursuant to Order 3 Rule 15 of the High Court of Delta State (civil procedure) Rules 2009, the group is seeking a declaration that the appointment of the chairman of Delta State Oil Producing Areas D e v e l o p m e n t Commission, Mr Oritsua Kpogho, be declared null and void in violation of the provisions of section7(1) (b) (c) of the laws establishing Delta State O i l Pr o d u c i n g A r e a s Development Commission (DESOPADEC).

Finance

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Nigeria loses over $40bn N investments in 2 years Sebastine OBASI

igeria is estimated to have lost more than $40 billion or N6.3 trillion investments in the last two years as a result of uncertainties in the o i l a n d g a s s e c t o r.

Specifically, oil companies have held back over $40 billion worth of investment while waiting to see what happens, sequel to r e g u l a t o r y u n c e r t a i n t y.

Sweeping reforms to taxes and royalties, transparency, local participation and the Nigerian National Petroleum Corporation, NNPC, have been promised since 2007.

According to estimates from the Senate Committee on the u p s t r e a m o i l i n d u s t r y, investments of at least $28 billion in the oil and gas sector have been lost or deferred since 2010.

Similarly, uncertainties are holding back Shell Petroleum Development Company ’s (SPDC) planned investment of about $30 billion in two offshore deep water projects in Nigeria. At the just concluded Nigeria Oil and Gas (NOG-13) conference held in Abuja, Mutiu Sunmonu, Managing Director of SPDC, said it was regrettable that Nigeria was losing huge revenues and investments, due to oil theft and bunkering because of uncertainties. Though Sunmonu did not mention the projects where the fund would be deployed to, he stated that “SPDC would rather wait for stable and right conditions before committing finances.”

According to him, “Perhaps Nigeria’s oil and gas industry is slipping into the era when it took Mexico about 50 years to recover from such challenges in its oil industry.

I recall the Mexican story where it took the country 50 years to recover from the loss in its oil production and my worry is that we are slipping towards that.”

Divestments While Shell may have held back further investments in the sector, Conocophillips, a Houston Texas-based oil group, sold its assets after 46 years of operation in Nigeria to Oando Group. Some of these assets included its 17 percent stake in Brass Liquefied Natural Gas, LNG

Bar of gold and Euro notes

facility and its joint venture stakes in OMLs 60, 61, 62, 63, 131, as well as KwaleOkpai independent power plant.

The company was estimated to have realized more than $1.7 billion from the sale of its assets in Nigeria. The sale of its

Nigerian business unit was part of ConocoPhillips’ plan to increase value for shareholders through portfolio optimization, focused capital investments that deliver growth in production and cash margins, improved returns on capital, and sector-leading shareholder distributions.

Earlier, British Gas (BG) Exploration and Production, citing Nigeria’s turbulent oil and gas sector, pulled out of Nigeria, despite investing more than $500 million in its exploration activities on the offshore blocks OPLs 332, 286, 284 and Olokola Liquefied Natural Gas (OK LNG).

While announcing the divestment from OK LNG, Fr a n k C h a p m a n , C h i e f Executive Officer, said, “We are switching properties to development of projects elsewhere, most probably the

expansion of our new assets i n Au s t r a l i a . A t t h e appropriate time, there would be further opportunities in Nigeria. For today, it is a low priority.”

International Oil Companies, IOCs are finding it easier to bye-pass Nigeria in their investment decisions, due to what they termed unfriendly oil sector operating environment.

Consequently, Nigeria is estimated to have lost about $2.7 billion or N426 billion from decline in crude oil production in the last quarter of 2012 - October to December.

According to the Central Bank of Nigeria, CBN, Fourth Quarter Economic Report, Nigeria’s oil revenue in the fourth quarter of 2012 dipped by N112.6 billion, as gross oil receipts in the Federation Account stood at N1.824 trillion. That showed

a 5.8 percent reduction from N1.936 trillion recorded in the third quarter of 2012.

The CBN report also stated that Nigeria’s crude oil production, including condensates and natural gas liquids stood at 2.00 million barrels per day (mbpd) or 184.00 million barrels during the fourth quarter of 2012, compared to the 2.26 mbpd or 207.92 million barrels recorded in the third quarter, thus representing a decrease of 0.26 mbpd or 11.5 per cent in production level.

The report said the average price of Nigeria’s reference crude, the Bonny Light stood at $112.73 (N17,811.34) per barrel, with crude oil export at 1.55 mbpd or 142.60 million barrels in the fourth quarter, compared with 1.81 mbpd or 166.52 million barrels in the preceding quarter, representing a decline of 14.4 per cent.

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e-mail: jimlaw2004@yahoo.com

Understanding Oil Shale extraction Processing principles Jim-Rex Lawson MOSES History n the 10th century, the Arabian p h y s i c i a n Masawaih alMardini (Mesue the Younger) wrote of his experiments in extracting oil from “some kind of bituminous shale”.The first shale oil extraction patent was granted by the British Crown in 1684 to three people who had “found a way to extract and make great quantities of pitch, tarr, and oyle out of a sort of stone”.

Modern industrial extraction of shale oil originated in France with the implementation of a process invented by Alexander Selligue in 1838, improved upon a decade later in Scotland using a process invented by James Young.

During the late 19th century, plants were built in Australia, Brazil, Canada, and the United States. The 1894 invention of the Pumpherston retort, which was much less reliant on coal heat than its predecessors, marked the separation of the oil shale industry from the coal industry.

China (Manchuria), Estonia, New Zealand, South Africa, Spain, Sweden, and Switzerland began extracting shale oil in the early 20th century. However, crude oil discoveries in Texas during the 1920s and in the Middle East in the mid 20th century brought most oil shale industries to a halt. In 1944, the US recommenced shale oil extraction as part of its Synthetic Liquid Fuels Program. These industries continued until oil prices fell sharply in the 1980s. The last oil shale retort in the US, operated by Unocal Corporation, closed in 1991.

The US program was restarted in 2003, followed by a commercial leasing program in 2005 permitting the extraction of oil shale and oil sands on federal lands in accordance with the Energy Policy Act of 2005.

As of 2010, shale oil extraction is in operation in Estonia, Brazil, and China.

In 2008, their industries

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Picture showing A.C. Kirk’s retort, used in the midto-late 19th century; it was one of the first vertical oil shale retorts. Its design is typical of retorts used in the end of 19th and beginning of 20th century.

Overview of shale oil extraction processed to generate oil similar to oil pumped from conventional oil wells; however, extracting oil from oil shale is more complex than conventional oil recovery and currently is more expensive. The oil substances in oil shale are solid and cannot be pumped directly out of the ground.

The oil shale must first be mined and then heated to a

Oil shale

produced about 930,000 metric tonnes (17,700 barrels per day) of shale oil.

Australia, the US, and Canada have tested shale oil extraction techniques via demonstration projects and are planning commercial implementation; Morocco and Jordan have announced their intent to do the same.

Only four processes are in commercial use: Kiviter, G a l o t e r, F u s h u n , a n d Petrosix .

What is Oil Shale The term oil shale generally refers to any sedimentary rock that contains solid bituminous materials (called kerogen)

that are released as petroleum-like liquids when the rock is heated in the chemical process of pyrolysis.

Oil shale was formed millions of years ago by deposition of silt and organic debris on lake beds and sea bottoms. Over long periods of time, heat and pressure transformed the materials into oil shale in a process similar to the process that forms oil; however, the heat and pressure were not as great. Oil shale generally contains enough oil that it will burn without any additional processing, and it is known as “the rock that burns”.

Oil shale Oil shale can be mined and

high temperature - a process called retorting; the resultant liquid must then be separated and collected. An alternative but currently experimental process referred to as in situ retorting involves heating the oil shale while it is still underground, and then pumping the resulting liquid to the surface.

The Oil Shale Industry While oil shale has been used as fuel and as a source of oil in small quantities for many years, few countries currently produce oil from oil shale on a significant commercial level. Many

countries do not have significant oil shale resources, but in those countries that do have significant oil shale resources, the oil shale industry has not developed because historically, the cost of oil derived from oil shale has been significantly higher than conventional pumped oil. The lack of commercial viability of oil shale-derived oil has in turn inhibited the development of better technologies that might reduce its cost.

Relatively high prices for conventional oil in the 1970s and 1980s stimulated interest and some development of better oil shale technology, but oil prices eventually fell, and major research and development activities largely ceased. More recently, prices for crude oil have again risen to levels that may make oil shale-based oil production commercially viable, and both governments and industry are interested in pursuing the development of oil shale as an alternative to conventional oil.

Oil Shale Mining and Processing Oil shale can be mined using one of two methods: underground mining using the room-and-pillar method or surface mining. After mining, the oil shale is transported to a facility for retorting, a heating process that separates the oil fractions of oil shale from the CONTINUES ON PAGE 21

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Understanding Oil Shale extraction CONTINUED FROM PAGE 20

mineral fraction. The vessel in which retorting takes place is known as a retort. After retorting, the oil must be upgraded by further processing before it can be sent to a refinery, and the spent shale must be disposed of. Spent shale may be disposed of in sur face impoundments, or as fill in graded areas; it may also be disposed of in previously mined areas. Eventually, the mined land is reclaimed. Both mining and processing of oil shale involve a variety of environmental impacts, such as global warming and greenhouse gas emissions, disturbance of mined land, disposal of spent shale, use of water resources, and impacts on air and water quality. The development of a commercial oil shale industry would also have significant social and economic impacts on local communities. Other impediments to development of the oil shale industry include the relatively high cost of producing oil from oil shale, and the lack of regulations to lease oil shale.

Surface Retorting While current technologies are adequate for oil shale mining, the technology for surface retorting has not been successfully applied at a commercially viable level even in the United States, although technical viability has been demonstrated.

Further development and testing of surface retorting technology is needed before the method is likely to succeed on a commercial scale.

In Situ Retorting Shell Oil is currently developing an in situ conversion process (ICP).

The process involves heating underground oil shale, using electric heaters placed in deep vertical holes drilled through a section of oil shale.

The volume of oil shale is heated over a period of two to three years, until it reaches 650–700 °F, at which point oil is released from the shale.

The released product is gathered in collection wells positioned within the heated zone.

Shell’s current plan involves use of groundfreezing technology to establish an underground

Stuart Oil Shale Facility, Queensland, Australia

barrier called a “freeze wall” around the perimeter of the extraction zone. The freeze wall is created by pumping refrigerated fluid through a series of wells drilled around the extraction zone. The freeze wall prevents groundwater from entering the extraction zone, and keeps hydrocarbons and other products generated by the in-situ retorting from leaving the project perimeter.

Shell’s process is currently unproven at a commercial scale, but is regarded by the U.S. Department of Energy as a very promising technology. Confirmation of the technical feasibility of the concept, however, hinges on the resolution of two major technical issues: controlling groundwater during production and preventing subsurface environmental problems, including groundwater impacts.

Disadvantages Both mining and processing of oil shale involve a variety of environmental impacts, such as global warming and greenhouse gas emissions, disturbance of mined land; impacts on wildlife and air and water quality. The development of a commercial oil shale industry as earlier stated would also have significant social and economic impacts on local communities. Of special concern in relatively arid regions is the large amount of water required for oil shale processing; currently, oil shale extraction and processing require several barrels of water for each barrel of oil produced, though some of the water can be recycled.

Te c h n o l o g y m i n i s t e r

Surface Retort

commends Shell, others at Science Fair The Minister of Communication Technology, Ms. Omobola Johnson, recently commended Intel Corporation, and Shell Pe t r o l e u m D e v e l o p m e n t Company, SPDC, for their support towards redirecting the objectives of educational development from knowledge based to empowerment.

The minister gave the commendation at the 2013 Annual National Science and Engineering Fair, which held at the University of Lagos. She also noted that the decision of the firms to bankroll the fair would further boost the study of Science and Technology in the country.

Activities to mark the fourday event included Science Quiz and exhibition showcase. The exhibition stage saw the competing schools pass their innovative inventions through several stages under the keen watch of panel of judges. The fair was jointly sponsored by Intel Corporation, Shell and Interswitch.

While applauding the participating students, the minister, represented at the occasion by the Director General of Nigerian Postal Services, NIPOST, Mr. Lawrence Okoro, stated that i t w a s ex p e d i e n t t h a t students at that level developed interests in practical sciences and

engineering solutions to challenge changes in t h e i r environment a n d t h e nation as a whole.

H e a d , S o c i a l Performance, S P D C , M r.

Emmanuel A n y i m , disclosed that t h e partnership with Intel and Interswitch was part of the Shell’s commitment to national development, aimed at a c t i v e l y positioning the Nigerian educational sector on a global pedestal.

Ayim said: “Science is key to the development of any country and we feel that the best way to begin is to encourage young talents by exposing them to global standards. And we are happy that the young scientists are rising to the challenge already.”

Also commenting, the spokesman for Intel Corporation, Mr. Osagie O g u n b o r, s a i d t h e partnership with Shell is pursuing a transformation agenda in the educational sector, to encourage a more practical approach to learning, and make students become pragmatic researchers rather than passive receivers of knowledge.

“The changing trends in the global economy are increasingly becoming knowledge-based being driven by advancements in Infor mation and Communication Technology and this has significantly raised the stakes in the educational sector, thus we want to encourage a practical approach that will excite these young minds and spur their appreciation and effective contribution at the student-teacher level and, ultimately add to their wealth of knowle d g e i n t h e i r respective disciplines.”

Ogunbor noted.

Solid Mineral

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Beaming the light on S small-scale mining Noel ONOJA

mall-scale and artisanal mining, a sector that governments and development agencies often see as only a problem, could be a source of sustainable livelihoods for millions of marginalised people, say researchers at the International Institute for Environment and Development, IIED. The sector is a paradox productive but undervalued, conspicuous yet overlooked, and ‘small-scale’ but economically and socially significant. It produces about 85 per cent of the world’s gemstones and 20-25 per cent of all gold. Its mines provide jobs and income for 20-30 million of the world’s poorest people and support the livelihoods of five times that number.

A sector met with inadequate attention not just in Nigeria, but in most parts of the world also, but this trend is likely to change in the short term future. Most recently, experts and other international institutes, spear-headed by the IIED, have launched a report that identifies the serious knowledge gaps in the sector and sets out options for a major new project-in-themaking. This project will aim to help policymakers ensure small-scale mining meets its potential to improve lives and take better care of local environments.

It will do this by connecting stakeholders, including miners and their communities, and ensuring that, better quality information is generated and used effectively in policy making at local, corporate, national and international levels.

“Small-scale and artisanal mines can be a force for good, just as small-scale forestry and agriculture are, but right now, they operate in a hidden world,” says Sarah Best of IIED. “We want to identify ways to overcome the challenges in information, investment and institutions that prevent small-scale mining from realising its potential to contribute to sustainable development.”

Overall, artisanal and small-scale mining (ASM),

Local mining

employs ten times more people than large-scale mining. But it takes place in very remote areas, usually involves poor and vulnerable people, including women and children and is renowned for severe pollution and harsh working conditions.

Despite all of these, development agencies and national authorities have historically given little attention to the sector and how to make it sustainable, instead focusing on large scale mining. Rather than supporting small-scale mining, governments’

policies are often poorly designed or implemented, or even repressive.

The miners themselves lack access to the rights, financial services, market information and technology they need to make this is a prosperous economic activity with reduced environmental impacts. As a result, many are often driven to operate illegally and it is this illegality that has biased attitudes about the whole ASM sector.

Donors often ignore smallscale and artisanal mining, perceiving activities such as small scale agriculture and forestry to be more ‘positive’

livelihoods for the poor.

Large-scale mining companies often only engage with the small-scale sector in cases of conflict over land and resources.

The report shows that, while there is good hands-on experience and innovation on-the-ground — for instance, with some governments adopting more inclusive policies and with the beginnings of ethical sourcing — these are often not widely known about, or face huge implementation challenges which stall progress. “ G o v e r n m e n t s ,

development agencies and the private sector have tended to overlook smallscale mining, seeing it as a source of problems or something that should not exist,” says Abbi Buxton of IIED. “This neglect has to end, particularly as the demand for mineral resources continues to grow.”

IIED’s new programme of work follows earlier work on mining. In 2000-2002, the institute ran the ‘Mining Minerals and Sustainable Development’ (MMSD) project, a major review that gathered evidence and engaged stakeholders around the question of ‘how can mining and minerals best contribute to the global transition to sustainable development?’

It will overcome weaknesses in the way that knowledge is gathered and influences policy, such as the lack of information from artisanal or small-scale mining communities, and limited coordination between sector stakeholders.

It will promote dialogue, learning and leadership at national and international levels and find practical solutions to sector-wide challenges, such as child labour, health hazards, informality, human rights, pollution, and transparency in supply chains. And it will embrace diverse collaborations at national and international level.

The new report presents several programme options that IIED has identified following initial consultations with ASM sector stakeholders. The institute now welcomes responses to these options and expressions of interest in collaboration.

Labour PIB: TUC queries discretionary powers to president, minister 23

Victor AHIUMA-YOUNG

T

RADE Union Congress, TUC, has picked holes in t h e discretionary powers allocated to the President and the Minister of Petroleum in Petroleum Industry Bill, PIB, before the National Assembly, saying it is an open invitation for abuse.

President of TUC, Comrade Peter Esele, is particularly concer ned about discretionary powers to a minister and the President in such a sensitive industry which is the main stay of the nation’s economy and where the standard all over the world is international best practice.

It would recalled that Comrade Esele, who was part of the Presidential Committee put in place by the Federal Government to prepare the draft PIB, in an interview with Sweetcrude, disowned the draft Bill before the National Assembly.

Esele argued that the discretionary powers accorded to the president and petroleum minister must be removed from the bill to ensure transparency in dealing with operators especially in award of contracts to private investors in the industry.

The former President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, argued that all licenses, leases, contracts and awards must be through transparent competitive bidding, while all tendencies for discretionary or absolute powers in the bill must be jettisoned.

According to him, the National Executive Council, NEC, of TUC had critically examined the contents of the bill before the National Assembly and established that there were challenges in the bill and resolved that it should be properly debated with a view to ensuring adequate changes.

He said: “My own understanding of “discretionary powers” is a situation where the petroleum minister will issue a directive that an investor should not be given an oil block even when the said investor has met all the

President Goodluck Jonathan

requirements. This should not be so, we do not need such powers in the bill. If an investor is qualified for oil block then so be it and if the investor is not qualified, let the law be implemented without fear or favour. This is our concern and we want the National Assembly to address this concern in the interest of the industry and the economy.”

The TUC President contended Nigeria should depart from the old regime of corruption and have a PIB with a balance between government and investors’ interest to ensure growth of the nation’s Petroleum industry. Esele called on the National Assembly to ensure that the PIB reflected a position that would promote and sustain growth and

fairness of all stakeholders in the Nigeria project, urging the lawmakers, however, to expedite action in the passage of the bill, because the delay was eroding investors’ confidence in the sector.

In a another development, TUC’s NEC of TUC has faulted the National Assembly’s suspension, sine die, of the debate on local g o v e r n m e n t a u t o n o m y, saying “ with so much resources committed to gaining people’s opinion across the country, it is criminal and inexcusable for the lawmakers to suspend the debate at this stage.” In a communiqué at its meeting in Benin City, Edo State, they argued that local government autonomy was not negotiable if democracy was to take a firm root in the country.

It noted that states or interests opposed to the local government authority were doing the nation’s fledging democracy more harm than good.

TUC also condemned the Fe d e r a l G o v e r n m e n t ’ s budget of N4billion for the p r o p o s e d Fi r s t L a d y ’ s Mission Home.

According to the communiqué, TUC “lends i t s v o i c e t o Pr o f e s s o r Soyinka’s view that the project is a mind-boggling fiscal misappropriation. The NEC believes that this is another drain pipe on the nation’s economy and called on the federal government to stop forthwith the project. It advised that such money should be applied to create jobs for the teeming Nigerian youths.”

It commended the approval of payments of terminal benefits of electricity employees, but requested that government builds confidence in the process by ensuring the participation of the unions in the sector in the compilation and the computation of the benefits of all employees.

Labour

24

Victor AHIUMA-YOUNG

S

ENIOR Staff Association of Electricity and A l l i e d Companies, SSAEAC, is not finding Fe d e r a l G o v e r n m e n t ’ s announcement that N384 billion will be used to settle the terminal benefits of w o r k e r s o f t h e Po w e r Holding Company of Nigeria, PHCN, ahead of the privatization of PHCN’s assets, funny.

The association has not only rejected it like its National Union of Electricity Employees, NUEE counterpart, but went further to petition the Minister of Po w e r, r e m i n d i n g t h e Government that labour, only gave conditional support to the planned privatization of the sector.

SSAEAC in the petition t h r o u g h i t s Pr e s i d e n t General and General Secretary, Engineer Bede Opara and Biodun O g u n s e g h a , a l a w y e r, warned government that if it went ahead with the process of privatization without carrying labour along, it would be definitely counterproductive.

The petition read “In furtherance of the agreement that the Unions in the Power Sector signed with Government on 11th December, 2013, the Federal Government of Nigeria through the Bureau for Public Enterprises (BPE), engaged the services of an International Consultant: A l ex a n d e r Fo r b e s , t o compute, using the necessary variables to arrive at the total terminal benefits due to staff of PHCN and also determine the individual benefits. The Unions were invited to work with the Consultancy and BPE, to diligently carryout this assignment.”

“At the meeting with the Consultant that was held on 14th to 15th January, 2013 in Lagos, our representatives (of the two in-house unions) on the computation of terminal/severance benefits, reported fundamental observations/errors in the computation as follows: the salary scale used in computing Gratuity is not PHCN Salary scale as at June 2012, as agreed with negotiation team under the leadership of SGF. Souvenir entitlement was omitted in computation of total entitlements, as agreed with

PHCN Workers

PHCN workers still unhappy over terminal benefits … Petitions power minister

Comrade Hassan Sumonu Committee, in compliance with our 2010 Conditions of Service. The variables used in the formula for annuity by the consultant are not realistic: (a) interest rate, (b) inflation rate (c) discount rate, and (d) life expectancy of each staff. Alexander Forbes used: ?5% as inflation rate (pension increase), instead of current rate of 12.5%. ?14% as discount rate, while

the current rate is 11%.

The data used for all staff are not correct in addition to unclear assumed life expectancy of each worker.”

According to SSAEAC, “We are left with no option than to bring this to your notice, for immediate redress by directing the Consultants through the BPE to correct these abnormalities to enable the reform to go on as planned. While our Union and staff re-affir m our conditional acceptance of Government reform despite our preferred position, we will not allow our members to be cheated. Any attempt to the contrary of the agreement reached will be resisted by the workers. It is in the light of the above that we were s u r p r i s e d a t t h e announcement of a N384 billion approval by the

Federal Executive Council as representing total terminal benefits to PHCN Employees.”

“This announcement was grossly misplaced because t h e A l e x a n d e r Fo r b e s Consultant engaged by BPE, had not concluded his assignment and no figure had been emanated from his work. We do not understand the rational for announcing such a figure. It should be noted also that, only the Unions as representatives of the workers can confirm the basis of computations while individual staff will verify their data. The proposed issuance of statements of workers’ terminal benefits at the exclusion of our Association headquarters by B P E w i l l b e c o u n t e rproductive. The earlier this verification of staff data is

done the better for progress of the reforms. We remind the government that our support for the reform is conditional upon the final settlement of all labour liabilities, hence the long period of negotiations and the resultant Agreement which upheld our Condition of Service 2010.

It would be recalled that barely 24 hours after the government said it had approved N384 billion for the payment of all entitlements of workers of PHCN, and process of the payment expected to begin a day after (21-02-13), NUEE rejected government position, threatening to shut down the industry, should government fail to reverse its position and perceived provocative utterances.

Insurance Will oil majors adhere to ‘no premium no cover’ regime?

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Rosemary ONUOHA

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premium no cover’ s the ‘no directive of the National Insurance Commission, NAICOM, gathers steam, stakeholders are of the opinion that the buy-in of oil majors is vital to its success The oil and gas sector all along, has been the main stay of the Nigerian economy.

However, activities in the oil and gas sector are yet to translate into a significant growth of the insurance industry. This is because the statutory requirement that insurers must underwrite 70 per cent of oil and gas risks emanating from the energy sector is yet to be achieved.

Although insurers are yet to achieve the 70 per cent coverage, stakeholders are of the opinion that the ‘no premium no cover’ mandate will impact positively on oil and gas risks underwriting if the oil majors adhere to it, irrespective of the capacity level of insurers.

According to experts, oil majors must pay insurance premiums in advance and not in installments, because they are not exempted at all from the ‘no premium, no cover policy.’

The new premium regime Since the new premium regime took effect from January 1, this year, it has received the support of the government, as all ministries, departments, agencies and stakeholders have been advised to ensure strict compliance.

It will be recalled that the Ministry of Finance issued a circular to Federal Government’s Ministries, Departments and Agencies (MDAs) to adhere to the implementation of ‘ no premium, no cover’ policy.

NAICOM, had late last year issued a circular stating that from January 1, any under writing fir m that provides insurance cover without collecting the

Executive Director of Crystalife Assurance Plc, Mr Teju Ogunjimi; Managing Director of the company, Mrs Seyi Ifaturoti ; President of NCRIB, Barrister Laide Osijo and Executive Director of Crystalife, Mr Owolabi Salami during a courtesy visit on NCRIB by management of Crystalife, recently

premium would be liable to a penalty of N500, 000 or lose its license.

According to the circular, all insurance covers shall only be provided on a strict ‘no premium no cover’ basis and that only cover for which payment has been received, directly by the insurer or indirectly through a duly licensed insurance broker, shall be recognised as income in the books of the insurer.

It said irrespective of period of insurance, insurers shall ensure that at any point, they have received directly or indirectly, through the insurance broker the full premium in advance for cover being granted.

NAICOM noted that all brokers should within 48 hours of receiving premiums

on behalf of any insurer, notify the insurer in writing in each case, of the receipt of such premium, adding that all such notification shall be accompanied by the broker’s credit notes, acknowledging indebtedness to the insurer. It said upon the receipt of such credit notes, the insurer shall issue cover and forward the policy documents along with the related debt notes to the broker, adding that any broker who fails to notify the insurer of any premium received on his behalf shall be liable to a penalty that is not less than N250,000 in each case of failure to notify.

NAICOM further mandated insurers to notify it, not later than 30 days from the end of every quarter, of all premiums acknowledged as having been received by brokers or lead

insurers, but not remitted to them, adding that any insurer who fails to render such return, shall be liable to a penalty of N5000 for each day of default.

Insurers and brokers were asked to reconcile their accounts not later than March 31, 2013 and brokers and lead insurers are to notify the commission of premium received and unremitted to insurers, not later than 30 days from the end of every quarter.

Expectations from oil majors To give bite to its bark, NAICOM said that the oil majors have no reason not to adhere to the new premium regime, adding that previous court’s rulings would aid its legal strength to push the new premium regime to

success.

Commissioner for Insurance, Mr. Fola Daniel, said that settled Appeal Court cases on the issue of insurance premium are clear indications that anything short of full payment at the commencement of an insurance contract renders such transaction null and void ab initio.

Daniel said “The Provision of Section 50 (1) of the Insurance Act 2003 which states that, ‘The receipt of insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance’, is indeed in the interest of the insured, going by decided cases on the issue by competent court of law.

Insurance

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Chevron donates science lab in Bayelsa Samuel OYADONGHA

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Insurance policies files

Staco Insurance targets N8.5bn premium income Favour NNABUGWU

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taco Insurance plc has set in motion all strategies within the ethical limits to gross premium income of not less than N8.5 billion in the current year 2013, as against N6.7 billion generated in 2012.

The company’s Managing Director Mr. Sakiru Oyefeso, hinted during an interaction with journalists in Lagos recently that, though it is difficult make premium projection due to the enforcement of “no premium, no cover” law contained in section 50 of the Insurance Act 2003, the insurance company has a guide it is working with.

He said “Projection is very difficult to work on with this new law until the dust is settled. However, we have a guide to operate with. Last

year, we end our business with N6.7 billion gross premium income. This year, we believe we should grow to N8.5 billion. But with the new trend of activities going now, it could be hard.”

Oyefeso added that the insurance outfit is, however, optimistic of meeting its premium target especially as “there could be opening in the economy with the seriousness of the Federal Government that the energy sector will come up, road network will be good, and there will be provision of potable water in all nooks and crannies of the country.

These are all gigantic projects that will need insurances. These are the areas that could help the insurance industry to generate more income. The oil and gas is there for us to take advantage of too.”

Again, as individuals are getting more aware of the need to buy insurance policies, the Staco boss

We cannot say we have got to maturity, we are still in the process. It takes a longer time to get there. We want to see this company living like Nigeria to reach 100 years and beyond like First Bank

stated that more members of the insuring public might eventually buy into the existing micro -insurance products before long.

He also explained that the

change of the company’s name from Standard Trust Assurance plc to Staco Insurance plc during the last re-capitalisation exercise in the nation’s insurance industry which ended in February 2007, has also helped the insurance outfit to become a household name in the country.

The Staco boss further stated that the company is not resting on its oars because “We cannot say we have got to maturity, we are still in the process. It takes a longer time to get there. We want to see this company living like Nigeria to reach 100 years and beyond like First Bank.”

To improve on the fortunes of the insurance company in the market, Oyefeso stressed that the organisation has put in place what it called seven “S”, adding that if the seven “S” are pursued vigorously and nobody changes the game, Staco will be better for it at the end of the day.

ayelsans had cause to smile recently as the management of Agbami Deep Water Oil Project, a joint project of the C h e v r o n , Fa m f a O i l , Statoil, Petroleo Brasileiro and the NNPC, donated a science laboratory building for St Jude’s Girls Secondar y School in Amarata, Yenagoa to boost science education.

The Agbami Field is located approximately 70 miles (133km) offshore Nigeria and contributes over 250,000 barrels of oil per day to Nigeria total oil production.

The company also donated a chest clinic for the Leprosy and Tuberculosis hospital in Yenagoa. The chest clinic and science laboratory building projects are part of the operators’ social responsibilities to communities in its area of operation.

The Director, Deepwater and Production Sharing Contracts of the joint venture, Mr. Ken Sample, said the donations were a demonstration of its c o m m i t m e n t t o conducting their business in Nigeria in a socially responsible manner.

Mr. Sample said the chest clinic and science laboratory building constitute an aspect of the strategic intervention plan of the Agbami partners in the education and health sectors of the nation.

According to Sample, “From Lagos, Ondo, Delta, Bayelsa Kaduna, M a i d u g u r i a n d Po r t Harcourt, Agbami partners have added values to the lives of Nigerians and several other projects are ongoing.” The partners, he said have instituted specialised educational scholarship programme in support of health manpower development in the country through targeted support for medical, nursing, laboratory sciences and engineering students.

Maritime

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FG moves to harness sea ports for economic development

Godwin ORITSE

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Godwin ORITSE

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H E Fe d e r a l Government through the Nigerian Ports Authority (NPA) has commenced moves to develop three deep sea ports across the country with a view to growing the economy. Disclosing this in Onne, near Port-Harcourt, Information Minister Mr Labaran Maku, said that the government was partnering with private investors to bring about these developments because, that, according to him is the only way to grow the economy.

Maku who visited the on going port extension work at the Federal Ocean Terminal currently being operated by Intels, also disclosed that the firm will hand over the facility to NPA after twenty years, so as to allow for enough time for the investor to recoup its investment. He explained that the new strategy by government to partner the private sector was paying off as the construction work has remained consistent unlike when government contractors are made to handle these kinds of jobs. â&#x20AC;&#x153;We are doing a prime project for the economy of Nigeria, this port covers about 90,000 hectares of land which is a huge area and you can see the land reclamation going on it is all part of the port project. In less than one year, this contract has been virtually executed to about 70% percent and it will be completed in August and you can see because this is government private sector partnership (PPP) you can see the speed at which the project is being executed. â&#x20AC;&#x153;If it were an entirely government contract , contractors will wait, they will delay, they will bring back papers for re-validation and they will keep working for years, but this new

NIMASA gives security operatives deadline on PICOMSS

Seaport

strategy to engage the priavte sector to develop our ports is really working.

This port as it were, still has phase 4B, which will follow as the concluding part of the port project. Intels will manage this port for twenty years and recover its money so government has not invested any thing in this port and that is indeed a good policy of government. â&#x20AC;&#x153;The infrastructures of the fast growing economies are provided by the private sector, all the government do

is to provide the legal framework. He noted that every aspect of the Nigerian economy is crying for attention as the economy grows and that government does not have the funds to do all of these at the same time, so the need for private sector participation.

Maku stated that the government will continue to use the private sector for the purpose of developing the economy.

The information Minister stated that it was the vision of

government to make Nigeria the leading economy in Africa in the two or three decades. He however urged the media to continue to monitor these on going projects and report the development as they unfold.

Meanwhile, the Managing Director of the Nigerian Ports Authority (NPA) Mr. Habib Abdullahi, said that the project was in response to the upsurge in maritime operations at Onne Port Complex due to the increasing need to serve the oil and gas sector in West and Central Africa.

OLLOWING the scrapping of the Presidential Implementation Committee on Maritime Security and Safety (PICOMSS) by the Jonathan Good Luck administration last year, the Nigerian Maritime Administration and Safety Agency (NIMASA), has given port facilities security operatives till July this year, to revalidate their security evaluation with the agency.

Disclosing this at the 64th edition of the Lagos Maritime Security zone of the Port Facility Security Officers (PFSO) Forum, Chairman of the Forum, Mr. Suberu Anataku said that the group was still watching events as they unfold adding that it will only report to the designated government agency.

The group said that it will await the government to make a formal declaration on who the designated authority will be before it will make its move. It was gathered that since the Committee was scrapped, NIMASA has taken upon itself to evaluate safety and security equipment and procedures at the facilities within and around the ports.

It will recalled that before now, PICOMSS was responsible for this, and certificates are usually issued to facilities that passes the evaluation process. It was further gathered that the certificates issued by PICOMSS were supposed to expire in December, but the Maritime agency has made these certificate i n v a l i d b y i t s pronouncement of the July deadline.

While the forum recognise the fact that PICOMSS has no legislative backing, but that it assisted members of the group in facing their security challenges in the port.

Maritime

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H E Fe d e r a l Government through the Minister of Tr a n s p o r t , Senator Idris Umar last month inaugurated the boards of the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA) where Chief Tony Anenih and Lt Col Agbu Kefas were appointed to chair the boards o f N PA a n d N I M A S A respectively.

In this interview with SWEETCRUDE, Lt Col Agbu Kefas told Godwin Oritse that he was ready to assist NIMASA to achieve its objectives in the area of maritime security and safety.

Excerpts Congratulations on your appointment Thank you very much What is your vision for NIMASA Already, the management has a vision , we will not change the vision because it is a positive one. What we will do is to support the current management in whatever way we can to ensure that the purpose for which the agency was set is achieved.

So what we are going to do as board or team is to give them all the necessary support to re-energize them and encourage them to achieve that goal.

There is this talk in the military circle that you were dismissed from the Nigerian Army because of your involvement with some militants in the Niger Delta area and after a lot of pressure your dismissal was converted to retirement, how would you react to this?

Which quarter of the military? The records are there to show, I retired meritoriously and it was voluntary and if you look around you can see a lot of military officers both serving and retired.They came in recognition of the appointment and to celebrate with me. So, if I was dismissed, nobody will be here so you do not need any rumor and the records are there and they are very straight. And you can see, do I look like some body that was dismissed? Most of the Senators you see here, came because of me, that is because I am a true Nigerian and it cuts across the entire country.

There is also this anxiety in the Military because they cannot understand why and how a Lt Col will be

NPA assures NLNG of improved economic relations

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Lt Col Agbu Kefas

We’ll support NIMASA to achieve its goals —Kefas First and foremost, when you get to a place, there must be attitudinal change, you have to create awareness, make people to be positive minded in their jobs, you have to make sure that they are committed

presiding over meetings where Generals and Rear Admirals are seated. What is your take on this?

My brother, during the military era, who were the military administrators I mean the Governors, what were their ranks ? I am a very senior officer in the military because from the rank of a major, you are a senior officer.

If the President did not deem it fit to appoint me, it means I was never qualified in the first place. Even you as a young man, are you not happy for me that a young man like yourself is getting appointed to this kind of office ? To see a young man like you being appointed to head the board of NIMASA means that there is hope for this country.

Let’s be positive and work together to make this country

great, let us not work on rumor.

Between the time you were appointed and now, you must have taken some notes, more so that you have watched NIMASA from afar , what would you want to quickly address ?

First and foremost, when you get to a place, there must be attitudinal change, you have to create awareness, make people to be positive minded in their jobs, you have to make sure that they are committed. What we intend to do is to bring everybody together and drive the agency together, it is a team work. When we start working as team, we can now begin to address issues together.

HE management of the Nigerian Ports Authority, has assured the Nigeria Liquified Natural Gas Company, NLNG, of its continued support in the Maritime Industry and called for a sustained relationship that will be beneficial to both organisations.

Speaking in Lagos Managing Director of N PA M a l l a m H a b i b Abdullahi made this declaration when he received a delegation from the NLNG Company which paid him a visit in his office in Lagos.

He commended the company for its contributions to the development of the nation’s seaports and the maritime industry in general and pledged that the Authority will fulfil its obligations to all stakeholders in the industry.

Represented by the E x e c u t i v e D i r e c t o r, Marine and Operations, Engineer David Omonibeke, the Managing Director assured the delegation that management will soon visit Port facilities in the Bonny Island for on the spot assessment of the situation.

Engineer Omonibeke d i s c l o s e d t h a t N PA Management is intensifying its plans to ensure an effective succession plan of its ageing marine personnel which includes the pilots a s w e l l a s t h e establishment of Vessel Tr a f f i c M a n a g e m e n t I n f o r m a t i o n Services[VTMIS] at Bonny to enhance safety of navigation and protection of the marine environment.

Earlier, the leader of the delegation and Deputy Managing Director of the company, Mr. Basheer Koko had listed Pilotage, training and certification of pilots, channel management, Jetty maintenance and traffic management, light house management etc. as critical operational issues which NLNG wants NPA to look into in order to ensure smooth operations in Bonny Island.

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Community halts Shell gas project … Demands adequate compensation

Simon ADEWALE

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he people of O t u m a r a C o m m u n i t y, Wa r r i S o u t h L o c a l Government Area of Delta State, have asked the Shell Petroleum Development Company Limited, SPDC, to halt a proposed gas plant project in the area, or, on the alternative, give them adequate compensation to relocate, before the company can go ahead to site its proposed gas plant in the area.

The people of the c o m m u n i t y w h o s p o ke through their Chairman, Mr James Edun, Spokesman, Pastor Alade Omaejile, Women Leader, Mrs Grace Odogene and P.R.O., Pastor

We y i m i F u l u d u , a r e requesting Shell Petroleum Development Company to pay a minimum of N25,000 per meter square, instead of N4,500, which the Company has proposed to pay them to vacate their residents which would be demolished to serve as site for the proposed gas plant which SPDC intends to site in the Community.

They have called on the company to follow the example of the Niger Delta Development Commission, NDDC, the Delta State Oil P r o d u c i n g A r e a Development Commission, DESOPADEC and the Delta State Government, that pay up to N120,000 per square meter to owners of properties usually demolished in construction sites, and said unless SPDC makes

adequate compensation which would be enough for them to build another befitting homes for themselves, they would not vacate the community for the proposed gas plant to commence.

It would be recalled that SPDC, in year 2000, proposed to site a gas plant in Otumara Community. Consequent upon the development, the company forwarded an Environmental Impact Assessment (EIA) to the Federal Ministry of Environment for approval.

Reacting to the EIA, copies which were made available to the press, the people of the community have alleged that SPDC, contrary to Article 11 Section 2 of the International Convention on Economic, Social and Cultural Rights, of the United Nations, the

company omitted “social, economic, physical, biological and hydrological impact which the gas project shall place on the immediate Otumara Community, and which avail the people of their rights to adequate compensation, an act which the people of the community have accused SPDC of deliberate witch-hunting”.

They also alleged that SPDC recently approached them to relocate, following approval of the EIA, by the Federal Government, “ with the intention to pay them a token compensation of N4,500 per meter square for properties to be demolished, which the community rejected”, insisting they must be paid N25,000 per meter square which is adequate for them to build another homes for themselves.

Gas plant

Oil, gas landowners berate oil majors

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IL and gas landowners in the Niger-Delta region, under the platform of Association of Family of Oil and Gas Producing Community, ASFOGAPCOM, have criticized multi-national oil majors for alleged willful connivance with community leaders to deprive them of their legitimate rights and privileges.

Addressing reporters in Warri, Delta state, after a meeting of the association, the National President, Mr. Joseph Abinogun, said, “The oppressive practice, which is now snowballing into a threat to the lives and socio-economic interests of oil and gas landowners, is even made w o r s e b y t h e acquiescence of Nigeria Petroleum Development Company, NPDC, an indigenous oil major.”

The association said the Shell Petroleum Development Company, SPDC, NPDC and NNPC and other oil majors “should start dealing directly with landowners as against the obtainable practice where they had established dealings with host community leaders to the exclusion and disadvantage of oil and gas landowners.”

Alleging that NNPC had “ ridiculously abdicated its supposed obligatory role , which ideally, should include the protection of rights and privileges of grassroots stakeholders in the Nigerian oil and gas industry”, it said, “If the oil majors are not dealing fraudulently, they should know their landlords and show them respect.”

“Direct dealing, including exchange of correspondences, relevant information, negotiation of all sorts, as a matter of fairness, should be entered into directly with oil and gas owners, and not the other way round,” Abinogun asserted.

Community

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Addax trains 64 on skills acquisition Jimitota ONOYUME

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Arrested Kidnappers

Uduaghan fortifies waterways against kidnappers, oil thieves Emma AMAIZE

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ITH the wave of kidnappi n g i n D e l t a State and his refusal to sign into law the death penalty bill on kidnappers, passed by the state House of Assembly, not a few Deltans were beginning to wonder what the feasible plan, if any, the Governor, Dr. Emmanuel Uduaghan, has to combat the menace.

His ban on motorcycle, otherwise known as okada transportation in Asaba, the state capital, Warri and Effurun, helped to stem the tide in the three cities, but kidnappers took their trade to nearby Sapele, Ughelli and Oleh. In fact, it is as if the more the government beefs up its strategy to curtail kidnappers, the deeper kidnappers extend their tentacles.

While the government inaugurated a special security task force in addition to the joint and separate teams of army and police officers patrolling the state, the governor has

Security concerns everybody.

All hands must be on deck to address security challenges

bolstered the Delta Wa t e r w a y s S e c u r i t y Committee, DWSC, Warri, to provide security agencies with intelligence information to fight kidnappers and oil thieves in the creek.

DWSC is the first committee that Uduaghan inaugurated when he assumed office as governor in 2007, and the group assisted in no small measure in stemming the tide of kidnapping in the creek.

H o w e v e r, k i d n a p p e r s

shifted their activities from the waterways to the land when the creek became a no go area because of the wide tentacles of the committee, which assisted the military to recover arms seized from soldiers by militants before it was quietly dissolved.

The committee was disbanded because of the new challenges that made land the new operational field of kidnappers and other security reasons. A source said it did not want duplication of efforts and so, government strengthened the army and police to take up more responsibilities in that regard.

However, owing to recent developments, the governor re-strategized and expanded the committee to rev his peace and security agenda.

Speaking through his deputy, Prof Amos Utuama, SAN, while reconstituting the committee at Government House annexe, Warri, he said gover nment would hold members of the committee responsible for any security breach in their areas. He, therefore, urged them to take their assignment, which is providing intelligence information to security agents seriously.

Even though DWSC is not an arms-bearing outfit, he said it had the mandate to intervene in critical situations to maintain peace, whether in the riverside areas or land. His words, “You are the eyes of the government in your respective areas and you will be held responsible for any security breach in your area.

Sleep with your head, but your eyes must be open.”

“We have decided to step up the security measures in the state through this committee. Security concerns everybody. All hands must be on deck to address security challenges in Delta State. Members of this committee have the responsibility to oversee security in the land as well and they are to intervene once there is a threat,” he said.

“We know your track records. Ensure that there is peace in Delta State for development to take place.

Once the state is fully developed, it will generate wealth and create job opportunities for our people and so you should know that your job is very vital, “he added.

O R T H A R C O U R T: SIXTY four trainees have graduated from the technical skills acquisition programme s p o n s o r e d b y Ad d a x Pe t r o l e u m N i g e r i a Limited at the Federal College of Education, Technical, Omoku in Rivers State.

Speaking at the graduation ceremony, Managing Director of the oil firm, Chief Cornelis Zegelaar , said 114 youths were enrolled for various skills acquisition programme in December 2011, while 64 graduated in programmes ranging from welding/fabrication, computer studies, catering, electrical installation/automobile mechanics and fashion designing. Adding, he said the graduands would be given starter packs and take- off grants of one hundred and fifty thousand naira each.

While appealing to them to use the fund wisely, Chief Zegelaar said they should deploy the skill gained from the programme to fir mly establish themselves.

According to the Managing Director, the firm had invested five hundred and fourteen million [514] naira in various training and e m p o w e r m e n t programmes for four hundred and sixty youths.

He said the firm also awarded two hundred and ninety one university scholarships annually to students.

On his part, Provost of the Federal college of Education, Dr Nkasiobi Oguzor, charged the graduands to shun the temptation to sell the starter packs just as he commended the oil firm for sponsoring the youths.

He urged the graduands to further embrace the opportunity to be self reliant and active in the entrepreneurial world.

Community

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N173bn methanol plant in jeopardy over land disputes Emma ARUBI

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Skill Acquisition Centre

Shell empowers Bayelsa, Rivers youths with skills Samuel OYADONGHA

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he Anglo-Dutch oil giant, Shell Petroleum Development C o m p a n y (SPDC) has empowered 20 youths drawn from the disputed oil rich communities of Nembe in Bayelsa and Kula in Rivers State, with lifesustaining skills as part of measures aimed at boosting capacity and increasing wealth portfolio in the Niger Delta.

The oil giant also helped the beneficiaries, who are mainly young women, to establish small scale businesses that would enable them cater for themselves and their families for life. Receiving their certificates of merit and business starter packs in Yenagoa, the beneficiaries of the LiveWIRE Business Enterprise Training for “Swamp 2” host communities of SPDC Eastern Operations

were full of joy and excitement as they commended the company for engineering a turn-around in their lives.

Speaking at the graduation ceremony, SPDC Manager, G o v e r n m e n t a n d Community Development Relations Bayelsa/Delta, Mr. Evans Krukrubo , said the scheme was designed in line with the company ’s philosophy of contributing to economic empowerment and job creation for youths and women in its area of operation.

He said, “The LiveWIRE programme, which has trained over 5000 youth and women entrepreneurs since 2003, aims to provide access to entrepreneurship training, business development services as well as start-up capital to establish and

expand youth-driven businesses.”

According to him, “the beneficiaries of the scheme have now created employment opportunities for thousands of youths across the region, thereby contributing to the reduction of youth unemployment in the region.”

Also speaking, Mr. Hope N o u k a , M a n a g e r, Sustainable Development and Community Relations, described the programme as a critical step towards the qualitative empowerment of the youths in the region.

He urged the participants to utilize the skills acquired by putting starter packs given to them into good use to improve their individual lives and the advancement of their families and communities.

In his remarks, the state

commissioner for Energy, Mr. Francis Ikio, thanked SPDC for empowering the youths and charged the participants to take advantage of the opportunity to excel and empower others desperate to acquire similar skills, own and manage their independent businesses.

Represented by the Permanent Secretary in the ministry, Mr. Prekake Gede, the commissioner however noted that the oil giant cannot achieve sustainable development in the region without the active collaboration of other actors in development. He, therefore, charged other major players to fashion viable partnerships aimed at delivering on the needed social performance commitments to achieve the desired impact and sustainability.

ARRI-LAND OWNERSHI P tussle is set to frustrate the proposed N173bn methanol plant

by Gulf of Guinea in Nigeria.

The Gulf of Guinea Oil Exploration Limited (GGOEX) $1.1billion dollar investment in Delta state is to be constructed at Aja-Edede, Ugborodo, Escravos, Warri SouthWest council area of Delta State. But the facility with a capacity of 1.8million tonnes and provide two percent of global methanol production, is already facing legal battle in the Effurun High Court i n S u i t N O : EHC/189/2010: Yonwuren & others Vs Shell & others.

The suit is challenging the right of any company or establishments to use Aja Edede land without prompt and adequate compensation to the host community of Aja Edede.

In a public notice by counsel to the Edede families in Ugbuwangue, Chief Pius Egomole of Inkeir uka Chambers, Warri, the plaintiff stated that they “ will not permit any other interloper to enter their native land without first settling them”.

I n a Va n g u a r d publication on February 5, 2013, they maintained that “Aja Edede is not Ogidigben or Ajudaibo”, saying that “it is a community of its own”.

Reacting to the claim, the Ugborodo Community Trust Vice-Chairman, Mr. Isaac Botosan and the Public Relations Officer, Chief Ayiri Emami said “no single family own a land in Ugborodo”, noting “that all Ugborodo land belongs to Ugborodo people”.

They called on every stakeholder, government and investors to disregard the claims by the Edede family.

Sweetcrude is a Publication of VANGUARD MEDIA LIMITED, Vanguard Avenue, Kirikiri Canal, P.M.B.1007, Apapa.

Website: www.vanguardngr.com (ISSN 2251-0001) Editor: CLARA NWACHUKWU . Phone: 08098051103, All correspondence to P.M.B. 1007, Apapa Lagos.