The Nation Newspaper

Category: Energy

  • Senate won’t rush into passing PIB, says panel 

    THE Senate will not rush the passage of the Petroleum Bill (PIB) into law to avoid shortchanging Nigerians, the Chairman of its Committee on Gas Resources, Senator Nkechi Nwaogu, has said.

    She said efforts were being made to ensure the speedy passage of the Bill, adding that it was the desire of the committee to ensure that the legislation is all-encompassing, spelling the dos and don’ts in the oil and gas industry.

    Senator Nwaogu said the bill was an important document that should be given priority because it would remove fears about the oil industry, especially the gas sector. She added that if passed into law, it would address bottlenecks in oil and gas operations in the country.

    The Bill has passed the first and second readings and is at the domain of public hearing. She noted that it would be detrimental to the economy to rush the processes of passing the Bill into law, without allowing experts’ input. This is to ensure that, at the end of the day, the Bill would be seen as a democratically-assembled document comprising inputs from experts in oil and gas and other sectors, Senator Nwaogu said.

    “That is why we are going to hold a public hearing, and for my Committee on Gas. We want to ensure that this document has a transparently identifiable dos-and-don’ts for gas exploration, production and processing and gas distribution.We don’t want a situation where we would say we have a petroleum industry law that does not take into account the peculiarities in gas exploration, processing and distribution,” she stated

    “We want to ensure that the volume of gas we have translates into increase in revenue profile for the country, and ensure that the new document gives opportunity for investment in the gas sector, as well as ensure that there would be easy entry into gas business in the country and easy exit of gas business at the same time.

    “We expect that this petroleum industry law as it affects gas, would help to create more wealth for Nigeria, more employment for Nigerians, and at the end of the day place Nigeria in the committee of nations as regards gas production and gas exploration,” adding that domestic gas development could be used to reduce the continuous abuse of our environment through deforestation and through gas flaring by putting a stop to the practice.

    She said if there is a law that prohibits gas flaring and ensures that we create a conducive environment for investors to come into the gas infrastructure business, firms would come in from outside the country that would want to establish a network of gas pipelines.

    She agreed that it is only when the government offers incentives, as well as taking some deliberate policies to attract investors into gas development, that people would come in to invest, adding that both the content companies would come and have a share of gas development projects in the country.

    She also said the committee would ensure it X-rays the PIB to ensure that gas and its operations in the country are well-carried out and that the law would protect investors, punish offenders, and ensure that those caped-wealth by some oil companies for many years, were released into the basket of investible assets where Nigerians could find them attractive to go and bid for them.

  • BPE to hand over distribution firms to investors soon

    The Bureau of Enterprises (BPE) will soon hand over the distribution companies to core investors that met the capital requirement.

    The companies include: Abuja Electricity Distribution Company Plc, Benin Electricity Distribution Company Plc and Eko Electricity Distribution Company Plc.

    Others are: Enugu Electricity Distribution Company Plc, Ibadan Electricity Distribution Company Plc, Ikeja Electricity Distribution Company Plc, Jos Electricity Distribution Company Plc, Kano Electricity Distribution Company, Port Harcourt Electricity Distribution Company Plc and Yola Electricity Distribution Company Plc.

    Speaking to The Nation, thhe Head of Media, Ministry of Power, Mr Timothy Oyedeji, said the payment of the 100 per cent capital requirement by the bidders was mandatory to ensure the successful privatisation of the power sector.

    The government, he said, was waiting for the successful bidding distribution and power generation firms to meet the 100 per cent capital regime.

    He said: ‘’Though the companies have paid 25 per cent of the capaital outlay, they are required to pay the remaining 75 per cent in line with the directives of BPE. When they pay the outstanding, the companies would be handed over to the bidders in the next couple of months.’’

    The BPE had announced the receipt of $335 million from the bidders for the generation and distribution firms last November.This followed a due dilligence process conducted on the distibution and generation power firms.

    The process included clearing the preffered bidders for the Power Holding Company of Nigeria (PHCN) generation and distribution firms, ensuring that they have the capacity to do the job.

    Others are decision of the government to reach an aggreement with the Nigerian Labour Congress (NLC) to guarantee the cooperation of workers in the handing over process, and raising finance to pay the entitlements of the workers exiting PHCN.

  • Shell, firm seal $84.5m pipeline contract

    KAZTEC Engineering Limited (KEL), an indigenous oil service company, has signed an agreement with Shell Nigeria Exploration and Production Company (SNEPCo) for the construction of a 58-kilometre loopline at $84.5 million.

    According to a statement by Kaztec, the agreement for Package 1 of the engineering, procurement and construction (EPC) of Trans-Nigeria Pipeline Loopline Project for Shell Nigeria Exploration and Production Company of Nigeria (SNEPCO), was concluded last week.

    The pipeline contract is expected to be completed and delivered within one year and Kaztec has assured Shell of delivering within the stipulated time frame.

    “This is the first major project to be executed by Kaztec Engineering Limited for Shell. The event took place at the SPDC Office, Port Harcourt, Nigeria, with high-powered delegations from both parties in attendance,” the company said.

    The objective of the project, Kaztec said, is to construct a three-inch, 58-kilometre loopline from the Ogale manifold to Bonny Terminal, in the South-South region of Nigeria. SNEPCO had been experiencing challenges with the current Trans-Niger Project. Seen by SNEPCO and National Petroleum Investment Management Services (NAPIMS), to be an emergency project. It was divided into three packages. Kaztec Engineering is to undertake Package One, having been chosen on the strength of its recent track record in the oil and gas sector, the statement added.

    The Chief Operating Officer (COO), Kaztec Engineering Limited, Ikechukwu Okpala, assured SNEPCO of KEL‘s delivery on time and quality, promising Shell’s management that it would get a taste of the Kaztec expertise.

    The contract-signing was done by the General Manager, Offshore and Shallow Water Projects, SNEPCO, Mr. Toyin Olagunju, on behalf of Shell and the Executive Chairman, KEL, Sir Emeka Offor, for Kaztec while Chioma Ogunuka, Contracting and Procurement Lead Pipeline Projects of SNEPCO, and the COO of KEL, Ikechukwu Okpala, among others witnessed the signing ceremony.

    SNEPCO’s Toyin Olagunju, said he looked forward to the successful completion of the project. He called for world-class performance on all aspects of the project, with particular attention on safety and environment. He advocated for zero-incident execution of the project.

    The Chairman Kaztec Engineering Limited, Sir Emeka Offor, declared that SNEPCO reassured Shell of KEL‘s commitment to deliver on time, and even surpass all expectations of the project. He said he was glad to join the Shell family, and looked forward to a productive partnership in the years to come.

    The Shell Petroleum Development Company of Nigeria Limited (SPDC), operator of the Nigerian National Petroleum Corporation, NNPC/SPDC joint venture (SPDC JV), had earlier announced that it has taken decision to invest $3.9 billion in the Trans Niger Pipeline loop-line (TNPL) and the Gbaran-Ubie Phase Two projects. T

    SPDC Managing Director, Mutiu Sunmonu, said the Trans Niger Pipeline (TNP) is important for Nigeria, pumping some 180,000 barrels per day of crude oil to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation (Afam VI power plant) and liquefied gas exports.

    He said: “Sections of the TNP have been heavily impacted by sabotage and crude oil theft. The design of the TNPL includes improvements which make the pipeline better protected against crude oil theft and sabotage, which should help to reduce pollution related to criminal activity which was a key aspect of a 2011 United Nations Environment Programme (UNEP) report on Ogoniland. The total capital investment for the TNPL project bundle is expected to be $1.5 billion while the total investment for the Gbaran-Ubie Phase Two bundle is $2.4 billion.”

  • ‘Why marginal fields’ operators need more funds’

    The Director, Pillar Oil Limited, Seye Fadahunsi, has advocated additional fields and funding for successful marginal fields operators.

    This, he said, would make them grow and use the same skills they had developed to generate commercial value and provide employment for Nigerians, and also add to the gross domestic product of the country.

    He said: “The government should carry out a bid round, which should be open to indigenous groups that aspire to get into the exploration and production business. And for those who are young and small in the exploration and production business, it is an opportunity for them to grow, while for those who are aspiring to get in and those who are in and are just starting, it will be an opportunity for them to make progress. This will help achieve the drive for increased indigenous participation in the sector.”

    Speaking with The Nation in Lagos, Fadahunsi said though the Petroleum Industry Bill (PIB) is yet to be passed into law, he said it would be nice if there are special terms for marginal field operators clearly defined in the bill.

    He said because there is production entry in the bill, most of the marginal producers would likely be small producers, but he expressed optimism that the bill would be beneficial to marginal producers to enable them to become productive and make it commercially viable for people to develop such fields.

    “We have been waiting for the bid round for some years now. A lot of people are getting to a point where they have begun to wonder whether it would ever happen, but if it does happen, it should be seen as an opportunity for either those small producers or those who want to get into the system,” he said, adding that the bid round should be restricted to indigenous companies only

    But to be successful in the business, Fadahunsi said there is the need for good analysis before one gets into it. In addition, there is the need for appropriate technology to be put in place to ensure achievement of commercial value.

    He said his company was successful because it deployed a lot of strategies, including funding mechanism to ensure that it realised its objectives. “Finding money was a challenge but we eventually put up a partnership and we started production,” he said, adding that the field is producing about 2,500 barrels per day and there are expectations that in the next two years, given the opportunity, it would be producing close to 10,000barrels per day.

  • Govt urged to find new market as US embraces shale oil

    Govt urged to find new market as US embraces shale oil

    Nigeria must rethink its marketing strategies to win the confidence of prospective buyers of its crude oil, an expert, Prof Adeola Adenikinju has said.

    He told The Nation that the introduction of shale oil by the United States (US) has implication for the nation’s oil and gas sector. Shale oil is a petroleum obtained by the distillation of bituminious shales.

    He said the country needs to adopt a more flexible and proactive strategy, by offering discounts to potential buyers of its oil.

    Adenikinju, the President of National Association of Energy Economics (NAEE), said India and China were Nigeria’s new oil destinations, advising the Federal Government to offer them discounts to win their confidence.

    “In the short- to-medium term, the emergence of shale oil will affect Nigeria’s ability to generate more money from the market, the reason being that the United States is the largest importer of our oil. Now, that the US is more concerned about the development and sales of its oil, Nigeria needs to overhaul its strategies to win new and stronger markets.

    “Nigeria will be struggling with other countries to penetrate new markets, especially India and China. We need to understand the fact that the two countries already have commitments, and the only way to penetrate them is to offer them discounts on any volume of crude they are buying from us,” he said, adding that there is nothing wrong in offering your prospective customers discounts. “In business, when you are entering a new market, you adopt different strategies to get your customers look in your direction. I think that is the most valuable option available to Nigeria now.”

    He advised the government to put in place short-medium and long-term strategies to cushion the shocks in the global oil market, adding that the inability to do that would affect the country. He listed the strategies to include building refineries in order to meet local demands and further reduce importation; prospecting for new buyers in advance to mitigate the shocks of losing some markets; offering a discounted oil price and providing value additions in the industry, among others.

    According to him, Nigeria must look beyond the US if it wants to achieve a lot in the global oil market.

    He said while it is good to acknowledge the growing influence of US in the oil market, the need to consider new debutants should not be overlooked.

    He explained that in recent times, some countries have discovered crude oil in West Africa, saying those countries have added to the list of players in the market. This means that the more players in the market, the stiffer the competition, he said.

    “Nigeria must be wary of these countries, by putting measures to protect its oil. That is why the government must consider future and potential problems, and find means of preventing them,” he stated.

    Also, the nation’s oil and gas industry is threatened by the activities of oil thieves and its attendant loss of an estimated $10billion in the last four years. While reacting to the issue, the President, Petroleum and Natural Gas Senior Association of Nigeria(PENGASSAN), Babatunde Ogun, said the development is making International Oil Companies to divest from the industry, as well as posing more threat to the economy. He said companies, such as Shell, Chevron, Addas, Petrobras, among others have plans to divest their stakes in the industry.

    He said: “Shell has divested part of its stakes in the industry. Chevron has concluded plans to do so. Addax and Petrolbras are making similar moves.”

    He said the companies are facing three problems namely; losing crude oil production and profit as a result of the activities of oil thieves, facing attacks from the government’s agencies and civil liberty organisations and spending a lot of money to repair the vandalised pipelines.

  • ExxonMobil supports environmental awareness training

    The Ibom Programme on Environmental Awareness (IPEA), an initiative of the Akwa Ibom State Ministry of Environment and Mineral Resources in partnership with ExxonMobil, has held a workshop for advocacy team members in Uyo, the Akwa Ibom State capital.

    The one-day training, according to a statement, was designed to empower IPEA personnel to effectively enlighten people at motor parks, schools, abattoirs, restaurants and other locations as part of the recently-launched environmental awareness campaign in Akwa Ibom State.

    IPEA is aimed at creating awareness on pollution, and helping the citizens of Akwa Ibom State develop positive environmental values that will enable them manage instances of environmental pollution that may occur, as well as prevent potential environmental hazards from happening.

    The General Manager, Public and Government Affairs, Mobil Producing Nigeria Unlimited, Mr Paul Arinze, represented by Mrs Regina Udobong, called on the participants to live up to expectation on the campaign.

    According to him, ‘ExxonMobil expects the participants to take full advantage of the training programme to sharpen their skills to educate target audiences and encourage best practices to curtail all kinds of environmental pollution – air, water and earth pollution.’

    Arinze reiterated ExxonMobil’s commitment to the environment, which had been demonstrated by the company’s partnership with Akwa Ibom State Ministry of Environment and Mineral Resources to achieve a cleaner and safer environment.

    Declaring the training open, the Commissioner for Environment & Mineral Resources, Prince Enobong Uwah, represented by the Permanent Secretary, Ministry of Environment & Mineral Resources, Mrs Atim Enoh, commended ExxonMobil for supporting the environmental awareness campaign.

    According to her, ‘the state Ministry of Environment & Mineral Resource is grateful to ExxonMobil for sponsorship of IPEA. This gesture by ExxonMobil reflects its commitment to cleaner environment in Akwa Ibom State’.

    Uwah advised the participants to make good use of the opportunity offered by the training to ensure that objectives of the campaign were achieved.

    The training witnessed presentations by resource persons, including Dr. James Asuquo, a lecturer in the Department of Chemistry, University of Uyo and Mr. Stephen Erakpotobar, an environmental expert. The training focused on key issues such as sources of water, air and land pollution and remedies and behavioural change communication in environmental management.

    The Ibom Programme on Environmental Awareness was launched on June 5, 2013 in Uyo by Governor Godswill Akpabio.

  • Why banks are reluctant to finance oil projects

    The Managing Director, Intelligent Flow Stations Limited, Babs Oyeneyin, has explained why banks are banks’ reluctant to finance oil and gas projects. Their reluctance is informed by the lack of meaningful structure or business framework to guarantee safety of funds for execution of such projects, he said.

    Oyeneyin, who spoke at a forum in Lagos, said that all over the world the oil industry is funded by banks with the aim of generating more money that could be extended to other sectors of the economy including the small and medium enterprises.

    He said the Nigerian situation is different because the government has not created meaningful structure that would guarantee banks to provide money for execution of oil and gas projects. Such structures include business plan and rebate for funding specific projects.

    The banks need to be properly equipped. He adding “Our banks need to have the right education as to what the oil and gas industry is all about. In the business, you need to bring bank guarantee because the bank guarantee is the field you have. The banks need to do their due diligence and if you have a field that you can estimate its reserves, it is enough for the banks to provide the finance to do the business.”

    The international oil companies (IOCs), he said didn’t use their money for projects execution; rather they use the assets they have as guarantee. “Because they have fields make them to be able to borrow from banks to fund the fields,” he explained.

    Oyeneyin said marginal fields’ development has not failed but noted that those working are doing so by virtue of personal efforts. He said the banks need not to be blamed so much because the framework is not there to educate them. He urged the government to facilitate the processes to support the banks.

    He said the government should not be involved in spending personal money to fund private businesses but should create the policy and partnership. He said for a bank to be able to fund field development, it must have people who would assess the business plan. The business plan includes what to do in the field, resources available, available reserves and how to go about the development as well as engineers who would be able to do the assessment.

    “The banks need to do their due diligence to make sure of the plans they have in place to do their business, the cost, the bank independent assessment, which will make it decide to give you money to fund the development. But they don’t have the infrastructure to do that, they don’t have the people, and even when they recruit engineers, they just sit on the counter. It is a cash and carry business that the banks do. They need to grow from that. Nigeria has been in the oil business for a long time. The IOCs are only helping to support of SMEs.

    “The banks need to be educated on what their responsibilities are, the government has to provide the inducement for banks to actually see that this is an opportunity for development, and at the same time the banks are not charity organisations, they want to see that there is the right framework for them to be able to support,” he said.

  • Oil field operators advised to use technical experts

    Marginal oil field operators have been advised on the need for technical experts. Such experts will provide indepth knowledge of well reservor and guide the operators on the completion and well-testing process.

    The Technical Supervisor, Expro, who Marcel Ahaneku, who gave this advice at a forum in Lagos, said some operators who acquired marginal fields neither had the necessary understanding to produce the well nor the funds to pay the services companies.

    “It is not enough to acquire oil well, you have to pay for services such as completion and clean out as well as acquire early production facilities to be able to produce from the well before thinking of what to earn from the field,” he said.

    He stated that good knowledge of how to produce from marginal fields is important, noting that out of the 24 marginal fields given out in 2004, only about eight have started production. The delay in bringing these fields into production was attributed to lack of technical know-how and inadequate capital to fund the project.

    Ahaneku said the major challenge in developing a well is lack of proper engineering, explaining that “if a well has a difficult terrain, it could be as a result of its being abandoned for many years before re—entry. With such long period of abandonment, it might pose some difficulties trying to look at the casing integrity.” He added that if a marginal field owner doesn’t have enough manpower and resources, it might be hard in achieving easy and successful re-entry.

    Expro, he said, is a multinational oil service company, which provides a range of solutions across six areas of capability including exploration and appraisal, well testing, subsea safety systems, drilling and completion, flowback and clean-up, production and well integrity and intervention.

    He said the company is positioned to help marginal field operators to develop their wells by giving them all the necessary engineering services in order to accomplish their objectives from their projects

    Ahaneku said the company offers market-leading technology and expertise to provide a full package of exploration and appraisal, and well testing services, with specific strengths in subsea wells and high flow rate gas wells.

    The company also provides integrated solutions across the exploration and appraisal phases of the value chain in oil production. It offers the complete well test package, utilising some of the industry’s most reliable technologies including surface well testing packages, landing string assemblies, drill stem testing, tubing conveyed perforating, fluid sampling, well site chemistry and real-time data services, among others.

    He said the company is committed to providing marginal field operators assistance in specialised areas, adding that the company recorded a major breakthrough in the orient oil and gas well in Anambra State by putting about 60 per cent of the resources in terms of manpower, engineering and development.

    The expert said the company works for Chevron, Shell Petroleum Development Company (SPDC), Shell Nigeria Exploration and Production Company (SNEPCo), ExxonMobil, and the Nigerian National Petroleum Corporation (NNPC) on various projects including well intervention for the NPDC, a system which he said is used to isolate the well in case of emergency.

  • Things were at a low ebb

    Things were at a low ebb in the energy sector in the first half of the year. The non-passage of the Petroleum Industry Bill (PIB) constituted a major setback on investment drive. The government, however, continued to push its power sector reforms, EMEKA UGWUANYI reports.

    Oil and gas industry

    Crude oil theft took centre stage in the upstream sector of the industry reaching an all-time high. The government and operators admitted that crude theft reached an alarming level in the first half of the year, indicating that the crude thieves were winning the crude theft battle despite the joint task force (JTF) comprising officers of the armed forces and the police.

    Shell Petroleum Development Company Limited (SPDC), which is the most affected company, a couple of weeks ago announced its intention to divest all its onshore and near offshore assets because the assets are accessible to the oil thieves.

    Shell’s pipeline, especially the Trans Niger Pipeline (TNP) was shut several times within the period under review. The company declared a couple of force majeure on oil supply as a result of continued vandalism of the pipeline and sometimes explosion arising from the activities of vandals.

    On the review of SPDC Joint Venture interests, the company said: “Today, Shell’s 100 per cent-owned subsidiary, SPDC, announced the initiation of a strategic review, consultation with partners, and the potential exit from the interests it holds in some further onshore leases in the Eastern part of the Niger Delta, subject to partner and regulatory approvals. The SPDC JV produced around 750,000 barrels of oil equivalent (kboe) per day in 2012 from 28 Oil Mining Licenses (OMLs) across the Niger Delta, both onshore and in the near offshore. SPDC has been following a strategy of selective divestments of its onshore portfolio, concentrating the operating footprint into a smaller, more contiguous area, while supporting the Government’s policy of encouraging investment by indigenous companies in the Nigerian oil and gas industry. Since 2010, SPDC has sold its interest in eight OMLs for a total of $1.8 billion.”

    The Federal Government has been seeking assistance of foreign governments in the fight against crude theft as it contributes to reasonable decline in revenues and oil export.

    The Petroleum Industry Bill (PIB) continued to stall fresh investment in the oil gas industry in the first half of the year. Besides the award of the $3.1 billion contract for the construction of the floating production, storage and offloading (FPSO) vessel for Egina deepwater oil field to Samsung Heavy Industries, a project owned by Total and NNPC Joint Venture, no very significant project took place within the period under review.

    The Federal Government and industry stakeholders are prevailing on the members of the National Assembly to harmonise various interests and pass the bill into law.

    Drilling results also showed hope of commercial discovery in Oil Prospecting Licence (OPL) 310 and Oil Mining Lease (OML) 113. Both assets are located offshore Nigeria and close to Lagos State. OML 113 interest holders include Yinka Folawiyo Petroleum (Operator), Vitol Exploration Nigeria, Chevron, P.R Oil and Gas and Lekoil. OPL 310 owners are Optimum, Afren Plc and Lekoil.

    Apart from some marketers that are still being interrogated by the Economic and Financial Crimes Commission (EFCC) over involvement in fuel subsidy fraud, the downstream sector ran smoothly in the first half. Despite a couple of attacks on the products distribution channels, products supply was regular and the government made part payment to marketers who imported fuel during the period under review.

    Gas

    The dispute on payment of levies between Nigeria Liquefied Natural Gas Limited (NLNG) and the Nigerian Maritime Administration and Safety Agency (NIMASA) worsened within the period under review.

    NIMASA has blocked NLNG’s Bonny channel in the past 11 days preventing exit from or entrance of NLNG’s owned and charted vessels into the channel. The NLNG took the case to court and despite court order that NIMASA shouldn’t obstruct NLNG’s operation or further request to pay levies pending determination of the case, nothing has changed.

    NLNG’s General Manager of External Relations,Dr. Kudo Eresia-Eke, said because of the blockade, “we have had to drastically reduce production and gas intake. Because of the blockade, we cannot meet obligations to our buyers. We have, therefore, had to declare Force Majeure as at June 28, 2013.”

    He also said the cost of the blockade in terms of revenue loss is huge. He said the cost couldn’t be quantified until the blockade is lifted but certainly it is huge. The company is contemplating to shut down operation if the blockade continues.

    NIMASA’s Deputy Director/Head, Public Relations, Isichei Osamgbi, said the blockade of the channel was necessitated by NLNG’s action. He said: “This course of action was forced on NIMASA by the NLNG’s subsequent refusal or/and failure to abide by the outcome of the negotiated settlement arrived at the mediation process it willingly instigated and subscribed to, after reaching agreement with NIMASA on its outstanding debt and paying US$20million out of it and its continued flagrant disregard for Nigerian laws.

    “By its action, the NLNG has trivialised the mediation process and the position of the Federal Government of Nigeria whose Nigerian National Petroleum Corporation owns and holds 49 per cent of the shares in NLNG and which endorsed the agreement reached that NLNG should pay its taxes/levies and observe all its obligations under the laws of Nigeria in which it is operating.”

    The dispute is costing the country huge revenue loss, and if the force majeure lasts longer than necessary, it would negatively affect domestic supplies.

    Also, the Federal Government, according to the Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, is on the neck of oil firms in the country to meet their gas supplies obligation to meet domestic demands including supplies to thermal power plants. He also said the government is building pipelines for some of the power plants to ensure increased gas and power supply to Nigerians.

    Some Nigerian companie in the first half of the year increased their efforts to deepen consumption of gas as fuel by Nigerians. They include Dangote, Oando, NIPCO and Lagos State Government through promotion of use of compressed natural gas (CNG) and liquefied natural gas (LPG) by vehicles and households.

    The period saw change of baton in leadership at the Department of Petroleum Resources (DPR) with the entrance of Mr. George Osahon and exit of Mr Osten Olorunsola.

    Power

    The Federal Government continued with its efforts to accomplish some milestones in the power sector reform. The buyers of the generation and distribution assets were given up to October to complete payment of the outstanding 75 per cent cost of their purchases. The assets include 11 distribution companies and six generation companies.

    Also, the process of selling the 10 power plants of the National Integrated Power Project (NIPP) started in the first half of the year. The road-shows aimed at sensitising prospective investors locally and internationally to buy into the project is still ongoing and the sale is expected to be completed before end of this year.

  • Shell probes Trans Niger pipeline fire

    A joint team has investigated the cause of the June 19 explosion and fire on the 28″ Trans Niger Pipeline (TNP), which led to the facility’s shutdown by the Shell Petroleum Development Company (SPDC). The shutdown resulted in the deferment of 150,000 barrels per day.

    According to Shell, the team comprised regulators, including the Ministry of Environment, community members, SPDC and independent observers.

    Shell said: “The TNP had previously been targeted by crude thieves and shut down several times to take out crude theft points. To ensure that the facility continued to meet operating standards, SPDC deployed a team to Bodo West on May 22, 2013 to remove and repair crude oil theft connections on both the 24 and 28-inch sections of the TNP.

    “The repair team’s presence and mandate to remove crude theft points were made known to the community, which granted them access. No sectional replacement work was underway. One operations support barge, one environmental barge and two tug boats were the only authorised vessels at the Bodo West worksite. Environmental barges are typically used to store and transport recovered oil.

    The Managing Director of SPDC and Country Chair, Shell Companies in Nigeria, Mutiu Sunmonu, said: “Unfortunately, crude thieves continued to operate at night even as the repair team worked to remove illegal connections during the day, such that, on the day of the incident on June 19, two unauthorised Cotonou boats were reportedly present at the time of the initial explosion and fire. The established operations routine at any repair site comprises a team of SPDC staff, contractors and regulators who only work during daylight hours and leave the site at the end of each day. This means that no SPDC authorised people could have been on the ground at the time of the incident.

    “Having shutdown and isolated the pipeline, but with oil continuing to flow from the pipeline under gravity to the low point on the TNP, the only other practicable option in the circumstance was to allow the fire burn out naturally. To prematurely extinguish the fire without functioning containment equipment on site could have resulted in further environmental damage. We continued to monitor the fire while also mobilising replacement oil spill containment and response equipment to site. With the fire out, a residual leak was observed at the site contained within the crater caused by the initial incident. We are currently mobilising crews to evacuate the pit, access the leak point prior to the joint investigation visit and complete repair.”

    On the reported arrest of some employees of SPDC’s contractors and sub-contractors on suspicion of involvement in crude theft activities, Mr. Sunmonu said: “We appeal that the arrested suspects be treated in line with the principle of presumption of innocence until proven guilty, and hope for a speedy and transparent dispensation of justice for anyone found to have violated the laws of the land.

    “We are committed to operating transparently, which is why we have invited the National Coalition on Gas Flaring and Oil Spill in the Niger Delta (NACGOND) to join the investigating team as independent observers.

    “We will continue to run our operations as safely as is possible and in accordance with both industry regulations and Nigerian laws.”