Category: Energy

An indigenous energy trading company, Hyde Energy Limited, has inaugurated a new Liquefied Petroleum Gas (LPG) facility in Makurdi, the Benue State capital.

The facility, with a capacity of 40MT, is expected to create jobs and boost the economy of the state, is located at the Nigerian Air Force (NAF) Base in Makurdi, and will provide the NAF and its environs with a reliable and sustainable source of energy. Besides, it is believed that it will significantly offer environmental benefits and support Nigeria’s Decade of Gas policy.

The Chief Executive, Hyde Energy, Oladimeji Edwards, said: “We are proud to partner the Nigerian Air Force to bring this important project to completion. This facility is a symbol of our commitment to a more secure and sustainable future. We are bringing tangible benefits to domestic and business LPG users, the  economy, and the environment. From developing storage terminals to establishing LPG hubs across Nigeria, our strategy focuses on delivering LPG to homes and other end users safely and efficiently.”

The Managing Director, NAFIL, Air Vice Marshal Al Adamu, noted that the rationale behind the project was to ease the problem of unavailability of cooking gas for the residents of the base.

He noted the significance of the facility, saying: “This is a good project for the Nigerian Air Force Makurdi and for the community, and I am glad to witness the commissioning of the NAFIL-Hyde Energy LPG facility.

“We are confident that the LPG facility will be a valuable asset to the Nigerian Air Force community and it will help enhance cleaner environment,” he said.

The reforms in the electricity sector are yielding positive results. Many believe that a stable power sector will guarantee sustainable growth and development. A research report has also indicated that right policies will enable Nigeria to consolidate on the gains. MUYIWA LUCAS reports.

Going by the strategic position it holds in the country’s development, submissions by the Manufacturers Association of Nigeria (MAN) cannot be taken for granted.The association reported that insufficient electricity supply had impacted manufacturers’ profitability with a yearly loss valued at N10.1 trillion or two per cent share of Nigeria’s Gross Domestic Product (GDP).

  The MAN complained that the unfavourable situation in the sector has placed the country among the worst countries to do business with a rank of 171 out of 190.

MAN’s position has been further accentuated by the World Bank, which in a report labelled Nigeria as the country with the world’s largest energy access deficit in 2021, with 43 per cent, representing 85 million  of the country’s population without access to grid-connected electricity.

In addition, the country’s electric power consumption per capita of 145KwH  falls behind those of some countries like South Africa with 4,198 KwH  and Ghana with 351KwH , as well as the average for lower middle-income countries with 811KwH.

However, hope is on the horizon for better efficiency in the sector, following the signing of the Electricity Act 2023 by President Bola Tinubu, with the real sector operators’ association backing ongoing electricity industry reforms of the present administration.

It was, therefore, instructive when the MAN’s Director-General (DG), Segun Ajayi-Kadir, assessing the possible impact of the Electricity Act 2023 signed by Tinubu, said the Act if well-implemented, promises to be a major game-changer for the manufacturing sector as it would address the numerous constraints within the sector.

A research report may have further raised the hopes of Nigerians of better says ahead for electricity supply. The report, conducted by Agusto & Co- a Pan-African Credit Rating Agency and a leading provider of industry research and knowledge in the country and Sub-Saharan Africa, noted that as at last December 3, the generating segment of the electricity market comprised 29 plants with a combined installed capacity of 13,014 megawatts (MW) and an average operational capacity of 4,523MW, a decline from  6,371.9MW, that is 29 per cent in 2019.

It further noted that as at last year, there were 12 Independent Power Plants (IPPs) in the country, accounting for 31.2 per cent of the country’s total power generating capacity, which is also a 300 basis points decline from 2021, caused largely by gas constraints and faulty machinery.

For Clarity, Agusto & Co. in the report, observed that on the average and due largely to gas constraints, only five IPPs: Azura-Edo accounted for 26 per cent; Odukpani, 19 per cent; Okpai, 16 per cent; Afam VI, 15 percent and Rivers IPP, eight per cent, accounted for circa 84 per cent of power generated from the 12 IPPs in the last four years.

According to Ajayi-Kadir, the Electricity Act 2023 has favourable implications for the manufacturing sector as it will help reduce cost of alternative energy, competitive and lower electricity tariff, improvement in inflow of Foreign Direct Investment (FDI) and manufacturing performance.

He noted further that it will help increase in Internally Generated Revenue (IGR), improve infrastructure and less tax burden on manufacturers, more investment in renewables, backward integration and energy security, and stable power supply and proper planning.

The MAN chief recalled that over the past decades, the sector has encountered much turbulence in its electricity value chain due to poor policy enforcement, over-regulation, instability of gas supply and bottlenecks in its transmission network.

“These problems have culminated into erratic electricity supply, frequent power outages and persistent collapses of national grid. For many years, the situation has stunted the growth of the economy,” he said.

The Augusto & Co report may have tallied with Ajayi-Kadir’s position. It explained that the entire Nigerian Electricity Supply Industry’s (NESI) value chain is fraught with structural impediments, which have continued to impede optimal performance, with operators consistently ‘passing the buck’ even in the post-privatisation era of the sctor.

The researchers further said the weakest link in the NESI value chain is the Transmission Company of Nigeria (TCN), which is still entirely government-owned. The national grid, with its frequent collapses last year, has a wheeling capacity of circa 8,100MW, a figure that pales in comparison to the nation’s peak electricity demand of 19,798 MW. The implication of this, it said, is that even with an increase in the generating capacity of the grid-connected IPPs, the TCN is unable to evacuate more than 8,100MW.

“This is a critical bottleneck in the supply of electricity and has stalled investment in power generation. On the other hand, the TCN continues to blame load rejection by distribution companies, particularly during the rainy season, for the high frequency of grid collapses,” the report said.

Nonetheless, it further said, it is anticipated that the current Nigerian Electricity Grid Maintenance Expansion and Rehabilitation Programme (NEGMERP), which aims to expand the country’s grid network through the diligent execution of network expansion projects funded by the Federal Government and donors, will result in some growth in NESI in the short term. This is in addition to the Presidential Power Initiative signed with Siemens AG, which is expected to result in an additional 25,000MW of operational capacity from the national grid.

“The completion of such projects will assure prospective power generation companies that the TCN has ample capacity to receive generated electricity. With a more efficient TCN, Nigeria can achieve self-sufficiency in power supply, making electricity exports easier through the West African Power Pool’s (WAPP) future Regional Electricity Market (REM),” Augusto & Co submitted in the report.

Legislation to the Rescue

According to the researchers, the recent assented to the Fifth Alteration Act No. 33, 2022 (the “Electricity Constitutional Amendment”), which allows Nigeria’s 36 states to generate, transmit, and distribute electricity in areas covered by the national grid, has significant implications for the country’s struggling power sector.

The amendment is believed could lead to increased investment in power generation and distribution infrastructure, as well as increased competition among power providers. By devolving power to the states, Agusto & Co. said, the Act could also lead to more efficient and effective management of the power sector, as states will have greater control over their power supply. This, they contended, could lead to more targeted investment in power infrastructure and more responsive management of power supply and demand.

However, the report warns that the Act also raises concerns about the potential for fragmentation of the power sector, as different States may have different priorities and approaches to power generation and distribution, leading some, to possibly bypass the national grid entirely. Furthermore, it said States deemed to lack a sufficient economic base may be unable to attract investors in their electricity generation, transmission, or distribution, causing them to fall behind other states in terms of electricity supply.This, it further warned, could constrain the business environments in these states, thereby eroding investor confidence, discouraging investment, and limiting growth and development.

Outlook

The research report hinted that the NESI is currently in the second stage – the Transitional Electricity Market (TEM) – on its evolutionary path, where the state-owned special purpose vehicle (the Nigerian Bulk Electricity Trading Plc – ‘NBET’) buys electricity in bulk from the generating companies and IPPs and resells to the distribution companies (DisCos) under vesting contracts.

“As it transitions to the medium-term market, we expect more IPPs to become operational, which will significantly raise the industry’s generation capacity over the medium term,” Augsto & Co submitted.

With the race for cleaner energy dispensation intensifying, fossil fuel offers huge revenue for countries exploring it. Nigeria, it is believed, will remain a major crude exploration hub in Africa, leading to an estimated $4.9 billion by 2033, derivable from the activity, MUYIWA LUCAS writes.

Nigeria has been identified as a major crude exploration hub in Africa, driving the global offshore drilling .market estimated to reach $4.1 billion this year end and $4.9 billion by 2033.

The biggest deepwater reserves of crude oil remain in the country, which is first among the 10 nations. The bulk of the reserves are located offshore in the Gulf of Guinea, the Bight of Benin and the Bight of Bonny as well as in the Niger River Delta. Two main drivers in this market are responsible for accelerating its growth in the past few years.

The increasing number of offshore projects along with the rising production of shale gas globally will garner the requirement for offshore drilling risers. At the same, the extraction of crude oil has driven extensive investments in offshore production and exploration activities globally.

A significant surge in the investments for multiple offshore projects has been prominent for the last five years and hence propelling the global demand for offshore drilling risers.

The Middle East and Africa are thought to be the most lucrative region for this market as large offshore oil and gas deposits are present in several Middle Eastern and African nations, says Oil Review Africa.

The South Pars Gas Complex present in the Persian Gulf, which is the biggest gas field in the world, as well as recent developments of oil and gas deposits in the eastern Mediterranean Sea are anticipated to support the market’s expansion.

Read Also: FG okays amendment of 2022/2023 deep offshore oil block bid round

For instance, Shell Plc stated in January, last year that a large oil and gas quantity had been discovered in a Namibian offshore well. Resources estimated to be worth 250-300 million barrels of oil and gas equivalent have been discovered since the Graff-1 well drilling began in December 2021. The region, which has been essentially inert for the past 25 years, is anticipated to see a big increase in foreign investment as a result of the Graff-1.

Although little onshore exploration is taking place, the emphasis on exploration is mostly on the deep as well as ultra-deep offshore. Therefore, it is anticipated that the number of offshore drilling risers in the region would increase throughout the projection period due to upcoming offshore E&P operations, particularly from the West African region.

Recovering crude oil prices have been driving investments in offshore exploration and production (E&P) around the world. A significant uptick in the number of final investment decision for a number of offshore projects has been prominent over the past couple of years, which has been driving the contracts for offshore drilling risers.

Emergence of integrated service providers, who provide both design engineering and installation services has been a prominent trend, as they help reduce the overall cost of the project to E&P operators.

Unstable crude oil prices and widening supply-demand gap are anticipated to hamper the growth prospects of the offshore drilling riser market in the foreseeable future.

Also, growing number of offshore discoveries in Nigeria, Iran, South Africa, Egypt, Guyana, and Mozambique are expected to create significant growth opportunities for offshore drilling riser manufacturers in the Middle East & Africa region.

Goldman Sachs remains confident on crude oil and other major commodities, expecting a rally after the biggest-ever destocking in commodities that is underway.

Should major economies, including the United States, avoid deep recessions, the foundations for a rally across the commodity complex remain intact, Goldman Sachs analysts wrote in a note, although they admitted their price calls have been wrong so far this year.

“Bulls, like ourselves, find comfort in the fact that end-use demand across the commodity complex has not shown recessionary signs and investment in supply remains elusive,” Goldman’s analysts said in the note, as reported by Bloomberg.

“But this misses the point that we were wrong on price expectations.”

Although prices continue to move opposite Goldman’s predictions, we are seeing what “It is likely the largest commodity destocking the complex has ever witnessed”.

Read Also: JPMorgan, Goldman say stocks recovery won’t be easy in 2023

Investors are also cashing in on hedging, and all these factors are setting the stage for commodity price increases later this year, the investment bank said.

“The absence of a recession would likely lead to higher oil and commodity prices as well as higher rates, to which equities would likely react poorly,” Goldman said.

“Despite weak manufacturing-related demand, overall demand and inventory data across the commodity complex support our more bullish view,” the bank’s analysts added.

Early in April, hours after OPEC+ announced it would reduce its combined oil production by more than one million bpd between May and December, Goldman Sachs raised its price forecast to $95 from $90 a barrel at the end of the year for Brent Crude.

The bank also raised its Brent forecast for 2024, now seeing it at $100 at the end of the year from an earlier projection of $97.

TotalEnergies, operators of oil mining licence (OML) 130, has renewed its production licence on the block for 20 years, according to a statement.

  Located 150 kilometres off the Nigerian coast, the OML130 block contains the prolific Akpo and Egina fields, which came into production in 2009 and 2018.

In 2022, production amounted to 282,000 boe/d- nearly 30 per cent was gas sent to the Nigeria LNG plant, contributing to Europe’s energy security. The production start-up from Akpo West, a short-cycle project, is expected by the end of the year. In addition, OML130 contains the Preowei discovery, to be developed by tie-back to the Egina FPSO.

Read Also: TotalEnergies hints of routine gas flareout

“Through the OML130 licence renewal, TotalEnergies is pleased to continue its contribution to the development of Nigeria’s oil and gas sector.

“This 20-year extension will enable us to move forward with the FEED studies on the Preowei tie-back project which aims to valorise a discovery using existing facilities in line with Company’s strategy focusing on low-cost and low-emission assets,” said Henri-Max Ndong-Nzue, the Senior Vice President Africa, Exploration and Production, TotalEnergies.

TotalEnergies Upstream Nigeria Limited operates OML 130 with a 24 per cent interest, in partnership with CNOOC (45 per cent), Sapetro (15 per cent), Prime 130 (16 per cent) and the Nigerian National Petroleum Company Limited as the concessionaire of the PSC.

The Shell Petroleum Development Company, operator of the SPDC joint venture, has unveiled eight Host Community Development Trusts in Bayelsa State. This, it said, is a critical step for unlocking the $56million earmarked for development in line with the provisions of the Petroleum Industry Act (PIA) 2021.

The cash represents funds to be paid this year by SPDC JV and Shell’s deep-water subsidiary, Shell Nigeria Exploration and Production Company Limited (SNEPCo), as contribution to HCDTs.

The eight Trusts are among the 22 that have been incorporated in SPDC JV’s areas of operation in Imo, Delta, Rivers and Bayelsa states, representing more than half of the total 41 which the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), has so far approved for host communities.

With its knowledge of the Niger Delta from over 60 years of operations, SPDC is managing a transition from the Global Memorandum of Understanding (GMoU) initiative which it introduced in 2006 to HCDTs, a key provision of the PIA enacted in August 2021.

Read Also: Nigeria has capacity to grow daily oil production to 4m – Shell

SPDC engaged more than 300 communities on the provisions of the Act, their roles and responsibilities, the obligations of oil and gas companies and facilitated grouping of communities and nominations for trustees. It also assisted in the development of a needs assessment and development plan for communities.

Stakeholders at the unveiling, held at the state capital, Yenagoa, charged the incorporated Community Trusts to work towards development in the Niger Delta through peaceful co-existence and collaboration with oil companies.

SPDC Managing Director and Chairman, Shell companies in Nigeria, Osagie Okunbor, in an address read by the General Manager Corporate Relations, Igo Weli, said the PIA would not deliver the intended development if “communities allow internal strife and chieftaincy struggles to negatively impact the setting up of or operations of the Trusts.” He stressed; “Regardless of the noble intentions of the PIA as well as the moral and financial support of government, SPDC and other operators, the development of communities ultimately rests on the shoulders of community people themselves.”

The Nigerian Content Development and Monitoring Board (NCDMB) is set to lead discussions at this year’s National Conference on building local content synergy between the insurance and the oil and gas sectors.

The conference, organised by STANMEG Communications’ Publishers of Oriental News Nigeria Online, has as its theme: Building Local Content Synergy Between the Oil And Gas  And The  Insurance Sectors In Nigeria” with sub-theme Harnessing Insurance Opportunities In The Oil And Gas Industry. The Executive Secretary of the Board, Simbi Wabote, will be the guest speaker at the conference.

According to the Chief Executive Officer, Stanmeg Communications, Mrs. Yemisi Izuora, the conference will bring together key stakeholders and regulatory agencies in both the oil and gas industry and insurance sector together to brainstorm on the benefits and challenges while implementing the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, particularly sections 49 and 50, which deals with insurance of oil and gas activities. The event is scheduled to hold on July 20, this year, at Sheraton Hotels, Ikeja Lagos.

Read Also: Firm lauds NCDMB for jobs, capacity development in oil sector

Izuora noted that her firm, using research tools, observed huge gap in the insurance industry underwriting capacity in the oil and gas sector.

“The provisions of Sections 49 and 50 of the NOGICD Act require operators engaged in any activity or project in the oil and gas industry to insure insurable risks related to its oil and gas business with an insurance company, through an insurance broker registered in Nigeria. It further mandates that where an operator seeks to place an insurable risk offshore, a written approval of National Insurance Commission (NAICOM) must first be sought and obtained and that NAICOM before the issuance of the approval must ascertain that local capacity has been fully exhausted. This and more is what experts will dwell on at the conference,” Izuora said.