PARTNER CONTENT Lekoil Nigeria, in which Lekoil Cayman, a Cayman Islands-registered AIM-listed holding company holds a 40% equity holding, announces that a number of its directors and senior executives have resigned with immediate effect from the Board of Lekoil Cayman.
Aisha Muhammed-Oyebode, Chair of Lekoil Nigeria, has resigned as a non-executive Director of Lekoil Cayman. Lekan Akinyanmi, CEO of Lekoil Nigeria, has resigned as an executive Director of Lekoil Cayman. Gloria Iroegbunam, Company Secretary of Lekoil Nigeria, has resigned as Company Secretary of Lekoil Cayman. All three will remain in their current positions at Lekoil Nigeria.
The resignations have been prompted by the recent behaviour and actions of the of the Board of Lekoil Cayman. In particular, Mr. Akinyanmi vigorously disputes his unilateral termination as CEO of Lekoil Cayman and all of the statements made by Lekoil Cayman in connection with his employment contract and the loan agreement between him and Lekoil Cayman.
Mrs Muhammed-Oyebode commented: “The Board and management of Lekoil Nigeria remains committed to its vision of developing the company’s assets and we wish to assure our numerous stakeholders, especially our shareholders, partners and colleagues, that the strategic national assets under our purview will be protected by all legitimate means available to us. This in turn will ensure the restoration of value for all shareholders, both in Lekoil Nigeria and Lekoil Cayman.
“The Board of Directors of Lekoil Cayman continue to show a blatant disregard for the Shareholder Agreement, a legally binding agreement which governs the relationship between Lekoil Cayman and Lekoil Nigeria and which was implemented at the time of Lekoil Cayman’s listing to meet the requirements in Nigerian law in respect of control of indigenous strategic assets.
“The continuous breaches of due process and corporate governance by the Board of Lekoil Cayman has left us with no option but to resign collectively from the Board of Lekoil Cayman. Meanwhile, Lekoil Nigeria has separately written to Lekoil Limited’s advisers and to the AIM authorities requesting them to investigate the behaviour of the current Board of Lekoil Limited.”
Over a thousand experts and industry professionals have gathered from all over the world during fifteen online conferences, waiting to meet live at IVS 2022.
Bergamo, 27th May 2021 – IVS WARM UP, the two-day event of technical and scientific conferences featuring the players in the global supply chain of industrial valves and components in virtual meetings, to discuss the most topical and innovative issues in the international debate, has ended.
The epicentre of the digital conferences was the city of Bergamo, where the fourth edition of IVS – Industrial Valve Summit will be held on 25th and 26th May 2022.
Twenty-five speakers, representing as many companies and research centres, led the fifteen conferences of the event attracting, «remotely», over a thousand operators and experts from all continents to Bergamo.
These numbers confirm the centrality that the Industrial Valve Summit represents within the supply chain dedicated to the industrial valve and flow control solutions. The event, promoted by the organisers Confindustria Bergamo and Ente Fiera Promoberg, was organised in collaboration with Valve Campus that has always been the scientific partner of reference of IVS.
”The success of IVS WARM-UP confirms the importance of creating connections and stimulating scientific discussion and insights, maintaining the attention on a key event that promotes a supply chain of excellence, an international point of reference for quality production” says Paolo Piantoni, General Manager of Confindustria Bergamo.
“The conferences have confirmed the value of IVS as a place to exchange knowledge and know-how, even in the digital edition”.
Over the years” Mr. Piantoni explains, “IVS has been an important driver of innovation for the sector, embodying the identity of a territory oriented towards development and projected onto the future. We are already working on the 2022 edition of IVS that will be held at the Exhibition centre at last, a great opportunity to revitalise the industry”.
Fabio Sannino, President of Ente Fiera Promoberg, concurs: “We are satisfied with the results of IVS WARM-UP”, he testifies. “The success of the digital conferences gives us hope for the success of the actual physical event in 2022. Over the years, the summit has positioned itself as our most international and visited event. To open the doors of the Fiera di Bergamo to IVS once again is a crucial step for the relaunch of the entire trade fair system, for Bergamo and for its industrial fabric. Confirming the numbers recorded in the last editions means generating considerable linked activities in favour of the territory, also in terms of visibility»”.
Four different debates marked the event’s programme. Wednesday morning (May 26, 2021), was dedicated to innovation in valve design, control, manufacturing, and materials. In the afternoon, the discussion moved to the management of fugitive emissions and developments in sealing technology. On Thursday, (May 27, 2021), the focus was on actuators and control systems, followed by a discussion on the international standards. At the end, IVS WARM-UP hosted a panel discussion shedding light on the evolution of the global demand for industrial valves and their components in the medium term. On this occasion, participants analysed the influence of the energy transition and new strategies following the pandemic scenario.
In view of IVS 2022, the aim of the Organizers is to continue the growth path of the exhibition as witnessed by the increasing number of visitors, exhibitors and traffic on communication channels. The third edition of the summit attracted over 250 companies and about 11,000 visitors to Bergamo, numbers 36% higher than the 8,000 registered in the 2017 edition and tripled compared to the 3,500 registered in 2015. Access to the fair’s website quadrupled in the months leading up to the exhibition, moving from 70,000 in 2017 to 300,000 in 2019.
Welltec has been awarded an exclusive three-year contract by global energy and solutions company, Petronas. The agreement, which officially commenced on April 1st, appoints Welltec as the sole provider of downhole conveyance and powered mechanical services in both East and West regions of Malaysia.
“It’s a great team effort that has that has led to the award of this exclusive long-term contract with Petronas, and Welltec has demonstrated a strong ability to deliver, even though a challenging 2020, high quality services in a safe manner to the largest assets in the country at a very cost-effective rate,” Espen Dalland, WelltecArea VP for the Asia-Pacific region, said. “This winning combination is the foundation for Petronas awarding us an even larger work scope for the next three years, where we will continue to deliver world-class technology and services.
“This is the third new contract we have received from Petronas following awards in 2014 and 2017, with an extension exercised in 2019. This latest contract predominantly features the same scope of services but now the geographical scope has increased from previously just being East Malaysia, to also include all assets in West Malaysia.”
With the new deal covering the entirety of Petronas’ intervention operations, the award not only builds on a long-standing relationship, but also shows a real vote of confidence in Welltec’sfleet and technological capabilities. The services are based on daily or monthly rental and will be selected by the various Petronas assets for any upcoming project during the coming three-year period.
The delivery will include the entire Welltec Intervention portfolio with the majority of services having already been deployed successfully for Petronas under previous agreements, but now additional services like the RCB (Reverse Circulating Bit) and several sizes of the Well Cutter family have also been added to the list. Welltec’s unique RCB breaks through obstacles, such as composite plugs, and recovers the generated cuttings with suction into integrated bailer sections. In a single run, this allows users to mill such obstacles as composite plugs and recover any associated debris the well to prevent further associated problems.
“This is a fantastic win for us. Petronas is a key customer in the region who over recent years have moved more and more towards an integrated approach for interventions.” said Alex Nicodimou, Welltec Sales & Marketing VP. “The fact they have provided us 100% of their intervention work speaks volumes about their belief in our technology and ability to deliver. We’re looking forward to continuing to support them to the best of our abilities.”
Hope Okwa, Founder/Chief Executive Officer Hd Drilling Services, sees the high cost of well construction as major impediment to Nigeria’s meeting its goal of achieving 4Million Barrels of Oil Per Day of crude oil in the short term.
“If we reduce well cost from $25Million to just $5Million hypothetically speaking, requiring only 20% of the previous investment demands”, he tells Africa Oil+Gas Report’sAhmed Gafar, “even local banks may be able to fund field development campaigns”.
He also fields questions on a range of issues, from opportunities that newly awarded marginal fields throw up to demand for Nigerian hydrocarbon.
A bachelors and masters degree holder in engineering from the University of Benin (Nigeria) and Heriot Watt University in the UK respectively, Okwa has 29 years of post graduation industry experience, the first 14 of which he spent in AngloDutch Shell, mostly on well engineering and drilling supervision. He had a stint at BG (the defunct British Gas) as a senior well engineer in the company’s Nigerian deep-water operations. He had a five year stretch as senior drilling and workover well engineer on critical gas operations at Saudi Aramco, after which he had another 18-month stint at BP Angola as senior drilling engineer.
Excerpts from the conversation.
Hd Okwa Drilling advertises itself as a company with a laser focus on oilfield drilling services. How did you come to this realisation?
The Nigerian Government targets Four Million barrels of oil per day (4MMBOPD), but the country is barely achieving 1.5MMBOPD due to high well cost. A 10,000 ft well producing only 3,000 BOPD costs up to $25Million to construct. To move from current 1.5MM to 4MM BOPD requires massive well construction activities, in the order of over 800 wells per year. The associated investment is $21Billion per annum. Where will this investment come from, especially in an era where top global financiers are moving their investment to renewables? The only way is to rethink well construction efficiency, with a view to drastically reducing well costs from current levels.
The sources of inefficiencies in well construction, is very much within our expertise, as a demonstrated through the several SPE papers we have authored.
It is very urgent to implement these solutions. In nine (9) years’ time, by 2030, the first world will pivot away from fossil fuel. What will then happen to Nigeria’s reserves of 37 Billion BOE?
We believe we have the solutions to reduce well costs in Nigeria by as much as 70%. I have a track record of this achievement from my employment with Shell, BG-Group, BP, Saudi Aramco, as well as many local operators. Hd Okwa Drilling is collaborating with operators and service companies to deliver wells that are only 30% of the standard cost. We hope to have an opportunity to talk about these alliances and collaborations in the course of this discussion.
When you say: A 10,000 feet well producing only 3000 BOPD costs up to $25Million to construct, are you referring to an onshore well or a shallow offshore well?
The statement is true for land, swamp and shallow offshore. These use surface blowout preventers.
Ad if a 10,000feet well is considered too expensive at $25Million in Nigeria, what is the reference round the world? What are you benchmarking against?
My reference is Canada/USA, where the rig rate for land is $32,000/day comparable with $25,000/day for Nigeria. A 10,000 ft land well takes 8 days to drill while it takes 83 days in Nigeria. The Canada/USA cost is less than $2 million, while Nigeria is $25 million. The Canadians and Americans achieve the success by efficient well design (without gold plating as we do in Nigeria, efficient supply chain management, avoiding NPT and applying the science of drilling optimisation. We are experts in these areas. I should add that we are currently preparing to execute a $5 million horizontal well for a Nigerian marginal operator, applying our technigues..
Your website indicates that there’s an entire business proposition around well services that require some single mindedness. and how is the journey so far?
The establishment of Hd Okwa Drilling Services is a milestone in its own right. We have had opportunities to offer advice on Well Design, NPT avoidance, cost improvement, personnel recruitment, etc for various operators. In the years ahead, we plan to expand these offerings to technical consulting, staff development on cost-reducing well delivery processes and dealing with the complexity of supply chains in Nigeria.
Rig activity has taken a dive in Nigeria in the past year. What has been Hd Okwa Drilling’s Business Strategy in this prolonged period of silence?
We may ascribe the direct cause of rig activity collapse to the COVID-19 outbreak. However, I suspect the underlying cause of this sharp decrease in drilling activity may not be far from the high cost of wells, as I highlighted earlier, and the challenge of obtaining investment cash in an environment where everyone is going to renewables.
We believe that if we reduce well costs drastically, through our activities, we will be able to stimulate activities. For example, if we reduce well cost from $25Million to just $5Million hypothetically speaking, requiring only 20% of the previous investment demands, even local banks may be able to fund field development campaigns.
Over 200 companies are expected to form 57 Special Purpose Vehicles (SPVs) to develop 57 Marginal Fields in the next 36 Months. How is Hd Okwa working on taking advantage?
Here is where we hope to make the most impact. In the past, many marginal field winners have struggled to bring oil to market due to several challenges, related to investment funds availability. Many of the marginal operators are going to need to drill 3-5 wells to realise their field potentials. Without support from our activities, each operator will try to raise $75 – $125Million for field development. With our expertise, this could just be only $15 – $25Million, which is within the capability of local banks. We have assembled a repertoire of options available to marginal operators e.g. from our bespoke consulting services, to full project management through our sister company H-PTP Energy services, or our supply chain improvement alliances The Well Engineering Platform, etc. Through these outlets Hd Okwa Drilling services hopes to transform the well delivery landscape in the country and catalyse a speedy development of the marginal resources.
What is your outlook on Nigeria’s Upstream sector for 2021?
The environment is very challenging. There is demand for Nigerian oil with the ongoing commissioning of Dangote’s 650,000 BOPD refinery, and several modular refineries. These refineries will help reduce dependence on imported fuel, and not only satisfy local consumption, but fulfil demand across Africa and many of the developing world, who would still be dependent of oil consumption for the foreseeable future. As our contribution to the preparation, we are developing local manpower by running courses like the
Well Design Masterclass,
Re-Entry and Workover Engineering Masterclass,
Abandonment and Decommissioning Planning Masterclass.
We also extending our collaborations to experts overseas, who we are bringing to run specialist training in Nigeria for Nigerians, at very low price. We are also developing ourselves in readiness for the future challenges. For example, I am completing my Master of Science in Innovation and Entrepreneurship at the No.1 Business School in Europe, HEC Paris. Thus, we are ready to make our contribution to energise the Nigerian oil sector.
Nigeria exports oilfield service expertise outside the country. Are you one of such providers? Does Hd Okwa Drilling have Pan African ambitions?
Not at the moment. The focus of Hd Okwa Drilling Services is Nigeria. In North America, drilling planning has really advanced, and the gap with Africa is very wide. So, we focus on Nigeria first, then we can expand to the other African countries later. Let charity begin at home.
Hd Okwa Drilling takes training a so seriously that it’s a full component of its spectrum of business. This is quite unusual in the Nigerian industry. Is training a highly monetised component of your business portfolio?
A direct answer is ‘NO’. However, we need a pipeline of skilled professionals to master the techniques and processes that we deploy. One way of doing this is through training and mentorship. We have established several specialists’ courses relating to efficient well delivery. These courses are available to both individuals and operators, at a fraction of the cost. Training cannot pay back if we are to consider the efforts we put in, as these courses are at the cutting edge of the future of well engineering. They cover Well Design Masterclass, Re-Entry and Workover Engineering Masterclass, Abandonment and Decommissioning Planning Masterclass, Efficient Cementing Technology, etc. We also organise team alignment workshops, well challenge sessions, drill-the-well-on-paper (DWOP) exercises, in addition to our normal specialist courses. Our resource persons are the leaders on the well engineering disciplines within Nigeria and the global industry.
The International Association of Drilling Contractors (IADC) Nigerian Chapter is always talking about training about quality and capacity of rig personnel, about safety on rigsite. Is your company looking at Collaboration with IADC?
We have it as part of our strategy to collaborate with the IADC Nigerian Chapter, on manpower development for the Nigerian industry. We are in the process of founding a Well Engineering professional organisation. When completed, the organisation will also be part of our springboard for driving down well costs in Nigeria by accelerating competence development of professionals through mentoring by Nigerian professionals with extensive international experience.
I am curious about a company calling itself strictly a Drilling Service company; why can’t you simply describe yourself as a full subsurface solutions provider?
Of course, we are a subsurface consultancy group. However, expertise in the other areas of petroleum engineering abound. As drilling requires long training and mentorship to attain professional maturity, it appears to be the area in serious need of attention. If well costs are allowed to continue to grow, the current lull in well construction activities will linger too long. There is need for urgency, as we cannot predict what would happen to Nigeria’s oil after 2030, which is only nine years time!
I see that you count Shell, Amni, and First E&P as part of your clientele. For indigenous companies who are mushrooming in Nigeria, the logistics of integrated project management can be so challenging they’d do better to outsource it. Is this the space you are after?
Shell, Amni, First E&P, Monipulo, Elcrest, Addax, etc, are some of the beneficiaries of our expertise and we have worked in one form or the other with these organisations. However, we are a technical consulting organisation. We use our expertise to help operators, reduce well costs. We do this by facilitating well design improvement, helping them eliminating non-productive times, and training and mentorship of personnel. Our project management activities are carried out through another organisation that we contribute expertise to.
Out of the several specialisations in Hd Okwa Drilling services: Well Cost Improvement Catalysis, Strategic Expertise & Technical Consulting, Well Operations Risk Elimination, which of them does Hd Okwa Drilling find most forward looking? And which are you best at?
Our expertise covers all areas, and we need all of them as arsenal to attack the monster of well costs escalation. We operate through several avenues:
In Non-Productive-Time elimination for example, our research showed that all NPT’s in the Nigerian drilling operations are caused by four main events namely Well control, wellbore instability, equipment failures and human errors. These events constitute 30% of the total time spent at the well site on a well. We have developed expertise that we use to support operators to eliminate these events.
Invisible lost time constitutes the least beneficial activity to the drilling operation, but are being carried because they can’t be detected. This time constitutes up to 50% of wellsite times. We collaborate with international experts to develop well operations analytics software. We currently support two – SMARD and CI Drill. Both software are creating disruption in the well analytics space. These two-software combined can eliminate up to 30% of all invisible lost times.
Drilling project management requires high level of expertise. The country has relied on Shell to develop drilling expertise for the industry in Nigeria. However, as the company has shrunk over the years, so have the number of professionals they develop. We contribute technically to H-PTP Energy Services which is full services well projects management organisation founded by like-mind professionals with strong international expertise.
We have developing collaborations and alliances with service suppliers to the drilling business to help them improve their services to international standards.
I act as Technical expert in well engineering such as expert witness, standards development, expert opinions, etc.
We have supported a financial service organisation to advise them on energy project funding.
We act as well examiner, in line with international standards, where we look at drilling project plans, and offer recommendations for improvement.
We conduct workshops to drive the ideas through the clients’ teams.
And, of course, training services. We are very good in this area.
The last annual report by Shell sounded so despondent about their experience out on the Nigerian oilfield environment. What is your message to international investors about the future of the Nigeria’s oil and gas market?
We need investors to help us develop the 4MMBOPD we need to develop the economy and enjoy the benefits of oil and gas. I think investors can help to improve the technical space in the local industry by patronising local expertise. For example, our organisation consists of high-level professionals with experience of global oil and gas industry, as well as internal consultancies such as McKinsey & co, as well as PWC, among others. These professionals understand international standards and procedures, and are able to offer advice to international level.
On the whole, the development of local refineries will help insulate the industry from the vagaries of international oil market cycles. With a population of 200Million citizens, Nigeria is the country to invest in. And the oil and gas leads the way.
Ikon Science, a British provider of geopredictive and knowledge management, says it is collaborating with Amazon Web Services to offer a “next-gen solution called Curate”, to access and manage the troves of subsurface data ,
Curate is built on the AWS implementation of OSDU™ Data Platform.
“While wells are being drilled, personnel can monitor those wells in real-time and access that data – as well as the data for wells around those being drilled”, Ikon Science says in a statement. “Curate can help determine where to drill and how to do it safely, saving human resources and capital while enhancing safety onsite”.
Curate is a solution that helps figure out ideal exploration opportunities and craft optimized production strategies.
“Together, we bring secure, reliable, global, and faster access of all subsurface data to engineers and geoscientists in a collaborative, cloud-enabled environment adding additional context and value of that data through workflows”, says Stuart Thomson, Chief Technology Officer, Ikon Science. “The goal is to maximize the potential of this open nature in a modern cloud-enabled software product that facilitates data accessibility and removal of barriers to knowledge. The solution provides a collaborative workspace for cross-discipline working, enables seamless data and knowledge flow and democratizes the value generated by specialist workflows — ensuring the right data and knowledge have the greatest impact on decision making. This enables companies to save human resources and capital investment while increasing safety in the field”.
To maintain growth in future years, the oil and gas industry faces a massive challenge to find innovative solutions that maximize productivity while battling rising costs and promoting long term business sustainability. “This critical data management problem is being addressed by a collaboration between Ikon Science and Amazon Web Services (AWS) “, Ikon declares
Theme:Energy Transition and Implications for Nigeria’s Economy – A Critical Assessment
Oil Majors, especially of the European extraction, are taking ambitious steps to commit to green energy targets and investments. According to the United States Energy Information Agency, EIA, the oil industry faces increasing demands to respond to the low carbon agenda. And leading the response are European companies like TOTAL SE, which in 2020 announced a $7b write-off in its Canadian “proved reserves” – that gold standard of value for oil companies. The action probably signaled early steps at transiting from an Oil Major to an Energy Major. With similar actions from Shell, BP, ENI, etc., it seems the energy transition train has literally left the station.
Is Nigeria’s 40 billion barrels proved oil reserves (or parts of), at risk of being written off someday to be replaced by green energy assets in the oil (sorry, energy) majors’ portfolio mix? Long shot?
Join the conversation at the AOGS Energy Webinar Series and see if and how the future of the Nigerian oil industry is likely to be re-calibrated and what it may mean for the economy and business. Sub-themes include:
Global Trends in Energy Transition
Regulatory framework on Net Zero Positions in the Oil and Gas Industry
Energy Transition and Nigeria’s Crude Oil Reserves Development Strategy
Local Content and Energy Transition Implications
Energy Transition and Nigeria’s Business & Economic Environment
Nigeria power sector in the face of Energy Transition
The impact of Energy Transition on the financial sector
Dr Felix Amieyeofori, Chairman, AOGS Energy Resources and Lead Promoter, EnergyHub
Prof Prof Joseph Ajienka,Emmanuel Egbogah Chair of Petroleum Engineering, University of Port Harcourt
Gerard Kreeft, Energy Transition Advisor, The Netherlands
Omowumi O. Iledare, Institute for Oil and Gas Studies, University of Cape Coast, Ghana
Professor Asiwaju Busari Akande, Islamic Institute of Accounting and Finance, Ilorin
Faruk Y Yusuf, Ag Director, Renewable and Rural Power Access, Federal Ministry of Power, Abuja
Toyin Yusuff, CEO Makitas Energy Ltd, Chairperson Future Energy and Renewable Committee, WEOG
Dr Patrick Obah, Director, Policy Research and Statistics, NCDMB
The Premium Times Centre for Investigative Journalism (PTCIJ), through its Natural Resources and Extractives Programme (NAREP), has selected nine journalists across Nigeria for its flagship NAREP Oil and Gas Media Fellowship.
This fellowship aims to advance natural resource journalism in Nigeria. It is designed to train and build journalists that can effectively report and analyse the oil and gas sector by equipping them with the tools and resources they need.
Following the organisation’s call, PTCIJ received 1,429 applications from journalists and non-journalists across the country. Out of these, seventeen journalists were shortlisted and nine of them have been finally selected from across eight media organisations following interviews by an internal selection committee.
The selected journalists underwent a three-day intensive training which introduced them to the oil and gas sector. The training started on the 2nd of March and ended on the 4th of March, 2021.
The participants were trained by experts on a range of issues including but not limited to revenue management and distribution in the oil and gas sector, the impact of the management of oil and gas on the quality of life of Nigerians, laws and regulations in the oil and gas sector, review of the underrecovery regime, use of the freedom of information act, data presentation and analysis, making sense of the figures in reporting the oil and gas sector among others.
The fellows will be engaged for a total of three months during which they will work with mentors and will be required to provide at least two stories per month.
“Oil and gas sector operations in Nigeria have traditionally been opaque with little or no transparency on the part of the government”, says Akintunde Babatunde , Manager of NAREP. “This lack of openness has led to zero accountability, mismanagement of funds, revenue leakages and above all, the inability of the government to meet its financial obligation and to raise the quality of life of Nigerians,” he explains.
“Through the NAREP fellowship, PTCIJ plans to combine the tools of data aggregation, civic technology and investigative journalism to advance transparency and accountability in the extractive sector.”
NAREP aims to strengthen the capacity of media and civil society to demand transparency and accountability in the extractive sector by enhancing media and civil society collaboration in the reporting of activities in the industry. It seeks to highlight issues, and help set the agenda for the government in designing strategies for revenue diversification by looking beyond oil.
The training was supported by Natural Resource Charter.
The Natural Resource Governance Institute (NRGI) has appointed Suneeta Kaimal the new President and CEO of the independent, non-profit organization.
Ms. Kaimal, currently Interim President and CEO of NRGI, joined the organization in 2009 and previously served as Deputy Director and Chief Operating Officer.
“NRGI’s trajectory is such that it requires someone who has a holistic understanding of the field of resource management and knows how to deal with the consequences of the upheavals we are going through,” said Smita Singh, Interim President of the Institute’s Board of Directors.
“After careful and in-depth global research that identified many excellent candidates, the Board of Directors came to the conclusion that Suneeta Kaimal offers the ideal combination of attributes: a vision for the future, interdisciplinary knowledge of issues related to the management of extractive industries in resource-rich countries, extensive external networks and in-depth knowledge of the internal strengths of the Institute. Her unique skills make her the ideal candidate to guide the Institute through the important changes that must continue to take place in order to continue its work with communities. The Board of Directors is unanimously convinced that Suneeta Kaimal has the capacity to continue the activities that make the reputation of the Institute and adapt to the profound changes we are witnessing around the world. “
Suneeta Kaimal to lead Institute’s ambitious programme for 2021, building on the successes f a difficult 2020. The Institute’s programme teams work with national and international civil society organizations, multilateral organizations and governments to facilitate the transition to a more climate-friendly future in countries dependent on fuel extraction. fossils; to help countries with significant mineral deposits meet growing demand for critical minerals in a way that benefits their citizens while reducing corruption and environmental impact; reduce resource-related debt; and to defend and develop governance, environmental and social standards.
“We are at a historic turning point in the area of natural resource governance,” said Suneeta Kaimal. “New thinking conducive to transformation is needed if we are to face the heavy economic consequences of the global pandemic and the looming climate emergency.” I have the honor and the privilege, as President and CEO, to have the opportunity to build on the success of the Institute to meet this challenge. In collaboration with the outstanding staff of the Institute, distinguished members of the Board of Trustees and advisers, committed donors and accomplished partners, I believe we can create a more just and sustainable future for resource-rich countries. “
NRGI’s goal is to ensure a future where countries rich in oil, gas and minerals achieve sustainable, equitable and inclusive development, enabling citizens to benefit sustainably from extractive industries and helping to reduce the associated negative effects. to the sector. The organization is present in more than a dozen resource-rich countries in Latin America, the Middle East and North Africa, Eurasia, sub-Saharan Africa and Asia-Pacific.
“Good governance of natural resources is more than ever essential if we want to strengthen economic resilience and advance social justice for the benefit of more than a billion people living in poverty in resource-rich countries” , added Suneeta Kaimal. “The NRGI team remains unfazed by the scale of the challenges and is emboldened by the opportunities ahead. “
Suneeta Kaimal succeeds President Emeritus Daniel Kaufmann, who worked for the Institute from 2013 to February 2020.
GM’s aspirations to End Sales of Gasoline-Powered Light Vehicles by 2035 Latest Sign that Peak Gasoline Demand from Light Vehicles Has Already Come and Gone
Oil demand (gasoline and diesel) from Light Vehicles peaked in 2019
The recent announcement by GM that it aspires to phase out sales of oil-powered light vehicles (LVs) by 2035—part of a broader proposal to make the automaker a net-zero-carbon company—is a prominent signpost that oil demand from LVs has already peaked, according to a new analysis by Jim Burkhard and the IHS Markit Crude Oil Market Service.
IHS Markit places the global peak for oil demand (gasoline and diesel) from LVs in 2019 when said demand averaged 29.1Million barrels per day (MMBOPD). The peak in demand is due to the impact of rising vehicle fuel economy and emission standards, and as time goes by, from more sales of electric vehicles.
“The GM announcement is a notable signpost on the road to decarbonization of road transportation. It demonstrates growing acceptance of tighter vehicle emission standards and of the energy transition beginning to move at a faster pace. When it comes to oil demand from light vehicles, it’s the latest sign that the 2019 peak is permanent.”– Jim Burkhard, vice president, oil markets and mobility and energy future, IHS Markit
For the oil market, what matters is the amount of demand that will be displaced by electricity.
Previous IHS Markit research has projected that electric vehicles (including battery, plug-in hybrid and fuel cell electric) will comprise 60-80% of all new car sales in 2050 (compared to just 2.2% of new car sales in 2020, according to IHS Markit data).
Nevertheless, oil will still be the dominant energy source for transportation for years to come due to the sheer size of the global car fleet and the amount of time it takes for it to turn over.
In 2020, there were about 9.2Million light plug-in electric vehicles (PEVs) in the global light vehicle fleet. When you include 20,000 fuel cell electric vehicles, these vehicles displaced about 150,000 barrels per day (b/d) of oil consumption—less than 0.2% of world consumption. When you include electric city buses and two-wheelers, the amount of oil displaced by electric vehicles totals 370,000BOPD, or just 0.4% of world oil demand in 2020.
“By 2020 electricity use in road transportation had only displaced about 370,000BOPD of oil demand—0.4% of world oil consumption. But it is clear that this will rise. By 2025, as much as 1.5 MMBOPD of oil will be displaced.”– Jim Burkhard, vice president, oil markets and mobility and energy future, IHS Markit
The amount of oil displaced by electricity will continue to rise, led by growth in PEV sales. IHS Markit estimates that by 2025 light PEVs will displace about 0.9-1.1 MMBOPD of world oil demand. Adding in electric buses and two wheelers, oil displacement by electricity in road transport could hit 1.5 MMBOPD—the equivalent of 1.4% of what IHS Markit projects for total world oil demand in 2025.
That much displacement—while still relatively small—is significant in the sense that oil-powered LVs were the biggest source of aggregate oil demand growth from 2000 to 2019. Increased electrification, along with rising fuel economy and emissions standards, will play an important role in the plateau and then decline of world oil demand that IHS Markit expects to emerge at some point over the next 10-15 years in its base case outlook.
“The GM announcement is the latest piece in a much larger story. It’s further proof that, while the road ahead is still a long one when it comes to dislodging oil as the predominant transportation fuel, it is very much a one-way street and there is no turning back.”– Fellipe Balieiro, director, mobility and energy future, IHS Markit
Governments’ plans for oil sector endanger economies of resource-rich developing countries
One fifth of anticipated investments in the oil and gas sector by state-owned oil companies are economically unviable if global warming is to be kept within 2 degrees Centigrade, a new research has shown.
With the United States rejoining the global coalition to meet the objectives of the Paris climate agreement, oil producers face a moment of reckoning. Research published by the Natural Resource Governance Institute (NRGI) has identified that state-owned national oil companies (NOCs)—many in developing countries—are on a trajectory to spend billions on oil and gas projects that will only break even if the world fails to meet the Paris goals.
While the climate approaches of such multinational oil firms as BP and ExxonMobil are routinely scrutinized, “this is the first report quantifying the incompatibility of NOCs’ investment plans with the Paris agreement”, NRGI claims.
NOCs produce half of the world’s oil and gas and are responsible for 40 percent of the capital invested in the industry worldwide. Using market data, NRGI’s report, Risky Bet: National Oil Companies in the Energy Transition, estimates that NOCs could invest about $1.9 Trillion in the next ten years. Of this, about one fifth, or $400Billion, would not result in a profit if the energy transition proceeds in line with current climate commitments. If widespread carbon capture and storage technologies are not deployed, this figure would climb even higher.
“A huge amount of state investments in oil projects will likely only yield returns if global oil consumption is so high that the world exceeds its carbon emission targets,” says Patrick Heller, an NRGI advisor and one of the report’s co-authors.
“This risky spending has major implications for the economic futures of national oil companies’ home countries. State-owned oil companies in developing and emerging countries including Algeria, Mexico and Nigeria might collectively invest more than $365 billion in such high-cost projects—expenditures that could instead help alleviate poverty or diversify their oil-dependent economies.”
As an example, the researchers highlight the Nigeria National Petroleum Corporation. Almost half of the Nigerian NOC’s upcoming oil project spending—an amount that exceeds the government’s expenditures on education and health care—may fail to break even if the world makes rapid progress toward climate goals. Similarly, Colombia’s Ecopetrol could invest the equivalent of a fifth of its government’s total expenditures into oil and gas projects that will break even only if the world fails to meet its climate commitments.
“State oil companies’ expenditures are a highly uncertain gamble,” says David Manley, NRGI senior economic analyst and report co-author. “They could pay off, or they could pave the way for economic crises across the emerging and developing world and necessitate future bailouts that cost the public dearly.” The report notes that the governments of countries including Algeria, Angola and Azerbaijan are making particularly risky bets with public money.
“National oil companies will have a major influence on the success of the push for a managed decline in fossil fuel production worldwide,” says Heller. “Authorities in many producing countries risk pushing ahead with new investment regardless of what is economically and ecologically feasible, and the outcomes could be dire. If international oil companies and private investors make good on their stated ambitions to move away from hydrocarbons, state actors may be even more tempted to step in and fill the gap in oil production.”
The Risky Betreport is accompanied by a briefing that details the specific challenges facing NOCs in the Middle East and North Africa (MENA). Researchers found that while some MENA NOCs have access to large, cheaply developed reserves that will help them withstand a long-term decline, others face uncertainty in maintaining the production on which their economies have come to depend. The briefing suggests that NOCs and their governments across the region should adapt their strategies, become more efficient and accountable to citizens, and adopt fiscal practices that lead to economic resilience in a low-carbon future.