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

THANK YOU