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|100 Days Of Oil And Gas Under President Goodluck Jonathan by Beaf: 8:29pm On Aug 17, 2010|
[size=14pt]100 Days of Oil and Gas under President Goodluck Jonathan[/size]
Business Aug 17, 2010 Share | By Yemie Adeoye
Straight from his inauguration as President and Commander-In-Chief of the Armed Forces of Nigeria, Dr. Goodluck Ebele Jonathan took the bull by the horn by embarking on some far reaching measures which in the last 100 days has positioned the all important oil and gas industry on the irreversible path of growth and sustained elixir.
Beyond rhetoric, the petroleum industry under the watch of President Jonathan has recorded great feats in the areas of transformation, the Nigerian content Act, push for the passage of the Petroleum Industry Bill, the implementation of the Gas Master Plan, improved relations with critical stakeholders, improved products supply, serious attention to issues of gas supply to power plants, issues of attraction of new investors to generate employment opportunities for Nigerians, improvement in the domestic usage of LPG, renewal of oil exploration activities in the Chad Basin and commitment to transparency in the industry.
Sustenance of Steady Supply of Petroleum Products Even before his formal inauguration as President, Dr Jonathan has never hidden his attitude of zero tolerance for scarcity of petroleum products in any part of the country. It is not surprising therefore, that in the last three months; the country has witnessed an unprecedented stability in the supply and distribution of petroleum products throughout the length and breadth of the federation.
The result is that with supply far out witting demand, the laws of economics is pushing the price of PMS below the official price of N65 per litre in some parts of the country, notable in the East and far North which has hither never enjoyed price parity with the rest of the country let alone price reduction.
To ensure that the current product stability is sustained, the President has since directed the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke and the NNPC to design and implement practical measures to ensure that steady fuel supply to all parts of the country is sustained in the medium to long-term basis. Also for the first time in almost five years the nation’s three refineries, Warri, Port Harcourt and Kaduna refineries are working simultaneously contributing effectively to the drive to increase local refining capacity.
In distribution, events of the last three months have witnessed an aggressive drive by the state owned Nigerian National Petroleum Corporation to increase its hold on the downstream sector via expansion of its retail outfit NNPC Retail.
As at the last count, NNPC Retail has acquired 427 affiliate stations in addition to its 37 mega stations and 12 floating filling stations as part of its strategic plan to own at least 50 percent of the entire filling stations in the country with the aim of squelching future artificially induced fuel scarcity.
Passage of Nigerian Content Development Act
The face of the oil and gas industry in Nigeria was changed for good with the coming of the Nigerian Content Act which was signed into law by President Jonathan. The law among other objectives seeks to ensure that Nigerians and Nigerian companies participate actively in the oil and gas industry with a view to boosting the local economy.
With full support of the President, the Minister of Petroleum Resources has since taken some aggressive measures in driving its implementation. Besides, the immediate appointment of an Executive Secretary for the Nigerian Content Development Board, the minister has ensured that a befitting office is secured for the agency in order to enable it function, while plans are already on for the development of the Board’s permanent site.
The multiplier effect of this new law is enormous. It sets the stage for the anticipated growth that the PIB will herald in respect of our national Oil and Gas asset portfolio. Post PIB, it is estimated that investment inflow into the industry will drive activities over the next five years in the magnitude unprecedented in the history of oil and gas in Nigeria.
Experts are of the opinion that the law has the potential to generate over 30,000 jobs in the next 5 years and has far reaching implications for the issues of technological advancement, long term cost effectiveness, post amnesty programs in the Niger Delta and the improved impact of the Oil & Gas Industry on our National GDP.
The Act among other notable objectives provides that Nigerian independent operators shall be given first consideration in the award of oil blocks; oil field licenses, oil lifting licenses and in all projects for which contract is to be awarded in the Nigerian oil and gas Industry.
It also stipulates that in the bidding for any license, permit or interest and before carrying out any project in the Nigerian oil and gas industry, an operator shall submit a Nigerian content plan demonstrating compliance with the Nigerian content requirements of this Bill.
The new law requires that a high proportion of these activities will be performed in Nigeria with increased participation of Local companies and indigenes. However, it is clear that such capacity is not currently available, but these gaps present significant business opportunities to grow required capabilities to support these requirements.
Petroleum Industry Bill
In keeping with the desire to continue with reform of the oil and gas industry, the government has reinvigorated the drive for the passage of the Petroleum Industry Bill which would provide a legal framework for the reform.
In this regard, government through the petroleum ministry has re-opened negotiations with various stakeholders who have expressed reservation with the proposed law. This is to ensure that all stakeholders are carried along. Already this approach has begun to yield dividends as feelers from the National Assembly indicate that the Bill would be passed soon.
Transformation and Reforms
Contrary to the norm in the past where top government officials abandon policies espoused by their predecessors, President Jonathan stated on assumption of office that he would continue with the oil and gas industry reform in order to transform the industry into a modern one where international best practice would be the rule.
Attraction of New Investors
In the last 100 days, the Nigerian Oil and Gas industry has witnessed sustained inflow of investment both in the upstream and downstream sectors.
Conscious of the pivotal role the oil and gas sector plays in the Nigerian economy, the federal government through the petroleum ministry is doing so much to ensure that the atmosphere in the industry is conducive to increase and sustain inflow of investments. The recent interest of investors like the CCECC, China’s largest engineering company, to build three Greenfield refineries and one petro-chemical plant in the country is a testimony in this regard.
The refineries which are being constructed in conjunction with the NNPC will increase the nations refining capacity by 750, 000 barrels per day translating to over 45million litres of pms per day. In terms of job creation, experts forecast that the projects will collectively attract over 20,000 jobs.
While about 14, 000 workers would be required during the period of the planned construction, an estimated 6,000 workers are needed to run the three refineries and the petro-chemical plant when they come on stream. Other multiplier effects will include the generation of local businesses for auxiliary services, including suppliers of goods and services of all types to the industrial sites.
Commitment to Transparency
Ahead of the passage of the PIB which has clauses that propose to remove all forms of confidentiality in business transactions in the industry to enhance accountability; the federal government has commenced a transparency crusade in the petroleum industry. This has ensured that transactions are carried out in strict adherence to laid down rules and procedures that can stand public scrutiny.
Commitment to Opening up the Industry
Concomitant to the desire to boost local content in the industry the president has committed to opening up the industry. In this regard, the Federal Government has since granted approval for new gas pricing regimes for gas to power and gas to the manufacturing industry to encourage more investors into the gas sub-sector.
There is also plan to grow the upstream sector through a bid round for marginal fields to encourage indigenous companies and other small time players to have a foothold in the industry.
Improved Relations with Stakeholders
As at the last count, the President through the Minister of Petroleum Resources Mrs Alison-Madueke has been able to broker a truce with stakeholders, who thought the PIB was a ploy to victimize them.
She achieved this by opening up avenues for dialogue on issues that bother them and by allaying their fears about the PIB and the oil and gas industry reforms. These new vista of friendship and conviviality with stakeholders has also manifested in improved relationship with industry unions like NUPENG, PENGASSAN, IPMAN, MOMAN and DAPPMA among others.
Renewal of oil Exploration activities in the Chad Basin
|Re: 100 Days Of Oil And Gas Under President Goodluck Jonathan by Beaf: 8:30pm On Aug 17, 2010|
[size=14pt]100 Days of Oil and Gas under President Goodluck Jonathan[/size]
Events of the last 100 days witnessed spirited moves by the Federal Government to build up the nations proven oil reserve through exploration of new frontiers for oil and gas production. Days after assuming office as President, the NNPC announced that based on Presidential directive .
more oil finds and is putting finishing touches to a comprehensive framework designed to herald the intensification of exploration activities in the Chad Basin.
The NNPC stated that though it is too early to be categorical, there is a possibility that oil may be found in commercial quantity in the Chad Basin because of the discoveries of commercial hydrocarbon deposits in neighboring countries of Chad, Niger and Sudan which have similar structural settings with the Chad Basin.
Discoveries made in neighboring countries in basins with similar structural settings are: Doba, Doseo and Bongor all in Chad amounts to over 2 Billion barrels (Bbbls); Logone Birni in Southern Chad and Northern Cameroun, over 100 Bbbls; and Termit-Agadem Basin in Niger totals over 1Bbbls.
Already, the NNPC New Frontier Exploration Services Division which is leading the charge for crude oil find in the entire Inland Basins is acquiring 3,550 sq km of 3- D seismic data for processing and interpretation in addition to the already acquired 6000km of 2-D data that is currently being reprocessed.
Currently over 600,000 seismic section and 30,000 well logs are being scanned and vectorised in good time for the eventual drilling. Before now, 23 wells have been drilled with two of the wells, Wadi-1 and Kinasar encountering non- commercial gas.
The NNPC New Frontier Exploration Division which is headed by Engr. Olakunle Olaosebikan is working in consultation with a renowned Geophysicist and Consultant to the United Nations, Prof. Deborah Ajakaiye who is leading a team of Nigerian and foreign Geologists/Geophysicists in the search for hydrocarbon deposit in the Nigerian Frontier Inland Sedimentary Basins, NFISB.
Interestingly, the search is not limited to the Chad Basin alone but covers extensive inquest in the entire Nigerian Frontier Sedimentary Basins which includes- The Anambra, Bida, Dahomey, Gongola/Yola and the Sokota Basins alongside the Middle/Lower Benue Trough.
Serious Attention to Issues of Gas Supply to Power Plants/ Gas Master Plan
The question of gas to power was raised to the front burner with the unveiling of a two-point agenda for the gas sector to meet the administration’s aspiration of delivering enough gas to the power stations to ensure adequate power supply in the country.
Unfolding the agenda, the Minister of Petroleum Resources stated that the Federal Government is focused on ensuring expeditious implementation of the Nigerian Gas Master Plan to attain clear-cut short-term and some medium term objectives as well as to position Nigeria as a major player in the global gas market by securing the FID of the Brass Liquefied Natural Gas by the end of 2010 while refocusing on the Olokola Liquefied Natural Gas project.
The Minister listed the objectives of the two-pronged action to include sustainable supply of and delivery of gas to the power sector, implementation of a sustainable commercial framework for domestic gas through a review of the gas pricing to encourage investors by enabling them secure bankable agreements and the transformation of Nigeria into a regional hub for gas-based industries by signing up world class investors in the petrochemicals, methanol and fertilizers sectors.
Explaining the newly approved gas pricing regime, the Minister said currently the price of gas to power is two cents ($0.2) per mmbtu of gas, and that by the end of the year, the price of gas would increase to $1/mmbtu.
The price would graduate to $1.50/mmbtu by 2011 and $2/mmbtu by the end of 2013, adding that beyond 2014, it would increase based on inflation rate.
It is envisaged that this effort will move the supply to the power sector (and other sectors) from the current loose, best endeavour basis to one anchored on strict commercial agreements. This will move the process of gas supply and purchase in Nigeria to world class levels.
The Minister further disclosed that in a bid to concretize the commercial framework for domestic gas, a program is currently being worked out with the World Bank to provide security for gas revenues sold to the power sector in order to ensure that gas suppliers do not lose money for supplying gas to the power sector.
“With the World Bank Partial Risk Guarantee that was initiated in the Gas Master Plan, the problem of lack of confidence on the part of gas suppliers that when they supply gas they will not get paid is now permanently fixed. The World Bank mission is currently on ground in Nigeria working with our team on the gas agreements and perfecting all other necessary agreements in respect of the Partial Risk Guarantee,” the minister said.
Giving an update of the gas to power supply situation in the country, Alison-Madueke said gas supply was at all time high because all the gas plants in the country are “operating at or very close to full capacity” and repairs on all critical pipelines have been completed.
“Current supply on the western system averages about 700mmcf/d, enough to power virtually all operational power plants on that axis. In fact, there is a situation of slight excess supply capacity. In the East, both Afam VI and Agip’s Okpai IPP are generating about 900MW with a planned addition of about 200MW very shortly.
There is also excess gas available at the Okoloma Gas Plant to fire additional PHCN turbine at Afam V whenever they are available,” the Minister said.
Already a plan is afoot to bring additional 65mmcf/d from PanOcean, 65mmcf/d from NPDC and 195mmcf/d from Chevron within the next four to eight months.
Weeks later, the new gas pricing regime yielded its first major dividend with the signing of a Gas Supply and Purchase Agreement (GSPA) between the NNPC/Pan Ocean Joint Venture and the Power Holding Company of Nigeria, PHCN.
The Minister who described the signing of the GSPA as a key milestone in the drive to reposition the Nigeria domestic gas market for sustainable growth said with the new gas pricing regime, the gas market is set for unprecedented growth propelled by demand from the power sector and other gas based industries.
Speaking on the significance of the GSPA between the NNPC/Pan Ocean JV and PHCN, Alison-Madueke said “The importance of today’s event is anchored not only in the size of the gas supply, but in the integrity and robustness of the process for gas access and contracting that this agreement has come to symbolize in the evolving Nigerian domestic gas market.”
The agreement which was signed by Chief Festus Fadeyi, Chairman of Pan Ocean Corporation on behalf of the NNPC/Pan Ocean JV, the Managing Director of PHCN, Engr Hussein Labo, and Dr David Ige on behalf of the Gas Aggregation Company would guarantee the supply of 65mmcf/d of gas from Pan Ocean’s Ogharefe Gas Processing Plant to Egbin Power Plant.
According to her, for the Nigerian gas sector to realize its full potential, the processes that govern it must be bankable and robust enough to attract external financing and the contractual process must be such that enforces performance on all players in the value chain from producer to off-taker, adding that the new GSPA template that has been developed by the Federal Government is designed to meet those standards.
“The template stipulates all the terms and conditions for effective and bankable supply for gas to power in Nigeria. Having developed this template through a rigorous process of consultation with all stakeholders, the template is being customized for each gas supply transaction. I have directed that the template be loaded on the website of the Gas Aggregation Company of Nigeria.
This will allow potential investors in IPPs etc. to have immediate visibility of the terms and conditions of gas supply in Nigeria, hence expediting their investment decision,” the minister explained.
Also speaking at the occasion, the Minister of State for Power, Architect Nuhu Wya noted that the signing of the GSPA was like a birthday to Nigerians as it marks the end of epileptic power supply in the country.
“Right from today, there is no hiding place for anyone in the power sector.
There is no more excuse for not generating enough power. Last year the excuse was that there was no gas, with this agreement that has been signed here today, PHCN is sure of receiving gas to generate power; and I can assure Nigerians of regular power supply,” Wya said.
|Re: 100 Days Of Oil And Gas Under President Goodluck Jonathan by asha80(m): 8:36pm On Aug 17, 2010|
Hmm piece of meat this your campaign for jona na whao
|Re: 100 Days Of Oil And Gas Under President Goodluck Jonathan by idupaul: 11:06pm On Aug 17, 2010|
God bless GEJ .pls beaf tell them about 100 days of the stock exchange unda GEJ
|Re: 100 Days Of Oil And Gas Under President Goodluck Jonathan by xterra2(m): 11:17pm On Aug 17, 2010|
Instead of you to Bold the important parts
Always bold the important art in a LONG article like this please
People have things to do you know
|Re: 100 Days Of Oil And Gas Under President Goodluck Jonathan by Beaf: 11:47pm On Aug 17, 2010|
The whole article is very detailed and spellbinding. . . I would have to highlight everything.
It is safe enough to say, fix your eyes on ANY paragraph to be intrigued.
At long last, the oil and gas sector is being completly reborn to serve Nigerians today and those yet unborn!
Please take the time to read it through, it is jam packed with serious info.
|Re: 100 Days Of Oil And Gas Under President Goodluck Jonathan by DisGuy: 6:08am On Sep 07, 2010|
so the PIB. . . . ??
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