Sweetcrude may 2014

Growing indigenous technology in Nigeria's petroleum sector

Nigerian companies now exporting capabilities -PETAN

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A Vanguard Monthly Review Of The Energy Industry VOL 04

N0. 60

MAY, 2014

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BP raises dividend again

B

P raised its quarterly dividend for the second time in six months and declared that more share buybacks were on the cards, showing how the British oil company's asset sales are providing more cash for investors.

Shareholders have urged big oil companies such as BP and Shell to control spending and give back more cash because of concerns over rising costs in the oil and gas industry and their impact on profitability.

Indigenous participation key for oil industry development P\8

Oil spills: ERA proposes environmental tribunal

2

Contents 4

COVER

Indigenous participation key for oil industry development

08 OIL 12 FOCUS 14 OIL & PEOPLE

Oil spills: ERA proposes environmental tribunal

Nigerian companies now exporting capabilities

Growing indigenous technology in Nigeria's petroleum sector

18

POWER FG trains engineers for power

20

GAS

21 22

Sinopec acquires 15% stake in B.C. LNG project

FINANCE

Nigeria loses N8.62bn on gas flaring

LABOUR PENGASSAN petitions Presidency over oil sector challenges

26 SOLID MINERAL

BEYOND OIL: Exploring solid mineral potential

28

MARITIME

30

COMMUNITY

We will not indulge in arbitrary decision

Bayelsa experiences 40 oil spills monthly

Sweetcrude is a publication of Vanguard Media Limited

THE TEAM Ag. EDITOR Clara Nwachukwu CORRESPONDENTS Victor AHIUMA-YOUNG Godwin ORITSE Jimitota ONOYUME Samuel OYANDOGHA Emma Arubi Michael Eboh Rosemary ONUOHA Sebastine OBASI Kunle KALEJAYE HEAD, SPECIAL REPORT Ubong NELSON PAGE LAYOUT/DESIGN

Francis AYO & Johnbull OMOREGBEE

Enquiries Call: 08098051103

Printed and Published by

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Vanguard Media Limited.

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

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

T

he Nigerian Conten t Act has been in for ce for four years now. W hile it is obvious th at the law has helped break the stranglehold of the foreign oil companies in Ni geria's petroleum industry, it is definitely not ye t “uhuru� for the indigenous players.

Certainly the law has ushered in mo re Nigerian players across the value chain upstream, downstream, gas, petrochemicals, marine, and especially in the ar ea of services.

PETAN's chair, Em eka Ene, argues tha t there is no subsector whe re Nigerians have demonstrated their ingenuity the most than i n the area of services, and are now exporting the ir capabilities around the world.

Also, more Nigeria n companies are licenced for crude oil exports, and are now beginn ing to acquire rigs, production ve ssels, storage vesse ls and a host of others to enhan ce their competitiv eness.

In power, Nigeria ns have demons trated their capacity to take ch arge, even at the risk of raising almost all the funds domestically in th e recent over $400billion electri city assets sale.

Definitely all of t hese are cheery ne ws, but like Oliver Twist, Nige rians are asking for more - for government to be more committed to enforcing its laws, and for the do minant multinatio n als to be less discriminatory in their offers and labo ur practices.

As Nigerians join hundreds of thous ands of other nationals from ar ound the world to pa rticipate in this year's OTC in Houston Texas, U SA, many are expecting to see evidence of the breaking of grounds by ind igenous compani es, to douse suspicions that the conference i s not a mere jamboree to unwind .

We wish all deleg ates and attende es fruitful participation!

Cover Story

4

Indigenous participation key for oil industry development There is a Nigerian company in Houston providing computer services to clients there. It is a Nigerian company that started from here and evolved over there

BY SEBASTINE OBASI

T

he long-held belief that Nigerians cannot m a k e a n y meaningful contribution in the nation's oil and gas industry development appears to be a ruse.

In the last four years, especially since the advent of the Nigerian Content Act, indigenous companies have continued to prove that appreciable development in the nation's hydrocarbon industry can only be achieved by Nigerians themselves. This is buttressed by the foray into the deepwater, hitherto seen as the exclusive preserve of the International Oil Companies, IOCs. Breaking new grounds The Petroleum Technology Association of Nigeria,

P E TA N , b e l i e v e s t h a t Nigerian companies have actually derived unique solutions to solve trying problems, especially in the deepwater. According to Mr. Emeka Ene, Chair man, PETAN, “Right now the world's longest fibre security project is being done by a Nigerian company. It is the longest installation of such a solution. It is a Nigerian company that is doing it not a multinational, not a foreign company “Nigerians indeed have the capacity to think through, and what is happening is that most of the research and development costs are usually funded from activity.

As for that, we will follow and that is already happening.”

The PETAN boss also believes that Nigerians are unique when compared with other oil producing countries.

“Nigeria and Nigerians in the oil and gas industry are

unique. They are unique in the sense that we've had the fastest growth in terms of hands on ability to deliver services. There are local content models across the Middle East, but the local content models are simply an agency-type model. So once you set up an agency you can do business.

“However, in our own situation we have Nigerians who have made and are prepared to make investments to grow technical service companies from ground up. That is a significant difference because what we now see is that some Nigerian companies are already able to export these capability outside Nigeria.

“There is a Nigerian company in Houston providing computer services to clients there. It is a Nigerian company that started from here and evolved

over there. We have Nigerian companies who are working in Mauritania offshore F P S O ' s . We a l s o h a v e Nigerians who are drilling in Congo. We have Nigerians who are offering services offshore Angola. We have Nigerians who are doing business in Yemen, in Saudi Arabia, in Oman.

“These are service companies that started in Nigeria and exported their business.

In that respect, Nigeria is unique. In all of Africa, it is difficult to find the kind of momentum of Nigerian entrepreneurs or technocrats in the oil and gas industry.It just does not exist.

Our experience is partly because we have the population, partly because we have the drive, also partly because by unique combination of historical facts we have had a large population of diaspora Nigerians who have the

experience both internal and external and are ready to take the risk involved in setting up their businesses, so in that regard Nigerians are pretty much ahead and I think the industry recognises that,” he said.

Ene also believes that indigenous participation in the nation's oil and gas industry is evolving. “What we are seeing is that there has been an evolution of indigenous technology in the i n d u s t r y. I n t e r m s o f breakthroughs we have some of our companies manufacture pegs for pegging pipelines. One of our members builds platforms.

One of our members manufactures electronic control panels for deepwater, shallow water control panels for FPSO's.

“One of our members just built a deepwater theatre for training safety professionals.

CONTINUES ON PAGE 5

Cover Story

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Usan FPSO

Indigenous participation key for oil industry development CONTINUED FROM PAGE 4

It is the only one in Africa.

This is just a few examples of some of the things you are going to see at the offshore technology conference, OTC, in terms of the technology profile of Nigerian companies that are constantly growing from year to year,” he said.

Enhancing industrial growth Mr. Scott Aitken, Chief Executive Officer, CEO, Atlantic Energy, also believes that indigenous participation is critical to the growth of the nation's oil and gas industry.

He noted that there are yet untapped potential that indigenous companies can take advantage of to push up the country's production in the petroleum sector.

According to him, indigenous players will not only boost production, they can also provide the much needed gas to boost power

generation. He said for a nation that wants to develop its economy, it must pay more attention to the activities of indigenous oil producers by providing them with enabling environment to operate.

The Atlantic Energy boss is of the view that the role of indigenous producers cannot be overemphasized in the nation's development, and reiterates that there are Nigerian solutions to every challenge that faces the nation.

He cites gas flared or compressed as LNG for export as possible areas where indigenous potential could be harnessed, saying that as indigenous producers, they needed to capture the gas, transport it safely and economically to the domestic market for highly effective and reliable power.

On the issue of funding which is one of the major problems facing the industry, Aiken was of the view that

fast-tracking solutions to deliver early results will further help provide the funds required for development, thereby reducing the over-reliance on bank loans.

Growing domestication of services Mr. Ayodele Oni, an energy law and policy expert and senior associate, Banwo & Ighodalo, a Lagos based law firm, said that in the last four years, there has been improvement in the participation of indigenous companies in the oil industry due to the implementation of the Nigerian Content Act. “After four years, there have been modest achievements and an improvement in the overall Nigerian value addition to the oil and gas industry and certain Nigerian engineering and oil service companies have benefitted from it, as there has been an increase in the

volume of in-country fabrication,” he said.

He explained that the first deepwater simulation theatre (DST) in Africa located in Port Harcourt, and commissioned in April, which was built by an indigenous oil servicing company, Tolmann Allied Services Company Ltd, lends credence to the evolving indigenous technology in the industry.

E & P exploits The Nigerian oil industry, which has been dominated by the IOCs in areas such as exploration and production, has seen Nigerian companies now owning more than 100 blocks across oil-producing regions in the country, and at least 30 marginal fields.

By the end of this year, the major divestments by IOCs since 2010, would have transferred about 5 billion barrels of oil and 20 trillion cubic feet (Tcf) of gas to indigenous players, said

Austin Avuru, managing director, Seplat Petroleum Development Company.

“The Nigerian Content Act has done so well in the last four years as many Nigerians now play active roles in the oil industry,” Tunde Adelana, director, monitoring and evaluation, Nigeria Content Development and Monitoring Board (NCDMB) said.

“We are seeing fabrication projects, pressure vessels being built by Nigerian companies,” he said, adding that the NCDMB was working very hard to put in place formidable processes to help detect non-compliance and abuses.

Effective competition Fo r E m e k a O k w u o s a , Managing Director of O i l s e r v, i n d i g e n o u s companies have come of age and are competing favourably with their foreign CONTINUES ON PAGE 6

Cover Story

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Local content

Indigenous participation key for oil industry development CONTINUED FROM PAGE 5

counterparts. “Indigenous companies are now taking control of lucrative pipeline construction projects. The competition is now between indigenous companies and their foreign counterparts.

For instance, the East-West Gas Pipeline project awarded to Oilserv was made possible because of the steady investment in capacity building, and the insistence of the Minister of Petroleum Resources that indigenous companies must be accorded due recognition in line with the Nigerian Content Act,” he said.

Developing technology

local

On the possibility of Nigerians sustaining indigenous technology that can stand them out in the industry, Mr. Barry Esimone, President of Crusteam, an energy and infrastructure group, believes that Nigerians can adopt a few and indigenise them.

“We can struggle to adopt a few and indigenise them especially in the area of process or drilling material technology. In doing this, we can beneficiate the local material to meet the requirement properties/ characteristics and can then patent such formula if it brings cost or efficiency advantage over imported ones. The Raw Material Research Institute has been

working on this area and may provide our niche in the industry,” he said.

Esimone also believes that technology development starts from Universities and are refined in research institutes.

He however said that government should encourage the establishment of low technology based industries to accommodate the participation of the locals in the industry.

“Local technology development must be achieved by trial and error method. Government should encourage the establishment of low technology based industries rather than sophisticated ones so that

Esimone also believes that technology development starts from Universities and are refined in research institutes locals can participate and learn the tricks through improvisation which could then be refined at the universities and research institutes. The modern complex factories are usually automated with process packages patented, thereby preventing meddling and therefore understudying,” he said.

Oil

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Oil spills: ERA proposes environmental tribunal Oil spill

BY EGUFE YAFUGBORHI

W

ARRI: T O institute environ mental justice in Nigeria, the Environmental Rights Action/Friends of the Earth Nigeria, ERA/FoEN, has called for the establishment of an “Independent National Environmental Tribunal” for speedy resolution of environmental disputes in the country.

The Executive Director, ERA/FoEN, Dr. Godwin Uyi Ojo, made the proposal in Warri, Delta State, where the environmental rights group facilitated a two-day workshop aimed at empowering civil society groups and communities to

achieve justice over incidents of environmental disasters.

Blaming rampant gas flaring and frequent oil spills in the operating environment on impunity by oil companies as well as ignorance and sometimes connivance by the host communities.

Ojo also said the Nigerian judiciary shared in the blame, as most of the spill cases even when dragged to court are hardly resolved conclusively, with the impacted communities hardly gaining justice.

“That is why you notice that in recent times, impacted communities with the support of ERA and other civil society groups now explore the option of foreign courts.

You remember the case of five fishermen from Bayelsa versus Shell in the Netherlands? One of the plaintiffs won against Shell in the Hague,” Ojo noted.

H

e argued that the regular courts have failed in playing their role in discouraging reckless operations resulting in spills because of the delayed justice system as well as the challenges of pervasive corruption in the country for which the judiciary is no exception.

The ERA boss, therefore, called for “an Independent National Environmental Tribunal specifically tailored to concentrate on environmental disputes would resolve all pending cases with dispatch as justice delayed is justice denied.

“There are about 10,000 oil spills sites in the operating environment and not one spill have been adequately cleaned up. This has resulted in severe degradation of farmlands and pollution of water bodies which the

Colombia warns of emergency decree for pipeline A month long standoff with a forest-dwelling indigenous group is threatening Colombian oil exports and may force the government to declare a national emergency, Mines and Energy Minister Amylkar Acosta said.

Members of Colombia's U'wa group are preventing repairs to the Cano Limon-Covenas pipeline following an attack by Marxist rebels March 25, cutting exports by more than 2.5 million barrels, Acosta said. The country's second biggest pipeline is controlled by state-run Ecopetrol SA. “This almost merits a declaration of emergency by the national government,” Acosta told local radio station Caracol today. “There are reasons of state, and there's a public interest that takes precedence.”

A emergency declaration would give Colombian President Juan Manuel Santos powers to rule by decree for 30 days and potentially overrule standard protocol when dealing with local groups. Royalties from oil, Colombia's biggest export, are a key source of revenue for the government, currently battling farmer protests ahead of presidential elections in four weeks.

The Cano Limon pipeline takes oil from eastern Colombia to the Caribbean coast. The U'wa group says it is demanding the duct be partially re-routed to bypass ancestral lands that have suffered repeated oil spills and a rising military presence.

Oil

9

Chadian oil field

ERHC gets presidential nod for Chadian oil blocks

E

RHC Energy Inc., said it has received the approval of the C h a d i a n President to retain oil exploration Block BDS 2008, and its voluntary relinquishment of the Manga and Chari-Ouest III Blocks.

ERHC, a publicly traded American company with oil and gas assets in SubSaharan Africa, had earlier announced the agreement of the Ministry of Mines, Energy and Oil to its request for relinquishment.

The request was made to enable the Company to focus its resources on the highly prospective Block BDS 2008.

With the receipt of the Presidential Order clearing the path for ERHC to proceed with exploration activities in BDS 2008, the Company has commenced in advance of a

potential farm-out the financing of approved geological and geophysical work.

ERHC is currently issuing a series of convertible notes to fund magnetic/gravity surveys and, thereafter, 2D seismic acquisition.

M o d e l i n g f o r gravity/magnetic surveys of BDS 2008 was completed recently and constitutes the basis for ERHC's request for bids from reputable survey companies for the requisite surveys.

ERHC also said it planned to gather data from an area of 5,000 square kilometers, with two main areas of focus: - North of Esso's Tega and Maku discoveries in the Doseo basin; and - East of and on trend with OPIC's Benoy-1 margin

With the receipt of the Presidential Order clearing the path for ERHC to proceed with exploration activities in BDS 2008, the Company has commenced in advance of a potential farm-out the financing of approved geological and geophysical work.

discovery in the Doba basin.

ERHC has 100 percent of the interest in BDS 2008 in southern Chad, which encompasses 41,800 square km. or more than 10 million acres. The Block is located on the northern edge of the Doba and Doseo basin, the site of a c t i v e ex p l o r a t i o n a n d development projects with discoveries exceeding 1,290 MMBOE. Based on its current understanding of available data, ERHC estimates the unrisked resource potential in the two focus areas in BDS 2008 to be 250 million barrels of oil equivalent (MMBOE).

In addition to its oil and gas exploration interests in the Republic of Chad, ERHC holds interests in the Republic of Kenya, the Sao Tome and Principe Exclusive Economic Zone (EEZ) and the Nigeria-Sao Tome and Principe Joint Development

Oil rebounds as geopolitical concerns resurface

O

il prices rose as traders refocused on geopolitical risks from an outbreak of violence in Libya to Russia's intervention in Ukraine.

On Monday, oil posted its biggest daily decline in a month, when Libya lifted a force majeure from the eastern Zueitina oil port, raising prospects for rising shipments.

But on Tuesday, gunmen stormed Libya's parliament, wounding several people, while a suicide bomber in a car killed at least two people and wounded two others at an army camp in the eastern city of Benghazi.

The developments raised questions about how soon oil flows will resume. "When you see an action like that, then you wonder if the port will in fact reopen," said James L. Williams, energy economist at WTRG Economics in London, Arkansas. "It just creates more uncertainty about it," he said.

June Brent crude futures settled at $108.98 per barrel, up 86 cents, or 0.8 percent, after spending much of the day above $109 per barrel.

The gain pared Monday's 1.4 percent drop. US crude for June delivery added 44 cents to settle at $101.28 per barrel, up 0.44 percent. It had moved as high as $102.20 earlier in Tuesday's trading.

Oil

10

Total tasks Hyundai on Nigerian content compliance

N

igerian unit of French oil giant, Total E & P Nigeria Limited, Total, has directed Hyundai Heavy Industries (HHI), a contractor on the NNPC/Total J o i n t Ve n t u r e ' s O f o n - 2 Project, to ensure full compliance with all applicable provisions of the Nigerian Content Act. The directive follows an intervention by the Nigeria Content Development and Monitoring Board, NCDMB, the company said in a statement.

Noting that “the relevant Ofon contracts were signed in 2007 before the Nigerian Content Act came into effect in 2010,” Total said it will “support the Nigerian Government aspirations in respect of Nigerian capacity development and increase of local content in the oil and gas sector.”

Accordingly, “Total has therefore directed HHI to significantly review the manning ratios to ensure the provisions of the Act are complied with. Following Total's directive, HHI has increased Nigerian manning participation from 29% to 65%.

“50 expatriate workers from HHI have been replaced by Nigerians and 50 additional positions have been created

We take the opportunity of the currently ongoing Nigerian Content Month to confirm our partnership with the Board to achieve the goals of the Government and people of Nigeria in this very important area of national development on the site to train Nigerian staff during the pre-start-up phase of the project,” the statement said.

To t a l a l s o s a i d i t i s committed “to working with N C D M B a n d To t a l ' s contractors to increase local capacity and to train workers for the up-coming projects in Nigeria.

“With a high ratio of Nigerian content over our major development projects over the last few years on Akpo and Usan and on the

recently launched Egina project, Total and its partners are proud to be the leader in Nigerian Content development.

“We take the opportunity of the currently ongoing Nigerian Content Month to confirm our partnership with the Board to achieve the goals of the Government and people of Nigeria in this very important area of national development,” the statement concluded.

Eni doubtful on Kashagan output in 2015, blames welding

I

talian oil major Eni is not counting on any production from Kazakhstan's huge Kashagan oilfield this year or possibly next due to faulty welding at the $50 billion project, its CEO designate said.

Production at Kashagan, the world's biggest oil find in 35 years, started last September but was stopped in early October after gas leaks were found in the pipeline network.

"It's worse than we considered. We have already put in place contingency plans to cover a possible lack of production in 2015," Claudio Descalzi told analysts in a conference call on Tuesday after Eni reported a drop in

first-quarter profits.

Descalzi, the current head of exploration and development who is slated to take over as CEO in May, said the two gas and oil pipelines at the plant would most likely have to be replaced.

"The problem is related to some spot hardness points on the pipes but mainly to the welding," he said.

Recent tests in Britain, France and Italy have shown that the pipes' carbon steel material was fit to withstand the hostile Kashagan conditions, he added.

Oil

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Global oil to grow in 2014 -IEA

I

nternational Energy Agency, (IEA), has revealed a greater rise in Global oil demand than expected this year, according to a new forecast that found consumption grew by 91.2m barrels per day (bpd) in Q4 last year.

The forecast, in its monthly report on the oil market, said consumption accelerated by 135,000 bpd, buoyed by the recovery of advanced economies led by the US. However, it noted the growth of Chinese demand slowed down in the second half of 2013, Agence FrancePresse reported.

Highlighting huge changes in the undercurrents of the oil market despite stable prices, the IEA said that emerging economies were now driving growth of oil demand, but its monthly report focused strongly on a huge rise in US output.

This was accelerating debate about whether or not the US should lift a ban dating from the oil shocks of the 1970s on the export of oil, the IEA said.

In the 34 countries belonging to the OECD group of advanced democracies, and for the first time since 2010, “demand appears to have swung back into growth in 2013,” the IEA said.

It raised its estimate of global demand for oil in the last quarter of 2013 by 135,000 bpd to 91.2 million bpd “led by a significant upward revision of 700,000 bpd to the US demand assessment pegged to industrial fuels.”

($13.33bn) over ten years, the Saudi Gazette reported.

It comes as Mohammad Khorsheed, General Manager of GE Saudi Innovation Centre, predicted an eight percent increase in energy efficiency practices will help save over SAR50bn

A ten percent reduction in oil consumption within the Kingdom by 2030 will result in the release of 255 million barrels for export achieving additional revenue of $28bn a year, he said.

Usan FPSO According to a GE study, the use of oil can be optimised through efficient technologies. Some 452 million metric tonnes of carbon dioxide were emitted in 2010 through power fuel consumption, while per capita carbon dioxide emissions stood at 16.5

Providing technical and consulting services in support of Drilling & Offshore Facilities maintenance operations

...Performance without compromise

tonnes.

As part of an $1bn investment commitment to the Kingdom, the company has unveiled its Saudi GE Innovation Centre in Dhahran Techno-Valley and also expanded its GE Manufacturing Technology Centre in Dammam.

F

Focus

12

Nigerian companies now exporting capabilities -PETAN ‌ OTC offers best forum for showcase

E

ach year scores of N i g e r i a n companies and participant throng the Offshore Technology Conference, OTC, in Houston Texas, USA. However, t h e C h a i r m a n , Pe t r o l e u m Technology Association of Nigeria, PETAN, Mr. Emeka Ene, tells Clara Nwachukwu, that it is far from the jamboree many suspect the conference to be, saying that Nigerian companies have broken new grounds in technology and exporting their capabilities and the OTC offers the best platform to showcase these. Excerpts: How would you describe technology deployment by indigenous companies in Nigeria's oil and gas industry?

I think that technology in itself and various technologies grow in phases.Technology is not one word; it derives from the application of knowledge to get things done. What has happened in the industry is that its being done in multiple phases. We had the phase of creating opportunities for Nigerians to provide service, now that it has started maturing with the Nigerian Content Act, to the p h a s e o f a c t u a l l y manufacturing.Now that is driving the phase of Research and Development, R&D.We have had a few instances of Professors in universities collaborating with private companies to create solutions including services, in fabrication; in process engineering etc, we have seen a lot of that already beginning to happen. So I see that there has been almost like a steep change between the last 10 years preceeding 2010 and the last four years post the Local Content Act. There has been a steep

change and therefore, you've seen a lot of progress even on the indigenous technology side.

So how would you then describe individual company's response to these changes?

There has been a mixed bag.

One thing is that the crop of entrepreneurs who kicked off what I would call the revolution in the oil and gas industry in Nigeria, were seasoned technocrats, people who had already paid their dues working in different parts of the world at different ends of the technology spectrum and who by virtue of their entrepreneurial prowess as individuals to invest in starting their own companies in Nigeria.

We went through what I would call the dark ages where the opportunities were just not there even though the competence was there to a period today where the field is wide open for Nigerians to demonstrate proof of concept to do work. So its a mixed bag because there are also people who have not gone through that process who have also jumped into the local content bandwagon. For those who have gone through two or three phases in their companies, it's a natural extension of the fact that for them to maintain a competitive advantage, there need to be home grown technology as it were.Although technology in itself is not local or indigenous, technology in itself is you get the best of what ever it is and put it together to solve your own problem.So in this sense, indeed on an individual basis we have seen a lot of progress. I'll give you a few examples in the companies who actually do engineering process d e s i g n l o c a l l y, t h e r e a r e Nigerian companies involved in deepwater who have actually

Emeka Ene

We went through what I would call the dark ages where the opportunities were just not there even though the competence was there to a period today where the field is wide open for Nigerians to demonstrate proof of concept to do work derived unique solutions to solve trying problems. Right now, the world's longest fibre security vision project is being done by a Nigerian company. It's the longest installation of such a solution; its a Nigerian company that is doing it; not a multinational, not a foreign company. So Nigerians indeed have the capacity to think through issues.What is happening is that most of the research and development costs are usually funded from activitiesthat will follow and that is already happening.

But can you really say that so

far, that we are doing enough?

Certainly we cannot say that we are doing enough but that is another wide question. It's never enough because you have to look at what the drivers of the business are. We went from a rent collection driver and we are now evolving into an actual resource application driver. Now what we are saying is, if we go to an innovation driver which is when we are driven by technology - this thing is derived from a guy called Joseph Schumpeter, he was the father of innovation as a driver for entrepreneurial growth, what you find is that it's a natural

extension that to maintain your competitive edge you have to go into innovation.We are not there yet where we are driven p r i m a r i l y b y t e c h n o l o g y, however, we already have examples of companies that by natural extension and in order to compete, they have to and they are doing that in the fabrication area,and in the manufacturing area.Things are already being manufactured in Nigeria, and what I mean by manufactured I mean they are being designed, they are being conceptualised, and they are being made in Nigeria, and exported to other countries. So you can never do enough, but our industry is not yet driven by innovation for obvious reasons.We just started this process but it's inevitable that as long as there is a level playing ground and the industry keeps growing that innovation would inevitably become the driver in doing our business.

Compared to your peers in other climes how would you compare Nigeria, not those in the developed world but those in Africa, but those in other developing countries in Asia and the rest of the world?

I would like to compare Nigeria

CONTINUES ON PAGE 13

Focus

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supposed to be done transparently, but ultimately we are trending in the right direction. It is our hope that more IOCs will embrace this concept and come to the table to discuss like we are already doing with a number of them to find ways in which capacity can be grown in a real and measurable manner.

In that case how can Government help further apart from enacting theLocal Content law, and secondly, the IOCs how can they also help to expand and build this further?

Nigerian companies now exporting capabilities -PETAN CONTINUED FROM PAGE 12 to another oil province say the Middle East. I am not even selecting a country; I am going to look at the whole of the Middle East from Algeria all the way to Yemen, all the way to Iran, and all the way to Saudi Arabia, Oman, Kuwait all that stuff. Now what you'll see even to South East Asia, if you like to Malaysia, Indonesia, Dubai, what you'll find is that Nigeria and Nigerians in the oil and gas industry are unique. They are unique in the sense that we've had the fastest growth in terms of hands on ability to deliver service. Now there are local content models across the Middle East, but these models are simply an agency type model,so once you set up an agency you can do business.

However, in our own situation we have Nigerians who have made and are prepared to make investments to grow technical service companies from ground up. That is a significant difference because what you now see is that some Nigerian companies are already able to export these capabilities outside

Nigeria. There is a Nigerian company in Houston providing computer services to clients there; it's a Nigerian company that started from here and evolved over there. You have Nigerian companies who are working in Mauritania offshore FPSOs; you have Nigerians who are drilling in Congo; we have Nigerian who are offering services offshore Angola; we have Nigerians who are doing business in Yemen, in Saudi Arabia, in Oman. These are service companies that started in Nigeria and exported their businesses, so in that respect Nigeria is unique. In all of Africa, it is difficult to find the kind of momentum of Nigerian e n t r e p r e n e u r s , o r technocratsthat we have in the oil and gas industry. This is partly because we have the population, partly because we have the drive.

Also partly because by unique combination of historical facts, we have had a large population of diaspora Nigerians who have the experience both internal and external, and are ready to take the risk involved in setting up their businesses.So in that

regard, Nigerians are pretty much ahead and I think the industry recognises that. There are problems obviously, it's not tidy, it's not neat, there are still capacity issues but the drive and the passion is not lacking, therefore invariably Nigerians are head and shoulders ahead of their peers from the rest of Africa.

I asked this question because of the recurrent issue of sidelining by the IOCs in Nigeria; so if we have made so much progress both within and outside the country why are they still afraid to take on your members?

I need to answer that question carefully; you see it is a process that is still evolving. Any business, IOC or not, wants to conduct its business at the most efficient point and at the best cost value point. Therefore, the initial interpretation of the Local Content Act was that this was a rent collection, a toll gate that was going to drive up all their costs and introduce less quality in the services and delivery of solutions to run their businesses.

This is a fact. Now what happened was that all the E & P companies adopted a collaborative approach, which is a development pact and the focus and emphasis was on local content development not on monitoring. The idea was to collaborate,and put heads together to find ways through which we can create real

capacity in the industry and give opportunities for Nigerians to progress. Now bear in mind that the oil and gas cycle is a 10-year cycle, so from the day you discover oil in a particular field to the day when you are actually producing the field is 10 years typically. So if you put that in perspective, you will understand that major projects are planned many many years ahead of time.So it's been a process and I can tell you that there are IOCs like Shell for example that have embraced the process and have worked closely with the industry to build real capacity through capacity development initiatives.This process will strengthen both the Nigerian companies and strengthen the pathway, for which Nigerian companies can do business, grow real global capacity. So the way I see it is that it's trending in the

Great,I will take the government's side first. A law in itself does not implement itself.

This sometimes is the mistake that people make both people in the industry and out, thinking that just passing the law is sufficient, it is not. Prior to the law, for the previous nine or 10 years, we had some 24 guidelines, and even during that period the IOCs kept saying you don't have a law so we are not obliged really to respect these guidelines. They said that when you do have a law then we are obliged to work with you to realisethese objectives. Now the same way the law provides what I would call a policy guideline, the actual regulations are for implementation via the regulator backed up by government.I will that in the first phase there was leadership provided by the honourable Minister of Petroleum Resources to support the process of local content and creating guidelines to ensure that the law is implemented not only in a realistic manner, butalso in a way that strengthens Nigerian companies in a measurable manner and that has yielded the results that we can look up to today.However, the capacity development initiatives by collaborating with the IOCs to bring long term large scale capacity, and I say this because you can't for example open up a fabrication yard only just for

Any business, IOC or not, wants to conduct its business at the most efficient point and at the best cost value point. right direction; we are not there yet, but its trending in the right direction. The initial barier that came up were bariers of fear, mistrust. All these bariers are now coming down gradually as more and more Nigerian companies are able to show that indeed we are adding value that you will not get from outside the shores of Nigeria. This is not to say that somethings are not being done the way they are

Shell; it has to be for the industry.Therefore, across the industry there needs to be an understanding, an appreciation that these initiatives will indeed serve the industry, that for example; in terms of standards you cannot have a multiplicity of standards - US standard; European standard; UK standard, all in the same Nigerian industry.

Oil &People

14

Chijioke Nwaozuzu

Growing indigenous technology in Nigeria's petroleum sector

Oil workers

T

echnology can h a v e a substantial impact on an industry's performance. Consider the effect of genetic engineering on phar maceuticals, of t r a n s i s t o r s o n telecommunications and of plastics on metals.

Identification of the commercial potential of technological developments has dramatically accelerated world-wide, and the lag between ideas, invention and commercialization has decreased.

In the past ten to 12 years, an amazing number of new technologies have brought forth such products as video recorders, compact discs, ever more powerful and ever smaller computers, mobile

phones, fax machines, new lightweight materials and highly effective genetically engineered drugs.

Technological progress over the next 10 years is predicted to be several times that experienced during the past ten years; much of it will be spurred by the need to find solutions to our environmental problems.

Major technological innovations can be expected in a variety of fields, e s p e c i a l l y inelectronics/telecommunica tions.

A modern advocate of the importance of innovation is D'Aveni who argues that due to technological progress and information technology the sources of competitive advantage are being eroded at an increasing rate. The

answer is to disrupt existing sources of advantage in the industry and create new ones. In the context of 'hypercompetition' the best the firm can do is seek to achieve a sequence of temporar y advantages that keep it ahead of the rest of the industry.

If this is true then an awareness of research and innovation is central to companies' success. As it is with the private sector, so it is with nations!

Choosing the right technology All companies and governments are faced with a dilemma when attempting to decide how much to spend on research. It is well established that the returns on research expenditure are potentially high in many

industries. A large scale research project carried out in the US back- tracked innovations, and found that the rate of return on research expenditure was of the order of 30 per cent. However, this rate of return related only to those inventions which reached the marketing stage, and did not take into account failures. The research also demonstrated that the rate of return on successful research is high, but left open the issue of the return on total research expenditure by companies, given that a proportion of research does not lead to marketable products.There are in fact two stages to the problem of allocating resources to research and development (R & D): how much to spend, and what criteria to use in order to identify potentially profitable

products from the possibilities produced by research, since a company may not have sufficient resources to exploit all potential products. It could be argued that since so little is known about the likely success of new products, the most efficient approach is simply to develop products on a 'first come' basis, and tailor research expenditure to produce the number of new products a company is capable of dealing with.

To do this it would be necessary to have some idea of the productivity of research expenditure in terms of producing new ideas. It is interesting to note that although many academic economists have

CONTINUES ON PAGE 15

Oil & People

15

matter of great importance in the petroleum sector.

Locally constructed tank farm

Property rights A firm's technology processes and specially developed formulas are one of its most valuable assets and confer a sustainable competitive advantage. One of the most serious issues such a firm encounters when making a direct foreign investment is controlling the use and dissemination of such infor mation-based assets.

On the other hand, some developing countries have viewed agreements for technology transfer as presenting issues of foreign legal and economic domination as were raised by the concession system in oil & gas production.

Growing indigenous technology in Nigeria's petroleum sector CONTINUED FROM PAGE 14

spent the past 30 years attempting to identify a relationship between research expenditure and the production of inventions, the f i n d i n g s h a ve b e e n a t t h e aggregate level and consequently this type of research has produced no guidelines on which an individual company can base its research expenditure decisions.

This is partly due to the fact that in aggregate there is a reasonably stable output of inventions by the global economy, but for the individual company it is highly unlikely that marketable ideas will occur at a constant rate over time.

Impact of R & D However, the task of leadership in research and innovations is not strictly one for the private sector.

Government has a significant role, in creating and funding research institutes, in granting research loans to individuals and other related institutes, and to create government agencies to facilitate and fund technological research and research-based learning.

In Nigeria, we have several relatively new agencies tasked with some of these functions, e.g.

P e t r o l e u m Te c h n o l o g y

Development Fund (PTDF), Tertiary Education Trust Fund (TETFUND), National Content Development and Monitoring Board (NCDMB). It may be premature, at the present, to measure the degree of functionality of these agencies and their output. However, if the top positions in these relevant agencies are constantly filled based on political considerations rather than candidates with the requisite credentials and experience then the result is a foregone conclusion.

There are strong indications that the Engr Ernest Nwapa-led National Content Board is progressing according to set goals and objectives of the agency.

Considering the poor state of indigenous technological advancement in Nigeria, then how have we coped so far and how do we move forward in this direction?

In the oil sector, we have managed to keep afloat through technology transfers as enshrined in the concession agreements and production- sharing contracts (PSCs). Generally, the purchase or licensing of privately-generated (typically Western) technology is a

Power

18

Nigeria's electricity infrastructure ageing, degraded GE

Power facility

MICHAEL EBOH

Despite the challenges,

He also called for the fast tracking the Gas Master Plan, and the tracking of progress of the power reform

Angbazo, however, argued that

G

e n e r a l

Electric, GE,

has described Nigeria's

electricity

infrastructure as inadequate, ageing and degraded, a situation that is responsible for the current power crisis in the country.

According

to

a

paper

titled:“How Do We Harness Electricity to Transform Social Infrastructure?” by Mr. Lazarus Angbazo, President

& Chief

Executive Officer, CEO, General Electric Nigeria, the country's power sector is bedeviled by inadequate generating capacity and inadequate gas supply.

He further stated that the transmission facilities are ageing and degraded, while the distribution

facilities,

comprising meters, transformers amongst others, are grossly inadequate.

He noted that vandalism of critical infrastructure, human capital issues, sector liquidity, and legacy debt overhang are some of the other challenges confronting the country that are also hampering the steady supply of power.

there

are

a

number

of

opportunities in the Nigerian power sector, ranging from the strong reform agenda of the Federal Government, the huge power demand in the country to the planned Nigeria Gas Master Plan.

He cited other opportunities in

comprehensive human capacity

(N995 million), excluding

the sector to include the

and skills development

capital expenditure, of the

domestic gas obligation policy,

programs.

the potential in the Petroleum

Also, Mr. Batchi Baldeh,

Industry Bill, PIB, and the

Senior Vice President, Power,

abundant fuel sources for

Africa Finance Corporation,

alternative power generation.

AFC, said the potential debt

To harness the opportunities in

financing opportunity for the

the power sector, especially in

National Integrated Power

the generating segment,

Projects and Independent Power

Angbazo recommended bolder,

Projects, IPPs, is US$6.22 billion

US$8.886 billion (N1.421 billion) financing required.

He noted that an additional US$5.758 billion (N921.28 million) is required for the former Power Holding Company of Nigeria, PHCN generating company assets for capital expenditure and operating

expenses over the next five years.

He identified other investment and financing opportunities in the sector to include, “Follow-on investments in PHCN assets, N I P Ps t r a n s a c t i o n , I P Ps , embedded generation as the sector becomes fully liberalized; distribution infrastructure and ancillary services (metering, billing, engineering services, software, others) “Other opportunities in the sector are in Transmission and Independent Electricity Distribution Network (IEDN); gas development, supply and transport infrastructure; manufacture of wires, cables, transformers, and other auxiliary equipment.”

faster investment decisions, and the diversification of the generation base, while also increasing the capacity of the Nigerian Bulk Electricity Trading Plc. He also called for the fast tracking the Gas Master Plan, and the tracking of progress of the power reform.

On the transmission side, he advocated an acceleration of the ongoing

grid

upgrade,

promotion of private sector investment in national grid and a

Statoil jumps after profit beats estimates on U.S. gas price

S

tatoil ASA (STL), has recorded a leap in Oslo after first-quarter profit beat estimates, helped by higher natural gas prices in the U.S with record low temperatures that raises demand in markets such as New York, and lower taxes.

According to a survey gotten from Bloomberg, it noted that adjusted net income rose to 15.8 billion kroner ($2.6 billion) as against 12 billion kroner a year earlier. That beat the 12.4 billion-krone average of 14. Sales rose 6 percent to 169.6 billion kroner as oil and gas prices

measured in kroner climbed after the currency weakened.

Chief Executive Officer, Helge Lund, stated that, “Gas prices are significantly higher in the U.S, with higher volumes and we can't promise this kind of result every quarter as it has been an especially cold winter.”

Statoil in Febr uar y cut planned investments, joining competitors such as Exxon Mobil Corp. and Royal Dutch Shell Plc (RDSA) in reducing or slowing spending amid rising costs and stagnant energy prices.

Power

19

Kainji dam

FG trains engineers for power ‌Describes experience in oil sector horrible

BY CHRIS OCHAYI

A

BUJA:

The

successful execution of the reforms in the nation's power

sector, especially, the handing over of assets of liquidated Power Holding Company of Nigeria, PHCN, to its new owners, hasno doubt brought in fresh challenges in the industry.

One of the numerous problems that confronted the preprivatisation of sector was the dearth of technical workforce.

This is partly due to the embargo placed on employment since 1998.It was very critical that the country experienced over 16 years of non-employment of engineers in the power sector.

Post privatisation challenges To tackle the post privatisation c h a l l e n g e s , t h e Fe d e r a l Government decided to establish the National Power Training Institute of Nigeria, NAPTIN, the idea is to make sure that that huge gap in manpower requirement is bridged.

The decision is informed by the fact that if the nation doesn't have the local capacity, then the local content law may not achieve its aim since the investors will definitely look

elsewhere to fill the manpower

12 months Training.

gap.

NAPTINis therefore to ensure that the country has enough

Multi-agency support To support capacity building in

engineers and craftsmen for the

the sector, the Subsidy Re-

investors to shop from.

investment Programme, SURE-

From

the

manpower

P, also sponsored 220 students to

requirement survey, Nigeria will

the NAPTIN graduate skill

need about 8,244 trained

development programme.

It will also be require about 17, 500 technical manpower including lines men, cable jointers, fitters and so on to support megawatts required

engineers and technologists to

The Minister of Labour, Chief

support the increased in

EmekaNwogu, who performed

generation requirement.

t h e I n d u c t i o n c e r e m o n y,

while also supplying electricity

commended SURE-P for

to the industrial layout.

It will also be require about 17,

Capital Development Authority (FCDA) to help the Institute in

The Minister of Power, Prof

clearing a massive dump site on

500 technical manpower

initiating the giant step, which

including lines men, cable

according to him, will enhance

Chinedu Nebo, while on an

the land, which had created

jointers, fitters and so on to

growth in the power sector and

inspection tour of the complex,

construction challenges and

support megawatts required.

The initiative recorded the graduation of 243 engineers in Generation, Transmission and

as well, as reducing the rate of

which is estimated to cost over

increased the project cost

unemployment among the

N16 billion,urged stakeholders

considerably.

teeming youths in the country.

to take advantage of this local

On the training capacity, he

content initiative by making it a

said the institution was involved

Centre

in an intensive one year training

Determined to reposition

for

functional

Distribution fields trained by

NAPTIN for effective service

NAPTIN on the 7th of November

deliver y through relevant

professional capacity building

year programme designed to

2013 for the 2012/2013 session. A

training

for the nation's power sector.

equip graduates of Engineering

great number of the graduates

government embarked on the

He said that government

with requisite skills and

construction of its permanent

would give priority to capacity

practical knowledge to pursue

site in Abuja.

building in the sector in order to

careers in the power sector.

have

already

secured

employment in the power sector with effort being made to absorb the others.

This also followed by the

modules,

the

avoid the repeat of ugly

He also explained that “for the

of land measuring 10.4 hectares

experience of the oil industry

effective delivery of its training

in Idu Industrial layout, Abuja,

where the workforce, including

programmes, NAPTIN has renovated and equipped its

Located at an expansive parcel

induction of another 308

the construction work on the

the low level, turned out to be

engineers under the Graduate

administrative tower, described

expatriates.

Skill Development Programmes,

as world standard has already

NGSDP, of NAPTIN in Abuja.

reached an advanced stage.

But in his remarks, the

Regional Training Centres, RTC, located in the six geo- political

Director-General of NAPTIN,

zones of the country to world-

Engr. Reuben Okeke, said that

class learning centres with state

The inductees, who were

The NAPTIN permanent site is

mostly sponsored by their

envisaged to incorporate

the project is now at 70%

-of the arts facilities including

respective state governments,

electricity generation and

completion stage, and is

classrooms and well-equipped libraries.

comprised of 72 mechanical

distribution schools, as well as a

expected to be commissioned

engineers, and 236 electrical

transmission substation that will

before the end of the year.

engineers that will undergo the

serve as instructional facilities,

Okeke appealed to the Federal

Gas

20

Italian gas deals with Azerbaijan to break systemic oil-link

I

LNG plant

Sinopec acquires 15% stake in B.C. LNG project

A

liquefied natural gas project in B r i t i s h Columbia led by Malaysia’s stateowned Petronas continues to gather momentum with the addition of a fourth Asian partner.

China Petrochemical Corp.

(Sinopec) has agreed to take a 15-per-cent equity stake in the Pacific Northwest LNG project, it was announced.

Sinopec has also agreed to purchase three million tonnes per year of LNG over 20 years, sourced primarily from Pacific Northwest, in addition to 1.8 million tonnes yearly in an equity offtake.

The deal follows on an agreement struck less than two months ago with stateowned Indian Oil Corporation Limited, which

is taking a 10-per-cent stake in Pacific Northwest.

The other partners are Japan Petroleum Exploration Co. Ltd., through Japex Montney Ltd., with 10 per cent, and PetroleumBrunei with 3 per cent.

This latest transaction agreement boosts Pacific Northwest’s prospects. It is one of 14 projects proposed for British Columbia’s coast intended to feed growing Asian demand for natural gas.

But only three or four of the capital-intensive proposals will actually end up being built, according to some experts.

“While the market has known for some time that a large Asian party has been in negotiations with Petronas, the agreement is still showing that Canadian LNG momentum is gathering visibility,” Dundee Capital

Markets analyst Maxim Sytchev said in a research note.

“The geopolitical uncertainty in Europe where energy has once again become a policy tool, makes the potential Canadian supply an attractive option from a supplier perspective.”

Once the Sinopec and Indian Oil transactions close, Petronas will own 62 per cent of Pacific Northwest, Sinopec and its affiliates Progress Energy Canada Ltd. and Pacific Northwest LNG Ltd. said in a news release. “ We a r e p l e a s e d t o conclude the addition of another Pacific Rim market and investment into British Columbia which continues to highlight the attractiveness of Canadian natural gas,” said Michael Culbert, president and chief executive officer of Calgary-based Progress Energy.

taly is counting on its new gas contracts with Azerbaijan to wriggle free of traditional oil-linked pricing mechanisms, used by its two biggest suppliers Russia and Algeria, in a bid to bring down energy prices.

Europe’s fourth-biggest economy has struggled to win access to market-priced gas supplies, partly due to reluctance by its main suppliers Russia and Algeria to rewrite profitable oillinked deals, as well as Italy’s lack of alternative sources.

But the BP-led Shah Deniz II development vying to grab a share of Europe’s gas market by 2019 is taking steps to undercut rival suppliers Russia and Algeria by offering long-term deals tied to prices on domestic spot markets, including Italy’s developing PSV hub.

The Azeri project will pump 16 billion cubic metres (bcm) of gas to Turkey and the European Union, where energy companies have contracted to buy 10 bcm.

“The Italian deals are similar to the contract between Qatar and (Belgium’s) Distrigas for long-term LNG supplies,” one source with knowledge of the matter said.

In that deal, Distrigas, now owned by Italy ’s ENI, initially paid a price tied to a barrel of crude oil for shipments of Qatari liquefied natural gas (LNG).

As Belgium’s Zeebrugge gas hub became a key trading point in Europe and liquidity rose, Qatar converted its pricing structure to one fully linked to local gas prices.

A similar move in Italy would help remove the risk of Italian gas buyers losing billions of euros on oil-linked deals when prices for the two commodities diverge, as has been the case in recent years.

European utilities bound by long-term supply deals from Russia and Algeria tied to oil have lost out in recent years, as the development of regional gas trading hubs meant that consumers bought the gas from utilities at a lower price than these had bought it from the producer.

Top gas buyers such as Italy’s ENI and Germany’s

E.ON lost billions of euros in such oil-linked deals.

To prevent such losses in future, France’s GDF Suez , which with 2.6 bcm is the single biggest buyer of Shah Deniz II gas, already secured a 100 percent indexation to prices at freely traded gas hub TTF in the Netherlands, several sources with knowledge of that deal said.

Other buyers of Azeri gas, like Italy ’s Enel, Hera Tr a d i n g , a s w e l l a s Switzerland’s Axpo, who signed deals to buy around 5 bcm per year, will pay a price fully linked to traded gas prices at Italy’s PSV hub, two sources with knowledge of the contract between Shah Deniz II and the gas buyers said.

Such an ar rangement would mean that Italian buyers would pay a price reflective of supply and demand for gas in their home markets, instead of to globally traded and costlier crude oil.

But in order to qualify for hub-linked prices, Italy ’s thinly traded PSV hub must first hit certain liquidity targets to demonstrate that it is a viable alternative to oil benchmarks, according to a clause in the contract.

Liquidity in Italy has for years been hampered by a lack of transparency and the dominant market position held by gas incumbent ENI. “Greater efforts need to be taken to increase traded volumes, especially with Algerian volumes under pressure and Libya in a bad state,” said Claudio Gianotti, head at World Energy, a gas and power trading company.

Although still falling short of targets, traded volumes at the PSV hub have seen steady growth this year, and the promise of cheap Azeri supply from 2019 may incentivise firms to become increasingly active at the hub.

Falling short of liquidity targets will see Italian buyers revert to paying a price based on a 20 percent indexation to crude oil, with the remaining 80 percent tied to spot gas prices at the TTF hub in the Netherlands.

Finance

21

Gas flare

Nigeria loses N8.62bn on gas flaring Michael EBOH

N

igeria loses a b o u t N 8 . 6 1 5 b i l l i o n ($53.846 million) in one month, as oil firms in the country flared about 53.846 billion standard cubic feet of gas in December 2013.

Also, the country’s total natural gas production appreciated by 44.29 per cent from 178.27 billion Standard Cubic Feet (BSCF) of gas in November 2013 to 257.22 BSCFin December.

Using the local gas price of $ 1 p e r 1 0 0 0 S C F, t h i s translates to an additional earning of about $78.95 million (N12.632 billion) to the country.

Specifically, December ’s natural gas production of 257.22 BSCF translates to

Nigeria loses about N8.615 billion ($53.846 million) in one month, as oil firms in the country flared about 53.846 billion standard cubic feet of gas in December 2013 about $257.22 million (N41.155 billion), while November ’s production of 178.27 BSCFtranslates to about $178.27 million (N28.523 billion).

In addition, data obtained from the Nigerian National Petroleum Corporation’s, NNPC, Monthly Petroleum Information for December

2013, revealed that Natural Gas Liquid (NGL) inventory produced for the month stood at 84,724 metric tonnes, MT out of which Mobil had about 43,210 MT, representing 51 per cent and NNPC 49 per cent, about 41,514 MT.It further stated that a total of 122,514MT was lifted for the month.

The report also stated that 39 oil companies produced 257.22BSCF of gas and flared 53.846BSCF of gas, representing 20.93 per cent of the total gas produced in the period.

This translates to $53.846 million, about N8.615 billion lost by the country in one month to gas flaring.

Marginal fields’ operators and sole risks/independent operators were the worst offenders, as they flared 85.69 per cent of their combined gas production of 23.047BSCF. S p e c i f i c a l l y, m a r g i n a l fields’ operators produced 1.889BSCF of gas, utilised 914.363 million SCF of gas and flared 974.306 MSCF in the period under review, w h i l e S o l e Risks/Independent operators produced 21.159BSCF of gas, utilised 2.383BSCF and

flared 18.776 SCF. Joint Venture companies, on the other hand, produced 178.979BSCF of gas, utilised 153.013BSCF and flared 25.966BSCF, representing 14.51 per cent of total gas production.

Production Sharing Contract companies followed in terms of gas production, w i t h 5 5 . 1 9 B S C F; t h e y utilised 47.063BSCF and f l a r e d 8 . 1 3 B S C F, representing 14.73 per cent of total gas produced.

The NNPC report added, however, that in the month of November 2013, total production of natural gas was 178.27BSCF, noting that this is lower than the October figure of 185.23 BSCF by 6.96BSCF. It also stated that about 20.96 per cent of the total production was flared, while the rest was utilised.

Labour

22

PENGASSAN petitions Presidency over oil sector challenges …Says oil theft, vandalism, others undermining sector Victor AHIUMA-YOUNG

P

ETROLEUM and Natural Gas Senior Staff Association of N i g e r i a , PENGASSAN, has written to President Goodluck Jonathan on the challenges facing the nation’s petroleum industry.

In the letter, the association warned that oil theft, pipeline vandalism and a host of others are threatening the survival of the oil and gas sector.

A c c o r d i n g t o PENGASSAN, the industry is today faced with severe internal and external challenges that must be addressed for continued development and sustenance of both internal and external.

Top among the external challenges, PENGASSAN said are oil theft and pipeline vandalism, lamenting that “It is saddening to note that petroleum pipelines are so frequently and callously vandalised in virtually all regions of Nigeria, while law enforcement agents feign helplessness and being illequipped to deal with the situation. Pipelines and depots strategically located across the country primarily to make petroleum products available to Nigerians at affordable prices as at when and where required suffer rampant punctures and leakages that lead to disruption in the supply of crude to the refineries, and in the distribution of refined petroleum products thus causing intermittent scarcity with consequential job losses for our members.

“As a Trade Union, one of our core obligations is the security of job prospects of members of our noble association. We are well conscious that this core objective can only be reinforced by the continued

Labour leaders

s t a b i l i t y, v i a b i l i t y a n d survival of the goose that is laying the golden egg for all and sundry; invariably, aside the oil workers yearning for sustainable employment opportunity, we are mindful of the industry’s sensitive provisions for the overall sustainable growth and development of Nigerian state and the aspirations of Nigerians as a people.

“It is noteworthy that further to the national questions on the inability of the state to convert the rent seeking features of the Nigeria oil and gas sector to reasonably backward linkages and optimisation of our oil and gas resource endowments with a view to stimulating investments and reduce capital flights, the industry’s plight was rather

exacerbated with overwhelming experiences of vandalism of pipelines and installations while oil thefts, illegal refining and bunkering degenerated than abated. PENGASSAN has painfully observed that the state is feigning helplessness and bereft of the right strategy to the social anomie.”

The panacea to the above challenges, the association said, “should ordinarily transcend us as a labour u n i o n ; h o w e v e r, o u r concerns and resolves are premised on the manifestation of lip service than the required political will to deal with the challenges at hand. It is the resolve of PENGASSAN to compel every responsibility to the noble cause that will

stem the tide of instability in our industry. Our fate as labour rests in boosting the shrinking confidence of the ex i s t i n g a n d p o t e n t i a l investors who yearn for enabling environment for the existing and future business interests and project(s), lest the nation misses investment opportunities to the detriment of all and sundry.

“By government’s own admission, more than 10 percent of Nigeria’s total crude oil production that is about 200,000 barrels is stolen every day, this is almost double the total production of our neighbour, Ghana. The nation therefore loses between $6billion yearly to crude oil theft and another N165billion to theft of refined products. As if this is not enough, there is also the brazen vandalism of

pipelines, which has adversely affected the supply of crude to the refineries, resulting in low or no output from the four refineries.

Illegal refineries account for only 20 per cent, while major crime is carried out at oil well heads, flow stations and export terminals.

“This is done in collaborations with some bad eggs in the Navy, JTF and military. Also some workers, who may not be our members, may also be involved. This has been discussed at different fora, but yet it is like the government is helpless in combating the crime. This, according to one of the oil majors, is not only endangering the economic power of the country, but also the existence of Nigeria as a nation.

Labour

23

Job seekers Victor AHIUMA-YOUNG

NUPENG tasks NCDMB on N employment of Nigerians

IGERIA Union of Pe t r o l e u m and Natural G a s Workers, NUPENG, has tasked Nigerian Content Development Management Board, NCDMB, on strict implementation of the National Content Act 2010, in the oil and gas industry to achieve its objective of among others, generating jobs for Nigeria.

President of NUPENG, IgweAchese, at the PENGASSAN/ NCDMB chapter roundtable d i s c u s s i o n i n Ye n e g o a , Beyalsa State, listed features of the Act to include Nigerians being given first consideration for employment and training, succession plans for positions not held by Nigerians, maximum of five percent of management positions for expatriates and that Nigerians must constitute a minimum of 60 percent of the Board.

Speaking on the theme: “Building synergy with trade unions to optimize value creation in the oil and gas industry in Nigeria - Benefits and Challenges of implementing NOGICD Act 2010,” Achese lamented that the NCDMB had not really lived up to expectation as a monitoring body for local content.

He called for the inclusion of

The NCDMB must monitor effectively that the key provisions in the Act are adhered to, like Nigerians being given first consideration for employment and training, succession plans for positions not held by Nigerians the two unions (NUPENG and PENGASSAN) in the oil and gas sector as members of the Board, saying, “The establishment of the Nigerian Content Monitoring Board is to monitor the achievement of local content in the oil and gas industry.

But the NCDMB has not really lived up to expectation, as a monitoring body for local content. In the Act, it states that an operator must submit Nigerian Content Performance report which would be verified by the

Board. It adds that “First consideration to be given to Nigerian goods and services.

Bidding process for procurement of goods and services shall give full and fair opportunity to Nigerian indigenous companies.

“We make bold to say that most of the companies currently involved in local content are actually owned by foreigners who use Nigerians as fronts. Even where we have firms owned

by Nigerians in the spirit of the local content arrangement, especially in

the drilling sub-sector, contracts are awarded to foreign firms or to companies which have no rigs. Where local companies are awarded some contracts, their workers are out sourced to service providers and casualised and paid pittance as wages. In most cases, the local companies are averse to unionism. This is not in the spirit and letter of the National Content Act signed into law on 22nd April, 2010.

The NCDMB must wake up to its responsibilities to enforce, impose sanctions and do enough monitoring.

“The NCDMB must monitor effectively that the key provisions in the Act are adhered to, like Nigerians being given first consideration for employment and training, succession plans for positions not held by Nigerians, maximum of 5 percent of management positions for expatriates and that Nigerians must constitute a minimum of 60 percent of the Board.

“The whole essence is to generate local capacity and utilization of the technology and use the products that are domiciled in the country, instead of relying on these things from abroad, which constitute a drain on our foreign exchange. This will go a long way to stimulate economic activities in the country, create employment and promote technology transfer. The end result is the use of Nigerian human and material resources which is a chain in the service delivery system.

It is against this backdrop that the Roundtable discussion on perspectives on local content value addition in the oil and gas industr y in Nigeria is therefore very auspicious.”

According to him, “In fairness, a lot of activities are going on in the area of fabrication with the use of local content and local manpower. This area has really helped in employment generation, but a lot still need to be done.

Labour

24

PENGASSAN blames gas shortages for power on sabotage

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ETR OLE U M and Natu ral Gas Senior Staff Association of Nigeria, PENGASSAN, has blamed the poor gas supply that leads to epileptic power in the country on sabotage.

It also called on the Federal Gover nment to p a y m o r e attention to the power sector to create more jobs in the country.

PENGASSAN’s National Publicity S e c r e t a r y, M r.

SeyiGambo, implored the F e d e r a l Government to do all possible to stop the saboteurs, stressing that there was the need for the Federal Government to do more in the protection of gas pipelines to improve power supply in the country.

According to h i m , h o s t communities and security agencies saddled to protect the gas pipeline network must play an objective role in fishing out the vandals, saying “ We h a v e l o s t some quantum of energy to pipeline vandalism, which had resulted to a drop of about 4,000 megawatts of power supply.

The consequence is that electricity consumers pay more out of their meagre salaries to power generating sets. Many companies, which can no longer cope

Power plant

Gas pipeline

We have lost some quantum of energy to pipeline vandalism, which had resulted to a drop of about 4,000 megawatts of power supply. The consequence is that electricity consumers pay more out of their meagre salaries to power generating sets with such drain on capital, have relocated from Nigeria. These companies ought to provide jobs for our youths.”

He advised government to exploit other means of alternative energy to boost power supply, arguing that the nation could have generated more than 10,000MW now, but the challenges of pipeline

vandalism had restrained the government from achieving the target.

According to him, vandals were bent on sabotaging the transformation of the power sector and urged the government to expedite action on the completion of the ongoing10 Independent Power Projects across the

country.

He said that the government should take pragmatic steps to fix the nation’s infrastr ucture, noting that worsening power situation in the country had compounded the problems of the self-employed.

G a m b o f u r t h e r said,”Government needs to do something tangible to fix the power situation in the c o u n t r y. B e f o r e t h e privatisation of the power sector, Nigerians were enjoying a little bit of light, but the situation has gone from bad to worse. If the investors have no muzzle to resolve the power problem, then the government can reverse the privatisation because the country can be in crisis for a long time.

“Small and medium-scale businesses are closing shops,

due to worsening power situation and those with bright entrepreneurship ideas could not exhibit or practice it as most development depends on power. The artisans, such as barbers, welders, tailors, carpenters, cyber café operators amongst others depend on electricity to continue in their businesses.”

He argued that if the power problem was addressed, it would go a long way in curbing some of the crimes committed by idle youths.

He described the unemployment situation in Nigeria as “a time bomb that can explode any moment,” stressing that the three tiers of government must be practical in their quest for job creation.

Labour

25

Schneider Electric inaugurates Nigeria’s Green Club

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c h n e i d e r Electric, a global specialist in e n e r g y management has inaugurated the Schneider Electric Green Currents loyalty programme for electricians as part of its initiative to develop the electrical retail business in Nigeria.

The company held a special induction event to welcome the first 250 members of the club in Lagos.

Country President, Schneider Electric, Marcel Hochet, said, “the essence of the programme is to build a critical manpower base for the electrical retail sector by connecting and growing the electricians club members to a network of accredited distributors and resellers ensuring availability but more importantly safety and reliability of new or renovated electrical installations.”

Hochet noted that electrical installations are a strategic part of any building as the safety of lives and property depend on it.

Also speaking at the event, the Vice President, Retail Business, Schneider Electric, Mr. Tonye Briggs, said the

Schneider Electric office loyalty programme is designed primarily to reward loyal electricians and electrical contractors and encourage them to patronise only an accredited network of resellers. He added that the idea is to build a network of distributors of reliable electrical solutions.

He said, “Schneider Electric is a major player in the power sector today, partnering with the government especially in ensuring stable and reliable distribution of power at the grid level. Today, we have added another focus to our business, electrical retail. This is to ensure that the final consumer in his home or office receives the full benefit of the power privatisation which essentially is safe, clean and available power.”

Briggs noted that the Schneider Electric Green Currents Club offers four levels of membership with associated discounts, trainings and rewards based on level of purchases. “One of our goals with this loyalty programme is to structure our market so that everyone in the value chain benefits”.

He revealed that the company plans to extend this programme to enroll up to 6000 electricians across the country and create a network of no less than 300 resellers.

Commenting at the event, Engr. Bada, the Public Relations Officer of the Licensed Electrical Contractors of Nigeria (LECAN), commended Schneider Electric for this initiative and reiterated the association’s commitment to support companies investing in developing the electrical and business skills of the sector.

He noted that training as one of the rewards of the club will help to improve the expertise of the sector and prevent electrical accidents.

Solid Mineral Gabriel EWEPU

I

t is mind-blowing to see a country such a s N i g e r i a wallowing in abject poverty and having a comatose industrial sector due to inadequate attention and political will to transform the abundant minerals and metals endowed by God across the country.

The dependence on oil had become worrisome as the economy of the country had not recorded significant diversifications, particularly in the minerals and metals sector. Those in government are not keen in developing and expanding the solid minerals sector as they are yet to realise that in global trade the world has gone beyond oil, whereby the nation’s prosperity is measured.

Ever y state and local government in Nigeria is blessed with various minerals and metals in commercial quantities. There is no gainsaying that the government and investors are yet to key into the money spinning sector, because it had become a world attraction in global trade.

BEYOND OIL: Exploring solid minerals potential

Economic diversification T h e Pr e s i d e n t o f t h e Nigerian Mining and Geosciences Society, NMGS, Prof. Clifford Teme, said that, “the number one consumer of Nigeria’s crude oil, America, has been playing tricks with us for a long time. When they buy from us they accumulate and they don’t use and they now have three times what we have. Now they are arranging with China to buy their own.

So we don’t have anybody to buy our own, except some minor countries.

“You see that it will affect the economythat is why we are now going towards the solid minerals industry, which is the mainstay of countries, like Australia, South Africa, Ghana, Uganda, and others. They don’t have oil, but they are managing.”

Teme speaking on the potentials of the solid minerals sector noted that with the 44 minerals discovered across the country, seven of them are capable of diversifying and driving the economy. This include gold, coal, limestone, iron ore, lead/zinc, bitumen

Cargo ship

In search of minerals

26 and barites.

“We have found out that we have enough commercial quantities of the seven minerals, so we should start exploiting them to boost our revenue. We should first commence the mining of the seven minerals before going into the second phase of other minerals,” Teme stated.

He expressed optimism that very soon the nation’s solid minerals would become the mainstay of the economy while less focus would be on crude oil.

Life beyond oil The Delta State Governor, Emmanuel Uduaghan, had at different occassion urged Nigerians to wake up to the reality of life beyond oil because the future of Nigeria’s economy is in danger as other sectors that could be of great economic prosperity remain underdeveloped and neglected.

Uduaghan said: “This is our thrust to end our overwhelming dependence on oil as the source of our i n c o m e . To u s , o i l dependence makes no sense because it is simply not sustainable.

“As everyone knows, oil is a volatile and exhaustible commodity with possible future substitutes, which if it happens as is now happening with large discoveries of shale oil, will end crude oil’s competitive edge.”

Uduaghan explained that this was the reason behind the ‘Delta Beyond Oil’ campaign initiated seven years ago, adding that the state had started planning for other investments, and to convince Deltans to embrace the diversification of the oilbased economy of the state.

He said the essence of the programme is to grow the state and make it prosperous and assure its future.

President, Nigerian Guild of Editors, NGE, Mr Femi Adesina, said that Nigeria needed to envision and evolve a nation beyond oil,else it could lead or plunge the entire economy into distress.

Adesina, who during the 9th All Nigerian Editors Conference, held in Asaba, Delta State, said, “Nigeria must now diversify or die. For well over four decades, we have run a mono-product economy.

Solid Mineral

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Colombia warns of emergency decree for pipeline standoff

A

Oil drilling equipment

Exxon’s Arctic oil drilling plans threatened by US sanctions on Russia

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xxonMobil’s dream of drilling in the Russian Arctic may risk running aground on the politics of Ukraine.

The company plans to start drilling in August in the Arctic’s remote Kara Sea in August - the centrepiece of Exxon’s global alliance with Russian state-controlled Rosneft. The partnership, which includes shale exploration in Siberia and joint venture fields in Texas, will come under greater scrutiny after the US placed sanctions on Rosneft’s chief executive Igor Sechin.

“With Sechin being sanctioned it may complicate relations for Rosneft with Western companies,” said Mattias We stman, who oversees about US$3.3

billion in Russia assets as chief executive of Prosperity Capital. “Maybe some transactions will be threatened as a result and perhaps Russia will counter and they will be less keen for American companies to work on Arctic projects.”

A spokesman for Exxon’s exploration arm said on April 25 the company’s Kara Sea project was on schedule. He d e c l i n e d t o m a ke a n y additional comment after the United States extended the reach of sanctions yesterday.

Rosneft assures its “shareholders and partners, including those in America,” that co-operation will not be hurt by sanctions, Sechin said in a statement yesterday.

“Our co-operation won’t suffer.”

A US Treasury official said yesterday that US companies

can still do business with Rosneft.

That said, the sanctions leave Exxon in business with a group headed by a man who is not allowed into the US. The exploration with Exxon is the most high-profile of several drilling ventures Rosneft plans with international oil companies including Norway’s Statoil and Eni of Italy.

The Arctic well will be among the most expensive Exxon has ever drilled, costing at least US$600 million. The spending is justified by the potential prize. Universitetskaya, the geological structure being drilled, is the size of the city of Moscow and large enough to contain more than nine billion barrels of oil, a trove worth more than US$900 billion at today’s prices.

The only way to reach the prospect is a fourday voyage from Murmansk, the largest city north of the Arctic circle. Everything will have to be shipped in w o r ke r s , s u p p l i e s , equipment - for a few months of drilling, then evacuated before winter renders the sea icebound. Even in the short Arctic summer, a flotilla is needed to keep drifting ice from the rig.

All this means that drilling the prospect will cost more than US$600 million, more than triple typical offshore exploration wells in other parts of the world, according to people in the industry familiar with the plans.

month long standoff with a forest-dwelling indigenous group is threatening Colombian oil exports and may force the government to declare a n a t i o n a l e m e r g e n c y, Mines and Energy Minister Amylkar Acosta said.

Members of Colombia’s U’wa group are preventing repairs to the Cano LimonCovenas pipeline following an attack by Marxist rebels March 25, cutting exports by more than 2.5 million barrels, Acosta said. The country’s second biggest pipeline is controlled by state-run Ecopetrol SA. “This almost merits a declaration of emergency by the national government,” Acosta told local radio station Caracol today. “There are reasons of state, and there’s a public interest that takes precedence.”

A emergency declaration would give Colombian President Juan Manuel Santos powers to rule by decree for 30 days and potentially overrule standard protocol when dealing with local groups.

Royalties from oil, Colombia’s biggest export, are a key source of revenue for the government, currently battling farmer protests ahead of presidential elections in four weeks.

The Cano Limon pipeline takes oil from eastern Colombia to the Caribbean coast. The U’wa group says it is demanding the duct be partially re-routed to bypass ancestral lands that have suffered repeated oil spills and a rising military presence.

“The Colombian state has a historic social debt with the U’wa nation for ethnocide, genocide and ecocide,” the group said in an April 25 statement, demanding two trillion pesos ($1 billion) in compensation.

The president’s office and Ministry of Mines and Energy didn’t immediately respond to an e-mail request for comment on the genocide claims.

Maritime

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We will not indulge in arbitrary decisions —NSC boss

Mr. Hassan Bello

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ollowing the appointment of the Nigerian Shippers Council, NSC, as the commercial regulator for the nation’s ports, the Executive Secretary of the Council, Mr. Hassan Bello, spoke with Godfrey Bivbere on a variety of issues including plans, challenges, legalities, and a host of others.Excerpt: How does it feel becoming the commercial regulator for the ports?

Becoming the commercial

We should increase competition in the ports; guard against monopoly; provide reasonable scientific regimen for tariffs; costs of doing business in Nigerian ports should go down

regulator is a matter of meeting this very important task that has been given to the Nigeria Shippers Council (NSC). The task is simply to make the ports more efficient, look at those economic imperatives that are necessary to make our ports more efficient.

We s h o u l d i n c r e a s e competition in the ports; guard against monopoly; provide reasonable scientific regimen for tariffs; costs of doing business in Nigerian ports should go down. The

ease of doing business in Nigerian ports should be in a c c ord a nc e wi t h international standards.

Our ports should be friendly and competitive in intra and inter-port competitions.

There will be shorter dwelling time for cargoes and turn-around time for ships, which will increase tonnage and revenue - revenue for the government and revenue for the operators.

Our task is also to CONTINUES ON PAGE 29

Maritime

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CONTINUED FROM PAGE 28

guarantee quality of service.

We should set up standards and expect that services that are being rendered to consumers of shipping services are of high quality, commensurate to the costs they are paying.

We should have the pride of the saying that Nigerian ports are of international standard.

We should also provide mechanisms for settlement of dispute through alternate dispute resolutions.

It is also the duty of the Shippers Council to look at the totality of investments in the ports for now and transport infrastructure later on. We should look at access to ports and recommend that the ports are linked with rail, inland waterways and good roads. We should encourage the development of modern deep-sea ports and I think we should also strive to see that there is technology, that is, electronic interface for trade facilitations facilities in our ports.

Should operators be worried about NSC ’s capacity to achieve all that you have mentioned?

NSC has the capacity, but we are always going to build capacity. Capacity involves constant adaptation of your manpower to modern problems cropping up. We have built capacity for the NSC; but we still need to do more depending on the needs because they keep changing.

For example, the World trade is now electronic trade.

We need to have the capacity to match the consequences of that e-trade.

We should have capacity equal to or greater than that of the operators because you h a v e t o b e m o r e knowledgeable than the people you are going to regulate.

We should have context of international standards but more importantly, we should have the economic parameters because all these things we are doing is to raise the position of the ports industry and its contribution to the economy.

Do you envisage issues with the operators, because there is no enabling legislation?

I am not envisaging any legal challenges for now. The concession agreement which is the legal bedrock for port operations has made adequate provisions for the appointment of the regulator by the government and this government used that clause to appoint us.

However, the NSC Act and the regulations made pursuant to the Shippers Council could also be used to start the regulations. We are

Mr. Hassan Bello

We will not indulge in arbitrary decisions —NSC boss We should have context of international standards but more importantly, we should have the economic parameters because all these things we are doing is to raise the position of the ports industry and its contribution to the economy n o t a v e r s e t o a comprehensive, modern and lucid legal framework.

We already have a draft for us to start and this will be submitted to government.

The minister has the power to issue directives to make regulations pursuant to NSC Act and pursuant to the Nigerian Ports Authority Act.

This is what we are going to do.Do not also forget about the NTC, Nigerian Transport Commission, which is the comprehensive Act or bill now and which the government is studying.

Some operators are being accused of operating with impunity, have you engaged stakeholders to secure their

cooperation?

It is not impunity per-se.

What we say is that ports are represented by many interests; the terminal operators we have engaged and spoken with them, the shipping companies are our engaging partners and we have had so many meetings here.

The idea is that it must be a democratic process. We need to have the buy-in of all the operators, the consumers and government before any major economic regulation is made.We are for consultation and communication and these two are instructive and imperative and we will never be arbitrary or unilateral in decisions we will take.

We have very important institutions. We have seen and talked with NPA and the reception we got from NPA is of course extremely warm. We are going to assist NPA to

make the ports even more profitable. NOA as you know have now introduced electronic payment, a very revolutionary move so everyone is looking forward.

Nigeria Customs Service, NCS, is another important institution in the ports. In fact, all these ports are Customs ports. They have introduced revolutionary methods, ICT into cargo clearance, the PAAR system despite the pioneering problems we have passed now which will make the clearance of goods easier.

The ease of doing business in Nigerian ports is looking easier through the efforts of Customs. All of us have one thing in common, to increase the efficiency of the ports, make Nigerian ports competitive and bring down the costs of doing business in Nigeria.

It is very important that as all of us, going on the same road, we must have a supervisor or coordinator; somebody who will push for the synergy that is needed to bring about this common goal and that is the Nigeria Shippers Council.

30

Bayelsa seeks alternative in oil palms …As poachers threaten farmland

Samuel OYADONGHA

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iving the volatility of crude oil production earnings and its impact on the economy, many of the oil producing states likeBayelsa,are enhancing diversification efforts, and tur ning to agriculture as a ready alternative to the their economies the deserved boost.

But the Elebele Lowland Palm Estate located in the outskirts of Yenagoa, the capital, which could have been a huge revenue earner for Bayelsa State, is still struggling to find its bearing several years after its establishment.

But the state owned multibillion naira Palm Estate has been taken over by weeds and its produce being poached by some unscrupulous persons from adjoining communities.

S a d l y, s u c c e s s i v e administrations invested huge sums of money on the estate with a view to transforming it into a money spinning venture to no avail.

Some three years ago, former Governor Timipre Sylva, as part of the government’s effort to diversify its revenue basetried to resuscitate the ailing palm estate with N850million allocation to its Ministry of Agriculture.

Sweetcrude learnt that of this amount, the sum of N300million was for the expansion of the ailing Bayelsa Palm Estatem, while t h e b a l a n c e o f N550millionwas for the ministry to complete the initial down payment and execution of a proposed Green House project.

In spite of the injection of the fund into the palm estate, there were no visible changes on ground at the

Oil palm fruits outfit, which if operated at fully installed capacity is capable of creating 2000 jobs.

Poachers threaten profitability But instead of expanding, the vast sprawling estate is competing with weeds and is being used as grazing field by herdsmen.

Also, some unscrupulous persons from the adjoining communities of Elebele, Azikoro, and Agbura have been exploiting the state of affair at the estate and its porous borders to poach on its produce.

Sweetcrude learnt that

though the estate is equipped with a modern processing mill, it could not be said to be a profit making outfit.

This, according to findings, is not just because of its size but also because the government had not mustered the political will to turn around its fortunes.

A staff of the estate, who spoke in anonymity, said a p a r t f r o m D r. E d w i n Dandeson-Spiff, a one- time Commissioner for Agriculture in the state, who made conscious effort to revitalise the ailing estate before his exit, others who came after could not sustain

the programme.

He said that part of the then commissioner’s programme was to get the government to expand the estate as it was not big enough to generate revenue for self-sufficiency.

He noted that although the state government had planned to expand the plantation in phases from its present 1,083 to 29,000 hectares, the local population from whom the land was acquired were still laying claim to the land, thereby stalling the plan to make Bayelsa the largest palm oil producing state in the country.

According to him, “the resources that accrue from operations can hardly meet the cost necessary to run the estate- the normal day to day operations.

“The estate is not big enough to generate enough revenue to become selfsufficient and this explained the reason why staff salaries comes directly from the state treasury.

“We are eager to work, but as you can see the place is dormant. It is our expectation that the government will revamp the estate,” the source said.

Community

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Julius Berger workers

Samuel OYADONGHA

S

peculations that construction giant, Julius B e r g e r, h a s moved out of BayelsaState over an alleged contractual debt of N18billion owed by the state government has turned out to be false.

Residents of Yenagoa, the state capital were alarmed by the rumour, coupled with the company sacking about 108 workers as well as the slow pace of work at various project sites.

The construction giant is handling a number of major critical infrastructure projects in the state such as the expansion of the Isaac BoroExpressway, the first fly

Julius Berger has not pulled out of Bayelsa —Dickson over in the capital city, the dualisation of the OpoloElebeleRoad amongst others.

But the State Governor, Seriake Dickson, dismissed the rumour making the rounds in town as untrue.

He said that findings by the state government showed that the workers were sacked from Julius Berger due to the reduced workload available on the projects. But he stated

that the government is committed to contractual responsibility and infrastructure revolution of the state.

Dickson, while handing over a bank draft in the sum of N2billion to the representatives of Julius Berger during the State briefing in Yenagoa, said the claim of a frosty contractual agreement between the state

and the construction company was a product of what he called “bad belle politics”.

According to him, “When these ‘bad belle’ people see Julius Berger working, they claim they cannot see them.

They claim the Isaac BoroRoad contract initiated by us and awarded by us was not our work. These people are products of bad belle

Gender, tax laws drive decline in protection new business sales

N

ew business sales across individual term life, critical illness, income protection and whole life products all fell in 2013, figures from reinsurer Swiss Re show.

The number of term

assurance new business sales fell by 17.4% to 1.2 million.

Critical illness new sales dropped by 20.5% to 445,679 and income protection fell by 24.4% to 120,094.

New business sales of whole life cover fell by 20.5% to 273,423.

However, Swiss Re said comparing 2013 with previous years needs to be treated with caution.

“Gender-neutral pricing created initial uncertainty as the market settled to the new model at the beginning of the year. Furthermore, changes to the taxation of life assurance funds saw prices generally increase,” it said.

The reinsurer suggested that this year ’s figures provide a more realistic view of genuine “new” business than previous years. Industry commentators featured in the report estimate that in 2013 approximately 85% of business is brand new as opposed to replacement of existing policies.

people. They have not seen anything yet. Our business is to make the state more developed.”

He noted that those involved in the alleged blackmail and campaign of calumny against his administration have also been identified as sponsors of violent youths to sabotage the various road construction projects in the state.

“They have paid boys to stop work on the projects or slow us down but they failed,” he said.

The governor however announced his acceptance of an invitation extended to him by the management of the construction giant to visit its headquarters in Germany next month.

According to him, “the visit to Germany will involve the signing of a Memorandum of Understanding (MoU), as part of the confidence of the company in the credibility of the state.

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