Category: Energy

The cost of building the Nigeria Liquefied Natural Gas Limited’s (NLNG) Train 7 will be reviewed upwards to match realities whenever the final investment decision (FID) on the project is due as a result of delay, it was learnt.

F1D is a business plan or strategy,   through which gas producing and exporting countries such as Nigeria sell  gas to its buyers abroad.

Its Managing Director,  Babs Omotowa told The Nation that the review becomes imperative because discussions on the project have been on the table in  the past seven  years, which is a long time.

The Train 7 project has been enmeshed in politics and personal interests, which stalled its timely FID and construction since 2008.

It was that the conflicting interests, which led to the delay are among the company’s shareholders. Although the NLNG does not want to disclose the cause of the delay, which has caused the government, shareholders and the economy billions of dollars that could have been earned as revenues.

Omotowa also stated that the tumbled price of crude and gas would not affect construction of the project if the FID is taken, but noted that the revenues that could have accrued from the project may not be as expected because of other suppliers that have come on stream within those past years that would be competing for the market.

He said: “Our focus remains that we shall continue to work with our shareholders as we have been doing. We have a couple of shareholders that are directly involved in the project but we also have stakeholders that are involved in our supply side, and the Joint Venture. We will continue working with all stakeholders to get this project through.

“There are still a number of works that we are doing and I think when we continue to do those works and when we come to the time of FID, we will be able to approach our shareholders to seek for approval. It was in 2008 that we first did a lot of the pre-FID type work. For example in 2008,  we tendered for the construction of that Train 7 plant.

“Many of those tenders have become unrealistic because it is just too long, so we still have to re-tender them to be able to get what will be the new cost of building the project. There are lots of works we need to do with the gas suppliers to make sure they have enough money to do the gas infrastructure and to be able to transport them to the plant.

“So, whatever we are doing we are working with all the shareholders to be able to achieve that, and it is when we complete that then we will indeed, go for an FID. We are optimistic that our shareholders have supporting the  project, and we will get the necessary support when we come for an FID. It will take about two years to complete the tendering process and require sometime to accomplish the other requirements.”

On the impact of shale gas on the prospects of Train 7, he said: “While the supply side is growing in terms of shale gas and we are seeing the impact today affecting price, the demand side will also continue to grow and we will continue to get even much more demand on gas side. It is fair to say that the price may not be as high as it used to be and indeed, we have seen the situation where the prices in Asia, which used to be between $15 and $20 per million British thermal unit (mBTu), has now come down to about $7 but we are still confident that the business case continues to be robust for the Train 7 and we will be able to deliver even an additional value despite all the stress.

The incoming government of  General Muhammadu Buhari  may adopt the Lagos State model of power generation to solve Nigeria’s energy problem in  short and long term measures, it has been learnt.

The Lagos Commissioner for Energy and Mineral Resources, Mr. Taofiq Tijani, who spoke to The Nation on the sideline at the just concluded Offshore Technology Conference in Houston, United States said the approach will quickly fix the problem.

He said the adoption of the embedded and captive generation had helped Lagos to tackle its power supply deficits. Vice President-elect Prof. Yemi Osinbajo plans to adopt that model at the Federal Government level, Tijani said.

His words: “I think the Vice-President elect has mentioned it several times that they will use Lagos State model  to rejuvenate the power sector and also see that things are done well and quickly to increase generation. On the Lagos State model, we have been doing embedded and captive generation. Today, the distribution infrastructure has been privatised, but they don’t have anything to distribute because there is no generation coming from anywhere.

“Most of the generation comes from the national grid, which is weak, inefficient and, besides, the transmission network is not capable of transmitting the generated power to distribution infrastructure. So, what the incoming government can do quickly is to encourage embedded power generation. Let them find a way of getting investors that can put in place captive, embedded power generation that can supply distribution infrastructure with power to distribute. That can be done quickly because I know there are a lot of investors, who are ready to do that.

“The last independent power plant we did in Lagos State was the 8megawatts (MW) in Lekki that supplies power to our water scheme in Lekki, Ikoyi  and Victoria Island and also the street lights in Lekki and Ikoyi. Today, we  run that plant to supply power to the infrastructure and because there is excess power, we need to let the street lights run 24 hours. If you go to Lekki, you will see the street lights on all the time and we cannot switch off because it will affect the turbines. But if there is a law that allows that captive power to be given to households or commercial concerns, they will have power to use, but the law doesn’t allow that to happen.

“So, those are the type of things the government can do. It can do many independent power projects (IPPs) to support the distribution infrastructure and people will have power. This is what the incoming government should do, going forward because the current government allowed things to happen without looking at the consequences. So, the new government should look at how to make things better. “

Tijani noted that the new government should consider the Petroleum Industry Bill and quickly look at the areas that are not contentious or do not have controversial issues and see if they can extract those areas and get the bill passed “because what the bill will do is to redevelop the oil industry and encourage investors”.

“There are some areas of the bill that are in contention and that is why it has not been passed. Even they can leave out areas and revisit them later and pass the other. There are also areas in legislation, law which need not the attention of the National Assembly, which can be done at executive level to encourage participants, investors and people put  in  money in that industry. Unless they put in money, invest and bring the whole industry back alive, I think we will just be lagging behind other countries,” he said.

The Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Dr David Ige, said the loss of 400 million standard cubic feet per day (mscf/d) of gas and the reduction in water level at the hydro plants had been responsible for the significant drop in power supply across the country, especially in the western axis. He said some major pipelines are out of operation because they are vandalised and generation at Shiroro hydro power plant dropped by about 300MW because of insufficient water level.

Despite the global low oil price, the Department of Petroleum Resources (DPR) has said there is a $40 billion new spending, planned for work programmes in Nigeria between 2015 and end of 2016.

The President/Founder, Anabel Group, Dr Nicholas Okoye, broke the news at the Nigerian Investment Forum, organised by the Nigerian Content Development and Monitory Board (NCDMB) in collaboration with SweetcrudeReports in  Houston , Texas, United States. He said the NCDMB was targeting  50 per cent local content in all oil and gas operations by 2020.

Speaking on the global effects of the Nigeria energy industry, Okoye said: “NCDMB is stepping up its development and monitoring mandate to expand access to Nigerian operators in shallow and deepwater operations as well as in topside fabrication of floating production, storage and offloading vessels (FPSOs), with clear goals of hitting 50 per cent Nigeria content by 2020.

“According to the Department of Petroleum Resources, there is a $40 billion new spending planned for work programmes in Nigeria between 2015 to end of 2016. With new investors in upstream assets of the international oil companies (IOCs) and many assets from the 2005/2006 bid round being due for signing of their production sharing contract, that figure will grow at 10 per cent over the next five years.

“International demand for crude oil is slowing in the United States and Europe due to shale gas and other alternatives, as well as slow growth in Europe. Crude demand from China is slowing due to the slow growth in demand for goods and services from European markets. In addition, Saudi Arabia is over producing, which has caused price pressures on the international price of crude

“However, Europe is stepping up its use of gas for heating during the winter UAE and other OPEC producers are also over producing. US dollar is getting stronger causing pressure on dollar loans,” he said.

On factors responsible for the oil price decline, he said, the slowing crude oil demand from China and India, USA and European nations as well as new shale oil and gas reserves in the United States and new production from the province, were responsible.

He said new alternative and renewable energy sources in USA and Europe, with the European Union (EU) setting targets of 35 per cent of energy from renewables by 2020, are also challenges facing pricing of the Nigerian and global oil, adding that Germany targets 80 per cent from renewables by 2050. He also noted that over production from Saudi Arabia, UAE, Kuwait and other OPEC producers contributed greatly to low oil price.

On alternative energy revolution, Okoye said Stromautobahn, named after the autobahn, is the most ambitious and largest alternative energy project in the world.

It is a monumental trillion dollar project that is designed to kiss nuclear and fossil fuel energy good bye for good. It is regarded as the linchpin of the Energiewende, the project that will transport energy from the coast to the heart land of the German Industrial centre. Energiewende Project also known as the Energy Revolution is estimated to cost 1 trillion Euro or $1.4 trillion. However, electricity costs are rising all over Germany, costs are up 60 per cent in the last five years while 75 per cent of SMEs say that the rise of energy costs in Germany is a major risk to development.  Germany economy declined by 0.6 per cent in the last quarter of 2014, estimated to grow 1.5 per cent in 2015, he said.

He however, said the oil price will rebound. Shale oil costs about $50 per barrel to extract while conventional crude oil costs about $2 to $10 to produce depending on the field and location. Shale Oil production will decline once oil price falls below $40 range. It fell below $50 in January and we saw a quick rebound. At January/ February many shale companies within the U.S. had to cut back production and lay off workers. At just above $60 we can see stability is forming, he added.

FMC Technologies, Inc. is collaborating with the University of Port Harcourt (Uniport) to start the award of the first Master of Science degree (Msc) in Subsea Engineering in Nigeria.

According to the company, the curriculum will be developed in collaboration with industry experts to ensure that students are prepared for work in the offshore oil and gas industry. The university will be accepting applications for the new programme this academic session.

“FMC Technologies is dedicated to developing its Nigerian workforce so that an ever increasing number of technical, leadership and management roles in Nigeria can be performed by Nigerians,” said Michael Hunt, Country Manager, FMC Technologies.

“This collaboration represents a major milestone in furthering the development of a highly skilled Nigerian workforce. These students will play key role in the future of the oil and gas industry in Nigeria,” he said.

The Vice-Chancellor, Professor Joseph Ajienka, while showing gratitude, described the event as a major milestone, not only for the university, but for the oil and gas industry in Nigeria. “We are very pleased to cooperate with FMC Technologies in this effort.  Given the facilities and experience of FMC Technologies, we are confident that a Master of Science degree in Subsea Engineering will add tremendous value to our services,” he said.

Participants upon graduation, would have expanded opportunities to work in the energy industry, including potential employment with FMC Technologies in Nigeria. FMC Technologies has been contributing to the growth of Nigeria’s vital oil and gas industry for more than 16 years and currently employs approximately 250 personnel in country.

The Sahara Group has been inducted into the Private Sector Advisory Group of the Sustainable Development Goals Fund (SDG-F). The induction is in recognition of its contribution to activities that promote inclusive economic growth for poverty eradication, capacity building, food security and access to potable water.

Sahara Group is an indigenous power, oil and gas, and infrastructure conglomerate with footprints in Africa, Europe, Asia and the Middle East. It will be represented on the advisory board by Mr. Tonye Cole, the Group’s co-founder and Executive Director.

Speaking at the Board’s inaugural meeting in Madrid, Spain, Ms. Paloma Durán, Director, SDG-F said the Private Sector Advisory Group would provide the SDG-F Secretariat with guidance and strategic support to achieve better development results in coordination with the private sector.

The SDG-F is a development cooperation mechanism created in 2014 by the United Nations Development Programme (UNDP), on behalf of the United Nations system, with an initial contribution of the Government of Spain to support sustainable development activities through integrated and multi-dimensional joint programmes.

Durán said the inclusion of Sahara Group on the advisory board was informed by its remarkable sustainable development activities that are driven by strategic funding, partnerships and volunteer activities involving Sahara’s staff.

“The decision to include Sahara Group will be of much value and I am confident that this Advisory Group will facilitate the emergence of formidable platforms through which the SDG-F can partner with the private sector to achieve its goals,” Duran added.

The Board is expected to, among others, help shape the SDG-F’s activities on capacity building, dialogue, research and knowledge sharing, resources and infrastructure as well as advocacy and creating awareness.

Describing Sahara’s involvement with the SDG-F as another unique opportunity to serve, Cole said the company continues to seek avenues to promote sustainable development across markets where it operates through its Personal Corporate Social Responsibility (PCSR) platform.

He said Sahara would through the SDG-F platform facilitate robust public-private partnerships that will accelerate development across Africa.

Cole said Sahara’s PCSR activities are coordinated under the aegis of Sahara Foundation, which focuses on sustainable community development, education and capacity building, healthcare and the environment.

“Sahara is passionate about touching lives, empowering people and providing opportunities for individuals, small businesses and communities to thrive and attain achievements beyond imagination. With over 3000 man-hour of volunteering by staff and implementation of many sustainable projects around the world, this appointment gives us another reason to remain steadfast in our resolve to transform lives by giving and serving sustainably,” Cole said.

According to Sahara, the SDG-F is expected to work within the selected regions of Latin America and  the Caribbean, Asia, Arab States and Africa, to continue to support national actions towards the achievement of the Millennium Development Goals (MDGs) through the initiation of new joint programmes. The organisation will pursue achievement of inclusive economic growth for poverty eradication, food security and nutrition, access to potable water and disease free environment.

Employees of the Nigerian Content Development and Monitoring Board (NCDMB) are ready  to go on strike if their management refuse to address issues relating to staff promotion, pension remittance and unionisation in the organisation.

The workers, under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), the inability of the NCDMB management to respond to the issues raised above necessitated the handling down of a 14 working day ultimatum, which will expire on Friday, May 8, 2015.

In the strike noticed issued by the Port Harcourt Zone of PENGASSAN and dated April 24, 2015, the workers stated that the management violated extant labour laws and practices concerning promotion, payment of non-regular allowances, allowing willing employees to join union and pension remittance.

The union demanded that the management should constitute a promotion committee made up of all general managers from various directorates and divisions in the Board, adding that the demand became inevitable as a result of avoidable communication gaps that exist during promotion exercise.

According to the workers, some staff were not promoted during the last exercise due to communication gaps between the board management and the management staff of the directorates and divisions that made up of the NCDMB. The workers demanded that staff affected due to such lapses should be promoted without further delay.

They also advised the management not to encourage selective promotion as such may cause disaffection among the staff.

The workers called on the NCDMB management to cancel a promotion examination conducted for staff on level SS4 as obtainable in other government agencies and parastatals in the oil and gas sector of the economy, such as the Department of Petroleum Resources (DPR), Nigerian National Petroleum Corporation (NNPC), Petroleum Products Pricing Regulatory Agency (PPPRA), Petroleum Equalisation Fund Monitoring Board (PEFMB) and Petroleum Training Institute (PTI), among others.

The senior staff called the management to promote all those affected by the examination result, while urging that all promotion should be backdated based on the normal three years promotion basis as was used in previous promotion and in other government agencies and parastatals.

The workers also demanded that all senior staff of the organisation eligible to be members of the union should be allowed without interference or intimidation by the management.

On pension remittance, the workers observed that in the last nine months, the management has stopped remitting pension deducted from staff salary into Retirement Savings Accounts (RSA) of individual staff Pension Fund Administrators (PFAs).

The workers therefore condemned this as a violation of the 2004 Pension Reform Act and demanded that the management should without delay commence remittance and payment of the arrears from June 2014 till date.