The Nation Newspaper

Category: Energy

  • Kachikwu to NLNG: look beyond Train 7 on expansion drive

    Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has challenged the Nigeria Liquefied Natural Gas Limited (NLNG) Board and management to expand the firm’s production volumes beyond what Train 7 will bring to catch up with other countries, secure a significant share in the global LNG market, and help with domestic supply of LNG in line with the company’s vision to help build a better Nigeria.

    Kachikwu stated this when he visited the NLNG Plant on Bonny Island, Rivers State to assess the company’s state of preparedness for the construction of  the new Train 7 that will lift the country’s Liquefied Natural Gas Production (LNG) output by 35 per cent from 22 million tonnes per annum (MTPA) to 30 MTPA.

    The Minister was received by NLNG Managing Director, Tony Attah; NLNG’s Deputy Managing Director, Sadeeq Mai-Bornu; NLNG General Manager, Production, Tayo Oginni; and NLNG’s General Manager, Human Resources, Eucharia Ezeani.

    Accompanying the minister were the Ministry of Petroleum Resources Permanent Secretary, Dr Folashade Yemi-Esan; Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Dr. Baru, who was represented by Salihi Dawaki; Director, Department of Petroleum Resources (DPR), represented by Deputy Director, DPR, Mr. Sanya Bajomo; Nigerian Content Development Monitoring Board (NCDMB) Executive Secretary, Simbi Wabote; Special Technical Adviser (Research & Development), Rabiu Suleiman; Ministry officials; and other officials of agencies under the Ministry.

    Speaking during a tour of the six-train plant complex and the Train 7 site, Kachikwu said: “Train 7 doesn’t have a good history in terms of operations. President Muhammadu Buhari will tell you when they started this project, they targeted 12 trains. Through no fault of yours, Train 12 hasn’t happened, but Train 7 is coming. Now, you have Train 7 largely ready to go. What excites me is that this Train will be bigger than the other individual trains, but in your 30 years outlook, you have to begin to look at Train 8. We need to catch up.

    “The transition to cleaner energy is going to happen faster than you think. As we reconstruct our refineries, we are going to be looking at how to make them more green friendly, but every indicator of our studies shows that the fastest move we are going to make to green energy is on gas. Although your market today is focused on externalisation,  you will soon see government policies drive you towards internalisation very rapidly. So, you need to grow those volumes for the teeming population we have. I challenge you to look at this and grow from the 30 MTPA you are talking of now to about 40 MTPA over the next 30 years.

    “One of the things we say every time to people is that they should look at the Nigeria LNG model. The model has stood the test of time. It has worked, it is efficient, non-interventionist and very transparent. To all of you, who are leaders here, you need a lot of praise and support for the consistency to which you have delivered. This country can be better if we manage it well. What NLNG and a lot of the joint ventures bring to the table is that there are a lot of Nigerians with the capabilities of great management.”

    While briefing the Minister on NLNG’s operations, Attah said it was time for Nigeria to use gas as catalyst for industrial and economic transformation.

    “With the support of NNPC, our ambition remains to grow through Train 7. We built six trains fast because every 18 months we were adding a train, but from 2007 to date, we have not been able to move. But with your support and that of the Federal Government, we have the full backing of all critical stakeholders. The stars have lined up in support for our expansion project and we are at a point of no return. So, for us, it is about the future and more importantly, the licence to grow which is about dealing with today’s realities and peculiarities. The starting point for us is safety. We work in a complex and intricate environment and safety is everything for us in keeping our people safe and assets safe to deliver value to our shareholders,” he said.

    Expressing appreciation to the Federal Government for the support for Train 7, NLNG Deputy MD, Mai-Bornu, said the Minister’s visit to Bonny was a boost toward the Final Investment Decision (FID).

    “In the long run, the benefit of a bigger market share in that space will translate into more revenue for our nation through taxes and shareholding for the Federal Government through the NNPC which currently holds 49 per cent shares in NLNG.

    “Additionally, this country will witness more transformational CSR initiatives sponsored by Nigeria LNG, as we have demonstrated keen and concerted resolve in fulfillment of our commitment towards helping to build a better Nigeria,” he added.

  • NNPC: contractors for AKK pipeline

    THE Nigerian National Petroleum Corporation (NNPC) has said the execution of the Ajaokuta-Kaduna-Kano gas pipeline project is progressing under the original concept of 100 per cent contractor financing model.

    The NNPC in response to some media reports of a possible resort to ‘proceed of gas tariffs’ as new means of funding because of purported collapse of negotiation with Chinese lenders, said the contractor finance arrangement is still intact, noting that the engineering, procurement and construction (EPC) contractors and possible lenders are in Dubai to discuss the financing terms.

    Its Group General Manager, Group Public Affairs Division, Ndu Ughamadu, said the application of revenue generated from the tariff is purely for loan repayment since the project financing is ‘contractor finance.’

    “We wish to further clarify that part of the approvals obtained from the Federal Government is to fund the implementation of the project front-end activities tagged “Early Works” in order to  continue to move the project forward pending the conclusion of the financing negotiations,” the Corporation said.

    NNPC further noted that the amount spent for the early works shall be recovered immediately the loans disbursement starts and no part of tariff shall be spent on the project until the end of the loan moratorium period.

    The Corporation restated its commitment to actualizing the AKK project as approved and in line with the Federal Government’s desire to improve the supply of gas nationwide, thereby enhancing power generation, economic growth and employment.

  • LADOL invests over $500m, says ED

    Lagos Deep Offshore Logistics Base (LADOL), an industrial free zone and logistics base, located in Lagos, has spent over $500million on facility development in the free zone, including a fabrication yard, its Executive Director and Head of Business Development, Jide Jadesimi, has said.

    The company said it is building over 10,000 square metres new workshops, ware houses, lay down area and other special requirements for its clients. Jadesimi said the model would provide the platform other Nigerian companies could plug into.

    This, he said, would save the companies the capital expenditure of setting up workshops and facilities for themselves and deliver cost-saving services to clients. He described it a win-win situation, adding that the company was established to enhance local content capability for itself and other companies.

    Jadesimi said this would allow the company to service its clients and boost the Federal Government’s ease of doing business as well as attract foreign direct investment into the economy.

    Speaking on the theme: “The role of Nigeria’s local content policy and its impact on sustainable economic value creation”, at a breakfast meeting, organised by the Nigerian-American Chamber of Commerce (NACC) in Lagos, Jadesimi said LADOL had been greatly supported and enhanced by the establishment of the Local Content Act.

    He admitted that the Act had enabled the company to develop a facility that could support the Nigerian logistics market as well as the West African sub-region. It is actually to promote the development of more fabrication yards where world class vessels can be done, for instance, the Egina project.

    The company, Jadesimi said, is currently in talks with some neighbouring African countries on the execution of upcoming floating production, storage and offloading vessels (FPSOs) and other massive industrial projects.

    According to him, the fabrication yard is a multi-sector one and not only for oil and gas projects. We also fabricate railway tracks, we can fabricate car parts and do work on bridges. It is about maximising the potential and making sure that this yard is a Nigerian asset and critical such that it is beyond Egina.

  • NEITI backs parliamentary forum on EITI

    A parliamentary group on Extractive Industries Transparency Initiative (EITI) is to be established by the National Assembly.

    The group, expected to be drawn from relevant Committees in the Senate and House of Representatives, will co-ordinate legislative actions on implementation of remedial issues identified by independent audit reports of the Nigerian Extractive Industries Transparency Initiative (NEITI) in the extractive industry.

    The decision to set up the parliamentary group was part of the resolutions reached at a retreat in Lagos for members of the National Assembly on EITI implementation in Nigeria.

    The chairmen of the relevant committees on extractive industry issues in both the Senate and the House of Representatives explained that NEITI Reports contents are quite comprehensive in information and data, which are essential tools in national planning.

    NEITI Executive Secretary, Waziri Adio, while addressing the retreat explained that the proposed parliamentary forum would help to coordinate the work of the various committees in addressing remedial issues in NEITI reports. The forum would also promote and strengthen intra-legislative committee relations, engagements and outreach on important issues that require urgent legislative intervention and advocacy.

    In a statement made available to The Nation, Adio used the forum to welcome the cordial working relationship between NEITI and the National Assembly, especially in monitoring and oversight.

    The retreat, supported by Trust Africa Project, a non-governmental organisation, legislators and their aides were exposed to the principles, processes, methods and benefits of EITI implementation in Nigeria by NEITI and the role of the legislature in the EITI value chain.

    Meanwhile, NEITI has expanded its operations in the oil and gas industry to cover commodity trading.

    At a workshop for relevant government agencies and oil trading companies, the NEITI Executive Secretary represented by Director, Communications and Advocacy, Dr. Orji Ogbonnaya Orji, explained that the decision to move into commodity trading is in line with NEITI mandate and in compliance with EITI 2016 global standards.

    Orji told participants that “the overall objective of NEITI’s interest in commodity trading is to improve transparency in the sale of the state share of production by the government and state owned enterprises among others”.

    He, therefore, called on the companies and government agencies involved in commodity trading to carefully study the developed templates by NEITI with a view to internalising these new reporting requirements as part of their respective overall business model.

    Responding, government agencies, oil and gas companies representatives viewed NEITI’s decision to expand its operations to commodity trading as a welcome development. They welcomed the development in view of the importance of transparency, fair competition and good business ethics.

    The participants, however, advised NEITI to focus on commodity trading, including ensuring accurate data on production, accurate measurement of volumes of government equity in crude oil including crude condensate, crude allocation for export and domestic use, accurate computation of in-kind revenues, taxes and royalty.

    The agencies, marketers and crude oil traders also identified marketing contracts and related agreements, process of transfer of income from sales of equity crude, liftings and other similar transactions as other key areas in commodity trading where NEITI is invited to pay attention.

  • NNPC chief urges firms to diversify

    The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, has called on stakeholders in the oil and gas industry to explore other areas to boost economic diversification.

    Baru spoke at the 2018 Nigerian Annual International Conference and Exhibition (NAICE) of the Society of Petroleum Engineers (SPE) Nigeria Council titled: Diversification of the Nigerian Economy:  The Oil and Gas Industry as an Enabler held in Lagos. He identified the reliance on oil and gas as responsible for the economic recession experienced in the country recently.

    The NNPC chief also urged the stakeholders to look for ways to create alternative funding for exploration activities in Nigeria.

    He said: “This obvious lack of proactive action unfortunately exposed the country to economic shock occasioned by the global economic crises that culminated in the recession experienced recently, adding the theme was in line with the vision of the present administration of energising the national economy through robust sectoral development.”

    He said with oil reserves of about 37 billion barrels and 199 trillion cubic feet of gas reserves, the country was well positioned to generate resources and accelerate developments.

    According to him, once this is achieved, Nigeria should be self-sufficient in providing general services, agriculture and manufacturing, among others.

    Baru stated that the reform by the NNPC has centered on third party financing for Joint Venture (JV) operations, hence there is need to look for ways to design an alternative funding for exploration activities in Nigeria.

    “I extend NNPC’s gratitude to our local banks, international lenders and Schlumberger representing the local service providers, for their continued faith in Nigeria and their support in providing funding. It is quite an exciting time ahead in the Nigerian oil and gas industry. The industry is financing both the development and infrastructure through alternative funding means.

    “The case in point is the Ajaokuta-Kaduna-Kano (AKK) pipeline that is being done under contractor financing with about $3billion. NNPC appreciates the cooperation of its partners and government financiers to move the industry forward. Our goal remains value delivery for all.

    “So far, the financing is centred on production, I will like to see the industry to concentrate and develop innovative ways on how to finance exploration. This, I believe, will be the big take-away from this workshop as it appears this is an area that is high and tough. Can we create an industry pool that will be funding for exploration? This is a worthy idea that we should look into. I hope that deliberations in this conference will dwell on other areas that I might have left out today.

    “We required an incremental annual capital funding of minimum of $7million  to cover the gap and to ensure growth, it was also clear to us that we cannot leave funding gap without looking out giving the outlook of government expenditures and strategic focus.”

    The Speaker, House of Representatives, Mr. Yakubu Dogara, represented by Sejus Ogun, said the country needed to pursue and develop an enabling environment that would promote transparency in the oil and gas sector.

    Dogara said the Legislature had given tacit support to ensure that the industry was run in a more transparent way, adding that the House of Representatives had demonstrated the support through accelerated passage of the Petroleum Industry Governance Bill (PIGB) now waiting for presidential accent. He also assured that the remaining three other bills would receive the desired attention as the legislators were concerned and willing to provide the investment climate to drive the industry.

    The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, represented by Mr Johnson Awoyemi, said the industry required a robust legislation that would help in the ongoing Federal Government transformation.

    Kachikwu  said the Federal Executive Council (FEC) had demonstrated commitment towards strengthening the industry by giving approval to the oil and gas policies. He urged the conference to come up with suggestions and strategies that would engender transparency, reduce contracting cycle issues, bring about cost reductions and accelerate development across the value chain.

    The Chairman, SPE Nigeria Council, Mr Chikezie Nwosu, called for immediate action to leverage the opportunities presented by the industry to develop other sectors. Nwosu regretted that the country had moved slowly in the quest to take advantage of the sector to fully transform the economy.

    He said government should not lose focus of the opportunities in the National Gas Policy, “as gas is critical to support such agenda.”

  • NPDC pledges compliance with Nigerian Content guidelines

    The Nigerian Petroleum Development Company (NPDC), the exploration and production arm of the Nigerian National Petroleum Corporation (NNPC), has promised to comply with the provisions of the Nigerian and Oil and Gas Industry Content Development (NOGICD) Act and other guidelines of the Nigerian Content Development and Monitoring Board (NCDMB).

    Its Managing Director, Mr. Yusuf Matashi, made the commitment in Abuja during a meeting with the Executive Secretary of the NCDMB, Simbi Kesiye Wabote. He said the company would not be seeking waivers from the board for its projects, rather it would abide by the provisions of the Act, especially as it relates to carrying out competitive bidding and utilising Nigerian oil and gas service companies and locally manufactured goods and services.

    Matashi said the company would approach the Board to obtain Nigerian Content Plan (NCP) approval as required by the NOGICD Act for all its future projects that is in excess of one million dollars. NCP sets out work scopes that would be executed in-country and guides project execution and monitoring. He promised to direct the company’s personnel on the primacy of Nigerian Content guidelines to project execution.

    The NPDC chief also solicited the Board’s support to develop and institutionalise Nigerian Content systems and processes within the NPDC to ensure compliance. Part of the support his company would need, he noted, includes workshop or training for staff of NPDC on Nigerian Content requirements and processes.

    The Managing Director of National Engineering & Technical Company Limited (NETCO), engineering arm of NNPC, Mr. Yakubu Mustapha, stated that his subsidiary is a major beneficiary of the Nigerian Content Act. He added that NETCO could not have been able to compete with its international counterparts but for the Nigerian Content Act which has enabled it to grow and build requisite capacity.

    Wabote underscored the need for close collaboration between the Board and NPDC. He charged NPDC to be a role model for the industry in terms of Nigerian Content compliance, considering especially that the NNPC played leading roles in the development and enforcement of the Nigerian Content policy and establishment of the NCDMB.

    Top management of the board at the meeting were the Director Planning, Research & Statistics, Mr. Daziba Patrick Obah; Director Monitoring & Evaluation, Mr. Akintunde Adelana and General Manager, Projects Certification and Authorisation Division (PCAD), Paul Zuhumben and Abayomi Bamidele, Special Technical Adviser to the ES & General Manager Strategy & Special Projects.

    The NPDC chief was accompanied by the Executive Director, Asset Management, Mr. Raifu Oyewole Oyedele, while the NETCO boss was accompanied by the Manager Projects Controls, Mr. Isokariari Soibi.

  • Chevron donates $500,000 to California fire victim

    Thevron has announced a contribution of $500,000 from the Chevron Global Community Fund to the American Red Cross in support of relief efforts for California wildfires.
    “These fires have had a severe impact on the lives of so many people, both residents and responders,” said Chevron Chairman and CEO, Michael Wirth. “Our thoughts are with all of them, and we know everyone is working very hard to prevent any further injuries or loss of life.”
    Chevron places a high priority on supporting the communities where it operates. In 2017, the Chevron Global Community Fund donated a total of $1 million for California wildfire relief efforts, he added.

  • ‘MAPs’ policy ‘ll bridge metering gap’

    The new regulation on metering – Meter Asset Providers (MAPs), will bring about huge relief for electricity consumers because it will enable them get meters as quickly as possible.

    The Managing Director/Chief Executive Officer , Momas Electricity Meters Manufacturing Company Limited (MEMMCOL), Kola Balogun, said also that arrangement would eliminate the estimated billing, attract private investment into the metering services and close the metering gap through accelerated meter rollout in the power sector.

    He said: “The Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola  should be commended for the giant stride made in the power sector, most especially on the Meter Asset Providers regulations, which was geared towards bridging the widening metering gap in the country’s electricity supply industry.

    “The metering regulation initiated by the Nigerian Electricity Regulatory Commission (NERC) was commendable, and it is a step in the right direction. The only language electricity consumers understand currently is metering of their premises, which the electricity distribution companies (DisCos) are not doing. The meter manufacturers have meters, but we cannot sell it directly to the consumers, so there is a big gap. Now that MAPs regulation has come up, it is another scheme that can be explored so that consumers will be metered as at when due.

    “It will allow investors to invest in metering and they will be able to partner with us, the manufacturers, to inject funds into the production of meters. I want to believe that the DisCos will be willing to partner MAPs, which is the most important. I have seen that metering is part of what they (DisCos) hold as their strength to run their operations. Let’s hope that it will be easier for them so that they can face the primary responsibility of providing electricity for the consumers.”

    Balogun the meter manufacturers hope the execution of MAPs will be done with the passion that was displayed when the regulation was conceived.

    “If the energy channeled towards the conceptualisation of the regulation is sustained during the implementation stage, I think we will have a hitch-free meter deployment for the power consumers and at the end of the day, the consumers will be totally liberated from the so-called estimated billing otherwise known as ‘crazy billing.” he added.

    On the concern whether Nigerian banks would be able to grant facility to MAPs as the asset recovery under the new regulation is said to be between 10 and 15 years, Balogun said: “The major issue concerning investment in metering that will span 15 years has to be substituted with a foreign investment. We need major financial institutions like Central Bank of Nigeria, World Bank, African Development Bank and others to come into that investment profile to guarantee long term stability.

    “Most importantly, we must have sufficient head room in terms of asset base or credit worthiness of each of us that wants to apply as a MAP and be able to enjoy long term credit line from such financial institutions. I  know this is possible. However, the good thing about this MAP policy is that, there are two ways to go about it. Consumers can as well pay for the prepaid meter willingly and as well they can opt not to pay but spread the payment over a period of time.

    “The fact that there is liberty for consumers to pay and install them with prepaid meter instantly will provide liberation for consumers from depending on estimated billing. This will be a great achievement for the government and the consumers.’’

  • ‘Over $5b derivable from local content implementation’

    THE  implementation of the local content initiative would attract over $5billion into the  economy, the Vice President, Nigerian-American Chamber of Commerce (NACC), Ehi Braimah, has said.

    Braimah spoke during the August Breakfast Meeting of the Chamber titled: The role of Nigeria’s local content policy and its impact on sustainable economic value creation  added that it will create employment for youths especially with the abundant natural and mineral resources in the country.

    He said there were synergies the local supply chains for human and material resources could benefit from the progress in the oil and gas industry, the Information Communications Technology (ICT), maritime, agriculture, manufacturing, engineering, power, finance and insurance through skill transfer, collaborations, logistics, funding and strategic capabilities.

    According to him, the country had already achieved a significant level of backward integration, in the cement sector with over 80 per cent of the materials for production sourced locally, adding that  there have been several policies to promote backward integration in food processing.

    He said the regulatory role of local content is to  enable access to benefits of a country’s natural resources for economic development and distribute wealth generated to the larger populace.

    The policy is also seen as a strategy to increase the participation of local firms in the value chain of various sectors; improve logistics and  create more employment opportunities for the indigenous workforce.  It is  considered to be an important contribution to  the extractive sector than its direct contribution to economic growth, he added.

    “It must be stated that Nigeria has long experience of local content policy in the oil and gas sector with the establishment of the Nigerian Oil and Gas Industry Content Development Act in 2010.

    “The Act, being enforced by the Nigerian Content Development and Monitoring Board, sets the minimum target for Nigerian participation in over 200 categories of oil services with the aim of fostering backward and forward linkages,” said Braimah.

    According to him, the adoption of local content policy for the benefits of developing oil rich countries is hardly new but the continuous debate has often centred on increasing the value added that local content could create within the oil industry.

    The level to which local policy can achieve this goal in some of these countries may not have  been ascertained  in Nigeria, the impact of local policy on local value creation has generated divergent speculations, he added.

    He restated commitment of the chamber to the extension of the local content to other sectors of the economy.

    Nigerian Content Development and Monitoring Board (NCDMB) Executive Secretary, Simbi Wabote, who was represented by the Director, Planning, Research and Statistics, of the board, Patrick Obah, said tremendous success was visible in the fabrication, training, vessels acquisition, manufacturing, pipe coating, among others, adding that topside integration of the Egina FPSO, the first in country is being witnessed.

  • ‘China key to future oil market’

    The first half of this year turned out to be a very successful period for the Organisation of Petroleum Exporting Countries (OPEC) and its allies. The alliance of OPEC and other non-OPEC producers, better known as OPEC+, was about to celebrate its triumph in June and declare that the job of rebalancing the oil market was done.

    China’s oil imports in the first six months of 2018 increased by 5.8 per cent from the same period a year ago. That was more than enough to absorb all the extra crude that some members of OPEC+, who weren’t fully committed to the pledged cuts, put in the market.

    A major force in Chinese oil demand is the small independent refiners known as teapot refineries who make up around 40 percent of China’s total refining capacity. China’s teapots are reducing imports and cutting operations as they profit under pressure from the weakness of the Chinese Yuan, the increase in crude oil prices, and the new tax measures introduced by the government.

    The teapots face higher tax bills after authorities closed a loophole that had allowed them to declare fuels such as gasoline and diesel — which are subject to a levy — as other oil products that don’t attract a consumption tax.

    Almost 40 per cent of the teapots may be running at a loss, Bloomberg reported, citing Pang Guanglian, Beijing-based senior economist at the China Petroleum and Chemical Industry Federation, whose members include state-run companies as well as teapots.