The Nation Newspaper

Category: Energy

  • No going back on reform, says NNPC chief

    No going back on reform, says NNPC chief

    The Group Managing Director of the Nigerian National PetroleumCorporation (NNPC) Dr. Maikanti Baru, has said his management will stick to the ongoing reform in the corporation to ensure transparency and accountability in its operation.

    Baru spoke at the conference of the Society of Petroleum Engineers (SPE) in Lagos.

    He said his predecessor, the Minister of State for Petroleum Resources, Dr. Ibe Kachiku, began  reforms in the NNPC, adding that the corporation’s businesses were opened to the public.

    Baru, represented by Mr Siky Aliyu, Managing Director, National Engineering and Technical Company (NETCO) Limited, an arm of the NNPC, said openness and accountability were essential in the oil and gas industry because they foster growth and stability.

    The oil and gas industry, he said, has numerous stakeholders – the community who provide the resource for the oil companies; the government, investors, non-government organisations, financiers’, and security agencies, among others.

    “Therefore, when all stakeholders are open with one another and are accountable for every decision taken, issues such as infrastructure vandalism, environmental degradation, public mistrust, among others will not arise,” he said.

    Baru, on assumption of office, said he set out a 12-point agenda to push the on-going NNPC reform aimed at introducing transparency in its businesses.

    “My first concern was on security because without a secure environment, we stand the risk of losing our existing and intending investors. Hence, during my visit to the Chief of Defence Staff, l informed him of my intention of setting up an all-inclusive advisory council on security, mainly to address all security and host community agitations. The advisory council would be made up of all stakeholders within the oil and gas industry,” he said.

    According to him, NNPC’s  reform is predicated upon granting of autonomy to its Strategic Business Units (SBUs) while the autonomous business units (ABUs) formally referred to as directorates; provide relevant directions to the SBUs.

    Baru said: “This will remain as part of my agenda for incubating and growing the new business models. We are working round the clock to ensure that all outstanding cash call arrears are settled. As part of our resolve to settle this pertinent issue, we are also working towards creating a sustainable and long term funding plan to sustain our portion of the Joint Venture funding.

    “The national aspirations for oil production and reserve growth to a target of four million barrels of oil production per day respectively, which have been elusive over the years due to a combination of factors ranging from funding constraints, infrastructure vandalisation, security concerns, among others, are being worked on.

    “We are committed to ensuring restoration of oil and gas production to peak levels, and growing the production mix and portfolio of oil and gas reserves through very transparent processes.

    “Our exploration and production (E&P) arm, Nigerian Petroleum Development Company (NPDC) will form the nucleus of growth for the corporation. We have developed strategies for re-kitting NPDC and empowering it to compete favourablly with other E&P companies. All contractual arrangements with NPDC will be reviewed. As mandated, where contracts are discovered to be against the interest of the government, they will be terminated.’’

    Gas Development, he said, is imperative for economic development. “We are seeing a situation whereby by 2018, domestic gas demand will outstrip gas supply to our export projects. This calls for an aggressive development of gas resources along with the gas infrastructure to deliver the gas to end-users. We intend to leverage on NNPC equity and dominance in the industry to fast track gas development to meet both our domestic demand and export commitments, assist the Federal Government towards delivering it’s commitment of 10,000Mw by 2019 and ensure an alternative source of revenue for NNPC.

    According to him, the NNPC has the mandate to open up new frontiers  to enable production and reserve addition.

    He added: “NNPC is set to resume exploration activities in both the Chad and Benue Troughs. There is a high level of optimism, based on recent seismic processed data from the Chad Basin, that our sojourn this time around will yield successes.”

  • Patronage of local meters: Fashola calls for persuasion

    Patronage of local meters: Fashola calls for persuasion

    The Minister of Power, Works and Housing, Mr. Babatunde Fashola has said persuasion should be applied to make electricity distribution companies patronise local meter manufacturing companies in view of the dynamics of the economy.

    The minister told The Nation during his visit to Mojec International, a local manufacturing firm in Lagos, that commercial dealings cannot be done by compulsion. “I think that commercial things should be done by persuasion, reason and the dynamics of the economy,” he said.

    The reason power sector players, such as distribution companies and meter manufacturers should embrace persuasion and dynamic of the economy, Fashola said it would make the sector more competitive in terms of pricing and quality products for the local market.

    When the market is competitive in terms of pricing and quality, it would make more business sense to produce and patronise meters locally, he added.

    However, he was pleased that there are indigeneous firms that can meet the metering requirements in the country, but wondered why there is still a huge meter gap in the sector.

    On the challenges of local meter manufacturing, Managing Director, Mojec International, Chantelle Abdul, noted lack of finance to operate factories and vendor financing to off-takers.

    “One of our critical issues at the moment is lack of access to foreign exchange. A lot of our manufacturing inputs rely on goods abroad. My goal as a manufacturer is to produce much of my manufacturing input locally here in Nigeria including our chips, which is the brain of the meter and all other component that is required.

    “There is nothing that stops us from producing the battery, and the capacitors that we need in-country. It is sad to say that we don’t have factories that produce those components here in Nigeria,” she said.

    She expressed the hope that meter manufacturers would get the support of the government both at the Central Bank of Nigeria (CBN) and financing institutions to be able to produce the components in Nigeria, noting that they need foreign exchange (forex) to  to do them.

    “We cannot afford to be borrowing at double digit rate, it will automatically increase the price of the meter,” she added.

  • Discos not to blame for poor power supply

    Recently in Kenya, there was a blackout for four  hours and its  people wondered what   happened.

    Later, the power generating firm KenGen in a statement, blamed  a monkey, which tripped on an equipment in an hydro power  plant for the problem.

    The generation company (GenCo) said though the monkey survived, Kenya lost 183megawatts (Mw)  during the blackout. It apologised to consumers, promising to secure its facilities from  such hazards in future.

    I  can’t help admiring the way  the  firm handled the matter efficiently. Of  course most Nigerians will argue that the power supply in Kenya is not compared with  that of Nigeria because it is erratic here and blackouts are more.

    I agree with them.  This is because  the Kenyan  power firm has been allowed to do its public relations without  any pressure and without  any  ‘monkey’ tricks  or  interference from any  quarters  on the source  of  power  failure.

    In  Nigeria, however,  the way  blackouts  are  explained is different. The  culprits are  the distribution companies (Discos) that deliver electricity to our homes and companies.

    This has been reinforced by the   hostile  attitude of the trade unions in the power sector in that they mobilised consumers against the discos. Take the case of when tariffs were approved for the discos by the Nigerian Electricity Regulatory Commissionwere announced early  this year.

    The unions instigated even  the Senate  to stop  the tariffs hike and  NERC went  to  court  to accuse the Senate of usurping  its  legitimate  function as the regulator  of electricity. The unions  did  not  stop there; they asked workers to go on strike on the new  electricity  tariffs as if it is  the same thing with the fuel price increase to N145 on which  they called out workers on strike recently.

    This  is  despite  that discos don’t  generate or transmit electricity,  but  only  deliver  to  consumers  when it is   is available.

    Stakeholders in the electricity  industry include the Nigerian  Electricity Bulk  Trading  Company, gencos, discos  and transmission  companies. How come then that the union  leaders are always  pointing fingers at  the  discos when  there is a power  failure?  As  the  Kenyan  example  has  shown, it was  a genco  that explained  what  happened, not a disco.

    In  Nigeria, it  is true that pipeline vandalism  has  reduced  the generation and transmission of electricity  not  to  talk of distribution, which is the responsibility  of the discos.  But,  then,  can  the  discos  distribute  what  they  don’t  have?

    True, the gencos cannot generate power  when they don’t  have the  basic  ingredients to  do so and even  when  sources  of  such  generation  have  been rendered  unproductive  or inactive  by  vandals.  In  Kenya,  the  genco  was  lucky  that it was a  monkey that  cut  power  for hours  only.

    It  is  an army  of vandals  that  are stalling electricity production daily    and  they have  even  metamorphosed into  a virile terrorist group  called  the Avengers  of the Niger  Delta  who  are daring   and taxing  the  federal    might.

    That really is the core  of the matter  and  that  is what the unions should  focus on as the cause of irregular electricity supply.

    Therefore,  the  discos,  which  are  at  the receiving end  of the poor electricity supply chain,  should  not  be blamed  by  the  unions.

     

    • Aliu, an analyst, writes from Kano
  • Oando opens fuel retail station

    Oando opens fuel retail station

    Oando Marketing Limited has opened a retail station in Orile, Lagos.

    The quality of the station is consistent with the company’s commitment to lead in fuels retailing in Nigeria.

    With a fuels distribution capacity of over two billion litres yearly, Oando has retained its leading market share for fuels retailing and is poised to continue to expand leveraging its strong brand affinity, efficient distribution capacity and entrepreneurial heritage.

    The new station called Oando KM3, Orile boasts of modern, contemporary and eye-pleasing design with detailing infused to meet the needs of customers and travellers on the expressway.

    The station upgrade was timely done to complement the new 10 lane super highway, billed for completion in less than 24 months. It is also close to one of the passenger train stations on the new highway.

    The station can service over 2000 cars per day with ultra-fast premium fuel dispensing units configured to deliver accurate quantities at all times to ensure consumers receive value for their money. It will deliver products to customers in the Ijora, Orile and Iganmu axis.

    The Chief Executive Officer, Oando Marketing Limited, Mr. Abayomi Awobokun expressed satisfaction with the quality of the station’s upgrade, its visual contribution to the neighbourhood, the environmental considerations in its design and most important the value it would bring to customers and travelers on the Lagos-Badagry super highway when it is completed.  He acknowledged the hospitality of the host community, led by the Ojora of Ijora, Oba Abdulfatai Oyeyinka Aremu Aromire.

  • Ekiti backs DisCo

    The Ekiti State Commissioner for Public Utilities and Infrastructure, Mr. Deji Adesua, has assured Benin Electricity Distribution Plc (BEDC) of the government’s support.

    He spoke at a town hall meeting at Ido-Ekiti.

    The Commissioner urged of the public to  pay its electricity bills promptly.

    In a statement by BEDC, Adesua said the plea became imperative as only prompt payment of bills could facilitate the realisation of its objectives.

    He noted that timely payment of  bills would enable BEDC to serve the people better since it is only one of the four states the company’s serves.

    He urged the BEDC to outsource the procurement of prepaid meters to licensed contractors, saying it is the only way to ascertain customers’ actual consumption.

    The firm’s Chief State Head for Ondo/Ekiti, Mr. Ernest Edgar, said BEDC is entitled to only nine per cent of power  generated in the country and that this would be shared among the four states under the company’s coverage.

    He explained the various payment channels available to customers. He listed them as Point of Sales (PoS), commercial banks, Automated Teller Machines (ATMs) or online payments.

    He advised customers not to give cash out, but rather use any of the channels.

    Edgar said as the country explores the economic diversification for  survival, following the  drop in the prices of crude oil, electricity could provide an alternative, especially in  boosting agriculture.

    BEDC, he noted, was willing to partner government, citizens and  investors on economic re-generation.

    In a presentation titled: Electricity as an agricultural enabler in Ekiti State, Edgar highlighted the uses of electricity in agriculture, which includes fertiliser production, irrigation, storage and agro-allied industries.

    According to him, the various roles the BEDC will play in agricultural industrialisation of the state will include construction of dedicated feeders embedded generation and advisory services on locations where power is assured.

  • Petroleum engineers decry harsh operating environment

    Petroleum engineers decry harsh operating environment

    The Society of Petroleum Engineers (SPE) Nigeria Council has decried the harsh operating environment caused by lack of investment, infrastructure for gas gathering and distribution and non-passage of the Petroleum Industry Bill (PIB).

    Its  Chairman, George Kalu who spoke at the group’s ongoing annual conference in Lagos, said natural gas is the future of the petroleum industry, lamenting that lack of gas gathering and supply infrastructure is hampering Nigeria’s ability to maximise the benefits of gas sale in the domestic market, which currently is more attractive than in the international market.

    He also noted that among other challenging factors, the delay in the passage of the PIB has constrained further investment in the industry to the extent that exploration activities are at its lowest ebb.

    Kalu stated that the level of crude oil and gas reserves addition do not match the rate of production, with rig count declining steadily in Nigeria between 2013 and this year resulting in minimal expectation and new development activities when compared to other producing countries.

    In view of the challenges, the theme of the conference “Transparency in the oil and gas business: An imperative for Energy security and stability,” is rather timely given that oil prices are hovering around $43 per barrel with significant challenges to the local oil and gas environment.

    He listed the challenges in the nation’s oil and gas industry to include funding constraints rising from cash call arrears, exchange rate differential in a cyclical oil price regime, high operational costs due to long contracting cycle time and severely delayed payment to vendors, as well as high cost of borrowing. These issues are affecting the much anticipated boom in the industry, he added.

    “The Nigerian oil and gas industry has also experienced massive capital flights due to bureaucratic bottlenecks in releasing information and prospects, fiscal regime, extant laws and feedback on performance of contractors. This resulted in significant delays in permits approval while providing a breeding and enabling environment for sharp practices.

    “The recent challenges of vandalism and outright destruction of oil and gas facilities has further curtailed Nigeria’s oil and gas production, power generation ability, reduced the inflow of revenue, escalated the cost of environmental remedies and provision of secondary health care facilities as well as increased security surveillance and facility replacement cost,” he said.

    The Managing Director/Chief Executive Officer, Seplat Petroleum Development Company Plc, Mr. Austin Avuru agreed no less with him.

    He said: “Last week, we published our half year result and for the first time ever since we started the business six years ago, we made a half year loss from bountiful profit in the last six years.

    “But still we hope that by 2020, our production of natural gas will fire this economy. We should be refining about half of our products in country by 2020. “Domestic refining capacity of 1.2million barrels per day is realistic by 2020, and domestic utilisation of between 3.2 billion standard cubic feet per day (bscf/d) of gas and 3.5bscf/d are realistic. As bleak as the situation looks, we see hope by 2020.”

  • Reps seek support for indigenous oil firms

    The House of Representatives’Committee on Local Content has called on the international oil companies (IOCs) to support indigenous oil service firms.

    The committee made the call during inspection of the shipyard and fabrication complex operated by West African Ventures (WAV) at Onne in Rivers State.

    Its Chairman,  Emmanuel Ekon, said patronage of WAV and other indigenous firms would help reduce capital flight and promote local content.

    Experts say about $8 billion is lost yearly to capital flight as a result of  jobs done by foreign firms. Based on this, the committee said it would push for a law to cancel contracts awarded by IOCs to foreign firms, which their indigenous counterparts can execute in-country.

    Ekon said the poor patronage of WAV shipyard, fabrication complex and marine facilities, as well as those of the other indigenous companies, has worsened capital flight in the oil and gas industry.

    He said the committee decided to  visit to assess its facilities  to avoid supporting indigenous contractors who are mere agents of foreign firms.

    “We believe that companies, such as WAV with huge investment in the country, and employer of over 5,000 Nigerians, should be encouraged so that the investors can do more. That way, we will reduce capital flight. WAV ought to be patronised first by the IOCs when they need marine services,” he noted.

    Ekon said indigenous firms if supported could boost revenue and enhance economic growth.

    He said: “What we have seen here is 100 per cent Nigerian company and by the Content law, WAV is supposed to be patronised first by the IOCs, where they need marine services. That’s what the law says and the law is not ambiguous but explicit, especially where there is Nigerian competence and in-country capacity. The law states that the IOCs or whoever is giving out contract, should give a Nigerian company the right of refusal.

    “The best the IOCs can do for Nigeria is to patronise indigenous companies such as WAV so they can in turn engage Nigerians teeming unemployed youths.”

    The committee chairman also admitted that issues relating to inadequate patronage were fallout of the global crisis in the oil and gas industry, but urged the IOCs to promote local content.

    “I think the primary thing is to make sure that the government wades in to restore peace particularly in the Niger Delta area where the oil and gas business is carried out. For now, we still have one major source of revenue in this country, which is the oil and gas business.

    ‘’Hence, the House of Representatives will oppose and cancel contracts awarded to foreign companies where there is in-country capacity, and where huge investments have been made local firms.

    “Basically, I think if there is peace and militant activities brought down to the barest minimum, opportunities will come in for WAV and other local firms. WAV has demonstrated capacity and needs to be patronised.

    A member of the Committee, Kehinde Agboola, said: “Drop in patronage is a global crisis; it’s not restricted to the oil and gas sector or WAV. The IOCs in Nigeria should patronise WAV because it is a good example of indigenous company with capacity. That is the whole essence of local content.”

    The committee members admitted that the Niger Delta issues contribute to the challenges of the indigenous companies, and stressed the need for the government ensures there is peace in the region as the oil and gas business remains the mainstay of the economy.

  • Chevron Nigeria votes $1.4m for PROMOT

    hevron Nigeria Limited (CNL), operator of the NNPC/CNL Joint Venture (JV), has launched a $1.4 million, two-year project called PROMOT (II) aimed at preventing the transmission of HIV from mothers to their newborn babies.

    The community-based Prevention of Mother-to-Child Transmission project (PROMOT II) is coming on   the heels of PROMOT (I), a four-year project, which was implemented in Bayelsa State between September 2012 and March, this year and to which Chevron committed $5.3 million.

    Both phases of the project are implemented in partnership with Pact, an international non-governmental organisation with active programming in Nigeria for more than a decade.

    The General Manager, Policy, Government & Public Affairs Deji Haastrup said PROMOT (II) project was officially launched on July 12, 2016 by Governor Seriake Dickson of Bayelsa State, who was represented by Chief David Serena Dokubo-Spiff the Secretary to the Bayelsa State Government (SSG), at Yenagoa, Bayelsa State.

    The Governor thanked Chevron for providing additional funds for the extension of PROMOT for another two years. “Chevron is a good company and I commend the firm for providing additional fund for the extension of PROMOT for another two years, in spite of the harsh economic climate,” he said.

    He noted that PROMOT (I) was a great success, as it contributed to the reduction of Bayelsa State’s HIV prevalence rates from 9.1 per cent in 2010 to 3.8 per cent by the end of the project’s third year in 2015.

     

  • NLNG, Warsash partner on maritime training, safety

    NLNG, Warsash partner on maritime training, safety

    Nigeria LNG Limited (NLNG) has opened a model of its new Dual Fuel Diesel Electric (DFDE) vessels at Southampton Solent University’s Warsash Maritime Academy, United Kingdom (U.K.) to contribute to the training and development of mariners globally.

    At a ceremony in Southhampton, the Managing Director and Chief Executive of NLNG, Babs Omotowa, said the introduction of the manned model was “a deliberate strategy to upscale NLNG’s world-class safety and operations records and achievements”.

    The External Relations General Manager, Kudo Eresia-Eke, said the manned model will join other model used by Warsash Maritime Academy, a world-leading marine technology and training academy, to provide training, consultancy and research to NLNG and help develop mariners in the art of handling a ship. The models are tools of simulation and are built to the correct power to weight ratio as its full sized counterpart.

    The model was built to the 1:25 scale after one of the six DFDE vessels recently inaugurated by Bonny Gas Transport (BGT), a subsidiary of NLNG. The company, in 2013, signed $1.6 billion deal with Samsung Heavy Industries (SHI) and Hyundai Heavy Industries (HHI) to build six vessels.

    Omotowa said: “NLNG’s current goal is to sustain growth and build upon it, safely. And that is precisely why we are here today. NLNG’s partnership with Warsash Maritime Academy helped us to obtain the required design specification for the manned model, which was delivered from South Korea last month.

  • Marketers hail deregulation

    Marketers hail deregulation

    The deregulation of the downstream oil subsector  is paying off as marketers are buying fuel from multiple outlets at prices.

    Independent Petroleum Marketers Association of Nigeria (IPMAN) National President, Chief Chinedu Okoronkwo said  his members have been buying fuel with ease from the Nigerian National Petroleum Corporation (NNPC) and private depot owners since the sector’s deregulation last May.

    He said due to deregulation, marketers were free to source for fuel at outlets or channels that benefit them.

    According to them, IPMAN members get premium motor spirit (PMS) from the Nigerian National Petroleum Corporation (NNPC) at N132.8 excluding the cost of transportation,  while those that are not satisfied with the NNPC price approach other importers and negotiate for a lesser price.

    Okoronkwo said: “The Federal Government through the NNPC was selling 30,000 litres of petrol to independent marketers at approximately N2.295million before it increased the price of fuel. Now the government sells 30,000 litres of petrol to marketers at approximately N3.99million. The differential is about N1.7million. Also, the government sells the product to us at N132. 28.

    “When marketers add the cost of transportation to it, about N10 per litre, depending on the distance, they sell at N145 per litre. Some marketers even sell at either N142 per litre or N143 per litre, and they make profit. That is the beauty of deregulation and by implication market forces.”

    According to him, the market is governed by the forces of demand and supply, and in the process, provides a flexible price regime for fuel marketers. The market, Okoronkwo noted, is structured in such a way that marketers can enter the market and exit the market anytime they like.

    He said contrary to reports, there was never a time the  Federal Government banned independent marketers from accessing depots for fuel, noting  that  the issue between the government and the his members has been resolved.

    “The issue of differentials is a normal thing in the industry. Whenever there is an official increase in the pump price of fuel, marketers would compare the old price and the new price and see the one that favours them. That was what happened when the price was increased to N145 per litre and that issue has been resolved as marketers have adjusted to the new price,” he added.