The Nation Newspaper

Category: Energy

  • OPEC puts Nigeria’s oil reserves at 37.1b barrels

    Nigeria’s crude oil reserves stood at 37.1billion last year, the Organisation of Petroleum Exporting Countries (OPEC) said in a report.

    The report titled: OPEC Share of World Crude Oil Reserves’’, stated that the figure represented 3.1 per cent of the 1,200billion reserves of the organisation.

    It said non-OPEC members had 277billion oil reserves, representing 19 per cent of the global oil reserves.

    It said Libya’s oil reserves stand at 48.5billion; Iraq(140billion); Venezuela( 297.7billion); Saudi Arabia(265.9billion); andIran( 157.3billion).

    Others are Algeria( 12.2billion); Angola(9.1billion); Ecuador(8.2billion); Qata(25.2billion); Iraq( 140.3billion); Kuwait( 101.5billion) and United Arab Emirates ( 97.8billion)

    ‘’According to current estimates, more than 81 per cent of the world’s proven oil reserves are located in OPEC’s member countries, with the bulk of OPEC’s oil reserves in the Middle East, amounting to 66 per cent of the OPEC total. OPEC member countries have made significant additions to their oil reserves in recent years. For example, by adopting best practices in the industry, realising intensive explorations, and enhancing recoveries. As a result, OPEC’s proven oil reserves stand at 1,200.83billion barrels.’’

    Nigeria is targeting 40billion oil reserves by 2020, a feat which the Nigerian Association of Petroleum Explorationists (NAPE) believes is realisable.

    Its President, George Osahon, said the 40billion barrels reserves and 4billion barrels per day is achievable, giving the reforms in the industry.

  • Stable power soon, say Makoju, others

    Nigeria will enjoy stable power supply soon as power firms are adopting measures to address the sector’s problems , experts have said. In an interview in Lagos, they raised hopes that things would be over soon.

    Joseph Makoju, a former Managing Director of the Power Holding Company of Nigeria (PHCN), said the prospects for fresh investments, new technology and expertise of the new owners represented hope that the power challenges would be over soon.

    He said the gains of the reforms would soon be made known to Nigerians, giving the commitment shown by the government and the private investors.

    “I believe the future is bright for the sector. I see a lot of opportunities for uninterrupted power supply, capacity building and employment prospects for Nigerians in the long run,”’ he said

    He called for patience and understanding from Nigerians as the investors embark rehabilitation, upgrade and deployment of robust infrastructure.

    Abiodun Ogunleye, the Managing Director, PowerCap Nigeria Limited, urged Nigerians to be patient as the operators are overhauling the subsisting infrastructure to improve electricity supply.

    Ogunleye said achieving uninterrupted power supply would require patience from Nigerians since the companies are deploying new technology in achieving growth.

    “I am aware that the new investors are already thinking along the line of new technology and have plans to train and retrain their workforce. I believe we will get the breakthrough we all deserve in the near future,” he said.

    Abraham Williams, Project Coordinator, Dubril Consortium Ltd. said the handover of some power assets to the private sector had brought new lease of life to the sector.

    “The participation of the private sector would bring about more efficient and cost effective power supply arising from increased investment, enhanced infrastructure and opportunity for transfer of technical know-how to Nigerians,” he said.

    Fashola Charles, Managing Director, Seacof Enginering Ltd., said the power sector transition represented unprecedented milestone for the nation.

    “What private participation did to the telecom sector is what we will eventually witness in the power sector. But I believe a lot of consumer education and enlightenment programmes are required to make the average Nigerian know that the handover did not mean we would begin to witness uninterrupted power immediately. The good news is that it kicked off the journey of a process that would eventually get us there,” he said

  • Britania-U ‘s chair honoured

    The Chairman, Chief Executive Officer, Britania-U Nigeria Limited, Mrs Uju Ifejika, has been inducted into the Global Women Leadership Hall of Fame.

    The induction, organised by the Centre for Economic & Leadership Development, took place during the Africa-Middle East-Asia Women Summit in Dubai, United Arab Emirates.

    The company in a statement, said the induction was in recognition of her contributions to women economic empowerment in Nigeria and West African sub region.

    The statement reads: “The Georgia General Assembly of the State of Georgia, United States of America, in a special resolution recognized the accomplishments of Mrs. Uju Ifejika, Chairperson/CEO of Brittania-U Nigeria Limited, as a role model who has made sterling contributions in the areas of economic empowerment in Nigeria and the West African sub-region. The resolution salutes her human qualities, humility, sense of humour and simplicity. It said the event, which was chaired by the Nigerian Ambassador to U.S., Prof AdebowaleAdefuye, would encourage other women to contribute to empowerment programmes.

  • Why power failure may persist

    Why power failure may persist

    Why have the 14 successor-companies of the Power Holding Company of Nigeria (PHCN) not been pulling their weight since taking over the utility’s assets two months ago?

    It is because of the rising cost of gas needed to power the thermal plants and the unresolved labour issues inherited by the firms, say some experts.

    The Nation learnt that many of the firms cannot meet their gas demands because the products’ commercial price under the Federal Government’s domestic gas supply obligations will rise from $1.80million British thermal unit(mbtu) to about $2mbtu this year.

    Sources close to West Gas Limited (formerly Eko Electricity Distribution Company Limited), who pleaded anonymity, said gas was a major problem in the industry. A source said the companies could not get enough gas for operations, thereby crippling efforts to improve electricity supply.

    According to the source, power supply will improve when the gas supply challenge is resolved.

    The Chief Executive Officer, Seven Energy International Limited, Philip Ihenacho, said the cost of production and transportation of gas to the power plants was huge, lamenting that the development has impacted negatively on the operations of the firms.

    He said: ‘’The production and transportation of gas to power plants come with attendant problems. It is difficult selling gas to power firms at $1.8mbtu when you add up the cost of transportation and tariff. Given the harsh operating environment, gas cannot be sold for less than $2 or $2.5mbtu.

    “This means the firms are required to pay above the commercial gas price of $1.8mbtu before they can operate well. Failure to pay the required amount of money for gas, means that they would not be able to access the product for improved electricity supply.

    Collocation is another problem in the industry.The power plants are situated miles away from gas sources. “The cost of taking gas to power plants is cheaper, if the plant is not far. But the reverse is the case in Nigeria.’’

    He said multiple gas plants are required to improve electricity generation in the country.

    Former President, Senior Staff Association of PHCN, Godwin Ihenacho, said the failure to locate the power plants close to gas supply was a problem in the industry.

    He said: “For instance, the Escravos Gas Project in Delta State is far from Omotosho and Papanlato power plants in Ondo and Ogun states. Based on this, the plants are unable to get enough gas for operations.’’

    The government’s inability to resolve labour issues, he said, would affect the companies’ performance of the companies. He also said some workers had yet to receive their entitlements, adding that these workers were ready to frustrate the reform programme.

  • Sustaining fuel supply in 2014

    Sustaining fuel supply in 2014

    Despite oil theft and pipeline vandalism in 2013, the Ministry of Petroleum Resources sustained products supply. There is need to maintain the tempo in 2014, writes EMEKA UGWUANYI, Assistant Editor

    Nigerians last year enjoyed unprecedented stable supply of petroleum products. Besides the stability, the pump price also remained stable at N97 per litre through the festive oeriod.

    Although some motorists slightly hiked their fares, it was not as a result of fuel scarcity, which has in the past characterised such festivities, creating undue hike in fares and suffering for travellers.

    Those who travelled during the festive periods to different parts of the country, testify that the every part of the country was streamed except in some rural areas where owners of petrol stations adjusted their pump prices to between N100 and N105 per litre.

    Beside the unpleasant stories of how houses went up in flames and passengers burnt to death following hoarding of fuel or carrying kegs of fuel by motorists in order not to run out of petrol, are not heard of or read. Unlike in the past when retail outlets were dry and the few that sold had long queues, the filling stations have sufficient stock and sell without queues; therefore, there is no need to hoard or carry fuel about in vehicles.

     

    How NNPC sustained supply

     

    The sustained sanity in the supply and distribution segment of the downstream petroleum industry, according to the Nigerian National Petroleum Corporation (NNPC) and other relevant agencies in the value chain, such as the Pipelines and Products Marketing Company (PPMC) and the Petroleum Products Pricing Regulatory Agency (PPPRA), was achieved based on the directive of the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke.

    Mrs Alison-Madueke, the agencies said, directed that all distribution and storage infrastructure be revamped while PPPRA ensured that guidelines on drawing from petroleum subsidy fund (PSF) are strictly followed.

    It was based on the minister’s directive that the NNPC and PPMC embarked on aggressive revamp of key downstream facilities, such as PPMC depots and product supply pipelines, which have hitherto remained out of use.

    According to PPMC, only three out of its 23 inland storage depots spread across the country are awaiting repairs, adding that its dilapidated depots and ancilliary pipelines in Aba, Benin, Suleja, Gombe, and product evacuation and reception jetty in Okrika, Rivers State, among others, have been turned around and are working efficiently.

    To prevent pipeline vandalism and ensure uninterrupted supply and distribution, the minister ordered the deployment of Horizontal Directional Drilling (HDD) at Arepo and Ije-Ododo, which were havens for pipeline vandals and petrol thieves. The approval of subsea bypass pipeline project to enable import of heavy crude to Kaduna refinery helped in improving products availability. These infrastructure have been abandoned for upwards of 10 years, but the minister ordered their revamp and clearing of the pipelines’ right of way and fixing of the pipelines for efficient distribution of products.

    The Nigerian Army Engineering Corps was awarded the contract to clear the pipelines right of way across the country; work has been completed on the Atlas Cove- Mosimi-Ibadan axis, Port Harcourt-Bonny line have also been completed while work was ongoing at other lines where people have encroached on and even built houses on top of the pipes, the NNPC said.

    To supplement the effort of the inland depots, the PPMC said it maintained a sustainable large stock of products at sea on massive vessels, especially offshore Lagos to serve as buffer for 32-day product sufficiency.

    Also, the continued flow of petroleum products was sustained as a result of implementation of some reform programmes in the last two years. Such reforms, including the implementation of the PSF by the PPPRA, led to huge reduction in national consumption of petrol from 60 million litres per day as witnessed in 2011 to 40 million litres per day, which saved the country billions of naira.

    Mrs. Alison-Madueke had attributed the success to President Goodluck Jonathan’s Transformation Agenda in the downstream subsector, which led to strategic management of petroleum products supply and distribution.

    “In spite of these savings,” she said, ‘’we have also been able to maintain stability of products supply, while putting in place, stringent regulatory conditions which would make it difficult for dubious marketers to short-change the system.”

    She said the Federal Government had done well in the stopping fuel subsidy scams, adding that efforts at ensuring transparency and accountability were yielding positive results.

    She also said the reforms were carried out to address pervasive malpractices in the oil and gas sector, to engender public trust and belief in government’s sincerity in the downstream sub-sector.

  • Different strokes for different sectors

    Different strokes for different sectors

    It was not all that rosy for power, oil and gas in the outgoing year. Though the power sector reform was completed, theft continued to take its toll on the oil sector. AKINOLA AJIBADE reports.

    The year is eventful going by the spate of reforms in the energy sector. Nigeria has just completed the sale of the unbundled assets of the defunct Power Holding Company of Nigeria (PHCN) to 14 companies.

    The assets were sold at N385billion. The sale marked a new beginning in the history of the power sector. The management of the state-owned electricity corporation was shifted to the private sector. Thereafter, the Federal Government handed over the assets to the private investors, signalling the commencement of private-driven electricity activities.

    Though the reforms, which started in 2005 have helped in providing the country with a template on how power sector can be privately run, there are issues. These include payment of severance package to the 48,000 workers of PHCN, infrastructure, insufficient meters, planned increase in tariffs, poor supply and others.

    The petroleum industry has been battling to rid itself of problems, such as oil theft, pipeline vandalism, divestment of shares by the International Oil Companies (IOCs), poor gas supply, and others. Many have gained from the reforms. Others have not.

     

    Power firms’ operation

     

    Infrastructural problems, such as weak transmission, poor distribution network, gas supply, shortage of meters, and frequent drop in water level at the Shiroro and Kainji Dams and drop in electricity megawatts(Mw) are common in the industry. It has been fluctuating between 3,500 and 4,500, thereby affecting power supply.

    The Minister of Power, Prof Chinedu Nebo said the government had improved water supply to the dams, adding that the electricity megawatts stand at 4,000. He said improvement in power generation and distribution would not be sudden, despite the take over of the sector by private investors, urging consumers to be patient with the new firms.

    He also urged consumers to pay their bills and resist the temptation to tamper with the metering system. An official, of the Ministry of Power Nuhu Sada said 2013 would be remembered for the sale of PHCN and the resolve of private investors to improve power supply.

     

    Payment of

    severance package

     

    Payment of N385billion as severance package to workers dominated issues in 2013. It pitched the government against the aggrieved workers. While the government accused the workers of trying to sabotage the reforms, the workers under the umbrella of the National Association of Electricity Workers of Nigeria, alleged that the government was playing politics with their future. This led to protests in Abuja and Lagos and subsequent threat to destroy all power installations in the country.

     

    Sack of PHCN’s workers

     

    The Bureau of Public Enterprises (BPE) sacked about 70 per cent of PHCN, following the payment of their severance package. The workers accused the government of throwing them into the labour market without following due process. The sack resulted in the shortage of skilled manpower in the power sector, and aggravated problems in the industry.

     

    More power stations opened

     

    Recently, the government opened a 434-megawatts power station in Geregu in Kogi State. It is planning to open another sub-station in Yola, Adamawa State. Also, the government has kicked off the process of privatising the 10 new power stations built under the National Integrated Power Project (NIPP) with a road show in Lagos.

    The Chief Executive Officer, Niger Delta Power Holding Company (NPDHC), James Olotu, said the privatisation of the firms had attracted over 40 local and foreign investors. The plants are in Olorunsogo in Ogun State, Omotosho, Ondo State; Ihobvor, Edo State; Geregu Egbema, Imo State; Alaoji, Abia State and Sapele, Delta State. Others are Calabar Power Station in Cross River State and Sapele in Delta State.

     

     

    Oil theft

     

    The oil and gas industry continued to suffer from theft with its attendant oil grant of revenue to the government. Oil giants, such as Shell, Chevron, Mobil are also becoming the major losers. The development stalled exploration, thereby hindering the flow of investment during the year under review. Of note is the divestment of shares by foreign firms, resulting in the sale of oil wells by some of the firms.

    In its third quarter report, the National Bureau of Statistics (NBS) said electricity and oil production challenges have slowed down the growth of Nigeria’s Gross Domestic Product (GDP).”

    Also Federal Government lamented that the country loses between 60,000 and 80,000 barrels of oil per day (bpd).

    President Goodluck Jonathan gave the figure in Abuja, while speaking at this year’s Annual Banking and Finance Conference, organised by the Chartered Institute of Bankers of Nigeria (CIBN).

    The President, represented by the Minister of State for Finance, Dr. Yerima Ngama, said the loss of 80,000 bpd to crude oil theft was minimal, compared to the 400,000 bpd being reported in some quarters.

    He said: “The oil sector has brought nothing to this country than shocks. Even some new shocks that we never thought could be shocks, things like oil bunkering and oil theft. These are shocks because once they happen, they shut down the entire system.

    “Most of the figures you see don’t even represent the theft. They say 400,000 bpd, but that does not represent what is being stolen in this country. What is stolen is between 60,000 and 80,000 bpd. But once they start stealing from your pipelines, do you allow them to continue? No, you shut them down and once you shut down, the entire production stops; so that is also a loss. So, when you see the entire loss, it is mainly because of the shutdowns and not because of the theft. The theft is little, but even that theft, since it is bringing another shutdown, is also a problem.”

     

    Pipeline vandalism

     

    Pipeline vandalism continued to take its toll on the industry, with many operators losing their facilities to fire. Shell Petroleum Development Company (SPDC) shut down its Trans Niger Pipeline on three occasions during the year.

    Its spokesman, Precious Okolobo said the government, as a result of the shut down, was losing about $116.05million(N2.568billion) going by a crude oil price of about $107 per barrel. Okolobo said the fire was discovered within the SPDC Joint Venture (JV) right-of-way at Bodo in Ogoniland in Rivers State.

    Besides, the Nigerian National Petroleum Corporation (NNPC) pipelines were vandalised in Lagos and other parts of the country.

     

    Shale oil

     

    The discovery of Shale Oil in the United States in June shook the country. Being one of the major buyers of Nigeria’s crude oil, the development is expected to further affect the country’s revenue.

    The Organisation of Petroleum Exporting Countries (OPEC), in its 2013 World Oil Outlook considered Shale oil and gas sufficiently important to devote large chunk of its report to a discussion on the new energy source under’’ matters arising’’. OPEC said Shale oil production would have significant impact on crude oil production in the near term, advising Nigeria and other member- states to re-double efforts on oil production.

    The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said OPEC had initiated a study into Shale and would consider the effect on the global market for OPEC crude ‘’ in the not-too-distant future.’’

    Mrs Alison-Madueke said the development would not have much impact on Nigeria because the country’s crude has the potentials to attract more buyers. Her defence failed to assuage some Nigerians who argue that the dwindling oil revenue affect economic growth, if not checked.

  • Govt hailed on power sector reform

    THE Federal Government has been lauded for privatising the Power Holding Company of Nigeria (PHCN) Plc.

    The exercise is a right step to wards the diversification of the economy, according to the Chairman, Gold Horse Group, Mr Temple Peters.

    In a statement, Peters said the economy’s diversification was imperative because “we can no longer rely solely on oil as our mainstay’’.

    Peters urged the government to ensure that the 14 PHCN sugcessor-companies discharged their obligations to the people.

    ‘’The generation companies (GENCOs) and distribution companies (DISCOs) should not be left to do whatever they like, ” he said.

    “The only way to get the best out of them is to ensure that the government keeps them on their toes always or else we will return to the NEPA (PHCN) days of no light,”Peters warned.

    He added: ”You see, we are currently at a crucial time in our nation’s history. I applaud Mr.President and the entire privatisation committee for taking the bull by the horns. An average factory in Nigeria spends between N10 and 20 million monthly on diesel to generate power .If we get stable power that can be channelled into recruiting more hands, which automatically deals with the agitations around unemployment. We also have to start looking seriously at the non-oil sector”.

  • Group faults PHCN on contract variations

    A group, Nigerian Contracts Monitoring Coalition, has blamed the delay on execution of projects under the Power Holding Company of Nigeria (PHCN) on mild penalties.

    Its Head, Mrs Seember Nyager, told The Nation that the law guiding projects execution has been relaxed, resulting in the abandonment of some contracts.

    She said the penalty clause was relaxed in favour of some contractors, adding that the development has affected implementation of projects.

    She said: “There are lots of contract variations in the sector. These have affected negotiations made and subsequently implementation of contracts. Cases abound where some contractors do not do the job and were not heavily penalised.’’

    Nyager also the Chief Executive Officer, Public and Private Development Centre(PPDC), said the coalition is made up of Nigerian Society of Engineers (NSE), Media Right Agenda (MRA), Initiative for Environmental and Health Society, the Centre for Organisational and Professional Ethics (COPE-AFRICA) and the Bureau of Public Procurement (BPP). He said the coalition has been monitoring contracts to know their level of execution.

    Also, the Chairman, Prevention, Investigation and Failures Analysis Committee, (PIFAC), Nigerian Society of (NSE), Charles Mbelede, stressed the need for monitoring of contract documents, specifications, among others, to encourage growth. This, he said, would enhance the monitoring exercise

    Mbelede said the contracting firms did not place order on time, adding that the development has affected the implementation of several projects.

    According to her, the group has focused attention on power projects including some electricity distribution projects in Lagos, Ibadan and Abuja.

  • NERC harps on transparency in power sector

    The National Electricity Regulatory Commission (NERC) is set to influence the culture of transparency and accountability in Nigeria’s electricity sector.

    The culture is aimed at enhancing the orderly and sustainable development in line with its mandate to carry out effective regulation of the sector.

    The Chairman/Chief Executive Officer of NERC, Dr. Sam Amadi who confirmed the development in a telephone interview, stated that the organisation is determined more than ever to ensure that investors carry out their operations in line with set rules and regulations.

    Specifically, Amadi said the whole idea behind the agency’ transparency is to create an open government through which operators, consumers customers and others would play according to set rules. He said the idea would help in ensuring effective energy audit and provide quality services to the consumers.

    Amadi said that NERC was recently ranked as the most transparent public institution in the country because of its penchant to make it a way of life in the sector.

    He added that the power companies would be made to be transparent in their dealings to move the sector forward, adding that the Commission would not condone any act of indiscipline in the way the firms approach corporate governance issues.

    He said the Commission has been able to correct the impression that disclosures by the companies would be a difficult issue to handle.

    Amadi said: ‘’The most difficult challenge is conceptual hurdle that we have to overcome. That is an erroneous belief that disclosure would do harm to an organisation. But this we have been able to correct.’’

    The chief executives, he said, must realise the fact that transformation in corporate culture is very important for them to achieve growth, adding that it would be difficult for them to make paradigm shift from non-transparent regime to transparent ones if they fail to make the right move.

  • Expert harps on human capital development

    EXperts in the petroleum and maritime sector have said investment in human capital is key to the growth of indigenous operators in both sectors.

    They said operators in both sectors were at disadvantage compared with their foreign counterparts.

    Speaking at a joint training workshop organised by the Nigerian Chamber of Shipping and Richardson Oil & Gas Limited, in Lagos, the Director-General, Nigerian Chamber of Shipping, Mrs. Ify Anazonwu-Akerele, said the workshop would improve the operators knowledge of oil and gas and maritime sectors.

    According to her, the recently passed Local Content Law has the potential of ensuring effective indigenous participation by guaranteeing cargo contracts that will stimulate tonnage building, financing and key developmental actions to the Nigerian maritime industry.

    The Managing Director, Richardson Oil & Gas, Mr Akin Osuntoki, noted that both organisations are partnering with the aim of bridging the knowledge gap within the Maritime/Upsream Oil and Gas Sector through the provision of professional human capital development programmes.

    Speaking on the workshop the, Understanding Cabotage and Local Content in the Nigerian Oil and Gas Industry (Upstream), he said it is a training programme that comes up every quarter.

    “It is designed to expose a more practical, thorough and in-depth technical and commercial understanding and approach to vessel operations from the Cabotage and Local Content perspective, which will eventually lead to a good understanding of international best practices as well as improve local participation in the upstream sector,” he said.

    The workshop, which was graced by experts, including the Acting Group General Manager, National Petroleum Investment Management Services (NAPIMS), Mr Fidel Pepple, Planning Manager, NAPIMS, Mrs Oritsemeyiwa Eyesan and Mrs Jean Chiazor Anishere, gave participants an in-depth understanding of the maritime/oil and gas upstream business in Nigeria.

    “Either as an indigenous operator, who wants to finance the acquisition of offshore vessels, have an understanding of vessel/offshore equipment inspections and surveys, understand the litigation and alternative dispute resolution processes in this sector, have a grasp of the fundamental technical and commercial knowledge of the maritime/upstream oil and gas business, appreciate environmental issues in upstream operations, comprehend ship management and deal confidently with the International Oil Companies, participants always find the course very comprehensive and valuable,” Osuntoki added.