Gas Master Plan and challenge of inadequate funding

Four years after the country’s Gas Master Plan was unveiled, stakeholders examine the progress made so far and express worry about bottlenecks threatening its implementation, STANLEY OPARA writes

The Nigerian gas revolution is aimed at harnessing the nation’s vast gas reserves (estimated at 187 trillion cubic feet) plus undiscovered potential of 600tcf of gas to drive a transformation of the nation’s economy under the outline defined in the Gas Master Plan unveiled in 2008.

The key objectives of the gas revolution include the monetisation of Nigeria’s gas reserves through reduction and ultimate stoppage of gas flaring and raising domestic gas supply from the current level of 1.0 billion cf/d to over 10 billion cf/d by 2020.

This is basically targeted at feeding the domestic power sector, which has a multi-billion dollar investment blueprint based on the sector’s privatisation plan, among other critical sectors like agriculture and industry.

It is also expected to enable private participation in the gas value chain and position Nigeria as the regional hub for gas-based industrialisation by adding value to its natural gas.

Experts in the Petroleum Sector recently met in Lagos at the 12th Petroleum Policy Roundtable organised by the Centre for Petroleum Information. It had the theme,’ ‘Making the Gas Revolution Happen.’

Speaking on the role of private equity in the ongoing gas revolution, a partner with African Capital Alliance, Mr. Afolabi Oladele, says the gas revolution is expected to attract huge Foreign Direct Investment into Nigeria, and has led to a couple of projects.

According to him, India’s Nagarjuna Fertilisers had expressed its commitment to building two fertiliser plant at about $2bn; Saudi Arabian Natpet is to invest initial $3.5bn in a petrochemical plant while Oando, in partnership with Agip Oil is to invest about $10bn over a period of three years in building a central gas processing facility.

He also adds that Chevron is to supply the needed gas to the CPF provided the needed pipelines and infrastructure are in place while two fertiliser plants are expected in Delta State and Lagos, as well as five fertiliser blending plants and one methanol plant, courtesy the gas revolution.

There is also a plan for a distribution network to improve the supply of liquefied petroleum gas to the North.

Oladele, however, says the gas revolution highlights the huge infrastructure gap in the sector and requires extensive pipeline backbone for successful implementation.

“For example: The recently completed construction of 128km 18” pipeline connecting Akwa Ibom State to Cross River State by the JV between Oando and Nigeria Gas Company. Calabar to Kano pipeline needs to be revived at a cost of about $2bn. At least 2,000 km of pipelines need to be constructed within five years to 2016,” he says.

The gas revolution, according to him, has highlighted massive funding gap for private sector participation as the government is incapable of providing the required funding within the target programme time frame.

He explains, “The GMP estimates that at least $150bn is required in new investments across the upstream, midstream and downstream gas sector over the next four years.

“With the country’s current economic data: Gross Domestic Product of $247.1bn in 2011; external reserves of $37.7bn in May, 2012; debt currently standing at about 17.6 per cent of GDP; and fiscal deficit at about 3.3 per cent of GDP, the government cannot fund the infrastructure development needs.

“Neither do the local banks have the capacity to finance the big ticket projects because they require long- term risk capital that is beyond their purview hence the need for other funding options.”

The African Capital Alliance Partner maintains that private equity is a powerful financing innovation introduced into the World in the 1940s.

He explains further that private equity is a pool of capital mobilised for investments under privately negotiated transactions in expectation of outstanding returns over a finite investment period. It is a highly specialised financial intermediation activity, and an alternative asset class, generally entailing equity investment in unlisted companies.

According to Oladele, private equity has grown to become an industry with multi-trillion dollars under management worldwide, with about $232bn and $168bn raised globally in 2005 and 2008 respectively

Private equity funds, he explains, are pooled from institutions and individuals with substantial net-worth.

He adds, “The sources include institutional investors like banks and other financial institutions (about 40 per cent of global commitments in 2006), pension funds, endowment funds and foundations, academic institutions, other body corporate and development finance institutions.

“Others are Fund of Funds and high net worth individuals.”

He says private equity continues to make great contributions to entrepreneurship, wealth creation and growth and development of countries worldwide, and remains a veritable tool for unlocking value and enhancing capacity

Speaking on commercialising gas in small and mid-sized fields, the Managing Director/Chief Executive Officer, Seplat Petroleum Development Company Limited, Mr. Austin Avuru, says Nigeria has no gas exploration to date as growth in reserves is largely linked to crude oil reserves growth.

He, however, says, “The nation’s gas agenda is robust. It puts gas-to-power at the core, but also envisions an aggressive gas based industrial growth. This in turn will drive further growth of power demand.”

In realising the country’s gas aspiration, Avuru says there is the need to embark on major reforms of the gas sector to assure delivery on a sustainable basis.

The Seplat boss says, “We need to commence implementation of the Gas Master Plan strategic framework towards wholly competitive, market driven domestic gas sector by 2014. We also need to put in place transitional framework to facilitate gas access in the short to medium term – particularly for the power sector.

“There is the need to redefine the commercial framework for domestic gas supply to assure long run sustainability of supply – pricing, contracting (agreements), among others.

“We need to commence implementation of a gas infrastructure blueprint to enable flexible delivery of high quality gas to power and other end users; award one of the three Central Processing facilities, and award the 120km x 48” Ob/Ob-Oben East West gas pipeline contract.”

He says the objectives of the GMP are to maximise the multiplier effect of gas in the domestic economy, optimise Nigeria’s share and competiveness in the high export markets, and assure the long term energy (gas) security for Nigeria.

The key components of the plan, he adds, are; Domestic gas supply obligation regulations which mandate all oil and gas producers in Nigeria to set aside a pre-determined amount of gas for utilisation in the domestic market as a precondition for export and the gas infrastructure blueprint that will guide future infrastructure investments in gas in time for capacity increase in gas supply to the domestic market.

In the same vein, the General Manager Finance, Nigeria LNG Limited, Mr. Victor Eromosele, says the terrain in LNG is fast changing as Africa in 2010 accounted for 18 per cent of annual world LNG trade of nearly 300 billion cubic metres.

The African LNG terrain, he adds, is set to change as Angola, Mozambique and Tanzania look set to join the African LNG league by 2016.

He maintains, “Australia is set to top the league table in 2020, moving up three places and deposing Qatar to second.Will Nigeria still maintain its fifth position?

“By 2020, Nigeria potentially could add another 27-40mtpa to current 24 mtpa capacity of Bonny Island plant if the three pending final investment decisions are taken without further deferment.”

PIB offers incentives for oil production —Alison-Madueke

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, on Tuesday described the Petroleum Industry Bill recently sent to the National Assembly by President Goodluck Jonathan as a viable document offering incentives for crude oil production.

Speaking at a summit in London organised by the Ministry of Trade and Investment in conjunction with the Bank of Industry, Alison-Madueke in a presentation titled, “Investment Opportunities in Nigeria’s Downstream Oil and Gas Value Chain,” called on investors around the globe to take full advantage of the enormous opportunities the proposed oil industry reform law offered.

The minister noted that apart from providing a healthy deregulated environment for private sector participation in the downstream sector, the PIB offered a refreshing fiscal regime with strong incentives for production.

“We have a fiscal regime by royalty and tax which is now predicated on production as opposed to terrain and investment as was previously done. Royalty by production as we have outlined in the bill will capture the output of company as opposed to its location; it will create a fair balance between small and big operators operating in the same terrain, it will give operators the opportunity to make fair returns during field decline, and it proposes lower rates on condensate from large fields as well as ultra deep water fields,’’ Mrs. Alison-Madueke said.

She noted that the new bill provided for a robust and efficient tax regime based on Corporate Income Tax, the Natural Hydrocarbon Tax and Production Bonus based regimes.

On the reported concerns raised by some operators over the proposed increase in government take from 61 to 72 per cent in the deep and ultra deep offshore, the minister stated that in arriving at the figure, the government considered all the variables taking into account the interest of the nation as well as what was obtainable in other jurisdictions across the world.

Tanzania plans sovereign wealth fund for gas finds

DAR ES SALAAM (Reuters) – Tanzania is to set up a sovereign wealth fund to ring fence future earnings from its major gas discoveries in the southern parts of the country along the Indian Ocean coastline, its president said.
The east African nation of 42 million people tripled its estimated gas reserves in June after offshore finds by Norway’s Statoil, U.S. group ExxonMobil and Britain’s BG Group and its partner Ophir Energy.

President Jakaya Kikwete told the nation that his government was studying various models for managing revenues from gas production, adding they were focusing on those that have sovereign wealth funds.

“We want to learn from them by setting up our own fund to ensure we similarly benefit,” he said in a televised address late on Wednesday.

When the country eventually sets up the fund it will join other African countries like Nigeria and Ghana, who are also moving towards the establishment of state-owned investment funds for revenues generated from the energy sector.

Kikwete said the government’s intention was to ensure natural gas revenues were used to speed up development.

“Since 1954 some 61 wells have been drilled. Out of those, natural gas was found in 22 wells … We haven’t been lucky yet to find oil but we have discovered gas in both onshore and offshore areas,” he said.

Tanzania’s recoverable gas reserves stood at 28.9 trillion cubic feet, Kikwete added.

“Offshore oil and gas exploration started in 2004 with just one company but we now have 18 companies. Gas exploration has escalated since the first gas discovery in 2010 … I believe that a lot more gas will be discovered,” he said.

Tanzania, which is east Africa’s second-biggest economy could see an increase in revenue of up to $3 billion a year from gas exports, according to the World Bank.

Kikwete said cheap access to gas would encourage construction of fertiliser plants and boost power generation.

“Some 350 megawatts of electricity in the national power grid currently comes from natural gas and our target of generating 3,500MW by 2015 largely depends on natural gas,” he said.

Kikwete said the government was working on a new national gas policy, gas utilisation master plan and legislation to regulate the fast-growing industry.

IFC lends $80m for gas-fired plant expansion to increase power generation in Ghana

The International Finance Corporation (IFC) July 24, 2012 announced it is giving a loan of $80 million to the Takoradi International Company (TICO), to help expand its gas-fired Takoradi 2 power plant (“T2”) in order to generate more electricity in Ghana.

The IFC believes the increase of power will “spur economic growth” in the country.

Alongside the $80 million, IFC said it will provide an additional $15 million loan to TICO on behalf of the Canada Climate Change Program, for which IFC is the implementing agency.

TICO is a joint venture between Abu Dhabi National Energy Company PJSC (TAQA) which holds 90% with the Volta River Authority (VRA) having 10% in the venture. TAQA is the operator of the T2 facility.

TAQA on July 16, 2012 said it has secured a $355 million of project financing for the 110 megawatts expansion of the T2 power plant.

The African Development Bank (AfDB) on the same day (July 16, 2012) announced its approval of a $60 million loan for the project expansion which is expected to save Ghana about $30 million a year in fuel costs.

Mitsui & Co of Japan and Korea’s KEPCO have been contracted to start the expansion this month and expected to be commissioned in 2015, TAQA said.

T2 will use waste heat recovery technology for the expansion, which means the plant will be able to generate 50% more electricity with only marginal incremental fuel consumption and without increasing greenhouse gas emissions. The increased efficiency will also lower the cost of electricity generated by T2, officials have said

UNEP welcomes Nigeria’s Hydrocarbon Pollution Restoration Project

Says Ogoniland oil clean-up, new future for Niger delta communities finally in sight 01 August 2012, Sweetcrude/African Press Organization (APO), NAIROBI, Kenya - The UN Environment Programme (UNEP) has welcomed the Government of Nigeria's decision to proceed with a major oil contamination clean-up of Ogoniland in the Niger Delta. Twelve months ago UNEP presented its scientific assessment of oil pollution in Ogoniland to Nigerian President Goodluck Jonathan, underlining serious public health and environmental impacts. The report emphasized the need for swift action to prevent the pollution footprint from spreading further and exacerbating the already tragic legacy for the Ogoni people. Diezani Alison-Madueke, the Nigerian Minister of Petroleum Resources, announced late last month that the Hydrocarbon Pollution Restoration Project had been established to “fully implement the United Nations Environment Programme's Assessment Report on Ogoniland”. The clean-up will reportedly be conducted under a new Nigerian government initiative—the Hydrocarbon Pollution Restoration Project. The Government of Nigeria has indicated that it will now define the scope, actions and financing of the project. The UNEP Environmental Assessment of Ogoniland had proposed an initial sum of US$1 billion to cover the first five years of clean-up operations. While some on-the-ground results could be immediate, overall the report estimated that countering and cleaning up the pollution and catalyzing a sustainable recovery of Ogoniland could take 25 to 30 years and will require long term financing. Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said today: “On the anniversary of the Ogoniland assessment there are now clear and encouraging signals that the government is keen to move on the recommendations—this is a welcome development for the people and the environment of this region who have suffered, and continue to suffer, the legacy of some 50 years of unsustainable oil exploration and production.” “UNEP stands ready to assist the government and its agencies with expertise for getting the Hydrocarbon Pollution Restoration Project up and running so as to improve the lives and livelihoods of the Ogoni people,” he said. Over recent weeks, UNEP has held discussions with Sir Peter Idabor, the Director-General of the National Oil Spill Detection and Response Agency (NOSDRA) and is engaged with the government to chart transformative pathways forward in order to realize the assessment's recommendations. “The immediate need is for the necessary funds to be mobilized and to be deployed to take the Project forward at a scale and speed commensurate with the challenge. Everyone has a part to play in realizing significant and positive results from the Government of Nigeria, local authorities and the oil industry to NGOs and local communities,” said Ibrahim Thiaw, Director of UNEP's Division of Environmental Policy Implementation, who on 4 August last year presented the UNEP report to the government. It woill be recalled that in compiling its two-year scientific assessment, the UNEP team examined more than 200 locations, surveyed 122 kilometres of pipeline rights of way, reviewed more than 5,000 medical records and engaged over 23,000 people at local community meetings. Altogether more than 4,000 samples were analyzed, including water taken from 142 groundwater monitoring wells drilled specifically for the study and soil extracted from 780 boreholes. In one community, at Nisisioken Ogale, in western Ogoniland, the report found that families were drinking water from wells that was contaminated with benzene – a known carcinogen – at levels over 900 times above World Health Organization guidelines. The Rivers State Government introduced alternate water supplies to the affected communities at Nisisioken Ogale, immediately following the release of UNEP's report, with trucks delivering safe drinking water. The Environmental Assessment of Ogoniland report is available online at: www.unep.org/nigeria. Site-specific fact sheets containing detailed information about 67 of the contaminated sites studied in detail are also available at this website. In August 2011, President Jonathan set up a government committee to review UNEP's report and make recommendations on immediate and long-term remedial actions. Since handing over its report, UNEP has signaled its willingness to be a partner in the environmental restoration of Ogoniland and its surrounding creeks, in conjunction with the government, the oil industry and the traditional rulers and people of Ogoniland.

Tanzania set for talks on LNG development

01 August 2012, Sweetcrude, DAR ES SALAAM - THE Tanzanian national oil firm and Norway’s Statoil will soon hold formal talks on their plan to build a liquefied natural gas, LNG, plant in the East African country to take advantage of the country’s recently discovered gas resources.

The Norwegian state oil company is looking to commercialise the Lavani and Zafarani discoveries, with combined resources of around 9 trillion cubic feet, made in its operated Block 2 together with partner ExxonMobil.

Statoil has confirmed that it is currently in dialogue with Tanzania Petroleum Development Corporation (TPDC) and the authorities about a possible development of the LNG facility.
Formal talks on the plan will hold later this month, Bloomberg reported.

“We are currently in an early phase of evaluating the concept selection for a possible LNG plant,” Statoil spokesman Fredrik Norman said.

A Statoil delegation is due to arrive in Tanzania this month for “inception talks”, according to TPDC’s principal petroleum geologist Kelvin Komba.

BG Group, which has separately discovered about 7 Tcf of recoverable resources off Tanzania, has been engaged in a parallel process for the past two years, including identifying potential sites for an LNG plant, company spokesman Kim Blomley said.

Komba said that Tanzania is currently drafting a gas policy and legislation to guide development of the nascent industry following the breakthrough offshore finds.

The government may however require operators to satisfy local demand for gas before export and jointly develop a single LNG plant, instead of building at several sites, to cut costs, he said.

“This will be cost-effective, and it works for us, because it is government that will pay for the plants through foregone revenue in companies recovering costs,” Komba said.

This could mean Statoil, which has previously been looking at a possible floating LNG solution as part of a standalone development, working together with BG Group to develop one facility.

A Statoil spokesman recently told Upstream “it is only natural to have a dialogue with other operators in the region”, adding that plans by Tanzania’s government to have an LNG project up and running within seven years were “not totally unrealistic”.

Nigeria Oil Output Rises to Record on Improved Security

Crude oil output in Nigeria, Africa’s biggest producer, reached an “all-time high” after security improved in the southern oil-producing Niger River delta region, Andrew Yakubu, group managing director of the Nigerian National Petroleum Corp., said.

Total production rose yesterday to 2.7 million barrels a day from 2.4 million barrels, he said in an e-mailed statement today from Abuja, the capital.

“The security measures put in place by the federal government in the Niger Delta region was beginning to yield positive results,” Yakubu, who was appointed to the job in June, said in the statement. Security along oil pipelines and production facilities has been restored, he said.

Energy companies have stepped up production as attacks on installations in the delta declined following a 2009 government amnesty for militants in the region fighting for a greater share of oil resources. Attacks by armed groups cut more than 28 percent of the country’s output between 2006 and 2009, according to data compiled by Bloomberg.

At least 90 percent of the country’s oil is pumped by the state oil company, also known as NNPC, in joint ventures with Royal Dutch Shell Plc (RDSA), Exxon Mobil Corp., Chevron Corp. (CVX), Total SA (FP) and Eni SpA. (ENI)

Nigeria depends on oil exports for more than 80 percent of government revenue and 95 percent of foreign-exchange income. The West African nation earned $196 billion from oil and gas shipments in the four years through 2010, according to the National Bureau of Statistics.

Nigeria: Prepaid Meter Contract - Power Minister, NERC Chairman Risk Jail

The Minister of Power, Professor Barth Nnaji, and the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi risk being committed to prison for allegedly refusing to obey a Federal High Court sitting in Abuja restraining them from going ahead with the award of contract for manufacturing prepaid meters.

Justice Kayode Eso (rtd) of the Court of Arbitration had earlier issued an order restraining the Power Holding of Nigeria (PHCN) from awarding the contract to any other company pending the determination of the appeal brought by a firm, Ziklagsis Network Limited.

But Nnaji was said to have vowed that the government of Nigeria would not be bound by any court order. PHCN had in 2003 entered into a tripartite agreement with Ziklagsis, Unistar High-Tech System Limited for the maintenance of Prepaid Electricity Meters.

This development prompted lawyer to Ziklagsis, Dr. Alex Iziyon (SAN), to file Form 48 at a Federal High Court in Abuja, a committal order indicating that Nnaji and Amadi had continued to obeyed the court's order and should be committed to prison.

The Ziklagsis, in separate letters to Nnaji and Amadi, alleged that the agreement was frustrated by very senior management staff of PHCN through various manipulations.

Nigeria: Privatisation of PHCN - Bidders Ask FG for Deadline Extension

As the deadline for the submission of bids for the Power Holding Company of Nigeria (PHCN) GENCO and DISCO assets expired last Tuesday, interested firms have implored the Federal Government to extend the time frame in order to ensure proper participation of companies.

The bidders who made this appeal in letter to the Director-General, Bureau of Public Enterprise Ms Bolanle Onagoruwa at the weekend noted in dismay that of the one hundred and eleven pre-qualified bidders for the PHCN successor distribution companies, only fifty-four of them successfully submitted their bids within the time.

Against this backdrop, the bidders urged the Presidency, the National Council in Privatisation (NCP) and the Bureau of Public Enterprises (BPE) to jointly reconsider granting a 48-hour concessionary timeline that will elapse 5 p.m. August 31, 2012.

According to them, such gesture will give the pre-qualified bidders for the six generating companies and the eleven distribution firms as announced by the BPE at the pre-qualification stage the opportunity to make and/ or complete their submissions.

The group expressed fear that of the 25 bidders who submitted for the GENCOS, about 14 of them representing 56% may be disqualified for lack of complete documentation including but not limited to the required bid bonds.

A breakdown of the bidders, showed that across board, each of the GENCOS recorded a submission rate of 60% as Ughelli Genco which recorded 56% tops the list.

Conversely, the bidders disclosed that the Shiroro Genco recorded only one submission by all regards a failed bid ab-initio.

The bidders posited that the total population of EOI's harvested for both the successor generating and distribution companies amounted to 190 but only 79 of them submitted their bids, adding that this translates to a submission rate of 41.5 per cent.

They however averred that global standards suggest that for such a process to be considered effective and truly competitive, at least a 60% submission rate should be recorded in a best scenario and at worst 50 per cent.

"In individual successor company terms, at least five bidding companies and at worst three should be evaluated for positions of "preferred," 'reserved' and 'alternate.' They said that this allows for proper evaluation flexibility.

The bidders stated that the deadline for the submission of the bids for the DISCOs was 5p.m. last Tuesday and various consortium along with other bidders missed the time limit by just seven minutes with very valid reasons.

They recalled with pain that the conditions for the bid were constantly being changed by the personnel managing the process for the Bureau, adding that this was evidenced by the multiple deadlines set by the Bureau.

"With every change came the onerous tasks of adjustments and re-strategising and the consequent toll it took on the participating firms," they said.

The bidders also lamented the non existence of multiple collection centres as would have been expected for investment of this magnitude as what recently obtained in the energy sector.

In the light of the above, the bidders enjoined the Federal Government to ensure that the power sector becomes vibrant once again by allowing the participation of credible Nigerian companies who have demonstrated genuine capacity to deliver in the face of daunting economic challenges in the company.

The bidders however stated that the country as a whole has so much at stake by ensuring that Nigeria's destiny is in the hands of Nigerians rather than foreigners.

Analysis – Iraq output overtakes Iran

London, 3 August (Argus) — Opec output declined slightly in July, and Iraq overtook Iran as the organisation's second-largest producer.

Iranian output slipped because of an EU embargo that started on 1 July, prohibiting EU insurance firms from covering Iran's crude exports (see below). Overall Opec output fell to 31.41mn b/d in July, which was roughly 80,000 b/d below output in June (see table).

Iran lost its place as Opec's second-largest producer for the first time in 22 years. It produced 200,000 b/d less than in June. A 190,000 b/d rise in Iraq's output in July almost offset the loss of Iranian production. Loadings from southern Iraq rose by just over 210,000 b/d in July, after maintenance to an offshore loading point in June depressed shipments. But exports from northern Iraq were down by around 25,000 b/d last month.

Angola's output fell by 50,000 b/d in July because of a brief gas leak at the Girassol field and upstream maintenance. Libya's output also fell by 50,000 b/d in July. Protests for autonomy in eastern Libya disrupted exports early in the month. And a power generation shortage reduced output from NOC subsidiary Agoco.

Saudi Arabia's output remained roughly unchanged from July at around 10mn b/d. Riyadh is reluctant to reduce output. It wants to ensure that prices do not rise above current levels, damaging the global economy, particularly since the EU debt crisis remains unresolved.

The aim of Saudi Arabia's output policy “is not to aggravate the problems that the world economy is facing”, a Middle East Opec delegate says. It is “too early to say that the time to reduce output has come”, he says. “We do not want prices to rise and harm the global economy.”

Contributory factors
Riyadh is offering the global economy “some kind of an economic stimulus” and is happy with prices around $100/bl, the Opec delegate says, echoing Saudi oil minister Ali Naimi's earlier statements. Riyadh wants “to contribute to global economic growth by keeping oil prices at a suitable level”, he says.

Saudi Arabia, which has a capacity of over 12mn b/d, is the only Opec member that can raise output to help meet any global shortfalls. The IEA says the limited amount of global spare capacity means that even a relatively small crude supply disruption could prompt IEA emergency stock releases.

Heritage Oil seeks $370m for acquisition of Nigerian asset

London-listed independent oil and gas exploration and production company, Heritage Oil announced Monday that it aims to raise $370 million through a rights issue to help pay for the acquisition of a 45% interest in OML 30 in Nigeria.

Tony Buckingham, Chief Executive Officer, who made the disclosure, said the Nigerian asset would provide oil and cash that would go to improve his company’s financial profile.

“We are delighted to have entered into an agreement to acquire a significant interest in the transformational OML 30 in Nigeria. OML 30 is expected to provide significant production and be cash flow generative immediately, thereby de-risking Heritage’s financial profile,” he said.

According to him, a recently published independent reserves report “gave an economic valuation of between US$3.4 billion and US$4.1 billion, using a discount rate of 10%, for the current 2P reserves at OML 30 and our assets in Russia,” highlighting the underlying value within the company’s enlarged portfolio.

He added that his company’s long term outlook is supported from full development of Miran field in Kurdistan and OML 30 field in Nigeria while short-medium term outlook is buoyed from the rising production from its Russian field and early development of Miran field.

It plans to conduct an extended well test on the Miran reservoirs to sell between 3,000 and 5,000 bopd into the local market in Kurdistan.

Heritage Oil also announced that its production averaged 567 barrels of oil per day (bopd) in the first half of 2012, up 35% from a year earlier, and reached 711 bopd in July.

Court orders TSKJ to pay $35m tax liability to FIRS

06 August 2012, Sweetcrude, ABUJA - THE Abuja division of the Tax Appeal Tribunal, TAT, has ordered TSKJ – the construction contractors to the Nigeria LNG Limited, NLNG – to pay N5.14 billion ($35,938,087) as tax liabilities to the Federal Inland Revenue Service, FIRS.

The order specifically concerns TSKJ II, a multinational company and parent firm to TSKJ Nigeria Limited.

It follows an appeal by TSKJ II, challenging the FIRS Tax assessments in a contract for the construction of the Nigeria liquefied natural gas project. The assessment is for the period, 2006 to 2008,

Acting Chairman of the Tribunal, Hon. Nnamdi Ibegbu (SAN), who issued the order, also awarded N300, 000 against TSKJ II as cost of the three appeals decided in favour of FIRS.

The company (TSKJ II) had filed three separate appeals with suits No TAT/ABJ/APP1010/2008, TAT/ABJ/APP/006/2006 and TAT/ABJ/APP/017/2010 before the tribunal.

In the appeal to the Tax Appeal Tribunal by TSKJ II against the FIRS assessment, the company challenged FIRS refusal to amend its assessments for 1997-2002 and additional assessment raised by the Service and 550, 556.74 dollars tax liabilities for 2008 and 2009 tax years, among others.

In the first ruling on the appeal of FIRS assessment for 1997-2002, the Tax Appeal Tribunal upheld FIRS assessment that TSKJN is to pay $ 16,688,267 dollars as tax.

Also, in the ruling, the court upheld FIRS assessment of $ 19,249,820 million dollars.

In trying to fulfill its tax obligations for the years in question, TSKJ II filed its tax returns, under Section 26 of Companies Income Tax, CITA, but made deductions on expenses incurred by its subsidiary, TSKJ Nigeria Limited, but, the FIRS scoffed at that.

FIRS maintained that since TSKJ II did not file its audited accounts, but filed under Section 26 of CITA, deductions in favour of TSKJ Nigeria Limited were not allowable.

Rather, FIRS maintained, Section 26 of CITA gives the FIRS Board discretionary powers to allow 80 per cent turnover as expenses/costs, and assess the remainder of 20 per cent of turnover at 30 per cent.

Statutorily, companies are required to file returns based on audited accounts, but TSKJN filed its returns for the years in question based on the Section 26 of CITA, with turnover as basis for assessment.

The FIRS additional assessment was also based on the company’s refusal to file its returns based on its audited accounts, in accordance with the law.

The tribunal said that tax law on the issues raised were clear and that there were no ambiguities whatsoever in Sections 41 and 26 of Companies Income Tax Act (CITA), which provides that payments to a subcontractor in any transaction by the taxpayer is not an allowance deductible under section 20 of CITA.

Said the TAT Chairman: “On resolving this issue in favour of the respondent, it is not disputed that the Appellant filed its returns on turnover basis, so under that basis, it is the respondent who defines what amount is fair and reasonable percentage of the turnover.

“It is undisputed that 80 percent covers all the costs incurred by the taxpayer when using the Turnover Basis of Assessment. There is no provision of the law which makes subcontract allowable deduction.”

He, therefore, dismissed the appeal.

Algeria’s New Hydrocarbons law to sweeten terms for non-conventional gas

06 August 2012, Sweetcrude, LONDON - Algeria’s new law on hydrocarbons will give more tax advantages to foreign investment in non-conventional hydrocarbons, the head of the country’s state oil and gas company said Thursday.

In remarks carried by Algeria’s state news agency APS, Sonatrach Chief Executive Abdelhamid Zerguine, said the law, which would be examined soon by the government, “should give a little more incentive for foreign investors” on non-conventional oil and gas.

Sonatrach said last month it will soon sign partnership agreements with Royal Dutch Shell PLC and Exxon Mobil Corp. on shale gas exploration in the north African country.

Last year, Eni SpA said it signed a cooperation agreement for the development of unconventional hydrocarbons, with particular focus on shale gas, adding that it confirms the country has significant shale gas reserves it wishes to explore and develop with Sonatrach.

Lekki FTZ attracts $1.1bn investment from oil firms, others

06 January 2012, Sweetcrude, LAGOS - THE Lekki Free Trade Zone, LFTZ, in Lagos has attracted $1.1 billion (N170.5 billion) investment commitment from 48 investors, Minister of Trade and Investment, Olusegun Aganga, has disclosed.

The minister who spoke based on briefings by the Managing Director of the zone, Mr. Chen Xiaoxing, noted that investment so far in the zone cuts across the oil and gas, transportation and health sectors, among others.

He spoke during the LFTZ Investment Forum and opening of the Eko Expo 2012, in Lagos, weekend.

According to the minister, some of the top investors in the zone include Puma Energy Free Zone Enterprise, which is investing in oil and gas terminal depo construction. The company is investing $400 million in the zone.

The minister also listed other investors to Imad Oil and Gas FZE, which is investing $200 million; China Railway Construction Corporation ($50 million); and YFK Pharmaceutical FZE ($30 million), among others.

Maintaining that the LFTZ had all the features to make it one of the most successful Free Trade Zones in Africa, Aganga said, “The Lekki Free Trade Zone is indeed the biggest of the 19 Free Trade zones Chinese investors have presently outside China and it has all the features to make it one of the most successful Free Trade Zones in Africa.

“I have been informed by the Managing Director of the zone that about 48 investors have already committed to investing close to $1.1 billion in the zone.

“I, therefore salute the commitment of the major stakeholders in the LFTZ venture, the Lekki Worldwide Investment Limited, the China African Lekki Investment Limited, the Nigeria Export Processing Zones Authority, and indeed, the host community. I also commend the staff and management of LFTZ for their hard work and dedication, which has helped to shape this ongoing success story.”

The minister added that, in line with the determination of President Goodluck Jonathan’s administration to transform the Nigerian economy through sound and viable trade and investment policies, the Federal Government would support the Lagos State Government, the consortium of Chinese investors and other stakeholders in ensuring that the LFTZ was developed to attain its full potential.

Continuing the minister expressed satisfaction with the management’s drive to attract significant investment into the zone, the technology it had brought and the jobs that had been created to date.

He said: “In today’s world, business relationships are symbiotic in nature. While we are expected to provide a conducive environment for investors, we also expect that investments coming to the zones will create jobs for Nigerians.

“And to enhance the contribution of FTZs to the growth of the Nigerian economy, my ministry will work with the African Free Trade Zone Association, through NEPZA, to provide the necessary facilities to support the operational efficiency of FTZs in the Nigeria.

“Globally, FTZs are known to have one of the largest job creation capacities. Record has shown that for every job created in FTZs, two additional jobs are created through a multiplier process.”

Speaking during the event, Governor Babatunde Fashola of Lagos State commended Aganga for his commitment to fast-tracking the completion of the LFTZ. He said, “What we are seeing here today is the first tentative test for the implementation of the plan for the Lekki Free Trade Zone. The project will out-live many of us and will be a good legacy that our children will be proud of and thankful to those who visualised the project.

“The partnership we have with the Federal Government and the enthusiasm the Minister of Trade and Investment has shown towards the project is a very strong signal of our commitment to taking advantage of the
investment opportunities in the state now.”

He, however, said that there was a need for a direct gas pipe line into the zone for the generation of power, noting that this was a major requirement for the sustainability of the zone.

Shell to pull cash from Europe

LONDON – Royal Dutch Shell is pulling some of its funds out of European banks over fears stirred by the euro zone’s mounting debt crisis, The Times reported on Monday.

The company’s chief financial officer, Simon Henry, told the newspaper that Shell is cutting back its exposure to European credit risk in the worst-hit economies and putting a higher price on doing business with the region’s peripheral nations.

“There’s been a shift in our willingness to take credit risk in Europe. The crisis has impacted our willingness to afford credit,” Henry is quoted as saying.

Henry is cited as saying that the Anglo-Dutch oil major would rather deposit $15bn of cash in non-European assets, such as United States Treasuries and US bank accounts.

The firm is forced to keep some money in Europe to fund its operations, but is keeping the bulk of its reserve liquidity out of the euro zone to avoid growing macroeconomic risk, the report said.

CNOOC signs $1.56 billion domestic coalbed methane deal

(Reuters) - CNOOC Ltd (0883.HK), China's largest offshore oil producer, has signed a deal to spend 9.93 billion yuan ($1.56 billion) to explore for coalbed methane (CBM) in China over the next five years as part of a 30-year agreement.

A deal on the project was signed between CNOOC Ltd and China United Coalbed Methane Corporation Ltd, which is half owned by CNOOC Ltd's parent, China National Offshore Oil Corporation (CNOOC Group), and half owned by China National Coal Group Corp, CNOOC said in a filing with the Hong Kong bourse.

The two firms aim to explore, develop and produce methane gas in China for 30 years, CNOOC said.

China is investing 100 billion yuan to double coalbed methane output by 2015. Beijing wants gas output from coal seams of up to 30 billion cubic meters (bcm) by 2020, which would account for 15 percent of China's total gas production, up from 5 percent last year.

Beijing plans to double the share of natural gas in its energy mix by 2015 and reduce the role of coal in a bid to ease pollution and slow greenhouse gas emissions. China will import more gas, but it also aims to boost output from domestic natural gas fields as well as develop unconventional sources of gas.

CNOOC Ltd said the deal with China United would give it an opportunity to develop its clean energy business and work onshore in China.

Under the agreement, exploration would cover a 10,866 sq km (4,195 sq miles) area in Shanxi, Shaanxi, Anhui, Shandong, Yunnan, Ningxia, Hebei, Hubei and Henan provinces, CNOOC said. Future coalbed methane production from the project would be shared between CNOOC Ltd and China United.

In general, CNOOC Ltd will take up to 70 percent of future development and production costs of a coalbed methane field, while China United will take up 30 percent, it said.

CNOOC Ltd, which last month agreed to buy Canadian oil producer Nexen (NXY.TO) for $15.1 billion in China's largest overseas acquisition, said the 9.93 billion yuan in budgeted expenses included 9.71 billion yuan for exploration for the first three years, with the rest for the remaining two years.

CNOOC Ltd, whose overall exploration expenditure averaged 35.8 billion yuan per year over the past five years, would fund the coalbed methane project with internal resources.

BP sells UK LPG business
08 Aug 2012 09:04 GMT

London, 8 August (Argus) — BP has agreed to sell its LPG distribution business in the UK to Irish firm DCC for $63mn.

The business supplies around 87,000 t/yr of LPG to industrial, commercial and domestic customers in the UK.

BP plans to sell $38bn of its assets by the end of 2013 to help meet costs associated with the 2010 Macondo oil spill in the US Gulf of Mexico. The firm has agreed around $24bn of asset sales since the start of 2010.

BP said in February that it plans to sell its LPG bottling and tank filling business, as well as some of its wholesale LPG activities, in the UK, Portugal, Austria, Poland, the Netherlands, Belgium, Turkey, China and South Africa.

Fashola seeks improved exploration activities in onshore, offshore basins .

THE Lagos State Governor, Babatunde Raji Fashola, has implored the Ministry of Petroleum Resources through the Department of Petroleum Resources, to intensify exploration activity within the onshore and offshore Dahomey basin, to enable Nigeria boost its oil and gas reserves for collective benefit.

Fashola, stated this at the opening ceremony of the 36th Society of Petroleum Engineers’ Nigeria yearly international conference and exhibition, in Lagos on Monday.

He agreed that the country is blessed with huge oil and gas resources, which are currently estimated at about 35 billion barrels reserves for oil and 187 trillion cubic feet for gas, but noted that for various reasons, these valuable assets have not been fully exploited and Nigeria’s deep offshore oil and gas resources remains untapped.

According to him, “Lagos State has all it takes to partner with and support the Federal Government in achieving this goal.

“The state falls within the Benin sedimentary basin and also among the Nigerian littoral states. Available information suggests that our offshore territorial areas are endowed with abundant hydrocarbon resources.

“This hydrocarbon belt is known to cover areas spreading towards the western flange of West Africa and up to Ghana, placing that country amongst the oil players of the world.

The governor pointed out that the conference theme, “Future of oil and gas: balance with the environment and sustainable stakeholders participation” is as interesting as it is timely.

“The conference is coming at a most auspicious time, a time when Nigeria is poised to implement radical reforms in the oil and gas industry that will, when implemented, certainly be an engine for growth and have a positive impact on our environment.

“I am certainly optimistic that when those reforms are in place, Nigeria will have no place in the index of nations with the paradox of having an abundance of natural resources and yet comparatively marginal economic and development,” he said.

He lauded the Minister of Petroleum Resources, for her courage in pursuing the reforms necessary to bring the oil and gas industry back from the brink, and in particular for working assiduously towards the quick passage of the PIB.

“All hands must be on deck to ensure that once the bill is passed into law, its implementation stimulates the transparency, efficiency, fairness and equity that we all desire.

‘A law is only as good as its effect and its effect depends on its implementation, just as the success of its implementation depends on its desire of all stakeholders to make it work.

“In Lagos State, we are eagerly awaiting its commencement, as we have already started our own energy reforms for the benefits of all Lagosians.

“ For instance, recognizing that energy is one of the most critical factors that affect our socio-economic growth, we created a new ministry at the start of this term, to be responsible for development and exploitation of energy and mineral resources in the state,” the governor added.

National Oilwell Varco to Buy Robbins & Myers for $2.5 Billion

National Oilwell Varco agreed on Thursday to buy Robbins & Myers, a maker of oil well drilling equipment, for about $2.5 billion, as deal-making in the energy sector continues unabated.

Under the terms of the deal, National Oilwell will pay $60 a share in cash, a 28 percent premium to Robbins & Myers’ closing price on Wednesday.

It is the latest deal in the oil patch, as a slew of companies seek to take advantage of a boom in drilling for oil and natural gas, especially in hardened rock formations untapped by previous generations.

National Oilwell has been among the more active buyers. Since 2010, the company has made 13 deals, according to data from Standard & Poor’s Capital IQ.

Based in Dayton, Ohio, Robbins & Myers specializes in making critical industrial parts like valve controls and grinders.

“Robbins & Myers has many complementary products with those National Oilwell Varco currently offers the industry,” Pete Miller, National Oilwell’s chairman and chief executive, said in a statement. “We feel that our combined manufacturing infrastructure and portfolios of technology will further advance our presence in the oil and gas markets we serve.”

Robbins & Myers’ biggest shareholder, M.H.M. & Company, which owns a 10 percent stake, has agreed to the deal. About two-thirds of the company’s shareholders must also sign on. The deal is expected to close in the fourth quarter.

National Oilwell was counseled by the law firm Fulbright & Jaworski, while Robbins & Myers was advised by Citigroup and the law firm Thompson Hine.

Unit of PPG to Merge With Georgia Gulf in $2 Billion Deal

The specialty chemicals company PPG Industries will spin off a commodities unit and merge it with Georgia Gulf in a deal valued at about $2 billion, the companies announced on Thursday.

PPG is expected to receive $900 million in cash and $1 billion worth of Georgia Gulf shares. It will also assume $95 million in debt. Owners of PPG stock will get a little more than half of the shares of the newly formed entity. The deal is expected to conclude late this year or early next year.

The new company is expected to have annual revenue of about $5 billion, and will be one of the largest North American producers of chlor-alkali and vinyl chloride — chemicals used in soaps, PVC piping and other products.

“This transaction creates a global industry leader with substantial opportunities for long-term growth and enhanced shareholder value,” Paul Carrico, president and chief executive officer of Georgia Gulf, said in a statement.

Charles E. Bunch, PPG’s chairman and chief executive, said in the statement: “We are pleased to have reached this agreement as this transaction is another major step in our strategic transformation into a more focused coatings and specialty products company. This is a unique opportunity to create significant value for PPG shareholders and to share in synergies that would not be available to PPG’s commodity chemicals business on its own.”

Cabot to Buy Norit for $1.1 Billion

The Cabot Corporation agreed on Thursday to buy Norit, a Dutch manufacturer of activated carbon that is used in chemical reactions, for $1.1 billion.

The deal for Norit is the latest example of companies looking to complete bolt-on acquisitions that will help support their existing business operations.

Cabot, a chemicals company based in Boston, said the transaction would bolster its presence in high-margin businesses, like the food and beverage industries, and would add up to 25 cents a share to the company’s earnings by 2013.

Cabot is acquiring Norit from the British private equity firm Doughty Hanson & Company and the Dutch investment company Euroland Investments, which bought Norit in 2007 for an undisclosed amount.

“This acquisition supports the ongoing transformation of our portfolio to a higher margin, less cyclical specialty chemicals focused company,” Cabot’s chief executive, Patrick Prevost, said in a statement.

Norit specializes in the manufacturing of activated carbon, which is used in a number of industries, like environmental protection, air and water purification and pharmaceuticals. The Dutch company operates 10 manufacturing plants across the Americas and Europe.

Norit generated $360 million of sales and reported a pretax profit of $92 million in 2011, according to a company statement. Last year, the Dutch company sold one of its divisions, Clean Process Technologies, to the water services company Pentair for 503 million euros, or $636 million.

Cabot said it expected to generate one-off cost savings of around $50 million after the deal closes by early September.

The company will finance the acquisition through a combination of $200 million in cash reserves, as well as $300 million in existing credit facilities and a further $600 million in new loans.

JPMorgan Chase and the law firm Wachtell, Lipton, Rosen & Katz advised Cabot on the deal.

Linde of Germany to Buy Lincare for $3.8 Billion

Linde of Germany said Sunday that it had agreed to buy Lincare Holdings, a Florida-based provider of respiratory therapy equipment for homes, for around $3.8 billion to expand its product offerings.

Linde, one of the biggest providers of industrial air and gas products in the world, will pay $41.50 a share in cash. That represents a 22 percent premium over Lincare’s closing price on Friday. It is also a 64 percent premium to Lincare’s closing price on June 26, the day before The Financial Times’s Alphaville blog reported that the company might sell itself to Linde.

Including $800 million of debt, the deal is valued at about $4.6 billion.

Sunday’s deal is the latest effort by Linde to broaden out its health care portfolio, which so far has focused on products for use in hospitals. Earlier this year, the company bought the European home care unit of Air Products and Chemicals for $751 million.

Linde has not been shy about turning to mergers to bolster its offerings. It has struck about 27 takeovers since 2007, according to data from Standard & Poor’s Capital IQ.

Buying Lincare would expand Linde’s presence in the sector in the United States. The 40-year-old company sells home oxygen equipment, as well as equipment that turns medicines into aerosols and delivers treatments via tubes.

Last year, Lincare reported $177.3 million in net income, on $1.8 billion in revenue. Based in Clearwater, Fla., the company has 10,841 employees.

Its shares have risen 13.8 percent in the last year.

Linde plans to finance the deal through cash on hand and a $4.5 billion loan. Having drawn $1.5 billion in net income and $17.5 billion in revenue last year, the company is expected to easily digest its latest acquisition.

The deal is expected to close in the third quarter and is subject to regulatory approval.

Nigeria: HoneyWell to Invest U.S.$1 Billion On Power Project

HoneyWell Group is to spend over $1 billion in the development of power generation and transmission projects in Bayelsa, Ogun and Lagos and States.

Its Chief Executive Officer, Chris Bale, made the disclosure in an interview with THISDAY in Lagos.

According to him, the first phase of the projects is the 150 megawatts power, Akute Oshun project in Ogun State, which was aimed to meet the electricity needs of Lagos, Ogun and other parts of the South-west who he said consume about 45 per cent the electricity generated.

Bale, said the Nigerian Electricity Regulatory Commission (NERC) had already granted the company a licence for the building of the Ogun power project and assured them that the project would be completed before the end of 2014.

He said: "Right now the group is approaching the next stage of development which is getting the necessary inputs together. We are discussing with Gas Aggregator Company of Nigeria. We have also gotten a Gas Purchase Order (GPO ), very soon negotiation would commence with the gas suppliers. Also, we are holding discussions with Transmission Company of Nigeria for a transmission line to evacuate the power that is going to be accruing from the Akute plant."

The CEO also disclosed that discussions with the Bulk Trading company was at advanced stage and would be formalise as soon as possible.

He said, Honeywell has the expertise as well as the financial muscle to operate the power companies if it succeeds in the bid process.

Bale, who noted however that as an integrated energy company, Honeywell is not wholly dependent on distribution aspect of the power sector, said: "Our strategy is not to depend on disco, clearly we would like to succeed in the bid process, but if we are not successful we still have these power generation projects to deal with. We see the potential for the housing Project in Ogun state to be 500 megawatts, we are looking at 100mw megawatts in Bayelsa State, we are looking at another 500mw plant closer home and this would be quiet the size of an investment portfolio."

Throwing more lights on the company's financial strength, Bale said the firm's track record was evidenced in various projects it has in Nigeria and other countries.

He added: " If you look at the HoneyWell group, the flour Mill's financial position is a matter of public record, and there are additional companies in the HoneyWell group that give you a sense of an established Nigerian company that has the financial capability to do new projects".

He said: "The company has a long standing involvement in the Nigerian power sector and also has good relationship with investors, and for the growth of the power sector, so we see this as an opportunity to deploy Honeywell group's resources and bring the much needed investment in the sector from outside the country".

The company was among the 54 firms that met the July 31 deadline for submission of bids for electricity distribution companies. Specifically, the company bided for Ikeja and Eko Distribution companies (Discos).

Shedding more lights on the company's interest in distribution networks, he said, apart from the projects in Ogun, Bayela and Lagos, there are other potential projects in other states of the federation.

Corroborating the CEO's statement , the project director power for the Seun Faluyi said the group was looking at the full value chain from generation to distribution, adding that participating in the bid process for the privatization exercise was just one of the recent steps that the group has taken. "We also have interest in generation that is Independent power projects. A lot of them are at developmental stages.

The project will compliment the Federal Government efforts at providing stable power supply top the country and thereby enhance economic activities that would stimulate employment," he said.

Nigeria: HoneyWell to Invest U.S.$1 Billion On Power Project

HoneyWell Group is to spend over $1 billion in the development of power generation and transmission projects in Bayelsa, Ogun and Lagos and States.

Its Chief Executive Officer, Chris Bale, made the disclosure in an interview with THISDAY in Lagos.

According to him, the first phase of the projects is the 150 megawatts power, Akute Oshun project in Ogun State, which was aimed to meet the electricity needs of Lagos, Ogun and other parts of the South-west who he said consume about 45 per cent the electricity generated.

Bale, said the Nigerian Electricity Regulatory Commission (NERC) had already granted the company a licence for the building of the Ogun power project and assured them that the project would be completed before the end of 2014.

He said: "Right now the group is approaching the next stage of development which is getting the necessary inputs together. We are discussing with Gas Aggregator Company of Nigeria. We have also gotten a Gas Purchase Order (GPO ), very soon negotiation would commence with the gas suppliers. Also, we are holding discussions with Transmission Company of Nigeria for a transmission line to evacuate the power that is going to be accruing from the Akute plant."

The CEO also disclosed that discussions with the Bulk Trading company was at advanced stage and would be formalise as soon as possible.

He said, Honeywell has the expertise as well as the financial muscle to operate the power companies if it succeeds in the bid process.

Bale, who noted however that as an integrated energy company, Honeywell is not wholly dependent on distribution aspect of the power sector, said: "Our strategy is not to depend on disco, clearly we would like to succeed in the bid process, but if we are not successful we still have these power generation projects to deal with. We see the potential for the housing Project in Ogun state to be 500 megawatts, we are looking at 100mw megawatts in Bayelsa State, we are looking at another 500mw plant closer home and this would be quiet the size of an investment portfolio."

Throwing more lights on the company's financial strength, Bale said the firm's track record was evidenced in various projects it has in Nigeria and other countries.

He added: " If you look at the HoneyWell group, the flour Mill's financial position is a matter of public record, and there are additional companies in the HoneyWell group that give you a sense of an established Nigerian company that has the financial capability to do new projects".

He said: "The company has a long standing involvement in the Nigerian power sector and also has good relationship with investors, and for the growth of the power sector, so we see this as an opportunity to deploy Honeywell group's resources and bring the much needed investment in the sector from outside the country".

The company was among the 54 firms that met the July 31 deadline for submission of bids for electricity distribution companies. Specifically, the company bided for Ikeja and Eko Distribution companies (Discos).

Shedding more lights on the company's interest in distribution networks, he said, apart from the projects in Ogun, Bayela and Lagos, there are other potential projects in other states of the federation.

Corroborating the CEO's statement , the project director power for the Seun Faluyi said the group was looking at the full value chain from generation to distribution, adding that participating in the bid process for the privatization exercise was just one of the recent steps that the group has taken. "We also have interest in generation that is Independent power projects. A lot of them are at developmental stages.

The project will compliment the Federal Government efforts at providing stable power supply top the country and thereby enhance economic activities that would stimulate employment," he said.

World oil demand to reach 90.5mb/d in 2013 – IEA

11 August 2012, Sweetcrude, VIENNA – THE International Energy Agency, IEA, has said that world oil demand will reach 90.5 million barrels per day next year, up from its predicted 89.6 million barrels per day for this year.

The agency said a slowdown in economic activity will put the brakes on global oil demand growth in 2013.

According to the IEA, annual demand growth will be restricted to 900,000 barrels per day this year, giving an average of 89.6 million bpd, with the rate sinking to 800,000 bpd in 2013, when it predicted 90.5 million bpd demand.

It said oil prices, which have rebound to above $110 per barrel after earlier falling below $90, are likely to be given support in the next few months by geopolitical tensions as well as sanctions on Iran crude exports over its nuclear programme.

“The geopolitical dimension is likely to continue to provide something of a floor for prices. The issue of Iran will likely continue to weigh heavy on the market through the second half of 2012,” the IEA stated in its report.

“Moreover, there is a risk that recent progress in restoring output from Libya, Iraq and Nigeria could be jeopardised if recent political and civil tensions worsen.”

The IEA attributes the lower demand growth forecast to “sluggish economic growth”with an expected slowdown in major economies China and the US contributing to the “weaker backdrop” for the crude market.

Its prediction echoes similarly pessimistic forecasts issued this week by Opec and the US government.

Meanwhile, global oil supply increased 300,000 bpd to 90.7 million bpd in July compared with the previous month, the IEA said.

Oben Gas Plant shut for expansion work

13 August 2012, Sweetcrude, LAGOS - THE Oben gas plant has been shut down by owners, Seplat Petroleum Development Company Limited, for a scheduled upgrade operation.

Seplat Petroleum, operator of the Nigeria Petroleum Development Company/Seplat Joint Venture (JV) Oil Mining Licenses, OMLs, 4, 38 and 41, said the plant would be shut down for two weeks.

The company said the scheduled shutdown of the Oben gas plant is part of plans to upgrade the plant to extend its lifespan by another 20 years and also achieve specification of the West African Gas Pipeline, WAGP.

Mr. Emmanuel Otokhine, the company’s head of corporate communications, said in a statement that the shutdown is the concluding part of the plant upgrade which the NPDC/SEPLAT JV has invested significant amount of money to undertake.

The statement quoted Mr. Austin Avuru, managing director of Seplat, as saying the upgrade is another testimony of the joint venture’s unwavering commitment to ensuring a long-term supply of abundant, clean, relatively cheaper fuel to end-users in Nigeria, Ghana, Togo and Benin.

Ghana takes delivery of pipes for national gas project

GHANA Gas Company, GGA, has taken delivery of about 3,271 pipes from China for the country’s National Gas Project at the Takoradi Port.

Dr Joe Obeng-Adjei, Minister of Energy; Dr Kwesi Botchwey, Chairman of the board of the Ghana Gas Company; Dr George Adjah Spia-Yankey, Chief Executive Officer of the company and the Western Regional Minister, Mr Paul Evans Aidoo, inspected the consignment on MV Amber Halo that brought in the equipment.

Another consignment of about 3,271 is due to arrive soon, Ghana News Agency reports.

The team later inspected a camp for the storage of about 1,268 of the pipes at Mampong near Takoradi.

Speaking to the media, Dr Obeng-Adjei said most of the equipment for the project have arrived and the laying of the pipes would soon begin.

He urged the contractors, Sinopec International Petroleum of China, to execute quality work within the stipulated budget and on schedule, adding that work done must meet international standards.

He also urged that quality be not overlooked in the quest to meet the deadline.

The minister appealed to communities in areas where the pipelines would be laid to be cooperative and not to create tensions and fan conflicts with people working on the project.

Dr Botchway said the local content of the project would be upheld whether or not there is a Local Content Law.

He said impression has been created that locals would be sidelined in the labour force for the project but this is not the case.

Dr Botchway said local people have been engaged for the project and expertise would only be brought from outside when it is lacking in the country.

Dr Spia-Yankey said it was the wish of the President that the project became a reality and the Ghana Gas Company was doing everything to make it happen.

He said government would pay adequate compensation to those whose crops and properties would destroyed by the project.

BP Sells Refinery, Arco Retail to Tesoro for $2.5 Billion

Oil company BP says it has agreed to sell its refinery in Carson, Calif., and other West Coast assets to Tesoro Corp.

BP [BP 42.15 -0.25 (-0.59%)] said Monday that Tesoro is paying $2.5 billion cash for the refinery, pipelines, storage terminals, and Arco-branded retail outlets in southern California, Arizona, and Nevada. BP is also selling the Arco brand rights for northern California, Oregon, and Washington, and will lease them back from Tesoro [TSO 38.83 3.33 (+9.38%)].

Earlier Monday, BP announced it was selling two gas processing plants in Texas to Eagle Rock Energy Partners [EROC 8.69 -0.27 (-3.01%)] for $227.5 million in cash for the Sunray and Hemphill gas processing plants in Texas.

BP says it has now sold or agreed to sell assets worth $26.5 billion since 2010. The company has a target of $38 billion in disposals by the end of next year to help pay the costs of the Macondo well blowout in the Gulf of Mexico.

Statoil, ExxonMobil make big gas find off Tanzania

Norwegian oil firm Statoil and ExxonMobil have discovered a large natural gas deposit off the coast of Tanzania and added further resources to another nearby find, Statoil said in a statement on Thursday.

The discovery, Statoil’s seventh major find in just over a year, confirmed 3 trillion cubic feet (Tcf) of gas in the Lavani well, 2,400 meters under the sea.

In addition, the firms also added 1 Tcf of gas to an earlier 5 Tcf discovery in the Zafarani sidetrack in the same block just 16 kilometres away, Statoil, the block’s operator said.

“We estimate a value of the discovery plus the upgrade on the Zafarani discovery of NOK 1.3 per share,” Swedbank First Securities said in a note. “We assume a fair share price reaction would be NOK 0.8-1.0 per share,” it added.

The discovery confirms Statoil’s recent track record for solid upstream success after it has made big finds in the mature areas of the North Sea, the Arctic Barents sea, in Brazil and Tanzania.

The block further bolsters east Africa’s hydrocarbon potential following a string of discoveries by oil majors off Mozambique and Tanzania.

Statoil operates the licence on 5,500-square-kilometre Block 2 on behalf of Tanzania Petroleum Development Corporation and holds a 65 percent stake while ExxonMobil Exploration has 35 percent

BP Sells Texas Midstream Gas Assets, USA

BP America Production Company said that it has agreed to sell its Sunray and Hemphill gas processing plants in Texas, together with their associated gas gathering system, to Eagle Rock Energy Partners for $227.5 million in cash.

The Sunray plant, in Moore County, and the Hemphill plant, in Hemphill County, have combined processing capacity of approximately 220 million cubic feet of gas a day (mmcf/d) and an associated gathering system of around 2,500 miles of pipelines.

BP said it believes these assets, which serve BP’s natural gas production in the Texas Panhandle region, will be more strategically valuable to a company that specializes in midstream oil and gas operations. The agreement does not include BP’s natural gas producing assets in the area.

The transaction is expected to close in the fourth quarter of 2012, subject to regulatory approvals and customary closing conditions.

BP’s North America Gas business has a high quality portfolio of assets with a presence in seven of the leading gas basins in the US Lower 48 states. In 2011, BP produced over 1,800 mmcf/d natural gas in the US. BP’s US onshore upstream operations are an integral part of its business, and the company continues to look at opportunities for growth over the long-term.

Tanzania looks to learn from Abu Dhabi with wealth fund

Tanzania plans to establish a sovereign wealth fund to invest future energy windfalls.

TanzaniaThe east African country is benefiting from a steady increase in its natural gas reserves and the government is studying states with significant hydrocarbon revenues. It is focusing on those that - like Abu Dhabi - have established sovereign wealth funds, said Jakaya Kikwete, Tanzania's president.

"We want to learn from them by setting up our own fund to ensure we similarly benefit," he said in a televised address.

New gas finds tripled Tanzania's proven reserves in June and the World Bank has estimated the country could earn US$3 billion (Dh11.01bn) a year from exporting gas. Other African countries such as Nigeria and Ghana are also working towards establishing sovereign wealth funds.

The oil and gas companies active in Tanzania are yet to shift from exploration to production, however, and a significant flow of gas is not imminent.

"It will be a few more years before we see substantial gas revenues in Tanzania," said Marne Beukes, an analyst at IHS Global Insight.

Somali piracy, and disputes over contracts signed with international oil and gas companies could become stumbling blocks to eventual exports. But growing gas finds have attracted some of the industry's big players to the country.

Yesterday, a joint venture comprising the BG Group and Ophir Energy announced its latest gas discovery, adding to its proven reserves of about 6 trillion cubic feet.

The US oil supermajor ExxonMobil and Norway's Statoil last month struck gas for a seventh time in the offshore Rovuma basin, which has already provided Mozambique with a wealth of proven reserves.

The discoveries take the joint venture's proven reserves there to 9 trillion cubic feet. The country's total recoverable reserves stand at 28.9 trillion cubic feet, Mr Kikwete said.

While Tanzania's discoveries are substantial, they are dwarfed by those in Mozambique, where Italy's Eni and a consortium including Anadarko, based in the United States, have found reservoirs holding up to 112 trillion cubic feet.

Nevertheless, Statoil's finds alone are considered sufficient to justify building a liquefied natural gas export terminal, which would allow Tanzania to monetise its gas production. "The results so far mark an important step towards a possible natural gas development in Tanzania," said Tim Dodson, Statoil's vice president for exploration.

One of the sovereign wealth funds Mr Kikwete hopes to learn from is already active in his country's gas sector.

Mubadala Oil and Gas, a subsidiary of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, last November invested $23 million into acquiring and exploring a stake in an offshore block.

East Africa: UBA to Finance Energy, Infrastructure in East Africa

United Bank for Africa Plc (UBA) is planning to invest in Energy and infrastructure in East Africa, the bank said in a statement yesterday.

The Group Managing Director/CEO, Mr. Phillips Oduoza said this in Nairobi, Kenya, while addressing leaders of the organised private and public sector as part of his business visit to Zambia, Tanzania and Kenya at the weekend, the statement said.

UBA would explore areas of collaboration with key players in private and public sectors as part of efforts to engineer growth and development of the economies of these countries where it presently operates, the statement said.

The bank would be providing financial advisory services, infrastructure financing particularly in the emerging energy sector and efficiency in revenue collection in the region.

Oduoza said: "Energy is one of the strengths of UBA and we hope to build capacity by bringing in people who have expertise in energy transactions. We have knowledge in structuring oil and gas transactions and we shall train our people here in the region on financing oil and gas deals, no matter the volume and magnitude of the transactions."

He listed tourism, agriculture, infrastructure, inter-African trade and utilities as some of the bank's target business areas in the region.