The Ministry of Petroleum Resources says it has developed a framework for the concessioning of oil and gas pipeline assets.
This was disclosed by the Permanent Secretary, Ministry of Petroleum Resources, Amb. Gabriel Aduda, at a workshop in Abuja.
According to a statement by Mrs Enefaa Bob-Manuel, Director (Information) of the ministry, on Thursday, the Permanent Secretary was represented by the Director, Midstream, Ministry of Petroleum Resources, Mr Felix Okeke.
Aduda said that the role of pipeline in fluid transport could not be overemphasised.
He said that the desire of government was to allow for private sector participation in the pipeline segment of the petroleum industry.
He craved for partnership to bridge the infrastructural gap in the segment, especially as the country has adopted gas as her transition fuel and its centrality as a source of energy He said Nigeria had two crude delivery pipeline networks to the refineries which included; the Escravos-Warri-Kaduna Pipeline system and the Bonny-Port Harcourt pipeline system, all originating from crude export terminals.
“The 5,120 Kilometers of Pipeline Network was also built for the distribution of petroleum products from the four refineries.
“With a capacity of 445, 000 barrels of crude per day to storage depots across the country, and about 3, 000 kilometers of gas pipeline network,” he said.
The permanent secretary said that over the years, ownership of pipeline assets in the Nigerian Oil and Gas industry had been the exclusive preserve of government.
This project, he noted, was conceived with the intention to bring private investors to operate pipeline assets as it was the desire of the ministry to develop a framework for easy and efficient concessioning of oil and gas pipelines.
According to him, this will enable private companies to design, construct and operate pipeline infrastructure.
In a remark, Mr Joe Nwakwue, Partner, Zera Advisory and Consulting, said that the quality of service depended on the cost and reliability of the product, hence delivery of the product was of essence to national growth and development.
He urged the government to consider upgrading the pipeline Master Plan which was developed by the Nigerian National Petroleum Company Limited (NNPCL) twenty years ago.
He underscored the need for the ministry to rewrite the existing Master plan and to own it as it would facilitate the attainment of the Ministry’s mandate of ensuring an enabling environment for investors.
Nwakwue said that concessions could enable competition for the market (as opposed to competition in the market).
The Assistant Director, Midstream Department, Mrs Olamide Adewale in her remarks sued for cooperation in making the Pipeline concessioning a success.
Some experts in the oil and gas industry have advised the Federal Government to ensure proper implementation of the Petroleum Industry Act (PIA), and transparency in future marginal fields licensing bids.
The experts gave the advice in seperate interviews with the News Agency of Nigeria in Lagos on Tuesday against the backdrop of the just concluded 20202021 marginal fields bid.
Mr Ayodele Oni, Partner, Broomfield Law Practice, told NAN that the just concluded 20202021 bid was a brilliant idea by the government to raise funds.
Oni alleged that the exercise was conducted in secrecy, and that many people complained that the process was not transparent.
He, however, said there were some positives in the sense that a number of bidders were able to come up with funds to buy the assets and there were newer and better rules.
“Other than those, the defunct Department of Petroleum (DPR) did not do a great job,” he said.
On the success of the bid, he said apart from the government raising funds through the exercise, it involved more indigenous players and had the potential to increase production.
He, however, said the exercise brought together strange bedfellows, and that it lacked sufficient transparency.
Oni identified other challenges to include claims of corruption, inordinate delays and the list of preferred bidders, which was never issued publicly.
He said the owners of the marginal fields would now be independent of head lessors and have their own Petroleum Mining Lease (PMLs) under the PIA.
“Also, we expect a more transparent process in future Marginal Field Licensing Bid Round.
“The powers of the minister have been reduced with better checks and balances.
“The PIA should be properly implemented and transparency should be entrenched in the next bid round,” he said.
Similarly, Mr Joe Nwakwue, an oil and gas consultant, said it was too soon to make an informed assessment of the just concluded 20202021 marginal fields licensing bid.
Nwakwue noted that from the detailed study of prior exercises, awarding assets to multiple parties posed lots of challenges.
He said one was constrained to observe the rather high signature bonuses paid, noting that it might make it difficult for the awardees to raise funds for field development.
Nwakwue, who is also the former Chairman, Society of Petroleum Engineers (SPE), Nigerian Council, said completing the award process in such an uncertain environment was clearly a plus but challenges of funding and technical capacity persisted.
“Awards to multiple parties except where they jointly bid should be avoided.
“We also need to be very clear on the objective of the licensing round; are we raising money or given blocks to parties that have what it takes to develop and monetise the assets,” he said.
Some oil and gas experts have underscored the need for global collaboration, technology deployment and host communities engagements to curb oil theft in Nigeria.
The experts spoke on Wednesday at a webinar organised by Nextier Consultants with the theme: “Protecting Petroleum Pipelines: Strategy for Curbing Oil Theft in Nigeria.”
The News Agency of Nigeria reports that the country’s oil output currently dropped to an average of 1.24 million barrels per day (bpd).
Nigeria lost about 3.5 billion dollars to crude oil theft in 2021, which was about 10 per cent of its foreign reserves.
Recent reports indicated that Nigeria losses most of its crude oil production to theft and vandalism.
Speaking on exploring pragmatic solutions to curb crude oil theft, Mr Joe Nwakwue, a petroleum sector specialist, said oil theft had become worst due to the response of the state to the challenges.
Nwakwue listed engagement of the host communities, application of technology (either satellite base or finger prints) and collaboration with global community as strategies to tackle oil theft issues.
He said international collaboration was paramount because there was a global trade in stolen crude oil products, adding that the issues had far reaching complications for both investors and government.
Nwakwue said Nigeria had witnessed overtime increasing amount of point of origin and terminal oil losses, with an average of 1.6 pbd in 2021 and an average of 1.2 pbd in 2022.
“Theft of this skill cannot go on without the complicity of the society at large; the host communities know what is going on and our processes are not transparent enough.
“The assumptions in the Petroleum Industry Act (PIA) is that it will attract investments, that’s why royalty and tax rates were reduced and on one hand crude theft is sending wrong signal to the market. It should be addressed, otherwise, we will not see gains of the PIA,” he said.
Also speaking, Mr Thomas Kieler, European Union (EU) Adviser on Security, who called for more engagements of the host communities said it was committed to ending the oil theft issues through support programmes and dialogues.
Kieler said the EU had interest in solving Niger-Delta issues and was keeping close eye toward curbing the menace, adding that accountability, adequate manpower and investments were necessary.
Mr Sam Otobueze, former General Manager, Group Security Head, Nigerian National Petroleum Company Ltd. (NNPC), said the decline in oil production was a huge concern and needed drastic measures because the sector accounted for 89 per cent of national income earnings.
Otobueze, the Chief Executive Officer of Abokus Integrated Security Ltd., said that the PIA could boost investors confidence if technology was deployed and issues of law enforcement and protection of the pipelines stakeholders addressed.
On his part, Dr Ndu Nwokolo, a social scientist, said there was a need for government to rebuild the trust of the host communities because they engage in such due to the unfair treatment from the state.
“Government should do enough to convince the people, rebuild their trust and allow them to join in protecting the assets,” he noted.
Earlier, the Convener, Mr Charles Achodo, Senior Director, Nextier, said oil theft had posed a threat to the nation, eroded revenue base , undermined national security, destroyed environment and biodiversity and stopped investments.
Achodo decried the fact that it militated against the country’s capacity to meet its quota given by the Organisation of the Petroleum Exporting Countries (OPEC).
He said the key discussion points would be documented to help policymakers and key stakeholders understand the status, gaps, challenges, and ways to mitigate the challenge.
According to the participants, the host communities are complicit, using the state of their communities to their gains.
They noted that collaborations between the community, civil society, International Oil Companies and security agencies were needed.
“If you have ever visited these oil producing communities and see first hand the kind of poverty in these areas, you will understand why the issue is unending,” the participants said.
The changes in the global energy landscape has made it imperative for the oil and gas industry to adapt accordingly in order to maintain relevance, remain competitive and thrive.
It was organised by the Society of Petroleum Engineers (SPE), Nigeria Council.
Sarki said theme of the summit “Changing Global Energy Landscape: Strategies for Industry Sustainability’’, was not only relevant and germane, but timely and apt as well.
“The scene of the world is changing rapidly, and the industry must respond and adapt accordingly to survive, maintain relevance, remain competitive and thrive,” he said.
According to him, the oil and gas industry has been affected by a combination of factors including, changing demography with resultant shift in energy supply and demand equilibrium.
He added that globalisation and geopolitics, climate change and drive for alternative energies, as well as technology and innovation, had also affected the industry.
“More recently, the effect of the ‘Triple force’ of COVID-19 pandemic, Oil Price Crash and OPEC+ production cuts have clearly demonstrated the compelling need for new thinking and approach for strategic repositioning and business optimisation in the industry,” Sarki said.
The DPR chief said the agency had adopted several approaches and streamlined its processes to deepen its influencing role as an opportunity house and business enabler for the industry.
He said the approaches included cost control and management, strategic partnership, vertical integration and diversification and portfolio rationalisation and operational resilience.
Sarki noted that DPR was proud to be associated with the SPE, which had the ideals and vision of enabling the industry meet the world’s energy demand in a safe, environmentally responsible and sustainable manner.
In his remarks, Mr Joe Nwakwue, Chairman, SPE Council Nigeria, said the world was gradually shifting to cleaner sources of energy due to environmental impacts of oil and gas activities.
Nwakwue said: “Awareness and policy geared toward renewable energy use and energy efficiency is spreading. These places a potential cap to oil and gas demand in the future.
“The impact of this transition toward a low carbon economy on energy-deficient and energy-hungry countries like Nigeria (where enhanced energy access and availability is crucial to human wellbeing and country’s economic growth and development), is a subject of great concern for sustainability.
“Consequently, there is a tendency of having rapid evolution and adoption of renewable energy technology (solar and wind), thereby reducing energy costs, changing lifestyles and habits by our large youth population.
“All these are expected to impact the economic futures of the affected countries and the future of Energy.”
Edited By: Olagoke Olatoye (NAN)
FCT minister Muhammad Bello has advised the private sector to invest in conference tourism by building world class centres and five star hotels in the territory.
Bello, represented by his Chief of Staff, Malam Muhammed Mai-Borno, spoke on Thursday in Abuja, when a Nigeria Council of Society of Petroleum Engineers delegation paid him a courtesy call.
The minister said that the FCTA was willing to provide land for investors that had the intention of providing world class conference facilities in the FCT.
He also encouraged the engineers to consider investing in the hospitality sector as part of efforts to host the 2027 or 2030 SPE international Conference and Exhibition.
Earlier, Chairman of the Council, Mr Joe Nwakwue, had said that it intended to bid for the hosting of either the 2027 or 2030 SPE International Annual Technical Conference and Exhibition.
Nwakwue appealed for the cooperation of the FCTA to bring their plan to fruition.
” Typically, it is cities that bid and we facilitate it because it is our industry.
”It is a global event in every sense of the word. The Council met and we said we are going to bid for it in 2027 or 2030, depending on our preparedness.
“But, before we can do that, we have to find a city that will host the large crowd and we thought Abuja will be the most appropriate location.
” So, we said let’s come and sit with you, share our vision and see if we get any traction on what we can do to proceed with this plan,” the chairman said.
Nwakwue also said that there were enormous benefits acruable to the FCT, if it won the rights to host the event, especially in the travel and tourism sector.
Edited By: Chinyere Bassey and Ephraims Sheyin
The Society of Petroleum Engineers (SPE) says that divestment of oil assets in the country does not have any negative implication for the nation’s oil and gas sector.
The Chairman of the group, Mr Joe Nwakwue, made this known while briefing newsmen in Abuja on Monday.
He said that the oil and gas sector in Nigeria was ripe for the growth of the secondary market through divestment of assets.
“You know that Nigeria started out oil business with the major International Oil Companies (IOCs), right from when SHELL showed up and then others.
“It means that by the 1980s all assets are held by the multinational companies; so, 50 years down the road, these assets are maturing and big companies will find it difficult to make gain on the assets as they decline.
“Naturally, they will like to sell of the assets for smaller parties to buy and that has happened in Nigeria, we have seen a lot of divestment.
“If you open the news, you will hear that SHELL or Mobil wants to sell; everybody is talking about selling one asset or the other.
“This is normal, it is nothing to worry, people tend to think that it is vote of no confidence in a country but I think it is important to understand that this is not a vote of no confidence.
“Rather, it is in the natural cause of business and there are several drivers to it,’’ he said
He said that the only challenge in the process was lack of clear rules guiding the process of divestment.
He said the SPE noted with pleasure that the secondary market was opening up and called on relevant policy makers to ensure that it had guiding rules.
“We must know clearly what the Policy, regulatory and commercial frameworks should be for this market,’’ he said.
Nwakwue said that the opening up of the secondary market through divestment of assets had propelled the choice of topic for the 2020 Oloibiri Annual lecture to be organised by the SPE.
According to him, the Lecture which will hold on March 19, has the theme “ Oil and Gas divestment of assets, the challenges, the status and ways forward”.
He said that the Niger Delta was a matured basin but Nigeria had yet to put asset to the growing market.
He said that license was last issued in the sector in 2007 adding that this had brought about scarcity of assets in the market.
“The economic impact and barrier to entry has been raised and if you are not putting up assets to the market, it will dried up,’’ he said.
He urged the policy makers to ensure adequate measures were in place to help open up the market.
Edited By: Donald Ugwu