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Tag: Gas

  • Kachikwu lists gains of gas policy

    Kachikwu lists gains of gas policy

    The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has listed the benefits of the National Gas Policy.

    Kachikwu said the policy would make gas a hub of the economy, stressing the need to have a stream of revenues between petroleum and gas to improve the economy and leverage opportunities in the oil and gas sector.

    He said: “This policy document builds on the policy goals of the Federal Government for the gas sector as presented in the 7 Big Wins initiative developed by the Ministry of Petroleum Resources and the National Economic Recovery & Growth Plan (ERGP 2017 – 2020).

    “The policy articulates the vision of the Federal Government, sets goals, strategies and an implementation plan for the introduction of an appropriate institutional, legal, regulatory and commercial framework for the gas sector. It is intended to remove the barriers affecting investment and development of the sector. The policy will be reviewed and updated periodically to ensure consistency in government policy objectives at all times.

    “The gas policy intends to move Nigeria from an oil-based to an oil and gas-based industrial economy, which will be driven by the core principles by separating the respective roles and responsibilities of government and the private sector, establish a single independent petroleum regulatory authority, implement full legal separation of the upstream from the midstream, and implement full legal separation of gas infrastructure ownership and operations from gas trading.”

    Other benefits include realising more of the liquefied natural gas (LNG) international downstream value, pursue a project-based, rather than a centrally-planned domestic gas development approach and make a strong maintenance and safety culture a priority.

    It will also ensure the implementation of international best practice for environmental protection, establish strong linkages with electric power, agriculture, transport and industrial sectors, establish payment discipline throughout the energy chain, honour stability of contract terms, ensure security of assets and ensure compliance with the Nigerian Content Act.

    The National Gas Policy covers governance (legislation and regulation), industry structure, development of gas resources, infrastructure, building gas markets and development of national human resources.

  • Eni seeks less gas flaring in Africa

    A delegation from Italian energy giant Eni, led by Chief Financial Officer Massimo Mondazzi, has made a presentation to the World Bank to reinforce the firm’s continued commitment to sustainable growth.

    Speaking at the World Bank’s headquarters in Washington, Mondazzi underlined Eni’s resilience in the current economic environment, and spoke of the company’s efforts to allow a wider access to energy in the Sub-Saharan region of Africa.

    One of Eni’s key strategies for the region is the World Bank’s Global Gas Flaring Reduction Partnership (GGFR), a public-private initiative involving international and national oil companies, national and regional governments, and international institutions.

    The World Bank Group is leading the GGFR’s efforts to significantly reduce the amount of gas flared globally. It estimates that flaring resulted in the burning of 147 billion cubic metres of natural gas in 2015, a figure that could generate 750 billion KWh of electricity, which exceeds the current annual consumption of the entire African continent.

    Flaring gas wastes a valuable energy resource that could be used to support economic growth and progress. It also contributes to climate change by releasing millions of tonnes of carbon dioxide (CO2) to the atmosphere.

    “Eni is proud to be a member of the GGFR and we have been in the process of reducing gas flaring at our assets. We are committed to achieving zero process flaring by 2025” Mondazzi said.

    The energy giant has cut flaring by about 75 per cent in the last decade and wherever possible, the gas is made available to the local market for electricity generation, providing access to electricity to over 18 million people in Sub-Saharan Africa.

    “The World Bank recognises that Eni is following up its endorsement of the “Zero Routine Flaring by 2030” Initiative with action on the ground, working to use flared gas for power projects and other applications that reduce CO2 emissions. We also appreciate Eni’s push to deploy and integrate more renewable energy technologies into their business model,” said Riccardo Puliti, Senior Director and Head of the World Bank’s Energy & Extractive Industries Global Practice.

  • Nigeria needs $10b yearly to achieve Gas Master Plan’s goals

    To achieve the objectives set out in the Nigerian Gas Master Plan, at least $10 billion yearly investment is required over two to four years period, the President of the Nigerian Gas Association (NGA) Dada Thomas, has said.

    The NGA President, who is also the Managing Director and Chief Executive Officer, Frontier Oil Limited, said such investment would create job opportunities for local line pipe manufacturing plants, construction companies and pipeline operators and an annual income of about $0.75 billion.

    Dada, who was highlighting the potentials of natural gas and the need to support its exploitation in-country, noted that the domestic gas (domgas) market has grown over the years, but only 13 per cent or 1.01 billion cubic feet (bcf) of total gas production of 7.5 bcf per day is consumed locally while 43 per cent is exported via liquefied natural gas (LNG) and West African Gas Pipeline, 34 per cent used for gas injection and 10 per cent flared.

    He said: “The growth in production came about largely by encouragement followed by compulsion. The end result is that Nigeria is only ranked 22nd in production of gas in the world, and we found ourselves in a perfect storm sitting in darkness generating less than five gigawatts (Gw) of grid power while flaring enough gas to generate two to three gigawatts of electricity and power plants are starved of gas. We have only two gas based industries (GBI) and barely any gas transportation infrastructure.

    “The bulk of our domgas is consumed by power plants within an illiquid and poorly regulated gas-to-power value chain that is threatening to cause systemic bankruptcy of all parts of the value chain and possibly the banking sector. We, therefore, have to conclude that we haven’t properly exploited our gas resources for domestic use for the benefit of our nation or our people and those brave enough to invest in our country’s development.

    “Looking to the future, the forecast demand for gas is ambitious with a target of eight bcf/d to 10 bcf/d in the long term, the bulk (about 60 per cent) of which is planned to be used for power generation. Given the relatively poor performance so far in developing the domgas sector over the years, how then do we propose to achieve these ambitious targets given the various impediments and issues that have bedeviled and continue to plague the domestic gas industry?”

    Speaking further on the subject entitled: Domestic gas utilisation in Nigeria : from producers to users, Thomas said no domgas market can exist without the upstream sector consisting of the oil and gas companies that explore, develop and produce the gas from reservoir to the wellhead delivering it to the gas treatment plant inlet gate.

    “These companies have to rise up to the challenge of ramping up domgas production from the current level of 1.01bcf/d to the forecast level of 2.5bcf/d over the next five years. The Independent Petroleum Producers Group (IPPG) estimate that this will require initial investments of $6 billion annually over a period of four years dropping to $3 billion annually thereafter in new gas production, processing and transportation infrastructure. The gas requirement is significant and cannot be realised unless gas resources currently untapped are freed up and made available to those willing to develop them,” he added.

    To him, within the midstream sector, a number of new initiatives based on traditional gas treatment technologies are now being deployed in Nigeria and will help revolutionise the domgas industry. Citing examples, he noted that a 500 million standard cubic feet per day (mmscf/d) compressed natural gas (CNG) industry could sustain a $1billion per annum industry.

    “A 500mmscf/d micro/mini liquefied natural gas (LNG) industry could sustain a $1.6billion per annum industry,” adding that growing liquefied petroleum gas (LPG) consumption from 2kg/capita or 400 metric tonnes per annum to 12kg – 20kg/capita or three to five million metric tonnes per annum, could generate a $10 billion plus industry,” he added.

  • How we support gas production, by Shell

    How we support gas production, by Shell

    Shell Petroleum Development Company (SPDC) Joint Venture is developing various gas projects to support domestic consumption, especially by industrial concerns and power generating firms, it was learnt.

    Shell, in a document obtained by The Nation, noted that several projects are ongoing, which will aid the development of about 2.8 trillion standard cubic feet (scf) of non-associated gas.

    Entitled: Shell’s role in supplying gas to markets, it shows the oil giant’s gas production dropped in 2016 compared to 2015 due to security issues.

    It said: “Shell companies in Nigeria have played a pioneering role in onshore, shallow and deepwater gas exploration and production and its delivery to domestic consumers and later, export markets since the early 1960s. Since 2010, the SPDC JV has also been producing at Gbaran Ubie integrated oil and gas plant in Bayelsa State, which has the capacity to process one billion standard cubic feet of gas per day for the domestic and export markets. Several projects are currently underway at Gbaran Ubie and nearby Kolo Creek and at Soku to develop around 2.8 trillion scf of non-associated gas. Natural gas in a reservoir which contains no crude oil is called non-associated gas.

    “This additional gas infrastructure will be used to sustain gas supply to the Nigeria Liquefied Natural Gas (NLNG) plant at Bonny and continue to fuel 225megawatts (Mw) capacity power plant built in Gbaran by the Federal Government under the National Integrated Power Project.

    “The SPDC JV also produced more gas in from the Agbada Early Gas Production Facility, which is expected to further boost gas availability on the eastern Niger Delta domestic gas network and enhance power generation by over 150Mw of electricity. In addition, the SPDC JV operated Okoloma gas plant supplies gas to the Afam VI power plant, which alone contributed approximately 12 per cent of Nigeria’s grid-connected electricity in 2016. Afam VI uses combined cycle gas turbine technology that burns 40 per cent less gas than plants using older open cycle technologies. This also contributes significantly to the reduction of greenhouse gas emission.”

    Shell companies in Nigeria, according to the report, remain committed to working with the Federal Government to increase gas supply to domestic market. For example, the Assa North/Ohaji South project in Imo State, which is a joint development involving SPDC, Nigerian National Petroleum Corporation (NNPC) and Seplat Petroleum Development Company, a leading indigenous producer, has the potential to be one of the largest domestic gas projects in the country, supplying 600 million scf per day. This translates into almost 2,400Mw of potential electricity generation when it comes to fruition.

    Other Shell companies in Nigeria continue to play a crucial role in the national energy gas mix. The Bonga deepwater field operated by Shell Nigeria Exploration and Production Company Limited (SNEPCo) produces gas that is piped from the Bonga floating production, storage and offloading facility to the NLNG plant on Bonny Island, it added.

    Also Shell Nigeria Gas Limited (SNG) supplies natural gas as fuel for various industrial processes and power generation in Nigeria. In 2016, SNG distributed an average of 33 million standard cubic feet a day (mmscfd) of natural gas against 42mmscfd in 2015 to industries and factories in its areas of operation in Ogun, Abia and Rivers states.

    The lower supply volume in 2016 was due to damage to equipment from attacks on oil and gas facilities in the Niger Delta. SNG also supplies natural gas to private companies that specialise in the delivery of compressed natural gas to industries located far from existing pipelines. SNG carries out its operations with an all-Nigerian staff and engages the services of a range of Nigerian companies as contractors, it said.

     

  • Nigeria’s, Morocco’s ‘Wonder of Africa’ pacts on gas, fertiliser

    Nigeria’s, Morocco’s ‘Wonder of Africa’ pacts on gas, fertiliser

    Moroccan National Board of Hydrocarbons and Mines Director-General Mrs Amina Benkhadra (right) and Nigerian National Petroleum Corporation (NNPC) Director-General Maikanti Kacalla Baru last Monday signed documents of cooperation agreement of the Nigerian-Moroccan gas pipeline project that will connect the two nations as well as some other African countries to Europe at the King Palace in Rabat. ASSOCIATE EDITOR OLUKOREDE YISHAU examines the importance of these deals

    Rabat, the heart of Morocco, was upbeat last Monday. Reason: the palace of King Mohammed VI was hosting a delegation from Nigeria, which was led by Minister of Foreign Affairs Geoffrey Onyeama.

    Minister of Agriculture and Rural Development, Audu Ogbe, his counterpart in the Ministry of Mines and Steel Development, Dr. Kayode Fayemi, Jigawa State Governor Presidential Committee on Fertiliser Chairman Abubakar Badaru, Nigerian National Petroleum Corporation (NNPC) Director-General Maikanti Kacalla Baru and Fertiliser Producers and Suppliers Association of Nigeria (FESPAN) President Thomas Etuh were also at the palace to witness history: the signing of two bilateral agreements.

    One of the Memorandums of Understanding (MoUs) signed is on the Joint Initiative on the Morocco –Nigeria Gas Regional Pipeline. This deal christened “The Wonder of Africa” will have direct impact on 300 million people.

    The MoU signed by the NNPC and the Office National des Hydrocarbures et des Mines (ONHYM), covers a feasibility study and a Front-End Engineering and Design (FEED) study on a gas pipeline from Nigeria to Morocco and ultimately Europe.

    The MoU shows that both countries have equal stakes in management and financing of the studies, which are expected to be completed in two years.

    The second agreement is on the second phase of the Fertiliser Initiative started after last December official visit of the King of Morocco to President Muhammadu Buhari in Abuja. The first phase has seen the supply of a cargo of phosphate from Morocco to Nigeria. Through this, 11 blending plants have been resuscitated and about 1.3 million tonnes of fertiliser have been produced. 50,000 direct jobs and 150,000 indirect jobs have been created and fertiliser’s price has crashed to N5,500.

    The new fertiliser deal will see to the maximisation of local fertiliser production through the creation of platform for basic chemical products and reinforcement of distribution channels.

    Moroccan Foreign Minister Nasser Bourita said President Buhari and King Mohammed VI have a shared vision for a sustainable, active and solidarity-based joint development for Africa.

    Onyeama thanked King Mohammed VI for his partnership with Nigeria and his belief in President Buhari.

    The minister said: “During His Royal Majesty’s State visit to Nigeria on December 3, 2016, our two countries entered into commitment to work in mutually beneficial ways to strengthen our bilateral co-operation in various areas, including agriculture, infrastructure and gas development. Who would have imagined that eight weeks after that commitment was signed, phosphates produced here in Morocco was already being blended into fertlisers for agriculture 2000 miles away in Nigeria under the programme known as the Presidential Fertiliser Initiative. The programme has revived several moribund fertiliser blending plants in Nigeria. It has so far created thousands of direct and indirect jobs, ensure that our farmers have access to good quality fertiliser at an affordable price and all these before the planting season. The remarkable success of this programme thus far can only be attributed to the strength of the personal relationship as well as the commitment, vision and leadership shown by both your royal majesty, King Mohammed 6 and Hs Excellency President Buhari.

    “These achievements are also testaments to the commitment of our chief executives and institutions that have worked tirelessly to implement what the two heads of states have directed. Without the focus and the drive of the government of the Kingdom of Morocco, the federal and state governments of Nigeria, OCP, the Nigerian Sovereign Investment Authority, the Central Bank of Nigeria (CBN)   and the Fertilisers Producers and Suppliers Associations of Nigeria, this idea could have remained just that, a good idea.”

    Onyeama went on: “This strong bilateral relationship is not limited to the fertiliser industry alone, the vision your royal majesty shared with His Excellency President Buhari to enhance our natural resources for economic growth has crystalised into extensive discussions on the decision taken in Abuja to start the proposed regional gas pipeline to connect Nigeria’s gas resources, those of other West African countries and Morocco. This initiative would also promote regional economic integration as well as accelerate electrification and industrialisation in mining, petrochemical, light manufacturing, agro-processing and fertiliser sectors.”

    Bourita traced the deals to six months ago when King Mohammed VI was on official visit to Abuja.

    “Six months ago, your majesty and your brother, His Excellency Muhammadu Buhari, President of the Federal Republic of Nigeria, announced the initiative of the gas pipeline, which connects Morocco to Nigeria and beyond to Europe. Today, a significant step of this initiative is reached, the signing of the cooperation agreement on the technical and financial feasibility study of this very important project,” he said.

    He added: “The Morocco/Nigeria gas pipeline project has a major historical significance that underpins the royal vision of an African continent that is master its own destiny. This project is a convergence of the vision of your majesty and President Buhari for the development of the continent, a vision founded on afro-optimism.”

    On the gas project’s feasibility, he said: “This project is feasible in many ways. First, the project arises from strong will. It is designed by Africans and for Africans aiming for a sustainable development and truthful and solidarity-based south-south co-operation as well as enhance regional co-operation.  Second, the vision has the capability, the high expertise and know how, relevant qualifications, adequate engineering and the right men and women to meet the challenge. The vision also has a number of previous success stories. Nigeria has a strong economy with the highest African GDP and enjoys the confidence of investors. Morocco, under your majesty’s leadership, has implemented world-class challenging projects. The project is also viable because it meets concrete needs relying on the potential of African gas resources on the one hand and the crucial role that energy can play to foster African development on the other hand. West Africa has a significant energy potential with 31 per cent of global reserves of natural gas resources. However, 200 million people don’t have access to electricity in West Africa, nearly two-third of the population. Only 45 per cent of energy needs are met. There are huge disparity in terms of energy among West African countries and for industries energy in West Africa is still very costly.”

    Bourita said the project would help integrate countries which the pipelines would pass through and create jobs and opportunities for their people.

    The Moroccan foreign minister said: “The viability of the project relies also on its integration effect. Gas pipeline will be an opportunity for all the countries that it will pass through, from the gas’s origin to the final destination and even for the midstream countries. ECOWAS producers as well as consumers can plug into the project to supply or be supplied. The project will have a real impact on the population of West African countries by directly benefitting 300 million people. It will enable West African countries to access a more reliable source of energy, which is considered among the cleanest and least expensive for power generation. Several sectors will derive considerable benefits from the pipeline in terms of employment as well as industrial development. The sectors concerned include agriculture, power generation, health, tourism and others. This Atlantic pipeline offers unprecedented opportunity for the region, for the transfer of technology, industrial and energy platforms that will accompany this project will enable the population of the region and more particularly the youths to benefit from its economic impact in terms of employment and investment. The Atlantic pipeline will have also stabilising effect. History has demonstrated that regional integration is synonymous with peace.

    “In the long run, the project will create an economically viable West African space connected to Europe. This project will simply change the face of West Africa. The project is also profitable. All these preliminary elements show the prospects for a profitable project, especially with its positioning as the gateway to Europe.”

    Speaking on the fertiliser pact,  Etuh emphasised the importance of food in development and enumerated the challenges faced in the first phase of the initiative and what are being done to tackle them.

    His words: “It was not an accident that you and your senior brother, President Muhammadu Buhari, decided to start this initiative with fertiliser. Why? Today we are talking about gas pipeline from Nigeria to Morocco to terminate in Europe. Can you do that project on empty stomach? No. And that is why the two brothers, His Majesty the King of Morocco and President Muhammadu Buhari, decided to start with an input so that we can feed ourselves, we can have the energy to think to do this ambitious project that we have started. In Nigeria, we have a potential one 8 million tonnes of fertiliser and we just started with a million tonnes this year and we are going to double it next year. We have a development programme to take this initiative to 6 million tonnes by 2020.

    “When we started there was a lot of logistics challenge which we never envisaged. Today it has been called the Wonder of Africa. The fertiliser is affordable and it is delivered to the farmer. How do we make it more affordable to the farmer? Today we have reached an agreement with OCP on how to solve the logistics problem. Both countries will be investing in the logistics. Storage facilities in those plants were also challenging. We have designed clusters. We are going to create inland logistics storage in the port and in the factory zone. This storage facility is not only for distributing fertiliser and for distributing the raw materials, but  it is also going to be a one-stop shop where the farmer can also bring its produce and sell.  We are guaranteeing the farmers cost plus profit.”

    Instructively, on March 14, when Etuh paid the chairman of the Presidential Committee on Fertiliser Initiative a courtesy visit during the Presidential Fertiliser Initiative tour in Dutse, Abubakar said both deals were independent of each other.

    He said: “The Sahara gas pipeline is a project we are planning to transport gas from here down to Morocco, then passing through so many countries and opening up use of gas in those countries across sub-Sahara. The supply of phosphate for fertiliser blending is a different agreement and the trans-Sahara pipeline is another project. We will do whatever agreement expected of us according to the Nigerian law? and the government of Morocco will do theirs. The countries that our pipelines will pass across, we will also use our gas and agree with us according to their rule.”

    The initiatives are no doubt laudable. But, being long term deals, it is hoped that the enthusiasm, with which the drivers have started, will be sustained till the end.

  • Fed Govt frets over increased gas flaring

    Fed Govt frets over increased gas flaring

    The Ministry of State for Petroleum, Dr. Emmanuel Ibe Kachikwu yesterday expressed fears that the establishment of modular refineries may increase the rate of gas flaring in the country.

    Kachiukwu, who was represented by his Senior Technical Adviser on Investment, Dr. Tim Okon, stated this during the presentation of the report on: New Nigeria Oil &Gas Framework and Policy  in Abuja,

    Kachikwu however said that the government will control the operations of the refineries.

    “Modular refineries will worsen our flare. We have to use economics of scale. If we have many refineries they will accentuate problems; so  we will have to control them,” he said.

    He said the Nigerian National Petroleum Corporation (NNP) will next year call for expression of interest for marginal fields, which will be opened for companies’ participation, saying that prior to the exercise, the marginal field policy would have come into force.

    The NNPC, said the minister, will ensure that the Niger Delta gets micro businesses to engage in as the government is keen about providing a business friendly environment.

    Kachikwu said there will be a critical legislation to make gas independent of government subsidy, which has caused significant loss of revenue from the product.

    He said the government wants to make sure that gas can economically stand on its own, adding that in the new scheme of things, government’s intervention in the petroleum sector will focus on developing entrepreneurs to discourage “sharing money that distorts political discourse and value system.”

    Kachikwu said besides oil, Nigeria is a country with deliverable resources, with an educated and aggressive populace.

    Commenting on the economic state of the nation and taking into cognizance of its potentials, he said: “I imagine what Nigeria could become if we do the right thing.”

    He noted that the essence of the seven big wins is to bring out the latent opportunities in the oil and gas system to take a collaborative responsibility to assist those who really want to become players in the field.

    The minister said the sector had been locked down by interest groups for too long positively or negatively, however time has come to open up the areas that are there.

    He pointed out that  it is now the responsibility of the ministry to assist those that have creative ideas about the industry  to “creates employment and development.”

    He recalled that he announced the concept of project 100 in Houston, which is to identify 100 Nigerians with skills, capacities and enthusiasm for the relevant assistance from government.

  • Lagos seeks Fed Govt’s approval to use Aje field’s

    The Lagos State government is in discussion with the Federal Government through the Department of Petroleum Resources (DPR) – Nigeria’s oil and gas industry regulator, to get approval to take all the gas produced from Aje field located offshore Lagos.

    A source in the Ministry of Petroleum Resources who requested for anonymity told The Nation that the discussion is progressing well but couldn’t confirm whether the state would be able to get the government’s endorsement for its request.

    According to the source, Lagos wants to take all the gas produced from Aje field to generate power for residential, commercial and industrial electricity consumers. However, he didn’t give further details on the transaction

    Lagos State Governor, Mr. Akinwunmi Ambode had announced that the state targets 3000 megawatts (Mw) generation capacity to be able to sufficiently meet the power consumption requirements of the state. He said the quest to achieve energy security for the nation can no longer be left to the Federal Government to address alone, adding that his government aspires to give the state 24 hours power supply by 2022.

    He said the reason Lagos embarked on the initiative was that it believes strongly that if the power problem is solved in Lagos, it is technically solved in the whole of the country.

    “The problem of power in Nigeria is the problem of transmission and that is the truth. We have generating companies and we have distributing companies and they say power is in the hands of the private sector but we know technically that that is not totally true. We also know that transmission is hundred per cent owned by government,” he said.

    Besides,  out of the 3000Mw envisaged by 2022, the governor said 350Mw would be delivered by the first quarter of next year, additional 850Mw by the last quarter of 2018, and the balance of 1,800Mw not later than third quarter of 2022. So the state needs a lot of gas to be able to achieve production of such power production, he said.

    Also, the state Commissioner for Energy and Mineral Resources, Olawale Oluwo told The Nation on the sidelines of the inauguration of the National Executive Council members of the Oil and Gas Trainers’ Association of Nigeria (OGTAN) in Lagos, where he represented the governor, that the state government just established an integrated oil and gas firm that will play across the entire oil and gas value chain, which may involve a petrochemical plant that consumes a lot of gas.

    He said Ibile Oil & Gas Corporation, the business arm of the Lagos State oil and gas operations, has concluded the setting up of its structures and has gone into marketing of the new oil firm for operation and partnerships. The oil firm will play in all the oil and gas value chain. They are into the downstream, midstream and upstream. They have been mandated to freely invest anywhere in the world and intervene in any area of business. They have put their structures and strategies in place.

    “Currently they are moving into business development, they are marketing. They are doing a front end work and sometime later this year they will go into major projects,” he said.

  • Domestic gas supply increases to 40%, says DPR

    Domestic gas supply increases to 40%, says DPR

    •Agency fines defaulters  

    Domestic Gas Supply Obligation (DSO), an initiative of the Federal Government to meet national demand, is achieving the desired result with the level of compliance by oil producing firms rising to 40 per cent this year, The Nation has learnt.

    Before now, the level of compliance by oil firms was very low. According to the Department of Petroleum Resources (DPR), between 2008-2013, DSO compliance was about 23 per cent, by 2016 it rose to 38.18 per cent and currently stands at 40 per cent.

    DPR’s Deputy Director/Head, Upstream, Mrs. Pat Maseli, stated this at the 10th annual sub-Saharan Africa Oil and Gas conference holding in Houston, Texas.

    She said DSO was assigned annually to all gas producers, such as Shell Petroleum Development Company (SPDC), Agip, Total, Chevron, Mobil Producing Nigeria Unlimited (MPNU), Addax, Nigerian Petroleum Development Company (NPDC), and Pan Ocean Oil Company Limited (POOCL) pursuant to the National Domestic Gas Supply Obligation & Pricing Regulations 2008 to determine the gas demand or the national gas requirement annually and evaluate utilisation along the gas value chain, among others.

    Maseli noted that the Federal Government intervenes in several ways to ensure that national gas requirements are adequately met. Some of the interventions include the estabegy to facilitate orderly gas sector development, ensures integrated approach to maximise potential benefits and ensure sustained implementation, which is critical for actualisation

    Others are through legislative reforms, Domestic Gas Supply Obligation Regulation (DGSO) 2008, establishment of National Gas Policy (NGP) and Production Sharing Contract (PSC) gas terms, provision of guidelines for third party access to gas-at-flare-points, commercial framework reforms, transitional gas pricing to power and other sectors, world class contractual frameworks for supply, transmission and network access, World Bank revenue securitisation, gas aggregator to manage DGSO and price aggregation, infrastructure blueprint, provision of network of critical pipelines and three Central Processing Facilities (CPF), Network Code Implementation, Petroleum Industry Gas Bill (PIGB) and sanctions, which include imposition of penalties such  as $3.5 per 1000 standard cubic feet (scf) shortfall, among others.

    Apart from boosting domestic gas supply to meet national demand, Federal Government’s interventions were to ensure that as much as possible is utilised to reduce flaring.

    According to a report on global gas flaring in 2015 by the World Bank led Global Gas Flaring Reduction (GGFR), Nigeria ranks seventh in the world having flared about 8billion cubic meters of gas in 2015.

    The GGFR report stated that within the period under review, Russia topped the global flaring with 20billion cubic meters of flared gas followed by Iraq with 16bilion cubic meters, Iran 12billion, United States 11billion, Venezuela and Algeria nine billion cubic meters each.

  • Nigeria can become global gas giant, says NLNG

    Nigeria can become global gas giant, says NLNG

    The Managing Director and Chief Executive Officer of Nigeria Liquefied Natural Gas Limited (NLNG), Tony Attah, said Nigeria can be a top gas producing country, with a potential to increase its LNG market share.

    He spoke during the public presentation of the company’s facts and figures in Lagos.

    For that transformation to be, Attah said the right business environment needed to exist. He referred to the proposed amendment of the NLNG Act by the National Assembly, which he said, would jeopardise the aspirations of making Nigeria global gas leader.

    He said: “The Nigeria LNG Limited (NLNG) Fiscal Incentives Guarantees and Assurances Act (NLNG Act) allowed investments to flow into the country. It provided investors the confidence that any agreement entered into would be respected and preserved. To amend the Act will not help Nigeria in developing its vast gas resources, NLNG and its hopes for expansion. It will erode investors’confidence that the Act provided in the first place.”

    Attah said opportunities, such as the expansion of NLNG’s Bonny Island Plant with Trains 7 and 8, could be a catalyst to unleashing the country’s gas potentials.

    He said it was time for Nigeria to use gas to spur industrial and economic transformation. He, however, warned that some challenges might slow down progress towards achieving the country’s dreams, citing the proposed amendment of the Nigeria LNG Limited (NLNG) Fiscal Incentives, Guarantees and Assurances Act (NLNG Act) by the House of Representatives as a potential show-stopper.

    “If the amendment is passed, the NLNG expansion project will be jeopardised and Nigeria will lose investments of US$ 1-3billion annually in the Upstream to enable NLNG maintain production capacity and gas developments. It means an immediate loss of foreign investment totalling US$25 billion in respect of Train 7 and 8 investments. Another impact will be the potential loss of about 18,000 jobs required for the construction activities of the Trains.

    “An amendment or change in the NLNG Act portrays Nigeria as a promise-breaker and untrustworthy, damaging the country’s reputation and hamstringing its ability to attract foreign investment,” he added.

    Attah cited Oatar’s journey into becoming a global gas giant. He said:  “Qatar started to ship LNG in 1997, two years before Nigeria. But you have to be awed by what the country has achieved since then. Today, oil and gas, and principally LNG, is the foundation of Qatar’s economy; and account for more than 70 per cent of total government revenue, and more than 60 per cent of GDP, as well as roughly 85 per cent of export earnings.

    “Qatar has LNG capacity of about 77metric tones per annum (MTPA), and generates revenues of about $91 billion per year. Gas was the catalyst for transformation of a small emirate to a global economic powerhouse. This will give you a feeling of what can happen when you focus on gas.”

    LNG, Attah said, contributed to reducing gas flaring from 65 per cent to less than 20 per cent, adding that all the benefits from Nigeria LNG, including financial contributions, among others, would be in jeopardy with the proposed amendment by the National Assembly, he said.

  • Battle to recover $15b gas sales dividends begins

    Battle to recover $15b gas sales dividends begins

    DETECTIVES are probing the whereabouts of $15.8billion Nigeria Liquefied Natural Gas (NLNG) Limited dividends, The Nation learnt at the weekend.

    Under investigation by the Economic and Financial Crimes Commission (EFCC) are former Petroleum Resources Minister Diezani Alison-Madueke and some former officials of the Nigerian National Petroleum Corporation (NNPC) and the Nigerian Petroleum Development Company (NPDC), the upstream arm of NNPC in charge of oil exploration and production.

    Some ex-Managing Directors of NNPC, former NPDC bosses and past executive directors are being investigated.

    The EFCC stepped into the “missing” cash issue following the audit report of the Nigeria Extractive Industries Transparency Initiatives (NEITI).

    The March 2017 Policy Brief of NEITI claimed that its audit report indicated that “it is doubtful if the entire $15.8 billion due from 2000 to 2014 is still intact”.

    According to some official documents, the $15,822,713,000.00 dividends came from the NLNG between 2000 and 2014.

    The funds were not paid into the Consolidated Revenue Fund of the Federation or the Federation Account.

    But about US$7.85 billion out of the dividends was allegedly withdrawn in 2011 under the guise of funding the Brass LNG Project.

    Detectives are working on some clues that a huge chunk of the $7.85billion might have gone into the 2011 presidential election campaign of former President Goodluck Jonathan.

    A source in the anti-graft commission confirmed the probe, saying it is all to ascertain if any part of the money has been spent, whether such expenditure followed due process, and if the expenditure was for specified purposes.

    “Although the dividends accumulated over a period of 14 years, about $7.85billion was withdrawn from the NLNG Dividend Account in March 2011 for Brass LNG Project which payment ought to spread for five years,” the source said, adding that the ex-minister on 30th March 2011 sent a memo to Dr Jonathan that about $7.85billion be sourced from NLNG Dividend Account for Brass LNG Project.

    Said the source, who pleaded not to be named so as not to jeopardise the investigation: “Although the $7.85billion was to be sequestered for Brass LNG Project, it was allegedly spent in one swoop.

    “We are working on clues that the bulk of the $7.85billion might have been diverted into private hands or used for the 2011 presidential campaign of the ex-President.

    “Diezani and her collaborators in NNPC and NPDC allegedly violated NNPC Funding Plan, which made the ex-President to give approval, for the Brass LNG project.”

    The Brass project was to be funded over a period of five years as follows: Year One ($1.18b); Year Two ($1.57b); Year Three ($1.96b); Year Four ($1.96b) and Year Five ($1.18b). Total is $7.85 billion.

    “We want to probe the circumstances behind the withdrawal of $7.85 billion at once in 2011.  So far, about $1.15 billion was said to have been spent by NNPC, leaving a balance of $6.7 billion to be accounted for, the source said.

    Some shareholders, who have invested over $1 billion in Brass LNG Project, have become frustrated. Some oil majors, such as ConocoPhillips and Total, have pulled out of the project “because the Federal Government is not serious”.

    The source added: “At a point, NNPC scaled down its seconded staff to Brass Project from about 58 to 12.

    “As for the balance of the $15.8billion, this is why we are likely to interact with some past Managing Directors and Executive Directors of NNPC, and NPDC.”

    The Nation stumbled on Mrs Alison-Madueke’s letter to Dr Jonathan on the withdrawal of the $7.85 billion in 2011.

    The 30th March 2011 titled “Request for approval to use dividend from NLNG project to fund Brass LNG project” states:

    “Nigeria’s enormous gas reserves offer significant potential to build viable domestic gas based economy as well as take advantage of a vibrant export gas market. Following recent approvals by Your Excellency in respect of the domestic gas market, steady progress is being made in meeting gas supply to the power sector and stimulating the growth of gas based industries, such as petrochemicals, fertilizer.

    “The Brass LNG project was conceived in 2001 as a two-train plant of total capacity of 10 million tons per annum with provision for expansion. The plant will be located on the Brass Island adjacent to the AGIP oil terminal facilities.

    “The project is being promoted by NNPC (49%), AGIP (17%), Total (17%) and ConocoPhillips (17%). It is expected that gas will be supplied from the NNPC/Agip JV (4.7TCF), NNPC/Total JV (3.6TCF) and NNPC/Chevron JV (3.3TCF).

    “The estimated cost of the Brass LNG project is about $16bn of which NNPC equity contribution (49%) is $7.85bn.

    “The project has expended over $700m, mostly on the front-end engineering and design, early site works, project management. NNPC plans to divest a total of 19% of its equity; 9% to Strategic Investors (Itochu, SemSah, LNG Japan) and 5% each to Bayelsa and Rivers states, after FID.

    “The project has made steady progress towards an early Final Investment Decision (FID). Attached to this letter is a brief presentation on the progress made so far towards FID. In particular, it highlights the major issues that NNPC as an investor needs to address urgently towards an early FID.

    “For FID to be achieved, there are 5 key Conditions Precedent (CP), namely:  Closure of Engineering, Procurement and Construction (EPC) contracts Closure of Gas Supply and supporting Gas Supply Agreement (GSPA); Execution of Sales and Purchase Agreement (SPAs) and Financing Closure of Shipping arrangements

    “Prayer.  In the light of foregoing, His Excellency Mr. President is kindly requested to approve:

    1. That the dividends due NNPC from the NLNG project be sequestered and dedicated to fund the Brass LNG projected;
    2. b) That the estimated sum of US$7.85 billion NNPC equity contribution be sourced primarily from the NLNG dividend account and other sources as detailed in Table 1 above.”

    But in its March 2017 Policy Brief, NEITI said it was important for NNPC to explain what has become of the $15.8billion dividends.

    It said the “recovery of these funds will significantly enhance government’s fiscal position in the short term”.

    The Policy Brief said: “However, NEITI’s audits have revealed that until 2015, NNPC failed to remit the interests and dividends from NLNG to the Federation Account.  In those years (2000-2014) NLNG paid a total of $15.8 billion to NNPC, which NNPC acknowledged receiving but failed to remit to the Federation Account.

    The dividends from Nigeria’s investment in the NLNG are undoubtedly covered by clear constitutional provisions which prescribe that all revenue received by the Federation must be paid into the Consolidated Revenue Fund of the Federation.

    Section 80 (1) of the 1999 Constitution states: “All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation”

    Also, Section 162 (1) of the 1999 Constitution states thus:

    “The Federation shall maintain a special account to be called “the Federation Account” into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja”

    “These sections of the Constitution are especially important because NNPC once stated that it had spent part of the NLNG dividends on gas projects. NNPC maintained that this was done in line with approvals from the Federal Government. The NNPC has also stated that it thought that the shareholdings were owned by the Federal Government and not the Federation.

    “However, it is doubtful if this alibi on lack of clarity on ownership can hold up to scrutiny. The NNPC is the joint venture partner with international oil companies on behalf of the Federation in all oil mining projects. NNPC also does all lifting for crude oil for the Federation. Can it now be said that revenue accruing from such lifting belongs to the Federal Government alone, because the NNPC is an agency of the Federal Government? Analogously, the NNPC holds shares in NLNG on behalf of the Federation and cannot possibly claim that such shareholding is for the Federal Government alone. It is also doubtful that even revenue belonging to the Federal Government can be expended without appropriation.”