The Nation Newspaper

Category: Energy

  • ‘Why NLNG disburses funds for CSR projects with caution’

    ‘Why NLNG disburses funds for CSR projects with caution’

    The Nigeria Liquefied and Natural Gas Limited’s (NLNG’s) decision to follow due process, especially in disbursing of funds for Corporate Social Responsibility (CSR) projects, such as building of roads and hospitals, among others, is borne out of the need to avoid illegalities, its Chief Executive Officer, Babs Omotowa has said.

    He said other factors included the need to avoid making illegal payments, or a repeat of the Halliburton’s scandal in the country.

    Speaking at a forum in Lagos, Omotowa said the firm was cautious of giving money for projects construction in the Niger Delta region without due diligence and accountability.

    He said NLNG cherishes its name in Nigeria and beyond, and as a result, wants to see where and what its money is being spent on. “NLNG has partnered the Niger Delta Development Commission (NDDC) before on issues bordering on the growth of the region. The issue is about the interest of the Niger-Delta.  Our aim is to transform the region by making it an industrial hub like Dubai.

    “We are executing more projects in the Niger-Delta than any other company. I cannot see any company who has offered N60 billion to build road. I do not know any company that has done the kind of thing we have done in Bonny. We provide N3billion every year to develop the town.

    “However, we want to see where our money is spent. The N2billion each given to six federal universities for the construction of laboratories was well monitored. We have offered NDDC an option in the area of roads and hospitals in the Niger-Delta that are not covered in the budget. We told them to partner with us (NLNG) on those projects,” he added.

    Omotowa said NLNG cannot defy court order by paying money to NDDC for projects it has executed in the region. “But if you want us to pay you as against what the court has decided, that amounts to illegalities.  If you remember the Halliburton case, we don’t want such issue again. When you make illegal payments, if the world gets to know, it will affect the image of the company involved. There is nothing more corrupt than that. We are willing to work with them (NDDC) provided a due process is followed. Right from 2007, my predecessors have offered NDDC opportunities to work with them,” he added.

  • PETAN seeks better collaboration with Shell on Nigerian Content

    PETAN seeks better collaboration with Shell on Nigerian Content

    The Petroleum Technology Association of Nigeria (PETAN) has praised  Shell for contributing to the development of the Nigerian Content in the oil industry and for seeking more collaboration.

    During a visit to the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCo), Bayo Ojulari,  the association chairman, Bank-Anthony Okoroafor, said: “Most of us have our roots here. The relationship with Shell has given us the required foundation and encouragement and we are now in a position to add value to the operations of oil companies in Nigeria,” Okoroafor said.

    Okoroafor, who was elected last month, said the members were on a familiarisation tour of international and national oil companies to brief them on the rebranding of the group.

    The group, he said, will play a more active role in the development of the industry, especially at this time of cost pressures.

    He said PETAN had created target groups to liaise with oil companies, including SNEPCo, and would like to proffer solutions to challenges of projects, cost and production.

    He said: “PETAN is already working with Shell Petroleum Development Company (SPDC) on an internship programme where graduates learn skills on one-year attachments to our companies and it will be very good to do the same with SNEPCo.”

    Ojulari praised the PETAN in the development of the oil and gas industry in Nigeria. He said: “The new executive has come at a critical time in our industry. I would advise PETAN members to collaborate more effectively so they can present a unified front that will be competitive in the global oil industry.”

    The SNEPCo chief was accompanied by his leadership team, who highlighted the various areas of potential collaboration with PETAN, including project implementation, cost leadership and value-adding service to the industry.

    Shell companies in Nigeria contributed very well to developing the country’s human capital and contracting capacity.  Last year, 93 per cent of contracts were awarded to Nigerian companies. Shell companies in Nigeria won PETAN’s Local Content Operator of the Year awards in 2013 and 2015.

  • Activist blames low generation for Edo outages

    Civil society activist Rev Olu Martins has explained to residents of communities in Egor, Benin, Edo State that the reason for power outages is that the Benin Electricity Distribution Plc (BEDC) is facing challenges due to the inability of generation companies (GenCos) to supply adequate electricity for domestic and industrial needs.

    Rev Martins, who disclosed this at a town hall meeting in Ugbowo, said power has become a major challenge in Nigeria with less than 5,000 megawatts (Mw) for a population of 170 million,  stressing that the current energy output of 1,500Mw is a reflection of the perennial energy crisis that is yet to be addressed.

    He stated that the power sector has been starved with investment since 1984 whereas the country has increased in population and infrastructure, adding that current operators of BEDC spent huge amount of money to purchase the company and “it is only natural for them to get their returns on investment and equally make profit, hence they are to give services only to those who will pay for it.”

    The civil society activist noted that government was not subsiding electricity or any point of the power value chain – generation, transmission or distribution, stressing that power is no longer a social but commercial commodity, and its price is determined by the forces of demand and supply.

    Martins, who supported the recent tariff review which saw a slight increase in tariff and removal of fixed charge, urged communities to manage their consumption by switching off appliances when not in use.

    Also Fidelis Obishai noted that the quantum of energy supplied to BEDC from the national grid was barely sufficient more so with the system collapses experienced along the value chain and urged customers to pay for the little energy they get.

    “BEDC is here to distribute electricity and collect revenue. With a customer base of 750,000 in our coverage states, we need 2,600Mw but we only get 320Mw, which means we don’t have enough to distribute.

    “BEDC is not punishing anybody through inadequate supply but resorted to load management to ensure that all customers get a feel of what is given to us,” Obishai stated.

    Obishai lamented that BEDC has not been able to collect money to the tune of the amount it pays for the cost of power, saying that customers should strive to pay whatever little they were getting to enable BEDC honour obligation to various tiers of the value chain.

    Responding to customers questions on staff impersonation and vandalism, the Edo State chief head, Obishai said that BEDC has concluded plans to issue out uniforms for linesmen and technical staffers to discourage the scourge of impersonation and illegal connection within the network.

  • How to solve power sector problems, by NLNG chief

    How to solve power sector problems, by NLNG chief

    Nigeria should adopt an all-inclusive approach to solve the myriad of problems of the power sector, the Managing Director/Chief Executive officer, Nigeria Liquefied Natural Gas Limited (NLNG), Mr. Babs Omotowa, has said.

    He said gas-to-power has become a problem in the industry, urging stakeholders, including the Federal Government, to proffer solution to problems in generation, transmission and distribution of electricity.

    He canvassed the exploration of opportunities in the grid and off-grid systems of power generation and also leverage on the strengths of the six geo-political zones through their resources, such as coal, wind, solar, water and gas, among others, to improve power supply.

    Omotowa said the country needed a holistic approach to solve its energy problems since it has tried various methods in the past, without success.

    He said: “A more comprehensive approach to resolving problems in the power sector is what Nigeria needs at this moment. There is the need to look at the energy strengths of each of the geo-political zones for growth.  For instance, states such as Benue, Kogi, Plateau, and others within the Middle Belt zone rely on hydro power, and should be allowed to use hydro power sufficiently.

    “The Eastern part of Nigeria should rely on coal because of the abundant coal deposit in the area, to solve the energy needs of that zone. The Southern part of the country especially the South-south should rely on gas, which means that turbines would operate optimally in that area, once there is gas infrastructure. A lot of the demands for gas are in the South-western part of the country, especially Lagos and Ogun axis. They have thermal plants and some of these plants are operating sub-optimally due to lack of gas. The power plants should be linked to gas pipelines to power the turbines. There are huge but unexplored opportunities in the country.”

    Omotowa urged stakeholders to give more attention to issues such as citing of power plants where gas facilities are, and the evacuation of electricity generated from the plants to the grid, adding that they are crucial to the growth of the sector.

    According to him, it is one thing to build power plants side by side with gas facilities, it is another thing for the plant to have capacity to take or evacuate the power generated to the grid citing Afam VI as an example.

    He said: “Afam power plant, for example, is cited close to a gas facility and today it generates 650 megawatts (Mw) of electricity. However, the grid cannot take all the megawatts of electricity generated by Afam. May be the grid takes about 300Mw or thereabout. Alaoji is another one power plant with similar problems. Having considered all the issues listed above, it is safer to conclude that an all embracing approach is what Nigeria needs to solve its energy problems.”

    He said the need to provide facilities that would help in evacuating electricity to the grid for onward distribution to customers is imperative for the growth of the sector.

    The industry is battling shortage of gas, poor power generation and distribution. This has resulted in poor supply of electricity.  To resolve the problems, the Federal Government embarked on upward review of gas price to ensure competitiveness, ensures effective policing of gas pipelines to forestall vandalism,among other initiatives. However, the problems persist.

  • ‘Otakikpo marginal field to start operation in June’

    The Otakikpo marginal field in oil mining lease (OML) 11 is expected to begin commercial production by end of second quarter, The Nation has learnt.

    The oil field is owned by a Joint Venture (JV) with Green Energy International Limited (GEIL) as the operator and Lekoil Oil and Gas Investment Limited as the technical and financial partners.

    According to the company, the Otakikpo-002 well flowed oil from two production tests on zones C5 and C6 concluded on April 10. Zone C5 flowed at a peak rate of 6,404 barrels of oil per day (bopd) while C6 zone flowed oil at a peak rate of 5,684 bopd for over 24 hours.

    Production testing at the well was curtailed due to storage capacity limits on well-testing equipment, the JV said, adding it expects to start commercial production by the end of second quarter of 2016.

    The Joint Venture said: “As previously announced on September 7, 2015, the lower E1 zone produced from the first of four planned production tests, flowing oil at various sizes for over 24 hours at a peak rate of 5,703 bopd. However, during completion operations, the well encountered cementing issues resulting in the temporary suspension of the E1 zone to allow remedial work to take place.

    “To keep Phase 1 of the field development plan (FDP) on track and under budget, the JV prioritised production from the second and third planned production zones, in the C5 and C6 reservoirs, and will pursue development options for the E1 zone in the future. The encouraging flow tests of upper zones, C5 and C6, reconfirm the sizeable potential of the oil field.

    “Following the completion of Otakikpo-002, well re-entry operations on Otakikpo-003 are expected to begin later in second quarter (Q2) and will target the E1 and C5 zones.  The company expects to commence commercial production from Otakikpo-003 in Q3 2016 and expects to be producing 10,000 bopd by year-end 2016. The facilities construction and permits are at an advanced stage to meet the company’s timeline for commercial production.”

    The company said following the conclusion of Phase 1 of the FDP, which is expected by the end of 2016, the company will  proceed to Phase 2 with new wells planned to bring aggregate production to an estimated 20,000 bopd by the end of 2017.

    The Otakikpo Joint Venture with LEKOIL as Financial and Technical Partner and Green Energy International Limited (GEIL) as operator began work  in December 2014.

    The Chief Executive Officer, Lekoil, Lekan Akinyanmi, said: “In about a year and half, Lekoil and its partner GEIL have managed to bring to life a marginal oil field, which is expected to produce 10,000 bopd by year end, demonstrating its technical and financial strengths as well as illustrating the fast-track approach by the Department of Petroleum Resources (DPR) to develop previously marginal fields and unlocking value for the benefit of Nigeria.

    “Lekoil as a financial and technical partner also commends the support of its stakeholders and host communities whose people and services stand to realise sustainable value.  These successful tests represent another major step towards continuous production and are the most significant accomplishment since operations began – demonstrating our disciplined approach to developing an asset efficiently. Safety remains our key priority and we will continue applying the highest standard to our operations as we grow production to, and beyond, our initial Phase 1 target.”

  • Fuel supply: Osinbajo, PETAN back modular refineries

    Fuel supply: Osinbajo, PETAN back modular refineries

    •Let private investors run refineries

    The Vice President, Professor Yemi Osinbajo, has endorsed the building of modular refineries to solve the recurrent fuel scarcity in the country.

    He spoke at the two-day 2016 African Modular Refinery seminar in Lagos. Osinbajo, who was represented by Ambassador Jide Olu, in his goodwill message, highlighted the need for modular refineries, noting that they will not only address the fuel scarcity problem but move Nigeria away from being a net exporter of crude oil to a big producer and net exporter of petroleum products.

    He said there was no better time to start than now because of changes in the global oil and gas space. Rather than merely extracting crude oil and exporting it and importing finished products, Nigeria should take full advantage of the oil and gas sector by refining crude and exporting it. That will mean full use of the oil and gas resources, he added.

    He said: “The advent of shale oil and gas is a technological revolution that has changed the oil market, moving to an era of long low oil prices. We, therefore, need to add value to our oil and gas resources to remain competitive.

    “It is in this regard, the Federal Government will prioritise the adoption and execution of a National Oil and Gas Master Plan later this year,” adding that Nigeria and Africa should think of modular refinery in the content of regional value gains and market sizes since production is increasingly coordinated across various geographical locations.

    The Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Bank-Anthony Okoroafor, also agreed with the Vice President on the need to build more modular refineries to enable self-sufficiency in fuel production.

    Okoroafor urged the Federal Government to allow the four refineries it owns to be run by private investors to make them operate and produce optimally.

    In a chat with reporters, he said government has no business running refineries but to make policies that would drive business activities. “Refinery business is a business on its own. Governments do not run such businesses. It was good at the initial stage for government to kick-start such investments and be able to build capacity.Government has no capacity to run refineries,” he said.

    The PETAN chief criticised giving jobs in onshore and swamp terrains to foreign oil companies when competent indigenous companies are available. He said that the association is keen to achieve value added local content to Nigerians.

    He said PETAN’s goal is to bring jobs hitherto exported to other countries back to Nigeria, create a hub for oil and gas service in-country. He said before now, Nigeria loses $380 billion and two million jobs to capital flight on oil and gas service jobs.

    He said there is a Nigerian Content Law, which states that 100 per cent onshore, swamp jobs should be given to Nigerian companies.  “So any job that can be done by PETAN company or by a competent Nigerian  should not be given to somebody outside the country, it is criminal,” Okoroafor said.

    However, where there is skills gap, PETAN encourages alliance with foreign companies, primarily to grow capacity. He said at the height of militancy in the Niger Delta, expatriates fled the region while indigenous companies’ workers continued with the jobs without fear of being kidnapped.

    “Nobody can develop our country better than we can do. But anywhere that the capability does not exist in the country, anybody can do the job. But where the capability exists, it has to be done by the  Nigerian company,” he said.

  • ‘Why fake lubricants exist in Nigeria’

    Lack of stricter measures against producers of fake lubricants, selling of fake lubricants at cheaper prices by unscrupulous persons, high level of connivance among distributors and others, have been adduced as reasons for the proliferation of sub-standard lubricants in the industry, stakeholders in the downstream petroleum industry have said.

    The stakeholders, including the Managing Director, A-Z Petrochemicals Mr. Linus Ilozue and the Managing Director, LUBCON Nigeria Limited, Mr. Taiye Williams, spoke at different fora in Lagos. They urged the Standards Organisation of Nigeria (SON) to come up with stricter measures to curb  fake lubricants.

    Ilozue said fake lubricants would reduce once regulatory policies are put in place to discourage adulteration. He said the activities of people who adulterate lubricants would have been curtailed, if officials of  SON were always at the ports when the products berth,.

    He said: “The issue surrounding proliferation of substandard products in the market is best linked to the less supervisory role of SON. For us (producers), the regulators have a lot to do in ensuring that fake lubricants and base oil are reduced to the barest minimum.”

    He also said that there has been a general preference for imported products over locally made products. “The inability of the country to appreciate our local products has paved way for sub-standard products to come into the market,” he added.

    Williams also stated that the country refined base oil last in 1995, stressing that activities of individuals  who adulterate engine oil and other lubricants are killing the business. According to him, the issue of fake product is affecting the sale of lubricants, adding that users doubt the efficacy of available  lubricants.

    “The country has remained mute over refining of base oil. Kaduna refinery is supposed to be refining these products but it refined base oil last in 1995.

    “We urged the government to come to our aid by ensuring these products are produced in the country, as it will generate more revenue for the economy and kick away fake products from the market.

    “Also, there is need to ensure a favourable environment for quality products to grow. There is need for stricter policies to discourage importation of these fake products to the country,” he added.

  • ‘Govt eyes six months contracting cycle’

    The Federal Government is set to cut the contracting cycle in the oil and gas industry from its current two to four years to six months as done in other countries, the Minister of State for Petroleum Resources and Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, has said.

    Kachikwu stated this at the stakeholders interactive workshop on the Nigerian Content Policy organised by the Senate Committee on Petroleum Resources (Upstream) in Calabar, Cross Rivers State.

    He identified the long contracting cycle as a major contributor to the high cost of production per barrel of crude oil in Nigeria compared to other member countries of the Organisation of Petroleum Exporting Countries (OPEC). He listed other challenges to include multiplicity of bidders, application of manual tools in bid evaluation and divergent tender requirements by approving entities such as the Nigerian Content Development and Monitoring Board (NCDMB), National Petroleum Investment Management Services (NAPIMS) and the International Oil Companies (IOCs).

    The minister, who was represented by the Group General Manager, (NAPIMS), Mr. Sajebor Dafe Stephen, stated that the contract approving entities were already implementing his charge to strategise and develop a single contracting procedure, which will soon be issued to the industry.

    He also confirmed plans to categorise companies that have invested heavily in the economy and become local content champions for specific work scopes in a way that will facilitate contract opportunities. These measures, he said, will enhance transparency and further boost investor confidence.

    He stated that a good number of  Nigerians had been motivated by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act to acquire high cost marine vessels and oil rigs, and assured the Act’s provision of first consideration for Nigerian owned assets shall always apply in tenders related to utilisation of rigs or marine vessels.

    With the emergence of a new crop of indigenous owners of marine vessels, he said the new focus was on the local construction of vessels, adding that an assessment of shipyards was ongoing and government will provide incentives and enablers that will enable local yards to construct vessels at competitive cost.

    While expressing gladness that some firms, including the Lagos Deep Offshore Logistics Base (LADOL) had accessed the Nigerian Content Development Fund (NCDF) for its ongoing fabrication and integration yard expansion, the minister regretted the challenges faced by some other companies in accessing the NCDF.

    He stated that government was currently reviewing the operating model for NCDF, adding “it is my hope that the revised model will see more Nigerian firms access NCDF for commercial and developmental interventions.”

    Kachikwu charged Nigerians to keep faith with the Local Content policy as an instrument for the industrialisation of the economy, noting that other prosperous jurisdictions succeeded because they adopted their preferred development policies and sustained the programmmes for long periods.

    He challenged the National Assembly to consider the possibility of expanding the provisions of the Nigerian Content Act to other sectors of the economy especially information and communication, automobile, construction and power for maximum socio-economic gains.

    He solicited the support of the private sector and the international community for Nigerian Content implementation and assured that the Act is not intended to drive foreigners out of the industry but to encourage domiciliation of industry activities in-country through genuine partnerships.

     

  • Fuel importation: ‘Banks don’t lend to most operators’

    Over 70 per cent of oil marketers eligible to import fuel are not doing so because banks are not lending money to them, the Chairman, Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho, has said.

    He said banks were not lending to operators in the downstream because of paucity of funds and the inability of operators to repay with interest as agreed upon.

    He said the banks’decision to impose restrictions on lending has compounded the woes of indigenous oil and gas operators further as they have to operate at below the capacity level.

    He said: “More than 70 per cent of the operators in the nation’s oil sector want to import fuel in the wake of lopsided performance of the refineries, but unable to do so because banks have shut the window to advance credit to them for reasons best known to them. In view of this, the operators rely on fuel allocations or supplies from the Federal Government.“

    Ihenacho said the country needed to adopt and implement a policy that is geared towards making the refineries refine more crude oil in order to proffer solution to the perennial fuel crisis and its attendant problems in Nigeria.

    “There is a need for a paradigm shift from importing to refining in-country. This shift can only be made possible when more refineries are allowed to operate. Why can’t we encourage companies to establish more refineries to meet fuel needs of operators in the downstream sector and the consumers,” he asked.

    Ihenacho said lack of a workable operation plan is killing initiatives by the Federal Government to move the downstream sub-sector of the oil and gas forward, adding that to improve the downstream sub-sector, government needs to restructure it.

    He said deregulation of the downstream segment of the industry cannot be possible unless private entities invest in refineries.

    Ihenacho said subsidy is a drain on the government’s purse, stressing that trillions of naira have been paid as subsidies to fuel importers in the last few years.

    He urged the government to remove subsidies, and also provide environment that is conducive for private refineries to operate, adding that the idea would help in reducing the fiscal challenges, which the country is facing.

  • Customers differ on prepaid meter

    Customers of Ikeja Electric in Ikorodu, Lagos have expressed divergent views on  ongoing prepaid metering by the electricity distribution company.

    In an interview with The Nation, the residents of Omolosho Ilariogun, Ade-Ekun Street,Lasunwon and Ijede town said while some of them preferred the prepaid meters, others  do not. Rather, they want the analog meters or estimation billing.

    Mr. Lawal Azeez of 14 Omolosho Ilariogun, who was given a pre meter in January, noted that a prepaid meter is not cheap in terms of billing as some people believe, adding that the major benefit of a prepaid meter is that he controls its consumption.

    “With prepaid meter, I have become very conscious, any electronic or electrical device that uses power is switched off once no one is making use of it. When we are in the sitting room, I ensure all the lights in the other rooms are switched. I don’t switch on the security light when it is not very useful.

    “With the meter, I’m sure I don’t pay for power that I didn’t use unlike in the past when we were given billed even if there was no supply.”

    Mr. Sola Anthony of 12 Ilariogun Street, said the meter is okay compared to the estimated bills that they used to give us but the light is not regular.

    “Well, the new meter is better than the estimation that we use to receive before. I no longer pay for what l don’t use. Whether there is light or not, l pay for whatever l use but the tariff is too high. May be they can help us reduce it. They should help us to improve on the supply,” he added.

    For Madam Modupe, “This new meter is making us pay more than double of what I used to pay. Before we don’t pay more than N1,500 in a month, but now I recharge with N4000 and within three weeks, it is finished despite that I don’t use hot plate again. If it is possible, I would have asked them (distribution company) to come and take their meter.”

    However, the customers complained that though they owed the distribution company before the installation of the prepaid meter, the distribution deducted the debt whenever they recharge.

    If the debt was huge, they said, the deductions would be done by instalments until they were paid,a dding that the distribution company doesn’t inform them (customers) before doing the deductions.