The Nation Newspaper

Category: Energy

  • ’97m Nigerians don’t access grid electricity’

    No fewer than 97 million out of 175 million Nigerians have no access to grid electricity.  The remaining 78 million people who are connected to the grid face substantial power interruptions, the Energy Savers Nigeria, a non-governmental organisation (NGO) has said.

    In a paper titled: “The Nigerian Power Sector, A Performance Appraisal under the Buhari Administration” Moses Nasamu, a  member of Board of Trustees of Energy Savers Nigeria, said about 56 per cent of the population are connected to the grid, while 44 per cent  are not.

    He said an estimated 41  per cent of Nigerian businesses generate their own power supply to augment supply from the grid, in line  with the recent World Bank report on electricity situations in Nigeria, adding that the problem was caused by poor generation and distribution system and other systemic issues in the sector.

    It said Nigeria lags behind other developing nations in terms of grid- based electricity consumption with 126 kilowatts hour(kwh) per capita, stressing that electricity consumption is expected to be five times higher than what it is today in Nigeria, if we  consider the country’s Gross Domestic Product( GDP) alongside other countries globally.

    The paper said 25 per cent of Nigeria’s 12, 522 megawatts (Mw) of electricity installed reach the end user. “Widespread inefficiency means that only 3, 879Mw of this capacity is operational, with 3,600Mw transmitted and 3,100 distributed. Most of the shortfalls, which were about 5,381Mw, is capacity that is unavailable due to obsolete equipment and poor maintenance or due to ongoing maintenance and repair activities at existing power plants. Also, about 3,262Mw of electricity is non-operational primarily due to gas, water, high frequency, and transmission line constraints.”

    According to the paper, the sector has recorded some operational improvements, mainly driven by increased availability of gas since May 29th, 2015, when the Buhari/Osinbajo led government started.

    The paper stated that in August 2015, Nigeria hits historical highs as both peak generation and total energy generated across the system stood at 4,811Mw and 4,213 megawatts hour (mwh) respectively. It said transmission losses fell by 10 per cent between June and August 2015, compared to the first four months of the year.

    “Nigerians would recall that at the commencement of Buhari/Osinbajo’s administration in May this year, the sector was plagued with challenges,  which included under-utilisation of generating plants partly due to insufficient gas availability occasioned by  frequent vandalism of gas distribution assets, inadequate transmission infrastructure, high distribution losses, liquidity problem, among others,” the group added.

    They said electricity generation and distribution has improved relatively, despite the fact that the problems still exist in the sector. “The Buhari government has helped in restoring confidence in the sector through its decision to fast-track execution of the first set of World Bank partial risk guarantees, and granting of sovereign immunity waiver which aimed at increasing the rate of growth of the first tranche of project-financed Independent Power Projects (IPPs) and the interim execution of the contracts undertaken by the management of Transmission Company of Nigeria (TCN).

    On solution, the group urged the successor distribution companies to improve on their revenues in order to enable them fund what they described as ‘Wholesale Obligations,’ cater for their operating expenditure requirements,  invest in new and modern capacity, and ensure cost- effective tariff is provided for the teeming consumers of electricity in Nigeria.  They said when these measures are well implemented, power supply would improve and industrial activities will improve also.

  • Why host communities’, operators’ problems persist

    Failure of oil and gas industry operators to identify the immediate needs of the host communities, leverage on the needs to initiate and implement a Memorandum of Understandings (MoUs) is the major cause of problems between the host communities and companies operating there, the Country Manager, Entrepreneurial Development, General Electric, Sunny Ojei has said.

    He said the need to ensure a peaceful coexistence between General Electric and its host communities,  informed the decision of the firm to sign  memorandum of understanding with the communities where it operates.

    He said GE is working with the communities on how to develop the entrepreneurial skills of the residents of the communities, make them have their own jobs and earn a living. He said computer training among others have been provided to the residents of its host communities in order to ensure that they are self- employed.

    He said GE has encouraged its suppliers to provide vocational training to the people, adding that their efforts are yielding fruits as the people are now engaged.

    Ojeh said: “People need some measures or levels of assurance that their future is safe. The assurance comes through the employment opportunities, which GE has provided for them and which they are tapping. As many residents, we (GE) can cascade and influence to buy into the jobs’ opportunities around, the better for the communities concerned, the industry and the economy.”

    He urged operators in the industry to firm up relationship with their host communities, by creating opportunities for them to secure employment and live better life.

    He said once this is done, problems such as low production, destruction of facilities owned by oil and gas companies by vandals, which were mostly aggrieved members of the host communities, would be reduced.

  • 270 Nigerian experts seek opportunities at SNEPCo’s summit

    Shell Nigeria Exploration and Production Company of Nigeria Limited (SNEPCo) hosted a business summit in Aberdeen last week with over 270 personnel representing Nigerian companies within and outside the country in attendance. They explored opportunities to repatriate skills and experience to the oil and gas industry back home in Nigeria.

    The forum christened ‘The Global Nigerian’ is the third in Europe’s oil and gas hub, and had the theme Networking and Collaboration as a tool for national Development and Growth.

    SNEPCo Managing Director Tony Attah in his address, said: “When, in 2013, we set out with the initiative for local companies to collaborate with Nigerian experts in Aberdeen on opportunities and challenges in the Nigeria oil and gas industry, we knew this would be a game changer. Today, we can say that the game changer is beginning to take shape as Nigerians have started returning home to set up businesses.”

    A representative of the Nigerian High Commission, Mr. Hassan Hassan said: “This is the right time for our experts based abroad to return home to make contribution and be part of the success story.”  The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzil Kentebe commended Shell on both The Global Nigerian and Partnership Facilitation Programme and confirmed the board’s continuing support for both initiatives.

    In a presentation on procedures for potential contractors in the oil and gas sector in Nigeria, the Deputy Manager, Reservoir Management and Evaluation, Joint Venture oil operations, at the Nigerian National Petroleum Investment and Management Services (NAPIMS), Mrs. Martina Atuchi said: “We are inviting you to be part of the leading economy in Africa with a lot of untapped hydrocarbon resources.”

    The General Manager, Nigerian Content Development, Shell Nigeria, Chiedu Oba gave a progress report on the decisions of The Global Nigerian since the first business summit in Aberdeen in 2013. He said several Nigerians had returned home to establish businesses in the oil and gas sector, while networking had continued on a collaboration portal which recorded more than 12,000 visitors every month by the 60 registered companies and users.

    The participants agreed that the return of a significant number of Nigerian oil and gas professionals could make a ‘game changing’ impact on the efficient delivery of many opportunities that exist in the upstream, mid-stream and downstream sectors. They also suggested the need for low interest rates to boost the growth of the companies.

    The Global Nigerian 2015 was enthusiastically supported by government and industry leaders including representatives from Nigeria’s leading oil and gas trade organisation, PETAN and UK Trade and Investment (UKTI).

  • Shell’s Bonga Northwest production hits 60,000bopd

    Shell’s Bonga Northwest production hits 60,000bopd

    In its first anniversary, Bonga Northwest, operated by Shell Nigeria Exploration and Production Company Limited (SNEPCo), has returned a good report card: It reached daily production of 60,000 barrels of oil.

    An excited General Manager, Deepwater Projects, Jerry Jackson, said this was a product of teamwork, adding that the production was a milestone for Bonga Northwest.

    Shell’s Deepwater Project and Technology team officials handed over the Bonga Northwest assets to the Offshore Asset team in March in Lagos.

    On the accomplishment, Jackson said: “Bonga Northwest demonstrates what can be achieved when people work together effectively. Every single team collaborated to enable the SNEPCo organisation deliver on this project in a very challenging environment. Bonga Northwest is showcased by the Shell Production Academy as a ‘Best-in-Class’ project in terms of execution.”

    According to the latest Shell World, a Shell Company’s publication, “Bonga Northwest is a six-well tied in to the main Bonga Floating Production, Storage and Offloading (FPSO) vessel. It produced its first oil on August 5, last year, and all the six wells have been hooked up and are producing an average of 50,000 – 60,000 barrels  daily.

    “In addition to being executed successfully, safely and within budget, Bonga Northwest also met its primary objectives.”

    Jackson also said the team executed the projects that resulted in the huge success because they wanted to fill the tank. He noted that some projects were successful, after some months, they are not able to fill the tanks for various reasons so that at the end of the day, one really doesn’t have a ‘successful’ project.

    Stressing the team spirit shared by the Deepwater Project and Technology team, and other colleagues from Well Engineering and Development, the former Bonga Northwest Project Manager, Joey Uyanwune said: “We had an integrated team. We worked together with a common purpose and focus to deliver this project.’’

    The Head, Deepwater Projects Operations Readiness/Excellence, Obinna Mbonu, said: “Not all projects achieved this milestone and in record time like Bonga Northwest project has done. It is a demonstration of due diligence and excellent collaboration by both teams.”

    The Bonga General Manager, Offshore Assets, Effy Okon and Operations Manager, Theo Ekiyor-Etimi, said the teams learnt many lessons, adding that they expected those learnings to be replicated in future projects.

    The Bonga project is located in oil mining lease (OML) 118 and about 75 miles offshore Nigeria. It is the country’s first deepwater development asset and in water depths of over 1,000 metres.

    It started production in 2005.  So far, it has produced over 500 million barrels of oil.

  • IOCs’ divestment: Indigenous firms target 100,000bpd output

    The divestment of equity shares by the International Oil Companies (IOCs) has buoyed the resolve of indigenous oil firms to be active in the sector.

    At the moment, some indigenous firms are targeting between 90,000 and 100,000 barrels of oil per day (bpd) in the next five years, the Group Managing Director, Obijackson Group, Dr Ernest Azudialu-Obiejesi, has said.

    The Obijackson Group is an indigenous firm with interests spanning oil and gas, maritime, telecommunication, aviation, health, and electricity.

    The group owns Nestoil and Neconde Energy, the operator oil mining lease (OML) 42, which has a joint venture with the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

    Neconde bought the divested equity shares of Shell Petroleum Development Company (SPDC).

    Azudialu-Obiejesi said indigenous oil firms, such as  Seplat, Neconde, Nestoil,and Oando, are producing between 30,000 and 70,000 barrels of oil per day, adding that the firms are aiming at 100,000bpd and becoming big players in the industry.

    He said with the foreign-owned oil firms for offshore, the coast is clear for indigenous firms to increase their oil production, and further invest in other parts of Africa.

    He said: “The divestment of shares by IOCs has kick-started the growth of local oil companies. Now, many local operators produce between 30,000 and 70,000 barrels of crude oil per day. They have got the financial, technical, and managerial expertise to undertake big ticket transactions through which they would increase their production to 100,000bpd.’’

    He said when this happens, the indigenous operators would find it easier to go to countries, such as Ghana, Kenya and Angola, to buy oil fields and develop them.

    Azudialu-Obiejesi said the development could place indigenous oil firms in vantage position to become oil majors.

    “What does it take to become oil major? It is no other thing than the ability to invest, develop and explore oil in bigger fields where daily oil production is in excess of 100,000 barrels,” he added.

    According to him, the nation’s oil industry came into being over 50 years, and indigenous operators have garnered enough strength and experience to undertake bigger oil production. He noted that local oil companies were getting into the driving seat, following the decision of oil majors to dispose their fields or wells that are classified unproductive to companies.

    He said oil and gas business is global and no country or firm that wants to become a big player could afford to isolate itself.

    He said domestic operators were not only depending on the banks for funds but approaching financial institutions abroad for finance.

    The President, International Association of Energy Economics (IAEE), Prof Wunmi Iledare, said the indigenous oil firms have shown they could produce thousands of barrels of crude oil daily, in view of their capacity.

    He said the acquisition of oil mining leases, which were offered for sale by multinational oil fims, in the wake of  insecurity, had shown that the Nigerians could dominate oil production in the future, barring any unforeseen circumstances.

    Iledare, a Professor of Energy Economics at the University of Port Harcourt, said Seplat and other indigenous operators could execute major oil production.

    Seplat and Oando showed capacity to play bigger roles in the industry through their acquisition of some of the big fields, and listing on the floors of London Stock Exchange.

  • Govt spends N100m to fix vandalised gas pipeline

    The Federal Government spends an average of  N100milion to fix a vandalised gas pipeline, a Senior Power Consultant, Nigerian Infrastructure Advisory Facility (NAIF), Dr Frank Edozie has said.

    He said the cost of fixing a gas pipeline could be much higher than N100 million depending on the extent of damage done to the pipeline. He said many gas pipelines have been broken in the country, especially in the Niger Delta region, adding that the government has spent billions of naira in maintaining them.

    Edozie while speaking on the topic ‘Deregulation: A key to Sustainable Development in Oil and Gas Sector’ at a stakeholders’ forum in Lagos, said each time a pipeline is ruptured or broken by unscrupulous people, the government spends a lot of money to fix it.

    He said over the years, gas pipelines have been vandalised with resultant effects on the power generating plants that use gas as a feedstock or critical production material, noting that huge amount of money that can be channeled into other projects was spent on the maintenance of the pipelines.

    He said: “Since the coming of the government of President Muhammad Buhari, the country has recorded few cases of pipeline vandalism and the situation has resulted in improvement in power generation that is currently over 4,500 megawatts (Mw).

    According to him, the country has witnessed increase in power generation and distribution since May 2015, adding the development is a good one for Nigeria that has been battling epileptic power supply for decades.

    Edozie said the industry is yet to attain the required electricity supply of 10,000Mw or more,  stressing that power will be stable once problems relating to destruction of gas pipelines and poor generation output are resolved.

    On gas price, he said any further increase in the price of gas from $2 or $3 per 1000 standard cubic feet (scf) depending on the buyers, would lead to increase in tariffs paid by electricity consumers.

    He explained that the cost of production of electricity by thermal plant is dependent on the cost of gas, which is a feedstock in the industry, among other variables.

    Edozie said power will improve remarkably once problems such as gas pipeline vandalism, and poor accessibility of the product (gas) by the turbines, are removed.

    The Managing Director, Frontier Oil Limited, Thomas Dada, said power generation has increased since May this year because there is an improvement gas infrastructure.

     

  • Practical Nigerian Content forum holds October

    The fifth Practical Nigerian Content Forum has been scheduled to hold from 20 – 22 October in Yenagoa, Bayelsa State.

    The Forum is an annual event organised by the Nigerian Content Development and Monitoring Board. The Executive Secretary of the NCDMB, Mr. Denzil Amagbe Kentebe, will be meeting with government and industry stakeholders at the event, where he will recap the progress made in Nigerian Content and discuss ways forward for Nigerian Content amidst volatile oil prices, high operational cost and increasing global competition.

    “This year, Practical Nigerian Content will once again gather an excellent speaker line up that represents the entire industry value chain to showcase Nigerian Content successes to date, outline the current challenges faced in compliance and discuss the outlook for the future. I look forward to welcoming all stakeholders across the oil and gas industry for what will be a very productive and enjoyable meeting,” Kentebe said.

    Confirmed speakers at the Forum include the Chairman, Petroleum Technology Association of Nigeria (PETAN) Emeka Ene; Chairman, Oil Producers’ Trade Section, Elisabeth Proust; Executive Secretary Petroleum Technology Development Fund, Olufemi Ajayi; Executive Secretary, NCDMB, Denzil Amagbe Kentebe; Chairman, Petroleum Contractors’ Trade Section, Andrew Olotu; Chief Executive Officer, GE Oil & Gas, Lazarus Angbazo; General Manager – Nigerian Content Development, Shell, Chiedu Oba; and Asset Manager & Coordinator, Statoil, Victor Ogwuda.

  • Why cost of cooking gas is high, by NLNG

    •Firm has helped in flaring reduction

    The Nigeria Liquefied Natural Gas Limited (NLNG) has attributed the high cost of liquefied petroleum gas (LPG) to logistics and lack of infrastructure.

    The General Manager, External Relations, Nigeria LNG, Dr Kudo Eresia-Eke, made this known during an interaction with reporters in Lagos.

    He said the cost of LPG (also called cooking gas) is supposed to be cheaper than it is, but owing to some factors, off-takers of the commodity add the extra cost they incur, making the end-users pay more. The price of 12.5kg cylinder of cooking gas is about N3000 in Lagos.

    He explained that if the infrastructure is available, the product would have be supplied from NLNG’s Bonny plant in Rivers State to Lagos, and to consumers but for lack of infrastructure, the product is delivered through vessels (ships). The ships take the LPG from Bonny to Lagos from where it is pumped into tanks at depots.

    Eresia-Eke said the intervention of NLNG has reduced the cost of the gas. According to him, supply of LPG to domestic market was not initially planned, but the company started the supply of LPG to the domestic market in 2007, when the refineries were down and supply affected. Now, the problem of inadequate supply had solved, he added.

    He said: “The intervention, which is in line with company’s vision of helping to build a better Nigeria, has significantly contributed to the stimulation and development of the domestic LPG market in Nigeria and has effectively brought down the price of cooking gas from over N7,000 in 2007 to less than N3,500 per 12.5kg cylinder today.”

    He added that NLNG is committed to delivering 250,000 tonnes of LPG yearly and has signed sales and purchase agreements (SPAs) with 15 off-takers for the lifting of LPG for the domestic market.

    Eresia-Eke also said the company has made huge gains on gas flaring.

    According to him, gas flaring was within the range of  50-70 per cent, but now it is about 10 per cent. He said the NLNG has created impact in gas flaring reduction, but noted there is still more to be done.

    He said because the interest of oil firms was in oil, gas then was a nuisance. ‘’Because you have to get rid of the gas before you get the oil, associated gas was flared. That is one of the fundamental reasons for the establishment of the NLNG, to contain the menace of gas flaring,’’ he added.

    He said there is almost an equation of pricing irrespective of location on the world stage as of today.

    “The major thing that has occurred in terms of NLNG and gas flow is the related technology in place. In the market, it is obvious that supply is so high; however, the price is very low. One thing is sure, it can no longer be what it used to be in terms of purchasing energy, cost and technology; and no one knows how it will end,” he said.

     

  • Ilaje coastal communities seek compensation from Shell

    The Ilaje communities in Ondo State have urged Shell Nigeria Exploration and Production Company, (SNEPCO), to compensate them for the Bonga oil Spill of 2011. They said SNEPCo and the communities reached an agreement for compensation but Shell has not fulfilled its promise.

    The General Secretary of Abereke Communities and field coordinator, Communities Environmental Protection Committee of Ilaje land (CEPCOM), Prince Taiwo Aiyedatiwa said despite the fact that Ilaje coastal communities of Ondo State are host communities to SNEPCo’s Bonga oil facility, which is offshore Ilaje Local Government of Ondo State, Shell has not been carrying out its corporate social responsibilities to the communities.

    He said: “In January 2014, we were aware that SNEPCO called about 88 coastal communities in Delta and Bayelsa States to stakeholders’ forum in Abuja through the house of representative committee on environment in which the Minister of Environment, National Oil Spill Detection and Response Agency (NOSDRA), Department of Petroleum Resources (DPR), Nigerian Maritime Administration and Safety Agency (NIMASA) and other regulatory bodies were in attendance, and Shell agreed to compensate the communities.

    “But to our surprise, Ilaje local Government of Ondo State that plays host to SNEPCO, and also affected by the oil spill was left out. We have written several letters to the company, regulatory bodies and Presidency since the occurrence of the oil spill but our communities have not been invited by Shell. The oil spill affected five coastal states in the Niger Delta including Akwa-Ibom, Bayelsa, Delta, Ondo and Rivers.”

    He appealed to Shell and the Federal Government as well as the spill committees to prevail on SNEPCO to call a stakeholders forum and invite the Ilaje coastal communities that were badly affected by the oil spill and compensate them, clean up and remediate the environment to restore aquatic lives. “We had planned to take legal action but were stopped by the traditional head of Abereke communities, Oloja Darosha Oladayo Mesagan. He advised us not to do so now, but the continued failure of SNEPCo to address our issue, will compel us to take action,” he added.

    NOSDRA’s director-general, Sir Peter Idabor had in a letter to Shell said the agency imposed a sanction on the company for pollution and damage to natural resources and means of livelihood of the affected communities. The Agency had recently threatened to sanction SNEPCo for failing to pay the $3.6 billion fine.

    He said: “Despite the fact that the incident was caused by equipment failure and the admission by the then Managing Director that 40,000 barrels of crude oil spilled into the Atlantic Ocean, no attempt was made by the oil company to provide relief materials for the shoreline fishing communities with respect to the acute and chronic impact of the crude oil on the environment.”

    NOSDRA directed SNEPCo to pay the sum of $3,600,191,206.00 or its Naira equivalent as compensation and administrative costs for failure to effect clean up on the impacted site within the stipulated period, as provided in the agency’s Act and Regulations.”

    Shell declined to comment on the issue when contacted by The Nation.

  • Nigeria still flares 20% of gas, says operator

    At least, 20 per cent of associated gas produced yearly in the country is still being flared, enough to generate 6,000 megawatts (Mw) of electricity, the Managing Director, Energy and Mineral Resources Limited (EMR), Abiola Ajayi, has said.

    Ajayi, who spoke to The Nation, said the yearly gas production stands at about 1.8 trillion standard cubic feet (tcf).

    He stressed the need for more investments in the sector to monetise the gas instead of burning it.

    He said International Oil Companies (IOCs) have failed to contribute to the domestic gas obligation, which has adversely affected output of the power plants in the country.

    He said the power sector, which requires about 70 per cent of gas produced for local consumption could not afford a market driven price, which is the reason for the unwilling disposition of the IOCs to commit to domestic supply.

    Ajayi said for the country to achieve 20,000Mw generation by 2020, gas required for open cycle power plants is at least 4.5 billion standard cubic feet per day (bscf/d), and 3.5 bscf/d for combined cycle plants.

    He also said for the Nigerian Gas Master Plan to succeed, the oil and gas producers must set aside a pre-determined amount of gas reserves and production for the domestic market.

    Also, they must comply with their obligations or face penalty for gas undersupply, and restrict export of produced gas.

    He said categorisation of the domestic gas market into domestic, industrial and commercial, would form the basis for the pricing framework, which according to him will determine the fair price for the various sectors.

    He advised that the Minister of Petroleum Resources be empowered to stipulate the requisite amount of gas to be set aside periodically by the international oil companies for a period of between five and seven years.

    Ajayi called for the establishment of a gas department within the Ministry of Petroleum Resources to oversee the execution of this regulation in accordance with the Department of Petroleum Resources (DPR).

    He said for gas supply to be sustainable, the government must ensure, among other things, a bankable commercial framework, gas investment drive, and address the issue of pipeline vandalisation as well as pricing based on willing-buyer-willing-seller.

    “Resolution of issues of gas policy, gas pricing, tariff structures and privatisation will drive the requisite levels of foreign direct investment into the sector,” he added.

    Again, building smaller power plants close to gas pipeline routes (embedded generation), realistic enforcement of gas flares sanction policy as well as frequent licensing rounds, he said.

    According to him, the challenges of gas supply shortage will require at least five years of significant investments in gas production and infrastructure development, adding that delivering constant power supply to the people would not happen overnight

    He said there was the need to look towards renewable energy sources based on an integrated resource plan for a more sustainable energy generation landscape, adding that the 20,000Mw power target cannot be easily achieved relying on upstream sources alone.

    This, according to him, would take care of off-grid rural area energy demand with the right combination of proper energy storage, policy and fiscal framework.