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Apr-13 101.05

Feb-13 112.75

Dec-12 106.55

Oct-12 108.36

Jul-12 99.55

May-12 108.07

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Sep-12 110.67

Nov-12 106.86

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104

100

92May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov--12 Dec-12 Jan-12 Mar-13 Apr-13 May-13Feb-12

Daily | Weekly | Monthly | Yearly 99.89 US

98

116

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124

A Vanguard Monthly Review Of The Energy IndustryJUNE, 2013

108

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P\08 P\13P\14

VOL 03 N0. 49

CONTINUES ON PAGE 15

Local content gives succour to indigenous players T

he golden era of e a s y o i l i s over...Today the rules of the game have changed:

SEBASTINE OBASI

CONTINUES ON PAGE 4

Developing local economies, s t imula t ing indus t r i a l development, increasing local capability, building a sk i l led workforce and creating a competitive supplier base – also referred to as local content – are

minimum requirements for

doing business with host

countries and national oil

companies,” a recent Accenture

report stated.

A c c e n t u r e , a g l o b a l

m a n a g e m e n t c o n s u l t i n g ,

t echno logy se r v ices and

outsourcing company in its

r e p o r t a l s o s a i d t h a t

International Oil Companies

(IOCs), now have to develop new

models and redefine their

business approaches with

National Oil Companies (NOCs)

Carter Center appreciates SEOF’s $250,000 donation

Our target is to ensure more jobs domiciliation —NCDMB

Our target is to ensure more jobs domiciliation —NCDMB

OPEC’s high output, high price days dwindle

PEC’s halcyon days of high prices and high production O

may be drawing to a close as soaring U.S. output opens a new era for world oil markets.

After a comfortable ride since the 2008 price crash and record revenue of $1 trillion last year, it may have to be more pro-active on output policy.

The rise of U.S. shale oil and slack demand will eventually force OPEC either to support oil at $100 a barrel by cutting output -

COVER

OIL

FINANCE

Contents488

1212

1818

2020 POWER

2

1313

1919

2424

2222 INSURANCE

LABOUR

FOCUS

2626

2727

2929

2424SOLID MINERALS

MARITIME

COMMUNITY

LABOUR

Sweetcrude is a publication of Vanguard Media Limited

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PAGE LAYOUT/DESIGN Francis AYO & Johnbull OMOREGBEE

Victor AHIUMA-YOUNGGodwin ORITSE

Jimitota ONOYUME

Samuel OYANDOGHA

Emma Arubi

Michael Eboh

Rosemary ONUOHA

Sebastine OBASI

Enquiries Call:08098051103

Ag. EDITORClara Nwachukwu

THE TEAM

MANAGER, MARKETINGUbong NELSON

Local content give succor to endogenous players

PIB: Panacea to efficient petroleum industry

Carter Center appreciates SEOF’s $250,000 donation

Our target is to ensure more jobs domiciation -NCDMB

Mainland Oil plans N2b investment in operation expansion

Drilling types and techniques

Minister promises 10,000 MW from solar

Shun independent approach to petroleum risks, insurers told

Power risk: concern grows on local capacity

Epileptic power, a major challenge facing Nigeria -TUC

Cadastre office has boosted investors confidence in mining

MAN to spend N2bn on sea training for cadets

Bayelsa community to get deep sea port

TECHNOLOGY

It s no 4 years i to ou renasc n em c c ,

’ w 1 n r e t d o ra yand Ni erians ave come ep at m lit y

g h to acc t th i arrule is o lo g r the f d B t so etime , it s ll

n n e a . u m s tiseems w ha n t comp e ely go over m lita sm

e ve o l t t i riu ging from the brutality that has pe vade the

j d r dys m or yea s ow B t that is a topic for anot r!

s te f r n . u heIn edition we bring you holistic

this , a a s s me t f our p rforman in the Energ

s e s n o e ce y secto acr ss the value c ain. ut is not ur cov r

r o h B it o e , as our cove weighs the ga ns a d pain of threer i n s years Nige i n Content m leme tati . While

of r a i p n onthe journey has b e large y sa uta y, i d genou e n l l r n i sope a rs insis t i co ld till be mu h bette .

r to t hat t u s c rThe Executiv S cre ry NCD B, M . Er est e e ta , M r nNwapa, ef nds th role o his gency in

d e e f ad m c lin m r ndus ry jobs, th re st mming

o i i g o e i t e by em re cap tal f ight from the economyo i l .f o rse, un l th PIB is pa s d, we a not hel

O c u ti e s e c n put eep t bs n evelopm nt wi h the bill. To thi

b k a o d e s t snd, the Di ctor D R M . Osten O orunsola

e re , P , r l ,p aks on the imp rtance of p er re u atio to

s e o rop g l n fos r inv s m nt as well s boost inv s ors’

te e t e s a e tcon ide c in the d st y.f n e in u r

As is ur custom e c year, Swee c ude s a o a h t r wa t the 2 13 O i Houston ex s, A. W u e this

0 TC n T a US e s opportun y to ank r num rous advertis rs for it th ou e e a successful o tin . For those who co ld not a ten

u g u t dfo one re on or an ther, we brin o you imag s of

r as o g t e what happ nede .In the var us seg ents Oil, F nannc ,

io m – i eFeedbeack, ec n ogy, olid nerals, T h ol S MiIn ura ce, Labou , Mariti e, a d C m u ity,

s n r m n o m nhere s so ethin new. t i m g

e also reme b r NN C s lat Dr. L v

W m e P ’ e e iuo uma, an pray G d to continu to con ol his

Aj n d o e s efamil .y

H p y ne mon h!a p w t

CONTINUES ON PAGE 4

CWCNog Tech Ad

4Cover Story

CONTINUED FROM PAGE 1

According to the Accenture, developing countries and

NOCs with maturing mineral sectors, particularly oil and gas,

have placed a renewed emphasis on increased local content participation by IOCs

in recent years

CONTINUES ON PAGE 5

Local content gives scour to indigenous players

Local content gives scour to indigenous players

Local content gives scour to indigenous players

to include equity-building

programmes that provide an

opportunity to improve the

IOC’s “license to operate” in

developing countries.

The report was based on the

growing concern by NOCs and

e m e r g i n g o i l p r o d u c i n g

countries to have bigger stake in

the management of their natural

resources, which have been in

t h e h a n d s o f f o r e i g n

multinationals over time.

According to the Accenture,

developing countries and NOCs

with maturing mineral sectors,

particularly oil and gas, have

placed a renewed emphasis on

i n c r e a s e d l o c a l c o n t e n t

participation by IOCs in recent

years. The report also said that

host nations and NOCs are

emphasizing that the desire for

an increased contribution to the

local economy and society and a

strategic intent to pursue local

content go beyond philanthropy

and are beginning to expand

their perspectives and mind-sets

regarding how local content

should be implemented.

Economic drainT h e i r r e a s o n i s q u i t e

understandable. In Nigeria, for

example, the control of oil and

gas resources by the IOCs has

led to a lot of capital flight,

resulting in a drain on the

economy of the country.

According to Ernest Nwapa,

Executive Secretary, Nigerian

Content Development and

Monitoring Board, NCDMB,

Nigeria recorded an estimated

capital flight of about $380

billion between 1956 when oil

was discovered and 2006, when

the Nigerian content policy was

initiated.

He also said that the country’s

oil and gas industry has

exported approximately two

million jobs to other countries

outside Nigeria within the 50

year period of operations by

various operators in the sector.

Content Act comes to the rescue

However, the situation has

changed since the signing into

law of the Nigerian Content Bill,

in April 2010, by President

Goodluck Jonathan. Nwapa told

the inaugural members of the

local content committee of the

House of Representatives that

before now, more than 95

percent of the jobs in the

industry were done abroad.

Specifically, he stated that

$ 2 1 4 b i l l i o n w o r t h o f

procurement and $9 billion

w o r t h o f r e s e a r c h a n d

development were done in

North America, while $78 billion

worth of technical services and

$39 billion worth of engineering

work were done in Europe. Asia

dominated the fabrication

aspect to the tune of $39 billion.

The NCDMB boss also said

that with the coming into place

of the Act , $107 bi l l ion

procurement, $20 bi l l ion

fabrication, $14 billion technical

services, $20 billion engineering

and $7 billion research and

development are domiciled in

Nigeria. Nwapa also explained

that $191 billion could be

retained, while 300,000 new

direct job opportunities are

expected in such areas as

engineering, sciences, technical

services and manufacturing. In

a similar vein, Nwapa said that

90 percent local content has

been achieved in engineering,

while 50 percent has been

achieved in fabrication.

On the one percent of the

contract sum for any project,

which must be deducted at

source and paid into the NCD

Fund, he said that $150 million

has accrued as at January, 2013.

He maintained that strong

stakeholder collaboration and

local value addition framework

would be required to achieve

real Nigerian content.

Allied sectorsApart from the oil and gas sector,

Nwapa identified maritime as

one other area with high impact

on employment, technology

transfer and value added

services where NCDMB’s

implementation strategies have

been visible.

He noted that the sector used

to be dominated by foreign

owned and crew vessels and rig

operators, resulting in about

three billion dollars capital

flight, but with the Board’s

m a r i n e v e s s e l a n d r i g s

ownership strategy, the situation

is changing with remarkable

indigenous participation.

He said, “Indigenous players

are currently participating fully

in the smaller vessel category,

thereby retaining about one

billion dollars annual spend in

Nigeria, while a structured

intervention for more Nigerian

ownership of the larger offshore

vessels has been put in place

with a potential for retaining a

further $1.5 billion in the next

two years.

“There is optimism, however,

that the current drive by the

Board will ensure that by 2020,

the ownership profile in the

marine sector would be more

indigene driven with a retention

in excess of $4 billion per

annum, 250,000 employment

and training opportunities.”

Three years of Content Act

On his assessment of the three

years of Nigerian content,

Nwapa resisted making a self

assessment, saying that it is left

for the public to judge him.

According to him, “I do not

believe in talking about my own

performance as a board, but the

feedback we get …all the oil

c o m p a n i e s , t h e s e r v i c e

companies advertised for the

three-year anniversary. I said to

myself, we should not over

celebrate it this year. Let other

p e o p l e g i v e t h e i r o w n

testimonies. The testimonies are

clear. If you look at expatriate

utilization, we are controlling it.

We are telling them to go and

find Nigerians to partner with.

5Cover Story

Local content gives scour to indigenous players

CONTINUED FROM PAGE 4

That is very fundamental. The

contracts that are being

awarded, you will see that mostly

all the contracts have Nigerian

participation if not complete, but

80 to 90 percent Nigerian

participation,” he said. Nwapa

may have been self-effacing in

assessing the performance of his

Board in the three years of its

existence.

Oil majors’ supportGeneral Manager, Nigerian

Content Development, Shell

Pe t r o l e u m D e v e l o p m e n t

Company Limited, Igo Weli, said

the NCDMB has done well in the

last three years. According to

him, “The Nigerian Content

Development Monitoring Board

has done a great job in terms of

leading this effort. They have set

ou t c lear f ramework fo r

implementation… If I read that

Act, I see a lot of opportunities to

create values, to create jobs in

this country and to use it as a

lever to manage some of the

issues we have as a nation.”

He however pointed out some

challenges facing the content

law such as dearth of research

and deve lopment , f a l len

educational standards, capacity

and capability gaps in key areas,

Petroleum Industry Bill, PIB

uncertainties, and the content

act waiver and moratorium.

A c k n o w l e d g m e n t s a n d

concerns

Dimeji Bassir, Vice President

O p e r a t i o n s , O f s e r v, a n

integrated energy company,

said the Local Content Act is

work in progress which has so

far, being able to el ici t

c o m p l i a n c e f r o m t h e

international oil companies.

“The implementation of the

Nigerian content act, in my

opinion, is work in progress. It is

a marathon and not a sprint…It

is giving priorities at par with

safety which is a very important

element of upstream oil and gas

development activities. Because

of the mandate vested on the

NCDMB, it has been able to

drive some level of compliance

within the IOCs and their

numerous projects. The IOCs

today know that if they are found

wanting in any areas relating to

their commitment to fostering

Nigerian content development

on pro jec t s and re la ted

operations, it is tantamount to

breaking a law which has

consequences. This fact has

f a c i l i t a t e d e f f e c t i v e

implementation of the law and

wide adoption by key industry

stakeholders,” he said.

Bassir however explained that

the NCDMB is resource

( f i n a n c i a l a n d h u m a n )

challenged, which limits its

effectiveness in following

through with monitoring

compliance. “Although most

IOCs and major ser v ice

companies today have full-

fledged role of NCD officer or

manager, there is not a clear-cut,

coordinated direction and focus

of efforts which makes for

s e v e r a l d i s c o n n e c t e d ,

duplicated, disjointed activities

which again make it difficult, if

not impossible to consistently

track and report Nigerian

content development progress,”

he said.

Emeka Ene , Managing

Director, Oildata/Xenergy

Group and Chairman, Petroleum

Technology Association of

Nigeria, PETAN, said the

c o n t e n t l a w h a s m a d e

r e m a r k a b l e i m p a c t o n

indigenous participation in the

nation’s oil and gas industry.

“It’s been very impactful. It’s

been a significant increase not

just in the quantum of local

content, but also in the intensity

of it, in the structure of it.

Nigerian service companies

have gone into areas that before

now, they were completely

locked up. We have seen gradual

increase, where we had a linear

growth right up to 2010; we have

an exponential growth in local

content, particularly in know-

how and in ownership of

equipment and processes. We

have seen right across the

industry, significant change in

the right direction.

Ene further explained that

some of the areas hitherto not

populated by Nigerians include,

deepwater sub-sea installations

and maintenance, fabrication of

jackets, remotely operated

vehicles, (ROVs), sub-sea

vehicles, mini sub-marines that

are controlled remotely from

surface to perform installation

jobs at the bottom of the sea.

Ene also said that the content

l a w h a s b e e n p r o p e r l y

implemented within the short

time it came into being.

“ I n t h r e e y e a r s , t h e

expectations have been largely

met and in some cases,

exceeded. Three years in the life

of an industry or in the life of a

law is nothing. In three years, we

have seen a step change. There

has been exemplary leadership

from the NCDMB. There has

been visionary leadership from

policy makers – the Ministry of

Petroleum Resources, NNPC,

National Oil Companies, and

the Independents.

“Service company umbrella

organizations like PETAN have

actually worked together in spite

of the flaws in the industry, in

spite of the challenges of

securi ty, in spite of the

upheavals in the g lobal

economic market, all we have

seen is a steady commitment to

make it work. That for me, is a

very positive take from this third

anniversary,” he said.

He however said that one of

the challenges facing the law is

finding the balance in the waiver

window so as to encourage

capacity bui lding in the

industry. Apart from that, Ene

stated that there should be

effective monitoring by the

Board to eradicate the tendency

to circumvent the law.

The Nigerian Content Development Monitoring Board has done a great job in terms of

leading this effort. They have set out clear framework for

implementation…

6Cover Story

…Improvement in production, reserves…Rising cases of crude theft, vandalism, controversial payments

DEMOCRACY @14:

Mixed fortunes for energy sectorMICHAEL EBOH

It has been mixed fortunes for the Nigerian energy sector since the current democratic dispensation began May 29, 1999.

Since the return to democracy, the sec to r has reco rded significant improvement in key parameters such as in reserves and production while it also recorded an increase in other negative parameters, l ike increase in pipeline vandalism, crisis in the area of subsidy payment, increased corruption, and divestments by oil majors among others.

Oil productionNigeria’s crude oil production increased from about 2.153 million barrels per day, bpd, in 1998 to 2.52 million bpd in 2012, representing an appreciation of 17.05 per cent over the last 14 years. Crude oil production was about 2.055 million bpd as at 1980, peaking at 2.627 million bpd in 2005.

Conversely, the nation’s crude oil reserves rose from 27.5 billion barrels as at 1998 to about 35 billion barrels at present, rising to a peak of 36.22 billion in 2006 and 2007, before dropping to

31.9 billion barrels in 2009, then rising to its current levels.A breakdown of Nigeria’s crude oil production since 1999,

according to data obtained from the Nigerian National Petroleum Corporation, NNPC, put Nigeria’s crude production over the years as follows:

Vandalism unlimitedOn the flip side, pipeline

vandalism and crude oil theft

attained a worrisome dimension

since the return to democracy in

May 1999, with the Petroleum

and Natural Gas Senior Staff

A s s o c i a t i o n o f N i g e r i a ,

PENGASSAN, saying the

country loses about N954 billion

($6 billion) to crude oil theft

annually. Similarly, the Pipeline

Product Marketing Company

(PPMC), a subsidiary of the

NNPC, said Nigeria lost a total

of N162.6 billion from crude oil

and petroleum products theft

between 2009 and 2012.

Last year, the Minister of

Petroleum Resources, Mrs.

Diezani Alison-Madueke, said

Nigeria lost about N1.908

trillion ($12 billion) to pipeline

vandalism and oil theft in 2011,

adding that of the total amount,

$5 billion was spent on pipeline

repairs, while the amount lost to

crude theft was valued at $7

billion.

Confirming this, the Minister

of Finance and Coordinator of

the Economy, Mrs. Ngozi

Okonjo-Iweala, said Nigeria is

losing an estimated 400,000 bpd

of crude oil, resulting in about 17

per cent reduction in export

sales. This cost the nation’s

treasury about $14 billion in

2011 alone.

More gas up in flames Another major issue that came to

reckoning during the return to

democracy in 1999 is the issue of

gas flaring, which the NNPC

estimated at N159 billion ($1

billion) losses annually.

According to the NNPC, the

country currently flares about 15

per cent of its 7.8 billion cubic

feet gas wells production per

day, amounting to 1.2bcf per day.

However, end seems not to be

in site to the issue of gas flaring,

as oil majors disclosed recently

that their inability to stop gas

flaring is due to absence of the

necessary infrastructure among

other challenges.

Scandalous subsidy regime

Furthermore, subsidy payment

generated a lot of controversies

CONTINUES ON PAGE 7

7Cover Story

…Improvement in production, reserves…Rising cases of crude theft, vandalism, controversial payments

DEMOCRACY @14:

Mixed fortunes for energy sector

Export down the yearsFurthermore, Nigeria’s crude oil export rose from 706.265 million barrels in 1998 to 822.08 million barrels in 2011. A breakdown of the export profile is shown below:

CONTINUED FROM PAGE 6

Oil workers

in Nigeria, with large scale

f raud and i r regu la r i t i e s

recorded in the system. It was

alleged that in 2006, Nigeria

spent N261.1 billion on fuel

subsidy; in 2007 - N278.9

billion; in 2008 - N633.2 billion.

A report by the National

Assembly revealed monumental

corruption in the fuel subsidy

scheme, disclosing that the

country paid out about N2.587

trillion between 2009 and 2011

against N384 billion budgeted

for the period.

A number of individuals and

firms were asked to refund

certain amounts of money to the

c o f f e r s o f t h e f e d e r a l

government, while some of

them are currently being

prosecuted.

Controversial lease sales There are also the controversies

surrounding the award of Oil

Mining Leases, OMLs, Oil

Prospecting Leases, OPLs, and

Marginal Oil fields among

others.

Darkness pervade the land

The mis fo r tune o f the

c o u n t r y ’ s p o w e r s e c t o r

continued with the return to

democracy in 1999, as power

supply declined to alarming

levels over the years.

However, despite the fact that

a significant increase had been

witnessed in power generating

capacity since the return to

democracy in 1999, the increase

is yet to translate into steady

power supply to Nigerians.

Prior to May 29, 1999,

Nigeria’s power generating

capacity was as low as 1,500

mega watts, MW, a factor, Prof

R a h a m o n B e l l o , V i c e

Chancellor, University of Lagos,

attributed to lack of investment

in maintenance and expansion

programs on existing power

plants.

From about 1,500MW, power

supply rose to about 5,500MW in

2010, before dropping to below

4,000MW currently.

Reforms in the power sector

were kick-started in 1999, when

the Federal Government, led by

President Olusegun Obasanjo,

set up the Electric Power Sector

Implementation Committee,

EPIC, through the National

Council on Privatisation, NCP.

The Committee set up to

undertake a comprehensive

study of the electricity power

industry, came up with the

National Policy on Electric

Power and a draft Electric Power

Sector Reform Bill which formed

the formed the basis of a draft bill

sent to the National Assembly by

t h e N C P i n 2 0 0 2 a n d

subsequently passed in 2005.

The Electric Power Sector

Reform Act which led to the

creation of the Power Holding

Company of Nigeria, PHCN,

and the Nigeria Electricity

Regulatory Commission, NERC,

has as its major components, the

restructuring of existing utility,

liberalisation and privatisation,

as well as reinforcement of

existing infrastructure through

National Integrated Power

Projects (NIPPs) and other

government interventions.

The Act empowers the PHCN

to assume the assets, liabilities

and employees of National

Electric Power Authority, NEPA,

unbundling of PHCN into

successor companies and

ensuring greater operational

autonomy, development of an

efficient electricity market,

privatisation of successor

companies.

On ascent to power, the

G o o d l u c k J o n a t h a n

administration jumpstarted the

p o w e r s e c t o r r e f o r m s

programme which was stalled.

He launched the Roadmap for

Power Sector Reform in August

2010, followed with the re-

instatement of the NERC and the

inauguration of the board of the

Nigerian Bulk Electricity

Trading Plc, which was created

to encourage investment in the

power sec to r, e spec ia l l y

i n v e s t o r s i n t h e p o w e r

generating sector.

The Jonathan administration

a l s o e m b a r k e d o n t h e

p r i v a t i s a t i o n o f t h e r m a l

generation stations and power

distribution companies across

the country, with the aim of

creating an electricity market

that would lead to a more

efficient electricity supply

industry and a more vibrant

power sector.

The administration also

entered into agreements with

d i f fe rent companies and

investors with the aim of

increasing the country’s power

sector.

It also embarked on the

commissioning of power projects

across the country and has

signed agreements with gas

companies to boost gas supply to

g a s - p o w e r e d g e n e r a t i n g

facilities in the country.

Oil 8

Oil &FELIX AYANROUH

Boost transparency, accountability in Nigeria’s petroleum industry now

Recently, the Honourable Minister of Petroleum Resources,

Mrs Diezani Alison-Madueke ordered an immediate

investigation into the management of 445,000 BPD domestic

crude purchase by the Nigeria National Petroleum Corporation

(NNPC) and remittance to the Federation Account. This is a welcome

development; however, the government should act now rather than

wait for the report of the investigation or the passage of the Petroleum

Industry Bill – since the country is losing billions of naira daily.

Albeit, the recent oil subsidy scandal, Nigeria’s oil and gas

resources management are still shrouded in secrecy and corruption.

This development shows how a few conspire against economic

development and hinders the lives of over 160 million citizens from

economic transformation.

It is aphoristic (and supported by the empirical evidence) that

corruption was and is still inherent in the oil and gas industry and

allegedly occurs in all sectors of the industry. Although the President

Jonathan’s administration has not executed any licensing round, but

it can occur in the licensing stage – where government officials might

be tempted to ask for kickbacks in the issuance and renewal of

upstream petroleum licenses and leases. Also, as was widely

reported, it has its deep roots in the downstream sector – oil subsidy

scandal were serious graft was alleged to have occurred in fuel

importation among others.

The Nigerian Extractive Industry Transparency Initiative (NEITI)

expressed concern over the country’s poor rating in the recent global

report issued by Revenue Watch Institute (RWI). The institutes

Resource Governance Index (RGI) measures the transparency and

accountability in the oil, gas and mining sector of 58 countries

worldwide and finds that Nigeria fail to meet satisfactory standards

on how its oil and gas resources are governed. The report went on to

state that opacity, corruption and weak processes are the major

problems of the industry. The report ranked Nigeria 40th position out

of 58 resource-rich countries across the world. Furthermore, in the

group of 17 sub-Saharan African countries ranked in the RGI report,

Nigeria lagged behind 10 countries, which included Ghana, Liberia,

Zambia, South Africa and Morocco among others.

The Africa Progress Panel (APP), an organization that portrays itself

as possessing cutting edge policy analysis skills and advocate for

equitable and sustainable development in Africa in its recent report

“Equity in Extractives” also decried the lack of accountability and

transparency in the nation’s national oil company. The report cited

the numerous examples of shortcomings in the revenue

administration of the NNPC that have been identified. The report

further stated that, a task force set up by the government concluded

that around US$6.8 billion had been lost between 2010 and 2012, as a

result of corruption and mismanagement involving transfers of fuel

subsidies. And that another government investigative body identified

losses of US$29 billion resulting from natural gas pricing, along with

missing payments connected to concessions and production-sharing

arrangements.

It is no accident that at every stage of the petroleum industry reform

process, including reports, findings and recommendations since the

late 1990’s the common denominator has always been corruption and

mismanagement. From the foregoing, the leadership and the very

entities charged with policy implementation may have collectively

failed to recognize - or just as likely, abdicated responsibility for this

endemic and corrosive social problem.

The NNPC has refused to issue its annual reports and provides

limited information on its balance sheet; it only reports to its Board

of Directors. The lack of transparency and accountability may have

a pernicious effect on public financing. I humbly call on the

honorable minister to immediately demand a full financial

disclosure of all transactions entered into by NNPC after the fuel

subsidy scandal and request a quarterly mandatory published

financial report of its activities. Felix.ayanruohlaw@gmail.com

Carter Center appreciates SEOF’s $250,000 donation

The Carter Center, founded by a former United Sates President Jimmy Carter,

has expressed appreciation to the Sir Emeka Offor Foundation, SEOF, for its g e n e r o u s d o n a t i o n o f $250,000 to the Center.

In a letter to SEOF Founder and Chairman of Chrome Group, Sir Emeka Offor, dated May 23, the Carter Center thanked its donor for the “generous contribution of $250,000 to aid the fight a g a i n s t b l i n d n e s s i n Southeast Nigeria.”

The letter signed by Jimmy Carter himself, expressed a desire to meet with Offor either in Atlanta Georgia-based Center, or in London, saying, “Your commitment to improve Nigeria will prove invaluable for the prospect of a better future for million,” while expressing gratitude for his investment.

Carter’s letter had earlier

… Books for Africa acknowledges receipt of $600,000

n another development, the Sir Emeka Offor F o u n d a t i o n , h a d I

fulfi l led its pledge of $600,000 to US-based, education-focused, Books For Africa, BFA, in line with the foundation’s mission to promote educat ion in Nigeria and the rest of Africa.

Confirming the receipt of the fund in a letter dated May 20, to SEOF Founder, Sir Emeka Offor, the BFA Executive Director, Dr. Patrick Plonski, expressed h i s o r g a n i s a t i o n ’ s a p p r e c i a t i o n f o r t h e generous donation.

Plonski said the donation, “will fund the delivery of well over one million books to Niger ia and o ther

been preceded by a n o t h e r l e t t e r s i g n e d b y t h e C o u n t r y Representative/Nigeria of the Carter C e n t r e , D r . Emmanuel Miri, also expressing appreciation for t h e S E O F g e n e r o u s donations.

Dated May 15, Miri expressed the “hope that this g e n e r o u s a n d humane gesture will signal the beginning of a long a n d f r u i t f u l

collaboration/partnership b e t w e e n t h e C a r t e r Centerand SEOF/Chrome Group for the benefit of the good people of the South East states in particular and Nigeria in general.”

He noted that although the fund will be administered

from Atlanta, he gave the a s s u r a n c e t h a t t h e N i g e r i a n u n i t ’ s c o m m i t m e n t t o t h e programme and to the “judicious and maximal utilization of the funds in the states in accordance w i t h S E O F / C h r o m e Group instructions

locations in Africa,” adding t h a t “ T h i s d o n a t i o n represents the single largest donation we have ever received in Books For Africa history, so we are naturally quite excited.”

H e n o t e d t h a t t h e generosity of Offor in promoting education across Africa is not only outstanding but quite commendable.

The Founder, BFA, Mr. Tom Warth, was quoted as saying that “the benefits that will accrue to the young people of Africa through this generous donation are immeasurable.”

He added that “We at Books For Africa struggle every day to convince folks of the wisdom of education in the advancement of African

nations. Over our 25 years, many have agreed with us but 6to have your generous as an example in the future will make our task easier.”

The international non-g o v e r n m e n t a l organisation, NGO, further noted that the donation will make a huge difference in the lives of children in Nigeria and across Africa that will benefit from largess.

The organisation also said that it will be working with SEOF to confirm the final list of countries to be served a n d t h e n u m b e r o f containers of books to be delivered to the respective countries.

9Oil

A welder

SEBASTINE OBASI

Wh e n

O f s e r v e N i g e r i a Limited, an integrated

oil and gas technical services company began operations in 2010, it was in response to the clarion call by the federal government for indigenous companies to participate in the nation’s oil and gas sector, in order to reduce the d o m i n a n c e o f t h e international oil companies, IOCs. It was also meant to develop local capacity and provide employment to Nigerians. In the last three years, Ofserv, a wholly indigenous company, has proven its mettle as a company that promotes local expertise.

The company provides technical and consulting services across two broad-based functional areas, namely, drilling and offshore facilities maintenance. In the oil and gas sector, drilling is t h e m o s t e x p e n s i v e component of the exploration a n d p r o d u c t i o n f i e l d development cycle. As a result, the industry pays a lot of attention to improving dri l l ing eff iciency and

reduced non productive time in order to control well cost. Ofserv’s drilling support services are aligned to every producer ’s objectives of drilling the most fit-for-purpose well in the safest manner and at the lowest cost per foot. The company’s directional services include; conventional mud motor drilling, measurement while drilling and ultra short radius d r i l l i n g . I t s d r i l l i n g o p t i m i z a t i o n s e r v i c e s i n c l u d e ; a r t i f i c i a l intelligence support drilling problem avoidance and drilling optimization staff support.

As part of its facilities support services, Ofserv caters for the needs of operators and oil and gas facilities owners focused on i m p r o v i n g p r o d u c t i o n p e r f o r m a n c e , w h i l e maintaining the highest safety standards. In the area o f i n s p e c t i o n a n d maintenance services, the company provides multi-disciplined rope access crews, permanent corrosion monitoring solutions, surface prep and offshore painting, bolt tongue and dropped item surveys. It also undertakes t h i r d p a r t y r o t a t i n g equipment maintenance, s u c h a s i n s p e c t i o n , refurbishment and overhaul.

The company is positioned to meet its growth objectives through a combination of organic and inorganic g rowth s t ra teg ies . I t s relationship with its carefully selected global partners ensures that the company is uniquely positioned to offer game changer technologies in such areas as directional drilling/measurement while drilling, wireless enabled c o r r o s i o n m o n i t o r i n g d e v i c e s , a r t i f i c i a l intelligence-enabled drilling optimization services. Other areas include; advanced f o r m a t i o n e v a l u a t i o n services with the adobel predic t ive too l (APT) , facilities inspection and maintenance services and laser – enabled pipe tally measurements.

Recently, Ofserv partnered with the Nigerian Content Development Monitoring B o a r d ( N C D M B ) a n d SNEPCO to organize and facilitate a month long offshore skills acquisition training program, as part of the NCDMB human capacity building initiative, where 20 Nigerians were trained and certified in various skills required to keep offshore f a c i l i t i e s o p e r a t i n g efficiently.

Ofserve projects local expertise

100 companies attend Shell, UKTI investment summit …Nigerian companies win $2.4bn contracts in 2012

Some 100 Nigerian and

B r i t i s h c o m p a n i e s

attended an investment

summit in Lagos on 23 May,

jointly hosted by Shell and the

United Kingdom Trade &

Investment (UKTI), as part of

efforts to forge partnerships

among businesses in the two

countries.

Some 45 British companies

met with their Nigerian

coun te rpa r t s t o d i s cuss

potential areas of collaboration

in Engineering Procurement

Installation Commissioning

( E P I C ) c o n t r a c t s ,

manufacturing, fabrication and

general oil and gas services. It is

expected that the partnerships

resulting from the summit will

help grow the capacity of

N i g e r i a n c o m p a n i e s i n

provision of goods and services

in the oil and gas industry.

Welcoming participants, the

Managing Director, Shell

Nigeria Exploration and

Production Company, SNEPCo,

Mr. Chike Onyejekwe, said

Shell is committed to further

developing local content in

Nigeria.

He said that last year, Shell

companies in Nigeria awarded

contracts worth $2.4 billion to

Nigerian companies, one

billion dollar more than the

amount in 2011. “Local content

is good for Nigeria and for the

business and we’re determined

to raise the game,” he added.

In a keynote address, the

Executive Secretary of the

Nigeria Content Development

and Monitoring Board, Mr.

Ernest Nwapa, commended

Shell for the “sustained interest

i n t h e N i g e r i a / U K T I

investment forum. “Since the

first summit, we’ve seen a

s i g n i f i c a n t n u m b e r o f

companies participating at the

event and we hope they will

focus on areas that will improve

their capability. It is good to see

that other IOCs are beginning

to follow Shell’s example by

o r g a n i s i n g s i m i l a r

engagements.”

T h e B r i t i s h H i g h

Commissioner to Nigeria,

represented by Mike Purves,

said, “I am overwhelmed by

the quality of attendees at this

event, it shows that the

symbiotic commercial interest

between Nigeria and Britain is

pro f i tab le .” The Group

General Manager NAPIMS

represented by General

Manager, MMD Luke Anele,

said supply chain transactions

account for 65% of the total

business value in the oil and

gas industry and promised to

support IOCs to develop local

content in the sector.

Chairman of the House of

Representatives Committee on

Local Content, Honourable

Asita in his remarks promised

that the law-making chamber

would strengthen the Nigeria

Oil and Gas Industry Content

Development Act, and help to

c r e a t e a c o n d u c i v e

environment for value-driven

partnerships and businesses to

thrive.

Since the first summit, we’ve seen a significant number of companies

participating at the event and we hope they will focus on areas that will improve

their capability

10Oil

Ma n a g i n g

Director/C

h i e f

Executive,

Internatio

nal Energy Services Limited,

IESL, Dr. Diran Fawibe,

arguCorruption still constitutes

10% of operating costs

… Only two major projects

worth over $20bn

Managing Director/Chief

Executive, International Energy

Services Limited, IESL, Dr.

Diran Fawibe, argued high level

corruption still constitute about

10 percent of production costs,

which is compounded by the

dear th o f in f ras t r uc ture ,

particularly power shortages.

According to him, Nigerians do

not feel the President is

committed to the fight against

corruption because in spite of all

that are being said, corruption is

on the increase.

“We see an inverse relation

because in spite of the ‘fight’

corruption is still on the increase,

which implies that corruption is

fighting back. But if we are very

proactive about the fight, there

will be a reduction, which means

that we haven’t yet proffered a

solution to fighting corruption

Corruption still constitutes 10% of operating costs

CLARA NWACHUKWUeffectively.

“Note that the corruption we

are talking about here is not the

one at the lower levels, but

corruption at the highest level

among people in government

and positions of leadership. This

is why the incidence is not

reducing.”

Fawibe further argued that the

insecurity in the system is a big

disincentive to foreign direct

investment, FDI, saying, “At the

just-concluded OTC in Houston

Texas, all the foreigners who

spoke, cited insecurity as a

limiting factor to investment.

“The shortage of power is still a

very great impediment to

development, and Nigeria will

not witness much jobs creation

due to lack of power. The cost of

direct generation of electricity

by homes and businesses is very

huge.

“So if power and corruption

can be tackled effectively

operating costs will be reduced

significantly. Mind you we have

identified these problems over

and over again, but it is how they

are being tackled that will

indicate whether we are making

progress or not.”

Oil and gas sector

Specifically, while he agreed

that there may be some growth in

some sectors of the economy, but

with regard to the oil and gas

sector, he said not much had

changed basically because of the

uncertainties over the non-

passage of the Petroleum

Industry Bill, PIB.

The big difference he noted in

the sector are two major projects

worth over $20billion from

France’s oil giant’s Egina project

constituting about $18billion,

and America’s ExxonMobil’s

Erha North project. “So this is a

pass mark for the government in

getting two of the international

oil companies, IOCs to start two

major oil projects in the country

worth over $20 billion.

“Also, I know that some others

are equally considering some

investments, but is the PIB is

passed early enough will put

their anxieties to rest.”

He noted that while the Total

and ExxonMobil’s projects are a

huge spend in the industry, there

may not be much job creation

because the industry is more

technology-driven than people-

driven. As such, he added that

this is where the Nigerian

C o n t e n t D e v e l o p m e n t

Management Board, NCDMB,

comes to the rescues in ensuring

that more jobs are domiciled in-

country from the $20billion, in

order for more Nigerians to get

some of the industry jobs.high

level corruption still constitute

about 10 percent of production

costs, which is compounded by

the dearth of infrastructure,

particularly power shortages.

Banks credit squeeze tightens fuel supply

Banks credit squeeze tightens fuel supply

he Federal Government’s

recent squeeze on banks Tcredit has tightened supply of

Premium Motor Spirit, (PMS)

also known as petrol, as fuel

importers are not able to raise

finance to bring in products.

The move became necessary

sequel to January 2012 subsidy

p r o t e s t s t o s a n i t i z e t h e

downstream sector of the

country’s petroleum industry. As

a result, several probe panels

were instituted by various arms

and agencies of Government to

scrutinize the fuel subsidy

scheme.

Chairman/Managing Director

Mobil Oil Nigeria Plc, Mr.

Adetunji Oyebanji said several

probe panels that were set up,

have created some uncertainties

and delays in refunding subsidy

claims under the Petroleum

Support Fund, (PSF) leading to

the squeeze on bank credits and

sporadic shortages in fuel supply.

Oyebanji disclosed this to

shareholders at the35 Annual

General Meeting and the

presentation of the Annual Report

and Financial Statement of the

company in Lagos last week.

He argued that the controlled

margins on PMS sales are barely

sufficient to cover operating costs,

adding that “Until we get

appropriate returns and the

industry is fully de-regulated, the

entire fuels sector will continue to

lack the level of investments

required to realize the enormous

potential inherent in the sector for

meeting the country’s energy

demands and s t imula t ing

economic growth.

“A s p r e v i o u s l y s t a t e d ,

Government undertook a number

of reviews into the operations of

the PSF in the year conducted by

its agencies. MAN co-operated

fully with these agencies,

p r o v i d i n g r e q u e s t e d

documentation and appearing

before the various panels

investigating the scheme. This

was a time-consuming task and

involved the provis ion of

e x t e n s i v e a n d d e t a i l e d

documentation to support and

explain the various transactions.

Presenting the company ’s

financial records to shareholders,

Oyebanji admitted that the

company did not perform well as

in 2011.

Kunle KALEJAYE

Note that the corruption we are talking about here is not

the one at the lower levels, but corruption at the highest level among people in government and positions of leadership. This is why the incidence is

not reducing

11Oil

Growing indigenous participation in oil industry

The signing of the

Nigerian Content

Act on April 22,

2010 by President

Goodluck Jonathan

marked the beginning of the

turnaround in the activities of

indigenous contractors in the

Nigerian Oil and Gas industry.

Indeed, the immediate result of

the implementation by the

Nigerian Content Development

a n d M o n i t o r i n g B o a r d

(NCDMB) through the effective

supervision of the Hon Minister

of Petroleum, Mrs Diezani

Alison-Madueke is the increase

in the number of technology

driven workspaces and capacity

b u i l d i n g b y i n d i g e n o u s

contractors who formerly found

it difficult to compete with

foreign contractors before the

signing of the Act.

As at 2013, the Petroleum

Technology Association of

Nigeria (PETAN) said its

membership had doubled!

Members are now specialized in

more than 200 areas o f

professional competence in the

Oil and Gas industry. There is

no gainsaying the success

recorded in the Oil and Gas

i n d u s t r y u n d e r A l i s o n -

Madueke’s administration as

manifested in the effects of her

policies.

According to the Chairman of

PETAN, Mr. Emeka Ene, the

Nigerian Content Act and

policies of the Petroleum

ministry have boosted support

for indigenous companies by

foreign companies and financial

institutions. “This is the reason

that at this year’s edition of

O f f s h o r e Te c h n o l o g y

Conference, OTC, we have 60

PETAN members, and due to

lack of space we were not able to

accommodate all our members

who signified interest in taking

part in this year’s conference.

Right now, we have 50 of our

members in attendance. Beyond

PETAN members, we have at

least another 50 exhibitors. So,

in all, there are over 100

Nigerian companies exhibiting

in this year’s OTC.”

Policy initiatives

In the upstream sub-sector,

Shell Petroleum Development

Company (SPDC) recently sold

its interests in four oil blocks to

i n d i g e n o u s c o m p a n i e s

including SEPLAT, Neconde

Consortium led by Nestoil Plc,

Shoreline Natural Resources,

and 45 per cent interest in OML

40 to Eland Oil & Gas Ltd and

Starcrest Nigeria Energy Ltd.

Another beneficiary of the

divestment by upstream foreign

players is Atlantic Energy

C o n c e p t L i m i t e d w h i c h

acquired (OMLs) 26, 30, 34 and

42.

Similarly, the opportunities

presented to indigenous

companies to become owners of

upstream assets, in turn,

resulted in the engagement of

indigenous contractors. A case

in question is the engagement of

Century Energy Services by

Amni Petroleum Development

Company Limited, Nigeria

Pe t r o l e u m D e v e l o p m e n t

Company and Afren Plc.

Also today, International

Energy Services (IESL) is

currently engaged in the

designing of facilities for the

deepwater projects of Chevron

and Total Upstream Companies.

The logistic base of LADOL is

now busy with projects from

Shell, Chevron and other

multinational oil companies.

E q u a l l y , i n d i g e n o u s

companies are now taking

control of lucrative pipeline

construction projects. The

Managing Director of OilServ,

Mr Emeka Okwuosa, argued

that the competition is now

between indigenous companies

and their foreign counterparts.

For instance, he said the East-

West Gas Pipeline project

awarded to his company over

other foreign contenders was

made possible because of the

steady investment in capacity

building, and insistence of the

Pe t ro leum Minis te r tha t

indigenous companies must be

accorded due recognition in line

with the Nigerian Content Act.

He said the Engineering

Procurement and Construction

project according commenced

from the last quarter of 2012 and

would be completed by early

2015.

M o r e i m p o r t a n t l y, t h e

e n g a g e m e n t o f s e v e r a l

Nigerians as skilled and

unskilled staff has helped to

offshore to access funds.

reduce the rate unemployment

and restiveness in the Niger

Delta.

Impact on Niger Delta

communities

According to Joseph Evah, the

National Coordinator of Ijaw

Monitoring Group, Mrs. Alison-

Madueke’s exposures while

working for Shell as well as other

international experiences

thereafter, prepared her for the

job of the minister, even at the

expence of pitching her against

her former employers.

He noted that although Niger

Deltans were initially afraid

when she was appointed as the

Petroleum Minister, but her

performance in terms of making

jobs available for the youths of

the Niger Delta through the

engagement of indigenous

contractors made them have a

change of heart.

Financial institutions

The need to ensure that

indigenous contractors had

access to funds to execute its

projects made Shell to enter into

an understanding with a select

group of Nigerian banks in 2012.

Under the terms, Shell will act as

guarantor for its indigenous

contractors without having to go

Furthermore, the Central Bank

of Nigeria, CBN, in a recent

s ta tement indicated that

i n c r e a s e d a c t i v i t i e s b y

i n d i g e n o u s c o m p a n i e s

contributed to the appreciation

of the Naira against the Dollar

and other currencies.

To underscore the importance

of funding, the Executive

Director (Risks) Mr Kehinde

Lawson, said that First Bank has

participated actively in excess of

$3billion in both upstream and

downstream transactions in the

petroleum industry.

The general impact of financial

institution’s involvement is

largely seen to be responsible for

11 Nigerian banks being listed

among the top 200 banks in

Africa. The list was published in

The Banker, a publication of the

Financial Times of London.

According to the Banker,

African banks have grown

rapidly in the past few years.

Based on 2010 results, 19 of them

have Tier 1 capital of more than

$1 billion, a level that roughly

marks the cut-off point for the

world’s biggest 500 banks.

Nigerian banks on the list

included Zenith, First Bank,

Guaranty Trust, Access, UBA

a n d F i d e l i t y, F i r s t C i t y

Monument, Diamond, Skye,

Stanbic IBTC, and Eco Bank.

Equally, indigenous companies are now taking control of

lucrative pipeline construction projects. The Managing Director of OilServ, Mr Emeka Okwuosa, argued that the competition is

now between indigenous companies and their foreign

counterparts

12FeedbackFeedback

PIB: Panacea to

efficient petroleum

industryBy Olaiwola Alao

Ma n y N i g e r i a n s

snorted when the

oil subsidy was

removed on the New Year day

last year. With hindsight, many

more will say, in retrospect, that

the nationwide protests which

greeted the removal of subsidy

on petrol were a blessing in

disguise.

Put more directly, the protests

served as a sort of public opinion

tool which triggered the much-

needed reforms going on in the

pet ro leum indust r y. The

January 2012 protests therefore

became an important factor in

President Goodluck Jonathan’s

government’s understanding of

what the people wanted and

where his government needed

to focus its attention regarding

the energy sector. While the

most strongly-held opinion may

not necessarily be the most

accurate, it was realized, for

instance, that Nigerians were

not absolutely against the

removal of subsidy on petrol, but

needed to be better oriented on

the advantages of the policy.

After the Farouk Lawan-led

ad-hoc committee set up by the

House of Representatives to

probe the subsidy regime lost its

c r e d i b i l i t y, t h e f e d e r a l

government set up committees

and task forces to investigate,

ascertain and recommend the

way forward in various sub-

sectors of the petroleum industry.

T h e A i g - I m o u k h u e d e ’ s

Technical Committee, chaired by

the MD/CEO of Access Bank,

Aigboje Aig-Imoukhuede, was

set up by the minister of finance,

Dr Ngozi Okonjo-Iweala in May

2012 to scrutinise the fuel

subsidy payments handed oil

marketers during the 2011 fiscal

year.

In its report submitted to

P r e s i d e n t J o n a t h a n , t h e

c o m m i t t e e u n c o v e r e d

i l l e g i t i m a t e t r a n s a c t i o n s

involving 50 oil marketing

c o m p a n i e s . O u t o f 8 5 7

t r a n s a c t i o n s v a l u e d a t

1,112,836,823,380.43 examined

by the committee, 661 (valued at

N880,644,248,166.23) were

classified as legitimate, while

196 t ransac t ions wor th

N232,192,575,214.20 (involving

the 50 companies ) were

illegitimate. The committee

r e c o m m e n d e d f u r t h e r

investigation and prosecution by

law enforcement agencies.

Other committees/taskforces

set up to look into issues in the

petroleum sector include: the

S p e c i a l Ta s k Fo r c e o n

Governance and Controls, set

up by the minister of petroleum

resources and headed by Dotun

Sulaiman, to clean up the

NNPC and its subsidiaries; the

Petroleum Revenue Special

Task Force, a 16-man team also

set up by Mrs Diezani Alison-

Madueke and led by Mallam

Nuhu Ribadu to determine and

ver i fy a l l ups t ream and

downstream petroleum revenue

taxes and royalties due and

p a y a b l e t o t h e f e d e r a l

government; the National

Refineries’ Special Task Force,

headed by Dr Kalu Idika Kalu to

ensure self-sufficiency of

petroleum products in Nigeria.

Two other bodies directly

concern the biggest issue in the

petroleum sector today: the

Petroleum Information Bill

(PIB). They are: the Osten

Olorunsola Committee and the

Udo Udoma Task Force. After it

was discovered that two

separate bills were sent to the

National Assembly, there was

the need to re-draft a standard

document to prevent the fate

suffered by the bill in the past.

Hence, the setting up of the

committee headed by Mr Osten

Olorunsola, director of the

Department of Petroleum

Resources (DPR). To ensure a

speedy passage of the bill this

time around, the executive arm

of government realised that a

be t te r synergy wi th the

legislative arm was necessary,

thereby leading to the creation of

the Udo Udoma Task Force to act

as a liaison between the two

arms.

It is common knowledge that

previous administrations have

avoided the legislation of a

single document which would

e f f e c t i v e l y r e g u l a t e t h e

s t r u c t u r a l a n d f i n a n c i a l

management of the petroleum

industry. Even when, towards

the end of the 6th Assembly, the

president promised to accent the

bill if sent to him by the

legislature, those of us who

understand the potency of the

PIB to revolutionalise the oil and

gas industry were surprised that

one way or the other the bill did

not make it out of the National

Assembly. Considering the push

by the Jonathan administration

for the prompt passage of the

PIB, and despite the clout pulled

by those hell-bent on preventing

its passage and the ethnic

coloration given it to elicit

unfavourable public opinion, it is

clear that it holds the key to the

success of any meaningful

reform in the industry. It could as

well define this administration

as that which sought and

delivered a permanent answer to

the perennial crisis in the

industry.

‘Indigenous participation

key to petroleum development’

It is becoming the fad for

Nigerian companies to go

funds shopping in offshore

exchanges; Lekoil recently

jumped the band wagon. Chief

Executive Officer, Mr. Lekan

Akinyemi explains:

Tell us more about Lekoil

Leko i l was f ounded in

December 2010 and is an Africa-

focused company with assets in

Nigeria and Namibia with a

strong technical and commercial

team. We recently listed on the

AIM exchange in London.

What is the market focus of

Lekoil?

It is a Pan-African company

with a balanced portfolio of

producing and exploration

assets. Near-term focus is in sub-

Saharan Africa.

What difference does Lekoil

bring to the table?

Access to capital markets,

s t r o n g t e c h n i c a l t e a m ,

disciplined approach to building

an asset portfolio and strong

local partnerships.

Why Africa?

H i s t o r i c a l l y , c a p i t a l

expenditure relative to resource

availability has shown that

Africa is under explored. In the

context of Africa, Nigeria is also

under explored – we haven’t

really had to do much in terms of

enhanced oil recovery in

Nigeria and there are some

areas where we think that if you

bring new technology to bear,

there’s a lot that can be done.

You get such a fantastic return

from what is already in place

that sometimes people don’t

push too hard on the exploration

side. But there’s a lot of room for

exploration in Nigeria and

many parts of Africa.

What is your perspective on

Nigerian oil & gas industry

reform?

We l ike the idea tha t

indigenous companies should

be allowed to grow, to flourish

and to attract capital. Over the

decades the majors and large

service companies have done a

fantastic job in terms of

k n o w l e d g e t r a n s f e r t o

Nigerians. However, reforms

like this are significant and

should be given time, we have

to keep going at it to get it done.

Many African countries are

discovering their hydrocarbon

assets. What does it mean for

Lekoil in terms of investment

options?

Good question. We have a

couple of assets in Namibia.

They are in a different phase of

the assets life cycle; in terms of

differentiation, a lot of the assets

in Nigeria fall into either

producing or near production

assets, except for the ones in the

Dahomey Basin. In the rest of

Africa, there is a tendency to take

more risks on the geological and

t e c h n o l o g i c a l s i d e , b u t

sometimes, a little bit less risk, in

terms of just the working

environment. In other words

there are opportunities to

balance risk in our portfolio of

assets.

How do you think Nigeria can

i m p r o v e i n d i g e n o u s

participation in the industry?

Improvements can be made

with better access to capital, by

improving structures and

transparency.

What is Lekoil’s growth

aspiration in the coming years?

L e k o i l

intends to use its

access to capital and

strong local partnerships to

build a multi-asset exploration,

development and production

business in Africa.

Does Lekoil have the capacity

of to take over assets being

d i s p o s e d b y s o m e

multinationals in Nigeria like

Shell, Petrobras?

From a disciplined portfolio

perspective, we are well

positioned to acquire divestment

assets because of our access to

the capital markets. We do

in tend to par t i c ipa te in

divestments where we believe

we are able to unlock value

through a combination of smart

financing, technical expertise

and partnerships.

FocusF 13

Our target is to ensure more jobs domiciliation —NCDMB

A welder

At the r ecent ly

c o n l u d e d ,

O f f s h o r e

T e c h n o l o g y

Conference, OTC,

in Houston Texas, USA, the

Executive Secretary, Nigerian

Content Management Board,

NCDMB, Mr. Ernest Nwapa,

spoke on three years enactment

of the Nigerian Content Act and

other industry-related issues, as

captured by Clara Nwachukwu

and Sebastine Obasi. Excerpts:

A lot have been said about the

PIB, what is your opinion of the

bill in relation to the Content

Act?

I have the firm belief that the

PIB will make investments flow.

It is a very good assumption. We

believe that once the PIB is

passed, there would be a lot

investment inflow. That is

conventional wisdom. As I said

in my short remarks (during the

panel discussion), if the PIB is

passed and investments flow

and those investments produce

revenues for Nigeria that is

expected. But what we have

been looking for is the kind of

impact that can give us

employment on top of the

revenue. That type of impact will

not come from investments that

do not result in domiciliation.

It is a good thing that we have

had a three-year head start from

local content. The three–year

start that we have had from local

content has enabled us to create

some capacity in Nigeria such

that as the PIB is being passed

and investments are coming, we

will then have jobs arising from

the investments. Where we are

today, if Petroleum Technology

Association of Nigeria, PETAN

companies, if service companies,

our multi-national companies do

not establish yards where they do

things in Nigeria, when the

i n v e s t m e n t s f r o m t h e

International Oil Companies,

IOCs come, if they are investing

$50 billion and $45 billion goes

back to their countries, we have

only touched the surface of the

water.

We need to go deep and that is

the responsibility of the Nigerian

Content Development and

Monitoring Board, NCDMB,

working with the industry to

create these facilities, to expand

these shortfalls. That is why the

Honourab le Min i s t e r f o r

Petroleum Resources is pushing

that we launch the industrial

parks project, what we call the

Nigerian oil and gas industrial

parks scheme, NOGIPS. This will

create the opportunity where we

use the Nigerian Content Fund to

create some satellites close to the

o i l f i e l d s a n d g e t l o c a l

entrepreneurs to bring the

OEMs, the big manufacturers

such as GE, which we all saw

t o d a y . I f t e l l t h e b i g

manufacturers to come and

manufacture in Nigeria, they ask

you how do we get power? How

do we get land? How do we deal

with community issues? We want

to take away all those problems

from them by setting up

industrial parks. In those parks

we will have electricity, we will

have infrastructure. They come

in. the communities are friendly

with us. They know we mean

well. We have experimented in

Kpolaku, Bayelsa State. We have

moved in there. We have bought

land, which we have cleared. We

are welcome by the community.

We are going to expand that. By

the time we finish it, it will be a

mini estate.

The responsibility of the

manufacturers will be to come

there and select the local

p a r t n e r s t h a t w o u l d

m a n u f a c t u r e t h e i r l o c a l

components. They will just plug

and play. That is the facility we

are trying to introduce now. That

is the area we want to go because

this whole issue of bringing in

investments. So, it is one thing to

get investments in, because we

need to sustain our revenue from

oil production. But the real end

game for us is when as we are

getting the revenue, we are

getting our people working. Our

people cannot work in NNPC,

Shell and Chevron. You know

what it takes to employ. You can

only employ about 150 people. If

you have 10 or 20 government

agencies, they cannot employ

more than 50,000 people. The

projects that would employ multi

tiers is when we start having

these people that are working

every day, manufacturing

components, manufacturing

consumables. That is the focus

and that is the strong linkage

between the Nigerian content

law and the PIB.

How then would you describe

three years of Nigerian

Content? Can you say it has

been successful, and what have

been the challenges?Your guess

is as good as mine. I do not

believe in talking about my own

performance as a Board, but the

feedback we get like all the oil

c o m p a n i e s , t h e s e r v i c e

companies advertised for the

three-year anniversary. I said to

my Board that we should not

over celebrate it this year. Let

other people give their own

testimonies. The testimonies are

clear. If you look at expatriate

utilisation, we are controlling it.

We are telling them to go and

find Nigerians to partner with.

That is very fundamental. The

contracts that are being

awarded, you will see that

mostly all the contracts have

Nigerian participation if not

completely, but up to 80 – 90

percent Nigerian participation.

So, it is one thing to get investments in, because we need

to sustain our revenue from oil production. But the real end

game for us is when as we are getting the revenue, we are getting our people working

14Focus

‘There's more convergence than divergence in PIB’

Regulat ion has been identified as ke y t o f u t u r e industry growth and development,

the Director, Department of Petroleum Resources, DPR, Mr. Osten Olorunsola in this i n t e r v i e w w i t h C l a r a Nwachukwu and Sebastine Obasi, in Houston Texas, USA, speaks on the role of the regulator under a new PIB. Excerpts:

A lot of opportunities have been identified even in spite of the criticisms against some of the fiscal provisions in the Petroleum Industry Bill, PIB. In the light of all the views that have been expressed, how do you think these opportunities and prospects can be realised?

My view is that you cannot take away the importance of dialogue. The more we discuss and the more we share, the more the chances that we will get to a common ground at some point. In my view, I am quite happy with what has happened this morning. It shows there is still a lot of an interest. Two, the mere fact that people are speaking their minds is even the more important thing. If people keep quiet over their views, it does not help. It is nice that people came up with their views. And the key areas of gaps are narrowing down. If I take the words of the honourable gent leman, Honourable Osagie (House of Representatives, Deputy Chair on PIB), we will soon see the end of the PIB.

In view of the divergence of views, do you really think we will have a convergence such that the National Assembly will come up with a bill that protects the national interest even as it e n s u r e s r e t u r n s o n investments?

The b i l l has severa l hundreds of pages. The areas of divergence you are talking of are less than 10 pages. People have been repeatedly talking about these 10 pages, and completely undermining the 200 pages that are the areas of convergence. We should focus more around where we have actually agreed. People can choose to look at a cup as half empty. I personally like to look at a cup as half full. Let us give attention to the 200 pages that we have convergence, and then address these little areas that are remaining.

In my view, there are three or four things people are still

talking about. If they don’t talk about fiscal gaps, they talk about host communities, or institutional authorities. But there are several other parts of the PIB that we can actually run with today. We should not stop talking about these little areas that are remaining. In any case, after going through these for 12 years, if it is only three or four areas that are remaining, we can try and resolve them. My personal view is that we should not spend another 12 years trying to fix these three or four items. Where we are today, we are ready to go. I think half PIB is better than none

. One of the worries raised

here today was that rather t h a n r e d u c i n g o r streamlining regulations, we a r e h a v i n g m u l t i p l e regulations instead?

It is true. It is an area that still has to be looked at, not from the point of what can be resolved in Nigeria alone, but actually looking at the benchmarks across the whole world. Apart from fiscals, one thing international investors look at is the robustness, simplicity and transparency of your regulation. The National Assembly is aware of that. I think they will look at it very well. However, in looking at it, we also have to take our local environment into consideration. The mere fact that there is only one

regulator does not mean that we cannot have another two or three. The only thing is that it has to work, and it does not have to become a bureaucracy to the industry. That is really the point. Any institution you have too many

regulations, it is a recipe for disaster. I think the National will look at that angle.

In that case, are you not

worried that with these streams of regulations, that the DPR and some of its functions are being whittled down?

It is not just the DPR; even the PIB itself has addressed it to some extent. Even some of the extant regulators that have been around, they have been somehow addressed in the PIB. However, we have to wait until it becomes an Act. If it does not become an Act, all of them will still continue to parade themselves as regulators. We have made our views known very well. In any case, we were part of the team that put the bill together as an executive arm. We have to wait and see the wisdom of the outcome from the National Assembly.

Coming down to specifics, we have been going on and on about new acreage allocation especially for the marginal fields operations. Is it fair to say that it is not materialising? If it is, what are those areas that you see as threats?

It is not proper to say that it is not materialising. We are working through it. It does take time to press go. Those are the things we are basically looking at. One of the major challenges is the fact that most of the fields that probably will come out as the next round, they are in assets that we are still trying to renew for the licence holders. If you don’t renew the licences, there is no point going ahead with fields people don’t even have titles

to. Some of those fields are within leases that are going through renewal right now. You need to renew the leases first before you give out the fields within the leases to other people as marginal

The bill has several hundreds of pages. The areas of divergence you are talking of are less than

10 pages. People have been repeatedly talking about these

10 pages, and completely undermining the 200 pages that

are the areas of convergence

CONTINUES ON PAGE 15

Mr. Osten Olorunsola

15Focus

‘There's more convergence than divergence in PIB’

fields. That’s what we are doing basically. The leases have expired. It is like building a house without putting a foundation. You do the foundation first before you start raising the walls.

Would it be correct then to say that some of these lease holders are hanging on to them deliberately?

It is not their baby, it is our baby and it is left for government to renew. They have applied for renewal, and government is going through the process of renewing them.

Looking at marginal fields operations, we have been told that they contributed only 12 percent of total production. And here we are, trying to give them more acreages as they have demanded. Yet there are still so many of them that are not into production yet. Is it then wise to give more to people who are not utilising these assets?

Let us correct it first and foremost. The 12 percent you heard is not from marginal f i e l d s . I t i s f r o m a l l i n d i g e n o u s p r o d u c e r s i n c l u d i n g N i g e r i a n Petroleum Development Company, NPDC. The marginal fields are far below that. The marginal fields are doing only 50,000 barrels per day out of 2.5 million barrels. Their cry for more is legitimate. It is their right to do so. After 50 years of production in Nigeria, we cannot be going about to say t h a t t h e i n d i g e n o u s production accounts for only 12 percent. It should be far more than that.

Even the government pol icy o f encouraging indigenous participation is in that direction. They should all be supported.

If you look at the marginal fields specifically, nine out of 24 are already producing today. Another four or five will soon be producing. They are doing pretty well. Don’t forget that the first four or five

years, they all had issues because it was a new law that came up. So, you don’t expect them to start from day one. They had all sorts of issues like funding. Most of the banks in Nigeria did not know how to fund long term projects like oil and gas. It is not an ATM where you put in your card and get money immediately. They needed time to understand the industry before putting in their money to support any

investment in that direction. The second was that they

a l so needed to bu i ld capacity. They needed to get the right people to help them to move those huge capitals in the right direction.

The third thing was that quite a few of them had some litigation among themselves as regards partnership issues. Some of them went to court. Now they are all c o m i n g o u t o f c o u r t gradually, we will see a lot of

CONTINUED FROM PAGE 14actions going forward.

In all of these, do you think they are adequately able to overcome these challenges you mentioned?

That is the point I am making; they are already in that direction. If you go to some of the marginal fields in Nigeria, you will be shocked by what you see. What some of them have put on ground will rival any international company in the world. I have

OPEC’s high output, high price days dwindleoffering higher price support to rival producers - or protect market share by keeping the taps open and allowing prices to fall.The Organization of the Pe t r o l e u m E x p o r t i n g Countries’ Friday meeting was content to simply agree, as expected, to retain the group’s 30 million barrels per day (bpd) output target through the rest of the year.

It will meet again on December 4. Ministers also agreed to set up a committee to investigate the impact of shale.

Oil is just above the $100 level favored by the group that pumps a third of the world’s oil. OPEC’s leading producer Saudi Arabia says the world oil market is in “good shape”.

For now, maybe. But OPEC has little room to pump more due to the U.S. oil boom that has shifted the existing competition for marketshare once and for all to Asia and intensified a rivalry between OPEC’s top two producers Saudi Arabia and Iraq there.

Core Gulf producers think OPEC will still be able to pump at least 30 million bpd, provided U.S. shale grows at a moderate pace. While that does not leave much room for growth, it implies that OPEC will not need to scale back significantly.

“This is not the first time

CONTINUED FROM PAGE 1 n e w s o u r c e s o f o i l a r e discovered, don’t forget history,” said the influential Saudi Oil Minister Ali al-Naimi. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”

There has not been such a surge in flows from outside OPEC in decades and that has rung the alarm with some members - particularly Nigeria and Algeria - that feel squeezed.

“The rapid ramp up in U.S. s h a l e b e a r s a s t r i k i n g resemblance to the situation in the early 1980s when North Sea oil production from the UK and Nor way was r i s ing ver y quickly,” said Neil Atkinson, director of energy research at Datamonitor.

“This presented OPEC with an enormous challenge because at the time demand growth was very weak. Nobody’s saying that will happen again, but all the ingredients in that brew are starting to come into place.”

Oil above $100 has freed vast quantities of U.S. shale oil in North Dakota and Texas that helped boost U.S. output by 850,000 bpd by the end of 2012.

That is more than each of OPEC’s two smallest producers, Qatar and Ecuador pump in total. Light, low sulfur shale poses no threat to OPEC’s Gulf members that sell heavier crude - but is a headache for Nigeria and Algeria, which produce oil of similar quality.

The surge may even push the United States closer to the Saudi

mindset, thinking more like a producer than a consumer keen to keep oil cheap.

Last year’s surge in U.S. output came with a hefty price tag as the rush to produce drove the cost of pumping marginal crude to $114 a barrel, according to a Bernstein Research report.

While Riyadh welcomes the rise of U.S. shale, the Saudi oil minister himself has said the kingdom would be lucky to go beyond current production rates of about 9 million bpd by 2020 due to new global supplies.

ut during that period, BIraq’s production will have doubled from current rates of around 3 million bpd, if all goes to plan - a concern for Riyadh.

At some stage, Saudi Arabia may decide to open the taps to shut in the marginal barrel and make Iraq feel some pain, said analysts. The kingdom has done this before - early last decade it let the price fall to punish non-OPEC producers. There are no signs of that now.

Oil at $70-$80 could start to impact the economics of some shale oil plays. Iraq’s breakeven budget price is well above $100 a barrel.

With no pressure on its budget, analysts say Saudi Arabia could easily pump 8 million bpd at $80 without breaking sweat. After pumping 10 million bpd with oil at $110 last year and 9 million bpd with oil at $110 this year, it has built up formidable financial

reserves.Analysts’ estimates for Saudi

Arabia’s break-even oil price this year vary from around $65 a barrel to $85, depending on projections for its spending.

“For Saudi Arabia, there’s plenty of room on the downside in terms of price and quantity before they start to panic,” said Yasser Elguindi of Medley Global Advisors.

“North Dakota will cut before anyone in OPEC if oil falls to $70.”

Others in OPEC - including Iran, whose revenue has been sunk by Western sanctions directed against its nuclear program, Iraq and Algeria - need oil well into triple digits to balance budgets.

This may lead them to call on Saudi Arabia to cut supply in order to support prices. But Riyadh may be thinking counter-intuitively.

“Saudi Arabia’s challenge will be to convince Nigeria and Algeria that higher prices will encourage the economics (of U.S. shale) that are their undoing,” said Elguindi.

The group will choose its next secretary general when it meets again in December, said the Saudi oil minister. The issue has stalled on competing candidates from Iran, Iraq and Saudi Arabia. Friday’s meeting continued to adjust the criteria for prospective candidates to come forward.

been there myself. I am not talking of pictures.

You said about four or five marginal fields will come on stream very soon. Could you please tell us their names?

I cannot give their names now. I know that Sogenal is one of the marginal fields companies; they are almost coming on stream very soon. Frontier has just come on stream, they are producing. There are three others.

OTC IMAGES SPREAD

OTC IMAGES SPREAD

18FinanceRecently, the Chief Executive

Officer of Chinak Group, Mr Chris Igwe spoke about e x p a n s i o n p l a n s b y a subsidiary of the Group, Mainland Oil and other industry issues as captured by Clara Nwachukwu. Excerpts:

e hear you w a n t t o e x p a n d y o u r operations,

how much specifically do you want to invest in the expansion o f y o u r d o w n s t r e a m operations?

In the first phase we are going to spend about N2 billion.

How do you intend to source for the funds?

We source our funds locally and it is quite challenging. And this is the area I appeal to the media to drum hard on. The Central bank Governor should come to our aid because our interest rate in Nigeria is about the highest in the world.

In US here interest rate is about four percent. How do we c o m p e t e w i t h f o r e i g n companies that get funding at four percent interest rate while we in Nigeria get funds at over 20 percent? That is a major challenge.

So, I want to use this opportunity to appeal to the Central Bank Governor to set up a special intervention fund for the downstream oil and gas industry. This has become important to bail out some operators that have made the mistake of taking short term l o a n s f o r l o n g t e r m investments. That is why some of them are not finding their feet.

But in Mainland we have a good structure peopled by profess ionals . But then funding at current interest rate h a s r e m a i n e d a m a j o r challenge.

Apart from finance what other challenges weigh against your business?

Finance is the key. The second one is infrastructure. Government has to develop infrastructure to enable businesses in the country. For us in the logistics business it is difficult to move equipment when there is no infrastructure.

We do a lot of work to maintain the logistics business because of poor infrastructure. So government should come up with more infrastructures to aid our operations. Why can’t w e h a v e e f f e c t i v e r a i l transportation system to move

W

Mainland Oil plans N2bn investments in operation expansion

products? In Europe the fuel haulage system depends on the rail transportation system. Why can’t we have such things in Nigeria? These are the things that w o u l d p r o m o t e t h e provisions in the PIB.

It is not enough to pass a law; but do you have what it t a k e s t o e f f e c t i v e l y implement the law? So in f ras t r uc ture i s ver y important.

And then there is the issue of finance. Finance is the key!

G i v e n y o u r g r o w t h projections in the short term, may we have an idea of your budget profile?

Well, in the short term our group has the ambition to grow the business so rapidly a s t o c r e a t e n e w o p p o r t u n i t i e s f o r e m p l o y m e n t . I n f a c t whenever I see Dangote employing Nigerians in their thousands, I nurse this strong feeling that our group should tie the same line; even if we do not employ the same number, we want to at least do half of that.

We are concerned as a group to take out more Nigerians from the labour market. So in the next two years, we want to employ 10,000 Nigerians. So when we do that we would feel confident that we are smarting up. So that is our starting point. When we c r e a t e h i g h v o l u m e

employment, then we know that we have started.

Mainland Oil and Gas has become a popular brand in the downstream sector of the d o m e s t i c p e t r o l e u m industry. May we have an idea of the enablers that drive your growth?

Mainland is a subsidiary of the Chrisnak Group of companies of which I am the Group Managing Director. We effectively started in 2008, and we were touched by what Nigerians go through especially in the rural areas before they get petroleum products,

So we stared with our first fuel service station at Umuoji Road in Onitsha Anambra State. Today we have over 14 s ta t ions care fu l ly and consciously located in the rural areas because of our belief in and passion for the welfare of the rural dwellers. However we have some of our stations in urban areas.

So, we are driven by our pass ion t o make fue l

available to the ordinary Nigerians. That is the vision behind Mainland Oil, a vision that drives our business strategies.

So, we started from there and the rest is history.

Given the challenges in pushing products to the rural areas, how have you been able to break even in marketing products in such remote locations?

In our group, we have a strong logistics arm. And because we are also in logistics business it has been easy for us to optimize internal synergy in bulk transshipment of products. We have a robust fleet of haulage trucks which we readily deploy in products bridging.

We also have our tank farm which happens to be one of the biggest storage facilities in Calabar, Cross River State. With our wheeling and storage capacity we are licensed by the Department of Petroleum Resources to get products allocation from N i g e r i a n N a t i o n a l Petroleum Corporation ( N N P C ) f o r d i r e c t distribution in the market.

We also import directly to mee t demand on our facilities in addition to holding strategic reserves to ensure that that all our storage facilities are wet with products to continuously and promptly respond to fuel demand from individuals and businesses.

Given the level of your p a r t i c i p a t i o n i n t h e domestic fuel market, what is your view of the fuel subsidy controversy that rocked the market in recent times?

The subsidy probe is a step in the right direction but there appears to be little will to drive the implementation o f t h e p r o b e recommendations. The spirit with the probe was pursued appears to be going down.

From where we are sitting, it is obvious that Nigerians want to see the outcome of the probes so that it would serve as deterrent to those who come to the market to reap from where they did not sow. People should know that there is law in the land and all operators in the business must operate within the ambits of the laws that govern the state.

In the short term our group has the ambition to grow the business so rapidly as to create new opportunities for employment

Mr Chris Igwe

19TechnologyJimlaw2004@gmail.com

Offshore Drillingm a j o r

d i f f e r e n c eb e t w e e n onshore and o f f s h o r e

drilling is the type of the drilling platform. Also, in offshore drilling the drill pipe must pass through the water column before entering the seafloor or lake. These type (offshore) of wells have been drilled in waters as deep as 10,000 ft (305 m). Below is an overview of drilling in offshore environments.

Drilling TemplateOffshore oil drilling is an oil

extraction technique which allows oil companies to access deposits of oil buried under the ocean floor. Most typically, offshore oil drilling sites are situated over the continental shelf, although advancements in drilling technology have made platforms even further out to s e a e c o n o m i c a l l y a n d physically feasible.

Offshore drilling requires the construction of an artificial drilling platform, the form of which depends on the characteristics of the well to be drilled. This drilling also involves the use of a drilling template that helps to connect the underwater drilling site to the drilling platform located at the w a t e r ’ s s u r f a c e . T h i s template typically consists of an open steel box with multiple holes, depending on the number of wells to be drilled. The template is installed in the floor of the water body by first excavating a shallow hole and then cementing the template into the hole. The template provides a stable guide for accurate dril l ing while allowing for movement in the overhead platform due to wave and wind action.

Drilling PlatformsThere are two types of basic

A

OIL AND GAS TECHNOLOGY

Drilling Types and Techniques Jim-Rex Lawson MOSES offshore drilling platforms, the movable drilling

rig and the permanent drilling rig. The former is typically used for exploration purposes, while the latter is used for the extraction and production of oil and/or gas.

A variety of movable rigs are used for offshore drilling. Drilling barges are used in

shallow (<20 ft [<6 m] water depth), quiet waters such as lakes, wetlands, and large rivers. As implied by the name, drilling barges consist of a floating barge that must be towed from location to location, with the working platform floating on the water surface. In very shallow waters, these may be sunk to rest on the bottom. They are not suitable for locations with strong currents or winds and strong wave action. Like barges, jack-up rigs are also towed, but once on location three or four legs are extended to the lake bottom while the working platform is raised above the water surface; thus, they are much less affected by wind and water current than drilling barges.

Submersible rigs are also employed in shallow waters and, like jack-up rigs, are in contact with the lake bottom. These rigs include platforms with two hulls positioned above one another, with the lower hull acting like a submarine. When being towed to a new location, the lower hull is filled with air and serves to float the entire platform. Once on location, the lower hull is filled with water, and the rig sinks until the legs make contact with the lake bottom. As with the previous movable rigs, use of this type is limited to shallow water areas.

The most common movable offshore drilling

rig is the semi-submersible rig. It functions in a similar manner to the submersible rig, with a lower hull that can be filled or emptied of water. However, this type of rig does not contact the lake floor but floats partially submerged and is held in place through a number of anchors. This type of rig provides a stable and safe working platform in deeper and more turbulent offshore environments, and when high reservoir pressures are expected. The final type of movable drilling rig is the drillship. These are ships designed to carry drilling platforms great distances offshore and in very deep waters. A drilling platform and derrick are located in the middle of a large, open area of the ship, and the drill is extended through the ship to the drilling template.

Wh e n ex p lo ra t o r y d r i l l i ng l oc a t e s commercially viable oil or gas deposits, a more permanent drilling platform is required to support well completion and oil and/or gas extraction.

A variety of such production platforms are used for offshore drilling. Fixed platforms are typically used in areas with water depths less than 1,500 ft (457 m).These platforms contact the bottom using concrete or steel legs and are either directly attached to, or simply rest on, the bottom. A variety of other production platforms are available for deeper water conditions.

Offshore Drilling Platforms

A Floating Production System Source: Minerals Management Service

[PART 2]

20Power

Su c c e s s f u l

bidders in the o n g o i n g privatisation in t h e p o w e r

sector have expressed eagerness to take over operations from the Power H o l d i n g C o m p a n y o f Nigeria, PHCN Distribution Companies (DISCOs) after the successful payment of 25 per cent of their investment.

However, the Federal Government through Bureau of Public Enterprises, (BPE) and the Secretariat of N a t i o n a l C o u n c i l o n Privatisation, (NCP), stated that successful bidders for the DISCOs will commence

Kunle KALEJAYE

PHCN: Investors await takeover amid epileptic supply

full operations only after 75 per cent down payment for their investments have been completed.

NCP in a statement stated that core investors are only allowed to take over the c o m p a n i e s t h e y h a v e purchased on completion of 100 percent payment of their bid consideration and PHCN successor companies will not be different.

The council reiterated that successor companies would be formally handed over to the bidders after full payment in a ceremony that will herald the takeover of the power sector by the private sector.

NCP also plan to allow purchasers access to the companies in order to p r e p a r e f o r t h e

implementation of their business plans laid out in their proposals submitted to the Bureau o f Publ ic Enterprises;

H o w e v e r , o u r cor respondent rel iably gathered that preferred bidders of some DISCOs are eager to proffer solutions to the erratic power supply in the country.

The winner of one of the DISCOs in Lagos told our correspondent in confidence that in the next three to four months, investors wil l commence complete take over.

“We have invested 25 per cent and as businessmen, we need to have a return on investment. We cannot allow our money to be tied down.

“In the next three to four

months, we would have taken over, but labour issues must be settled before we can come in. Don’t forget that there is difference between hand over and taken over,” the source said.

Our correspondent also gathered that investors plan to target corporate business companies, large firms and industrial companies to recoup their investments in the next six months to one year on assumption of operations before shifting attention to residential areas.

Aside from return on investment, one of the major drives by investors to commence operations in the power sector according to findings is to put an end to d erratic power supply in the c o u n t r y. E l e c t r i c i t y

consumers in recent time have complained about poor power supply in the country.

It would be recalled that the Transmission Company of Nigeria, TCN, had earlier r e v e a l e d t h a t , p o w e r generation has improved significantly to over 4,000 megawatts.

Meanwhile consumers across the country have compla ined about the constant darkness that their homes and industries have been plunged into since February, about the time P r e s i d e n t G o o d l u c k Jonathan, in an interview with Christiane Amanpour, said Nigeria’s power supply had tremendously improved.

The Chairman, House of Representatives Committee on Power, Patrick Ikhariale, also alleged that apart from Egbin Power Plc, all the power generating companies i n t h e c o u n t r y w e r e functioning at less than 40 per cent capacity. But a minor relief might have come with the TCN announcement of an increase of about 1,160 megawatts.

The Assistant General Manager of the TCN, Mr. Dave Ifabiyi, said that power generation would reach its peak in Nigeria when all the National Integrated Power Projects (NIPPs) were fully integrated into the national grid.

He attributed the recent increase in the generation capacity to the privatisation of the sector by the Federal Government, and appealed to energy consumers to continue to partner with TCN in protecting electricity installations and forestalling vandalism. He said that vandalism constituted a major setback to efforts to improve power supply.

Nigeria currently needs over 10,000 megawatts of electricity to guarantee stable electricity supply in the country.

Power plant

21Power

The Minister of Po w e r, P r o f Chinedu Nebo has announced the planned

streaming of additional 1,000 Mega watts, MW of solar power yearly to boost energy needs in the country over the next 10 years, to be boosted by the coming on board of a Korean firm set to inject funds into the process.

Speaking in Abuja at the signing ceremony of a M e m o r a n d u m o f Understanding (MoU) with the HQMC, Korea Company Limited, a Korean firm that is ready to inject $30 billion for

Minister promises 10,000MW from Solar

Noel ONOJA

w o B P r i g s u p e r v i s o r s Tcharged in the

deaths of 11 workers in the Deepwater Horizon d i s a s t e r c l a i m t h e manslaughter counts in their indictment must be dismissed because they don’t apply to conduct on a foreign-owned vessel operating outside U.S. Territory.

Court filings Thursday by Robert Kaluza and D o n a l d V i d r i n e ’ s attorneys also argue that 11 of the 22 manslaughter counts don’t extend to their clients because they weren’t responsible for m a r i n e o p e r a t i o n s , m a i n t e n a n c e o r navigation of the rig that exploded in the Gulf of Mexico in April 2010.

U.S. District Judge Stanwood Duval Jr. is tentatively scheduled to hear arguments on the motions to dismiss on A u g . 7 . J u s t i c e Department spokesman Peter Carr declined to c o m m e n t b u t s a i d p r o s e c u t o r s w o u l d respond in court at the appropriate time.

Kaluza and Vidrine pleaded not guilty last year to the charges in their 23-count indictment, which accuses them of botching a key safety test a n d d i s r e g a r d i n g abnormally high pressure r e a d i n g s t h a t w e r e glaring signs of trouble before the blowout of BP’s Macondo well.

They also face one count of violating the Clean Water Act. Thursday’s court filings don’t seek the dismissal of that charge.

T h e D e e p w a t e r Horizon, a rig that BP leased from Transocean Ltd., was about 48 miles from the Louisiana coast and operating under the flag of the Marshall Islands at the time of the deadly blast.

Kaluza and Vidrine’s attorneys argue that 11 counts of involuntary manslaughter should be dismissed because the charges only apply to U.S. - owned vessels , whereas their clients were on a rig owned by a Swiss-based company.

BP supervisors challenge manslaughter charges

the next 10 years, the Minister said that this addition, no doubt is a laudable effort, describing it as truly visionary, which is in line with the President Goodluck Jonathan led Transformation Agenda.

He said that the addition of 1,000MW of solar power yearly for the next ten years will give the nation the required energy mix needed f o r s u s t a i n a b l e development, adding that this scenario will also enable spread of power across the country. He added that Nigerians even in the rural a r e a s w o u l d b e n e f i t i m m e n s e l y f r o m t h e proposed project.

Korea, according to the

Minister is a top ranking technologically advanced e c o n o m y ; n o t i n g t h a t undertaking projects of this magnitude will provide N i g e r i a n s w i t h j o b opportunities and skill a c q u i s i t i o n t h a t w i l l positively impact on our youths.

So, Nigeria as an emerging economy is set to provide the best market for direct foreign investment, especially in the power sector he said.

Prof. Nebo expressed optimism that his Ministry will continue to create more a v e n u e s f o r f o r e i g n investment and participation, so as to ensure the desired turn- around in the fortunes of the power sector.

Earlier, the Permanent Secretary, in the ministry, Dr Godknows Igali, said that the agreement signing was part of efforts geared towards the realization of the sector ’s desire for more foreign investment.

Also, speaking at the event, the Managing Director of HQMC Korea, Mr. Moon Sang Kim harped on the d e t e r m i n a t i o n o f t h e company to make a success of the project.

Solar panels

22Insurance

In s u r a n c e

practitioners have been advised to shun independent approach to doing

things and align more e f f e c t i v e l y t o t h e fundamentals of insurance practice globally which is pooling and sharing of risks.

Mr. Wole Adetimehin, President of the Chartered Insurance Ins t i tu te o f Nigeria, CIIN, said the move is necessary for insurers to tackle the challenge of h u m a n c a p a c i t y a n d maximise opportunities provided by the local content policy.

Adetimehin said that the concept of pool formation and working together are the only way operators can grow their c a p a c i t y, a d d i n g t h a t available facts show that operators have not begun to scratch the sur face of opportunities provided by the local content policy.

He said, “I would say inadequate human capacity has remained a re-occurring c h a l l e n g e f a c i n g o u r industry. It is more prominent with the underwriters . Nobody can fau l t the underlining reason of the local content policy initiative and it is meant to cut across all the sectors of the Nigerian economy. But in appraising the benefits so derived from the insurance sector, we are all having the fears as to what conclusion or report card we would give at this time.

“This is because, from all facts available, we are yet to begin. Yes, there has been some participation here and there, but it is still far from the real intention and I think the i n d u s t r y s h o u l d b e addressing these challenges in a more pragmatic manner and one of such strategies, would be to really come together, sit down and evolve practical solution.

“ T h e w h o l e i d e a o r approach of everybody going

h e M a n a g i n g D i r e c t o r o f Riskguard-Africa T

Nigeria Limited, Mr. Yemi Soladoye, has suggested t h a t e x p e r i e n c e d individuals with little capital should be allowed to participate in the proposed micro-insurance business.

According to Soladoye, there is an urgent need for the nation to have three tiers of insurance practice - underwriters, brokers and micro -insurance operators, adding that the system would really help take insurance to the grassroots.

He said, “If NAICOM opens the doors for retail business, what it gets from the over N200 billion that is generated now by o p e r a t o r s w i l l b e multiplied by five. For example, let NAICOM u r g e a l l i n s u r a n c e journalists that have been on ground for the past three years, to bring their application to run a micro-insurance company with statutory capital of a car, rent a room and parlour, have a fan not an air-conditioner and the total cost must not be beyond N1 million, including application fee of N25,000 and renewal fee of N5,000. That will open up the industry.

“In countries like the Philippines, they have three tiers of insurance system, just like what we have in the banking sector. The national level, which is the first tier operation, has its capital base, state has its own and the local government , has i ts capital base too. If we do this, insurance will get to everywhere in Nigeria.”

Soladoye noted that the insurance industry needs a treat from within, stressing that the treat would come when the N a t i o n a l I n s u r a n c e Commission, NAICOM, appreciates the fact that insurance should not be distributed only through the traditional distribution channel.

Expert urges NAICOM to liberalise micro-insurance

Shun independent approach to petroleum risks, insurers told

Rosemary ONUOHA

about it alone can hardly resolve this challenge. At our level as an institute, the challenge to us is to promote t ra ining modules and curriculums that would open or widen the mind-set of practitioners as to what to d o . C a p i t a l b a s e o f companies have grown

considerably, in fact, beyond imaginable scope.”

Adetimehin noted that beyond capital, there is a lot more that is expected from operators, stressing that operators ought not to underwrite or shoulder risks with their capital. He said capital is meant to provide infrastructure that would propel them to underwrite risks effectively.

He said operators need to develop the capacity to absolve risks, adding that the experience has been fairly

good in the oil and gas business. He noted that if stakeholders can come t o g e t h e r u n d e r p o o l f o r m a t i o n s , a s b e i n g canvassed at many levels, capacity would grow.

Adetimehin said that when operators build adequate capacity; they would even go beyond the shore of Nigeria to absolve risks. He urged o p e r a t o r s t o s h u n independent approach to doing things and align with globally practices of pooling and sharing of risks.

Oil rig on fire

23Insurance

The Nigerian I n s u r e r s A s s o c i a t i o n , NIA, has said t h a t t h e

insurance sector loses over N150 billion yearly to fake vehicle policies racketeers.

Director General of the NIA, Mr. Sunday Thomas, who revealed this, said that of the over 12.5 million vehicles on the nation’s roads, only I.5 mi l l i on have genu ine insurance particulars, which are either comprehensive and are sold at 10 per cent of the worth of the vehicle or third party which are sold at N5,000.

Operators lose N150bn to fake insurers

Rosemary ONUOHA Thomas said that about 1.5 million vehicle policies have so far been uploaded on the N i g e r i a n I n s u r a n c e Industry Database, NIID, which was designed to capture the data of all insured vehicles in the country.

He said, “So far, close to 1.5 million vehicles have been uploaded, which is still a f a r c r y f r o m o u r expectations. Our target is to upload all the vehicles in the country.

“O n e o f t h e m a j o r objectives of the NIID, is to be able to capture the data of transactions within the market. In the past, this has been very difficult to get. We had peop le bounc ing

different figures all around, we want to put an end to that, and we need some time to do that.

“We will continue to update the record. There has not been any structured policy in the past to get figures of numbers of vehicles. We only transact in terms of the financial reports not the physical presence of number of vehicles. We are looking to a situation where we would be able to say this is the number of lives and vehicles insured in Nigeria.

“If you ask me today about the number of insured vehicles in the country, I would tell you that they are about 1.5 million, because that is what I can account for

and have on my system.”Meanwhile, the Group

Managing Di rec to r o f Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, also said that of all the vehicles plying Nigerian roads, 90 per cent of the third party are fake papers.

Ogunbiyi said “We have 12.5 million vehicles on Nigerian roads according to statistics outside Okadas and tricycles. If you want to achieve the objective of Market Development and Restructuring Initiative, MDRI, increasing insurance contribution to the Gross Domestic Product (GDP), this aspect of insurance that is compulsory is in the hands of touts and we are losing income on daily basis.

takeholders in the i n s u r a n c e industry have all S

embraced the proposed consultative committee, which is aimed at uniting and promoting common interest of the industry.

P r e s i d e n t o f t h e Char tered Insurance Institute of Nigeria, CIIN, Mr. Wole Adetimehin, who disclosed this in Lagos, said that the committee w o u l d s o o n b e commissioned, adding that the Commissioner for Insurance, Mr. Fola Daniel has endorsed the initiative.

Adetimehin said that the name, Insurance Industry Consultative Committee (IICC), has been adopted by a l l s takeho lders , s t r e s s i n g t h a t t h e committee would stem the present independent ways of sorting issues in the industry.

He said the committee would be made up of executives of the various arms, which would before coming to meetings, meet with their members and table issues bothering on their operat ions and practice, and present same to the committee to be c h a i r e d b y t h e C o m m i s s i o n e r f o r Insurance.

He said, “The executives of the various arms have met to re-appraise the modalities, objectives, c o n s t i t u t i o n o f membership, frequency of meetings, chairmanship of the body, administration of the body, as well as who qualifies to be a member of the committee. All these have been peacefully resolved and conveyed to the Commissioner who endorsed the initiative.

“If we have this kind of bonding, the situation whereby the various arms of the industry approach and sort out issues with our regulator one-on-one will be a thing of the past. Such attitudes have always affected the interest of one arm of the industry or the other. As such, at the end of the day, we often have conflict of interest at the end of the day.

Stakeholders endorse consultativecommittee

L-R: Senior President of Alternative Risk Solutions Practice, Willis, Canada, Mr. William Chan; President of the Nigerian Council of Registered Insurance Brokers, Barrister Laide Osijo and Mr. Joe Beesack, Senior Vice President of Willis Canada, during the 2013 International Business Visit of NCRIB members to Canada , recently

24Labour

TRADE Union C o n g r e s s o f Nigeria, TUC, has said besides inept leadership

at most levels, the epileptic and inconsistent electricity supply is the greatest problem facing the Nigerian nation.

T h e b o d y e q u a l l y condemned the prolonged importation of petroleum products into the country and the huge loss of foreign exchange that follows it and calls on government to immediately refurbish all the old refineries to ensure they operate optimally.

S p e a k i n g i n A b u j a , President of TUC, Comrade Peter Esele, said, “The power sector has continued to be a source of worry to all of us despite reforms, yet the importance of electricity to e m p l o y m e n t a n d development cannot be over-emphasized. Believing that the government’s recent attempts at liberalising the sector will bring succour to the country, we may well say that there could be a silver-lining in the dark cloud. Although the labour issues connected to liberalisation have not been fully resolved, it is salutary that government is at least concerned as it appears that effort is being made not to short-change labour this time around. We hope this turns out to be true, and soonest too.

“It is common knowledge t h a t , v i r t u a l l y e v e r y household in Nigeria now owns a generator. Several persons even have inverters and battery backups installed in their homes because the government has consistently proven itself incapable of making adequate supply of electricity available to the masses. Where it is available, t h e c h a r g e s a r e i n d i s c r i m i n a t e a n d unpredictable, irrespective of whether the particular consumer actually used it or not. Electricity is an absolute n e c e s s i t y t o t h e industrialisation that we all seek. Apart from inept leadership at most levels, the epileptic and inconsistent supply of electricity is perhaps the greatest problem that we face as a nation today. Going by our last count, there are just 16 power plants in the country, with the Power Holding Company of Nigeria owning 10 of them while the remaining 6 are owned by independent producers. D e s p i t e p r e s i d e n t i a l

Epileptic power, a major challenge facing Nigeria —TUC

Victor AHIUMA-YOUNG

assurances that the country’s total electricity supply will hit the 6000 MW mark by the end of 2009, the level of production is still less than 4000 MW three years later. And this is a country with a population of over 160 million people.”

According to him, “We obviously need to have more players in this power and energy field. Meanwhile Brazil with a population of 192 million people, produces over 100,000 MW of power, while South Africa – whom w e h e l p e d t o a t t a i n independence and which has a population of about 50 million people – generates over 40,000 MW of power.

The difference is clear and painful. We understand that the causes of this appalling s i t u a t i o n i n c l u d e incompetent management, poor maintenance culture, i n a d e q u a t e f u n d i n g , c o r r u p t i o n , f a c i l i t i e s vandalism, etc. But these are a l l i s s u e s t h a t t h e government can and must tackle decis ive ly and promptly if we are to venture into the group of twenty most developed nations by the year 2020. Indeed, there is no gainsaying that there is urgent need for substantial i m p r o v e m e n t i n t h e generation and distribution of power nationwide.”

“The government should

even explore alternative sources of energy (e.g. the large-scale use of solar power and gas turbines). We also advise that the power sector be fully deregulated to allow for competition and greater efficiency. For starters, the federal government should immediately initiate and facilitate the amendment of relevant statutes to give states that are ready to distribute power for their needs the leeway to do so. The government should also increase funding for the sector and ensure effective security against vandalism and theft of electrical equipment, etc. Please let there be light.”

On Oil and Gas sector, Esele said, “We strongly condemn the prolonged importation of petroleum products into this country and the huge loss of foreign exchange that it occasions. This ugly situation also means that we are indirectly stimulating massive creation of jobs in those countries from whom we buy the petroleum products, while our own people seek for jobs here at home.

As a panacea to this, the g o v e r n m e n t s h o u l d immediately refurbish all the old refineries to ensure that they operate optimally.

Electricity Transformer

25Labour

PE T R O L E U M and Natural Gas S e n i o r S t a f f Association of N i g e r i a ,

PENGASSAN, has said the Petroleum Equalisation Fund, PEF, should be merged with the regulatory agency post-Petroleum Industry Bill, PIB.

The association condemned the provision in the PIB, whereby PEF will be left to the discretion of the Minister of Petroleum Resources after the passage of the bill into law.

It argued that since the functions of the PEF are related with the Downstream Pe t r o l e u m R e g u l a t o r y Agency, DPRA, one of the regulatory agencies provided for in the PIB, the fund should be merged with the agency.

The current PIB has, in Section 100 Sub-section 4, provided that “Where the Government decides that Petroleum Products markets

igeria Union of Petroleum and NNatura l Gas

Workers, NUPENG, has expressed concern over the abandonment of projects b y t h e N i g e r D e l t a Development Commission, NDDC, in many parts of the country.

President of NUPENG, I g w e A c h e s e , i n a statement decried the complaints by various communities in the Niger Delta of complete neglect and abandonment of projects by the NDDC, saying, “It is sad to state that despite the huge funds allotted the NDDC from oil revenue to develop Niger Delta, there is nothing really on ground to show for its existence. We have had many cases of NDDC contractors collecting mobilisation fees and abandoning the projects. The objective of setting the NDDC has not really been met, as the roads in the Niger Delta are still in deplorable state. The NDDC is just another avenue for its officials and government cronies to enrich themselves. The NDDC has fa i led to transform lives in the Niger Delta.”

“It is only its signboards that are seen, with no noticeable progress in the contracts awarded. A case in point is the reclamation project in Gbaramatu area where the contractor was reported to have removed its equipments even when the project has not been completed. The Union calls on the federal government to review the mandate of the NDDC to make its impact felt by the people whose soil has been destroyed by the activities of oil multi-nationals. It is a pity that the NDDC has not lived up to expectations despite the huge billions of naira voted for its activities every year.”

Achese added that “The federal government must therefore set up a special task force to monitor all its activities, projects and make sure that they are commissioned on time.

Victor AHIUMA-YOUNG

NUPENG worries over abandoned NDDC projects

Victor AHIUMA-YOUNG

PIB: Workers want merger of PEF with downstream regulator

have been e f fec t i ve ly deregulated, the Minister shall take the required action t o e n s u r e t h a t t h e Equalisation Fund ceases to exist and its assets and liabilities transferred to the Government to be controlled a n d m a n a g e d b y t h e Ministry and at such time the provision of the sections of this Act relating to the Equalisation Fund shall stand repealed. “

Speaking on the fate of PEF post-PIB, PENGASSAN P r e s i d e n t , C o m r a d e Babatunde Ogun, said the bill did not stipulate the time frame for PEF to be repealed and neither did it stipulate the fate of the workers of the PEF when it was repealed.

According to him, “This should be clarified to ensure that the fate of the current workers, especially members of PENGASSAN and the National Union of Petroleum and Natural Gas Workers (NUPENG) in that agency is adequately catered for. As a result of this observation, we have proposed in our

position on the PIB that the agency should be merged w i t h t h e D o w n s t r e a m Pe t r o l e u m Re g u l a t o r y Agency as their current functions can still align with functions of the Agency.”

“We have presented this our position on the status of the PEF to the NNPC in one of our meetings with NNPC, where the Group Executive Director, Exploration and Product ion, Mr. Abiye Membere agreed with us that provision should be made in the PIB to move staff of PEF t o t h e D o w n s t r e a m Regulatory Agency post-PIB instead of leaving their fate hanging while the PEF dies a natural death. NNPC also agreed that since their functions will be transferred to the Downstream Regulator Agency, the workers should also be transferred to DPRA where they will be more relevant instead of moving them to the ministry where they may not be relevant.”

T h e P E N G A S S A N President also said that appointment into the board

of PEF post PIB before it fizzle out should not be based on the recommendations of the Minister of Petroleum Resources but, should follow the process of appointment for other regulatory agencies such as the Nat iona l E lec t r i c i t y Regula to r y Commission (NERC) or Nigerian Communications Commission (NCC) and such appointments and removal should be ratified by the Senate, adding that such appointments should be for a specific term of four years and renewable for another term.

Such appointment, he stated should be through competitive process of selection and open to all qualified Nigerians either home or abroad.

Comrade Ogun noted that the omission of PEF in the staff transfer in the PIB may be intentional, saying, “In the interest of industrial peace and harmony in the oil and gas industry, workers in the current PEF should be captured under staff transfer in the bill.

Nigerian workers pressing for demand

26Solid Mineral

In this brief interview with NOEL ONOJA, the Director-General of the Mining C a d a s t r e O f f i c e , M r. Mohammed Amate, opened up on how much investment the sector has been able to amass since the setting up of the office and how its operation has put on the Wo r l d ’ s m i n i n g m a p . Excerpts:

What does your office do? h e M i n i n g C a d a s t r e Office was set up primarily to manage and

administer mining titles all over the country. This came about as a result of a reform programme that was carried out by the ministry in the sector. If you recall, we had a World Bank intervention and it was in collaboration with the World Bank that this agency was setup. It is to serve mineral title holders on certain basic principles. One is first come, first served basis. If you submit an application to us, the first who submits first will be considered first. The second c r i t e r i o n i s n o n -discretionary. Irrespective of who you are, where you come from, you are all treated on the same pedestal. Neither the minister nor myself can exercise any discretionary power on mining titles, it is purely on the basis of your fulfillment of the requirements of the Minerals and Mining Act, a n d t h e l a s t o n e i s transparency. Our system is very transparent and we follow the rule of law.

What are the prerequisites to get the titles?

B e f o r e y o u b e c o m e qualified to obtain a title, first of all, we want to know whether you are financially and technically competent to carry out mining business. Then, we will also want to know whether you are a good citizen, and that is to say, you have not been convicted by

T

‘Cadastre Office has boosted investors confidence in mining’

any court of law. And in your previous businesses, you have been paying tax as at when due and also you have

identified an area that you want to obtain a licence on.

There are about [5] five categories of licences we issue in the Mining Cadastre Office. The first one is Reconnaissance Permit, which enables you just to walk around and see the topography, the geological settings, to find out whether the area is mineralised or not. But it does not give you the powers to dig holes, trenches or even drill holes. It is only for you to walk on the surface. The second category of licence is that, if t h e c o u r s e o f y o u r Reconnaissance license, you are able to identify an area that you think is mineralised, then you go for what we call E x p l o r a t i o n L i c e n c e . Exploration Licence is given

over a specific area and it is given in the first instance for a period of three years. Within the three years, you are allowed to go to the area, carry samples, dig trenches, dig holes and whatever for the purposes of taking geological samples only. Then, after three years, you are convinced that zero down to whether the mineral is of commercial quantity, then we can now give you what we called a Mining Lease. But if after that, three years, you are still not satisfied with what you have carried out, we can renew that licence for you for another two years, making it five years. After that, there is still another chance for you to renew it for another two years, making it a total of seven. After the

seventh year, it cannot be renewed again.

Mining Lease is only licence that enables you and gives you the power to mine, and it is a mining lease because you have reached an advanced stage of your developmental programme which is given for a period of 25 years. And for as long as you have not exhausted the deposit, you still have another chance of renewing it until you are satisfied that the deposit you have has been exhausted.

Mining Lease is usually for large-scale mining and where the capital is substantial. If you don’t have substantial capital, and you still want to mine, we’ve created another licence for you - called small-scale mining licence. It is usually for five years for a much smaller area and there are certain things that you cannot do if you have a small-scale mining licence. For small-scale, you cannot dig tunnels, you cannot go deep underground; you are limited to a certain level because of your level of finance.

There is another licence we call Quarry Lease. It is usually for quarriable minerals like granite, limestone, clay and the rest. But for minerals like precious stones, metals and the rest, it has to be carried out under a mining lease.

How many titles have you g i v e n o u t s i n c e t h e e s t a b l i s h m e n t o f t h i s Cadastre Office?

I was appointed as Director-General in 2011. In 2011, we issued about 1,500 mining titles. In 2012, we issued about 1,600 mining titles. Of course, when I say mining title, it consists of Exploration Licence, Mining Lease, Quarry Lease and the rest. And from the beginning of this year to the present time, we have issued close to 400 mining titles. When we issued these titles, we don’t just issue titles and go back to sleep; we also monitor what you are doing.

Mining Lease is usually for large-scale mining and where the capital is substantial. If you don’t have substantial capital, and you still want to mine, we’ve created another licence for you - called small-scale mining licence

Mr. Mohammed Amate

27Maritime

FO L L O W I N G the set back y o u n g N i g e r i a n marine cadets

have suffered in getting job placement, occasioned by their inability to get sea time training, the Maritime Academy of Nigeria, has concluded plans to send 250 cadets abroad for their compulsory training.

The move to embark on this training programme for cadets, was borne out of an experiment the management of the Academy is currently considering by sending these cadets abroad for eighteen months.. The Academy is currently experimenting with the idea of sending about 250 cadets abroad for the purpose of sea time

MAN to spend N2bn on sea training for cadets Godwin ORITSE

training so as to ensure that these category of Nigerians get quality training needed

to flourish in the profession..In an interactive session

w i t h m e m b e r s o f t h e Maritime Reporters Congress of Nigeria (MARCON), the Academy’s Rector Dr. Joshua Okpo, said that the first twenty cadets are being used as a pilot programme for the entire project.

Okpo also said that the Ministry of Transport has been intimated of the plan, adding that a proposal has also been sent to the Minister, Senator Idris Umar. The Academy’s boss explained that, while about one of the cadet are from the nautical science department, 150 of the cadets are from marine engineering department.

He further explained that it was the desire of the A c a d e m y t o m a k e Government fund the project, but the government needed to be convinced before we

approach them. According to the Rector, about N8million has been budgeted for each of the cadets and the amount will cover their living expenses, general upkeep of the cadets.

“The money is meant to pay for their upkeep of the cadets, part of the money will a lso be spent on the m a i n t e n a n c e o f t h e i r w o r k i n g t o o l s a n d e q u i p m e n t . ‘ We w a n t government to fund the project, but government has to be convinced, we must first of all do a pilot project by spending our money”. He stated.

Speaking further Okpo stated that the academy is also is also looking forward to its partnership with both the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration a n d S a f e t y A g e n c y

(NIMASA) in provision of boats for the training needs of its cadets.

The maritime academy is also partnering with both the International Maritime Organisation (IMO) and the World Maritime University (WMU) for the purpose of affiliation.

Okpo also commended the support the academy has been receiving from the N i g e r i a n M a r i t i m e Administration and Safety Agency, a development that has assisted in completing most of the major projects in the campus.

“The academy has never had it so good, NIMASA has been very supportive and I want you all to help me say a big thank you to the Director G e n e r a l , M r. Pa t r i c k Akpobolokemi for h is support” he stated.

Cadets in sea training

The money is meant to pay for their upkeep of the cadets, part of the money will also be spent on the maintenance of their working tools and equipment. ‘We want government to fund the project, but government has to be convinced

28Tribute

Memories of Levi Ajuonuma, the f o r m e r

Group General Manager, Public Affairs, Nigerian N a t i o n a l P e t r o l e u m C o r p o r a t i o n , N N P C , resonated at the recently c o n c l u d e d O f f s h o r e Technology Conference (OTC) in Houston, Texas, USA, when he was given a post-humous award, by the Pe t r o l e u m Te c h n o l o g y Association of Nigeria, P E T A N . T h e P E T A N Outstanding Leadership A w a r d w a s g i v e n i n r e c o g n i t i o n o f h i s d i s t i n g u i s h e d a n d outstanding contributions to the development of the Oil and Gas Industry in Nigeria. The award which was presented by Andrew Yakubu, Group Managing Director, NNPC, was received by Michael Ajuonuma, first son of the deceased, on behalf of the family.

Yakubu said that for eight years, Ajuonuma was in charge of organizing NNPC’s participation at the OTC. According to him, ”the passion and exceptional enthusiasm he brought on the j o b w o u l d b e m i s s e d . Ajuonuma died in the ill-fated Dana Airline crash that

SEBASTINE OBASI

Levi AjuonumaLevi Ajuonumaoccurred on the third of June, 2012, at Agege, Lagos, which claimed the lives of about 153 passengers on board. With his foray into full time public relations practice as the chief image maker of the NNPC, Ajuonuma was able t o d e p l o y r e l e v a n t communication tools to get Nigerians to understand the workings of the oil and gas industry and the NNPC to dispel the wrong impressions most Nigerians used to have about the Corporation and the entire industry

Before his appointment as the Group General Manager, Public Affairs Division of the NNPC in November 2003, he was a broadcaster and public relations consultant with a string of radio and television talk/entertainment shows such as Levi Ajuonuma Live, The Sunday Show and Showtime on NTA Network, as well as The Nation Today

Live on NTA Channel 10 and Open House Party on R a y p o w e r 1 0 0 F M , a programme that ran from the late 80’s through the 90’s. Between producing and presenting the series of talk and entertainment shows, Ajuonuma, as Managing Director/Chief Executive O f f i c e r o f L a s o m Communications Ltd (a consortium of media and p u b l i c r e l a t i o n s consultants), engaged in market ing and publ ic relations consultancy for a number of organisations ranging from the United States Information Service, Fe d e r a l Ro a d S a f e t y Commission to the Nigerian Institute of Structural Engineers. He also designed and produced corporate marke t ing and b rand promotional TV programmes for corporate giants like Nigerian Breweries Plc,

C a d b u r y P l c , Intercontinental Bank Plc and a host of others.

Ajuonuma started his working career in 1977 as an announcer/newscaster with the Imo Broadcasting Service, IBS, in Owerri, Imo State. He left IBS in 1979 and proceeded to the United States of America for further studies at Hunt ington Col lege, Indiana, where he bagged a Bachelor of Arts in Communications. He later got a Master of Arts and P h . D i n M a s s Communication from the University of Minnesota in 1 9 8 3 a n d 1 9 8 7 respectively. He topped these qualifications with an MBA from Plymouth State College of the University System of New Hampshire in 1989. He had a stint in the academia as Assistant Professor at t h e D e p a r t m e n t o f Journalism, Keene State College of the University System of the State of New Hampshire, USA, before returning to Nigeria to his first love – broadcasting and public relations.

One of his legacies in television broadcasting is t h e N T A N e t w o r k programme, Network N i g h t l i n e w h i c h metamorphosed in to Tuesday Live, which runs till date. He was the pioneer producer and p r e s e n t e r o f t h e programme. He is also credited with innovations such as the first simulcast of TV and radio program achieved on the second anniversary of The Sunday Show Live in 1995 by NTA channel 10 and Raypower FM.

Remembering Remembering

For eight years, Ajuonuma was in charge of organizing NNPC’s participation at the OTC. According to him, the passion and exceptional enthusiasm he brought on the job would be missed

29

The hope of the people of Agge c o m m u n i t y seeing their c o m m u n i t y

transform into an economic hub received a boost last w e e k , f o l l o w i n g t h e presentation of the survey report for the proposed deep sea port in the area by the Nigerian Army Engineers Corps to the Bayelsa State Government.

Agge is a predominantly fishing community on the Atlantic fringe of Bayelsa State in Ekeremor Local Government Area of Bayelsa State.

T h e D e e p S e a p o r t SweetCrude learnt, is to occupy an area of about eight thousand hectares, which is an increase from the initial seven thousand proposed for the facility which will not launch the community on the fast lane of development but the entire Ekeremor council area.

Presenting the survey report in Yenagoa, the state governor, Seriake Dickson sa id the p lan by the administration to build a word class Deep Seaport in the state was now on course.

”Today, my dear people of Bayelsa State, you are now seeing in real terms, our plans to transform our economy beyond oil and gas. And I have always said that, we are going to spare no ef fort in ut i l iz ing the maritime endowments of the state.

“Our decision to build a world class deep seaport is now on course. What you are seeing today is the beginning of a long journey. I know we still have a long way to go before we have a deep seaport, but then we have started,” Dickson said.

The governor, who noted that the surveyed area, ex tended over f i f t een

A R R I -T H R E E Wyoung men

allegedly working as oil pipeline surveillance workers and two women deal ing in i l legal ly refined diesel have been arrested by officers and men of the 3 Battalion Army, Warri, Delta State.

About 15 mammy boats,

used fo r convey ing

i l l e g a l l y r e f i n e d

petroleum products were

also destroyed during an

operation to wipe out

illegal refineries in the

state.

Commanding officer of

the 3 Battalion, Lt. Col.

Ifeayin Otu, made these

d i s c l o s u r e s w h i l e

parading the suspects

b e f o r e n e w s m e n ,

describing the early hours

operations around the

Opumami, Bennet Island

and Macaraba areas of

Warri South and South-

West as very successful.

The names o f the

surveillance workers are:

O l o t o y e R u f u s ,

Emotoghan Akpos while

the third, alleged to be a

worker in one of the illegal

refineries is Victor Tene.

The suspected female oil

thieves caught along with

them at a camp include

Tokere Lucky, 22 and

Ebibare Ayas, 36 years.

Commander Otu said

they would be thoroughly

investigated and then

handed over to the

appropriate prosecuting

authorities for further

action.

T h e s u r v e i l l a n c e

workers were allegedly

caught at the entrance of a

creek where i l legal

bunkering is conducted

while the women were

caught busy transferring

refined products from

jerry-cans.

JTF nabs security personnel, others for oil theft

Emma ARUBI

Bayelsa community to get deep sea port

Samuel OYADONGHA

thousand hectares of land, directed the Commissioner for Lands and Survey, to beg in the p rocess o f enumeration, as well as computation of the claims and entitlements of the owners of the affected areas, to enable government commence the payment of adequate, fair and prompt compensations as required by law.

H e c o m m e n d e d t h e Nigerian Army Engineering Corps for the professional manner it undertook the assignment and expressed delight with the partnership,

noting that it was the beginning of what will b e c o m e a m u t u a l l y beneficial relationship.

”This is just the beginning of what will be a mutually b e n e f i c i a l l o n g t e r m relationship,” he assured the Nigerian Army.

The governor used the occasion to commend the Chief of Army Staff for diligently carrying out his duties at such a critical stage in the nations’ nascent democracy, describing him as a loyal and hardworking officer.

Earlier, the Commander,

Engineers Corps, Nigerian Army, Major Gen. Funso Owonibi, noted that, the a s s i g n m e n t h a s b e e n rewarding adding that the hydrographic survey of the proposed deep seaport will be completed and presented to government.

Gen Owonibi expressed appreciation to the state g o v e r n m e n t f o r t h e confidence reposed in the Nigerian Army Corps of Engineers, stating that he A r m y E n g i n e e r s w e r e c a r r y i n g o u t o t h e r e n g i n e e r i n g r e l a t e d a s s i g n m e n t s i n A b i a , Anambra and Delta States.

Deep sea port

30Community

PO R T

H A R C O U RT: APPEAL on the f e d e r a l government to

release about N500 billion owed the Niger Delta Development Commission, NDDC, re-echoed again w h e n t h e H o u s e o f Representatives Committee on the Niger Delta toured some states in the region inspecting projects being executed by the Commission.

By the Act establishing the Commission, the federal government is to contribute an equivalent of 15 percent of the total sum accruable to the nine oil producing state from the Federation Account for its o p e r a t i o n s . B u t t h e government had defaulted on this on several occasions. As at 2009, what had been denied the Commission was put at about N500billion approximately.

Chairman of the House Committee on NDCC, Hon Nicholas Mutu, who led members of his team round some member states in the region stressed on the urgent n e e d f o r t h e f e d e r a l

eports revealed that over 85 per cent of Nigerian R

school age children use public transportation on daily basis and are suscep t ib le to road accident. As a result, Total Nigeria Plc has commenced a safety programme for primary and secondary school children in the country as part of its Corporate Social Responsibility initiative.

This year’s programme tagged, “Road Safety Cubes Campaign for Children,” which was launched in Lagos and will cut across all the states in the country, is aimed at protecting and e d u c a t i n g N i g e r i a n children between the age of 6 to 12 on road signs and proper behavior on the road while going to school.

Managing Director, Total Nigeria Plc, Mr. Francois Boussagol , explained that thousands of lives including school age children are lost every year to avoidable road accident. He commended the Federal and States government for their concerted effort to stem the tide of road accident among Nigerian children.

Boussagol stressed that little efforts have been put in place by government to protect the l ives of children who form part of the society from road accident.

Explaining the drive behind Road Safety programme, Boussagol s a i d To t a l i s f u l l y committed to reducing road accidents and its associated risks.

“Over 85 per cent of Nigerian school age chi ldren use publ ic transportation on a daily bas is and are seen attempting to cross major roads in a bid to avoid traffic.

“Its commendable that at Federal and State levels, concerted efforts have been made to stem the tide of this colossal waste.

Lawmakers urge FG to release N500bn owed NDDC

… Tour projects in Niger Delta Jimitota ONOYUME

government to clear up the backlog for the effectiveness of the commission. For four days the lawmakers went through Rivers, Imo, Edo, Delta and Bayelsa states inspecting projects of the commission.

During the inspection, the committee observed the

challenges posed by the terrain and the rain for construction related jobs. Mutu at a point voiced it again that the funds owed the Commission should be urgently released for it to a c h i e v e i t t a r g e t s expectations in the region

“We now appreciate the need to commit more funds for the rapid development of the oil-rich region. What we have seen convinces us that the NDDC i s making tremendous impact on the lives of the people. We will, therefore, urge the Federal Government to give the commission the financial muscle to be able to handle more big ticket projects.

“We commend the NDDC for working against these odds and still delivering on its mandate of fast-tracking the development of the Niger Delta. In the light of this, we c a l l o n t h e F e d e r a l Government to encourage the commission by releasing the over N500 billion it is owing on outs tanding statutory allocations to it,” he

said. Adding, Mr Barry Mpigi,

representing Tai/Eleme Federal Constituency who also sought greater funding f o r t h e c o m m i s s i o n , expressed the hope that the Petroleum Industry Bill when passed into law, would create avenue for additional fund to address challenges of under development in the region.

The lawmakers went round nine ongoing road projects. In Rivers state they inspected the 23.7 kilometer Owaza-Etche-Igwuruta road, the 18.9 kilometre Erema Ring road in Ogba/Egbema Ndoni Local Government Area. In Delta and Bayelsa they also visited the Koko-Ugheaye-Escrovos Road, which would link Delta to Ondo State, with 6 bridges; the 28-kilometer Patani-Angoloma Road in Delta State and the Sampou-Odoni Road in Bayelsa State.

In Imo State, they inspected the 17-kilometre Ishinweke-Onicha River Road in Ihite Ubuma LGA and the 18-kilometre Obokofia internal roads in Ohaji/Egbema LGA.

CSR: Total Nigeria kicks off safety programme for schools

Kunle KALEJAYE

We now appreciate the need to commit more funds for the rapid development of the oil-rich region. What we have seen convinces us that the NDDC is making tremendous impact on the lives of the people

Lawmakers in section

31Community

keremor is one of the many oil r i c h l o c a l g o v e r n m e n t council areas E

in Bayelsa State that cannot be accessed by road.

T h o u g h t h e Fe d e r a l Government through its interventionist agency, the Niger Delta Development C o m m i s s i o n ( N D D C ) , embarked on what many described as ‘cosmetic road project’ from the Sagbama flank to link the isolated oil rich Ekeremor enclave to mainland Yenogoa and the f e w u p l a n d communities in the state.

The project was starved of funds causing it to go at snail speed for m a n y y e a r s , a development that p r o m p t e d t h e administration of Seriake Dickson to ask the commission to hands off the road and took over the project.

Interestingly, the B a y e l s a We s t senatorial district like the central and east senatorial districts is host to the Anglo-Dutch oil giant, Shell Petroleum Development Company and the Nigerian Agip Oil Company, NAOC, while the natives are predominantly farmers and fishermen.

While the oil companies and the Nigerian state are making mega fortunes from t h e e x p l o r a t i o n a n d exploitation of crude oil, the natives are wallowing in penury and are at the r e c e i v i n g e n d o f t h e environmental despoliation associated with the industry in the Niger Delta.

With the rivers and land polluted leading to poor harvest, most of the natives have been forced to abandon their traditional farming and fishing occupation.

This development, coupled w i t h t h e a b s e n c e o f manufacturing industry in the area to absorbed the d isp laced f i sh ing and farming population among others have brought about widespread poverty among the natives.

it was against the backdrop of this scenario that the S e n a t o r r e p r e s e n t i n g Bayelsa West Senatorial District, Senator Heineken Lokpobiri, initiated an

Ekeremor indigenes receive empowerment tools

Samuel OYADONGHA

empower ment s cheme designed to assist indigenes of the area in setting up small-scale businesses to boost the crusade against poverty in the area..

The scheme, which is a collaborative effort with the National Poverty Eradication Programme, NAPEP, has succeeded in rekindling the hope of many of the natives.

I t was therefore not surprising that Ekeremor community came alive last weekend, when indigenes of the senatorial district, converged on the serene riverside settlement to receive yet another set of empowerment tools from Senator Lokpobiri.

Over 500 persons from the area, especially women and the youths went home with

m o u t h w a t e r i n g empowerment tools to start their own businesses, a gesture initially seen as the exclusive preserve of the trans-national oil firms.

A similar exercise it would be recalled was held last year at Sagbama where over 1000 indigenes of the senatorial d i s t r i c t w e r e g i v e n empowerment packages to kick start and also boost exist ing businesses of beneficiaries in the area.

S p e a k i n g a t t h e presentation ceremony, the initiator of the scheme, Senator Lokpobiri said it was part of his contributions to assist in improving the fortunes of his people whose means of livelihood have been negatively affected as a result of the activities of the

multi-national oil companies operating in the area.

“As you are aware, our people are mainly farmers and fishermen, but the advent of the oil companies and the attendant pollution of the envi ronment have impacted negatively on f a r m i n g a n d f i s h i n g activities. What we are doing is to empower them so that they will be in a position to cater for themselves and take care of their families,” Lokpobiri said.

He, however, expressed displeasure at the attitude of some of the beneficiaries of the scheme, who sold equipment meant for poverty eradication at give-away prices.

The senator recalled that some of those that benefitted

f r o m l a s t y e a r ’ s empowerment scheme held at Sagbama in Sagbama counci l area so ld the equipment given to them at the venue of the ceremony.

According to him, some of the benef ic iar ies so ld equipment that cost over N100,000 to interested buyers at a paltry sum of N20, 000.

He described their action as discouraging and not in tandem with effort aimed at eradicating poverty at the grassroots.

His words, “last year a similar exercise was held at S a g b a m a w h e r e empowerment packages w e r e g i v e n o u t t o beneficiaries.

Some of the empowered indigenes carrying their gifts(inset) Senator Heineken Lokpobiri arriving the occasion