Oil & Energy
Encouraging Local Participation In Oil And Gas Industry
Being an address presented by the Executive Secretary, Nigerian Content Development and Monitoring Board, Engr. Ernest Nwapa at an enlightenment Forum on September 29, 2011 in Port Harcourt.
It gives me great pleasure to be here today at this event, one of the series of enlightenment progammes of the Nigerian Content Development and Monitoring Board (NCDMB) to keep oil producing states and communities abreast of opportunities in the oil and gas sector. The enlightenment events are aimed at constructively engaging the oil-bearing states and communities on the fundamentals of the Nigerian Oil and Gas Industry Content (NOGIC) 2010 Act, signed into law on April 22, 2010 by President Goodluck Jonathan.
The antecedents of the NOGIC 2010 Act are still vivid, especially to indigenous oil and gas operators and the oil-bearing communities. The story of the industry hitherto can be surmised as almost foreign, dominated with very little space available to qualified indigenous professionals and businesses. There was certainly less space for the participation of oil-bearing communities.
The former environment was characterized by:
(i) Excessive importation of goods and services at the expense of local participation resulting in otherwise avoidable impoverishment and alienation of the people. A major contributor to the Niger Delta situation;
(ii) Performance of the mega-projects of the industry abroad thereby eliminating opportunities to develop human and infrastructural capacity in Nigeria. – Capacity constraints in turn, limit the industry’s ability to perform sufficient work scope in Nigeria when designing, procuring and fabricating facilities, plants and assets or for after-sales support in the operations and maintenance phase;
(iii) Our estimates that over 150 times more jobs are created in other countries than in Nigeria on the back of Nigerian projects at the expense of national development. Apart from the obvious negative impact of unemployment on the economy, the nation is denied opportunities for industrialisation and technology transfer;
(iv) In absolute terms, less than 20% of $18bn average annual industry spent was retained in Nigeria.- such prolonged capital flight is a major factor for low economic performance, insignificant impact of the sector on national GDP and poor levels in local infrastructure investment despite heavy government expenditure in the sector.
Although some discretionary allocation of oil blocks were made by the military government to indigenous operators to promote the presence of Nigerian companies in the upstream in 1993, government also took the bold move to break the detrimental mould of low Nigerian upstream participation in 2004 by evoking the latent policy on Marginal Fields to admit Nigerian entrepreneurs. By that action, some 24 discoveries classified as Marginal Fields which had been left unattended for upward of 10 years and above were allocated to 31 indigenous companies under a strict technical and commercial evaluations.
Though the exercise is now often classified as a success, it was obvious that the composite in-country value addition to the oil and gas operations in Nigeria needed to be taken beyond the Marginal Fields to encompass the entire Exploration and Production value chain to meet expectations for significant growth. The establishment of Nigerian Content Division (NCD) by the Nigerian National Petroleum Corporation (NNPC) in 2005 for the first time gave a formal structure to Nigerian Content issues and significantly positioned the policy for more holistic application in the industry. NCD also came up with focused directives and formally established Nigerian content base for every contract in the entire value chain of oil and gas operations. It further became the bridge to link the major operators with indigenous service companies on Nigerian Content issues.
The benefits of the NCD directives on the industry were clearly evident, especially in areas of domiciliation of Front End engineering design (FEED) fabrication and capacity building, especially in the engineering sector. The prescriptions on domiciliation of fabrication works significantly increased project work scope thereby boosting activities in hitherto dormant fabrication yards. Structured certification and training of welders and pupilage through work attachment were part of the significant achievements of the NCD initiatives.
Distinguished ladies and gentlemen, notwithstanding the NCD strides, it also became obvious that the challenges of developing and nurturing Nigerian Content beyond fringe participation required a focused statute. That necessitated the promulgation of the NOGIC Act, 2010 and the prompt assent of the President, Dr. Goodluck Ebele Jonathan to the Act on April 22, 2010.
Specifically, the NOGIC Act gave teeth to the fundamental aspirations of government for strong Nigerian E and P Sector and a virile indigenous service sector. The statute further established the process for Nigerian Content in all segments of the oil and gas value chain by prescribing minimum Nigerian Content benchmarks for the listed activities in contracting process. The Act also established the Nigerian Content Development and Monitoring Board (NCDMD) as the regulating body of Nigerian Content in the oil and gas industry. NCDMB headquarters is located in Yenagoa, Bayelsa State, in line with prescriptions of the law that mandates siting the body within the Niger Delta.
Whereas the headquarters’ office covers operation activities in Rivers and Bayelsa States, NCDMB has also established offices in Owerri to cover Imo and Abia States and in Warri to cover Delta and Edo States. Plans are at advanced stages to also establish offices in Akwa Ibom State, Cross River and Ondo States for complete coverage of all the oil and gas producing states.
Distinguished ladies and gentlemen, without pre-empting other speakers, please allow me to dwell briefly on the operational strategies and some programmes in place by the Board for implementation of the NOGIC Act.
First, we fully understand that successful Nigerian Content policy should be run on the back of projects. We are also aware that ample opportunities had been lost by Nigeria in the past by not leveraging on the multi-billion dollar upstream projects to develop capacity and grow indigenous participation. In line with the stipulations of the Act, therefore, the Board always ensures that no Invitation to Tender (ITT) goes out in the industry without explicit minimum Nigeria Content stipulation and that no tender gets pre-qualified without approved Nigerian Content plan.
Secondly, we understand the roles of competent skills in meaningful local participation, especially given the complex operational environment in the oil and gas industry. Training and curriculum development are required to grow in tandem with the industry needs to keep abreast of opportunities.
The Board has, therefore, set up elaborate programmes to ensure that annual training budgets in the industry are effectively utilized in ways that would add real values to the skills of our teeming youths, especially from the oil and gas communities. The Board has also met with the Oil and Gas Trainers’ Association of Nigeria (OGTAN) to deliberate on how to further enhance the industry training process to move beyond spending to adding the required values, in real terms, to our teeming youths and practitioners in the industry. Oil and gas companies had been put on notice that manpower training would henceforth be a vital index of the Nigerian Content performance.
Thirdly and corollary to the foregoing, the Board is decisively committed to structured attachment policy in the industry, especially for sub-surfacing and engineering graduates to enable young Nigerians gain relevant experience to qualify them for positions in the industry. I was particularly pleased to show case, at the anniversary of the NOGIC 2010 Act held recently in Abuja, some of the university graduates that have successfully passed through the NCDMB attachment training schemes and are gainfully employed in the industry. The future of Nigerian participation in the industry lies in its teeming youths. The Board is committed to ensuring the realisation of Nigeria’s potentials, especially in the oil bearing communities.
Distinguished ladies and gentlemen, past experiences have shown that the best way forward to realising the full potentials of Nigerian oil and gas resources is through peace and sustainable development of the communities. Establishment of the Board is a strong indication by government that it is indeed serious about growing indigenous capacity and improving local participation in the oil and gas industry. By providing that, the Board headquarters should be located in the Niger Delta as the law intends the oil-bearing communities to be the main focus of its activities.
We are here today to tell you about the activities of the Board since inception and also listen to your suggestions, especially on how the state and the oil-bearing communities can be better served. I am sure, we shall leave here mutually fulfilled that we have achieved our objectives.
I thank you for listening.
The House of Representatives has launched an investigation into the disbursement and utilisation of the N200billion Central Bank of Nigeria (CBN) loan allocated for the National Mass Metering Programme (NMMP) to Electricity Distribution Companies (DISCOs).
Chairman, House Committee on Public Assets, Rep. Uchenna Okonkwo, disclosed this in a statement in Abuja.
He confirmed that a 19-member sub-committee had been inaugurated to probe the matter thoroughly.
Okonkwo recalled that the NMMP, initiated in 2020, was designed to provide free electricity meters to Nigerian consumers through the Licensed Electricity Distribution Companies (DISCOs).
He said the programme was a joint initiative of the CBN, the Nigerian Electricity Regulatory Commission (NERC), and other stakeholders in the Nigerian Electricity Supply Industry (NESI), aimed at eliminating estimated billing, improve transparency in energy usage, and enhance customer satisfaction.
Speaking on the launch of the NMMP, the Rep said the programme was to be implemented in three phases to ensure the reduction of collection losses and improve market remittances in the industry.
“Under the pilot phase of the programme’s implementation, CBN commenced with the sum of N59.280 billion for procurement and installation of one million meters in 2020 at an interest rate of 9 per cent after a two year moratorium.
“Preliminary research on the NMMP has shown that instead of the pronounced amount of N59.280 billion naira for the phase 0, what was released was N55.4 billion for procurement and installation of 962,832 meters instead of one million meters pronounced by CBN”, he noted.
Okonkwo stated futher that concerns have been raised regarding repayment, with the committee noting discrepancies in the repayment of the funds by the DISCOs.
According to Okonkwo, “Research has also shown that the eleven Electricity Distribution Companies who received the loan have paid back to CBN as refund for the N54.4 billion they received in 2020 without mentioning the 9 per cent interest on the loan.”
The lawmaker, however, said the subsequent phases of the programme, which were expected to significantly expand metering across the country, have stalled, explaining that Phase 1, which was to be funded by the CBN and Deposit Money Banks (DMBs) for 1.5 million meters, and Phase 2, expected to be financed by the World Bank for four million meters, are yet to take off.
He said the House, exercising its constitutional powers under Sections 88(1) and (2) of the 1999 Constitution, resolved to investigate the matter with a view to safeguarding public interest.
According to him, the sub-committee is expected to scrutinise all aspects of the NMMP funding, from disbursement and meter procurement to distribution and repayment mechanisms.
The 19-member committee comprises Reps. Obed Shehu, Ali Shettima, Abel Fuah, Salisu Koko, Ahmed Munir, Sani Umar Bala, Gbefwi Jonathan, Abdulmaleek Danga, Chinedu Obika, and Okunlola Lanre.
Others include Reps. Abass Adekunle, Akinosi Akanni, Obuzor Victor, Peter Akpanke, Ngozi Lawrence, Ogah Amobi Godwin and Ikeagwuonu Onyinye.
It would be noted that the NMMP was expected to be a game-changer in Nigeria’s power sector by reducing estimated billing, enhancing energy accountability, and restoring consumer trust.
However, the current revelations point to implementation failures and possible mismanagement of public funds.
Analysts believe that the outcome of the House probe could lead to reforms in electricity metering policy and strengthen regulatory oversight of loan disbursements to DISCOs.
Renaissance Africa Energy Company Limited and its joint venture partners, including the Nigerian National Petroleum Company Limited (NNPC), have donated vital medical equipment and essential drugs to the Intensive Care Unit (ICU) of the Rivers State University Teaching Hospital (RSUTH).
Among the equipment are three ventilators, a laser therapy machine, as well as significant supply of seed stock drugs targeted at enhancing the hospital’s capacity to provide critical care and ensuring consistent drug availability.
Speaking at the Handover Ceremony at Renaissance Energy Headquarters, in Port Harcourt, the General Manager, Relations and Sustainable Development, Renaissance Africa Energy, Igo Weli, said, “The gesture by Renaissance and our partners is to enhance the capacity of the hospital to provide critical care to patients in need; improve the training of upcoming healthcare personnel; and provide support to dedicated healthcare professionals in their mission to save lives and improve patient outcomes.”
The Chief Upstream Investment Officer, NNPC, Oluwaseyi Omotowa, noted that the donations were part of a broader social intervention strategy of the Renaissance-operated joint venture.
Omotowa, who was represented by the Lead, Stakeholder Relations, NNPC Upstream Investment Management Services, Mrs. Uzo Ejidoh, further said “the JV has a deliberate corporate social responsibility strategy to serve the people.
“This is an unchanging commitment, hence our steadfast support and investment in social impact projects for the healthcare sector to continue to transform lives”.
Recieving the donations, the Chief Medical Director, RSUTH, Professor Chizindu Alikor, stated that the hospital was committed to the delivery of excellent healthcare along with research and training.
Alikor said, “The teaching hospital is on an upward trajectory. The ICU facilities were over stretched, and we are excited that our request to Renaissance and its partners for assistance was granted.
The CMD expressed the hospital’s confidence in Renaissance’s capacity and people-centric interventions, especially as it concerns Corporate Social Responsibility (CSR) in the health space.
By: Lady Godknows Ogbulu
Last week, OPEC+ announced it will once again accelerate the pace of unwinding of production cuts, with output targets for June increasing by 411,000 barrels per day, equivalent to three monthly increments.
This follows a similar move in April, with the organization appearing willing to stay the course amid low oil prices and fears of weakening demand.
We reported that global crude inventories remain low enough, thus giving OPEC+ a window to scale back its voluntary cuts until the market surplus finally arrives.
Saudi Arabia appears intent on “punishing” OPEC+ rascals such as Kazakhstan and Iran for repeatedly violating their quotas.
Commodity analysts at Standard Chartered have reported that the latest OPEC survey of secondary sources reveals that Kazakhstan’s crude oil output clocked in at 1.852 mb/d in March, 384 kb/d above its OPEC+ quota.
Further, the country also failed to keep its promise to cut 38 kb/d in compensation for overproduction in March, bringing its total overproduction to 422 kb/d.
The same scenario is expected to unfold in the coming months. Kazakhstan produced 240 kb/d more y/y in March, a sharp contrast from the other eight OPEC+ members who produced a combined 612 kb/d less.
And now, the oil futures markets are sending a dire warning that oil bulls could find themselves in trouble quite soon due to a combination of the OPEC+ output hike and Trump’s tariffs.
Oil futures curve has formed a rare “smile” shape, a structure Morgan Stanley says was last seen briefly in February 2020 just before the infamous oil price crash.
On Wednesday, Brent futures’ July contract was trading at a premium of 74 cents to the October contract, a market structure known as backwardation, foreshadowing immediate tight supply.
However, prompt prices from November have formed a contango, with forward prices flipping to a discount, indicating oversupply as traders predict Trump’s tariffs will eventually weaken oil demand. Having backwardation and contango together leads to the rare “smile” shaped curve.
According to the latest available data by the International Energy Agency (IEA), global oil inventories stood at 7.647 billion barrels in February, down from 7.709 billion barrels for last year’s corresponding period and close to the bottom of their historical five-year range.
Meanwhile, refiners’ appetite for crude is climbing ahead of the peak driving season in July and August, “Refinery maintenance in the Atlantic basin will start to taper off, increasing oil demand (for refining)… Summer driving should provide some support,” BNP Paribas analyst told Reuters.
Global oil demand is expected to rise by 1.3 million barrels per day in the third quarter of the current year, up from an average of 104.51 million bpd in the second quarter, the IEA has predicted.
The 1 million bpd output increases announced by OPEC+ so far, coupled with another 400 kb/d increase in July, almost matches the predicted demand increase, implying oil markets will not face a surplus till late in the year.
Meanwhile, oil prices jumped in Thursday’s session after the Trump administration announced it has struck a trade deal with the UK. Brent crude for July delivery was up 2.7% to trade at $62.75/bbl at 12.50 pm ET while WTI crude contract for June delivery added 3.0% to change hands at $59.86 per barrel. However, terms of the deal appear to fall well short of the “comprehensive” package Trump earlier touted.
According to Trump, UK Prime Minister, Keir Starmer, will further reduce non-tariff barriers and fast-track U.S. goods into his country.
Meanwhile, another solid week of jobless claims underscored the Federal Reserve’s ongoing unwillingness to cut rates. U.S. jobless claims fell 13,000 to 228,000 for the period ending on May 3.
Continued claims, however, clocked in at just over 1.9 million, near the highest levels since 2021, suggesting workers are still finding it difficult to secure new jobs as the economy stalls.
That said, commodity analysts at Standard Chartered have predicted that path of least resistance for oil prices is lower in the coming months, with oil prices to remain low before beginning a gradual recovery later in the year as U.S. oil output declines.
StanChart, however, says there’s some technical support in the short-term, with fundamentals remaining fairly positive. Recently, StanChart cut its 2025 oil price forecast to $61/bbl from $76 and also lowered its 2026 forecast to USD 78/bbl from $85 citing Trump’s tariffs.
By: Alex Kimani