Wale Tinubu, the Group Chief Executive Officer of Oando PLC, the leading indigenous energy player in Nigeria, appeared before the Senate Joint Committee on Petroleum Resources yesterday, to correct allegations regarding Oando’s supposed role in the privatisation of the Port Harcourt refinery.
“As indicated in the rejoinder statement we published, I must explicitly state that no mandate for the concession, sale, equity transfer or privatization of the Port Harcourt refinery or any of the nation’s refineries has been signed with Oando. As a crude exporter and supplier of refined products to the country, it is intuitive and patriotic for us to be interested in the refurbishment and upgrade of the refineries. Our proposed participation as a local partner in this effort is an opportunity to drive the country forward and accelerate the process to see product security realized in this dispensation. We share the vision of the Nigerian Government to become a petroleum product self-sufficient country in the short to medium term, and ultimately be a net exporter. The Port Harcourt refinery remains a national asset, under the full control of the NNPC as far as we are aware,” Tinubu said in a statement to the Committee Chairman Senator Kabir Garba Marafa of Zamfara state
Nigeria’s refineries have continued to lie in a perpetual state of disrepair and encounter capacity utilization challenges due to sporadic crude supply, lack of funding, challenged maintenance execution, and bureaucracy.
The Senate initiated a hearing following misleading reports which indicated that the Port Harcourt refinery was due to be sold via a privatization or concession exercise with Oando and Eni as the preferred consortium.
Initial findings from the Upper Legislative Chamber show that the NNPC is still at a preliminary stage of information gathering regarding the proposed refurbishment and highlights Aniebor Kragha’s, the NNPC’s Chief Operating Officer, Refineries, indication that President Muhammadu Buhari’s directive has always been a non-privatization of the country’s refineries.
However, President Buhari has always supported the potential engagement of strategic investors with refining experience and funding capacity to partner with local players who understand Nigeria’s downstream oil market to revamp the refineries.
In a bid to strengthen international relations, ENI (an Italian oil and gas company), committed to support the rehabilitation of the country’s refineries, specifically the Port Harcourt refinery in which it has a long history of technical involvement.
Earlier this year, the Minister of State for Petroleum Resources and Chairman of the Board of the NNPC, Dr. Emmanuel Ibe Kachikwu met with ENI CEO, Claudio Descalzi, to discuss further cooperation between ENI and the Nigerian government within the energy sector.
The NNPC and ENI, through its local subsidiaries, Nigerian Agip Oil Company (NAOC) and Nigerian Agip Exploration (NAE), signed a Memorandum of Understanding (MoU) to promote new activities which would significantly boost Nigeria’s social and economic development.
In the upstream sector, oil and gas production operations would increase with an increased focus on development and exploration activities in the onshore, offshore and Ultra Deep Water operated areas. The parties also agreed to explore a potential collaboration on refined product security via technical services for the rehabilitation and enhancement of Port Harcourt refinery, while power generation and access to energy would be further enhanced by doubling the power generation capacity in Okpai IPP through the fast track development of its Phase II, making it one of the largest combined cycle power plants in Africa.
The MoU also set the basis for the assessment of the electricity national grid reliability alongside efficient renewable energy projects, to secure energy accessibility in Nigeria’s most remote areas.
ENI/NAOC’s decision to partner with Oando to explore technical and funding options to support the government’s refinery rehabilitation efforts is understandable taking into consideration the long standing working relationship going as far back as 2002 when Oando acquired acquired ENI’s downstream business in Nigeria (Agip Nigeria Plc) and more recently via upstream and DSDP Joint Venture (JV) contracts.
At the Senate hearing, the Honorable Minister of State for Petroleum Resources and Mineral Affairs, Dr. Ibe Kachikwu commended Oando’s willingness to participate in the rehabilitation process saying “We are very grateful for any company or companies that has shown an interest in the refinery rehabilitation efforts.”
With the refinery privatization scheme proven untrue, the Senate has been widely applauded for its oversight of the NNPC, reinforcing the long-running mandate of the Buhari administration regarding transparency and accountability by all arms of Government andolor:#002060;”>With the refinery privatization scheme proven untrue, the Senate has been widely applauded for its oversight of the NNPC, reinforcing the long-running mandate of the Buhari administration regarding transparency and accountability by all arms of Government and within the private sector. The hearing is also testament to the Federal Government’s efforts to implement pertinent and active reforms to develop a more stable and enabling oil and gas landscape within the Downstream sector to tackle capital flight, negatively impacting jobs, infrastructure growth, public service provision, and ultimately the country’s GDP.
“We acknowledge that Oando was quoted out of context and we hope that they understand that this committee was set up as a matter of oversight and in the interest of Nigerians because we represent Nigerians. When the time comes, we will instruct the NNPC to carry out this rehabilitation process in the most transparent manner. We advise Oando as a responsible company and good corporate citizen to guard its future statements in public, but applaud the fact that the minute they were misquoted by the media, they put out a statement to correct the facts,” said Senator Kabir Garba Marfa, the Chairman of the Joint Committee.
The crude processing nameplate capacity for the nation’s refineries stands at Port Harcourt – 210,000 bpd, Kaduna – 110,000bpd, and Warri – 125,000 bpd. However, all three refineries supply a fraction circa 19% (2,009kt) of the nation’s Premium Motor Spirit (PMS) requirement (10,800kt) on an annual basis. This equates to an import burden on the Federal Government in excess of $7bn annually and annual export refining margins of ~$768m.
A long-winded privatization exercise under the auspices of the Bureau of Private Enterprises (BPE) was held from 2003-2007 for the Port Harcourt refinery with Blue Star Oil Services Limited emerging the preferred bidder with a successful bid of $561 million. Almost immediately Blue Star opted out of the investment, and was fully refunded by the Nigerian Government. The premise for refinery privatization was subsequently shelved.
In light of the current financial and technical deficiencies of the NNPC and avid interest from private companies to spur the sector, the current administration publicly called on private partners, local and international, to support the reformation program and get the refineries back up and running to full capacity.
This reinforced a commitment made by President Buhari and Kragha in March 2017 proposing a new approach to the rehabilitation of the refineries via private-public partnerships (PPPs).
Via its midstream vehicle, Oando Gas & Power, Oando has often taken up the mantle of supporting the government in economic advancement through PPPs. Its first mover role in the gas sector has seen the development of almost 300km of pipeline infrastructure in the South-West and South-East regions of the country, providing innovative energy solutions to key industrial hubs and over 23 million people.
ENI/NAOC has substantial expertise and local knowledge as a refiner of international standing, and has successfully built and run five refineries in Italy and Germany. The company built the the Sannazzaro refinery, similar in complexity to PHC refinery with a capacity of 200kbbl/d, and owns the proprietary technology that delivers Europe’s most efficient refinery. Eni also produces 4 million boepd, a stark contrast to Nigeria’s estimated 2 million boepd.
“As a company, we have always consistently worked together with the Government in creating solutions for the oil and gas industry and the country at large. We are not new to working hand-in-hand with the Government in creating infrastructure to be able to utilise a common carrier for the entire industry to benefit from. What has been agreed upon at this stage is the opportunity to try and establish a framework for the rehabilitation of Port Harcourt refinery, which will then go through appropriate regulatory approvals, where necessary,” Tinubu said.
Falcon Corporation secures N19.41bn debt facility to build LPG plant, jetty
Falcon Corporation Limited has secured a N19.41 billion facility from the Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF) for the development of a state-of-the-art 15,000 metric ton Liquefied Petroleum Gas (LPG) storage facility and a dedicated jetty situated in Rumuolumeni, Saipem/Aker Base Road, Port Harcourt, Rivers State.
The company in a statement noted that the Project, which has reached an advance stage, is being carried out in two distinct phases, with the initial phase focusing on the construction of a 10,000 metric ton spherical tank (consisting of 2 tanks, each with a capacity of 5,000 metric tons), a dedicated jetty and other associated infrastructure, which is to be followed by the development of an additional 5,000 metric tons of storage at a later date.
According to the Managing Director of the Company, Prof. Joe Ezigbo, “At Falcon, we consider our investments in the Gas industry as a national service first. This is why over the past almost thirty years, we have continued to expand our footprints within the industry, despite the various challenges within the environment. Gas development is our contribution to nation building and we remain unrelenting in this regard.
“We positioned our LPG facility strategically in proximity to major Gas sources and navigable water routes. The Project is set to facilitate and enhance more direct procurement and distribution of LPG, which will dramatically lower conventional delivery and storage costs. Beyond economic gains, we anticipate significant social benefits including job creation, income growth, health improvements, and environmental sustainability as our customers and communities transition to cleaner fuel options on a larger scale.”
The Deputy Managing Director and Co-Founder of Falcon, Mrs. Audrey Joe-Ezigbo, emphasised that, “As a progressive company, deeply committed to the growth and advancement of Nigeria’s domestic Gas industry, we are expanding our investments across the Gas industry value chain, from our traditional role in the downstream sector, to our current midstream investments, and positioning for an intended upstream play.
“We are fully aligned with the nation’s aspirations to leverage gas for industrialization, and our primary energy transition fuel, with a strong focus on its use for power and cooking. LPG’s characteristics, such as portability, high energy value, low emissions, and reduced carbon footprint, make it an ideal choice for cooking and other industrial uses.
“The Project aims to ensure the availability of LPG and deepen its market penetration and adoption within the catchment areas, contributing to the mitigation of ecosystem damage and greenhouse emissions caused by use of other traditional fuels.”
On his part, the Chief Executive Officer of Chapel Hill Denham, Mr. Bolaji Balogun, said, “Chapel Hill Denham is pleased to support the integrated LPG infrastructure in Rivers State as this will not only increase domestic LPG consumption but also help in achieving one of the critical sustainable development goals aimed at reducing carbon emissions, air pollution, and habitat loss resulting from the use of firewood for cooking by more than 30 million households.
“The Project is also in line with the Federal Government of Nigeria’s objective of increasing the adoption of LPG as auto fuel and a replacement of diesel for power generation.”
ExxonMobil to increase cash flow by $14bn from 2023 to 2027
Multinational oil and gas corporation, ExxonMobil says it plans to increase cash flow by $14 billion/ from 2023 to 2027.
The company stated this in a corporate plan update released on Wednesday, December 6./ This growth will be facilitated by the ongoing efforts to reduce operational costs and enhance the company’s business mix.
ExxonMobil also said that it/ aims to optimise its business mix by expanding production from low-cost assets while increasing the sales of high-value products like performance chemicals, low-emission fuels, and advanced lubricants.
This strategy aligns with their commitment to providing energy globally while simultaneously developing solutions to reduce emissions in challenging sectors of the economy.
The company foresees a significant increase in upstream (oil and gas production) earnings by 2027 compared to 2019. This growth will stem from investments in profitable projects that have a low cost of supply. Around 90 percent of their planned capital investments in new oil and gas production over the next five years are anticipated to yield returns of more than 10 percent at a Brent price of $35 per barrel.
ExxonMobil also said in its statement that it intends to achieve an additional $6 billion in structural cost reductions by the end of 2027, bringing the total savings to about $15 billion compared to 2019.
They plan to achieve this by streamlining various operational aspects such as maintenance, supply chain, financial reporting, and trading, among others.
In October 2023, the International Energy Agency (IEA) highlighted in its 2023 World Energy Investment report that major oil, gas, and coal companies are projected to boost investments in unabated fossil fuel supply by over 6% in 2023, totalling approximately $950 billion.
In September 2023, President Bola Ahmed Tinubu met with a delegation of ExxonMobil and tried to woo the energy giant to invest in Nigeria’s oil and gas business, stating that the country is now ready for business under his leadership./
Meanwhile, ExxonMobil’s President of Global Upstream Operations, Liam Mallon, conveyed his recognition of President Tinubu’s steadfast dedication to Nigeria’s interests. He assured a notable surge in production, committing to delivering almost 40,000 barrels per day (bpd) as part of an upcoming investment phase in Nigeria.
Addressing President Tinubu, Mallon highlighted the production growth and emphasised their dedicated work on expanding deepwater production.
Expressing gratitude for Tinubu’s leadership, Mallon pledged reciprocal efforts, emphasizing the opportune moment for progress.
NCDMB tasks oil companies to innovatively utilize HCD fund to develop human capital
The Nigerian Content Development and Monitoring Board (NCDMB) has tasked operators in the oil and gas industry to innovatively utilize the Human Capital Development Fund setup by the Nigeria oil and gas industry content development act (NOGICD) in developing human capital in the country.
Speaking at the 12th Practical Nigerian Content Forum holding in Yenagoa, Bayelsa State, the Executive Secretary of the NCDMB, Engr.Simbi Wabote acknowledged that Nigeria’s human capital index still remains abysmally low.
According to him, “Most of the divestments to the IPPG companies were done by the IOCs and when the IOCs divested, they divested the human capital and this people are aging.”
“Somewhere along the line this people will fade away. The idea behind the fund is thus for companies to devise a strategy to deploy the fund to build capacity. That is why the NCDMB collaborated with the PTDF to develop a facility in Port-Harcourt. We went to to the IPPG to use whatever HCD fund they have to develop the centre.”
“When you want to employ the young ones you say they don’t have expeirence, how will they gain the experience? Using that fund, NCDMB does not touch it but it is for you to build the capacity of Nigeroans to manage the business you have inherited from the IOCs. It is for the indigenous companies to use the funds to feed the industry with human capacity.”
The NCDMB ES also board that the board has also committed to developing the capacity of its workforce.
“As we carry out various intervention across the industry, we also ensure that our staffs are not left behind as we continue to develop the capacity and capability of our staff via training and exposure and assignment to job roles that bring out commensurate talents.” Wabote said.
“On Human Capacity Development, we identified existing technical/vocational or craft centers and carried out intervention programs to strengthen the institutions such as Government Technical College in Abak, Akwa Ibom State, GTC Port Harcourt, GTC Amoli, University of Ibadan, University of Port Harcourt, Rivers State University, University of Lagos, Nigerian Maritime University, and many others.”
“The HCD programs has enabled training and provision of sea-time exposure to marine cadets, underwater divers, boat builders, NDT Level-3 certified engineers.” He explained further.
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