The FT Nigeria Oil and Gas Report 2013 is scheduled to come out on Monday 6th of May and will be distributed at OTC and to the Nigerian exhibitors there.

To find out about advertising opportunities  contact Mr Toke Ibru:

tokeibru@hotmail.com  

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Shell Returns To Ogoniland After 19 Years 

Nearly 20 years after leaving Ogoniland, the Shell Petroleum Development Company of Nigeria (SPDC) Ltd Joint Venture has re-entered the community, not, it is keen to stress, to resume operations. It is there to conduct an inventory of its assets in Ogoniland. This, it said in a statement, is in line with the recommendations of the  United Nations Environment Programme (UNEP) report on Ogoniland. As part of the UNEP report, SPDC JV says it was required to conduct a comprehensive review of its assets in Ogoniland and develop a decommissioning plan.

The Managing Director of SPDC and Country Chairman of Shell Nigeria, Mr. Mutiu Sunmonu confirmed in a statement that the company has held engagements and consultations with the Ogoni communities after which the asset inventory commenced with bush clearing in Q4 last year.The assets being identified include flowstations, compressor and gas plants and pipelines.  Seven fields have so far been covered in the asset inventory.  

Mr Sunmonu said: "I wish to make clear that the exercise is not an attempt to secretly resume oil production in Ogoniland."  

"The intention is to determine the state of our facilities since we suspended operations in the area in 1993, and determine how best to decommission them. We are grateful for the co-operation of local government councils and the communities, including traditional rulers, and are working to complete the exercise later this year."  

Previous moves by the Nigerian National Petroleum Corporation (NNPC) to resume oil production from 30 or so oil fields belonging to the SPDC Joint Venture in the area were unsuccessful in the face of opposition from the Ogoni people who were said to oppose the re-entry plan due to the Federal Government's delay in implementing the UNEP report on oil pollution in their environment. It appears that SPDC has managed to convince them that its re-entry is purely for the limited purposes it has indicated. 

OPEC Daily Basket Price Stood At $103.26 A Barrel  

The price of OPEC basket of twelve crudes stood at $103.26 dollars a barrel on Wednesday, after dropping to $102.72 the previous day, following the dim outlook for global oil demand growth forecast by three international agencies in the same weak.

 IEA Forecasts Third Year of Weak Global Consumption  

The International Energy Agency (IEA) expects 2013 to be the third consecutive year of weak growth in demand, adding only 795,000 barrels per day (bpd), according to the April Oil Market Report (OMR) published on Thursday.    

The Agency predicts a relatively strong demand growth among non-Organization for Economic Cooperation and Development (OECD) countries of 1.28 million bpd. This will be moderated by shrinking OECD consumption, predicted to go down by 480,000 bpd and by 340,000 bpd in Europe, the weakest since 1985, says the Agency which advices 28 industrialised countries on energy.   

Oil Market Report (OMR), the monthly IEA publication, which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead, estimates in its April edition that total global demand for the year will remain roughly the same as in its March report prediction of 80.6 million bpd.

The OMR estimates that non-OPEC oil supply output for the quarter averaged 54 million bpd, a gain of 650,000 bpd from the first quarter of 2012. OPEC turned lower in March, falling 140 kb/d to 30.44 mb/d, in the wake of disruptions in Nigeria, Libya and Iraq and against a backdrop of seasonally weaker second-quarter refiner demand.

The IEA also forecast lower supply from non-OPEC countries with an average of 54 million bpd for the quarter representing a gain of 650,000 bpd from the first quarter of 2012. The IEA also said that OPEC output had declined after falling by 140,000 bpd to 30.44 million bpd. The report partly blamed disruptions due to oil theft in Nigeria. In addition, many refineries doing their spring maintenance in the second-quarter, led to a seasonal drop in demand from refineries.

The predictions come hot on the heels of reports earlier this week from the Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) also predicting weakening world oil demand.  

The OPEC report said that worldwide oil consumption will rise this year by 800,000 bpd, or 0.9 per cent, revised down from 840,000 last month. The report disclosed that demand for OPEC's own crude is forecast to drop to 29.75 million barrels a day this year, compared with 30.16 million in 2012. Meanwhile, the United States based EIA which provides independent energy information  downgraded its worldwide consumption estimate by 50,000 bpd to 960,000 bpd.

OPEC, EIA Blame Nigeria For Decline In Crude Oil Supply  

CRUDE oil production from the Organisation of Petroleum Exporting Countries (OPEC) fell in March to its lowest level in the last two years, according to the April reports of OPEC and the U.S Energy Information Administration (EIA).

The decrease, the OPEC report noted, was as a result of oil theft in the Niger Delta, which resulted in several force majeures declarations by oil companies operating in the country. The OPEC report revealed a decrease in Nigeria's crude oil production from 2.035 million barrels per day (bpd) it recorded in February to 1.971 million bpd in March.

OPEC, which supplies about 40 per cent of the world's oil, produced 30.19 million barrels of crude a day last month, according to OPEC estimates based on secondary sources. That compares with 30.29 million in February.

Also, EIA in its Short-Term Energy Outlook, said that OPEC members pumped 29.83 million barrels a day last month, revise down from   29.88 million barrels a day in February.

The United States based agency which provides independent energy information, said that the drop in crude oil production in March marked the organization's seventh straight monthly decline. "The slide in OPEC crude output has coincided with tepid global demand for crude oil, thanks to uncertain economic expansion in China, sluggish U.S. growth and the continuing debt crisis in Europe," the report said.

"Last month, the reduced production largely came from Libya and Nigeria. Both nations saw their output cut by 500,000 barrels a day last month-to 1.35 million barrels a day for Libya and 1.95 million barrels a day for Nigeria," according to the report.

External Reserves Rose To $49 Billion In March  

Nigeria's external reserves rose to $49 billion in March 2013, from $47 billion in February. The news of the rise in external reserves, which has just been released by the National Bureau of Statistics, has been greeted with general optimism, some analysts commenting that this is likely to increase foreign investors' confidence in the stability of the economy.  

However, some are warning that it is time to diversify the economy and reduce the continued reliance on oil especially at a time when the market for Nigerian oil is shrinking, particularly with the US's increasing self sufficiency in oil. Whilst the Asian market is growing, the distance from Nigeria, makes Nigerian crude less attractive to that market in the long run.

Shell Signs MOU For $5 Billion Oil Contractors' Support Fund

A Memorandum of Understanding (MoU) has been signed between Shell Nigeria Exploration and Production Company (SNEPCo) and five financial institutions for a $5 billion support fund for Shell contractors in Nigeria.

The five institutions which will contribute to the fund are Fidelity Bank Plc, Access Bank Plc, First Bank of Nigeria Plc, Standard Chartered Bank Limited and DLR Integrated Services Limited

At the MoU signing ceremony and awareness session for the Shell contractors support fund, General Manager, Nigerian Content Development, Shell Companies in Nigeria, Mr Igo Weli, said that the contractors' support fund was a partnership for local content development as each of the banks is expected to provide $1 billion for the fund, which is spread over a period of five years.

He said Shell embarked on the programme in order to sustain the growth of indigenous enterprise in the country. According to him, lack of access to affordable funds has been identified as a major constraint to the performance and growth of indigenous contractors.

"Financing of projects has traditionally been a major challenge to contractors' growth and participation in the delivery of goods and services to the oil and gas industry. But as it appears the banks have committed themselves to relaxing the collateral security requirements, reducing interest rates and establish their competitive advantage to become global players."

In its presentation, Fidelity Bank Plc, identified key features of the $5billion fund to include reduced interest rates; reduced loan receipt time; absence of hidden charge and a relaxed collateral requirement.  

The Team Head, E&P/Projects of Fidelity Bank Plc, Emeka Nkemakolam, said the bank was fully committed to supporting the implementation of the Nigerian Content policy.

"To qualify for the fund, contractor must have successfully executed contracts of similar nature and value in the last 12 months and must have lodged such proceeds with a bank.  We shall review and appraise credit request and inherent risks.  We also liaise with Shell on confirmation of contract and domiciliation of proceeds.  We are also responsible for the disbursement and monitory of the facility," he added

With the signing of the MOU, Shell contractors are to be supported by these financial institutions towards the realisation of the country's local content aspirations.

ESQ Summit Speakers: Legal And Regulatory Inconsistencies Mar PIB

Uncertainty sums up the situation created by the inconsistencies in the legal and regulatory framework meant to govern the petroleum industry, which has led to the delay in the passage of the contentious Petroleum Industry Bill (PIB).

Stakeholders including lawyers and oil and gas executives who spoke at the just concluded ESQ Energy/Oil and Gas summit 2013 in Lagos reiterated this fact whilst speaking on the theme "Looking Beyond The Wave Of Reform: Opportunities And Challenges In Nigeria."

Managing Partner at Adepetun, Caxton-Martins, Agbor & Segun, Sola Adepetun said the existing provisions in the Bill are such that if not revised, could lead to confusion and uncertainty as there are various vexed issues thrown up by them.

On the issue of renewal of licenses, with particular emphasis on OMLs 71, 72, 73, 74 and 79 owned by Shell, he said the Bill provides that a written application is required 12 months before the expiration of an Oil Mining License (OML). He then wondered how an applicant (licensee), for instance, Shell is expected to comply with such a requirement if the process of application has to wait until the new law comes into effect. Consequently, he said this could result in strings of litigation as parties try to advance their different positions.

On the issue of the identity of indigenous companies, he noted that the provision in the Bill gives different connotations to "indigenous companies," arguing that this may lead to an identity crisis.

"Indigenous companies deserve a distinct identity which the Bill appears not to be clear on. As a matter of fact there is no uniform definition from the Bill of who an indigenous company should be. For me, I think indigenous companies should be hundred per cent owned by Nigerians. But the PIB does not sufficiently deal with this. In actual fact it is not clear if foreigners are allowed to be part of the indigenous companies, a situation which is gradually becoming the norm now," he said.

Owing to the prevailing regulatory uncertainties, Adepetun warned that a disincentive could be caused to further investment and development adding that a consequential divestment by the IOCs would then become the rule and not the exception.

Mr Chidi Momah, the Executive General Manager, Public Affairs and Communications, Total Upstream Companies said it was incredible to know that no transition plan was made prior to the formulation of the PIB.

With about $133 billion expected to be spent in the next five years on deepwater production currently at about 850,000 barrels per day, Momah wondered why such a far-reaching action could be taken without a proper transition plan.

He said that as much as he believes the Petroleum Act was obsolete and requires reforms, the reform should have been done in a manner that encourages investment.

Although admitting it is the prerogative of the government to formulate laws, Momah noted that the government should realize that any harsh policy could put the huge investments in the industry in jeopardy. He said, with the current status of the bill, no new deepwater project could happen in the country adding that about $100m investment would also not proceed.

Momah said the issues of dispute resolution, measurement point, and sanctity of contract, fiscal terms and funding challenge are some of the grey areas of the bill.

Mrs Asiyah Alao-Mutallab, Legal Adviser, Mart Resources Incorporated said that if the country is to stay competitive and avoid more divestments, the Bill should be revisised as the terms would not work.

She said that Ghana understands that for the emerging industry to thrive the terms must be right and this explains why the Product Sharing Contracts (PSC) for its deepwater operation is 25 years. She said for an industry such as Nigeria's, stability should be key as an air of uncertainty would not do investment opportunities in the country any good.

Indigenous Firm Boosts Local Content With Manufacture Of Completion Systems  

The Nigeria Content initiative has recorded yet another success with the announcement by indigenous company Royal Niger Emerging Technology that it has achieved full manufacturing and qualification of a Nigerian standard well head and xmas tree design.

The company expects to take delivery this month of its first design 3-inch and 4-inch single completion systems from the premium manufacturer in China, Jiangsu Jinshi Machinery Group (JMP).

Speaking on the achievement, the Managing Director of the company, Mr Anthony Okolo said, "This is a new era for the Nigerian oil industry and is the first step in the creation of West Africa specific equipment standards which take into consideration the material and specification requirements of our local industry. By standardizing our design model, our entry into this market means that we can provide premium quality equipment for the local market at more reasonable costs and shorter lead times."

"We are sure to compete favourably with our larger global competitors as our equipment presents many technological advantages to the seasoned and marginal field operators in land and swamp assets.  With the Nigerian Content laws behind us, we are confident that this offering will quickly become a favourite in the local industry as they are designed specifically for the West African environment and do not include the over-specifications that occur from utilizing equipment designed for North Sea and Gulf of Mexico environments," he added.

He said three special features make the systems which are rated between 5000-10000 psi unique, and these are: the performance of intervention without having to remove the tree cap; the offer of hydraulically actuated control valves, the lower master valves and the subsurface control safety valves; and the possibility of having two continuous penetrations hence the ability to control more than one function down holes.

He said with this great achievement, the oil and gas industry would be taking a first step to domiciling the manufacture of offshore well head and Christmas tree as against assembling which was the norm before now.

Also, Nigerian companies in the future, according to him would no doubt be able to go into the detailed technology required for incorporating Nigerian standards for equipment manufacture and supply in the oil and gas industry just as his company intends to do full manufacture by 2015.

On the effect which over-specification of equipment has had on the industry, Okolo said this has been responsible for the increased cost of production through increase in the cost of equipment. He added that it had also made technology difficult for Nigeria to attain as well as increased the delivery lead times for product.

Okolo stated that the situation before now was such that if you had to work with a system designed for a -46degrees centigrade environment one would have had to rent a refrigerator before the system could be deployed for a shallow water environment like Nigeria's where the temperature is degrees centigrade.

This is part of what the new fit-for-purpose and Nigerian standard well head and Christmas tree design intends to address, Okolo said.

On the benefit the system offers, he said, it is potentially becoming easier to perform interventions as well as offering more control of downhole functions as a standard design while providing more cost efficiency for marginal and brown field projects. He said the reliability of the systems for international oil companies' attraction is not in doubt as the systems are API 6A compliant and as such meet international standard.

He hinted that the systems' third party inspection is done through DMV, which is an internationally reputed company that offers ISO compliance for manufacturing processes.

In few years' time, Okolo said, he was optimistic that his company would have become one of the leading technology companies providing specific solutions to technical issues in Nigeria and the other West Africa countries in the Gulf of Guinea with similar environment characteristics.

He concluded he was happy that Royal Niger has now joined an elite group of companies who design, manufacture and supply its own brand of drilling and production around the world, previously the exclusive preserve of global multinational companies.

IOCs Perceived As Not Fully Committed To Nigerian Content  

The Nigerian content advocacy group, Borderless, has carried out a survey on the Nigerian content development perception in commemoration of the third anniversary of the Nigerian Oil and Gas Industry Content  Act.

The survey carried out by Nigerian law firm, Kusamotu Associates on behalf of Borderless, revealed that leading international oil company operators are perceived as not doing enough to integrate their suppliers. In addition, they were seen as not doing enough to achieve the requisite transfer of technology, expertise and skills and also did not appear sufficiently transparent in their dealings.

Among the 6 of the leading international oil companies, Shell was ranked as having the highest perception of commitment. Second was Total, while Chevron was third and Mobil ranking joint 4th with Agip with Addax coming in at the bottom of the perception index.

The survey was carried out among a cross-section of oil and gas service companies.

Speaking further on the survey, Mr Tunde Kusamotu gave NOGintelligence some more details of the survey. He said:   "From the look of things, I simply don't think the oil companies are really showing interest in this local content initiative by getting the transfer of skills from the Tier 1 suppliers who are the actual manufacturers from abroad to the Tier 2 suppliers who are the oil servicing companies. Despite their clout and financial resources, they have been unable to attract the Tier 1 suppliers to the country for the purpose of transferring skill and technology to Tier two suppliers for business growth. This can be attributed to no other reason than lack of sincerity."

He noted that the half-hearted commitment is even noticeable in their training programmes where they abide by the letters of the law but not the spirit just as it is in their award of contracts where they have preference for short term contracts rather than long term ones.  

The report also chided the organised civil society, which was perceived to have not done well in sufficiently monitoring the Nigerian content activities of international oil company operators for greater compliance.

In the light of the survey Borderless is calling for a speedy passage of the Petroleum Industry Bill (PIB).

"One greatest challenge faced by the local content initiative is the non-passage of the PIB by the legislators. We must understand that one of the objectives of the local content is to attract investment which has not been possible in recent times due to the non-passage of the Bill by both chambers," he said.

"The National assembly has not performed creditably well in monitoring the implementation of the law through its oversight function. So also the civil society, which has failed in the monitoring of oil companies for accessibility of information for performance assessment," he added.

Castigating the operators for their nonchalant attitude towards providing information, he noted that their "arrogance" had made it difficult for non-partisan bodies and NGOs to get data that could have helped in determining the effectiveness of the Nigerian content law. He therefore urged them to be more transparent by making their records book open and available upon request for analytical purposes.

Whilst the Nigerian Content Development and Monitoring Board (NCDMB) was perceived as having done sufficiently well in the discharge of its functions, Mr Kusamotu also tasked the board to be more proactive by imposing sanctions on any company found to have breached the compliance rules.

In the light of the survey, the advocacy group has called for a speedy passage of the PIB, greater transparency in Nigerian content development oil and gas activities by operators and a review of the Nigerian Content Development strategy by operators to encourage greater integration between Tier 1 and Tier 2 suppliers in the transfer of skills, expertise and technology.

13 Police Officers Killed in Niger Delta  

Following the threat by the Movement for the Emancipation of the Niger Delta (MEND) to restart attacks in retaliation for the jailing of leader Henry Okah by a South African court, 13 police officers have been killed while on active duty after an ambush on their vessel. Okah was sentenced to 24 years in prison on March 26 for his part in the fatal car bombings that killed at least 10 people in Abuja in 2012. MEND has not claimed responsibility for the attack.

The policemen are reported to have been shot dead at close range in an area close to Azuzuama in Southern Ijaw Local Government Area of the state.  The policemen killed were said to have been deployed on official duty at the funeral of the mother of ex militant leader, Kile Selky Torughedi and were attacked as they arrived in the area in a vessel.  

There are reports that there may have been bad feeling between Torughedi and some of his former followers who felt abandoned and that they may have killed the policemen to settle a score with Torughedi. No official confirmation has been given by the authorities about the group responsible or the motive for the killings.

Monrovia, Liberia

9 - 11 April

www.africabusiness.com 

Nigeria Integrated Oil Spill Summit

Uyo, Nigeria

10 - 12 April

www.nosdra.gov.ng

Global Oil & Gas Crisis Management & Emergency Response

Barcelona, Spain 

11 - 12 April

www.3dent-media.com

2ND Africa East Africa Oil & Gas Summit

Nairobi, Kenya

18 - 19 April

www.expogr.com/kenyaoil 

21st Annual Middle East Petroleum & Gas Conference

Abu Dhabi, United Arab Emirates,

21 - 23 April

www.cconnection.org

19th Western Africa Oil/Gas & Energy Conference

Windhoek, Namibia

22 April

www.pr-inside.com

Oil & Gas Libya Exhibition & Conference

Tripoli, Libya

22 - 25 April

www.oilandgaslibya.com