The Nation Newspaper

Category: Energy

  • Lubcon Oil is ‘Best Indigenous Lubricant Company’

    Lubcon Oil is ‘Best Indigenous Lubricant Company’

    An indigenous lubricant oil producing company in Ilorin, Kwara State capital, Lubcon Limited has emerged winner of the National Productivity Order of Merit Award, given by National Productivity Centre, an arm of the Federal Ministry of Labour and Productivity.

    The award was bestowed on Lubcon by President Muhammadu Buhari, through the Permanent Secretary, Federal Ministry of Labour & Productivity, Dr. Clement O. Illoh, at a ceremony marking the 15th National Productivity Day, which held at the Nicon Luxury Hotel, Abuja.

    He expressed delight about the criteria for choosing the overall winners at this year’s edition of the awards. “Ten thousand entries were received this year by the award committee; the entries were shortlisted to 11 winners in the individual category and two winners in the corporate category.

    Lubcon Oil was picked for its high level of professionalism, the use of cutting-edge technology, optimum returns to shareholders, and immense contribution to wealth creation, employment generation, and overall development of Nigeria,” he said.

    He said the President signed the certificates of Honour of the awardees and that this year’s recipients should prepare for greater challenges in nation building, which his government is currently driving. The award, President Buhari says, is meant to redirect the minds of Nigerians from various walks of life to work harder, and renew hope of a better Nigeria.

    The objective of the award is to establish and institutionalise a culture of productive work ethics. The award is also intended to provoke a more positive attitude to work among Nigerians and to serve as a spice to higher productivity.

    It is also purposed to widen the scope of productivity awareness in Nigeria and, thus, stimulate productivity consciousness, productivity reorientation and reawakening among the citizenry.

  • How to achieve full deregulation, by operators

    How to achieve full deregulation, by operators

    The deregulation of the downstream segment of the oil sector is key to the growth of the petroleum industry. In this report, experts proffer ways of achieving this goal, writes AKINOLA AJIBADE.

    The oil and gas industry requires a level playing field driven by economic and market forces and removed from the government’s control, operators have said.

    The industry, operators added, should also operate a system that is devoid of monopoly to promote a well-deregulated market that will ensure economic growth.

    The operators, who spoke at the this year’s National Association of Energy Correspondents (NAEC) Conference in Victoria Island, Lagos, advocated a business model  where there no inhibitions and where some operators are favoured above others.

    The operators include the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Ibe Kachikwu, Managing Director, Mobil Oil Nigeria Plc, Mr. Tunji Oyebanji, Managing Director, Frontier Oil Limited, Mr. Thomas Dada, Group Managing Director, Aiteo Power, Dr Ransome Owan and Dr Frank Edozie, Senior Power Consultant, Nigerian Infrastructure Advisory Facility (NAIF), Chief Executive officer, Egbin Power Plc, Dallas Peavey Jr., and Dr Oladele Amoda, Chief Executive officer, Eko Electricity Distribution Company.

    Speaking on the topic “Deregulation: Key to sustainable development in the oil and gas, they identified the issues affecting deregulation, the methods, and benefits vis-à-vis what operators and the industry stand to gain when they  operate in a fully deregulated environment.

    Kachikwu said there would  be a fair deal because of the abundant petroleum resources, fair product  prices for consumers, full cost recovery and reasonable profit margins for operators whenever the Federal Government implements the  deregulation policy. He said implementation of the policy would entrench efficiency in product usage, product availability and effective competition among operators. The development, according to him, would put an end to product shortage.

    He urged the government to fast-track the implementation of the policy to grow the downstream sector of the oil and gas industry. This, Kachikwu said, would go a long way in encouraging the inflow of local and international investment, and further foster the industry’s growth.

    Oyebanji said there must be a level playing ground for operators, before full deregulation could be achieved. He said the deregulation meant the removal of government hands from fixing prices. Therefore, the government’s participation through fixing prices of products or services would cease when deregulation takes off.

    He said deregulation presupposes market forces as the determinant of prices, and not fixing of prices by administrative fiat with its attendant bias in favour of certain interest groups. He explained that the low rate of investment in the industry, was a result of the government fixing the prices of petroleum products for operators.

    According him, when this happens, investors would not increase their profit margins and stop products adulteration.

    He said: “One of the problems faced by downstream operators, especially owners of fuel retail outlets, is a fixed price regime. Government fixes the prices of fuel, a development which makes it difficult for operators to determine their own prices, and further achieve a reasonable level of profitability. To make up for the shortfall in profit realised at the end of each  financial year, some operators were allegedly  adulterating the  petroleum products. Cases abound where people mix petrol with kerosene to make money. These situations would not arise when prices were fixed by  market forces, as against government’s price fixing.”

    According to him, regulated prices cause problems, such as distortion in the market, prolonged product outages, absence of innovation, indiscriminate construction of stations and terminals and unhealthy competition.

    Oyebanji also said fuel stations were springing up indiscriminately across the country because the government fixes the prices. “If you go to some areas in Port Harcourt, Rivers State capital,  you would see new terminals coming  up. In some places, you would see more filing stations than houses, a development which has created unhealthy competition in the oil and gas sector,” he added.

    Edozie said there was nothing like monopoly when there is full deregulation, urging the government to provide anti-monopoly laws to prevent or forestall monopoly    oil and gas sector. He said the government assumed greater powers which resulted in the fixing of prices for products, when the market is partially deregulated.

    He said deregulation must be handled with caution to prevent a situation whereby operators would come together in a locality and dictate the prices for others.

    “Deregulation of the energy sector requires that market forces (forces of demand and supply) determine the prices of products as against a situation in which some operators would gang up, for example, in a place like Lagos and dictate the price for others.  To forestall this, there must be anti-monopoly legislation, which would ensure that the market is open to every player,” he added.

    Edozie, formerly of Federal Ministry of Power, said various business models exist when it comes to deregulation, arguing that a country or industry is allowed to choose the one that suits its purpose.

    He said in deregulating the nation’s oil and gas industry, operators would be allowed to choose between a business model in which prices are controlled to some extent and the one in which prices were not controlled at all.

    He said the former model requires that a maximum ceiling is placed on prices to prevent operators from going beyond the ceiling, while the latter model suggests there is no barrier to price fixing.

    He said operators in oil and gas industry would fare well, when the market is deregulated in such a way that the government removes the ceiling placed on prices of petroleum products.

    Similarly, Dada, the Chief Executive officer, Frontier Oil Limited, said a fully deregulated petroleum industry presupposes free entry and free exit for players. He said there would be inflow of investments when operators are allowed to come into the sector freely and leave in the same manner.

    He said gas price is fixed and regulated by the Federal Government, arguing that the idea is at variance with the aims and aspirations of a  deregulated industry. According to him, operators in the gas value chain are yet to get a fair value for the product, in spite of the decision of the government to review the prices of gas upward in 2014.

    ‘’If the government is fixing the price of gas at $3 per 1000 standard cubic feet and I cannot sell above that price due to one reason or the other, then the market forces which is one of the features of a deregulated industry is yet to be operational,” Dada said.

    He said full deregulation of the oil and gas industry would bring in more operators, urging the government to incentivise the private sector operators to increase their gas production.

    Similarly, Peavey said full deregulation is the way out for operators  in the power sector. His representative Mr. Kingsley Okotie, said there was need to remove the caps or ceiling placed on some fees charged by power firms, stressing that Power Distribution Companies(DISCOs) were yet to fix some prices.

    The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said partial deregulation would not help the oil and gas industry and the economy. He said when the government removed its hand from the sector by allowing market mechanism to determine prices of petroleum products, the better for operators and the industry.

  • Niger Delta Petroleum Resources wins Global Gas Flare Award

    The  Niger Delta Petroleum Resources Limited has been declared the winner of the “Global Gas Flare Reduction Excellence Award.”

    In a statement, the oil and gas industry regulator, Department of Petroleum Resources (DPR), expressed its appreciation on the recognition of the indigenous petroleum firm.

    It said the achievement was more remarkable as the Niger Delta Petroleum Resources Limited prepares to celebrate its 10th anniversary.

    DPR said: “It is a further testimony of Nigeria’s progress in its effort to strengthen indigenous capacity in adhering to international best practices while exploiting our natural resource.

    ‘’We commend the relentless efforts of the management and staff of Niger Delta Petroleum Resources Limited in ensuring gas flare reduction in their Ogbele gas field project, in line with government’s flare down policy, which has led to this global recognition.

    “We rejoice with them and acknowledge their excellent achievements as being the first indigenous company with a fully integrated oil and gas operation across the entire value chain of the Nigerian oil and gas sector.’’

    It continued: “The Department of Petroleum Resources will continue to provide needed support and guidance to all operators in an effort to encourage optimal productivity of their respective assets in line with global standards, as this will ensure a positive economic growth in Nigeria and sustainable development in the sector.’’

    Niger Delta Petroleum Resources  would be conferred with the award by the Global Gas Flaring Reduction Partnership – a World Bank Group –  between September 9 and 10, 2015 in the Russian Federation.

  • Indigenous operators fault reports on tax holiday

    Indigenous independents and marginal field operators have faulted reports, which described the five-year tax holiday for pioneer status, granted them by the Federal Government as fraudulent.

    The local oil firms said the tax holiday was a policy aimed at empowering them to boost production and curtail security issues through increased employment and investment in their corporate social responsibility projects.

    Operators of these firms condemned reports that oil and gas firms got $4.5 million tax holidays, which they were not entitled to. The reports alleged that the tax holiday given during the administration of former President Goodluck Jonathan to 20 local oil companies was bonanza to the firms for buying marginal fields from some International Oil Companies (IOCs).

    “The Economic and Financial Crime Commission (EFCC) is investigating the Federal Ministry of Industry, Trade and Investment as well as the Nigerian Investment Promotion Commission (NIPC) for tax holidays to about 20 oil companies,” the report added.

    But the indigenous operators said the pioneer status is in the national tax policy and it entitles companies and firms to tax holidays as an incentive not only to oil and gas companies but to qualified firms in other industries anywhere in Nigeria.

    “The grant of Pioneer Status to a company in Nigeria is aimed at enabling such company operating within the pioneer industry make significant capital expenditure and a reasonable level of return of profit within its formative years without having to pay company tax,” said Azeez Alatoye, a tax and regulatory expert.

    The enabling legislation on the Pioneer Status in Nigeria is in the Industrial Development (Income Tax Relief) Act 2004. The Act provides that where the government says any sector or industry is not being undertaken on a scale suitable to the economic advancement of Nigeria or that it is in the public interest to encourage the further development or establishment or advancement of trade in such sector or industry, the President is authorised to publish in a gazette, a list of such industries who qualify for pioneer status.

    “Whoever is insinuating that the tax holiday is fraudulent is either being mischievous or not well-informed, and do not understand the policy,” Alatoye added.

    He said the Petroleum Profit Tax  of these firms meant to  pay for the first five years will not be taken out of the book and shared as dividends among the shareholders of the company but invested to meet the aspirations of the government who have targeted to boost oil output from the region of about 2.5 million barrels per day (mbpd) to 4mbpd in the nearest future.

    “The money is in the book for the five year-period and not taken out. It is like government’s investment, which when matured in near future will mean that government will collect 85 percent of 4mbpd instead of 2.5mbpd as PPT. The government is not losing any money. There is absolutely nothing like that. The money is used as investment to boost production output,” he said adding that most of the oil companies went through due process to procure their pioneer status. The processes of obtaining tax holiday cuts across different agencies of the government like the NIPC, Federal Ministry of Trade and Investment, Federal Inland Revenue Service, among others.

  • Frontier Oil seeks better deal for local gas firms

    The Chief Executive Officer of Frontier Oil Limited, Dada Thomas, has called on the Federal Government to discuss with indigenous gas companies on ways of boosting gas production to meet the nation’s power and other domestic gas needs.

    He made the call in Lagos at the yearly conference of the National Association of Energy Correspondents (NAEC) titled: “Tackling gas supply challenges to arrest power crisis.”

    He said about 182 trillion cubic feet (tcf) of gas is in Nigeria waiting to be developed but that what is required to achieve it, is the political will, enabling policy, commercial and regulatory framework.

    Thomas said the future of gas and gas-to-power in the country is bright and called on the government to grant the kind of incentives it gave International Oil Companies (IOCs) in the past to the indigenous operators who contribute over 53 per cent of local gas production in Nigeria.

    He said: “I strongly believe that the Federal Government should incentivise indigenous operators to undertake domestic gas projects, which will help Nigeria meet its power and other gas related requirements. If the government could give incentives to IOCs in the past, then surely it is only fair and equitable that it also give similar incentives to the indigenous operators.”

    He said the highly successful Nigeria LNG project at Bonny owned by the Shell-led Joint Venture, the Chevron Escravos Gas project and similar projects were all given incentives to ensure these projects came to fruition.

    He condemned the gas prices in Nigeria, saying it is lower than what obtains in other markets around the world. This, according to him, has made the gas business less attractive than the oil business for more than 40 years.

    He said: “For the gas transactions to be based on a willing-buyer, willing-seller driven commercial platform, government should stay away from regulating the commercial transactions between interested parties.”

    He said though the Federal Government increased baseline gas price to the power sector to $3.3 per thousand standard cubic feet in 2014, the gas producers, transporters and end users were yet to actualise the new pricing regime as the necessary modalities were not put in place for the implementation of this price regime.

    He stressed the need for Nigeria to get a collaborative gas distribution system between the private sector and the government, which would be led by the private sector, and based on an open access and economic tariff basis. This, according to him, would enable gas producers tie in to the nearest pipeline and reduce the security challenges facing gas distribution in the country.

    “In spite of the fact that we lack adequate pipeline transportation and distribution system, the disturbing thing is that the little we have has been subjected to attacks and sabotage over the last five years, a phenomenon that created the crisis this conference is trying to address,” he added.

  • Nestoil to deliver multi-million dollar gas pipeline in 2016

    Nestoil, a local oil firm, is set to deliver multi-million dollar gas pipeline in 2016, the Group Managing Director, Obijackson Group, Dr Ernest Azudialu Obiejesi has said.

    The group is the parent company of Nestoil that is building the pipeline.

    Obiejesi said the pipeline known as OB3 pipeline is 48 inches by 67 kilometres, will help in transporting gas to power generation plants to improve electricity generation and supply.

    He said the pipeline would help in delivering gas to power plants located in the Niger Delta region and other parts of the country.

    Obiejesi said the pipeline is one of the major projects being executed by the Group, adding that the project was part of efforts to contribute to the growth of the nation’s energy sector.

    He said: “The pipeline known as OB3  is 48 inches by 67 kilometres. The pipeline is scheduled for completion in the first quarter of 2016. When the pipeline is completed, it would help in transporting gas from all the fields towards Oben across the Delta and to Escravos –Lagos pipeline where gas is supposed to be evacuated for the West and the Northern regions.

    He, however, said the completion of the project may be delayed till first quarter of 2017 in the event there are problems from the communities where the pipeline would pass.

  • ‘Increased gas supply boosts output from Egbin Power’

    ‘Increased gas supply boosts output from Egbin Power’

    Improved gas supply to power stations has helped to substantially increase the power generation from Nigeria’s biggest power station, Egbin Plc, it was learnt.

    The Chief Executive Officer, Egbin Power Plc., Mr. Dallas Peavey told The Nation that the impressive electricity supply being experienced by consumers, especially in Lagos State and other surrounding states, is due to increased gas supply and huge investment in new and upgrade of power infrastructure by the owners of the company, Sahara Power Group and the Korea Electric Power Corporation (KEPCO).

    Peavey said Egbin generates and supplies over 1,100 megawatts (Mw) of electricity to the national grid and hopes to reach plant’s installed capacity of 1,320Mw or a little below it. He assured that if gas supply is sustained, the output from the power plant would not only be sustained, but well exceeded.

    He said the 1,100Mw generation was attained last month and the company is gradually exceeding it, adding that in no distant time, the company will be generating the plant’s 1320Mw installed capacity and that will be good news for electricity consumers.

    “We want to help the government to achieve its aspiration of providing stable power supply to Nigerians,” he said, adding that Egbin was generating below 500Mw when the private sector investors took over in November 2013.

    Peavey said after the current owners acquired Egbin, they commenced upgrade and replacement of obsolete and dysfunctional equipment and materials. “We have injected about N50 billion into Egbin post-privatisation. We have brought unprecedented innovation, professionalism, human capital development and new technology into the power plant,” he said.

    He continued: “For instance, the control panels installed when the plant was built has been removed and upgraded to state-of-the-art digital panels. The main rehabilitation occurred in the first quarter of 2015, when the company successfully rehabilitated the plant’s unit six steam turbine (ST06), which added 220Mw to the plant.

    “We also restored the capacity of some of the units that were working below capacity and other ancillary equipment and materials. I assure you with these developments, Egbin Power Plc is now equipped to generate power at its installed 1,320Mw capacity.

    “Remember that the management is working on further expansion of the plant to achieve its vision of attaining 2,670Mw by 2017 and total capacity of over 10,000Mw in the next decade, if the demand permits.”

  • Manufacturers spend over N4b on diesel yearly, says MAN

    Over N4billion is spent yearly by manufacturers under to procure Automotive Gas Oil (AGO), the President of Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs Udemba, has said.

    Udemba told The Nation that the manufacturing sector spends the huge cash on diesel  monthly, adding that the figure translates to an average of over N4billion when multiply by 12 months of the year.

    He said manufacturers invest on power devices such as UPS and inverters to keep some equipment working and further prevent loss of valuable data because power supply in the country is unreliable. He added that their members spend a chunk of that money on fuel to power their generators to stay in business.

    He said low metering coverage and the consequent dependence on estimated billing from distribution companies (DISCOs) has resulted in rise of costs in the power sector.

    He explained that low electricity generation is affecting power distributed to consumers, stressing that  when  electricity generation improves, supply would also improve.

    Udemba said: “The country generates less than 5,000 megawatts (Mw) of electricity for its over 160million population.  In a big country like Nigeria, we still struggle, fumble and wobble on 4000 megawatts and below. This does not and cannot go anywhere in meeting the energy requirements of the teeming populace. The sector would be able to employ more people if reasonable electricity supply is made available to them. But there is nothing like that for now.”

    According to him, the sector is yet to guarantee power supply, two years after private investors bought the unbundled assets of the Power Holding Company of Nigeria (PHCN),  adding  that the operation of the  power firms is fraught with problems including technical and commercial, among others.

    Penultimate week, Vice President Yemi Osinbajo held a meeting with Dr Sam Amadi,  chairman, National Electricity Regulatory Commission (NERC), representatives of power Ministry, MAN and other stakeholders on the need to develop a  framework for the creation of micro grid for industrial clusters across the country.

    At the meeting, a special committee with nomination from the Commission will be coordinated by MAN since its members will be the major beneficiaries of a stable power supply.

    This happened, amid announcement by the Transmission Company of Nigeria (TCN) of increase in generation from 4,517 megawatts to 4,545 megawatts in two weeks.

  • Total E&P appoints DMD

    Total E&P appoints DMD

    The Board of Total Exploration and Production Nigeria Limited (TEPNL) has appointed Mr. Ahmadu-Kida Musa as the Deputy Managing Director (DMD), Deepwater District of the firm with effect from August 1.

    He replaced Mr. Charles Ngoka, who has proceeded on retirement.

    The company’s Deputy General Manager, Media & Public Affairs, Charles Ogan, said Musa is a dynamic and focused manager with 30 years’career in oil and gas operations and management.

    A 1984 Engineering graduate (B.Eng. Civil) from Ahmadu Bello University, Zaria, Musa also holds a Postgraduate Diploma (PGD) in Petroleum Engineering from the Institut Francais du Petrole ( IFP), Paris, France.

    He has attended various management and technical courses at the University of Port Harcourt, Harvard Business School and the Massachusetts Institute of Technology, among others.

    Musa is a fellow of the Nigerian Society of Engineers, member of various bodies, including the Council of Registered Engineers of Nigeria, Nigeria Institute of Management, Society of Petroleum Engineers International and Institute of Petroleum, United Kingdom (UK).

    Musa started his career in 1985 with Elf Petroleum Nigeria Limited as a trainee engineer and materials co-ordinator – engineering department and was later appointed to various positions of responsibility in production, operations and projects.

    Last September, he was appointed to the Board of TEPNL as Executive Director, Port Harcourt District, a position he held until his present appointment.

    Musa is also the Chairman, Rivers State Basketball Association, member and Southsouth zone representative, Nigerian Basketball Federation and Vice-President, Federation of International Basketball Associations, (FIBA) Africa Zone 3.

  • Why NNPC’s growth is slow, by don

    Why NNPC’s growth is slow, by don

    It is not the dearth of technical know-how, but undue political interference and continued appointment of wrong personnel into the board of the Nigerian National Petroleum Corporation (NNPC) that have been responsible for the slow growth of the Corporation, the President of the Nigerian Chapter of International Association of Energy Economics (IAEE), Prof Wunmi Iledare, has said.

    The industry, he said, boasts of enough technical manpower, adding that interference from  political elite has made it difficult for people with the right skills to get on Board of NNPC and manage its affairs well in recent times.

    He said the development has prevented the Corporation from managing and moving the nation’s oil and gas industry to enviable height and compete favourably with their counterparts globally.

    He said Nigeria needs to choose between having a politically constituted NNPC’s Board or a technically constituted NNPC’ Board, if it wants to achieve meaningful progress in the petroleum industry.

    He said when the Board of NNPC is technically constituted, the Corporation would be able to carry out its commercial activities of producing and selling oil well for socio- economic growth and further compete with institutions such as Petrobas among others.

    According to him, failure to have a well regulated political process in Nigerian means that activities in NNPC and the entire industry would not go on smoothly.

    Iledare, an Emeritus Professor at the Centre for Energy Studies, University of Louisiana, United States (US), told the The Nation that some people have misconstrued the restructuring of the NNPC to mean unbundling of the corporation, adding that what the Federal Government was trying to do was to reposition NNPC commercially.

    He said: “The Federal Government has unbundled NNPC into different units or institutions several years ago. The development culminated in the emergence of subsidiaries like the Nigerian Petroleum Development Company (NPDC), Nigerian Gas Company (NGC) and others. What the government is doing now is to make NNPC more commercially-oriented and stronger.  The issue is line with the NNPC’s Act 1977, which stated that the Corporation should make the production, refining and selling of oil its major objectives.

    However, this has not been the case. What NNPC is doing is to preoccupy itself with many responsibilities by regulating the industry, collecting royalties from operators, refining crude oil and selling petroleum products. Why should there be multiplication of duties in NNPC if we want to compete with its counterparts across the world?

    Iledare said the government wants NNPC to focus on its commercial duties of producing, refining and selling of oil; the Federal Inland Revenue Service (FIRS) to concentrate on collection of taxes; Assets Management Company of Nigeria (AMCON) focusing on assets evaluation and management, among others.

    He said the idea of repositioning NNPC and the industry for greater performance is important, in view of the fact the country relies mainly on earnings from oil for growth.