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2013 September, SweetcrudeReports


CBN honours PEF for efficient payment system YEMIE ADEOYE


he Petroleum Equalisation F u n d (Management) Board is among five public and private organisations honoured at the maiden International Conference on payment systems organised by the Central Bank of Nigeria, CBN. PEF's spokesman, Mr. Goddy Nnadi, disclosed this in a statement made a v a i l a b l e t o SweetcrudeReports, saying all five institutions were recognised for effective deployment of end-to-end electronic payment platform for effective and efficient service delivery. CBN governor, Mallam Sanusi Lamido Sanusi, presented the award to the companies at the conference, which held at the Congress Hall of the Transcorp Hilton, Hotel, Abuja. Executive Secretary of the

Sanusi, CBN Governor PEF Board, Mrs Adefunke Sharon Kasali led the PEFMB team to receive the award meant to recognise the organisation for its ‘‘committed and effective usage of end-to-end epayment’’ in its operations.

The statement said other organisations that were honoured along with the PEFMB are Bemil Nigeria Limited, Guinness Nigeria Plc, Ministry of local Government and Chieftaincy Affairs, Kano State, and the

Kano state Universal Basic Education Board. The CBN instituted the award to recognise public and private sector organisations that have demonstrated significant adoption of electronic

Nigeria behind other oil producing nations on SWF —Report


report by BGL Securities Limited says Nigeria, with its $1 billion investment in the Sovereign Wealth Fund, SWF, is behind other major oil producing nations in relation to investment in the Fund. The Nigeria Sovereign Investment Authority, NSIA, which administers the Fund on behalf of the Nigerian government, commenced the investment of the Nigerian funds in June this year, with a pledge to ensure judicious use of the $1 billion seed fund. The BGL report said the amount of money put into the scheme by the Nigerian government when compared

to those of other oil producers and when measured in terms of volume of oil production, showed that of Nigeria as minimal. Norway has the largest SWF of $737.2 billion and has daily oil production of 1.92 million barrels per day, b/d, the report said. Saudi Arabia with $657.9 billion and 11.55 million barrels per day oil production is second while the United Arab Emirates is next with $627 billion and 3.21 million barrels per day oil output. Next, according to the report, is Kuwait with $386 billion, producing 2.78 million barrels of oil per day. Nigeria's fellow Africa and OPEC member, Algeria boosts

SWF of $77.2 billion, producing 1.8 million barrels of oil day as against Nigeria which is managing a SWF of $1 billion from its daily oil production of about 2.2 million barrels. BGL said of this finding in relation to Nigeria; "There is a lesson for Nigeria to learn from the foregoing. Petroleum production and exports currently play a dominant role in Nigeria’s economy and accounts for about 90 per cent of her gross earnings. "This dominant role has pushed agriculture, the traditional mainstay of the economy till the early 1970s, into the background. During those periods, agricultural

produce exports were the main source of foreign exchange earnings for the economy with the production and export of cocoa, groundnut, rubber, palm kernels and palm oil accounting for 96.4 per cent of total exports earnings; non-oil export products accounted for 97.3 per cent of total export then. "In our opinion, those days can be conveniently brought back.

payments in line with the apex bank’s initiative on endto-end e-payment of salaries, pension, tax and suppliers. According to the CBN, the end-to-end initiative refers to the seamless electronic processing and payment of all forms of salaries, pensions, suppliers and taxes with the electronic delivery of associated schedules alongside payment transactions on CBN approved electronic platforms. Such system includes the ability of a payer to independently monitor and obtain electronic feedback on the status of any payment, at any time without depending on any third party manual or semi-manual means. T h e P e t r o l e u m Equalisation Fund (Management) Board is the first organisation to introduce the electronic payment system in the public service. This eliminated all inefficiencies in the payment process and engendered faster settlement of marketers' claims. The epayment has been adopted by all agencies after the Board was reviewed as a case study. Also, PEFMB runs a complete paperless system covering all payments and processes, including processing and payment of marketers claims auditing, salaries, pensions and third party payments. In January, the Board launched "Project Aquila", an in-house developed electronic solution meant to check leakages, enthrone transparency and drive p r o c e s s e s w h i l e transforming the Board’s operations for a more efficient and effective service delivery to all stakeholders. Project Aquila enabled automated data capture, faster processing and payment of claims, with an online real-time information management system.

2013 September, SweetcrudeReports






t has been reaping t i m e f o r shareholders of N i g e r i a ' s integrated energy group, Oando Plc, in the last two months. The company, which achieved a profit after tax of N10.9 billion for the year ended December 31, 2012, has been paying dividend to its teeming shareholders since August. The company now says it has completed the exercise. "The centrepiece of our overall growth strategy remains focused on steady and progressive value creation for our shareholders. With a business such as ours that guarantees steady returns on investments, we are positioning ourselves to ensure that our shareholders continue to enjoy an exemplary dividend pay-out year after year," said Mr. Wale Tinubu, Managing Director and Chief Executive Officer of Oando, which is listed on both the Nigerian Stock Exchange, NSE, and South Africa's Johannesburg Stock Exchange, JSE. The company said in a statement in Lagos that it concluded payment of the dividend on Monday, September 2, adding that the

It's reaping time for Oando shareholders dividend payment of N5.1 billion was based on its N10.9 billion profit after tax at the end of the year. Dr. Faruk Umar, president of Association for the Advancement of the Rights of Nigerian Shareholders, AARNS, confirmed having received his dividend, saying: "Shareholders who have edividend accounts had their accounted credited directly by

the registrars and I got mine through this medium. "This is why we have urged our fellow shareholders to embrace e-dividend because it has many benefits," Faruk said. As at the end of the year, Oando recorded a profit after tax of N10.9 billion, with the board recommending N5.1 billion as dividend on the basis of 75 kobo per share.

This was later approved in the July annual general meeting of the company by the shareholders. Oando is a Pan- African multinational energy corporation with headquarters in Lagos, Nigeria, but with operations in various African countries. It is engaged in every aspect of the energy value chain, including

petrochemicals, exploration and production; refining, and power generation. It is Nigeria's largest nongovernment owned company in the energy industry and the first Nigerian company to achieve a dual listing on both the NSE and JSE. It boasts a market capitalisation in the region of $1 billion.

UBA targets Africa power sector with $2bn


he United Bank for Africa, UBA, is searching for opportunities to put $2 billion in the power sector across Africa. Managing Director and Chief Executive Officer, Phillips Oduoza, said the investment is for the next three years, as he disclosed an expenditure of $700 million on the

sector by the bank already. "We have been financing different parts of the power sector both generation and distribution. We are looking in Nigeria and across Africa with around $2 billion in the next three years," Oduoza said in Abuja. Out of the planned expenditure, about $1.2 billion has been earmarked for Nigeria, which is

suffering massive power shortages as demand outstrips supply, forcing those who can afford it to rely on diesel generators. The state-owned Power Holding Company of Nigeria has been broken up into 11 generation companies and six distribution companies, all being sold separately to private consortia, for a total of around $2.5 billion.

Nigeria is reforming its electricity sector in a privatisation scheme meant to end the country’s chronic power shortages. Oduoza also said UBA plans to grow loans by around 14 percent in the next six months, as it had done in the last six months.

2013 September, SweetcrudeReports



Oil firms rein in spending to save cash for dividends


il and gas firms are cutting back o n investments to try and improve profits and save cash for dividends, perhaps signalling an end to a decade-long boom in capital spending. Companies seeking to bring oil fields into production have splashed out on new drilling, equipment or pipelines, supported by rising oil prices. But suppliers and analysts expect investment growth to slow sharply this year and in 2014, in line with a projected fall in oil prices. The spending boom has squeezed budgets and forced companies to sell assets and issue debt to pay dividends. Onshore spending will be hurt the most, including the saturated US shale segment. New ultradeep markets, such as Brazil, West Africa and Mexico, will still flourish, however, as they offer the rare opportunities for big finds. "Oil firms have a dilemma: They still need to grow their production, which is virtually flat and even declining, so they have to spend but will have to become much more selective," Magnus Lundetrae, the chief financial officer of Seadrill , the world’s biggest offshore rig operator said. "In total they’ll spend around $700 billion (this) year…I expect spending to be flat (from next year) … with onshore declining and offset by deepwater." Many companies prefer to quietly delay projects but there have been a few high profile casualties already this year including Statoil delaying its $15 billion Johan Castberg project in Norway’s Arctic and BP reconsidering its $10 billion Mad Dog project in the U.S. Gulf of Mexico. Nordic bank SEB, a major lender to the sector, has cut its estimate of exploration and production spending from a rise of 12 percent this year, broadly in line with

Oil refinery

2012, to 7 percent this year and 4 percent next year. Deutsche Bank said growth could be even lower, falling to 5 percent this year and 1 percent next year. Norway said it expects capital spending in its offshore market to rise just 1 percent next year after growing 18 percent in 2012. "A balanced oil market with stable to slightly lower oil prices, rapid growth in U.S. tight oil production and lower free cash flow have a dampening effect on budgets," SEB analyst Terje Fatnes said. Capital spending has grown by more than 10 percent a year since 2003 and oil prices have

risen nearly four-fold to $115 per barrel but energy firms have not reaped major benefits because they have not become more efficient, analysts say. Their return on average capital employed, a measure that shows profitability on investments, fell from over 15 percent six years ago to just 9 percent now, analysts say. Credit Suisse estimates that capital spending per barrel rose by around 14 percent between 2005 and 2012 while production is expected to rise just over 1 percent this year and next.

Low Valuation Spending is so high that cash flow from operations cannot cover dividends so the net cash flow has been negative since 2009 and expected to stay in the red for several more years. "The oil price has not boosted earnings in the exploration and production sector. Oil companies make money but not as much as expected," Ole Henrik Bjoerge, the CEO of brokerage Pareto said. "The largest oil companies have no free cash flow in 2013. Their cash flow is the worst in the last four years."

Forte Oil to consolidate market position, grow profitability


orte Oil Plc plans to consolidate market position and grow profitability through increased revenue as part of its s h o r t - t e r m transformation strategy, Group Chief Executive Officer, Mr. Akin

Akinfenwa, has said. Akinfenwa made the disclosure as the company announced a profit after tax of N1.39 billion for the half year-ended June 30, 2013 - a 63 per cent increase over the N855 billion earned in the same period of 2012. The company’s revenue

equally rose by 21 per cent to N59.9 billion from N49.7 billion recorded in the same period of 2012. But, the group CEO said gross profit declined by 14 per cent to N5.73 billion from N6.65 billion in the same period in 2012.

Shares have also suffered as oil and gas stocks underperformed the broader market by over 25 percent since the start of 2012 as profits fell, cash flow declined and the sector’s return on investment fell, analysts said. Major oil companies trade at a price to 2014 earnings ratio of 8.9, below their own long term average, while Shell and BP both trade at about 1.1 times their book value, both among the lowest on the FTSE 100. "What has happened over the past year, is that a certain number of projects, for various reasons, were no longer economically profitable for our clients," Thierry Pilenko, the CEO of French oil services group Technip said. "Some of them were because of costs increase that were not taken into account, but were real, like the Australian projects." Woodside Petroleum this year shelved its $45 billion Browse LNG plant off Australia due to rising costs. Seismic explorers, considered bellwethers in the industry because they gauge exploration appetite, have warned recently that energy firms are pushing out contract awards, delaying spending, moving some projects into next year to reduce budgets.


2013 September, SweetcrudeReports


PENGASSAN raises alarm over renewed killings, kidnap of oil workers …Demands presidential action to avoid industrial unrest

Oil workers



he umbrella body for senior workers in the Nigerian oil a n d g a s industry, the Petroleum and Natural Gas Senior Staff Association, PENGASSAN, has raised alarm over the security of its members. It said the lives and property of members and their families were no longer safe due to upsurge in the kidnap and killings of oil workers in Niger Delta region. The association lamented that the increase in kidnap and killings occur mostly in Rivers State as it warned that unless urgent measures were not taken to arrest the situation, the union would not hesitate to withdraw members from the region . PENGASSAN in a petition to President Goodluck

Jonathan said the International Oil Companies had already issued security alert and warnings to their employees on the increasing threat to lives of workers and operations. The petition, signed by PENGASSAN's General

Secretary, Comrade Bayo Olowoshile, was sent also to Governor Rotimi Amaechi of Rivers State; Petroleum Resources Minister, Mrs. Diezani Allison-Madueke; Minister of Labour, Chief EmekaWogu; Minister of Interior, Abba Moro, as well

as the Director General, Department of State Security Service, National Security Adviser, and the Inspector-General of Police. PENGASSAN said: "We are painfully constrained to draw the attention of your esteemed office to the

disconcerting resurgence of kidnapping, abduction and gruesome killing of oil workers in the Niger Delta Area for which we passionately ask for your Excellency’s immediate intervention.

PHCN workers not worried about losing their jobs —Ajaero SAM IKEOTUONYE


omrade Joe A j a e r o , G e n e r a l Secretary of the National Union of Electricity Employees, NUEE, says workers of the Power Holding Company of Nigeria,

PHCN, are not worried by the possible loss of their jobs following the takeover of the PHCN successor companies by the new investors who bought over the companies. Following the recent payment of the total bid sum for the generating companies or gencos and the distribution companies or

discos, the new owners of the companies that were created from the unbundling of the PHCN are now expected to take over their companies from October 1. But Ajaero said the PHCN workers were not worried about the loss of jobs that would result from the development, as he

maintained that what was of concern to the workers was the payment by the Federal Government of their full benefits. "Everybody (PHCN worker) is already sacked by virtue of our agreement which says every worker will be paid off.

2013 September, SweetcrudeReports



Oil workers urge action by Govt to stem pipeline vandalism


igerian oil i n d u s t r y workers under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, say the government should deploy resources to ensure effective monitoring of petroleum products pipelines. This, the union said, is necessary to stem the rising cases of vandalism across the country. Chairman of the Lagos Chapter of PENGASSAN, Mr Folorunsho Oginni, who made the call, said there was the need to bring vandals of pipelines to book to act as deterrent to others. Oginni said in a statement that the call had become necessary in the background of the recent contamination of drinking water wells by petroleum products from broken and vandalised pipelines in Lagos. According to the Lagos PENGASSAN chairman, Nigerians could no longer fold their hands while few individuals destroyed the natural resources because they want to enrich

Protesters in front of Diamond Bank office

themselves. He maintained that government already admitted that over N200 billion has been lost to pipeline vandalism in the last 10 years as he noted that the level of pipeline vandalism and theft of products had hampered the socio-economic growth of the country. Insecurity in the Niger Delta region, according to him, has also contributed significantly to the instability in the petroleum sector, explaining that current developments in the region might frustrate efforts of the country to become one of the top oil producing countries of the world. The PENGASSAN leaders suggested that effective security should be provided to cover the entire Nigerian National Petroleum Corporation, NNPC, pipeline network to curb the menace of pipeline vandalism, and that communities around the pipelines be urged to be involved in the surveillance of the petroleum pipelines.

NLC puts workers on alert, strategises against Diamond Bank OLUONYE KONYEGWAEHI


he national leadership of the Nigeria L a b o u r Congress, NLC, has asked workers in the country, especially those in Lagos, and civil society allies to be on the alert, ready to take on Diamond Bank for alleged anti-workers and unfair labour practices. The management of the bank and an affiliate of NLC, the National Union of Banks, Insurance and Financial Institutions Employees, NUBIFIE have been at loggerheads for a while over

the bank alleged unprocedural sack of workers, including union officials without pay. The matter got to a boiling point in July when leaders of NUBIFIE and civil society allies picketed the bank. However, the matter took a different dimension on Friday, September 6, when some officials of the bank’s unit of NUBIFIE were arrested and detained by the Lagos State Criminal Department, CID, till Monday September 9, following which they were charged to court after all efforts by the union to secure their bail had failed. R e a c t i n g t o t h e development, visibly angry

The management of the bank procured the services of the Lagos State Police Command and deployed the police in the brutalisation of some of the workers and the detention of five of them leaders of NLC in a statement, threatened to deal with the bank. They said in a statement: “On Friday, 6th September 2013, workers of Diamond Bank Plc were picketing the head office of the bank in Lagos. The workers, under

the umbrella of the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), were protesting to press home their demand for better working conditions, reinstatement of 200 sacked workers as directed by the

National Industrial Court (NIC) and their demand for the right to organise and associate freely in the workplace as guaranteed by the Nigerian Constitution. “The management of the bank procured the services of the Lagos State Police Command and deployed the police in the brutalisation of some of the workers and the detention of five of them. We are shocked that the Nigeria Police will allow itself to be dragged into what is purely an industrial relations matter, which ought to be resolved through social dialogue.

2013 September, SweetcrudeReports



NUEE tackles NERC chairman over sack call OLUONYE KONYEGWAEHI


ational Union of Electricity Employees, NUEE, is not taking a recent call by the Nigerian Electricity Regulation Commission, N E R C , f o r t h e disengagement of staff of Power Holding Company of N i g e r i a , P H C N , headquarters in Abuja. Organised labour in the power industry said it is irked by what it described as “this seeming callous act” and demanded for a retraction of the call by the NERC chairman to avoid the wrath of workers. NUEE in a statement argued that it had observed that in recent times, NERC had abandoned its regulatory functions to be dishing out anti-people policies, including the recent increase in electricity tariff that has compounded the hardship Nigerians were going through amid erratic power supply. The union contended that the Power Sector Reform Act 2005 that established NERC did not give it the powers to recommend the stoppage of p a y m e n t s a n d disengagement of PHCN employees. In a response to the NERC’s memo to the Minister of Power, Professor Chinedu Nebo, NUEE through its General Secretary, Comrade Joe Ajaero implored NERC to focus on its roles of monitoring and regulating the electricity industry rather than engaging in inflammatory utterances. According to the union “We have noted with dismay your call for the disengagement from their legitimate employment, members of staff of PHCN. One then wonders why you should be at the vanguard of the advocacy of disengagement of workers already gainfully employed. “By this act, you have transformed overnight to being the enemy of the working class who hitherto

Amadi, NERC chairman

had been impoverished even with the meagre income they receive. NERC is equally operating contrary to the policy of Dr. Goodluck Jonathan’s administration which has employment power generation as one of its cardinal objectives. NERC has

equally advocated for increase in tariff which the poor masses may find very excruciating to bear. “Besides, the atrocious submission against the poor and vulnerable Nigerians; the staff of PHCN have not been paid off as there are

unresolved issues agitating their minds which include haphazard implementation of payments of terminal benefits, non-payment of their pension into retirement saving accounts, non-payment of gratuity to retirees who disengaged

since 2011, among other issues. “From the foregoing and your declaration of war against the poor, you may wish to explain to us why Nigerians and the workers of PHCN should continue to trust your credibility.

Don’t near PHCN facilities for your safety, union warns investors OLUONYE KONYEGWAEHI


he National U n i o n o f Electricity Employees, NUEE, has warned private investors who bought assets of the power Holding Company of Nigeria, PHCN, to in their own interest steer clear of the PHCN facilities as their safety could not be guaranteed. The union in a petition to the Presidency

through the Minister of Power, Prof Chinedu Nebo, insisted that until all the labour issues were settled and workers’ benefits paid in full, any investor found close to a PHCN facility would have him or herself to blame. The petition by the General Secretary of NUEE, Comrade Joe Ajaero, said “After we have patiently observed the actions and inactions of the Federal Government in relation to the privatisation process of the power sector,

especially as it affects the resolution of labour issues; we regret to state that the government seems to be unwilling to prove her genuine willingness to conclusively address the issues. More worrisome is government’s resort to media propaganda by making bogus statements to earn public trust and credibility while the issues that originally constitute cogs in the privatisation process are left unattended.”

“We have noted of late that the Power Minister, Prof. Chinedu Nebo, has made public the intention of government to commence the handover of PHCN facilities to investors. Hinging his reasons on having sorted out all the challenges hampering the transition, as a major stakeholder in the power sector, we cannot sit back and pretend that all is well in the whole process.

2013 September, SweetcrudeReports



Job recruitment exercise

Ekiti blames FG over youth unemployment


he Ekiti State Government through its D i r e c t o r General, the State Job Creation and Employment Agency, Mr Folorunso Aluko, has traced t h e p r o b l e m o f unemployment among the youths and the attendant crime rate in the country to the insensitivity of the Federal Government. Speaking in Ado Ekiti, the Director General traced the problem to 1983 to the military incursion to politics and lamented failure of the Federal Government to arrest the economic drift. Aluko said the introduction of the Subsidy Reinvestment Programme, SURE-P, by President Goodluck Jonathan, was as a result of the enormous efforts being made by the Southwest Governors to tackle the problem. He noted that Governor Kayode Fayemi had directed his Agency to provide employment for about 20,000 Ekiti indigenes under volunteer corps before October, 2014, saying about

17,666 target had been met in this regard . According to him “We can see Governor Kayode Fayemi ‘s efforts in Ekiti volunteer

programmes, which had produced the chunk of the operatives of Ekiti State Traffic Management Agency , the Paramedic and Fire

Fighters and about 1400 that had been injected into the Teaching Service Commission. “This programme and

others being midwife in Osun, Ogun, Oyo and Lagos States forced President Goodluck Jonathan to establish SURE-P. Though, the efforts might not reduce unemployment rate permanently in these states , but gradually , our people will continue to feel the impacts.”

Miners strike at CODELCO in Chile


he Copper Workers’ Federation, FTC, affiliated to IndustriALL, has given its full backing to workers at the El Salvador Division of CODELCO Chile, who are on a legal strike to safeguard the division’s future. The strike began on the first shift of 5 September and involves 1,122 members of unions N°2 (Potrerillos) and N°6 (Salvador), both part of CODELCO’s El Salvador Division. Unions were unable to reach agreement with the state-owned mining company through the normal process of collective bargaining. The FTC issued a statement to the general public and its

members declaring its support for “the sovereign decision by workers at the El Salvador Division to start a legal strike in order to ensure the government invests enough to make this important mining and metalworking operation viable in the medium and long term while also ensuring respect and decent conditions for the workers who strive every day to achieve this objective for the country”. The FTC also criticised company management “for not having the capacity to listen and reach an agreement that is satisfactory to both sides”. The FTC said “that it has

always been and will remain available to help find a balanced and fair solution to this dispute in a framework of dialogue, mutual respect and understanding, for the good of the future of the division and its workers, who are the main asset of this company, which is owned by all Chileans”. R e g a r d i n g t h e government’s decision to invest only US$ 1,000 million in CODELCO in 2013, the FTC said that on 10 September “the National Executive Committee filed a claim for the Supreme Decree issued by the

Finance Ministry to be declared legally invalid “as it constitutes an infringement of Decree Law 1.350 of 1976, which created the National Copper Corporation of Chile (CODECLO)". IndustriALL Global Union and IndustriALL’s national council in Chile have declared their support for the Copper Workers’ Federation and its president Raimundo Espinoza, who is a member of the IndustriALL executive committee, and their efforts to find a solution to this labour dispute, said Horacio Fuentes of the national m e t a l w o r k e r s ’ confederation,

Solid Mineral

2013 September, SweetcrudeReports

Local miners

Expert urges implementation of Minerals Act


n environmental l e g a l consultant, Mr C a l e b Mutfwang, has urged the Federal Government to fast track the implementation of the Minerals Act, to check illegal mining in the country. Mutfwang said in Abuja that it was not the absence of law that caused the Zamfara lead poisoning incident but non-enforcement of laws, emphasising that the Minerals Act had more than enough provisions to prosecute illegal miners in the country. According to Mutfwang, Nigeria had so many environmental laws but

There are many constrains against the effectiveness of those laws, part of the problem is that those laws were not properly worded in the first place to give clear cut powers to those organisations for implementation lacked the political will to implement them. It will be equalled that the lead poisoning that occurred in Zamfara between March and June 2012, led to the death of no fewer than 163 people, including 111 children. "The pace of implementation of that law needs to be fast

tracked so that we can avoid incidents like the Zamfara episode because there are a lot of illegal mining sites in Nigeria. The authorities need to step up because they have the backing of the law to be able to call those illegal miners to order and make

sure that things are done in accordance with the law," he said. He added: "People who grew up in that environment just felt it was a natural way of doing things so they need to be educated; part of the key instrument of enforcement of any law is education. "If you don’t educate people to know that this is illegal or this is an offence, they will not be able to stop it. It is not an offence simply because it is national wealth, it is also an offence because the way they are going about it is injurious to their health and injurious to the environment in which they live." Mutfwang said that the Koko incident was a wakeup call for the management of chemical and hazardous waste in the country. The Koko Port shipment dump of 1988 in Sapele, Delta, was the first incident of toxic/harmful waste recorded in Nigeria, which killed some people. The consultant recalled that the military promulgated a decree (now an Act of Parliament) that


criminalised the issues of waste dumping and related offences after the Koko town incident, but stated that there were many constraints against the effectiveness of those laws, among which is the overlapping function of agencies enforcing the laws. He further stated: "The effectiveness of those laws differ from sector to sector; some of them like NAFDAC law which is well known to most Nigerians has been reasonably effective. The NESREA (National Environmental Standards Regulatory and Enforcement Agency) Act is also beginning to create a lot of awareness about environmental safety issues. "There are many constrains against the effectiveness of those laws, part of the problem is that those laws were not properly worded in the first place to give clear cut p o w e r s t o t h o s e organisations for implementation. Part of the problem is that the same powers have been given to different organisations, so there is a lot of conflict of management in terms of who should do what. "The other issues of cause that hamper effectiveness include funding, the capacity of personnel to be able to effect enforcement and also the tools for those officers to carry out their work such as laboratories and so on and so forth.’’ The consultant said that the UN had supported Nigeria to do a study on those overlaps and gaps and how the country could fill them and that Nigeria was selected as one of the pilot countries to test what he called the Quick Start Programme for the Strategic Approach to International Chemicals Management. According to him, Nigeria has signed a Memorandum of Understanding that brought all the key ministries and departments of government involved in chemical management under one umbrella. He, however, called for understanding among the agencies working to regulate the management of chemicals in the country, saying that such efforts would lead to effective implementation of relevant laws in the country.

2013 September, SweetcrudeReports

Solid Mineral


Zamfara: Govt deploys machines for safer mining


he Federal Government said it would soon deploy the Igoli and Wet Milling Machines (crushers) from South Africa in three mineral processing centres in Anka, Bukkuyum and Maru Local Government Areas of Zamfara State. The machines which came into the country under the Safer Mining Programme in Zamfara State is for the processing of gold ores to prevent re-occurrence of lead poisoning. A statement from the Ministry of Mines and Steel Development in Abuja quoted the Minister, Musa Mohammed Sada, as announcing this while declaring open a three-day training programme on safety, health and environmental issues in mining. The training was organised by the Ministry of Mines and Steel Development for artisanal and small scale cooperatives in Gusau, the Zamfara State capital under the Safer Mining Programme in Zamfara State. The minister stated that more training programmes and extension services would be provided for the artisanal and small scale mining cooperatives in the state. He was represented at the event by the Director of Planning Policy Analysis and Monitoring in the ministry, Mr. John B.G. Mshelia, through whom the minister advised artisanal and small scale miners all over the country to form cooperatives in order to benefit from various training programmes and extension services offered by the ministry for sustainable mining in the country. Urging the participants to ensure they benefitted from the programme by taking it seriously, he also told them to imbibe and practice what they were taught at the event. Safety kits for mining operations were distributed to the artisanal and small scale miners at the training, which was flagged off by the minister.

Mining site

It attracted about 50 artisanal and small scale miners cooperatives in Zamfara State, nongovernmental organisations, investors, stakeholders, the media, officials of the Ministry of Mines and Steel Development, the Zamfara State Ministry of Environment and Solid Minerals Development. Mouktar Lugga, Zamfara State Commissioner for Environment and Solid Minerals Development, who was represented by a Director in the ministry, Kabiru Morai, thanked the Ministry of Mines and Steel Development for organising the training programme and assured them that the state would continue to support the federal government to ensure safer and sustainable mining activities in the state. Also speaking, the Director of Artisanal and Small Scale Mining in the Ministry of

The papers presented at the training programme were on safety, health and environmental issues such as the safe ways of disposing tailings; the use of the wet milling process for Gold Ore with the use of the Igoli machines M i n e s a n d S t e e l Development, Mr. Obiora Azubike, told the participants that there registration as Artisanal and Small Scale Mining Cooperatives enables them to access some privileges the ministry gives to cooperatives. But, he also told them to note that the certificate of

registration issued to them by the ministry is not a mineral title. He added that if they want to mine without mineral titles, they have to enter into agreements with investors who have mineral titles in the areas they intend to mine. The cooperatives, according to him, should

endeavour to acquire mineral titles if they want to mine any mineral in the state in accordance with Nigerian Minerals and Mining Act, 2007. He also advised the beneficiaries of the safety kits to use them for mining and processing of minerals. The papers presented at the training programme were on safety, health and environmental issues such as the safe ways of disposing tailings; the use of the wet milling process for Gold Ore with the use of the Igoli machines and crushers; better extraction process of gold ore; the need to engage mineral processing outside residential areas; appropriate dressing in mining and mineral processing activities; prevention of children from mineral processing areas; sustainable mining among others.


2013 September, SweetcrudeReports


APM Terminal

APMT risks closure as President Jonathan gives 30-day ultimatum TOJU VINCENT


n response to the b a r r a g e o f c o m p l a i n t s emanating from port operators about the alleged inefficient services rendered by the terminal operators, President Goodluck Jonathan has given APM Terminals a 30-day ultimatum to put its terminal in order or risk closure. The President sent his Senior Special Assistant on Maritime Affairs, Mr. Leke Oyewole, on an unscheduled visit to the APMT and the Tin Can Island Container Terminal in Lagos last week for an on-the-spot inspection, in order to ascertain the

veracity of the complaints emanating from the sector. The presidential aide issued the deadline at the end of a stakeholders’ meeting between the APMT, the TICT, Nigerian Port Authority, Nigerian Shippers’ Council, Nigeria Customs Service, truck operators and the freight forwarding associations. H e e x p r e s s e d disappointment that the APMT had disregarded with impunity the directives and advice of Ministers of Transport and National Planning as well as the Comptroller General of Customs. He also noted that the APMT does not have adequate cargo handling equipment and that

its claims of massive investment are nothing but a hoax. S p e a k i n g w i t h SweetcrudeReport at the end of the meeting, Oyewole said: "We have seen the issues and they seem the same both at Tincan and APMT, the first thing is the inadequacy of equipment" "The 30-day ultimatum came out of the fact that ministers have come, they got agreements, but they never agreed to anyone. I am taking this to the president who knows what to do, the APMT cannot be bigger than Nigeria, We have the masses to serve. "They should concentrate on servicing the people, what

they are doing now is to service themselves the way they have designed their project, if you buy equipment you are only making more money. "We are giving you 30 days, that place must be paved, we still have what it takes to ensure that you do what is needful" The President’s aide also directed that NPA should implement its agreement with the shipping companies and ensure that it provide holding bays, failure to do this will result into suspension of activities at the shipping company. He also alleged that the TICT is conniving with shipping companies to turn

their terminal into holding bays at the expense of the container deposits paid by importers. "They have turned Nigeria into a holding bay at the expense of Nigerians importing goods, the agents lose money deposited to them while the terminal operators enjoy the chaos", he sressed. Some of the resolutions are that NPA should reduce the stemming of vessels to TICT until the terminal operator provides space and prove that it is efficient to handle more cargoes. The authority is to direct shipping companies to direct shipment to bonded terminals with effective monitoring.

2013 September, SweetcrudeReports



Master mariner wants govt to support seafarers' training TOJU VINCENT


resident of the N i g e r i a n Association of M a s t e r Mariners, Capt. Adejimi Adu, has advised the Federal Government to give periodic tax relief to shipping lines in exchange for training of seafarers. He said in Lagos that such p olicy could g ua ra nt ee quality training for Nigerian seafarers to the benefit of the Nigerian maritime industry. “Since Nigeria no longer has a shipping line, the government can extend a periodic tax relief incentive to shippers and ask them to create berths to accommodate cadets for training,” he said. Adu said the call for such policy became necessary because the Maritime Academy of Nigeria, Oron, Akwa Ibom, lacked facilities and manpower to train professional seafarers needed in the industry. “In its 35 years of existence now, the Nigerian Maritime Academy, Oron, has not been able to award certificates beyond the lowest certificate of the officer cadre.

Mariners in training

In its 35 years of existence now, the Nigerian Maritime Academy, Oron, has not been able to award certificates beyond the lowest certificate of the officer cadre

“Every year, the school admits students and churns out graduates, but they don’t have training facilities. Some of the students sent out to do IT have never seen a vessel. “This makes the industry in Nigeria to continue to engage foreigners, because people like these cannot be

Baco-Liner, Nigeria’s international shipping line, sails into troubled waters TOJU VINCENT


he once-thriving global container barging and shipping line; Baco-Liner has gone under, dragging along, its Nigerian representative, Brawal Shipping. Baco Liner has been distressed for some time, leading to the scrapping of its three carriers, Baco Liners 1, 2 and 3. T h e e c o n o m i c misfortunes of its trading partner has also taken its toll on Brawal Shipping, which in response to its dwindling fortunes, has embarked on a mass layoff of employees.

SweetcrudeReport confirmed last week that after the scrapping of Baco-Liner 3 last year, Baco-Liner 1 and Baco-Liner 2 have now also been sold at an Indian ship scrapping yard. Our source also hinted that what befell, Baco Liner ships was the effect of ageing. The ships were between 34 and 33 years old respectively. Shipping Position Daily confirmed that the oncebustling premises of the Brawal Shipping in Lagos, Port Harcourt and Warri have become deserted and that the owners have begun disengagement of employees. “I can confirm to you that b o t h B r a w a l a n d Aeromaritime are gone, no

cargoes again, the only small operations left is the Onne port facilities. They were lucky to have that terminal in Onne,” said a source. The source added: “You know when Brawal was alive, they took effective charge of KLT, because no biog ship can go there, so everyone needed Baco Liner badges. Anytime you see a Baco Liner container, they came in through Elder Demster; another shipping agency”. In its good days, Baco Liner was a dominant shipping service between Europe and Africa owned by Seerederei Bacoliner GmbH of Duisburg, Germany. It used a fleet of LASH vessels which

have a very unusual design; they carry both conventional shipping containers, and barges that are loaded through doors in the bow. This system of barges inside a larger ship allows cargo to be discharged midstream in African Ports, including Nigeria, thus avoiding port delays. Each Baco Liner v e s s e l i s approximately 205metre long, 28.5metre beam and operating on a loaded draught of 6.65metre.

saddled with the responsibility of managing a vessel,” said the president. Adu said the master mariners were contributing their quota by going to the academy in Oron to lecture the students. He, however, said that more needed to be done to take advantage of the huge employment potential in the industry. “We have the home and international ports. There are oil and gas operations and within the home ports, most companies are going deep-water for exploration. “Being a marine environment with platforms, rigs, there are needs for vessels and officers to man the vessels. If Nigerian seafarers are well trained that will reduce unemployment”. He said that ahead of the association’s election, billed for Sept. 21, the master mariners wanted industry experts to look into the Cabotage Law that required that ships be built locally. He also wanted government to consider having master mariners on the boards of maritime agencies of government to offer professional advice to guide deliberations and policies.

2013 September, SweetcrudeReports


Nigerian Navy counter piracy boats

Nigeria, Cote D’Ivoire partner to combat sea piracy


igeria and Cote D’Ivoire a r e considering a partnership with the aim of combating piracy in West Africa territorial waters. This is the result of a meeting between Minister of Transport, Senator Idris Umar, and his Ivorien counterpart, Mr. Gaoussou Toure, during the visit of the Ivorien minister to Abuja. During discussions, Umar had expressed Nigerian government’s readiness to collaborate with the government of Cote D’Ivoire in combating piracy He said the joint efforts between both countries became necessary, in order to completely stamp out the nefarious activities of pirates on the West African coastline. Urging the Ivorien minister to come out with any suggestion that would bring

about a lasting solution to this menace, Umar said the cooperation will be of benefit to the two countries as well as other countries in the West

African sub-region. Umar, in a statement, issued in Abuja said President Goodluck Jonathan was determined to

arrest the tide of piracy along the territorial waters of Nigeria, revealing that Nigeria already had bilateral relations with the


government of the Republic of Benin on maritime safety, which, he said, was yielding positive results for the two countries. The statement, signed by the Deputy Director, Press and Public Relations, Federal Ministry of Transport, Mrs. Yetunde Sonaike, said the federal government will also wish to partner the government of Cote d’Ivoire in the development of railway services that will link other African countries. According to the statement, these rail linkages will boost transportion in addition to improving trade relationship among the countries in the West Africa Sub-region. Umar told his counterpart that feasibility studies to align the various corridors on the West Africa rail line are ongoing. Umar, who expressed gratitude to Toure for visiting his ministry, said the Nigerian government has rehabilitated ninety per cent of existing narrow gauge rail lines, one of which is the Lagos-Kano rail line and also embarked on the modernisation of railway tracks with double gauge between Abuja and Kaduna, which is expected to be completed soon. He added that feasibility studies on modernisation of railway projects in other parts of the country are ongoing. He therefore called on both foreign and local investors to invest in the transport sector in African countries so as to boost their economy stressing that government cannot do it alone.

Minister laments insecurity in Gulf of Guinea YEMIE ADEOYE


e t r o l e u m R e s o u r c e s Minister, Mrs. Diezani Alison-Madueke has bemoaned the rising incidence of insecurity in the Gulf of Guinea resulting in ceaseless cases of hijacking, unauthorised vessel boarding and kidnapping in the region. Mrs. Alison-Madueke stated this at the First Nigerian Navy Offshore

Patrol Vessel Africa Conference, OPV, in Lagos. Describing the situation as unacceptable, the Petroleum Resources Minister, who was represented by the Group Managing Director of the Nigerian National Petroleum Corporation, Engr. Andrew Yakubu, noted that crude oil theft and illegal oil bunkering in the Gulf of Guinea had become a major source of concern to the Federal Government. According to the US Naval Intelligence Report, the

region in the first half of 2013 witnessed nine hijacking incidents in addition to 55 incidents of unauthorised vessel boarding, vessels fired upon and kidnappings this year, Alison-Madueke revealed. The Minister emphasized that maritime security is not only essential to maintaining the flow of revenue from oil and gas but also impacts greatly on the region’s broader economic development adding that maritime resources such as

fish, aquaculture and an intact ecosystem directly contribute to the livelihood of many Africans. Providing a breakdown of oil and gas operations in the region, Mrs. AlisonMadueke noted that the Gulf of Guinea consists of 15 countries with oil production exceeding 5.4 million barrels per day in 2012 stressing that oil supply from the Gulf of Guinea region in 2011 was equivalent to 27 percent of EU consumption and 29% of total US petroleum consumption in the same year.

2013 September, SweetcrudeReports



NUPENG wants improved security on waterways


he Nigeria U n i o n o f Petroleum and Natural Gas Workers, NUPENG, called for improved security on the Nigerian water ways, urging the Federal Government to beef up security on waterways. Deputy-General Secretary, Operations, NUPENG, Mr Joseph Ogbebor, said in Benin that the presence of increased number of security personnel on the waterways would arrest the activities of pirates and curb incessant theft of crude oil. “If we really want to put a stop or reduce oil theft in this country, government should deploy more security personnel to the waterways,” Ogbebor said, stressing that the waterways needed more surveillance, especially

in the Niger Delta. He was also of the view t h a t a r r e s t i n g malpractices in the nation’s downstream petroleum sub-sector will check economic sabotage. There is also need to carry out a holistic audit of the oil and gas sector of the economy, he said, adding: “As a union, we have always made our position very clear: that government needs to step up security on our water ways to ensure that those responsible for illegal acts are apprehended. “There is also need to do a complete audit of the oil and gas sector, because if there are insiders perpetrating economic sabotage, government can easily bring them to book. We have made this known severally, we are not happy about this development because it is not good for the system”.

Nigeria Port

Importers worry over low patronage of Warri port


usiness men, who patronise the Warri port in Delta State h a v e expressed worry over low patronage of the national asset, blaming the development on high charges by Intels. They also said the low patronage was as a result of the belief that the port was being managed by the company after the concession exercise. The Nigerian Ports Authority, NPA, on its part, blames low throughput on the shallow draft of the port. According to an Onitsha-

The Nigerian Ports Authority, NPA, on its part, blames low throughput on the shallow draft of the port based importer, the belief among importers is that Intels is incharge of the port. Athough there are two concessionaires at the port Intel and Julius Berger – Intel’s dominance was discouraging them from shipping their goods through Warri port because of its high

charges. He disclosed that for goods for which Julius Berger would charge N15 million, Intels would charge N62 million. General Manager in charge of Public Affairs of the NPA, Capt Iheanacho Ebubeogu, however, said the low level of

business at the Warri port was a result of the shallow draft which makes it impossible for bigger vessels to call at the port. He disclosed plans were on to arrest the situation by having the channel dredged to about 10 metres to accommodate bigger vessels. “It has the element of development that we are trying to embark on now. We are working at dredging it (Warri port channel) to 10 metres, fill in break waters and so on,” Ebubeogu said. According to the National Financial Secretary of the Association of Nigeria

Licensed Customs Agents, ANLCA, Prince Val Johnbull Oribhabor, the shallow draft of the channel and inability of the state government to assist were responsible for the present situation of the port in Warri. Oribhabor said that another hindrance to vessels calling at the port is the fact that ships that call there do not get cargoes to load on their return trip. He, therefore, urged the state government to move in and market the port so as to attract increased patronage to it.

2013 September, SweetcrudeReports



Apapa port

CMDLCA alerts on imminent congestion at ports TOJU VINCENT


group known as the National Council of Managing Directors Licensed Customs Agents, NCMDLCA, has alerted the nation to an impending congestion that might hit the

nation’s sea ports if urgent steps were not taken to avert it. In a letter to the Presidency, the president of the group, Mr. Lucky Amiwero, disclosed that there was currently a terrible build up of uncleared containers at Lagos ports that might become a treat to the economy.

The situation, according to Amiwero, has assumed an alarming proportion, and if not urgently checked, could have a devastating effect on the port system and create serious economic imbalance. Amiwero said the refusal of some shipping firms to transfer their containers to off dock facilities and bonded

warehouses were some of the causes of the congestion that was currently gathering momentum. He also blamed the situation on inefficient and unethical attitudes of some terminal operators, who he accused of not having respect for the concession agreement they went into

Nigeria, others lose $940m to piracy in Gulf of Guinea – Navy


he Nigeria Navy has said Nigeria and other nations lost about $940 million last year to piracy in the Gulf of Guinea, GoG. Rear Admiral Ibok-Ette Ibas, the Flag Officer Commanding, FOC, Western Naval Command, WNC, who revealed this, said the loss could escalate this year.

He spoke in Lagos to journalists, lamenting that the African continent was seeing rising piracy cases even in the face of increased offshore activities. “It is regrettable that maritime insecurity and illegal activities in the maritime domain threaten and invariably undermine the great potentials of the African continent.

“The magnitude of these threats is aptly captured by a study of the advocacy group tagged ‘Ocean beyond or piracy’ in June 2014 which estimated that piracy in the GoF cost the world between 740 and 950million dollars last year and this cost is expected to rise in 2013. “In response to this, the Chief of Naval Staff (CNS), Vice Admiral Dele Ezeoba, in

repose to the maritime insecurity in the GoF aptly advocated for an international conference of naval chiefs and stakeholders to provide credible and sustainable solution to the scourge of maritime insecurity in Africa’s maritime domain,” he said.

with government. He said: “The present congestion being experienced in Lagos is due the refusal of shipping companies to transfer the containers owned by their Lines to off dock facilities. “The refusal has created build up in the Lagos Ports, which is presently associated with delay in the positioning of containers for scanning, physical examination and delivery. This sometimes takes weeks, with the cost still borne by the importer/licensed customs agents”. Amiwero stated further: “The major cause of unethical practice and increase in port cost is the total control of the allocation/steaming of ships by concessioners, which allows them to keep containers and refuse to allocate them to off dock terminals that are lying fallow”. He called for an economic regulator that will take care of the deficient and unethical practices at the ports.


2013 September, SweetcrudeReports


The best used cars for every need Totally Painless Transportation


he best used cars for every n e e d should make for totally p a i n l e s s transportation. The Toyota Corolla is in

this league. And there are reasons this car holds its value: Hardly anything breaks, and when something does go wrong, Toyota’s stalwart econobox tends not to b r e a k d o w n

catastrophically. Models five years old and older have had less-thanstellar paint wear and some brake issues, but that’s about it. So, what are those other best used cars? Here we go.

Hyundai Tiburon

Ford Escort Audi A4, 2000

Honda Element Ford Ranger

Mazda Miata


2013 September, SweetcrudeReports


The best used cars for every need CONTINUED FROM PAGE 39

Honda Civic

Honda S2000

Toyota Corolla

Mini cooper

Subaru Impreza

VW Golf

Toyota Tacoma

Nissan Quest

VW Jetta


Technology Oil Exploration Oil is a fossil fuelthat can be found in many countries around the world. In this section, we will discuss how oil is formed and how geologists find it.

2013 September, SweetcrudeReports


How oil drilling works

Forming Oil Oil is formed from the remains of tiny plants and animals (plankton) that died in ancient seas between 10 million and 600 million years ago. After the organisms died, they sank into the sand and mud at the bottom of the sea. Over the years, the organisms decayed in the sedimentary layers. In these layers, there was little or no oxygen present. So microorganisms broke the remains into carbon-rich compounds that formed organic layers. The organic material mixed with the sediments, forming finegrained shale, or source rock. As new sedimentary layers were deposited, they exerted intense pressure and heat on the source rock. The heat and pressure distilled the organic material into crude oil and natural gas. The oil flowed from the source rock and accumulated in thicker, more porous limestone or sandstone, called reservoir rock. Movements in the Earth trapped the oil and natural gas in the reservoir rocks between layers of impermeable rock, or cap rock, such as granite or marble.

These movements of the Earth include: *Folding - Horizontal movements press inward and move the rock layers upward into a foldor anticline. *Faulting - The layers of rock crack, and one side shifts upward or downward. *Pinching out - A layer of impermeable rock is squeezed upward into the reservoir rock. Finding Oil The task of finding oil is assigned to geologists, whether employed directly by an oil company or under contract from a private firm. Their task is to find the right conditions for an oil trap —

Photo courtesy Institute of Petroleum: Oil forms from dead organisms in ancient seas

Photo courtesy Institute of Petroleum Close-up of reservoir rock(oil is in black)

satellite images. However, they also use a variety of other methods to find oil. They can use sensitive gravity metersto measure tiny changes in the Earth’s gravitational field that could indicate flowing oil, as well as sensitive magnetometersto measure tiny changes in the Earth’s magnetic field caused by flowing oil. They can detect the smell of hydrocarbons using sensitive electronic noses called sniffers.

In seismic surveys, a shock wave is created by the following: *Compressed-air gun shoots pulses of air into the water (for exploration over water) ?Thumper truck - slams heavy plates into the ground (for exploration over land) ?Explosives - drilled into the ground (for exploration over land) or thrown overboard (for exploration over water), and detonated

sensitive microphones or vibration detectors — hydrophonesover water, seismometersover land. The readings are interpreted by seismologistsfor signs of oil and gas traps. Although modern oilexploration methods are better than previous ones, they still may have only a 10percent success rate for finding new oil fields. Once a prospective oil strike is found, the location is marked by GPS coordinates on land or by marker buoys on water.

Preparing to Drill

Photo courtesy Institute of Petroleum Oil reservoir rocks (red) and natural gas (blue) can be trapped by folding (left), faulting (middle) or pinching out (right).

the right source rock, reservoir rock and entrapment. Many years ago, geologists interpreted surface features, surface rock and soil types, and perhaps some small core samples obtained by shallow drilling. Modern oil geologists also examine surface rocks and terrain, with the additional help of

Finally, and most commonly, they use seismology, creating shock waves that pass through hidden rock layers and interpreting the waves that are reflected back to the surface. Photo courtesy Institute of Petroleum Searching for oil over water using seismology

The shock waves travel beneath the surface of the Earth and are reflected back by the various rock layers. The reflections travel at different speeds depending upon the typeor densityof rock layers through which they must pass. The reflections of the shock waves are detected by

Once the site has been selected, it must be surveyed to determine its boundaries, and environmental impact studies may be done. Lease agreements, titles and rightof way accesses for the land must be obtained and evaluated legally. For offshore sites, legal jurisdiction must be determined. Once the legal issues have been settled, the crew goes about preparing the land: 1.The land is cleared and leveled, and access roads may be built. 2.Because water is used in drilling, there must be a source of water nearby. If there is no natural source, they drill a water well. 3.They dig a reserve pit, which is used to dispose of rock cuttings and drilling mud during the drilling process, and line it with plastic to protect the environment. If the site is an ecologically sensitive area, such as a marsh or CONTINUES ON PAGE 42

2013 September, SweetcrudeReports



How oil drilling works CONTINUED FROM PAGE 41 wilderness, then the cuttings and mud must be disposed offsite — trucked away instead of placed in a pit. Once the land has been prepared, several holes must be dug to make way for the rig and the main hole. A rectangular pit, called a cellar, is dug around the location of the actual drilling hole. The cellar provides a work space around the hole, for the workers and drilling accessories. The crew then begins drilling the main hole, often with a small drill truck rather than the main rig. The first part of the hole is larger and shallower than the main portion, and is lined with a large-diameter conductor pipe. Additional holes are dug off to the side to temporarily store equipment — when these holes are finished, the rig equipment can be brought in and set up.

Photo courtesy Institute of Petroleum Mud circulation in the hole

*Shale slide - conveys cuttings to the reserve pit *Reserve pit - collects rock cuttings separated from the mud *Mud pits - where drilling mud is mixed and recycled *Mud-mixing hopper where new mud is mixed and then sent to the mud pits

Setting Up the Rig Depending upon the remoteness of the drill site and its access, equipment may be transported to the site by truck, helicopter or barge. Some rigs are built on ships or barges for work on inland water where there is no foundation to support a rig (as in marshes or lakes). Once the equipment is at the site, the rig is set up. Here are the major systems of a land oil rig:

Anatomy of an oil rig *Power system *large diesel engines burn diesel-fuel oil to provide the main source of power *Electrical generators powered by the diesel engines to provide electrical power *Mechanical system driven by electric motors *hoisting system - used for lifting heavy loads; consists of a mechanical winch (drawworks) with a large steel cable spool, a blockand-tackle pulley and a receiving storage reel for the cable *Turntable - part of the drilling apparatus *Rotating equipment used for rotary drilling *Swivel - large handle that holds the weight of the drill

Drill-mud circulation system

string; allows the string to rotate and makes a pressuretight seal on the hole *Kelly - four- or six-sided pipe that transfers rotary motion to the turntable and drill string *Turntable or rotary tabledrives the rotating motion using power from electric motors *Drill string - consists of drill pipe(connected sections of about 30 ft / 10 m) and drill collars(larger diameter, heavier pipe that fits around the drill pipe and places weight on the drill bit) *Drill bit(s) - end of the drill that actually cuts up the rock; comes in many shapes and materials (tungsten carbide steel, diamond) that are specialized for various drilling tasks and rock formations *Casing - large-diameter

concrete pipe that lines the drill hole, prevents the hole from collapsing, and allows drilling mud to circulate *Circulation system p u m p s d r i l l i n g mud(mixture of water, clay, weighting material and chemicals, used to lift rock cuttings from the drill bit to the surface) under pressure through the kelly, rotary table, drill pipes and drill collars *Pump - sucks mud from the mud pits and pumps it to the drilling apparatus *Pipes and hoses connects pump to drilling apparatus *Mud-return line returns mud from hole ?shale shaker shaker/sieve that separates rock cuttings from the mud

*Derrick - support structure that holds the drilling apparatus; tall enough to allow new sections of drill pipe to be added to the drilling apparatus as drilling progresses *Blowout preventer high-pressure valves (located under the land rig or on the sea floor) that seal the high-pressure drill lines and relieve pressure when necessary to prevent a blowout (uncontrolled gush of gas or oil to the surface, often associated with fire)

Drilling Photo courtesy Phillips Petroleum Co. Rotary workers trip drill pipe The crew sets up the rig and starts the drilling operations. First, from the starter hole, they drill a surface hole down to a preset depth, which is somewhere above where

they think the oil trap is located. There are five basic steps to drilling the surface hole: 1.Place the drill bit, collar and drill pipe in the hole. 2.Attach the kelly and turntable and begin drilling. 3.As drilling progresses, circulate mud through the pipe and out of the bit to float the rock cuttings out of the hole. 4.Add new sections (joints) of drill pipes as the hole gets deeper. 5.Remove (trip out) the drill pipe, collar and bit when the pre-set depth (anywhere from a few hundred to a couple-thousand feet) is reached. Once they reach the pre-set depth, they must run and cement the casing— place casing-pipe sections into the hole to prevent it from collapsing in on itself. The casing pipe has spacers around the outside to keep it centered in the hole. The casing crew puts the casing pipe in the hole. The cement crew pumps cement down the casing pipe using a bottom plug, a cement slurry, a top plug and drill mud. The pressure from the drill mud causes the cement slurry to move through the casing and fill the space between the outside of the casing and the hole. Finally, the cement is allowed to harden and then tested for CONTINUES ON PAGE 43

2013 September, SweetcrudeReports



How oil drilling works CONTINUED FROM PAGE 42 such properties as hardness, alignment and a proper seal.

New Drilling Technologies The U.S. Department of Energy and the oil industry are working on new ways to drill oil, including horizontal drilling techniques, to reach oil under ecologicallysensitive areas, and using lasers to drill oil wells. Drilling continues in stages: They drill, then run and cement new casings, then drill again. When the rock cuttings from the mud reveal the oil sand from the reservoir rock, they may have reached the final depth. At this point, they remove the drilling apparatus from the hole and perform several tests to confirm this finding: *Well logging - lowering electrical and gas sensors into the hole to take measurements of the rock formations there *Drill-stem testing lowering a device into the hole to measure the pressures, which will reveal whether reservoir rock has been reached *Core samples - taking samples of rock to look for characteristics of reservoir rock

Blowouts and Fires In the movies, you see oil gushing (a blowout), and perhaps even a fire, when drillers reach the final depth. These are actually dangerous conditions, and are (hopefully) prevented by the blowout preventer and the pressure of the drilling mud. In most wells, the oil flow must be started by acidizing or fracturing the well. Once the well is completed, they must start the flow of oil into the well. For limestone reservoir rock, acid is pumped down the well and out the perforations. The acid dissolves channels in the limestone that lead oil into the well. For sandstone reservoir rock, a specially blended fluid containing proppants(sand, walnut shells, aluminum pellets) is

Photo courtesy California Department of Conservation

pumped down the well and out the perforations. The pressure from this fluid makes small fractures in the sandstone that allow oil to flow into the well, while the proppants hold these fractures open. Once the oil is flowing, the oil rig is removed from the site and production equipment is set up to extract the oil from the well.

Extracting the Oil After the rig is removed, a pump is placed on the well head.Once they have reached the final depth, the crew completes the well to allow oil to flow into the casing in a controlled manner. First, they lower a perforating guninto the well to the production depth. The gun has explosive charges to create holes in the casing through which oil can flow. After the casing has been perforated, they run a smalldiameter pipe (tubing) into the hole as a conduit for oil and gas to flow up the well. A device called a packeris run down the outside of the tubing. When the packer is set at the production level, it is expanded to form a seal

Photo courtesy California Department of Conservation

around the outside of the tubing. Finally, they connect a multivalved structure called a Christmas treeto the top of the tubing and cement it to the top of the casing. The Christmas tree allows them to control the flow of oil from the well.

Pump on an oil well In the pump system, an electric motordrives a gear boxthat moves a lever. The lever pushes and pulls a polishing rodup and down. The polishing rod is attached to a sucker rod, which is attached to a pump. This system forces the pump up and down, creating a suction that draws oil up through the well. In some cases, the oil may be too heavy to flow. A second hole is then drilled into the reservoir and steam is injected under pressure. The heat from the steam thins the oil in the reservoir, and the pressure helps push it up the well. This process is called enhanced oil recovery.

Enhanced oil recovery With all of this oil-drilling technology in use, and new methods in development, the

question remains: Will we have enough oil to meet our needs? Current estimates suggest that we have enough oil for about 63 to 95 years to come, based on current and future finds and present demands.


2013 September, SweetcrudeReports


Water affected by oil spill

Bodo communities tackle Shell over N7.5bn spill settlement


egotiations between Shell and residents of its host communities affected by two oil spills in 2008 has failed to reach a compensation deal, with residents’ lawyers calling the oil giant’s settlement offer "insulting." Talks began on Monday September 9 in Port Harcourt, the oil hub in southern Nigeria’s Niger Delta region, with representatives of about 15,000 residents from Bodo, a cluster of fishing communities in Rivers state. Both the British-Dutch firm and the residents’ lawyers

said the talks had failed to reach a compensation deal and it was unclear when further talks would occur. Villagers rejected the offer unanimously, their lawyers said. "We took part in this week’s settlement negotiations with two objectives — to make a generous offer of compensation to those who have suffered hardship as a result of the two highly regrettable operational spills in 2008, and to make progress in relation to clean-up," a Shell statement said. "We haven’t reached agreement on compensation, which is disappointing." Shell said however that progress

had been made regarding plans for a clean-up of the area. Meetings have been set for September 26 and 27 to discuss how to proceed with a clean-up, with the talks to be overseen by the Dutch ambassador. The community and Shell have so far been unable to agree on the parameters for a clean-up. Sources familiar with the talks said Shell proposed a settlement of 7.5 billion naira ($46 million, 35 million euros). Shell and lawyers for the community declined to discuss the total settlement amount. However, Martyn Day, senior partner at London-

based law firm Leigh Day, which represented Bodo residents in the talks, told AFP each individual would end up with around 275,000 naira (1,300 euros, $1,700) after subtracting a lump sum to be paid to the community. He said the community met on Friday morning and unanimously rejected the settlement offer. "Our clients know how much their claims are worth and will not be bought off cheaply," Day said in a statement. "The settlement figures, which we assume Shell had determined prior to these talks, are totally derisory

and insulting to these villagers." Lawyers for the villagers say the local environment was devastated by the two spills, depriving thousands of subsistence farmers and fishermen of their livelihoods. According to Leigh Day, experts estimate the spills to be between 500,000 and 600,000 barrels. Shell admitted liability for the spills in 2011 but disputes the amount of oil spilled and the extent of the damage. If a compensation agreement is not reached, the case may go to trial in Britain.

2013 September, SweetcrudeReports



Shell Women’s Network brings medical help to Lagos YEMIE ADEOYE


a r k e t w o m e n a n d residents of Lagos Island East local Government Area in Lagos State turned up en-masse for free health checks and blood screening in events marking "SWN & Me Day" organised by the Shell Women Network. More than 200 market women and residents of the local government area received free annual medical insurance and 125 eye glasses even as medical personnel conducted checkups and tests on long queues of beneficiaries. " T o d a y , w e ’ r e demonstrating our commitment to the health and wellbeing of not only our staff but our neighbours and communities," said Managing Director, Shell Closed Pension Fund Administrator, Yemisi Ayeni, as she welcomed guests. "We also urge you to always know your medical status as this will enable you to better manage your health." The well attended programme featured interactive lecture sessions on different type’s cancer, by Professor Ketiku, Head of Oncology Unit, Lagos University Teaching H o s p i t a l , a n d Hypertension/Diabetes, by Dr. Ahmed Balogun, Head of Endocrinology/Medical Director of the Lagos General Hospital, while Dr Emokpae, Medical Director of Massy Children’s Hospital, Lagos spoke on Asthma and Household Emergencies. General Manager, Gas, at S h e l l P e t r o l e u m Development Company, Ubaka Emelumadu, thanked the doctors for their participation in the awareness sessions. "The quality of information shared and the response from participants is indicative of the fact that these diseases can be defeated because knowledge is power." In her remarks, Head

Female doctor attending to a patient

I am so happy; not only did I get free medical examination, I also have free brand new glasses, I feel like a new woman

Nurse, Lagos Island East Local Government Area Mrs Adebisi said: "This is a laudable programme which is aligned to the health policy of the Lagos State Government and we’re pleased to support it." "I am so happy; not only did I get free medical examination, I also have free brand new glasses, I feel like a new woman," a

beaming beneficiary enthused. The Shell Women’s Network is the umbrella body for all women that work in the various Shell companies in Nigeria. The network sponsored the SWN & Me Day initiative as part of their support for the companies’ social responsibility efforts.

Edo Govt assures oil-producing communities of quality projects


do State Government has assured the people of the three oil-producing local government areas of the state that it would execute quality and sustainable projects for them. Mr Orobosa Omo-Ojo, the Edo State Commissioner for Special Duties, Oil and

Gas, gave the assurance in Benin. Omo-Ojo said that the projects would be executed through the Edo State Oil Producing Areas Development Commission, EDSOPADEC. According to Omo-Ojo, EDSOPADEC was currently executing 169 various projects that would help to bring speedy development to the councils – Ovia North-

East, Orhionmwon and Ikpoba-Okha. He said that the projects, which included school buildings, solar-powered bore-holes and health centres, were in different stages of completion. He said that the agency also embarked on the construction of a 10-km road in each of the the areas to link their communities. "Because of the state

government’s shift in ideology in relation to leadership, it has embarked on the execution of quality and sustainable projects for the people. "The relationship between my ministry and the agencies is that of supervision; it is our responsibility to ensure that these projects are executed according to specifications of the designs.

2013 September, SweetcrudeReports



SURE-P empowers 5,000 in Delta


ver 5,000 indegenes of Delta State have so far benefitted from the Subsidy Reinvestment and Empowerment Programme, SURE-P e m p o w e r m e n t programme. And the state government has said it was satisfied with the transparent manner the local government areas in the state were administering the N1.6 billion released to them for the programme. Beneficiaries of the programme included physically-challenged persons and others empowered in the area of capacity training,

provision of starter packs and provision of buses. The state Commissioner for Local Government Affairs, Mr. Newworld Safugha, said in Asaba that he was particularly impressed with the level of commitment exhibited by the council chairmen in the pursuit of the programme. He said: "We are impressed with the performance of the councils on the implementation of the programme, so far, so good. They have fared well and I tell you that the state government will continue to play its part to ensure strict compliance with what the programme is meant to achieve.�

Itsekiri group tackles DESOPADEC on development


n organisation, the Save Itsekiri Group, SIG, have condemned the Delta State Oil Producing Areas Development Commission, DESOPADEC, for failure to meet up with its mandate.

A road project

Total hands over road project to community


rench oil giant, Total E&P, has handed over the Obiozimini Beach Road it constructed in Obiozimini community in Rivers State to the people of the area. The General Manager, JVA Field Operations, Total, Mr Jean Clude Vachet, said at the commissioning ceremony in Obiozimini, Ogba Egbema Ndoni Local Government Area, that the road was economically viable and important to people of the area and the local government. He addded that it would

This road will provide access to the great Sombreiro River with its quality of sharp sand. The beach road will not only provide resource for building construction within the Egi communities help to attract development to the area even as he assured that his company would maintain its warm relationship with its host communities. "This road will provide access to the great Sombreiro

River with its quality of sharp sand. The beach road will not only provide resource for building construction within the Egi communities and beyond, but will also be a ready loading bay to feed the upcoming float glass

industry. This will provide excellent business opportunities for entrepreneurs and help in creating jobs for our teeming youths," he said. Also speaking, the chairman of the Community Development Committee, Mr Ewe Mbadike, expressed gratitude to Total for the road, pleading with the oil company to connect the Onoshi-Ulo to Onoshi-UmuNkweke Road to also open up the entire area for development. He also urged Total to commence direct drilling of its oil and gas deposit in the area.

SIG was of the view that while Itsekiri nation accounts for the highest volume of oil among the oilproducing areas in Delta State, it was the least developed. Chairman of the Mr. Johnson Madendo and secretary, Mr. Omagbemi Anuwe, in a statement, entitled "DESOPADEC has failed Itsekiri", stated that apart from "the first Itsekiri Oil Producing Area Commissioner, Engr. Toritsemotse, subsequent people given the responsibility to develop the Itsekiri nation have failed". " S u b s e q u e n t commissioners have busied themselves in either bogus or white elephant projects. They are clearing nonexistent creeks, building police station or renovating Warri Club, which has no bearing on the development of oil-producing areas," the group said. The statement articulated the needs of oil-producing communities to include jetties, electricity, shore protection, medical facilities, health centres, potable water, information and communication centres, housing, pathways and alternative source of livelihood.


2013 September, SweetcrudeReports



From commonwealth to personal fief



Ondo oil communities accuse N/Delta Ministry of neglect


il producing communities in Ondo State have accused the Ministry of Niger Delta of neglect in the execution of its projects in the state. According to a spokesman of the communities and former Special Assistant to

the President on Youth Matters, Mr. Kolade Akinjo, the Ministry was busy executing multi-billion naira projects in Irele and Okitipupa Local Government Areas, LGAs, to the neglect of Ilaje and Ese-Odo - the two oil producing LGAs in the state. Akinjo, who stated that leaders from the two oil

producing LGAs had in the past sent several complaints to the Ministry of Niger Delta concerning their neglect, said the projects being executed in Irele and Okitipupa were awarded in the Ministry’s 2013 budget, whereas no provisions were made for Ilaje and Ese-Odo Local Government Areas in the appropriation.

Tension in Kenyan valley communities over oil find


eports of possible presence of oil deposits in Kenya’s Kerio Valley have triggered land ownership rows in the area, with some of those whose great grandparents lived in the area long ago, now claiming land ownership, with a view to reaping from the oil fortunes. UK firm, Tullow Oil, is engaged in oil and gas exploration in the valley. Boundary disputes have suddenly become prevalent in areas that were previously uninhabited with cases of inter-clan violence already

reported. Kerio Valley lies between the Tugen Hills and the Elgeyo Escarpment. It sits at an elevation of 1,000 metres in the Great Rift Valley. A few years ago, the valley was merely a hunting and grazing ground until the reports of oil exploration. With the reports, those who had emigrated from the region decades ago are trooping back, only to find their previous land occupied by other people. Two weeks ago, residents of Kamaingon sub-location in Keiyo North woke up to huge billboards erected at night announcing the arrival of the

‘real’ owners of the land. "When we woke up in the morning, we were welcomed by huge billboards," said Amos Kipsat, former Keu civic leader. "We did not know who had erected them." The billboards, which read ‘Kaptoyoi clan land, Kabonon Arror’, were brought down by the locals following orders from DC Moses Lilan. Kabonon, according to Mzee Elijah Chesire, 89, were immigrants from Mount Elgon who passed the area in the early 1970s on their way to Arror, Marakwet West, where they settled.

he appointment of Naomi Campbell, forgive me, Diezani Alison-Madueke, to the top job at the Petroleum Ministry was a controversial story and the first indication the Nigerian public had that this president is not a man that would worry about the sensitivities of his people. In the economic politics of Nigeria, at least four major groups present themselves as stakeholders of the oil and gas wells that dot the Niger Delta region: the Northern states that produce no oil but desire to mutate into several more states because of the incongruous arrangement in a federal state of sharing revenue accruing from one region on a monthly basis; the federal government that legislated the resources into its ownership and supervises the sharing; the industry that operates the resources and the states (and communities) that actually produce the resources. Although Ms. Campbell could trace her pedigree to at least two of these groups, her nomination by the president was rejected by all four groups and indeed anyone who had an interest in the continuity of the system. She was fortunate in many respects. Her critics were blackmailed into silence by feminist groups who successfully dragged the issue into the realm of sexual discrimination. She was given a free hand to operate as a substantive minister without a junior minister where her predecessor, Odein Ajumogobia, SAN was only a minister for state with full time supervision from the Rock. By the time she settled into office the production fields had been calmed into tranquillity for her by Umaru Yar ‘Adua’s amnesty programme. Also, the downstream sector had found some rhythm, stability and predictability. She entered upon her duties with unhelpful attitudes such as lateness to meetings, absenteeism, lack of a team spirit and acted as though she had been in the pith of production activities at Shell where she got her “experience” of the industry. Anyone who dared to remind her that public relations and production were two very different kettles of brew got into her bad books. The Petroleum Industry Bill, the promised piece of revolutionary legislation to reorder the ills of the Oil and Gas

Industry and assuage the suffering of oil and gas producing communities, was finally submitted by the Petroleum Ministry to the National Assembly. Before it was submitted however, the Petroleum Minister set up a task force that included men like Senator Tunde Ogbeha, Senator Udo Udoma, Prince Chibudom Nwuche and PENGASSAN’S Peter Esele among others to do a review of the Bill. The task force sat, poring over provisions and making recommendations. Little did they know that their efforts accounted for nothing. Some of them now swear that the document they reviewed is by far different from the copy that was submitted to the National Assembly. The Minister’s PIB, from promising to unite the divergent aspirations of stakeholders into an acceptable position for all, now portends to tear the country apart. The IOCs are drawing up new strategies for divesting of their stakes in Nigeria as they are worried that the fiscal provisions in the PIB would make Nigeria’s investment environment the most expensive in the world. The SPDC has decided to postpone a $30 Billion investment in Nigeria because of the Bill. Industry watchers agree that if the PIB passes legislation as it is, it would convert Nigeria’s Oil and Gas Industry, from the Commonwealth of Nigeria to the personal fief of the Petroleum Minister because of provisions that grant her office more powers than the presidency. The current Minister’s appreciation of history is so little that she has tailored the Bill to serve the ends of an office she thinks she will occupy forever. Last week, Shell complained that they are losing sixty (60) thousand barrels of crude daily to pipeline vandals and crude oil thieves. Their investigations, they claim, revealed that illegal crude refineries are building large tank farms to store stolen products. We see this as the direct consequence of a mishandled amnesty programme and the failure of the Petroleum Ministry to invest in modern technologies that detect and prevent pipelines vandalism and other acts of sabotage and theft. As there is no reason to hope that the Presidency would wake up to its responsibilities by redeploying Ms. Campbell to the Culture Ministry or demanding her resignation, it is now left to Nigerians to march her under the forceful will of twenty (20) thousand or more feet in and around Nigeria’s own Tahir Square, out of the office of the Honourable Minister for Petroleum Resources.

2013 September, SweetcrudeReports


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