The Nation Newspaper

Category: Energy

  • ‘Nigerian refineries younger than those in US, Europe’

    ‘Nigerian refineries younger than those in US, Europe’

    To confirm that the nation’s refineries have suffered severe lack of maintenance over the years, the National Engineering and Technical Company (NETCO), an arm of the Nigerian National Petroleum Corporation (NNPC), has said the refineries are younger than many in Europe and the United States, which are working efficiently.

    NETCO, which participated in the independent assessment of the refineries, pipelines and depots with AF Consult Group of Sweden and Switzerland, found that most refineries, abroad are older than Nigeria’s.

    The independent assessment was funded by the Facility for Oil Sector Transparency and Reform (FOSTER).

    FOSTER is an organisation funded by the United Kingdom Department for Foreign Development which engaged the AF Consult Group of Sweden and Switzerland, that  conducted the test.

    It said: “The findings showed that  the refineries are younger than the average refineries in Europe and the United States, some of which are world leaders today. The ongoing phased turnaround maintenance (TAM) in the refineries is hindered by financial constraints and inefficient approval processes.

    “In 2011, NNPC designed a new business model that its focus was to reposition its business units and increase profitability. In this model, all NNPC strategic business units will run as major profit centres. This model is yet to be fully implemented. A viable commercial model with good cost control mechanisms, secure crude supply, and unhindered product evacuation is key to attracting investors to this sector.”

    The independent assessment project team, which consisted of AF Consult, FOSTER, representatives from NNPC group managing director’s office, refineries, technical services directorate and NETCO, noted that rehabilitating the refineries will save about two-third of the cost of building new ones. Streamlining the organisational structure and simplifying its processes will result in higher effectiveness and efficiency that would foster growth, they added.

    The team said: “With the high gross refining margins reported by the refineries, there is a great opportunity for investment in the downstream sector. However, in spite of the huge opportunities, pipeline vandalism still poses a major threat to its survival. Unless the planned rehabilitation of the refineries is carried out, the plants will still remain unreliable, unsafe, and unprofitable.

    “The implementation of the new business model with a solid and transparent governance structure, assets transfer, and available working capital is fundamental to the expected transformation. Concerted efforts involving relevant government and security agencies including military and paramilitary are required to curb pipeline vandalism, which continues to pose a huge national threat. The host communities being major stakeholders should also be directly involved.

    “The fuels are profitable and critical for national stability, prioritization of the TAM is required and the efforts should be centred on the fuels plants to get them running profitably before the rehabilitation of the non-fuels plants at the refineries”.

    “Fast track approvals, funding, and procurement should be secured to enable the successful completion of the phased and future TAM within schedule and budget. With low crude oil price resulting in higher margins in Nigeria, more investments will go towards the refining sector to create huge job opportunities.”

  • Why govt should respect agreements, by NLNG chief

    Why govt should respect agreements, by NLNG chief

    IT is vital for the Federal Government to respect the sanctity of agreements with investors, so Nigeria will not be seen as a nation that breaks agreements, the Nigeria Liquefied Natural Gas Limited (NLNG) has said.

    Its Managing Director, Babs Omotowa, said this at a public hearing of the House of Representatives Committee on Gas Resources. The hearing was on a bill to amend the NLNG Act so that it will begin to pay the Niger Delta Development Commission (NDDC) levies.

    He, however, reiterated the commitment of the company to partnering government agencies, including the (NDDC), to develop the Niger Delta, adding that it was  why the NLNG is one of the biggest promoters of Corporate Social Responsibility (CSR) in the area, supporting education, infrastructure development and entrepreneurship.

    He said: “As evidence of our commitment to the development of the Niger Delta, NLNG has spent $177 million in the areas of infrastructure, education etc in the region.  So it is not an issue of reluctance to support Niger Delta, but one of ensuring we work within the confines of the law and honour agreements and promises to maintain the valued reputation of our country in international business.

    “NLNG needs to be in the position to continue to support the region through being a successful Nigerian company, bringing value to the Delta and the nation in general, but that this would only be possible if the promises made to investors are not broken by amending the NLNG Act, which would certainly portray the country as one that does not honour agreements. Keeping agreements entered into with investors was crucial to retaining and attracting foreign investment into NLNG, as well as other sectors of the economy in line with the drive of the current administration.

    “The intervention of NLNG, more than any other single factor, has led to the progressive decline in Nigeria’s gas flaring profile over the years, from well over 65 per cent in the 1990s, to less than 20 per cent today. Therefore,2 aside from the fact that the company is earning revenue for the Federal Government and its other shareholders, it is cleaning up the Niger Delta environment in the process.

    “It goes without saying that the NLNG Act has been pivotal to the commencement of the project in the first place, and for the huge success the company has represented for Nigeria, with the country reaping over US$33 billion from its initial investment of US$2.5billion. The Act enabled the company to grow from its original 2-Trains to 6-Trains, creating an asset base of US$19 billion, 49 per cent of which the Federal Government owns.”

    He noted that the incentives which have been granted to NLNG are not peculiar to Nigeria. They were granted to encourage investments in gas utilisation to reduce flaring which had become a major problem for the country. Examples of similar incentive initiatives abound in Angola (12 years), Oman, Malaysia, Qatar and Trinidad (up to 10 years). Other more generous incentive schemes also exist in Nigeria, in the Free Trade Zones.

    Omotowa said the current amendment effort is most unusual as it attempts to enforce the payment of a levy from which an entity is expressly exempted by a valid and subsisting legislation in which the Federal Government of Nigeria gave unequivocal undertakings and declarations that induced significant investments.

    “As far as we are aware, this is the first time in the history of legislative practice in Nigeria that a proposal is being made to amend a law for the sole purpose of imposing a levy against a company for the benefit of an agency of government. We urge the honourable Committee not to lend itself to the establishment of an unjust precedent. To do otherwise would be to encourage other agencies of government who fail to make their case in judicial proceedings in court, to resort to legislative engineering to achieve what they failed to obtain in court,” he added.

  • NDCMB, others collaborate on research

    A framework for developing a world-class research for the oil and gas Industry is being formulated by the Nigerian Content Development and Monitoring Board (NCDMB), the Nigerian National Petroleum Corporation (NNPC), the Imperial College of London and four universities in Nigeria.

    This collaboration,  an initiative of  NCDMB, seeks to establish a Centre of Excellence (CoE) for oil and gas research at the Federal University of Technology Minna, Niger State, Federal University of Technology, Akure, Ondo State, Federal University of Technology, Owerri, Imo State and the Niger Delta University, Yenagoa, Bayelsa State.

    The aim is to solve oil and gas industry problems in Nigerian universities and local research centres thereby growing local research capacities and retaining huge money,  spent on research overseas.

    Speaking at the Needs Assessment Workshop on the Board’s CoE initiative held at Imperial College, London, recently, the Acting Executive Secretary of the NCDMB, Mr. Patrick Daziba Obah, represented by the General Manager, Zonal Coordination and Board’s Projects, Dr. Ginah O. Ginah, explained that the Board conceived the policy to galvanise the development of home grown research and technology in the oil and gas industry.

    Other objectives, according to him, include developing a pool of capable researchers and world class research centres, linking the oil and gas industry to academia and local supply chain through research programmes, and creating employment and training opportunities for Nigerians on the back of research projects domiciled in-country.

    He noted that the Imperial College has an enviable track record in research capabilities and collaboration with the oil and gas industry and would be expected to provide technical support to the Research Centres of Excellence being promoted by the Board.

    He noted that the Board invited the NNPC to participate in the CoE initiative because of the corporation’s leadership role and enormous influence in enforcing Federal Government’s policy in the oil and gas industry.

    The Head of Department for Earth Science and Engineering, Imperial College, Prof Mark Sephton, confirmed that the Institute had supported a number of countries on similar initiatives and was currently collaborating with Petrobras of Brazil to develop its Sustainable Gas Institute, a world class Research and Development institute for gas.

    He discussed various models for CoE and highlighted the need to develop the required infrastructure and adopt the right recruitment plan for the CoE. He promised that the institution would assist the Board with strategies for investment, funding models and as well as help distill identified research areas into specific scopes.

    The Chairman, House of Representatives Committee on Local Content, Hon. Emmanuel Ekon confirmed that the legislature’s participation in the workshop had offered them an opportunity to understand the workings of NCDMB and strategy for implementing Nigerian Content. He charged other agencies to engage the National Assembly in their activities so as to reduce executive/legislature friction over government initiatives.

    Hon. Ekon assured that the House of Reps will support NCDMB in its quest to establish centres of Excellence for Research and Development as well as on other initiatives.

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had at a recent workshop on Nigerian Content Policy in Calabar, Cross Rivers State confirmed that the oil and gas industry would encourage Research and Development to drive the development of home grown technology, innovation and enhance production processes in the industry. The road map for the setting up of the R&D

  • Stakeholders task govt on sub-standard meters

    Nigeria is battling with low-quality meters because the Federal Government, the Nigerian Electricity Regulatory Commission (NERC), the Nigerian Metering Management Agency(EMMC) and others have failed to formulate policies to regulate the importation of meters. Coupled with this, is the love of money by importers, stakeholders have said.

    The stakeholders include the  Secretary, Electricity Meters Manufacturing Association of Nigeria (EMMAN), Muhideen Ibrahim  and the Managing Director, MEMCOL Limited,  Mr Kola Balogun.

    According to them, there is no regulation to check importers of meters. The development is having grave consequence on the industry.

    Ibrhahim said sub-standard meters were installed in Abuja and other cities a few years ago, adding that the meters did not last.

    He said people buy sub-standard meters from China because they are cheap, without considering the interest of users of the meters.

    He said: ‘’ Sub-standard meters work for a while; may be three to four years.  Aside that the meters are of lower qrade, they are easily by-passed.When the meters are by-passed, the power distribution companies (DisCos) bear the brunt, by not generating enough revenue.

    ’’Balogun said the meters’ voltages are below global recommendation.

    ‘’While the voltage approved for meters in the United States, the United Kingdom and other countries is 220 to 240, this could not be said of Nigeria where the voltage has dropped to 110 to 80. When companies import meters from developed countries, they do not bother to re-configure the voltage to meet the needs of users. Failure to do this means people who use such meters will not enjoy them,” he said.

    He said voltage flucturates in the country, stressing that there are problems when  voltage rises beyond normal level.

    Ibrahim urged the Federal Government to put in place measures  to domesticate imported metersand insitute policies that would improve  the growth of local manufacturers of meters.

  • OB3 pipeline to boost gas supply by 2bscf/d next year

    The East-West pipeline, popularly called Obiafu, Obrikom, Oben (OB3) gas pipeline, will increase  domestic gas supply from 1.5 billion standard cubic feet per day (bscf/d) to 2bscf/d, when it begins operation in 2017, The Nation has learnt.

    The OB3, estimated  to cost over $400 million, is a Federal Government’s project  being handled by Nigerian oil service companies including Oilserv Limited.

    The 48-inch pipeline will cover about 120km and supply gas to thermal power plants.

    The Managing Director of Oilserv Limited, Mr. Emeka Okwuosa, said they hoped to complete the project  in July 2017.

    He said: “We are looking at the project’s completion in 2017. The scheduled completion date is July 2017. The project has faced quite a few challenges like you will expect of any project. Projects as you know, come with plans, based on scope and as you progress with the project, you may have changes in scope depending on what you intend to achieve.

    “We also have challenges that come with community management and security issues. We also have several other challenges but at the end of all, we expect to have reduced and recalibration of the schedule. Currently we are looking at July 2017. The project is really not being affected by the current situation in oil and gas industry because the government has had the intention of doing it to get gas distribution come in top gear.

    “Therefore, it means clearly that the project has been programmed overtime and the funding is also being kept by the Nigerian National Petroleum Corporation (NNPC) and the Federal Government. So, clearly the funding is on stream and I believe by next year, we should have that pipeline fully functional to be able to increase the capacity of gas supply for domestic uses.”

    Okwuosa noted that at the peak of supply, they are looking at a maximum of two billion standard cubic feet of gas per day (bscf/d), adding that whether the capacity woulb be achieved depended on there being enough gas to feed it.

    On the security measures for the pipeline, he said pipelines are built based on what is called ‘engineering codes,’ and these codes determine the way you scope the project, and the way you scope the specifications of the project, and once that is done by the clients, the service companies’ job is to build to that specifications.

    “There are many ways to secure a pipeline, but the most important way to secure a pipeline is the engagement of stakeholders including the government, the community and all manner of people that have direct impact on the pipeline. There are various forms of technology like the defined optic system, but that’s not being installed in the pipeline because it wasn’t part of the original scope. But tampering with a gas pipeline is a clear sabotage because you don’t tamper with gas pipeline to steal the gas,” he According to him, government has to set up a system to guide the pipeline because it is a national asset. It is a very strategic national asset because anywhere in the world, you guide your pipelines by using technology, engaging the communities around there, or putting up a proper security including military security, but you have to guide your pipelines, he said.

  • NGA launches study groups to boost gas growth

    To facilitate gas optimisation, the executive council of the Nigerian Gas Association (NGA) has inaugurated five study groups to lead research and explore viable methods to exploiting the vast and untapped gas resources for domestic utilisation.

    NGA President Bolaji Osunsanya said: “I am excited by the calibre and experience of the volunteers involved, and the vibrant enthusiasm they’ve shown for the task at hand. The rejuvenation of the study groups encourages the self-development of our members, and establishes the groups as focal engagement points and drivers of the NGA’s pertinent objectives. More importantly, the key findings collated will significantly enhance the association’s advocacy capacity, and enable us better synergise with the government and other important institutions to promote the best technical, regulatory, and contractual practices.”

    NGA’s 1st Vice President and overseer of the study groups, Dada Thomas said: “The fact-based research and key position papers provided by the study groups will play a crucial part in advancing the NGA’s four cardinal value propositions of anticipating and driving legislation and policies; positioning the association as the data and knowledge resource centre of choice within the industry; encouraging best practices and acceptable standards; and promoting viable investments within the Nigerian gas sector. The executive council is committed to the prevailing success of the groups, and will ensure adequate support is constantly provided.”

    The study groups are Natural Gas Transmission and Distribution chaired by Mr. James Odiase, Senior Manager, Commercial Gas, Seven Exploration & Production Limited; Industrial Utilization and Power Generation, chaired by Mrs. Yetunde Taiwo, Managing Director,                Seplat Gas, a subsidiary of Seplat Petroleum Development Company Plc; Domestic, Commercial and Transportation, chaired by Mr. Emeka Ene, Managing Director                Oildata Energy Group; Environment, Safety and Health, chaired by Mr. Toyin Adenuga, Managing Director, Shell Gas Nigeria Limited; and Legal and  Fiscal, Mr. Ike Oguine, Chief Consultant, Advisory Legal Consultants

  • NUPENG threatens to stop fuel supply over salary

    NUPENG threatens to stop fuel supply over salary

    The lingering fuel scarcity may continue, if the over 300,000 petrol attendants in the country do not get a pay rise, The Nation has learnt.

    The National Union of Petroleum and Natural Gas Workers (NUPENG) has threatened to down tools in sympathy with the petrol attendants.

    Industry sources said Petroleum Tanker Drivers (PTD), an arm of NUPENG, planned to embark upon a strike if an agreement is not reached over the N18,000 minimum wage being proposed for the attendants.

    Confirming this, the Zonal Chairma, Southwest, NUPENG,  Mr. Tokunbo Korodo, said tanker drivers might go on strike to identify with the petrol attendants on the issue.

    The inability of stakeholders to reach a compromise, he said, has slowed discussions on the issue.

    According to him, petrol dealers are the ones working against the agreement reached on the payment of the minimum wage, not marketers.

    Korodo said efforts to get the dealers to understand the predicaments of the petrol attendants and further increase their salaries have proved abortive.

    He said: “Discussions are ongoing on the issue of increasing the emoluments of petrol attendants and others working at fuel retail outlets across the country. Several meetings have been held on the issue because we believe that the workers’ welfare must be improved.  We are going to mobilise our members, especially tanker drivers, to go on strike. If the dealers are not ready to acquiesce to our demands,we would order our drivers not to provide fuel to stations that are being run by dealers.”

    He noted that through this, NUPENG would achieve its aspirations of providing better remuneration for petrol attendants.

    Also, the National Chairman, PTD NUPENG, Mr. Akanni Oladiti, said efforts were being made to reposition the downstream sector of the oil and gas for growth.

    He said petrol tanker drivers were being trained to be professionals, adding that the training would be nationwide.

    He said many drivers would be trained in areas, such as safety, among others.

    NUPENG and other bodies involved in the agitation for improved package for the attendants fixed last February for the implementation of the scheme.

    With February gone and no solution in sight, NUPENG is threatening strike.

  • OPEC losing force on oil market control

    OPEC losing force on oil market control

    The Organisation of Petroleum Exporting Countries (OPEC) is gradually losing its force and control on the oil market. The collapse of oil producers meeting in Doha, Qatar was a worrisome signal because the presence of the organisation’s leader, Saudi Arabia, couldn’t make a difference.

    Although the organisation counts 13 countries among its membership, but Saudi Arabia has long reigned as a first among equals, coming handy whenever there was need to intervene in the global oil market especially at periods of low oil. Saudi Arabia produces about 10.2 million barrels per day (bpd), which is about a third of OPEC’s total output, and about 11 per cent of world supply.

    Last week’s failed talks in Doha to enact a production freeze, according to Platts report, saw a potential new oil producer group emerge with another player in the room that could have changed the dynamics of the market and challenged Saudi political eminence in world oil affairs.

    The Doha summit of 18 nations included 11 OPEC members and several major non-OPEC producers, most notably Russia, whose output surpasses Saudi Arabia’s at close to 11 million bpd, according to its energy ministry.

    Russia has geopolitical ambitions that in many cases do not align with Saudi Arabia’s, particularly in the Middle East, where the two have clashed over the civil wars in Yemen and Syria.

  • Firm promises to deliver 7000mw of power

    Firm promises to deliver 7000mw of power

    •Calls for 20% upward review of tariff 

    Aggreko Projects Limited, a supplier of temporary power generation and temperature control equipment, has said it will deliver about 7,000 megawatts (mw) of electricity to Nigerians in the next two years.

    This, according to the company, will be part of its contribution to solving the power problem facing the country.

    Its Business Development Manager, Theophilus Igbozurike told The Nation that the company has built several power plants in various parts of the world, adding that it has the capacity to mobilise and build in each state 100mw to 200mw generating plants within two years, and Nigeria would have adequate power supply.

    He said: “The company will contribute its quota to solving the power problem of this country. We can build 200mw in six months. We already have about 80Mw scattered all over the country, we have projects in some states of the country including Akwa Ibom, Port Harcourt, Delta, Ogun, Enugu, Anambra States and the FCT.”

    He also called for an upward review of the tariff system by 15 to 20 per cent, adding that it would encourage more operators.

    Igbozurike told The Nation in Lagos that the tariff system was so tight for the investors. He said: “By the time you do your feasibility studies and business plan, you find out that the project is not bankable and getting fund to finance the project becomes a problem,” adding: “if you don’t take time, you run into problems.”

    He continued: “The margin is too tight for investors, who bring money to invest in this country, any slight mistake they run into problems, that is why the government after giving licences for construction of several power plants, none is being built.”

    He urged stakeholders to look at the cost implication and review it in such a way that everybody would be fairly treated. He agreed the problem confronting the Nigerian power sector was lack of gas supply. He said though there was abundance of gas in the country, nevertheless, its distribution to parts of the country was lacking, adding that most of the gas we generate are either wasted or exported.

    He challenged the government to do everything within its power to ensure that gas is made available to every part of the country.

    According to him, the company has started developing the market based on emergency power solution. “We build Independent Power Projects (IPP), power solution and captives, and do quick delivery. What we sell is energy, so we have started developing the market in Nigeria,” he said.

    Power issue in Nigeria, he said, should not be a rocket science. “Other countries of the world have gotten it right. If the government is willing to do it, I can assure you that the company can power Nigeria within one year,” he said.

  • ‘Nigeria needs energy mix to fix power crisis’

    Nigeria requires a combination of on-grid and off-grid sources of energy to meet the needs of its over 170 million population, the Chairman, Energy Institute, Osten Olorunsola has said.

    Olorunsola, who was a former Director of Department of Petroleum Resources (DPR), said the country would get out if its worsening power problems, if it  adopts and implements various energy sources at its disposal.

    He said energy mix was the most viable option of proffering solution to electricity problems in Nigeria, since the country has tried a single method of generating electricity without much success.

    At the Continuing Professional Development(CPD) Programme organised by the Energy Institute (EI) in Lagos, Olorunsola said to improve the skills of workers in the oil and gas sector and related areas, the Federal Government should leverage on energy sources such as coal, solar, gas, hydro, biomass and others for the power sector growth.

    He said: ‘’Energy mix is the way out of the problems, which Nigeria has found itself. We have no choice than to use a combination of different sources of energy to generate the required electricity megawatts (Mw) in the country. The government needs to marry both the renewable energy and traditional energy sources together to attain the goal of providing electricity for all Nigerians.  While solar, coal, and wind are used to generate renewable energy, gas and hydro are used to provide the traditional energy. Other countries have adopted this strategy, and Nigeria should not be an exception.

    “So, today’s programme is about continuing development programme on  energy business. The real problem is that we have a lot of skills gap, so we are basically using EI as a platform to help brush up and sharpen the capabilities of all our engineers or any energy related professional for that matter.

    “It is doesn’t really matter whether the professionals are lawyers or accountants, because we all have something to do about energy. So, it’s about skills, knowledge and good practice, therefore, bringing young people together to sharpen their professionalism and skills are imperative. We have a lot of young people who are engineers, we want to help them to develop.”

    He said the northern part of Nigeria is blessed with solar, while the eastern part has huge coal and gas reserves, stressing that failure of the government to make use of various sources of energy would not augur well for the country.

    “There is even a global initiative that even compels Nigeria to also be looking in the direction of renewable (the Paris meeting), so all those agreements, which it signed on will be monitored from now onward, so we really don’t have a choice. We really need to be thinking about renewable, even companies. Recently, I went to take a loan in the United Kingdom for some projects and they simply told me sorry, we only give loans to renewable projects, so you can see where the world is going, we better do a mix of all the energy fuels,”he said.

    An official of Total Exploration and Production Nigeria Limited, Chinedu Ogwus, also said the seminar was aimed at developing young professionals, especially engineers in the nation’s oil and gas industry and allied sectors.

    He said: “The benefits of being a professional member of a body such as Energy Institute is enormous. They stand to have some post-nominals after their names, have extra recognitions and different benefits that the Institute has. For example, you can register your company in the Energy Institute and use its logo, have access to online libraries, and gain professional membership.”