The Nation Newspaper

Category: Energy

  • How a cabal hijacked cooking gas business

    How a cabal hijacked cooking gas business

    Last month, the price of liquefied petroleum gas (LPG), commonly called cooking gas, went up by almost 30 per cent. What is responsible? A cabal in the LPG sub-sector has hijacked the business, thwarting the objective of the Federal Governmen to make the product affordable. What is the solution to the problem? EMEKA UGWUANYI examines the situation.

    The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) saw it coming. Last June 3, it raised the alarm over the malpractices in the liquefied petroleum subsector, warning that if nothing was done, price rise was imminent.

    Shortly after, the price of cooking gas rose sharply from N2.3 million  to N4.3 million for 20 tonnes. The cost of filling a 12.5-kilogramme cylinder went up from N3,000 to N4,000.

    Investigation by The Nation revealed that off-takers appointed by the Nigeria LNG hijacked the LPG business as they control the shipping and the terminals from which the product is supplied to various sales points in the country.

    After a screening, the NLNG appointed six firms to lift the product to terminals and depots in Lagos for distribution to consumers. The off-takers, which are Le Global, Harig, Linetrade, Chimons, Greenfield, and Hyson, an arm of the Nigerian National Petroleum Corporation (NNPC), lift 150,000 metric tonnes yearly. However, it was alleged that the off-takers were conniving with terminal owners to hike the price.

    According to sources, this happened because the NLNG and other regulatory bodies failed in their supervisory roles.

    The Liquefied Petroleum Gas Retailers (LPGAR) National Chairman, Mr. Michael Umudu, confirmed that the LPG business has been hijacked  by a cabal. But he did not mention names.

    He said: “I am not here to mention names, but we all know that NLNG appointed a selected number of firms to receive and market the product. They should explain to us the factors that brought us to this precarious situation. They (off-takers) should explain to LPG stakeholders, the government and the consumers what happened. We worked together to persuade the government to intervene when the sector was almost dead in 2007. They were appointed to receive and redistribute with the intention of making the product available to other marketers because it is not possible for every marketer to receive directly. Now see what is happening. Our common patrimony has been hijacked by some people who are playing the ostrich.

    “I know what we suffered in the past to rescue this industry and now a few privileged ones are taking advantage of the sector. This has not happened in the industry before. We have never witnessed supply shortage without any known cause. The last major scarcity we had was in 2013 when NLNG had a dispute with NIMASA and the distribution was halted as part of sanctions placed on NLNG by NIMASA. The crisis lasted for weeks, but LPG price was not up to what it is today. There were marginal rise in price in the past, which were caused by rise in price of crude oil.

    “We were able to easily adjust because the effect was minimal. But now no genuine reason has been given, and the price kept going up. We suspect stage-managed supply shortages to be cause. The situation is such that the LPG industry has been pocketed by a few. Some of them did not even participate in the process that led to the relative growth  being witnessed in the sector in recent years.”

    According to him, the alleged cabal does not think about the growth and future of the LPG sub-sector, because “all they think is self, self and only self”.

    “The cabal protects its members interest only. They are organised and cohesive in their dealings,” he added.

    The alleged hijack of the LPG business, it was learnt, started when a private depot was the only depot selling LPG. “The depot kept increasing  the price and everyone was complaining, including some off-takers, mainly Nigerians. The depot was accused of being owned by foreigners, whose interest was not the progress of Nigeria, but to exploit Nigerians. Eventually, another consignment arrived three weeks after in which many indigenous off-takers had allocation. We expected them to sell at normal price or at least bearable price as a show of patriotism, but instead the price continued to go up higher,” a source said.

    According to the source, members of the cabal are so powerful that they presented one-sided data to the NLNG. “They are highly connected. They present themselves as if they represent the common interests of the sector. So, what is happening is that the NLNG is made to believe that there is normalcy in the sector whereas the reverse is the case. It is just unfortunate,” he added.

    On what the members of ALPGAM, NALPGAM and LPGAR are doing to address the problem, Umudu told The Nation that the only organisation that is independent of this cartel is the one he heads and that is LPGAR branch of NUPENG.

    “They are so powerful and parade a lot of cash. Of course, you know what money can do in Nigeria. They do everything to suppress and impoverish gas retailers and their umbrella body – LPGAR. But we don’t mind. We will continue to provide checks and balances in the sector. “We are planning a number of events to tell the whole world what is happening.

    “Apart from publicity, we are planning to petition relevant authorities and if that does not suffice, we move to the next stage which is protest. Our lawyers are already instructed to secure for us necessary police clearance. We are planning to stage some protests to bring this to the notice of some arms of government.

    “We are peace loving people but should not submit to this kind of exploitation. Though the president of Nigeria LP Gas Association, Mr. Dayo Adeshina, told me he is planning a meeting of the stakeholders to address the problem. We are waiting and hope it happens soon.’’

    Umudu said LPG retailers planned to meet with agencies, such as the Department of Petroleum Resources (DPR) and Products and Pipeline Marketing Company (PPMC), on the issue. “Meeting the regulatory bodies is part of activities we have planned for next week and beyond. This battle may take longer than one may ordinarily imagine because the powers of the people and organisations involved. I don’t take them for granted at all. They approximate themselves to the whole sector.

    “They often advance the argument that it is a free market. But they don’t realise that even in the Western world where liberalisation originated, you dare not manipulate the system for personal gains,” he said, adding that the monopoly must be broken and the NLNG should get more involved in the process beyond making the product available. They should monitor what happens at the transportation level.

  • How to make refineries efficient, by expert

    Steady access to crude oil will enhance refineries’ efficiency,  Enfrasco Energy and Infrastructure Services Limited Chairman/Chief Executive Officer Chukwuma Okolo has  said.

    He also said autonomy in the management of refineries, such that their Managing Directors (MDs) could take decisions without elaborate applications to the Nigerian National Petroleum Corporation (NNPC) or the Presidency for approval should be ensured.

    In an interview in Lagos, the oil and gas expert said Nigeria did not need to privatise its refineries to make them work.

    According to him, determination and political will are all that is required to drive the refineries in Port Harcourt, Kaduna and Warri.

    Okolo noted the refineries by international standard were not old, adding that refinery maintenance and operation have simple processes.

    He said those running the refineries are among the best in the world, adding that if privatised, it will is still be these same Nigerians who are running it today that will run them. He said commitment was important.

    “Our refineries by global standard are extremely good, they are not old, there are refineries built in the sixties, most of our refineries were built in the 80s and 90s-there’s the “old old” Port Harcourt refinery, which was the first one ever to be built, then there was the Port Harcourt (second refinery), there is the Warri refinery which is actually three plants in one, we call it Warri Refinery and Petrochemical Company which is a refinery, a petrochemical plant as well as a carbon black plant, there is Kaduna refinery which is actually a dual crude finery,” he said.

    He said the Kaduna refinery could handle both Nigerian crude and imported Venezuelan heavy crude, adding the “design was that when we need to run it so that we can produce bitumen for road construction, they run the heavy crude and have the byproducts of running heavy crude after kerosene, petrol and diesel”.

    According to him, the Kaduna refinery was designed as dual crude plant to refine Nigeria light crude or more of the Venezuelan heavy crude depending on the product yield desired.

  • OPEC output up by 300,000 bpd on Nigeria’s recovery

    OPEC output up by 300,000 bpd on Nigeria’s recovery

    Organisation of the Petroleum Exporting Countries’ (OPEC) oil production increased by 300,000 barrels per day (bpd), with Nigeria contributing additional 150,000 in June.

    OPEC’s overall output of 32.73 million bpd shot the body’s output to an eight-year high with Libya tentatively recovering along with steady increases from Saudi Arabia and Iran, according to an S&P Global Platts survey of OPEC, said oil industry officials.

    “OPEC’s 300,000-barrel-per-day output rise, sends a strong message over its unwavering market share strategy,” said Eklavya Gupte, Senior Editor for S&P Global Platts.

    “If the situation persists, the case for a return to some kind of production cap may gain traction,” he added.

    Venezuela acted as a check on the overall level though, as the crisis-hit country’s production continues to hit fresh lows. The bloc’s top producer, Saudi Arabia, increased its output further to produce an average 10.33 million bpd in June in order to meet domestic demand. Last summer, Saudi Arabia produced as much as 10.45 million bpd.

    A spike in air-conditioning demand has traditionally boosted the volume of crude burned directly in the kingdom’s power plants during the summer months. In addition, domestic refining also picked up.

    The sharp increase in OPEC’s June production affirms a continuation of its market share strategy.

    Meanwhile, OPEC added a new member in the month, Gabon, and next month Nigeria’s Mohammed Barkindo will take over as the group’s secretary-general.

    This comes at a critical juncture for OPEC, after a spate of infighting and disagreements. Analysts said these two decisions which were taken at the June meeting could lay the groundwork for future cooperation on bigger issues.

    The largest rise in output came from Nigeria, where production rose 150,000 bpd to 1.57 million bpd, due largely to the return of its largest export grade, Qua Iboe, as production and exports resumed at the end of May.

    Nigerian production hit 30-year lows in May as militancy continued in the country’s oil rich Niger Delta.

    The situation remains volatile. Barely 10 days after a 30-day ceasefire deal with the Federal Government, militants claimed a round of fresh attacks in the Niger Delta at the start of July, marking a major setback after weeks of respite.

    Libyan oil production rose 60,000 b/d to 310,000 b/d in June as exports from the eastern port of Marsa el-Hariga resumed in late May after a three-week blockade caused by a dispute between the country’s two rival national oil company factions.

    The North African country’s production remains less than a quarter of its 1.6 million bpd production capacity, but early in the month Libya’s National Oil Corp agreed to unify its rival administrations under one management structure, a positive step for the country’s beleaguered oil sector.

    Analysts, however, said production could only see a sustained increase if the new national unity government unites with several other factions to reopen the country’s two largest oil terminals — the 340,000 bpd Es-Sider and 220,000 bpd Ras Lanuf facilities.

    Iranian output in June climbed to 3.63 million bpd, its highest since June 2011, and very close to pre-sanctions levels, according to Platts OPEC survey data.

    Iran’s oil output rise has been swift since sanctions were lifted on January 16, increasing 740,000 bpd compared with last December.

    The decline in Venezuelan crude output accelerated further, with production falling by 120,000 bpd in June to 2.15 million bpd, the lowest since February 2003, S&P Global Platts data showed.

  • NLNG’s $2m centre for UNILORIN

    NLNG’s $2m centre for UNILORIN

    Nigeria LNG Limited (NLNG) has inaugurated  its $2 million Engineering Research Centre at the University of Ilorin (UNILORIN).

    The centre is part of gas giant’s $12 million University Support Programme (USP).

    So far, NLNG has inaugurated four laboratories in varsities. The  based at the Ahmadu Bello University Multi-user Engineering Laboratory, the University of Ibadan Engineering Complex and the NLNG/University of Port Harcourt Oil and Gas Engineering Centre.

    The scheme, according to NLNG’s General Manager, External Relations, Kudo Eresia-Eke, was launched in 2014 to boost engineering education.

    The other beneficiaries are University of Maiduguri and University of Nigeria, Nsukka. The projects at the UMAID and UNN are at various levels of completion.

    The inauguration was witnessed by a representative of Kwara State Governor, Dr Abdulfatah Ahmed,  the Commissioner for Education, Musa Yekiti, directors of NLNG, the Council members of UNILORIN, among others.

    In his keynote address, NLNG’s Managing Director/Chief Executive Officer, Babs Omotowa, said:  “The University Support Programme is one of NLNG’s approaches to developing Nigerian human capital and fostering technological advancement. We recognise that universities, with their crop of young people and nimble minds, when aided properly, are the fertile grounds from which ideas to fast track Nigeria’s progress will spring from.’’

    He continued: “At Nigeria LNG, we like to proudly assert that we have successfully built a great company. That is a fact. But today our challenge and focus is building an even greater one to bequeath to our successors and to Nigeria. Therefore, the USP project is, in a sense, another chapter in that momentous journey and another feather in NLNG’s cap as a socially responsible corporate organisation.

    “We continue to offer scholarships to deserving young Nigerians at secondary school, university and post graduate levels. We also endow the Nigeria Prize for Science and the Nigeria Prize for Literature worth a $100,000 each, and run the Bonny Vocational Centre which awards the International Technical Vocation Level 3 Certificate of London City and Guilds and the Nigerian Skills Technical Certificate to graduates.

  • Forex shortage hits DisCos’ metering plan

    Forex shortage hits DisCos’ metering plan

    These are not the best of times for power distribution companies (DisCos).

    They are finding it difficult to get enough foreign exchange (forex) for the importation of meters and other equipment, The Nation has learnt.

    A source, who does not want to be mentioned, said the Discos could not procure meters because of their weak financial positions caused by non-payment of bills by customers.

    The source said many of the power firms supply meters which they imported before the exchange rate went up.

    The Association of Nigerian Electricity Distributors (ANED) Executive Director, Mr. Sunday Oduntan, said funds were limiting the capacity of the firms to import meters for their customers.

    He said the firms have not been able to close the metering gap of over five million households, which they inherited from the Power Holding Company of Nigeria (PHCN) in November 2013, due to scarcity of forex.

    He said the firms were seeking forex concessions from the Federal Government to import meters for customers, among others.

    Oduntan said: “The capacity of the DisCos to meet the metering needs of their customers has been limited by scarcity of forex. At N350 to a dollar at the parallel market, it is impossible for the firms to buy dollars that would be enough to import meters and other equipment. The cost of buying dollar has increased by over 100 per cent when compared to an exchange rate of N165 to a dollar few years ago.

    “The development hinders DisCos from closing the metering gap of over five million households inherited from the Power Holding Company of Nigeria (PHCN) in 2013. Out of this figure, only 2.8 million households have gotten meters. Inability of the DisCos to get forex concessions for importation means many people would not get their meters in time.”

    Oduntan noted that power firms, such as the Ibadan Electricity Distribution Company (IBEDC), Benin Electricity Distribution Company (BEDC), Eko Electricity Distribution Company (EKEDC), Ikeja Electric (IK) and Kano Electricity Distribution Company (KEDC), have supplied meters to customers in recent times.

    According to him, people who need meters are growing by the day as more houses are being built.

  • TCN chief sure of improved power supply

    TCN chief sure of improved power supply

    Transmission Company of Nigeria (TCN) Managing Director Mr. Mack Kast is sure that power supply will soon improve.

    He spoke at the launch of a book titled: “Succeeding in Communication” written by Mr. Clement Ezeolisah, an official of TCN in Abuja.

    Kast acknowledged the poor power supply arising from rampant vandalism of gas pipelines, saying: “Be assured that all stakeholders are working tirelessly to reverse the current situation so that we can return to winning ways again with uninterrupted power supply.”

    He commended the author of the book, describing him as diligent and development-oriented.

    The Chairman of Senate Committee on Finance, Senator John Owan Enoh who was the Guest of Honour, also praised the author for writing the book, noting that the book will help people improve their communication skills.

    The senator also called on leaders to do all that is possible to restore reading culture among the populace and encouraged everyone to adjust their life-styles in order to live better and keep in check the rampaging life-style diseases like diabetes.

    According to the author, Clement Ezeolisah, motivation for writing the book came from the desire to bridge the existing gaps in communication activities so that people would be more disposed to communicating more effectively and efficiently.

    The book reviewer, Mrs. Ndidi Mbah, described the seven chapter-book as the ‘little but great book which brings together in a simple but concise manner the art of effective communication’,  Mr.

    ‘Succeeding in Communication’ attempts to deepen the understanding and achievement of the communication process. It analyses the elements of the communication system, the various traditional and emerging digital modes and suggests ways for proper and effective utilisation of these modes to achieve success in the communication process.

    Former group managing director of Leadership Newspaper and publisher of The Interview magazine, Azubuike Ishiekwene, wrote the Foreword to the book.

  • Trafigura, others in talks with marketers on fuel supply

    The Federal Government’s decision to deregulate the downstream sector appears to be paying off as globally acclaimed-oil trading institutions are approaching indigenous oil marketers for a deal, The Nation has learnt.

    The firms – Trafigura (Switzerland), Puma (Singapore), Noble Group (Hong Kong), and Archer Daniels Midland Co. (Illinois), Vitol Group (Swizerland), Mercuria Energy Group (Switzerland), and Cargill Energy Incorporation (Minnesota) – which are global firms with operations in North America, South America, Europe, Asia, Africa, have been meeting with major and independent marketers for a deal.

    According to sources, if the deal sails through, it would see the oil trading firms supplying fuel to marketers in Nigeria.

    An independent oil marketer, who spoke on the condition of anonymity, said partnership plans among marketers were ongoing, adding that the leadership of the Independent Petroleum Marketers Association of Nigeria (IPMAN) may speak on the issue.

    IPMAN’s President Chief Chinedu Okoronkwo confirmed the discussions.  He said it was difficult to rule out partnership among oil and gas operators within and outside the country since the industry has been deregulated.

    He said deregulation has created room for competition, adding that the best way operators could maximise the gains of deregulation is to go into partnership.

    Okoronkwo said: “In view of the recent deregulation of the downstream sub-sector of the oil and gas industry, the country should be expecting huge supply of petroleum products soon.  The reason is because marketers and major oil trading firms are discussing to achieve that goal. Trading firms, such as Trafigura, Puma and others have been coming to Nigeria to hold meetings with marketers on how to supply them fuel, and further establish an enduring relationship with them.

    “The firms want to start bringing fuel to Nigeria. They have spoken to many marketers and the response has been quite good.  There would be increase in the supply of fuel in the country soon, a development, which would engender competition in the industry.”

  • Reps laud Dorman Long Engineering

    The House of Representatives Committee on Local Content has praised Dorman Long Engineering, an oil and gas service firm, describing the firm’s products as world- class.

    The committee as part of its oversight function visited the company’s office in Lagos.

    The Committee Chairman, Hon Emmanuel Ekon, said their visit was aimed at showing their support for local firms.

    The lawmakers toured Dorman Long’s fabrication facilities. After the tour, they said the firm could  generate 40,000 jobs, boost technology transfer, and domesticate spending.

    Ekon said: “We thank the Dorman Long team for their hospitality and strong commitment to building and sustaining local content in this country.We have witnessed the immense work you are doing on the Egina Project, among others. We are delighted to see a local company that is significantly contributing to the socio-economic development of Nigeria.

    “Your presentation on the industry insight and challenges has been impactful and well received. We have also noted the gaps in the industry and we will ensure we address them. As a committee, we will discuss further to see how we can collectively build the capacity of this industry. However, I encourage your association, Petroleum Technology Association of Nigeria (PETAN), to share a more holistic list of industry requirements that would allow your organisations meet their objectives. Our members are keen to build a good relationship with your association and of course we are here to support and to work with you.”

  • Reps warn Samsung, others on local content compliance

    House of Representatives’ Committee on Local Content has warned international oil and gas services companies, including Samsung Heavy Industries (SHI) of South Korea against flouting the Nigerian Local Content laws.

    The committee said it strongly opposed a situation where foreign oil firms and their cohorts exceed expatriate quota and breaking other rules that are contained in the Nigerian Content Act, adding that it would not allow any infractions on the Act to go unpunished.

    The Committee’s Chairman, Hon Emmanuel Ekon, while speaking on the sideline of tour of LADOL Free Trade Zone in Lagos by the committee, said no efforts would be spared on ensuring that foreign-owned firms comply with all known local content rules in Nigeria.

    He said the committee would sanction any non-compliant firm irrespective of its investments in the country.

    Ekon said: “The fact that Samsung partner LADOL to build multi-billion dollar Total Egina Floating Production, Storage and Offloading (FPSO) vessel in Nigeria does not confer on it the right to violate the laws of the land. The committee is not out to witch-hunt any firm, but it was only doing its job of implementing laws for the growth of country.”

    According to him, monopoly is the bane of the Nigerian economy, adding that local operators in the petroleum industry have shown that they cannot be put aside by their foreign counterparts. Ekon said the committee would use its legislative instruments to protect indigenous operators in the oil sector and others.

    “The indigenous companies have shown that they have the capacity to grow the economy. LADOL is one of such firms. The company has demonstrated faith in Nigeria by investing over $600million in the country. Besides, LADOL has built a fabrication yard of its zone. The yard has employed 2,500 jobs and helped in developing skills.  The major goal of LADOL is to provide 50,000 direct and indirect jobs and the firm is working hard to achieve this. That is why stakeholders must join forces together to support LADOL and other companies that have shown the desire to promote the nation’s economy,” he added.

    He berated Nigerians, who have lots of money in banks abroad because they help in promoting foreign economies to the detriment of Nigeria.

    Also, the acting Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr. Daziba Patrick Obah, urged local investors to invest in Nigeria, stressing that they stand to gain a lot by doing so. He said with the local content law, indigenous firms are sure of getting good returns on investment.

    Obah said: “The Board, the House of Representatives Committee on Local Content and other relevant stakeholders are out to promote indigenous investment.  We would do all we can to support local operators with a view to developing the nation’s economy.  The Board, for instance, has taken a decision to open office in LADOL base. It is part of efforts to promote local content,” he said.

    The Managing Director of Lagos Offshore Logistics (LADOL), Dr. Amy Jadesimi said the ongoing  Egina  FPSO project and others in the zone, are undertaken by LADOL and its partners in order to make Nigeria oil and gas hub in West Africa and Africa.

  • Flared gas in Nigeria drops to 750mscf/d

    With the increasing utilisation of associated gas, flared gas has dropped from over one billion standard cubic feet per day (bscf/d) to 750 million standard cubic feet per day (mmscf/d) as at the end of last year.

    The Managing Director of Seplat Petroleum Development Company Plc, Mr. Austin Avuru stated this at the 2016 Business Forum of the Nigerian Gas Association (NGA) in Lagos. Avuru, quoting the Nigerian National Petroleum Corporation’s (NNPC), said at the end of 2015 that gas flaring stood at 0.75bscf/d, while domestic consumption, taken largely by the power sector and industries, was 1.3bscf/d.

    Avuru further noted that exported liquefied natural gas (LNG) accounted for 3.05bscf/d while re-injection and other operational usage accounted for 2.9bscf/d bringing the total gas utilised daily in 2015 to 8.0bscf.

    In his paper titled: “Re-evaluating the development of the Nigerian gas industry: A prerequisite for re-energising and maximising its potential”, the Seplat chief said historically that gas discoveries have been incidental to oil exploration and development, adding that flare penalty of N10/mmscf has proved ineffective in dissuading gas flaring as Nigeria ranks second in flare volumes, accounting for 10 per cent of total global flares in 2011, following Russia.

    According to him, to ensure future growth by closing the gaps in the industry, players should do something different. He said power sector reforms, licensing of more independent power projects (IPPs) and the gas master plan (GMP) have resulted in increased potential demand for domestic gas.

    He said 6.5 gigawatts (Gw), which is 67 per cent of gas-fired power capacity, is in Western Delta and reliant on Escravos Lagos Pipeline System (ELPS) for feedstock, and 45 per  cent of feedstock is associated gas, transported mainly via Trans-Forcados pipeline.

    He noted that if the stakeholders do things different, the industrial sector including the downstream, electricity generation (gas to power), petrochemical industry,  construction industry (cement), agricultural industry (fertilizers) can take between 10-12 bscf/d.

    In the power sector, Avuru  noted the importance of infrastructure, highlighting the constraints on gas transmission and distribution. He also stressed the difficulty in accessing funds, adding that when funds are available, they are expensive. Regulatory framework, he said, is not encouraging because of the extensive and bureaucratic processes  for obtaining licenses.

    Other issues that need to be addressed to optimise gas resources, according to Avuru include pipeline/infrastructural vandalism and theft, and gas pricing. He stated that gas revenue in naira is not as attractive to some investors.

    Avuru said $5 billion per year can be saved from aggressive gas development, the downstream sector transformed from cost centre to revenue centre, oil and gas grown from raw revenue earnings to an economy enabler, and the development would lead to domestic energy security.