Energy
PETAN to introduce seal of quality to weed middlemen frustrating local patronage
…As NCDMB unveils procedures for implementation of Presidential directive on Local Content
By Olaseinde Gbenga, Abuja
The Petroleum Technology Association of Nigeria (PETAN) has disclosed plans to introduce a seal of quality for Nigerian companies to weed out middlemen frustrating local patronage in the sector.
The Chairman and Chief Executive Officer of Petroleum Technology Association of Nigeria (PETAN), Engr. Wole Ogunsanya made this known at a panel session at the ongoing Nigeria Oil and Gas(NOG) Energy week conference and exhibition in Abuja on Tuesday.
Speaking, the PETAN Chairman said, “The Nigerian content has been a business enabler as it has enhanced local operators to offer services in the oil and gas industry that has hitherto offered by multinationals.”
According to him, in the oil and gas Industry, PETAN is essentially the sponsor of local content law, and in contributing to shape that law, in oil and gas assets in Nigeria.
He noted that Nigerian companies should have first consideration, “and we are happy to see that these opportunities are birthing strategic collaborations by lowering barriers of entry for local operators, retaining millions of dollars’ worth of investment in the country, and building Nigerian brands that work in and beyond Africa.”
The Chairman expressed his grief on ‘middlemen businesses’ that cast shadow on the competencies and integrity of Nigerian oil and gas operators, adding that “PETAN is ready to partner with relevant stakeholders such as Nigerian Content Development and Monitoring Board (NCDMB) and Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to weed them out through the introduction of a PETAN’s seal of quality with international recognised certification company to serve as additional layer of authenticating those listed on the Nigerian Content Development and Monitoring Board (NCDMB’s) NOGIC JQS portal and Nigerian Upstream Petroleum Regulatory Commission (NUPRC’s) National Data Repository.”
Echoing similar sentiments, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Felix Omatsola Ogbe hailed the Presidential Directive on Local Content Compliance Requirements as crucial for enhanced competitiveness and mitigation of risks in regard to unqualified contractors, just as he unveiled five focal areas for implementation of the policy initiative.
The Executive Secretary spoke at the Nigerian Content Seminar, the opening day of the Nigerian Oil and Gas (NOG) Energy Conference, in Abuja.
The NCDMB boss listed the areas as ‘Promoting the Utilisation/Growth of In-country Capacities,’ ‘Enhancing the Cost Competitiveness of Oil and Gas Projects,’ ‘Non-inclusion of Intermediary Entities Lacking the Essential Capacity to Perform from the Nigerian Content Plan (NCP),’ ‘Approval of Nigerian Content Plan (which consists of contractors that meet the legal definition of Nigerian companies and demonstrate capacity to execute projects within Nigeria),’ and ensuring that ‘Entities acting solely as intermediaries, with no demonstrable capacity to execute the project or activity, shall not be approved.’
Engr. Ogbe assured that under the first focal area, ‘Promoting the Utilisation/Growth of In-country Capacities,’ “the Board would continue to leverage its existing processes “to assess and verify the capacity of companies, facilitating and carrying out in-country capacity audits in collaboration with all relevant stakeholders.”
On enhancement of cost competitiveness of oil and gas projects, he said, among other activities operators in the oil and gas industry would only be permitted to source capacities out-of-country “only after in-country capacity gaps have been identified.”
In regard to the third focal area, namely, ‘Non-inclusion of Intermediaries Lacking the Essential Capacity,’ Engr. Ogbe stated that the “Tender opportunity’s pre-qualification and technical evaluation phases” would be used to eliminate entities so identified as incapable of performing.
Explaining the Board’s procedure in respect of ‘Approval of Nigerian Content Plan (NCP),’ he noted that international players’ participation would be deemed appropriate only “when the necessary Nigerian Content level is unavailable locally or inefficient.”
While assuring that entities acting solely as intermediaries with no demonstrable capacity to execute a project would not be approved, he reiterated that the Board remains “steadfast in its dedication to guaranteeing that any services provided will generate value in the country,” and that it would “evaluate current policies and guidelines to encourage the development of indigenous capabilities and guarantee that these policies and guidelines are not misused, misapplied, or misinterpreted.”
In all, he observed with satisfaction that the Presidential Directive and the Board’s modalities are in sync with the objectives of its 10-Year Strategic Roadmap, which aims to increase Nigerian Content to 70 percent by 2027.
Among recent landmark accomplishments of the Board, as identified by the NCDMB boss, were the inauguration of Amal Technologies Gas Leak Detection Device and Printed Circuit Board Manufacturing facility in December 2023 in Abuja, the commissioning of the Kwale Gas Gathering (KGG) Hub and NEDOGAS Plant in June in Delta State, and the Final Investment Decision (FID) on the Ubeta Field Development Project by TotalEnergies Exploration and Production Nigeria Limited and its Joint Venture partner, Nigerian National Petroleum Company Limited.
Engr. Ogbe seized the occasion to congratulate winners and participants in the Golf Tournament organised as part of the NOG Energy Week. The golf tourney is sponsored by the NCDMB and the Executive Secretary emphasised that the event is an excellent platform to provide clarity, expositions, tips and guidance to industry players on the provisions of the NOGICD Act.
Speaking during one of the breakout sessions, the Director of Projects Certification and Authorization Certificate (PCAD) at the NCDMB, Engr. Abayomi Bamidele explained that NCDMB had enabled oil and gas through its policies, collaboration and investments. He indicated that about 1000 Nigerian service companies were registered on the NOGIC JQS in 2011, but the number had increased to 13,000, while the number of operating companies had equally increased to 120 firms.
He charged service companies to only accept jobs they have the technical capacity to execute, and to eschew the practice of bidding for every job in the oil and gas industry. He also emphasised that Nigerian Content is not a major cost driver in Nigeria, noting that other elements like security and managing community stakeholders are big cost drivers.
In his contribution, the General Manager, Planning Research and Statistics, Mr. Silas Omomehin Ajimijaye affirmed that subsequent legislations enacted in the oil and gas industry after the Nigerian Oil and Gas Industry Content Development (NOGICD) Act had reinforced the NOGICD Act.
Nigeria’s debt to petrol traders has surpassed $6 billion, doubling since early April, as the state oil firm, Nigerian National Petroleum Corporation (NNPC), struggles to cover the gap between fixed pump prices and international fuel costs, according to six industry sources.
This is according to a report by Reuters on Thursday, which tracks data on international petrol prices.
Sources confirmed to the American media outlet that NNPC has capped the pump prices of petrol shortly after the removal of subsidy in May 29, 2023.
The cap on fuel prices has resulted in stability at the pump despite increases in international crude oil prices and the devaluation of the naira against the dollar.
This situation has led many to speculate that the government might have reinstated some form of petrol subsidy, given the discrepancy between market prices and the steady price of the commodity.
According to data from Reuters, NNPC began facing difficulties early this year when late gasoline payments exceeded $3 billion.
The company has yet to pay for some January imports, with traders stating that the late payments now amount to between $4 billion and $5 billion.
Under the terms of their contracts, NNPC is required to pay within 90 days of delivery.
“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” one industry source said.
At least two suppliers have already stopped participating in recent tenders after reaching their self-imposed debt exposure limits to Nigeria, the sources said.
This means they will not send more gasoline until they receive payments.
The tension to reconcile the international landing cost of petrol and the fixed price of N617 has deepened the debt of NNPC to the traders, the sources confirmed.
Chevron Nigeria Limited (CNL), operator of the joint venture between the Nigerian National Petroleum Company Limited (NNPCL) and CNL – NNPCL/CNL JV – was recognized with the Best Exhibitor award at the 2024 edition of the Nigerian Oil and Gas (NOG) Energy Week conferences and exhibition in Abuja.
The award presented by the Minister for Petroleum Resources (Oil), Senator Dr. Heineken Lokpobiri was received by Chevron Nigeria’s Chairman and Managing Director, Jim Swartz during the NOG closing gala dinner hosted by NNPCL at Transcorp Hilton Hotel, and attended by dignitaries including government officials, regulators and captains of industry.
Jim Swartz appreciated the organisers of the event for the award and noted that Chevron remains committed to its partnership with Nigeria in ensuring safe, reliable, and efficient operations in and delivering affordable, reliable and ever cleaner energy supply that is critical to the development of the Nigerian economy.
He assured that the company remains committed to supporting the social and economic development of Nigeria and desires to grow its business in the country.
…Urges Govt to support local manufacturers
Mrs Nkechi Obi, Group Managing Director (GMD), Techno Oil Limited has discredited the Federal Government for its policies on Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) cylinders.
Obi made her displeasure known during a panel session at the 2024 Nigeria Oil and Gas (NOG) conference in Abuja.
Speaking, Obi urged the government to reverse the zero import duties placed on the importation of LPG cylinders and restore the initial 40 per cent import duties, to discourage importation.
“We need policy reversal on that to encourage local producers. The unofficial explanation we are getting from some customs officers is that the Compressed Natural Gas (CNG) which the government wants to encourage its usage in Nigeria, has the same Harmonised System (HS) code with LPG.
“So, the import benefits placed on CNG equipment eventually affected LPG equipment; that is why they were tied together on the zero import duties.
“Harmonised System codes are commonly used throughout the import and export process for the classification of goods.
“For me, we don’t produce CNG cylinders in Nigeria because it involves advanced technology but we produce LPG cylinders here.”
“For us to produce CNG cylinders, we have to change one or two machines, and we expect the government to encourage us to upscale our technology to 32, which we are planning to do,” she lamented.
Obi also called on the Federal Government to separate LPG HS code from that of CNG, to ensure that importers of LPG pay higher import duties, and to also enable the government to continue with its efforts to make CNG affordable in the country with zero import duties.
“The previous government protected those producing cylinders, so that import will not overshadow local production; they did that to encourage local manufacturing but when this government came into existence, policy changed.
“We only enjoyed that policy for six months before it was scrapped and replaced with the new ‘zero import duties’ policy.”
“Definitely, we have to produce CNG cylinders and the government needs to consider those that will go into that production. But if government policy is killing LPG cylinder production that we are doing, it will be very difficult to enter into CNG cylinder production.
“So, if there is anybody who can venture into CNG cylinder production, we the producers of LPG cylinders are here to do that and it is in our plan.
“But we are not encouraged to do it because of what happened to us in the LPG cylinder production because of the frustrating policy that is encouraging its importation,” Obi added.
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