The NGA Under My Leadership Will Create The Platform to Invest In Capacity Building, Planning And Creating A Robust Utilization Market For gas In Nigeria – Osunsanya
Mr.Bolaji Osunsanya was appointed as an Executive Director of Oando PLC in June 2007; he has been the Chief Executive Officer of Oando Gas and Power Limited (OGP) since September 2007 and Gaslink Nigeria Limited since January 2004. As the Chief Executive Officer of Oando Gas and Power Limited, he oversees the company’s pipeline expansion programme, the independent power plant projects as well as other gas to power projects in Nigeria. In the last year, under his watch OGP has successfully launched the Alausa Independent Power Plant and a Compressed Natural Gas (CNG) facility.
Mr. Osunsanya joined the former Unipetrol Nig PLC in August 2001, as Head of Lubes and Specialties where he was responsible for product coordination and eventual sales of Lubricants, Bitumen, Chemicals, LPG and Aviation fuels. In July 2004, he became Chief Marketing Officer and had the responsibility for national commercial sales.
Before joining Oando in August 2001, He was an Executive Director at Access Bank Plc from November 1998 to March 2001 and an Assistant General Manager / Head of Local Corporate Group of the Institutional Banking at Guaranty Trust Bank PLC from 1992 to 1998. From 1988 to 1992, he worked as a Consultant with Arthur Andersen, Nigeria (now KPMG professional services) gaining experience in the banking, oil and gas and manufacturing industries.
As Mr. Osunsanya takes up the gallant role of championing the cause of this great Association, Orient Energy Review caught up with him in his office, to hear his plans in moving the NGA forward. He spoke with Margaret Nongo-Okojokwu. Excerpts.
Hello sir, could you start off by telling us a bit about yourself
At Oando, we place a firm emphasis on innovative world class services comparable to what is implemented in other parts of the globe, and as the Chief Executive Officer of Oando Gas and Power I oversee all gas and power initiatives for the Oando PLC group. I’m also a Director within the group, and as the current 1st Vice President of the Nigerian Gas Association I would like to commend your publication for all that you’ve done in your coverage of local content development in the country. This is a very important facet needed to facilitate growth within the various industrial sectors, and with all hands on deck we can do a lot more to advance the energy sector in Nigeria and beyond, and to that extent our objectives coincide.
You were very instrumental in the setting up of the Akute Power Plant via OGP’s Gaslink subsidiary, and due to the project a lot of positive changes have been effected in the Lagos area. Earlier this year, you mentioned the possible commencement of construction of the 4th phase of the Greater Lagos 4th pipeline, what’s the update on that project?
The Greater Lagos IV pipeline is an extension of our current Gas Link distribution grid, and we’ve covered 100KM in major parts of Lagos but this phase will basically connect Ijora to the Lagos Island. It’s about a 9-10 km stretch, and it is unique because it will cut across two major lagoons as part of the development. So even though small in distance, it is quite complex in execution. However, we are keen to extend gas to our customers in that zone, particularly within Lagos Island; and therefore we’ve chosen to undertake this endeavour. Earlier in the year, I indicated that we were commencing all the pre-works, which we have now completed, and we are about to begin actual construction. All the materials needed are now in-country, and actual digging and excavation will start in October as we aim to complete the 1st segment by the end of the year, and finish the entire the project by mid-2015.
What are your mid to long term plans to increase OGP’s power generation capacity beyond 23 Mega Watts?
Well I think I should point out that we implement a highly symbiotic gas and power strategy, so our gas initiatives are structured to extract value via power linkages. We have achieved the 23mw that you referred to because that was our benchmark in the short term, and with environmental initiatives more critical to our business, we developed viable bilateral contracts with parties who had the same goals and interests as us. But now that power reforms are in place, the power sector has started to open up a bit more, and there is an increasing number of commercial constructs that are sustainable, leading us to seek more active participation in the power sector. We will continue to build active power plants, and we have another 100mw that we seek to develop in different parts of Nigeria. But more importantly, we will look at the possibility of investing in larger commercial plants of 400 MW and above, as we are keen to do a lot within the embedded generation space. We’ve begun discussions with the distribution zones on how far we can go on the embedded bases, as this a critical facet of our long term strategy.
You also mentioned compressed Natural Gas, could you please give us updates on what you have done so far with regards to your Compressed Gas distribution programme?
We are extremely excited about our CNG venture as we set it up to create a market ahead of the existing pipeline infrastructure. It’s our approach to reach out to stranded customers, and we will work towards developing the market sufficiently to justify putting in pipeline infrastructure in these areas. We have a Mother Station in Ilasa, which is a 150,000 standard cubic metre facility capable of supporting about 25 megawatts of energy requirements. Today we have four active customers taking gas from our plant in Ilasa, and these are customers within a100km radius. The success of this pilot station has encouraged us to look at other locations in Nigeria where we can provide energy solutions to stranded customers, while we wait for the expanded pipeline grid. So we have two new projects, we are considering, one towards Ibadan and one certainly in Port Harcourt and those projects will mature by the end of the year, and hopefully we will make the needed investment decisions early next year.
Coming to the popular gas flaring issue: when do you intend to stop gas flaring at your production sites?
When you say production sites, you take me to a larger realm because as a gas and power subsidiary, we don’t have production sites, but as the larger Oando PLC group, we have parts of our business engaged in activities that may today need to flare. As a PLC, we are part of the Nigerian Agip Oil Company (NAOC) joint venture via our Upstream subsidiary, Oando Energy Resources. The NAOC joint venture is a very active player in the flare down programme, and it has a very impressive record of converting flare to energy and as you know, they are a critical provider in the domestic gas obligations. NAOC has done extremely well, and it would be nice if other IOCs actually replicate or do similar projects.
With that said, on the Gas and Power side, our main focus is to find outlets and markets to make the gas flare down programme very easy and one of the things we discovered is that we have to backwardly integrate to make that happen. The E&P companies are happy to drill for oil and get the gas out, but they are not very keen on the downstream processes that take the same gas to the market. We are refocusing our strategy to involve the processing, transportation, and the eventual distribution of gas to the market. Where that is impossible on account of infrastructure, we will also implement utilisation projects that can take the gas easily. In this regard we have an overarching strategic framework to build central processing facilities. We have an initiative with the NNPC and Agip to put in place a 600 million cubic per day processing facility around the South Central area of Nigeria, and we also have plans to build mini-LNG plants in specific locations where gas is currently being flared, and we also looking at soft spots to establish a mini-LNG Programme. On the back of that, we will also look to develop power plants at flare sites, and we are currently investigating the potential of two or three sites in Nigeria. Our aim remains to move the gas to power projects or move the gas to another utilization arena or convert it to energy.
Does Oando Plc have any intention of going into renewable energy? Like the Going Green Project, does this fall into your plans?
I believe the whole gas and power initiative is in itself a Green initiative, thus everything we are doing falls within the sphere of going green. But, if you take the very restricted definition of Green being non-fossil, then that would be an area that today we are not actually looking at actively. We will continue to monitor developments in the renewable space and do things when we get there. However, at the moment, we are more focused on dealing with the richly available gas resource, and working to get the gas converted, thus reducing emissions and achieving our specified green targets.
What are your future prospects at Oando Gas and Power?
We have quite a bit, but to just put them in a nutshell: it’s still our aspiration to build up the gas field in Nigeria. Therefore, we are looking at expanding the current pipeline network to other parts of Nigeria. In other words, we only have about 2000km of pipeline in Nigeria today, and Nigeria probably needs an excess of 10,000km. You can see the existing vacuum we are tasked to fill, and within the framework of the Gas Master Plan we will look at how to articulate getting a lot of gas to the end consumer. Obviously, this project is something we will do in the medium to long term. Another critical facet we are working on is the development of technologies that aid our aspirations. Again, our focus is not just on building pipelines, it’s also about developing all the ancillary infrastructure that supports gas usage like CPFs, CNGs, LNGs, and all the progammes we have planned for the future. A third part would be increasing our play in the power sector, and we would work within the reform plan, and implement that are practical within that programme. In the long term there is more than enough power to be generated, and our view will be to look at the power space and deal with the gaps that we are best suited to serve as we would not wish to put ourselves forward in parts of the power value chain where there will be no clear advantage. We will also look at areas of embedded generation where we have facilities and gas, this will enable us conduct mid-sized generation to quickly bridge the gap. All of these are areas we believe hold the potential for substantial value add to our long term growth strategy.
Looking at the bigger picture now, some are of the opinion that with the growing profile of shale gas discovery in the United States, Nigeria may have lost her biggest market. Does shale really pose a threat to our gas?
I guess it’s a matter of perspective, as gas for us has served in two ways: a significant foreign exchange earner, and more recently as a catalyst for internal development. Shale gas does not compete with gas for internal development because we never had a situation where we were thinking of importing gas from the United States anyway. But like everything export, shale gas will potentially reduce prices because of active demand from the United States, which was a big driver in terms of keeping the prices up. This is what is being challenged and therefore, in terms of export potential, I think it will have an effect. However, I am not worried about the effect that it will have because commodity gas is an international commodity, and regional imbalances sometimes get compensated by regional gaps. So the requirements within Europe and the Far East will more than compensate for the depression that the reduction in US demand may cause. It would be too simplistic to say the advent of American shale gas does not have an impact, but I will be quick to say that it gets compensated for by the other two regions and the socio-political events within those markets. Domestically, I think we are not where we should be, but we should focus on the aggressive rollout of our gas utilization programmes with local use and exportation to foreign markets playing a significant part.
The Nigerian Gas Master Plan has been hailed as the vehicle for developing the country’s gas sector and the economy. How is the Nigerian Gas Association positioned to make this a reality?
I would like to say that the Nigerian Gas Master Plan is a collective industry effort; and we should recognize the role played by the NNPC in championing it. The participation of all the players in the industry and the ministry has been pivotal to the development of a platform for the future expansion of gas in Nigeria. I’ll like to emphasise that it’s not a static effort, but a conduit where we are trying to enter and engender what the gas master plan is supposed to achieve. It is a dynamic project that requires an all participatory approach to critically restructure the processes that we need for a vibrant gas market.
The NGA is exactly about that; galvanizing all participants in the gas sector in Nigeria under the umbrella of the International Gas Union. Under the IGU, we are the champions of gas development in our respective countries, and here in Nigeria the gas master plan and the NGA’s long term strategy are complimentary. We will continue to support the active planning of gas utilisation in Nigeria, and while the planning of gas infrastructure and gas utilisation in Nigeria are important, we will also work to increase the capacity-building in our industry on a sustainable basis. So as an organisation, we will look at learning solutions where we are actively pushing out industry-led training programmes to build up the capacity of the people in our industry, as well as continually building platforms where the older and experienced hands can pass on valuable experiences they’ve gathered over time to the young and upcoming players in our industry. We also have a students’ platform within our association that tries to encourage and incentivize new engineers and graduates within our industry. Most importantly, we create a platform where policies and discourse that can impact the industry positively are brought to the forefront.
Many wonder why the Gas Master Plan has not been fully implemented yet. What do you see as the challenge here?
The challenges in question are those that you find in the ordinary course of business, and they are not challenges that were not given prior thought. The Master Plan indicates the necessary elements such as pricing regulation that need to occur, bankability or commerciality expressed in contracts, and all other building blocks that we need to put in place. I think this is just a momentary period of inertia in us implementing the building blocks. We have done a good job scoping the back bone infrastructure, but what we have not done properly is the actual of that same structure and the constraints in funding and making it bankable. On the policy side, we have worked on pricing regulation and the announcement of a joint team by the honourable Petroleum Minister to work on gas prices for power is a step in the right direction. The creation of a pricing regime sensitises everyone, and contracts are also being reviewed, which shows our progress. Another positive is in gas aggregation. Today we have a central log of suppliers in demand of gas, so we are well aware of where the gas is and who needs it. But issues remain regarding co-ordination and ownership, and these are things we will try to sort out over time. The immediate horizon looks bright, and the NGA will support in closing of all the aforementioned gaps.
We understand you will assume leadership of the Nigerian Gas Association very soon, what are your plans for this first tenure?
There is only one tenure; it’s a two-year tenure and it is automatic, so the 1st Vice President becomes President and that has helped the NGA with internal consistency. We must commend Eng. Saidu Mohammed, who is the current president for following the trail of the previous presidents to execute the vision of the IGU (International Gas Union) and NGA when these were put in place. Under my leadership the NGA will be a direct translation of what the vision of the pioneering fathers of the association was; which is to create a consistent platform, to invest in capacity building, to be a vehicle for planning and creating a robust utilisation market for gas in Nigeria and beyond. That will be my major focus as I go, but I would also like for us to improve upon our connectivity with the global gas players. Under my leadership, I would certainly like us to take the IGU connection more seriously so that we can leverage on ongoing research and technologies that we enable us to be better informed in Nigeria. It’s almost a settled industry globally. The goal is to go to other global industries, select vibrant aspects, and bring it back home for implementation. We need to network and interface at that level, connecting to the work streams that will be beneficial to Nigeria. I would also like us to engender continuous development; what I mean is that we need people to be constantly engaged as an association. What we typically see is that people get very serious and focused and after six to seven years, they lose focus. We need to keep their engagement sustained, and to do that everybody who is a part of the NGA has to attain a certain level of participation so that we can focus on recruiting new people into the NGA. Consequently, we will take our students programme more seriously, we will take our non-city centre chapters more seriously, and we will try to bring in the buyers, bring in the end consumers, because there has been a tendency to look at only the suppliers. But if you are trying to create a holistic market, the link between the suppliers and the buyers is actually the trigger in creating a vibrant market. So I will reach out to the non-active segment of our catchment, to encourage them.
One year after the privatisation of the power sector, we are beginning to hear from various quarters about the slight improvement in Power transmission. What is your take on this; do you think we are really making progress?
I think progress or no progress; we had no choice but to hand over the Discos to the private sector. Having said that, even though it’s early days, I think directionally, we are going in the right direction. I am pleased that we are able to show some quick wins that even the ultimate users can start to say that there’s been an improvement over what we had in the past. I was not so optimistic that those quick wins would show in the first year, but I am still very excited about the programme and I believe we’ll get it right. People have always talked about the shortcomings in the transmission infrastructure. Today, we know what that capacity is, and people are already to power and test it to its limits. Interested parties are also looking at creative ways of solving existing problems; look at the whole discussion around the embedded generation, that wouldn’t have happened in the past. So I am excited that the private sector is wholly involved, and you will see creativity at its best now that the onus falls on the private sector. I think even more power solutions will be implemented sooner than we envisaged, and looking at the pace it is going at now, it shows us there is light at the short end of the tunnel. However, there are a few things that we can be more proactive about, like the MYTO adjustments, but I think that can be easily taken care of.