The Nation Newspaper

Category: Energy

  • NCDMB sponsors 22 to China for pipe mill training

    The Nigerian Content Development and Monitoring Board (NCDMB) has concluded arrangement to sponsor 22 young Nigerians to the Peoples Republic of China to acquire skills in the operation and maintenance of machines that will be used at the pipe mill being set up at Polaku, Bayelsa State by Mainland Pipe Mill Nigeria.

    The trainees, who will travel before the end of the month, will be heading for the Baoji Petroleum Steel Pipe Company Limited (BSG), Baoji in Shaanxi Province, China where they will undergo their 45-day training.

    The training is being facilitated by Mainland Pipe Mill, which has BSG of China as its technical partner.

    Speaking in Yenagoa, the Bayelsa State capital at the induction for the trainees ahead of their trip, the Executive Secretary, NCDMB, Mr. Denzil Kentebe, urged them to take the programme seriously and acquire the necessary training and certifications that will enable them successfully operate the Polaku pipe mill when it becomes operational.

    He said the trainees had been offered an opportunity, which millions of Nigerians were desirous of and charged them to comport themselves as worthy ambassadors and return home as successes.

    Kentebe cautioned the trainees against breaking the laws of their host country, especially on the possession and use of illicit drugs as such offence attracts stiff punishment by the Chinese authorities. Besides, offenders will be disappointment to their families and the nation that have reposed confidence in them.

    The General Manager, Capacity Building Division, NCDMB, Ikpomosa Oviasu, restated that the programme was part of the Board’s efforts to imbue Nigerians with critical skills required in the oil and gas industry.

    According to him, the trainees would be assessed during and after the programme and the best performers would be placed in existing pipe mills in Nigeria for further on-the-job training ahead of the start of the Polaku pipe mill.

    Oviasu also confirmed that the Board and BSG had made arrangements for the trainees’ accommodation.

  • Sahara’s project produces alternative energy

    Young inventors at the second edition of the ‘Sahara Light Up Nigeria Challenge’ in Lagos, have proffered alternative and renewable energy sources that have the potential to enhance eco-friendly and sustainable electricity supply in Nigeria.

    The competition, a yearly event hosted by Sahara in partnership with ENACTUS Nigeria, seeks to inspire students of tertiary institutions across the nation to explore opportunities for achieving sustainable power supply within their environment. It also serves as Sahara’s contribution to the growth of the Power sector where it has affiliates in the generation and distribution sectors through the Sahara Power Group.

    The contest involved the development of simple power models that can reduce production cost and encourage the broad utilisation of different energy sources to power communities and schools.

    Kaduna Polytechnic’s Renewable Energy Advancement Project (R.E.A.P) emerged as the winning entry in the competition that had impressive projects from 28 schools.

    The Kaduna Polytechnic team created a self-running hydro-power system that runs solely on the kinetic energy of water. The energy produced is stored in a  75-litre enclosed water tank that houses a pump and other materials required to drive generation of electricity. The technology is made from locally modified and recycled parts to ensure that it is environmentally friendly. The development of this project has brought about an alternative to electricity generation for small businesses, a health care centre and a school within the impact area of the project.

    “We are excited about our performance and want to thank the Sahara Group for giving us a platform to express our abilities. With more support, we believe we can contribute immensely to efforts aimed at improving power supply in Nigeria,” said Gibson Emmmauel, from Kaduna Polytechnic. The institution will represent Nigeria at the Enactus World Cup 2015 scheduled to hold in Sandton Convention Centre, South Africa from October 14  to 16, this year.

    Sahara Foundation’s Manager, Babatomiwa Adesida said: “We believe the Sahara Light Up Challenge has started a movement that will ultimately redefine the way we produce, store and consume power in Nigeria, whilst ensuring environmental protection. We are confident that the competition will ultimately light up Nigeria.”

  • Lagos calls on Nigerians to conserve energy

    The Lagos State Government has called on residents to cultivate the habit of conserving energy to promote energy efficiency.

    The General Manager, Lagos State Electricity Board (LSEB), Peter Okonji, who stated this at a conference organised by the Power Sector Group of the Lagos Chamber of Commerce and Industry (LCCI), said there was need for energy conservation in the country.

    He said electrical appliances are supposed to be switched off when not in use, but regretted that Nigerians do not switch off their bulbs after business hours.

    “If we conserve energy, we will reduce the demand of energy and have higher voltage of energy for other purposes. The available power is not enough for all Nigerians if we switch on all our bulbs. So it is important to practice power conservation. For every watt that is wasted, it is money we are wasting.”

    He said Lagos is a 24-hour commercial centre, but darkness has forced businesses and other activities to close early due to insecurity which darkness conveys. He said: “Captive power has helped to power Lagos State facilities and we opted out of the national grid so that there will be enough power for the rest of the citizens in Lagos State. Constantly powered economy will provide efficiency and stimulate productivity.

    “Power demand for Lagos State is 10,000Mw after our last audit in June. The national grid can only transmit about 10 per cent of what we required. However, our five Independent Power Plants (IPPs) which include Akute IPP, Island Power, Mainland Power, Alausa Power and Lekki Peninsula IPP, are together generating 47.5MW to power government facilities like water corporations, general hospitals, the secretariat and state High Courts,” he said.

    The President of LCCI, Remi Bello said the theme: “Embedded power generation and the economy” of the event  was germane at this critical stage of the economy, knowing that the increased  power generation and distribution play a significant  role in the development of our economy.

    “The economy can truly be an investors’ haven if the issues around the power sector are holistically addressed. We expect to see government provide an enabling environment for private sector investment in the embedded power generation sector,” he said.

    According to the rules by Nigerian Electricity Regulatory Commission (NERC), embedded power regulation allows an independent power producer to embed power within the network of the local distribution company without going through the trouble of connecting to the transmission line, he added.

  • ‘880,000bpd of crude coming from offshore fields’

    •IOCs may divest from 12 oil blocks

    The Energy Research group of Ecobank Development Corporation (EDC) has projected additional production of 880,000 barrels of oil per day from Nigeria’s offshore fields over the next three years.

    The Head, Energy Research, Ecobank Development Corporation, Dolapo Oni gave the hint when he spoke with The Nation. He said there are about 15 major offshore oil fields, which if effectively implemented, would add about 880, 000 barrels per day over the next three years.

    The 880,000bpd, he said, doesn’t include production from divested assets, fields that will be re-entered, and output from marginal field operators and other indigenous companies.

    Oni, however, said the move by oil companies into the deepwater region will come with more costs; therefore, the industry will require a higher amount of capital and could potentially see its financing needs rise by over 40 per cent due to the higher cost of assets development.

    He told The Nation in Lagos that the upstream segment required massive investment in various oil and gas infrastructure including pipelines, flow stations, modular refineries, NLNG Train 7 and the Brass LNG. Also, the Trans Saharan Gas Pipeline, which according to him would create another exit for the Nigerian gas to Europe, will be very significant for the country in the long term.

    He said the country has about 5,000 kilometres of gas pipeline that needed to be funded adding that most of the new pipelines will be channeled towards liquefied natural gas (LNG). “The other major pipeline we have is the Escravos that will take gas from the Niger Delta to Lagos. It needs some major investment and this will manifest within the next two years,” he said.

    According to Oni, there is an indication that the International Oil Companies (IOCs) will divest at least 12 more oil blocks before the end of 2019. He said the divestment will come from onshore blocks that are in troubled areas and assets that lie close to some independents.

    Asset divestment by the IOCs, he said, will continue as there are still many oil blocks in troubled areas, adding that indigenous companies will have to play the exploration game at some point. “At the moment, indigenous companies only buy fields that already have certified reserves, and into production,” but indigenous firms have to play the exploration game,” he added.

    He said there are about 33 operational rigs, both onshore and offshore, that would bring massive change in the industry as the country starts to move into the deepwater, adding that there is need to get semi-salt terrains into the industry.

    On financing, Oni said Nigerian banks have increased their share of lending to the oil sector in line with growth in their tier 1 capital. He said though some banks are now able to provide up to $500 million to oil and gas transactions, but it is still small amount compared to the size of funding structures required in the industry. “Nigerian oil and gas companies urgently need equity. The dependence on debt is unsustainable. Debts can be used at any stage with companies that have very stable high volume production, but often through a borrowing base structure,” he added

     

  • OPEC crude price drops 10% in July

    OPEC crude price drops 10% in July

    The Organisation of Petroleum Exporting Countries (OPEC) has said the price of crude oil supplied by its members known as (OPEC Reference Basket) averaged $54.19 per barrel in July, representing a decline of more than 10 per cent from the previous month.

    The group in its August Monthly Oil Market Report said crude oil futures were also driven lower by various bearish factors, noting that global oil demand is expected to grow by 1.38 million barrels per day (mb/d) this year, which is about 90,000 barrels per day higher than last month’s projections with total oil demand anticipated to reach 92.70 mb/d. In 2016, world oil demand growth is expected at 1.34 mb/d with total world consumption hitting a record level of 94.04 mb/d.

    The report said after falling to multi-year lows earlier in the year, crude oil prices stabilised in April, remaining at around the $60 per barrel range until June. However, in July, a set of bearish factors pushed crude oil prices to their lowest levels in months, with Nymex WTI nearing $45 per barrel and Brent around $50 per barrel.

    This decline in oil prices came amid a sell-off in crude futures, triggered largely by continued oversupply at a time when incremental global demand has not followed suit. Financial concerns in Greece and China, as well as the outcome of the world powers’ talks on Iran’s nuclear programme, have all contributed to the current bearish market conditions, OPEC said.

    On the physical side, crude oil values for light sweet West African grades including Nigeria’s sweet crude have been pressured by several months of overhang cargoes. This is despite the recent easing of the oversupply as refiners increase utilisation to capitalise on lower crude oil prices amid a rebound in gasoline demand and better arbitrage economics to Asia. In the Middle East, spot crude cargoes are being squeezed by an inflow of Atlantic Basin crudes into the Asia-Pacific market on the back of relatively low light sweet crude prices compared with sour Middle East grades, the report added.

    On refining, the organisation said refining margins have been healthy in most regions. While margins have seen a slight weakening in Asia, they remain on the rise in the Atlantic Basin due to lower crude prices along with the excellent performance of the top of the barrel.

    During the driving season, US gasoline demand has reached as high as 9.5 mb/d over the last two months, a level not seen in years, supported primarily by lower gasoline prices.

  • Upgrade of Ijaiye substation nears completion

    The management of Ikeja Electric has said it will soon complete upgrade of the Ijaiye 11kv injection substation located at Ijaiye/Ojokoro in Lagos as part of its commitment to enhance service excellence within its network.

    Its Head, Communication Strategy, Pekun Adeyanju said due to the upgrade, service disruptions are expected within the area during the exercise. He said the upgrade was planned to last for 10 days (August 6 and 15), adding that on completion, it will enhance the output of the existing 1x15MVA to 2x15MVA substations, and expected to boost power supply to customers in that axis.

    “All the existing panels at the substation will be removed during this period while new ones will be installed to accommodate the additional 15MVA transformer that will be installed,” he said.

    Areas to be affected by service disruptions during the upgrade period include Jankara, Fadehan, Ojokoro and Millennium Housing Estates, parts of Olaniyi, Agbado Railway crossing, Akera, Owonikoko, Meiran and environs, he noted, adding the company apologises for the inconveniences customers would go through.

  • U.S. sanctions put Gazprom, Shell plans in jeopardy

    Shell and Gazprom signed an agreement in June to develop a strategic alliance in the gas sector, ranging from upstream–exploration and production, to sales, including possible asset swaps.

    Development of the Yuzhno-Kirinskoye field on the island of Sakhalin in the Pacific, a project known as Sakhalin-3, has been seen as central to that alliance as it would allow the two companies expand their sole existing LNG venture, Sakhalin-2, located nearby.

    State-owned Gazprom was believed to be considering selling a stake in Sakhalin-3 to Shell, which confirmed only last week that it was interested in buying a share, possibly through an asset swap, according to Bloomberg. It may now have to rethink those plans.

    The U.S. government said it was restricting exports, re-exports and transfers of technology and equipment to the Yuzhno-Kirinskoye field.

    Shell, with considerable assets in the United States, would face consequences if it went against the sanction, as would other potential foreign investors.

    U.S. officials have repeatedly said that sanctions on Russia’s energy sector – part of broader penalties imposed since 2014 over Moscow’s involvement in Ukraine – would target new projects, not existing supplies as that could cause a spike in global energy prices.

  • Eunisell displays technical competence

    Africa oil and gas firm, Eunisell has restated its commitment to support local content in the oil and gas industry, particularly among marginal field operators in the country, with a view to early production from oil and gas marginal fields.

    In an interaction during a technical session at the Society for Petroleum Engineers (SPE) Conference and Exhibition in Lagos, the General Manager of the company, Engr. Patrick O’Callaghan stated that the changing times in the oil and gas industry now requires companies to embrace partnership, and innovation, if they must stay profitable.

    “The dwindling oil price is a major topic here today, companies are cutting cost and so the modus operandi has to change in many ways as finance, cash flow, releasing value from stranded assets, have become some of major concerns of operators today.  This is one of the reasons we are at the conference and exhibition to show stakeholders our central production facility which was built for Network exploration and production in record time of 90 days from which significant quantities of oil from the field have been produced within the last five  months,” he said.

    He stated that a combination of modular construction processes and lease, operate, and own agreement has been a good choice for the field owner who is reaping the benefits of a producing asset while spreading the capital costs required.

    “During the option period, the operator enjoys a reliable operation, gains valuable insight into his production profile, and can effectively manage his cost of managing, operating, and running the facility. This provides the opportunity to build equity that can be invested in adding additional assets,” he said. O’Callaghan added that about a month ago, the company recorded 100,000 man hours at one of its facilities without any loss time incident which he attributed to the professionalism, quality of staff and a sound health and safety policy of the company.

  • TCN shortlists investors for 8,000Mw transmission capacity

    TCN shortlists investors for 8,000Mw transmission capacity

    • N15b needed yearly for three years

    The Transmission Company of Nigeria (TCN) has shortlisted over 30 local and foreign investors for investment in the transmission infrastructure to enable it attain its target of 8,000 megawatts (Mw) capacity by end of next year.

    The firm has set a target to achieve the capacity to transmit 8,000Mw of power by the end of next year considering the continued improvement in power supply.

    Its Managing Director, Dr. Abubakar Rasheed Tambuwal, an engineer, said the management was being proactive in order not to be caught unprepared.

    He said that the step being taken by the management was important because the Federal Government would not be part of the funding. The investors will bring in their money and TCN will pay them back within an agreed period.

    Abubakar said the TCN wheels out 4662Mw and has capacity for 5300Mw.Although the company can transmit 4662Mw and has capacity to wheel out more, it has to prepare for more power generation and shouldn’t wait for the government before taking steps to achieve that. This is why  management seeks private sector investment.

    To achieve 8,000Mw transmission capacity, TCN needs an investment of about N15 billion yearly over the next three years, he added.

    He said: “We are looking at a minimum of about N15 billion yearly over the next three years if we should be able to achieve the 8,000Mw. Therefore, with regard to the investor financing scheme (IFS), we have just shortlisted investors from within and abroad that are interested in the project. “We have over 30 of them that we feel will be able to deliver on some projects that they have chosen. I cannot tell you the names of the shortlisted investors for now until the deal is sealed and delivered. We are trying to see that they are capable technically and financially because once they come in; they are expected to execute the project themselves with the funding they are able to galvanise from either externally or within the country.

    “We have shortlisted them and we are in the process of coming up with a framework from which they can recover their investment with time. Since the Federal Government will not give them sovereign guarantee, we are coming up with modalities of repayment from the wheeling charges from our internally generated revenue over a period of time. It has not been finalised. We are still working to get all the support that is needed from the government for us to be able to achieve this.”

    He said internally generated revenue is  part of the moneyTCN collected from the customers by the distribution companies, noting that considering the quantum of power generated, TCN’s portion of the collection will be substantial enough to sustain its operation and pay back to the investors in the project.

    On the level of funding from the government, Abubakar said funding has not improved considering the fact that a lot of projects are in the pipeline, which need to be funded and because of the present situation, there is need for additional funding even from what the firm used to have. ‘’We are making all efforts to ensure that we bring funds outside appropriation of government. We have investors who are ready to come in and participate in our investor financing scheme. The scheme is still at preliminary stage but as soon as we finalise it, we will have investors who are willing to put in their funds to develop our transmission infrastructure. We also expect more funding from the Federal Government to be able to achieve the mandate we have set for ourselves to improve on the transmission capacity,” he said.

    Abubakar also explained reason for the improved power supply being experienced. He said generation has improved because gas supply has improved tremendously to generating stations and have been able to generate the highest ever peak in July of 4662Mw. “Our transmission capacity is a bit above that. We are capable of transmitting 5300Mw at the moment. But as generation is improving, we are expected to expand our transmission capacity to be able to evacuate the extra capacity being generated at the station for distribution companies to use. I can assure you that we have our plan, our project that are very critical has been mapped out so that within the shortest possible time, we will be able to reach 8000Mw transmission capacity, by end of 2016.

    “We have never transmitted more than 5000Mw to the customers due to many factors. When you generate, you transmit and utilise in the distribution, the distribution arm has to be ready to receive the quantum of power that has been generated. But I must tell you that transmission is capable of wheeling out 5,300Mw from generation down to distribution. It is only what the distribution companies can collectively take that is what is wheeled as the maximum energy at any given time.”

  • Fed Govt begins gas network code implementation

    The Federal Government has begun the implementation of the Nigeria Gas Transportation Network Code (NGTNC), it was learnt.

    The Director, Department of Petroleum Resources (DPR), Dr Mordecai  Ladan, stated this on the sideline of the just concluded 2015 conference and exhibition of the Society of Petroleum Engineers (SPE) held in Lagos.

    The code   NGTNC is a contractual framework between transporter (or network operator) and network users (known as shippers) that provides open competitive access to existing and future gas transportation infrastructure. The code stipulates that every gas meant for domestic use be it power, petrochemical or industrial, will have a single entry and exit point to eliminate sharp practices that exist in the current supply and distribution system.

    Ladan said stakeholders in the sector had earlier met in Abuja, the Federal Capital Territory, to discuss the way forward to ensure smooth implementation of the code. He said part of the implementation exercise of the NGTNC is the training of 20 personnel outside the country under the guidance of foreign partners.

    The steps taken by the government, according to him, is to help eradicate the bottlenecks and problems in the system, adding that the approach may help in ending gas flaring in the country from the end of 2020, but noted that adequate funding is required to achieve it.

    To further reduce or eliminate gas flaring, the Nigerian Gas Company  (NGC) said gas supply to power plants will increase by additional 800 million standard cubic feet per day (MMscf/d) by the end of next year. The increase in supply will be created by market forces where there will be a willing-buyer, willing-seller situation.

    According to NGC, although the willing-buyer, willing-seller situation is currently in place, the government needs to implement the $2.50 per 1000 standard cubic feet pricing regime for gas in order to help gas suppliers boost supplies to the market. The successes of increase in gas supply to power plants, also depends on adequate regulatory framework on the commercial side of the sector.

    Its immediate past Managing Director, Dafe Sejebor, said: “Regulation has a major role to play for effective gas supply. Regulation should be looked at more on a commercial basis and we don’t want to forget that time is of essence. Government should implement regulations on time.’’

    Sejebor noted that the reluctance of upstream oil and gas companies to invest in domestic gas production is as a result of low pricing while uneconomical gas-to-power price framework is stalling growth of the gas industry. He said the inadequate funds for infrastructure development and limited appetite of Nigerian banks to invest in long to mid-term projects as well as host community issues, work against gas industry’s growth.