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Tag: Diezani Alison-Madueke

  • Fuel Subsidy: Minister denies award of fuel importation contracts

    Fuel Subsidy: Minister denies award of fuel importation contracts

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, on Thursday denied that some companies indicted by the House of Representatives over fuel subsidy scam were awarded new contracts to import fuel.

    Alison-Madueke spoke with State House Correspondents at the Presidential Villa in Abuja.

    According to her, there is no way the companies indicted will have been patronised by the Petroleum Products Pricing and Regulatory Authority (PPRA).

    The minister said that all successful companies penciled down for the importation of fuel were thoroughly screened before selection.

    The News Agency of Nigeria (NAN) reports that Alison-Madueke was in the villa to attend the meeting between President Goodluck Jonathan and the leadership of the Nigerian Bar Association (NBA).

    “All companies were vetted carefully and only companies that were cleared were put on the list,’’ she said.

    Speaking on the Petroleum Industry Bill before the National Assembly, Alison-Madueke said the progress made in its passage was in tandem with the expectations of the executive.

    “As different stakeholders go through the bill, there will be different views.

    “There will always be different stakeholders whose views are brought to bear when there is a document of such critical importance.

    “Once it enters the purview of the legislature, it is expected that different views will be heard.

    “At the end of the day, the expectation is that the document that comes out will represent a fairly win-win situation for all stakeholders for the good of the entire economy and the entire polity,’’ she said.

    The minister said she was invited by the President to attend the meeting with the NBA, because of the importance of some of the legal policies in the oil and gas sector.

    She said the NBA, which was a critical stakeholder in the country, considered the PIB as “a very critical piece of legislation’’ because of its far reaching implications on the country’s oil and gas sector.

    “It is an amalgamation of 16 existing laws in the oil and gas sector which have now been refined and repositioned to hopefully take Nigeria in this sector into the next 30 years and beyond.

    “We will like to see it move forward,’’ she said.

    Also speaking, the NBA President, Okey Wali (SAN), said the meeting with the President discussed some issues bordering on security, economy, the rule of law, and the Judiciary.

    “We thought we should have audience with the President and express our concerns on some issues and then the President graciously took the issues and addressed them.

    “We talked about the issue of the independence and funding for the judiciary.

    “We talked about the rule of law because we believe that it is a strong issue in any civilised society and we talked about the economy,’’ Wali said.

    Wali said the NBA acknowledged and appreciated the fact that Jonathan’s administration is working.

    He, however, stressed the need for the effects of the work to trickle down and affect the common man positively.

    “The government is working because we have lots of reports, but our concern is also the impact on the average Nigerian. It is not good enough to have the statistics, but we will like it to be moved to the next level where the average Nigerian gets the impact of what the government is doing,’’ he said.

    Wali said the delegation expressed the association’s concern over the crisis in Rivers and appealed to the President to do all that he could lawfully do to ensure that peace returned to the state.

     

  • Alison-Madueke: no going back on zero gas flaring

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has restated the Federal Government’s commitment to end gas flaring.

    Delivering a paper entitled: The future of African energy in a changing world, at St Anthony’s College, University Oxford, United Kingdom, she said the government has begun the implementation of mitigation strategies that will over time compensate for years of carbon emissions arising from gas flaring and environmental pollution.

    Nigeria, she said, aspires to achieve carbon neutrality by 2025.

    She said the government’s aspiration was being realised with gas flares now at a significantly reduced level relative to previous levels. She said as at 2010, flared gas was 30 per cent, but now it is down to 11 per cent and would be down to two per cent by 2020 and beyond.

    Mrs Alison-Madueke highlighted the rising profile of African energy in the global energy matrix, citing the numerous offshore and onshore oil and gas discoveries across the continent, which she noted, has placed Africa on the front burner of the global energy industry.

    She advised that the continent should rise up to the challenge of the potent threat posed to Africa’s oil producing countries by the embrace of shale oil and gas by the United States and China.

    The minister appealed to the global community and the developed economies to invest in the development of the growing African energy economy so as to ensure a win-win scenario for the continent and the rest of the globe.

    She argued that while it may make economic and geo-strategic sense for a nation to meet its energy needs from domestic sources instead of imports, it may not make so much sense from the perspective of the broad-based global development necessary to ensure the global stability.

  • Reps bicker over N59tr oil deal

    Reps bicker over N59tr oil deal

    Bickering over which Committee will investigate the alleged N59 trillion oil deal involving the Minister of Petroleum Resources, Diezani Alison-Madueke, the Shell Petroleum Development Company (SPDC) and others, nearly truncated the House of Representatives’decision to continue with the probe.

    The intervention of the presiding officer, Deputy Speaker Emeka Ihedioha, who stamped his authority saved the day after Robinson Uwak (PDP, Akwa Ibom) had raised objection over the resolution of the motion that the investigation be undertaken by the House Committee on Petroleum Resources (Upstream).

    Victor Ogene (APGA, Anambra), who moved the motion, had urged the House to constitute an Ad-hoc Committee to investigate the alleged shady deal involving the farm-out or allocation of Oil Mining Leases (OMLs) 4, 26, 30, 34, 38, 41 and 42; and to report to the House in four weeks.

    But before the conclusion of his argument, Uwak raised a point of order, citing a section of the House rule that empowers House Committee on Petroleum Resources (Upstream) to investigate such matters.

    The presiding officer noted Uwak’s point, but when he was about to rule in the motion, Uwak protested for the second time that his observation has not been ruled on.

    Another member immediately raised a point of order citing another House rule that forbids members making comments more than once on the same subject.

    When it became obvious that the proceeding might be jeopardised, the Deputy Speaker exercised his authority and ruled Uwak out of order after, which the majority of the lawmakers voted in support of the motion.

    In his argument, Ogene observed that representatives of oil producing ethnic nationalities in Delta State protested the alleged fraudulent allocations of some marginal oil fields at the premises of the National Assembly on Thursday, April 25, 2013.

    He said: “The protesters complained of the secret and arbitrary farm-out of the Oil Mining Leases (OMLs) 4, 26, 30, 34, 38, 41 and 42 to both Atlantic Energy Drilling Concept Limited and Septa Energy Limited, without regard to the law and due process.

    “We are, however, aware that the Minister of Petroleum Resources, Shell Petroleum Development Company (SPDC) Limited, compromised officials of the Ministry of Petroleum Resources and the Nigerian Petroleum Development (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), which were allegedly accused of impropriety, abuse of due process and fraud in the transactions leading to the farm out of the said oil blocks.

    “In addition, it was also alleged that a colossal sum of $380 billion or about N59 trillion and $15.72 trillion worth of gas asset were at stake in the shady deal.

    “It was alleged that there was a deliberate exclusion of indigenous operators from exercising their rights of first consideration or refusal in the deal in violation of sections 3(1), (2) and 5 of the Nigerian Oil and Gas Industry Content Act (No 2), 2010, which action obviated the need for an open and competitive bidding in favour of Atlantic Energy Drilling Concept Limited, which neither tendered nor bidded for the blocks allocated to it.

  • FG seeks Britain’s assistance on oil ‘bunkering’

    FG seeks Britain’s assistance on oil ‘bunkering’

    Nigeria has asked Britain for help to tackle a multi-million dollar oil theft business which is run by international crime syndicates, the Minister of Petroleum Resources, Diezani Alison-Maduke said on Tuesday.

    Oil “bunkering”– hacking into pipelines to steal crude then refining it or selling it abroad — is costing Nigeria a fifth of its two million barrels per day output, government and international oil companies say.

    “The products from bunkering are not sold in (West Africa), neither are the financial outputs … laundered in West African banks, they are ending up in far flung international fiscal institutions,” Reuters quoted Alison-Madueke as saying at an industry conference in Abuja.

    “Mr. President has begun to reach out with his colleagues around the world. A discussion was held with the prime minister of Great Britain on Monday a week ago and they are all coming on board to help sort out this particular menace,” she added.

    Anglo-Dutch oil major Royal Dutch Shell, the biggest foreign producer in Nigeria, has been lobbying the British government to help Nigeria to end bunkering, industry sources say.

    Yet the complicity of security officials and politicians who profit from the practice may limit the impact international governments can have on ending the illegal industry.

     

  • Will Petroleum Minister meet stakeholders’ expectations?

    Will Petroleum Minister meet stakeholders’ expectations?

    Expectations from the Minister of Petroleum Resources Mrs. Diezani Alison-Madueke are high this year. EMEKA UGWUANYI reports

    Last year was chaotic for the petroleum industry. It began on a stormy note with protests over the withdrawal of fuel subsidy by the Federal Government and resultant increase in fuel price. The protests led to calls from Nigerians and interest groups for increased transparency and probity in the petroleum sector.

    There were calls from several quarters and groups for the sack of the minister for her alleged inability to meet the expectations of Nigerians, especially with the unveiling of the rot in the downstream sector through the probe of petroleum subsidy regime. The probe uncovered billions of naira corruptly frittered away by unscrupulous marketers who claimed subsidy refunds without actually importing fuel.

    The public outrage and calls for transparency in all transactions in the downstream sector compelled the minister to set up four task forces to cater for different areas of public complaints. The terms of reference for all the task forces were geared toward promoting efficiency and transparency in the petroleum industry and other parastatals under the ministry. The committees include the Special Taskforce on Petroleum Industry Bill (PIB), which was headed by Senator Udoma Udo Udoma, Special Task Force on Governance and Control headed by Dotun Suleiman, Special Task Force on Petroleum Revenue chaired by Mallam Nuhu Ribadu and Task Force on National Refineries headed by Dr. Kalu Idika Kalu.

    The taskforces have submitted their reports. Some of which revealed some uncomplimentary findings and recommendations. For instance, the Mallam Nuhu Ribadu-led taskforce revealed undue loss of public revenue through unwholesome practices by some parastatals under the ministry and allocation of oil blocks without recourse to due process and at give away prices.

    The Kalu Idika Kalu-led taskforce wrote off the refineries as mere scraps, noting that they operate below 20 per cent capacity, which led to fresh calls for privatisation of the refineries. But operators noted that if the refineries would be sold at this stage, it are complete loss to the country. They said that the potential investors that would bid for the refineries would so much under-price them that it would add no meaningful contribution to the country’s revenue base.

    Besides, they noted that some unpatriotic Nigerians would use fronts to buy them (refineries) at give away prices and later begin to make enormous profits from them. What the Federal Government has decided to do, is bring the refineries and some oil and gas national assets as well as the National Petroleum Development Company (NPDC) to form the national oil company post-PIB, which will be private-sector run and also listed on the Nigerian Stock Exchange (NSE).

     

    Downstream

    The downstream sector witnessed some hiccups especially in distribution of products resulting in fuel scarcity which was caused primarily by refusal of marketers to import fuel as expression of discontentment for the over N200 billion owed them by the Federal Government in subsidy refunds. The fuel scarcity was worsened by vandalisation of major distribution pipelines.

     

    Upstream

    The non-passage of the Petroleum Industry Bill (PIB) has continued to shut out fresh investments into the exploration and production segment of the oil industry. The undue rise in crude oil theft has continued to dampen investment prospects and oil companies especially Shell is adversely affected.

     

    Expectations

    Stakeholders in the industry expect the Minister of Petroleum Resources to explore avenues and reasons to convince the National Assembly to see the need to pass the PIB. It is the belief of the stakeholders that the passage of the bill would drastically reduce the corruption in the downstream through the enthronement of transparent business process and global best practices. The bill is expected to make the multinationals and other exploration and production companies to take definite stand on commitment to fresh investments.

    The minister is also expected to explore other models that would entrench stability in fuel supply that will enable motorists to drive into a retail outlet at any time across the country and buy fuel without queuing.

    “Other expectations include tangible value creation in the industry, which will result in increased employment of Nigerians in the industry, increased skills acquisition by Nigerians, sustainable technology transfer and transparent practices that would ensure safety and health of Nigerians especially those in producing communities and safe environment.”

     

    Scorecard

    The minister had commented on provisions of the PIB. She said the new PIB was drafted with equity in mind and that the concerns of the international oil companies were taken into consideration so as to engender a win-win situation for Nigeria as well as stakeholders in the oil and gas industry.

    Besides, to guard against reoccurrence of what happened in the past when the PIB was bogged down by allegations of forgery and different versions said to be in circulation, Alison-Madueke said the new PIB was imbued with security features and tamper proof attributes. She said apart from having watermarks bearing her own handwriting on every page, the draft bill is locked in a code such that no one can add to or remove anything from it without the code. “All these features are designed to secure the document to avoid the type of duplication that led to the emergence of fake versions of the old PIB, which created confusion in the National Assembly.

    She said her ministry last year took extra-ordinary measures to achieve sufficiency in gas supply to power stations to meet the Federal Government’s desire to ensuring improved electricity supply. Within the period, she declared a 12-month gas supply emergency plan designed to address the challenges of gas to power.

    “Delivery of gas to assure sufficient, uninterrupted supply to existing, as well as new thermal generating plants has been a special focus area of mine and the Ministry of Petroleum Resources. Up to recent times, gas supply to power plants outstripped demand to the extent that significant volumes of available gas remained unutilised on a daily basis. However a close analysis of the supply chain has revealed that over the last 10 years or so, there has been significant misalignment between power projects and gas supply sources,” she said.

    The efforts to strengthen the capacity and roles of the Gas Aggregation Company of Nigeria Limited (GACN), which is a DPR-regulated company of the Ministry of Petroleum Resources with responsibility for gas sourcing and allocation, as well as operator of the commercial framework of the Gas Master Plan, is also a milestone.

    In addition to its traditional gas demand management role which includes processing requests from gas buyers, managing gas supply/demand allocation, as well as facilitating Gas Supply Aggregation Agreement (GSAA) negotiations, the GACN was mandated to achieve the following: identifying gas sources/suppliers and designing incentives for accelerated domestic gas delivery; driving the implementation of the findings of the Emergency Gas Committee, which focused on short and medium term gas supply but on a sustained basis; and ensuring integration as well as alignment between gas demand and supply to ensure robustness of longer term gas supply to power. It is also geared towards providing implicit data to enable the DPR to be more proactive in compelling suppliers to meet domestic gas supply obligations, among others.

    The completion of critical pipelines, such as the 27kmX24 inch gas supply pipeline from Itoki to Olorunshogo via Ewekoro in Ogun State, the 56kmX24inch Escravos-Warri gas pipeline, which doubled the pipeline capacity and enhanced gas evacuation from Escravos as well as the 130kmX36inch Oben to Geregu pipeline, improved electricity supply as a result of steady gas supply.

  • Too much money chasing too much frivolity

    Too much money chasing too much frivolity

    Between them, three women have partitioned Nigeria into an overbearing and scheming country. It is doubtful whether the three – Dr Ngozi Okonjo-Iweala (Finance), Stella Oduah(Aviation) and Diezani Alison-Madueke(Petroleum) – do so deliberately. But by their policies, and the vociferous arguments they summon to drive them, the country’s fate seems sealed, at least under President Goodluck Jonathan. The situation was probably not better under Chief Olusegun Obasanjo’s presidency, but in those days it was at least difficult to determine where Obasanjo’s overbearingness began and where the conceitedness of his appointees ended. We groped in that fogginess for eight years to 2007 assured that some sort of balance could be conjured by nature itself. Nature, we convinced ourselves, abhorred imbalance. But under Jonathan, there is no fog anywhere, nor is nature keen to intervene.

    For a moment, let us put aside the policy parade of the Finance and Petroleum ministers, and instead concern ourselves with the Aviation minister, who is on some sort of rampage. It is of course mere co-incidence that the three ministers are from the Southeast/South-South. Their power and influence – some say dominance – is probably not due to their states or regions of origin. They are influential partly because of their intellects and mostly because of their personalities. When it comes to the debate over finance and poverty, have you ever tried to convince the highly opinionated Okonjo-Iweala that the square of the longest side hypotenuse of a right triangle is equal to the sum of the squares of the other two sides? Forget it; it’s a lost cause. No matter how right you are, she is even righter. If you draw the sword of Pythagoras, she will counter with the shield of Euclid. And you would be lucky to get in a word when she is declaiming on any topic.

    Diezani (I mean no disrespect; her first name, which is not common, is simpler to use than her hyphenated surname) is probably the most oratorical of the three, and certainly the most dashing. What degree of persuasiveness she loses by way of conjured or ambiguous facts and figures, especially when she is put to task by the National Assembly and the querulous long-suffering public, she makes up for by way of sheer verbal profundity. It is always an unequal combat when a brilliant but not fluent speaker meets an eloquent exaggerator who can manage to pay occasional homage to logic. Whereas the Finance minister undermines your statistics and makes you doubt the sources of your figures, the Petroleum minister overwhelms you with her rolling words and glacial composure, thawing only sparingly to remind you of her humanity, nay, femininity. Neither of the two ministers is ever able to convince anyone about the fidelity of the facts and figures coming from the two ministries, whether as they concern poverty and the application of fiscal tools to regenerate the economy, or as they concern fuel consumption or the so-called subsidy regime.

    Of the three, however, Oduah, who is the main focus of this piece today, appears to be the most daring and enterprising, and perhaps the most energetic. By dint of her obtrusion, she has managed to raise the status of the Aviation ministry from a sedate, backroom bureaucracy to a frontline and, if we should borrow a phrase from modern analysts, cutting-edge organisation. As her obtrusiveness during electioneering showed, when she made the so-called Neighbour-to-Neighbour unit of the Jonathan campaign organisation a powerful instrument propelled by delicate and indecipherable financial engineering, she has a knack for turning water to wine, and turning a molehill to a mountain. Left alone in the Aviation ministry, as the Jonathan government seems increasingly bent on doing, she could soon begin imagining the prospect of developing a rocketry department in the ministry with the objective of putting a Nigerian on the moon, if not next year, then the year after. Her imagination is so fecund that, like God observed of human beings at the Tower of Babel (Gen 11), whatever she proposes to do she was likely to accomplish. But of course I exaggerate, for Oduah’s fecundity is neither profound nor without a terrible price.

    During the 2011 electioneering, Oduah knew how to get things done. She has transferred that talent and energy to her present assignment. Somehow, she does not seem to be discomfited by lack of funds. She is renovating, modernising, and in some instances, expanding the airports in the country, of course, in phases. And from all evidence, and by frequent fliers’ testimonies, she is doing the renovation to taste. But that exercise, as salutary as it seems, jars against a sensible consideration of the economics of airports. Might the renovation not be an unsupportable elevation of aesthetics over functionality? Ghana’s Kotoka Airport is not as fascinating as Murtala Mohammed International Airport, but it is better maintained, better utilised, friendlier to travellers, and there is always a general sense of sanity and safety in its precincts. I won’t push this point, however, for Nigerians, high and low, are eternally fond of the meretricious.

    Oduah speaks interminably about grandness in the aviation sector without a correspondingly grand and realistic paradigm to support her dreams. She wants at least one International Airport comparable with the best in the world. But in which aspect of Nigerian leadership is there anything comparable with the best in the world? Is it in observance of the constitution? What of the justice system, education, politics, healthcare, and all other human development indicators? This objectionable lack of realism, as personified by Oduah’s approach to aviation matters, is discernible in the attitudes of Nigerian leaders to the construction of State Houses, legislative complexes, official residential quarters, and the headquarters of some powerful ministries, departments and agencies. Oduah’s comparable airport terminal will pander to our outsized ego, and nothing more.

    Perhaps the most disagreeable policy to come from the Aviation minister is the decision to float a new national carrier barely 10 years after the same federal government scrapped the old carrier, the Nigeria Airways. The old carrier was scrapped because the government and its World Bank economists argued that governments were notoriously inefficient in running businesses. With maniacal zeal, the previous government scrapped virtually everything publicly owned. Official residences and cars were monetised. Roads were to be offered to willing concessionaires, and even Federal Government Colleges were scrapped. Virtually nothing was to be left in the hands of the government except the privileges of power. Now, they are gradually reversing themselves – a troubling indication of sloppy thinking, official grandstanding and depressing lack of public debate.

    When the Aviation minister first mooted the idea of a new carrier, a columnist with this newspaper argued along the following lines: “Oduah indicates the new national carrier will welcome private equity and be jointly and professionally managed to make it a successful venture. In addition, she says, if all things go well, the new carrier could hit the skies before many months. But it was not too long ago, however, that the government invited Virgin Atlantic to invest in the airline business in Nigeria over the ashes of Nigeria Airways. It proved an impossible task after just a few years, as the new airline made huge losses estimated at more than $300m between 2005 and 2010. In 2007 alone, Virgin Nigeria Airways lost nearly N10 billion. Moreover, Virgin Atlantic Limited never took more than 49 percent equity in the Virgin Nigeria project. So, what has changed? Oduah says the government has learnt its lessons, and will not repeat the mistakes of the past. She is confident that a new national carrier operated jointly with private capital will fly. Nonsense.

    “If private investors want to come into the airline business either in partnership or alone, the skies are always open. As everyone knows, the skies may be open, but the capital to establish and run airlines here has not always been open or friendly. Airline business has been a difficult one in recent years requiring the help of the government to keep it aloft…It is doubtful whether Oduah can convince anyone of the need for a new national carrier. The idea of a new national carrier is idle and wishful thinking. There is absolutely no basis for it, either financially or managerially…”

    And while we were still trying to come to terms with the new carrier bugaboo, Oduah threw us an even tougher bone to chew. According to an aviation source, the federal government plans to buy 30 new aircraft to be distributed to airlines to help them operate better and to crash air fares. Now, if there is a worse malady than this, we would like to hear it. The crazy venture, we are told, is to be funded by the Central Bank of Nigeria (CBN) – would Sanusi Lamido Sanusi countenance this nonsense? – and the Bank of Industry (BoI). Would the planes be given free? If not, would it not further aggravate the financial distress of the operators and encumber their operating costs? And are the CBN and BoI so loaded with idle money that they can be persuaded to throw it on fantasies?

    It is not enough to absorb the fact that these three ministers are powerful and influential, or that they give the Jonathan cabinet its steely core; we must also recognise that they are in fact symptomatic of the lack of consistent policy framework required to run a disciplined, transformative and progressive government. The ministers and their policies indicate just how besotted to grand fantasies the government has become, and why their successes will be few and far between.

  • Local Content Act: How far can it go?

    Local Content Act: How far can it go?

    The Local Content Act designed to cede 70% of oil contract jobs to Nigerian firms, is seen as one strategy to push sustainable growth, create employment, value-addition and technology transfer. The initiative, when fully implemented, is expected to drive the economy, Daniel Essiet reports.

     

    To ensure oil and gas resources generate large, long-term economic benefits for the nation, including, skilled employment for Nigerians, the government promulgated the Local Content Act.

    As a result, the industry’s activities are coming under increased scrutiny to guarantee Nigerians access to its operations.

    Some positive outcomes have been achieved in the past two years. Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke said the Nigerian Content implementation has attracted foreign direct investments worth over $500million in the manufacturing of equipment components for the oil and gas industry.

    The minister spoke at the opening ceremony of the Practical Nigerian Content in Yenagoa, the Bayelsa State capital. She said the equipment components manufacturing initiative is an effective way to drive industrialisation of the economy, adding that the initiative has already created over 1,000 skilled jobs.

    Mrs. Alison-Madueke, who was represented by the Permanent Secretary, Ambassador Abdulkadir Musa, explained that the initiative which mandates original equipment manufacturers to partner with their representatives to set up facilities to manufacture or assemble equipment components in Nigeria, will also ensure the retention of spend within the economy on critical industry equipment, such as valves, pumps, electrical and instrumentation products.

    She expressed confidence that the initiative will ensure that about 30 original equipment manufacturers would have set up fully in Nigeria within the next five years. She described the Nigerian Content Act as the most important development in the Nigerian oil and gas , noting that the impact of the Act is being felt in several sectors of the economy.

    She said: “Nigerians now own land, swamp, jack up rigs and some proportion of deep offshore rigs. More Nigerians are acquiring anchor handling tugs, dynamic positioning platform vessels, line handling tugs and other larger vessels otherwise called category two vessels.”

    The Minister directed the Local Content Board to lead the industry to establish vessel and rig maintenance facilities so that the Nigerian economy will realise maximum economic benefits from asset ownership.

    In training and employment, Mrs. Alison-Madueke indicated that the Board has also introduced guidelines that will ensure that investments in the industry lead to employment generation and training opportunities.

    She said: “In the last two years, over 5000 Nigerians have been provided training and employment opportunities under the project based training scheme of Nigerian Content Development and Monitoring Board (NCDMB),” adding that the developments has always impacted other sectors of the economy.

    Also, the Nigerian National Petroleum Corporation (NNPC) has pledged to partner with the NCDMB in the oil and gas industry to ensure that the 70 per cent target set by the Federal Government, especially in the complex deep offshore operation is attained..

    The Group Managing Director, Andrew Yakubu said the participation of Nigerians in the industry, especially in the upstream sector, has substantially increased from a merger 10 per cent before the enactment of the law to more than 30 per cent, citing the recent USAN Deep Offshore Field development as one significant milestone in this respect.

    He said: “These percentages are even higher and in some cases have attained 100 per cent. The Utorogu Gas Plant Expansion Project, is an example,” he stated.

    The GMD listed other projects with high local content value to include the OB3 Pipeline Project, Escravos Lagos Pipeline Phase 2 and the Aba Depot and Okirika Jetty Rehabilitation Project.

    He explained that windows of opportunities to grow Nigerian Content exist in the upstream, midstream and downstream segments of the oil and gas value chain.

    Yakubu advised Nigerians to set up medium sized companies in both exploration and production in areas like well services engineering, measurement, mud and logging engineering services.

    He said the monetisation of the country’s natural gas endowments presented other opportunities for growing local content, just like the revamping/rehabilitation of existing downstream infrastructure, adding that the enactment of the Nigerian Content Law has positively impacted on the sector. He said the passage of the Petroleum Industry Bill will further enhance benefits from the Nigerian Content Act.

    Speaking during the signing of the MoU, the Executive Secretary of NCDMB,Ernest Nwapa, said the service companies would now be required to submit a pupilage programme committing to employ Nigerians as a precondition for participation in tenders.

    He said: “To qualify to play in the industry, you must demonstrate that you are running an employment programme. Companies will employ young Nigerians and put them through pupilage before the contracts are awarded, so they can work when the contract is awarded.”

    Nwapa explained that PETAN was chosen for this programme because its members were the most enterprising players in the service end of the sector and they were partnering voluntarily with NCDMB on the programme.

    He added that the Petroleum Technology Development Fund (PTDF) will also be involved in the programme.

    The availability of sufficient skilled labour to support the growth of the oil and gas industry continues to be of concern and hence a high value-adding priority in the local content act. The areas of greatest concern are in the supply of trades and skilled labour for building new projects and supply of adequately trained and experienced technical staff to operate new and existing projects over the longer term. Nwapa said the board is committed to providing full and fair opportunity to local suppliers.

    These include processes for identifying industry capability and for working with suppliers to enhance their competitiveness and maximise their participation. The industry, government and training providers have made a solid start at developing a suite of measures for responding to the expected growth in the industry’s skilledlabour requirements. However, much remains to be done in developing and implementing a number of these programmes.

     

    Challenges

    Some of these obstacles include the lack of capacity, in terms of human resource and infrastructure, to meet the challenges in the industry which is capital intensive, requires a great deal of infrastructure and a highly skilled labour force.As new projects have started construction, expectations have risen as to the volume of work likely to flow to local industry. Delays to contract awards or disappointment at not winning work considered to be within the capability of local companies, have prompted criticism of the industry and generated calls for government intervention.

    The phase of industry growth provides the opportunity for suppliers of goods and services to the resources sector to grow their businesses. However, suppliers need to ensure that they are internationally competitive and understand and meet projects’ requirements for cost, schedule and deliverability. Suppliers face the same cost pressures and skilled labour shortages as project proponents and are further disadvantaged by the high dollar.

     

    Funding

    One of these challenges is that local businesses servicing the oil and gas industry require a sound capital base because of the capital intensive nature of the industry. However, many local companies may not be in the position to afford this and the only way out is to source funding from banks which could affect the quality and efficiency of goods and services provided. Another option is to partner foreign companies to boost their financial capabilities but this will in a way defeat the purpose of the policy itself which seeks to encourage indigenous businesses to take up the challenge of providing goods and services for the oil and gas industry.

     

    Prospects

    The NCDMB and the Petroleum Technology Association of Nigeria (PETAN) has signed a Memorandum of Understanding (MoU) that will make creating employment for young and qualified graduates part of the conditions for winning oil and gas contracts.

    The two organisations signed the agreement dubbed-NCDMB-PETAN Capacity Building Internship Programme during the opening ceremony of the conference in Yenagoa.

    Nwapa signed for the Board, while PETAN Chairman, Mr Emeka Ene, signed for the service companies association.

    Under the MoU, PETAN companies will make commitments in the form of plans that they will recruit Nigerian graduates.

    The NCDMB will issue certificates to the service companies on receipt of the plans and the commitments will count alongside other variables in the evaluation of bids by service companies for industry contracts.

    Thereafter, NCDMB and PETAN will recruit qualified Nigerian graduates and expose them to various training and skills development workshops and on-the-job training to prepare them to work in the course of the contracts and gain employment.

    PETAN companies will then absorb the trainees once they win the contracts and retain them after the internship phase based on their performance.

    Part of the MoU reads: “PETAN Companies will recruit qualified Nigerian graduates as trainees attached to a contract for a period of one year.

    “PETAN companies will absorb the candidates after the programme based on their performance and available vacancies.”

    Growth in gas demand is being matched by equally strong growth in the gas resource base.

    Unconventional gas resources are now estimated to be as large as conventional gas resources .

    Investment in other forms of unconventional gas is gathering pace, made possible by new developments in technology.