ministry of petroleum resources

0

ACHIEVEMENTS OF THE MINISTRY OF

PETROLEUM RESOURCES AND IT’S PARASTATALS

DURING MR. PRESIDENT’S

FIRST ONE (1) YEAR IN OFFICE

BY

The Honourable Minister of Petroleum Resources MINISTRY OF PETROLEUM RESOURCES

TUESDAY 22, 2012

1

• MPR’s Mission

Effective implementation of National oil and gas

policies on exploration, production, distribution

and utilization in accordance with international

standards.

• MPR’s Vision

An internationally competitive oil and gas sector

that contributes maximally to the growth and

development of the Nigerian economy.

The MPR’s Mission and Vision

2

The Ministry has the overall responsibility for the articulation

and implementation of policies in the oil and gas sector of the

Nigerian economy

Supervises activities in the oil and gas industry

Protect government’s Joint Venture interests in the industry

Manage oil concession policies

Manage all policy matters relating to the marketing of petroleum

and gas products

Issue licences for exploration, production, distribution and

conservation in oil and gas operations

Support the development of hydrocarbon industries including

natural gas processing, refineries and petrochemical industries

Maintain standards, monitor quality/quantity and regulate

practices in the industry

Train professional and technical hands in the industry for both

local and international application

Functions/ Business of the Ministry

3

Key Industry Policy Issues

Nigerian (Local) Content

Attracting Local and Foreign Investment through adequate Fiscal Regimes

Discouraging Crude Oil Theft and General Safety of the Industry

Development and operation of Deep Offshore fields

Development and Utilization of our Natural Gas Resources

Marginal field development

Development of Inland basins

Regional cooperation on energy supplies (WAGP, Trans- Saharan Gas Pipeline Project, etc.)

Facility Unitization (to protect marginal field operators)

Liberalization of Petroleum Refining Business

Review of Fiscal Policies in the Petroleum Industry

Coastal bunkering and export of refined products and expansion of Nigerian retail outlet business to West Africa

Major Initiatives and Achievements

of the Petroleum Industry

Government’s policy thrust in the Gas Sector is to make Gas take its rightful place

in the energy mix.

Government’s objective is to promote investment throughout the gas value

chain.

Government has midwifed one of the most dynamic transformations of the gas

sector.

The growth recorded in the gas sector from 1999 to 2012 includes:

Reserves; 136.5 trillion standard cubic feet to 187 trillion standard cubic feet

Production; 1.38 trillion standard cubic feet to 2.847 trillion standard cubic feet

Utilization; 515 billion standard cubic feet to 2.27 trillion standard cubic feet

Flaring; reduced from 63% to 18% GAS FLARING

Government is pursuing its stated objectives of reducing gas flaring, through the encouragement of accelerated

gas development projects. Between 2011 and today (2012) flaring has been reduced from 24% to 18%.

DEREGULATION:

Government has continued to engage various stakeholders on the issue of deregulation. While government

believes that deregulation of the downstream sector of the petroleum industry is in the best interest of the

country, it has resolved to carry the people along in its policies. At the appropriate time, a decision will be taken.

5

PROPOSED GAS PIPELINE NETWORK

Ob/Ob – Oben (East – West

interconnector pipeline) ;

Calabar – Umuahia – Ajaokuta;

Ajaokuta – Abuja – Kano – Katsina;

Makurdi – Yola – Gombe – Maiduguri;

GTS 1 (Export) – Domestic Sector

(Obigbo North) Gas Pipeline;

Ob/Ob – Owerri – Umuahia;

Gas Supply line from ELPS – Delta IV

Power Plant;

ELPS - Ekiti

Major Initiatives and Achievements of the Ministry

Implementation of the National Domestic Gas Supply &

Pricing Policy (Institution of the Domestic Gas Supply

Obligation and Development of the Instruments for

Implementation of Domestic Gas Supply Obligation)

• During the period under review, Government commenced the

implementation of the Domestic Gas Supply Obligation (DGSO)

scheme.

This scheme has made it possible for the supply of adequate

quantity and quality of gas by oil and gas producers to all active

power plants in the last one (1) year of Mr. President in office.

One (1) Bscf/day supply of gas to the domestic market has been

achieved through effective implementation of the DGSO.


Upstream Milestones

• Usan Floating Production and Storage System (FPSO) belonging to NNPC/Total JV,

the fifth in the Nigeria Deep Offshore region was recently commissioned and is

currently producing 103,000 barrel per day (4% of the total Nigerian production of

2.7 million barrel per day).

• Government in its aggressive drive and in line with its transformation agenda and

the vision 20:20-20, is developing a comprehensive framework for bringing on

stream other project such as Egina, Ofon, Bonga NW Fields etc. that will ensure

increase of our national production to 4 million bpd benchmark as envisaged.

• Government effort at encouraging indigenous participation in the Oil and Gas

industry has already recently yielded another dividend – an oil terminalling

facility (the Ebok terminal), has being established by an indigenous company with

current daily crude Oil production of 7,000 barrel b/d and a Plateau production of

50,000bpd at full capacity.

• Government’s effort at encouraging indigenous participation in the oil and gas

industry has recently yielded another dividend – an oil terminalling facility, the

Ebok Terminal, has been established by an indigenous company with current daily

crude oil production of 7,000 b/d and a plateau production of 50,000 b/d at full

capacity.


Proposition of the Petroleum Industry Bill (PIB)

• The Ministry proposed the PIB – an omnibus regulatory instrument

intended to turn around the Oil and Gas industry in Nigeria. The

Bill is presently being packaged for re-presentation to the National Assembly (NASS)

In line with the transformation agenda, the Transparency and

Accountability principle of the Government, the Ministry has set up Special Task Forces headed by eminent Nigerians, to address

critical issues in the sector:

• The Special PIB Task Force and PIB Technical Committee.

• The Special Task Force on Governance and Controls in the NNPC and Other Parastatals

• The Petroleum Revenue Special Task Force

• The National Refineries Special Task Force

The Gas Revolution Mr President in 2011 launched the Gas Revolution which focuses on developing

the industries that will work with Oil and Gas derivatives.

The government is proposing the establishment of two world – scale

petrochemical and fertilizer companies as well as five fertilizer blending

plants, a methanol plant and a liquefied petroleum gas (LPG) distribution

plant.

These definitely will position Nigeria as the undisputed regional hub for

gas based industries such as fertilizers, petrochemicals and methanol

Accelerated Gas Development and Utilization programme In its commitment to ensure availability of gas in the domestic sector at very short time, the

Ministry has identified all the uncommitted gas flare points and has concluded arrangement

to take the gas at flare and give them to indigenous third party companies willing to invest in

gas monetization.

The Ministry is also pursuing the Installation of Supplementary Gas Treatment/ Processing

plants by indigenous investors to enable the supply of dry gas to power plants



Gas Flaredown Campaign: • Government’s gas flaredown campaign has contributed immensely in

the reduction of the volume of the associated gas flared to 18%.

• Government effort at enforcing zero-flare for upcoming fields has

yielded additional dividend.

A 45MMscf/d Non-associated Gas (NAG)/Associated Gas (AG)

processing facilities have been completed and commissioned by

an indigenous company during the first one (1) year of this

Administration

Gas Flare Down Monitoring Facilities and Services • The Ministry has installed pilot gas flare meters on a few flare lines and

has established the shortfall in gas flare estimates

• This project is being pursued vigorously as it will enable actual value of

the gas flare penalty to be established and thereby encourage gas

flaredown

Parastatal: Nigerian National Petroleum Corporation (NNPC) Upstream Oil (Exploration & Production)

• Production growth has been achieved in spite of the incessant vandalism of pipeline infrastructure at a huge cost especially to

NNPC. Notable achievements in this regard include the

following;

• Critical crude pipelines such as; • Escravos-Warri-Kaduna,

• NCTL (Nembe Creek Trunk Line),

• NAOC JV line to Brass

• TNP (Trans Niger Pipeline)

• Have been subjected to repeated sabotage resulting in crude

losses in excess of N95bn

11


Parastatal: Nigerian National Petroleum Corporation (NNPC) Upstream Oil (Exploration & Production): Pipeline Vandalism Hotspots

21

11

45

14

6

9

17

11

13

9

Apr – Dec 2011

Post-GSF Deployment

Grievanc

e

Crude Theft

/

Grievance

Crude Theft

/ Hacksaw

LEGEND

Reported Incident

x Represents No. of Sabotage points

x

Widespread… And Growing

About 150,000 barrels a day could be added to Nigeria’s production if

vandalism is stopped 12


Parastatal: Nigerian National Petroleum Corporation (NNPC) Upstream Oil (Exploration & Production) - NPDC

• Future production growth is expected to come from NPDC through the

assignment of oil & gas fields from shell divestments to the Nigerian

Petroleum Development Company (NPDC) - upstream subsidiary of

NNPC

• These blocks will now be free of the funding constraints of the JV and

increased investments from both the NNPC and the parties that have

acquired shell/Total/ Agip interests in these blocks can proceed to

develop the blocks at an accelerated pace

• As a result of Mr. President’s endorsement, the reserve base has

increased and Nigeria can expect incremental production of up to

345,000 barrels of oil by 2015

• Since funding is not expected to come through JV cash calls this

production represents incremental royalty and tax contribution to the

National treasury (see reserves slide).

13


Parastatal: Nigerian National Petroleum Corporation (NNPC) Upstream Oil (Exploration & Production) NPDC Oil & Gas Reserve Profile

429 443 431 623

603

1120

2007 2008 2009 2010 2011

Oil Reserves (MM bbl) 1,723

14

1,809 1,837 1,837 2,785

2,778

4,230

2007 2008 2009 2010 2011

Gas Reserves (bscf) 7,008

New

reserves

New

reserves


Parastatal: Nigerian National Petroleum Corporation (NNPC)

Upstream Oil (Exploration & Production): NPDC Oil & Gas Production Forecast

15

181

Growth & Optimisation(Oil&Gas production – forecast)

267

78

2015

75

345

2014

315

240

56

2012

233

12.2011

177

2019

0

100

100

50

20212020201820172016

500

350

300

250

500

450

200

150

400

2013

25591

Oil

Gas

NPDC oil projects

beyond 2014

191 257 334 340 321 291 265 242 221 202 186

1 Excluding potential projects beyond 2014

▪ NPDC’s totalproduction is expected to reach 345 kboepd by 2015, with oil contributing 267 and gas 78 kboepd

▪ NPDC aspires to reach and maintain oil production at 400 kbod beyond 2015

Year

average1

Kboepd


Parastatal: Nigerian National Petroleum Corporation (NNPC) Upstream Oil (Exploration & Production): Joint Venture & PSC Operations

16

• Gas produced has increased to over 4bcf/d

• For the first time industry supplied more gas than was produced by the power

and industrial sectors

• Frontier Exploration has continued with increased pace of work in the

Chad Basin, while the Aero-Magnetic survey of other hinterland basin

has been signed

• Leases renewed for OMLs 67,68, 70 to ensure stability of terms for

continuing operations

• NNPC/Exxon Mobil JV NGL II re-financing loan agreement amounting to

$1.1bn in 2011 has been signed. similarly in 2012 the NNPC/Exxon Mobil

JV reserve development financing also signed with competitive interest

rates

• Government’s support for long term financing for the JVs is

demonstrated in the OGIC report and Mr President continues to push for

the passage of the PIB which will include long term funding solutions for

the JVs

• Financing scheme has national content component allowing Nigerian

Banks participation consistent with the National Content Act


Parastatal: Nigerian National Petroleum Corporation (NNPC) Mid-Stream Oil (Refineries): Refinery Upgrade Roadmap

17

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-12 -9 -6 -3 0 3 6 9 12 15 18 21 24

Strategy to Improve the Refinery Availability Going Forward

PMS 13.4m Ltr

HHK 6.16m Ltr

AGO 10.2m Ltr

PMS 15.60m Ltr

HHK 7.18m Ltr

AGO 11.90m Ltr

PMS 20.3m Ltr

HHK 9.24m Ltr

AGO 15.36m Ltr

PMS 35 m Ltr

HHK 8 m Ltr

AGO 12 m Ltr

Daily National Consumption

70%

90%

Pre

–2

01

0 S

tatu

s

20

10

Sta

tus

Cu

rren

t

Sta

tus

60% • PHRC TAM completed

and running at 90%;

• WRPC and KRPC

running at 60%

• TAM of all

refineries

completed &

running at 90%

• Improvements in capacity

due to 2010 interventions


Parastatal: Nigerian National Petroleum Corporation (NNPC)

Downstream Oil (Retail): NNPC Retail Footprint

37,10632,433

23,138

10,1758,9145,229

2012 2014 2013 2011 FYP 2010 A

2009 A

18

Na

ira

Mill

ion

Gross Revenue(Million Naira)

2012 2013 2014

Mega Stations

40 44 48

Affiliate

stations 376 388 401

Floating

Stations 12 12 12

2014

461

12

401

48

2013

444

12

388

44

2012

428

12

376

40

Affiliate stations Floating Stations Mega Stations 18.016.0

14.012.011.5

7.0

2014 2013 2012 2011

FYP

2010

A

2009

A

Market Share (%)

No

. o

f Sta

tio

ns


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power): Gas Revolution

19

The gas reform is anchored on a robust strategic framework that is focused on maximum economic impact through gas. Aims to drive linkages with agriculture, manufacturing and dispersed small enterprise through Power

GAS TO POWER “… By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.”

GAS BASED INDUSTRIALISATION

• Significantly increase gas supply to the Power Sector

• Focused delivery plan to support existing and ongoing power plants by PHCN and NIPP

• Deliver Gas for at least 12GW by 2015

HIGH VALUE EXPORT

STRATEGIC FRAMEWORK FOR NIGERIAN GAS

Consolidate Nigeria’s position and market share in high value export markets

• Targeted LNG export opportunities

• Regional gas pipelines that help consolidate nation’s footprint and influence

Deliver on President’s Gas Revolution Agenda to:

• Position Nigeria as the regional hub for gas-based industries such as fertilizer, petrochemical and methanol

• Transform gas sector to value adding sector

LNG Regional Pipelines


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power): Increasing Gas Supply to Power

20

4

5.4

3.2

8.6

201

-6.8GW

Peak

demand1

101

Average

hourly

generation

Average

capacity

not

available

Installed

capacity

0.040.121.342.19

4.356.63

12.83

2.6

EthiopiaNigeriaEgyptBrazilSAGermanyUS

1 Peak demand estimates vary significantly, but indicate that if demand was not suppressed by supply constraints it would be at least 10 GW

SOURCE: NBS fact sheet 2009, CBN quarterly economic reports, EIA, World Bank, UCT Graduate School of Business

Nigeria power generation capacity shortfalls

GW, 2010

Capacity

Peak demand upper

estimates

World

average

Implications of power supply constraints

MWh/capita/year, 2008

▪ Electricity consumption levels in Nigeria are low

(~10% compared to Egypt)

▪ Supply constraints and shortages are a strain on

economic growth and industry competitiveness

– World Bank indicates that value lost due to power

outages amount to 9% of sales for Nigeria enterprises

▪ Closing the supply gap could stimulate economic

growth with $5-11bn GDP impact and create >1m jobs

– ~$5bn in recovered sales and production (~9% of sales

of the non-extractive or agriculture sectors of GDP)

– $6bn in cost savings from using grid rather than

generator power, translating into higher consumption

– >1m jobs with GDP impact of $5bn, based on current

GDP contribution of $2.5k per job (in non ag sector)

Meeting the power demand needs via gas fired power

plants will have a GDP impact of $5bn-$11bn and create

more than a million jobs


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power): Policy Initiatives

21

9

• Legal basis for gas supply to domestic market now in place

− The underpinning Regulation was put in place in 2008

− Incorporation in Petroleum Industry Bill (PIB) also ongoing

• DPR issued the first set of supply obligations to all IOCs in 2009

• Recent supply growth fully linked to the respective DSO obligations of the suppliers – the concept is essentially now institutionalized

• New and more sustainable domestic gas pricing to Power and other sectors now in place

• World class contractual frameworks for supply, transmission and Network access now in place

• World Bank revenue securitization scheme in place to mitigate risk of payment failures for gas supplied

• Gas Aggregation Company of Nigeria established to manage DSO and price aggregation

• Good progress being made in Negotiations and execution of various gas supply agreements (GSAA) ongoing

• Infrastructure Blueprint approved by Federal Executive Council (FEC) in 2008 and being rolled out—anchored on a network of critical pipelines and 3 CPFs

• Critical pipelines identified and development in progress for some

• Investors assembled for the Central Area CPF and have commenced project development

• Feasibility study concluded for the Western Koko CPF

Scalable Gas Infrastructure

Blueprint

To support the agenda, a set of enabling policies were approved by His Excellency, Dr. Goodluck Jonathan. These are being rolled out and have created a major boost and jumpstart for the sector’s agenda


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power): Domestic Gas Supply Plan

22

The gas supply to underpin agenda is from the Domestic Gas supply

Obligation (DSO)


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power): Potential Job Creation and Import Substitution Opportunities (1)

23

6

Using domestic gas to maximize employment and achieve

import substitution could create >0.5 million jobs with GDP

impact of $20bn (provided gas is available)

SOURCE: NNPC, US RIMS II Multipliers (2005), industry reports, expert interviews, MGI; Team analysis

Potential gas use

Mmscfd, 2020

GDP impact potential

$bn GDP, 2020

Imports substitution

$bn, 2009 imports

2

475

91

255

196

104

43

32

21

24

10

0

335

700

Rubber

Plastics

Ethylene

Pulp & Paper

Glass

Methanol

4,650Total shortlisted users

Power, current

Industry, current

1,035Current demand, 2010

2,300Power, new

Existing industry, new3

3,335Power & Existing Industry, 2020

Fertilizers

Agro-processing (Corn)

Iron & Steel

Cement

Aluminium smelting

Existing demand

Additional domestic

gas demand

Total employment potential

Thousand jobs, 2020

0

513

29

151

99

16

36

74

18

25

12

54

0.6

3.1

1.5

2.8

3.7

1.0

5.8

0

20.7

0.5

0.9

0.7

0.5

0

0.3

0.9

0.2

0.6

0.2

0

2.61

2-3

7-9

1 Imports of ethylene, plastics and rubber

2 GDP impact of Power has estimated using potential sales recovery and savings from substituting diesel generation with grid power; assuming

demand continues to surpass supply by 2020

3 Includes demand for new cement capacity additions to meet local demand by established Nigerian players

Gas users

Import substitution might be used as a

basis to allocate gas according to

“domestic gas supply obligation”


Parastatal: Nigerian National Petroleum Corporation (NNPC) Potential Job Creation and Import Substitution Opportunities (2)

24

5

For industrial development, industries can be shortlisted and prioritized based

on their energy competitiveness, job impact and potential for import substitution

SOURCE: OECD; US federal statistic office; Team analysis

Energy competitivenessMmscf gas used per m$ output, Nigeria(2)(3)

110

100

90

80

70

60

50

40

30

20

10

0

Total job impactTotal jobs created per mmscfd of gas used, Nigeria1

2,4001,1001,0009008007006005004003002001000

Power generationLNG export

Methanol

Cement

Petrochemicals (ethylene from LPGs)

Nitrogenous fertilizers

Pulp

Aluminium

Synthetic rubber

Iron & Steel

Corn

Paper

Downstream plastics

Glass

1 Estimate based on USA impact and x3-4 ratio for job creation and x1,2 energy efficiency between developed and developing countries

2. Ethylene feedstock in Nigeria would be LPGs, consumption of natural gas is only utility needed for conversion vs feedstock. Downstream

plastics, only non-ethylene energy required is taken into account not initial feedstock needs.

Absolute import to Nigeria

(2009, Mn USD)Illustrative, relative mapping

of Power and Export


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power) Highlights of Achievements :Western Pipeline Network System

25

ELPS 2

OBIAFU-OBRIKOM-OBEN (OB3)

GAS SUPPLY TO OLORUNSHOGO

ELPS A

OBEN – GEREGU 36” x 136km; Project completed in

2011 Gas supply to Geregu

power plant and access for gas to the North

24” x 31km; Line Pipes procured and all

lengths welded Project to be completed by

May 2012

24”/36” x 104km; Project to be

completed by May 2012

36” x 324km; Doubling pipeline capacity to 2

bscfd to support the growing demand in the West

Construction about to commence Project to be completed by Q1

2013

48” x 127km; Contract awarded by FEC in April;

completion in 2013/2014

1 2

3

4

5

1 2

6

3

4


Parastatal: Nigerian National Petroleum Corporation (NNPC) Midstream (Gas) & Downstream (Power) Highlights of Achievements : Eastern Pipeline Network System

26

Existing Gas Source

Existing Pipeline System

Ongoing/Planned Pipeline system

Legend

Power Plant

Industries QIT

Bonny NLNG

Uquo

Alscon

Ibom

Power

Calabar

NIPP

Unicem

Cement

Imo River

Obigbo

Alaoji

NIPP

Aba Industries

Notore

Indorama

Obiafu/Obrikom

Obite Ubeta

Rumuji

Alakiri GTS 1

Cawthorne

Channel

Escravos

Oben

Geregu

NIPP Ajaokuta

ELPS 1

ELPS 2

Egbin

Olorunshogo

Omotosho

Koko Gas

Industrial Park

Ibadan

Jebba

OUR

Oso

OB3

Contract awarded by

FEC in April

Completion by 2013/14

NOPL

Project ongoing

Expected Completion date

is end 2012

NGC/Oando Pipeline

Project completed

Gas is currently supplied to

Unicem

Permanent Line to Alaoji NIPP

Project ongoing

Expected Completion date

June 2012


Key objectives of the Nigerian Content Act

Employ & Train Nigeria

ns

• Create over 300,000 direct and indirect jobs per annum

Build & Utilise Local

Capacity

• Fab/Dock yards

• Pipe/ Steel mills

• Service Coys

• Downstream

Retain Spend Add

Value

• Retain 10 of 20Bn spend

• Manufacture Component

• Own marine Vessels

Involve Oil Producing

areas

• Integrate indigenes

• Care for environment

The implementation of the Act since April 2010 has seen very high levels of compliance and growth trends

towards achieving these objectives for employment, value addition in country and integration of communities

Nigerian Content Development & Monitoring Board

(NCDMB)

NIG

ER

IAN

NATIONAL PETR

OLE

UM

CORPORATIO

N

Pipe Mills Fab Yards Marine Vessels

Some Progress Examples

Shell, MPN, CNL

and NAOC put

100 Km pipe

order in SCC

yard. Over

$100m retained

Operators

putting

unprecedented

tonnage of work

in Local yards

Grow indigenous

Ownership from

10% to 60% in 4

years.

3 More Mills

Coming up to support

Gas Masterplan projects

2 new Mega yards

Upgrade on old

yards

Over 1Bn Dollar FDI

Growing Nigerian fleet

Over 10 indigenous vessels

in period, further 25 earmarked


(NCDMB)

29

• The Nigerian Content Development and Monitoring Board was established following

the signing into law of the Nigerian Oil and Gas Industry Content Development Act

on April 22 2010, with a mandate to develop capacity of the local supply chain and

enforce compliance with provisions of the Nigerian Content Law.

The key achievements of the NCDMB include

• Growth in Indigenous Ownership of Assets in Marine sector

• Marine Vessels Ownership & Utilization:

• Rig Ownership & Utilization:

• Nigerian companies own land, swamp and offshore rigs (Oando, Seawolf, Bell Oil

and Gas). Ownership of assets is a key performance indicator in well and drilling

services. Indigenous ownership of drilling rigs therefore signifies a major growth in

the business of Nigerian service companies. $500 million is being retained in the

economy


(NCDMB)

30

Steel Pipe Mill Scheme

• Maximization of Existing Facility:

• Nigerian made steel pipes are being sourced for industry use; over

100km line pipe sourced from SCC. This $80 million contract kept

over 350 jobs and provided additional 150 new job opportunities in

SCC. This intervention is a classic case of fostering linkage between

the oil and gas industry and manufacturing.

• Promotion of the establishment of new Pipe Mills:

• To complement the SCC facility, Yulong Steel and Vigeo Steel are

committed to establishing LSAW (250,000Mt/annum) and HSAW

(200,000 Mt/annum) Pipe Mills respectively. This effort will ensure that

a significant proportion of the demand for steel pipe envisaged in

the Gas Master Plan program, replacement of aged pipes and

upcoming field development projects are sourced from Nigerian

facilities. Expected retention of spend is estimated at over $700

million per annum in addition to over 10,000 direct and indirect job

opportunities.


(NCDMB)

31

Infrastructure Development & Facility Upgrade

• Dry Dock Facility:

• Upgrades of Fabrication Yards:

• Fabrication yards in Nigeria have invested in new capabilities since NOGIC Act.

Saipem has completed its jumbo yard; Niger Dock fabricated the Abang & Itut oil

production platforms using 100 % Nigerian engineering and fabrication;

Fabrication of first Christmas tree frames in Nigeria at Globestar; Dorman Long has

installed major galvanizing facility serving LNG & telecommunications industry.

Total investment on facility upgrade is estimated at about $ 2billion. These

upgrades and investments have generated over 10,000 jobs while ensuring

retention of existing jobs.

• Training Facilities

• Hyundai has established a Fabrication & Subsea Training Facility in

country; Aker Solutions is in the process of setting up a Subsea

Academy.

•


(NCDMB)

32

3.4 Training Center of Excellence

• Equipment Components Manufacturing Initiative

• Domiciliation of Equipment Component Manufacturing:

• Original Equipment Manufacturers (OEM) representatives in Nigeria are

partnering with OEMs to set up manufacturing facilities in Nigeria. This

initiative is already yielding positive results with significant number of

applications by OEM representatives to domicile equipment component

manufacture in Nigeria. There are multiple benefits for the Nigerian

economy including technology transfer, productive employment and

elevation of manufacturing base.


(NCDMB)

33

3.4 Training Center of Excellence

• Creation of Training and Employment Opportunities

• Project Based Training Scheme:

• Structured approach for training and productive employment on

the back of industry projects, created over 500 training and

attachment opportunities for Nigerians. Over 250 gained permanent

employment. This intervention further supports Mr. President’s

campaign promise to create new jobs.

• Direct Facilitation of Training in critical Industry Skill Requirement:

• The Board has packaged environmental remediation training to

address recurring environmental challenges. About 1,000

candidates shall be trained on environmental management. There

shall be retention of a minimum of 30% of environmental

remediation budget in the oil producing communities.


(NCDMB)

34

Supplier Development Programs

• Nigerian Oil and Gas Industry Content Joint Qualification System (NOGIC JQS):

A Nigerian Oil and Gas Industry Content Joint Qualification

System (NOGIC JQS) has been created to manage the Board’s

business processes, exchange information between the Board

and stakeholders and also categories service companies.

To date the platform has captured over 7,000 individuals, 4,833

service companies and all the 6 IOCs.

A key benefit of the system is in employment generation, as it

provides a credible platform for sourcing Nigerian talents by

operators and service companies.


(NCDMB)

35

6.2 Nigerian Content Development Fund:

• The operating model for the Nigerian Content Development Fund has been

developed. The Board is about to launch the pilot for NCDF using 3 companies to

test run the partial guarantee component of the fund (70%). The capacity

development component of the fund (30%) is being applied for critical

infrastructure development and training programs such as geosciences and

environmental remediation

• Creation of Joint Ventures & Alliances:

• A wave of consolidation and alliances is going on across industry supply chain

e.g. NigerStar emerged from alliance between Globestar and NigerDock.

Alliances will deepen indigenous capability for EPC contracts and other high end

services in the industry; it will also foster greater ability to acquire new assets and

operational capabilities

• Research & Development

• The Board is enforcing greater visibility to Research for Development in order to

inculcate a culture of continuous process improvement and new product

development within Nigerian service companies and operating companies.


(NCDMB)

36

• Ladies and Gentlemen, it is evident that under the last one year, the oil and

gas industry has witnessed increased activities and development and that

the Ministry of Petroleum Resources has put in place numerous programmes

that would engender far reaching positive changes and ensure the

fundamental transformation of Nigeria’s Oil and Gas Industry, to enable the

realization of Government’s Vision 20:2020.

• Our Country’s crude and condensate production peaked at 2.5 million

barrels per day. Mr. Presidents total support of the radical transformation of

the oil and gas infrastructure, including funding of accelerated gas

development, processing and transmission to ensure adequate gas supply

to the domestic market and the rehabilitation of the existing refineries

through the engagement of the original plant builders are steps that shall

ensure adequate product supplies to the rapidly expanding economy.

• No doubt these are interesting times for all the stakeholders in the Nigeria oil

and gas industry.

Conclusion

37

THANK YOU

ministry of petroleum resources

Documents

gas industry

gas sector

gas policies

gas operations

gas flaring government

industry development

natural gas processing

gas value chain