NIGERIA :THE FRESH AIR CHRONICLES (SERIES 1: THE PETROLEUM SECTOR)

Fellow Nigerians,

As far as conversations go on the state of the Nation since Mr President's assumption of office, its been one unsubstantiated story after the other. Most times bordering on the fantastic. With the increased tempo of the many voices raised to demand good governance and equitable access to the dividends of democracy, it is only apt that every Nigerian committed to the idea of Nation Building begins to have a fly on the wall view/understanding of the 'health'of sectors of our
economy and deliverables/outcomes of their activities in the period under review.

I would like to point out that non of the information you will be reading on this blog are the preserve of a select few, but rather surprisingly are already in public domain but sadly most of us either lack the zeal
to want to know or just cant be bothered.

So i invite you to take this journey with me as we start with an overview of activities of the Petroleum Sector under the stewardship of Mrs Deziani Allison-Madueke

CRUDE OIL PRODUCTION

Within the period the nation’s crude oil production has been consistently maintained above the budgeted production level of 2.3 million barrels per day. This is a direct fallout of the amnesty programme which has now allowed for the renewal of production activities in wells hitherto shut-in as a result of the Niger Delta crisis.

•Efforts at increasing the nation’s stock of crude has received major attention during this period with the escalation of oil exploration activities in the Inland Sedimentary Basins especially in the Chad Basin. Already the Nigerian National Petroleum Corporation and the Federal Ministry of Petroleum Resources are concluding arrangement for contract award for advanced seismic data acquisition and processing.

•In all, the seven in-land basins of Bida, Gongola, Sokoto, Anambra, Dahomey, Chad and Benue are billed to benefit from the programme. ·

•Yet the drive to increase the nation’s crude and gas reserve is not limited to the In-land Basin. As part of the effort at growing the capacity of the Nigerian Petroleum Development Company, NPDC, eight producing blocks have been assigned to the company. With special support by the President for NPDC’s operatorship of the blocks, the impact has been tremendous on the NPDC’s growth aspiration with current production now averaging 80,000 barrels per day.

•A major enhancement of deepwater oil production was achieved as a result of the arrival of FPSO Usan into Nigerian waters. On completion of the subsea wells and facilities tie-in, oil production will increase by about 180,000 barrels per day.

MIDSTREAM

•Gas supply for power generation and industrial use has been sustained with supply outstripping demand both in the Western and Eastern axes. Available records indicate that the volume of gas available for power generation is unprecedented in the history of oil and gas in Nigeria.

•Renewed efforts at ensuring relevant Gas Supply Purchase Agreements are being been executed in order to encourage upstream gas development. As at the last count-Three Gas Supply & Purchase Agreements (GSPAs) have been signed among buyers, gas suppliers and Aggregator Company (Egbin / Shell / Chevron / PanOcean).

•Contracts for the critical pipeline infrastructure for gas supply to Alaoji, Olorunsongo have been awarded with projects’ completion in 2012. Upon completion, this would lead to the availability of additional gas to generate extra 2000MW of electricity.

•Approval has also been given to change the contracting strategy for OB3 gas pipeline, in order to expedite project execution.

•The Brass LNG project is been fast-tracked- Commercial bid evaluation for the Engineerin Procurement and Construction contract is currently ongoing. The gas supply challenges have also been resolved.

•The implementation of the critical gas projects as encapsulated in the Gas Revolution was given a boost with the visit of the investors (Xenel of Saudi Arabia and Nagajurna of India) to the proposed site at Koko, Delta State for the 1.3 metric tonnes per annum Petrochemical and 1.3 MTPA fertilizer plants.

•There has generally been increased investor confidence in the Gas Revolution with additional gas utilization projects being pursued. These include:

2.75 metric tonnes per annum Dangote Fertilizer plant in Edo State.

2.4metric tonnes per annum Brass Fertilizer plant in Bayelsa State.

•1.34 metric tonnes per annum Indorama Fertilizer and 1.2MTPA methanol plants at Eleme, Rivers State.

•450, 000 tonnes per annum methanol plant at Onne, Rivers State.

DOWNSTREAM

•Products Supply has been sustained nationwide through a combination of offshore processing, SWAP arrangements and increased domestic refining. The first 100days has seen the re-streaming of Kaduna Refinery and sustained operation of Warri Refinery.

•The issue of kerosene availability has been tackled through NNPC direct distribution programme.

• The integrity of key product pipeline infrastructure (Kaduna-Kano, Kaduna-Gusau, Kaduna-Suleja) has been re-established. The impact of this is that more products are now available in inland depots, which will enable faster intervention when necessary.

•Security contracts awarded for the protection of a major crude oil supply pipeline (Escravos-Warri) to improve capacity utilization of Warri Refinery which has now achieved 70%.

•Sustained efforts at increasing local refining capacity, through:

Revamping the existing refineries with a view to increasing their contribution to national demand of petroleum products. Engagement ongoing with original EPC contractors to ensure effective implementation of Turn-Around-Maintenance / Rehabilitation works. An NNPC team is currently in Japan to conclude the engagement of the original Engineering Procurement Construction, EPC contractor for Port Harcourt Refinery which will be the first to be so rehabilitated.

Greenfield refinery development: The detailed feasibility studies for the three Greenfield Refineries to be sited in Lagos, Kogi and Bayelsa have been concluded with preliminary report reviewed. The final report is scheduled for submission by end September 2011.

LOCAL CONTENT INITIATIVE

Signed into existence on April 22, 2010 by President Goodluck Jonathan, the Nigerian Content Act is designed to ensure that Nigeria achieves the much desired In-country capacity in the oil and gas industry. This would guarantee that a huge chunk of the estimated $20 billion annual industry spend domicile in the country for the benefit of Nigerians and indigenous Nigerian Companies and Service Providers.

Under the watch of the President, the Nigerian Content Development Board, NCDMB, which has the Honourable Minister of Petroleum Resources as Chairman of the Governing Council has accomplished the following:

•Ensured the escalation of the historic use of made-in-Nigeria pipelines by Exxon Mobil recently at its Edop – Idoho Offshore field ·

•Secured the placement of over 100 kilometers of pipelines orders in Nigeria’s only pipe manufacturing company, SCC Abuja

•Ensured the increase of in-country fabrication tonnage from 1,000,000 in 2009 to 1,200,000 currently ·

•Advanced talks with Jiangsu Yulong of China to establish 250,000 tons per annum LSAW Pipe mill in Nigeria

• Initiated the establishment of deep water port in a major upcoming project · Developed the Nigerian Oil and Gas Employment and Training Strategy, which has resulted in the absorption of over 5000 engineers, geologists, welders and other skill sets into the industry and formed the basis of a national skill database

•Nigerian Content activities have already generated over 30,000 direct and indirect jobs and will surpass 300,000 within the next four years

•NCDMB has designed and launched the Nigerian Content Joint Qualification Standards, an electronic platform for the Board’s implementation of the NOGIC Act, especially its capacity Building & Monitoring functions. ·

•Established the Nigerian Content Development Fund, to be used for investment in Oil & Gas infrastructure, provide partial guarantee for service providers, manufacturers

•NCDMB developed Indigenous Marine Vessel and Offshore Assets Acquisition Strategy to promote utilization of marine vessels and offshore rigs/equipment with genuine Nigerian ownership in all O&G operations to increase the participation of Nigerians, empower communities and maximize Nigerian crew.

• Developed Original Equipment and Local Component Manufacturing Strategy to promote utilization of materials of Nigerian origin in oil and gas industry and ensure the establishment of equipment manufacturing plants that will employ thousands

PETROLEUM INDUSTRY BILL (PIB)

The period has witnessed sustained interaction with the National Assembly to ensure passage into law an oil reform legislation that will stand the test of time to the benefit of Nigeria, and give fair Return on Investment.

Regulatory Control and MonitoringConsiderable efforts have been made under the watch of Mrs. Allison-Madueke to ensure effective regulatory compliance in the Nigerian oil & Gas industry in the following areas:

•Enforcement of flare penalty of $3.50/1000scf to discourage flaring and encourage commercialization of the gas that is being flared. ·

• The launch of the “Offshore Safety Permit (OSP)” to account for the safety and competencies of personnel who embark on swamp, offshore and deep offshore duties in line with the expectation of the Nigerian Content Policy.

•The initiation of this program has brought about the establishment offshore training centre within the Nigeria

•Completion of a pilot scheme of the National Production and Monitoring system (MPMS) aimed at ensuring independent real time production monitoring, accurate production accounting and to enhance efficiency in Terminal Operations in the country.

WITH THESE I GUESS ITS SAFE TO SAY THE SECTOR IS ON COURSE.

OTBN

OSA