Energy Mix July Edition Final Preview

June / July 2014 Edition
NIGERIAN CONTENT:
CHALLENGES ABOUND DESPITE
RELATIVE SUCCESSES
FEATURE
NIGERIAN CONTENT
ACT 4 YEARS ON:
LAUDABLE ACHIEVEMENTS IN NIGERIAS
OIL & GAS SECTION
SOCIETY OF PETROLEUM
ENGINEERS; NAICE 2014
+ NEWS, ARTICLES & MORE
CONTENT
4
Upstream
Overview of the Nigerian Oil and

Gas Industry Content Development
Act 2010
12
Midstream
14
Nigerian Content Act 4 Years On:

Laudable Achievements In Nigerias
Oil & Gas Sector
EDITORIAL
Welcome to the April/May 2014 edition of Energy
Mix Report. A lot has occurred in the last few
years with regard to divestments in the upstream
sector and the Nigerian E&P space is witnessing
a gradual shift by the IOCs from onshore fields to
more offshore plays.
This issue focuses largely on this shift and looks
at the potential outlook and challenges facing
Nigerias upstream sector going forward. As always, there is a roundup of reports on the energy
sector, insightful articles as well as an illuminating
interview with Mr. Steven Fox, a partner at international law firm Clifford Chance LLP.
I would also like to take this opportunity to remind you to visit our website (www.energymixreport.com) and sign up for our e-newsletter, follow
us on Twitter (@energymixreport) or like us on
Facebook (Energy Mix Report) to ensure that you
have access to the latest energy news in Nigeria
and Africa as it happens on a daily basis.
18
Downstream
20
Power
22
Nigerian Content:
Challenges Abound Despite
Relative Successes
25
Industry Event
30
Interview with Engr. Wole

Ogunsanya, MD/CEO Geoplex
Drillteq Limited
Best regards,
Noma Garrick
Editor
EDITORIAL TEAM
Publisher
The Energy Mix (Nigeria) Limited
Editor
Noma Garrick
Contributors
Ike Eboh
Kunle Kalejaye
Felix Jaro
Eze Nwosu
Design/Layout
Witts & Stratts
www.wittsandstratts.com
Photography
Jide Odukoya
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DISCLAIMER: While we endeavour to ensure the accuracy of information in all the reports and articles within this publication and also utilise information from only the most reliable
sources, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or suitability with respect to the information within this
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Energy Mix Report and its logo are registered trademarks of The Energy Mix (Nigeria) Limited. This publication and its content are copyrights of Energy Mix Report. All rights reserved.
UPSTREAM
Shell declares
force majeure
at its EA field in
Nigeria
Shell has declared force majeure at its

EA field in Nigeria to repair equipment
damaged by bad weather, suspending
production of about 40,000 barrels of
oil a day. According to an official
statement, repairs were needed for a
mooring platform that connects to a
floating storage vessel. The EA field is
located southwest of Warri in
southern Nigeria, in water depths of
around 25 metres. The closure of the
oilfield has reduced the volume of
Nigerias export to the world market
but Shell did not say when it hoped to
restart the flow of the EA blend in
Africas top oil producer. It only
recently lifted force majeure on the
Forcados grade of crude oil that it had
declared in March.
Seadrill signs
$1.1 billion rig
deal with Total
Offshore driller Seadrill has signed
a five-year, $1.1 billion contract
with Total for work offshore Nigeria
at its Egina field, the company said
recently. The contract, for Seadrills
newly built ultra-deepwater West
Jupiter drillship, is worth around
$600,000 per day, including mobilisation, according to calculations.
The vessel will be delivered from
Samsung Heavy Industries shipyard
in Geoje, South Korea in August.
4 / ENERGY MIX REPORT
Oando Energy Resources completes

acquisition of ConocoPhillips assets
Oando Energy Resources (OER), a subsidiary of Oando Plc, has completed the transaction with ConocoPhillips for the acquisition of its Nigeria
upstream business for a total sales price, after customary adjustments,
of $1.5 billion. ConocoPhillips Nigerian oil and gas businesses consist of
onshore and offshore businesses. The onshore business consists of Phillips
Oil Company Nigeria Limited (POCNL), which holds a 20% non-operating
interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited
(NAOC) Joint Venture (NAOC JV). The other co-venturers are the
Nigerian National Petroleum Corporation (NNPC) with a 60% interest
and NAOC (20% and operator).
The offshore business consists of Conoco Exploration and Production
Nigeria Limited (CEPNL), which holds a 95% operating interest in OML
131 located 70 km offshore in water depths of 500m to 1,200m.; and
Phillips Deepwater Exploration Nigeria Limited (PDENL), which holds
a 20% non-operating interest in Oil Prospecting Licence (OPL) 214
located 110 km offshore in water depths of 800m to 1,800m. The other
co-venturers are ExxonMobil (20% and operator), Chevron (20%), Svenska
(20%), Nigerian Petroleum Development Company (15%) and Sasol (5%).
In June 2014, the Honorable Minister of Petroleum Resources for Nigeria
approved the conversion of OPL 214 to OML 145 for an initial period of 20
years.
Operators, stakeholders worry

over marginal bid round delay
Operators in Nigerias oil and gas industry and other concerned stakeholders have expressed worry at the continued delay in the conduction of bid rounds for marginal oil fields. This follows the failure of
the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke
to approve the holding of the bid round in March this year as initially
planned, coupled with her failure to explain the reason(s) for the delay.
In November 2013, the Federal Government had announced the opening of the second marginal oil field licensing round, indicating that it
would conduct the exercise in March 2014 and promising transparency and accountability in the process. The announcement was made
after many earlier cancellations and postponements. The Minister
is still yet to give a definite date for the exercise, which is said to be
critical to the development of the countrys indigenous oil operations as well as the development of its hydrocarbon resources.
Nigeria oil production

rebounds to 2.15 mbpd
in June
Nigerias crude oil production rose by
200,000 barrels a day to 2.15 million in
June, a Bloomberg survey of Organisation of
Petroleum Exporting Countries (OPEC) producers showed. The gain in Nigeria was the
second-biggest in the survey and the highest
output since September. Figures for Africas
biggest producer are volatile because of
unrest and theft in the Niger River delta,
the main oil-producing region. Production
by the 12-member OPEC rose by 278,000
barrels a day to 30.223 million, according to
the survey of oil companies, producers and
analysts. OPEC ministers kept their output
target unchanged at 30 million barrels a day
on June 11 in Vienna. The group is scheduled to meet next on November 27, 2014.
Chevron highlights
ongoing operations
on its deep water
fields
Chevron, in a recent
report has highlighted
some of its ongoing deep
offshore operations. The
Agbami field, in which
Chevron has a 67.3
percent interest, is a subsea development with wells tied back to a floating
production, storage and offloading
(FPSO) vessel. A 10-well Phase 2 development program is expected to offset
field decline and to maintain production
capacity. Drilling, which started in 2012,
is expected to continue through 2015.
As of early 2014, four of the wells are
producing. The next phase, Agbami 3,
is a 5-well drilling program that began
front-end engineering and design work
in early 2014, with a final investment
decision expected in the second half of
the year. Drilling is scheduled to continue through 2017. The Agbami field lies
Afren plans further drilling in three of

its Nigerian oil fields
UK listed independent oil and gas company, Afren Plc has indicated that it plans
to begin further development drilling at
its Nigerian offshore Ebok, Okoro and
Okwoko oil fields in the third quarter
(Q3) of this year in a bid to ramp up oil
reserves and production. The company,
in its interim management statement for
the first quarter stated that installation of the Central Fault Block
(CFB) extension platform has started on Ebok and is expected to
be completed by the end of Q2 2014, with development drilling
planned for Q3 2014 targeting additional reservoirs in the CFB.
It also noted that the Okoro field continued to perform well with
gross production at the field averaging 15,648 bopd in the period,
incorporating planned downtime. Furthermore, the Field Development Plans (FDP) for the Okoro Further Field Development and
Okwok were approved by the Nigerian authorities. The Okwok
wellhead jacket has also been fabricated and is currently in transit
to the Okwok field area, with platform installation to be completed
in Q2 2014 prior to development drilling planned for Q3 2014.
70 miles (113 km) off the coast of the

central Niger Delta region, spans 45,000
acres (182 sq km) and is at a water depth
of approximately 4,800 feet (1,463 m).
The oil multinational also has a 30 percent non-operated working interest in
the Usan Project, in 2,461 feet (750 m) of
water, 62 miles (100 km) off the coast of
the eastern Niger Delta region. Net daily
production in 2013 averaged 28,000
barrels of crude oil and 3 million cubic
feet of natural gas. Additional development drilling is planned through 2017.
Meanwhile the Aparo Field and the Bonga SW Field which share a common geologic structure are planned to be developed jointly. The structure lies in 4,300
feet (1,311 m) of water, 70 miles (113
km) off the coast of the western Niger
Delta region. The proposed development
plan involves subsea wells tied back to
an FPSO vessel. Front-end engineering
and design work began in the second
quarter of 2013, and a final investment
decision is expected in late 2014.
SacOil may get

first production
asset in Nigeria
According to
several reports, SacOil
Holdings Ltd
is in talks to
buy what could be the South
African oil and gas companys
first production asset in Nigeria, its Chairman Tito Mboweni
said. The Johannesburg-based
company has the possibility of
an OML, or oil-mining license,
for a project that is in the production phase in Nigeria, the
continents largest economy
and crude producer, Mboweni
said in an interview. He however declined to provide more detail on the stage of negotiations
or the location of the asset.
www.energymixreport.com / 5
UPSTREAM
Mart Resources
Inc. provides
production
and drilling
update for its
Umusadege field
Mart Resources Inc. an international
oil and gas company focused on
production and development
opportunities in the Niger Delta
region of Nigeria, stated that the
Umusadege field production during
June 2014 averaged 6,793 bopd. It
also stated that aggregate
Umusadege field downtime during
June 2014 was approximately 11.3
days due to (1) a shutdown of the
Nigerian Agip Oil Company Limited
(NAOC) export pipeline resulting
from a lack of storage capacity at the
Brass River export terminal due to
export shipment delays, and (2) other
operational interruptions resulting
from general pipeline repairs and
maintenance. There were two full
down days during the month. The
average field production based on
producing days was 10,871 bopd in
June 2014.
It also noted that drilling operations
have been completed on the UMU-3
side-track horizontal well. Total
depth of the UMU-3 well is 8,549
feet and a sand screen completion
has been installed in the 787 foot
lateral section in the VI sand.
Extended production testing is
expected to commence shortly with
results expected by the end of July.
Further updates will be provided
once testing is completed.
Meanwhile, the rig is being moved to
the UMU-4 well to execute a similar
horizontal side-track, targeting the
VII sand.
Indigenous oil firms to produce

500,000bpd by 2018 Seplat boss
The Managing Director of Seplat, Mr.
Austin Avuru, has said that Nigerian
wholly owned exploration and production companies operating in the
upstream sector of the oil and gas industry will produce 500,000 barrels
of oil daily which represents about
20% of Nigerian output by 2018. The
Seplat boss made this known at a Q
+ A session hosted by the Lagos Oil
Club recently.
Our
Quest
Takes
Root.
He further stated that Nigerian oil and gas companies will also be responsible
for the production of 1.5 billion cubic feet of gas daily, about half of the total
supply of natural gas in the domestic market within the same period. According to him; while the ongoing divestments by the IOCs is transferring considerable asset holdings to Nigerians he also pointed out that these potential
figures could only be attained and sustained by the Nigerian independents if
they focus on a strong corporate governance structure, which allows for long
term sustainability.
Sahara Group announces new discovery

in OPL 274, reserves up 100%
Sahara Group has announced
results of drilling and testing
in OPL 274, where Sahara
holds a 100% working interest. Saharas upstream affiliate
Enageed Resources completed
the third well of a three-well onshore drilling program in the Edo State
block and has demobilized its drilling rig, HPEB-187. Saharas CEO and
MD Tonye Cole remarked Today marks an historic occasion for Sahara
Group, for its upstream division and for the Nation. Success was achieved
in doubling our certified 2P reserves in the Oki-Oziengbe South field and
making a new commercial discovery with the Oluegi-1 exploration well.
Saharas successful drilling program followed a two year-long, two-phase,
land-swamp 3D seismic survey in the 871 sq km license. Saharas seismic
and drilling program achieved nearly two-million man-hours LTI-free operation. Plans are next to tie-into existing facilities, allowing Sahara to begin
first oil production. Four flow lines from Oki-Oziengbe South 4 and 5 well
heads will take crude to the Oziengbe South flow station for crude processing. When completed and flowing, oil from Oziengbe S will join NPDCs 6
pipelines at Oredo and Ogharefe where it will enter the Forcados trunk line.
From a leading energy solutions provider to Nigerias largest indigenous oil

and gas producer, this significant milestone in the realisation of our
upstream ambition bears testament to our vision, resilience and focus.
We are committed to further expanding our portfolio of assets, whilst
offering immense growth and investment opportunities.
We are Oando. We are proudly African.
OVERVIEW OF THE
NIGERIAN OIL AND GAS
INDUSTRY CONTENT
DEVELOPMENT ACT 2010
By Noma Garrick
It has been four years since the Nigerian Oil and Gas Industry Content Development Act 2010
was enacted into law. This piece looks at some of the core features of the Act as well as gives an
overview of the Acts key provisions.
rior to the enactment of The Nigerian Oil and

Gas Industry Content Development Act 2010
(popularly referred to as the Nigerian Content
Act), the Nigerian oil industry was originally
the exclusive preserve of the International Oil
Companies (IOCs) and other expatriate companies in
areas ranging from exploration and production, trading
as well as service operations.
Reports in 2008 highlighted the fact that although the oil
and gas industry accounted for 90% of Nigerias revenue,
it contributed less than 38% to the Nations GDP. In
other words, the absence of local capacity in the industry
had resulted in the repatriation of the majority of the $10
billion yearly average industry spend into foreign bank
accounts abroad. An expatriate workforce largely dominated the local strategic positions in the industry and
most of the industrys lucrative contracts were carried
out in foreign fabrication yards, ultimately leading to
adverse effects on labour creation and the growth of the
domestic economy as a whole.
Attempts by previous administrations to introduce local
content policies were ineffective and impotent largely
as a result of the absence of an appropriate legal framework to drive such policies. The Nigerian Oil and Gas
Industry Content Development Act 2010 was therefore
signed into law on April 22nd 2010 and aims to increase
indigenous participation in the oil and gas industry by
prescribing minimum thresholds for the use of local
services and materials and to promote the transfer of
technology and skill to Nigerian labour in the industry.
General Aims and Major

Provisions of the Nigerian
Content Act
General Application
The Nigerian Content Act applies to
all regulatory authorities, operators,
contractors, sub-contractors and other
entities involved in any project or activity
in the oil and gas industry (Section 2) and
takes precedence over all other existing
enactments and laws in respect of all
operations and transactions pertaining
to Nigerian content carried out in or
connected with the Nigerian oil and
gas industry (Section 1). The Nigerian
Content Development and Monitoring

Board (NCDMB) has been established
to implement the provisions of the
Act, make procedural guidelines and
monitor compliance by operators within
the industry (Section 4). There is also
provision in the Act for a Nigerian
Content Development Fund which is
established for the purpose of funding
the implementation of Nigerian content
development in the Nigeria oil and gas
industry (Section 104).
Preference for Nigerian Companies
The Act provides that Nigerian independent operators shall be given first
consideration in the award of oil blocks,
oil field licenses, oil lifting licenses and
all projects contracts (Section 3(1)) and
also notes that there shall be exclusive
consideration to Nigerian indigenous
service companies which demonstrate
ownership of equipment, Nigerian
personnel and capacity to execute
contracted work (Section 3(2)). For the
purposes of the Act, a Nigerian company is defined as: A company formed
and registered in Nigeria in accordance
with the provisions of the Companies
and Allied Matters Act with not less
than 51% equity shares by Nigerians
(Section 106).
Minimum Level of Nigerian Content
Nigerian content is defined in section
106 of the Act as the quantum of
composite value added to or created
in the Nigerian economy by a systemic
development of capacity and capabilities through the deliberate utilization
of Nigerian human, material resources
and services in the Nigerian oil and gas
industry. Section 11(1) of the Act states
that the minimum Nigerian content
in any project to be executed in the
Nigerian oil and gas industry shall be
consistent with the level set out in the
Schedule to the Act. The Schedule goes
further to list various activities in the oil
and gas industry and sets out the desired
level of Nigerian content in accordance
with various units of measurement.
There is however a caveat where there
is inadequate capacity domestically, as

section 11(4) provides that the Minister
may authorize the continued importation
of any of the relevant items in the Schedule where this is the case for up to 3 years
from the commencement of the Act.
Requirement of a Nigerian Content Plan

Section 7 of the Act provides 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 to
the NCDMB demonstrating compliance
with the Nigerian content requirements
of the Act. Upon a favourable review and
assessment of the plan by the NCDMB
the operator is then to be issued a Certificate of Authorization to proceed with the
project (Section 8). The proposed contents of the Plan are contained in section
10 of the Act.
Preference for Bids with
NigerianContent
The Act in sections 14, 15 and 16 provides
for the consideration of Nigerian content
in the evaluation of bids and for advantage to be conferred on bidders on the
basis of the level of Nigerian content.
Where bids are within 1% of each other at
commercial stage, the bid containing the
highest level of Nigerian content shall be
selected provided the Nigerian content in
the selected bid is at least 5% higher than
its closest competitor (Section 14).
Furthermore The award of contract shall
not be solely based on the principle of the
lowest bidder where a Nigerian indigenous company has capacity to execute
such job, the company shall not be disqualified exclusively on the basis that it is
not the lowest financial bidder, provided
the value does not exceed the lowest bid
price by 10% (Section 16).
The Act also sets up a procedure for monitoring bids for projects valued in excess
of $1,000,000 by the NCDMB. Operators
are required to submit to the NCDMB
quarterly, for approval all advertisements
for invitation to tender, prequalification
criteria; technical bid documents, pro-
Section 28(1) of the Act

provides that Nigerians shall
be given first consideration
for employment and training
in any project executed by
any operator or project
promoter in the Nigerian oil
and gas industry.
posed bidders list etc (Sections 17-24).

Establishment of a Project Office Locally
Section 25 of the Act refers to the establishment of a project office within the
catchment area where the project is to
be located by the operator or other body
submitting a Plan. While the Act refers
to the establishment of a project office
where applicable, it does confer power
on the NCDMB to require that a project
office is maintained.
Preference for Nigerian Personnel in
Employment and Training
Section 28(1) of the Act provides that
Nigerians shall be given first consideration for employment and training in
any project executed by any operator or
project promoter in the Nigerian oil and
gas industry. The Act further requires
that the Nigerian Content Plan submitted
by any operator or project promoter for
any project shall include and Employment and Training Plan which complies
with Section 29 of the Act. The Act also
obligates operators to provide training
to Nigerians where Nigerians are not
employed because of their lack of training
and to provide a succession plan for a
Nigerian to understudy an expatriate for
a maximum period of 4 years (Section 30
and 31(1) respectively).
Section 32 provides that expatriate management positions are limited to 5% in
respect of each project carried out by an
operator as may be approved by NCDMB.
Section 33 also requires that all applications for expatriate quota must first be referred to NCDMB and approval received
before applications are made to any other
Government agency. The Act requires in
Section 34 that a Labour Clause be in-
serted in projects or contracts whose total

budget exceeds $100 million, mandating
the use of a minimum percentage of
Nigerian workers as may be stipulated by
NCDMB. Finally all operators and companies operating in the Nigerian oil and
gas industry shall employ only Nigerians
in their junior and intermediate cadre
(Section 35).
Research and Development
Requirements
Sections 36, 37, 38 and 39 deal with the R
& D requirements of the Act and require
operators to submit a programme for the
promotion of education, attachments,
training, research and development in
Nigeria.
Technology Transfer Requirement
Section 43 of the Act provides that each
operator must have a programme for the
promotion of technology transfer into
Nigeria in relation to its oil and gas activities. Furthermore section 44 provides
that the operator is required to submit
to the NCDMB annually a plan setting
out a programme of planned initiatives
aimed at promoting the effective transfer
of technologies from the operator and
alliance partners to Nigerian individuals
and companies. An operator is required
to fully support the transfer of technology
initiative by encouraging and facilitating
the formation of joint ventures, partnering and the development of licensing
agreements between Nigerian and foreign
contractors (Section 45).
Other provisions to ensure and improve
the transfer of technology include section
48 which provides that the Minister
may grant tax incentives for foreign and
indigenous companies which establish
facilities, factories, production units or
other operations in Nigeria for purposes
of carrying out production, manufacturing or for providing services and
goods otherwise imported into Nigeria.
Another provision is section 41(2) which
states that; international or multinational companies working through their
Nigerian subsidiaries shall demonstrate
that a minimum of 50% of the equipment

deployed for execution of work are owned
by the Nigerian subsidiaries.
Energy Mix Report readers are eligible for an

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Simply quote AEM20 when booking.
In Country Requirements
Section 53 of the Act provides that all
operators, project promoters and contractors engaged in the Nigerian oil and gas
industry must carry out all fabrication
and welding activities in the country.
Section 52(3)(f) also provides that all operators, contractors and sub-contractors
shall maintain a bank account in Nigeria
in which it shall retain a minimum of
10% of its total revenue accruing from its
Nigerian operations.
Use of Indigenous Insurance, Legal and
Financial Services
Section 49, 51 and 52 provide for the use
indigenous insurance, legal and financial
services respectively where practicable.
Submission of Content Performance
Report
An operator is required to submit an annual Nigerian Content Performance Report covering all its projects and activities
for the year under review to the NCDMB
within sixty days of the beginning of each
year (Section 60).
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Strategic Energy Energy
Regulatory Commission
Transnet Port Authority Global
Alliance for Clean Cookstoves
Oando Downstream AlHussami
Companies Camel Fuels
WLPGA Petroleum Institute of
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Regulator of South Africa
Fogs Norton Rose Fulbright
NNPC Disa Gas SAPIA
SAOGA Standard Bank
National Gas FBN Capital Nile
Petroleum Gunvor Glencore
Oil Tanking Mauria Reatile
Gaz Geostock Amtrol-Alfa
Hexagon Ragasco B.B Energy
Gas Equipment Manufacturers
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Offences and Penalties

An operator, contractor or subcontractor
who carries out any project contrary to
the provisions of the Act, commits an
offence and is liable upon conviction to
a fine of 5% of the project sum for each
project in which the offence is committed or cancellation of the project entirely
(Section 68).
Network with delegates from Ghana,

Uganda, Alergia, Nigeria, South
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Joint Qualification System

Section 55 and 56 provide for the
establishment and maintenance of a
Joint Qualification System (JQS) which
shall constitute an industry databank
of available Nigerian content levels and
capabilities.
60+ Companies Attending
LPG/NGL
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MIDSTREAM
India replaces US as
largest importer of
Nigerias crude NNPC
The Nigerian National Petroleum Corporation

(NNPC) recently disclosed that India has displaced
Nigerias longest and largest crude oil importer, the
United States of America (USA) from its status as
the top importer of Nigerias crude. The Corporation
in a statement noted that the United States which
had traditionally taken the bulk of Nigerias crude
oil but had in recent months drastically reduced its
demand, now takes just about 250,000 barrels per
day (bpd) of the countrys crude oil. It, however, explained that India now purchases some 30 per cent
of Nigerias daily crude production which currently
hovers around 2.5 million barrels per day (mbpd);
when calculated, this amounts to 750,000bpd of
crude oil purchased by India.
Nigeria loses
N342m
daily as Eni
shuts down
pipeline
According to reports, Nigeria will be losing about
N342.4 million ($2.14 million) daily, as Italian oil
firm, Eni, shut down its 20,000 barrels per day
crude oil pipeline in Nigeria. The shut down, according to a spokesman of the company, is due to sabotage on the pipeline, which had led to the interruption of 4,000 barrels a day it gets from its 20 per cent
share in Nigerian Agip Oil Company. The Wall Street
Journal reported that Enis disclosure confirmed
information from a local activist, who stated that
the pipeline had been blown up. The activist had
previously said Enis local operation is in a dispute
with former security contractors on the project, a
claim the Eni spokesman failed to confirm or deny.
MIDSTREAM
Nigeria may lose global market
share due to non-take-off of
LNG projects - Expert
The delay in reaching the
final investment decision
(FID) for the Olokola Liquefied Natural Gas (OKLNG), Brass LNG and NLNG
Train 7 projects may lead
to Nigeria losing a large
share of the high-demand
Asian LNG markets as
competition from other exporters increase. Both LNG plants
situated in Brass in Bayelsa and Olokola in Ogun states have
been in a comatose state for over five years while the FID for
the Train 7 project is still yet to beascertained.
Victor Eremosele, a former official of the Nigeria LNG Limited,
noted at the recently concluded World Petroleum Congress in
Moscow, that the windows available for the projects may soon
disappear. This is because by 2020, it is possible we would find
a situation where significant funds have been spent by other
countries on their gas projects and these countries would now
become new sources of gas supply to the market. He also said
another problem that would confront the gas from Nigerian
plants, if they ever take off, would be the increasing drop in the
price of gas at the international market, because of Shale gas
from the United States.
Nigeria
expresses
intent to meet
EUs long term
gas supply
security
The Federal Government has stated its determination to meet the
long-term gas supply security of the European countries. It said the
move was part of measures to expand the countrys gas market across
veritable frontiers. The Minister of Petroleum Resources, Mrs. Diezani
Alison-Madueke, said the country was ready to explore its gas potential to the fullest.
She spoke after holding discussions with the EU Energy Commissioner,
Gnther Oettinger, at the sideline of the 11th European Union-OPEC
Energy Dialogue Ministerial Meeting in Brussels, Belgium.
A statement from the Group General Manager, Public Affairs of the
Nigerian National Petroleum Corporation (NNPC), Ohi Alegbe, stated
that the discussions focused on the role Nigeria can play in supporting
the EUs energy sector priorities, and particularly the long-term security and diversification of gas supplies.
Commercial viability
doubts stall $4bn
South-North gas
pipeline
A lack of commercial viability has stalled the
$4 billion South-North gas pipeline which is
designed to take-off from Calabar through
Ajaokuta and terminate in Kano according to
a BusinessDay report. The proposed pipeline
is supposed to be part of the Trans-Sahara
gas pipeline, the purpose of which is to flow
gas to Europe from Niger Delta.
The core problem is that there are apparently no off-takers for the gas which would
pass through the 1,500 kilometres pipeline,
even if it was constructed. The volume of
gas available must be enough to support the
investment on the gas. The price of gas from
the pipeline is also said to be between $5 and
$6 per 1,000 standard cubic feet (SCF/D).
However there are no investors who would
be ready to risk putting down money for such
a project yet.
Govt plans new gas price for Gencos, others

Power firms owe N25bn Gas
companies
Gas companies have raised the alarm over the rising indebtedness by power companies, which has risen to about N25bn.
The companies, which are mainly International Oil Companies,
made their grievances known at the monthly meeting of the
Nigerian Electricity Regulatory Commission (NERC) with
stakeholders in the power sector in Lagos recently.
Some of the power generation firms, however, indicated that
they had paid part of what they owed but that between the
banks and the gas aggregator (Nigerian Gas Company), the
money was not getting to the gas companies. The power firms
also further rejected the claims of the gas companies by saying
some of the money owed them were legacy debts owed by the
defunct Power Holding Company of Nigeria. A committee has
been set up to look into the problem and address the anomalies in the system.
Minister of Petroleum Resources, Mrs Diezani Alison-Madueke,

has indicated that the ministry is working with relevant agencies
in the energy sector to ensure that the pricing for gas is made as
competitive as possible in the next three to four months. The Gas
Pricing Framework, when unveiled, will stipulate a price regime for
gas to the power sector, fertiliser and steel, petrochemical as well
as for domestic use, among others. The minister made this known
at the maiden Bayelsa State Investment and Economic Forum,
inYenagoa.
The Chairman/CEO, Nigerian Electricity Regulatory Commission
(NERC), Dr Sam Amadi also corroborated this and noted that the
current prices are considered inadequate to encourage local firms
to produce for domestic use. The proposed price regime is expected to bring the local price nearly at par with the international
market rates. Amadi stated that the Ministry of Power, NERC and
other relevant stakeholders were working to ensure that the price
comes out before September, adding that the Commission had no
doubt that companies in the oil and gas sector would comply with
the policy.
F E AT U R E
NIGERIAN CONTENT ACT

4 YEARS ON: LAUDABLE
ACHIEVEMENTS IN
NIGERIAS OIL & GAS
SECTOR
By Noma Garrick
In the four years since the

Nigerian Oil and Gas Industry Content Development
Act 2010 has been in force,
a growing number of indigenous companies have begun
playing more active roles
in the Nigerian oil and gas
industry. This feature looks
at some of the notable highlights the Act has achieved
thus far.
Another example of indigenous ownership is provided by Oando Energy Services Limited (OESL), which has invested
over US$300 million in the acquisition,
refurbishment and upgrade of swamp
rigs since its inception. In 2007 OESL
commenced its drilling rigs business by
acquiring two swamp rigs namely; OES
Teamwork and OES Respect. Since then,
the company has acquired an additional 3
swamp rigs and drilling equipment to be
utilized in the Niger Delta swamps. These
5 rigs which are wholly owned by OESL
are at various stages of being deployed to
work for major oil companies operating
in country.
In 2010, Shell supported Caverton
Helicopters an indigenous provider of
aviation services to upgrade its fleet with
more advanced aircrafts. Notably, Shell
awarded a 5-year contract worth about
$694million to provide aviation services
to Caverton Helicopters; this also represented the biggest aviation contract to a
Nigerian Company.
In-Country Fabrication
Al-KAT) valued at over US$30million.

The Al-KAT is currently supporting
Chevrons joint venture drilling campaigns as a liquid mud cuttings vessel
combined with gravel pack operations.
The NCDMB has stated that between

$2-$5 billion worth of investments have
been made in the development of new
fabrication yards and the upgrade of
existing yards and facilities. In line with
this, Kaztec Engineering Limited, an
indigenous oil service company and a
subsidiary of the Chrome Group stated
that it is building a fabrication yard at
the Snake Island in Lagos. The fabrication yard is to be utilised for fabricating
jackets, topsides, equipment as well as
skills development and will be handled in
tandem with Kaztecs technical partners,
Addax Petroleum Limited.
Another indigenous company, CNS Marine Nigeria Limited, which has already
worked with several international oil
companies in Nigeria, recently acquired
three vessels to facilitate its offshore
Section 53 of the Nigerian Content Act

provides that all operators and investors engaged in the Nigerian oil and gas
industry must carry out all fabrication
and welding activities in the country. As
he Nigerian Oil and Gas Industry Content Development

Act 2010 (popularly known
as the Nigerian Content
Act) was signed into law
on April 22, 2010 and has so far aided
several indigenous companies to build
the capacity and competence with which
to execute major projects that were the
exclusive preserve of expatriates before
the legislation was put in place. At the
same time there have been an increasing
number of multinational companies that
have also been compelled by the legislation to perform a certain amount of their
operations in-country. Below are some
notable highlights.
projects in Nigeria. The offshore diving

vessels, Adessa Ocean King, Adessa Legend and Adessa Sea Protector, worth over
$50 million, have an intensive capacity of
50 tonnes and can accommodate about 90
workers on offshore projects.
Indigenous Asset Ownership

The Nigerian Content Development and
Monitoring Board (NCDMB) noted
recently that it has been able to save the
country about $2.5billion through its
promotion of indigenous marine vessel
and rig ownership. In 2012, Chevron provided support to an indigenous company;
Seabulk Offshore Operations Nigeria
Limited to acquire its first DP-2 PSV (The
The Nigerian Content

Development and
Monitoring Board (NCDMB)
noted recently that it has
been able to save the country
about $2.5billion through
its promotion of indigenous
marine vessel and rig
ownership.
such, NCDMB efforts have resulted in

several projects being executed in local
fabrication yards. Mobil Producing Nigeria (MPN), operator of the NNPC/MPN
joint venture (JV) built three wellhead
platforms locally for the development
of 20 new oil fields in the country. MPN
contracted Nigerdock Plc. to fabricate
the Abang and Itut wellhead platforms
while another leading indigenous service
company; Dorman Long Engineering
Limited handled the fabrication of the
Oyot wellhead platform.
An offshore living quarters platform was
fabricated in Nigeria for the Ofon Phase
II project developed by Total and was the
first of such to be done in Nigeria. The
completion/load-out of the platform was
carried out at the Snake Island Integrated
Free Zone Lagos base of Nigerdock Plc
by Eiffel Nigeria Limited, a local subsidiary of Eiffage Construction Metallique
of France, contractors to the project. The
Ofon Phase II living quarters platform
and topside was built for Total by Eiffage
Construction Metallic of France, with
OOP Engineering Limited as its local
content partner.
In a bid to develop local capacity, part of
Chevrons Agbami Project also entailed
the fabrication of two FPSO topsides
modules (1,100 tons), the Agbami offloading buoy (1,080 tons) and 21 suction
piles (2,460 tons) for the buoy and FPSO
locally by Nigerdock Plc. In addition,
Aveon Offshore fabricated the manifolds
and associated suction piles (1,200 tons)
in Port Harcourt. Two additional modules
and flare bloom were also constructed at
Daewoo Nigeria Ltds yard in Warri.
Manufacturing
The Oil Producers Trade Section (OPTS)
of the Lagos Chamber of Commerce
and Industry (LCCI) in their Report;
Local Content Strides in the Oil and
Gas Industry state that at various times,
selected OPTS members partnered
with SCC Pipe Mill to provide technical
support, upgrade its pipe mill operations
and place multiple orders to encourage
development of line pipe manufacturing
in country.
A notable highlight is the use of
made-in-Nigeria pipes for the first time in
the nations oil and gas industry by ExxonMobil. The company deployed Helical
Submerged Arc Welded (HSAW) pipes
fabricated locally by SCC Pipe Mill for its
Usari-Idoho pipeline replacement project
in Akwa Ibom State.
The NCDMB has also stated that
construction work has commenced for
two steel pipe mills in Bayelsa and Edo
states. These mills are to produce about
400,000MT per annum of steel pipes
for the oil and gas industry by 2016
and create more than 10,000 direct and
indirect jobs during the construction and
operating phases of the mills.
The NCDMB has stated that it has plans
to establish world class industrial parks
in strategic oil bearing communities
through the Nigerian Oil and Gas Industrial Parks Scheme (NOGIPS). NOGIPS
is a capacity development initiative to
establish physical infrastructure and
create enabling environments for low cost
production of goods, domiciliation of
capacity, technology acquisition, training,
creation of employment opportunities
and structured community participation.
To this end the NCDMB intimated that
the Federal government recently concluded plans to set up nine industrial
parks in the States of the Niger Delta as
part of the agenda to boost the harnessing of hydrocarbon resources as well as
the overall development of the economy.
The industrial parks when established
would be a significant milestone in the
continued quest for achieving effective
participation of the local supply chain in
the oil and gas sector. The beneficiaries of
F E AT U R E
the scheme would be operating companies, multinationals, small and medium

enterprises (SMEs), original equipment
manufacturers (OEMs) and oil producing
States.
The NCDMB and Shell Petroleum Development Company (SPDC) also recently
signed an agreement with six original
equipment manufacturers (OEMs) that
have committed to invest $62million
(about N9.6billion) in the manufacture of
local components in Nigeria.
Human Capital Development

and Training
The NCDMB notes that its On the Job
Training (OJT) scheme has been a success
with over 5,000 employment/OJT slots
created for Nigerian engineers and technicians on ongoing oil and gas projects.
Chevron and its partners have upgraded
an existing facility the Training and
Conference Centre (TCC) located in
Ogere, Ogun State and setup a world class
1st of its kind simulation training facility for Operations & Maintenance (O&M)
training. As at 2013, the $10million facility has graduated over 400 trainees, 98%
of which have been absorbed into the Oil
and Gas sector.
In a similar vein, an indigenous oil servicing company, PEM Offshore Limited has
begun to test run its Offshore Simulation
and Innovation Center. The first phase
has been set up and once other facilities
are put in place, the center will have a full
suite of simulation systems which will
support the training of local and foreign
offshore personnel involved in Nigerian
oil and gas operations. According to the
companys Vice President, PEM Offshore
has secured a 5-year commitment from
Chevron and Agip to utilize the facility
in actualizing Chevron and Agips annual
scholarship award programme to train
Nigerian seafarers.
The OPTS also indicates that several
of its members have been dedicated to
supporting Nigerian-owned engineering
companies and to ensuring that they develop their expertise and skilled resources
through awards of contracts for provision

of engineering services to local operators
such as DeltaAfrik, NETCO, Amazon
Energy, Point Engineering and Linkso
Nigeria Limited to name but a few.
service the financing needs of the industrys contractors/vendors, led to an improvement in their understanding of the
dynamics of the oil & gas sector; helped
to develop their capabilities on project
financing as well as the underwriting of
project risks.
The Nigerian Content

Development Fund
Examples include Total E&P Nigeria

Limited and Total Upstream Nigeria
Limiteds signing of a memorandum of
understanding (MoU) with eight banks in
2013 to provide an estimated $7.5billion
(N1.24trillion) in contract funding to
local contractors. The fund tagged the Nigerian Contractors initiative (NCI) is to
bridge the funding gap for the companys
local contractors including indigenous
vendors and suppliers. The NNPC/MPN
Joint Venture has also secured syndicated project facilities totaling $975million
from Nigerian Banks over the last ten
years to finance the NGLII ($435millon),
Satellites Field Development Phase 1
($90million) & 2012 Reserves Development Financing ($450million) projects.
The financing capacity of Nigerian banks
grew from less than 10% of financing
commitments in 2004 to 50% in 2012.
A total of fourteen Nigerian commercial
banks apparently participated in the
financing arrangements over the same
period.
The Fund is pooled from 1% of all contracts awarded in the upstream sector
of the oil and gas industry for use in
developing the supply chain and building
local capacity in the industry. 70% of the
pool is to be used to provide guarantees
for single digit and longer tenure lending
by banks and funding institutions to
Nigerian service companies seeking to
acquire critical assets while 30% is to be
applied for direct intervention by the
Board in critical infrastructure development and training programs. Currently
the Nigerian Content Development Fund
has grown to around $350m and is now
capable of being accessed by Nigerian
service companies.
Admittedly, the fund has so far been
accessed by only a handful of Nigerian
service companies but the NCDMB and
its Executive Secretary Ernest Nwapa
have indicated that the Board is working
to review the administration process and
the conditions to be met for prospective
beneficiary companies so as to make it
more accessible. The current conditions
require the benefitting company to tie-up
an arrangement with its bank for a facility
meant for financing the acquisition of
assets and ensure that it draws down the
loan and services it successfully. The Fund
will then kick in to offset 50 per cent of
the interest charged by the bank.
Finance and Insurance

Nigerian Content
Achievements
The OPTS notes that its members have
deployed several initiatives to address the
industrys funding challenges by collaborating with Nigerian Banks. This has
increased capacity of Nigerian Banks to
The OPTS also states that its members

have supported the greater participation
of Nigerian insurance and re-insurance
firms in operations and project risk
underwriting and provision of insurance cover for projects/ facilities. Some
examples of this include; the NNPC/
MPN JV which retained three (3)
Nigerian insurers - Lasaco Assurance
Plc., Sovereign Trust Insurance(STI) Plc
and Royal Exchange General Insurance
Company Ltd. - as Lead insurers for its
operational insurance programs. Under
this arrangement, NNPC/MPN JV paid
about $13.7million and $36.2million in
premiums, in 2010 and 2011 respectively.
Shell (SNEPCo) also retained Sovereign
Trust Insurance as the lead insurer in
2011 for the Bonga North West /Phase
II/STIFO Construction All Risks (CAR)
insurance with estimated premium of
$45million paid.
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Petroleum
illuminating the markets
Market Reporting
Consulting
Events
DOWNSTREAM
Lagos State govt
approves 250 hectares of
land for Mid Oil refinery
The Lagos State government has approved about
250 hectares of land for the
establishment of a 100,000
barrels per day Mid Oil
Refining and Petrochemical
Company Limited proposed
refinery in Ejirin, Epe Local Government Area of
the state.
The acquisition of the land will enable the
company commence necessary construction
activities that would lead to it refining petroleum
products after getting approval for the project
from the Department of Petroleum Resources
(DPR). According to a DPR source, the firms
application is receiving the necessary attention
and would get the go ahead to start work on the
site for the project in due course.
MOMAN, LUPAN urge

FG to sanitise lubricants
sector
The Executive Secretaries of Major Marketers
Association of Nigeria, MOMAN, Mr. Timothy
Olawore and of the Lubricant Producers Association of Nigeria, LUPAN, Mr. Emeka Obidike have
both stated that investors were worried about
several illegal activities in the lubricants sector of
the petroleum industry. They stated that the activities, including massive importation of fake and
low quality lubricants have greatly threatened the
stability of the domestic market.
According to them, the situation has also affected
the legal operations of serious investors who were
committed to the sustainable development of the
sector in the nation. They remarked that the fake
and low quality lubricants also constituted serious
sources of damage to automobiles, generators
and other appliances. The Executive Secretaries
called on the federal government to ensure that
these fake lubricants are eliminated from the
domestic market and also made a strong case for
introduction of policies, capable of discouraging
their penetration in the domestic market.
DOWNSTREAM
Dangote refinery set to come on
stream as licence is almost ready
Dangote Group is said to be poised to acquire the licence to start
preliminary work on its proposed petroleum refining project
from the Department of Petroleum Resources (DPR) as the
agency is said to have concluded the evaluation of the necessary
technical details on the first stage of the project.
The company is expected to be given an initial Licence-To-Establish (LTE) and as work progresses there will be further evaluation
by the DPR team. Based on its evaluation another licence; Approval-To-Construct (ATC) could be issued. The last phase of the
licence, the Licence-To-Operate (LTO) would come after every
structure has been put in place, including all the processing units.
The basic engineering design and optimization for the project
has been given to UOP, of the Honeywell Group of USA, and the
award of project management consultancy has been made to
Engineers India Ltd, a Government of India undertaking.
Forte Oil, GTB partner to extend

reach to customers
Forte Oil Plc has announced a partnership
with Guaranty Trust Bank
Plc through the launch of
GTExpress, a comprehensive Agent Banking
Service at its locations nationwide. A statement said through
the partnership, GTBank will leverage on the extensive reach of
Forte Oils network of over 500 stations nationwide to further
bring banking services such as account opening, cash deposit
and withdrawal via ATMs, customer enquiries, bills payment and
funds transfer closer to the people.
The Bank has rolled out in 14 Forte Oil locations including
Western Avenue, Surulere; Bank Road, Ikoyi; Local Airport Road,
Ikeja; Festac; Olorunsogo, Mushin; Shomolu, Ikorodu Road,
Apapa-Oshodi/ Mile 2 Expressway; Boundary Road Ajegunle;
Campos Square Lagos Island, Jebba, Ebute Metta; Old Apapa
Road; Wharf Road and Kingsway Road, Apapa.
The statement also noted that customers at these same locations
are also able to access Forte Oils premium petroleum products,
such as premium motor spirit (PMS/petrol), Automotive Gas Oil
(AGO/diesel); its renowned top quality lubricant brands such as
the Super Visco, Visco 2000 and Synth1000 to mention but a
few; as well as other non-fuel services such as telecommunications, quick services restaurants, grocery stores, car wash and
quick vehicle repair.
Insurgents
scare original
manufacturers
away from
refineries
maintenance
The original equipment manufacturers (OEM) of the Warri,
Port Harcourt and Kaduna
refineries are unwilling to come
to Nigeria for the planned
turnaround maintenance (TAM)
of the refineries due to security
challenges in the North and the
Niger Delta.
The former Group Managing
Director, NNPC, Mr. Andrew
Yakubu, at a capacity programme
by the corporation organised for
stakeholders in the oil and gas
industry, confirmed this development and noted that security
concerns raised by the OEMs
were frustrating the planned
TAM of the four refineries. He
said that the OEMs turned
down our request for them to
come down to Nigeria for the
maintenance because of perceived security challenges. The
refineries are still available and
running, and we are currently
optimising their integral units.
The security challenges, which
have been brought about as a result of the activities of the Boko
Haram sect in the North and
the militants in the Niger Delta,
has led to the OEMs developing
security charts of the country,
where most areas have been
described as high security-risk
locations. The development has
necessitated the federal government to look elsewhere and
to engage other equipment and
engineering companies to do
thejob.
Govt cuts down on

fuel import licensees
for Q3
The federal government has reduced the

number of companies licensed to import
gasoline in the third quarter to 27 from
40 in the previous three months, lists corroborated by regional industry sources
have showed.
According to Reuters, 27 companies
were allocated gasoline import rights
by Nigerias downstream regulator
Petroleum Products Pricing Regulatory
Authority (PPPRA), the lists showed.
These companies are expected to import
around 1.7 million tonnes for third quarter, down from 1.85 million tonnes in the
second quarter. Though market sources
expect some winners will be unable to
import owing to financing obstacles
some are still waiting for a backlog of
subsidy payments owed by the government following the 2012 subsidy fraud
investigation, which unearthed billions of
dollars worth of fake claims.
Nigeria imports gasoline through two
state-owned authorities PPPRA and
the Pipelines and Product Marketing
Company, PPMC. The names of companies licensed to import gasoline for July
to September 2014 by PPPRA are: A-Z,
Aiteo, Avidor, BSR, Bovas, Conoil, Cybernetics, Folawiyo, Forte Oil, Gulf Treasures, Hyde, Integrated, Matrix, Mettle,
NIPCO, Oando, Rainoil, Sahara, Shorelink, Total, TSL, Mobil, Ascon, Hudson,
Dee Jones, Techno and Masters.
NALPGAM
calls for clarity
with regard to
regulation of
domestic LPG
market
The Nigerian Association of Liquefied Petroleum Gas Marketers
(NALPGAM) has called for clarification on the multiplication of
operational regulations by various
agencies of the federal government
and indicates that the confusion
has continued to create a series of
imbalances in Nigerias domestic
LPG market.
NALPGAM noted that asides from
the Department of Petroleum Resources (DPR), which is statutorily
empowered to regulate business
operations in the domestic LPG
market, other agencies of government whose statutory responsibilities are not directly connected
to its operations have constituted
themselves as part of the existing
challenges limiting the growth of
the LPG market.
President of NALPGAM, Mr. Basil
Ogbuanu, stated recently at the Annual General Meeting (AGM) and
unveiling of the associations new
logo in Abuja that the overbearing
acts of these government agencies,
notably the weight and measure department of the federal ministry of
trade and investment, has prompted the association to seek better
clarification from the government
as to which of its agencies is actually responsible for regulation of
the domestic LPG market. Ogbuanu
explained that given the terms of
demands from such agencies, the
association has in its bewilderment
deemed it necessary to know the
actual position of DPR in operations within the domestic market.
POWER
FG, 7 NIPP plant
investors to negotiate
Share Sale Agreement
The Joint Transaction Board (JTB) comprising
the National Council on Privatisation (NCP) and
the Niger Delta Power Holding Company (NDPHC), owners of the National Integrated Power
Project (NIPP) and the preferred bidders for 7
of the 10 NIPP power plants are to commence
negotiations over the Share Sales Agreement for
the assets.
This follows the JTBs approval on March 21 of
the preferred and reserved bidders for 7 out of
the 10 NIPP power plants. The sale of the 3 other
power plants, namely Alaoji Generation Company, Omoku Generation Company and Gbarain
Generation Company are affected by litigation
instituted by Messrs Ethiope Energy Limited
and have been stepped down until the matter is
resolved.
Benin Disco secures USTDA grant

The Benin Electricity Distribution Plc (BEDC) has become the first
distribution company to benefit from a grant funding by United States Trade and Development Agency (USTDA). The grant
funding is offered for the purpose of Technical Assistance (TA)
to update and modernise the electricity distribution network for
BEDC in Nigeria.
A statement issued by the company said that its core investor
consortium, Vigeo Power Limited (VPL), with the assistance of Citi
Asset Management Limited (CAML), initiated this process in order
to ensure that strategic investments initiatives to be taken by
BEDC, will be based on adequate research and planning. The signing ceremony was witnessed by the Minister of Power, Minister
of Trade and Commence, Ambassador to United States, Deputy
Ambassador to United States, Director of USTDA and USTDA
Country Manager West Africa.
NDPHC to hand over

power infrastructure to
boost supply
Nigeria, US sign MoU to

build $2.5bn power plant
The MoU which would outline the roles to be

played by Nigeria and the US was signed in
Abuja recently by the US ambassador to Nigeria,
James Entwistle, and the Minister of Power,
Prof. Chinedu Nebo, on behalf of both countries.
Also to be achieved through the MoU is a 70mw
solar manufacturing plant to be built in Nigeria.
The Operator of the Nigerian Electricity Market

(ONEM) otherwise known as the Market Operator (MO) has unveiled a central revenue settlement system for the Nigerian Electricity Supply
Industry (NESI) called the NIBSS-Power Collect
system. The revenue settlement platform for all
stakeholders in NESI was initiated and developed by the ONEM in partnership with the
Nigerian Inter-Bank Settlement System (NIBSS)
of the Central Bank of Nigeria (CBN) as an automated
revenue lifecycle management system.
According to the ONEM, the system is expected to help the
market operator and other operators in NESI ensure equitable revenue collection and splitting among themselves.
It will also give the MO the tools to regulate market price
stability. Nebo said in his remarks while inaugurating the
The handover of the 10 NIPP plants was scheduled for June 2014, according to the timelines
unveiled in June 2013. But owing to non-completion of some of the projects and pending litigations as noted above, the privatisation process
is several months behind schedule, while only
seven assets are currently being sold.
United States power plant developer, Global Edison Corporation, is set to build a new 1,500mw
power plant in Anambra State following an
agreement signed between the FG and Global
Edison for the construction of the $2.5 billion
gas-powered plant. The plant is part of a memorandum of understanding (MoU) signed between Nigeria and the United States (US) Power
Africa Initiative.
Nebo inaugurates
automated payment
system for power
sector
FG considers 3 options for

TCN privatisation
The federal government is considering three options for the
privatisation of the Transmission Company of Nigeria. This was
disclosed by the Minister of Power, Prof. Chinedu Nebo, recently.
The options being considered, according to the minister, are full
privatisation, regional privatisation and concession of the TCN to
private investors.
Nebo described the inflow of potential investors from all over the
world into the country for the proposed privatisation of the TCN
as massive. The minister, who did not give a tentative date when
the privatisation process would begin, said the federal government was overwhelmed with the interest shown by investors, but
would outline the process schedule in due course.
system said that ONEM had done a great job in taking the
sector to a whole new level by the development and deployment of the NIBSS-Power Collect system. Nebo also
urged stakeholders in the power supply chain to key into
the system to ensure adequate data capture and transparency in payment system. He said such stakeholders include
the Generating Companies, the Transmission Company
and the Distribution Companies.
Bresson signs pact with

Aggreko on 250 mw of
electricity
Pioneer Independent Power Producer Bresson AS Nigeria
Limited has concluded plans with emergency power conglomerate Aggreko to bolster power supply in Nigeria with 250mw
of electricity within the next nine months.
The Niger Delta Power Holding Company Ltd

(NDPHC) has concluded plans to handover distribution and transmission sub-stations to Distribution
Companies (DISCOs) to boost power supply in the
country. The NDPHC Head of Communication and
Public Relations, Mr Yakubu Lawal said the sub-stations, which were spread across the 11 Discos in
the country, would also include some electrical
power transformers to improve the service delivery
of the Discos. He gave a breakdown of some of the
auxiliary power projects completed by NDPHC to
include about 40 transmission lines, 45 transmission
sub-stations and 20 sub- station extensions.
The memorandum of understanding (MoU) for the project

which is to be cited in industrial clusters across the country was concluded and signed in Paris, France by Bresson
AS Chairman, Mr. Gbenga Olawepo and Aggreko Regional
Director, Mr. Christopher Jacquin. Supply has been historically
proven to be inadequate in areas of high activities, thereby
inviting private sector interests to increase supply.
Olawepo said Bresson was determined to further add a total
of 500mw within the next 12 months to its daily generation
capacity through emergency power generation, particularly
in strategic centres in order to arrest acute power shortages. Bresson AS, which owns Magboro 90mw power project
situated in Magboro, Ogun State also hopes to commission its
Magboro plant configured on 2GE LM 6000.
NIGERIAN CONTENT:
CHALLENGES
ABOUND DESPITE
RELATIVE
SUCCESSES
By Noma Garrick
One of the core allegations

that have been raised is
that some multinationals
have continued to violate
the provisions of Nigerian
Content Act through the use
of expatriates, who perform
job functions that Nigerians
have capacity to execute.
Issues of Non Compliance

One of the core allegations that have
been raised is that some multinationals
have continued to violate the provisions
of Nigerian Content Act through the use
t is impossible to argue with

the fact that there have been
several major achievements
with regard to the promotion of Nigerian content
and also that a lot success has
been recorded since President
Goodluck Jonathan signed into
law the Nigerian Oil and Gas
Industry Content Development
Act (Nigerian Content Act)
on April 22, 2010. However, as
we will highlight briefly below,
there have also been some
instances which have called
into question the ability of the
Nigerian Content Act to adequately protect the interests of
indigenous oil and gas companies. Furthermore, several local
companies maintain that it is
still a challenge getting access to
the choice contracts awarded by
the multinationals thereby creating a scenario whereby a lot
of their services, factories, fabrication yards and equipment
are left idle not to mention the
massive amount of revenue
that has been lost as a result.
Content Development and Monitoring

Board (NCDMB) instead resorts to a
more collaborative or persuasive approach to get the erring multinationals
to comply with the provisions of the Act.
A recent example of non compliance
allegedly involved Total Exploration
and Production Nigeria Ltd and its
contractors Saipem and Hyundai Heavy
Industries (HHI) of Korea, whom the
NCDMB accused of gross violations
of sections 28, 33 and 41 (2) of the Act
by deploying non-compliant assets and
expatriates. The NCDMB in this case
however, appears to have wielded the
big stick against Total by apparently
stopping the companys Ofon-2 project.
The NCDMB also banned Italian
engineering, construction and drilling
contractor, Saipem, as well as Hyundai
Heavy Industries (HHI) of Korea, the
contractor for Total on the project from
participating in the ongoing and future
tendering processes in Nigerias oil
and gas industry as a result of what the
board called abuse of expatriate quota
and procurement processes.
Total, on its own part released a statement denying the reports claiming it
had shut down its Ofon-2 project but
acknowledged receipt of a notice of
non-compliance with the Nigerian Content Act, from the NCDMB, against one
of its contractors, HHI. It also denied
reports suggesting that there were only
two Nigerians working for HHI on the
Ofon-2 project. The statement further
said that Total would be meeting with
HHI and NCDMB to ensure a timely
and satisfactory resolution of the issues
raised by the NCDMB notice.
In Country Fabrication
of expatriates, who perform job functions

that Nigerians have capacity to execute.
It has also been alleged that instead of
resorting to the sanctions provided by the
Act to enforce compliance, the Nigerian
Another issue relates to the amount

of in country fabrication for major
projects in the oil and gas industry. In
particular, not enough of the integration
of fabricated steel structures which go
into large structures such as Floating
Production Storage and Offloading
(FPSO) vessels is done locally. A typical
FPSO in use for each of Nigerias deepwater oilfields has on average a weight
of more than 110,000 tonnes; a length of

over 300 metres; and a width of about 60
metres. However, of this amount, only
about 8,00010,000 tonnes per vessel
are fabricated in Nigeria by indigenous
contractors due to the fact that the majority of the fabrication work is carried
out in Korean yards by companies such
as Hyundai Heavy Industries (HHI) and
Samsung Heavy Industries (SHI).
Furthermore, the ongoing court action
between Samsung Heavy Industries (SHI)
of Korea and the Lagos Deep Offshore
Logistics (LADOL) base is a serious
cause for concern. SHI recently won the
contract for the construction of the FPSO
for the Egina Oilfield being developed by
French oil giant, Total and the integration
of the FPSO was originally planned to
take place at the LADOL base in Lagos as
SHIS pre-agreed partner and indigenous
logistics and oil service provider. However, at the Federal High Court, it was
alleged by LADOL that SHI had sought
to exclude LADOL from benefiting from
the contract.
This is of particular concern as one of the
policies of the NCDMB is that major oil
and gas projects such as the Egina FPSO
project should give rise to the construction of a legacy facility in the country
for the benefit of its economy and the
employment of its citizens. In this case
the legacy project was the upgrade of the
fabrication and integration facilities at
LADOL, which the NCDMB estimated
would cost between $150 million and
$200 million. While the facts of the case
are lengthy, it suffices to say that much
of the crux of LADOLs action is based
on the fact that after the award of the
contract, SHI sought to terminate the
original arrangement and insisted on a
re-evaluation of the in-country integration strategy by suggesting that exporting
the entire work to South Korea would
save $500 million and avoid a 10-month
delay in project execution. The case is still
currently in court and the outcome yet to
be determined, but should SHI succeed
in securing offshore fabrication, it would
present a major test to the objectives of
the Nigerian Content Act at a time of
extreme unemployment in Nigeria and
INDUSTRY EVENT
Society of Petroleum
Engineers (SPE):
NAICE 2014
The Minister of
Petroleum Resources,
Mrs. Diezani AlisonMadueke, explained that
the contract awards to
indigenous firms to lift
crude oil were to promote
even local participation
in the oil and gas sector.
How successful this
development will be
however, remains to be
seen.
would also impact negatively on the aim

of developing local capacity in Nigeria.
Discrimination and Under

Utilization of Nigerian
Services
There are also still complaints of discrimination and under utilization of indigenous capacity in the oil and gas industry.
These allegations of discrimination have
been made with particular regard to
project rates and also remuneration in
relation to Nigerian man hours when
compared to the value of expatriate man
hours. Linked to this are also allegations of the poaching of skilled Nigerian
workers from indigenous firms by foreign
companies in the services sector of the industry, thereby reducing the human capital base of local firms. A senior executive
of a local service company recently noted
that; indigenous companies providing
similar services to their foreign counterparts are paid less thereby affecting
negatively their ability to sustain competent and certified personnel, especially
those trained by them. He also stated
that payments for projects executed by
local firms executing projects for major
oil companies should be at par with what
foreign contracting firms obtained.
At the Practical Nigerian Content Workshop held in Yenagoa, Bayelsa State late
last year, the executives of top indigenous
companies such as Oando Energy Services Ltd, Mr. Bandele Badejo and Fenog
Nigeria Limited, Mr. Chukwudi Uwakwe;
made appeals to the IOCs operating in

the country to encourage local operators
by considering them for more contracts
and ensuring fair treatment for them.
This is particularly the case as they had
borrowed large sums from local and international banks to boost their capacities
and needed to meet their obligations with
their respective banks.
Legal services also appear to be an area
which has suffered some neglect with regard to Nigerian content strides. Section
51 of the Act provides that all operators,
contractors and other entities in any
operations, business or legal services
transaction in the Nigerian oil and gas industry requiring legal services shall retain
only the services of a Nigerian Legal Practitioner or a firm of Legal Practitioners
located in Nigeria. However, according to
several prominent legal practitioners, the
amount of legal instructions emanating
from the industry is still considerably low
despite the promulgation of the Act. With
most of the notable, considerable high fee
earning transactions still largely given to
foreign law firms.
stipulates that Nigerian independent operators shall be given first consideration

in the award of blocks, oil fields licenses,
oil lifting licenses and in all projects for
which contract is to be awarded in the
Nigerian oil and gas industry subject to
the fulfilment of such conditions as may
be specified by the Minister. However,
up until recently, there were literally no
Nigerian vessels involved in the lifting
or transportation of crude oil since its
discovery in commercial quantities back
in 1956. There now seem to be some
promising signs going forward as the
Nigerian National Petroleum Corporation (NNPC) awarded the yearly crude
oil lifting term contracts for 2014/2015 to
mostly Nigerian companies comprising
Aiteo, Taleveras, Barbedos and others,
and by so doing, downsized contracts
traditionally awarded to international
oil traders. The Minister of Petroleum
Resources, Mrs. Diezani Alison-Madueke, explained that the contract awards
to indigenous firms to lift crude oil were
to promote even local participation in the
oil and gas sector. How successful this
development will be however, remains to
be seen.
12
10
11
13
14
From top left to bottom right: (1)A cross section of delegates at the opening ceremony (2)
Abdulrazaq Isa, Danjuma Saleh, a delegate and Bernard Oboarekpe (3) Chevron exhibition booth
(4) Cross section of delegates (5) Felix Amieyeofori and other delegates (6) Cross section of
industry awardees at the industry awards night (7) Alex Neyin, Chairman BoT of Nigeria Council,
SPE (8) Mutiu Sunmonu (9) Austin Avuru, Bernard Oboarekpe, Dr. Ike Ibe, Engr. Taofiq Tijani,
Mark Rubin and Cornelius Zegelaar (10) Bernard Oboarekpe, Emeka Ene and Eng. Taofiq Tijani
(11) Shell exhibition booth (12) Bernard Oboarekpe, SPE Chair, Nigeria Council and an awardee
(13) SPE NAICE 2014 Exco members (14) NPDC exhibition booth (15) Richmond Osuji, Chi Ukpai,
Folorunsho Alakija and other delegates
Crude Oil Lifting

Another area where there has been low
compliance with the Act over the last four
years is in the area of crude oil lifting.
Section 3 (1) of the Nigerian Content Act
15
ALTERNATIVE & RENEWABLE ENERGY
LEGAL
Solar technology to
drive rural electrification projects Nebo
Brittania-U files appeal at Supreme Court over disputed

Chevron blocks, cautions Minister against contempt of court
The Minister of Power, Prof. Chinedu

Nebo, has said solar technology solution
will replace the traditional use of generators as a primary source of energy for the
rural electrification projects across the
country. Nebo disclosed this when a group
of officers from the Defence Command
and Staff College (DCSC) of Bostwana, led
by its commandant, Brigadier Shadrack
Moloi, visited the ministry.
Represented by the Permanent Secretary, Dr Godknows Igali, Nebo said with
improvement in the storage capabilities of
solar, it was now possible for rural people
to enjoy electricity without any hindrance.
He also identified the need to train locals in
the maintenance of solar panels and other
ancillary facilities, adding that solar power
is not only sustainable, but also renewable
and better than diesel generators.
FG to generate electricity from coal

fields, to revoke non-performing
coal licences
Minister of Mines and Steel Development, Mr Musa Sada has said
that the federal government would develop coal fields across the
country to facilitate electricity generation and industrialisation. Sada
said the federal government had introduced the National Integrated
Infrastructure Master plan (NIIM) to develop coal fields as part of
designed efforts to generate power and fast-track industrialisation.
According to him, the federal government has identified 16 coal blocks
in Enugu, Gombe, Nasarawa, Benue, Delta and Kogi states.
He said the Nigerian Geological Survey Agency and the National Steel
Raw Material Exploration Agency (NSRMEA) were still undertaking
exploration work on coal deposits in the country. He also said that the
Ministry of Mines and Steel Development, in collaboration with the
Ministry of Power, had established an inter-ministerial committee to
assess people who could use coal to produce power. The minister said
some coal blocks were currently under the supervision of the Ministry
of Power to enable investors to generate coal for power generation.
The federal government has also sternly warned that it would revoke
non-performing coal licences. The National Council on Privatisation
held a meeting with Vice President Namadi Sambo at the Presidential
Villa recently where the warning was issued to those holding coal
blocks. After the meeting, the Minister of Power, Prof. Chinedu Nebo,
noted that those who had coal licenses had not performed optimally,
as coal was still in short supply for power generation. He stated that
those who have no immediate plans to produce coal would have their
licences withdrawn. Sada added that a deadline of one month would
be placed for those having the licences to give reasons why their
licenses should not be revoked.
ENVIRONMENT
Nigeria emerges UNEPs regional centre for marine pollution

The United Nations Environment Programme, UNEP,
has sited the headquarters of the regional coordination centre to combat marine pollution in West, Central and Southern Africa, in Nigeria. UNEP Regional
Coordinator on the Abidjan Convention, Mr. Abou
Bamba, stated that the decision to grant Nigeria the
centre hosting right was reached at the 11th meeting
of the Conference of Parties to the Abidjan Convention and that Nigeria won the right based on its long
years of experience in marine pollution management.
According to him, with this special hosting right,
Nigeria would be in charge of the coordination of
combating trans-boundary marine pollution across the
22 countries of the Abidjan Convention. As the host
for the centre, Nigeria would among other functions, be

required to collect and disseminate relevant information,
initiate, design and assist in the running of national and
regional training courses and exercises and assist the
countries in ensuring the sustainability and revision of
their national plans and of the sub-regional contingency
plan.
Others include; facilitation and coordinating international assistance in cases of emergency, fostering scientific
and technical cooperation with UN specialised agencies,
intergovernmental, governmental and non-governmental
organisations, and facilitation of the provision of technical and scientific assistance and training to governments
and institutions within the region.
The legal battle over the disputed Chevron oil blocks has shifted to the Supreme Court as Brittania-U Nigeria Limited has filed an appeal at the apex court challenging the ruling of the Court of Appeal sitting in Lagos against the
extension of the interim orders made by a Federal High Court in Lagos on the disputed oil blocks Oil Mining Leases
(OMLs) OMLs 52, 53 and 55.
The lawyer to Brittania-U, Mr. Ricky Tarfa (SAN) has also petitioned the Minister of Petroleum Resources, Mrs.
Deziani Alison-Madueke, the Nigerian National Petroleum Corporation (NNPC) and other relevant parties not to
jeopardise the ongoing suits by taking actions that would pre-empt the outcome of the case in court. Brittania-U is
claiming specific performance of the assignment of the three OMLs or $10billion damages for wrongful repudiation
of the contract.
REGULATORY
DPR to begin electronic

processing and issuance of
service permits
Proposed NEMSA Bill may

blur regulatory lines in the
electricity sector
The Department of Petroleum Resources (DPR) is

to commence electronic processing and issuance
of statutory oil and gas industry service permits
(OGISP), in line with initiatives of the agency to
reposition and ensure enhanced service delivery.
A private members bill called the Nigerian Electricity Management Authority (NEMSA) bill currently
before the National Assembly may blur the lines
in Nigerias electricity sector. The bill, a private
members bill, proposed by Hon. Patrick Ikhariale,
Chairman of the House Committee on Power and
Steel, proposes to situate NEMSA as a technical
regulator and enforcement institution in the Nigerian Electricity Supply Industry (NESI).
By this development, Nigerian registered companies

seeking to render services in the oil and gas industry
would be required to submit online applications for
new permits and the renewal of expired ones to the
oil and industry regulatory agency with the required
documents.
Head, Public Affairs at the DPR, Ms. Dorothy
Bassey, explained that the electronic application
system for statutory permits is the beginning of
digitalisation of the agencys entire licensing and
permitting system and is geared to remove bottlenecks and ensure quality service. She explained that
the online application system will require applicants
to log onto the DPR website to create their company
accounts from which they can apply for different
categories of permits upon completion of the applicable forms.
She said duly completed applications would be
processed within 72 hours and that all required
steps for the online application processes, including
the specified fees and charges for all the statutory
service permits are currently posted on the DPR
website.
The bill seeks to convert the Electricity Inspectorate Service (EIS), whose functions previously
carried out under the auspices of the Ministry of
Power had been transferred to NERC in the Electric
Power Sector Reform Act, to the National Electricity Management Authority (NEMSA)). The bill
further proposes that NEMSA will also take over
the staff and assets of the current Electricity Management Services Plc.
However, the Nigerian Electricity Regulatory
Commission (NERC) has powers similar to those
being sought to be vested in the new authority. The
National Electric Power Policy (NEPP) 2011 which
is the foundation of Nigerias power sector reform
and the Electric Power Sector Reform Act (EPSR)
2005, particularly section 32 provides clearly for
the mandate of the NERC as the technical and economic regulator of the Nigerian Electricity Supply
Industry (NESI).
LOCAL CONTENT
BUSINESS
Agip embarks on manpower development for

indigenous contractors
The Nigerian Agip Oil Company (NAOC) has said it has initiated a vendor development programme to enhance effective and efficient project delivery by improving the administrative
and technical competencies of indigenous contractors. The company said the programme was
targeted at small, medium and community contractors, and would address key areas of project
delivery and implementation.
Also, the Vice-Chairman and Managing Director of NAOC, Mr Massimo Insulla, while declaring open the three-day training workshop for its indigenous contractors in Port Harcourt, said
the manpower development initiatives was to bridge the gap between skills requirement and
available skills in compliance with the Nigerian Oil and Gas Industry Content Development
(NOGICD) Act 2010.
Afren suspends CEO, COO; shares plunge

London-listed, Nigeria-focused
oil explorer Afren Plc, said its
board had temporarily suspended its Chief Executive,
Osman Shahenshah and Chief
Operating Officer, Shahid
Ullah; wiping about 500 million
pounds ($840 million) off its
value. The company said in a
statement on the London Stock Exchanges company news
service that a review for the board found evidence of the
receipt of unauthorised payments potentially for the bene-
fit of the CEO and COO.

It went on further to say; these payments were not
made by the company. The investigation has not found
any evidence that any other board members were involved. No conclusive findings have yet been reached
and the investigation is ongoing, the statement added.
Shares in FTSE 250 company Afren plunged by as much
as 34 percent, hitting their lowest level since June 2012,
before recovering some of their value to trade down
26 percent at 110.50 pence. The investigation is being
conducted by law firm Willkie Farr & Gallagher.
FINANCE
COMMUNITY
Delta State communities

threaten NPDC with
shutdown of its activities
The Opuama/Ikpotogbene Community in Warri North

Local Government Area of Delta State has called on the
Nigerian Petroleum Development Company (NPDC)
to immediately halt oil exploration and exploitation
activities in its community, alleging that the company
did not follow due process before its ongoing operation
in the area. The community expressed disappointment
with the apparent decision of the company to abandon
the process initiated to fashion a Memorandum of
Understanding (MoU) between the host communities
and the NPDC.
This is comes barely days after the NPDC, which is a
subsidiary of the Nigerian National Petroleum Corporation (NNPC), was given a similar notice to quit a community for alleged illegal entry and commencement of
operations in the locality by Youths, women and elders
of Polobubo (Tsekelewu) community in Warri North.
Chevron to double
donations to social projects
in Nigeria
Chevron plans to nearly double its donation to Nigerian social projects over the next five years, part of
a choreographed plan to improve the local economy
and bolster the companys supply chain in the African
country, its second-largest source of crude oil. According to Reuters, Chevron is donating $40 million to the
Niger Delta Partnership Initiative (NDPI), a nonprofit
it helped form in 2010 with $50 million in seed money.
The second round of funding will make NDPI the largest recipient of Chevron donations in the companys
history, executives said. The NDPI works with local
organizations in the Niger River Delta to help cull HIV
transmission rates, teach cassava farmers marketing
techniques and connect catfish breeders with feed suppliers, among other projects.
ExxonMobil announces
second quarter 2014
results
ExxonMobil has announced its second quarter 2014

results. The multinational in a statement through
its Chairman Rex W. Tillerson commented: ExxonMobils financial results were achieved through
strong operational performance and portfolio
management. We continue to enhance shareholder
value by funding capital projects and delivering
robust shareholder returns through dividends and
share purchases. Upstream production for the year
remains in line with plans and we continue to add
volumes from our high-quality development portfolio through assets such as the Papua New Guinea
LNG project, which started up ahead of schedule
during the quarter.
Second quarter 2014 earnings were $8.8 billion,
up 28 percent from the second quarter of 2013,
reflecting strong operations and asset divestments.
Capital and exploration expenditures for the first
half of 2014 were $18.2 billion, down 17 percent
from the first half of 2013. Through the first half of
2014, the Corporation distributed $11.7 billion to
shareholders through dividends and share purchases to reduce shares outstanding.
Royal Dutch Shell Plc

announces second
quarter 2014 results
Royal Dutch Shells has announced its second quarter 2014
earnings. Its earnings on a current cost of supplies were $5.1
billion compared with $2.4 billion for the same quarter a year
ago. Earnings included an identified net charge of $1.0 billion
after tax, mainly reflecting impairments which were partly
offset by divestment gains. Second quarter 2014 CCS earnings excluding identified items were $6.1 billion compared
with $4.6 billion for the second quarter 2013, an increase of
33%.
Cash flow from operating activities for the second quarter
2014 was $8.6 billion, compared with $12.4 billion for the
same quarter last year. Excluding working capital movements, cash flow from operating activities for the second
quarter 2014 was $11.0 billion, compared with $8.4 billion
for the second quarter 2013. Capital investment for the
second quarter 2014 was $8.5 billion. Net capital investment
for the second quarter 2014 was $1.1 billion, compared with
$10.9 billion for the same period a year ago.
Total dividends distributed in the quarter were $3.0 billion,
of which $1.0 billion were settled under the Scrip Dividend
Programme. During the second quarter some 8.6 million A
shares were bought back for cancellation for a consideration
of $0.3 billion. Shell has now cancelled the Scrip Dividend
Programme and scrip dividends will not be offered for the
second quarter 2014 dividend. Gearing at the end of the
second quarter 2014 was 13.4%. A second quarter 2014 dividend has been announced of $0.47 per ordinary share and
$0.94 per American Depositary Share (ADS), an increase of
4% compared with the second quarter 2013.
INTERVIEW WITH THE MD/

CEO OF LEADING INDIGENOUS SERVICE COMPANY,
GEOPLEX DRILLTEQ LIMITED
Q | It has been four years since the Nigerian Oil and Gas Industry Content
Development Act 2010 was enacted
into law. How do you feel the legislation has impacted upon your business
activities in this time span?
It has been a mix of challenges and successes. We have had to learn to leverage
on the benefits of the Local Content Act
to grow our business by expanding our
capacity and acquiring better technologies to add greater composite value to the
Nigerian economy. We secured strategic
partnerships with leading original equipment manufacturers, this has precipitated
a gradual but consistent process that
would see these OEMs set up assembly
plants here which would be run by our
personnel. This would improve our local
content performance indices and create
employment for Nigerians as we position
our processes to be compliant to global
best practices. In essence, the legislation
has impacted positively to our business.
Q | Would you say your technical
expertise and capability to handle
complex jobs have improved with the
inception of the Act?
Technology acquisition and manpower
development have been pivotal to our
business. We have seen our business grow
from a single product line with severely
limited capabilities to one that provides
solutions to complex problems across
diverse terrains from land to deepwater.
We have acquired Slickline technology,
expanded into Directional Drilling, Well
testing, tubular inspection and riser
maintenance services. We continually
invest in the training and development
of our personnel because they are the
drivers of our success therefore we ensure
they get the knowledge and skills in
the industry. Our systems are built on

continuous improvement, so we would
keep working to get better at what we do.
With increase in acquisition of tools and
equipment and support from our technical partners, our technical expertise has
improved tremendously since inauguration of the Act.
Q | How effective do you feel the
Nigerian Content Development &
Monitoring Board (NCDMB) has been
in enforcing the Nigerian Content Act
and in terms of ensuring that the multinationals comply with the relevant
provisions of the Act?
The board so far has been effective in
ensuring that multinationals do not
drive local companies out of business by
their sheer size and tendency towards
anti-competitive business strategies,
through ensuring that Land / Swamp
Contracts are awarded to local companies. However a lot more needs to
be done. The board needs to set up a
framework that would cause multinationals to transfer expertise and technologies
to Nigerians as part of a broader strategy
to ensure rapid industrialization of the
country.
Q | What are the major challenges
your business as well as other indigenous companies are currently facing
in terms of patronage from multinationals and as regards the promotion
of local content in general?
Multinationals have come to realize that
we deliver great value at minimal cost
so the initial challenge of trust has been
overcome. Our business requires considerably enormous financing to acquire
tools and redress parts, interest rates
have stood between us and the scope of
work which our multinational partners
Engr. Wole Ogunsanya, Geoplex Drillteq Limited
often require. Epileptic power supply has

increased our overhead costs and led to
depletion of funds which should have
been invested in technology acquisition.
Indigenous companies are still faced with
acquiring required technologies needed in some specialized services due to
unavailability of tools in the open market
thus invariably providing more opportunities for the multinational service
companies with patented tools. With
government support in providing adequate infrastructures and basic amenities,
I believe we can establish research centers
that will facilitate the manufacturing of
tools and equipment to meet the industry
demand.
Q | What suggestions would you put
forward to improve the local Content
drive in Nigeria?
Indigenous companies should be granted
tax and import duty waivers, this would
allow the companies grow their businesses and break even at a sustainable
rate. The Nigerian Content Development
and Monitoring Board needs to work
with banks to set up a special interest
rate regime for indigenous contractors,
this would improve access to funds for
renewed investments in the industry. The
government should also provide basic
amenities that will facilitate local development of Research centers, manufacturing
and fabrication plants that can be used in
producing tools and equipment locally
within the country.

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June / July 2014 Edition

Overview of the Nigerian Oil and

Nigerian Content Act 4 Years On:

Interview with Engr. Wole

TO CONTACT US REGARDING ADVERTS, ARTICLE CONTRIBUTIONS OR FEEDBACK

Shell has declared force majeure at its

4 / ENERGY MIX REPORT

Oando Energy Resources completes

Operators, stakeholders worry

Nigeria oil production

Afren plans further drilling in three of

70 miles (113 km) off the coast of the

SacOil may get

6 / ENERGY MIX REPORT

Indigenous oil firms to produce

Sahara Group announces new discovery

From a leading energy solutions provider to Nigerias largest indigenous oil

We are Oando. We are proudly African.

rior to the enactment of The Nigerian Oil and

8 / ENERGY MIX REPORT

General Aims and Major

Content Development and Monitoring

is inadequate capacity domestically, as

Requirement of a Nigerian Content Plan

Section 28(1) of the Act

posed bidders list etc (Sections 17-24).

10 / ENERGY MIX REPORT

serted in projects or contracts whose total

that a minimum of 50% of the equipment

Energy Mix Report readers are eligible for an

Argus Africa LPG 2014

Confirmed Companies Include:

Oryx Energies Petredec

Abayomi Awobokun, CEO

Blaise Edja, Global General

Said Akretche, Chief

Offences and Penalties

Network with delegates from Ghana,

Joint Qualification System

60+ Companies Attending

The Nigerian National Petroleum Corporation

12 / ENERGY MIX REPORT

Govt plans new gas price for Gencos, others

Minister of Petroleum Resources, Mrs Diezani Alison-Madueke,

NIGERIAN CONTENT ACT

In the four years since the

14 / ENERGY MIX REPORT

Al-KAT) valued at over US$30million.

The NCDMB has stated that between

Section 53 of the Nigerian Content Act

he Nigerian Oil and Gas Industry Content Development

projects in Nigeria. The offshore diving

Indigenous Asset Ownership

The Nigerian Content

such, NCDMB efforts have resulted in

the scheme would be operating companies, multinationals, small and medium

Human Capital Development

16 / ENERGY MIX REPORT

through awards of contracts for provision

The Nigerian Content

Examples include Total E&P Nigeria

Finance and Insurance

The OPTS also states that its members

Argus Africa Storage and Logistics