The Nation Newspaper

Category: Energy

  • How to maximise Nigeria’s huge gas resources

    The Department of Petroleum Resources (DPR) says the country’s natural gas proven and unproven reserves stand at 200.79 trillion cubic feet (Tcf) and 600 Tcf, making it more of a gas province than oil. However, industry operators say until the right regulatory and fiscal policies are put in place, optimising the potentials of natural gas for development of the economy will remain a mirage, reports EMEKA UGWUANYI.

     

    The Nigerian Gas Association Workshop Report noted that Nigeria has large hydrocarbon resources, including natural gas, when compared to other producing countries.

    This resource, the report said, is of benefit as it has become and continues to be the fuel of choice in developed and developing countries.

    The distribution ratio of proven reserves between Associated Gas (AG) and Non-Associated Gas (NAG) is 50/50, Roger brown the report said, adding that the  natural gas industry is developing  as the country is only consuming a fraction of it, especially in meeting its internal energy demand.

    According to the report, gas development is constrained by the absence of fiscal policies; gas pricing mechanism; legal and regulatory frameworks; and inadequate finance.

    These uncertainties have had deleterious effects on the industry. Creating an enabling and reliable legal and regulatory environment will ensure the successful and sustainable development of the industry.

    A research by the Facility for Oil Sector Transformation (FOSTER) with objectives of improving the performance of the oil and gas sector in terms of efficiency and productivity, the report said, identified gas regulatory and pricing and proposed recommendations to the impending problems.

     

    Gas pricing challenge

    According to FOSTER, The end user gas price of US$3.85 per million standard cubic feet (Mscf) directive by the Minister of Petroleum Resources for textile manufacturers based on a distribution tariff of US$1.15 and marketing margin of US$0.50 fails to cover the scope and cost of last mile distribution companies and does not take into account the capital that has been invested to develop the distribution network.

    The extension of a special pricing arrangement to any arm of the industry should be preceded by an extensive consultation, in-depth research and an assessment of the consequences of such arrangements for the manufacturing industry to ensure that no element of the value chain is broken in the process.

    The National Gas Policy 2017 also recognises the importance of stakeholders being carried along in regulatory decision making. For example, the regulated tariff for monopoly infrastructure is to be based on a tariff methodology and model developed by the petroleum regulatory authority with input from stakeholders.

     

    Consequences of the directive

    According to players in the natural gas distribution chain, pursuant to the directive, the end user gas price of US$3.85/Mscf took effect from January 1, 2018.

    It is a retroactive price, which fails to take into account the cost of our services or the capital we have invested; therefore, it will have a crippling effect on our businesses and result in “gross value erosion for local and foreign investors who have already committed funds; creation of unanticipated liabilities for Local Distribution Companies (LDCs) as other manufacturing customers will expect back payments at the LDC’s expense based on policy-generated debts for 2018 (resulting from the US$3.77/Mscf difference between the US$7.62/Mscf price that was in effect during 2018 and the US$3.85/Mscf price in the Directive);  and potential future tax complications, levies and penalties against LDCs.

    Others are making LDCs face significant difficulty in meeting up with financial obligations to lenders for facilities expended towards gas infrastructure deployment, which ability to meet up with financial obligations was under severe strain as a result of the significant currency devaluation; and negative effects for contracts executed before the release of the directive.

    Also on capital recovery, the gas players said: “We have invested very significant capital to develop our extensive downstream distribution network.This capital is recovered through a portion of the end user gas price.  The directive, however, does not make any provision for capital recovery.

    This would grossly erode already constrained margins, meaning that we would never be able to recover our prior investment and would be unable to carry out any further development of the distribution network to promote further industrialisation.

    This will compound our already pressured ability to conduct Operations and Maintenance (O&M) at the right quality and safety standards in the normal course of business.

    “Additionally, the imperative to upgrade our distribution infrastructure as required from time to time demands fresh injection of significant capital.

    The provisions made for these at the initial investment decision phases have become grossly inadequate as a result of changes in macro and micro economic variables – currency devaluation, foreign exchange constraints and inflation, among others.

    Our capacity to meet these obligations would be greatly diminished as a result of inadequate margins espoused by the directive, and inability to accommodate all ongoing negotiations with small industries requiring marginal gas volumes.

     

    Investment protection and sanctity of contracts

    The supply of gas to customers in the textile and manufacturing sectors is based on commercially negotiated, legally binding contracts.

    The implementation of the directive would ignore the commercial agreement between parties and send a wrong signal to the private sector and foreign investors that contracts do not need to be respected or can be interfered with by the Federal Government.

    This will hinder further investment in the industry and other sectors given that policy risk is a first consideration during the investment appraisals.

    The report noted that the “LDCs are already feeling a strain on their investments as a result of the currency devaluation and the fact that any overseas costs, which the LDCs incur would be at NAFEX rate (about $1:N365) while the end user gas price is converted from US dollars to Naira at the CBN rate ($1:N306)’’.  A $3.85 end user gas price will compound this situation.

    The directive also creates the risk of disputes and litigation between commercial parties in the gas industry. Gas pricing in the gas value chain is based on investments made on established economics (as recognised by the Gas Policy) and the erosion of margins, which underpinned the investments would mean that there is the significant risk that suppliers or distributors of gas would be unable to continue to meet their contractual obligations on a sustainable basis.

    Directive at variance with Gas Policy and hinders development of the gas industry.

    Read Also: Shift to gas will knock out petroleum subsidy – Sylva

     

    According to the report, the Gas Policy is clear that to fully develop the industry, there is a need to move towards a deregulated market allowing for willing buyer-willing seller arrangements.

    This would help incentivise private sector investment in the various aspects of the gas value chain.  The Gas Policy also recognises that cost of service has to be taken into account in regulatory decision making.  The directive, however, fails to note the cost required to develop, operate and maintain gas infrastructure.

    A strict regulation of the gas price for the entire gas value chain is at  variance to the spirit of the National Domestic Gas Supply and Pricing Policy 2008 and the Gas Policy, which enshrine the government’s position on achievement of a market-led pricing approach and incentivising private sector investment in the gas industry.

    It would also deter much needed private sector and foreign investment in the Domestic Gas industry given that investors will be unwilling to invest in an industry where there is no certainty as to viability of the investment if the Federal Government can unilaterally make significant reductions to the pricing, which was used to assess the economic viability of the investment.

    Such directive shows there is no sanctity of contracts as commercial terms of commercially negotiated contracts can be significantly adjusted by the Federal Government at any time.

    “The US$3.85/Mscf end user gas price for the whole manufacturing industry would also mean the distribution companies would be unable to expand their networks (which would further promote industrial development) given that there would be no way to recover the investment.

    The positive impact LDCs have had on the development of our nation through our significant investments in the downstream gas sector must be emphasised.

    “Since the LDCs commenced commercial operations we have enabled the creation of hundreds of thousands of jobs (directly and indirectly); enabled contribution of over N565billion to Nigeria’s gross domestic product; developed over 250 megawatts (Mw) power generation capacity; displaced over 1,980kt of CO2 emissions through customers we have enabled to switch from diesel to natural gas; provided education-focused initiatives to several thousand students; and provided entrepreneurial training, capacity development and empowerment programmes and provided medical interventions for several thousand indigenes, it said.

    The report continued: “All these significant contributions would not have been possible without gas pricing, which supports the cost of service and enables the recovery of capital invested.

    The LDCs have also made a significant contribution to industrial development by being able to supply gas at a price which is at a discount of 30 per cent plus to the price of alternative fuels.

    Without an end user gas price that took into account cost of services and enabled recovery of capital invested we would have been unable to develop the gas infrastructure, which has enabled this industrial development.

    In facilitating industrial development, we have even gone as far as incurring the costs required to connect some customers to our network that did not pass the economics required for new connections (achieved through cross-subsidising with customers that passed the economics).

    “The overall effect of this strict regulation of the gas price in the manner set out in the directive is that the development of the gas industry would be significantly hampered when there is a need for our nation to move towards a gas-based economy.”

  • Content Board trains 1000 science teachers

    By Emeka Ugwuanyi

     

    As part of its Teachers Development Training Programme (TDTP), the Nigerian Content Development and Monitoring Board (NCDMB) has trained over 1000 science teachers in secondary schools across the country.

    NCDMB Executive Secretary, Simbi Kesiye Wabote, stated this at the closing ceremony of the second phase of the training in Kastina State, where  270 teachers benefited from the programme.

    At the event organised with support from the state Ministry of Education, Waboote, who was represented by the agency’s Director, Planning Research and Statistics , Mr. Patrick Daziba Obah, promised that NCDMB would increase the pace of continuous development of teachers across the country.

    He explained that the Board’s sponsorship of the retraining programme was borne out of its desire to create new models in the quest for academic knowledge, adding that the training would enable their pupils to compete with counterparts elsewhere and position them in the knowledge of science, technology, engineering and mathematics (STEM).

    He expressed hope that the training of teachers would translate to better performances by their students in west African Examinations Council (WAEC), National Examination Council (NECO), Joint Admissions Matriculation Booard ( JAMB) and other national and international examinations and lead to better technical skills and craftsmanship.

    He charged the teachers to ensure that Katsina State emerges as number one in STEM Education and the pupils among the leaders in the quest for technological and industrial self-reliance.

    Wabote stressed that NCDMB was set up to ensure the development and utilisation of Nigerian materials, equipment and workforce in the oil and gas Industry and the realisation of this important goal required technical workforce, better trained administrators and personnel with essential skills.

    “The teaching method of yesterday is no longer sufficient for the challenges of today and so we have modified the design and delivery of this programme in response to your needs.

    This year, we have given you electronic tablets with all the reading materials and we have enough reasons to continue to advance the methods of learning,” he said.

    Read Also: Unqualified teachers: Honestly, we can’t blame them

     

    Wabote noted that NCDMB places high premium on capacity development, especially in the teaching of STEM education across secondary and tertiary institutions.

    “Our target is to train a minimum of 1000 science teachers each year and to upgrade and equip technical schools to provide infrastructure required for the acquisition of technical, digitisation and essential skills,” he added.

    He stated that NCDMB has started the upgrade and equipping of some technical and vocational schools and provided modular science laboratories, modern teaching aids and improved science and engineering infrastructure in some tertiary institutions.

    The General Manager Capacity Building Division, NCDMB, Dr. Ama Ikiru, explained that the Board organised a phase two of the programme in Katsina State because the state government was receptive of the initiative and collaborated effectively with the Board.

    The Commissioner for Education, Kastina State, Dr Badamasi Lawal, commended NCDMB for sponsoring the training, noting: “It is remarkable that an agency that is based in Bayelsa State will come all the way to train teachers in Kastina.”

    He noted that pupils from the state recorded an improved performance in the last WAEC and NECO examinations, an indication that the programme that begun in 2018 was making a positive impact.

    The event also featured presentations from some secondary school pupils and award of prizes to the best participating teachers from the five-week programme held during the last holiday.

  • ‘Energy sector important to Lagos’

    By Emeka Ugwuanyi

     

    The Lagos State Commissioner for Energy and Mineral Resources,Olalere Odusote, has said the state administration is desirous of creating enabling environment for oil companies in the state in line with its campaign for ease of doing business.

    Odusote disclosed this at the inaugural Enyo Correspondents Breakfast Session organised by Enyo Retail and Supply.

    Odusote said the administration in Lagos was determined to promote clean energy and improve its use in Lagos.

    “Over 200 schools in Lagos are benefitting from solar energy and the administration is making spirited efforts to bring in more schools into the mix.

    We also plan to pan out the first phase of gas-powered vehicles for public transport in 2020, which was driven by the desire of the  administration to deepen the use of gas by fixing infrastructure in the state.

    “This sector is of outmost importance and its improvement should be a collaborative effort between the government, private sector and the end users.”

    The forum, which held in Lagos is part of Enyo’s initiative to upskill stakeholders to drive innovative solutions needed in the downstream sector to attain its full potential in Nigeria. The forum brought together energy correspondents, dealers and experts from finance, logistics and the oil and gas sector and featured panel discussion and paper presentations.

    The speakers included Chief Executive Officer, ENYO Retail and Supply Limited, Abayomi Awobokun; Chief Executive Officer, Transport Service Limited, Deji Wright and Energy Finance Specialist, Rolake Akinkugbe-Filani.

    In his welcome address, Chairman, ENYO Retail and Supply Limited, Tunde Folawiyo, said: “This year’s forum was carefully designed to provide insightful and constructive ideas and solutions towards navigating the country’s downstream sector.

    The oil and gas sector is of ultimate importance to the economic growth of the country and we are excited to be contributing to the growth and development of the sector.”

    Chief Executive Officer, ENYO Retail and Supply Limited, Abayomi Awobokun, said: “The oil and gas sector is one of the most important sectors in Nigeria with its own peculiarities.

    Read Also: Sterling Bank seeks energy sector reform

     

    Thus, proper collaborations are extremely important and are part of our responsibility as stakeholders to educate citizens with solutions that would drive the sector forward.

    Innovation is part of the essentials for this growth, and the technologies being created can lead to a number of possibilities within the sector all of which we believe will ultimately improve our economy.

    The country’s energy sector requires innovation, technical changes and policy dialogues like this to promote operational and economic efficiencies.

    This event is ENYO’s way of being a part of the conversation towards a positive outlook in the sector, and we hope by educating the voices of our industry, the public becomes educated, too.”

    The theme of the panel discussion was “Navigating Nigeria’s Downstream.” It provided innovative ideas around alternative, cleaner and sustainable energy to improve downstream business operations.

    The second session focused on “Outlook of Logistics in Nigeria’s Downstream” presented by the Chief Executive Officer, Transport Service Limited, Deji Wright, shared insights on ways policies concerning logistics are necessary for the growth of the sector and how they can be improved.

    The presentation by Rolake Akinkugbe-Filani was entitled “Financing in Nigeria’s Downstream Sector” shed light on the need to intensify investments in the telecoms industry to drive economic growth.

    The event reiterated Enyo’s commitment to adding value to its immediate communities.

     

  • Deregulation of gas market will improve power sector

    In every economy, deregulation comes with various modes of payments for goods and services. Little wonder stakeholders in the electricity value chain, especially thermal plants operators, are seeking a review of the price of the product. This, no doubt, would impact positively on their operation and the sector, writes AKINOLA AJIBADE.

     

    Like a recurrent decimal, issues, such as inadequate supply of gas to thermal plants and poor gas pricing, have continued to recur in the power industry.

    Hardly does any forum pass without the issues being discussed. Notably, is the issue of poor pricing of gas, a feedstock for electricity generating plants.

    Data show that about 30 per cent of electricity supply comes from hydro power plants while the balance comes from thermal plants that are powered by gas.

    This is coupled with the fact that the price of gas is benchmarked at the international market, a development, which is attributed to the instability of the price of the product.

    Investigation by The Nation reveals that gas is sold to Nigeria’s power generating firms at between $2.50 and $4 per million British thermal unit (mmBTU), a situation, which has given rise to poor accessibility of the product by power firms.

    This, among others, made stakeholders to demand full implementation of “Willing Buyer and Willing Seller” system, on the use and sale of gas.

    Earlier, the Federal Government had introduced the concept of willing buyers and willing sellers in the gas market to encourage  economic growth, and boost the power sector, which uses gas for the production of electricity.

    However, the idea has since suffered implementation, a development that made gas users, especially power sector operators, to revisit the issue of gas purchase and availability again. Recently, stakeholders expressed their desires to make the government fully implement the willing buyer, willing seller concept called in the industry.

    According to stakeholders, the sector can only move forward, once the power plants are able to purchase gas from suppliers and producers on a willing buyer and willing seller basis. Therefore, there is the need to examine the views/ suggestions and the way forward to the problem as canvassed by the stakeholders.

     

    International prices of gas

    The Federal Government had many years ago announced that natural gas would be made available to industrial users, especially power plants at $2.50/mmBTU. However, many of the electricity generation companies are not always buying the product at that price.

    Association of Power Generation Companies (APGC) Executive Secretary Joy Ogaji said gas price is normally $2.50, as it is regulated internationally.

    She, however, said the price fluctuates in response to the vagaries of the market, adding the price ranges from $2.50 to $4 and power generators pay 80 cent for transportation.

    This, she said, was a problem to the GenCos as they buy gas at exorbitant prices, adding that the government could help resolve the problem by creating a conducive environment for GenCos and other operators in the sector.

     

    Generating companies’ problems

    The industry boasts of about 30 electricity generation companies. Of this, thermal plants operators form the largest percentage. Ogaji said there were issues confronting the firms, adding that the problems  affected their performance.

    Besides, the rise in the prices of gas, which in most cases has compounded the woes of the sector,  the GenCos, Ogaji said, were facing operating in a bad environment.

    According to her, there is no effective contracts between the parties that are involved in the generation of electricity. She listed the parties to include thermal operators, plants and gas suppliers.

    She said the grid has suffered collapse on several occasions, stressing that when such things happen, the power generation firms are at the receiving end.

    Ogaji said: “GenCos lose between 15 per cent and 20 per cent of their gas whenever there is grid collapse in the country. When this happens, power firms would be forced to use gas meant for production of 50 megawatts (Mw) for 10Mw of electricity. How can power firms make up for the loss.’’

    Tariffs

    Ogaji said there is tariff on gas used in generating electricity, adding that the tariff does not take off the inefficiency of the national grid. Besides, the Value Added Tax (VAT) does more harm than good for power firms, which rely on gas for production of electricity.

    “VAT is 7.5 per cent. What it means is that the companies must pay the VAT on gas, if they want to operate well,’’ she said.

     

    Gas suppliers to power plants

    While the Federal Government has left the exportation of natural gas to NLNG, it is magnanimous enough to leave certain percentage of gas for domestic consumption. This is the main reason  the government allows International Oil Companies(IOCs) to be supplying gas to thermal plants.

    Read Also: Power sector under-recovery may hit N500b

     

    According to former NLNG Managing Director, Dr Godswill Ihetu, oil majors have been  providing natural gas for power companies.

     

    Other stakeholders

    The pioneer Chief Executive officer, Nigerian Liquefied and Natural Gas (NLNG), Dr Godswill Ihetu, said there had been complaints in the gas sector for a long period.  The complaints, he said, border on the rising price of gas, shortage of the product, among others.

    He said some of the problems were not genuine, others are real. He said: “Problems, such as inability by the power generation firms to access gas for production due to its rising prices are genuine. But I can tell you that there is gas in the country. Remember that Nigeria has proven gas reserves of 200trillion standard cubic feet and 600 trillion standard cubic feet of unproven gas reserves.

    ‘’Of this, what percentage of the volume has been explored? Quite insignificant,’’ he added. There is gas in the country. The only problem is price. There is enough gas in the Niger Delta region. How does NLNG get gas for its Train 1,2,3,4,5,6 and the 7, which is about to take off? So, it is a lie that there is no gas for domestic and international users. I can authoritatively say there is enough gas for power plants.

    Once the Federal Government can deregulate the gas market, there would be willing buyer and willing seller of the product and the better for the power sector. He added that the issue of willing buyer, willing seller is the way out of problems caused by increase in the price of gas in the market.

    Similarly, the Director, Centre for Energy Studies, University of Port Harcourt, Prof Wummi Iledare, said the willing buyer, willing seller system will enable power firms to operate optimally, if it is well implemented.

    He said the issue of willing buyer and willing seller must be the goal of the Federal Government in the  sector, if there is going to be growth in the long term.

    “There must be holistic reform of the oil and gas sector, a development, which would take into recognition of principle of Willing Buyer and Willing Seller “in order to encourage the growth of the petroleum, power and other sectors of the economy.

  • NLNG Train 7 FID: Significant milestone to economic development

    It was a good way to end 2019 for the country’s oil and gas industry when on December 27, the shareholders of the Nigeria Liquefied Natural Gas Limited (NLNG), including the Nigerian National Petroleum Corporation (NNPC), Shell, Total and Eni took the Final Investment Decision (FID) on NLNG Train 7 project. The decision, which signals a go-ahead with the construction of the huge project, is significant to the development of the petroleum industry and the economy, writes EMEKA UGWUANYI.

     

    After 12 years of delay and shifting the post on taking the Final Investment Decision (FID) on NLNG Train 7 project, the owners (shareholders) of the Nigeria Liquefied Natural Gas Limited (NLNG) put ink to paper last December 27, thereby ending the dilly-dallying on the Train 7 project FID.

    To oil and gas industry stakeholders, taking the FID was significant in many ways. Beside the potential huge income and employment generation that are anticipated in it, the project is an answer to calls for the utilisation and monetisation of the country’s huge gas resources.

    The calls were part of concerns expressed by stakeholders about the sub-optimal exploration and utilisation of the nation’s natural gas.

    Notwithstanding the low utilisation, Nigeria is still among world’s major gas flaring nations, and also the world is gradually moving away from fossil fuels, which calls for aggressive and maximum monetisation of the nation’s natural gas for use in development of other sectors of the economy.

    According to data from the Department of Petroleum Resources (DPR), flared gas in Nigeria can attract $3.5 billion investments and enough to generate 2.5 gigawatts (Gw) of power or produce 50 million barrels of oil equivalent (boe).

    The DPR noted that the flared gas can produce 600,000 metric tonnes of liquefied petroleum gas (LPG)  yearly, produce 22 million tonnes of carbon dioxide (CO2), feed two-three liquefied natural gas (LNG) trains and generate 300,000 jobs, among others.

    It further said gas flared last in 2018 was as high as 324 billion standard cubic feet (bscf), while about 888 million standard cubic feet of gas was flared daily in 2017, adding that it identified about 178 flare gas sites or points spread across the Niger Delta in onshore and offshore oil fields.

    According to the Nigerian National Petroleum Corporation (NNPC), oil and gas firms in 2018, flared a total of 282.08 billion standard cubic feet of natural gas, which was put at a financial loss of about N234 billion.

    It is in view of the huge financial losses, health and environmental hazards caused by flared gas that the Federal Government created the Nigerian Gas Flare Commercialisation Programme (NGFCP) to capture all flared gases.

     

    Train 7 journey

     

    The Train 7 project has been on the table for about 12 years. The delay on taking the FID was initially attributed to inclement investing environment and later lack of consensus among the shareholders. Even before the FID was finally taken on December 27, it took about seven consecutive days of prolonged meetings of the shareholders before the contentious areas were resolved.

    At a point, stakeholders in the oil and gas industry gave up hope on the actualisation of Train 7 and thought it has gone the ways of Olokola and Brass LNG projects. About four years ago, Train 7 was considered to be broken into two Trains – 7&8, owing to its size and to make the funding easier.

    However, the plan later changed and it has to be implemented as a single Train. Therefore, it was not surprising to see airs of joy, excitement and fulfillment among the shareholders immediately the Train 7 documents were signed. It was mission accomplished after many years.

    However, despite the bottlenecks in taking the FID, the shareholders were forging ahead expectantly as they took steps that gave assurance the FID must be realised.

    For instance, in March, last year, the Nigerian Content Development and Monitoring Board (NCDMB) and the Nigeria LNG Limited (NLNG) signed the Nigerian Content Plan (NCP) for the Train 7 project. At the event were senior officials of the Nigerian National Petroleum Corporation (NNPC), Shell, Total and ENI shareholders of the NLNG.

    NCDMB Executive Secretary,  Simbi Kesiye Wabote, and NLNG Managing Director, Tony Attah signed the NCP. The $1billion Nigerian Content Plan for Train 7 project, according to Wabote, is to ensure that work scopes of the project with capacities in-country must be done in Nigeria.

    The NCP is also to aid the maximisation of Nigerian content deliverables in the project by giving first consideration to indigenous goods, services and human resources as well as opportunities to Nigerian firms.

    Under the Nigerian Content Plan for Train 7, the NCDMB introduced a provision that would ensure that a lead engineering, procurement and construction (EPC) bidder that has built capacity in-country is not disadvantaged with regards to cost.

    The scope of work on the Train 7 project includes in-country and out of country work. They are “design, engineering, procurement, expediting, transportation, management, construction, installation, pre-commissioning and start up support and acceptance testing of an expansion to the NLNG facility.”

    The NCP is a key outcome of the Service Level Agreement (SLA) the Board signed with the NLNG in May 2017. The SLA committed the two organisations to timely approvals and compliance with the Nigerian Content.

    Also last July, the Nigeria LNG Limited sought $7 billion from the global financial markets for the sustainability of its operations and construction of Train 7.

    At a ceremony in London to commemorate the repayment of a US$5.45 billion shareholder loan for its trains, Attah revealed that funds being sought would cover the company’s expansion programme (construction of Train 7) and investment in the upstream gas sector in Nigeria that will ensure the sustainability of feedgas supply to its existing trains (Trains 1 to 6) and the new Train 7.

    Attah also said the NLNG has monetised over 5.96 trillion cubic feet (Tcf) of associated gas (AG), which would have otherwise been flared thus helping to build a better Nigeria.

    Last September, the NLNG  announced the issuance of a Letter of Intent (LoI) for the Engineering, Procurement and Construction (EPC) contract of the Train 7 project to SCD JV consortium. SCD JV Consortium is made up of Saipem of Italy, Japan’s Chiyoda and Daewoo of South Korea.

    According to the General Manager, External Relations, NLNG, Eyono Fatayi-Williams, the LoI was coming on the heels of the Nigeria Content Plan signed with NCDMB and the submission by NLNG the summary outcome of the commercial bids evaluation for the Train 7 Project to NCDMB in line with the project certification and authorisation procedure.

     

    Benefits of Train 7 project

    According to the Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Mallam Mele Kyari, the actualisation of the FID of Train 7 of the NLNG would open windows of opportunities for the economy.

    He said the taking of Train 7 FID is an affirmation that Nigeria remains a prime foreign investment destination, adding that the project will generate $20billion in revenue to the Federal Government’s coffer, provide 10,000 direct and 40,000 indirect jobs to Nigerians. This could not have come at a better time to help government deliver on its promises, he added.

    Describing the FID as a desired met, the NNPC boss said the project would help open a floodgate of opportunities for more of such investments, which could boost the economy and create prosperity for the over 200million Nigerians, who are the shareholders of the corporation.

    “We need to do more, and we can do more. This FID has opened the gateway for doing more great things. We will work with our partners to bring in more projects that will add value to this country in the upstream, and particularly in the gas processing sector,” he said.

    The NNPC chief thanked President Muhammadu Buhari for giving him the utmost support to the project. This, however, might not be a surprise to Nigerians as some of the refineries were constructed during his tenure in the 1980s as  the Minister of Petroleum, he added.

    He thanked the investment partners and the management of the NLNG for their tenacity in staying committed to the project despite  the challenges, adding that  the President’s desire was to drive the NLNG to establish Train 12 soonest.

    The Managing Director of Shell, who was represented by Mr. Henry Bristol, the Managing Director of Total, Mr. Mike Sangster and the Managing Director of ENI, who was represented by Mr. Peter Costello,  expressed the commitment of their firms to the realisation of the project.

    Train 7 would boost the production capacity of NLNG’s current six Trains by 35 per cent from 22million tonnes per annum (MTPA) to 30MTPA and increase its competitiveness in the global LNG market.

    According to stakeholders, the consummation of the processes leading to the Train 7 FID, was worthy of commendation, especially the  leadership role of the Kyari, who demonstrated immense dexterity to actualise the decision. He expressed the commitment of the oil industry leaders to buoy its contribution to the economy.

    The NCDMB Executive Secretary said Train 7, like other forthcoming major projects in the oil and gas sector, must leave a legacy facility, just like Total’s Egina deepwater, which catalysed the development of floating production, storage and offloading (FPSO) integration facility in Lagos.

    Read Also: Buhari meets with Sylva, NNPC GMD as oil sales spike

     

    He explained that the expected job explosion from Train 7 is banked on the Nigerian Content Plan, which provides for 100 per cent engineering of non-cryogenic areas in-country. The total in-country engineering man hours is set at 55 per cent, which exceeds the minimum level stipulated in the NOGICD Act.

    “It will also provide great opportunities for the utilisation of local goods and services in addition to enhancing and developing new capacities and capabilities for the local supply chain.

    There will be 100 percent local procurement of all LV cables and HV cables, all non-cryogenic valves, protective coatings, and all sacrifice anodes. 70 per cent of all non-cryogenic pumps and control valves will be assembled in-country.

    “Other spin-off opportunities would include logistics, equipment leasing, insurance, hotels, office supplies, aviation and haulage,” he added.

    Wabote pointed out that the increased number of NLNG Trains would also provide huge business opportunities for local businesses to build capabilities in the maintenance of LNG plants, especially in cryogenics.

    The project would also catalyse other upstream gas supply projects required to keep the LNG train busy and make stranded gas fields in the shallow and deep offshore in the area economical.

    Attah confirmed that the value network of the Train 7 project would be about $12billion, including the net cost of the project, estimated in the region of $5 billion and additional spend at its operational base in Bonny, Rivers State.

    “It is also about the upstream development, which is the real gas that will come to us. That also is a huge investment of $5 to $6 billion. So, potentially, the full value network is almost $12 billion.”

    The stakeholders urged the NNPC chief to extend the kind of commitment to Train 7 to the Brass LNG as well as Olokola LNG and other projects such as the integrated gas processing facility in Delta State.

    Each of these projects, according to them, is capable of generating tens of thousands of jobs in the country; reduce gas flaring and boost the nation’s economy with the concomitant effect of enabling Government to provide for the needs of the citizens.

    To the President of Nigerian Gas Association (NGA), Mrs Audrey Joe-Ezigbo, natural gas is key to unlocking the country’s economic potential, therefore, the actualisation of Train 7 is a major milestone to the oil and gas industry and Nigeria’s economy.

    Mrs Joe-Ezigbo, who is also the co-founder/Executive Director Falcon Corporation, said: “The gas industry is one that has significant prospects, and the potential to transform the landscape of economic development in Nigeria.

    It is a well proven fact that there is a correlation between the amount of natural gas that is used and consumed in-country and the level of economic development of any nation.

    Indeed, it is said that every $1 of gas that is consumed in-country contributes an extra $3 to the GDP. It can create thousands of jobs that can absorb a significant chunk of our teeming mass of unemployed youths.”

     

    NLNG history

     

    The NLNG was incorporated on May 17, 1989 to harness the country’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export. The establishment of NLNG is backed by the NLNG Act.

    The company is owned by four shareholders, namely, the Federal Government, represented by NNPC (49 per cent); Shell (25.6 per cent); Total Gaz Electricite Holdings France (15 per cent) and Eni International N.A. N.V. S.àr.l ( (10.4 per cent).

    Its subsidiaries are Bonny Gas Transport (BGT) Limited and NLNG Ship Management Limited (NSML).

    With six trains, NLNG’s plant on Bonny Island in Rivers State,  produces 22 million tonnes yearly (MTPA) of LNG, and five MTPA of NGLs (LPG and Condensate) from 3.5 billion standard cubic feet per day (Bcf/d) of natural gas intake. NLNG’s construction of a seventh train will shoot up its production capacity to 30 million tonnes per annum (MTPA) of LNG.

    NLNG’s operations have helped to reduce the country’s gas flaring volume from 65 per cent to below 25 per cent. It also supplies about 40 per cent of the yearly domestic liquefied petroleum gas (LPG) (cooking gas) consumption.

     

  • Anxiety as govt concludes review of DisCos performance

    The Federal Government has finally concluded the review of activities of the privatised electricity distribution companies (DisCos) in the country. The exercise gave the government opportunity to ascertain the level of compliance of the firms with the Performance Agreements (PAs) they signed after the privatisation of the sector in 2013. Stakeholders are divided on the outcome of the initiative, writes AKINOLA AJIBADE.

     

     

    The Federal Government has  finalised the review of the 10 out of the 11 electricity distribution companies (DisCos) in the country.

    Precisely, last Tuesday, the government ended the review of the activities of the firms, which it started months ago. By this, the government has celebrated the Fifth Anniversary of the Performance Agreements (PAs), which it signed with the firms.

    The government signed the agreements with the (DisCos) on January 1, 2015. The agreements ensure that DisCos significantly reduce problems relating to metering, collection and technical losses within five years of operation.

    Prior to this period, the government had directed its agencies and parastatals to review activities of core investors who bought the distribution assets of the defunct Power Holding Company of Nigeria (PHCN). The firms include Ikeja Electricity Distribution Company now Ikeja Electric (IE), Abuja Electricity Distribution Company (AEDC), Enugu Electricity Distribution Company (EEDC), Ibadan Electricity Distribution Company (IBEDC), and Eko Electricity Distribution Company (EKEDC).

    Others are Benin Electricity Distribution Company (BEDC) and Jos Electricity Distribution Company(JEDC), Yola Electricity Distribution Company (YEDC), Port Harcourt Electricity Distribution Company (PHEDC) and Kano Electricity Distribution Company (KEDC).

    Only Kaduna Electricity Distribution Company (KEDC) was left out of the review by the government because it signed PA with the firm much later after January 1, 2015. This implies that the company is yet to complete the five-year mandatory tenure given to the DisCos to comply with the provisions of the agreements.

    While this lasted, the government came with the idea of finally reviewing the activities of the firms, especially those that border on the performance agreements they signed in 2015.

    Stakeholders are, however, divided over the outcome of the review. While some believe the exercise would help in defining the status of the firms as well as help the government to proffer solutions to the myriad of problems facing them, others see the review as a futile exercise.

    According to those opposed to the review, the issue may not positively impact on the operation of the firms due to what they described as inconsistency in the policies of the Federal Government to move the sector forward. However, there is  need to examine some that pertain to the review exercise introduced by the government.

     

    The PAs

     

    In line with the provisions of the performance agreements, which the government signed with the power distribution firms, after the privatisation of the sector six years ago, the firms are expected to significantly reduce the metering problems as well as technical and collection losses in the sector.

    However, neither has the DisCos been able to solve the metering problems nor halve their commercial and technical losses. In 2018 alone, the sector was believed to have recorded technical and collection losses of between 39 per cent and 70 per cent, a development, which implied that the industry is yet to rid itself of losses.

     

    BPE’s position

     

    The Director-General, Bureau of Public Enterprises (BPE), Mr. Alex Okoh, said the performance agreements of the 10 power firms became effective January 1, 2015, adding that the final review of the agreements would come up December 31, this year, marking the fifth anniversary of the agreements.

    He said only Kaduna Electricity Distribution Company(KEDC) is excluded, since the firm is yet to complete the five-year deadline given to DisCos to comply with the provisions of the agreements.

    Read Also: Senate probes Gencos, Discos over unsteady power supply

     

     ANED’s views

    The Association of Nigerian Electricity Distributors (ANED) said there was nothing wrong in reviewing the activities of its members, adding that the issue would help in engendering growth in the sector.

    Being an umbrella body of the power distribution companies, ANED said its members are making efforts to reduce the number of unmetered customers in the country while at the same time reduceingtheir technical and collection losses.

    Its Director of Research and Advocacy, Mr Sunday Oduntan, said the firms have raised collection by N43 billion, from N423 billion in 2018 to N466 billion in 2019, adding that the DisCos hope to increase their revenues in the future.

    He said DisCos would meet the requirements of the Federal Government, whenever they assess the effectiveness of the operators in the industry.

    Other stakeholders

    Stakeholders in the value chain who expressed their views on the exercise, said the idea would help in improving the growth of the sector if well implemented.

    An official of the Senior Staff Association of Electricity and Allied Companies(SSAEAC) urged the government to make good use of the exercise, adding that the  government has taken the right step to accelerate growth in the sector.

    The source advised the government to examine the operation of the meter asset providers (MAPs), which was approved by the Federal Government early this year. He added that many of the MAPs are not discharging their duties well, adding that the development has resulted in their inability to meter more Nigerians. According to him, the Federal Government does not own 40 per cent in the DisCos and as such has no right to claim that it owns 40 per cent in the sub-sector.

     

    Metering difficulties

     

    MAPs were introduced to bridge the metering gap of 4.6 million electricity consumers. However, the scheme is yet to achieve any meaningful results. The initiative, which began operation on May 1, last year, has not been able to provide meters to a larger number of customers in the country.

    Investigations reveal that many of the MAPs do not have the required capital to provide meters to electricity customers in their jurisdiction.

    The founder, Change Partners International, Mr Akachkwu Okafor, said metering is a major problem in the sector, noting that the issue has slowed down the growth of the sector. He said metering is not only a drawback on the sector but also capable of jeopardising the efforts of the government to improve the growth of the sector.

    According to him, inability of the government, to improve distribution of meters across the country, would affect the growth of the sector.

  • Seplat gets stakeholders’ award

    Our Reporter

     

    Seplat Petroleum Development Company Plc has emerged as the Best Company in Stakeholders’ Engagement for 2019.

    The Lagos PR Industry Gala and Awards (LaPRIGA) hosted by the Nigerian Institute of Public Relations (NIPR), Lagos Chapter, gave the award to the indigenous oil and gas company at a ceremony in Lagos.

    LaPRIGA recognises excellence and celebrate public relations practitioners and stakeholders via awards dinner to boost professionalism and more investment in the practice.

    The LaPRIGA is a great networking platform that leaders from different sectors and has evolved to become the communications industry Oscars, adding new colours, dimensions and values to the industry by recognising best accomplishments in reputation management, relationship management and support for marketing functions.

    “On behalf of the Selection Panel of the 2019 LaPRIGA, we are delighted to inform you that Seplat has been awarded the honours for the Best Company in Stakeholders’ Engagement in recognition and appreciation of its consistency in engaging relevant stakeholders for a clear purpose to achieve agreed outcomes.

    Read Also: Imo stakeholders score Ihedioha high on achievements

     

    The criteria for selection were based on the tools used for assessment of the 2019 SERAs; a renowned CSR monitoring organisation and assessor,” NIPR said in a statement.

    The General Manager, External Affairs and Communications, Seplat, Dr. Chioma Nwachuku, lauded the organisers for the recognition accorded the brand, and pledged the Company’s commitment to effective stakeholder engagement and firm adherence to global best practices.

    Again, Seplat had recently clinched the Petroleum Technology Association of Nigeria’s (PETAN) 2019 Local Content Operator Award, the Frontier Energy Independent Player in Africa (Leopard) Award and the Capital Market Correspondents Association of Nigeria (CAMCAN) Most Profitable Company in Oil/Gas on the Nigerian Stock Exchange (NSE) Award for the year.

    Other firms, such as MTN Foundation, Chevron Nigeria, Promasidor, Dufil Prima Foods, Airtel Networks, First Bank, GTBank, Nigerian Breweries and Lafarge, are recipients of the prestigious LaPRIGA honours for their extraordinary acts of giving, sharing and loving, which have made a difference in host communities and in some people.

  • Enugu DisCo denies disconnecting prepaid meter customers

    Our Reporter

     

    The Enugu Electricity Distribution Company (EEDC) has debunked reports that it was disconnecting prepaid customers in the Southeast, describing the reports as false.

    Its Head of Communications,  Mr. Emeka Ezeh, in a statement, urged customers to disregard the report. According to him, the rumour was triggered by false online publications, which he stated was misleading and did not emanate from the company.

    Ezeh explained that the company wanted to ensure that its few customers, using a particular outdated prepaid meter brand, which the company could no longer provide technological support for migrated to the smart prepaid meters.

    He said the development did not apply or involve overwhelming number of its customers already using the smart prepaid meter platform. He noted that the affected few customers were preinformed of the development through a letter sent to them earlier this year.

    Read Also: Ibadan DisCo promises efficient service

     

    “They are also encouraged to take advantage of the ongoing Meter Asset Provider (MAP) metering scheme to get their meters replaced as the ones they are using are obsolete and no longer compatible with the existing operating technology. The company can no longer provide technical support for these affected meters,’’ he said.

    Ezeh further said arrangement had been put in place to reimburse all those affected customers that still have energy units (credit) on their meters with the same value.

    “As an ICT-driven organisation that is committed to delivering customer satisfaction, we invest in upgrading our infrastructure and always carry our customers along as we do this.

    “In this case, we have informed those customers affected and expect them to understand that the whole effort is towards satisfying them,” he added.

     

  • ‘Boosting domestic gas consumption ‘ll aid economic devt’

    Nigeria has huge proven and unproven reserves of 200.79 trillion standard cubic feet (Tscf) and 600Tscf. Despite this huge gas deposit, the resource is not adequately utilised in-country, calling for the need to boost exploration and utilisation of gas, reports CLINTON OBETO.

     

    Nigeria is blessed with huge deposits of hydrocarbon resources with a greater part of these deposits yet untapped. At the last count, according to the Department of Petroleum Resources (DPR), Nigeria’s proven natural gas reserves as at last January stands at 200.79 trillion standard cubic feet (Tscf) while the expected to be discovered reserves stand at 600Tscf.

    Until recently, focus of oil firms and the government was on crude oil from where refined products, such as premium motor spirit (petrol), household kerosene and aviation fuel as well as automotive gas oil (diesel), are derived. Less attention was given to gas as most of the associated gas was flared while gas fields were ignored.

    However, reality globally is that gas has become the preferred fuel because it is cleaner and more environmental-friendly than other fossil fuels. The late recognition of the value of gas made Nigeria to be one of the lowest consumers of gas including liquefied petroleum gas (LPG) also called cooking gas despite being producer of LPG.

    According to data, Nigeria is among large producers of LPG in the world.

    Experts and stakeholders believe that harnessing and deepening of LPG consumption can serve as an engine and catalyst for the economy and for the benefit of Nigerians.

    According to them, it is important to create sustainable growth for the LPG sector through systematic and concerted efforts by all stakeholders if the Federal Government is to achieve its target of five million metric tonnes per annum (MTPA) of LPG consumption in Nigeria by 2023.

    The Nigeria Liquefied Natural Gas Limited (NLNG) has been setting aside 350,000MTPA of LPG for domestic consumption, but experts are demanding for an upward review in line with realities.

    In a renewed drive by the government, Minister of State for Petroleum, Chief Timipre Sylva,  has declared 2020 as “the Year of Gas” for the nation.

    He said the government will rehabilitate the Warri, Port Harcourt and Kaduna Refineries to achieve local production of 360,000MTPA of LPG by 2023.

    The minister, who spoke at the Nigeria Gas Summit in Lagos recently, said the government was desirous of deepening LPG penetration in the country. He said other plans by the government include upgrading the Lagos-Apapa LPG plant from 4,000MT to 8,000MT storage and increasing LPG allocation to the domestic market from Natural Gas Liquids (NGLs) to reduce butane/propane exports.

    He said the government also aims to diversify supply sources with 110,160MTPA from Nigerian Petroleum Development Company’s Oredo facility expected to come on stream by first quarter of the year.

    Sylva said: “By our 2018 record, gas utilisation is being deepened by increasing LPG penetration. LPG consumption increased by about 16 per cent year on year.

    “A total of 364 LPG plants licences and approvals were issued in 2018. This is expected to give about 15 per cent rise in the nation’s LPG consumption based on storage capacity.”

    Similarly, Programme Manager, National LPG Expansion and Implementation Plan, Mr Dayo Adeshina, said Nigeria has made a giant stride in the LPG market with about 70,000MTPA in 2007 to 624, 000 MPTA as at last September.

    Achieving the target of five million MTPA of consumption by Nigerians w, he said, would require about $750 million worth of infrastructure for LPG transport and retailing across the country.

    Read Also: Firms, NLNG deepen knowledge in oil, gas

     

    “Apart from household consumption, the government is also moving to increase LPG usage in areas such as agriculture, transportation and manufacturing.This will enable Nigeria to reduce carbon dioxide (CO2) emission by about 20 per cent and create about 450,000 direct jobs.

    “It will require infrastructure development, including the establishment of 3,000 LPG plants, procurement of 10,000 trucks, 5,000 bridgers as well as additional skids,” he added.

    The Group Managing Director, Nigerian National Petroleum Corporation, Mallam Mele Kyari, stated that the recent signing of final investment decision (FID) for the NLNG Train 7 Project, would boost gas supply.

    According to him, it will increase the Federal Government’s revenue by $9 billion and generate about 10,000 direct jobs and 40,000 indirect jobs to ease youth unemployment challenge in the country

    Industry stakeholders said the government has demonstrated commitment towards improving domestic gas usage through the removal of the five per cent Value Added Tax on domestic LPG.

    Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) President, Mr Nosa Ogieva-Okunbor, said LPG marketers would continue to support government’s efforts to deepen gas consumption in the country.

    Ogieva said NALPGAM has distributed no fewer than 10,000 6kg cylinders with burners to Nigerians in seven states and has been holding sensitisation exercises to enlighten Nigerians on the benefits of switching to LPG usage as against kerosene and firewood.

    Also, Nigerian Liquefied Petroleum Gas Association (NLPGA) President, Mr Nuhu Yakubu, said there was the need to sustain the efforts of LPG penetration. He called for a synergy between government and industry stakeholders to maximise the potential of LPG for the benefit of the country.

     

  • NCDMB donates science lab, ICT centre to schools

    Our Reporter

     

    The Nigerian Content Development and Monitoring Board (NCDMB) has donated a modular science laboratory to Model Government Secondary School, Twon Brass and an Information Communication Technology (ICT) Centre to Government Secondary School Okpoama, both in Brass Local Government Area of Bayelsa State.

    The ICT centre was inaugurated by the Minister of State for Petroleum Resources, Chief Timipre Sylva. The facility has two air conditioned rooms, each fully equipped with 31 computers linked to the internet, projector and printer. The centre also has an administrative office, instructor’s office, conference hall and a stand-by generator.

    The laboratory was opened by the Member Representing Nembe/Brass Federal Constituency in the House of Representatives, Hon Isreal Sunny Goli.

    The lab has separate laboratories for Physics, Chemistry and Biology and is supported with solar power.

    NCDMB Executive Secretary, Simbi Kesiye Wabote, explained that capacity building is one of NCDMB’s key objectives and the agency had decided to promote such efforts from the primary school level up to the university level.

    ‘’So far, NCDMB has donated 25 ICT centres to secondary schools across the country and built the capacity of teachers in some states including Kastina and Bayelsa states as part of its capacity building and corporate social responsibility programmes.

    He said: “We believe in enhancing the quality of Science, Technology, Engineering and Mathematics (STEM) education. It is sad that in some secondary schools, particularly in remote locations, students are taught these subjects without any practical experience.

    “Our strategy going forward is to encourage STEM education as well as ICT in secondary schools across the country. These days every entrance examination is done online and we if don’t start inculcating those knowledge in secondary students, most of them will fall behind in meeting up with the ICT age.”

    On strategies for maintaining the centres, Wabote explained that NCDMB had instituted a sustainability programme, which includes a one year management arrangement and training of staff and locals to operate the centres.

    He assured that NCDMB will run periodic assessments of the facilities and develop new strategies to sustain them. “We have a strategic objective and a plan to follow through on most of these centres we have established for sustainability. For us, it is an end to end thinking in most of these activities we are doing,” he said.

    Read Also: Access Bank donates laptops to communities

     

    Speaking on oil and gas investment opportunities that could be developed on the Brass Island, the ES described the island as a strategic location, stating that it is the closest point from where one can access many of the Floating Production, Storage and Offloading (FPSO) platforms that operate off the shores of Nigerian waters, including Bonga main.

    He noted some of the offshore oil and gas fields were being accessed from far locations like Lagos with considerable costs. He stated that developing and utilising nearby locations like Brass Island for oil and gas logistics operations would help the industry meet the recent charge by the Minister of State for Petroleum Resources for players in the industry to ensure a significant reduction in the cost per barrel of Nigeria’s crude oil production.

    He said: “Part of the strategy is to site logistics requirements where it is easy to access, reducing time, fuel consumption and improving turnaround maintenance time. A serious study is going on to see the things that would be possible on the Island of Brass bring down our cost of production.”

    He listed other investments opportunities that were being considered by NCDMB for Brass Island to include siting a modular refinery in partnership with Waltersmith Petroleum Limited and utilising feed stock from the Nigerian Agip Oil Company, said:

    “It is also a veritable location for even a dry dock facility or a floating dock facility. NCDMB is currently studying a strategy for establishing and enhancing all the existing dry dock facilities to maintain our ships, light crafts and also expand our integration base in the country.”