Oil & Energy

‘How Policy Feedbacks Promote Effeciency In Oil Industry’

Published

15 years ago

September 5, 2011

Being A Speech Presented By The Minister Of Petroleum Resources, Mrs Diezani Alison-Madueke At The 2011 Annual Conference Of The National Association Of Energy Correspondents Held August 25, In Lagos.

Excerpts.

It is my pleasure to welcome you all to this year1s National Association of Energy Correspondents (NAEC) annual conference. I am particularly pleased with the positive efforts of this association towards creating awareness amongst key gas industry anchored by the Ministry of Petroleum Resources.

We truly value and pay close attention to your feedback as a way of improving our pel1or-mallce and respect the checks and balances associated with your traditional responsibility in the fourth estate of the realm as custodians of the public trust.

I am happy to note that the topic of today’s discussion “the impact of the Petroleum Industry Bill on Nigerian Content Development” is very apt and in alignment with a major preoccupation of the Oil and Gas industry at this important juncture.

Therefore, I would like to express my appreciation to the entire members of your association for the opportunity to share the vision of the Ministry of Petroleum Resources on this subject of critical importance with this enlightened audience. It is our hope that the strong collaboration with this important stakeholder group will strengthen the confidence and engender a better understanding of the determination of government to drive reform in the sector using the enablement of the Nigerian Content Act and Petroleum Industry Bill when it is finally passed into law by the national assembly.

Both of these initiatives of government introduce changes of a magnitude never seen in the industry, therefore it is in our enlightened self-interest to provide clarity of vision, a roadmap for implementation, policy predictability, continuity and more importantly, assurances on peace and stability. I could not be more confident than I am today in telling you that Nigeria is firmly on course to meet each and everyone of those conditions.

By way of providing background, I will dwell a bit on an overview of the Nigerian Oil and gas industry.

Nigeria’s Oil And Gas Resources

As we ail know, Nigeria is endowed with about 187 Trillion Cubic Feet (TCF) of proven gas reserves and another estimated 600TCF of undiscovered gas potential. In addition to the gas reserves, we have over 35 billion barrels of proven oil reserves.

Our oil production is over 2 million barrels per day and we currently produce over 8 billion cubic feet of gas per day. We are also a major Liquefied Natural Gas (LNG) exporter of over 3billion cubic feet per day of gas in the form of LNG. We have also commenced export of natural gas through the West African Gas Pipeline to the Economic Community of West African States (ECOWAS) sub-region.

There is a renewed focus on the domestic gas sector for which we are driving an unprecedented growth in gas utilization from the current 1 billion cubic feet per day to about 5 billion cubic feet per day by 2015. This growth rate is forecast to be the world’s most aggressive growth in gas, stimulating an unparalleled level of investment activity in Nigeria, seen only in the early oil boom days of the 70s.

Putting it in investment perspective, to sustain the current scale of activities in the sector and fund the expected growth for the next few years, the industry need to spend about $20 billion annually. Recently, upstream gas production for the domestic market alone, has been receiving a dedicated spend of between $1.5 billion – $2 billion annually from the Federal Government of Nigeria.

Loss Opportunities

For sometime, it has been a major concern that after many decades, Contractors and multinationals that have done business worth several hundred millions of Dollars in Nigeria do not have appreciable footprint in Nigeria. Instead the trend has been to look to foreign countries for procurement of .equipment, spares and technology in support of their operations in Nigeria and the Gulf of Guinea region.

The major operators have not helped matters by reliance on the importation of goods and services from abroad without making provisions to develop sustainable capabilities within Nigeria that would support life cycle operations in Nigeria. Instead more emphasis has been placed on speedy achievement of first oil, generation of revenue without paying attention to actions that add value to the economy.

The cumulative effect of operating this model for so long is that in an industry that currently spends an average sum of $20 billion per annum, less than $2 billion is retained in the National economy and over $300 billion has been lost to capital flight in this way. Of more significance is the fact that, this persistent practice has actually resulted in the export of millions of employment opportunities, opportunities for training, knowledge and technology transfer, opportunities for investment in facilities and infrastructure to support industry operations within Nigeria and denied indigenes of Nigeria the opportunity to participate in the most critical aspect of their national development activity.

The challenge therefore is for government to create the enabling environment that allows capital to flow inwards and get retained for economic growth and development. I want to reassure Nigerians and our international partners that the Government has taken firm steps to address these concerns in a structured and sustainable manner. Let me quickly share with you the specific steps we have taken in the oil and gas sector to create the required environment to support government’s transformation aspirations.

Enabling Environment

Nigerian Content Act: One of the key steps taken in recent times by government to ensure that oil and gas activities result in value retention in Nigeria is the signing of the Nigerian Content Act which came into effect in April 2010. The Act’s provisions can be presented in four main thrusts:

The introduction of a structured organization and implementation framework involving the creation of the Nigerian Content Development and Monitoring Board (NCDMB) which can issue procedure guides and empowerment for the Minister of Petroleum to make regulations.

The provision of guarantees for indigenous participation and integration of oil producing communities into mainstreams industry activity.

Development and utilisation of local capacity by promoting education and training, employment, asset domiciliation, indigenous ownership of equipment and establishment of a fund for capacity building.

Setting of targets for specific work items to be executed in Nigeria, with monitoring framework and defined penalties for non-compliance

The implementation of the Act in the past one-year has provided immense inspiration and confidence to adopt the pilot schemes, which are already making positive and measurable impacts. From the testimonies presented at the first anniversary celebrations by the major operators, multinational and local service providers, major milestones have been achieved and the appetite for compliance is quite palpable across the industry.

Specifically, based on directives I issued in the 3rd Quarter of 2010 to the NCDMB in my capacity as the Chairman of the governing council, the following programs and interventions are at various stages of maturation. With the full support of the Federal Government. The key objective of these targeted activities is to ensure that as we progress towards the passing of the PIB, sufficient local capabilities would have been developed to execute the projects to be stimulated by the favorable terms anticipated in the PIB.

Nigerian Oil and Gas Employment Training and Tracking System (NOGETTS) designed to retrain and provide attachment opportunities to Nigerians to prepare them for the skills required to work in the industry. This has resulted in the absorption of over 5000 engineers, geologists, welders and other skill sets into the industry and formed the basis of a national skill database. ·

Utilisation of existing Pipe Mills and Promotion of the establishment of New Mills

Upgrade of existing Yards and development of new Shipyards and Fabyards Offshore Rig Acquisition strategy Expatriate Quota Utilisation and Management strategy Equipment and Component Manufacturing initiative Nigerian Content Development Fund (NCDF)

NOGIC JQS

It is important to emphasize at this juncture that the Nigerian Content Act is not intended to indigenize the industry or nationalise assets of investors in the Nigerian, economy. Rather, it sets out provisions that guarantee that investments made in facilities within the country will be fully utilised and we will ensure that the rights of every investor are protected under the laws.

In order to address another major aspiration of the government to unlock the enormous potential of the Nigerian domestic gas sector and attract investments even ahead of the PIB, Mr. President directed a structured accelerated implementation of the Nigerian gas masterplan.

In this regard, we have implemented the most aggressive reform of the commercial framework for gas in Nigeria to address the observed inadequacies in the erstwhile, commercial terms that stunted investment.

A more stringent and bankable contractual framework has been introduced for the gas sub-sector through the establishment and development of world class gas supply and purchase agreements, gas transmission agreements and more recently the Gas Transmission Network Code.

We also addressed a major area of vulnerability in the system, which is the risk of payment for gas consumed, particularly by government owned power companies. Consequently, we implemented the World Bank Partial Risk Guarantee, which provides a triple-A bank guarantee for suppliers against payment risks.

In addition to the above, we established the Gas Aggregation Company of Nigeria to manage access to gas in Nigeria for potential investors.

Recently, we achieved another milestone in our implementation, which is the formal launch of the Gas Revolution – a critical aspect of the Gas Master Plan that brings gas and industrialization together. The gas revolution is focused on an industrial rebirth of Nigeria through the stimulation of gas-based industries such as fertilizer, methanol and petrochemicals. These help diversify the gas sector and jumpstart industrialisation as well as the attendant job creation.

Towards this end, President Goodluck Jonathan, launched 3 major investment programmes as part of the event namely the development of Africa’s largest petrochemical complex by NNPC and its partner, the Saudi Arabian conglomerate – Xenel. This will cost about $6 billion and is planned to be in place by 2015. The President also launched the development of 1 billion cubic feet per day gas Central Processing Facility which is expected to be built by a consortium led by Agip in partnership with NNPC and Oando. Two other CPF’s (Eastern and Western) are also in the process of being developed.

These major initiatives all fall within the principles and concepts enshrined in the PIB. With continued active collaboration between the National Assembly and the Oil and Gas industry, a Petroleum Bill that will meet the long-term aspiration of Nigerians and the economic interest of all investors will be passed into law. We believe that a Bill that ensures transparency, full accountability, responsible environmental stewardship, good corporate responsibility and above all a fair reward for all stakeholders including the oil producing communities will be passed into law.

The full impact of the PIB will introduce a new culture of competition, transparency and openness in the management of the oil and gas industry. The new order will open new opportunities for investments in Exploration &Production, Refining Capacity, Gas Infrastructure, Research, Development & Innovation and Petroleum Products Distribution Assets. These investments will come through domestic savings and foreign direct investment.

Passage of the PIB will certainly unlock investments currently being held back by perceived uncertainties and there is a major link between the PIB and NC Act implementation and the lessons we are learning from our current efforts will certainly come in handy, in the development of the post PIB structures and models.

As a government our desire is to ensure that substantial proportion of these investments are retained in Nigeria and that explains the unique provisions for Nigerian Content Development in the PIB.

Emerging Business And Investment Opportunities

As you can see from above, we have put in place all the machinery for an explosive growth in activity of the gas sector. There is an enabling environment for investment and we are continually evolving to adapt to the challenges of the time.

The investment opportunities implicit in the above are numerous, some of which include:

Engineering Design and Related Services

There will be need for world class engineering design capability to support the development of the various petrochemical, fertilizer, gas processing plants, refineries etc.

Petroleum Engineering Services – the growth of gas utilisation from 1 bcf/d to 5bcf/d will require a step growth in petroleum engineering studies, drilling activity and other related services by both NNPC and its joint venture partners. Third party support will be inevitable Fabrication and Construction – With the local content law, a significant amount of fabrication of all components will need to be done locally current in-country capacity is significantly smaller than what is required, hence there is need for investment in this area to build modern fabrication yards.

Pipe Mills, Pipe Laying and Support Activities

As part of the agenda above, we will be laying over 2,000 km of oil and gas pipelines over the next 4 years. There is need for domestic pipe mills, pipe laying equipment and services

Equipment leasing

As you can imagine, when the activity commences, the country will be a giant construction site. All sorts of heavy equipment will be required. Leasing of equipment will be a major opportunity for investors.

Logistics and Haulage – As over $40bn is planned to be expended within the next few years in both oil ,and gas activities, logistics alone is expected to account easily for 5-10% of this spend, creating a major service industry on it’s own

Financial Services – The envisaged growth will succeed only with commensurate growth in the nation’s Financial Support Services, the banking and insurance sector.

Hospitality Services – A lot of the activities will be in location where little or no facilities exist. From as early as 2012, there will be a desperate need for all sorts of hospitality services for construction workers – local and foreign

Legal Services – Numerous contractual agreements will need to be signed. This will create a lot of opportunities for legal service etc.

Civil Works – The agenda calls for major construction effort, often in hostile terrains. There will be need for both routine and specialized civil engineering capability.

These are just a few of the opportunities that will unfold as the agenda gets implemented.

To facilitate your participation in these emerging business and investment opportunities, potential investors can either direct enquiries to the Ministry of Petroleum Resources or NNPC.

Oil & Energy

Global Coal Consumption Hits Record Even As Coal Power Declines

Published

4 hours ago

August 3, 2026

The Tide

Global coal consumption reached another record in 2025, seemingly contradicting years of discussion about phasing out the world’s most carbon-intensive fossil fuel.

But the headline number does not tell the whole story.

The latest Statistical Review of World Energy shows that global coal consumption rose to 166.0 exajoules last year. That represented an increase of 0.7% from 2024.

At the same time, global electricity generation from coal declined. Coal-fired power production fell 0.3% to 10,511 terawatt-hours.

Those two trends are not mutually exclusive. Coal is used not only to generate electricity, but also in steelmaking, cement production, and other industrial processes. The divergence also reflects a changing geographic picture in which coal is declining across much of the developed world while remaining deeply embedded in Asia’s industrial economy.

A Record With Important Qualifications

Coal consumption reached a record in absolute terms, but it did not keep pace with overall energy demand.

Total global energy supply increased from 592.2 exajoules in 2024 to 600.3 exajoules in 2025, an increase of about 1.4%. Coal grew more slowly, so its share of the global energy mix slipped from 27.9% to 27.7%. Thus, despite the global record in coal consumption, coal lost a small amount of market share.

This pattern appears frequently during energy transitions. A fuel can continue growing in absolute terms even as faster-growing alternatives reduce its share of the total. With global energy demand still rising, losing market share does not necessarily mean declining consumption.

Renewable energy provides a relevant comparison. Renewable energy supply increased by nearly 10% in 2025, far outpacing coal. But the world’s appetite for energy was large enough to accommodate growth in renewables and another record for coal at the same time.

Coal Is Increasingly an Asian Fuel

The most striking feature of the coal market is its geographic concentration.

Asia Pacific consumed 138.1 exajoules of coal in 2025, accounting for 83.2% of the global total. China alone consumed 92.2 exajoules, or 55.6% of all the coal used in the world.

India contributed another 23.1 exajoules, representing 13.9% of global consumption. Together, China and India accounted for almost 70% of the world’s coal use. Add Indonesia, and the three countries consumed nearly 73% of the total.

This is why broad statements about a global coal phaseout can be misleading. Coal may be steadily retreating in Europe and North America, but its future is increasingly being determined in Asia.

Non-OECD countries accounted for 85.2% of global coal consumption in 2025. Their coal use has grown at an average annual rate of 1.9% over the past decade. OECD consumption, by contrast, has declined at an annual rate of 4.8%.

Europe consumed just 4.4% of the world’s coal last year. The European Union’s share was only 2.8%, following another 3.2% decline in consumption.

The global total therefore combines two very different stories. One is a long-term retreat from coal across much of the developed world. The other is coal’s continued importance to the large and growing economies of Asia.

One surprise in the 2025 data is that coal-fired electricity generation declined even as total coal consumption increased.

China generated 5,756 terawatt-hours of electricity from coal, down 1.1% from 2024. India’s coal generation fell 3.0% to 1,464 terawatt-hours. Since those two countries produce nearly 69% of the world’s coal-fired electricity, relatively small percentage declines can have a large effect on the global total.

Coal generation across Asia Pacific declined 1.2%, while Europe posted another 3.4% decrease. The European Union’s coal generation fell 3.6% and accounted for only 2.6% of the global total.

The divergence between consumption and power generation indicates that coal demand outside the electric power sector helped support the record. Coal consumption statistics include industrial uses that are not captured by electricity-generation totals. Changes in plant efficiency, coal quality, inventories, and measurement can also prevent the two series from moving in perfect alignment.

Whatever the precise combination, the result is notable. The world consumed a record amount of coal while producing less electricity from it.

The United States broke sharply with the broader developed-world trend in 2025.

U.S. coal consumption rose 10.4% to 8.7 exajoules. Coal-fired electricity generation jumped 13.1% to 804 terawatt-hours, while domestic coal production increased 4.4%.

In absolute terms, the increase in U.S. coal consumption was larger than the net increase for the entire world. U.S. consumption rose by about 0.8 exajoules, while the global total increased by roughly 0.7 exajoules. Declines in several other countries offset part of the American increase.

Still, this should not be mistaken for a return to coal’s former dominance in the United States.

U.S. coal consumption remains about 62% below its 2005 peak. Coal-fired generation is approximately 63% below its 2007 high, and production is about 54% below its 1998 peak.

The 2025 increase was substantial, but it occurred within a long-term structural decline. The United States still accounted for just 5.3% of global coal consumption and 7.7% of global coal-fired generation.

Global coal production remained near record levels at 180.8 exajoules, but it was essentially flat in 2025.

China increased production by 1.7% and supplied 52.4% of the world total. Its coal consumption was nearly unchanged, but its imports fell 10.1%. The combination suggests that increased domestic production displaced a meaningful amount of imported coal.

That shift helped push global coal trade down 3.1% to 35.3 exajoules. Indonesia, the world’s largest exporter, saw exports fall 7.4%. U.S. exports declined 11.5%, while Colombian exports plunged 21.3%.

Thus, record global consumption did not translate into record international trade. Much of the world’s coal is produced and consumed within the same countries, especially China and India.

The 2025 data support neither the claim that coal is disappearing nor the claim that the energy transition has stopped.

Coal use reached a record, but its share of global energy declined. Coal-fired electricity generation fell, but industrial and other uses kept total consumption elevated. Coal rebounded sharply in the United States but remained far below its historical peak. Europe continued to move away from coal, while Asia accounted for more than four-fifths of global demand.

The coal market is no longer one unified global story. It is a widening divide between countries that are steadily reducing their dependence on coal and countries where it remains central to electricity, industry, and economic development.

That divide is likely to continue defining the coal market for many years.

By Robert Rapier

Oil & Energy

FG To Stop Electricity Subsidy Payments From 2027

Published

4 hours ago

August 3, 2026

The Tide

The Federal Government has announced plans to end electricity subsidy payments from 2027 as part of efforts to tackle mounting liabilities in the power sector.

Minister of Power, Joseph Tegbe, disclosed this at a media interactive session , in Abuja, at the weekend.

Tegbe said the Federal Government would phase out subsidies beginning from 2027, assuring Nigerians the policy would not deprive citizens of the benefits currently enjoyed under the subsidy regime.

According to him, the proposed removal forms part of broader reforms aimed at ensuring the long-term sustainability of the electricity sector while tackling the financial challenges confronting the industry.

Tegbe explained that despite the planned subsidy withdrawal, there are no immediate plans to increase electricity tariffs, reassuring consumers that the government is not considering a tariff hike in the short term.

“The phase-out of electricity subsidies will begin from 2027. However, there are no immediate plans to increase electricity tariffs. Our goal is to build a commercially viable power sector while protecting vulnerable consumers.

“The Power Consumer Assistance Fund will play a critical role in cushioning the impact on vulnerable consumers as we implement these reforms,” the minister stated.

He pointed out that implementation timeline and consumer protection measures would be unveiled as the reform process progresses, emphasizing that Nigeria’s electricity subsidy has remained a major fiscal burden.

Oil & Energy

Firm unveils New Products For Oil Facilities

Published

4 hours ago

August 3, 2026

The Tide

An oil servicing firm, Solewant Group, has unveiled protective coatings and paints to secure oil facilities.

The products, manufactured at its new plant, sited in Alode Eleme, Rivers State, comprise of paints and coating that aid durability of oil facilities.

The products included the Solguard Architectural Coatings range comprising emulsion, matt and silk paints; Solguard Industrial Protective Coatings, featuring red oxide metal primer and alkyd gloss enamel; Solguard Heavy-Duty Protective Systems, including zinc-rich epoxy primer, high-build epoxy coat and acrylic polyurethane; and the flagship Novaguard Premium Specialty Coatings, made up of 100 per cent solid epoxy, polyurethane and polyurea systems for heavy industrial applications.

Unveiling the paints, at the weekend, Minister of State for Petroleum Resources(Oil), Senator Heineken Lokpobiri, described the products as innovative and pledged the federal government’s support to indigenous companies.

Lokpobiri described Solewant’s products as milestone in Nigeria’s industrialisation drive and local content development.

“This is clear evidence of the growth, which shows that local service providers in Nigeria have developed over the past 15 years.

“I’m very happy today that I have the privilege to witness this plant that will not just service Nigeria, but will service the entire African continent”, the minister said.

Lokpobiri praised Solewant’s expansion into Namibia, saying it marked the beginning of broader opportunities for Nigerian companies across Africa’s energy sector.

“We are fully committed to supporting companies like Solewant Group. That is the only way we can grow this industry.

“The solution to Nigeria’s energy problem lies with Nigerians. Nobody will come from anywhere to solve our problems in Africa”, he said.

He noted that the company’s new manufacturing capability would help address one of Nigeria’s biggest oil production challenges by providing locally manufactured protective coating solutions for ageing pipelines.

“Our pipes are completely corroded, and we need solutions that Solewant is providing to address that problem. What you have done here is a Nigerian solution to the Nigerian problem”, he said.

Speaking at the occasion, Solewant Group Chief Executive Officer, Solomon Ewanehi, said the investment was driven by the vision of ending Nigeria’s dependence on imported industrial coatings while building globally competitive manufacturing capacity.

In his words, “today we are not just launching the Solewant Coating Manufacturing Plant. We are launching confidence; confidence that Nigeria has the competence, the capacity and the courage to manufacture not just what we consume but also what we can export to compete with international standards.”

Ewanehi explained that the company unveiled 11 enhanced coating products under the Solguard and Novaguard brands, developed and manufactured in Nigeria for the oil and gas, marine, infrastructure and industrial sectors.

“Sixteen years ago, we asked a simple question: Why should Nigeria, a leading oil and gas nation, continue to import the very coatings that protect our critical assets?

“Today, that vision has become steel, concrete, plant and people”, he stated.

According to him, the products were designed to deliver world-class corrosion protection for pipelines, offshore platforms, refineries, storage tanks, bridges, power plants and other critical infrastructure operating in harsh environments.

Also speaking, Secretary to the Government of the Federation, Senator George Akume, described the project as “a powerful statement of confidence in Nigeria” and applauded Solewant for expanding local manufacturing despite ongoing economic reforms.

Represented by the his Special Adviser on Technical Matters, Prof Bolaji Babatunde, Akume said “your decision to expand manufacturing capability, develop technology and create value within Nigeria is a commendable example of the kind of private sector leadership that the Federal Government seeks to encourage me”.

Rivers State Governor Siminalayi Fubara, represented by his Chief of Staff, Barr. Sunny Ewuhle, also commended the company for choosing Rivers State as its industrial base.

“We are calling on all local and foreign investors to emulate what Solewant Group has done in Rivers State,” he said, pledging the state’s support for manufacturing, local content development and industrial growth.

Namibia’s High Commissioner to Nigeria, H.E. Walde Natangwe Ndavishiya, described the investment as timely, saying Solewant was well positioned to support Namibia’s emerging oil and gas industry.

“I particularly commend Solewant Group for taking the bold step of establishing a branch office in Namibia. This demonstrates confidence in Namibia and its emerging opportunities,” he stated.

By: Kevin Nengia