The Nation Newspaper

Category: Energy

  • Fed Govt urged to improve on renewable energy policies

    The Federal Government has been advised to improve on policies that will address  trade, production, distribution, consumption and investment in renewable energy and also energy efficiency.

    Prof Titilayo Kuku of the Department of Electronics and Electrical Engineering, Obafemi Awolowo University(OAU),  Ile-Ife, gave the advice at the Nigeria Photovoltaic Energy conference held in Lagos.

    He said  that the country is currently facing energy crisis and noted that the government should put in place market and fiscal policies that would promote green/renewable energy as well as promote open energy markets to remove legislative and commercial barriers to entry and engender transparent competition.

    According to him, with the current generated capacity of about 4,000 megawatts (MW) for a population of about 170 million, with energy per capita of 30 watts, the country is in dire state regarding energy sufficiency with the attendant consequences on all developmental indicators of employment, growth, production, cost of production, security, general wellbeing, among others.

    He stressed the need to explore alternative sources of power generation to close the wide gap between demand and supply of energy in Nigeria. He said that energy poverty in the country is acute with only 47 per cent of the populace having access to inadequate electricity and about 10 per cent of the population not connected to the grid.

    He noted that the majority of the people in the rural areas do not have access to electricity making most of them to use traditional biomass as source of energy.  Even in urban areas, 56 per cent of the population still uses firewood while 27 percent use kerosene as household energy.

    He said problems associated with current poor power supply include lack of investment in the energy sector by successive governments in the past, low level awareness of alternative options such as renewable energy solutions, and lack of access to finance. Also, lack of support by financial institutions to invest in clean energy options, low incentives and inadequate government policies to promote the development of renewable energy at the same level as conventional sources of electricity generation and oil and gas production, continuous subsidy of conventional fossil fuel by government as well as poor business environment for renewable energy, he said.

    He advised that before involving the private sector to provide energy services, strong polices, legislation and institutions should be put in place to regulate their activities

    Head of Renewables, Nigeria Electricity Regulatory Commission (NERC), Imamuddeen Talba, said  that  key policies to drive the development of solar energy are being put in place. He said that the country is effectively harnessing solar energy resources to integrate them with other energy resources. The Commission is also promoting the use of efficient solar energy conversion technologies such as use of photovoltaic and concentrated solar panels for power generation. The nation is promoting solar energy generation for productive use and intensifying efforts to increase the percentage of solar energy in the present energy mix. He agreed that the country has enormous solar energy potential that is not currently exploited

    According to him, a number of challenges militate against grid-connected power sources, which include high cost of installation and wiring provided by utilities are high as well as large land area required for the projects. Connecting small, isolated villages to a grid can be expensive because of the necessary investment in transmission lines, poles, transformers, and other infrastructure adding that solar power come in relatively small size and are best connected to low voltage lines.

  • Shell, community trade blames over oil spillage

    Lack of consensus over the volume of oil spills, among other issues, has pitched Shell against one of its host communities in Ogoniland, Bodo in Gokana Local Government Area of Rivers State.

    Shell Petroleum Development Company (SPDC), in a statement in Lagos, said an estimated 4,114 barrels of crude oil was spilled in Bodo, but the community put the volume at over 70,000 barrels.

    The Chairman, Council of Chiefs, Bodo Community, Mene Sylvester Kogbara, said the volume of oil spill was huge, in view of the fact that the days the oil spillage occurred were over 100 days.

    Kogbara said between 2008 and 2009, the spills were occurring regularly; therefore, the spillage would be over 70,000 barrels. He said: “There is disconnect between the quantity of oil spilled as quoted by Shell and that of the community.  Oil spills took place in 2008 and 2009. The first spill ravaged the community for over 90 days while the second spill was 45 days. Given this, the community reckoned that over 70,000 barrels of oil was spilled in the community, as against 4,114 barrels of oil given by Shell.”

    The Amnesty International corroborated the allegation that Shell under-reported the volume of oil spills in the Niger Delta. The body said Shell had known for years that “its pipelines in the Niger Delta were old and faulty, a development which buttressed the claims that large volumes of oil spilled into the community.” Amnesty International said the total amount of oil spilt exceeded 100,000 barrels. Relying on an independent assessment carried out by a United States firm, Accufacts Incorporation, Amnesty International said the figure is far higher than 4,000 barrels as mentioned by Shell.

    “For years, Shell has dictated the assessment of volume spilled and damage caused in spill investigation reports, now these reports aren’t worth the paper they’re written on. These spill investigation reports have cheated whole communities out of proper compensation,” Amnesty Director for Global issues, Audrey Gaughran, said.

    The Community and Shell are yet to reach an  agreement on the issue of compensation of victims of the oil spillage. The problem came to the fore when Shell’s spokesman, Precious Okolobo, told reporters that the company want to compensate those who have been genuinely affected by the spills. Shell based its action on a joint investigation its officials, relevant government agencies, and members of Bodo Community carried out to ascertain the level of destruction in the community, which showed an estimated 4, 114 barrels.

    Shell said satellite remote sensing experts, hydrologists, and experts in mangrove ecology were used to assess the volume of spills and the extent of damage to Bodo waterways and mangroves. However, the outcome of the investigation was opposed by the community on grounds of irregularities. According to Kogbara, everybody in the community was affected by the oil spills, given the fact that the inhabitants of the village are farmers and fishermen who rely on the waters and the land as their sources of livelihood.

    He said the multiplier effect of the environmental degradation caused by the spills were huge, because people were directly or indirectly affected. “ The 65,000 people in Bodo sleep, eat, and drink hydrocarbon. This is one of the environmental damages caused by the oil spillage.  Bodo is a riverine area and its people are predominantly fishermen. Virtually, everybody takes to fishing as part of efforts to maximise the opportunities offered by nature. However, some are into farming. Those ones breed crops in large quantities to feed their families. Considering this, it would be unfair to compensate some and leave others. This is the reason the statement by Shell that it would compensate only those that were genuinely affected by the spills did not go down well with the community,” he added.

    On compensation, Kogbara said the community was yet to arrive at an amount. He said the chiefs, and other villagers were still meeting on the issue. The issue has dragged for years, he said, adding that the physical, emotional and physiological impacts of environmental degradation suffered by the communities in the Niger Delta region would be difficult to quantify. He said many of the victims had died, while others were in one problem or the other.

  • Nigeria, others to face long-term budgetary problems, says EIA

    The possibility of Nigeria, Algeria, Libya, Angola, and other oil producing nations facing budgetary hiccups is high, following the persistent fall in the international prices of crude oil, the International Energy Agency (IEA) has said.

    The United States -based energy watchdog, in its October report, said it was unlikely that prices of crude oil would rebound soon implying that Nigeria, which depends largely on oil revenues to service 85 per cent of its budget, has to contend with budgetary problems for some time.

    The agency, which typically refrains from predicting oil prices, said that prices could fall further in 2015, after declining to their lowest levels since 2010. “While there has been some speculations that the high cost of unconventional oil production might set a new equilibrium for Brent prices in the $80 to $90 range, supply/ demand  balances suggest that the price rout has yet to run its course,’’ the IEA said.

    The body said barring any new supply disruptions, downward price pressures could build further in the first half of 2015. “Oil prices have fallen 30 per cent since peaking in June, pressured by a strong US dollar and rising US light oil output while largely ignoring the impact of Libyan supply disruptions,” it added.

    According to the agency, its forecast of global oil demand growth remains unchanged at 1.13million from a five year annual low of 680,000 barrels per day (bpd) in the year in view of the happenings in the global oil market.

    Price of crude oil has fallen from $115 per barrel to below $80 per barrel in the past three months on account of crisis in the Middle East, surge in the production of U.S shale oil among other issues. The development made the Federal Government to try and introduce austerity measures to cushion the effect of the falling oil price on the economy.

    Also, the government is planning to withdraw $2 billion from excess crude account (ECA) for financing of capital projects and also benchmarked oil price at $73 per barrel in its 2015 budget.

  • ‘Look beyond national barriers in addressing power challenges’

    Council member, ECOWAS Regional Electricity Regulatory Authority, Ghana, Mrs. Ifey Ikeonu, has advised stakeholders in the power sector to look beyond the country for solutions to the  sector’s problems.

    Mrs Ikeonu gave the advice in a presentation titled: ‘Improving regulatory governance through benchmarking’ at the West African Power Industry Convention (WAPIC) in Lagos.

    She said the biggest challenge in the region remains bridging the gap between electricity supply and demand with average access rate of electricity in the region being about 30 per cent.

    She said: “This is a very huge gap that requires a lot of proactive and innovative solutions if we are to meet the sustainable energy for all goal of providing universal access to electricity by the year 2030. The region is blessed with an abundance of natural and renewable resources and we must try to articulate the right strategies that will attract the required financial resources needed to put in place power infrastructure across board. We should leverage on the resources within the region, to rapidly improve access to electricity.”

    As Ikeonu observed that West Africa leader’s vision for the electricity industry should be sustainable and integrated as well as reliable and affordable. She said such integrated electricity would serve as the bedrock for economic and social development and growth of the region.

    “My advice will be to emphasise that stakeholders begin to look beyond national barriers in addressing the electricity sector challenges in the various countries of West Africa. We must learn to rely on our joint resources be it natural, human or financial in tackling these challenges.

    “Furthermore, we need to pay attention on the governance of the sector because a sustainable power sector can only be built based on a clear, predictable and transparent regulatory framework,” Mrs Ikeonu added.

    Mrs Ikeonu said to ensure the smooth operation of the regional market, member-states were mandated to establish an independent regulatory authority where none exist, adding that there was need to protect the independence of the regulatory authority.

    Mrs Ikeonu said member-states should  ensure that the regulatory authority had legal personality, budgetary autonomy, adequate human and financial resources to carry out its duties. Ikeonu said that the Council was faced with challenges of absence of information technology and communications infrastructure to facilitate integration.

    “Importance of benchmarking in the power sector cannot be over-emphasised, benefits includes, establishment of credible targets for performance improvement.  Enables best practices from the industry to be incorporated into the benchmarked functions and stimulates competitive behaviour and encourages innovation,” she said.

    Mrs Ikeonu said the Council is building blocks for the takeoff of the ECOWAS regional electricity markets, adding that the council had finalised the regional market rules and would be adopted by the Council following the conclusion of the methodology for the regional transmission tariffs.

    “We are also working on the development of the contractual templates for cross-border electricity trading in the region. The adoption of all of these regulatory tools will signal the commencement of the first phase of the regional market and I am eager to see this in place as soon as possible,” she said.

  • Capital flight on equipment import to hit $800m

    Nigeria’s capital flight of $400 million due to importation of oil and gas equipment may double in  the next few years if the importation continues, the Managing Director, Royal Niger Emerging Technologies, Anthony Okeke, has said.

    He said the country imports most of its oil and gas equipment and recorded over $400 million capital flight between 2008 and 20014 due to dependence on oil and gas technologies coming from the developed economies such as the United States and Germany.

    He said Nigeria’s failure to domesticate the production of equipment used in exploration and production would further increase its capital flight.

    Okeke said: “Over the years, the country has depended on foreign-made technologies to grow its petroleum industry.  The development made local and foreign oil companies to import equipment estimated to be over $400 million within six years (2008 to 2014). This money should be used for jobs’ creation, and accelerating of socio-economic activities.

    “Most of the local manufacturers are not ready to engage in production of key oil and gas equipment due to one reason or the other. When the majority of machinery are produced locally, the standards in the industry would be raised, and jobs would be created.  Also, the sector’s contribution to the Gross Domestic Product (GDP) would increase as a result of the initiative.”

    He noted that Nigeria has been involved in what it described as ‘technology transfer,’ an idea, he noted, would not bring the much-needed growth to the industry and the economy.

    “We need to see how to make operating environment conducive for bigger companies planning to come to do business in the country. When this is done, the local operators, would study and get the required knowledge from companies with better expertise and facilities,” he said.

    The Nigerian Content Development Monitoring Board (NCDMB) is planning to establish eight industrial parks. The parks, billed to be sited in Edo, Rivers, Akwa-Ibom, Cross River, Bayelsa states, among others, would  produce tools that would be use in the oil and gas sector.

  • Shell’s global deepwater holds 675b bbls recoverable oil, says IEA

    Shell’s global deepwater holds 675b bbls recoverable oil, says IEA

    The Royal Dutch Shell’s global deepwater assets have been said to contain an estimated 675 billion barrels of recoverable oil.

    In its latest monthly publication, Shell World, published by Shell companies in Nigeria, the company quoted the International Energy Agency (IEA) as putting Shell’s global deepwater proven reserves at about 675 billion barrels. In the publication, Shell confirmed that it has enjoyed decades of successful projects and some landmark moments in 2014 in global deepwater.

    It stated that its Nigerian Bonga North West (BNW) Field, which achieved first oil in August, is part of Shell’s long-standing commitment to developing deepwater engineering skills in Nigeria, adding that the investments made by Shell Nigeria Exploration and Production Company (SNEPCo) and its other project partners in the Bonga North West project include upgrades of local contractors’ facilities and providing specialised training for Nigerians to work in the energy industry.

    Oil from the Bonga North West field, according to Shell, is transported by a new subsea flowline to the existing Bonga subsea infrastructure while additional equipment and control systems were installed and integrated with Bonga Main topsides.

    The publication noted that a significant part of the project was carried out by Nigerian companies including an indigenous contractor that fabricated and installed the BNW topsides equipment.

    Commenting on the BNW achievement, Shell’s Vice President Nigeria & Gabon, Markus Droll, said: “It is significant to note that the project leadership and majority of staff working on the BNW project are Nigerians – testament to the growth of deepwater engineering experience in SNEPCo. Above all, we are pleased that the project has so far been delivered without lost time injury (LTI) with SNEPCo and contractor staff working safely on various aspects of the project in about 10 different locations in the United States, Europe and Nigeria.

    “This programme – on top of the ongoing Phase 2 drilling and after the start-up of Bonga North-West barely two months ago – further underlines our commitment to Nigeria and leadership in deepwater production.”

    The Corporate Media Relations Manager, Precious Okolobo, also said that SNEPCo has announced plans to drill eight more wells in the Bonga field to help maximise deepwater production in Nigeria. This third phase of the Bonga Main development is expected to add about 40,000 barrels of oil equivalent per day through the existing Bonga floating production, storage and offloading (FPSO) facility.

    Okolobo stated that Phase 3 is an expansion of the existing Bonga Main development and will involve drilling four oil producing and four water injection wells. Drilling is expected to start in 2015. Output from the new wells will be transported through existing pipelines to the FPSO facility. The facility has the capacity to produce more than 200,000 barrels of oil and 150 million standard cubic feet of gas a day.

    The Phase 3 work will be executed by several contractors including Nigerian companies that have developed deepwater expertise through the provision of similar services for SNEPCo. The Bonga field, which began producing oil and gas in 2005, was Nigeria’s first deep-water development in depths of more than 1,000 metres. Bonga has produced over 500 million barrels of oil to date.

    The Bonga project is operated by SNEPCo as contractor under a production sharing contract with the Nigerian National Petroleum Company, which holds the lease for OML 118, in which the Bonga field is located. SNEPCo holds a 55 per cent, Esso Exploration & Production Nigeria Limited 20 per cent, Total E&P Nigeria Limited 12.5 per cent and Nigerian Agip Exploration Limited 2.5 per cent.

  • Power Ministry to Kano Govt: follow due process

    The Ministry of Power has advised Kano State Government to follow due process in obtaining all requisite approvals before commencement of any hydro electricity project in the state.

    The Special Adviser to the Minister of Power on Investment, Finance and Donor, Olajuwon Olaleye, told The Nation at a conference in Lagos that as much as the ministry encourages the growth of the sector by seeking private and public participation in electricity projects, due process is required of Kano State Government before it can access water for power generation purpose.

    He said the Federal Ministry of Water Resources is charged with the responsibilities of giving approval for the use of water for power generation, therefore, he advised the Kano State Government to approach the Water Resources Ministry for such approvals.

    Olaleye, who was responding to allegations of non-approval of licence for hydro power generation raised by the Special Adviser to the Kano State Governor, Amisi Abdullahi, insisted that due process must be followed to get needed approvals. He said there is a director in the Water Ministry that the Kano State Government needs to interface with to get the approvals.

    He said: “The Federal Ministry of Water Resources also has an agency that is being funded by bilateral organisations. The agency works on dam projects especially dams that are meant for power generation. On the issue of licensing for power generation, there is a process that needs to be followed, especially for a private company that wants to be involved in electricity generation.”

    He said the state government needs to look inward by tapping into opportunities in solar energy.

    In a related development, Abdullahi said that Kano State Government is targeting 10 megawatts (Mw) of electricity by December 2014. He said the 10ms would be added to the 250mw of electricity, which the state is currently getting from the national grid.

    He stated that the state government will use the 10mw of electricity to provide street lights, noting that the government relies on alternative source of energy for sustenance.

    “We are targeting 10mw of electricity by December 2014.  We will use it to power our street lights. We are using diesel generators, which virtually everybody is using in Nigeria to augment supply from the grid.  The government is facing challenges such as failure to get approvals to generate power through hydro means,” he said.

    Abdullahi said the state government is taking a proactive approach towards improving electricity generation, adding that hydro power generation holds much prospects for the state.

  • ‘Infrastructure deficit inhibits growth in gas sector’

    Inadequate infrastructural facilities such as pipelines, pressure station, and Central Processing Unit (CPUs), is hindering the growth of the gas sector, the President, Liquefied Petroleum Gas Association of Nigeria (LPGAN), Mr. Dayo Adesina, has said.

    Other  challenges, he said, include lack of gas stripping plants and effective regulatory mechanisms, among others.

    Adesina said the problems are ineffective utilisation of gas, which makes it impossible for critical sectors of the economy to access the product for growth. He said the country is finding it difficult to take the gas to where it is needed, processed and used to achieve the desired results.  He lamented that Nigeria is flaring gas without considering its socio-economic implications.

    He said: “The country is flaring millions of metric tonnes of gas daily, because there is no infrastructure in place to capture it for productive usage.  And to take the gas to where it is needed, the government has not done much  in that regard. Facilities such as Central Processing Units (CPUs), gas stripping plants, pressure stations and others are lacking in the country. What is considered a waste in the gas sector can be turned around and be useful in other sectors, if there are adequate infrastructural facilities in place.”

    According to him, the gas  being flared can power the whole of Africa, if the right policies are in place.

    Also, the Director-General, Bureau of Public Enterprise (BPE), Benjamin Dikki in an interview with The Nation, said gas shortage has affected the operation of the power sector. Dikki said infrastructural deficit in the gas industry is having spillover effects in the power sector. “Instead of wasting gas by flaring it, we can channel it to the power sector. Due to gas shortage, the power sector cannot generate enough electricity. We are producing less than 6,000MW of electricity. We are hovering between 4,000MW to 5,000MW of electricity; when we are supposed to generate 10,000MW.We have been targetting 10,000MW for some time now and we are yet to achieve it.

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, and her counterpart in the Power Ministry, Prof. Chinedu Nebo, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), and other relevant stakeholders had in Abuja, discussed how to make gas available to the power sector.

  • ‘Refining crude in-country will help grow economy’

    The Independent Petroleum Marketers Association of Nigeria (IPMAN) has urged the Federal Government to boost in-country refining of crude to enhance growth of the economy, especially in this period of oil price decline.

    IPMAN National President, Chief Chinedu Okoronkwo gave the advice during the association’s zonal meeting and swear-in ceremony of the new western zone’s vice-chairman held in Lagos.

    Okoronkwo stated that the current decline of crude price in the international market should not disturb Nigerians, noting that if crude is substantially refined locally, it would eliminate expenditures on importation and other processes of ensuring petroleum products availability in the country as well as boost value creation, Gross Domestic Product (GDP) and job creation.

    According to him, over 243 byproducts are derived from crude oil but only three are exploited in Nigeria. He said: “We should not entertain any fear on the current decline in crude oil prices globally. IPMAN is working seriously to ensure that the proposed $3 billion refineries in Kogi and Bayelsa states come on stream by 2016 to reduce refining outside the country.

    “We are proposing to build two refineries in Nigeria; one in Bayelsa State and another in Kogi State to ease fuel scarcity. This is part of the present administration’s agenda. We are in discussion with our foreign investors.

    “We will ensure that petroleum products get to all nooks and crannies of the country. It will also grow the GDP of the country because capital flight will reduce drastically. Nigeria spends $60 billion in importing refined products, the proposed refineries will reduce the cost and stress of exporting crude to bring in refined products.”

    He said that when the refineries come on stream it would continue to build and maintain healthy products reserves for the country. It will also create jobs for Nigerian youths. It will also reduce incessant kidnapping in the country, he added.

    Okoronkwo stated that the proposed refineries would go a long way in opening up the socio-economic growth of the country, which would also key into the transformation agenda of President Goodluck Jonathan.

    He said that Nigeria, Africa’s largest crude oil producer, is unarguably the biggest importer of refined petroleum products in the continent, creating lucrative market for refineries in Europe and the United States.

    He expressed confidence that the refineries hold enormous economic benefits for the states where they will be located and entire Nigeria. For instance, there is no way we can put down over $3billion without making sure that the refineries work.

    The newly elected vice-chairman, western zone of IPMAN, Alhaji Debo Ahmed, lauded government’s effort in combating pipeline vandalism. He assured members of total support in ensuring effective monitoring and distribution of petroleum products. He urged members to embrace peace and support one another in moving the association forward, adding that internal wrangling will not help the collective interest of the association.

    “I will ensure that the integrity and harmonisation of members become paramount. I’m going to work with my zonal chairman and national executives to find lasting solution to challenges in products availability and distribution within the western zone,” he said.

  • Prices hamper SON’s battle against fake gas cylinders

    The Standards Organisation of Nigeria (SON) is facing challenges in its fight against the influx of substandard gas cylinders in the market because they are very cheap.

    The Nation investigations showed that there is a surge in the influx and sale of the cylinders in Lagos and its environs due to their low cost. It was gathered that marketers are repainting old gas cylinders in various colours – blue, brown, light red and others – to give them a new look and further get buyers for them.

    The Nation gathered that marketers sell 12.5 kilogramme of  cylinders at between N3,000 – N4,000 at Oshodi, Egbeda, Idimu, Ikotun, Iyana Oba, Yaba and other areas within the Lagos metropolis, as against  N7,000 for a new one. Refurbished 14.7 kilogramme gas cylinders are sold for between N5,200 – N5,000 as agaisnt N9,000 for the new ones.

    A marketer who spoke to The Nation in confidence, said that he gets supplies from a business associate and friend who imports the product, among other household equipment from Europe. He said the gas cylinders are fairly used, adding that many of them were produced 10 to 15 years ago.

    The source said: “I do not know the reasons behind the grouping of some gas cylinders as substandard, obsolete and new.  It is like fairly used cars popularly called Tokunbo being imported into Nigeria.  The fact that they are produced years ago does not mean they have outlived their usefulness.  I discover that when these cylinders come to Nigeria, some are in perfect condition. They look beautiful, while others are not. We separate the gas cylinders that are leaking and faded, from the ones that are not.

    “Thereafter, we look for spraying machine and do the needful. After using the machine to spray the gas cylinders with different colours, we put a price tag on them. The price is relatively lower, compared to the new cylinders. The reason for different prices is to allow customers to choose from the various categories.  This is part of the marketing strategies adopted to woo customers and made them buy the products.  We are in a country where consumers love to buy cheaper products.”

    The Head, Enforcement Department, Standard Organisation of Nigeria (SON), Bede Obayi said plans are ongoing to rid the country of substandard gas cylinders.  He said the agency has impounded over 5,000 cylinders, which are kept in the warehouse. He stated that the cylinders were seized from various parts of the country in line with ensuring safety of lives and environment.

    “We have offices in virtually all the states of the federation. We ensure that our workers in those offices are mobilised to inspect goods and later impound those that are found to have grave consequences on the people. Immediately we seize those goods (cylinders), we take them to the warehouse from where they are moved to fabrication companies for melting,” he said.

    The Federal Government had issued a directive banning obsolete gas cylinders from sale in the market and ordered that such cylinders should be replaced with new ones. The directive, which took effect in 2014, will see the government outlawing gas cylinders of certain age to ensure a healthy and safe environment.

    Meanwhile, the government is making move to re-start production of gas cylinders in the country. The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa, said the idea will help in promoting local content activities and further reduce importation of the product.