NIGERIAN CONTENT, GAS REVOLUTION: Scream for Joy?

Nigerian Content to boost Gas Revolution projects-FG …Act will not indigenize foreign assets

The federal government has announced that the progress being recorded in the implementation of the Nigerian Oil and Gas Industry Content Development Act 2010 will ensure the successful execution of the Gas Industrial Revolution.

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke stated this while delivering the lead paper on Investment Opportunities in the Nigerian Oil and Gas Industry at a workshop organized by the Petroleum Technology Association of Nigeria at the just concluded 2011 Offshore Technology Conference in Houston Texas.

While describing the passage and signing of the Nigerian Content Bill into law as one of the most important achievements of President Goodluck’s administration, the Minister assured that the implementation of the Act will result in the execution of major aspects of the projects envisaged under the Gas Revolution in Nigeria.

According to her, this will create thousands of jobs in Nigerian facilities and yards.

She explained that the Act mandates a significant retention of the planned capital investments in-country, in a non-disruptive manner, adding that the capacity required in-country to support the planned projects is huge and thus created a major investment opportunity for stakeholders.

The Minister stressed that the Gas Industrialization Revolution launched by President Jonathan is focused on an industrial rebirth of Nigeria through the stimulation of gas based industries such as fertilizer, methanol and petrochemicals.

Projects launched by Mr. President under the Gas Revolution include the development of Africa’s largest petrochemical complex by the Nigerian National Petroleum Corporation and its partner, the Saudi Arabian conglomerate – Xenel.  This will cost about $6bn and is planned to be in place by 2015.

It also includes two fertilizer plants to be built in partnership with the Indian conglomerate – Nagarjuna.  This will consist of two 1.3 Million Tons Per Annum Fertilizer plants complemented by five discrete blending plants to be located across the country, to cost about $4bn.

Another major project is the development of a 1 billion cubic feet per day gas Central Processing Facility which is expected to be built by a consortium led by Agip in partnership with NNPC and Oando.  This facility will cost about $2bn and will provide the feedstock for the fertilizer and petrochemical plants, in addition to supplies to the Power Plants.

She also stated that government is also in the process of setting up an “LPG Distribution Network” that will distribute LPG to various part of the Country. LPG supplies to the network will be drawn from three Gas Processing Facilities to be developed.

The Minister who doubles as the Chairman of the Governing Council of the Nigerian Content Development and Monitoring Board also restated that the Nigerian Content Act is not intended to indigenize the industry or nationalize assets of investors in the Nigerian economy.

Rather, the Act sets out provisions that guarantee that investments made in facilities within the country will be fully utilized and that we will ensure that the rights of every investor is protected under the laws. Alison-Madueke further explained that the targets set out in the Act present substantial opportunities to establish new facilities in Nigeria, upgrade existing yards and develop human capital to take advantage of the imminent expansion of the industry, following the expected passage of the Petroleum Industry Bill.

She reported that the implementation of the Act in the past one year has provided immense inspiration and the confidence to adopt the various pilot schemes which are already making positive and measurable impacts.

The testimonies presented at the first anniversary celebrations of the Nigerian Content Act by the major operators, according to the Minister, showed that multinational and local service providers have achieved major milestones and the appetite for compliance is now high across the industry.

In his presentation, the Executive Secretary of NCDMB, Engr. Ernest Nwapa noted that the anxieties expressed by some stakeholders after the signing of the Nigerian Content Act into law are turning into genuine interest on how to comply. He attributed the success recorded in the implementation of the Act in the first year to the unflinching support of President Jonathan, the commitment of the Minister and the collaborative approach adopted by the Board in its relationship with the industry.

The Executive Secretary further stated that the recent laying of first ever set of made-in-Nigerian Oil and Gas grade pipes at the ExxonMobil’s Edop-Idoho Offshore field had unlocked opportunities for utilization of locally made pipes. Shell, Agip and Chevron have since placed orders for about 100 kilometers of line pipes in the SCC plant located in Abuja, a move that will sustain the employment of over 200 Nigerians in the facility.

He further explained that with job creation now a priority of President Goodluck’s administration, Nigerian Content implementation has pledged to create 300,000 direct and indirect jobs. To deliver on this, Nwapa said the Board will more than ever before insist that industry projects must be executed in Nigeria, so as to create jobs in facility and yards. He reiterated that industry projects executed outside the country leads to lose of jobs and training opportunities for Nigerians.

He added that in compliance with the Rule of Law posture of the administration, the Board will not ignore certain aspects of the Act as canvassed by some stakeholders.

On the Nigerian Content Development Fund, the Executive Secretary stated that operating and service companies have started remitting one per cent of every contract awarded in the industry since April 22, 2010 as provided by the Act.

He projected that the Fund will grow to $100m per annum, especially as the Bank of Industry, Nigerian commercial banks and a host of international funding agencies have indicated interest in participating in the fund so as to make it robust. He remarked that the interest shown by BOI and other financial institutions followed from the transparent governance model which the Board had developed for the Fund Nwapa also warned that the Board will take non-compliance with provisions of the Act seriously as that influences the decision of investors to make commitment.

He added, “The Board will forge ahead with implementing the Act to support industry operations. “Nigeria must retain substantial capacities from major projects and Nigerians in senior positions in the industry must insist that provisions of the Nigerian Act be complied with to create capacity, create jobs and opportunities for on the job training.”

NUTSHELL:

The Nigerian PIB, Gas Masterplan, Gas Revolution and so many other initiatives purport to change the face of the Nigerian Oil and Gas industry. However, at what stage do we celebrate these initiatives; at the name-calling preliminary stage, the implementation stage or the post-implementation stage. Take your pick.