Tag: shell

The Shell Petroleum Development Corporation Limited (SPDC) Joint Venture (JV) has stated that it will achieve more than 80 per cent gas flare-out from its operations by next year from the current 60 per cent.

Its Director, Gas, Mr. Ubaka Emelumadu, stated that the gas flare-out would be achieved with three new gas projects being carried out by the Nigerian National Petroleum Corporation (NNPC)-SPDC JV, which will come on stream next year.

He said  Shell has designed a methodology that is channelled towards ending gas flaring and also put the gas that would have been flared to better use.

Emelumadu spoke yesterday at the ongoing 32nd Annual International Conference and Exhibition of Nigerian Association of Petroleum Explorationists (NAPE) in Lagos. He said the new gas projects are in Forcados Yokri, Adibawa and Otumara/Saghara.

In his presentation titled: “Obstacles to Developing Gas Infrastructure in Nigeria,” Emelumadu stated that SPDC JV has made good progress by successfully reducing the volume of gas flared as well as gas flaring intensity by 60 per cent over the last decade.

He said: “While this means less threat to the environment, it also means more gas infrastructure for the country and increase in gas sales to the domestic economy.

“In the next one year, more of SPDC JV gas flares-out projects (Forcados Yokri, Adibawa and Otumara/Saghara) will come on stream as we intend to achieve more than 80 per cent reduction by 2015.”

He said Nigeria ranks next to Russia in countries with the highest volume of gas flared, adding that since 2000, there has been progress made in flares reduction. He said the industry has seen a year-on- year reduction that trails SPDC who has been reducing flares 12 per cent faster than the industry average.

He said past focus on small associated gas gathering infrastructure proved expensive and presented some challenges because the rate of return on investment was not competitive compared to development of huge reserves or oil development.

He noted that it must be acknowledged that Nigeria and other stakeholders have made considerable progress in reducing gas flaring in the past decade, surpassing countries such as Russia and Iraq, with Shell playing a key role despite the challenge of executing such infrastructure.

He said one of the key elements of achieving gas flare-out agenda in any country is availability of backbone gas infrastructure to produce, process, transport and distribute gas to final customers. He pointed out that lack of commercially attractive and sustainable investment model is another obstacle because government-led investment in domestic gas infrastructure is no longer adequate. He said government being at the commanding height of the gas value chain will continue to stifle the required investment by the private sector.

According to him, this does not necessarily mean zero presence of government in the chain because best practices models on how government can play role of investment stimulator through private public partnership (PPP) and ensuring conducive business environment abound with specific examples in Norway’s GASSCO and Netherland’s GASUNIE.

The Shell Petroleum Development Company (SPDC) has been accused of delaying the privatisation of Afam Power Plant by the Bureau of Public Enterprises (BPE) for undisclosed reasons.

This is because the oil major has continued to  delay the signing of the Gas Purchase Agreement (GPA) for the power plant.

Being a condition precedent for the sale of the plant to its preferred bidder, Televeras Group, which was expected to pay its 75 per cent balance three days ago, the Federal Government could not conclude the privatisation of the plant without the agreement.

BPE Director-General, Mr. Benjamin Dikki disclosed this to The Nation in Abuja via a short message service (SMS).

Asked what has been delaying the signing of the GPA for the plant, he  replied: “There are issues with the gas suppliers-Shell.”

When our reporter called SPDC’s spokesman, Mr. Precious Okolobo on phone to respond to the story, he said since it was a public holiday, he should be given time to find out.

“Today is a public holiday; I will find out and get back to you,” he said.

But as at the time of going to the press yesterday, Okolobo refused to pick the call of our correspondent neither did the text message sent to his mobile phone elicited any response.

It would be recalled that the the Federal Government had granted the request by Televeras Group and Northwest Power Plc- the preferred bidders for Afam Power Plc and Kaduna Electricity Distribution Company respectively for the extension of date of payment of the balance of 75 per cent of purchase price by additional 60 days, from August 6 to October 6.

Televeras Group had on May 19 requested from the Federal Government an extension of time to pay the balance of the 75 per cent bid price for the power company because gas agreement that is germane to the completion   under the Share Purchase Agreement (SPA) it signed with the government had not been executed.

Televeras  lamented that the bankability of the transaction was  predicated on the execution of the gas agreement  and  that the non-execution of the agreement  has made it difficult to satisfy the due diligence enquiry required for raising the funds for financing of its  pre and post acquisition plans.

For Northwest Power Limited, the preferred bidder for the Kaduna Electricity Distribution Company, it had on July 25 requested an extension of transaction timeline by 60 days due to the recent security challenges experienced within the Kaduna Electricity Distribution Company which made its offshore financiers to postpone disbursement of bank facilities already obtained.

The company explained that though it had secured financing for the transaction from a foreign bank, the bank had requested for additional time to review the transaction in the aftermath of the security challenges in Kaduna to ensure the safety of its funds.

Televeras had paid the initial deposit of 25 percent of the bid price of $65,012,500 for the Afam Power Plant and Northwest Power Plc $40,750,000 for the Kaduna Electricity Distribution Company following which the SPA were executed by the two parties.

They were required to pay the outstanding balance of 75 per cent of the bid price within six months of the execution of the SPA on August 6 this year.

But there were indications last week that the BPE might extend the October 6 deadline for the payment because of SPDC’s ddelay of the  GPA.

Dikki told reporters in Abuja that following the three public holidays in the same month, government would look into the deadline for the payment of the 75 per cent balance.