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NUPRC: Nigeria on Course to Bolster Its Gas Reserves by 20 Percent

By Macson Obojemuinmoin

“Engaging with operators on the need to drill below the conventional oil window to target gas rich zones”

The Nigerian Upstream Petroleum Regulatory Commission says it is pulling out all the stops to increase the rate of natural gas utilization, expand the country’s gas market (both domestic and export) and thus encourage producers to commit to further exploration for gas.

“We are encouraging investors to leverage on the generous gas fiscal incentives in the Petroleum Industry Act (PIA) such as zero hydrocarbon tax, reduced royalty rates, tax consolidation provisions amongst others to take Final Investment Decisions on their proposed upstream projects”, says Gbenga Komolafe, the commission’s Chief Executive.

“Based on the provisions of the PIA, the Commission has issued the annual Domestic Gas Delivery Obligation (DGDO) to all lessees. This allows the Commission to drive gas production growth as operators are made to balance the export appetite with increasing domestic supply of gas”, Komolafe explains.

Nigeria produces about Eight (8)Billion standard cubic feet of gas 8Bscf/d, out of which about 20% is delivered to the domestic market, approximately 40% is exported to international markets, 30% is utilised for producer’s internal consumption and the excess gas is flared, the commission maintains.

“With a proven gas reserve base of 208.62Trillion Cubic Feet (Tcf) (as at 1st January 2022), we are on track to increase our reserves volumes to 220Tcf in less than 10 years and 250Tcf thereafter”, the CE declares in a report sheet of his six months in office.

One initiative that the Commission is implementing to improve finding success for gas, is “constant engagement with operators on the need to drill below the conventional oil window to target gas rich zones for production and increase the nation’s gas reserves”, the CE explains. Another initiative is to “steer operators with saturated reservoirs to ensure their well placements drive optimal exploitation of oil and gas resources”, Komolafe remarks.

A career public servant, Mr. Komolafe was appointed in September 2021, less than month after the PIA became the new, overarching petroleum law of the country.

He says the report of his six months stewardship is in accordance with the promise to be open. “We told Nigerians we will tell them everything”, he contends.

His report lists other initiatives that he says are being implemented by the Commission to increase gas production and utilisation:

Commencement of mandatory conduct of gas well deliverability tests for all gas producers to establish operating limits. This enables the Commission determine production potentials and guides the industry towards its maximum optimum capacity.

Revising the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 and its associated Guidelines to incorporate methane emissions capture, to ensure the elimination of gas flaring/venting and monetisation of gas resources in the country.

Implementation of the provisions of the PIA 2021 on Gas Flare Elimination and Monetisation, as a means of unlocking more gas availability to the market. Companies are made to commit to a robust plan that eliminates gas flaring by bringing them to the market.

Accelerating the facility development and debottlenecking projects as a tool to incentivise gas production projects from the upstream sector to meet midstream and downstream demands.

Enforcement of approved associated gas development solution in all applicable oil development.

 


Alternatives to Russian Gas in Europe Materialize and Firm Up

By Rystad Energy

Russian gas exports to Europe have declined in the past month, with Norway increasing flows 17% in the past week and LNG imports at a 5-year hire.

Here is Rystad Energy’s regular gas and LNG note from senior analyst Nikoline Bromander:

European LNG imports are soaring, hitting a five-year monthly high in April as supply tightness in the continent continues, averaging 4.45 GWh/d, continuing the strong trend over the past months.

Russian gas exports to Europe have declined in the past month, with Norway increasing flows 17% in the past week and LNG imports at a 5-year hire.

Alternatives to Russian gas in the European market have started to materialize and firm up since Russia’s decision to halt flows to Bulgaria and Poland.

Poland is now cut off from Russian gas as of May 3, 2022, but a new pipeline to Lithuania, opened on May 1, 2022, will provide some supply relief.

Bulgaria too has been cut off by Russia, but announcement of a new floating LNG facility opening in 2023 in nearby Greece will keep them buoyant.

France, Spain, and the UK have accounted for most LNG imports in the past month.

The limited gas pipeline capacity in Europe has resulted in weaker price couplings between different regional benchmark prices.

The UK’s NBP spot benchmark is trading at a large discount to the TTF, priced at €46 at closing yesterday compared to €96 for the TTF spot.

Russian pipeline flows to Europe are stable May 4, 2022, ~250 MCMD, after Flows via the Yamal pipeline from Germany to Poland went to zero May 3, 2022.

Norway has ramped up its gas flows to Europe, currently at ~329 MCMD, up 17% week over week.

Nervousness in the market is driving gas prices (TTF) to EUR 106/MWh (~$35/MMBTU) on May 4, 2022, up nearly 7% day on day, following the new list of sanctions including a phase out from the EU announced earlier.

In addition to concern in the market over EU sanctions, there is also a upside risk related to threats from Russia terminating natural gas exports, as has already happened with Bulgaria and Poland.

If Russia shuts off supplies to more countries unwilling to pay in rubles then prices could skyrocket in the near term.

Most European countries will struggle to replace a sudden drop in supply.

Germany and Italy in particular are likely to suffer severe economic consequences given their heavy reliance on Russian gas imports.

Poland has currently ample natural gas storage, currently at 79%.

Poland has prepared well for this eventuality and has the capacity to ramp up liquefied natural gas (LNG) imports and will also benefit from the Poland-Lithuania Gas Connector (GIPL) that started operating on 1 May with a capacity of 2.4 Bcm/year.

Bulgaria, which was 100% reliant on Russian gas imports, will need to quickly take opportunities to diversify its gas imports.

The announcement, on May 3, 2022, that a new floating liquefied natural gas (FSRU) facility near the Greek port of Alexandroupolis, will start operations at the end of 2023, will be welcome news in Sofia.

Asian gas prices have been falling since the week of April 25, 2022,  due to lower demand and lockdowns.

Pricing in the region continues to trail the European market, while still competing with Europe for LNG deliveries.

 


EU Ambassadors Campaign in Egypt and Nigeria, For Increased LNG Supply

European Union Ambassadors have been campaigning in Egypt and Nigeria for increased supply of Liquefied Natural Gas from these countries into Europe.

In Abuja, Samuela Isopi, led a delegation of European diplomats on a courtesy call on the Chief Executive of NNPC, the Nigerian state hydrocarbon firm.

In Cairo, Frans Timmermans held separate talks with each of Egypt’s Ministers of Foreign Affairs and Petroleum Resources as well as the country’s Prime Minister.

All the engagements, in the last three days, had at their heart, the increase of African natural gas export to Europe.

Isopi, who is the EU Ambassador to Nigeria and ECOWAS, told NNPC Group Managing Director Mele Kyari and some of his management team, that as a result of the current geopolitical situation in Europe, the continent was interested in strengthening its cooperation with Nigeria particularly in the area of possible increase in the supplies of Liquiefied Natural Gas LNG).

NNPC holds 49% interest in the Nigeria Liquefied Natural Gas (NLNG) Ltd, the largest gas liquefaction facility in Africa.

Isopi is aware. “Nigeria is the fourth gas supplier to Europe. At least 40% of the Nigerian LNG is currently exported to Europe”, she said. “We are not only major clients for Nigeria, we are also major partners in the Oil & Gas Sector because some of the companies that are working with you are from Europe.  So we share the same interest and same objectives.”

In separate meetings in Cairo, EU Executive Vice-President Frans Timmermans told Prime Minister Mostafa Madbouly, Foreign Minister and COP27 president Sameh Shoukry, Oil Minister Tarek El Molla, and Planning Minister Hala El-Said, that the EU is looking to increase its imports of liquefied natural gas (LNG) from Egypt in the short term — and contribute to building a local green hydrogen production facility in the long term. The war in Ukraine has pushed EU countries to accelerate their transition to clean energy and diversify supply, Timmermans said.

“We desperately need your gas”: (above) EU Executive Vice-President Frans Timmermans (left), in Cairo talking with Egyptian Foreign Minister and COP27 president Sameh Shoukry. In the featured photo: EU Ambassador to Nigeria and Ecowas Samuela Isopi (left) engages the NNPC CEO, Mele Kyari.

In Abuja, Mele Kyari the GMD/CEO NNPC Ltd, assured the European delegation that the Company would continue to deepen its historical relationship with EU companies in Nigeria in order to add more value to its business, particularly towards increasing gas supply to the global market and enhancing domestic gas utilisation.

Other diplomats from the European delegation on the visit to NNPC were: Ambassador of Portugal, Luis Barros; Ambassador of Spain, Juan Sell; Ambassador of Italy, Stefano De Leo and Deputy Head of Mission (France), Olivier Chatelais.

 

 


Our Archive/EUROPE: Did Africa Waste the Ukraine Crisis?

DATELINE: LAGOS, NIGERIA, JULY 2014

Did African states, through short sighted energy strategies, inclement investment climate, project delays and resource nationalism, shut themselves out of the opportunity created by the Europe-Russia gas supply crisis?

Below we re-publish TOYIN AKINOSHO’s perspective on the EU-Russian gas crisis of 2014, produced from an African lens…

 “A crisis is a terrible thing to waste”, Stanford economist, Paul Romer, declared 10 years ago.

A decade before the current face-off between Russia and Ukraine over the latter’s choice to be part of the European Union’s sphere of influence, European countries had wished they didn’t have to rely so much on Russia for their gas supplies.

EU’s idea of energy diversity has largely meant diversification away from Russia.

Although Europe’s challenges with Russia as an energy supplier are multifaceted, the one issue that consistently meets headline news has been Ukraine’s involvement in part of the supply. Arguments between Russia and Ukraine always threatened to disrupt a significant flow of gas to Europe.  Russia cut supplies to its neighbour in January 2006, causing serious disruptions. The same happened in 2009; this time Ukraine drew on gas destined for customers in Europe and Russia responded by cutting off all supplies.

On a break from meetings at the PEN Congress in Berlin in May 2006, I invited myself to an EU-Russia Conference on gas, sponsored by Gazprom, the Russian gas behemoth. It was holding on the same street in Berlin’s Mitte (centre of the city), where the PEN Congress was taking place. Speaker after speaker from Europe spoke of “security of supply”. Speaker after speaker from Russia insisted on “security of demand”. These were relatively new terms to me, at the time, but I knew clearly that Africa could supply more gas to Europe than it was then doing. Africa could help Europe lessen its reliance on Russia. There were quite a number of projects, already several years on the drawing board as of then, meant to boost the supply of gas from Africa to Europe. One was the 4,128km long, multibillion dollar pipeline, aimed at evacuating Nigerian gas through Niger Republic to Algeria to Europe.

The African continent, with over 400Trillion Cubic feet of natural gas reserves, mostly unexploited as of 2004, had been a possibly strong alternative supplier of gas to Europe. If there was a pan continental economic zone in Africa, the way it has been in Europe for 30 years, with strong commitment to-and implementation of- cross border regional infrastructure projects, we would be a formidable force, able to snatch and eat a lot of what Russia considers her lunch.

As of 2002 Algeria in North Africa accounted for 25% of gas imports into the European Union. Algeria’s neighbours Libya and Egypt were also looking for a stake in the European market. Immediate opportunities for expansion were provided by the liberalization of the gas markets in Spain and Italy. With proposed pipelines to Italy, Spain and France in sight, Algeria planned to increase her overall gas export from 65Billion cubic metres (2.3 Trillion cubic feet) per year to 85Billion cubic metres (3Trillion cubic feet) per year by 2008. A Memorandum of Understanding was in place for a 1,000km Algeria-Sardinia-France gas pipeline, transporting eight (8)Billion cubic metres of gas (282 Billion cubic feet) per year.

Algerian share of European import has since declined to less than 20% as Norway’s production grew in size (now 27%), becoming the second largest gas supplier to Europe after Russia (29%). Algeria’s much hyped plan to boost export to 85Bcm/y never materialized. Indeed, the gas export has declined. Total Algerian gas export in 2013 amounted to 54Bcm ( 1.9 Trillion cubic feet), not because Algeria was busy growing domestic gas demand like Egypt and Nigeria, nor because the country couldn’t find the gas volumes to assign for export like Angola and Equatorial Guinea, but simply that the strategy to grow the production was inadequate.

While Norway and Russia invested furiously in gas production and supply infrastructure, Algeria slacked. Many of the field development projects have been delayed by several years by government’s lack of urgency in approval, the country’s difficulties attracting investment partners, infrastructure gaps, and technical problems. 13 years after the MoU was signed for the Algeria-Sardinia-France pipeline, the project still hasn’t taken off.  Investment decision has been held up by wrangling over long-term supply contracts for gas. The drawn-out process has witnessed reduced demand in gas in those parts of Europe that the project was aimed at, as other suppliers have muscled in. The volumes to be exported to Italy, for example, have been curtailed.

With 56Tcf of gas and a population of just seven million, Libya is in as much a favourable geographic position to supply gas to Europe. This was the third country in the world, after Algeria and the United States (Alaska), to begin exporting liquefied natural gas (LNG). But Libya’s gas export last year was 6Bcm (212Billion cubic feet), according to OPEC Bulletin, a publication of the Oil Producing and Exporting Countries. It’s not likely to grow further in the near term. With western sanctions on the country for most of the 90s and early noughties, Libya wasn’t in a comfortable position to draw up, let alone implement a strategy, to be a robust gas supplier to its neighbours across the Mediterranean. The fact that the Western Libyan Gas Project (WLGP), a 50-50 joint venture between the Libyan National Oil Corporation (NOC) and the Italian operator ENI, came online in October 2004, after sanctions were lifted, is symbolic of what could be possible under a favourable investment climate. By July 2007, 280Billion cubic feet (7.9Billion cubic metres) per year of natural gas was being exported from a processing facility at Melitah, on the Libyan coast, through the Greenstream pipeline to southeastern Sicily, in Italy.

Even though there are other gas export projects on Libya’s drawing board, the country, now in a perennial state of war, is clearly not in a position to take advantage of Europe’s dire need to diversify its sources of natural gas supplies.

Egypt is no longer a candidate for gas export. In the last two years, it has been steadily diverting gas meant for export to domestic use and as it struggles to satiate its citizens’ voracious appetite, the options of LNG and piped gas exports make less business sense.

Nigeria has not had a coherent gas policy from day one, either for domestic gas development or for export. Now that the gas business is steadily opening up, Militant activity and pipeline vandalism, both of them projected as variations of resource nationalism, affect the flow of the resource, even for domestic supply. The Trans Saharan Gas Pipeline (TSGP) was proposed as far back as the 1970s. By 2002, Sonatrach, the Algerian state hydrocarbon company and its Nigerian counterpart NNPC signed an MoU for preparations of the project. In June 2005, the two parties signed a contract with Penspen Limited for a feasibility study which was completed in September 2006. Three years later, energy bureaucrats from the two companies were still talking of proceeding with the MoU signed in 2005. In 2014, nine years after that MoU, the appetite for large scale export projects from Nigeria is considerably reduced. The latest of three stalled Liquefield Natural Gas projects in Nigeria has been on the drawing board for at least five years. So projects that had been lined up to supply Europe, America and South Asia with gas from Africa had become non-starters, long before the opportunity grew this large.

Angela Merkel visited Nigeria and Angola in 2011, in part to assess the possibility of German access to gas in West Africa. Germany wanted a dedicated LNG project that would deliver gas directly from Nigeria to its receiving terminals, but the Nigerian environment, in which two Greenfield LNG projects had suffered setbacks in the four years prior to Ms. Merkel’s visit, wasn’t ready to take advantage of the opportunity. The Europe-Russian gas crisis is an opportunity that Africa had wasted long before it even came up.

Reproduced from our archive. The article was published -exactly as it is-in the July 2014 edition of Africa Oil+Gas Report, the trade journal which marked its 20th anniversary in November 2021.

As they say: The more things change, the more they remain the same…

 


Helios Divests 25% of Axxela to Japanese Firm

Helios Investment Partners has sold a quarter of its equity in its wholly owned Axxela, the Nigerian gas distribution company.

Helios sold 25% interest in the holding company of Axxela to Sojitz Corporation, a widely known conglomerate investment and trading house listed on the Tokyo Stock Exchange. Helios retains a 75% interest in the company.

Helios purchased Oando Gas &Power, (formerly Gaslink), a division of the Oando group, in late 2016. The company became known as Axxela, which describes itself as “a pioneering energy infrastructure company at the forefront of delivering cleaner, cheaper and more reliable energy to industrial customers across West Africa”, supporting the “utilisation of Nigeria’s vast domestic gas resource to drive industrial growth while also facilitating fuel switching by industries to gas”.

Axxela says in a release: “This transaction marks Sojitz’s first significant equity investment in Africa, indicating its growth ambitions on the continent and serving as a blueprint for future collaboration in Africa between Helios and Sojitz across a range of sectors. As like-minded shareholders, Helios and Sojitz expect to accelerate further growth of Axxela’s business by leveraging Sojitz’s expertise in developing gas and power infrastructure projects and providing lower-carbon energy solutions to industrial customers globally”.

 


Descalzi in Algiers: ENI Leads Europe’s Search for African Alternative to Russian Gas

By Toyin Akinosho, Publisher

Claudio Descalzi, Chief Executive Officer of the Italian major ENI, was in Algiers, in Algeria, over the weekend, meeting with Prime Minister Aymen Benabderrahmane; Minister of Energy, Mohamed Arkab and Sonatrach CEO, Toufik Hakkar, to define, among other things “further opportunities for supplying gas to Italy”.

Since the security of supply of gas to Europe became unbearably challenged by Russia’s invasion of Ukraine, ENI has played the role of the champion of alternative supply from the African front.

The company has scraped together some calculations of its African gas resources: Its Coral South Floating LNG in Mozambique, close to first cargo; its planned LNG project in Congo Brazaville; the possibility of increasing gas export from out of Egypt; its fast track of the new Ivorian discovery and even a participation in an Angolan gas output initiative.

In Algiers over the last weekend, (April 2, 2022), Descalzi discussed with Algerian authorities “the issue of gas supply and reviewed the short- and medium-term initiatives underway to increase supplies through the TransMed / Enrico Mattei gas pipeline”.

Descalzi’s business diplomacy in Algiers, to encourage Algerian authorities to prioritize ENI’s planned and ongoing gas export projects, mirrors his meeting, in Cairo, last Thursday (March 31, 2022), with the Egyptian President Abdel Fattah el-Sisi and the country’s petroleum minister Tarek El-Molla, at which “the main issues were the production of natural gas and LNG exports, areas in which Egypt has acquired a central role in the Mediterranean since ENI’s discovery of Zohr”.

ENI says that the meeting in Algiers was also “an opportunity to confirm the will to accelerate the development of new oil and gas projects in the area of the Berkine South contract, which entered into force on 6 March”. The project includes the fast-track construction of a new oil and gas development hub in the region, leveraging synergies with the existing MLE-CAFC assets (Block 405b)”.

 


Nigerian LNG Volumes Dropped by ~20% in 2021

Output and export from the Nigeria Liquefied Natural Gas (NLNG) Ltd’s six -train Bonny Plant dropped to 16.8Million Tonnes in 2021, from 20.7Million Tonnes in 2020 and 2019.

“The decrease was mainly due to feed gas constraints and higher maintenance activities”, Shell said in its 2021 annual report.

The partners, (Shell, TOTAL, ENI and NNPC) could not take optimum advantage of the Global demand for natural gas, which rose by an estimated 4.6% in 2021, after the COVID-19 pandemic caused consumption to decline by around 1.2% in 2020.

“The (Global) 2021 rate represents a return to around the historical norms of growth for gas”, Shell said in the report, “and is roughly the same as the pre-pandemic growth rate of 2019”.

Shell holds 25.6% in NLNG Ltd. Its share of the output dropped to 4.3MMTPA in 2021, compared with 5.3MMTPA in 2020 and 2019.

 

 


OB3 “Enabled” The 300MMscf/d Gas Processing Facility in OML 56

The completion of the western arm of the OB-3 gas trunkline enabled the coming to being of the 300MMscf/d Kwale Gas Gathering (KGG) facility on Oil Mining Lease (OML) 56, Africa Oil+Gas Report has learned.

Prior to the completion of that arm of OB-3, most of the gas produced in marginal fields in the so called mid-west cluster (including Umusadege, operated by Midwestern Oil&Gas; Ebendo, operated by Energia;  Umuseti, operated by Pillar Oil and Matsogo, operated by Chorus Energy) were stranded, because the closest manifold to the cluster was the Eriemu manifold, which is 55Km from the cluster.

With the OB-3 running much closer to the cluster, the gas from these fields can be pumped into the OB-3, after being collected, processed and or metred at the KGG hub, which has been tied-in to the NGC-owned and operated 48-inch OB-3 gas trunk line.

It should be noted that the eastern arm of the OB3 is not yet completed and the entire project, under construction by the NNPC for the past 12 years, is struggling in the finishing line. But that is not the focus of this article.

The KGG was built by Nedogas Development Company Limited (NDCL), a joint venture company between Xenergi Limited and the Nigerian Content Development Monitoring Board (NCDMB), in partnership with the Nigerian Gas Company (NGC), a subsidiary of the NNPC.

It is designed to handle stranded gas resources in the cluster by providing the opportunity for independent operators in the area to monetize natural gas from their fields through the gas gathering, compression, injection and metering infrastructure of the KGG for quick access to market.

The KGG is now fully commissioned with an initial 30MMscfd of pipeline quality gas currently being injected into it from the Nedogas Plant, located 3km away in Energia’s Ebendo field. Plan is ongoing to ramp that up to 50-60MMsf/d. Other cluster producers are progressing projects to connect to the hub. The first one is gas from Chorus Energy’s Matsogo field, planned for Q2, 2022.

In addition to the cluser producers, who are all located in OML 56,  First Hydrocarbon Nigeria (FHN), whose asset, OML 26 is nearby, is progressing plans to bring its gas to the KGG.

 


First Gas from Mozambique’s Deepwater Rovuma Basin Expected in October 2022

By Lancet Iromatotoe, in Maputo

Mozambique will start monetizing the natural gas accumulations in the deepwater Rovuma basin, in the Indian Ocean, from October 2022.

That is the date the first cargo of Liquefied Natural Gas (LNG) will be exported from the 3.4Million Tonne Per Annum (3.4MMTPA) Floating LNG on the Coral South field in the basin’s Area 4 concession.

The gas is contracted to bp for 20 years with an option for a 10-year extension; it could help in Europe’s gas supply crisis.

October 2022 will be roughly 12 years and eight months since Anadarko-the now defunct American independent- discovered the giant accumulations of natural gas in Area 1 in deepwater Rovuma basin. It will be about 11 years after ENI discovered similar resources in Area 4, adjacent to Area 1.

Thus, for the otherwise aggressive operator ENI, Coral South FLNG is one of its longest discovery- to- market hydrocarbon projects, at least in Africa.

ENI, in 2015, discovered the giant Zohr in deepwater Mediterranean, offshore Egypt. By 2017, the field was in production, supplying mostly Egyptian power plants.

Area 4 is operated by Mozambique Rovuma Venture (MRV), a joint venture led by ENI and consisting of ExxonMobil and CNPC (China), which holds a 70% participating interest in the concession contract. Galp, KOGAS (South Korea) and Empresa Nacional de Hidrocarbonetos (Mozambique) each hold 10% stakes.

The Coral South FLNG platform has storage tanks on the hull and 13 modules on top, including a liquefaction plant, an eight-story module that can accommodate 350 people and a helicopter runway.

 

 


‘The Case for Utorogu Industrial Park’

The Utorogu gas field in the western Niger Delta is the site of the second largest gas gathering and processing facility for the supply of natural gas to the Nigerian domestic market.

The field is one of the several producers in the Oil Mining Lease (OML) 34, which is jointly operated by NDWestern Ltd, a homegrown, private Nigerian independent and the Nigerian Petroleum Development Company (NPDC), a state-owned firm which is a subsidiary of the NNPC Ltd.

In February 2022, OML 34 averaged 355Million standard cubic feet per day, retaining its position as the largest gas producing asset in the country, run by an entirely Nigerian Joint Venture.

The partners have commenced the process of developing Utorogu into an industrial park. At the heart of the proposed hub are natural gas delivery, crude oil refining and power supply to co-located factories. There are plans for an export route, featuring a rail line for transporting the manufactured products to the Warri wharf and out to sea.

 As part of our series of interviews with Chief Executives of producing companies, regulators and ranking agencies, Eberechukwu Oji, managing director and chief executive officer of ND Western, tells Africa Oil+Gas Report’s Akpelu Paul Kelechi, that NDWestern is filling the gap left by Shell’s exit from Warri and the Niger Delta, and establishing significant projects to industrialize the area. Excerpts from the conversation:

AOGR: The Nigerian government has declared this decade as a decade of gas. Where do you think you want ND Western to be in 2037?

Eberechukwu Oji: If you look at the trajectory of the company, ND Western will grow to be a global integrated Energy Company by 2037 playing not just in Nigeria but well across Africa and most definitely playing globally.

As the Chief Executive of a key Nigerian Independent, what keeps you most awake at night, of all the risks that challenge your company’s growth plans?

On the now and immediate, we have the security challenges in the Niger Delta, pipeline vandalism, crude oil theft, illegal refinery, as you know. These are pressing issues and they affect our production quite significantly. It’s a battle against criminals to ensure that the oil we produce actually gets to the terminal. I think that’s the most significant threat and most significant challenge on the security front that affects our production and that could impact our growth.

Utorogu Gas Plant: We have been successful in our operation in stemming crude theft over a 12km pipeline and we’ve done that with a combination of technology. We have drone flights that basically patrol that line to give us on the spot and real-time pictures of what is going on.

Investors keep hearing all this news and it makes them a little bit hesitant to put money into projects in the Niger Delta. So that affects our funding not just on the immediate but on the long term. In the medium term, we have to understand the implementation of the PIA because some of these regulations are good on paper but implementation is always a challenge. The industry needs to be engaged as government begins to implement the PIA so that we are sure that we bank the benefits of the PIA.

In the long term, I worry about regulatory activism around the energy transition and climate change. It’s important that we pay attention to the levels of carbon emission and limiting emission as has been increasingly recognized. However, many people today don’t have energy of any sort. People are dying from the use of charcoal and firewood and the lives of those people do matter. So it’s important that we balance climate change and its impact in the future with the realities of today, especially in Africa, where there are huge numbers of people who are energy denied.

Is there a global solution to the vandalism and crude theft in the entire nooks and crannies of the Niger Delta?

We have been successful in our operation in stemming crude theft over a 12km pipeline and we’ve done that with a combination of technology. We have drone flights that basically patrol that line to give us on the spot and real-time pictures of what is going on. We have what we call Ground Trotting, which means we have people patrolling the line over the 12km and they’re able to report any unusual activity. And then we have the cover of the government security agents who then can respond when something is noticed. And I said we’ve been successful over a very short length of pipeline which is 12km, but in this 12 km of pipeline, we were able to remove 300 crude theft points: 300 over 12 km of pipe.

So, if you then use that as a corollary and then look at the hundreds if not thousands of kilometres of pipeline across the country, it gives you a sense of how much theft is going on. And the effort that we should take to keep those lines free from illegal crude tapings is just enormous. So there needs to be more than just the mechanical interventions to ensure that the crude theft doesn’t happen. More needs be done with the socio-economic status of the Niger Delta which fuels the desire or intention to go into this line of criminal activity and we can have some conversation around what should be done about that.

Crude oil prices have experienced a see -saw, from the plunge in the first two quarters of 2020 to the sky-high prices of today.

Nobody can accurately predict oil price and its direction. One major incident and it goes north, because crude oil is sold in futures. That’s what people don’t realize. There is some forecasting that go behind crude oil prices and there are geopolitical incidents that drive the forecasting. As you know, the West and Russia are in tension over Ukraine, with anticipation that war could break out and there will be severe supply disruptions. Second, there was pent-up demand during the lockdown in terms of the supply chain and companies are trying to catch up and are putting pressure on the supply chain. There is also an unusual cold winter that we’ve seen in parts of the world. Cold winter means more energy use, to keep homes warm.

So, a combination of those factors are currently in the mix and driving prices northward. Some of those could be resolved quite quickly; for instance, if the Security Council’s efforts to diffuse tension with Ukraine, works, then you will see an unwinding [in] the market.

As a company, we have a very clear growth strategy that is not based on crude oil price forecast. If the prices are good we take advantages of it. When it slumps, we try to make sure that our unit cost of production is low. But in this business, we’ve been around for some time, prices are up today and they’re down tomorrow.

Are there specific, key pillars to ND Western’s growth in the next 10 years?

Our growth projection is built around [the 4Ps]. If you take the people for instance, we now have in place the ND Western networks. We have the ND Western Future Leaders Network and that is essentially recognizing that 10 years from now, we need new highly experienced, well-trained managers who will run this business and continue its growth trajectory and all these things we are projecting 20-30 years away. People will make it happen and you must train them today.

We have the Women Network and that is recognizing that STEM studies for women need to be promoted. They bring a certain diversity of views into the workplace and it’s important for us that we harness the capability that our women bring. So, those are two critical networks that we have in ND Western. We’re working to re-introduce the former Shell Intensive Training Program. Now, we just call it Intensive Training Program. Essentially, this is a learning Hub in Ejeba that was originally built by Shell which is now owned by OML 34 JV of ND Western and NPDC. We want to bring it back. We will invest in the young industry professionals of today so that they will be competitive in the future with all the advances in technology that are coming their way.

So, it’s going to be a massive intervention to develop specialist skills that is needed to fuel our growth ambition. We call it Growing Our Own Timber to make sure that we train our people to the level that we need them to be able to perform to deliver our growth aspiration.

And there are other things that we’re doing in that capability space. Currently our plant capacity in terms of gas is 600MMscf/d. Oil is about 120,000 barrels a day. So that’s significant capacity increase in the plants. We must keep the plants full which means that we must grow our production to take up all our available capacity and then that buys us time to grow and build and build more capacity.

In terms of production, yes, I just mentioned we’ve got 120,000BOPD capacity but of course, all of it is not oil, some of that will be water coming with production. But when it is full, even at 50% BS&W, so that’s already 60,000 barrels a day of production capacity from our current 20 to 30,000 barrels a day and we produce around 360MMScf/d [of gas] now and our short-term ambition is to take it to 400MMscf/d and in the longer term, take it to 600MMscf/d and then we begin to grow from there.

For processes, we make work process, effective, efficient, sustainable, etc. So those are the key pillars of growth for our company.

What were your thoughts on creating an Industrial Park?

There are many imperatives behind the industrial park. Number one, our industry utilizes a lot of capital resources, but employment is low. So, the oil industry [can’t] provide all the employment that is needed in the Niger Delta. The restiveness in the Niger Delta is not going to be solved by the oil companies alone. So, we need manufacturing, we need to industrialize the Niger Delta and as ND Western, we have a unique opportunity to promote to other industrial investors that they can come within our vicinity, and we can challenge the assumption that Niger Delta is unsafe because we are there, and we have been there for many years. If we can operate there anybody else can operate.

Transcorp is also there and have been operating for many years; the Delta Glass company is also there, and they have been operating for many years. Delta Steel Company is also there. This whole assumption that the Niger Delta is unsafe is not true. Folks need to come down, visit the place, make an assessment for themselves and then they can see the viability of locating new plants and manufacturing concerns around the Utorogu Industrial Park.

Since 2021 when we began to promote the industrial park, we have received very strong interest from many potential, anchor tenants in the Utorogu Industrial Park. It totally makes sense if you locate your plants in our industrial park and we have our gas plant supply gas directly to you, you have already saved yourself transport costs because the gas will be piped directly to your plant. Apart from the power that we will provide eventually for industrial park, Transcorp can also provide you power. The security architecture that we have will extend to cover the entire industrial park. So [there are] a lot of benefits in co-locating.

We are also working on an export route. There is a rail line and a short portion could extend it to Warri wharf. Manufacturers in the park who need it for export could take their products straight to the port for export. Before that infrastructure is built, [they could use] a short road trip to Warri wharf and then export. The Warri airport, can be extended into a proper cargo airport to export products from the Industrial Park.

We are building a mini refinery in that park to stake our claim to the park and our belief, that it would work.

What is the capacity of the mini refinery? Will ND Western be able to supply all the gas that would be needed in that cluster?

The government has implemented the gas network code, which means that ultimately, it won’t be only ND-Western gas that is used in industrial park. Our refinery is a 10,000 barrel a day mini refinery and there is a discussion on another 10,000 barrel a day condensate refinery with NNPC.

ND-Western is the upstream supplier of gas into the West African Gas Pipeline, through NGas. If the Ghanaians complain of perpetually low gas supply into the line (less than 70MMscf/d) does this bother you at all?

There was a technical issue, a very well-known technical issue with a force majeure on the line for some time but that force majeure has been lifted towards the end of last year. So, the technical issue is resolved. [There] is a commercial issue around the terms of the ongoing supply agreement; we like to supply more if the Ghanaians want to take more gas.

Is carbon capture something that is in the horizon of ND Western, and are you looking at virtual pipeline?

Some of these concepts are nice to talk about but there’s no limitation from our side to assess or utilize technology. To make a virtual pipeline work, there are several things, one is that you must have Compressed Natural Gas so then you can do virtual pipelines for short distances, or you can have Liquefied Natural Gas so that you can do virtual pipeline for long distances. We have some key players in the market who are proving the concept on both CNG and domestic LNG. We’ll watch these companies to see if the demand is real.

To your point about carbon capture, Nigeria should not be talking about carbon capture. I think Nigeria should be talking about commercializing all our gas. Carbon capture is about producing excessive amount of CO2 and you want to capture it and strip it. Our biggest carbon comes from the flares, so this is gas that can be used but we are burning it to produce CO2. There is a good initiative around gas flare commercialization that is ongoing. I think we need to accelerate [it to] utilize all the gas we produce.

If you were to advice the government on implementing Petroleum Industry Act, what would be top on the list?

We should engage the industry. The government did very well in their engagement strategy before the PIA was passed. They need to sustain that engagement. In the Nigerian parlance, they say, you must tell someone before you shave his head. So, if the PIA is meant to grow the industry, industry players must be squarely integrated, properly engaged in the implementation.

In the wake of the departure of Shell from Warri, how does ND Western feel it should bring back what is perceived as Warri’s lost glory?

We are in Warri today and the glory is not lost completely. ND Western owns the Ejeba estate formerly owned by Shell. Today that estate is over 90% occupied, from around 15%. The same for Ogunu. We have basically refurbished the bungalows, repopulated, maxed out their use. There is the former SITP now called the Intensive Training Programme which we’re bringing up and we are just commissioning Delta Plus, the IPPG/ NPDC/ND Western Test Laboratories.

ND Western is already helping to restore the glory of Warri as a city and the Niger Delta. Our Utorogu Industrial Park and our refinery, and the port, the airport [will create new jobs].

What else do you want the government to put in place to escalate investments into this industry?

You must take care of your current investors. They are your biggest advocate for future investors. ND Western like many other companies are currently investing or we have invested in Nigeria. We need to be taken care of so that we do extremely well and that becomes the biggest PR or marketing campaign for the country to say if investors like NDWestern have done so well, then others can come.

If someone asked you: “what is your bestselling plan as ND Western to host communities,” what would you say?

We firmly believe in the government’s plan to set up a Community Trust. Our shareholder partner NDPR pioneered Host Community Trust investment which has now become law in the PIA. We now need to implement it rigorously and make it work, ensure that community trusts are set up, are well-funded, have the right caliber of people in their boards to administer these funds, [then have a] conversation with the community around what direction should things go in terms of developing the community.

We have a very robust Community engagement strategy, committee management strategy; we have a very well-funded GMoU, very functional GMoU, which deploys quite a lot of resources into the community, and we have excellent relationship with the community. We are yet to have any Community related shutdown of our facility and that is incredible in the Niger Delta.

 

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