LOGISTICS EXPERIENCES FROM HEAVYWEIGHT PROJECTS IN THE OIL & GAS INDUSTRY:
MANAGING THE LOGISTICS OF OIL AND GAS PROJECTS – PITFALLS AVOIDED AND LESSONS LEARNED:
ROTIMI OLOMOLATAN GGCP & NWP DEVELOPMENT PROJECTS
CHEVRON NIGERIA LIMITED
Globally, Logistics is key to the success and delivery of any MCP in the Oil & Gas
industry. Any logistics failure and incompetency is suicidal to overall project objective
Project Expectations:
On time / schedule
Within budget
Safety
The regulatory environment and major obstacles to coordinating a vast international project
2. MOT – Ministry of Transportation
IOCs Request to Discharge at Private Jetty
MOT approval for direct discharge “ by vessel” basis
IOCs Request for waiver to discharge single vessel
MOT approves waiver for single vessel
REGULATORY AGENCIES: 1. NAFDAC – National Agency for Food and Drug Administration
Application request letter is sent
Import Permit received
4. SONCAP - Standards Organisation of Nigeria Conformity Assessment Program
Central Bank of Nigeria letter advising of SONCAP requirement
IOCs request for SONCAP Import Permit
SONCAP Import Permit
3. NPA – Nigerian Ports Authority
Granting of License to operate a private Jetty
IOCs vessel arrival notice to NPA (Apapa, Warri, etc)
IOCs vessel notice to Customs (Apapa, Warri, etc)
IOCs vessel arrival notice to Immigration (Offshore)
5. NQS – Nigerian Quarantine Services
IOCs requests for Permit
Plant Import Permit issued
6. PHCN – Power Holding company of Nigeria
IOCs request for PHCN Certificate
Approved PHCN certificate received
8. Form M / RAR (Non Free Zone Shipment) – Application to Import / Risk Assessment Report (RAR)
Application and approved Form M
Approved RAR
• Free zone Opportunities: Importation of construction / fabrication materials without import duty
Fabrication / Construction at Multiple Locations (ND / DLE)
• Stakeholders Interface, Engagement and Alignment: Engineering
Construction
Installation / Operations – Spare Parts Management (OEM’s
perspective)
Partners (JVs /NAPIMS insight and thresholds)
The in-country perspective – ensuring logistics excellence
The provisions of Section 5 of Customs, Excise Tariff (Consolidation) Act 1995 and Section 2 of Customs, Excise Tariff, (Consolidation) (Amendment) Decree No. 16 of 1997 make it clear that “any machinery, equipment or spare part imported into Nigeria by an industrial establishment, engaged in the exploration, processing or power generation through the utilization of Nigerian gas, for its operation, shall be exempted from the customs duties set out in Schedule 1 to this Act.” The law regulating the issuance of Import Duty and VAT Exemption Certificates (IDEC) provides that machinery, equipment and spare parts imported into Nigeria for gas projects will be granted full exemption from Customs Duty. The President of Nigeria delegated the power to grant exemptions to the Federal Minister of Finance. In approving IDECs, the FMOF has consistently provided a monetary estimate of the duty exemption granted companies.
Maximizing available legislative opportunities to deliver Gas projects within budget, exploring huge savings
With the re-introduction of Destination Inspection, the government appointed service providers to manage this process at all the Ports in Nigeria. These service providers issue Risk Assessment Reports (RARs) which are the documents used for the inspection of all imports. A RAR typically contains the description and value of the material, freight costs, insurance value etc which act as a guide in enabling Customs assess the import duty payable for materials imported. Upon assessment of duty by Customs, submission of all importation documentation, completion of all the requirements for customs clearance and issuance of the exit note indicating release of the imported materials, the RAR is deemed to have been utilized.
Customs applies this monetary estimate as a cap. Where the value of import duty exemption approved on the IDEC is exceeded, Customs views this as a failure to pay revenue owed the Federal Government. This is notwithstanding that the import duty exemption for gas projects is absolute.
IDEC processing with Ministry of Finance
Preferred Strategy:
MMIL – Master Materials Items List
Engage NAPIMS (National Petroleum Investment Management Services
(NAPIMS)) to get alignment
MOF approvals of Exemption Certificate
MOF letter advising Customs / Destination Inspection Agents of
Exemption Certificates
Monitor utilizations