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Transcript of Sweetcrude June 2013 Edition
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A Vanguard Monthly Review Of The Energy IndustryJUNE, 2013
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VOL 03 N0. 49
CONTINUES ON PAGE 15
Local content gives succour to indigenous players T
he golden era of e a s y o i l i s over...Today the rules of the game have changed:
SEBASTINE OBASI
CONTINUES ON PAGE 4
Developing local economies, s t imula t ing indus t r i a l development, increasing local capability, building a sk i l led workforce and creating a competitive supplier base – also referred to as local content – are
minimum requirements for
doing business with host
countries and national oil
companies,” a recent Accenture
report stated.
A c c e n t u r e , a g l o b a l
m a n a g e m e n t c o n s u l t i n g ,
t echno logy se r v ices and
outsourcing company in its
r e p o r t a l s o s a i d t h a t
International Oil Companies
(IOCs), now have to develop new
models and redefine their
business approaches with
National Oil Companies (NOCs)
Carter Center appreciates SEOF’s $250,000 donation
Our target is to ensure more jobs domiciliation —NCDMB
Our target is to ensure more jobs domiciliation —NCDMB
OPEC’s high output, high price days dwindle
PEC’s halcyon days of high prices and high production O
may be drawing to a close as soaring U.S. output opens a new era for world oil markets.
After a comfortable ride since the 2008 price crash and record revenue of $1 trillion last year, it may have to be more pro-active on output policy.
The rise of U.S. shale oil and slack demand will eventually force OPEC either to support oil at $100 a barrel by cutting output -
COVER
OIL
FINANCE
Contents488
1212
1818
2020 POWER
2
1313
1919
2424
2222 INSURANCE
LABOUR
FOCUS
2626
2727
2929
2424SOLID MINERALS
MARITIME
COMMUNITY
LABOUR
Sweetcrude is a publication of Vanguard Media Limited
FEEDBACK
CORRESPONDENTS
Printed and Published byVanguard Media Limited.Vanguard Avenue, Kirikiri
Canal, P.M.B. 1007,Apapa.
WEB:
All correspondence: P.M.B 1007, Apapa, Lagos.
PAGE LAYOUT/DESIGN Francis AYO & Johnbull OMOREGBEE
Victor AHIUMA-YOUNGGodwin ORITSE
Jimitota ONOYUME
Samuel OYANDOGHA
Emma Arubi
Michael Eboh
Rosemary ONUOHA
Sebastine OBASI
Enquiries Call:08098051103
Ag. EDITORClara Nwachukwu
THE TEAM
MANAGER, MARKETINGUbong NELSON
Local content give succor to endogenous players
PIB: Panacea to efficient petroleum industry
Carter Center appreciates SEOF’s $250,000 donation
Our target is to ensure more jobs domiciation -NCDMB
Mainland Oil plans N2b investment in operation expansion
Drilling types and techniques
Minister promises 10,000 MW from solar
Shun independent approach to petroleum risks, insurers told
Power risk: concern grows on local capacity
Epileptic power, a major challenge facing Nigeria -TUC
Cadastre office has boosted investors confidence in mining
MAN to spend N2bn on sea training for cadets
Bayelsa community to get deep sea port
TECHNOLOGY
It s no 4 years i to ou renasc n em c c ,
’ w 1 n r e t d o ra yand Ni erians ave come ep at m lit y
g h to acc t th i arrule is o lo g r the f d B t so etime , it s ll
n n e a . u m s tiseems w ha n t comp e ely go over m lita sm
e ve o l t t i riu ging from the brutality that has pe vade the
j d r dys m or yea s ow B t that is a topic for anot r!
s te f r n . u heIn edition we bring you holistic
this , a a s s me t f our p rforman in the Energ
s e s n o e ce y secto acr ss the value c ain. ut is not ur cov r
r o h B it o e , as our cove weighs the ga ns a d pain of threer i n s years Nige i n Content m leme tati . While
of r a i p n onthe journey has b e large y sa uta y, i d genou e n l l r n i sope a rs insis t i co ld till be mu h bette .
r to t hat t u s c rThe Executiv S cre ry NCD B, M . Er est e e ta , M r nNwapa, ef nds th role o his gency in
d e e f ad m c lin m r ndus ry jobs, th re st mming
o i i g o e i t e by em re cap tal f ight from the economyo i l .f o rse, un l th PIB is pa s d, we a not hel
O c u ti e s e c n put eep t bs n evelopm nt wi h the bill. To thi
b k a o d e s t snd, the Di ctor D R M . Osten O orunsola
e re , P , r l ,p aks on the imp rtance of p er re u atio to
s e o rop g l n fos r inv s m nt as well s boost inv s ors’
te e t e s a e tcon ide c in the d st y.f n e in u r
As is ur custom e c year, Swee c ude s a o a h t r wa t the 2 13 O i Houston ex s, A. W u e this
0 TC n T a US e s opportun y to ank r num rous advertis rs for it th ou e e a successful o tin . For those who co ld not a ten
u g u t dfo one re on or an ther, we brin o you imag s of
r as o g t e what happ nede .In the var us seg ents Oil, F nannc ,
io m – i eFeedbeack, ec n ogy, olid nerals, T h ol S MiIn ura ce, Labou , Mariti e, a d C m u ity,
s n r m n o m nhere s so ethin new. t i m g
e also reme b r NN C s lat Dr. L v
W m e P ’ e e iuo uma, an pray G d to continu to con ol his
Aj n d o e s efamil .y
H p y ne mon h!a p w t
4Cover Story
CONTINUED FROM PAGE 1
According to the Accenture, developing countries and
NOCs with maturing mineral sectors, particularly oil and gas,
have placed a renewed emphasis on increased local content participation by IOCs
in recent years
CONTINUES ON PAGE 5
Local content gives scour to indigenous players
Local content gives scour to indigenous players
Local content gives scour to indigenous players
to include equity-building
programmes that provide an
opportunity to improve the
IOC’s “license to operate” in
developing countries.
The report was based on the
growing concern by NOCs and
e m e r g i n g o i l p r o d u c i n g
countries to have bigger stake in
the management of their natural
resources, which have been in
t h e h a n d s o f f o r e i g n
multinationals over time.
According to the Accenture,
developing countries and NOCs
with maturing mineral sectors,
particularly oil and gas, have
placed a renewed emphasis on
i n c r e a s e d l o c a l c o n t e n t
participation by IOCs in recent
years. The report also said that
host nations and NOCs are
emphasizing that the desire for
an increased contribution to the
local economy and society and a
strategic intent to pursue local
content go beyond philanthropy
and are beginning to expand
their perspectives and mind-sets
regarding how local content
should be implemented.
Economic drainT h e i r r e a s o n i s q u i t e
understandable. In Nigeria, for
example, the control of oil and
gas resources by the IOCs has
led to a lot of capital flight,
resulting in a drain on the
economy of the country.
According to Ernest Nwapa,
Executive Secretary, Nigerian
Content Development and
Monitoring Board, NCDMB,
Nigeria recorded an estimated
capital flight of about $380
billion between 1956 when oil
was discovered and 2006, when
the Nigerian content policy was
initiated.
He also said that the country’s
oil and gas industry has
exported approximately two
million jobs to other countries
outside Nigeria within the 50
year period of operations by
various operators in the sector.
Content Act comes to the rescue
However, the situation has
changed since the signing into
law of the Nigerian Content Bill,
in April 2010, by President
Goodluck Jonathan. Nwapa told
the inaugural members of the
local content committee of the
House of Representatives that
before now, more than 95
percent of the jobs in the
industry were done abroad.
Specifically, he stated that
$ 2 1 4 b i l l i o n w o r t h o f
procurement and $9 billion
w o r t h o f r e s e a r c h a n d
development were done in
North America, while $78 billion
worth of technical services and
$39 billion worth of engineering
work were done in Europe. Asia
dominated the fabrication
aspect to the tune of $39 billion.
The NCDMB boss also said
that with the coming into place
of the Act , $107 bi l l ion
procurement, $20 bi l l ion
fabrication, $14 billion technical
services, $20 billion engineering
and $7 billion research and
development are domiciled in
Nigeria. Nwapa also explained
that $191 billion could be
retained, while 300,000 new
direct job opportunities are
expected in such areas as
engineering, sciences, technical
services and manufacturing. In
a similar vein, Nwapa said that
90 percent local content has
been achieved in engineering,
while 50 percent has been
achieved in fabrication.
On the one percent of the
contract sum for any project,
which must be deducted at
source and paid into the NCD
Fund, he said that $150 million
has accrued as at January, 2013.
He maintained that strong
stakeholder collaboration and
local value addition framework
would be required to achieve
real Nigerian content.
Allied sectorsApart from the oil and gas sector,
Nwapa identified maritime as
one other area with high impact
on employment, technology
transfer and value added
services where NCDMB’s
implementation strategies have
been visible.
He noted that the sector used
to be dominated by foreign
owned and crew vessels and rig
operators, resulting in about
three billion dollars capital
flight, but with the Board’s
m a r i n e v e s s e l a n d r i g s
ownership strategy, the situation
is changing with remarkable
indigenous participation.
He said, “Indigenous players
are currently participating fully
in the smaller vessel category,
thereby retaining about one
billion dollars annual spend in
Nigeria, while a structured
intervention for more Nigerian
ownership of the larger offshore
vessels has been put in place
with a potential for retaining a
further $1.5 billion in the next
two years.
“There is optimism, however,
that the current drive by the
Board will ensure that by 2020,
the ownership profile in the
marine sector would be more
indigene driven with a retention
in excess of $4 billion per
annum, 250,000 employment
and training opportunities.”
Three years of Content Act
On his assessment of the three
years of Nigerian content,
Nwapa resisted making a self
assessment, saying that it is left
for the public to judge him.
According to him, “I do not
believe in talking about my own
performance as a board, but the
feedback we get …all the oil
c o m p a n i e s , t h e s e r v i c e
companies advertised for the
three-year anniversary. I said to
myself, we should not over
celebrate it this year. Let other
p e o p l e g i v e t h e i r o w n
testimonies. The testimonies are
clear. If you look at expatriate
utilization, we are controlling it.
We are telling them to go and
find Nigerians to partner with.
5Cover Story
Local content gives scour to indigenous players
CONTINUED FROM PAGE 4
That is very fundamental. The
contracts that are being
awarded, you will see that mostly
all the contracts have Nigerian
participation if not complete, but
80 to 90 percent Nigerian
participation,” he said. Nwapa
may have been self-effacing in
assessing the performance of his
Board in the three years of its
existence.
Oil majors’ supportGeneral Manager, Nigerian
Content Development, Shell
Pe t r o l e u m D e v e l o p m e n t
Company Limited, Igo Weli, said
the NCDMB has done well in the
last three years. According to
him, “The Nigerian Content
Development Monitoring Board
has done a great job in terms of
leading this effort. They have set
ou t c lear f ramework fo r
implementation… If I read that
Act, I see a lot of opportunities to
create values, to create jobs in
this country and to use it as a
lever to manage some of the
issues we have as a nation.”
He however pointed out some
challenges facing the content
law such as dearth of research
and deve lopment , f a l len
educational standards, capacity
and capability gaps in key areas,
Petroleum Industry Bill, PIB
uncertainties, and the content
act waiver and moratorium.
A c k n o w l e d g m e n t s a n d
concerns
Dimeji Bassir, Vice President
O p e r a t i o n s , O f s e r v, a n
integrated energy company,
said the Local Content Act is
work in progress which has so
far, being able to el ici t
c o m p l i a n c e f r o m t h e
international oil companies.
“The implementation of the
Nigerian content act, in my
opinion, is work in progress. It is
a marathon and not a sprint…It
is giving priorities at par with
safety which is a very important
element of upstream oil and gas
development activities. Because
of the mandate vested on the
NCDMB, it has been able to
drive some level of compliance
within the IOCs and their
numerous projects. The IOCs
today know that if they are found
wanting in any areas relating to
their commitment to fostering
Nigerian content development
on pro jec t s and re la ted
operations, it is tantamount to
breaking a law which has
consequences. This fact has
f a c i l i t a t e d e f f e c t i v e
implementation of the law and
wide adoption by key industry
stakeholders,” he said.
Bassir however explained that
the NCDMB is resource
( f i n a n c i a l a n d h u m a n )
challenged, which limits its
effectiveness in following
through with monitoring
compliance. “Although most
IOCs and major ser v ice
companies today have full-
fledged role of NCD officer or
manager, there is not a clear-cut,
coordinated direction and focus
of efforts which makes for
s e v e r a l d i s c o n n e c t e d ,
duplicated, disjointed activities
which again make it difficult, if
not impossible to consistently
track and report Nigerian
content development progress,”
he said.
Emeka Ene , Managing
Director, Oildata/Xenergy
Group and Chairman, Petroleum
Technology Association of
Nigeria, PETAN, said the
c o n t e n t l a w h a s m a d e
r e m a r k a b l e i m p a c t o n
indigenous participation in the
nation’s oil and gas industry.
“It’s been very impactful. It’s
been a significant increase not
just in the quantum of local
content, but also in the intensity
of it, in the structure of it.
Nigerian service companies
have gone into areas that before
now, they were completely
locked up. We have seen gradual
increase, where we had a linear
growth right up to 2010; we have
an exponential growth in local
content, particularly in know-
how and in ownership of
equipment and processes. We
have seen right across the
industry, significant change in
the right direction.
Ene further explained that
some of the areas hitherto not
populated by Nigerians include,
deepwater sub-sea installations
and maintenance, fabrication of
jackets, remotely operated
vehicles, (ROVs), sub-sea
vehicles, mini sub-marines that
are controlled remotely from
surface to perform installation
jobs at the bottom of the sea.
Ene also said that the content
l a w h a s b e e n p r o p e r l y
implemented within the short
time it came into being.
“ I n t h r e e y e a r s , t h e
expectations have been largely
met and in some cases,
exceeded. Three years in the life
of an industry or in the life of a
law is nothing. In three years, we
have seen a step change. There
has been exemplary leadership
from the NCDMB. There has
been visionary leadership from
policy makers – the Ministry of
Petroleum Resources, NNPC,
National Oil Companies, and
the Independents.
“Service company umbrella
organizations like PETAN have
actually worked together in spite
of the flaws in the industry, in
spite of the challenges of
securi ty, in spite of the
upheavals in the g lobal
economic market, all we have
seen is a steady commitment to
make it work. That for me, is a
very positive take from this third
anniversary,” he said.
He however said that one of
the challenges facing the law is
finding the balance in the waiver
window so as to encourage
capacity bui lding in the
industry. Apart from that, Ene
stated that there should be
effective monitoring by the
Board to eradicate the tendency
to circumvent the law.
The Nigerian Content Development Monitoring Board has done a great job in terms of
leading this effort. They have set out clear framework for
implementation…
6Cover Story
…Improvement in production, reserves…Rising cases of crude theft, vandalism, controversial payments
DEMOCRACY @14:
Mixed fortunes for energy sectorMICHAEL EBOH
It has been mixed fortunes for the Nigerian energy sector since the current democratic dispensation began May 29, 1999.
Since the return to democracy, the sec to r has reco rded significant improvement in key parameters such as in reserves and production while it also recorded an increase in other negative parameters, l ike increase in pipeline vandalism, crisis in the area of subsidy payment, increased corruption, and divestments by oil majors among others.
Oil productionNigeria’s crude oil production increased from about 2.153 million barrels per day, bpd, in 1998 to 2.52 million bpd in 2012, representing an appreciation of 17.05 per cent over the last 14 years. Crude oil production was about 2.055 million bpd as at 1980, peaking at 2.627 million bpd in 2005.
Conversely, the nation’s crude oil reserves rose from 27.5 billion barrels as at 1998 to about 35 billion barrels at present, rising to a peak of 36.22 billion in 2006 and 2007, before dropping to
31.9 billion barrels in 2009, then rising to its current levels.A breakdown of Nigeria’s crude oil production since 1999,
according to data obtained from the Nigerian National Petroleum Corporation, NNPC, put Nigeria’s crude production over the years as follows:
Vandalism unlimitedOn the flip side, pipeline
vandalism and crude oil theft
attained a worrisome dimension
since the return to democracy in
May 1999, with the Petroleum
and Natural Gas Senior Staff
A s s o c i a t i o n o f N i g e r i a ,
PENGASSAN, saying the
country loses about N954 billion
($6 billion) to crude oil theft
annually. Similarly, the Pipeline
Product Marketing Company
(PPMC), a subsidiary of the
NNPC, said Nigeria lost a total
of N162.6 billion from crude oil
and petroleum products theft
between 2009 and 2012.
Last year, the Minister of
Petroleum Resources, Mrs.
Diezani Alison-Madueke, said
Nigeria lost about N1.908
trillion ($12 billion) to pipeline
vandalism and oil theft in 2011,
adding that of the total amount,
$5 billion was spent on pipeline
repairs, while the amount lost to
crude theft was valued at $7
billion.
Confirming this, the Minister
of Finance and Coordinator of
the Economy, Mrs. Ngozi
Okonjo-Iweala, said Nigeria is
losing an estimated 400,000 bpd
of crude oil, resulting in about 17
per cent reduction in export
sales. This cost the nation’s
treasury about $14 billion in
2011 alone.
More gas up in flames Another major issue that came to
reckoning during the return to
democracy in 1999 is the issue of
gas flaring, which the NNPC
estimated at N159 billion ($1
billion) losses annually.
According to the NNPC, the
country currently flares about 15
per cent of its 7.8 billion cubic
feet gas wells production per
day, amounting to 1.2bcf per day.
However, end seems not to be
in site to the issue of gas flaring,
as oil majors disclosed recently
that their inability to stop gas
flaring is due to absence of the
necessary infrastructure among
other challenges.
Scandalous subsidy regime
Furthermore, subsidy payment
generated a lot of controversies
CONTINUES ON PAGE 7
7Cover Story
…Improvement in production, reserves…Rising cases of crude theft, vandalism, controversial payments
DEMOCRACY @14:
Mixed fortunes for energy sector
Export down the yearsFurthermore, Nigeria’s crude oil export rose from 706.265 million barrels in 1998 to 822.08 million barrels in 2011. A breakdown of the export profile is shown below:
CONTINUED FROM PAGE 6
Oil workers
in Nigeria, with large scale
f raud and i r regu la r i t i e s
recorded in the system. It was
alleged that in 2006, Nigeria
spent N261.1 billion on fuel
subsidy; in 2007 - N278.9
billion; in 2008 - N633.2 billion.
A report by the National
Assembly revealed monumental
corruption in the fuel subsidy
scheme, disclosing that the
country paid out about N2.587
trillion between 2009 and 2011
against N384 billion budgeted
for the period.
A number of individuals and
firms were asked to refund
certain amounts of money to the
c o f f e r s o f t h e f e d e r a l
government, while some of
them are currently being
prosecuted.
Controversial lease sales There are also the controversies
surrounding the award of Oil
Mining Leases, OMLs, Oil
Prospecting Leases, OPLs, and
Marginal Oil fields among
others.
Darkness pervade the land
The mis fo r tune o f the
c o u n t r y ’ s p o w e r s e c t o r
continued with the return to
democracy in 1999, as power
supply declined to alarming
levels over the years.
However, despite the fact that
a significant increase had been
witnessed in power generating
capacity since the return to
democracy in 1999, the increase
is yet to translate into steady
power supply to Nigerians.
Prior to May 29, 1999,
Nigeria’s power generating
capacity was as low as 1,500
mega watts, MW, a factor, Prof
R a h a m o n B e l l o , V i c e
Chancellor, University of Lagos,
attributed to lack of investment
in maintenance and expansion
programs on existing power
plants.
From about 1,500MW, power
supply rose to about 5,500MW in
2010, before dropping to below
4,000MW currently.
Reforms in the power sector
were kick-started in 1999, when
the Federal Government, led by
President Olusegun Obasanjo,
set up the Electric Power Sector
Implementation Committee,
EPIC, through the National
Council on Privatisation, NCP.
The Committee set up to
undertake a comprehensive
study of the electricity power
industry, came up with the
National Policy on Electric
Power and a draft Electric Power
Sector Reform Bill which formed
the formed the basis of a draft bill
sent to the National Assembly by
t h e N C P i n 2 0 0 2 a n d
subsequently passed in 2005.
The Electric Power Sector
Reform Act which led to the
creation of the Power Holding
Company of Nigeria, PHCN,
and the Nigeria Electricity
Regulatory Commission, NERC,
has as its major components, the
restructuring of existing utility,
liberalisation and privatisation,
as well as reinforcement of
existing infrastructure through
National Integrated Power
Projects (NIPPs) and other
government interventions.
The Act empowers the PHCN
to assume the assets, liabilities
and employees of National
Electric Power Authority, NEPA,
unbundling of PHCN into
successor companies and
ensuring greater operational
autonomy, development of an
efficient electricity market,
privatisation of successor
companies.
On ascent to power, the
G o o d l u c k J o n a t h a n
administration jumpstarted the
p o w e r s e c t o r r e f o r m s
programme which was stalled.
He launched the Roadmap for
Power Sector Reform in August
2010, followed with the re-
instatement of the NERC and the
inauguration of the board of the
Nigerian Bulk Electricity
Trading Plc, which was created
to encourage investment in the
power sec to r, e spec ia l l y
i n v e s t o r s i n t h e p o w e r
generating sector.
The Jonathan administration
a l s o e m b a r k e d o n t h e
p r i v a t i s a t i o n o f t h e r m a l
generation stations and power
distribution companies across
the country, with the aim of
creating an electricity market
that would lead to a more
efficient electricity supply
industry and a more vibrant
power sector.
The administration also
entered into agreements with
d i f fe rent companies and
investors with the aim of
increasing the country’s power
sector.
It also embarked on the
commissioning of power projects
across the country and has
signed agreements with gas
companies to boost gas supply to
g a s - p o w e r e d g e n e r a t i n g
facilities in the country.
Oil 8
Oil &FELIX AYANROUH
Boost transparency, accountability in Nigeria’s petroleum industry now
Recently, the Honourable Minister of Petroleum Resources,
Mrs Diezani Alison-Madueke ordered an immediate
investigation into the management of 445,000 BPD domestic
crude purchase by the Nigeria National Petroleum Corporation
(NNPC) and remittance to the Federation Account. This is a welcome
development; however, the government should act now rather than
wait for the report of the investigation or the passage of the Petroleum
Industry Bill – since the country is losing billions of naira daily.
Albeit, the recent oil subsidy scandal, Nigeria’s oil and gas
resources management are still shrouded in secrecy and corruption.
This development shows how a few conspire against economic
development and hinders the lives of over 160 million citizens from
economic transformation.
It is aphoristic (and supported by the empirical evidence) that
corruption was and is still inherent in the oil and gas industry and
allegedly occurs in all sectors of the industry. Although the President
Jonathan’s administration has not executed any licensing round, but
it can occur in the licensing stage – where government officials might
be tempted to ask for kickbacks in the issuance and renewal of
upstream petroleum licenses and leases. Also, as was widely
reported, it has its deep roots in the downstream sector – oil subsidy
scandal were serious graft was alleged to have occurred in fuel
importation among others.
The Nigerian Extractive Industry Transparency Initiative (NEITI)
expressed concern over the country’s poor rating in the recent global
report issued by Revenue Watch Institute (RWI). The institutes
Resource Governance Index (RGI) measures the transparency and
accountability in the oil, gas and mining sector of 58 countries
worldwide and finds that Nigeria fail to meet satisfactory standards
on how its oil and gas resources are governed. The report went on to
state that opacity, corruption and weak processes are the major
problems of the industry. The report ranked Nigeria 40th position out
of 58 resource-rich countries across the world. Furthermore, in the
group of 17 sub-Saharan African countries ranked in the RGI report,
Nigeria lagged behind 10 countries, which included Ghana, Liberia,
Zambia, South Africa and Morocco among others.
The Africa Progress Panel (APP), an organization that portrays itself
as possessing cutting edge policy analysis skills and advocate for
equitable and sustainable development in Africa in its recent report
“Equity in Extractives” also decried the lack of accountability and
transparency in the nation’s national oil company. The report cited
the numerous examples of shortcomings in the revenue
administration of the NNPC that have been identified. The report
further stated that, a task force set up by the government concluded
that around US$6.8 billion had been lost between 2010 and 2012, as a
result of corruption and mismanagement involving transfers of fuel
subsidies. And that another government investigative body identified
losses of US$29 billion resulting from natural gas pricing, along with
missing payments connected to concessions and production-sharing
arrangements.
It is no accident that at every stage of the petroleum industry reform
process, including reports, findings and recommendations since the
late 1990’s the common denominator has always been corruption and
mismanagement. From the foregoing, the leadership and the very
entities charged with policy implementation may have collectively
failed to recognize - or just as likely, abdicated responsibility for this
endemic and corrosive social problem.
The NNPC has refused to issue its annual reports and provides
limited information on its balance sheet; it only reports to its Board
of Directors. The lack of transparency and accountability may have
a pernicious effect on public financing. I humbly call on the
honorable minister to immediately demand a full financial
disclosure of all transactions entered into by NNPC after the fuel
subsidy scandal and request a quarterly mandatory published
financial report of its activities. [email protected]
Carter Center appreciates SEOF’s $250,000 donation
The Carter Center, founded by a former United Sates President Jimmy Carter,
has expressed appreciation to the Sir Emeka Offor Foundation, SEOF, for its g e n e r o u s d o n a t i o n o f $250,000 to the Center.
In a letter to SEOF Founder and Chairman of Chrome Group, Sir Emeka Offor, dated May 23, the Carter Center thanked its donor for the “generous contribution of $250,000 to aid the fight a g a i n s t b l i n d n e s s i n Southeast Nigeria.”
The letter signed by Jimmy Carter himself, expressed a desire to meet with Offor either in Atlanta Georgia-based Center, or in London, saying, “Your commitment to improve Nigeria will prove invaluable for the prospect of a better future for million,” while expressing gratitude for his investment.
Carter’s letter had earlier
… Books for Africa acknowledges receipt of $600,000
n another development, the Sir Emeka Offor F o u n d a t i o n , h a d I
fulfi l led its pledge of $600,000 to US-based, education-focused, Books For Africa, BFA, in line with the foundation’s mission to promote educat ion in Nigeria and the rest of Africa.
Confirming the receipt of the fund in a letter dated May 20, to SEOF Founder, Sir Emeka Offor, the BFA Executive Director, Dr. Patrick Plonski, expressed h i s o r g a n i s a t i o n ’ s a p p r e c i a t i o n f o r t h e generous donation.
Plonski said the donation, “will fund the delivery of well over one million books to Niger ia and o ther
been preceded by a n o t h e r l e t t e r s i g n e d b y t h e C o u n t r y Representative/Nigeria of the Carter C e n t r e , D r . Emmanuel Miri, also expressing appreciation for t h e S E O F g e n e r o u s donations.
Dated May 15, Miri expressed the “hope that this g e n e r o u s a n d humane gesture will signal the beginning of a long a n d f r u i t f u l
collaboration/partnership b e t w e e n t h e C a r t e r Centerand SEOF/Chrome Group for the benefit of the good people of the South East states in particular and Nigeria in general.”
He noted that although the fund will be administered
from Atlanta, he gave the a s s u r a n c e t h a t t h e N i g e r i a n u n i t ’ s c o m m i t m e n t t o t h e programme and to the “judicious and maximal utilization of the funds in the states in accordance w i t h S E O F / C h r o m e Group instructions
locations in Africa,” adding t h a t “ T h i s d o n a t i o n represents the single largest donation we have ever received in Books For Africa history, so we are naturally quite excited.”
H e n o t e d t h a t t h e generosity of Offor in promoting education across Africa is not only outstanding but quite commendable.
The Founder, BFA, Mr. Tom Warth, was quoted as saying that “the benefits that will accrue to the young people of Africa through this generous donation are immeasurable.”
He added that “We at Books For Africa struggle every day to convince folks of the wisdom of education in the advancement of African
nations. Over our 25 years, many have agreed with us but 6to have your generous as an example in the future will make our task easier.”
The international non-g o v e r n m e n t a l organisation, NGO, further noted that the donation will make a huge difference in the lives of children in Nigeria and across Africa that will benefit from largess.
The organisation also said that it will be working with SEOF to confirm the final list of countries to be served a n d t h e n u m b e r o f containers of books to be delivered to the respective countries.
9Oil
A welder
SEBASTINE OBASI
Wh e n
O f s e r v e N i g e r i a Limited, an integrated
oil and gas technical services company began operations in 2010, it was in response to the clarion call by the federal government for indigenous companies to participate in the nation’s oil and gas sector, in order to reduce the d o m i n a n c e o f t h e international oil companies, IOCs. It was also meant to develop local capacity and provide employment to Nigerians. In the last three years, Ofserv, a wholly indigenous company, has proven its mettle as a company that promotes local expertise.
The company provides technical and consulting services across two broad-based functional areas, namely, drilling and offshore facilities maintenance. In the oil and gas sector, drilling is t h e m o s t e x p e n s i v e component of the exploration a n d p r o d u c t i o n f i e l d development cycle. As a result, the industry pays a lot of attention to improving dri l l ing eff iciency and
reduced non productive time in order to control well cost. Ofserv’s drilling support services are aligned to every producer ’s objectives of drilling the most fit-for-purpose well in the safest manner and at the lowest cost per foot. The company’s directional services include; conventional mud motor drilling, measurement while drilling and ultra short radius d r i l l i n g . I t s d r i l l i n g o p t i m i z a t i o n s e r v i c e s i n c l u d e ; a r t i f i c i a l intelligence support drilling problem avoidance and drilling optimization staff support.
As part of its facilities support services, Ofserv caters for the needs of operators and oil and gas facilities owners focused on i m p r o v i n g p r o d u c t i o n p e r f o r m a n c e , w h i l e maintaining the highest safety standards. In the area o f i n s p e c t i o n a n d maintenance services, the company provides multi-disciplined rope access crews, permanent corrosion monitoring solutions, surface prep and offshore painting, bolt tongue and dropped item surveys. It also undertakes t h i r d p a r t y r o t a t i n g equipment maintenance, s u c h a s i n s p e c t i o n , refurbishment and overhaul.
The company is positioned to meet its growth objectives through a combination of organic and inorganic g rowth s t ra teg ies . I t s relationship with its carefully selected global partners ensures that the company is uniquely positioned to offer game changer technologies in such areas as directional drilling/measurement while drilling, wireless enabled c o r r o s i o n m o n i t o r i n g d e v i c e s , a r t i f i c i a l intelligence-enabled drilling optimization services. Other areas include; advanced f o r m a t i o n e v a l u a t i o n services with the adobel predic t ive too l (APT) , facilities inspection and maintenance services and laser – enabled pipe tally measurements.
Recently, Ofserv partnered with the Nigerian Content Development Monitoring B o a r d ( N C D M B ) a n d SNEPCO to organize and facilitate a month long offshore skills acquisition training program, as part of the NCDMB human capacity building initiative, where 20 Nigerians were trained and certified in various skills required to keep offshore f a c i l i t i e s o p e r a t i n g efficiently.
Ofserve projects local expertise
100 companies attend Shell, UKTI investment summit …Nigerian companies win $2.4bn contracts in 2012
Some 100 Nigerian and
B r i t i s h c o m p a n i e s
attended an investment
summit in Lagos on 23 May,
jointly hosted by Shell and the
United Kingdom Trade &
Investment (UKTI), as part of
efforts to forge partnerships
among businesses in the two
countries.
Some 45 British companies
met with their Nigerian
coun te rpa r t s t o d i s cuss
potential areas of collaboration
in Engineering Procurement
Installation Commissioning
( E P I C ) c o n t r a c t s ,
manufacturing, fabrication and
general oil and gas services. It is
expected that the partnerships
resulting from the summit will
help grow the capacity of
N i g e r i a n c o m p a n i e s i n
provision of goods and services
in the oil and gas industry.
Welcoming participants, the
Managing Director, Shell
Nigeria Exploration and
Production Company, SNEPCo,
Mr. Chike Onyejekwe, said
Shell is committed to further
developing local content in
Nigeria.
He said that last year, Shell
companies in Nigeria awarded
contracts worth $2.4 billion to
Nigerian companies, one
billion dollar more than the
amount in 2011. “Local content
is good for Nigeria and for the
business and we’re determined
to raise the game,” he added.
In a keynote address, the
Executive Secretary of the
Nigeria Content Development
and Monitoring Board, Mr.
Ernest Nwapa, commended
Shell for the “sustained interest
i n t h e N i g e r i a / U K T I
investment forum. “Since the
first summit, we’ve seen a
s i g n i f i c a n t n u m b e r o f
companies participating at the
event and we hope they will
focus on areas that will improve
their capability. It is good to see
that other IOCs are beginning
to follow Shell’s example by
o r g a n i s i n g s i m i l a r
engagements.”
T h e B r i t i s h H i g h
Commissioner to Nigeria,
represented by Mike Purves,
said, “I am overwhelmed by
the quality of attendees at this
event, it shows that the
symbiotic commercial interest
between Nigeria and Britain is
pro f i tab le .” The Group
General Manager NAPIMS
represented by General
Manager, MMD Luke Anele,
said supply chain transactions
account for 65% of the total
business value in the oil and
gas industry and promised to
support IOCs to develop local
content in the sector.
Chairman of the House of
Representatives Committee on
Local Content, Honourable
Asita in his remarks promised
that the law-making chamber
would strengthen the Nigeria
Oil and Gas Industry Content
Development Act, and help to
c r e a t e a c o n d u c i v e
environment for value-driven
partnerships and businesses to
thrive.
Since the first summit, we’ve seen a significant number of companies
participating at the event and we hope they will focus on areas that will improve
their capability
10Oil
Ma n a g i n g
Director/C
h i e f
Executive,
Internatio
nal Energy Services Limited,
IESL, Dr. Diran Fawibe,
arguCorruption still constitutes
10% of operating costs
… Only two major projects
worth over $20bn
Managing Director/Chief
Executive, International Energy
Services Limited, IESL, Dr.
Diran Fawibe, argued high level
corruption still constitute about
10 percent of production costs,
which is compounded by the
dear th o f in f ras t r uc ture ,
particularly power shortages.
According to him, Nigerians do
not feel the President is
committed to the fight against
corruption because in spite of all
that are being said, corruption is
on the increase.
“We see an inverse relation
because in spite of the ‘fight’
corruption is still on the increase,
which implies that corruption is
fighting back. But if we are very
proactive about the fight, there
will be a reduction, which means
that we haven’t yet proffered a
solution to fighting corruption
Corruption still constitutes 10% of operating costs
CLARA NWACHUKWUeffectively.
“Note that the corruption we
are talking about here is not the
one at the lower levels, but
corruption at the highest level
among people in government
and positions of leadership. This
is why the incidence is not
reducing.”
Fawibe further argued that the
insecurity in the system is a big
disincentive to foreign direct
investment, FDI, saying, “At the
just-concluded OTC in Houston
Texas, all the foreigners who
spoke, cited insecurity as a
limiting factor to investment.
“The shortage of power is still a
very great impediment to
development, and Nigeria will
not witness much jobs creation
due to lack of power. The cost of
direct generation of electricity
by homes and businesses is very
huge.
“So if power and corruption
can be tackled effectively
operating costs will be reduced
significantly. Mind you we have
identified these problems over
and over again, but it is how they
are being tackled that will
indicate whether we are making
progress or not.”
Oil and gas sector
Specifically, while he agreed
that there may be some growth in
some sectors of the economy, but
with regard to the oil and gas
sector, he said not much had
changed basically because of the
uncertainties over the non-
passage of the Petroleum
Industry Bill, PIB.
The big difference he noted in
the sector are two major projects
worth over $20billion from
France’s oil giant’s Egina project
constituting about $18billion,
and America’s ExxonMobil’s
Erha North project. “So this is a
pass mark for the government in
getting two of the international
oil companies, IOCs to start two
major oil projects in the country
worth over $20 billion.
“Also, I know that some others
are equally considering some
investments, but is the PIB is
passed early enough will put
their anxieties to rest.”
He noted that while the Total
and ExxonMobil’s projects are a
huge spend in the industry, there
may not be much job creation
because the industry is more
technology-driven than people-
driven. As such, he added that
this is where the Nigerian
C o n t e n t D e v e l o p m e n t
Management Board, NCDMB,
comes to the rescues in ensuring
that more jobs are domiciled in-
country from the $20billion, in
order for more Nigerians to get
some of the industry jobs.high
level corruption still constitute
about 10 percent of production
costs, which is compounded by
the dearth of infrastructure,
particularly power shortages.
Banks credit squeeze tightens fuel supply
Banks credit squeeze tightens fuel supply
he Federal Government’s
recent squeeze on banks Tcredit has tightened supply of
Premium Motor Spirit, (PMS)
also known as petrol, as fuel
importers are not able to raise
finance to bring in products.
The move became necessary
sequel to January 2012 subsidy
p r o t e s t s t o s a n i t i z e t h e
downstream sector of the
country’s petroleum industry. As
a result, several probe panels
were instituted by various arms
and agencies of Government to
scrutinize the fuel subsidy
scheme.
Chairman/Managing Director
Mobil Oil Nigeria Plc, Mr.
Adetunji Oyebanji said several
probe panels that were set up,
have created some uncertainties
and delays in refunding subsidy
claims under the Petroleum
Support Fund, (PSF) leading to
the squeeze on bank credits and
sporadic shortages in fuel supply.
Oyebanji disclosed this to
shareholders at the35 Annual
General Meeting and the
presentation of the Annual Report
and Financial Statement of the
company in Lagos last week.
He argued that the controlled
margins on PMS sales are barely
sufficient to cover operating costs,
adding that “Until we get
appropriate returns and the
industry is fully de-regulated, the
entire fuels sector will continue to
lack the level of investments
required to realize the enormous
potential inherent in the sector for
meeting the country’s energy
demands and s t imula t ing
economic growth.
“A s p r e v i o u s l y s t a t e d ,
Government undertook a number
of reviews into the operations of
the PSF in the year conducted by
its agencies. MAN co-operated
fully with these agencies,
p r o v i d i n g r e q u e s t e d
documentation and appearing
before the various panels
investigating the scheme. This
was a time-consuming task and
involved the provis ion of
e x t e n s i v e a n d d e t a i l e d
documentation to support and
explain the various transactions.
Presenting the company ’s
financial records to shareholders,
Oyebanji admitted that the
company did not perform well as
in 2011.
Kunle KALEJAYE
Note that the corruption we are talking about here is not
the one at the lower levels, but corruption at the highest level among people in government and positions of leadership. This is why the incidence is
not reducing
11Oil
Growing indigenous participation in oil industry
The signing of the
Nigerian Content
Act on April 22,
2010 by President
Goodluck Jonathan
marked the beginning of the
turnaround in the activities of
indigenous contractors in the
Nigerian Oil and Gas industry.
Indeed, the immediate result of
the implementation by the
Nigerian Content Development
a n d M o n i t o r i n g B o a r d
(NCDMB) through the effective
supervision of the Hon Minister
of Petroleum, Mrs Diezani
Alison-Madueke is the increase
in the number of technology
driven workspaces and capacity
b u i l d i n g b y i n d i g e n o u s
contractors who formerly found
it difficult to compete with
foreign contractors before the
signing of the Act.
As at 2013, the Petroleum
Technology Association of
Nigeria (PETAN) said its
membership had doubled!
Members are now specialized in
more than 200 areas o f
professional competence in the
Oil and Gas industry. There is
no gainsaying the success
recorded in the Oil and Gas
i n d u s t r y u n d e r A l i s o n -
Madueke’s administration as
manifested in the effects of her
policies.
According to the Chairman of
PETAN, Mr. Emeka Ene, the
Nigerian Content Act and
policies of the Petroleum
ministry have boosted support
for indigenous companies by
foreign companies and financial
institutions. “This is the reason
that at this year’s edition of
O f f s h o r e Te c h n o l o g y
Conference, OTC, we have 60
PETAN members, and due to
lack of space we were not able to
accommodate all our members
who signified interest in taking
part in this year’s conference.
Right now, we have 50 of our
members in attendance. Beyond
PETAN members, we have at
least another 50 exhibitors. So,
in all, there are over 100
Nigerian companies exhibiting
in this year’s OTC.”
Policy initiatives
In the upstream sub-sector,
Shell Petroleum Development
Company (SPDC) recently sold
its interests in four oil blocks to
i n d i g e n o u s c o m p a n i e s
including SEPLAT, Neconde
Consortium led by Nestoil Plc,
Shoreline Natural Resources,
and 45 per cent interest in OML
40 to Eland Oil & Gas Ltd and
Starcrest Nigeria Energy Ltd.
Another beneficiary of the
divestment by upstream foreign
players is Atlantic Energy
C o n c e p t L i m i t e d w h i c h
acquired (OMLs) 26, 30, 34 and
42.
Similarly, the opportunities
presented to indigenous
companies to become owners of
upstream assets, in turn,
resulted in the engagement of
indigenous contractors. A case
in question is the engagement of
Century Energy Services by
Amni Petroleum Development
Company Limited, Nigeria
Pe t r o l e u m D e v e l o p m e n t
Company and Afren Plc.
Also today, International
Energy Services (IESL) is
currently engaged in the
designing of facilities for the
deepwater projects of Chevron
and Total Upstream Companies.
The logistic base of LADOL is
now busy with projects from
Shell, Chevron and other
multinational oil companies.
E q u a l l y , i n d i g e n o u s
companies are now taking
control of lucrative pipeline
construction projects. The
Managing Director of OilServ,
Mr Emeka Okwuosa, argued
that the competition is now
between indigenous companies
and their foreign counterparts.
For instance, he said the East-
West Gas Pipeline project
awarded to his company over
other foreign contenders was
made possible because of the
steady investment in capacity
building, and insistence of the
Pe t ro leum Minis te r tha t
indigenous companies must be
accorded due recognition in line
with the Nigerian Content Act.
He said the Engineering
Procurement and Construction
project according commenced
from the last quarter of 2012 and
would be completed by early
2015.
M o r e i m p o r t a n t l y, t h e
e n g a g e m e n t o f s e v e r a l
Nigerians as skilled and
unskilled staff has helped to
offshore to access funds.
reduce the rate unemployment
and restiveness in the Niger
Delta.
Impact on Niger Delta
communities
According to Joseph Evah, the
National Coordinator of Ijaw
Monitoring Group, Mrs. Alison-
Madueke’s exposures while
working for Shell as well as other
international experiences
thereafter, prepared her for the
job of the minister, even at the
expence of pitching her against
her former employers.
He noted that although Niger
Deltans were initially afraid
when she was appointed as the
Petroleum Minister, but her
performance in terms of making
jobs available for the youths of
the Niger Delta through the
engagement of indigenous
contractors made them have a
change of heart.
Financial institutions
The need to ensure that
indigenous contractors had
access to funds to execute its
projects made Shell to enter into
an understanding with a select
group of Nigerian banks in 2012.
Under the terms, Shell will act as
guarantor for its indigenous
contractors without having to go
Furthermore, the Central Bank
of Nigeria, CBN, in a recent
s ta tement indicated that
i n c r e a s e d a c t i v i t i e s b y
i n d i g e n o u s c o m p a n i e s
contributed to the appreciation
of the Naira against the Dollar
and other currencies.
To underscore the importance
of funding, the Executive
Director (Risks) Mr Kehinde
Lawson, said that First Bank has
participated actively in excess of
$3billion in both upstream and
downstream transactions in the
petroleum industry.
The general impact of financial
institution’s involvement is
largely seen to be responsible for
11 Nigerian banks being listed
among the top 200 banks in
Africa. The list was published in
The Banker, a publication of the
Financial Times of London.
According to the Banker,
African banks have grown
rapidly in the past few years.
Based on 2010 results, 19 of them
have Tier 1 capital of more than
$1 billion, a level that roughly
marks the cut-off point for the
world’s biggest 500 banks.
Nigerian banks on the list
included Zenith, First Bank,
Guaranty Trust, Access, UBA
a n d F i d e l i t y, F i r s t C i t y
Monument, Diamond, Skye,
Stanbic IBTC, and Eco Bank.
Equally, indigenous companies are now taking control of
lucrative pipeline construction projects. The Managing Director of OilServ, Mr Emeka Okwuosa, argued that the competition is
now between indigenous companies and their foreign
counterparts
12FeedbackFeedback
PIB: Panacea to
efficient petroleum
industryBy Olaiwola Alao
Ma n y N i g e r i a n s
snorted when the
oil subsidy was
removed on the New Year day
last year. With hindsight, many
more will say, in retrospect, that
the nationwide protests which
greeted the removal of subsidy
on petrol were a blessing in
disguise.
Put more directly, the protests
served as a sort of public opinion
tool which triggered the much-
needed reforms going on in the
pet ro leum indust r y. The
January 2012 protests therefore
became an important factor in
President Goodluck Jonathan’s
government’s understanding of
what the people wanted and
where his government needed
to focus its attention regarding
the energy sector. While the
most strongly-held opinion may
not necessarily be the most
accurate, it was realized, for
instance, that Nigerians were
not absolutely against the
removal of subsidy on petrol, but
needed to be better oriented on
the advantages of the policy.
After the Farouk Lawan-led
ad-hoc committee set up by the
House of Representatives to
probe the subsidy regime lost its
c r e d i b i l i t y, t h e f e d e r a l
government set up committees
and task forces to investigate,
ascertain and recommend the
way forward in various sub-
sectors of the petroleum industry.
T h e A i g - I m o u k h u e d e ’ s
Technical Committee, chaired by
the MD/CEO of Access Bank,
Aigboje Aig-Imoukhuede, was
set up by the minister of finance,
Dr Ngozi Okonjo-Iweala in May
2012 to scrutinise the fuel
subsidy payments handed oil
marketers during the 2011 fiscal
year.
In its report submitted to
P r e s i d e n t J o n a t h a n , t h e
c o m m i t t e e u n c o v e r e d
i l l e g i t i m a t e t r a n s a c t i o n s
involving 50 oil marketing
c o m p a n i e s . O u t o f 8 5 7
t r a n s a c t i o n s v a l u e d a t
1,112,836,823,380.43 examined
by the committee, 661 (valued at
N880,644,248,166.23) were
classified as legitimate, while
196 t ransac t ions wor th
N232,192,575,214.20 (involving
the 50 companies ) were
illegitimate. The committee
r e c o m m e n d e d f u r t h e r
investigation and prosecution by
law enforcement agencies.
Other committees/taskforces
set up to look into issues in the
petroleum sector include: the
S p e c i a l Ta s k Fo r c e o n
Governance and Controls, set
up by the minister of petroleum
resources and headed by Dotun
Sulaiman, to clean up the
NNPC and its subsidiaries; the
Petroleum Revenue Special
Task Force, a 16-man team also
set up by Mrs Diezani Alison-
Madueke and led by Mallam
Nuhu Ribadu to determine and
ver i fy a l l ups t ream and
downstream petroleum revenue
taxes and royalties due and
p a y a b l e t o t h e f e d e r a l
government; the National
Refineries’ Special Task Force,
headed by Dr Kalu Idika Kalu to
ensure self-sufficiency of
petroleum products in Nigeria.
Two other bodies directly
concern the biggest issue in the
petroleum sector today: the
Petroleum Information Bill
(PIB). They are: the Osten
Olorunsola Committee and the
Udo Udoma Task Force. After it
was discovered that two
separate bills were sent to the
National Assembly, there was
the need to re-draft a standard
document to prevent the fate
suffered by the bill in the past.
Hence, the setting up of the
committee headed by Mr Osten
Olorunsola, director of the
Department of Petroleum
Resources (DPR). To ensure a
speedy passage of the bill this
time around, the executive arm
of government realised that a
be t te r synergy wi th the
legislative arm was necessary,
thereby leading to the creation of
the Udo Udoma Task Force to act
as a liaison between the two
arms.
It is common knowledge that
previous administrations have
avoided the legislation of a
single document which would
e f f e c t i v e l y r e g u l a t e t h e
s t r u c t u r a l a n d f i n a n c i a l
management of the petroleum
industry. Even when, towards
the end of the 6th Assembly, the
president promised to accent the
bill if sent to him by the
legislature, those of us who
understand the potency of the
PIB to revolutionalise the oil and
gas industry were surprised that
one way or the other the bill did
not make it out of the National
Assembly. Considering the push
by the Jonathan administration
for the prompt passage of the
PIB, and despite the clout pulled
by those hell-bent on preventing
its passage and the ethnic
coloration given it to elicit
unfavourable public opinion, it is
clear that it holds the key to the
success of any meaningful
reform in the industry. It could as
well define this administration
as that which sought and
delivered a permanent answer to
the perennial crisis in the
industry.
‘Indigenous participation
key to petroleum development’
It is becoming the fad for
Nigerian companies to go
funds shopping in offshore
exchanges; Lekoil recently
jumped the band wagon. Chief
Executive Officer, Mr. Lekan
Akinyemi explains:
Tell us more about Lekoil
Leko i l was f ounded in
December 2010 and is an Africa-
focused company with assets in
Nigeria and Namibia with a
strong technical and commercial
team. We recently listed on the
AIM exchange in London.
What is the market focus of
Lekoil?
It is a Pan-African company
with a balanced portfolio of
producing and exploration
assets. Near-term focus is in sub-
Saharan Africa.
What difference does Lekoil
bring to the table?
Access to capital markets,
s t r o n g t e c h n i c a l t e a m ,
disciplined approach to building
an asset portfolio and strong
local partnerships.
Why Africa?
H i s t o r i c a l l y , c a p i t a l
expenditure relative to resource
availability has shown that
Africa is under explored. In the
context of Africa, Nigeria is also
under explored – we haven’t
really had to do much in terms of
enhanced oil recovery in
Nigeria and there are some
areas where we think that if you
bring new technology to bear,
there’s a lot that can be done.
You get such a fantastic return
from what is already in place
that sometimes people don’t
push too hard on the exploration
side. But there’s a lot of room for
exploration in Nigeria and
many parts of Africa.
What is your perspective on
Nigerian oil & gas industry
reform?
We l ike the idea tha t
indigenous companies should
be allowed to grow, to flourish
and to attract capital. Over the
decades the majors and large
service companies have done a
fantastic job in terms of
k n o w l e d g e t r a n s f e r t o
Nigerians. However, reforms
like this are significant and
should be given time, we have
to keep going at it to get it done.
Many African countries are
discovering their hydrocarbon
assets. What does it mean for
Lekoil in terms of investment
options?
Good question. We have a
couple of assets in Namibia.
They are in a different phase of
the assets life cycle; in terms of
differentiation, a lot of the assets
in Nigeria fall into either
producing or near production
assets, except for the ones in the
Dahomey Basin. In the rest of
Africa, there is a tendency to take
more risks on the geological and
t e c h n o l o g i c a l s i d e , b u t
sometimes, a little bit less risk, in
terms of just the working
environment. In other words
there are opportunities to
balance risk in our portfolio of
assets.
How do you think Nigeria can
i m p r o v e i n d i g e n o u s
participation in the industry?
Improvements can be made
with better access to capital, by
improving structures and
transparency.
What is Lekoil’s growth
aspiration in the coming years?
L e k o i l
intends to use its
access to capital and
strong local partnerships to
build a multi-asset exploration,
development and production
business in Africa.
Does Lekoil have the capacity
of to take over assets being
d i s p o s e d b y s o m e
multinationals in Nigeria like
Shell, Petrobras?
From a disciplined portfolio
perspective, we are well
positioned to acquire divestment
assets because of our access to
the capital markets. We do
in tend to par t i c ipa te in
divestments where we believe
we are able to unlock value
through a combination of smart
financing, technical expertise
and partnerships.
FocusF 13
Our target is to ensure more jobs domiciliation —NCDMB
A welder
At the r ecent ly
c o n l u d e d ,
O f f s h o r e
T e c h n o l o g y
Conference, OTC,
in Houston Texas, USA, the
Executive Secretary, Nigerian
Content Management Board,
NCDMB, Mr. Ernest Nwapa,
spoke on three years enactment
of the Nigerian Content Act and
other industry-related issues, as
captured by Clara Nwachukwu
and Sebastine Obasi. Excerpts:
A lot have been said about the
PIB, what is your opinion of the
bill in relation to the Content
Act?
I have the firm belief that the
PIB will make investments flow.
It is a very good assumption. We
believe that once the PIB is
passed, there would be a lot
investment inflow. That is
conventional wisdom. As I said
in my short remarks (during the
panel discussion), if the PIB is
passed and investments flow
and those investments produce
revenues for Nigeria that is
expected. But what we have
been looking for is the kind of
impact that can give us
employment on top of the
revenue. That type of impact will
not come from investments that
do not result in domiciliation.
It is a good thing that we have
had a three-year head start from
local content. The three–year
start that we have had from local
content has enabled us to create
some capacity in Nigeria such
that as the PIB is being passed
and investments are coming, we
will then have jobs arising from
the investments. Where we are
today, if Petroleum Technology
Association of Nigeria, PETAN
companies, if service companies,
our multi-national companies do
not establish yards where they do
things in Nigeria, when the
i n v e s t m e n t s f r o m t h e
International Oil Companies,
IOCs come, if they are investing
$50 billion and $45 billion goes
back to their countries, we have
only touched the surface of the
water.
We need to go deep and that is
the responsibility of the Nigerian
Content Development and
Monitoring Board, NCDMB,
working with the industry to
create these facilities, to expand
these shortfalls. That is why the
Honourab le Min i s t e r f o r
Petroleum Resources is pushing
that we launch the industrial
parks project, what we call the
Nigerian oil and gas industrial
parks scheme, NOGIPS. This will
create the opportunity where we
use the Nigerian Content Fund to
create some satellites close to the
o i l f i e l d s a n d g e t l o c a l
entrepreneurs to bring the
OEMs, the big manufacturers
such as GE, which we all saw
t o d a y . I f t e l l t h e b i g
manufacturers to come and
manufacture in Nigeria, they ask
you how do we get power? How
do we get land? How do we deal
with community issues? We want
to take away all those problems
from them by setting up
industrial parks. In those parks
we will have electricity, we will
have infrastructure. They come
in. the communities are friendly
with us. They know we mean
well. We have experimented in
Kpolaku, Bayelsa State. We have
moved in there. We have bought
land, which we have cleared. We
are welcome by the community.
We are going to expand that. By
the time we finish it, it will be a
mini estate.
The responsibility of the
manufacturers will be to come
there and select the local
p a r t n e r s t h a t w o u l d
m a n u f a c t u r e t h e i r l o c a l
components. They will just plug
and play. That is the facility we
are trying to introduce now. That
is the area we want to go because
this whole issue of bringing in
investments. So, it is one thing to
get investments in, because we
need to sustain our revenue from
oil production. But the real end
game for us is when as we are
getting the revenue, we are
getting our people working. Our
people cannot work in NNPC,
Shell and Chevron. You know
what it takes to employ. You can
only employ about 150 people. If
you have 10 or 20 government
agencies, they cannot employ
more than 50,000 people. The
projects that would employ multi
tiers is when we start having
these people that are working
every day, manufacturing
components, manufacturing
consumables. That is the focus
and that is the strong linkage
between the Nigerian content
law and the PIB.
How then would you describe
three years of Nigerian
Content? Can you say it has
been successful, and what have
been the challenges?Your guess
is as good as mine. I do not
believe in talking about my own
performance as a Board, but the
feedback we get like all the oil
c o m p a n i e s , t h e s e r v i c e
companies advertised for the
three-year anniversary. I said to
my Board that we should not
over celebrate it this year. Let
other people give their own
testimonies. The testimonies are
clear. If you look at expatriate
utilisation, we are controlling it.
We are telling them to go and
find Nigerians to partner with.
That is very fundamental. The
contracts that are being
awarded, you will see that
mostly all the contracts have
Nigerian participation if not
completely, but up to 80 – 90
percent Nigerian participation.
So, it is one thing to get investments in, because we need
to sustain our revenue from oil production. But the real end
game for us is when as we are getting the revenue, we are getting our people working
14Focus
‘There's more convergence than divergence in PIB’
Regulat ion has been identified as ke y t o f u t u r e industry growth and development,
the Director, Department of Petroleum Resources, DPR, Mr. Osten Olorunsola in this i n t e r v i e w w i t h C l a r a Nwachukwu and Sebastine Obasi, in Houston Texas, USA, speaks on the role of the regulator under a new PIB. Excerpts:
A lot of opportunities have been identified even in spite of the criticisms against some of the fiscal provisions in the Petroleum Industry Bill, PIB. In the light of all the views that have been expressed, how do you think these opportunities and prospects can be realised?
My view is that you cannot take away the importance of dialogue. The more we discuss and the more we share, the more the chances that we will get to a common ground at some point. In my view, I am quite happy with what has happened this morning. It shows there is still a lot of an interest. Two, the mere fact that people are speaking their minds is even the more important thing. If people keep quiet over their views, it does not help. It is nice that people came up with their views. And the key areas of gaps are narrowing down. If I take the words of the honourable gent leman, Honourable Osagie (House of Representatives, Deputy Chair on PIB), we will soon see the end of the PIB.
In view of the divergence of views, do you really think we will have a convergence such that the National Assembly will come up with a bill that protects the national interest even as it e n s u r e s r e t u r n s o n investments?
The b i l l has severa l hundreds of pages. The areas of divergence you are talking of are less than 10 pages. People have been repeatedly talking about these 10 pages, and completely undermining the 200 pages that are the areas of convergence. We should focus more around where we have actually agreed. People can choose to look at a cup as half empty. I personally like to look at a cup as half full. Let us give attention to the 200 pages that we have convergence, and then address these little areas that are remaining.
In my view, there are three or four things people are still
talking about. If they don’t talk about fiscal gaps, they talk about host communities, or institutional authorities. But there are several other parts of the PIB that we can actually run with today. We should not stop talking about these little areas that are remaining. In any case, after going through these for 12 years, if it is only three or four areas that are remaining, we can try and resolve them. My personal view is that we should not spend another 12 years trying to fix these three or four items. Where we are today, we are ready to go. I think half PIB is better than none
. One of the worries raised
here today was that rather t h a n r e d u c i n g o r streamlining regulations, we a r e h a v i n g m u l t i p l e regulations instead?
It is true. It is an area that still has to be looked at, not from the point of what can be resolved in Nigeria alone, but actually looking at the benchmarks across the whole world. Apart from fiscals, one thing international investors look at is the robustness, simplicity and transparency of your regulation. The National Assembly is aware of that. I think they will look at it very well. However, in looking at it, we also have to take our local environment into consideration. The mere fact that there is only one
regulator does not mean that we cannot have another two or three. The only thing is that it has to work, and it does not have to become a bureaucracy to the industry. That is really the point. Any institution you have too many
regulations, it is a recipe for disaster. I think the National will look at that angle.
In that case, are you not
worried that with these streams of regulations, that the DPR and some of its functions are being whittled down?
It is not just the DPR; even the PIB itself has addressed it to some extent. Even some of the extant regulators that have been around, they have been somehow addressed in the PIB. However, we have to wait until it becomes an Act. If it does not become an Act, all of them will still continue to parade themselves as regulators. We have made our views known very well. In any case, we were part of the team that put the bill together as an executive arm. We have to wait and see the wisdom of the outcome from the National Assembly.
Coming down to specifics, we have been going on and on about new acreage allocation especially for the marginal fields operations. Is it fair to say that it is not materialising? If it is, what are those areas that you see as threats?
It is not proper to say that it is not materialising. We are working through it. It does take time to press go. Those are the things we are basically looking at. One of the major challenges is the fact that most of the fields that probably will come out as the next round, they are in assets that we are still trying to renew for the licence holders. If you don’t renew the licences, there is no point going ahead with fields people don’t even have titles
to. Some of those fields are within leases that are going through renewal right now. You need to renew the leases first before you give out the fields within the leases to other people as marginal
The bill has several hundreds of pages. The areas of divergence you are talking of are less than
10 pages. People have been repeatedly talking about these
10 pages, and completely undermining the 200 pages that
are the areas of convergence
CONTINUES ON PAGE 15
Mr. Osten Olorunsola
15Focus
‘There's more convergence than divergence in PIB’
fields. That’s what we are doing basically. The leases have expired. It is like building a house without putting a foundation. You do the foundation first before you start raising the walls.
Would it be correct then to say that some of these lease holders are hanging on to them deliberately?
It is not their baby, it is our baby and it is left for government to renew. They have applied for renewal, and government is going through the process of renewing them.
Looking at marginal fields operations, we have been told that they contributed only 12 percent of total production. And here we are, trying to give them more acreages as they have demanded. Yet there are still so many of them that are not into production yet. Is it then wise to give more to people who are not utilising these assets?
Let us correct it first and foremost. The 12 percent you heard is not from marginal f i e l d s . I t i s f r o m a l l i n d i g e n o u s p r o d u c e r s i n c l u d i n g N i g e r i a n Petroleum Development Company, NPDC. The marginal fields are far below that. The marginal fields are doing only 50,000 barrels per day out of 2.5 million barrels. Their cry for more is legitimate. It is their right to do so. After 50 years of production in Nigeria, we cannot be going about to say t h a t t h e i n d i g e n o u s production accounts for only 12 percent. It should be far more than that.
Even the government pol icy o f encouraging indigenous participation is in that direction. They should all be supported.
If you look at the marginal fields specifically, nine out of 24 are already producing today. Another four or five will soon be producing. They are doing pretty well. Don’t forget that the first four or five
years, they all had issues because it was a new law that came up. So, you don’t expect them to start from day one. They had all sorts of issues like funding. Most of the banks in Nigeria did not know how to fund long term projects like oil and gas. It is not an ATM where you put in your card and get money immediately. They needed time to understand the industry before putting in their money to support any
investment in that direction. The second was that they
a l so needed to bu i ld capacity. They needed to get the right people to help them to move those huge capitals in the right direction.
The third thing was that quite a few of them had some litigation among themselves as regards partnership issues. Some of them went to court. Now they are all c o m i n g o u t o f c o u r t gradually, we will see a lot of
CONTINUED FROM PAGE 14actions going forward.
In all of these, do you think they are adequately able to overcome these challenges you mentioned?
That is the point I am making; they are already in that direction. If you go to some of the marginal fields in Nigeria, you will be shocked by what you see. What some of them have put on ground will rival any international company in the world. I have
OPEC’s high output, high price days dwindleoffering higher price support to rival producers - or protect market share by keeping the taps open and allowing prices to fall.The Organization of the Pe t r o l e u m E x p o r t i n g Countries’ Friday meeting was content to simply agree, as expected, to retain the group’s 30 million barrels per day (bpd) output target through the rest of the year.
It will meet again on December 4. Ministers also agreed to set up a committee to investigate the impact of shale.
Oil is just above the $100 level favored by the group that pumps a third of the world’s oil. OPEC’s leading producer Saudi Arabia says the world oil market is in “good shape”.
For now, maybe. But OPEC has little room to pump more due to the U.S. oil boom that has shifted the existing competition for marketshare once and for all to Asia and intensified a rivalry between OPEC’s top two producers Saudi Arabia and Iraq there.
Core Gulf producers think OPEC will still be able to pump at least 30 million bpd, provided U.S. shale grows at a moderate pace. While that does not leave much room for growth, it implies that OPEC will not need to scale back significantly.
“This is not the first time
CONTINUED FROM PAGE 1 n e w s o u r c e s o f o i l a r e discovered, don’t forget history,” said the influential Saudi Oil Minister Ali al-Naimi. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”
There has not been such a surge in flows from outside OPEC in decades and that has rung the alarm with some members - particularly Nigeria and Algeria - that feel squeezed.
“The rapid ramp up in U.S. s h a l e b e a r s a s t r i k i n g resemblance to the situation in the early 1980s when North Sea oil production from the UK and Nor way was r i s ing ver y quickly,” said Neil Atkinson, director of energy research at Datamonitor.
“This presented OPEC with an enormous challenge because at the time demand growth was very weak. Nobody’s saying that will happen again, but all the ingredients in that brew are starting to come into place.”
Oil above $100 has freed vast quantities of U.S. shale oil in North Dakota and Texas that helped boost U.S. output by 850,000 bpd by the end of 2012.
That is more than each of OPEC’s two smallest producers, Qatar and Ecuador pump in total. Light, low sulfur shale poses no threat to OPEC’s Gulf members that sell heavier crude - but is a headache for Nigeria and Algeria, which produce oil of similar quality.
The surge may even push the United States closer to the Saudi
mindset, thinking more like a producer than a consumer keen to keep oil cheap.
Last year’s surge in U.S. output came with a hefty price tag as the rush to produce drove the cost of pumping marginal crude to $114 a barrel, according to a Bernstein Research report.
While Riyadh welcomes the rise of U.S. shale, the Saudi oil minister himself has said the kingdom would be lucky to go beyond current production rates of about 9 million bpd by 2020 due to new global supplies.
ut during that period, BIraq’s production will have doubled from current rates of around 3 million bpd, if all goes to plan - a concern for Riyadh.
At some stage, Saudi Arabia may decide to open the taps to shut in the marginal barrel and make Iraq feel some pain, said analysts. The kingdom has done this before - early last decade it let the price fall to punish non-OPEC producers. There are no signs of that now.
Oil at $70-$80 could start to impact the economics of some shale oil plays. Iraq’s breakeven budget price is well above $100 a barrel.
With no pressure on its budget, analysts say Saudi Arabia could easily pump 8 million bpd at $80 without breaking sweat. After pumping 10 million bpd with oil at $110 last year and 9 million bpd with oil at $110 this year, it has built up formidable financial
reserves.Analysts’ estimates for Saudi
Arabia’s break-even oil price this year vary from around $65 a barrel to $85, depending on projections for its spending.
“For Saudi Arabia, there’s plenty of room on the downside in terms of price and quantity before they start to panic,” said Yasser Elguindi of Medley Global Advisors.
“North Dakota will cut before anyone in OPEC if oil falls to $70.”
Others in OPEC - including Iran, whose revenue has been sunk by Western sanctions directed against its nuclear program, Iraq and Algeria - need oil well into triple digits to balance budgets.
This may lead them to call on Saudi Arabia to cut supply in order to support prices. But Riyadh may be thinking counter-intuitively.
“Saudi Arabia’s challenge will be to convince Nigeria and Algeria that higher prices will encourage the economics (of U.S. shale) that are their undoing,” said Elguindi.
The group will choose its next secretary general when it meets again in December, said the Saudi oil minister. The issue has stalled on competing candidates from Iran, Iraq and Saudi Arabia. Friday’s meeting continued to adjust the criteria for prospective candidates to come forward.
been there myself. I am not talking of pictures.
You said about four or five marginal fields will come on stream very soon. Could you please tell us their names?
I cannot give their names now. I know that Sogenal is one of the marginal fields companies; they are almost coming on stream very soon. Frontier has just come on stream, they are producing. There are three others.
18FinanceRecently, the Chief Executive
Officer of Chinak Group, Mr Chris Igwe spoke about e x p a n s i o n p l a n s b y a subsidiary of the Group, Mainland Oil and other industry issues as captured by Clara Nwachukwu. Excerpts:
e hear you w a n t t o e x p a n d y o u r operations,
how much specifically do you want to invest in the expansion o f y o u r d o w n s t r e a m operations?
In the first phase we are going to spend about N2 billion.
How do you intend to source for the funds?
We source our funds locally and it is quite challenging. And this is the area I appeal to the media to drum hard on. The Central bank Governor should come to our aid because our interest rate in Nigeria is about the highest in the world.
In US here interest rate is about four percent. How do we c o m p e t e w i t h f o r e i g n companies that get funding at four percent interest rate while we in Nigeria get funds at over 20 percent? That is a major challenge.
So, I want to use this opportunity to appeal to the Central Bank Governor to set up a special intervention fund for the downstream oil and gas industry. This has become important to bail out some operators that have made the mistake of taking short term l o a n s f o r l o n g t e r m investments. That is why some of them are not finding their feet.
But in Mainland we have a good structure peopled by profess ionals . But then funding at current interest rate h a s r e m a i n e d a m a j o r challenge.
Apart from finance what other challenges weigh against your business?
Finance is the key. The second one is infrastructure. Government has to develop infrastructure to enable businesses in the country. For us in the logistics business it is difficult to move equipment when there is no infrastructure.
We do a lot of work to maintain the logistics business because of poor infrastructure. So government should come up with more infrastructures to aid our operations. Why can’t w e h a v e e f f e c t i v e r a i l transportation system to move
W
Mainland Oil plans N2bn investments in operation expansion
products? In Europe the fuel haulage system depends on the rail transportation system. Why can’t we have such things in Nigeria? These are the things that w o u l d p r o m o t e t h e provisions in the PIB.
It is not enough to pass a law; but do you have what it t a k e s t o e f f e c t i v e l y implement the law? So in f ras t r uc ture i s ver y important.
And then there is the issue of finance. Finance is the key!
G i v e n y o u r g r o w t h projections in the short term, may we have an idea of your budget profile?
Well, in the short term our group has the ambition to grow the business so rapidly a s t o c r e a t e n e w o p p o r t u n i t i e s f o r e m p l o y m e n t . I n f a c t whenever I see Dangote employing Nigerians in their thousands, I nurse this strong feeling that our group should tie the same line; even if we do not employ the same number, we want to at least do half of that.
We are concerned as a group to take out more Nigerians from the labour market. So in the next two years, we want to employ 10,000 Nigerians. So when we do that we would feel confident that we are smarting up. So that is our starting point. When we c r e a t e h i g h v o l u m e
employment, then we know that we have started.
Mainland Oil and Gas has become a popular brand in the downstream sector of the d o m e s t i c p e t r o l e u m industry. May we have an idea of the enablers that drive your growth?
Mainland is a subsidiary of the Chrisnak Group of companies of which I am the Group Managing Director. We effectively started in 2008, and we were touched by what Nigerians go through especially in the rural areas before they get petroleum products,
So we stared with our first fuel service station at Umuoji Road in Onitsha Anambra State. Today we have over 14 s ta t ions care fu l ly and consciously located in the rural areas because of our belief in and passion for the welfare of the rural dwellers. However we have some of our stations in urban areas.
So, we are driven by our pass ion t o make fue l
available to the ordinary Nigerians. That is the vision behind Mainland Oil, a vision that drives our business strategies.
So, we started from there and the rest is history.
Given the challenges in pushing products to the rural areas, how have you been able to break even in marketing products in such remote locations?
In our group, we have a strong logistics arm. And because we are also in logistics business it has been easy for us to optimize internal synergy in bulk transshipment of products. We have a robust fleet of haulage trucks which we readily deploy in products bridging.
We also have our tank farm which happens to be one of the biggest storage facilities in Calabar, Cross River State. With our wheeling and storage capacity we are licensed by the Department of Petroleum Resources to get products allocation from N i g e r i a n N a t i o n a l Petroleum Corporation ( N N P C ) f o r d i r e c t distribution in the market.
We also import directly to mee t demand on our facilities in addition to holding strategic reserves to ensure that that all our storage facilities are wet with products to continuously and promptly respond to fuel demand from individuals and businesses.
Given the level of your p a r t i c i p a t i o n i n t h e domestic fuel market, what is your view of the fuel subsidy controversy that rocked the market in recent times?
The subsidy probe is a step in the right direction but there appears to be little will to drive the implementation o f t h e p r o b e recommendations. The spirit with the probe was pursued appears to be going down.
From where we are sitting, it is obvious that Nigerians want to see the outcome of the probes so that it would serve as deterrent to those who come to the market to reap from where they did not sow. People should know that there is law in the land and all operators in the business must operate within the ambits of the laws that govern the state.
In the short term our group has the ambition to grow the business so rapidly as to create new opportunities for employment
Mr Chris Igwe
Offshore Drillingm a j o r
d i f f e r e n c eb e t w e e n onshore and o f f s h o r e
drilling is the type of the drilling platform. Also, in offshore drilling the drill pipe must pass through the water column before entering the seafloor or lake. These type (offshore) of wells have been drilled in waters as deep as 10,000 ft (305 m). Below is an overview of drilling in offshore environments.
Drilling TemplateOffshore oil drilling is an oil
extraction technique which allows oil companies to access deposits of oil buried under the ocean floor. Most typically, offshore oil drilling sites are situated over the continental shelf, although advancements in drilling technology have made platforms even further out to s e a e c o n o m i c a l l y a n d physically feasible.
Offshore drilling requires the construction of an artificial drilling platform, the form of which depends on the characteristics of the well to be drilled. This drilling also involves the use of a drilling template that helps to connect the underwater drilling site to the drilling platform located at the w a t e r ’ s s u r f a c e . T h i s template typically consists of an open steel box with multiple holes, depending on the number of wells to be drilled. The template is installed in the floor of the water body by first excavating a shallow hole and then cementing the template into the hole. The template provides a stable guide for accurate dril l ing while allowing for movement in the overhead platform due to wave and wind action.
Drilling PlatformsThere are two types of basic
A
OIL AND GAS TECHNOLOGY
Drilling Types and Techniques Jim-Rex Lawson MOSES offshore drilling platforms, the movable drilling
rig and the permanent drilling rig. The former is typically used for exploration purposes, while the latter is used for the extraction and production of oil and/or gas.
A variety of movable rigs are used for offshore drilling. Drilling barges are used in
shallow (<20 ft [<6 m] water depth), quiet waters such as lakes, wetlands, and large rivers. As implied by the name, drilling barges consist of a floating barge that must be towed from location to location, with the working platform floating on the water surface. In very shallow waters, these may be sunk to rest on the bottom. They are not suitable for locations with strong currents or winds and strong wave action. Like barges, jack-up rigs are also towed, but once on location three or four legs are extended to the lake bottom while the working platform is raised above the water surface; thus, they are much less affected by wind and water current than drilling barges.
Submersible rigs are also employed in shallow waters and, like jack-up rigs, are in contact with the lake bottom. These rigs include platforms with two hulls positioned above one another, with the lower hull acting like a submarine. When being towed to a new location, the lower hull is filled with air and serves to float the entire platform. Once on location, the lower hull is filled with water, and the rig sinks until the legs make contact with the lake bottom. As with the previous movable rigs, use of this type is limited to shallow water areas.
The most common movable offshore drilling
rig is the semi-submersible rig. It functions in a similar manner to the submersible rig, with a lower hull that can be filled or emptied of water. However, this type of rig does not contact the lake floor but floats partially submerged and is held in place through a number of anchors. This type of rig provides a stable and safe working platform in deeper and more turbulent offshore environments, and when high reservoir pressures are expected. The final type of movable drilling rig is the drillship. These are ships designed to carry drilling platforms great distances offshore and in very deep waters. A drilling platform and derrick are located in the middle of a large, open area of the ship, and the drill is extended through the ship to the drilling template.
Wh e n ex p lo ra t o r y d r i l l i ng l oc a t e s commercially viable oil or gas deposits, a more permanent drilling platform is required to support well completion and oil and/or gas extraction.
A variety of such production platforms are used for offshore drilling. Fixed platforms are typically used in areas with water depths less than 1,500 ft (457 m).These platforms contact the bottom using concrete or steel legs and are either directly attached to, or simply rest on, the bottom. A variety of other production platforms are available for deeper water conditions.
Offshore Drilling Platforms
A Floating Production System Source: Minerals Management Service
[PART 2]
20Power
Su c c e s s f u l
bidders in the o n g o i n g privatisation in t h e p o w e r
sector have expressed eagerness to take over operations from the Power H o l d i n g C o m p a n y o f Nigeria, PHCN Distribution Companies (DISCOs) after the successful payment of 25 per cent of their investment.
However, the Federal Government through Bureau of Public Enterprises, (BPE) and the Secretariat of N a t i o n a l C o u n c i l o n Privatisation, (NCP), stated that successful bidders for the DISCOs will commence
Kunle KALEJAYE
PHCN: Investors await takeover amid epileptic supply
full operations only after 75 per cent down payment for their investments have been completed.
NCP in a statement stated that core investors are only allowed to take over the c o m p a n i e s t h e y h a v e purchased on completion of 100 percent payment of their bid consideration and PHCN successor companies will not be different.
The council reiterated that successor companies would be formally handed over to the bidders after full payment in a ceremony that will herald the takeover of the power sector by the private sector.
NCP also plan to allow purchasers access to the companies in order to p r e p a r e f o r t h e
implementation of their business plans laid out in their proposals submitted to the Bureau o f Publ ic Enterprises;
H o w e v e r , o u r cor respondent rel iably gathered that preferred bidders of some DISCOs are eager to proffer solutions to the erratic power supply in the country.
The winner of one of the DISCOs in Lagos told our correspondent in confidence that in the next three to four months, investors wil l commence complete take over.
“We have invested 25 per cent and as businessmen, we need to have a return on investment. We cannot allow our money to be tied down.
“In the next three to four
months, we would have taken over, but labour issues must be settled before we can come in. Don’t forget that there is difference between hand over and taken over,” the source said.
Our correspondent also gathered that investors plan to target corporate business companies, large firms and industrial companies to recoup their investments in the next six months to one year on assumption of operations before shifting attention to residential areas.
Aside from return on investment, one of the major drives by investors to commence operations in the power sector according to findings is to put an end to d erratic power supply in the c o u n t r y. E l e c t r i c i t y
consumers in recent time have complained about poor power supply in the country.
It would be recalled that the Transmission Company of Nigeria, TCN, had earlier r e v e a l e d t h a t , p o w e r generation has improved significantly to over 4,000 megawatts.
Meanwhile consumers across the country have compla ined about the constant darkness that their homes and industries have been plunged into since February, about the time P r e s i d e n t G o o d l u c k Jonathan, in an interview with Christiane Amanpour, said Nigeria’s power supply had tremendously improved.
The Chairman, House of Representatives Committee on Power, Patrick Ikhariale, also alleged that apart from Egbin Power Plc, all the power generating companies i n t h e c o u n t r y w e r e functioning at less than 40 per cent capacity. But a minor relief might have come with the TCN announcement of an increase of about 1,160 megawatts.
The Assistant General Manager of the TCN, Mr. Dave Ifabiyi, said that power generation would reach its peak in Nigeria when all the National Integrated Power Projects (NIPPs) were fully integrated into the national grid.
He attributed the recent increase in the generation capacity to the privatisation of the sector by the Federal Government, and appealed to energy consumers to continue to partner with TCN in protecting electricity installations and forestalling vandalism. He said that vandalism constituted a major setback to efforts to improve power supply.
Nigeria currently needs over 10,000 megawatts of electricity to guarantee stable electricity supply in the country.
Power plant
21Power
The Minister of Po w e r, P r o f Chinedu Nebo has announced the planned
streaming of additional 1,000 Mega watts, MW of solar power yearly to boost energy needs in the country over the next 10 years, to be boosted by the coming on board of a Korean firm set to inject funds into the process.
Speaking in Abuja at the signing ceremony of a M e m o r a n d u m o f Understanding (MoU) with the HQMC, Korea Company Limited, a Korean firm that is ready to inject $30 billion for
Minister promises 10,000MW from Solar
Noel ONOJA
w o B P r i g s u p e r v i s o r s Tcharged in the
deaths of 11 workers in the Deepwater Horizon d i s a s t e r c l a i m t h e manslaughter counts in their indictment must be dismissed because they don’t apply to conduct on a foreign-owned vessel operating outside U.S. Territory.
Court filings Thursday by Robert Kaluza and D o n a l d V i d r i n e ’ s attorneys also argue that 11 of the 22 manslaughter counts don’t extend to their clients because they weren’t responsible for m a r i n e o p e r a t i o n s , m a i n t e n a n c e o r navigation of the rig that exploded in the Gulf of Mexico in April 2010.
U.S. District Judge Stanwood Duval Jr. is tentatively scheduled to hear arguments on the motions to dismiss on A u g . 7 . J u s t i c e Department spokesman Peter Carr declined to c o m m e n t b u t s a i d p r o s e c u t o r s w o u l d respond in court at the appropriate time.
Kaluza and Vidrine pleaded not guilty last year to the charges in their 23-count indictment, which accuses them of botching a key safety test a n d d i s r e g a r d i n g abnormally high pressure r e a d i n g s t h a t w e r e glaring signs of trouble before the blowout of BP’s Macondo well.
They also face one count of violating the Clean Water Act. Thursday’s court filings don’t seek the dismissal of that charge.
T h e D e e p w a t e r Horizon, a rig that BP leased from Transocean Ltd., was about 48 miles from the Louisiana coast and operating under the flag of the Marshall Islands at the time of the deadly blast.
Kaluza and Vidrine’s attorneys argue that 11 counts of involuntary manslaughter should be dismissed because the charges only apply to U.S. - owned vessels , whereas their clients were on a rig owned by a Swiss-based company.
BP supervisors challenge manslaughter charges
the next 10 years, the Minister said that this addition, no doubt is a laudable effort, describing it as truly visionary, which is in line with the President Goodluck Jonathan led Transformation Agenda.
He said that the addition of 1,000MW of solar power yearly for the next ten years will give the nation the required energy mix needed f o r s u s t a i n a b l e development, adding that this scenario will also enable spread of power across the country. He added that Nigerians even in the rural a r e a s w o u l d b e n e f i t i m m e n s e l y f r o m t h e proposed project.
Korea, according to the
Minister is a top ranking technologically advanced e c o n o m y ; n o t i n g t h a t undertaking projects of this magnitude will provide N i g e r i a n s w i t h j o b opportunities and skill a c q u i s i t i o n t h a t w i l l positively impact on our youths.
So, Nigeria as an emerging economy is set to provide the best market for direct foreign investment, especially in the power sector he said.
Prof. Nebo expressed optimism that his Ministry will continue to create more a v e n u e s f o r f o r e i g n investment and participation, so as to ensure the desired turn- around in the fortunes of the power sector.
Earlier, the Permanent Secretary, in the ministry, Dr Godknows Igali, said that the agreement signing was part of efforts geared towards the realization of the sector ’s desire for more foreign investment.
Also, speaking at the event, the Managing Director of HQMC Korea, Mr. Moon Sang Kim harped on the d e t e r m i n a t i o n o f t h e company to make a success of the project.
Solar panels
22Insurance
In s u r a n c e
practitioners have been advised to shun independent approach to doing
things and align more e f f e c t i v e l y t o t h e fundamentals of insurance practice globally which is pooling and sharing of risks.
Mr. Wole Adetimehin, President of the Chartered Insurance Ins t i tu te o f Nigeria, CIIN, said the move is necessary for insurers to tackle the challenge of h u m a n c a p a c i t y a n d maximise opportunities provided by the local content policy.
Adetimehin said that the concept of pool formation and working together are the only way operators can grow their c a p a c i t y, a d d i n g t h a t available facts show that operators have not begun to scratch the sur face of opportunities provided by the local content policy.
He said, “I would say inadequate human capacity has remained a re-occurring c h a l l e n g e f a c i n g o u r industry. It is more prominent with the underwriters . Nobody can fau l t the underlining reason of the local content policy initiative and it is meant to cut across all the sectors of the Nigerian economy. But in appraising the benefits so derived from the insurance sector, we are all having the fears as to what conclusion or report card we would give at this time.
“This is because, from all facts available, we are yet to begin. Yes, there has been some participation here and there, but it is still far from the real intention and I think the i n d u s t r y s h o u l d b e addressing these challenges in a more pragmatic manner and one of such strategies, would be to really come together, sit down and evolve practical solution.
“ T h e w h o l e i d e a o r approach of everybody going
h e M a n a g i n g D i r e c t o r o f Riskguard-Africa T
Nigeria Limited, Mr. Yemi Soladoye, has suggested t h a t e x p e r i e n c e d individuals with little capital should be allowed to participate in the proposed micro-insurance business.
According to Soladoye, there is an urgent need for the nation to have three tiers of insurance practice - underwriters, brokers and micro -insurance operators, adding that the system would really help take insurance to the grassroots.
He said, “If NAICOM opens the doors for retail business, what it gets from the over N200 billion that is generated now by o p e r a t o r s w i l l b e multiplied by five. For example, let NAICOM u r g e a l l i n s u r a n c e journalists that have been on ground for the past three years, to bring their application to run a micro-insurance company with statutory capital of a car, rent a room and parlour, have a fan not an air-conditioner and the total cost must not be beyond N1 million, including application fee of N25,000 and renewal fee of N5,000. That will open up the industry.
“In countries like the Philippines, they have three tiers of insurance system, just like what we have in the banking sector. The national level, which is the first tier operation, has its capital base, state has its own and the local government , has i ts capital base too. If we do this, insurance will get to everywhere in Nigeria.”
Soladoye noted that the insurance industry needs a treat from within, stressing that the treat would come when the N a t i o n a l I n s u r a n c e Commission, NAICOM, appreciates the fact that insurance should not be distributed only through the traditional distribution channel.
Expert urges NAICOM to liberalise micro-insurance
Shun independent approach to petroleum risks, insurers told
Rosemary ONUOHA
about it alone can hardly resolve this challenge. At our level as an institute, the challenge to us is to promote t ra ining modules and curriculums that would open or widen the mind-set of practitioners as to what to d o . C a p i t a l b a s e o f companies have grown
considerably, in fact, beyond imaginable scope.”
Adetimehin noted that beyond capital, there is a lot more that is expected from operators, stressing that operators ought not to underwrite or shoulder risks with their capital. He said capital is meant to provide infrastructure that would propel them to underwrite risks effectively.
He said operators need to develop the capacity to absolve risks, adding that the experience has been fairly
good in the oil and gas business. He noted that if stakeholders can come t o g e t h e r u n d e r p o o l f o r m a t i o n s , a s b e i n g canvassed at many levels, capacity would grow.
Adetimehin said that when operators build adequate capacity; they would even go beyond the shore of Nigeria to absolve risks. He urged o p e r a t o r s t o s h u n independent approach to doing things and align with globally practices of pooling and sharing of risks.
Oil rig on fire
23Insurance
The Nigerian I n s u r e r s A s s o c i a t i o n , NIA, has said t h a t t h e
insurance sector loses over N150 billion yearly to fake vehicle policies racketeers.
Director General of the NIA, Mr. Sunday Thomas, who revealed this, said that of the over 12.5 million vehicles on the nation’s roads, only I.5 mi l l i on have genu ine insurance particulars, which are either comprehensive and are sold at 10 per cent of the worth of the vehicle or third party which are sold at N5,000.
Operators lose N150bn to fake insurers
Rosemary ONUOHA Thomas said that about 1.5 million vehicle policies have so far been uploaded on the N i g e r i a n I n s u r a n c e Industry Database, NIID, which was designed to capture the data of all insured vehicles in the country.
He said, “So far, close to 1.5 million vehicles have been uploaded, which is still a f a r c r y f r o m o u r expectations. Our target is to upload all the vehicles in the country.
“O n e o f t h e m a j o r objectives of the NIID, is to be able to capture the data of transactions within the market. In the past, this has been very difficult to get. We had peop le bounc ing
different figures all around, we want to put an end to that, and we need some time to do that.
“We will continue to update the record. There has not been any structured policy in the past to get figures of numbers of vehicles. We only transact in terms of the financial reports not the physical presence of number of vehicles. We are looking to a situation where we would be able to say this is the number of lives and vehicles insured in Nigeria.
“If you ask me today about the number of insured vehicles in the country, I would tell you that they are about 1.5 million, because that is what I can account for
and have on my system.”Meanwhile, the Group
Managing Di rec to r o f Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, also said that of all the vehicles plying Nigerian roads, 90 per cent of the third party are fake papers.
Ogunbiyi said “We have 12.5 million vehicles on Nigerian roads according to statistics outside Okadas and tricycles. If you want to achieve the objective of Market Development and Restructuring Initiative, MDRI, increasing insurance contribution to the Gross Domestic Product (GDP), this aspect of insurance that is compulsory is in the hands of touts and we are losing income on daily basis.
takeholders in the i n s u r a n c e industry have all S
embraced the proposed consultative committee, which is aimed at uniting and promoting common interest of the industry.
P r e s i d e n t o f t h e Char tered Insurance Institute of Nigeria, CIIN, Mr. Wole Adetimehin, who disclosed this in Lagos, said that the committee w o u l d s o o n b e commissioned, adding that the Commissioner for Insurance, Mr. Fola Daniel has endorsed the initiative.
Adetimehin said that the name, Insurance Industry Consultative Committee (IICC), has been adopted by a l l s takeho lders , s t r e s s i n g t h a t t h e committee would stem the present independent ways of sorting issues in the industry.
He said the committee would be made up of executives of the various arms, which would before coming to meetings, meet with their members and table issues bothering on their operat ions and practice, and present same to the committee to be c h a i r e d b y t h e C o m m i s s i o n e r f o r Insurance.
He said, “The executives of the various arms have met to re-appraise the modalities, objectives, c o n s t i t u t i o n o f membership, frequency of meetings, chairmanship of the body, administration of the body, as well as who qualifies to be a member of the committee. All these have been peacefully resolved and conveyed to the Commissioner who endorsed the initiative.
“If we have this kind of bonding, the situation whereby the various arms of the industry approach and sort out issues with our regulator one-on-one will be a thing of the past. Such attitudes have always affected the interest of one arm of the industry or the other. As such, at the end of the day, we often have conflict of interest at the end of the day.
Stakeholders endorse consultativecommittee
L-R: Senior President of Alternative Risk Solutions Practice, Willis, Canada, Mr. William Chan; President of the Nigerian Council of Registered Insurance Brokers, Barrister Laide Osijo and Mr. Joe Beesack, Senior Vice President of Willis Canada, during the 2013 International Business Visit of NCRIB members to Canada , recently
24Labour
TRADE Union C o n g r e s s o f Nigeria, TUC, has said besides inept leadership
at most levels, the epileptic and inconsistent electricity supply is the greatest problem facing the Nigerian nation.
T h e b o d y e q u a l l y condemned the prolonged importation of petroleum products into the country and the huge loss of foreign exchange that follows it and calls on government to immediately refurbish all the old refineries to ensure they operate optimally.
S p e a k i n g i n A b u j a , President of TUC, Comrade Peter Esele, said, “The power sector has continued to be a source of worry to all of us despite reforms, yet the importance of electricity to e m p l o y m e n t a n d development cannot be over-emphasized. Believing that the government’s recent attempts at liberalising the sector will bring succour to the country, we may well say that there could be a silver-lining in the dark cloud. Although the labour issues connected to liberalisation have not been fully resolved, it is salutary that government is at least concerned as it appears that effort is being made not to short-change labour this time around. We hope this turns out to be true, and soonest too.
“It is common knowledge t h a t , v i r t u a l l y e v e r y household in Nigeria now owns a generator. Several persons even have inverters and battery backups installed in their homes because the government has consistently proven itself incapable of making adequate supply of electricity available to the masses. Where it is available, t h e c h a r g e s a r e i n d i s c r i m i n a t e a n d unpredictable, irrespective of whether the particular consumer actually used it or not. Electricity is an absolute n e c e s s i t y t o t h e industrialisation that we all seek. Apart from inept leadership at most levels, the epileptic and inconsistent supply of electricity is perhaps the greatest problem that we face as a nation today. Going by our last count, there are just 16 power plants in the country, with the Power Holding Company of Nigeria owning 10 of them while the remaining 6 are owned by independent producers. D e s p i t e p r e s i d e n t i a l
Epileptic power, a major challenge facing Nigeria —TUC
Victor AHIUMA-YOUNG
assurances that the country’s total electricity supply will hit the 6000 MW mark by the end of 2009, the level of production is still less than 4000 MW three years later. And this is a country with a population of over 160 million people.”
According to him, “We obviously need to have more players in this power and energy field. Meanwhile Brazil with a population of 192 million people, produces over 100,000 MW of power, while South Africa – whom w e h e l p e d t o a t t a i n independence and which has a population of about 50 million people – generates over 40,000 MW of power.
The difference is clear and painful. We understand that the causes of this appalling s i t u a t i o n i n c l u d e incompetent management, poor maintenance culture, i n a d e q u a t e f u n d i n g , c o r r u p t i o n , f a c i l i t i e s vandalism, etc. But these are a l l i s s u e s t h a t t h e government can and must tackle decis ive ly and promptly if we are to venture into the group of twenty most developed nations by the year 2020. Indeed, there is no gainsaying that there is urgent need for substantial i m p r o v e m e n t i n t h e generation and distribution of power nationwide.”
“The government should
even explore alternative sources of energy (e.g. the large-scale use of solar power and gas turbines). We also advise that the power sector be fully deregulated to allow for competition and greater efficiency. For starters, the federal government should immediately initiate and facilitate the amendment of relevant statutes to give states that are ready to distribute power for their needs the leeway to do so. The government should also increase funding for the sector and ensure effective security against vandalism and theft of electrical equipment, etc. Please let there be light.”
On Oil and Gas sector, Esele said, “We strongly condemn the prolonged importation of petroleum products into this country and the huge loss of foreign exchange that it occasions. This ugly situation also means that we are indirectly stimulating massive creation of jobs in those countries from whom we buy the petroleum products, while our own people seek for jobs here at home.
As a panacea to this, the g o v e r n m e n t s h o u l d immediately refurbish all the old refineries to ensure that they operate optimally.
Electricity Transformer
25Labour
PE T R O L E U M and Natural Gas S e n i o r S t a f f Association of N i g e r i a ,
PENGASSAN, has said the Petroleum Equalisation Fund, PEF, should be merged with the regulatory agency post-Petroleum Industry Bill, PIB.
The association condemned the provision in the PIB, whereby PEF will be left to the discretion of the Minister of Petroleum Resources after the passage of the bill into law.
It argued that since the functions of the PEF are related with the Downstream Pe t r o l e u m R e g u l a t o r y Agency, DPRA, one of the regulatory agencies provided for in the PIB, the fund should be merged with the agency.
The current PIB has, in Section 100 Sub-section 4, provided that “Where the Government decides that Petroleum Products markets
igeria Union of Petroleum and NNatura l Gas
Workers, NUPENG, has expressed concern over the abandonment of projects b y t h e N i g e r D e l t a Development Commission, NDDC, in many parts of the country.
President of NUPENG, I g w e A c h e s e , i n a statement decried the complaints by various communities in the Niger Delta of complete neglect and abandonment of projects by the NDDC, saying, “It is sad to state that despite the huge funds allotted the NDDC from oil revenue to develop Niger Delta, there is nothing really on ground to show for its existence. We have had many cases of NDDC contractors collecting mobilisation fees and abandoning the projects. The objective of setting the NDDC has not really been met, as the roads in the Niger Delta are still in deplorable state. The NDDC is just another avenue for its officials and government cronies to enrich themselves. The NDDC has fa i led to transform lives in the Niger Delta.”
“It is only its signboards that are seen, with no noticeable progress in the contracts awarded. A case in point is the reclamation project in Gbaramatu area where the contractor was reported to have removed its equipments even when the project has not been completed. The Union calls on the federal government to review the mandate of the NDDC to make its impact felt by the people whose soil has been destroyed by the activities of oil multi-nationals. It is a pity that the NDDC has not lived up to expectations despite the huge billions of naira voted for its activities every year.”
Achese added that “The federal government must therefore set up a special task force to monitor all its activities, projects and make sure that they are commissioned on time.
Victor AHIUMA-YOUNG
NUPENG worries over abandoned NDDC projects
Victor AHIUMA-YOUNG
PIB: Workers want merger of PEF with downstream regulator
have been e f fec t i ve ly deregulated, the Minister shall take the required action t o e n s u r e t h a t t h e Equalisation Fund ceases to exist and its assets and liabilities transferred to the Government to be controlled a n d m a n a g e d b y t h e Ministry and at such time the provision of the sections of this Act relating to the Equalisation Fund shall stand repealed. “
Speaking on the fate of PEF post-PIB, PENGASSAN P r e s i d e n t , C o m r a d e Babatunde Ogun, said the bill did not stipulate the time frame for PEF to be repealed and neither did it stipulate the fate of the workers of the PEF when it was repealed.
According to him, “This should be clarified to ensure that the fate of the current workers, especially members of PENGASSAN and the National Union of Petroleum and Natural Gas Workers (NUPENG) in that agency is adequately catered for. As a result of this observation, we have proposed in our
position on the PIB that the agency should be merged w i t h t h e D o w n s t r e a m Pe t r o l e u m Re g u l a t o r y Agency as their current functions can still align with functions of the Agency.”
“We have presented this our position on the status of the PEF to the NNPC in one of our meetings with NNPC, where the Group Executive Director, Exploration and Product ion, Mr. Abiye Membere agreed with us that provision should be made in the PIB to move staff of PEF t o t h e D o w n s t r e a m Regulatory Agency post-PIB instead of leaving their fate hanging while the PEF dies a natural death. NNPC also agreed that since their functions will be transferred to the Downstream Regulator Agency, the workers should also be transferred to DPRA where they will be more relevant instead of moving them to the ministry where they may not be relevant.”
T h e P E N G A S S A N President also said that appointment into the board
of PEF post PIB before it fizzle out should not be based on the recommendations of the Minister of Petroleum Resources but, should follow the process of appointment for other regulatory agencies such as the Nat iona l E lec t r i c i t y Regula to r y Commission (NERC) or Nigerian Communications Commission (NCC) and such appointments and removal should be ratified by the Senate, adding that such appointments should be for a specific term of four years and renewable for another term.
Such appointment, he stated should be through competitive process of selection and open to all qualified Nigerians either home or abroad.
Comrade Ogun noted that the omission of PEF in the staff transfer in the PIB may be intentional, saying, “In the interest of industrial peace and harmony in the oil and gas industry, workers in the current PEF should be captured under staff transfer in the bill.
Nigerian workers pressing for demand
26Solid Mineral
In this brief interview with NOEL ONOJA, the Director-General of the Mining C a d a s t r e O f f i c e , M r. Mohammed Amate, opened up on how much investment the sector has been able to amass since the setting up of the office and how its operation has put on the Wo r l d ’ s m i n i n g m a p . Excerpts:
What does your office do? h e M i n i n g C a d a s t r e Office was set up primarily to manage and
administer mining titles all over the country. This came about as a result of a reform programme that was carried out by the ministry in the sector. If you recall, we had a World Bank intervention and it was in collaboration with the World Bank that this agency was setup. It is to serve mineral title holders on certain basic principles. One is first come, first served basis. If you submit an application to us, the first who submits first will be considered first. The second c r i t e r i o n i s n o n -discretionary. Irrespective of who you are, where you come from, you are all treated on the same pedestal. Neither the minister nor myself can exercise any discretionary power on mining titles, it is purely on the basis of your fulfillment of the requirements of the Minerals and Mining Act, a n d t h e l a s t o n e i s transparency. Our system is very transparent and we follow the rule of law.
What are the prerequisites to get the titles?
B e f o r e y o u b e c o m e qualified to obtain a title, first of all, we want to know whether you are financially and technically competent to carry out mining business. Then, we will also want to know whether you are a good citizen, and that is to say, you have not been convicted by
T
‘Cadastre Office has boosted investors confidence in mining’
any court of law. And in your previous businesses, you have been paying tax as at when due and also you have
identified an area that you want to obtain a licence on.
There are about [5] five categories of licences we issue in the Mining Cadastre Office. The first one is Reconnaissance Permit, which enables you just to walk around and see the topography, the geological settings, to find out whether the area is mineralised or not. But it does not give you the powers to dig holes, trenches or even drill holes. It is only for you to walk on the surface. The second category of licence is that, if t h e c o u r s e o f y o u r Reconnaissance license, you are able to identify an area that you think is mineralised, then you go for what we call E x p l o r a t i o n L i c e n c e . Exploration Licence is given
over a specific area and it is given in the first instance for a period of three years. Within the three years, you are allowed to go to the area, carry samples, dig trenches, dig holes and whatever for the purposes of taking geological samples only. Then, after three years, you are convinced that zero down to whether the mineral is of commercial quantity, then we can now give you what we called a Mining Lease. But if after that, three years, you are still not satisfied with what you have carried out, we can renew that licence for you for another two years, making it five years. After that, there is still another chance for you to renew it for another two years, making it a total of seven. After the
seventh year, it cannot be renewed again.
Mining Lease is only licence that enables you and gives you the power to mine, and it is a mining lease because you have reached an advanced stage of your developmental programme which is given for a period of 25 years. And for as long as you have not exhausted the deposit, you still have another chance of renewing it until you are satisfied that the deposit you have has been exhausted.
Mining Lease is usually for large-scale mining and where the capital is substantial. If you don’t have substantial capital, and you still want to mine, we’ve created another licence for you - called small-scale mining licence. It is usually for five years for a much smaller area and there are certain things that you cannot do if you have a small-scale mining licence. For small-scale, you cannot dig tunnels, you cannot go deep underground; you are limited to a certain level because of your level of finance.
There is another licence we call Quarry Lease. It is usually for quarriable minerals like granite, limestone, clay and the rest. But for minerals like precious stones, metals and the rest, it has to be carried out under a mining lease.
How many titles have you g i v e n o u t s i n c e t h e e s t a b l i s h m e n t o f t h i s Cadastre Office?
I was appointed as Director-General in 2011. In 2011, we issued about 1,500 mining titles. In 2012, we issued about 1,600 mining titles. Of course, when I say mining title, it consists of Exploration Licence, Mining Lease, Quarry Lease and the rest. And from the beginning of this year to the present time, we have issued close to 400 mining titles. When we issued these titles, we don’t just issue titles and go back to sleep; we also monitor what you are doing.
Mining Lease is usually for large-scale mining and where the capital is substantial. If you don’t have substantial capital, and you still want to mine, we’ve created another licence for you - called small-scale mining licence
Mr. Mohammed Amate
27Maritime
FO L L O W I N G the set back y o u n g N i g e r i a n marine cadets
have suffered in getting job placement, occasioned by their inability to get sea time training, the Maritime Academy of Nigeria, has concluded plans to send 250 cadets abroad for their compulsory training.
The move to embark on this training programme for cadets, was borne out of an experiment the management of the Academy is currently considering by sending these cadets abroad for eighteen months.. The Academy is currently experimenting with the idea of sending about 250 cadets abroad for the purpose of sea time
MAN to spend N2bn on sea training for cadets Godwin ORITSE
training so as to ensure that these category of Nigerians get quality training needed
to flourish in the profession..In an interactive session
w i t h m e m b e r s o f t h e Maritime Reporters Congress of Nigeria (MARCON), the Academy’s Rector Dr. Joshua Okpo, said that the first twenty cadets are being used as a pilot programme for the entire project.
Okpo also said that the Ministry of Transport has been intimated of the plan, adding that a proposal has also been sent to the Minister, Senator Idris Umar. The Academy’s boss explained that, while about one of the cadet are from the nautical science department, 150 of the cadets are from marine engineering department.
He further explained that it was the desire of the A c a d e m y t o m a k e Government fund the project, but the government needed to be convinced before we
approach them. According to the Rector, about N8million has been budgeted for each of the cadets and the amount will cover their living expenses, general upkeep of the cadets.
“The money is meant to pay for their upkeep of the cadets, part of the money will a lso be spent on the m a i n t e n a n c e o f t h e i r w o r k i n g t o o l s a n d e q u i p m e n t . ‘ We w a n t government to fund the project, but government has to be convinced, we must first of all do a pilot project by spending our money”. He stated.
Speaking further Okpo stated that the academy is also is also looking forward to its partnership with both the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration a n d S a f e t y A g e n c y
(NIMASA) in provision of boats for the training needs of its cadets.
The maritime academy is also partnering with both the International Maritime Organisation (IMO) and the World Maritime University (WMU) for the purpose of affiliation.
Okpo also commended the support the academy has been receiving from the N i g e r i a n M a r i t i m e Administration and Safety Agency, a development that has assisted in completing most of the major projects in the campus.
“The academy has never had it so good, NIMASA has been very supportive and I want you all to help me say a big thank you to the Director G e n e r a l , M r. Pa t r i c k Akpobolokemi for h is support” he stated.
Cadets in sea training
The money is meant to pay for their upkeep of the cadets, part of the money will also be spent on the maintenance of their working tools and equipment. ‘We want government to fund the project, but government has to be convinced
28Tribute
Memories of Levi Ajuonuma, the f o r m e r
Group General Manager, Public Affairs, Nigerian N a t i o n a l P e t r o l e u m C o r p o r a t i o n , N N P C , resonated at the recently c o n c l u d e d O f f s h o r e Technology Conference (OTC) in Houston, Texas, USA, when he was given a post-humous award, by the Pe t r o l e u m Te c h n o l o g y Association of Nigeria, P E T A N . T h e P E T A N Outstanding Leadership A w a r d w a s g i v e n i n r e c o g n i t i o n o f h i s d i s t i n g u i s h e d a n d outstanding contributions to the development of the Oil and Gas Industry in Nigeria. The award which was presented by Andrew Yakubu, Group Managing Director, NNPC, was received by Michael Ajuonuma, first son of the deceased, on behalf of the family.
Yakubu said that for eight years, Ajuonuma was in charge of organizing NNPC’s participation at the OTC. According to him, ”the passion and exceptional enthusiasm he brought on the j o b w o u l d b e m i s s e d . Ajuonuma died in the ill-fated Dana Airline crash that
SEBASTINE OBASI
Levi AjuonumaLevi Ajuonumaoccurred on the third of June, 2012, at Agege, Lagos, which claimed the lives of about 153 passengers on board. With his foray into full time public relations practice as the chief image maker of the NNPC, Ajuonuma was able t o d e p l o y r e l e v a n t communication tools to get Nigerians to understand the workings of the oil and gas industry and the NNPC to dispel the wrong impressions most Nigerians used to have about the Corporation and the entire industry
Before his appointment as the Group General Manager, Public Affairs Division of the NNPC in November 2003, he was a broadcaster and public relations consultant with a string of radio and television talk/entertainment shows such as Levi Ajuonuma Live, The Sunday Show and Showtime on NTA Network, as well as The Nation Today
Live on NTA Channel 10 and Open House Party on R a y p o w e r 1 0 0 F M , a programme that ran from the late 80’s through the 90’s. Between producing and presenting the series of talk and entertainment shows, Ajuonuma, as Managing Director/Chief Executive O f f i c e r o f L a s o m Communications Ltd (a consortium of media and p u b l i c r e l a t i o n s consultants), engaged in market ing and publ ic relations consultancy for a number of organisations ranging from the United States Information Service, Fe d e r a l Ro a d S a f e t y Commission to the Nigerian Institute of Structural Engineers. He also designed and produced corporate marke t ing and b rand promotional TV programmes for corporate giants like Nigerian Breweries Plc,
C a d b u r y P l c , Intercontinental Bank Plc and a host of others.
Ajuonuma started his working career in 1977 as an announcer/newscaster with the Imo Broadcasting Service, IBS, in Owerri, Imo State. He left IBS in 1979 and proceeded to the United States of America for further studies at Hunt ington Col lege, Indiana, where he bagged a Bachelor of Arts in Communications. He later got a Master of Arts and P h . D i n M a s s Communication from the University of Minnesota in 1 9 8 3 a n d 1 9 8 7 respectively. He topped these qualifications with an MBA from Plymouth State College of the University System of New Hampshire in 1989. He had a stint in the academia as Assistant Professor at t h e D e p a r t m e n t o f Journalism, Keene State College of the University System of the State of New Hampshire, USA, before returning to Nigeria to his first love – broadcasting and public relations.
One of his legacies in television broadcasting is t h e N T A N e t w o r k programme, Network N i g h t l i n e w h i c h metamorphosed in to Tuesday Live, which runs till date. He was the pioneer producer and p r e s e n t e r o f t h e programme. He is also credited with innovations such as the first simulcast of TV and radio program achieved on the second anniversary of The Sunday Show Live in 1995 by NTA channel 10 and Raypower FM.
Remembering Remembering
For eight years, Ajuonuma was in charge of organizing NNPC’s participation at the OTC. According to him, the passion and exceptional enthusiasm he brought on the job would be missed
29
The hope of the people of Agge c o m m u n i t y seeing their c o m m u n i t y
transform into an economic hub received a boost last w e e k , f o l l o w i n g t h e presentation of the survey report for the proposed deep sea port in the area by the Nigerian Army Engineers Corps to the Bayelsa State Government.
Agge is a predominantly fishing community on the Atlantic fringe of Bayelsa State in Ekeremor Local Government Area of Bayelsa State.
T h e D e e p S e a p o r t SweetCrude learnt, is to occupy an area of about eight thousand hectares, which is an increase from the initial seven thousand proposed for the facility which will not launch the community on the fast lane of development but the entire Ekeremor council area.
Presenting the survey report in Yenagoa, the state governor, Seriake Dickson sa id the p lan by the administration to build a word class Deep Seaport in the state was now on course.
”Today, my dear people of Bayelsa State, you are now seeing in real terms, our plans to transform our economy beyond oil and gas. And I have always said that, we are going to spare no ef fort in ut i l iz ing the maritime endowments of the state.
“Our decision to build a world class deep seaport is now on course. What you are seeing today is the beginning of a long journey. I know we still have a long way to go before we have a deep seaport, but then we have started,” Dickson said.
The governor, who noted that the surveyed area, ex tended over f i f t een
A R R I -T H R E E Wyoung men
allegedly working as oil pipeline surveillance workers and two women deal ing in i l legal ly refined diesel have been arrested by officers and men of the 3 Battalion Army, Warri, Delta State.
About 15 mammy boats,
used fo r convey ing
i l l e g a l l y r e f i n e d
petroleum products were
also destroyed during an
operation to wipe out
illegal refineries in the
state.
Commanding officer of
the 3 Battalion, Lt. Col.
Ifeayin Otu, made these
d i s c l o s u r e s w h i l e
parading the suspects
b e f o r e n e w s m e n ,
describing the early hours
operations around the
Opumami, Bennet Island
and Macaraba areas of
Warri South and South-
West as very successful.
The names o f the
surveillance workers are:
O l o t o y e R u f u s ,
Emotoghan Akpos while
the third, alleged to be a
worker in one of the illegal
refineries is Victor Tene.
The suspected female oil
thieves caught along with
them at a camp include
Tokere Lucky, 22 and
Ebibare Ayas, 36 years.
Commander Otu said
they would be thoroughly
investigated and then
handed over to the
appropriate prosecuting
authorities for further
action.
T h e s u r v e i l l a n c e
workers were allegedly
caught at the entrance of a
creek where i l legal
bunkering is conducted
while the women were
caught busy transferring
refined products from
jerry-cans.
JTF nabs security personnel, others for oil theft
Emma ARUBI
Bayelsa community to get deep sea port
Samuel OYADONGHA
thousand hectares of land, directed the Commissioner for Lands and Survey, to beg in the p rocess o f enumeration, as well as computation of the claims and entitlements of the owners of the affected areas, to enable government commence the payment of adequate, fair and prompt compensations as required by law.
H e c o m m e n d e d t h e Nigerian Army Engineering Corps for the professional manner it undertook the assignment and expressed delight with the partnership,
noting that it was the beginning of what will b e c o m e a m u t u a l l y beneficial relationship.
”This is just the beginning of what will be a mutually b e n e f i c i a l l o n g t e r m relationship,” he assured the Nigerian Army.
The governor used the occasion to commend the Chief of Army Staff for diligently carrying out his duties at such a critical stage in the nations’ nascent democracy, describing him as a loyal and hardworking officer.
Earlier, the Commander,
Engineers Corps, Nigerian Army, Major Gen. Funso Owonibi, noted that, the a s s i g n m e n t h a s b e e n rewarding adding that the hydrographic survey of the proposed deep seaport will be completed and presented to government.
Gen Owonibi expressed appreciation to the state g o v e r n m e n t f o r t h e confidence reposed in the Nigerian Army Corps of Engineers, stating that he A r m y E n g i n e e r s w e r e c a r r y i n g o u t o t h e r e n g i n e e r i n g r e l a t e d a s s i g n m e n t s i n A b i a , Anambra and Delta States.
Deep sea port
30Community
PO R T
H A R C O U RT: APPEAL on the f e d e r a l government to
release about N500 billion owed the Niger Delta Development Commission, NDDC, re-echoed again w h e n t h e H o u s e o f Representatives Committee on the Niger Delta toured some states in the region inspecting projects being executed by the Commission.
By the Act establishing the Commission, the federal government is to contribute an equivalent of 15 percent of the total sum accruable to the nine oil producing state from the Federation Account for its o p e r a t i o n s . B u t t h e government had defaulted on this on several occasions. As at 2009, what had been denied the Commission was put at about N500billion approximately.
Chairman of the House Committee on NDCC, Hon Nicholas Mutu, who led members of his team round some member states in the region stressed on the urgent n e e d f o r t h e f e d e r a l
eports revealed that over 85 per cent of Nigerian R
school age children use public transportation on daily basis and are suscep t ib le to road accident. As a result, Total Nigeria Plc has commenced a safety programme for primary and secondary school children in the country as part of its Corporate Social Responsibility initiative.
This year’s programme tagged, “Road Safety Cubes Campaign for Children,” which was launched in Lagos and will cut across all the states in the country, is aimed at protecting and e d u c a t i n g N i g e r i a n children between the age of 6 to 12 on road signs and proper behavior on the road while going to school.
Managing Director, Total Nigeria Plc, Mr. Francois Boussagol , explained that thousands of lives including school age children are lost every year to avoidable road accident. He commended the Federal and States government for their concerted effort to stem the tide of road accident among Nigerian children.
Boussagol stressed that little efforts have been put in place by government to protect the l ives of children who form part of the society from road accident.
Explaining the drive behind Road Safety programme, Boussagol s a i d To t a l i s f u l l y committed to reducing road accidents and its associated risks.
“Over 85 per cent of Nigerian school age chi ldren use publ ic transportation on a daily bas is and are seen attempting to cross major roads in a bid to avoid traffic.
“Its commendable that at Federal and State levels, concerted efforts have been made to stem the tide of this colossal waste.
Lawmakers urge FG to release N500bn owed NDDC
… Tour projects in Niger Delta Jimitota ONOYUME
government to clear up the backlog for the effectiveness of the commission. For four days the lawmakers went through Rivers, Imo, Edo, Delta and Bayelsa states inspecting projects of the commission.
During the inspection, the committee observed the
challenges posed by the terrain and the rain for construction related jobs. Mutu at a point voiced it again that the funds owed the Commission should be urgently released for it to a c h i e v e i t t a r g e t s expectations in the region
“We now appreciate the need to commit more funds for the rapid development of the oil-rich region. What we have seen convinces us that the NDDC i s making tremendous impact on the lives of the people. We will, therefore, urge the Federal Government to give the commission the financial muscle to be able to handle more big ticket projects.
“We commend the NDDC for working against these odds and still delivering on its mandate of fast-tracking the development of the Niger Delta. In the light of this, we c a l l o n t h e F e d e r a l Government to encourage the commission by releasing the over N500 billion it is owing on outs tanding statutory allocations to it,” he
said. Adding, Mr Barry Mpigi,
representing Tai/Eleme Federal Constituency who also sought greater funding f o r t h e c o m m i s s i o n , expressed the hope that the Petroleum Industry Bill when passed into law, would create avenue for additional fund to address challenges of under development in the region.
The lawmakers went round nine ongoing road projects. In Rivers state they inspected the 23.7 kilometer Owaza-Etche-Igwuruta road, the 18.9 kilometre Erema Ring road in Ogba/Egbema Ndoni Local Government Area. In Delta and Bayelsa they also visited the Koko-Ugheaye-Escrovos Road, which would link Delta to Ondo State, with 6 bridges; the 28-kilometer Patani-Angoloma Road in Delta State and the Sampou-Odoni Road in Bayelsa State.
In Imo State, they inspected the 17-kilometre Ishinweke-Onicha River Road in Ihite Ubuma LGA and the 18-kilometre Obokofia internal roads in Ohaji/Egbema LGA.
CSR: Total Nigeria kicks off safety programme for schools
Kunle KALEJAYE
We now appreciate the need to commit more funds for the rapid development of the oil-rich region. What we have seen convinces us that the NDDC is making tremendous impact on the lives of the people
Lawmakers in section
31Community
keremor is one of the many oil r i c h l o c a l g o v e r n m e n t council areas E
in Bayelsa State that cannot be accessed by road.
T h o u g h t h e Fe d e r a l Government through its interventionist agency, the Niger Delta Development C o m m i s s i o n ( N D D C ) , embarked on what many described as ‘cosmetic road project’ from the Sagbama flank to link the isolated oil rich Ekeremor enclave to mainland Yenogoa and the f e w u p l a n d communities in the state.
The project was starved of funds causing it to go at snail speed for m a n y y e a r s , a development that p r o m p t e d t h e administration of Seriake Dickson to ask the commission to hands off the road and took over the project.
Interestingly, the B a y e l s a We s t senatorial district like the central and east senatorial districts is host to the Anglo-Dutch oil giant, Shell Petroleum Development Company and the Nigerian Agip Oil Company, NAOC, while the natives are predominantly farmers and fishermen.
While the oil companies and the Nigerian state are making mega fortunes from t h e e x p l o r a t i o n a n d exploitation of crude oil, the natives are wallowing in penury and are at the r e c e i v i n g e n d o f t h e environmental despoliation associated with the industry in the Niger Delta.
With the rivers and land polluted leading to poor harvest, most of the natives have been forced to abandon their traditional farming and fishing occupation.
This development, coupled w i t h t h e a b s e n c e o f manufacturing industry in the area to absorbed the d isp laced f i sh ing and farming population among others have brought about widespread poverty among the natives.
it was against the backdrop of this scenario that the S e n a t o r r e p r e s e n t i n g Bayelsa West Senatorial District, Senator Heineken Lokpobiri, initiated an
Ekeremor indigenes receive empowerment tools
Samuel OYADONGHA
empower ment s cheme designed to assist indigenes of the area in setting up small-scale businesses to boost the crusade against poverty in the area..
The scheme, which is a collaborative effort with the National Poverty Eradication Programme, NAPEP, has succeeded in rekindling the hope of many of the natives.
I t was therefore not surprising that Ekeremor community came alive last weekend, when indigenes of the senatorial district, converged on the serene riverside settlement to receive yet another set of empowerment tools from Senator Lokpobiri.
Over 500 persons from the area, especially women and the youths went home with
m o u t h w a t e r i n g empowerment tools to start their own businesses, a gesture initially seen as the exclusive preserve of the trans-national oil firms.
A similar exercise it would be recalled was held last year at Sagbama where over 1000 indigenes of the senatorial d i s t r i c t w e r e g i v e n empowerment packages to kick start and also boost exist ing businesses of beneficiaries in the area.
S p e a k i n g a t t h e presentation ceremony, the initiator of the scheme, Senator Lokpobiri said it was part of his contributions to assist in improving the fortunes of his people whose means of livelihood have been negatively affected as a result of the activities of the
multi-national oil companies operating in the area.
“As you are aware, our people are mainly farmers and fishermen, but the advent of the oil companies and the attendant pollution of the envi ronment have impacted negatively on f a r m i n g a n d f i s h i n g activities. What we are doing is to empower them so that they will be in a position to cater for themselves and take care of their families,” Lokpobiri said.
He, however, expressed displeasure at the attitude of some of the beneficiaries of the scheme, who sold equipment meant for poverty eradication at give-away prices.
The senator recalled that some of those that benefitted
f r o m l a s t y e a r ’ s empowerment scheme held at Sagbama in Sagbama counci l area so ld the equipment given to them at the venue of the ceremony.
According to him, some of the benef ic iar ies so ld equipment that cost over N100,000 to interested buyers at a paltry sum of N20, 000.
He described their action as discouraging and not in tandem with effort aimed at eradicating poverty at the grassroots.
His words, “last year a similar exercise was held at S a g b a m a w h e r e empowerment packages w e r e g i v e n o u t t o beneficiaries.
Some of the empowered indigenes carrying their gifts(inset) Senator Heineken Lokpobiri arriving the occasion