The Nation Newspaper

Category: Energy

  • Why oil prices may not rise soon, by expert

    Why oil prices may not rise soon, by expert

    The oil prices dip is different from previous cyclical scenarios in which  prices don’t take so long to rebound, the Chairman of Society of Petroleum Engineers (SPE) Nigeria Council, George Kalu, has said.

    Kalu, who spoke at the Oloibiri Lecture Series and Energy Forum (OLEF) in Abuja, said besides oil supply glut, most of the oil consuming countries have huge stocks, which may considerably delay a quick rebound of the prices.

    He said: “With an all-time high crude oil inventory by the Organisation for Economic Co-operation and Development (OECD) countries, the oil prices dip this time around is different from previous cyclical scenarios. This was partly occasioned by the demand-supply landscape in the global oil market and need to hedge against supply shortfall to the OECD.

    “The emergence of oil supplies from the United States shale areas plus the decline in oil demand from Europe and North America has contributed to a large extent. Simple innovative technology deployed such as water shut-off, short radius horizontal sidetrack in existing assets will ensure low cost oil production.”

    According to him, this year’s theme Technological advances in hydrocarbon exploration and exploitation: Solutions to global oil price stability,”is pertinent coming in a low oil price scenario. It thus provides Nigeria with the unique opportunity of maximsing benefits from adoption of low cost technology in asset management as well as industry collaboration between buyers, suppliers and vendor with operators in the oil and gas industry.

    “It is our hope and expectation that through OLEF 2016’s theme and the subtopics, we will stimulate discussions aimed at mitigating the effect of low oil prices and helps chart the right course towards a sustainable future for the Nigeria oil and gas industry.

    “Permit me to mention that OLEF 2016 also coincides somewhat with 60 years of oil exploration and exploitation in Nigeria since the first discovery in Oloibiri in commercial quantity. During this period, Nigeria has operated within the league of oil producing and exporting nations. The industry has experienced much transformation along the way,” he said

    Speaker of the House of Representatives, Hon. Yakubu Dogara, said: “This year’s partnership demonstrates the hallmark of the cooperation between the Executive and Legislature on non-partisan professional body the opportunity to address and proffer common solution geared towards growing in-country capacity to meet the challenge posed by the ongoing reforms and divestments in the upstream sector and petroleum industry at large.

    “As Nigeria aspires to maintain its current growth forecast and sustain the year 2012 GDP growth rate of 6.48 per cent, Morgan Stanley has predicted that Nigeria is expected to become an economic power overtaking South Africa by 2025 in its terms of GDP.

    “The theme is timely given that the role of a strong local refining in maximising benefits for economic growth in a declining oil prices environment and linkages to the manufacturing industry as well as the agricultural sector; which creates growth in the real sector of the economy. This shall enable Nigeria achieve its desired growth aspiration.”

    He said the National Assembly shall consider and expedite the passage of legislation of the Petroleum Industry Bill (PIB) to enable the restructuring and deregulation of the downstream sector; thus, allow for competition in all segments including open access to the pipeline as well as providing a robust tariff mechanism for all players.

  • EKEDC laments poor grid supply, outages

    EKEDC laments poor grid supply, outages

    Eko Electricity Distribu-tion Company (EKEDC) management is lamenting the slump in power supply from national grid, which within last month has fallen between 1,589 and 624 megawatts (Mw) after the attainment of a record 5,074.70Mw early in the month.

    The fall in supply has led to substantial drop in revenue generation by the DisCos as power output to customers and receipts from services rendered to customers have plunged.

    The Head, Corporate Communications, EKo Electricity Distribution Plc (EKEDC), Idemudia Godwin, said the drop has been responsible for the power rationing and intermittent outage being experienced in areas under its coverage in the past few weeks.

    He said the power supply instability was partly due to inadequate bulk electricity load allocation to the company from the national grid, which also arose from a drop in the national generation level as a result of incessant acts of vandalism on gas pipelines and transmission towers.

    According to him, the situation was not limited to Eko Electricity Distribution Company coverage areas alone, adding that since the problem had to do with low generation level, all parts of the country were affected.

    “The situation had led to acute power rationing in all areas within the company’s operational territory. Areas worst hit in Eko DisCo by the resultant power rationing include Surulere, Lekki, Ajah, Ibeju, Mushin, Apapa, Yaba and their environs.

    “EKEDC appeals to all its customers to please bear with the situation. We assure that the company is doing all within its powers to ensure a fair and equitable distribution of available power to all customers pending the time there would be a significant improvement in the national power generation level,” he added.

    He said the company’s Customer helplines will be available on a 24-hour basis to receive complaints from customers and attend to same with despatch. This is in addition to all the customer care centres which operate from 8am to 5pm.

    Customers having localised faults that are outside the general power rationing were enjoined to contact the customer care unit covering their areas or the central Customer Care Centre at the Marina Headquarters of the company, he said.

  • Controversy trails pay rise deal for 300,000 petrol attendants

    Talks on the planned enhanced remuneration for about 300,000 petrol attendants across the country  may have been stalled, The Nation has learnt. The talks were scheduled to begin last  month.

    There was an agreement to increase the salaries of petrol attendants  by last month, but the decision has been mirred by disagreement and stakeholders in the deal are back to the discussion table.

    The deal is being brokered by some interest groups within the downstream sector of the petroleum industry.

    The Independent Petroleum Marketers Association of Nigeria (IPMAN); Petrol Dealers Association of Nigeria (PEDAN); Petrol Station Workers Union (PSWU) and National Union of Petroleum and Natural Gas Workers (NUPENG) are yet to reach an agreement on the issue.

    Intrigues and power play, it was gathered, are hindering the implementation of the scheme, a development that suggests that the majority of the workers are still receiving  N8,000.

    Sources, who pleaded anonymity, said the controversy has mirred the  unions involved in the issue have failed to reach a consensus to ensure that the workers get a better deal.

    The sources at the meeting of the unions, which took place in Ilorin, Kwara State capital, said the workers could not get new salary package as planned for last month due to some problems in the scheme, which were yet to be resolved.

    The Major Marketers Association of Nigeria (MOMAN), a part of the talks, according to the sources, though absent, would not refuse to accede to the demand of the petrol station workers, adding that   MOMAN’s commitment was not in  doubt.

    “The Petrol Dealers Association of Nigeria (PEDAN), Petrol Station Workers Union (PSWU) and others are still working out modalities for the implementation of the enhanced welfare package. The Independent Marketers Association of Nigeria (IPMAN) is yet to show strong commitment to the issue. We do hope that all the concerned groups would come to terms on the issue soon. This will give the workers a new lease of life, given that most of them are not well paid,” the sources said.

    Efforts to get the IPMAN’s President, Chief Chinedu Okoronkwo to speak on the issue proved abortive, but the ex-officio, Petrol Station Workers Union, Mr. Samson Akintayo said modalities for the new salary scheme for the fuel attendants have been fashioned out by bodies, such as PSWU, which is the apex body for petrol attendants, Petrol Dealers Association of Nigeria (PEDAN), IPMAN and NUPENG.

    He said the assocaitions were involved in the Collective Bargaining Agreement (CBA), which drafted the conditions of service for the workers.

    He said the agreement would spell out the new salary structures of the attendants, their leave bonuses, hospital bills, and other packages, adding each of the 300,000 attendants  who work in over 30,000 filling stations in the six-geo political zones of the country would be given a copy of the agreement, as soon as the scheme takes off.

    He said the minimum salary for the attendants is N15,000, while the older and experienced ones would earn between N20,000 and N25,000  monthly under the new scheme.

  • Aisha Buhari names new NLNG’s ship

    Aisha Buhari names new NLNG’s ship

    The wife of the President, Mrs. Aisha Buhari  has named a new ship owned by Bonny Gas Transport (BGT), a subsidiary of Nigeria LNG Limited (NLNG), LNG Abuja II.

    The naming of the new ship by Mrs. Buhari was done in her capacity as the vessel’s Godmother.

    At a ceremony in Geoje Island, South Korea, Mrs. Buhari with top executives and directors of NLNG and BGT conducted the ceremonial naming of the 175,000m3 ship, which will carry LNG from Bonny Terminal to customers around the world.

    The General Manager, External Relations Division of NLNG, Mr. Kudo Eresia-Eke said LNG Abuja II is the fifth ship to be commissioned from the six newly acquired vessels by NLNG. It is also the third ship by Samsung Heavy Industries (SHI). In 2013, BGT signed a contract with SHI and Hyundai Heavy Industries (HHI) for the construction and delivery of four and two ships.

    Mrs. Buhari said: “It was with great delight that I received the invitation of the management of Nigeria LNG Limited to be the God-mother of and commission this magnificent new vessel; one of five recently purchased.

    “The new ships, I learnt, are part of a growth programme, which will ensure that NLNG continues to develop its capacity and enhance its reputation as one of the most reliable gas suppliers in the world. I am, therefore, very pleased to be the new ship’s Sponsor Lady and Godmother. By tradition, the Sponsor Lady bestows good luck on the vessel and the crew, and I wish to assure you all, that this vessel will go out into the world, proudly flying Nigeria’s flag and be an enduring symbol of the partnership and cooperation between our two countries for many years to come.”

    The Managing Director/Chief Executive Officer NLNG, Babs Omotowa said: “As we take possession of this great ship, we can reflect on the double symbolism of today’s event. Our country and the LNG business are both experiencing some difficult times. It is altogether fitting and symbolic that our country and our company are by this ceremony reaffirming our faith and confidence in a bright and prosperous future for our country as well as our industry.  This new vessel bearing the name of Nigeria’s capital city is a sign of that confidence and that is what this ceremony represents for us.

    “We take pride in the fact that LNG Abuja II is truly Nigerian. Based on Nigeria LNG’s local content aspirations, we have become the first Nigerian company to incorporate unique local content component into the construction of our vessels. Courtesy of this local content programme, over 600 young Nigerians acquired specialised skills in shipbuilding.

  • Federal Govt backs safety training centre

    Federal Govt backs safety training centre

    The Falck Prime Atlantic Training Centre in Ipara, Remo, Ogun State has received the Federal Government’s support for in-country training of public servants. The Minister of Interior, Lt-Gen. Abdulrahman Dambazau, gave the assurance during a visit to the centre.  EMEKA UGWUANYI was there.

    Falck Prime Atlantic Training Centre in Ipara, Remo, Ogun State isbthe nation’s flagship safety training centre for the oil and gas and allied industries.

    The centre, established a few years ago, has facilities and equipment of international standards, the management has said.

    Its Managing Director, Mr. Ayo Otuyalo told The Nation that his goal was to make the centre Africa’s number one oil and gas industry health and safety training centre.

    He said: “Our objective here is to showcase what we have in-country, he will be surprised at the competence and capability that we can provide in-country, all the facilities we have here are world class, and it matches any training centre anywhere in the world. What we want to do is that you can take advantage of what we have on ground and see how we can provide services to those who require the training in Nigeria.

    “Ours is strictly safety training which encompasses various types of fire-fighting, helicopter manning officers, which visit those who work offshore, and helicopters that come to land on platforms. We do confine space training. We train with latest fire-fighting equipment  called the Cobra, where we train people with technology for fighting fire, where you don’t need to go into the building because you can fight the fire from the outside the building.”

    He said the company prides itself as an example of local content. “We are proud to say we are the flagship of local content because a lot of training that were previously done abroad is being done here. We have several courses that we do here that we are the only one that do it in Africa and because of this; a lot of oil companies have resolved to be their training here. Certain certifications are required to do offshore works in Nigeria.

    “I must say we have most of the certifications in-country such as Offshore Petroleum Industry Training Organisation (OPITO) and most of our courses are OPITO certified. We are currently building scaffolding training platform, and we are the only company that has a certificate called CSRS in-country. Some of our clients are Chevron, Shell, Total ExxonMobil and some other companies, and we have capacity to accommodate 100 people a week because training here is not long term,” he added.

    Interior Minister Lt-Gen. Abdulrahman Dambazau, during the tour of the facilities, was shown the Emergency Breathing System (EBS) and helicopter underwater escape training (HUET) for emergencies, such as fire outbreak on platforms, among others.

    Dambazau said: “I’m very impressed with the facilities we have here for training particularly in the area of fire fighting. We have such facilities here, so we don’t need to send our personnel outside this country. The advantage is we save cost, and we also contribute towards providing employment to Nigerians. We also build capacity faster and more efficiently. I think there is a lot we will do with this company in terms of training our personnel but I won’t say what exactly.”

    Otuyalo further noted that Falck Prime Atlantic believes that training should be as practical and realistic as possible. Our highly regarded and qualified instructors are experienced firefighters with practical knowledge of dealing with emergency situations, he said.

    According to him, training is conducted with the latest techniques and technology and is delivered in a safe and controlled environment. This allows trainees to receive the maximum benefit from their training should it be required in a real life situation.

    Training is delivered in a variety of training simulators and where realistic fire scenarios are created to simulate emergency situations. Our ability to develop and change scenarios means that we can offer training to meet the demands of varied industries, for example offshore energy, maritime and petrochemical.

    He said: “Training is conducted to OPITO standards for the offshore sector and for the maritime industries advanced and basic programmes to SCTW 95 standards. In addition basic fire fighting courses are provided for onshore customers covering topics such as fire safety awareness and fire warden training.”

  • ‘Why NNPC can’t be privatised’

    ‘Why NNPC can’t be privatised’

    The petroleum product is a natural resource that is communally held and in real sense, it doesn’t belong to any company, individual or group, so the call for privatisation of the Nigerian National Petroleum Corporation (NNPC) or the sector should not arise, Jite Ogunye, a lawyer, has said.

    He told The Nation in Lagos that going by statistics, privatised organisations have not served the interest of the economy and the people. He identified corruption as a major issue that should be tackled in the oil and gas industry. He urged the Federal Government to overhaul and re-engineer the industry by putting credible and knowledgable persons to run the sector.

    The oil and gas industry require such people to form the management of the oil sector if the country will make meaningful headway with sector in the face of these challenges facing the oil and gas industry, he stated.

    He said: “I don’t think the major challenge in the oil and gas sector in Nigeria is lack of capacity. We have been drilling oil in Nigeria since 1958 and overtime the expertise either locally developed or brought in by foreign penetration has come of world standard.

    “The key issue has to do with corruption.  Corruption has almost brought the country to its knees. In the oil and gas sector the government has to tackle the issues of corruption, and one way of doing this is to reengineer the NNPC.”

    He also noted that for too long, appointments into the key sector have been more political than professional. There are visible efforts by the present government to clean up the rot in the sector, however, it has to be holistic.

    He said the level of corruption in the NNPC may have informed the reason many are calling on the government to hand over the all important firm to private sector. He stressed the urgent need for the government to strengthen the nation’s institutions including the judiciary and the legislature, adding that the oil and gas sector does not operate in a vacuum but in neighbourhood and environment.

    “We also need to think of the external environment that has factors and institutions that infringe on the oil and gas sector,” he said.

    If the regulating authorities are working, if our law enforcement agencies are working in that sector, signature bonuses will not disappear, remittances of royalties will no longer be hard in the oil and gas sector, but as long as those laws are not enforced, we will continue to have problem,” he stated.

  • Ikeja Electric repositions

    Ikeja Electric repositions

    Ikeja Electric has embarked on strategic steps to reposition its business and reinforce its vision to be the provider of choice.

    In the last few months, the electricity distribution company has scaled up its metering programme to meet the expectations of its customers and further reduce the agitation on estimated billing.

    It has also achieved significant strides in human capital development, which is critical to the repositioning programme, the Head, Corporate Communications, Felix Ofulue, said.

    As part of the strategic initiative, the company also embarked on a re-engineering exercise focused on aligning the company’s structure with its operating model and optimising human capital capacity for better efficiency.

    “One of the key objectives of Ikeja Electric is to create a high performing organisation, which satisfies the needs of all of our stakeholders, especially our customers, as we reposition for growth.

    ‘’We wish to assure all our customers that the organisation has put in place processes to ensure excellent delivery of quality service to our customers in 2016 and beyond,”  he added

  • NEITI urges govt to end crude theft, others

    NEITI urges govt to end crude theft, others

    The Nigeria Extractive Industries Transparency Initiative (NEITI) has urged the Federal Government to speed up measures  to end crude oil theft, considering the attendant financial losses and environmental degradation.

    The agency also advised the government to discontinue all forms of offshore processing arrangements of Nigerian crude, and oil swap. NEITI said the country loses so much money to crude oil theft, adding that in 2012 alone the country lost about 160 million barrels of crude valued at $13.7billion from three major oil companies, Shell, Chevron and the Nigerian Agip Oil Company, and which has continued to impact the oil and gas industry

    NEITI said: “It gives you an idea of the magnitude of the problem we are facing in this country. Imagine how far that money could have gone in alleviating the suffering of the people, and that’s just for crude oil theft and pipeline vandalism. The government needs to do something very seriously about it because it is bleeding in that area.”

    Under the crude oil swap arrangement, Nigeria’s crude oil was exchanged for refined products due to poor refining capacity of the refineries. There were concerns that the objective of this arrangement has been shortchanged and badly treated. In 2012 alone, the cost of crude oil swapped was about $6.4 billion while the value of refined products returned to the country was $6.3billion leaving the sum of $100 million as revenue loss to the country. NEITI also said between 2009 and 2011 over $866million was recorded as revenue loss under the swap arrangements.

    The Director of Communication, NEITI, Obiageli Onuorah, who spoke to The Nation in Lagos, said the country is also losing money as a result of under-assessment and under-payment including losses in meeting the cash call obligation, adding: “We have losses for not paying attention to the use of gas as a major revenue earner for the country.”

    She said: “The reform in the oil and gas industry should be a holistic thing. The amount of money we are losing from the various sectors on daily basis is very huge, so the government needs to do something very seriously about these losses and plug those leakages.”

    Onuorah commended President Muhammadu Buhari led government for its efforts in implementing part of the audit recommendations. She said since the inception of the present administration some of the positions of the NEITI reports have been implemented.

  • Kachikwu confirms OLEF 2016 participation

    Kachikwu confirms OLEF 2016 participation

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu,  has confirmed his participation as the Guest of Honour and Host Minister at the Silver Jubilee and 25th edition of Annual Oloibiri Lecture Series and Energy Forum (OLEF) next week, at the PTDF Towers Auditorium in Abuja.

    The Secretary-General of the Organisation of the Petroleum Exporting Countries (OPEC), Abdallah El-Badri and  Nigeria’s Senate President Bukola  Saraki are expected as Special Guests of Honour.

    According to the Chairman, SPE Nigeria Council, Mr. George C. Kalu, this year’s edition will bring together experienced exploration and production (E&P) industry experts who will provide insights on advances in Nigeria’s oil and gas activities aimed at mitigating the effect of low oil prices and how these wil chart the right course towards sustainable future for the industry.

    Other confirmed top E&P executives to speak at the event include Managing Director, First E&P Development Company, Mr. Ademola Adeyemi-Bero; Director, Department of Petroleum Resources, Mr. Modecai Baba-Ladan; Managing Director, SNEPCO, Mr. Bayo Ojulari; Managing Director, ExxonMobil Nigeria, Mr. Nolan O’Neal; Group Executive Director, E&P NNPC, Dr. Maikanti K. Baru; and Chairman, PETAN and Managing Director, Oildata Inc., Mr. Emeka Ene.

    The Oloibiri Annual Lecture Series focuses on contributing to oil and gas policies development for Nigeria in commemoration of the first oil well drilled in 1956 in Nigeria by Shell D’Arcy at Oloibiri, Ogbia, Bayelsa State.

    It is a platform that attracts participants from the government, regulatory agencies, heads of industry practitioners at all levels, as well as other key stakeholders from around Africa.

    The Energy Forum, which runs concurrently with the annual lecture, seeks to educate stakeholders handling energy issues in the nation’s financial and allied industries, for  public  benefit and  to  provide  opportunities  for  professionals  to  enhance  their technical  and professional  competence.

  • ‘Nigeria’s oil industry issues beyond low crude price’

    To players in the oil and gas industry, aside the slump in the global oil price, there are other issues. They include economic insecurity, funding challenges and renewed insecurity in the Niger Delta, as well as low reserve replacement ratio (RRR), high and uncompetitive production cost.

    The oil industry operators spoke at the January Technical and Business meeting of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos.

    NAPE’s President-elect Mr. Abiodun Adesanya, who presented a paper titled: Current realties in the upstream sector of the Nigerian oil and gas industry, said discoveries were low when measured against production, adding that gas development is also not at the level that it is supposed to be as production cost is put at $29 per barrel.

    He noted that due to oil price crash, there is a shortfall in foreign exchange (forex) because 95 per cent of Nigeria’s forex earnings come from crude oil. Gross Domestic Product (GDP) from the industry, according to him, dropped from 6.3 per cent in 2014 to 2.8 per cent in 2015, adding that about 120,000 direct and indirect jobs have been lost to the market situation while more layoffs are imminent.

    Adesanya, who is also the Managing Director of Degeconek, an oil service firm and sponsor of the meeting, said there was a 53 per cent drop in Nigerian National Petroleum Corporation (NNPC)’s cash call payment to the Joint Venture (JV) operations between 2005 and 2015.

    The drop in cash call obligations by the NNPC, according to him, led to a 62 per cent drop in JV production that is currently masked by Production Sharing Contracts (PSCs) production. It also played a part in decline of crude oil production from 2.3 million barrels per day to 2.1million barrels per day in over the same period.

    He said the renewed security situation in the Niger Delta should be a source of worry to stakeholders because immediately after the last election violence, insurgency, security threats, pipeline vandalism, illegal oil bunkering, kidnapping and hostage-taking including proliferation of illegal refineries reinforced.

    He urged the Federal Government to address low reserve replacement ratio issue and increase oil reserves to 40 billion barrels and achieve production of three million barrels per day. “Government needs to focus on stabilising production by identifying low hanging fruits that require low cost workover/remedial operations. Reduction in capital expenditure will come from reduced spending on exploration, facility construction.

    “Embrace gas development; identify distressed or underperforming assets by isolating assets, which may be falling short due to investment assumptions that no longer hold true. Focus on high performing assets to maximize production,” he added.

    The former Managing Director, Conoil Upstream Company, Mr. Ebo Omosola, said that the profit currently  is in the petrochemicals, noting that if Nigeria must stop export of its crude, make the refineries work; the country will make more profit from hydrocarbon exploitation than the trending export of crude oil.

    He urged the Federal Government to stop exporting its equity crude and refine it locally because it is more profitable to refine locally than export the crude and import only few products like premium motor spirit (PMS), Automotive Gas Oil (AGO) and Household Kerosene (HHK) and aviation fuel.

    He stated that with the re-entry of Iran into the crude oil market, oil export is becoming less attractive. He said: “If you produce the crude, where is the market to sell it. Iran is back, Saudi Arabia is not relenting, Russia and United States (U.S) are also pumping, so where is the market? The U.S has stopped crude export for over 40 years and they consume all they have been producing all these years and even imported some. Nigeria is not addressing the problem of drop in crude prices as it did in the past.

    “We need improved metering and monitoring of what goes into the pipelines. People announce figures of what was the cost to vandalism, but they have not been factual. The government must do more to meter oil flow from stations.

    “The reality is that crude oil price may not go beyond $45 per barrel. In the last 50 years, crude oil price was highest in the last five years. Now that the reality has set in, companies must reduce operating cost to stay afloat and re-negotiate with contractors. It is obvious that crude swap is the biggest damage to this country, and maybe it is time for the government to stop selling its equity crude but rather refine locally and value.”

    The General Manager, Joint Venture, Seplat Petroleum Development Company, Dr. Mason Oghenejobo, stated that because Nigeria sees crude oil as source of revenue and not energy, that is why the current reality is badly affecting it.