24 — Vanguard, TUESDAY, JUNE 11, 2013
Industry E&P spending to reach record $678bn in 2013
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IL and gas companies will spend a record $678 billion on exploration and production, E&P, this year, 10 percent more than last year, Barclays said in a report this week, but did not say how much of this spend will come to Africa. The Global 2013 E&P Spending Update from the bank offered a bullish outlook on the energy industry, with oil demand continuing to outstrip supply and oil companies spending more to find deposits in more remote places, Reuters reported. “We do believe the industry in the early stages of a strong, sustained up cycle,” Barclay’s analyst, James West, said on a conference call, according to the news wire. Higher spending in the Middle East, as well as solid E&P budgets in India, Australia and the rest of Asia, would more than offset slowing growth in Latin America, Barclays said. E&P spending outside North America should rise 13.2% this year, a bigger increase than the more than 9% Barclays had forecast earlier. Growth in the Middle East is driven mainly by higher spending forecasts for Saudi Aramco, the world’s biggest oil exporter, and increased drilling
Revenue Watch seeks audience with DPR
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Mr. Andrew Fawthrop, Chairman/Managing Director, Chevron Nigeria Limited (CNL) (right), receiving an award for environmental stewardship from Chief Philip Asiodu, President, Nigerian Conservation Foundation.
in Iraq, according to the report. Barclays forecast a 2% rise in E&P spending in North America this year. It had previously estimated flat year-on-year spending levels for the region. Strong US land drilling has created a market of “haves” and “have nots” among oil service providers, though spending should still rise in the country, Barclays said. The relatively slow pace of recovery in the US land market was causing continued challenges for smaller companies, while industry leaders such as Schlumberger, Halliburton and Baker
Hughes are expected to benefit from the demand for premium technology and equipment, Barclays said. E&P companies are basing their spending budgets for the year on oil prices of $101 for Brent, $86.5 for West Texas Intermediate and benchmark US natural gas prices of $3.62, Barclays found in a survey of more than 300 oil and gas companies conducted last month. The report also said PetroChina is expected to be the world’s largest E&P spender this year, overtaking ExxonMobil for the first time since the 1980s.
Nigeria to earn N46bn yearly from pipe fabrication BY MICHAEL EBOH
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HE Nigerian Content Development Monitoring Board, NCDMB, said Nigeria will earn about $300 million (N47.7 billion) annually or $1.2 billion (N190.8 billion) over the next four years, between 2013 and 2017, in the local production of steel pipes for the exploration and production of crude oil in Nigeria. The NCDMB in its ‘Nigerian Content Implementation Framework for 2013,’ said it planned to directly facilitate the increase of local steel pipe annual production capacity from 100,000 metric tonnes, MT, in 2011 to 900,000MT by 2017. According to the NCDMB, by 2017, local capacity of 500,000MT will exceed exploration and production demand for steel pipes leading to 100 per cent utilisation of locally produced steel pipes. “NCDMB’s approach is structured around radically increasing local supply of steel pipes in product categories that will have the largest impact, thus starting
with welded pipes. “Through NCDMB’s intervention, $300 million of upstream oil and gas industry spend will be retained annually, with 1,200 direct jobs and 9,000 indirect and induced jobs created,” the report stated. The NCDMB put the petroleum industry’s annual demand of line pipe at about 800,000 tonnes, saying this presents enormous opportunities for investors. According to the report, the projected annual industry demand of line pipe is put at over 800,000 tonnes, arising from the demands from the Gas Master Plans, replacement of aged pipes and new fields development projects against the current supply opportunity of 100,000MT per annum. The NCDMB said it is already promoting the establishment of three pipe mills in Nigeria, adding that it has already acquired a portion of land in Bayelsa State to support the
establishment of a 250MT pipe mill. In this regard, the NCDMB said, “Attributes of the land acquired for the pipe mill include nearness to Shell gas plant facility for accessibility to gas; proximity to the Gbaran Ubie National Integrated Power Plant, NIPP, and closeness to River Nun for easy transportation of raw materials and finished goods. “Steel line pipes are one of the critical inputs in the oil and gas industry in terms of utilisation. It, therefore, has high potential for employment generation; local value addition and retention of industry spend.” Continuing, the NCDMB said from now till 2017, a total of 4.27 million metric tonnes of steel pipes will be needed for exploration and production, gas, water and infrastructure projects in the country, adding that at present, only 10 per cent of this demand can be sourced locally, while 90 per cent are imported.
C C O U N TA B I L I T Y watchdog, Revenue Watch International, RWI, has requested an audience with oil and gas industry regulator, Department of Petroleum Resources, DPR, to discuss industry related issues. The meeting, scheduled to hold on June 17, at the DPR Corporate Headquarters in Lagos, will be the first of its kind by Revenue Watch, a non-profit policy institute that promotes the effective, transparent and accountable management of oil, gas and mineral resources across the globe. Speaking more about the proposed visit, DPR told Vanguard in Lagos that as the regulator of the Nigerian oil and gas sector, it “ welcomes and wholeheartedly supports the RWI initiative as it is for public good,” adding that “This is in line with the transparent and open policy stance of DPR management policy in conducting regulatory business in Nigeria.” The industry regulator also reiterates its “readiness to cooperate with other agencies, local and international in other to achieve government’s aspiration for a more transparent and accountable oil and gas industry.” To underscore its role, the DPR noted that parts of its functions also include the collation of production data from oil and gas activities in the country; monitoring of crude oil lifting at the terminals; generation of revenues for government through collection of royalty for oil production and gas sales, operational fees and signature bonuses during licencing rounds as well as enforcement of operational standards in the industry. Specifically, the regulator explained production figures are usually reconciled at the end of every month, but retains the maximum allowable production granted to companies until figures are reconciled. It also noted that the Department has in place a transparent system, which captures crude oil lifted from the terminals, and monitors hydrocarbon mass balance of the various oil companies. With regard to enforcing standards, the regulator said it takes “utmost interest in the fiscal metering systems in the Upstream and Downstream sectors of the industry by monitoring and supervising the engineering designs, construction and site acceptance tests and installations at operational locations.”