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21/08/2015 News

Total at SPE Nigeria International Conference & Exhibition (NAICE) 2015

… Provides Guidelines for Unlocking Nigeria’s Gas Potential

The 39th edition of the Nigeria Annual International Conference & Exhibition (NAICE) of the Society of Petroleum Engineers (SPE) Nigeria Council took place from 4-6 August 2015 in Lagos.

Total was a sponsor of the 3-day conference which also featured technical sessions, stakeholder engagement session, banquet and awards, panel discussions and exhibition amongst others. Our downstream subsidiary Total Nigeria Plc also participated and exhibited products in the Total booth.

Total was represented by the Deputy Managing Director, Deep Water District, Total E&P Nigeria Ltd, Mr. Ahmadu-Kida Musa who spoke on behalf of the Managing Director, Mrs. Elisabeth Proust.

“With the right enabling environment, Nigeria will benefit domestically from the multiplier effect of natural gas to diversify its economy, create jobs and boost the economy,” Mrs. Proust said at the opening ceremony.

Explaining further, she stressed that “Nigeria has tremendous gas reserves and should be self-sufficient in both gas and power. Only about 46 trillion cubic feet (TCF) of the reported 178 TCF of discovered gas resources is currently developed.  A joint effort by all stakeholders is needed to unlock the remaining 133TCF of gas to power the country and boost its economy.”

The Managing Director disclosed that Nigeria’s gas production had been “hampered by high development costs and low gas prices, unfavourable fiscal regime, inadequate infrastructure, prolonged project and contract approval process, payment insecurity,” among other factors. She recommended that the following conditions be put in place to unlock the huge potential of the sector:

  • Proper commercial and fiscal terms that enable gas development
  • Settlement of outstanding gas and power debts and ensuring payment security
  • Promote willing-buyer/willing-seller market.  Over-regulation, unworkable domestic gas obligations and penalties, price aggregation and allocation of GPOs should either be reviewed or discontinued.
  • Deregulation of gas prices and provision of proper enablers that could unlock ~25 TCF of gas resources in the near term; or up to ~15 GW power.
  • Ensure a power tariff level that provides a commercial return across the entire gas-to-power value chain
  • Set globally competitive fiscals for gas, considering the total government take and returns sufficient to attract the required investment. PSC gas terms must be agreed; otherwise deep water gas will not be developed.
  • Sufficient infrastructure: Nigeria lacks adequate back-bone infrastructure to enable sufficient delivery of gas to off-takers. Incentives are required to attract required investment in gas infrastructure.
  • Adequate Joint Venture funding with a fully funded long term domestic gas budget
  • Provision of a conducive business environment. There must be harmonisation, consolidation and streamlining of regulatory institutions with significant overlapping functions and responsibilities (e.g., Department of Petroleum Resources (DPR) and NOSDRA, NIMASA, Weight and Measure – FMITI) and elimination of multiplicity of fees and levies collection via several agencies.
  • Promote stability in laws and policies, sanctity of contracts and independent, fair resolution of disputes in any laws, such as the Petroleum Industry Bill (PIB).
  • Immediately address the lengthy Nigerian National Petroleum Corporation (NNPC) and Nigerian Content Development and Monitoring Board (NCDMB) contracting process to reduce the lead time (currently 24-36 months). This lengthy process adds a tremendous cost to every contract. A good start would be to clear the backlog of pending NNPC Board approvals.

    In his welcome remark, the Chairman SPE Nigeria Council, Mr. Emeka Ene described the SPE conference as the largest gathering of oil and gas experts in Africa.

“Oil and gas industry remains the building block as well as plays important role in the economic development of our country…and will remain important even in times when oil prices are low. We need to evolve our energy policy in the short and long term to put our oil to good use. Today, oil prices are low but also present a huge opportunity for Nigeria and the rest of Africa to diversify our economies from oil to gas,” he advised.

The General Manager Services at the National Petroleum Investment Management Services (NAPIMS), Mr. Abu-Bakr Nuhu Mohammed who represented the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) called for innovative financing schemes to attend to the challenge of gas financing and disclosed government’s plan to come up with anti-sabotage law to check pipeline vandalism.

Other speakers included the Chairman Emerald Energy Resources Limited, Dr. Emmanuel Egbogah; Chairman & Managing Director, Chevron Nigeria Limited, Mr. Clay Neff; Managing Director Seplat Petroleum Development Company, Mr. Austin Avuru and the Vice President Strategy/Portfolio Development & Production, North America, Statoil, Mr. Helge Hove Haldorsen.