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Greetings!
Welcome to our 44th issue. Once again, thank you for supporting our launch. Do check back next week as we will have photographs in our next issue.
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Indigenous Participation in Upstream Sector On Track |
At the recent2013 Annual Oloibiri Lecture Series and Energy Forum organised by the Society of Petroleum Engineers (SPE) in Lagos, stakeholders had the rare opportunity of appraising the level of participation by indigenous companies in the Nigerian Petroleum Industry. The discussion session had representatives of the indigenous companies and the government in attendance, speaking on the topic: Indigenous Participation in Nigeria Petroleum Industry: Are We On Track?
After reeling out accounts of how far the local content initiative has gone particularly in the upstream sector of the industry, the general submission by the speakers was that although indigenous participation was growing, there were still obstacles militating against full growth of the initiative.
The Managing Director/Chief Executive Officer, Weltek Nigeria Limited, Pedro Egbe, said he is proud to say with a sense of conviction that the local content initiative is working particularly in the upstream sector of the industry although amidst some real challenges.
He said: "I believe the local content initiative or indigenization policy is working in the petroleum industry because indigenous companies have been doing well despite the challenges faced. Through our umbrella body, the Petroleum Technology Association of Nigeria (PETAN), which was created in 1990, much progress has been made by these companies in meeting the challenging demand requirements of the industry. PETAN has been in the forefront of fighting for its members for local content implementation."
"One of the indigenous players, Walter Smith I know has been doing well playing on the big stage just as other indigenous companies are equally trying to do same to catch up with the big players," he said.
But despite these notches by indigenous companies, Egbe says the road to the destination point is still long for indigenous participation as there are many issues begging for attention.One of them, he said is the issue of technology which is a major source of concern for indigenous participation.
"Though a lot of people talk about technology, but it is known that going to school of technology or engineering to get knowledge is one thing, the application of the acquired knowledge is another. Before anything we must try to ask ourselves the questions: Who wants the technology and how has the technology been felt in the industry. The industry and companies need the technology. State governments also require this technology to grow their economies," he said.
He said the huge gap in the system therefore requires prompt action to be taken by developing our technology.
Acknowledging the contributions of the IOCs, Egbe said they have been making real effortsto comply with the provisions of Nigerian Content Development Act but noted that right now the system has not shown that every strata of government is adequately supported by technology.He added that it is surprising that currently there is no industrial policy by the government.He called on the NNPC and IOCs to come together to design a business model to help deal with this situation.
Egbe said community development is another area that ought to be looked at if indigenous participation is to improve as it is possible oil communities frequently engage in illegal oil activities because of lack of infrastructure in their domains.
"We need to consider the level of infrastructural development in our oil communities. One of the reasons for illegal activities especially unconventional refining in these areas could be that there is no infrastructure. So, infrastructure must be improved so that the crude oil theft economy can be made unattractive," he said.
He concluded that PETAN as a body is prepared to contribute its quota in growing indigenous participation with the setting up of the Niger Delta Energy Corridor (NDEC) through which it is looking at how raw materials required in the industry can be manufactured and processed locally.
Dr Layi Fatona, Managing Director/CEO, Niger Delta Exploration and Production said he is of the opinion that indigenous participation has been growing because between 1987-2007 about 53 indigenous companies were awarded licenses to carry out exploration and exploitation activities in the Niger Delta and Anambra basins.Right now, he said Nigerian Petroleum Development Companies (NPDC) and other indigenous companies can boast of about 287, 000 barrels of combined oil production per day, which is a relatively significant production achievement when compared to the situation before now.
He added that indigenous participation can also be said to be on track as integrated values are being created by indigenous companies.
"Most indigenous companies are making their marks in the development of gas resources. NDEP is monetizing gas and Frontier Energy just commissioned facilities for this purpose too. This is just a way by which we are integrating values in the oil and gas industry," he said.
However, he said because the terrain is changing, indigenous players are not finding things easy.For instance, he said out of the 28 marginal fields licensed in 2003, only eight are yet in production, an indication that the environment is becoming harsher by the day.Apart from this, he said the issue of delay in project approval is a big concern.
"It takes between 3 months to 6 years for approving deals and projects whereas it should have been 6 months from start to finish. This is a major disincentive as investors may be forced to look for greener pastures elsewhere due to this bureaucratic process," he said.
Community issues, duplication of taxes by both state and local governments according to him are other areas of concern citing the case of Rivers state where his company is faced with multiple taxes from the government.
He identified other issues to include the fiscal regime, funding, personnel and human capacity development and technology and the unattractiveness of the marginal assets.
He noted that these and other issues have made it impossible for indigenous companies to contribute immensely to growing Nigeria's reserves, as their contribution to the daily oil production is a dismal 10 per cent.
He made the following recommendation as a way forward: that the challenges be assessed and analysed for remedial actions to be taken, that performing indigenous players be encouraged by giving them additional assets or fields and that in addition to awarding marginal fields, small to medium fields be awarded to indigenous players to boost their capabilities.
With these, he concluded that by 2018, the totality of indigenous participation should be able to do half of the daily oil production. .
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Total, Samsung Seal $3bn FPSO Deal
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More details have been emerging of about the award of a $3.1bn Floating Production, Storage and Offloading (FPSO) vessel contract for the Eginadeepwater oil field which was recently concluded between Total Upstream Petroleum Nigeria Limited, the Nigeria National Petroleum Corporation's Joint Venture partner and Samsung Heavy Industries (SHI).
In a statement, Total said Samsung Heavy Industries became the preferred bidder in a highly competitive and transparent bidding conducted by National Petroleum Investment Management System (NAPIMS), the investment arm of the NNPC and approved by the corporation's Group Executive Committee headed by the Minister of Petroleum Resources, Mrs.Diezani Alison-Madueke.
The NNPC/Total management was said to have taken the decision to award the Egina FPSO contract to SHI after a comprehensive review of the economics, the track records of the bidders and having met all the requirements of NCD, including 12,000-15,000 tonnes in-country fabrication of topsides.
The multi-billion dollar Egina field in OML130 near Akpo Field is the third deep offshore development project of the French oil giant in Nigeria with reserve potential in excess of 550 million barrels and a peak production of 150,000b/d.
According to sources, Hyundai Heavy Industry bid $3.8bn for the Egina FPSO, while SHI stuck to $3.1bn for the same facility, a development that gave it the winning edge.Industry experts commended the French oil giant, Total Upstream, and NNPC for the transparent manner they conducted the bidding process and their determination to move the project to the next level.
Speaking on the scope of the multibillion dollar project, the General Manager, Samsung Nigeria Limited, Mr. Frank Ejizu, said the new FPSO would measure approximately 330 metres in length, 61 metres in width and 33.5 metres in depth; adding that it was expected to have an oil storage capacity of approximately two million barrels.
"Besides, the FPSO will equally have topsides modules with a gross dry weight of 34,000 tonnes and it will be delivered on schedule for the production activities by 2014," Ejizu said.He further explained that SHI's foray into Nigeria dated back to 2002 when it built the first FPSO, Bonga, with a 304,400 DWT for Shell Petroleum Development Company.
Egina oil field in OML 130 is being developed under a Production Sharing Contract by Total Upstream Nigeria (24 per cent) in partnership with NNPC (10 per cent), CNOOC (45 per cent), Sapetro (five per cent) and Petrobras (16 per cent).The field, which was discovered in December 2003, is located 150 kilometres off the coast of Nigeria and about 20km from the Akpo oil field. It is the third deep offshore development of Total in Nigeria. The field is currently under development and production is scheduled to begin by 2014/2015.
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Nigeria Exports 95% of Gas Production Annually
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Interesting facts have emerged regarding the past and current performance of Nigeria Liquefied Natural Gas Ltd (NLNG). The Managing Director of NLNG, Mr BabsOmotowa made the revelations whilst delivering a paper at the annual Oloibiri lecture series in Lagos.
He revealed that NLNG is producing 7 per cent of global liquefied natural gas (LNG) saying: "This is the first time the Nigeria government provided measures to encourage gas utilisation, which creates enabling environment for serious Nigeria investors to partner with the International Oil Companies (IOCs)."
He said that NLNG makes a contribution of 4 per cent to the GDP of the country and supplies about 65 per cent of liquefied petroleum gas (LPG) also known as cooking gas, to the domestic market. This represents some 150,000 metric tonnes a year.
He made a further revelation that although Nigeria is currently producing about 23 million tonnes of gas annually, 95 per cent of the production is exported as Liquefied Natural Gas, with 63 per cent to Europe and 32 per cent to Asia. Although this has raked in over $60 billion over the last 13 years it does beg the question whether the imbalance is in alliance with Nigeria's gas to power plans.
He however admitted that the situation in the international market is now very challenging with the increasing availability of unconventional gas. This has led to an 85 per cent drop in the price of gas on the international market. Many believe that the future market for Nigerian gas is the domestic market and West Africa although producers complain that the gas infrastructure is not mature enough to absorb the production capacity. The government hopes to remedy the position very quickly with the gas master plan.
NLNG is a joint venture between the Nigerian National Petroleum Corporation (NNPC) with a 49 per cent stake, Shell with 25.6 per cent, Total LNG with 15 per cent and ENI with 10.4 per cent.
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Waltersmith Plans 5,000 barrels per day Refinery
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WaltersmithPetroman Oil Ltd, a wholly indigenous operator of the Ibigwe marginal field is planning 5,000 barrels per day capacity mini-refinery around the oil field located in the eastern Niger Delta.
The company recently celebrated a successful completion of the first phase of the oil field development, located in the Oil Mining Lease (OML) 16, which was awarded to it in 2003, with a farm-in agreement with the Shell Petroleum Development Company (SPDC) signed in April 2004.
The field currently produces 4,000 barrels of oil per day (bpd) and expects to inch higher to 7,000 bpd after the ongoing production optimisation phase is concluded.
The company said in a statement that the proposed refinery would provide alternative source of income.
"The refinery will provide an alternative income stream especially in the wake of very frequent disruption in export schedules caused by the vandalisation of pipelines in the Niger Delta", said the statement.
According to the statement, the mini-refinery will produce diesel, jet fuel, kerosene and naptha.
Waltersmith's Chairman and Chief Executive Officer, Mr.Abdurazaq Isa, said his company had spent over $200,000.00 on the feasibility studies for the mini-refinery.
The feasibility was conducted byChemex LLC, the Bakersfield, California, United States-based company, which has already built a mini refinery at Ogbele field in Rivers State for another marginal field operator.
"The reports they submitted indicate that the economics are favourable but we are doing our own due diligence," Isa added.
First oil from the Ibigwe field was attained in March 2008, after the company had initially put in place an early production facility, which included a 20,000-barrel capacity crude storage tank.
In 2009, the company embarked on the first phase of its drilling campaign with the objective of appraising and developing the shallow reservoirs. Following the approval by the Department of Petroleum Resources (DPR), the company commenced the second phase of the drilling campaign and the development of the field with the planned work-over of Ibigwe wells 1 and 2 and the drilling of three additional wells.
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OPEC Basket Price Stood At $105.85 On Wednesday |
The OPEC basket of twelve crudes stood at $105.85 dollars a barrel on Wednesday, compared with $106.52 the previous day, emulating the previous week's pattern.
Introduced on 16 June 2005, the new OPEC Reference Basket is currently made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
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President Jonathan Confirms Plans For Subsidy Withdrawal |
It has become clear that the Federal Government is finalising plans to withdraw the subsidy on petrol after reiterating twice within 24 hours that there was no going back on the new policy.President Jonathan at a recent Nigerian Summit organised in Lagos by The Economist said that the Federal Government was planning to fully deregulate the downstream sector.He, however, noted that his administration would hold consultations with relevant stakeholders on how to go about the implementation of the policy.
"We cannot continue to waste resources meant for a greater number of Nigerians to subsidise the affluent middle class, who are the main beneficiaries," said President Jonathan.
He however said the government would first discuss the proposal with Nigerians before carrying out the exercise to prevent a repeat of what happened last year's mass protests during which the nation ground to a halt for one week.
Barely 24 hours after President Jonathan gave this hint, the Minister of Information, Mr.LabaranMaku, stated that despite the criticism of the policy by some Nigerians, the overwhelming majority were now satisfied that its implementation was crucial to the scaling up of the oil and gas sector so as to curtail corruption and develop the nation.This was alsothe day after a Federal High Court in Abuja declared deregulation illegal.
Maku said the Federal Government was currently losing a lot of money to the payment of subsidy, while Nigerians continue to suffer from lack of infrastructure and paying extra to avail themselves of services from the oil and gas sector.
Maku,who briefed State House correspondents at the end of the Federal Executive Council (FEC) meeting presided over by President Jonathan, said the president had to suspend the policy in 2012 because of the many calls that were made on him not to implement the policy.
"Without deregulation there will be no deregulated downstream sector. Currently the government is losing, the people are losing, because we cannot generate jobs. The potential that the oil and gas sector could have unleashed on the country is completely truncated. But the effort is continuous, as the government will not relent on its effort to convince Nigerians so as to reverse the trend of Nigerians suffering as a result of the subsidy on fuel."
According to the Petroleum Product Pricing Regulatory Agency's pricing template, the landing cost of a litre of petrol is currently N131.10, with total distribution margins of N15.49, thus bringing the total cost to N146.59. The government is subsidising the difference between the pump price and the actual costs of petroleum marketers.
The Federal Government had on January 1 2012 deregulated the price of petrol, a decision that hiked the price of petrol from N65 per litre to N140 per litre.
But the organized labour and other civil society coalitions mobilized Nigerians to the street to protest against the policy.The civil action paralysed social and economic activities, shutting down the country's economy for one week.
The resistance by the generality of the public forced the government to reverse the policy but raised the fuel price from the then prevailing N65 per litre to N97.
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NEITI Set To Battle Oil Theft, Pipeline Vandalism |
The Nigeria Extractive Industries Transparency Initiative (NEITI) has stated that it will shift focus to oil theft, oil bunkering and pipeline vandalism in Nigeria's oil and gas industry, in view of the huge revenue lost by the country through these activities in the sector.
The Chairman of the National Stakeholders' Working Group (NSWG) of NEITI, Mr.LedumMittee unveiled this plan at a recent meeting of the agency with the political and economic counsellors of member countries of the European Union (EU) to review the activities of the agency.
NEITI said in a statement signed by the Director of Communications of NEITI, Mr. Orji Ogbonnaya Orji that the absence of reliable baseline information and data on the actual quantity of crude either lost through theft, illegal bunkering or pipeline vandalism had been responsible for the poor response and speculation over facts and figures required to deal with these complex problems.
Mittee was also quoted as saying that full disclosure and public understanding of the quantity of crude oil either lost through vandalisation, bunkering or outright stealing as well as the enormous cost to the economy in financial terms would help draw national and international attention to the urgent need for solutions.
He noted that NEITI plans to include in its audit template for Nigeria's oil and gas sector these variables as a way forward.
"NEITI hopes to include as part of its independent audit a template to capture the quantity of crude stolen, quantity lost through bunkering and others through vandalisation and conspiracy.
"By such an exercise, it will be easier to quantify the loss and provide information publicly to raise the public consciousness," Mittee said.
He also disclosed that NEITI's target was to transit its activities from merely focusing on transparency through accountability to ensuring measurable impact arising from its operations. This is being done with a view to ensuring that oil and gas revenues translate to good roads, electricity, water, employment opportunities and poverty reduction.
Head of the Political Section of the EU, Mrs Belen Calvo-Uyarra, said the reason for the decision for NEITI to address the political and economic counsellors' meeting was for member countries of the EU to seek ways of supporting the efforts of NEITI in enthroning transparency and accountability in the nation's extractive sector.
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New JTF Raid On Oil Communities |
The operatives of the Joint Task Force (JTF) have raided communities along the creeks and waterways of the Niger Delta, arresting 33 persons including three Ghanaians and a Togolese in an onslaught against illegal bunkering operations in the region.
The soldiers also arrested three vessels christened King I, MV Gift and MV Tiger Fish with the 33 members ofcrew during the multiple raid operations carried out between March 1 and 19, 2013.
In the operation, which took the communities by surprise, the soldiers seized three vessels and destroyed over 143 bunkering camps used by operators to cook stolen crude oil. The men also seized 8 heavy-duty trucks laded with stolen crude, 70 boats and 214 storage tanks filled with stolen crude oil.
The Media Coordinator to the Joint Military Task Force, Lt. Col. Onyema Nwachukwu, confirmed that the three ocean vessels with crew members of foreign nationalities including one Togolese and three Ghanaians and 30 Nigerians were arrested along Federal Ocean Terminal, Onne in Rivers State.
"The vessels christened King I, MV Gift and MV Tiger Fish with 33 crew members were arrested by operatives of the JTF in multiple raid operations carried out between March 1 and 19, 2013 along Federal Ocean Terminal near Onne in Rivers State and are currently secured at 2 Brigade Nigerian Army, Gun Boat Company, Onne," he said.
It is generally claimed that Nigeria currently loses as much as 150,000 barrels of crude oil per day and up to $7 billion per annum in revenue from crude oil theft. The government is looking at various measures to combat the growing menace and President Goodluck Jonathan has met with other world leaders to discuss ways to stem the tide.
Other measures which the government is said to be working on includes the finger printing of crude oil and a joint collaboration between the Ministry of Petroleum Resources and Nigeria's service chiefs on sustainable security of crude oil assets.
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Career And Competency Development In E&P Industry |
The Nigerian Association of Petroleum Explorationists (NAPE) recently held its March technical meeting in Lagos with the focus on enhancing the Exploration &Production business through career development strategies for both the employer and the employee.
Mathew Duke, Manager, Earth Sciences and Reservoir Services Division, Chevron Nigeria Limited (CNL) who spoke on Developing Organisational Capability (OC) In The E&P Industry said the importance of managing career and competency development by individuals and companies cannot be overemphasized as today's organization capability needs are influenced by talent and skill gap.
He noted that specific skill sets which can be obtained through knowledge transfer processes and systems are now required in addition with the traditional ones in such areas such as drilling, well completion engineering, well planning, geomechanics and project management for individuals and companies to meet up with the ever changing developments within the industry.
Although admitting that sparse hiring in the 70s and mid 80s indeed created unprecedented challenges in the areas of recruitment, retention and knowledge transfer, Duke said the time has come for oil companies to come up with the best integrated programmes to get the competitive advantage needed to remain relevant in the oil and gas business.
He said that companies have to carry out multi-tier training and development programmes through a high focus on on-the job training and experiential learning as well as establishing structured monitoring programmes.He noted that companies should also have a robust leadership and technical succession plan by identifying key leadership and technical roles in the organization.
Citing an example of a 4D modeller with knowledge in Ocean Bottom Cable (OBC), Duke said there is need for his employer to have a succession plan to get a replacement in the event that he decides to leave or retire.
For the employee, Duke said the strategy is for him to first and foremost have a career vision and plan that focuses on developing technical mastery for understanding the oil and gas business and boosting productivity.
He concluded that companies most importantly need to give their workers reasons to stay on with their jobs by personalizing and humanising their plans for them through effective communication as well as recognizing and rewarding performance through career progression.
In the near future, Duke said, organizational capability would be required for doing more with the same people or less in such challenging terrains such as tight formations, shale oil and gas, chemical Enhanced Oil Recovery (EOR), artic development, ultra deepwater operation as well as hydrate exploration.
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HEALTH, SAFETY & ENVIRONMENT NEWS
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NSCDC Destroys Illegal Refinery In Ondo
Oxberry Announces First Gulf of Guinea Anti-Piracy Workshop
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Oxberry Risk Strategies, a maritime security company based in London known for innovation and development of advanced maritime security solutions, publications and products, have announced the launch of the first Gulf of Guinea Anti-Piracy Workshop which will be held in London in May 2013. The workshop is being launched in association with Dryad Maritime, the UK's largest maritime intelligence provider.
The Gulf of Guinea Anti-Piracy Workshop will focus on providing an in-depth overview of the complex operating environment that vessel owners and operators face when trading in the region and guidance on what can be implemented to mitigate the risk of being targeted.
This announcement comes just a few weeks after the company's release of Gulf of Guinea: Beyond Intelligence, a specialist report on security and piracy in the Gulf of Guinea. The workshop will provide an even deeper insight into the security situation in the Gulf of Guinea and enable attendees to hear from industry experts firsthand.
The Gulf of Guinea Anti-Piracy Workshop is being held onboard the former Royal Navy Battle Cruiser HMS Belfast in London with expected attendance by CSO's, DPA's, HSEQ Managers having responsibility for the security and safety of their vessels operating in West Africa as well as likely attendance by leading maritime law firms and marine underwriters.
For more information, email: jbellamy@oxberryrisk.com
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March Worldwide Oil and Gas Events | |
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Once again, please don't don't forget to join our mailing list if you haven't done so already. Remember, you won't have to look anywhere else for your weekly Nigerian oil industry updates, and it's free to join. Do send us your news. And let us know if you want to advertise in NOGintelligence.
Sincerely,
Remi Aiyela
Editor, NOGintelligence
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