The Nation Newspaper

Category: Energy

  • How Nigeria can raise oil output, by experts

    ANALYSTS have given an insight into how the country can increase its crude oil production from 2.3million to 2.6million barrels per day(bpd).

    According to them, it can be increased through the repair of destroyed oil facilities in the Niger Delta, production from deepwater projects, exploration of new oil wells, creation of infrastructure in oil producing areas, and passage of the Petroleum Industry Bill (PIB) and stability in the fiscal regime.

    The President, Petroleum Technology Association of Nigeria(PETAN) Mr Emeka Eze, and energy expert, Mrs Funmi Akinluyi, said when the government stabilises its fiscal regime programmes, more foreign investments would come to the oil and gas industry.

    Investors, he said, were not interested in oil and gas because they are not sure of the government’s next action and that crude oil production will increase when there more investments in the industry.

    He said the passage of PIB would quicken local content development, adding that the development would lead to improvement of indigenous capacity.

    Eze said: ‘Most Nigerian oil service companies are not well capitalised. Many oil blocks are left untapped because there is no adequate capital. Nigeria should bring more money into the sector and further grow capacity, just as Brazil and Malaysia did 10 years ago. Nigerian oil service companies have no where to go than to stay and help in improving crude oil production in the next few years,’

    Mrs Akinluyi said there should be a long-term stability in the Niger Delta to improve crude oil production.

    She said steady increase in production from two million barrels to as high as 2.6 million bpd in the future is possible if necessary mechanisms are put in place.

    “The long-term stability of the Niger Delta will remain a major factor to consider as we approach the election year, “Nigeria’s production has been plagued by years of attacks on vulnerable pipelines and platforms in the Delta, which increased in intensity from mid-2006, allowing Angola briefly to become the continent’s top crude oil producer.

    “But an amnesty last year brought a halt to sabotage attacks helping push Nigeria’s crude output above two million bpd. Production has risen gradually since the amnesty and has averaged more than 2.1 million bpd so far in the second half of the year, according to Reuters’ data, far eclipsing Angola’s planned production of 1.68 million bpd over the same period. Angola’s crude exports peaked near 1.9 million bpd earlier this year but summer maintenance and production glitches pulled this back to below 1.7 million bpd in the third quarter, according to data collected from trade sources,” she added.

    The Minister of Petroleum, Diezani Alison-Madueke, said the reforms in the PIB would be passed soon, adding that targets for implementing this legislation have been repeatedly missed.

  • Oil workers protest exclusion from PIB public hearing

    Members of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers (NUPENG) have protested their exclusion from the National Assembly’s public hearing on the Petroleum Industry Bill (PIB).

    They alleged that critical stakeholders in the oil and gas industry were denied the opportunity of making their presentations at the hearing.

    The action of the National Assembly Joint Committee was deliberate and not in the interest of the nation. They said the committee ended the hearing, without allowing the invited stakeholders to make their presentations.

    In a position paper sent to The Nation, the PENGASSAN’s President, Mr Babatunde Ogun, said 14 out of the 54 memoranda given to the National Assembly was presented during the hearing.

    Ogun listed the memoranda to include expunging the provision granting the President powers to use his discretion to award petroleum licences and leases from PIB; ensuring that the bill provides transparency on the award of contracts and licensces, and other accompanying processes.

    Others are ensuring that the bill builds on the efforts of National Extractive Industries Transparency Initiative (NEITI) by erasing the ’black hole’ perception of the oil and gas industry; mandatory publication of all licences, tenders, and contracts; voiding confidentiality clauses for oil revenue and payment information; publication of statistical figures of oil operations that include but not limited to production export and import on quarterly basis; annual reports and audits of operations and commercial and associated institutions created by the PIB, National Petroleum Assets Management Corporation/ Company.

    Ogun stressed the need for critical examination of proposed changes in the fiscal regime to ensure that Nigeria does not discourage investments in oil and gas.

    He said: “It is our considered view that the PIB should allow for the optimisation of returns to Nigeria from its oil and gas resources without stifling investments and growth of the industry. The government will, therefore, have to strike a balance between taking a significantly higher stake from industry operations and ensuring the sustainable growth of the industry. To this end, we suggest that the National Assembly should arrange a meeting between the government represented by the Nigeria National Petroleum Corporation (NNPC) and the Oil Producers Trade Section (OPTS) to reconcile the disagreements on the fiscal regimes.”

    The unions called for the curtailing of the power of the Minister under the PIB to avoid the bureaucracy that characterises the management of the sector; fixing the tenure of the board, chief executive officer and other management staff of Nigerian National Petroleum Corporation (NNPC) and National Oil Company (NOC) to prevent undue interference of the board and ensuring that workers meet the targets set for them.

    Ogun said the Petroleum Host CommunityFund(PHCF) should cover communities hosting oil and gas resources and assets, including downstream infrastructure, adding that independent and effective regulators should be provided to ensure the bill’s success.

    “The Joint Venture(JV) has, however, been bedevilled by inadequate funding, as the government has not being able to meet its cash call obligations. The Petroleum Minister only recently pointed out that inadequate JV funding was negatively impacting on exploration and with it, reserves addition. The proposal under the PIB for the JV assets to be under a government-owned corporation does not seem to solve this cash call problem even with the proposed seed capital. There is no doubt that government’s finances are constrained, what will therefore, be more practical is for government to divest some of its holdings in the NPAMC while members of the public hold the rest. This way, the JV will be better funded,” he added.

    He said the oil firms are putting 10 per cent of their profits into the fund, adding that they cannot draw from it when their facilities are vandalised.

    According to him, regulatory functions are placed under the Ministry of Petroleum in line with the provisions of the PIB. He said the call for the establishment of the Upstream Petroleum Inspectorate (UPI) and Downstream Petroleum Regulatory Agency (DPRA) to regulate the sector is in order, adding that this is the only way to prevent abuse of power.

     

  • ‘Nigeria’s energy consumption’ll grow by 56% by 2040’

    Nigeria’s energy consumption will increase by 56 per cent in 2040 due to its rapidly growing population, the Energy Information Administration (EIA) has said.

    Already,the country is targeting increase from 4,000MW to 10,000MW and gas production from 26,000 to 46,000 mega watts to meet its energy needs in the next few years.

    EIA, in its International Energy Outlook report released at the weekend, said the energy needs of Nigeria among other countries in Africa, would increase in tandem with its growing population in the next few decades. It said the growth in energy consumption is driven by the its growing economy, among other indices..

    It said China and India’s rising prosperity is a major factor in the outlook for global energy demand, adding that the power requirements of the two countries have been more than double in recent times.

    The report said: “These two countries combined, account for half the world’s total increase in energy use through 2040. This will have a profound effect on the development of world energy markets.”

    It said energy demand will increase to 820 quadrillion British thermal units (Btu) in 2040, up from 524 quadrillion Btus, adding that China’s energy use will double that of the United States by 2040.

    It said renewable energy and nuclear power are the fastest growing source of energy consumption, with each increasing by 2.5 per cent per year. stressing that fossil fuels, including oil, natural gas and coal will continue to supply almost 80 per cent of the world’s energy through 2040.

    The report said natural gas is the fastest growing fossil fuel in EIA’s outlook, and will continue to dominate the landscape.

    It said non-OECD in Europe, Middle East and the United States, accounted for the largest increase in natural gas production globally.

    The explosion in supply from unconventional sources will underpin growth of natural gas demand, while high oil prices will encourage countries to focus on liquid fuels “when feasible”, the report stated.

    The report projected benchmark Brent crude to average $105 this year, and $100 by 2014, adding that prices will increase long-term with the world oil price reaching $106 a barrel in 2020, and $163 in 2040 in the reference case.

  • ‘Oil vessels prone to attacks’

    Oil vessels, which anchor off Nigerian waters are prone to pirate attacks, Oil Rig Zone has said in its latest weekly report.

    According to the organisation, a surge in piracy in the Gulf of Guinea region, including waters off Nigeria, is alarming.

    It said Nigeria’s position as one of the major producers of oil, cocoa and metals, lend credence to this assertion.

    It said vessels that anchor off West African coastal nations are often the target of criminals. Unlike waters off the coast of East Africa, where ships can move past at high speed with armed guards on board, many vessels have to anchor off West African coastal nations, with little protection, making them a soft target for criminals, it added.

  • MDAs, others owe PHCN N3.174b

    CUSTOMERS are owing the Ikeja Business Unit of the Power Holding Company (PHCN) N3,173,910,457.47, the Business Manager, Lateef Olaleye has said.

    Speaking during a customers’ consultative forum in Lagos, Olaleye said payment of the debt would enable the unit to improve on its service delivery.

    He said: “We at Ikeja Business Unit have been trying to ensure that we satisfy our customers in every way possible. I, therefore, appeal to all electricity debtors to please settle their outstanding. It is only when customers settle their bills as and when due that we will be able to render the best of services.”

    He said Ministries, Departments and Agencies owe N2.4billion, while non-maximum demand customers owe N778.2million.

    Olaleye said the rate of vandalism of PHCN’s equipment has increased within the unit. “Vandalism of PHCN installations, especially in the Government Reserved Area (GRA), has increased, adding that Ikeja has become a cankerworm, which has assumed a personality of its own.

    He said in the past four months, the Unit has recorded the highest vandalism of nine transformer substations. Oba Akinjobi 300kva substation was vandalised thrice in March, April and May, while Remi Fani-Kayode 500KVAsubstation was vandalised on April 8, and after the vandalised materials were replaced, the vandals came again two days later on April 10, and stole the replaced cables and other substation materials.

    He said on July 2, they stole virtually all the materials in the same substation, including 20 metres of 150mm2x4 single core cable, adding that another theft was recorded on March 7 at Ladoke Akintola 500KVA substation when the thieves carted away eight metres of 150mm2x4 core cable, cable sockets and ferrules. He said GRA Local and Ladipo Bateye were also affected.

    The vandals destroyed equipment on May 8 and June 10.

    He said the management has been doing its best to reduce vandalism in the unit.

    “But I thank members of the community development association (CDA) in the GRA and their security committee for their unrelenting efforts in trying to put an end to this malaise. I also thank the DPO of Area F Police Station for giving us all necessary assistance. I appeal to well-meaning Nigerians to assist us in fighting these vandals,” he added.

    Olaleye also noted that though the quality of service has not reached that level where PHCN workers can rise and click glasses for job well done, the utility firms are making efforts to see it happen.

    He said there are occasions where some areas do not without electricity supply for hours or days probably due to obsolete equipment. poles.

  • Shell promises $5m jetty for pipe mill

    Shell Petroleum Development Company (SPDC) will build a jetty worth $5 million in support of the pilot pipe mill being promoted by the Nigerian Content Development and Monitoring Board (NCDMB).

    The Executive Secretary of NCDMB, Mr Ernest Nwapa, stated this when he received members of the Senate Committee on Petroleum Resources (Upstream) who went on oversight visit to the Board in Yenagoa, Bayelsa State.

    The jetty would be used for shipping raw materials and finished products from the 250 metric tonne pipe mill being located in the same precincts with the Shell Gbaran Ubie’s gas plant and the National Integrated Power Plants (NIPPs).

    He said the pipe mill would create over 1,000 direct jobs and several thousand indirect jobs for Nigerians as well as provide an invaluable platform for training Nigerians. He said the mill will also supply pipes for the over 2,000 kilometres of new gas pipelines to be laid in the gas master plan, replacement of aged existing pipes, as well as supply pipes for the numerous fertiliser, LPG and gas-to-power projects planned for the next few years.

    Nwapa reassured the Senate Committee, led by its Chairman, Senator Emmanuel Paulker, that the Board was focusing on developing local capacity which will ensure that industry jobs are executed in-country and employment is created for qualified Nigerians.

    He stressed that the existence of local capacity and manufacturing of components of industry equipment was a sure way to grow the Nigerian Content, generate employment and reduce dependence on importation for industry operations.

    Other initiatives of the Board, according to him, includes the on-going plan by the Board to establish the Nigeria Oil and Gas Industrial Parks in proximity to the oil fields to spur Small and Medium Enterprises (SMEs) to grow their capability in manufacturing through partnerships with multi-nationals and original equipmentmanufacturers (OEMs).

    “We intend to use the industrial park model to establish physical infrastructure and create enabling environment for low-cost manufacturing of equipment components, with a view to maximise utilisation of Nigerian made goods in the oil and gas industry; and to integrate community entrepreneurs into oil and gas value chain,” he said.

    In his remarks, Paulker reminded the Board that it has an important role to play in the development of the economy, especially in increasing the participation of Nigerians in the oil and gas industry and developing indigenous capacity.

  • Nigeria’s oil revenue threatened by OPEC’s planned cut

    WITH the Organisation of Petroleum Exporting Countries (OPEC) planning to cut down production by 300,000 barrels next year, Nigeria’s oil output and revenue are bound to suffer, according to experts.

    In its latest report, OPEC said production would fall to 29.6million barrels per day bpd, 300,000 barrels and 2.6 per cent lesser than its current production of 30 million bpd.

    It said OPEC’s decision was informed by the need to maintain production levels that keep price from falling below $100 a barrel.

    President, Nigerian Association of Energy Economics, Prof Adeola

    Adenikinju, said OPEC’s proposed cut would affect member-countries. He said any attempt to keep oil production or price below or above certain thresholds would affect OPEC members.

    He said Nigeria’s case is peculiar because its oil production and revenue have been declining.

    ‘The issue is going to have marginal effects on Nigeria’s oil output. This is because the country is not new to declining oil production. Besides, the fact that Nigeria is not meeting OPEC quota of 2.5million barrels or thereabout, oil production has been hindered by issues, such as oil theft and pipeline vandalism, divestments of stakes by oil majors, among others. Based on these, the sliding oil production will have minimal effects on Nigeria,” he said.

    “The impacts would be much on revenue. The budget is predicated on oil production. Once there is a problem with oil production, it would affect fiscal flow of the government. It is obvious that Nigeria cannot meet the current or future quota because it has too many internal problems to contend with. This means the country will further experience shortfall in oil revenue.”

    He noted that the government benchmarked the budgets at 2.5million barrels a day and $90 barrel but the country is producing less than 2million barrels a day.

    ‘The government is already having problem with the budget. The oil projection of 2.5million

    barrels has not been met, which means that that the government is battling fiscal challenges. The government thought it would be able to boost the Excess Crude Account to mitigate the effects of any shortfall in oil revenues, but that has not happened. Giving the probelms in the Niger Delta oil producing region, the country would still not be able to increase its oil production and revenue next year.

    Also, the Chief Executive officer, Economic Associates, Dr Ayodele Teriba said any major development in the international oil market would have ripple effects on the economy of OPEC’s member countries.

    He said the government’s inability to meet some of its fiscal needs was as a result of some failed projections. He advised the government to put in place measures that would  mitigate

    the any external shocks.

    Meanwhile, crude oil production, including condensates and natural gas liquids, fell by 1.5 per cent from 1.97million barrel per day in April to 1.94 mbd in May, this year.

    According to the Central Bank of Nigeria’s (CBN)’s Economic report, deliveries to the refineries for domestic consumption remained at 0.45million barrels a day or 13.9 millions in the period under review. CBN attributed the decrease in production to recurring oil spills, crude oil theft and force majure on oil activities in Niger Delta.

  • How to avoid another NLNG/NIMASA feud, by activist

    NIGERIANS have been advised to learn how to use dialogue, the judiciary and public-private initiative to resolve their disputes to avoid the re-currence of the Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigerian Liquified and Natural gas (NLNG) clash.

    An energy lawyer/activist, Mr Gbite Adeniji, said the crisis would not have persisted had the two parties sought legal interpretations of the problems from the beginning.

    ‘He said: “Though the parties have gone to court on two occasions, they did not explore the option of the judicial system when the problem started. In the beginning, the crisis was reduced to blame shifting. From all indications, the feud between the two agencies has taught Nigerians one big lesson – the judiciary has the power to resolve thorny issues. Ultimately, the judicial system has provided clarity to the situation as evident by the court judgment, “ he said.

    Adeniji urged Nigerians to approach issues that are capable of creating problems to the economy from legal perspective, adding that this is the only way to save the country from future crisis.

    He said: “Now that the court has stepped in, we all see how the crisis was resolved between the two parties. If not that the court waded into the crisis, the problem would persist.”

    Also, the President, Petroleum and Technology Association of Nigeria (PETAN), Mr Emeka Ene, said an integrated approach would have helped the country to prevent crisis.

    He said groups such as the Manufacturers Association of Nigeria(MAN), Petroleum and energy associations, government’s bodies among others must be invited to proffer solutions whenever problems transpires.

    “What happened between the two organisations is a lesson for Nigeria. There was no all-inclusive approach to solving the problem between them in the beginning. If such things had existed, the issue would not been prolonged. The reason is because professional groups or associations are made up of technocrats who can come together to engage in cross fertilisation of ideas to put volatile issue under control,” he said.

    Ene said everybody on both sides of the fence wants to move the country forward, stressing that inability to reach a compromise affected the relationship between the two institutions.

    He advised stakeholders to try and reach a compromise on or before they get out of hands, adding that ability to shift ground would help organisations either private or public to forestall crisis in the future.

  • Kerosene price may go up over cooking gas scarcity

    The scarcity of Liquefied Petroleum Gas (LPG) (cooking gas), a fallout of the disagreement between Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigerian Liquified and Natural Gas (NLNG) may push up the price of kerosine.

    The President, Nigerian LPGas Association (NLPGA), Dayo Adeshina, said the face-off between the two government agencies was grounding activities, especially in the LPG sub-sector.

    He said if the scarcity continued it may result in the price of kerosene going up to N250 per litre. The demand for kerosene, he said, increased because of the scarcity of LPG.

    “We may not appreciate the enormity of the situation we have on our hands now, until we get to a time the problem gets out of hand. The truth is that by the time LPG depots are dried up, consumers of cooking gas will have no other option than to depend on kerosene for their cooking. So, as the demand for the product increases, the price of the product will go up, too, according to the law of demand.

    “So, with the product being sold currently at N130, consumers may yet pay as much as N250 or more for a litre as the current scarcity of cooking bites harder.”

    He said the three LPG terminals in Lagos, including PPMC, Navgas and NIPCo, had dried up as the vessel, Gaz Providence, which was to supply them the product, has been detained and prevented from berthing.

    Adeshina said the development was not healthy for the industry and the economy as the crisis, if not addressed, may worsen the scarcity even after the vessel is released and allowed to discharge its content.

    “Just as we seek the immediate release of Gaz Providence, we will also like to implore the government to intervene so that the two warring parties can sheathe their sword in the interest of the country. This is because the vessel being detained is a 9,000 tonnes capacity one, despite the monthly consumption being over 12,000 tonnes.

    “So, what this means is that even if the vessel is released today, it would only be able to meet consumption for no more than one month. By this it means that if the standoff between NIMASA and NLNG is not resolved before then, we may be going from a bad-to- worse situation.

    Adeshina said the call for the release of the vessel was not borne out of sentiments but sound reasoning as the owners of the vessel had paid necessary fees.

    “This is not about taking sides between the two parties, but about following sound logic.We believe nothing stops NIMASA from releasing the vessel even while it pursues its case with NLNG.This is because the owners of the vessel have paid all statutory fees and so should be allow to discharge the contents of the vessel for onward supply to terminals and depots,” he said.

  • ‘Oil firms face losses over 2015 poll’

    Oil producing firms in the Niger Delta risk losing their investments to pre- and post-2015 election conflicts unless urgent steps are taken to avert such crises, the United States Institute for Peace, has said.

    In a special report, titled: What next for security in the Niger Delta, the group said major conflict drivers were still in place in the region despite the Federal Government’s decision to grant amnesty to militants.

    In the past, the region witnessed kidnappings, killings, destruction of oil pipelines and wells and loss of revenues arising from oil theft, among other problems that attracted the attention of local and international agencies.

    According to the report, issues such as wavering leadership on security, the closedown of amnesty in 2015, exclusion of some militants, divisions within the oil producing communities and post-election results, among others, could lead to violence and eventual disruption of oil facilities in 2015.

    It said: “Some possible triggers could have only distant ties to elections. In the run up to 2015, for instance, violence could flare around law enforcement efforts , particularly Joint Task Force (JTF) action on oil theft. During the 2000, skirmishes between soldiers and militants over stolen oil triggered a number of larger violent episodes. Some of the more financially independent groups could react badly to a crackdown on theft, not least those that have enjoyed period of impunity.”

    The report said militants dissatisfied with, or excluded from the amnesty programme could launch fresh attacks before the voting day, adding that there are many splinter groups, or factions that could fuel violence based on their perceived wrong treatments by the government.

    “While the amnesty has prevented some youths from committing crimes, such as kidnapping of expatriates and destruction of oil facilities among others, the programme and the complimentary initiatives have not meaningfully reduced the widespread corruption, zero-sum resource competition, under employment, local economic dysfunction, high youth unemployment, environmental degradation, lack of public accountability or criminality that fuelled past violence in the region,” the report said.