Author: Sasforde

Aliko Dangote, group chairman and founder of Dangote Group has disclosed that the newly built Dangote refinery located in Lagos, Nigeria would not have been possible without the African Export-Import Bank (Afreximbank), the International Finance Corporation (IFC), and Access Bank.

He also disclosed that he has paid interest and principal of about $2.4 billion out of the $5.5 billion borrowed to establish the refinery in Nigeria.

Dangote said this on Tuesday during a fireside chat with CNN on ‘Using Industrial Transformation to Build Bridges: The Global Africa Vision and Experience of the Dangote Group’, at the ongoing 2024 Afreximbank annual meetings, incorporating Africaribbean trade and investment forum, in Nassau, The Bahamas.

“We borrowed the money based on our balance sheet, we borrowed a total of $5.5 billion but we have paid a lot of interest as we go along because the project was delayed because of lack of land, also the sand filling. It took a long time, almost six years or so. We didn’t do anything for five years.

“It was actually in 2018 that we started. We borrowed that much, we have actually of course paid interest and some principal, of about $2.4 billion. So, we’ve done very well. We now have only about $2.7 billion left to be paid. So we’ve done very well for a project of that magnitude,” he said.

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“I think the luck that we had by getting the refinery done is because people believed that we were crazy, it will never happen. So I think the people who were sabotaging us were less concerned because they knew that these guys had entered into something that they were going to finish. They thought that we were going to fail. And I must thank a lot of our bankers for not panicking.

“The issue is that I must say, not because Benedict Oramah is here, but I can tell you, this refinery wouldn’t have been possible without Afreximbank. I think he’s one person who has so much belief in the refinery himself and then the other gentleman who is late now, Herbert Wigwe of Access Bank.

“Oramah is actually more convinced than some of my staff. Yes, he’s more convinced because when we took him there, both him and some of his board members, they became so much sort of convinced that this is the right way to go. And I must honestly tell you that, which I told you in the interview, even though I didn’t see that path. I said without the likes of Afreximbank, African Finance Corporation (IFC), it will be very difficult for us to industrialise,” Dangote said.

Narrating his experience in the refinery journey, he said, “I feel great but we really went through tough times, also including covid-19 time. So, during the setting up of the refinery, when we thought about building the refinery, we first of all did not have a clue of how huge this refinery is going to turn out to be. That is the reason we went into building the refinery. If we knew what we were really going to get into, we would not have started at all.”

The Nigerian National Petroleum Company Limited (NNPC) and its partner, TotalEnergies, have agreed to invest $550 million for the development of a gas processing facility in southern Rivers State to boost exports and domestic supplies of gas.

An official at NNPC who is privy to the agreement disclosed this to Reuters yesterday, saying the investment would include a gas processing plant and a pipeline.

TotalEnergies declined to comment while the NNPC source said an announcement would be made this week, according to the international news agency.

The gas processing facility would be built on the Ubeta onshore gas field, jointly owned by TotalEnergies and NNPC and would supply gas to the Nigeria Liquefied Natural Gas (NLNG) plant, the report stated.

The NLNG is a consortium between NNPC, Shell, TotalEnergies and Italy’s Eni (ENI).

When completed, the plant would generate 350 million standard cubic feet per day of gas (mmscf/d) and 10,000 barrels per day of associated liquids, the source stated.

Nigeria, which holds Africa’s largest natural gas reserves of over 209 trillion cubic feet (tcf) flares – or burns off gas from its oil fields because it lacks processing infrastructure and faces capital constraints.

The latest investment could mean President Bola Tinubu’s bid to attract investment into Nigeria’s energy sector is beginning to succeed, analysts said.

“The government will hope this offers confidence not only in the quality of the Nigerian resource base, but also in the government’s pledge to improve ease of doing business,” Reuters quoted the Director, sub-Saharan Africa at Political Risk Consultancy Horizon Engage, Clementine Wallop, to have said.

Energy analysts hold the view that Nigeria has failed to increase its exports to the European Union after the bloc sought alternative supplies to make up for lost Russian imports because of the Ukraine War.

Locally, Nigeria is struggling to feed its gas power plants that generate most of its grid electricity, the report added.

The Federal Government has re-engineered Nigeria’s oil bidding process with emphasis on production bonuses, targeted at enabling investors to channel their scarce resources into immediate development and early production.

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In the past, emphasis was placed on the high signature bonus, a development that discouraged local and foreign investors from investing while also scuttling early development and commencement of oil and gas production as well as the unlocking of many multiplier effects.

But under the new arrangement, the industry regulator, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, has removed entry barriers, including the slashing of the signature bonus – a single, non-recoverable lump sum payment made upfront by oil companies to the government for the rights to develop an oil block commercially after successfully winning in the license bid round – to only $10 million for deepwater assets and $7 million for shallow water and onshore assets.

The strategy aims at growing oil and gas production, enhancing Nigerian Content Development, attracting Foreign Direct Investment, contributing to long-term global energy sufficiency, expanding opportunities for gas utilization, and creating employment opportunities while adding value to government and investors.

According to experts, the development illustrates the sensitivity of the Commission to developments around the world, especially the sustainable rise in Capital Expenditure, CAPEX, going into funding renewables in the spirit of the global energy transition.

They said it further showed its accurate comprehension of trends in other oil and gas climes; where the governments have drastically reduced signature bonus to attract investors and financiers into their industries.

Available data indicate that in the Middle East and North Africa, signature bonus currently stands at about $10 million while Thailand and Indonesia have about $3 million (minimum) and N1.5 million, respectively, meaning that Nigeria’s oil and gas landscape is now in alignment with the rest of the world.

Besides, the current bidding also opens a window for investors to bid for the 2022 blocks based on the current incentivized terms instead of paying the previous $50 million.

It was gathered that Nigeria will be able to complete many projects, leading to the creation of many multiplier effects, including production capacity, employment, contracts, community development, local content and gas-to-power, thus providing more energy to households and businesses nationwide.

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Also, it was further gathered that Nigeria will be able to generate substantial revenue in the form of production bonus when investors begin their oil and gas production.

Commenting on the development, the Executive Chairman, African Energy Chamber, NJ Ayuk, said: “Nigeria has established a robust framework that is set to attract foreign exploration companies with modernised fiscals that are competitive for deepwater exploration. We the AEC believe the most lucrative balancing point between creating a welcoming environment for international companies and achieving Nigeria’s own national goals is important.

“Key to this bidding round will be the role of independents and indigenous players when it comes to exploration. The bidding round also paves the way for gas monetisation that will bring amazing benefits to Nigeria and also international markets.”

Similarly, the Executive Director, Emmanuel Egbogah Foundation for Petroleum, Prof. Wumi Iledare, said: “A high signature bonus is regressive. It does make a petroleum province with a high signature bonus less attractive.”

On his part, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “Investors need a conducive environment to put their money. Once the right environment exists, foreign capital will begin to flow in.”

However, speaking at the recent pre-bidding conference in Lagos, the Commission Executive, NUPRC, Engr. Gbenga Komolafe, said: “A review of Welligence Energy Analytics reports on Licensing rounds across the globe including Brazil, Guyana, Angola, Middle East, North Africa, SouthEast Asia, etc, revealed that the era of huge front-loaded signature bonuses is over.

“Accordingly, Nigeria under President Bola Ahmed Tinubu, as the Minster of Petroleum Resources has proactively and intuitively vacated barrier to entry for investment in exploration blocks being offered, in both the 2022 deep offshore bid round and the 2024 licensing round, in line with international best practices.”

He said: “President Bola Ahmed Tinubu and Minister of Petroleum Resources, Nigeria have embarked on a transformative agenda that aligns with the most stringent global standards and commitments. The recent Presidential Executive Orders issued in March this year, aimed at improving the efficiency and attractiveness of Nigeria’s oil and gas sector, were generously targeted to incentivize oil and gas development, introduced measures to balance the implementation of Nigerian Oil and Gas Industry Content Development Act, 2010 to ensure that oil and gas development is not hindered by local content bottlenecks. The Executive Orders also include directives on the reduction of contracting costs and timelines to enhance the global competitiveness of our oil and gas industry and achieve a higher rate of return on oil and gas investments.

“Nigeria is endowed with abundance of Crude Oil and Condensate Reserves and of Natural Gas Reserves representing above 30% and 33% respectively of the entire Oil and Gas reserves in Africa aside abundant mix of other renewable energy resources. In a bid to exploit and optimize these abundant Hydrocarbon resources, Section 7(t) of the Petroleum Industry Act (PIA) empowers the NUPRC, the Industry Regulator to conduct bid rounds for the award of PPLs and PMLs under the Act and applicable Regulations.

“It is on this premise that the Federal Government of Nigeria through the NUPRC recently announced the commencement of the 2024 Licensing Round both in-country and outside the shores of the nation. It would be recalled that we commenced the announcement at the maiden edition of the NEITI Dialogue Session, 2024, where the bid processes were thoroughly interrogated by civil society and the media.

“This was subsequently followed by the announcement of the commencement of the bid round at the 2024 OTC in Houston, the roadshow in Miami organized by Zeste Advisory, African Energies Summit in London organized by Frontier Network and Invest in Africa Energy Summit in Paris organized by Energy Capital Power. The Commission aims to project and attract robust local and foreign investors who will be participating in the bid exercise.”

He also said: “The NUPRC on behalf of the Federal Republic of Nigeria is committed to conducting the licensing round in a fair, competitive and transparent manner and ensuring a level playing field for both indigenous and international investors. Our approach is underpinned by the robust legal framework of the Petroleum Industry Act 2021(PIA), which ensures compliance with best practices to boost investors’ confidence.

President Bola Tinubu is set to inaugurate three vital gas infrastructure projects carried out by the Nigerian National Petroleum Company Limited (NNPCL) and its partners.

This is contained in a statement by the President’s spokesperson, Ajuri Ngelale, on Friday in Abuja.

According to the statement, the projects will enhance the federal government’s initiative to increase the value derived from the nation’s gas assets and eliminate gas flaring.

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Ngelale pointed out that the delivery of the projects was expedited from the start of the administration, aligning with the overarching goal of enhancing domestic gas supply as a vital catalyst for economic prosperity.

“In line with his commitment to significantly leverage gas to grow the economy, President Bola Tinubu will commission three critical gas infrastructure projects being undertaken by the Nigerian National Petroleum Company Limited (NNPCL) and partners.
“The projects support the federal government’s effort to grow value from the nation’s gas assets while eliminating gas flaring.
“The delivery of the projects was accelerated from the inception of the administration in keeping with the overall objective of deepening domestic gas supply as a critical enabler for economic prosperity,” Ngelale noted.
The Projects to be Commissioned by the President
The projects lined up for commissioning include:

1. AHL Gas Processing Plant 2 (GPP – 2) – 200mmscf/dd:
This project is an expansion to the Kwale Gas Processing Plant (GPP – 1), which currently supplies about 130MMscf/d of gas to the domestic market. The processing plant is designed to process 200MMscf/d of rich gas and deliver lean gas through the OB3 Gas Pipeline.
This additional gas supply will support further rapid industrialization of Nigeria. The plant will also produce about 160,000 MTPA of Propane and 100,000 MTPA of Butane, which will reduce the dependency on LPG Imports.
The AHL Gas Plant is being developed by AHL Limited, an incorporated Joint Venture owned by NNPC Limited and SEEPCO.

2. ANOH Gas Processing Plant (AGPC) – 300MMscf/d:
The ANOH gas plant is an integrated 300MMscf/d capacity gas processing plant designed to process non-associated gas from the Assa North-Ohaji South field in Imo State.
The plant will produce dry gas, condensate, and LPG. The gas from ANOH gas plant will significantly increase the domestic gas supply, leading to increased power generation and accelerated industrialization.
The ANOH Gas Plant is being developed by ANOH Gas Processing Company, an incorporated Joint Venture owned by NNPC Limited and Seplat Energy Plc on a 50-50 basis.

3. ANOH-OB3 CTMS Gas Pipeline Project:
The project involves the engineering, procurement, and construction of 36”x23.3km ANOH-OB3 Project.
The Transmission Gas Pipeline will evacuate dry gas from the Assa North-Ohaji South (ANOH) primary treatment facility (PTF) to OB3 Custody Transfer Metering Station (CTMS) for delivery into the OB3 pipeline system.
About 600MMscf/d is estimated to be available from two separate 2 x 300MMscf/d capacity gas processing production trains from AGPC & SPDC JV.

Furthermore, Ngelale further stated that the projects will boost gas supply to the domestic market by about 500 million standard cubic feet per day, fostering a more favorable investment environment and cumulatively promoting balanced economic growth following their commissioning.

What you should know
Earlier in February, President Bola Tinubu signed new executive orders aimed at enhancing the investment environment and establishing Nigeria as the top choice for investments in the oil and gas industry across Africa.

The president issued this policy directive in Abuja’s extensive engagements with major stakeholders in the sector.
The directives entail the provision of financial incentives for the development of non-associated gas, midstream operations, and deepwater projects.
In addition, the initiative focused on optimizing the contracting process to decrease the cycle time to six months.

The Nigerian National Petroleum Company Limited (NNPCL) has warned the public against panic buying of the premium motor spirit (PMS), also known as petrol, stating that it has about 1.5 billion litres of the product which would be sufficient for 30 days’ supply.

This was disclosed in a statement by the company, noting that queues across fuel stations in the country have reduced significantly over the measures it has taken to address supply scarcity.

It stated, “
As the nationwide supply and distribution of Premium Motor Spirit (PMS), also known as petrol, continue to improve, the Nigerian National Petroleum Company (NNPC) Limited has once again called on motorists to shun panic buying of the product.”

“The Company wishes to state that at the moment, it has over 1.5 billion litres stock of PMS, which is equivalent to over 30 days sufficiency.”

The company further noted that it is collaborating with relevant agencies, the Nigerian Mainstream and Downstream Petroleum Regulatory Authority (NMDPRA), labour unions and security agents to address uncompetitive practices and hoarding by marketers and distributors.

“It stated,
“The NNPC Ltd. is also collaborating with relevant downstream agencies, such as the Nigeran Midstream & Downstream Petroleum Regulatory Authority (NMDPRA), labour unions in the sector and security operatives, to address hoarding and other unwholesome practices.”

Backstory
In the past week, Nigerians have had to queue for petrol due to shortages in the supply of the product, resulting in a significant increase in its pump price across the country.

Although the NNPCL stated that the scarcity would be over in three days, blaming the shortages on logistical and distribution issues. However, the scarcity has lingered on and resulted in a significant increase in transportation costs for members of the public.

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What you should know
An investigation by Nairametrics revealed that petrol sold for over N700 per litre in Abuja, Lagos and Ogun states. In some places, the price of petrol was as high as N1500 per litre in the “black market” last week.

Furthermore, Nairametrics also reported significant increases in transportation costs following the scarcity and resultant hike in petrol prices. In some cases, the increase in transport fares was as high as 100% and on average there was a 50% increase in transport costs following the scarcity of petrol in Lagos.

Also, the scarcity in transport costs also brought to the fore the discussion on resumption in payment of subsidy for petrol after the removal in 2023. The CEO of Rain Oil, Mr Gabriel Ogbechie, had earlier stated that the Federal Government was spending around N600 billion monthly on fuel subsidy, mainly due to the significant depreciation of the naira.

The Nigerian National Petroleum Company Exploration and Production Limited (NNPC E&P Ltd.) and its partner, Natural Oilfield Services Ltd. (NOSL), have announced the commencement of crude oil production at Oil Mining Lease (OML) 13 in Akwa Ibom State.

The NNPCL disclosed this in a press statement signed by its Communications Officer, Olufemi Soneye, where it stated that oil production began in the location on the 6th of May 2024 with 6,000 barrels daily.

The company further said that daily oil production in OML 13 is expected to rise to 40,000 barrels per day by the 27th of May 2024.

It stated, “NNPC Exploration and Production Limited (NNPC E&P Ltd.), NNPC Ltd.’s flagship upstream subsidiary, and Natural Oilfield Services Ltd. (NOSL), a subsidiary of Sterling Oil Exploration & Energy Production Company Ltd. (SEEPCO), announce the successful commencement of oil production at Oil Mining Lease (OML) 13 in Akwa Ibom State, Nigeria.”

“The production, which commenced on the 6th of May 2024, with 6,000 barrels of oil, is expected to be ramped up to 40,000 barrels per day by May 27th, 2024.”

Increase in oil production
The company explained that the commencement of crude oil production in OML 13 signifies an intent to increase the volume of oil production in the country to meet local energy needs and propel economic growth.

The statement further read, “The achievement does not only signify the culmination of rigorous planning and execution by the teams involved but also represents a new era of economic empowerment and development opportunities for the host communities.”

“Furthermore, for Nigeria, the first oil from OML 13 holds some significance as it contributes to the country’s efforts to increase its oil production capacity, which is crucial for meeting domestic energy needs and driving economic growth.”

Regarding environmental and sustainability considerations, the NNPCL and its partner promised that its operations would be done in a safe and environmentally responsible manner beneficial to its host community.

What you should know
Production at the OML 13 conventional oil development project was earlier stated to commence in 2024, with peak output anticipated in 2029.

Under the current economic projections, it is expected that production will persist until the field reaches its economic limit in 2063, according to Global data.

Nigeria is desperate to increase oil production to meet local revenue expectations and generate needed foreign exchange (FX). In the first quarter of 2024, Nigeria barely met its OPEC production quota of 1.5 million bpd.