The Nation Newspaper

Category: Energy

  • US, Iran feud may boost Nigeria’s forex earnings 

    The United States/ Iran face-off has resulted in oil sanction, which in the long run may improve the earnings of many OPEC member states, including Nigeria, writes AKINOLA AJIBADE

    Penultimate week, the United States (US) imposed a sanction on the oil-rich state of Iran, after weeks of threats and permutations on what would be the likely consequence of such action on the oil rich country. Iran is reputed to be the third largest member of the Organisation of Petroleum Exporting Countries (OPEC) and the global oil industry.

    Fuelled by alleged failure of the Iranian government to respect the earlier agreements reached with the US and other world powers on the issue of producing nuclear energy for growth, the sanction as declared by the US government on November 4, this year, has generated discussion, among  stakeholders in the value chain.

    The reason being that the sanction coincided with when OPEC was duly guided to monitor oil  supply quota allocated to countries that are its members, while at the sametime, placed a ceiling on the barrels of oil produced daily by some members, including Nigeria.

    Coupled with this is the fact that the prices of crude oil are rebounding at the international market for the first time since the global oil market was hit by recession and its subsequent fall in the prices of crude oil. This development, which has delighted governments, as they believe that the development, if its continues, will enable them meet their fiscal responsibilities.

    For instance, price of Brent crude recorded a four-year high in late September, this year, as it closed at $86.74 per barrel, a development that was greeted with excitements, globally.

    Though the price dropped later to $84.75, per barrel, following the decision of the International Monetary Fund (IMF) to lower its forecasts, among other issues, the rise in price of crude was not an issue to be forgotten soon.

    Days after, the price rose to $85 per barrel early October as the US continued its push to sanction Iran.

    A university don, Prof  Wunmi Iledare, said the sanction is flexible and as such will not have immediate effects on Nigeria.

    According to him, the US imposed the sanction on Iran with some measures of flexibility by granting waivers to countries that buy crude from Iran.

    He said China, India and five other countries are allowed to buy some barrels of oil from Iran, adding that the development suggested that the US did not outrightly ban those  countries from buying Iranian crude.

    Iledare said: “By allowing some countries to buy crude from Iran, however, small it may be, the US government has reduced the pressures, which the sanction would have on the global oil market and members of OPEC. “This means that those countries that the pressures or shocks, which the sanction is going to have on Iran and other members of the cartel, if it was outright sanction, has reduced. Based on this, the decision by the US to sanction Iran is not going to impact negatively on Nigeria.”

    He said the increase in shortage and price of crude oil is expected to occur in the event that the sanction continued, adding that the issue is going to impact tremendously on the earnings of Nigeria, which relies on revenues from oil to sustain itself.

    “If the ban on Iranian crude persists, obviously, it is a blessing to oil producing countries, especially Nigeria, which relies on crude oil exports for more than 70 per cent of its foreign exchange earnings. The sanction is a gain to some countries and a loss to others. While the countries buying the crude oil are going to pay more for the product, the oil producing countries are expected to make more money in the process,“ he said.

    Iledare said Nigeria and Iran are members of OPEC, adding that unfavourable developments in one member state needed not cause major problem in other state or country.

    He said Iran is a country, which is always resilient, as it moves from one crisis to another, adding that the issue may have little effect on its partners.

    “ Obviously, there would be protests in Iran if the sanction continues, because Iranians would take to the streets to express their feelings.

    “This may take the form of vandalism of oil installation, a development, which would affect production of crude and further cause shortage of the product. This is good for Nigeria that is eyeing increase in the price of crude to finance its fiscal responsibilities,“ he said.

    Also, the former  President, International Association of Energy Economist ( IAEA), Prof Adeola Akinnisibu, said many barrels of Iranian crude would still get to the market, as long as the US allows some countries to buy the product.

    Akinnisibu said the issue is a good development for Nigeria, because the shocks on Brent crude, which is the country’s crude oil, would not be much.

    He urged the Federal Government to put in place measures to improve oil production, adding that OPEC will soon  exempt Nigeria from crude oil cut imposed on the country and Libya since last year.

    According to him, developments in the global oil market have presented opportunities for Nigeria to plan ahead by exploring potentials in areas considered green fields for improved oil production.

  • NNPC eyes over 14% market share of downstream oil sector

    The Nigerian National Petroleum Corporation (NNPC) will control more than 14 per cent share of fuel supply in the country, its Group Managing Director, Dr Maikanti Baru, has said.

    Speaking during the NNPC Day at the just concluded International Trade Fair in Lagos, Baru said NNPC currently holds 14 per cent market share of the downstream sector and has expanded its retail outlets to achieve its objectives.

    “In order to achieve this target, we at (NNPC), have expanded our retail outlets, notable examples are, indeed, located in the Southwest. For example, we have the newly constructed ultra-modern mega station along the Lagos-Ibadan Expressway,” he said.

    According to him, the corporation was leaving no stone unturned to ensure that Nigerian Pipeline and Storage Company (NPSC) already in existence is rehabilitated and new ones added as part of efforts to ensure  efficient storage and distribution of petroleum products across the country, thereby ensuring supply reliability and energy security.

    He said the NNPC has completed the rehabilitation and restoration of the vandalised 36, 42 and 48 Forcados Oil Terminal (FOT) Export pipelines, leading to resumption of production operations in the terminal.

    “The corporation has also completed the repair of the vandalised 20” ELPS-A pipeline, thereby, ensuring gas supply to gas-fired power plants and supply into the West African Gas Pipeline,” he added.

    Baru said NNPC has awarded the contract for the construction of the Ajaokuta-Kaduna-Kano (AKK) line gas infrastructure projects, adding that the corporation is expanding and integrating the country’s gas pipeline network system to meet the unprecedented domestic gas demand.

    ‘’We have recorded significant progress in the execution of key on-going gas pipeline infrastructure projects (ELPS II, OB3),” he said.

    According to Baru, the ongoing transformation is not limited to the downstream sector, stressing that NNPC  has  kick-started the process of rebranding some critical midstream entities,  and  with the downstream, “we are not only creating new logos for these companies, we are repositioning them all for global competitiveness in line with the 12 Business Focus Areas of our administration”.

    He said with these measures in place, the corporation strongly believes that the initiatives will invariably impact positively on the nation’s economy, stressing that NNPC is representing the interests of the government in the oil and gas industry.

    He said, the corporation, in line with its corporate social responsibilities, will continue to improve on its systems, processes and procedures in order to add value to the exploitation of hydrocarbon resources in the country.

    It would be recalled that the downstream sub-sector of the oil industry was partially deregulated, a development many stakeholders have described as not too healthy for the industry.

     

  • Trains 7&8 will cost  over $9.4b

    MORE than $9.4billion will be spent by the Nigeria Liquefied Natural Gas (NLNG) to finance the construction of Trains 7&8. The trains would be used to export Liquefied Natural Gas (LNG) to interested buyers/nations, its former Managing Director, Mr Godswill Ihetu, hinted.

    He said the firm was awaiting Financial Investment Destination (FID), with a view to building the LNG plant, where the gas would be kept for exportation.

    In a telephone interview with The Nation at the weekend, he said building the two trains require significant funding and technical expertise. He said as a result, it would be difficult for the company to give unreliable figures on the cost of the projects.

    He said the NLNG’s shareholders,  mainly the Nigerian National Petroleum Corporation (NNPC), Shell, Total and Eni, are expected to approve the FID in line with laid down principles of the firm, before the building of the trains begins.

    Ihetu said: “The cost of each of the trains is huge, as it runs into billion of dollars, which only multinational oil firms and foreign financial institutions that are credit worthy can provide to finance transactions such as the building of LNG export plants.”

    He said fund would be spent on the trains in view of the fact that the six trains earlier built by the NLNG cost $9.4billion.

    “ Why would Trains 7&8  not cost more money? Mind you, the country has experienced rise in  inflationary rates, foreign exchange rates and among other economic indices, which when factored into the cost of providing the plants is a lot of money. When one calculates the cost of inflation and exchange rates over a period of time, especially when the trains are built and compare the rates with those that are available, one needs not be told that more money is required for the project.” he said.

    According to him, the Federal Government removed the pioneer status of NLNG years ago, and as a result, the company started paying taxes.

    “Ever since the time the government removed the pioneer status granted NLNG and further granted it exemptions in the area of payment of taxes, the firm has paid taxes, which run into billions of naira to the government.

    “This is aside billions of naira earmarked and judiciously spent on Corporate Social Responsibility( CSR) every year, as part of efforts to give back to the society, in which it operates, that is the Niger- Delta,” he added.

  • How to diversify Nigeria’s economy, by NAPE

    The Nigerian Association of Petroleum Exploratio-nists  (NAPE) has identified how the government can diversify the economy and add value to its citizens.

    Its President, Dr Andrew Ejayeriese, said the government’s diversification plan must include finding and enhancing new opportunities and prudently allocating its revenue, which comes mainly from oil and gas, to the development of other key sectors of the economy.

    He told reporters in Lagos while unveiling the programme for NAPE’s forthcoming conference and exhibition scheduled for Lagos between November 17 and 22. He said although significant achievements have been recorded in the management of the nation’s oil and gas resources compared to recent past. The government, he added, must strive to build a more diversified and more resilient economy.

    According to him, the government must offer oil and gas investors an attractive environment by reforming the regulatory, fiscal and licensing systems in the country. “Knowing that the sustainability of the industry will be affected by a number of drivers, including price of oil, impact of renewable and alternative energy sources, emergence of new competition and legislative frameworks, oil and gas companies will need to look beyond new discoveries and pursue improved efficiencies and operational excellence and innovation.

    Ejayeriese also spoke on the need for the government to partner NAPE in the conduct of credible and transparent oil bid round with a view to attracting more investors and growing the oil and gas industry. He advocated the need for the government to purge itself of political and other subterranean considerations in the conduct of bid rounds.

    He said the development would go a long way in generating more revenues for the government as well as creating more job opportunities for the country. To him, Nigeria needs urgent review of archaic laws that tend to drawback the nation’s oil and gas industry, adding that NAPE would continually mount advocacy on the repeal of those laws in order to conduct the affairs of the industry in line with global standards.

    According to him, Nigeria’s prospect for gas is higher than oil, arguing that there should, therefore, be more aggressive exploration for the carbon resources in order to maximally utilise the value of the asset.

    He said the 36th edition of the annual International Conference and Exhibition of the Association will deliberate on major critical issues in a quest to address the challenges in the energy industry.

    “The conference will also throw its searchlight on survival strategies for petroleum exploration and exploitation in a challenging environment and examine the effectiveness in the existing policies to drive growth in the oil and gas industry so as to come up with initiatives for the development of road maps and new policy initiatives.

    “The absence of fiscal policy will continue to retard investments flow into Nigeria’s oil and gas industry such that attainment of 40billion crude oil reserves might not be realised.”

    The 36th conference will have as its theme: “Evolving strategies for a sustainable business in a fluctuating oil price regime.” The conference will attract over 1,500 participants within and outside the country, and the special guest of honour is the Minister of State, Petroleum Resources, Dr Ibe Kachikwu.

  • Sahara Power, South Sudan partner for sector development

    In keeping with its vision to ‘Light up Africa’, Sahara Power Group (SPG) has signed a Memorandum of Understanding (MoU) with the South Sudanese Ministry of Energy & Dams to develop the country’s power sector in the generation, transmission and distribution spaces.

    The MoU will enable Sahara Power, one of Africa’s largest vertically integrated utilities firms, expand the remit of its East African operations as well as develop the infrastructure necessary to grow the power sector and engender capacity building for economic transformation.

    Its Group Managing Director, Kola Adesina, said: ‘’We consider this to be another landmark in our quest to facilitate growth  in Africa through seamless power supply.” He said the company was working with the Republic of South Sudan (RSS)  to develop a crude oil processing plant, with a view  to guaranteeing steady and adequate supplies to the power plants when needed, adding that the approach was necessary to make electricity readily available resource to the people of South Sudan.

    He said RSS and SPG would  collaborate to develop transmission backbone infrastructure and establish the grid code, adding that there will be further collaborations between the two parties on the Environmental Impact Study (EIS), Load Evacuation Study and overall project development. SPG aims to achieve financial close on the proposed transaction in 2019.

    SPG is one of the largest privately run power conglomerates in Sub-Saharan Africa with interests in Egbin Power Plant, Ikeja Electric and First Independent Power Limited. The organisation is also working assiduously to launch a scheme to generate power into the sub-region through the West Africa Power Pool.

    “We have high hopes for this partnership with the Ministry of Energy and Dams and anticipate the commencement of the project in 2019. Developing the power sector brings the government closer to its vision for transforming the socio-economic landscape for the people of South Sudan. We are honoured to have been chosen as a strategic partner,” Adesina added.

  • How to develop funds for local content, by agency

    The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, has identified  five key parameters required for sustainable local content practice in Africa.

    He said regulatory framework, capacity building, gap analysis, research and development, and funding and provision of incentives are the five elements required for sustainable local content practice.

    Wabote who addressed delegates at the African Oil Week (AOW) in Cape Town, South Africa, at the start of the African Local Content Forum, said the importance of funding cannot be over-emphasised in any human endeavour.

    Speaking on: “How to Develop Funds for Local Content Development”, he said Nigerian Content Development Fund (NCDF) model, which is underpinned by legislation, is an attractive option for both upcoming and matured oil and gas jurisdictions in the African sub-region.

    “The authors of the Nigerian Content Act, in recognition of the importance of funding to the success of Nigerian Content, made a key provision for funding to deliver the key objectives of the law,” he said.

    The funding provision, he emphasised, is not only to enable the Board carry out its functions as a regulator “without having to go round cap-in-hand to solicit fund from operators”, but to also enable it develop capacities and capabilities in-country for increased value retention.

    He said the success of the NCDF could be attributed to a clear, unambiguous provision backed by law; a clear remittance framework; sufficient time for accretion; transparent and impactful utilisation.

    He said: “There is no ‘one size fits all’ in local content practice. To succeed, countries need to adopt best practices, but it is useful to tweak them to suit local circumstances,” he added.

    Earlier, Chairman, Permanent Local Content Committee, Energy Sector for the Government of Trindad & Tobago, Tony Paul,  who spoke on: “ Developing successful local content framework and policies to promote in-country value and shared prosperity”, agreed no less with Wabote.

    “There’s no perfect model, countries must avoid “cut and paste” in designing their framework,” he said.

    Other presenters and discussants, who shared their countries’ experiences at the forum included former CEO, Brazilian National Agency of Petroleum, Natural Gas and Biofuels, Magda Chamraird;  Betty Namubiru of the Petroleum Authority of Uganda; Ranti Omole for PETAN; Chairman, Aveon Offshore, Tein George and Exxonmobil Angola, Armando Afonso, to mention but a few.

    On the second day of the forum   he was head to head with leading voices in the various international oil companies on the imperatives, benefits and concerns about local content practice.

    African Local Content Forum is an innovative inclusion in the bouquet of AOW plenaries promoted by NCDMB and other partners.

    It was designed to serve as a high profile platform for National Oil Companies (NOCs), International and Independent Oil Companies and service companies to generate single vision of future roadmap for African Content within the global oil and gas sector.

  • Anxiety as consumers besiege DisCos  for meters

    Electricity consumers have been in dilemma over Federal Government’s intention to meter them  and subsequently rid the industry of estimated billings, it was learnt.

    The Nation investigation revealed that the power distribution companies (DisCos) in recent times have witnessed a large turnout of customers, who visited them for meters.

    A visit to the business units of the Eko Electricity Distribution Company(EKEDC) and the Ikeja Electric, showed that customers have made it a routine to make enquiries about the amount to be paid before being given meters and the time it would take to get the meters, among others.

    This is inspite of Federal Government and some  power firms’ decision to give the meters free of charge and that no payment must be attached to it by DisCos’ officials, except in cases where they need to reconcile their accounts, especially in the area of unpaid bills.

    A civil servant with  the Lagos State Ministry of Lands and Housing,  Mr Abiodun Ojo, said many consumers are confused over power firms’ insistence that customers must pay for the meters.

    He said: “ I have on several occasions visited the Ponle office in Egbeda under Ikeja Electric, with a view to find out when the meters would be issued to customers. I need the meters badly; so also other consumers across the country.

    “I have been hearing conflicting stories on the issue. Some sections of the public said consumers would pay for meters; others said consumers would not pay a dime. The question is which of the information should consumers believe, more so, when the power  firms are being economical with the truth?’

    Also, another consumer, Mr Chika Udensi, said he was not comfortable with the process of applying for meters. According to him, neither the Federal Government, nor the power firms/the Meter Asset Providers (MAPs) approved by the Nigerian Electricity Regulatory Commission(NERC), is sincere on the issue.

    Udensi, a legal practitioner, said his colleagues are at a loss on the issue of payment for meters, following EKEDC  officials’ decision  to ask for money from those applying for meters.

    A member of staff of Ikeja Electric at Ebute in Ikorodu, said the firm was not demanding payment for meters from consumers. He said the story that the firm was asking for N35,000 for three- phase meter and N25,000 for single-phase meter was in the realm of rumour and should be treated accordingly.

    The official, who does not want to be mentioned, said Ikeja Electric Business Unit in the area, asked people to apply for meter in batches. “We told landlords in the area  that they should formed a group of 10 people each and thereafter apply for meters. The aim is to make the process of applying for meters and collection seamless,” he said. It would be recalled that the Ikeja Ekectric’s Chief Executive Officer, Mr Anthony Youweoi, said meter us free and that no customer must pay for the product, except cases where customer(s) have some financial obligations to settle.

  • Oil firms advised on post -Ogoniland clean-up

    International Oil Companies (IOCs) and their local counterparts operating in the Niger Delta region, especially Ogoniland, should set aside funds for post clean-up exercise of the area, the Chairman, Institute of Oil and Gas and Research and Hydrocarbon Studies(IOGRHS), Professor Akin Akindoyeni, has said.

    The firms include Shell Nigeria, Chevron and Agip among others. He said the development became necessary in order to prevent a re-occurence of environmental degredations, arising from oil spillage in the area.

    the Federal Government’s decision to rid Ogoniland of wastes that had destroyed their rivers, farmlands, trees and other natural habitats, he said, is a welcome development adding that there is the need to continue the cleaning later in the future.

    Speaking at an Oil and Gas Forum last week in Lagos, he said funds set aside for post clean-up of  Ogoniland and its environs would be used for research purposes.

    He said research requires expertise and funds, adding that research into the composition of the soil used for farming and prevention of effects on environmental degradation in the area would be easier, when the necessary resources are put in place.

    He said the huge post clean- up funding would help harness the potentials of the oil producing zone and make it economically viable.

    “We believe the responsibility of the oil companies are not exhausted until there is economic utility in the exercise. We do not want to propagate any kind of mind-twisting inputs until we have facts and these facts should be based on focus research,” Akindoyemi said,  adding that the research would provide technical and economic benefits in the industry.

    “More people would not only have their skills sharpened, but would be able to make economic gains out of the exercise.  The reason is because the fish would migrate to the shoreline, where it would be caught for feeding and other activities,” he said.

    Also, the Institute has decried the continued 100 per cent crude oil export and refined products import, stating that huge revenue, and infrastructure and employment opportunities are being frittered away in the process.

    He said tremendous progress is being made in the production of Shale oil and other energy resources in order to reduce green gas emissions, adding that if the current rate of progress is maintained, the country would demand less for the oil production and usher in a more rapid growth in the area of manufacturing and  others in United States.

  • NLNG, others partner to provide electricity in Bonny

    The Nigerian Liquefied and Natural Gas (NLNG), Shell Petroleum Development Company (SPDC) and Mobil, have signed a memorandum of understanding (MoU) to provide uninterrupted power supply to Bonny, in Rivers State which hosts NLNG’s plants.

    The firms in a paper titled: “Effective Utilisation of Gas Powered Plants in Nigeria”, said power has not fallen below 90 per cent in the area, saying the partnership has led to the formation of Bonny Utility Company(BUC), through which the indigenes will be employed.

    It said the BUC, in order to curb power theft, has installed a sophisticated tracking system to identify discrepancies between customer payment and consumption.

    The paper said:  “The pre-paid metering model has reduced energy waste and subsequently promoted power sustainability. Bonny Kingdom indigenes currently account for 95 per cent of the BUC’s workforce. By hiring locally, the BUC has installed company pride in its indigenes, because the people of Bonny Kingdom take a sense of pride in  the ownership of the company, they actively work towards its best.’’

    The paper said that ministries and government agencies provide tax exemptions and operational licences to the companies, adding that the development has helped  has helped in reducing tax bills of BUC, while at the same time, ensures improvement in its operations.

    According to the paper, BUC provides the Bonny Island  community with a fixed amount of power, in order to meet the power consumption needs of the 40 per cent of consumers in the area.

    It said other consumers in the area purchase additional power from BUC at an affordable rate.

    ‘’ On average, the BUC charges less than 20 per cent of the Port Harcourt Distribution Company’s( PHDC) tarrifs.’’

    In a related development, Shell  Managing Director, Mr  Osagie Okunbor, said the firm will continue to play significant roles in the nation’s energy industry, by supplying gas to thermal plants that need the product for generation, adding that it has been  playing a vital role in the energy sector.

  • Why Nigeria’s rural electrification projects are delayed

    Lack of reliable data and paucity of funds may scuttle the dream of getting supplying electricity to rural communities across the country,  the Rural Electrification Nigeria Agency (REA Target) Chief Executive Officer, Mrs Damilola Ogunbiyi, has said.

    She spoke during the week at the 2018 edition of the Nigeria Off-Grid Innovations and Summit in  Lagos.

    She said Nigeria needed to provide adequate information on people living in rural and semi-urban areas, before it could effectively utilise the $200 million loan expected  from African Development Bank (AfDB).

    According to her, the bane of the power industry is poor funding and  access to reliable data on the people who need electricity.

    Mrs Ogunbiyi said: “A lot of private organisations do not have thousands or millions of dollars to provide electricity for the teeming population in Nigeria. But once data is made available for rural electrification agency, which is saddled with the responsibility to meet the energy needs of people in the rural areas, the job would have been made easier for the agency. When people say  there are 80 million or 70 million people without electricity in Nigeria, I keep on asking myself questions such as:  Where are the people? What are they doing? What is their productive use? What are the solutions on ground to meet their needs? These are some of the information that needed to be sought for, if we want to solve their energy problems.

    “If development agencies asked me what to do with the money, if it is given to me, I would straight away tell them that the money would be used to provide data, with a view to meeting the energy demands of people in the rural areas. We have to do what would make things easier for us, which is reliable data of people in needs of energy.“

    Ogunbiyi said government should not think that power programmes or policies would materialise without the involvement of the private sector, noting that such has never worked in the past.

    Also, Shell’s Managing Director, Mr Osagie Okunbor, said private participation is key to the issue of resolving energy crises in Nigeria.

    Represented at the event by the Managing Director, Shell Gas Nigeria, Mr ED Ubong, Okunbor urged private sector operators to take a cue from Shell and be passionate about Nigeria’s energy problems.

    “Shell is so passionate on the issue of resolving Nigeria crises. Shell began operation in Nigeria over 50 years ago. It has worked in deep waters, shallow waters and other areas in the country. Not done yet, Shell has transformed from being an oil company to energy solution firm. This is evident in the huge investments made in Afam power plant, through which Shell is able to generate some megawatts of electricity  in Nigeria,” Okunbor said.

    He said it is not possible for a company to invest substantially in a project, without considering the economic benefits of such project, stressing that passion is making Shell to do such things.

    He said Shell desire is to close the energy gap in the country, adding the issue made the firm to set up On All, an energy driven solution company, with a view to providing electricity to communities, that do not have  electricity to create the much needed growth for their people.

    Okunbor said Shell, despite being a partner in the Nigeria Liquefied and Natural Gas (NLNG) Limited, where its holds 26.5 per cent shares alongside the Nigerian National Petroleum Corporation( NLNG), Eni and Agip,  also see the need in providing gas to thermal plant for improved supply of electricity.

    He said the issue of changing Nigeria energy landscape is paramount to Shell, urging stakeholders in the value chain to develop similar interest in provision of electricity for the country.

    It would be recalled that the sector generates less than 5,000 Mw of electricity, a development that was attributed to shortage of gas and other issues.

    The issue made Federal Government to introduced what its describes as gas development strategy. Through this, the government hopes to make gas more utilised and commercial in the country.