Nigeria urges for indigenous participation in upstream sector

Aug 03, 2001 02:00 AM

Practical steps towards domesticating the upstream sector of the oil industry began in Abuja, Nigeria, with the Federal Government giving all multinational oil companies marching orders to that effect. Indications also emerged that government has issued a fresh deadline for the installation of a modern metering system in all the six crude oil export terminals in the country.
Special Adviser to the president on Petroleum and Energy. Dr. Rilwanu Lukman who spoke on the participation of local firms in the industry at a workshop, listed the areas to be immediately accomplished by the multinational companies, if they do not wish to incur the wrath of government. He expressed government's concern that 24 years after the NNPC was established to aid the participation of indigenous companies in all spheres of the sector, the reverse had continued to be the case.
He spoke at the opening of a two-day national workshop on "improvement of local content and indigenous participation in the upstream sector," organised by the NNPC in Abuja. Charging the companies to begin deliberate action towards encouraging local content and indigenisation, Lukman said. "It is now time for the multinational operating companies as well as the service companies to make deliberate efforts to develop strategies that will support local content development within the industry in the shortest possible time.

The special adviser who described this period as a turning point in the life of the nation, urged all stakeholders to close ranks and expedite action on the government directive which will be to the ultimate advantage of the nation.
He said: "We therefore need all participants in the oil and gas industry to cooperate with us in ensuring acceleration of the indigenisation of operations of the industry in Nigeria up to the highest practical level in order to ensure that the industry contributes fully to the nation's economic development."
Lukman decried the attitude of indigenous companies towards taking advantage of the oil industry saying: "the indigenous companies have unfortunately, for several reasons, not been able to take full advantage of our vibrant industry."
Noting that the Nigerian community is now aware and very sensitive to the need for a participatory role in the industry, he charged stakeholders to, among other things, take steps in the following directions in order to increase the level of local content: define the scope of local content stimulate awareness and create conducive environment for indigenous companies to have insight into available opportunities and develop an all-encompassing contracting strategy and guidelines and support high sense of professionalism. He also charged the oil companies to make a conscious effort to give preference to locally manufactured materials and equipment, machinery and consumables.

In his welcome address, the Group Managing Director of NNPC, Mr. Jackson Gaius-Obaseki, lamented that the nation loses over N 500 bn ($ 4.95 bn) yearly in capital flight by way of technical services and goods procured outside Nigeria. "It is a source of concern for us to realise that about $ 5.5 bn budgeted annually in the industry, over 90 % (about $ 4.95 bn) is spent on technical services and goods procured outside Nigeria," he said.
Against this backdrop, Gaius-Obaseki who was represented by the Group Executive Director, Refinery and Petrochemicals, Mansur Ahmed, stressed the need for a review of the situation with a view to proffering strategies that would make the industry more responsive to the yearnings and aspirations of Nigerians.
Specifically, Gaius-Obaseki called for the domestication of fabrication work, to promote expansion of yards and establishment of new ones. And in an attempt to check the exact volume of crude oil being exported from the country, the Department of Petroleum Resources (DPR) is believed to have issued a fresh deadline for the installation of modern metering system in the export terminals.
Under the fresh deadline, all the oil multinationals operating export terminals are required to install the facility before the end of February next year. The metering system which will make a major departure from the existing static measurement to the dynamic system is expected to check sharp practices being perpetrated at the terminals.

The DPR directive followed an agreement among the CEOs of the oil prospecting companies under the aegis of Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry. Apart from checking the actual volume of crude being exported or lifted at the terminals by the operating companies, the dynamic metering system is also expected to accelerate the level of activities at the terminal.
The Guardian's source said that the new metering system would be more accurate and faster when loading a vessel for export market. But DPR officials said the initial plan was for all the companies to comply with this directive by December this year, pointing out that based on the available reports from the terminal operators, some equipment which were initially imported were considered to be sub-standard and they had been asked to install better equipment.
Specifically, the source said an integral part of the metering system called "Static Mister" already ordered by some of the companies was of low standard. According to the source, latest information on the issue based on the meeting of OPTS held early last month indicated that the fresh mixers ordered by the terminal operators are awaiting factory acceptance test before shipment to the country expectedly from next month.

Some of the export terminals where the facilities are expected to be installed include Chevron Nigeria, Escravos Terminals, Shell Petroleum Development Company of Nigeria (SPDC), Bonny and Forcados Terminals in Rivers and Delta states. Others are the Qua Iboe export terminals of ExxonMobil Nigeria, the Brass Terminal of the Nigerian Agip Oil Company (NAOC) and the Peninton Terminal of the Texaco Overseas Petroleum Company (Nigeria) (TOPCON).
SPDC source said its Western Division Forcados terminal had been upgraded at a cost of $ 540 mm while that of Bonny was ongoing. The Federal Government in 1996 introduced pre-inspection at the crude oil export terminals to check the loss of crude oil during lifting process as a result of inaccurate measurement.
About two inspection agencies were appointed for the purpose then in what the then government called "topping" at the export terminal. DPR officials however said that despite the introduction of dynamic measurement system, all relevant government agencies would still be at the terminals to cross-check available information.

Source: AllAfrica.com
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