The Nation Newspaper

Category: Energy

  • ‘Dangote’s coming will help petroleum sector’

    The entry of Dangote Group into the petroleum industry will increase local participation in the sector, the Executive Secretary, Petroleum Trust and Development Fund(PTDP), Dr Oluwole Oluleye, has said.

    He told The Nation at the sideline of Africa Downstream Exhibition in Lagos, that the decision of Dangote to establish a refinery and a petrochemical would spur investment in the sub-sector and further reduce importation of refined petroleum products into the country.

    He said: ”From all indications, Dangote has changed the face of petroleum business in the country. What we used to experience was a situation whereby the government refines the crude oil abroad, ships, supplies and regulates its consumption in the country. But that has now changed. We now have a situation in which an individual investor will be refining the crude oil, sell it locally and internationally, using the instrumentality of market forces.

    “Based on this, Dangote has become a catalyst through which more people would come into the downstream sector,’’ adding that Dangote will be in business whether the Federal Government removes subsidy or not.

    He said if more investors go into the refinery business, the quantity of petroleum products produced locally will increase, and this will be better for the economy. He said with increased output, Nigeria’s experience with fuel scarcity and delay in distribution of petroleum products, will become a thing of th past.

    He urged investors to take a cue after Dangote, arguing that the challenges facing the sector can only be reduced through the contributions of all the stakeholders.

    Also, the Executive Secretary, Petroleum Product Price and Regulatory Agency, Reginald Stanley, said the coming of Aliko Dangote into refinery business is a welcome development, adding that the initiative would improve local production of crude oil in particular, and the economy in general.

  • Govt opts for renewable energy to boost power supply

    Govt opts for renewable energy to boost power supply

    TO address the power problems, the Federal Government is considering the use of renewable energy, such as solar, coal, wind and biomass, to boost hydro supply.

    The Chairman, National Electricity Regulatory Commission (NERC), Dr Sam Amadi said the government had granted waivers and tariff, among other incentives, to prospective and existing producers of renewable energy to foster its growth.

    The incentive, he said, were to motivate producers of renewable energy as well as assist the government to diversify its energy sources in line with the Roadmap for the Power Sector, launched in 2010 by President Goodluck Jonathan.

    The commission, he said, introduced the Feed-In-Tariff to enable producers of renewable energy to sell power to the grid at prices higher than the ones produced by conventional producers of power that rely on either gas or hydro for production. The 30 megawatts solar plant in Katsina State is an initiative that would benefit from the tariff regime, he said.

    NERC, Amadi said, approved and implemented an import duty waiver for companies bringing renewable energy parts into the country, stating that the idea was part of efforts to bring more people into the renewable energy net and further boost Nigerians’ access to electricity supply.

    “NERC has come up with a tariff rate for renewable energy to spur investment in that area, and further expand sources of energy in Nigeria. It is part of efforts to deepen the market and subsequently make people to have an array of electricity sources to choose from for socio-economic growth,’’ Amadi said.

    The Minister of Power, Prof Chinedu Nebo, has inaugurated an eight- committee to develop a framework to help in generating power from coal.

    He said the ministry was working on a renewable energy and energy conservation policy for the country, stressing that the scheme would guide the government on how to tap into the opportunities in the renewable energy sub-sector. The government, he said,was diversifying the sources of energy because it wanted more Nigerians to access electricity.

    “The idea will enable many of the rural areas that are not connected to the national grid to have some kind of ring-fencing, where they would be serviced with renewable energy.’’

    He said there are plans by the government to build coal-fired plants in Enugu, Benue, Kogi and Gombe states, adding that the idea is aimed at providing energy mix in the country.

    Besides, the Chairman, Presidential Task Force on Power, Beks Dagogo Jack, said the country needs energy mix for growth, stating that government should not rely only on thermal, or hydro sources of power because of Nigeria’s size and population.

    He said Nigeria has solar, fossil fuel and wind in abundance, adding that they would be useful as the electricity market is unlocked, adding that thousands of electricity mega watts could be harnessed from renewable energy sources, thus the call for advocating the energy mix.

    The government is committed to the transformation of the power sector as evident by the recent privatisation and unbundling of the energy sector, Jack, said.

    Nebo, and the Minister of Mines and Steel Development, Mohammed Sada, have concluded a visit to coal plants and other facilities operated by HTG-Pacific Energy Consortium in India and China to ascertain the competencies of the consortium to render good services to Nigeria.

  • Experts back NEITI on oil licences allocation

    The position of the Nigerian Extractive Initiative Transparency Industry (NEITI) that the award of oil licences should be open, transparent, competitive and in accordance with international bid processes, has been supported by experts.

    Prof Adeola Akinnisiju of the Geology Department, University of Ibadan, and Emeka Ene, president of Petroleum technology Association of Nigeria, agreed that NEITI’s position must be respected in view of its role as a watchdog in the extractive industry.

    Akinnisiju, who is the president, Association of International Energy Economics, argued that NEITI is trying to correct some of the lapses in the bidding and allocation of marginal oil fields in the country, saying the issue of allocation of oil wells and licences was not without discrepancies. He said the Petroleum Industry Bill (PIB) would address them when passed.

    “That the president and the Minister of Petroleum Resources were vested with discretionary powers to issue licences to marginal field operators may not be far from the truth. There are lapses in the laws guiding the issuance and allocation of oil licences/wells, and that is what NEITI is trying to correct. The body is trying to ensure that the right legislations are put in place to restrain some political officer holders from dabbling into sensitive issues in the oil and gas industry,” Akinnisiju said.

    He said PIB would ensure a true bidding process, and further limit the powers of some political appointees who issue licences indiscriminately.

    Ene said the legal allocation of oil wells was germane to the growth of the industry, adding that the industry is sensitive, and therefore requires that competent hands manage it.

    He said oil discovery ad exploration, among others, should not be left in the hands of mediocres, adding that the fitness level of people applying for licences must be ascertained for growth.

  • Nigeria consumes 39.66m litres of petrol daily

    Nigeria consumes 39.66m litres of petrol daily

    The Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, has said the country consumes 39.66 million litres of Petroleum Motor Spirit (PMS) daily.

    She said the volume of petrol consumption has reduced by 34.17 per cent within a short period of time.

    Mrs. Alison-Madueke, who spoke in Abuja, said the subsidy has reduced by 59.05 per cent to N850 billion, adding that the government spent N5.27 trillion on petroleum products between 2006 and last year.

    She said: “As at December 2012, N5.27 trillion has been expended on products subsidy since the commencement of Petroleum Subsidy Scheme in 2006. A comprehensive reform programme put in place, under the Minister of Petroleum Resources, yielded outstanding results in 2012.”

    She said the industry reform was in line with the government’s transformation agenda to promote socio-economic activities.

    The reform initiatives, she said, are aimed at restoring effective product monitoring, enhancing transparency and accountability, restoring the integrity of the products importation and volume determination process, changing the negative perception of the sub-sector, especially of the Petroleum Product Price Regulatory Agency (PPPRA), among others.

    Mrs. Diezani said the reforms between 2010 and this year covered the downstream, midstream and upstream, among other areas in the oil and gas value chain.

    She said the ministry was repairing and upgrading facilities in the refineries and pipelines distribution network to sustain in-country product supply

    She maintained that the ministry would continue to ensure stable supply of petroleum product, effective and efficient administration of the subsidy programme which she said remains unsustainably expensive and increased domestic refining

    In addition, she said, improvements in local capacity and indigenous participation in infrastructure investments had been vigorously pursued, saying the outcome had been in upgraded training facilities and increased regulatory compliance with local content requirements

    The ministry in line with government drive in achieving the national aspiration of 40 billion barrels of oil reserves and four million barrels of oil per day production, including condensate, as captured in Vision 20:2020, has increased exploration activities in the offshore, onshore and Inland basins.

    Meanwhile, exploration has been stepped-up in the inland basins of Chad, Anambra, Benue and Bida/Sokoto/Dahomey, she disclosed.

    According to her, last year, 19 exploration wells were drilled comprising eight exploration wells in the JV and 11 wells (3 exploration and 8 appraisal wells) under the PSC. Also, 93 development wells were drilled including 55 development wells under JV while PSC delivered 38 development wells.

    Within the same year, 33 work- over wells were drilled consisting of 32 work-over wells under JV and one work-over well in PSC

    This increased exploration activity is reflected in acquisition of a total of 6, 102 sq.km of seismic data, including 818 sq.km acquired for FES operations in the Chad Basin in Phase 3, 4 and 5 combined.

    She said acquisition of 266sq.km of seismic data in the Phase 6 is ongoing by IDSL (a subsidiary of NNPC) in the Chad Basin.

    In addition, the ministry has also grown IDSL Land Acquisition capacity by additional three 100percent wholly owned seismic party crews, she said, adding that all these are in line with realising the objectives of the present administration.

  • PHCN loses equipment to vandals

    The Power Holding Company of Nigeria (PHCN) has lost equipment worth millions of naira to theft and vandalism, less than two months to the January 2014 deadline for the power generation and distribution companies to start operation.

    The Nation learnt that materials, such as cables and wires, among others, had either been stolen or vandalised within the Lagos metropolis, with the recent one taking place in Ilupeju area of Lagos State.

    The Business Manager, Ikeja Unit of PHCN, Lateef Olaleye, said equipment such as 300KVA and 500KVA were vandalised in Ikeja.

    He said: “Vandalism of PHCN installations, especially in the Government Reserved Area (GRA) Ikeja, has become a problem. Within the past four months, the unit has recorded further acts of vandalism of nine transformer substations – Oba Akinjobi 300KVA substation was vandalised thrice in March, April and May this year, while Remi Fani-Kayode 500KVA substation was vandalised on April 8, this year. After the vandalised materials were replaced, the vandals came again two days later on April 10 and stole all the replaced cables and other substation materials. And on the second of this month, they stole virtually all the materials in this same substation, including 20 metres of 150mm2x4 single core cable.”

    Olaleye said another theft was recorded on March 7 at the Ladoke Akintola 500KVA substation, where the thieves carted away eight metres of 150mm2x4 core cable, cable sockets and ferrules.

    It would be recalled that the NERC is working out modalities on how to penalise people who vandalise and steal appliances belonging to the PHCN. The Commission’s Secretary, Ada Ozomenan said the body is coming out with strong penalties for people who steal or vandalise cables, meters, among other appliances.

    She said the Commission has stepped up monitoring activities in order to check cases of theft and vandalism in various power projects in the country.

  • Govt pushes for renewable energy production

    Govt pushes for renewable energy production

    The Federal Government is encouraging the production of renewable energy, such as solar, coal, wind and biomass, in addition to thermal and hydro sources for electricity supply.

    The Chairman, National Electricity Regulatory Commission (NERC), Dr Sam Amadi said the government has provided waivers and tariffs, among other incentives, to prospective and existing producers of renewable energy to foster its growth.

    He said the incentives are to motivate producers of renewable energy as well as assist the government to diversify its energy sources in line with the Roadmap for the Power Sector, launched in 2010 by President Goodluck Jonathan.

    He said the commission has introduced a scheme, the Feed-In-Tariff, to enable producers of renewable energy sell power to the grid at prices higher than the ones produced by conventional producers of power that rely on either gas or hydro for production. He added that the 30 megawatts solar plant in Katsina State is one initiative that would benefit from the tarrifs regime.

    He said NERC has approved and implemented an import duty waiver for companies bringing renewable energy parts into the country, stating that the idea was part of efforts to bring more people into the renewable energy net and further boost Nigerians’ access to electricity supply.

    “NERC has come up with a tariff rate for renewable energy to spur investment in that area, and further expand sources of energy in Nigeria. It is part of efforts to deepen the market and subsequently make people to have an array of electricity sources to choose from for socio-economic growth,’’ Amadi said.

    Also, the Minister of Power, Prof Chinedu Nebo, has inaugurated an eight-member committee to develop a framework that would help in generating power from coal.

    Nebo said the ministry was working on renewable energy and energy conservation policy for the country, stressing that the policy will guide the government on how to tap into the opportunities in the renewable energy sub-sector. He said the government was diversifying the sources of energy because it wants more Nigerians to access electricity.

    “The idea will enable many of the rural areas that are not connected to the national grid to have some kind of ring-fencing, where they would be serviced with renewable energy.’’

    He said there are plans by the government to build coal-fired plants in Enugu, Benue, Kogi and Gombe states, adding that the idea is aimed at providing energy mix in the country.

    Besides, the Chairman, Presidential Task Force on Power, Beks Dagogo Jack, said the country needs energy mix for growth, stating that government should not rely only on thermal, or hydro sources of power because of Nigeria’s size and population.

    He said Nigeria has solar, fossil fuel and wind in abundance, adding that they would be useful as the electricity market is unlocked, adding that thousands of electricity mega watts could be harnessed from renewable energy sources, thus the call for advocating the energy mix.

    The government is committed to the transformation of the power sector as evident by the recent privatisation and unbundling of the energy sector, Jack, said.

    Nebo, and the Minister of Mines and Steel Development, Mohammed Sada, have concluded a visit to Coal plants and other facilities operated by HTG-Pacific Energy Consortium in India and China to ascertain the competencies of the consortium to render good services to Nigeria.

  • How we’ll manage N50b power fund, by NBET

    How we’ll manage N50b power fund, by NBET

    The N50 billion earmarked by the Federal Government for the power sector will be managed by the Nigerian Bulk Electricity Trading company (NBET) to stabilise the power sector, The Nation has learnt.

    NBET’s Head, Power Procurement and Power Contracts, Yesufu Longe Alonge, said the fund would be used to provide the needed comfort and guarantee to the privatised power generating plants (GENCOS).

    The firms include Ughelli, Sapele, Afam, Shiroro and Kainji.

    He said NBET will manage the N50 billion from an escrow account, alongside the monthly receivables from the power distribution companies (DISCOS).

    On modalities for managing the money, he said NBET will pay the power generation firms every month to offset any shortfall from what they generate.

    ’’ The stakeholders will play vital roles in the electricity ecosystem. Once the Transitional Electricity Market (TEM) is declared open by the Minister of Power, NBET will start buying electricity in bulk from the generation companies through a Power Purchase Agreement (PPA), and will in turn sell the electricity to the Distribution Companies through a Vesting Contract (VC).

    “At the end of every month, the Market Operator will issue what is known as a Settlement statement to all stakeholders, stating the quantity of electricity that was sold and bought during the month. Based on the Settlement statement, the power generation companies will invoice NBET, using the unit price stated in the Power Purchase Agreement, while NBET will likewise invoice the Distribution Companies.

    “For the service charge, the market operators will invoice the Distribution companies, and thereafter, make all the necessary payment to the different service providers, such as NBET, National Electricity Regulatory Commission, Market Operators and System Operators, among others,’’ he said.

    He explained that NBET will use agents to make payment to the power generation companies, after receiving the monthly payment from the distribution Companies, adding that the N50billion was part of the proceeds from the sale of Egbin Power Plant that the government earmarked to capitalise NBET.

    He said NBETwas also capitalised via appropriation and proceeds from the sales of Euro Bond, explaining that the government provided the N50billin for the operations of successor power generation companies, because the World Bank Partial Guarantee(PRG) that was part of the sales arrangement for power generation firms is yet to be completed.

    He said the fund was not a subsidy, but rather a means of ensuring that companies get paid for the electricity generated and sold into the market. He said the power generation firms would pay back the money in future.

    Also, the Chief Executive Officer, Transcorp Ugbelli Power Limited, Adeoye Fadeyibi, said power generation firms need the money to foster growth, produce optimally and further boost economic activities.

    He said measures have been put in place on how the Generation Companies (GENCOSs) will share the N50billion earmarked for them.

  • Crude output: local operators account for 10 %

    Indigenous oil firms account for 10 per cent of the nation’s total oil production, the Chairman, Seplat Petroleum Development Company, A.B.C. Orjiako, has said.

    Orjiako, who spoke during an oil & gas leadership conference in Accra, Ghana, at the weekend, said indigenous firms contribute would rise to 20 per cent of the nation’s oil output, and 40 per cent of domestic gas supply in the next five years, adding that the local companies are likely to be responsible for 100 per cent supply of domestic refining by the year, 2020.

    Orjiako spoke alongside the Managing Director of Shell Petroleum Production Company, Mutiu Sunmonu, former Chief Executive of Nigeria Liquefied Natural Gas (NLNG), Chima Ibeneche, as well as the Executive Secretary, Nigerian Local Content Monitoring Board, Ernest Nwapa. He said 25 local firms are producing 250,000 barrels-per-day of the nation’s 2.5million barrels daily production, adding that the figures not only point to the significance of the indigenous oil players, but also, their rising profile in the industry.

    He said the government has since 2003 been pursuing a policy that is geared towards preferential access ing the bid for new acreage.

    “Since 2003, the government has favoured the allocation of acreage to indigenous companies during the bid rounds. The Nigerian Content Act (2010) also specifies that Nigerian independent operators be given first consideration in the award of oil blocks.”

    Another critical factor in the emergence of independent oil and gas operators, according to Orjiako, was the “Marginal Field Development Programme which ensured that fields left fallow by the International Oil Companies (IOCs), are farmed out to indigenous Exploration & Production companies, which are then granted preferential fiscal incentives.”

    Orjiako said 24 “marginal” licences were awarded in 2002 , adding that many of them have begun production.

    “Local companies / local company led-consortiums are expected to continue being the beneficiaries of divestitures of onshore/shallow offshore oil blocks by the International Oil Companies that favour deep-water acreage because of their natural advantage in terms of technology, experience and financial capacity, ” he said.

    Orjiako noted that aside NPDC, which is a government owned operator, “Seplat is the highest with 52,800 bopd from three fields while Conoil is second with 25,000 from two fields and Midwestern with 13,000bopd , according to a publication of Africa oil and gas report.”

  • Nigeria’ll meet 40b barrels oil reserves projection, says NAPE

    Nigeria could still meet the four million barrels-per-day and 40 billion oil reserves’ projection, despite the problems in the industry, the National Association of Petroleum Explorationists (NAPE) has said.

    Speaking with reporters on the forthcoming Annual International Conference of the association in Lagos, the body’s outgoing President, George Osahon, said the country has the capacity to increase its daily oil production from less than 2.5million barrels to four million barrels a day, once the problems such as oil theft, pipeline vandalism and kidnapping of expatriates, among other vices are resolved.

    “If the stakeholders can work together to minimise the problems, and further face the business of boosting the production of crude oil, the better for the economy,’’ he said, adding that Nigeria is under pressure to increase its crude oil production, following the successes recorded by some countries in Africa.

    He said modern technologies have helped many Marginal Oil Field operators to boost their production in recent times, advising existing and prospective operators to toe similar path.

    He said a careful examination of the industry’s policies and oil exploration technologies must be given priority to foster growth.

    Osahoh, who is also the Director, Department of Petroleum Resources (DPR), said issues such as the signing and implementation of the Petroleum Industry Bill(PIB) must be given the desired attention to encourage the industry’s growth, adding that the association will continue to advise the government on the issues of implementation of policies outlined in the bill for growth.

    “In our own opinion, people’s perception and criticisms of the PIB cannot alter the growth of the industry. It is better the bill is passed so that the waiting game would be over. If you see the problems which the issue of divestment from the nation’s oil and gas industry by Multinational Oil Companies has caused, you would appreciate the fact the country needs PIB to drive the industry’s growth. We will try as much as possible to continually tell the National Assembly the importance of the bill in the interest of the country, but we cannot force it to pass the bill. We can only advise the government on the issue of passing the bill in the interest of the country.

    He said the National Assembly has the responsibility to modify, pass or reject the bill, advising stakeholders to make representations to the Senate to facilitate the passage of the bill.

  • Shell lifts force majeure on Bonny Light exports

    Shell lifts force majeure on Bonny Light exports

    Shell Petroleum Development Company of Nigeria has lifted the force majeure, or suspension on Bonny Light exports, following the repair of recent spill points on the Trans Niger Pipeline (TNP), its spokesman, Precious Okolobo has said.

    Okolobo, in a statement, said the company declared force majeure on October 10 as a result of production deferment from the spills that were recorded on the 24-inch line of the Trans Niger Pipeline at B-Dere and Nonwa-Tai.

    The statement said: ‘’Production was switched to the 28-inch line of the TNP, which was also briefly shut for repair following a fire at Patrick Waterside, Bodo and reopened on October 16. Repair of the 24-inch line is progressing and it remains shut in,

    “Joint investigation of the spills has now been completed, coupled with reports from stakeholders including representatives of the Ministry of Finance, Shell Petroleum Development Company, security agencies and communities. While the spill at B-Dere came from a hole drilled by unknown persons,it was confirmed that pipeline failure was responsible for the incident at Nonwa-Tai. About 2,200 barrels of oil were spilled, of which more than 1,500 barrels have since been recovered.”