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NLNG Deputy MD, Sadeeq Mai-Bornu, Ends Tenure, To Hand Over To Olalekan Ogunleye

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NLNG Deputy MD, Sadeeq Mai-Bornu, Ends Tenure, To Hand Over To Olalekan Ogunleye

Olushola Okunlade Writes

The Board of Directors of Nigeria LNG Limited (NLNG) has approved the appointment of Mr. Olalekan Olufemi Ogunleye as successor to Engr. Sadeeq Mai-Bornu as Deputy Managing Director of the Company.

Engr. Mai-Bornu, appointed by the NLNG Board in April 2016, will return to his parent company, Nigerian National Petroleum Company Limited (NNPC), at the expiration of his tenure.

Mr. Ogunleye, who is concluding his tenure as Managing Director and Chief Executive Officer of Gas Aggregation Company Nigeria Limited (GACN), will take over from Engr. Mai-Bornu on 14th April 2022.

NLNG Deputy MD, Sadeeq Mai-Bornu, Ends Tenure, To Hand Over To Olalekan Ogunleye
Outgoing NLNG Deputy Managing Director, Sadeeq Mai-Bornu.

During his tenure, Sadeeq contributed significantly to repositioning NLNG as a globally competitive LNG company and oversaw vital projects, including the Train 7 project, re-marketing of volumes for Trains 1-3, and the expansion of the Company’s domestic LPG market initiative. He also oversaw the implementation of the ongoing Bodo-Bonny Road project, one of NLNG’s biggest CSR initiatives, and the NLNG Realigning to Win (RtW) project, an organizational improvement initiative that has positioned NLNG as a more effective company.

NLNG Deputy MD, Sadeeq Mai-Bornu, Ends Tenure, To Hand Over To Olalekan Ogunleye
New NLNG Deputy Managing Director, Mr. Olalekan Olufemi Ogunleye.

Mr. Ogunleye, a lawyer, comes to NLNG with rich gas industry experience. At GACN, he oversees adequate gas supply to the domestic market and manages the interface between gas buyers and sellers. He was strategic to the Federal Government’s gas programs, Decade of Gas, and the Autogas initiatives.

Before his appointment at GACN, Mr. Ogunleye served as the General Manager and Chief Executive Officer of N-Gas Limited (N-Gas), a joint venture company between 2018 and 2019; and Company Secretary and Legal Adviser at Nigerian Gas Marketing Company (NGMC) Limited (2017-2019) and Nigerian Gas Company Limited (2014 – 2018), both subsidiaries of Nigerian National Petroleum Corporation (NNPC).

NLNG is an incorporated Joint Venture owned by four Shareholders, namely, the Federal Government of Nigeria, represented by Nigerian National Petroleum Corporation (49%), Shell Gas B.V.  (25.6%), TotalEnergies Gaz & Electricite Holdings (15%), and Eni International N.A. N. V. S.àr.l (10.4%).

Oil & Gas

Shell Companies Contribute To Nigeria’s Economic Growth, Creates Employment

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In 2019, the Southern Swamp Associated Gas Solutions project was commissioned, and the SPDC JV is planning to reduce associated gas flaring further through its Forcados Yokri gas-gathering project, of which large parts are set to be completed in 2022. Despite such efforts to reduce continuous flaring, unfortunately flaring intensity (the amount of gas flared for every tonne of oil and gas produced) at both SPDC- and SNEPCo-operated facilities increased in 2021 owing to short-term operational issues. Flaring from SPDC-operated facilities increased by around 5% in 2021 compared with 2020. The increase was primarily because of the extended outage of the gas compression system in SPDC’s shallow-water operations. The system was restored and became operational from January 2022. Flaring at SNEPCo-operated facilities rose by around 160% in 2021 compared with 2020. This was mainly because of an increase in flaring on the Bonga floating production, storage and offloading (FPSO) vessel. Repairs to a flex-joint on the Bonga FPSO’s gas export riser in the second quarter took longer than expected, in part because of weather conditions. While repairs were under way, the FPSO continued to produce oil and therefore flaring was necessary for safety reasons. The repairs were safely concluded in July 2021. Although flaring intensity levels rose in 2021, SPDC and SNEPCo over the last 10 years have almost halved the combined amount of hydrocarbons they flare from 1.5 million tonnes in 2012 to 0.8 million tonnes in 2021. This reduction is the result of a strict flaring reduction management process and both SPDC and SNEPCo will continue to work in close collaboration with joint-venture partners and the government to make progress towards ending routine flaring of associated gas. NIGERIA LNG EXPANSION UNDERWAY Global demand for LNG continues to grow as the world increasingly seeks reliable supplies of lowercarbon energy. Shell’s investment in Nigeria’s gas infrastructure for export is expected to help 6 This is according to a data provided by global research and consultancy business Wood Mackenzie. the country benefit further from revenues. Shell Gas B.V. and its partners took a final investment decision in 2020 on a new LNG processing unit – known as Train 7 -- at NLNG. The expansion is expected to create around 12,000 jobs for Nigerians during construction and stimulate growth of the local oil and gas service sector, with 55% of engineering and procurement of goods and services being sourced in-country. Train 7 is expected to ensure Nigeria’s continued place as a global player in a lower-carbon energy source. Once operational, Train 7 will add around 8 million tonnes per annum of capacity to the Bonny Island LNG facility, taking the total production to around 30 million tonnes per annum. In 2021, NLNG began awarding procurement and construction contracts. Early works started at the site. The first phase of the worker village is expected to be ready for occupancy in 2022 and the new material offloading facility ready for use by the end of 2022. NLNG’s Train 7 is expected to come onstream in the middle of the 2020s. KEY LICENCE RENEWED FOR DEEP-WATER SNEPCo has interests in four deep-water blocks in the Gulf of Guinea, two of which it operates. Today, nearly one-third of Nigeria’s deep-water oil and gas production comes from the Bonga and the nonoperated Erha fields.6 Since production began in 2005, Bonga alone has produced more than 950 million barrels of oil with the 2021 average oil production per day at 105,000 barrels. The Bonga FPSO vessel has a total production capacity of 225,000 barrels of oil per day and 150 standard cubic feet of gas export per day. In 2021, the availability of the FPSO vessel increased to 80% from 70% in 2020. In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas over the last two decades, including the Bolia and Doro fields (Shell interest 55%). Nigeria Briefing Notes Helping to power Nigeria’s economy 13 In the right investment climate, SNEPCo believes that there are opportunities to expand. In 2021 the OML 118 (Bonga) production sharing contract was renewed and the lease extended for 20 years. Bonga North and Bonga South West Aparo (BSWA) oil fields are two such potential opportunities. Bonga North is a proposed tie-back project to the existing Bonga FPSO with Phase 1 comprising 14 wells. BSWA is a development of a new FPSO with Phase 1 comprising 23 wells. SUPPORTING RENEWABLE ENERGY STARTUPS Millions of Nigerians are excluded from the country’s power grid and Shell Companies in Nigeria have established and provided substantial funding for a not-for-profit, impact-investing company called All On. Operating as an independent company, All On works to bring reliable electricity – often from renewable energy sources -- to off-grid urban and rural customers. This support aims to build a solid pipeline of viable businesses that can create the scale required to address Nigeria’s access to energy gap. In December 2019, SPDC and SNEPCo made a significant additional 10-year financing commitment of $160 million in All On, bringing the total commitment to $200 million. By the end of 2021, All On had provided investment capital to over 40 renewable energy start-ups in its portfolio – an increase of more than 30% from 2020. One such company is Infibranches Technologies Limited, to which All On has committed $2 million, which is expected to enable the indigenous technology company to expand sales of solar home systems via its more than 13,000 agent banking partners across Nigeria. With the support of the Rockefeller Foundation, the All On Hub was established in 2020 to provide nonfinancial support and build the capabilities of off-grid energy entrepreneurs. In 2021, the hub supported 81 ventures – nearly double the 41 supported in 2020. Also in 2021, All On, Odyssey Energy Solutions and the Global Energy Alliance for People and Planet launched a $10 million equipment financing facility as part of the DART pilot programme in Nigeria. 7 Hydraulic flying leads support the delivery of hydraulic fluid and/or chemicals between subsea equipment. 8 Subsea trees are an assembly of valves and other components used to monitor and control the production of a subsea well. DART will combine demand pooling, aggregated purchasing of solar equipment, and access to affordable finance to unlock economies of scale for solar companies, achieve cost savings for end-users, and accelerate the growth of the renewable energy sector in Nigeria and beyond. DEVELOPING LOCAL CONTENT AND SKILLS Shell Companies in Nigeria contribute to the growth of Nigerian businesses that can provide technical and support services to the industry. This includes the manufacture of tools and technical kits, the operation of helicopter flights in the Niger Delta, and strategic partnerships between foreign and local companies to stimulate technology transfer and capacity development. While there are government-required programmes in some areas, such as the Nigerian and Community Content Strategy embedded in the Assa North/Ohaji South gas development project, Shell Companies in Nigeria deliberately seek to contract local businesses wherever possible. In 2021, Shell Companies in Nigeria awarded $800 million worth of contracts to Nigerian-registered companies. Of these, 92% were companies with at least 51% Nigerian ownership. SNEPCo has awarded major engineering and construction contracts to companies that are indigenous, have local staff, or possess domestic capabilities in the country. At present, the manufacture and rebuild of hydraulic flying leads7 (HFLs) is being carried out in-country by wholly indigenous companies. Pressure Controls Systems Nigeria Limited, another Nigerian company, continues to refurbish old subsea trees.8 Sometimes, a lack of access to capital hinders Nigerian companies from competing for and executing contracts effectively. Shell Companies in Nigeria have provided access to nearly $1.6 billion in loans to 901 Nigerian vendors under the Shell Contractor Support Fund since 2012. These loans help improve their tendering opportunities.

…paid $3.5 billion in production entitlements, royalties, fees, and taxes

Nigeria’s natural resources offer attractive investment opportunities and significant potential for Nigerians to boost their economy

Rashidat Olushola Okunlade Writes

Shell Companies in Nigeria have been contributing to economic growth in Nigeria by generating revenue for the government through taxes, creating employment opportunities, and contributing to the development of local businesses.

In 2021, Shell Companies in Nigeria directly employed 2,500 people, 97% of whom were Nigerian nationals. More than 8,500 contractors supported our operations during the year.

Shell Companies in Nigeria awarded contracts worth $800 million (the same as in 2020) to Nigerian-registered companies, of which 92% were to companies where the Nigerian ownership was at least 51%.

The latest country-by-country tax data available is for 2020 and can be found in the Shell Tax
Contribution Report. In 2020, Shell’s business in Nigeria collected and paid a total of $3.5 billion in production entitlements, royalties, fees, and taxes. Some tax numbers are available for 2021: SPDC paid $424 million and SNEPCo paid $562 million in corporate tax and payments to the government.

Shell Companies in Nigeria are investing in expanding offshore oil and gas production and developing infrastructure for domestic and export gas. These projects and assets will continue to bring employment and contract opportunities to Nigerians and their businesses.

Security Challenges Onshore Production: Shell Companies in Nigeria have a track record of strong production. But in 2021, the combined production from the SPDC JV and SNEPCo (Bonga) fell to 493,000 barrels of oil equivalent per day from 614,000 in 2020.

The SPDC JV produced 383,000 barrels of oil equivalent in 2021, compared with 497,000 barrels of oil equivalent in 2020. The fall in output was largely a result of curtailed oil production because of heightened security issues, such as crude oil theft and illegal oil refining. Production numbers were also down as a result of divestment action, including the sale of SPDC’s 30% interest in OML 17 for $533 million.

In the last quarter of 2021, crude oil theft from pipelines across the region increased ostensibly as a result of rising oil prices, which made the activity more profitable. Security risks have heightened and production in some areas has been put on hold. The situation is impacting operators across the Niger Delta. The Nigerian National Petroleum Corporation (NNPC) has reported that crude thefts in 2021 reached 200,000 barrels per day-a quarter of onshore production.

The SPDC JV declared a force majeure on its Bonny export program with effect from March 3, 2022. The declaration of force majeure was on account of significantly lower deliveries of crude oil to the Bonny Terminal because of theft from illegal connections to pipelines.

Offshore in the deep waters of the Gulf of Guinea, production at SNEPCo’s Bonga field continued steadily but not without its own challenges. Production fell to 110,000 barrels of oil equivalent per day from 117,000 barrels in 2020. This was because of repairs on two production lines in 2021.

The five-year average production for SPDC and SNEPCo is 606,000 barrels of oil equivalent per day.

Shell Companies in Nigeria stated its intention to reduce its involvement in onshore oil and gas production in Nigeria and to focus future investment on our deep-water and gas positions. This aligns with Shell’s Powering Progress strategy. We are in discussion with the Nigerian government and other stakeholders on how this can be best achieved.

Focus on Safety and Security: Shell Companies in Nigeria aim to consistently apply international safety standards. We work closely with communities, civil society, local businesses, joint- and co-venture partners, as well as federal and state government agencies, to promote a secure and safe environment. Shell Companies in Nigeria aim to achieve no harm to people and no leaks across operations.

In 2019, the Southern Swamp Associated Gas Solutions project was commissioned, and the SPDC JV is planning to reduce associated gas flaring further through its Forcados Yokri gas-gathering project, of which large parts are set to be completed in 2022. Despite such efforts to reduce continuous flaring, unfortunately flaring intensity (the amount of gas flared for every tonne of oil and gas produced) at both SPDC- and SNEPCo-operated facilities increased in 2021 owing to short-term operational issues. Flaring from SPDC-operated facilities increased by around 5% in 2021 compared with 2020. The increase was primarily because of the extended outage of the gas compression system in SPDC’s shallow-water operations. The system was restored and became operational from January 2022. Flaring at SNEPCo-operated facilities rose by around 160% in 2021 compared with 2020. This was mainly because of an increase in flaring on the Bonga floating production, storage and offloading (FPSO) vessel. Repairs to a flex-joint on the Bonga FPSO’s gas export riser in the second quarter took longer than expected, in part because of weather conditions. While repairs were under way, the FPSO continued to produce oil and therefore flaring was necessary for safety reasons. The repairs were safely concluded in July 2021. Although flaring intensity levels rose in 2021, SPDC and SNEPCo over the last 10 years have almost halved the combined amount of hydrocarbons they flare from 1.5 million tonnes in 2012 to 0.8 million tonnes in 2021. This reduction is the result of a strict flaring reduction management process and both SPDC and SNEPCo will continue to work in close collaboration with joint-venture partners and the government to make progress towards ending routine flaring of associated gas. NIGERIA LNG EXPANSION UNDERWAY Global demand for LNG continues to grow as the world increasingly seeks reliable supplies of lowercarbon energy. Shell’s investment in Nigeria’s gas infrastructure for export is expected to help 6 This is according to a data provided by global research and consultancy business Wood Mackenzie. the country benefit further from revenues. Shell Gas B.V. and its partners took a final investment decision in 2020 on a new LNG processing unit – known as Train 7 -- at NLNG. The expansion is expected to create around 12,000 jobs for Nigerians during construction and stimulate growth of the local oil and gas service sector, with 55% of engineering and procurement of goods and services being sourced in-country. Train 7 is expected to ensure Nigeria’s continued place as a global player in a lower-carbon energy source. Once operational, Train 7 will add around 8 million tonnes per annum of capacity to the Bonny Island LNG facility, taking the total production to around 30 million tonnes per annum. In 2021, NLNG began awarding procurement and construction contracts. Early works started at the site. The first phase of the worker village is expected to be ready for occupancy in 2022 and the new material offloading facility ready for use by the end of 2022. NLNG’s Train 7 is expected to come onstream in the middle of the 2020s. KEY LICENCE RENEWED FOR DEEP-WATER SNEPCo has interests in four deep-water blocks in the Gulf of Guinea, two of which it operates. Today, nearly one-third of Nigeria’s deep-water oil and gas production comes from the Bonga and the nonoperated Erha fields.6 Since production began in 2005, Bonga alone has produced more than 950 million barrels of oil with the 2021 average oil production per day at 105,000 barrels. The Bonga FPSO vessel has a total production capacity of 225,000 barrels of oil per day and 150 standard cubic feet of gas export per day. In 2021, the availability of the FPSO vessel increased to 80% from 70% in 2020. In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas over the last two decades, including the Bolia and Doro fields (Shell interest 55%). Nigeria Briefing Notes Helping to power Nigeria’s economy 13 In the right investment climate, SNEPCo believes that there are opportunities to expand. In 2021 the OML 118 (Bonga) production sharing contract was renewed and the lease extended for 20 years. Bonga North and Bonga South West Aparo (BSWA) oil fields are two such potential opportunities. Bonga North is a proposed tie-back project to the existing Bonga FPSO with Phase 1 comprising 14 wells. BSWA is a development of a new FPSO with Phase 1 comprising 23 wells. SUPPORTING RENEWABLE ENERGY STARTUPS Millions of Nigerians are excluded from the country’s power grid and Shell Companies in Nigeria have established and provided substantial funding for a not-for-profit, impact-investing company called All On. Operating as an independent company, All On works to bring reliable electricity – often from renewable energy sources -- to off-grid urban and rural customers. This support aims to build a solid pipeline of viable businesses that can create the scale required to address Nigeria’s access to energy gap. In December 2019, SPDC and SNEPCo made a significant additional 10-year financing commitment of $160 million in All On, bringing the total commitment to $200 million. By the end of 2021, All On had provided investment capital to over 40 renewable energy start-ups in its portfolio – an increase of more than 30% from 2020. One such company is Infibranches Technologies Limited, to which All On has committed $2 million, which is expected to enable the indigenous technology company to expand sales of solar home systems via its more than 13,000 agent banking partners across Nigeria. With the support of the Rockefeller Foundation, the All On Hub was established in 2020 to provide nonfinancial support and build the capabilities of off-grid energy entrepreneurs. In 2021, the hub supported 81 ventures – nearly double the 41 supported in 2020. Also in 2021, All On, Odyssey Energy Solutions and the Global Energy Alliance for People and Planet launched a $10 million equipment financing facility as part of the DART pilot programme in Nigeria. 7 Hydraulic flying leads support the delivery of hydraulic fluid and/or chemicals between subsea equipment. 8 Subsea trees are an assembly of valves and other components used to monitor and control the production of a subsea well. DART will combine demand pooling, aggregated purchasing of solar equipment, and access to affordable finance to unlock economies of scale for solar companies, achieve cost savings for end-users, and accelerate the growth of the renewable energy sector in Nigeria and beyond. DEVELOPING LOCAL CONTENT AND SKILLS Shell Companies in Nigeria contribute to the growth of Nigerian businesses that can provide technical and support services to the industry. This includes the manufacture of tools and technical kits, the operation of helicopter flights in the Niger Delta, and strategic partnerships between foreign and local companies to stimulate technology transfer and capacity development. While there are government-required programmes in some areas, such as the Nigerian and Community Content Strategy embedded in the Assa North/Ohaji South gas development project, Shell Companies in Nigeria deliberately seek to contract local businesses wherever possible. In 2021, Shell Companies in Nigeria awarded $800 million worth of contracts to Nigerian-registered companies. Of these, 92% were companies with at least 51% Nigerian ownership. SNEPCo has awarded major engineering and construction contracts to companies that are indigenous, have local staff, or possess domestic capabilities in the country. At present, the manufacture and rebuild of hydraulic flying leads7 (HFLs) is being carried out in-country by wholly indigenous companies. Pressure Controls Systems Nigeria Limited, another Nigerian company, continues to refurbish old subsea trees.8 Sometimes, a lack of access to capital hinders Nigerian companies from competing for and executing contracts effectively. Shell Companies in Nigeria have provided access to nearly $1.6 billion in loans to 901 Nigerian vendors under the Shell Contractor Support Fund since 2012. These loans help improve their tendering opportunities.

Shell Companies in Nigeria also contribute to the safety of communities around their facilities by responding to third-party emergencies in these communities. These incidents include fires near our facilities. In 2021, Shell Companies in Nigeria responded to 32 third-party emergencies.

Tragically, six people working for a contractor company were killed in 2021 when gunmen attacked a convoy of buses traveling to the Assa North/Ohaji South gas development project site. A government security agent was also killed in the incident and seven other people were injured. This was a truly horrendous event.

SPDC, in its capacity as operator of the SPDC JV, and its employees, feel these losses deeply and, together with government security agencies, learn from such incidents to help prevent them from happening again. SPDC immediately stopped work on the site. Work will resume when we are satisfied that security has been restored around the project site. SPDC has supported the contractor during the emergency response and follow-on investigations.

Developing Gas Opportunities: Nigeria has around 200 trillion cubic feet of proven gas reserves and about 600 trillion cubic feet of unproven reserves. However, a lack of adequate power grid infrastructure results in unreliable power supply from the electricity grid and power shortages in urban and rural areas. The development of energy infrastructure is a priority for the country.

Nigeria has declared 2021-2030 the “Decade of Gas Development for Nigeria” and is determined to develop the gas sector to transform the country into an industrialised nation. Gas has enormous potential to diversify and lift the Nigerian economy.

Shell is investing in a gas portfolio that will increase supply for Nigeria’s growing industrial and commercial sectors, as well as international customers via an expanding network of plants, pipelines and export terminals. Shell has interests in two gas supply operations in Nigeria: NLNG and SNG. Both are supplied with gas by the SPDC JV and SNEPCo.

However, Nigeria needs to create an enabling environment to continue to foster investments in the gas sector.

According to Ed Ubong, SNG Managing Director and President of the Nigeria Gas Association, an enabling environment rests on the development of infrastructure across the gas value chain and a predictable regulatory, commercial and legal framework. He also states that all stakeholders need to uphold contracts and that resolving the security challenges in the Niger Delta is critical if Nigeria is to benefit from the “decade of gas”.

Shell Energy Nigeria To Grow SNG’s Customer Base Further: Nigeria has a population of more than 200 million and this is expected to double by 20505, so there is enormous potential to expand businesses within the domestic gas market. In 2021, on the back of the successes of SNG, Shell launched the Shell Energy Nigeria (SEN) business line. SEN aims to grow Shell’s natural gas marketing and sales business in Nigeria.

In 2021, SNG supplied more than 400 megawatts (MW) equivalent of gas-generated power in Nigeria. SEN’s goal is to distribute 1 billion cubic feet of gas in the domestic market by 2030.

SNG has a distribution network of 150 kilometers and is the only gas distribution company in Nigeria certified according to the ISO14001 international standard for an effective environmental management system. In 2021, it provided gas to more than 130 commercial and industrial customers.

In 2021, SNG signed a 20-year agreement for the domestic distribution of gas to industrial customers and manufacturing plants in Lagos and Ogun States. The new deal with the Nigerian Gas Marketing Company (NGMC) will also enable SNG to extend its distribution network to Badagry to serve a new market in the community that borders the Republic of Benin.

By the end of 2021, SNG had agreements in place with 165 customers across six states: Ogun, Abia, Rivers, Bayelsa, Oyo, and Lagos. The agreements will enable the supply of reliable, lower-carbon energy that drives industrialisation, provides employment for both the skilled and unskilled local population, as well as directly improve internally generated revenues in these states. Infrastructure is being built to supply gas to new customers where necessary as SNG was actually providing gas to around 130 customers at the time of writing this report.

Gas Partnership with Government: The SPDC JV has long produced oil in the Niger Delta but it also supplies about 10% of Nigeria’s domestic natural gas. Today, it aims to produce more natural gas and is working with the government and NNPC on developing four of the government’s seven designated critical gas supply projects. These are the Assa North/Ohaji South field; the four unitised gas fields – Samabri-Biseni, Akri-Oguta, Ubie-Oshi, and Afuo-Ogbainbri; Gas Supply to Brass Fertilizer Company; and Okpokunou/Tuomo West field cluster.

Construction of the Assa North/Ohaji South gas development project in Imo state started in 2019. However, the project was put on hold in August after the security incident described above. Prior to the suspension of the project, Assa North/Ohaji South was expected to be completed in 2023 with a potential capacity of 300 million standard cubic feet of gas per day, one of the largest domestic gas projects in Nigeria.

The other three projects are in the early stages and investment decisions have not yet been taken.

In 2021, the SPDC JV-operated AFAM VI power plant in the Oyigbo local government area of Rivers State supplied 7% of Nigeria’s grid-connected electricity. AFAM VI has a nameplate capacity of 650 megawatts (MW) but in 2021 operated between 250MW and 350MW depending on grid allocations. The SPDC JV’s Gbaran-Ubie gas plant achieved peak production in 2021 with about 182,000 barrels of oil equivalent per day.

Ending Routine Flaring: Shell Companies in Nigeria are working towards their goal of ending the routine flaring of associated gas from their oil production operations. They have made a series of investments and partnerships over the last 20 years to capture and supply associated gas for domestic and export markets.

In 2019, the Southern Swamp Associated Gas Solutions project was commissioned, and the SPDC JV is planning to reduce associated gas flaring further through its Forcados Yokri gas-gathering project, of which large parts are set to be completed in 2022.

Despite such efforts to reduce continuous flaring, unfortunately flaring intensity (the amount of gas flared for every tonne of oil and gas produced) at both SPDC- and SNEPCo-operated facilities increased in 2021 owing to short-term operational issues.

Flaring from SPDC-operated facilities increased by around 5% in 2021 compared with 2020.
The increase was primarily because of the extended outage of the gas compression system in SPDC’s shallow-water operations. The system was restored and became operational in January 2022.

Flaring at SNEPCo-operated facilities rose by around 160% in 2021 compared with 2020. This was mainly because of an increase in flaring on the Bonga floating production, storage, and offloading (FPSO) vessel. Repairs to a flex-joint on the Bonga FPSO’s gas export riser in the second quarter took longer than expected, in part because of weather conditions. While repairs were underway, the FPSO continued to produce oil, and therefore flaring was necessary for safety reasons. The repairs were safely concluded in July 2021.

Although flaring intensity levels rose in 2021, SPDC and SNEPCo over the last 10 years have almost halved the combined amount of hydrocarbons they flare from 1.5 million tonnes in 2012 to 0.8 million tonnes in 2021. This reduction is the result of a strict flaring reduction management process and both SPDC and SNEPCo will continue to work in close collaboration with joint-venture partners and the government to make progress toward ending routine
flaring of associated gas.

Nigeria LNG Expansion Underway: Global demand for LNG continues to grow as the world increasingly seeks reliable supplies of lower-carbon energy. Shell’s investment in Nigeria’s gas infrastructure for export is expected to help. This is according to data provided by global research and consultancy business Wood Mackenzie. the country benefits further from revenues. Shell Gas B.V. and its partners took a final investment decision in 2020 on a new LNG processing unit-known as Train 7 at NLNG.

The expansion is expected to create around 12,000 jobs for Nigerians during construction and stimulate the growth of the local oil and gas service sector, with 55% of engineering and procurement of goods and services being sourced in-country. Train 7 is expected to ensure Nigeria’s continued place as a global player in a lower-carbon energy source.

Once operational, Train 7 will add around 8 million tonnes per annum of capacity to the Bonny Island LNG facility, taking the total production to around 30 million tonnes per annum.

In 2021, NLNG began awarding procurement and construction contracts. Early works started at the site. The first phase of the worker village is expected to be ready for occupancy in 2022 and the new material offloading facility ready for use by the end of 2022. NLNG’s Train 7 is expected to come on stream in the middle of the 2020s.

Key Licence Renewed for Deep-Water: SNEPCo has interests in four deep-water blocks in the Gulf of Guinea, two of which it operates. Today, nearly one-third of Nigeria’s deep-water oil and gas production comes from the Bonga and the non-operated Erha fields.

Since production began in 2005, Bonga alone has produced more than 950 million barrels of oil with the 2021 average oil production per day at 105,000 barrels. The Bonga FPSO vessel has a total production capacity of 225,000 barrels of oil per day and 150 standard cubic feet of gas exported per day. In 2021, the availability of the FPSO vessel increased to 80% from 70% in 2020.

In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas over the last two decades, including the Bolia and Doro fields (Shell interest 55%).

In the right investment climate, SNEPCo believes that there are opportunities to expand. In 2021 the OML 118 (Bonga) production-sharing contract was renewed and the lease was extended for 20 years. Bonga North and Bonga South West Aparo (BSWA) oil fields are two such potential opportunities. Bonga North is a proposed tie-back project to the existing Bonga FPSO with Phase 1 comprising 14 wells. BSWA is a development of a new FPSO with Phase 1 comprising 23 wells.

Supporting Renewable Energy Startups: Millions of Nigerians are excluded from the country’s power grid and Shell Companies in Nigeria have established and provided substantial funding for a not-for-profit, an impact-investing company called All On. Operating as an independent company, All On works to bring reliable electricity – often from renewable energy sources — to off-grid urban and rural customers. This support aims to build a solid pipeline of viable businesses that can create the scale required to address Nigeria’s access to energy gap.

In December 2019, SPDC and SNEPCo made a significant additional 10-year financing commitment of $160 million in All On, bringing the total commitment to $200 million. By the end of 2021, All On had provided investment capital to over 40 renewable energy start-ups in its portfolio – an increase of more than 30% from 2020. One such company is Infibranches Technologies Limited, to which All On has committed $2 million, which is expected to enable the indigenous technology company to expand sales of solar home systems via its more than 13,000 agent banking partners across Nigeria.

With the support of the Rockefeller Foundation, the All On Hub was established in 2020 to provide nonfinancial support and build the capabilities of off-grid energy entrepreneurs. In 2021, the hub supported 81 ventures – nearly double the 41 supported in 2020.

Also in 2021, All On, Odyssey Energy Solutions, and the Global Energy Alliance for People and Planet launched a $10 million equipment financing facility as part of the DART pilot program in Nigeria. DART will combine demand pooling, aggregated purchasing of solar equipment, and access to affordable finance to unlock economies of scale for solar companies, achieve cost savings for end-users, and accelerate the growth of the renewable energy sector in Nigeria and beyond.

Developing Local Content and Skills: Shell Companies in Nigeria contribute to the growth of Nigerian businesses that can provide technical and support services to the industry. This includes the manufacture of tools and technical kits, the operation of helicopter flights in the Niger Delta, and strategic partnerships between foreign and local companies to stimulate technology transfer and capacity development.

While there are government-required programmes in some areas, such as the Nigerian and Community Content Strategy embedded in the Assa North/Ohaji South gas development project, Shell Companies in Nigeria deliberately seeks to contract local businesses
wherever possible.

In 2021, Shell Companies in Nigeria awarded $800 million worth of contracts to Nigerian registered companies. Of these, 92% were companies with at least 51% Nigerian ownership.

SNEPCo has awarded major engineering and construction contracts to companies that are indigenous, have local staff, or possess domestic capabilities in the country. At present, the manufacture and rebuild of hydraulic flying leads7 (HFLs) are being carried out in-country by wholly indigenous companies. Pressure Controls Systems Nigeria Limited, another Nigerian company, continues to refurbish old subsea trees.

Sometimes, a lack of access to capital hinders Nigerian companies from competing for and executing contracts effectively. Shell Companies in Nigeria have provided access to nearly $1.6 billion in loans to 901 Nigerian vendors under the Shell Contractor Support Fund since 2012. These loans help improve their tendering opportunities.

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Oil & Gas

Shell Advances In Gas Distribution, Deep-Water Exploration, And Production

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Mr. Osagie Okunbor, Managing Director, Shell Petroleum Development Company of Nigeria (SPDC) and Country Chairman of Shell Companies in Nigeria.

…Helping to power Nigeria’s economy

Olushola Okunlade Writes

The Shell Petroleum Development Company of Nigeria Limited (SPDC) has invested in businesses in Nigeria for more than 60 years and has shown growth interests in several companies that produce, distribute, and export oil, gas, and liquefied natural gas (LNG), and other energy products.

The Shell Nigeria Exploration and Production Company Limited (SNEPCo) produces oil and gas in the deep waters of the Gulf of Guinea. Shell Nigeria Gas Limited (SNG) provides gas to industrial and commercial customers.

Three businesses are ultimately wholly owned by Shell Plc and together are known as the Shell
Companies in Nigeria (SCiN): The Shell Petroleum Development Company of Nigeria Limited (SPDC) has a 30% share in the SPDC joint venture (SPDC JV) which produces oil and gas in the Niger Delta.

The SPDC JV has 16 Niger Delta onshore oil mining leases (OML) after the completion of the sale of its interest in OML 17 on January 15, 2021.

SPDC also has three shallow-water licenses (OMLs 74, 77, and 79) and a 40% interest in the non-Shell-operated Sunlink joint venture that has one shallow-water license (OML 144).

SNEPCo has interests in two Shell-operated deep-water blocks: Bonga (OML 118 – 55% interest) and Bolia/Doro (OML 135 – 55% interest).

SNEPCo also has an interest in the non-operated deep-water block: Erha (OML 133 – 43.75% interest). SNEPCo’s license for the non-operated Zabazaba block (OPL-245) expired in 2021.

Mr. Osagie Okunbor, Managing Director, Shell Petroleum Development Company of Nigeria (SPDC) and Country Chairman of Shell Companies in Nigeria.
Mr. Osagie Okunbor, Managing Director, Shell Petroleum Development Company of Nigeria (SPDC) and Country Chairman of Shell Companies in Nigeria.

Osagie Okunbor, Country Chairman of Shell Companies in Nigeria recalls last year’s achievement “I stand in awe of the sheer grit and determination of our staff and contractors that have enabled us to achieve most of our business goals despite the challenges that we have faced and continue to face. The year has so many success stories, including how we are advancing our ambitions in gas distribution and deep-water exploration and production.

“However, Shell Companies in Nigeria, like other operators, have suffered from a growing number of sabotage attacks on our oil wells and pipelines, as well as the rising levels of crude oil theft. This forced us to declare a force majeure on our Bonny export program, effective March 3, 2022. Now is the time to remind ourselves of a stark reality: the theft of crude oil is also the theft of jobs and opportunity. The illegal actions of third parties are robbing Nigeria’s economy of billions of dollars and this must end. I am also saddened by an unprecedented tragedy.

“In August 2021, gunmen attacked a convoy of buses carrying workers to the Assa North/Ohaji South gas project. They killed six contract workers and one government security agent. Seven others were injured. My thoughts and those of Shell are with the families who have lost their loved ones. We provided emergency support immediately after the attack and assisted in the investigation. I hope we never again witness such a horrific incident.

Shell Value Their Communities: Despite the security challenges we face, Shell Companies in Nigeria continue to contribute positively to the communities where we do business. Alongside
our long-standing health-care, education, enterprise development, and community-led programs, we have financially supported the purchase of vaccines for Nigeria through COVAX and we have launched awareness-raising and vaccination campaigns.

The highest concentration of direct social investment in 2021 within the Group was made in Nigeria. As a development partner with a strong belief in Nigeria, we will continue to support the country’s aspirations toward achieving the UN’s Sustainable Development Goals.

Shell is making advances within the access-to-energy space. All On, a not-for-profit, impact investment company to which SPDC and SNEPCo have committed around $200 million, has helped renewable energy start-ups to connect 45,000 off-grid customers and aims to increase this to 75,000 in 2022. All On, together with Odyssey Energy Solutions and the Global Alliance for People and Planet also launched a global procurement program for renewable energy
companies to help bring affordable, high-quality solar products to the Nigerian communities most in need.

“On behalf of Shell Companies in Nigeria, I congratulate All On for winning the 2021 impact investor of the year award in Nigeria conferred by the Impact Investors Foundation. I am also very proud to announce the completion of the Oloibiri Health Campus in the Ogbia area of Bayelsa State. Oloibiri holds a special place in the heart of Shell Companies in Nigeria because it is where we discovered oil many decades ago. The campus will be commissioned later in 2022 and includes a primary healthcare facility and a centre for specialist health services.

Shell’s relationship with Nigeria is strong, Shell has announced its intention to review options for its onshore Nigeria portfolio but Shell’s relationship with Nigeria remains strong. We may be changing the content of our portfolio but this is because we intend to focus future investment in Nigeria on deep-water exploration and production, and expanding our gas distribution network for domestic and international customers.

In 2021, the Bonga field’s oil mining lease (OML) 118 and its production sharing contract (PSC) were renewed for another 20 years. This lease underpins our deep-water operations. Its renewal opens up further opportunities for Shell in Nigeria. We also successfully launched the Shell Energy Nigeria business line to expand the gas distribution solutions being championed by SNG. I am confident that this move will extend the efforts of Shell in delivering gas for power and industrial use across the country.

Natural gas is a critical component of Nigeria’s economy and is very significant for the country’s energy transition. The growing global market for LNG is also driving the development of Nigeria LNG’s expansion with the construction of Train 7, which will
increase production capacity by 35% from the current 22 million to 30 million tonnes a year.

Recognition for Shell Companies in Nigeria Shell Companies in Nigeria received a number of accolades in 2021. For example, in May, we were named the International Oil Company with the most impactful Local Content Initiatives at the Nigerian Oil and Gas Opportunity Fair. In December, Nigeria’s Tertiary Education Trust Fund described the consistent contributions of SNEPCo to education in Nigeria as exemplary and worthy of emulation by other corporates.

Looking ahead, I hope that the business environment remains conducive to existing and new investors. I have no doubt that Nigeria, Nigerians, and my colleagues across Shell Companies in Nigeria will face whatever they must with the same compassion, dignity, and resilience that they have always shown, Okunbor concluded.

In addition, Shell Gas B.V. holds a 25.6% shareholding in Nigeria LNG Limited (NLNG) which produces and exports LNG to European and other markets. SPDC and SNEPCo also own All On Partnerships for Energy Access Limited (All On), a not-for-profit company limited by guarantee for the purpose of improving access to energy in Nigeria.

For more than 60 years, Shell has invested in Nigeria’s economy and the Nigerian people. Together, they have built robust oil and gas businesses and contributed to neighboring communities. Shell’s commitment remains strong, even as the content of our asset portfolio changes. Shell also announced a review of our Nigerian onshore oil investments.

Deep-water exploration and production in the Gulf of Guinea, where the renewal of the OML 118 license for 20 years has opened up further opportunities; and Expansion of the gas supply and distribution network within Nigeria and to international markets.

These ambitions align with Shell’s Powering Progress strategy and support Nigeria’s vision to provide reliable, affordable power to its people. In 2021, Nigeria continued to receive the largest concentration of social investment in Shell. Our healthcare and education programs helped thousands more people over the last year. We continue to work to bring energy to off-grid communities through All On, our not-for-profit impact investment company.

We will continue to clean up oil spills, despite the challenges arising from the illegal actions of third parties, such as sabotage and crude oil theft. The clean-up and remediation in the Ogoniland community of Bodo have made solid progress, with around 60% of the area remediated and 300,000 mangrove seedlings planted.

The Powering Progress: Powering Progress sets out Shell’s strategy to accelerate the transition of its business to net-zero emissions. It is designed to create value for our shareholders, customers, and wider society. Powering Progress has four main goals in support of Shell’s purpose, to power progress together by providing more and cleaner energy solutions. It is underpinned by our core values and focus on safety.

It has four main goals: achieving net-zero emissions, powering lives, respecting nature, and generating shareholder value.

2021 Key Developments Financial Sheet: Shell Companies in Nigeria spent $800 million on
contracts with Nigerian-registered companies which is the same level as 2020 spending.

$986 million in corporate taxes and royalties paid to the Federal Government of Nigeria (SPDC $424 million and SNEPCo $562 million), compared with $900 million in 2020.

The SPDC JV, SNEPCo, and SNG spent $33.82 million in direct social investment, compared with $49.4 million in 2020. The decline is largely because, in 2020, significant contributions were made to COVID-19-specific programs supporting communities impacted by the onset of the pandemic.

The SPDC JV, in compliance with statutory requirements, paid $38.7 million in 2021 to the Niger Delta Development Commission (NDDC). SNEPCo and its co-ventures paid $23 million
to the NDDC.

Combined production from SPDC and SNEPCo (Bonga) declined to 493,000 barrels of oil equivalent, compared with 614,000 barrels of oil equivalent in 2020. The decline was largely a result of divestment action and activity curtailment due to heightened security issues in the Niger Delta.

Shell Companies in Nigeria directly employed 2,500 people (of whom 97% were Nigerian nationals) with more than 8,500 contractors supporting operations.

Business Developments: Shell Energy Nigeria was established to focus on gas, power, renewables, and energy solutions for industrial and commercial customers.

SNG, the domestic gas distribution entity of the Shell Energy Nigeria business line, continues to expand and has signed agreements to deliver gas to around 165 corporate customers.

SNG provides gas to more than 130 commercial and industrial customers, at the time of writing. Infrastructure is being built to enable the delivery of gas to new customers.

SNEPCo, its OML 118 partners, and the Nigerian National Petroleum Corporation (NNPC) extended the OML 118 production-sharing contract (PSC) license for another 20 years, further incentivising the development of the OML 118 block and opening opportunities in Nigeria’s deep waters.

NLNG Train 7 early works, including engineering, procurement, and construction activities, have ramped up. SPDC completed the sale of its 30% interest in OML 17 for $533 million.

Shell has announced its intention to reduce its involvement in onshore oil and gas production in Nigeria and will continue to develop its deep-water oil and gas production and its gas supply businesses for domestic use and export.

Social Investment: The All On impact investment company increased the size of its total portfolio of renewable, energy access investee companies from 31 to more than 40, and the All On Hub increased its supported businesses from 41 to 81 ventures.

All On, together with Odyssey Energy Solutions and the Global Alliance for People and Planet, launched the Demand Aggregation for Renewable Technology (DART) program to bring affordable, high quality solar products to communities most in need.

Community Health Insurance Scheme added 8,180 people. More than 85,000 people have been enrolled across the Niger Delta since its launch in 2010. The scheme is a partnership between the SPDC JV, Rivers State Government, and local communities.

The health-in-Motion mobile community health outreach program added 2,451 people.
More than one million people across the Niger Delta have benefited since 2010.

The SPDC JV renewed five Global Memorandum of Understanding (GMoU) agreements to provide secure funding for community-led development programs and also deployed one new agreement. Over $98.6 million was disbursed over the last five years.

The SPDC JV and SNEPCo invested $6.2 million in education programs. More than 2,500 secondary school grants, over 3,200 university grants and 900 Cradle-to-Career scholarship
grants have been made since 2016.

The SPDC JV has delivered the first phase of a $5 million infrastructure project to the Nigeria Maritime University (NMU), Okerenkoko, Warri, Delta State.

The global Shell LiveWIRE entrepreneurship program helped 190 Nigerians through training and grants.

Spills and Clean-up: SPDC JV operational spills: nine1 incidents of more than 100 kilograms of crude oil compared with 12 incidents in 2020. The total volume of 29 tonnes of spilled crude was slightly less than the 30 tonnes reported in 2020.

Spills from illegal activities: 1062 incidents with volume of 3.3 thousand tonnes, compared with 122 incidents in 2020, with a volume of 1.5 thousand tonnes. The doubling of the volume was mainly attributable to one incident, caused by sabotage, which accounted for 2.3 thousand tonnes of crude oil. This was contained and around 90% recovered and returned to the system.

Ogoniland: Clean-up led by the government agency, Hydrocarbon Pollution, and Remediation Project (HYPREP). In 2021, remediation was completed and certified on nine sites; work continues on 11 sites.

Bodo: By the end of 2021, remediation was completed 60% of the clean-up area with around 300,000 mangrove seedlings planted so far out of the required 2 million seedlings that are planned by the end of 2025.

Nigeria is core to Shell’s business strategy, Shell remains committed to Nigeria and its people and has done business in the country for more than 60 years.

Like other multinationals, Shell continually seeks to enhance its portfolio of assets through selective investments and divestments in order to return value to shareholders.

Over the last decade, SPDC has reduced its licences in the Niger Delta by half and in 2021 completed the sale of its 30% interest in Oil Mining Lease (OML) 17 in the Eastern Niger Delta. Options for the remaining onshore portfolio are under consideration.

Security issues, sabotage, and crude oil theft in the Niger Delta remained significant challenges to our onshore operations in 2021. We continue to monitor the situation closely and evaluate implications for the integrity of our infrastructure and the sustainability of the SPDC JV’s operations.

Shell also announced their intention to review material portfolio options for onshore Nigeria, in line with our intent to focus future investment in Nigeria on our deep-water and gas positions. The company is in discussions with the Nigerian government and other stakeholders on how this can best be achieved.

Despite the required portfolio rebalancing, which is in line with Shell’s Powering Progress Strategy, Nigeria remains core for Shell and we will continue our investments in deep-water and gas.

Shell Recognition and Awards: In 2021 Shell Companies in Nigeria received numerous awards in recognition of their contribution to the country. Among these are:

YEAR AWARDING ORGANISATION AWARD TITLE/DESCRIPTION UNIT SCIN COMPANY

2021 – NCDMB NOGOF – The most impactful local content in the upstream category – SCiN

2021 – TETFUND – Tertiary Education Trust Fund – SNEPCo

2021 – SAIPEC – Health Safety and Environment (HSE) Company of the Year – SCiN

2021 – NOG – Women in Leadership of the Year Award – SNEPCo

2021 – FIRS – (Federal Inland Revenue Service) Remarkable Performance in Remittance of the various Taxes in 2021 Tax year – Shell

2021 – FIRS (Federal Inland Revenue Service) One of the best Tax Compliant Organization in Nigeria for 2021 Tax Year – Shell

2021 – NIES – Upstream company of the year 2021 – Shell

2021 – Nigeria International Energy Summit (NIES) Women in Energy award – SNEPCo

2021 – Manufacturers Association of Nigeria (MAN) In recognition of Shell’s contribution to powering industries in Nigeria and for its long partnership with MAN over the years – SNG

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We Are Working Towards Sustainable Industrialization Of Nigeria – NCDMB

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We Are Working Towards Sustainable Industrialization Of Nigeria – NCDMB

Olushola Okunlade Writes

The Nigerian Content Development and Monitoring Board, NCDMB, has expressed commitment to achieving sustainable industrialization in Nigeria.

The NCDMB aims at achieving this through patriotism, professionalism, and commitment to its Expatriate Quota Management, EQM, initiative.

The Executive Secretary, NCDMB, Engr. Simbi Wabote, who disclosed this at the stakeholders’ sensitization workshop on EQM, an initiative for companies in the Nigerian Oil and Gas Industry in Lagos, Wednesday, noted that the initiative falls under the medium-term plan of the NCDMB’s 10-year Strategic Road Map.

Engr. Wabote, who was represented by the Director, Planning, Research and Statistics, Mr. Daziba Obah, said: “On behalf of the Executive Secretary, NCDMB. I am highly delighted to welcome you all to this stakeholders sensitization workshop on the Expatriate Quota Management initiative for companies in the Nigerian Oil and Gas Industry.

We Are Working Towards Sustainable Industrialization Of Nigeria – NCDMB
Executive Secretary, NCDMB, Engr. Simbi Wabote.

“As a reputable Board, our Vision statement is to be the instrument for the industrialization of Nigeria. We hope to achieve this through an uncanny display of patriotism, integrity, team spirit, professionalism, creativity, and passion. In addition, as part of the Board’s 10-year strategic Road Map and implementation plan, the EQM initiative falls under the medium-term (3-5 year plan) of the 10-year Strategic Road Map.

“This event has been put together to create awareness and extend the EQ management initiatives to companies in the Nigerian Oil & Gas Industry and other agencies of government: The government agencies invited for the workshop are the Ministry of Interior (MOI), Nigerian Immigration Services (NIS), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA), & Nigerian Maritime Administration & Safety Agency (NIMASA).”

According to him, “The main thrust of the stakeholders’ sensitization workshop was to showcase the features on the NOGIC-JQS portal to the industry stakeholders, take the stakeholders through the different modules to address various issues of concerns in using the NOGIC-JQS portal, and provide an opportunity to educate the industry stakeholders of the possible benefits of using the NOGIC JQS platform.”

He maintained that it was also aimed at, “Presenting an opportunity to inform the industry stakeholders of the need for constant update of their JQS profile accounts, Present an opportunity to interact with the industry stakeholders on the possible ways to gather quality data through the JQS platform, extend Expatriate Quota Management initiative to companies operating in the Oil and Gas Industry & strengthen compliance with the NOGICD-ACT 2010 and discuss Expatriate Quota application process, Temporary Work Permit processes, Expatriate Biometric Data Capture Scheme, 1% NCDF Remittancesvia the NOGIC-JQS portal and any other issue of concerns.”

He also explained that “The Nigerian Oil and Gas Content Industry Joint Qualification System (NOGICJQS) is the industry databank for available capacities and capabilities used for the Nigerian Content registration and pre-qualification of contractors in the industry; verification of contractors’ capacities and capabilities; evaluation of the application of Nigerian Content in the operations of oil companies and contractors; database for national skills development; and ranking and categorization of service companies based on capacities and Nigerian Content.

“Equally important is the automation of some of the Board’s business processes via our NOGIC-JQS platform, which included, “Expatriate Quota Management Module- EQ, TWP & Exchange Program, Tender Management Module, NCEC Management Module, Marine Vessel Management Module, and Whistle Blower Module.”

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