Management of Shell Petroleum Development Company of Nigeria (SPDC) has confirmed that, owing to oil theft and sabotage, the company recorded 17 oil spill incidents in the month of June 2020.

The company said between June 1st and June 30th 2020, it experienced leaks in Abia and Rivers States amounting to 1,266.25 barrels of crude oil.

The information contained in the company website said the affected facilities include  those in; 28″ Bomu-Bonny Pipeline, 14″ Okordia-Rumuekpe Pipeline, 28″ Nkpoku-Bomu Pipeline, 20″ Kolocreek-Rumuekpe Pipeline, 12” Imo River-Ogale Pipeline, 36″ Nkpoku-Ogale Pipeline, 8″ Nkali-Imo River Pipeline, and 4” Imo River2-Imo River1 Bulkline.

Shell said the while the 20″ Kolocreek-Rumuekpe Pipeline experienced two leaks at two locations, within the month of June, 14″ Okordia-Rumuekpe Pipeline got five leaks at different theft points, while the 12” Imo River-Ogale Pipeline also experienced five leaks at almost the same theft points within Umuololo, Ukwa West LGA of Abia State.

Shell also confirmed that three of the leaks were recorded in the swamp area, while 14 occurred on land; the volume of each spill ranges from 0.04barrel minimum to 655 barrels maximum, in each of the spill site. Information from JIV reports endorsed by the Department of Petroleum Resources (DPR), the National Oil Spill Detection and Response Agency (NOSDRA), Host communities and State Ministry of Environment in the impacted states and SPDC, showed that all the other 17 leaks were caused by sabotage and third party interference.

While no recoverable oil was found in some of the spill sites, recovery and assessment are yet to be completed in most sites, as some would take as far as January and February 2021.

By Chibisi Ohakah, Abuja

A Federal High Court sitting in Lagos has said that the Department of Petroleum Resources (DPR) can go on auctioning 10 marginal fields whose licenses have been revoked. The court had rejected an interlocutory injunction application filed by the operators of affected marginal oil fields which intended to restrain Federal Government from auctioning them.

The affected parties representing 10 marginal fields had prayed the court to stop the Federal Government from auctioning the affected 10 marginal oil fields which licenses have been revoked.

The affected operators are Associated Oil & Gas Limited, Dansaki Petroleum Limited; Bayelsa Oil Limited; Bicta Energy and Management Systems Limited: Del-Sigma Petroleum Nigeria Limited; Sogenal Energy Limited; Independent Energy Limited; Sahara Energy; African Oil & Gas Limited and Goland Petroleum Limited.

Defendants in the suit are the Minister of Petroleum Resources, Attorney-General of the Federation (AGF) and the Director, Department of Petroleum Resources (DPR), Mr Auwalu Sarki.

Delivering ruling on the application, Justice Chukwujekwu Aneke held that the operators of the affected Marginal Oil Fields failed to convince the court on why the order ought to be granted.

In dismissing the application, Justice Aneke held: “the court having considered the papers filed and exchanged by the parties, refuse to grant the application on the ground that it lacked merit, I hereby dismiss same.”

Justice Aneke further held that the applicants failed to convince the court that an order of interlocutory injunction ought to be granted in the case. Consequently, he adjourned the matter till October 29, 2020, for hearing of the substantive suit.

The court had on May 29, refused to grant an ex-parte application seeking to restrain the defendants from withdrawing licenses of the operators instead, and directed the applicants to put the defendants on notice. However, rather than complying with the court’s order, the applicants allegedly decided to serve the processes through email without recourse to the court’s order.

When the application for interlocutory injunction came up for hearing, the defendants were absent thereby forcing the court to grant the application as prayed. Upon becoming aware of this development, the defendants through their legal team, Mr Adetunji Oyeyipo SAN, Dr. Adewale Olawoyin SAN and Adebayo Ologe, approached the court for a reversal of the order of injunction, on the ground of non-service of court’s processes.

The court was forced to set aside its earlier orders made on June 3 which restrained the defendants and consequently directed that the application for interlocutory injunction be heard afresh after service of relevant court processes on the defendants.

By Chibisi Ohakah, Abuja

A human rights group, representing erstwhile managers of four oil wells in Nigeria has signaled to enter into legal battle with the Nigerian government as the country engages battle gear to auction the oil wells hitherto in the hands of politicians and past leaders of the country.

The group, Human and Environmental Development Agenda, (HEDA Resource Centre) is asking the President Muhammadu Buhari to stop the processes leading to auctioning of the oil wells already put up for sale, and said to be worth about $22.5 billion dollars.

The oil wells are ) OML 24, OML 98, OML 122, OML 110, OML 88, OML 62, OML 11, OPL 292 and OPL 258.

In a petition to Aso Rock, the HEDA Chairman, Olanrewaju Suraju stated that “the total cost of the oil wells run to about $12 billion. We want to know why these oil wells are being put up for sale. Who are the prospective buyers? Where will the proceeds of the oil wells go? How will Nigerians benefit from the sale of the oil wells?”

Suraju linked political undertones to the proposed sales of the oil well. According to him, oil wells have been used over the years for political patronage and sold to individuals by fiat. “This should stop. The resources belong to Nigerians and they should not be sold without prior and informed consent of the people.”

The group said the timing of the sale of the oil well is suspicious given the current scrutiny going on in the Niger Delta Development Commission (NDDC). “Nigerians have the right to determine what the Federal Government is doing with the oil wells.

“The decision to sell the oil wells can only be taken after due consultation with relevant stakeholders and active participation of the civil society organisations, media and labour to understand and verify the beneficial owners of the bidding companies.”

Nigeria is home to some 159 oil fields and 1481 wells in operation, and all are under the authority of the Department of Petroleum Resources, (DPR). Most effective of the oil wells are located in the Niger Delta, which remains one of the poorest regions in the country. The Niger-Delta alone has 78 oil fields out of the 159 oil fields in Nigeria.

The most productive region of the nation is the coastal Niger Delta Basin in the Niger Delta or “South-south” region which encompasses 78 of the 159 oil fields. With the recent revelations of insider dealings, compromise and contract benefit by parliamentarians, ministers accused of corruption and illicit assets beyond legitimate means, public perception is not at all in favour of this surreptitious sale of these oil fields.

“Selling national assets is not a decision to be taken by a few people. Selling of these oil wells will have longterm implications for the future of Nigeria beyond the tenure of those who wish to sell the oil wells. This is the reason why the Federal Government should not sell the oil wells without constructive engagement of the people but rather the employment of a Consultant as middlemen for the sale of these oil blocks, the group argued.

HEDA urged the President to seek from the DPR who the buyers of the oil wells are and on what conditions they are being auctioned; where the bids were advertised and what were the level of competence of the bidders. The organisation signaled the intention to seek legal redress if the final outcome is not satisfactory to them.

By Chibisi Ohakah, Abuja

Concerned over the influx of foreign vessels on Nigeria’s waterways, the Senate joint committees on local content, downstream petroleum and legislative compliance have invited the Minister of State for Petroleum Resources, Chief, Timipre Sylva and the Minister of Transportation, Rotimi Amaechi to provide explanation on the worrisome trend.

Also, invited is the Group Managing Director of Nigeria National Petroleum Coporation, NNPC, Mele Kyari, the chairman of the committee on local content, Teslim Folarin, has said.

The trio are expected to give explanations over the alleged abuse of the Coastal and Inland Shipping (Cabotage) Act, 2003 and the Nigerian Content Act, 2010.

The panel is currently investigating the breach of Nigerian laws by foreign vessels in the coastal region of the country.

This was prompted after Senate deliberated on the breach of Nigerian laws by foreign vessels in coastal shipping of petroleum products in downstream sector of the Nigerian maritime industry, and subsequently called for an urgent investigation.

The lawmakers had expressed worry over the influx of foreign vessels into Nigeria’s water ways which is contrary to the country’s Cabotage Act that clearly restricts vessels engaged in domestic coastal trade to only wholly-owned, manned and registered Nigerian vessels to engage in the domestic coastal carriage of petroleum products within the coastal and inland waterways.

The Senate had also mandated the panel to investigate foreign ship owners of freight associated with downstream activities repatriated overseas by NNPC to the detriment of the local economy.

According to Folarin, the panel had earlier invited the former Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside, who he said “could not answer because they were not his responsibilities but that of the minister (Amaechi).”

“The Senate discovered that foreign vessels are still dominating the maritime industry and the local companies are saying Nigerians must have first option. Also, COVID-19 has exposed this so-called globalisation.

“For instance, the issue of waiver, all the foreign vessels plying our waterways, what is the criteria for their operations? Also, the two per cent paid to NIMASA after any business is done, will help develop the local industry. The money is being banked and we found out they have not spent a penny. So, we want to invite the minister and GMD of NNPC to help us out and tell us why the business is being dominated by foreigners.”

He also faulted the documents earlier submitted by the former DG of NIMASA, said it contained some ‘inconsistencies’, adding that “some the names of foreign vessels are also the same names as the local vessels”.

“We can’t carry out the investigation without talking to the key players,” he said.

The invited parties are expected to appear before the committee after the Senate’s annual recess.

By Peace Obi

A Rystad Energy analysis has stated that the oilfield service market is not likely to rebound to last year’s activity level until 2023, following the impact of the Covid-19 downturn, Offshore Energy reported last weekend.

The analysts said that suppliers could diversify some oil and gas capabilities and replace up to 40% of 2019’s revenue by servicing the renewable markets. Rystad Energy analyzed the activity of the top 50 oil and gas suppliers, which together earned $220 billion in upstream revenue in 2019, $100 billion of which originated from well services and commodities.

They said that many services provided by well-focused suppliers will be challenging to deploy in the context of energy transition operations, especially tracking services, OCTG and drilling services and tools.

However, the top contractors providing engineering, procurement, construction and installation (EPCI) services – which earned around $55 billion in 2019 from the oil and gas industry – will find it easier to apply their competencies towards the green shift.

“Around $90 billion, or 40% of the revenue from the top 50 players in the global service market, could potentially be replaced by energy transition projects, such as clean energy infrastructure and renewable energy production development services. The supply chain industry must also look to avenues outside of the energy transition to stay afloat”, Offshore Energy quoted Rystad Energy’s Head of Energy Services Research Audun Martinsen.

In terms of market opportunities rebound, Rystad stated that most traditional oilfield service suppliers are looking to expand into low carbon segments, meaning technologies or services aiming to reduce or prevent emissions from oil and gas extraction and production. This can be done by offering more efficient operations and digital solutions. This is a space where most suppliers, regardless of current exposure in the service market, have a role to play.

Another emerging market within the energy transition is clean energy infrastructure, where suppliers can provide services to support blue and green hydrogen infrastructure, carbon capture and storage, or energy storage in general. This is a market where engineering houses, fabricators and equipment manufacturers will find big opportunities for growth and for synergies, Offshore Energy said.

A third option within the energy transition, the analysts said, is to supply the end-to-end development and operations of renewable power generation itself, for example by developing solar power plants, wind parks offshore and onshore, and geothermal energy.

The solar energy supply chain is highly fragmented and has become essentially out-of-box, yet the wind market offers great potential for offshore contractors to support the development of offshore wind.

However, the risk and investment required for expanding into other energy markets beyond oil and gas will not be feasible for all oilfield service providers.

In terms of growth opportunities, the clean energy market represents a fast-growing industry. The installed capacity of all utility-scale global renewable energy assets has doubled every fifth year since 2010, and will total 1000 gigawatts (GWAC) in 2020, comprised of 600 GWAC of onshore wind capacity, 284 GWAC of utility PV capacity and 34 GWAC of offshore capacity.

By 2025, Rystad expects this number grow by at least 50% to 1500 GWAC, potentially reaching 1800 GWAC of global capacity in the high case. Due to economies of scale and cost deflation, operator’s investment towards asset development will grow slower than capacity, but still much faster than the oil and gas market.

In Europe for instance, investments in offshore wind will exceed offshore O&G investment as soon as 2022. Geothermal energy is also getting broader attention in the market, especially in Europe.

Mapping Service Relevancy
Rystad Energy has mapped out the relevance of existing oilfield service business offerings in the context of emerging energy transition markets.

Within the scope of its analysis, Rystad sees that those oil and gas segments which will return to 2019 market levels by 2023 are those that are most agile – those that are able to support both the diversification of oil and gas offerings towards the energy transition and at the same time, those that will continue to see high growth from traditional O&G operations.

The SURF, and the maintenance, construction and installation segments rise to the top in this regard, emerging as the most nimble service segments.

SURF represents the market for subsea cables and pipelines, and the installation of these mechanisms. As a key segment for the development of deepwater oil and gas operations, particularly the high growth markets of Brazil and Guyana, Rystad Energy believes the SURF segment will be on track to surpass 2019 market levels in 2023.

In addition, SURF services will be in demand for both floating and grounded offshore wind – the fastest growing renewable energy segment.

Similarly, the skillset of the maintenance, construction and installation segment is applicable to the emerging energy infrastructure market and to renewable energy production in general. This segment is also expected to win big in as the oil and gas market recovers, as the segment has a major focus on LNG development, which many E&Ps have favoured in recent years.

The energy transition is likely to be more challenging for well-related services, such as rigs and well services, even though geothermal energy – a potential consumer of these services – is gaining momentum around the world. Geothermal projects typically are comprised of two to six wells per project.

However, the 1,000 geothermal wells which might be drilled every year going forward will not be sufficient to compensate for falling O&G well services demand, which Rystad anticipates will only decline from a high of the 70,000 oil and gas wells drilled last year.

Therefore, the sectors that are, by nature, less agile in shifting towards the green revolution would be wise to focus on reducing emissions by way of digitalization and by developing automation and emissions control technologies.

Source: Offshore Energy