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PNC Forum: The Energy and Consistency of Industry Players-OPINION

By Esueme Dan Kikile

In 10 unbroken years of active participation in the Practical Nigerian Content (PNC) Forum, organised by the Nigerian Content Development and Monitoring Board (NCDMB), the leading lights of Nigeria’s oil and gas industry have signified that local content has something of a creedal force in their ranks. In-country value addition through enhanced local capacities and capabilities remains the unchanging focus – what they must pursue and actualise to enhance the country’s economic performance and development.

The apostolic zeal of the industry stakeholders, as they assemble in their hundreds from year to year to appraise the state of the industry and to determine what way(s) to maximise opportunities along lines spelt out in the Nigerian Oil and Gas Industry Content Development Act, 2010, is most remarkable. In the spirit of collaboration and stakeholder engagement, issues of topical importance are ever adopted as themes for presentation and deliberations in different editions of the Forum.

Innovations at NCDMB and results

NCDMB and stakeholders have been thus guided in subsequent actions by way of interventions, policies and compliance. The Board gets more and more innovative as challenges emerge through workshops and exhibitions. Concepts and undertakings such as Nigerian Oil and Gas Technology (NOGTECH) Hackathon, Nigerian Oil and Gas Opportunity Fair (NOGOF), Nigerian Oil and Gas Industry Content Joint Qualification System (NOGIC JQS), and research and development funding, were in response to felt need and have bolstered the sector.

“Key Highlights of this year’s PNC Forum from December 5-8, 2022

  • Harnessing Nigerian content opportunities for indigenous companies in Nigeria’s “Decade of Gas”
  • What opportunities have been revealed by the Seven Ministerial Regulations for increasing Nigerian content compliance?
  • Outlining Nigeria’s future energy mix and Nigerian content objectives over the next 30 years
  • What are the enablers required to bridge the capacity gap for improved local content implementation with a growing focus on gas?
  • How can indigenous companies attract required funding?
  • What efforts are in place to explore Nigerian content opportunities in AfCTA?”

Together, the industry regulator and the oil and gas companies – upstream, midstream and downstream – have moved mountains, radically altering the status and image of Nigeria as rent-seeker and placing her in a respectable position as resource-endowed and with appropriate technological capabilities to efficiently exploit and utilise hydrocarbons.

What difference NCDMB has made

In twelve (12) years of implementation of the NOGICD Act, 2010, Nigeria, through the Board’s well targeted strategic interventions, has developed the widest range of competencies and facilities for engineering, procurement, fabrication, and a lot else, and thus upped in-country value retention from less than five (5) per cent in 2010 to forty six (46) per cent in the first quarter of 2022. And seventy (70) per cent is in focus as we march towards the 2027 terminal date of the Board’s Nigerian Content 10-Year Strategic Road Map.

Today the world-class fabrication yards and pipe mills have turned Nigeria into a hub for related businesses in the Gulf of Guinea, just as the country’s service companies now operate as international servicing companies in different African countries. That’s the success story of the NCDMB made possible by far-sighted and resourceful leadership that carries all stakeholders along, unhesitatingly intervening in material terms to bolster operational capabilities of companies. This year’s edition of the PNC Forum, scheduled for December 5-8, 2022, is another platform with great possibilities for participants and the wider society.

What to expect from PNC 2022

Face to face with potential clients and investors, participants in PNC Forum 2022 in Uyo, Akwa Ibom State, will deliberate on the theme, “Deepening Nigerian Content Opportunities in the Decade of Gas.” Key topics, as highlighted at the PNC dedicated website are:

  • Harnessing Nigerian content opportunities for indigenous companies in Nigeria’s “Decade of Gas”
  • What opportunities have been revealed by the Seven Ministerial Regulations for increasing Nigerian content compliance
  • Outlining Nigeria’s future energy mix and Nigerian content objectives over the next 30 years
  • What are the enablers required to bridge the capacity gap for improved local content implementation with a growing focus on gas?
  • How can indigenous companies attract required funding?
  • What efforts are in place to explore Nigerian content opportunities in AfCTA?

Conclusion

In the broadest terms the PNC Forum is billed “to help shape the Nigerian Content Agenda for the next twelve months.” Industry regulator and all stakeholders would hopefully be on the same page all the way, directing energies and resources in a manner that would best promote corporate success as well as national development. But economic spin-offs never fail, particularly for a host city and state, in this case, Uyo and Akwa Ibom, whose hospitality industry is already bubbling in anticipation of several hundreds of guests in early December.

PNC Forum 2022 is the place to be for fresh ideas and strategies in the nation’s quest for economic development through effective and efficient management of her abundant hydrocarbon resources, especially gas as the transition fuel for Nigeria.

Esueme Dan Kikile ESQ, is the Manager, Corporate Communications, NCDMB

 

 

 


TOTAL Can Do Better than the East African Crude Oil Pipeline(EACOP)-OPINION

By Gerrard Kreeft

Will the East African Crude Oil Pipeline (EACOP) ever be constructed? Public dissent has been mounting and financial hurdles have yet to be resolved. Continued delays only make the completion of this on-going saga more uncertain.

The Project

EACOP is being constructed in parallel with the Tilgenga and Kingfisher upstream development projects. Tilenga, operated by TOTALEnergies, will produce some 200,000 Barrels of Oil per Day (BOPD) and Kingfisher, operated by CNOOC(China National Offshore Oil Corporation) will produce some 40,000BOPD.  Each development will consist of a Central Processing Facility (CPF) to separate and treat the oil, water and gas produced by the wells.  Kingfisher will have 4 well pads and a CPF and  Tilenga has 31 well pads. The Ugandan Refinery project has a right of first call to 60,000BOPD, with the remainder of the oil being exported via EACOP.

EACOP will have a length of 1,443 kilometres  and export crude oil from Kabaale – Hoima in Uganda to the Chongoleani peninsula near Tanga port in Tanzania.  At peak capacity it will handle 246,000BOPD.

The project dates its origins back to 2004 when Tullow Oil gained three exploration blocks following its acquisition of Energy Africa. In April 2020 Tullow sold all of its oil assets to TOTALEnergies for $575Million in order to reduce its debt and strengthen its balance sheet. TOTALEnergies’ vision was simple: purchasing Tullow Oil assets for next-to- nothing made it a no-brainer to move on to developing Tilenga and together with CNOOC, Kingfisher and EACOP.

The Next Hurdle

Time and events on the ground have proven difficult.

For example, the European Parliament’s resolution of September 2022, condemning human rights in Uganda and Tanzania, linked to investments in fossil fuel projects, have proven embarrassing to the French oil giant.

French President Macron has also indicated that France does not support this project.

Various interest groups have been extremely vocal and successful in their stand against the project:

The Climate Accountability Institute(CAI) have charged that during the 25-year lifespan of the project associated  oil emissions would be more than double those of Uganda and Tanzania in 2020.

Omar Elmawi, coordinator of the Stop EACOP campaign, said: “EACOP and the associated oilfields in Uganda are a climate bomb that is being camouflaged us as an economic enabler to Uganda and Tanzania. It is for the benefit of people, nature and climate to stop this project.”

Stop EACOP Campaigners argue that, as the world’s longest heated oil pipeline which will run through many populated areas, it will contribute to poor social outcomes for those displaced. They also mention the significant risk to nature and biodiversity, as the pipeline runs through large areas of savannah, zones of high biodiversity value, mangroves, coastal waters, and protected areas, before arriving at the coast where an oil spill could be dire.

According to Elmawi, TOTALEnergies is still in search of $3Billion in order to complete the financing of EACOP. To date, he says, 24 banks, 18 insurance companies, and export credit agencies in France, Germany, Italy and the UK have refused supporting this project. “Already the project has suffered a three year delay”, the STOP EACOP campaigner claims.

How much delay can TOTALEnergies withstand before it walks away from the project and declare the necessary impairment charges? The delay will also ensure that TOTALEnergies’ financial team will be re-evaluating their energy portfolio. Think back to the summer of 2020 when TOTALEnergies  announced a $7Billion impairment charge for two Canadian oil sands projects. This might have seemed like an innocuous move, merely an acknowledgement that the projects hadn’t worked out as planned.

Yet it opened a Pandora’s box that could change the way the industry thinks about its core business model—and point the way towards a new path to financial success in the energy sector.

While it wrote off some weak assets, it did something else: TOTALEnergies began to sketch a blueprint for how to transition an oil company into an energy company.

Patrick Pouyanné, TOTALEnergies’ chairman and chief executive, said that by 2030 the company “will grow by one-third, roughly from 3Million barrels of oil equivalent per day (BOEPD) to 4Million BOEPD, half from LNG, half from electricity, mainly from renewables.” This was the first time that any major energy company had translated its renewable energy portfolio into barrels of oil equivalent. So, at the same time that the company  slashed “proved” oil and gas from its books, it added renewable power as a new form of reserves.

TOTALEnergies’ emphasis is on ensuring that its LNG portfolio and its renewables continue to grow to ensure shareholder income. Pesky oil projects which highlight climate opposition and encourage environmental activism, both local and international, are not the type of projects which promote TOTALEnergies’ shareholder stability.

Finally, COP27, the next UN Climate Conference, to be held in November 2022 in Egypt, will no doubt also become a rallying cry for stopping EACOP. Could EACOP become an African stranded asset much like the Keystone Oil Pipeline in the USA?

 Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report, and contributes to IEEFA(Institute for Energy Economics and Financial Analysis). His book the 10 commandments of the Energy Transition is on sale at https://books.friesenpress.com/store/title/119734000211674846/Gerard-Kreeft-The-10-Commandments-of-the-Energy-Transition

 

 

 

 

 

 

 

 

 

 

 


Nigeria’s unending Gas Dilemma, By Adedayo Ojo

Nigeria has enormous gas resources. The official estimates of the country’sojo natural gas reserves is in the region of 187 trillion cubic feet (TCF). Despite a history of more than 50 years of oil production, Nigeria is predominantly a gas province.
Almost every successive Nigerian government aspired at one time or the other to legislate a regulation that will optimize the use of the country’s vast gas resources. Quite a good number gas projects have been conceptualized but unfortunately few have been actualized. The bottom line is that decades after the discovery of gas in commercial quantity, Nigeria’s gas sector and gas system remains underdeveloped.
Today’s reality in the international oil and gas market requires Nigeria to wake up and make something of the gas resources or be left behind countries that are more committed to utilizing their gas resources. Ghana’s gas company is expected to begin production this year. If the tension in the Middle East abates (as it may), oil & gas prices will drop!
Gas Aspiration
Several Nigerian government policies have highlighted plans to monetise gas resources. In 2008, the Federal Government developed the Gas Master Plan (GMP) in order to lay a framework for gas infrastructure development and expansion within the domestic market. According to the Nigerian National Petroleum Corporation (NNPC), the GMP is a guide for the commercial exploitation and management of Nigeria’s gas sector which seeks to grow the Nigerian economy with gas. The GMP has three key strategies, namely to stimulate the multiplier effect of gas in the domestic economy, position Nigeria competitively in high value export markets and guarantee the long term energy security of Nigeria.
In response to government policy, a number of ambitious gas projects were initiated by both government and the private sector. Some of the most popular gas projects and initiatives include;
a) Liquefied Natural Gas (LNG) Projects

b) Trans –Sahara Gas Pipeline Project

c) The West Africa Gas Pipeline Project (WAGP)

d) Gas To Power Projects Around The Country

Liquefied Natural Gas
Despite initial momentum on LNG projects, Nigeria remains far behind. Production started from trains 1 and 2 at the Nigerian Liquefied Natural Gas Limited in 1999. By 2007, NLNG added four more trains. Although the seventh train has been planned, six years later, it hasn’t been sanctioned.
Apart from NLNG, other planned LNG projects include Brass LNG and Olokola LNG (OKLNG). Final investment Decision (FID) on Brass LNG was planned for 2006; it was later rescheduled for 2008; then 2010. The FID was never realised on any of those dates; nor has it been now. The same applies to OKLNG. The shareholders of OKLNG signed a memorandum of understanding (MoU) in 2006; FID was billed for 2007 while production was scheduled to begin in 2009.
The originally proposed dates for streaming these projects have long expired; yet final investment decision (FID) has not been taken on any of the projects. In all these years, not much has been accomplished on Brass LNG and OKLNG.

Other countries have shown more commitment with LNG projects. Consider Australia. In 2011 alone, four LNG projects in Australia reach FID. These projects include: Australian Pacific LNG T1, GLNG T1-2, Wheatstone LNG T1-2 and Prelude LNG. Another Australian project, the two train, Ichthys LNG T1reached FID in January 2012.

According to the international Gas Union, Qatar, the world’s largest LNG exporter produced 77 metric tonnes per annum in 2011, about 31 per cent of global supply. Meanwhile new LNG frontiers have emerged in Eastern Africa such the Anadarko’s LNG project in Mozambique and the onshore LNG project by BG in Tanzania.

The United States, a former net importer of LNG is now turning away cargoes while increasingly relying on unconventional domestic gas, such as shale gas, to meet its energy need. In addition, the United States plans to become a net exporter of gas in less than a decade, effectively shrinking the global gas market.

The chokehold in the world LNG market and the emergence of new supplier nations will ultimately make Nigeria’s position increasingly vulnerable if the country’s LNG projects are allowed to continue to suffer. If FIDs on existing LNG projects in Nigeria are not taken now, the global LNG market will become increasing tougher for the country and more so in the coming years.

Trans-Saharan Gas Pipeline

In January 2002, the Nigerian and Algerian governments, through their respective national oil companies signed a memorandum of understanding (MoU) to build a Trans-Saharan gas pipeline running from Nigeria to Algeria to make Nigerian gas available to European market.

Since the signing of the MoU eleven years ago, not much has happened on the project except the feasibility study and intergovernmental agreement between the governments. As a result of the decade-long inactivity, it does appear that the project may have been abandoned.

Dr Ghaji Bello, Acting Director of Nigeria’s Infrastructure Concession Regulatory Commission (ICRC) said in Abuja in January that the Federal Government of Nigeria has earmarked $400 million for the project in the 2013 budget. Industry analysts received the news with scepticism in view of apparent non-commitment to the project.

West African Pipeline Project
The West African Gas Pipeline is a 680-kilometre gas transport project jointly-owned by Shell, Chevron and the Nigerian National Petroleum Corporation (NNPC) forming the African Gas Pipeline Company (WAGPCo). The project takes Nigerian gas from Itoki in Ogun State through Agido near Badagry in Lagos, passing through 33 Nigerian communities to Togo, Benin Republic and Ghana. West African Gas Pipeline Company (WAGPCo) and the participating countries signed an International Project Agreement (IPA) in May 2003 to pipe 200million standard cubic per day of gas (200mmscf).

Over the years, this project has failed to deliver the anticipated volume of gas due to a plethora of reasons – policy, politics, infrastructure, funding, security, etc.

Central to the operation of WAGPCo is the availability of gas. With vandalism and associated shut-ins, gas supply is never guaranteed.
As a result unavailability of gas, an average of 134mmscf is often piped in the 475mmscf capacity pipeline, thus making the $1billion facility to be sub-optimally utilised.

Other Gas Projects

Ironically, it is in the smaller gas projects operated by small Nigeria independents that real success has been observed. Consider the Ovade-Ogharefe gas processing facility, the largest carbon emission reduction project in sub Saharan Africa. The first phase of Pan Ocean’s gas utilization project which was streamed in 2010 has capacity to process 130 million standard cubic feet of gas per day. Pan Ocean is expected to stream the second phase of its Ovade-Ogharefe gas project before the end of 2013.

Uquo gas project: Seven Energy and Frontier Oil have made commendable progress on Uquo gas project. The gas central processing facility (CPF) of the Uquo gas project is owned by Frontier and Seven Energy while Seven Energy through its subsidiary, Accugas, runs the pipeline. The gas is delivered to Ibom Power plant owned exclusively by Akwa Ibom State Government. Power generation at the Ibom Power Plant is tied to gas generated at Uquo. The project has the capacity to boost power generation in Nigeria by 1000 megawatts of electricity.

East Horizon Gas Company (EHGC), a subsidiary of Oando Plc, is a special purpose vehicle set up to Develop, Finance, Construct and Operate a gas transmission pipeline linking the Calabar Cluster of Industries to the Nigerian Gas Company (NGC) grid in Akwa Ibom state. The company is embarking on a $125m project which involves the construction of an 18inch by128 kilometre (km) gas pipeline through forest, swamps and built up areas. The project has a total capacity of 100million standard cubic feet of gas per day (mmscfd).
Oando Gas and Power Limited has developed a robust natural gas distribution network. The company has built extensive pipeline network to distribute natural gas to industrial and commercial consumers and has successfully revived private sector participation in the gas distribution business in Nigeria. Oando has over 100km of pipes already laid in Lagos State and another 128 km in progress in Akwa Ibom and Cross River States.

If more players will be as committed as these not-so-big players, the collective contribution will add to big gains in the drive to grow the gas sector and optimize Nigeria’s gas resources.

Wake up call

The time left for Nigeria to make something tangible from her gas resources is running out. As we end the first quarter of 2013, policy makers and oil and gas industry operators have another opportunity to think long and hard and make the committed decision of making the Nigerian gas a key contributor to national economic life.

The largest obligation rests with the government. A robust and thriving gas sector would require good legal framework that will clearly specify the rules of engagement. The law will necessarily provide good fiscal terms that will encourage investment in the gas sector. The gas sector will only thrive under an effective regulatory structure. These are the necessary conditions that can ensure private sector commitment in the gas sector. It is the government that can provide them.

Adedayo Ojo is Lead Consultant/CEO of Caritas Communications Limited, a specialist reputation strategy and corporate communication consultancy in Lagos/Accra.
Caritas is the West Africa affiliate of Regester Larkin, the pioneer reputation strategy and management consultancy with offices in London, Washington, Houston, Singapore and United Arab Emirates.


Solving the World’s Energy Challenges: The Critical Role of the Private Sector

 By Samuel Bodman

 It’s A PLEASURE TO BE BACK INCAIRO. I would like to thank Omar (Mohanna President of American Chamber of Commerce In Cairo) for that kind introduction. I’m also honoured that my counterparts — Ministers Fahmy and Younes — have joined me at today’s lunch.

Let me get right to the point: the world needs safe, reliable, clean, affordable, and diverse energy supplies — and in considerably greater numbers than we now have. This is a global challenge, perhaps one of the most significant of our time — and one that you all understand acutely.

The International Energy Agency’s most recent World Energy Outlook, estimates that the world’s primary energy needs will grow by 55% by 2030.

Addressing this challenge in a timely way will require literally billions of dollars annually over many years. The IEA estimates that $22 trillion of investment will be needed between now and 2030 to meet expected demand.

We also know that this investment must occur around the world — in developed and developing nations alike — and at all stages of the energy cycle.

At the same time, we all must recognize the realities of global climate change and look for ways to develop cleaner sources of energy that at the very least do not worsen — and hopefully can improve — the health of our earth’s environment.

So the energy scenario we must confront is this: if we are to encourage economic growth around the world, if we are to raise living standards for all people of all nations, if we are to improve our environmental health, the world needs clean, affordable, diverse energy supplies, as well as new suppliers and supply routes. And achieving that demands responsible action both from consuming nations and producing nations.

I don’t want to sound too alarmist, but in some ways, what we are really talking about is reducing the world’s energy insecurity.

So what do we do about it? That answer is complex, of course, and the solution is multifaceted. But, it can be summarized this way: we must grow the pie of what’s available.

For conventional fuels, the principal challenges facing us are: Will the necessary investments be made to bring sufficient hydrocarbons to market? Is the investment climate in producing countries conducive to inviting such capital flows? Are large consuming nations having the right type of discussions and collaborations with producing nations? If not, why not? And, are we adequately investing in ways to produce fossil energy more cleanly and efficiently?

Beyond hydrocarbons, the world absolutely requires new energy options in the form of alternative fuels and advanced energy technologies: the development of commercially competitive cellulosic ethanol; advanced hybrid vehicle technologies — with a focus on developing better batteries; hydrogen fuel cells; solar energy, including an acceleration of the development of solar photovoltaics; high- efficiency wind power; and carbon sequestration and clean-coal technologies.

Besides, any global energy strategy must include efforts to expand access to emissions- free nuclear power in a way that responsibly manages waste and dramatically reduces proliferation risks. The Egyptian government shares this belief. It is a topic that I’ve been discussing with officials during my visit to Cairo, including this morning in my meeting with President Mubarak.

To advance this global effort, nearly two years ago President Bush introduced the Global Nuclear Energy Partnership, which aims to facilitate the worldwide expansion of nuclear energy for peaceful purposes in a safe and secure manner. Among other things, GNEP establishes the common goal of creating reliable fuel services that will provide a viable and economic alternative to the spread of sensitive nuclear technologies.

The partnership seeks to take advantage of the best available fuel cycle approaches to recycle spent nuclear fuel to reduce the amount of waste and tap its unused energy.

In all these areas — from traditional hydrocarbon development to alternative energy to nuclear power — governments certainly have a tremendously important role to play. But the public sector cannot do this job alone. Even our research priorities — the research and development agenda itself— must be developed with substantial input from corporations, utilities, and universities. And, research needs to be conducted in a coordinated way. As we ramp up research and development investment, I believe we also must find innovative approaches to get beneficial technologies out into the marketplace quickly and to share the risk that the capital markets and private sector are not yet ready to take on. In the United States we are doing this through a range of collaborative models, including cost-sharing partnerships and loan guarantees.

At the Energy Department, we are also establishing an Entrepreneur in Residence programme, which aims to bring venture capital- sponsored entrepreneurs into three of our National Laboratories to help commercialize new technologies. And we are developing a new Technology Commercialization and Deployment Fund. This fund will allow our laboratories to move clean energy technologies toward commercial viability though prototype development, demonstration projects, market research, and other deployment activities.

In general, our strategy recognizes that many of the transformative breakthroughs are likely to happen in and in conjunction with — the private sector. . . and that the government must take an active role in encouraging that activity. Personally, I believe that we are already seeing results.

Having spent a good chunk of my career in the financial sector, I can honestly say that for the first time in my life we are seeing the venture capital community put sizeable amounts of money into entrepreneurial companies in the alternative energy business.

In the first three quarters of 2007, investments in the so-called “clean tech” sector (which includes alternative energy and conservation technologies, among other things) by U.S. venture capital firms totaled $2.6 billion — the highest annual dollar volume ever (even with just 3 quarters worth of data) — according to a recent industry report. Of those investments, solar energy was the biggest sub-sector funded, with 35 solar-related deals totaling $664.6 million. And, I interpret this as a clear sign that the clean-energy market is viable — indeed, thriving.

All this illustrates the coalescence of forces that we’re seeing in the energy arena in the United States — and indeed, throughout the world. Governments around the world recognize that there is an urgent need to accelerate the development of these technologies and to bring them to market. And, at the same time, the private sector recognizes that there’s a big opportunity here: one that can favourably impact their balance sheets as well as the world’s energy security and environmental health.

The challenges that we face are too large and too important for a “business as usual” approach. We must bet on technology and we must take some risks.

One final point, which I make with particular emphasis: we must promote increased energy efficiency across the global economy. The truth is the biggest source of immediately available “new” energy is the energy that we waste every day. I believe that improvements in energy efficiency can be achieved — in relatively short order — on a global scale in our industrial and power-generating sectors, our government agencies, our homes, our offices, and our transportation sector.

Collectively, these measures will not only take some pressure off of demand, but also improve the health of our shared environment.

Together, with the right leadership and funding commitments from governments around the globe, with the talent of our world’s scientists and engineers, and with (he capital, commitment and innovative power of our commercial sectors — which you all represent — we will solve this problem . .we will achieve a cleaner, affordable, and secure energy future for all people of the world.

The Honourable Samuel W Bodman, United States Secretary of Energy at lunch with the American Chamber of Commerce in Cairo, January 2008..

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