Nigeria the new era of energy

Nigeria confirmed its importance to the global petroleum economy in 1971 with its entry into OPEC and hasn’t looked back. According to OPEC’s 2008 figures, Nigeria exports about $76.8 billion worth of goods, with petroleum exports comprising $74.7 billion of that figure.

Production rates are just over 2 million b/d, with most of that exported, and 32.8bcm of marketed natural gas production, with 20.5bcm exported. The country has around 37.2 billion barrels of crude oil reserves and 5.2 tcm of natural gas reserves.

Beyond that, operators seem to be frequently reporting finds in the deepwater area offshore Nigeria, which will drive those figures up.

The country is ranked seventh globally in terms of proven natural gas reserves, although much of that lies in environmentally-sensitive Niger Delta. Security has become a watchword for the Niger Delta, home of the Movement for the Emancipation of the Niger Delta (MEND), a militant group that has been linked to attacks on foreign-owned petroleum companies in Nigeria.

As petroleum is such a large part of the country’s economic base, the government has been working to stop attacks in the region. Part of those efforts included a ceasefire and an offer from the government of amnesty. The amnesty program offered monetary support to help members of MEND and other Niger Delta militant groups finance a new life and seek lawful employment.

The government is working to ensure the country receives its dues from the petroleum riches that lie within its borders and maritime limits. It is considering a Petroleum Industry Bill, backed by President Umaru Yar’Adua, that would restructure state-owned Nigerian National Petroleum Corporation as a for-profit company. The bill also would redistribute un-produced fields that are under permit to foreign oil companies, raise taxes and royalties, and increase employment of Nigerians in the sector. The country itself has about 150 million inhabitants, which provides a large pool from which to draw local talent.

The Nigerian government set goals for local content of oil projects at 70% by 2010. During their bidding process, petroleum companies must include a Nigerian content percentage as part of the bid. Companies operating in Nigeria have several ways they pave the path toward local content, but they all point to experience-building through hiring and training indigenous employees, education through providing scholarships, or a combination of the two.

Mr. Andrew Fawthrop Managing Director, Nigeria/Mid-Africa SBU CHEVRON NIGERIA LTD	Mr. Femi Odumabo General Manager, Policy, Government and Public Affairs Department CHEVRON NIGERIA LTD

Chevron features prominently in Nigeria’s oil-rich history: in 1963, Chevron found the Okan field, the first offshore oil-producing field in the country, and later built the first gas processing plant in Nigeria, which supplies pipeline quality gas for domestic use. Currently, says Andrew Fawthrop, Chairman and MD for Chevron’s Nigeria/Mid-Africa Strategic Business Unit (SBU), Chevron is executing over 10 large projects in Nigeria. For example, the Agbami deepwater field project was completed and commenced operations in mid 2008, with peak production attained earlier than originally scheduled.

‘We have had several successes in our deepwater exploration activities,’ Fawthrop says. The company’s gas program is making good strides with the Escravos Gas-to-Liquid project, employing about 6000 people.

In 2008, Chevron’s gross production was about 300,000b/d and in 2009 that figure was 550,000b/d.

Chevron expects to bring several largescale projects to completion over the next five years. In doing so the company expects to increase local content on each of the projects.

The supermajor, which operates onshore and in the Niger Delta’s near-offshore areas as well as in the country’s deepwater areas, works to keep its enterprise closely linked with the community and has a strong commitment to local content.

‘Our operation in the swamp and shallow waters offshore is very closely linked to our community stakeholders through economic empowerment or local community content patronage. Gas produced from those leases is primarily sent into the domestic gas sector,’ In 2005, Chevron Nigeria adopted a new approach (described as the Global Memorandum of Understanding – GMOU) to community engagement in the Niger Delta, in order to better address the needs of the people in the areas where the company operates.

Chevron’s commitment to Corporate Social Responsibility (CSR) is organic to the company culture and it is commendable, Fawthrop believes. For example, the company has a large scholarship program that benefits over 8000 Nigerians annually. Femi Odumabo, now an Executive Director and the GM for policy, government and public affairs of Chevron Nigeria, himself is an example of a local beneficiary of that educational assistance program.

He graduated with excellent grades and subsequently Chevron hired him. ‘The good thing about it is that when you enter the company after it, you feel you owe the company something and you work harder to show them you are grateful and deserved it. There are many Nigerians like me, out there, that the company had sent to school and they are now succeeding in their respective professional lives.’

Chevron is also focusing some of its CSR dollars on health, a critical issue in Nigeria and the Niger Delta where healthcare services are not normally available due to swamps and rivers.

‘We have been using the riverboat clinic, which is an innovative system we use to deliver medical care to roughly 3000 indigenes every month in 33 different communities along the creeks, that otherwise would not have had easy access to medical facilities,’ Odumabo says about one of Chevron’s health-related CSR programs. In 2009 Chevron Corporation donated $30 million to the Global Funds, to healthcare initiatives in the fight against HIV/ AIDS, malaria and tuberculosis.

Dr. Edet J. Amana Chairman CEO AMANA CONSORTIUM

Amana Consortium, a consulting agency, has helped pave the way for many large projects – in the oil industry and out and for local and foreign interests – to come to completion. Dr. Edet J. Amana, chairman and CEO, says the company’s involvement has ranged in projects from oil infrastructure like FPSOs to national projects like highways, university campuses and hospitals in the course of its 35 years. When it comes to oil, one of the main projects on Amana’s reference list is ExxonMobil’s Erha project, where Amana provided technical support services for the FPSO activities.

‘We are now targeting the establishment of a steel fabrication facility for production of items needed in offshore oil & gas exploration and production, and the service and maintenance of vessels and offshore production platforms, to the extent that in the very near future we will be doing FPSO integration in the country,’ Amana says. About this last endeavor, he adds, the company is ‘obviously open to new partnerships regarding the steel fabrication for the offshore vessels.’

Within the next five years, Amana aims to become an effective player in the steel fabrication and vessel manufacture and services areas. He says, ‘This is very important because it will help us make a mark and be competitive with other companies in the industry.’

”The daily consumption of petroleum for our population alone is 30 million litres per day and currently our refineries are not producing more than 12 million. We are doing very well in the upstream sector, but Nigeria needs businessman to come and invest in the downstream sector, I mean, to invest in refineries and petrochemicals”

NETCO
With an engineering pedigree that includes work on Chevron’s Onshore Gas Plant for Phase 1 of the Escravos Gas Project and topsides modules for Chevron’s Agbami project, National Engineering & Technical Company Limited (NETCO) has ambitions to become responsible for up to 80% of the petroleum-related engineering work carried out in Nigeria.

Mr Samuel O. Babatunde Executive Director of Operations and Engr. Kenneth Ejuoneatse Engr. Kenneth Ejuoneatse NATIONAL ENGINEERING & TECHNICAL COMPANY LIMITED (NETCO)

NETCO, a wholly-owned subsidiary of Nigerian National Petroleum Corporation (NNPC) since 1996, originated as a 1988 joint venture between NNPC and Bechtel in an effort to provide local engineering talent for petroleum engineering projects. Currently, NETCO carries out about half of all the Nigerian oil & gas engineering design activities.

‘NETCO staff strength stands at 250 with NNPC contributing 100 employees. The annual turnover of the company in 2007 was four billion naira and five billion naira in 2008. This shows a 25% growth in one year,’ says Samuel O. Babatunde, the company’s executive director of operations. In May 2000, NETCO became the first indigenous Nigerian company to receive the BVQI ISO 9001 Quality Management System Certificate. ‘The PIB (Petroleum Industry Bill) provides opportunities and directives that will enable more international oil companies to come to Nigeria to invest and open up the industry for more involvement by NETCO and other indigenous engineering companies in the execution of engineering projects.’ Ejuoneatse says it’s important that the National Assembly approves the PIB because doing so will not only benefit contractors, oil & gas companies and the nation as a whole, but it will also restore confidence to potential investors.’ NETCO is fully committed to the domestication engineering capacity and capability within the oil & gas industry in order to grow and export these services to other countries within and outside the West African subregion’ Netco’s MD reinforces.

Nigeria has been working to restore that confidence in another way as well – through an amnesty offer to miltants in the Niger Delta region, an effort Ejuoneatse calls laudable. ‘Stability in that region would guarantee security and increase oil production; and involvement and participation of the people from the oil production area in turn will translate into the development of the local communities,’ he says, stressing that stability is paramount if the country wants to see more investment funds. ‘Nigerian crude oil is largely a sweet grade, which is in high demand which is why everybody wants to come to Nigeria and invest in our activities. The investment opportunities in Nigeria guarantee high profit expectations for anyone who is willing to invest in this market’ he adds. So, don’t give up on Nigeria yet, stay tuned as we are about coming up by God’s grace!’

SWIFT

Mrs. Pat Otrofanowei Managing Director	Mr. Aya Otrofanowei Operation Director SWIFT RENTAL CARS LTD.

 
Formed in 2004 to meet the growing demand for transportation, especially among oil and gas companies, Swift Rental Cars set a goal of redefining service standards in the car rental industry in Nigeria. Pat Otrofanowei, Swift’s MD, notes the company offers retnal cars, provides manpower, and handles logistics for many companies in Nigeria. About 60% of Swift’s clients come from the oil and gas industry, she says.

Swift’s fleet includes over 100 vehicles that include economy vehicles, luxury vehicles, saloon cars, vans and buses.

‘We are very particular about getting quality vehicles, well-trained manpower that would run the business taking safety as core to our operations,’ she says.

The company employs over 300, and annual turnover exceeds N250 million. Swift operates out of four locations –Ikoyi, the Muritala International Airport, Abuja, and Port Harcourt – and plans to expand to new locations. Some potential areas for expansion, Otrofanowei says, are Calabar, Bayelsa, and the new international airport in Asaba. SWIFT

LEASING PLC 

Mr. Christian Chigbundu Country Manager HERTZ NIGERIA	Mr. Emeka Ndu Managing Director LEASING PLC.

The oil & gas industry may keep vehicles in motion, but Hertz aims to keep the industry itself going. Hertz Nigeria is part of C&I Leasing Plc, which began operating in Nigeria in 1990. Together, they cover both short-term (Hertz’s specialty) and longterm (C&I’s focus) vehicle leases in Nigeria.

About a decade ago, Hertz’s Nigeria business was 85% to 90% oil related. Emeka Ndu, C&I’s MD, says that number has dropped so that oil & gas clients represent about 40% of the company’s customers. ‘We felt that we were unduly exposed to the vagaries of the oil industry which is traditionally cyclical,’ he says. ‘One of the objectives we have in the short-term strategy is to grow this number again.’

While Hertz serves well-known multinational companies, it also invests its focus on small and medium-sized Nigerian companies that are clients. ‘We know their business will grow in the future, and we will be there to assist them with a privilege fleet management program,’ Christian Chigbundu, country manager for Hertz, says.

‘All our vehicles are brand new and part of the company fleet for no longer than 2 or 3 years. They are controlled and inspected in regular times and our chauffeurs receive a special and rigorous training to be able to offer a quality, personalized service,’ Ndu says. ‘In Hertz we don’t play with security.’

OWEL-LINKSO GROUP

Engr. Gabriel Oseloka Group Executive Director OWEL-LINKSO GROUP	Engr. Charles A. Osezua Chairman/CEO OWEL-LINKSO GROUP

 
West Africa Gas Pipeline aiming to promote regional development
Since 2006, Linkso Nigeria Ltd has been working with the West Africa Gas Pipeline, among other projects. The WAGP – a 678km-long pipeline reaching from Nigeria’s Escravos region of the Niger Delta area to Benin, Togo and Ghana – is the first regional natural gas transmission system in sub-Saharan Africa.

The country is seeing the introduction of major pipeline networks stemming from the implementation of Nigeria’s gas master plan. ‘We plan to support the pipeline compa-nies with pipeline integrity management services,’ says Engr. Gabriel Oseloka, group Executive Director of Owel-Linkso Group.

In the anticipation of seeing more pipeline networks related to the master plan, Linkso is positioning itself to be able to provide pipeline integrity management to international partner companies. ‘In view of these areas of endeavor, technical partnerships would be of great benefit to our company and we are very open to them,’ Oseloka says.

In addition to that project, Osezua notes, Linkso Nigeria is involved in about seven projects, including several for Addax, Shell and Total. Linkso’s management capabilities support the onshore and offshore oil industry by bringing together employees and technical expertise in related fields from around the world. The company employs about 450.

Linkso boasts an annual turnover close to $35 million and has contracts booked exceeding $150 million for over three years, Osezua adds. With those plans for growth the management is keeping the doors open for making mutually beneficial partnerships. ‘We are willing to go into partnership with foreign companies especially in new areas we intend to go into like asset integrity management, pipeline integrity, etc.,’ Oseloka Group Executive Director says.

Linkso is involved in two partnerships: Audubon Engineering of Houston for engineering and Marking Services International of Milwaukee, Wisconsin, for the local manufacture of safety markings and signage.

Lee Engineering and Construction Co. Ltd. Chief L. A. Ikpea Managing Director & CEO

Lee Engineering and Construction Company recently celebrated 1 million LTI free work manhours on its West Africa Gas Pipeline (WAGP) Gas Supply project for Shell Petroleum Development Company. With those hours, the Nigerian engineering, procurement and construction company has moved the pipeline project closer to completion.

The project – being carried out in two phases – is intended to achieve stringent WAGP gas specification, metering, monitoring, and integrity-related work to renew plant design life for another 20 years and debottleneck the Utorogu gas plant from 270mmcf/d to 360mmcf/d, says L.A. Ikpea, Managing Director and Chief Executive of Lee Engineering.

The first phase included integrity and dew point related modifications at the Utorogu and Oben gas plants to meet the terms of the gas supply agreement. Phase 2 work includes installing online metering, a quality monitoring system and VSAT data transmission facilities at five Shell inlet points: Oben NAG, Utorogu NAG, Jones creek NGC, Odidi NGC and Escravos Beach NGC.

Chief Ikpea says Lee Engineering is commissioning the Utorogu gas plant and the Oben plant. ‘The Utorogu gas plant is the major gas hub for Nigeria’s economy, and every eye in the country is looking at this project for its importance in economical terms,’ he adds.

To carry out its work on the WAGP project, Lee Engineering has been working with companies around the world, including Shell, ABB and Frames Process Int., B.V. Holland. The project is projected to be complete in June 2010.

The company, founded nearly two decades ago, is also busy at work on a second project – the rehabilitation and reconstruction of Okrika Jetty, bombed by militants in 2005. The company has completed the engineering phase and has entered the procurement stage of the project, commissioned by the Nigerian National Petroleum Company. ‘We are sure to complete the project in line with specification, quality and on schedule,’ Ikpea says.

Additionally, the company is also working on the Ewekoro Power Plant construction project at Ewekoro Cement Factory in Ogun State in Western Nigeria and the Ughelli East Heater Rehabilitation and Hot Water Pump Change-out for Shell Petroleum Development Company.

An administrator by background, Ikpea decided to found the company in the early 1990s when he saw room for an indigenous EPC company while he was doing administrative work for multinational engineering and construction companies.

Lee Engineering employs 1000 people across Nigeria and has an annual turnover ranging from $30 million to $50 million. Ikpea says the company has had a growth rate of 50% since 2005.

As Lee Engineering’s managing director, Ikpea won an award from the American Embassy, citing Lee Engineering as a transparent and honest company. The company has also been involved in several corporate social responsibility projects, including the building of an orphanage, providing skill acquisition for the local and host communities and a scholarship program. The company’s commitment to social responsibility and philanthropy has won him recently the Peace Award from the Nigerian Television Authority, a popular governmentowned TV station in Nigeria.

The company has also received awards from the Warri South Local Government of Delta state in the Niger Delta region for contributing immensely to the socio and infrastructural development of the society.

“Nigeria’s poor image abroad is largely due to the media painting a negative view of the country by covering certain aspects of Nigeria and not emphasizing the actions the federal government is taking to fight corruption, stabilize the situation in the Niger Delta, develop the economy and portray the investment opportunities the country has to offer” Chief L. A. Ikpea

Issue: February 2010 OE
Special section produced by World Investment News