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NNPC Weekly Review: Stakeholders Hail PIA as Economic Game-Changer

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The Nigerian National Petroleum Company Limited (NNPC) started the week with the commendation of stakeholders in the nation’s political and industrial sectors on the successful activation of the Petroleum Industry Act (PIA 2021).

It would be recalled that the Act was signed into law by President Muhammadu Buhari on Aug.

16, as an economic game-changer.

The stakeholders who include the Governor of Akwa Ibom State, Mr Udom Emmanuel, the Chief Executive Officer (CEO) of NNPC, Malam Mele Kyari, and former Managing Director of Seplat Petroleum Mr Austin Avuru, gave the commendation at the just concluded 27th Nigerian Economic Summit (NES).

The summit was a public-private sector dialogue organised by the Nigerian Economic Summit Group (NESG).

In a virtual presentation, Gov. Emmanuel applauded President Buhari’s timely assent to the PIA, saying that the law has given a sense of belonging to all stakeholders, especially the host communities.

The Governor who was represented by the Secretary to the State Government (SSG), Dr Emmanuel Ekuwem, said that the provisions regarding frontier exploration would help revisit the oil wells that had been capped and would improve the state’s economy.

On his part, the former Managing Director of Seplat Petroleum, Mr. Austin Avuru, said the PIA would change NNPC’s mode of operations as it had empowered the Company to do business according to rules rather than discretion.

He further noted that NNPC operating under the Company and Allied Matters Act (CAMA) would strengthen the petroleum industry.

In his presentation titled: “PIA 2021 Is a New Day”, the CEO of NNPC, Malam Mele Kyari, gave an overview of the structure of the new NNPC Limited as provided in the PIA.

Kyari who was represented by the Chief Financial Officer of the Company, Mr Umar Ajiya, said that according to the PIA, NNPC would operate under CAMA, declare dividends to its shareholders and retain 20 per cent of its profits to grow its businesses.

The PIA was enacted to provide legal, governance, regulatory and fiscal frameworks as well as provide guidelines for the development of host communities and other related matters in the upstream, midstream and downstream sectors of the Nigerian Petroleum Industry.

The Act is made up of five Chapters, 319 Sections, and 8 Schedules.

Still in the week under review, the NNPC said the country’s petroleum product demand would expectedly grow by 14.57 per cent to 17.3million metric tons by 2025 from 15.1million metric tons in 2020.

This projection was made by the company’s CEO, Mele Kyari, at the opening of the 15th Oil Trading and Logistics (OTL) Africa Downstream Week which took place in Lagos.

In a keynote address at the event, Kyari disclosed that the country required about 3.097billion dollars worth of investment in condensate refineries to meet the projected demand for petroleum products.

According to Kyari who was represented by the Group Executive Director, Downstream, NNPC, Engr. Adeyemi Adetunji, the NNPC requires between 1.6billion dollars and 2.7billion dollars to improve the supply and distribution of petroleum products, revamp Liquefied Petroleum Gas (LPG) infrastructure, and build Compressed Natural Gas (CNG) plants in the country.

Speaking on the theme of the conference “Downstream in Transition: Getting Set”, the NNPC helmsman said that the country would need a refining capacity of about 1.52million barrels per stream day (MBPSD) to meet its petrol requirement in the next four years.

He also projected that the demand for natural gas could grow about four times over the next decade from 4.8billion cubic feet per day (bcf/d) in 2020 to between 10 and 23bcf/d in 2030.

He said that the current supply to the domestic market was about 8bcf/d to power, 0.77bcf/d to industries, and 3.2bcf/d for export through the LNG and the West Africa Gas Pipeline (WAGP), while about 54bcf/d was flared.

According to him, the expected demand growth would come from the increase in the wheeling capacity of existing national power grid in line with the Presidential Power Initiative, major fertilizer projects (Dangote, Brass), and industrial demand for natural gas in the northern axis of the country.

On the global oil market outlook, Kyari said: “Some 10.4trillion dollars global stimulus in response to the COVID-19 pandemic led to the rebound in consumers’ spending while incentives for long-term investments in hydrocarbon had waned.”

Quoting the recent data by the Organisation of Petroleum Exporting Countries (OPEC), Kyari stated that hydrocarbon would continue to be relevant in the global energy mix for the next two decades.

He slao quoted OPEC date saying that the world oil demand is expected to rise from a pandemic stricken 90.6million barrels per day (mbpd) in 2020 to 108.2mbpd in 2045, thereby accounting for 28 per cent of global energy needs.

The OPEC data further stated that the rise in demand would be driven by growth in world population, which is set to expand to 9.5 billion by 2045, and the huge potential for expanding access to modern energy services for the under-served.

He noted that the downstream sector of Nigerian oil and gas industry had been in transition prior to the passage of the PIA.

This he said, was in response to the global energy transition and decarbonisation initiatives.

Kyari maintained that it would be difficult to discuss the transition in the downstream sub-sector in isolation from the overall evolution that is happening in the industry, adding that NNPC had diversified its portfolio over the years towards transiting to an energy company with new investments in gas, power, and renewables.

He said that key pipeline projects were on-going to assure delivery of gas to the demand nodes, stressing that the corporation has also progressed with the Refineries Rehabilitation Programme to enhance its participation in the Oil and Gas value chain.

Kyari explained that the transition in Nigeria’s oil and gas sector was being driven by the global decarbonisation efforts to switch to renewables in response to environmental concerns.

As investments in hydrocarbon continued to wane due to energy transition and geopolitics, Kyari said the world economy faced shortages, high energy prices, rising inflation and sluggish growth.

Meanwhile, the NNPC has revealed the cost of the 21 road it plans to rehabilitate under the Federal Government Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme in pursuant to Presidential Executive Order 007 of 2019.

Following the approval by the Federal Executive Council (FEC), the NNPC would construct a total of 1,804.6km of roads at a total cost of N621,237,143,897.35 (Six Hundred & Twenty-One Billion, Two Hundred & Thirty Seven Million, One Hundred & Forty Three Thousand, Eight Hundred & Ninety Seven Naira, Thirty Five Kobo).

The breakdown is as shown below in a statement issued by Mr Garba Deen Muhammad, Group General Manager, Group Public Affairs Division of the NNPC.

S/NoZONEKMs TO BE COVEREDCOST (BILLION NAIRA)
1.North Central791.10244,872,518,149.29
2.North East273.3556,126,741,692.11
3.North West283.523,057,338,426.61
4.South East122.043,281,895,080.04
5.South South81.9172,027,737,903.32
6.South West252.781,870,912,645.98
Total6 Zones1,804.6kmN621,237,143,897.35

Oil & Gas

FG Inaugurates Committee to Enhance Gas Distribution in Urban Buildings

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The Ministry of Petroleum Resources has inaugurated a Technical Working Group to enhance gas reticulation practices in Nigeria’s building industry.

The ministry’s Permanent Secretary, Amb. Nicholas Ella inaugurated the Technical Working Group (TWG) between the National Gas Expansion Programme (NGEP) and the Council of Registered Builders of Nigeria (CORBON) on Wednesday.

Reports= says that reticulation refers to the process of creating a network of pipes or tubes to distribute gas or other utilities to buildings or industrial sites.

The permanent secretary restated the importance of creating energy smart cities, saying that modern urban development relies on efficient gas and utility distribution systems,

“Most modern cities in developed countries have evolved to energy smart cities where energy, specifically gas and other utilities are piped to districts and estates.

“However, one of the key tools in creating energy smart city is the National Building
Code which, in essence, sets the guidelines on Building Pre-design, designs, construction and post-construction stages,” he said.

The permanent secretary reiterated the benefits of reticulated gas systems for households and businesses alike, adding that it ensured metered supply akin to water and electricity,

According to him, it eliminates the need for cumbersome refills, and also enhances safety by burying pipes and incorporating advanced safety equipments.

“The TWG is tasked with designing a comprehensive policy to implement best practices for gas reticulation using LPG, PNG, and Bio-Gas across Nigeria’s building sector.

“Key responsibilities include reviewing the current National Building Code, examining global gas distribution systems, and proposing quality standards for materials used in gas installations,” he said.

The permanent secretary emphasised the need for rigorous safety protocols and guidelines to ensure the efficient and safe use of gas in construction.

He urged the group to prioritise environmental sustainability in its recommendations, adding that the group is expected to submit its report by Nov. 15.

Earlier, Mr Samson Opaliwah, the Chairman of CORBON. expressed the council’s commitment to collaborate with the group to ensure safe uptake of gas for use in houses and housing estates in Nigeria.

“I assure you of the williness of CORBON to leverage the expertise and resources at her disposal to ensure that steps are put in place for gas infrastructure in buildings and estates.

“The gas infrastructure will be safe, sustainable and world-class.

” Our collective efforts will yield clear, standardised guidelines for safe and effective gas systems in buildings, matched with a skilled workforce to meet growing demands in Nigeria,” he said. (NAN)

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Oil & Gas

Utilise Oil, Gas Industry Report as Tool for Public Debate – NEITI

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The Nigeria Extractive Industries Transparency Initiative (NEITI) has urged stakeholders to utilise its 2022/2023 oil and gas report for civic engagement, constructive dialogue, and public debate.

Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji, made the call at the report’s public presentation on Thursday in Abuja.

The report was unveiled by Mr Ola Olukoyede, Chairman, Economic and Financial Crimes Commission (EFCC), alongside Sen.

George Akume, Secretary to the Government of the Federation and Chairman, NSWG, NEITI and other dignitaries.

Orji emphasised the report’s significance in guiding policy, encouraging public debate, and improving governance in natural resource management.

He highlighted the report’s comprehensive data on revenues, governance structures, operations, and compliance within the oil and gas sector.

Speaking at the public presentation of the report, Akume reaffirmed the Federal Government’s commitment to transparency principles.

Olukoyede pledged to investigate the report’s findings and recommendations, noting that NEITI’s previous reports led to the recovery of over N1 billion.

The report is available on NEITI’s website, providing valuable insights into the sector’s performance and challenges.

The presentation was attended by Chairmen of National Assembly Committees, captains of industries, members of diplomatic missions, development partners, civil society organisations and the media. (NAN)

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Business Analysis

A Peep Into Dangote’s Refinery, The World’s Engineering Wonder

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By Cletus Akwaya

Call it Dangote Republic and you would not be wrong, for that is what it means in real sense.

The ultra-modern Dangote Refinery and Petrochemical complex located at the Lekki Free Trade Zone in Lagos is the World’s Engineering wonder.

A guided tour for top Media executives in the country  by the President,  Dangote Industries Group himself, Alhaji Aliko Dangote on July 14, provided a rare privilege and opportunity to appreciate the project that has emerged as the World’s largest  single train petroleum refinery.

Dangote, the Kano-born business mogul and Africa’s richest man, whose vision for the industrial transformation of Nigeria led to the initiation of this project is certainly a fulfilled person, having accomplished such a gargantuan task in the spelt of just about 10 years.

The refinery, which is  built and equipped with the latest technology in the industry. It is a behemoth sitting on a huge land space of 2, 735 hectares, approximately seven times, the size of Victoria Island, the octane section of Lagos, which has become the abode for the very rich in the nation’s commercial nerve – centre over the decades.

The land was provided by the Lagos state government after the payment of $100million dollars by the Dangote Group as cost of the land.

The edifice didn’t come easy as the engineers had to reclaim 65million cubic metres of sand  through dredging of the Atlantic coastline to pave way for the construction of the refinery and its accompanying facilities especially the Jetty.

The Dangote refinery is not a stand-alone project as it has a coterie of associated industries and infrastructure making it a self-reliant complex.

For instance, the company has a fully developed port (jetty)for maritime operations for both in-take of crude and discharge of refined products. This perfectly compliments the huge pipeline network that lands into the Atlantic for intake of crude and loading of refined products to ships.  Its Jetty, which stretches 9KM into the international waters in the Atlantic Ocean and 12.5 KM from the refinery is perhaps one of the most modern in the world built with sand piles that shield the final landing points from the violent oceanic waves, thus providing for safety and stability of ships, barges and oil tankers.

The complex is accessed by 200KM network of concrete under-lay and well asphalted road network to ease vehicular traffic. The refinery has its dedicated steam and power generation system with standby units to adequately support operations of the various plants in the complex.

 It has successfully completed a 435 MW power generating plant for its operations. The power generated from this plant surpasses the entire distribution capacity of Ibadan Electricity Distribution company, which supplies electricity to five states of the Federation including Oyo, Osun, Ondo, Ekiti and Kwara.

The Dangote refinery with a capacity of 650,000 bpd of crude oil is designed to handle the crude from many of the African countries, the Middle East and the US light crude. Its petrochemical plant is designed to produce 77 different high-performance grades of polypropylene, which is the major raw material for numerous industries and other refineries. With a huge refining capacity, Alhaji Dangote said the products from the refinery company would easily meet 100 per cent the needs of  Nigeria’s demand for gasoline, diesel, Petrol and Aviation Jet with 56 per cent surplus for export, from which the company projects to earn a princely $25billion  per annum from 2025.

The company has facility to load 2,900 trucks with its various products in a day by land and millions of litres of products through the waters depending on where the orders come from. The $25million projected revenue in 2025 could translate to a huge relieve for the nation in dire need of foreign earnings to shore-up the value of the nation’s currency.

The associated industry, the Dangote Fertilizers Limited also situated in the complex utilises the raw materials from petrochemicals to produce different varieties of fertilzers especially Urea, NPK and Amonia grades of fertilizers. Apart from the local market, Dangote is already exporting its fertilizers to other countries including Mexico, a testament to its high quality that meets world standards.

This feta,  the President of Dangote industries explained was possible because of the high quality, the company has opted to pursue. In between the refinery and the fertilizers complex lies a 50,000 housing estate, which provided accommodation for the construction workers at the time of construction especially during the COVID-19 lockdowns of 2020, when workers remained encamped on the project site to continue with the work.

What stands out the Dangote Refinery is perhaps not in its sheer size and capacity but in the fact that  it is  perhaps the only of such projects whose Engineering, Procurement and construction(EPC) was done directly by the company without engaging the world renowned refinery constriction companies  like Technip Bechtel (USA)Technip (France)Aker Solutions (Norway)Chiyoda Corporation (Japan)SNC-Lavalin Group (Canada)J. Ray McDermott (USA)JGC Corporation (Japan)Hyundai Heavy Industries (South Korea)Foster Wheeler (USA) and Daelim Industrial Company (South Korea)

“The design of the refinery was handled by dozens of Engineers and technical experts assembled in India and Houston, Texas, USA to execute engineering designs of the refinery,” said Edwin Kumar, the Executive vice President, Oil and Gas for the Dangote Group who midwifed  the birth of the refinery complex.

“We didn’t give out contracts to anybody, we bought every single bolt and equipment ourselves and had it shipped into the country,” Dangote explained to his guests.

Part of the equipment imported into the country was the procurement of over 3,000 cranes to handle the evacuation of huge consignments of machinery from the wharf and for subsequent installation at the construction site. The cranes have become an unusual assemblage of such equipment to be found in one place on the African continent.

If there was any doubt that Alhaji Aliko Dangote is Africa’s richest man, the successful completion of the refinery and petrochemical complex at the cost of about $20billion has further confirmed his status as Africa’s leading businessman and entrepreneur.

However, Dangote does not really accept that he is the richest man on the continent,
“When you are rich, you accumulate cash, but when you  wealthy, you create wealth” he told the top Media executives on tour of the huge project, explaining that he would rather  prefer to be referred to as a “Wealthy man.”

And consistent with his business philosophy, Dangote hinted of plans to list the refinery on the Nation’s stock exchange by the first quarter of 2025. His vision is to avail the public of 20 per cent of the shares so as to ensure participation by Nigerians and even international portfolio investors.

The refinery company and the entire of Dangote Group at the moment provides direct employment to about 20,000 Nigerians and much indirect jobs to Nigerians, making it the highest employer of labour outside the government.

Most interestingly, the highly technical operations of Dangote refinery is operated by over 70 per cent of local manpower who work in the refinery control, centre, the numerous production and quality control laboratories among others. Some of the staff who explained their tasks to the visiting media executives said they were graduates of Engineering and allied disciplines recruited mostly from Nigerian universities and trained in various institutions abroad for periods ranging from sixth months – one year to master refinery operations. Through this strategy, Dangote has ensured transfer of technology to thousands of Nigerian youths.

“We don’t  know where they come from as long as they are Nigerians and if they decide to leave and join international oil companies for better job opportunities, we have no problem with that,” Dangote responded to a question on the strategy to retain the technical manpower for stability of the refinery’s operations.

The Dangote Refinery is a Republic of some kind,  at least an economic or industrial Republic.

But the man who presides over this ‘industrial empire’, Alhaji Dangote says his only ambition is to boot the nation’s economy and ensure netter life for Nigerians.

“When you import any product into Nigeria, you are importing poverty and exporting our jobs to those countries from where you are importing” Dangote said  adding “this is why I want economic nationalism in Nigeria.”

Dangote’s vision even goes beyond Nigeria as he has cement factories and other business concerns in about 13 African countries including Ghana, Ethiopia, Tanzania, Uganda, etc. This signifies his continent-wide  dream to transform Africa’s economies.

There has been attempts by some international oil companies to frustrate the successful take-off of the refinery, through over pricing and in some instances outright  denial of crude supplies for processing. This made Dangote to commence importation of crude from the US. However, the cheering news that the Nigerian National Petroleum Company Limited (NNPC) has finally approved a supply arrangement has raised hopes that full operations will commence and that the long-awaited Dangote oil products will reach consumers around the country from August.

At last, the Dangote Group may have achieved its objective to serve as the elixir to Nigeria’s industrialisation effort. This is perhaps the greatest legacy of Africa’s richest man to his country of birth.

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