orient energy review, march 2015

ISS

N:

Vol. 4 No. 3 March, 2015Vol. 4 No. 3 March, 2015

N300 3Ghc US $2 1.5

Covering Local Content * Oil & Gas

NCDF: Building Indigenous

Capacity through Provision

of Access to Finance

NCDF: Building Indigenous

Capacity through Provision

of Access to Finance

AfDB Grants NEXIM Bank

$302,000 for Regional

Maritime Project

Nigerian Content: Petrolog Acquires

Largest DP2 Vessel In Sub-Saharan Africa

Ghana State Oil Company

Close To Signing

$700 Million Loan

NERC Not Under Pressure to Increase Tariff Amadi

PUBLISHER/EDITOR-IN-CHIEF:

EDITOR:

PRODUCTION:

CORRESPONDENTS:

Business Development Executive:

MARKETERS:

CREATIVE:

CIRCULATION MANAGER:

Nneka Ezeemo

Margaret Nongo-Okojokwu

Pita Ochai

Shola Akingboye (Abuja Bureau Chief)

Vivian Osuji Isreal

(Head, South-South Bureau, Port Harcourt)

Pita Ochai (Lagos)

Gilbert Boyefio (Ghana)

Amie Anerobi

Chidiebere Ezeoke

Ejiro Praise Adjarho

EtimSkill

Ajayi Kayode

Nneka Ezeemo

Pita Ochai

Vivian Osuji Isreal

Pita Ochai (Lagos)

Amie Anerobi

Chidiebere Ezeoke

EtimSkill

Ajayi Kayode

LONDON OFFICE:

Charity Place, Unit 1 Thurrock Park Way

Thurrock Park Ind. Estate

Tilbury, Essex Rm 18 7Hz.

+447974199137

LONDON OFFICE:

+447974199137

ORIENT ENERGY REVIEW has emerged

to be the platform and voice for the

growing local content policy across

the world. It is a monthly publication of

Orient Magazine, Newspaper and

Communications Limited

5, Dipo Dina Drive, Abule Oshun,

Badagry Express Way - Lagos

www.orientenergyreview.com

email: [email protected]

has emerged

Editor, +234-8136329948

HOTLINES: 08109266167, 08091373788, 08129532355

he Nigerian Content Development Fund (NCDF), a Special

Purpose Vehicle which mainly aims to build indigenous

capacity, was set up in 2010 by the Nigerian Content TDevelopment and Monitoring Board, NCDMB, working with its joint

financial advisers, BGL Plc and UBA Capital Limited.

The fund which has grown to about $350 million as at last year is

designed to help achieve the aims and objectives of the Local Content

Act. It is to be accessible to local operators to enhance local content in

the oil and gas industry with the central aim of developing indigenous

skills across the value chain, promoting indigenous ownership of

assets and use of indigenous assets, promoting the establishment of

support industries and creating customised training and sustainable

employment opportunities.

Over the years, the difficulty faced by indigenous operators in the oil

and gas sector in accessing funds to finance their operations have

posed a serious hindrance to the growth and development of the

Nigerian oil sector. These threats to increased indigenous

participation has in the last few weeks taken a dangerous dimension

following the sharp decline in the prices of crude oil in the

international market, making funding inaccessible to small operators

in the oil sector.

But how can this fund be accessed? What is the criterion required?

These are the questions we sought to answer as Godspower Ike and

Pita Ochai give us indepth analysis on this subject matter.

We continue to beam our search light on Nigerias Power sector, in our

bid to follow developments there, which brings us to the door step of

Dr. Sam Amadi, the Director General of the Nigerian Electricity

Regulatory Commission. He spoke with Our Abuja correspondent,

Shola Akingboye, about the rising tariff being borne by Electricity

consumers in the country.

Please read on, I am quite sure you will never get bored. We hope to

get your feedbacks, so please keep them coming, using the email

address below.

Do have a great read.

Cheers!

[email protected] 22 33

33

INDUSTRY NEWS 4

LOCAL CONTENT 7

COVER 10

INTERVIEW 16

GHANA REPORT 18

PICTURE GALLERY 20-21

CORPORATE PROFILE 22

FROM THE NIGER DELTA 26

SPECIAL REPORT 28

EXPLORATION / DRILLING 31

MARITIME/LOGISTIC 32

GAS 34

POWER 36

EDITORS Note

PUBLISHER/EDITOR-IN-CHIEF:

EDITOR:

PRODUCTION:

CORRESPONDENTS:

Business Development Executive:

MARKETERS:

CREATIVE:

CIRCULATION MANAGER:

Nneka Ezeemo

Pita Ochai

Vivian Osuji Isreal

Pita Ochai (Lagos)

Amie Anerobi

Chidiebere Ezeoke

EtimSkill

Ajayi Kayode

Nneka Ezeemo

Pita Ochai

Vivian Osuji Isreal

Pita Ochai (Lagos)

Amie Anerobi

Chidiebere Ezeoke

EtimSkill

Ajayi Kayode

LONDON OFFICE:

+447974199137

LONDON OFFICE:

+447974199137

ORIENT ENERGY REVIEW has emerged

has emerged

Editor, +234-8136329948

HOTLINES: 08109266167, 08091373788, 08129532355

he Nigerian Content Development Fund (NCDF), a Special

Purpose Vehicle which mainly aims to build indigenous

capacity, was set up in 2010 by the Nigerian Content TDevelopment and Monitoring Board, NCDMB, working with its joint

financial advisers, BGL Plc and UBA Capital Limited.

The fund which has grown to about $350 million as at last year is

designed to help achieve the aims and objectives of the Local Content

Act. It is to be accessible to local operators to enhance local content in

the oil and gas industry with the central aim of developing indigenous

skills across the value chain, promoting indigenous ownership of

assets and use of indigenous assets, promoting the establishment of

support industries and creating customised training and sustainable

employment opportunities.

Over the years, the difficulty faced by indigenous operators in the oil

and gas sector in accessing funds to finance their operations have

posed a serious hindrance to the growth and development of the

Nigerian oil sector. These threats to increased indigenous

participation has in the last few weeks taken a dangerous dimension

following the sharp decline in the prices of crude oil in the

international market, making funding inaccessible to small operators

in the oil sector.

But how can this fund be accessed? What is the criterion required?

These are the questions we sought to answer as Godspower Ike and

Pita Ochai give us indepth analysis on this subject matter.

We continue to beam our search light on Nigerias Power sector, in our

bid to follow developments there, which brings us to the door step of

Dr. Sam Amadi, the Director General of the Nigerian Electricity

Regulatory Commission. He spoke with Our Abuja correspondent,

Shola Akingboye, about the rising tariff being borne by Electricity

consumers in the country.

Please read on, I am quite sure you will never get bored. We hope to

get your feedbacks, so please keep them coming, using the email

address below.

Do have a great read.

Cheers!

[email protected] 22 33

33

INDUSTRY NEWS 4

LOCAL CONTENT 7

COVER 10

INTERVIEW 16

GHANA REPORT 18

PICTURE GALLERY 20-21

CORPORATE PROFILE 22

FROM THE NIGER DELTA 26

SPECIAL REPORT 28

EXPLORATION / DRILLING 31

MARITIME/LOGISTIC 32

GAS 34

POWER 36

EDITORS Note

INDUSTRY NEWS

OANDO Energy Resources, OER

and Network Exploration and

Production Limited, NEPN has

commenced it's first commercial

production of crude oil on it Qua

Iboe field reservoir(OML13) at an

initiate rate of 2, 150 barrel per

day.

This is sequel to completion of all civil

and pipeline works associated with the

field.

The exert date of production

commencement as at press time was

yet to released by the company.

OER as technical service provider

holds a 40 percent working interest in

the field while NEPN holds 60 percent

together brought the field from

conceptualization, through

development, to first oil delivery.

The crude processing facility

according to statement from OER was

commissioned in the fourth quarter of

2014 but commercial production was

delayed until the completion of the

associated cluster crude delivery

and sales infrastructure into the

Qua Iboe Terminal.

We are delighted to have

achieved this milestone, having

taken this field through the full

cycle of asset development, from

drilling to facility engineering,

construction and commissioning,

and also increasing our organic

production contribution from our

portfolio, Pade Durotoye, CEO

OER said in the statement.

He continued We will

now be focusing our attention on

maturing the potential of this

field through seismic acquisition

and interpretation, and a

possible multi-well drilling

program.

We hope the Qua Iboe field will

follow in the footsteps of our

successful Ebendo field, where

production has increased from

900bopd (gross) at inception to

over 7,500bopd (gross) through

the identification and drilling of

new reservoirs in the field.

The statement explained that

Oando The identified the asset in

2012 and an agreement was

reached with NEPN for OER to

technically lead and fund certain

aspects of NEPN's costs until first

oil.

This means that post

recovery of all loan repayments,

OER is entitled to 90 percent of

NEPN's sales proceeds from its

60 percent share of crude oil

production until NEPN's

obligation is paid in full, with

OER earning an additional 10%

fee on the funded amount.

Qua Iboe is located at the mouth

of the Qua Iboe River in the

eastern Niger Delta and covers

an area of 14 km2 (3,459 acres).

The field is immediately adjacent

to the ExxonMobil Qua Iboe

Terminal.

44

S oil giant Chevron Tuesday

said it plans $15 billion in

asset sales through 2017 as it Useeks to maintain a strong dividend

for shareholders amid lower oil

prices. The divestment program

expands by 50 percent a previous

target to sell $10 billion in assets

through 2016, according to a

presentation by Chevron chief

executive John Watson. In 2014,

Chevron divested $6 billion in assets,

including the $1.3 billion sale of a

stake in a Chad oil project to the

Republic of Chad. The deal also

comprised Chevron's interest in a

pipeline system that transports oil

from Chad to Cameroon.

Watson said the company

was on track to increase production

from 2.57 million barrels of oil

equivalent per day in 2014 to 3.1

million in 2017. Major projects

ramping up include Texas shale

ventures and natural gas

developments in Australia and

Angola. 'We are well-positioned to

manage through the

recent drop in

commodity prices

and are taking

several responsive

Orient Energy Review March 201544 Orient Energy Review March 2015 55

INDUSTRY NEWS

Despite the slump in crude

oil prices, projects in

West Africa will largely

continue to fuel Africa's subsea

demand, with Nigeria, Angola

and Ghana projected to account

for 87 per cent of West Africa's

capital expenditure (capex)

demand, according to a new

Interim Subsea Market Report

by Infield Systems.

In the global oil and gas

industry, subsea is used to

describe the exploration, drilling

and development of oil and gas

fields in underwater locations.

The advancement in

technology and high price of

crude oil have encouraged oil

and gas producers to search for

and develop hydrocarbons

deep inside the high seas, thus

encouraging subsea projects.

In the past, project

economics had made the

developing prospects in the high

seas quite challenging. Infield

Systems' new Interim Subsea

Market Report to 2019 sees

potential for growth in the

subsea market over the next five

years.

The report predicts that

if oil prices recover, subsea

capex could grow at a

compound annual growth rate of

11.1 per cent from 2015 to

2019.

The report noted that subsea

demand is likely to continue to

be dominated by developments

in Africa, Latin America and

North America, as a result of

their continued focus on

deepwater activity.

Infield Systems' subsea market

forecast expects these three

regions combined to account

for 75 per cent of global

subsea capex demand and 59

per cent of subsea tree

installations over the next five

years.

The current global

energy dynamics, which has

created uncertainties in global

oil prices could put some

subsea projects at risk,

particularly those associated

with field developments with

high costs and high risks. But

the report said despite the

challenges, Africa's subsea

demand will continue to

largely come from projects in

West Africa, with Angola,

Nigeria and Ghana playing

dominant role.

According to the

report, the French oil major,

Total will continue to maintain

a significant presence in the

West African subsea market,

with Infield Systems projecting

the company to hold a 40 per

cent share of the region's

subsea capex demand,

focused on developments in

Angola, Nigeria, Congo

(Brazzaville), and the Ivory

Coast.

The report identified

Nigeria's Egina deepwater

project, Kaombo and Moho

Nord marine developments as

some of the noteworthy projects

to be developed by the company

over the next five years.

In Latin America, Infields

said the subsea market would

continue to be predominantly

driven by developments in Brazil,

while the US Gulf of Mexico is

likely to continue to drive subsea

activity in North America,

accounting for 97 per cent of the

region's subsea capex demand

and 87 per cent of subsea tree

installations.

According to the report,

Chevron, Shell, ExxonMobil, and

BP could still hold the largest

share of capex demand.

The report further

highlighted that while the subsea

market has the potential for

growth during the next five years,

low global oil prices will affect

subsea developments.

* This Day

Mrs. Diezani Alison-Madueke,

Nigeria's Minister of

Petroleum Resources

Nigeria, Angola, Ghana

To Account For 87% Of

Subsea Market

actions, including curtailing capital

spending and lowering costs,' Watson said.

Shares in Dow member Chevron

plummeted 3.1 percent to $48.46 in late-

afternoon trade.

The move follows Chevron's January

announcement of a 2015 capital budget of

$35 billion, down 13 percent from last

year. The company also halted its share

buyback program, citing the big drop in oil

prices. In recent months, Chevron has also

withdrawn from exploration ventures in

Poland, Romania, Lithuania and Ukraine.

large oil companies, including

ExxonMobil and Royal Dutch Shell, have

also trimmed spending in response to

about a 50 percent drop in oil prices since

June. Leading oil services companies,

including Halliburton and Schlumberger,

have announced deep job cuts.

Source: AFP

Chevron To Sell More Assets

Amid Drop In Oil Prices

Oando, NEPN produces first oil on Qua Iboe field

INDUSTRY NEWS

OANDO Energy Resources, OER

and Network Exploration and

Production Limited, NEPN has

commenced it's first commercial

production of crude oil on it Qua

Iboe field reservoir(OML13) at an

initiate rate of 2, 150 barrel per

day.

This is sequel to completion of all civil

and pipeline works associated with the

field.

The exert date of production

commencement as at press time was

yet to released by the company.

OER as technical service provider

holds a 40 percent working interest in

the field while NEPN holds 60 percent

together brought the field from

conceptualization, through

development, to first oil delivery.

The crude processing facility

according to statement from OER was

commissioned in the fourth quarter of

2014 but commercial production was

delayed until the completion of the

associated cluster crude delivery

and sales infrastructure into the

Qua Iboe Terminal.

We are delighted to have

achieved this milestone, having

taken this field through the full

cycle of asset development, from

drilling to facility engineering,

construction and commissioning,

and also increasing our organic

production contribution from our

portfolio, Pade Durotoye, CEO

OER said in the statement.

He continued We will

now be focusing our attention on

maturing the potential of this

field through seismic acquisition

and interpretation, and a

possible multi-well drilling

program.

We hope the Qua Iboe field will

follow in the footsteps of our

successful Ebendo field, where

production has increased from

900bopd (gross) at inception to

over 7,500bopd (gross) through

the identification and drilling of

new reservoirs in the field.

The statement explained that

Oando The identified the asset in

2012 and an agreement was

reached with NEPN for OER to

technically lead and fund certain

aspects of NEPN's costs until first

oil.

This means that post

recovery of all loan repayments,

OER is entitled to 90 percent of

NEPN's sales proceeds from its

60 percent share of crude oil

production until NEPN's

obligation is paid in full, with

OER earning an additional 10%

fee on the funded amount.

Qua Iboe is located at the mouth

of the Qua Iboe River in the

eastern Niger Delta and covers

an area of 14 km2 (3,459 acres).

The field is immediately adjacent

to the ExxonMobil Qua Iboe

Terminal.

44

S oil giant Chevron Tuesday

said it plans $15 billion in

asset sales through 2017 as it Useeks to maintain a strong dividend

for shareholders amid lower oil

prices. The divestment program

expands by 50 percent a previous

target to sell $10 billion in assets

through 2016, according to a

presentation by Chevron chief

executive John Watson. In 2014,

Chevron divested $6 billion in assets,

including the $1.3 billion sale of a

stake in a Chad oil project to the

Republic of Chad. The deal also

comprised Chevron's interest in a

pipeline system that transports oil

from Chad to Cameroon.

Watson said the company

was on track to increase production

from 2.57 million barrels of oil

equivalent per day in 2014 to 3.1

million in 2017. Major projects

ramping up include Texas shale

ventures and natural gas

developments in Australia and

Angola. 'We are well-positioned to

manage through the

recent drop in

commodity prices

and are taking

several responsive

INDUSTRY NEWS

Despite the slump in crude

oil prices, projects in

West Africa will largely

continue to fuel Africa's subsea

demand, with Nigeria, Angola

and Ghana projected to account

for 87 per cent of West Africa's

capital expenditure (capex)

demand, according to a new

Interim Subsea Market Report

by Infield Systems.

In the global oil and gas

industry, subsea is used to

describe the exploration, drilling

and development of oil and gas

fields in underwater locations.

The advancement in

technology and high price of

crude oil have encouraged oil

and gas producers to search for

and develop hydrocarbons

deep inside the high seas, thus

encouraging subsea projects.

In the past, project

economics had made the

developing prospects in the high

seas quite challenging. Infield

Systems' new Interim Subsea

Market Report to 2019 sees

potential for growth in the

subsea market over the next five

years.

The report predicts that

if oil prices recover, subsea

capex could grow at a

compound annual growth rate of

11.1 per cent from 2015 to

2019.

The report noted that subsea

demand is likely to continue to

be dominated by developments

in Africa, Latin America and

North America, as a result of

their continued focus on

deepwater activity.

Infield Systems' subsea market

forecast expects these three

regions combined to account

for 75 per cent of global

subsea capex demand and 59

per cent of subsea tree

installations over the next five

years.

The current global

energy dynamics, which has

created uncertainties in global

oil prices could put some

subsea projects at risk,

particularly those associated

with field developments with

high costs and high risks. But

the report said despite the

challenges, Africa's subsea

demand will continue to

largely come from projects in

West Africa, with Angola,

Nigeria and Ghana playing

dominant role.

According to the

report, the French oil major,

Total will continue to maintain

a significant presence in the

West African subsea market,

with Infield Systems projecting

the company to hold a 40 per

cent share of the region's

subsea capex demand,

focused on developments in

Angola, Nigeria, Congo

(Brazzaville), and the Ivory

Coast.

The report identified

Nigeria's Egina deepwater

project, Kaombo and Moho

Nord marine developments as

some of the noteworthy projects

to be developed by the company

over the next five years.

In Latin America, Infields

said the subsea market would

continue to be predominantly

driven by developments in Brazil,

while the US Gulf of Mexico is

likely to continue to drive subsea

activity in North America,

accounting for 97 per cent of the

region's subsea capex demand

and 87 per cent of subsea tree

installations.

According to the report,

Chevron, Shell, ExxonMobil, and

BP could still hold the largest

share of capex demand.

The report further

highlighted that while the subsea

market has the potential for

growth during the next five years,

low global oil prices will affect

subsea developments.

* This Day

Mrs. Diezani Alison-Madueke,

Nigeria's Minister of

Petroleum Resources

Nigeria, Angola, Ghana

To Account For 87% Of

Subsea Market

actions, including curtailing capital

spending and lowering costs,' Watson said.

Shares in Dow member Chevron

plummeted 3.1 percent to $48.46 in late-

afternoon trade.

The move follows Chevron's January

announcement of a 2015 capital budget of

$35 billion, down 13 percent from last

year. The company also halted its share

buyback program, citing the big drop in oil

prices. In recent months, Chevron has also

withdrawn from exploration ventures in

Poland, Romania, Lithuania and Ukraine.

large oil companies, including

ExxonMobil and Royal Dutch Shell, have

also trimmed spending in response to

about a 50 percent drop in oil prices since

June. Leading oil services companies,

including Halliburton and Schlumberger,

have announced deep job cuts.

Source: AFP

Chevron To Sell More Assets

Amid Drop In Oil Prices

Oando, NEPN produces first oil on Qua Iboe field

LOCAL CONTENT

Orient Energy Review March 2015 77

major feat has been

recorded in the

implementation of the ANigerian Content Act with the

unveiling of Petrolog Group's

newly acquired DP2 Saturation

Diving Vessel, which is believed

to be the largest of its kind in

Sub-Saharan Africa.

The saturation diving vessel,

christened DSV Vinnice is valued at

$170 million and is equipped for

shallow and deep water operations

and can be used for construction,

repair and maintenance of oil-rigs

and other offshore naval

constructions.

Speaking at the unveiling

ceremony in Lagos, the Executive

Secretary of the Nigerian Content

Development and Monitoring

Board, (NCDMB) Dr. Ernest Nwapa

described the acquisition as another

affirmation that indigenous oil

servicing companies have

developed capacity to acquire and

operate hi-tech assets and could

participate in every segment of the

oil and gas industry notwithstanding

the challenges.

According to him, the

emergence of a new breed of

Nigerian investors and the quantum

of investments they are making have

erased any doubts that government

and the people of Nigeria were

resolute with the implementation of

the policy.

Restating that Nigerian Content

was a national agenda, Nwapa

added that the Federal Government

has started to extend the

implementation of the policy to the

power and information technology

sectors following the huge success

recorded in the oil and gas industry.

He credited President

Goodluck Ebele Jonathan and the

Honourable Minister of Petroleum

Resources, Mrs. Diezani Alison-

Madueke for providing a

conducive environment for the

successes recording in the

implementation process, noting

that signing the Nigerian Content

Bill into law unleashed the

potentials of Nigerians

entrepreneurs. When President

Jonathan signed the Act in 2010,

he set Nigerian entrepreneurs

free, he added.

Speaking further, the

Executive Secretary stated that

real Nigerian Content

accomplishment would only come

when vessels such as DSV Vinnice

are constructed in Nigeria,

expressing hope that any other

such vessel to be acquired by a

Nigerian investor will be outfitted

at the Naval Dockyard Lagos and

some of the components

manufactured in-country.

He assured that the Board

was working with the National

Petroleum Investment

Management Services (NAPIMS)

to ensure that any major asset

acquired by a Nigerian investor gets

deployed in the industry as doing

otherwise will negatively affect the

banks that funded the acquisition as

well as make it difficult for other

companies to get similar credit from

Nigerian banks.

Nwapa recalled that the Board

made ownership of assets a key plank

of implementation because it

provided the opportunity for exposing

the technology to other Nigerians.

He also announced that the

Board will henceforth make it a

requirement for all contracting entities

in the Nigerian oil and gas industry to

adopt a faculty or department in any

Nigerian university and develop a

programme that allow the students to

learn on the company's assets as a

means of bridging the gap between

universities and the oil and gas

industry.

Giving his welcome address, the

Chairman of Petrolog Group, Dr.

Joseph Ebuh described the Nigerian

Largest DP2 Vessel In Sub-Saharan Africa Oil companies to adopt university faculties

Survival Systems Ltd. CanadaSurvival Systems Ltd. CanadaDeepwater Survival Training Center (DSTC)

Plot 7b Trans-Amadi Industrial Layout, Port Harcourt

Tel: +234 803 312 9962, 0803 760 0151, 0809 990 1280

Email: [email protected] Website: www.tolmann.com

Deepwater Survival Training Center (DSTC)

Tel: +234 803 312 9962, 0803 760 0151, 0809 990 1280

OFFICE/TRAINING FACILITIESOFFICE/TRAINING FACILITIES TECHNICAL PARTNERSTECHNICAL PARTNERS

Continued on pg8

LOCAL CONTENT

major feat has been

recorded in the

implementation of the ANigerian Content Act with the

unveiling of Petrolog Group's

newly acquired DP2 Saturation

Diving Vessel, which is believed

to be the largest of its kind in

Sub-Saharan Africa.

The saturation diving vessel,

christened DSV Vinnice is valued at

$170 million and is equipped for

shallow and deep water operations

and can be used for construction,

repair and maintenance of oil-rigs

and other offshore naval

constructions.

Speaking at the unveiling

ceremony in Lagos, the Executive

Secretary of the Nigerian Content

Board, (NCDMB) Dr. Ernest Nwapa

described the acquisition as another

affirmation that indigenous oil

servicing companies have

developed capacity to acquire and

operate hi-tech assets and could

participate in every segment of the

oil and gas industry notwithstanding

the challenges.

According to him, the

emergence of a new breed of

Nigerian investors and the quantum

of investments they are making have

erased any doubts that government

and the people of Nigeria were

resolute with the implementation of

the policy.

Restating that Nigerian Content

was a national agenda, Nwapa

added that the Federal Government

has started to extend the

implementation of the policy to the

power and information technology

sectors following the huge success

recorded in the oil and gas industry.

He credited President

Goodluck Ebele Jonathan and the

Honourable Minister of Petroleum

Resources, Mrs. Diezani Alison-

Madueke for providing a

conducive environment for the

successes recording in the

implementation process, noting

that signing the Nigerian Content

Bill into law unleashed the

potentials of Nigerians

entrepreneurs. When President

Jonathan signed the Act in 2010,

he set Nigerian entrepreneurs

free, he added.

Speaking further, the

Executive Secretary stated that

real Nigerian Content

accomplishment would only come

when vessels such as DSV Vinnice

are constructed in Nigeria,

expressing hope that any other

such vessel to be acquired by a

Nigerian investor will be outfitted

at the Naval Dockyard Lagos and

some of the components

manufactured in-country.

He assured that the Board

was working with the National

Petroleum Investment

Management Services (NAPIMS)

to ensure that any major asset

acquired by a Nigerian investor gets

deployed in the industry as doing

otherwise will negatively affect the

banks that funded the acquisition as

well as make it difficult for other

companies to get similar credit from

Nigerian banks.

Nwapa recalled that the Board

made ownership of assets a key plank

of implementation because it

provided the opportunity for exposing

the technology to other Nigerians.

He also announced that the

Board will henceforth make it a

requirement for all contracting entities

in the Nigerian oil and gas industry to

adopt a faculty or department in any

Nigerian university and develop a

programme that allow the students to

learn on the company's assets as a

means of bridging the gap between

universities and the oil and gas

industry.

Giving his welcome address, the

Chairman of Petrolog Group, Dr.

Joseph Ebuh described the Nigerian

Largest DP2 Vessel In Sub-Saharan Africa Oil companies to adopt university faculties

Survival Systems Ltd. CanadaSurvival Systems Ltd. CanadaDeepwater Survival Training Center (DSTC)

Tel: +234 803 312 9962, 0803 760 0151, 0809 990 1280

Deepwater Survival Training Center (DSTC)

Tel: +234 803 312 9962, 0803 760 0151, 0809 990 1280

OFFICE/TRAINING FACILITIESOFFICE/TRAINING FACILITIES TECHNICAL PARTNERSTECHNICAL PARTNERS

Continued on pg8

LOCAL CONTENT

Orient Energy Review March 201588

TANZANIANS will be given

priority in procurement of

goods and services in

investments along oil and gas

resources, to ensure optimum national

participation in the booming industry,

a new national energy policy draft

shows.

According to the draft policy

the objective is to increase national

participation so as to maximise

benefits from oil and gas value-chain.

Tanzania has become one of

the world's most soughtafter oil and

gas regions with a string of vast

discoveries that have attracted major

global oil and gas companies.

The country is estimated to

have over 50 trillion cubic feet (tcf) of

gas, which is projected to rise four-fold

over the next five years, putting it on

par with some Middle East producers.

Under the new policy, the government

will ensure Tanzanians participate

strategically in the oil and gas value

chain.

The government will also ensure

capacity building and skills

development for Tanzanians in the oil

and gas industry and ensure

implementation of Corporate Social

Responsibility (CSR) initiatives have

significant impacts to prioritised needs

of local communities.

The draft policy stipulates

that local content and national

participation in the oil and gas

value chain include investment in

operation, provision of goods and

services, capacity building, local

engagement, skills development,

local authorities awareness and

investors' CSRs.

According to the policy, the

government will give priority to

domestic use of the natural gas

resources over exports.

The objective is to enhance

reliability of supply and utilization of

oil and gas products for domestic

market which is buoyed by growing

demand for energy supplies to feed

the rapid expanding economy.

Under it the government will ensure

development of a competitive

domestic market for oil and gas

products and ensure security of

supply to meet domestic demand.

British company BG

Group, together with partners

Exxon Mobil, Statoil and Ophir

Energy, plans to build a two-train

LNG export terminal, expected to

start operating in the early 2020s. A

final investment decision is set for

2016 at the earliest.

Tanzania: Oil, Gas Policy to

Give Nationals Priority

Content Act as the greatest boost to

the company's growth. He stated

that since the Act came into effect,

we have been emboldened to take

giant steps and risks to meet

existing demand.

He commended the NCDMB

for its implementation of the

Nigerian Content Act, which

according to him has created

opportunities for indigenous

companies to thrive.

In his comments, the Managing

Director of First Bank Nigeria, Mr.

Bisi Onasanya confirmed that the

bank supported Petrolog in the

acquisition of the DSV Vinnice,

affirming the bank's readiness to

support infrastructural development

and local content.

Delivering a goodwill message,

the Group General Manager,

NAPIMS, Engineer Jonathan Okeys

described the vessel as a welcome

addition to the contracting pool,

especially at a time industry

operations were becoming more

complex and moving into the deep

offshore.

He assured that NAPIMS

would develop a special contracting

scheme to support any Nigerian

contractor that invests on the back

of the Nigerian Content Act.

Also speaking, the President of

the Petroleum Technology

Association of Nigeria (PETAN),

Engineer Emeka Ene commended

NCDMB for being instrumental to

most of the investments made by

local companies since the Nigerian

Content Act came into being.

Nigerian Content:

Petrolog Acquires

Largest DP2 Vessel

In Sub-Saharan

Africa

Tanzanian: Songas Gas

Processing Plan

Continued from pg7

LOCAL CONTENT

TANZANIANS will be given

priority in procurement of

goods and services in

investments along oil and gas

resources, to ensure optimum national

participation in the booming industry,

a new national energy policy draft

shows.

According to the draft policy

the objective is to increase national

participation so as to maximise

benefits from oil and gas value-chain.

Tanzania has become one of

the world's most soughtafter oil and

gas regions with a string of vast

discoveries that have attracted major

global oil and gas companies.

The country is estimated to

have over 50 trillion cubic feet (tcf) of

gas, which is projected to rise four-fold

over the next five years, putting it on

par with some Middle East producers.

Under the new policy, the government

will ensure Tanzanians participate

strategically in the oil and gas value

chain.

The government will also ensure

capacity building and skills

development for Tanzanians in the oil

and gas industry and ensure

implementation of Corporate Social

Responsibility (CSR) initiatives have

significant impacts to prioritised needs

of local communities.

The draft policy stipulates

that local content and national

participation in the oil and gas

value chain include investment in

operation, provision of goods and

services, capacity building, local

engagement, skills development,

local authorities awareness and

investors' CSRs.

According to the policy, the

government will give priority to

domestic use of the natural gas

resources over exports.

The objective is to enhance

reliability of supply and utilization of

oil and gas products for domestic

market which is buoyed by growing

demand for energy supplies to feed

the rapid expanding economy.

Under it the government will ensure

development of a competitive

domestic market for oil and gas

products and ensure security of

supply to meet domestic demand.

British company BG

Group, together with partners

Exxon Mobil, Statoil and Ophir

Energy, plans to build a two-train

LNG export terminal, expected to

start operating in the early 2020s. A

final investment decision is set for

2016 at the earliest.

Tanzania: Oil, Gas Policy to

Give Nationals Priority

Content Act as the greatest boost to

the company's growth. He stated

that since the Act came into effect,

we have been emboldened to take

giant steps and risks to meet

existing demand.

He commended the NCDMB

for its implementation of the

Nigerian Content Act, which

according to him has created

opportunities for indigenous

companies to thrive.

In his comments, the Managing

Director of First Bank Nigeria, Mr.

Bisi Onasanya confirmed that the

bank supported Petrolog in the

acquisition of the DSV Vinnice,

affirming the bank's readiness to

support infrastructural development

and local content.

Delivering a goodwill message,

the Group General Manager,

NAPIMS, Engineer Jonathan Okeys

described the vessel as a welcome

addition to the contracting pool,

especially at a time industry

operations were becoming more

complex and moving into the deep

offshore.

He assured that NAPIMS

would develop a special contracting

scheme to support any Nigerian

contractor that invests on the back

of the Nigerian Content Act.

Also speaking, the President of

the Petroleum Technology

Association of Nigeria (PETAN),

Engineer Emeka Ene commended

NCDMB for being instrumental to

most of the investments made by

local companies since the Nigerian

Content Act came into being.

Nigerian Content:

Petrolog Acquires

Largest DP2 Vessel

In Sub-Saharan

Africa

Tanzanian: Songas Gas

Processing Plan

Continued from pg7

COVER

equivalent of N90 billion,

has not been accessed by

majority of the indigenous

oil servicing companies,

raising concerns about the

accessibility of the fund.

Stakeholders are of the

view that lack of access to

the Fund, which was as a

result of the cumbersome

requirements of banks and

the inability of a number of

indigenous operators to

draw up bankable business

proposals, is threatening the

successful disbursement and

operation of the NCDF.

In addition, some of the

stakeholders are concerned

about the impact of the fund

on the cost of doing business

in the oil and gas sector and

on the ability of the country to

attract foreign investment.

The trend becomes

worrisome especially as

accessing funds to finance oil

and gas transactions in Nigeria

and build indigenous capacity,

has over the years been a

major source of worry for

indigenous operators. This has

worsened over the past few

months by the sharp drop in

the prices of crude oil in the

international market.

Specifically, investment

houses and analysts had

predicted that a number of oil

The trend becomes

and gas projects would be stalled

due to the crude oil price decline

as the companies will find it

difficult accessing funds from the

banks.

Already, in the wake of the

drop in the prices of crude oil,

the Central Bank of Nigeria,

CBN, directed banks in the

country to reduce their exposure

to operators in the oil and gas

sector, citing rising non-

performing loans as one of the

reasons for the decision.

This directive from the CBN

made it difficult for majority of

the operators, especially oil

servicing companies, both in the

upstream and downstream sector,

to access funds for their

operations. The directive was

even blamed for the fuel scarcity

recorded in some states across

the country a few days ago.

The development has

already started to take its toll on

large corporations, as recently, a

number of oil companies in

Nigeria, especially international

Oil Companies (IOC) are

considering cutting down on their

operations in Nigeria, while some

of them have gone ahead to sack

their staff ahead of the planned

shutdown.

In particular, Total

announced its decision to shut

down its o perations in some

countries, citing tough operating

environment. The company, it

was reported, has also

commenced the shutdown of its

Abuja operations and has already

started the process of

disengaging about half of its

workforce.

Others are selling off their

assets so as to be able to use

proceeds from the sales to

finance their operations.

With the large foreign oil

companies already feeling the

banks.

The development has

shutdown.

down its operations in some

workforce.

With recent developments in the

Nigerian banking sector, banks

are no longer favourably

disposed to lending to

indigenous operators in the oil

and gas sector, leaving the

Nigerian Content Development

Fund (NCDF) as a critical

financing avenue for indigenous

p layers.

Stakeholders are of

the view that the Fund, set up

by the Nigerian Content

players.

Stakeholders are of

Development Monitoring Board

(NCDMB) if effectively deployed,

can be a major source of funding for

indigenous oil servicing companies,

while ensuring the entrenchment of

good corporate governance among

the companies.

One other important

area where the fund is expected to

be of utmost importance is i n the

area of capacity building of

indigenous operators, in line with the

Nigerian Oil and Gas Industry

the companies.

One other important

be of utmost importance is in the

Content Development

(NOGICD) Act.

However, a worrying trend

in the whole issue is the fact

that only a handful of

companies have been able to

draw from the fund since its

inception, while a few others

are on the queue, hoping to be

able to meet the criteria to

ensure they benefit from the

fund. The Fund currently put at

about $450 million, an

Content Development

(NOGICD) Act.

Over the years, the difficulty faced by indigenous operators in the oil and gas

sector in accessing funds to finance their operations have posed a serious

hindrance to the growth and development of the Nigerian oil sector. These

threats to increased indigenous participation has in the last few weeks taken

a dangerous dimension following the sharp decline in the prices of crude oil

in the international market, making funding inaccessible to small operators

in the oil sector.

By Godspower Ike

Despite the inherent

benefits in the NCDF,

as stated by the

NCDMB, operators

and analysts are still

skeptical about it,

saying that the

provisions of the Fund

will hike the cost of

contracts in the oil

and gas sector, as well

as impact negatively

on investment inflow

into the country.

COVER

The trend becomes

banks.

The development has

shutdown.

down its o perations in some

workforce.

banks.

The development has

shutdown.

down its operations in some

workforce.

p layers.

Stakeholders are of

players.

Stakeholders are of

the companies.

One other important

be of utmost importance is i n the

the companies.

One other important

be of utmost importance is in the

Content Development

(NOGICD) Act.

Content Development

(NOGICD) Act.

Over the years, the difficulty faced by indigenous operators in the oil and gas

sector in accessing funds to finance their operations have posed a serious

hindrance to the growth and development of the Nigerian oil sector. These

threats to increased indigenous participation has in the last few weeks taken

a dangerous dimension following the sharp decline in the prices of crude oil

in the international market, making funding inaccessible to small operators

in the oil sector.

By Godspower Ike

benefits in the NCDF,

as stated by the

NCDMB, operators

and analysts are still

skeptical about it,

saying that the

provisions of the Fund

will hike the cost of

contracts in the oil

and gas sector, as well

as impact negatively

on investment inflow

into the country.

COVER COVER STORY

bite, it is expected that

indigenous operators, will in no

time begin to feel the impact

also.

However, it is hoped that

operators will be awakened to

the huge opportunities

presented by the Nigerian

Content Development Fund

(NCDF) and begin to tap from

the fund to finance their

operations.

The size of the fund is

expected to drive capacity

building of indigenous

operators when effectively

utilized, as Executive Secretary

of the NCDMB, Dr. Ernest

Nwapa, had a couple of

months ago, hinted that the

NCDMB is considering using a

part of the Fund to support

companies that are committed

to venture into gas cylinder

manufacturing.

The NCDMB is also

proposing phased increases in

indigenous equity in the

proposed Offshore Rig

Acquisition Strategy (ORAS), to

meet the requirements of the

NOGICD Act and is planning

to assist with long term funding

and equity financing through

the NCDF.

Nwapa disclosed that the

fund has been accessed

successfully by two Nigerian

service companies, while some

other companies are at various

stages of processing their

applications. He, however,

noted that the NCDMB was

working with the fund

managers, BGL, to fine-tune

the conditions to be met for

prospective beneficiary

companies so as to make it

more accessible.

We are not satisfied with

the level of access to the fund

and we are working to review

the administration process, he

explained.

He blamed banks and the

inadequate packaging of proposals

by companies for the delays

witnessed in the process, stating that

the delays emanated mostly from

the processes in the banks and how

the companies packaged their

proposals.

To this end, Nwapa disclosed

that the NCDMB had to appoint a

fund manager and also constitute an

Advisory Committee, which

comprises representatives of

international oil companies,

Petroleum Technology Association of

Nigeria, (PETAN), Oil and Gas

Trainers Association of Nigeria

(OGTAN) and Bank of Industry in

an effort to create a structured and

transparent process for accessing the

funding.

According to him, the current

conditions require the benefiting

company to tie up an arrangement

with its bank for a facility

meant for financing the

acquisition of assets and ensure

that it draws down the loan and

services successfully.

He added that the Fund

will then kick in to offset 50 per

cent of the interest charged by

the bank.

benefits in the NCDF, as stated

by the NCDMB, operators and

analysts are still skeptical about

it, saying that the provisions of

the Fund will hike the cost of

contracts in the oil and gas

sector, as well as impact

negatively on investment inflow

into the country.

Specifically, analysts at

KPMG, led by M r. Victor

Onyenkpa, Partner and Head

of Tax Regulatory and People

Services at KPMG Professional

Services Limited, in their

analysis of the NOGICD Act,

said, It is also unclear how the

requirement to pay one per

cent of total contract sum

awarded in the sector into the

Fund (NCDF) would be

implemented.

Will this payment cascade

to all levels of contract award,

or only apply at the stage of

award by the oil exploration

and production (E&P)

companies?

Further, this additional

levy of one per cent of contract

value, together with the

requirement for contract to be

awarded to a Nigerian

company, even if 10 per cent

higher than the lowest bidder,

would significantly increase the

cost of contracting in the

Nigerian oil and gas industry.

Ultimately, this might

become a factor in the

investment inflows into the

country, relative to other

countries with lower costs of

production.

Also speaking, Mr. Simbi

Wabote, Global Local Content

Manager, Shell Exploration and

Production International

Limited, called on the NCDMB

to publicise the procedures and

requirements for accessing the

NCDF and use feedback from

the exercise to improve the

administration process. He

cautioned against allowing

NCDF go the way of the

moribund Nigerian Content

Support Fund which could not

be accessed by any service

company.

The NCDF, which mainly

aims to build indigenous

capacity, was set up in 2 010

Board, NCDMB, working with

its joint financial advisers,

BGL Plc and UBA Capital

Limited.

By 2011, the fund rose to

$25 million, from a zero fund

at inception, while as at today,

the fund has grown to about

$450 million, with a

projection that it will hit $700

million by year end.

The fund, according to

the NCDMB, was designed to

encourage funding agencies to

give money to indigenous

operators. An evidence of its

capacity building function is

the fact that it was designed to

among other things, assist

Nigerian oil service providers

who have been awarded

contracts by the oil producing

companies to access cheap and

affordable credit facilities to

execute these contracts.

In addition, it also aims to

provide a platform for financing

major capital projects which is

critical to Nigerian content

development in the industry.

The NCDMB describes the

NCDF as, The sum of one per

Nigerian workers still hopeful

Dr. Ernest Nwapa

Allison- Madueke

COVER COVER STORY

bite, it is expected that

indigenous operators, will in no

time begin to feel the impact

also.

However, it is hoped that

operators will be awakened to

the huge opportunities

presented by the Nigerian

Content Development Fund

(NCDF) and begin to tap from

the fund to finance their

operations.

The size of the fund is

expected to drive capacity

building of indigenous

operators when effectively

utilized, as Executive Secretary

of the NCDMB, Dr. Ernest

Nwapa, had a couple of

months ago, hinted that the

NCDMB is considering using a

part of the Fund to support

companies that are committed

to venture into gas cylinder

manufacturing.

The NCDMB is also

proposing phased increases in

indigenous equity in the

proposed Offshore Rig

Acquisition Strategy (ORAS), to

meet the requirements of the

NOGICD Act and is planning

to assist with long term funding

and equity financing through

the NCDF.

Nwapa disclosed that the

fund has been accessed

successfully by two Nigerian

service companies, while some

other companies are at various

stages of processing their

applications. He, however,

noted that the NCDMB was

working with the fund

managers, BGL, to fine-tune

the conditions to be met for

prospective beneficiary

companies so as to make it

more accessible.

We are not satisfied with

the level of access to the fund

and we are working to review

the administration process, he

explained.

He blamed banks and the

inadequate packaging of proposals

by companies for the delays

witnessed in the process, stating that

the delays emanated mostly from

the processes in the banks and how

the companies packaged their

proposals.

To this end, Nwapa disclosed

that the NCDMB had to appoint a

fund manager and also constitute an

Advisory Committee, which

comprises representatives of

international oil companies,

Petroleum Technology Association of

Nigeria, (PETAN), Oil and Gas

Trainers Association of Nigeria

(OGTAN) and Bank of Industry in

an effort to create a structured and

transparent process for accessing the

funding.

According to him, the current

conditions require the benefiting

company to tie up an arrangement

with its bank for a facility

meant for financing the

acquisition of assets and ensure

that it draws down the loan and

services successfully.

He added that the Fund

will then kick in to offset 50 per

cent of the interest charged by

the bank.

benefits in the NCDF, as stated

by the NCDMB, operators and

analysts are still skeptical about

it, saying that the provisions of

the Fund will hike the cost of

contracts in the oil and gas

sector, as well as impact

negatively on investment inflow

into the country.

Specifically, analysts at

KPMG, led by M r. Victor

Onyenkpa, Partner and Head

of Tax Regulatory and People

Services at KPMG Professional

Services Limited, in their

analysis of the NOGICD Act,

said, It is also unclear how the

requirement to pay one per

cent of total contract sum

awarded in the sector into the

Fund (NCDF) would be

implemented.

Will this payment cascade

to all levels of contract award,

or only apply at the stage of

award by the oil exploration

and production (E&P)

companies?

Further, this additional

levy of one per cent of contract

value, together with the

requirement for contract to be

awarded to a Nigerian

company, even if 10 per cent

higher than the lowest bidder,

would significantly increase the

cost of contracting in the

Nigerian oil and gas industry.

Ultimately, this might

become a factor in the

investment inflows into the

country, relative to other

countries with lower costs of

production.

Also speaking, Mr. Simbi

Wabote, Global Local Content

Manager, Shell Exploration and

Production International

Limited, called on the NCDMB

to publicise the procedures and

requirements for accessing the

NCDF and use feedback from

the exercise to improve the

administration process. He

cautioned against allowing

NCDF go the way of the

moribund Nigerian Content

Support Fund which could not

be accessed by any service

company.

The NCDF, which mainly

aims to build indigenous

capacity, was set up in 2 010

Board, NCDMB, working with

its joint financial advisers,

BGL Plc and UBA Capital

Limited.

By 2011, the fund rose to

$25 million, from a zero fund

at inception, while as at today,

the fund has grown to about

$450 million, with a

projection that it will hit $700

million by year end.

The fund, according to

the NCDMB, was designed to

encourage funding agencies to

give money to indigenous

operators. An evidence of its

capacity building function is

the fact that it was designed to

among other things, assist

Nigerian oil service providers

who have been awarded

contracts by the oil producing

companies to access cheap and

affordable credit facilities to

execute these contracts.

In addition, it also aims to

provide a platform for financing

major capital projects which is

critical to Nigerian content

development in the industry.

The NCDMB describes the

NCDF as, The sum of one per

Nigerian workers still hopeful

Dr. Ernest Nwapa

Allison- Madueke

cent, which shall be deducted

en bloc and at source from

every contract awarded to any

operator, contractor, sub-

contractor, alliance partner or

any other entity involved in any

project, operation, activity or

transaction in the upstream

sector of the Nigerian oil and

gas industry and be paid into

the Fund.

According to the NCDMB,

the NCDF was established by

the Nigerian Oil and Gas

Industry Content Development

(NOGICD) Act of 2010, with

Section 104 of the Act,

specifically requiring a Fund to

be set-up for the purpose of

funding the implementation of

the Nigerian content in the

Nigeria Oil and Gas Industry.

The Act requires the

NCDMB to manage and

employ the NCDF for projects,

programmes and activities

directed at increasing Nigerian

content in the oil and gas

industry. In so doing, the

NCDMB created independent

Special Purpose Vehicles (SPV)

with representation of industry

stakeholders to drive the NCDF

utilisation.

The NCDF was designed to

support the Nigerian oil and

gas service companies with

credit enhancement in form of

guarantee and cash back

interest incentive when

accessing credit facilities from

Nigerian Banks. The Fund was

also designed to provide direct

capacity investment to Nigerian

companies operating within the

oil and gas industry.

The Act empowers every

contract awarding entity to

deduct one per cent of the

contract sum and remit same to

the fund.

The fund, according to the

NCDMB is open to every Nigerian

company operating within the

Nigeria oil and gas industry; who

has either been issued contracts by

the International Oil Companies,

International Oil and Gas Service

companies and other operators of oil

and gas assets or who desires to

develop capacity within the oil and

gas sector.

As part of requirements to

access the fund, Nigerian oil and

gas service companies are expected

to put in place appropriate

corporate governance structure,

risk management framework and

accounting reporting system.

The companies are also

required to separate business

interest from personal interest in

managing operations, while

ensuring that competent staff are

engaged to package bankable loan

application at all times.

The NCDF model provides 30

per cent guarantee on loans

accessed and 50 per cent interest

rate rebate and elongated tenure

for loan facilities.

To deepen local content and

boost capacity building, the Fund

hopes to carry out commercial and

developmental interventions, by

providing partial guarantee for

Nigerian companies to access credit

facilities in form of contract

finance, working capital finance,

assets acquisition finance,

project finance.

In addition, the fund also

aims to carry out developmental

interventions through the

Board's direct investment;

towards capacity building and

human capital development.

Considering the current

growth potentials of the Fund,

the NCDMB said it is expecting

a continuous increase in its size

and in its capacity to attract

other sources of funds both

locally and internationally to

support Nigerian Oil and Gas

content development.

The NCDMB said it is

creating a platform upon which

the credibility of the program

can be measured and the

confidence of other fund

providers can be secured.

It said, The NCDF is

providing multiple yet

complementary approaches to

addressing capability gaps in

the oil and gas sector and

providing cheap and

consistent single digit interest

rate funds for Nigerian content

development. It is also

creating consistent and

sufficient liquidity reserves and

ensuring its capacity to attract

more funds.

growth potentials of the Fund,

the NCDMB noted that it

expects a continuous increase

in its size and in its capacity to

attract other sources of funds

both locally and

internationally to support

Nigerian Oil and Gas content

development.

It further advocated the

maximum support of Nigerian

banks to the programme in

order to build the desired

credibility that can attract

other international funds and

intervention partners.

However, Mr. Jesse Ovadia, a

lecturer in International Political

Economy, School of Geography,

Politics and Sociology, Newcastle

University, in his write-up titled,

'Measurement and

implementation of local content

in Nigeria a framework for

working with stakeholders to

increase the effectiveness of local

content monitoring and

development,' expressed

optimism on the ability of the

NCDF to build capacity of

indigenous operators in the

Nigerian oil and gas sector. He

said, Given its size and apparent

transparent processes, the NCDF

will, when it is finally operational,

make a meaningful contribution

to Nigerian content

development.

The benefits of the fund in

building capacity o f indigenous

COVER COVER STORY COVER COVER STORY

The NCDF is

providing multiple

yet complementary

approaches to

addressing

capability gaps in

the oil and gas

sector and

providing cheap

and consistent

single digit interest

rate funds for

Nigerian content

development.

CBN Governor, Godwin Emiefele

cent, which shall be deducted

en bloc and at source from

every contract awarded to any

operator, contractor, sub-

contractor, alliance partner or

any other entity involved in any

project, operation, activity or

transaction in the upstream

sector of the Nigerian oil and

gas industry and be paid into

the Fund.

According to the NCDMB,

the NCDF was established by

the Nigerian Oil and Gas

Industry Content Development

(NOGICD) Act of 2010, with

Section 104 of the Act,

specifically requiring a Fund to

be set-up for the purpose of

funding the implementation of

the Nigerian content in the

Nigeria Oil and Gas Industry.

The Act requires the

NCDMB to manage and

employ the NCDF for projects,

programmes and activities

directed at increasing Nigerian

content in the oil and gas

industry. In so doing, the

NCDMB created independent

Special Purpose Vehicles (SPV)

with representation of industry

stakeholders to drive the NCDF

utilisation.

The NCDF was designed to

support the Nigerian oil and

gas service companies with

credit enhancement in form of

guarantee and cash back

interest incentive when

accessing credit facilities from

Nigerian Banks. The Fund was

also designed to provide direct

capacity investment to Nigerian

companies operating within the

oil and gas industry.

The Act empowers every

contract awarding entity to

deduct one per cent of the

contract sum and remit same to

the fund.

The fund, according to the

NCDMB is open to every Nigerian

company operating within the

Nigeria oil and gas industry; who

has either been issued contracts by

the International Oil Companies,

International Oil and Gas Service

companies and other operators of oil

and gas assets or who desires to

develop capacity within the oil and

gas sector.

As part of requirements to

access the fund, Nigerian oil and

gas service companies are expected

to put in place appropriate

corporate governance structure,

risk management framework and

accounting reporting system.

The companies are also

required to separate business

interest from personal interest in

managing operations, while

ensuring that competent staff are

engaged to package bankable loan

application at all times.

The NCDF model provides 30

per cent guarantee on loans

accessed and 50 per cent interest

rate rebate and elongated tenure

for loan facilities.

To deepen local content and

boost capacity building, the Fund

hopes to carry out commercial and

developmental interventions, by

providing partial guarantee for

Nigerian companies to access credit

facilities in form of contract

finance, working capital finance,

assets acquisition finance,

project finance.

In addition, the fund also

aims to carry out developmental

interventions through the

Board's direct investment;

towards capacity building and

human capital development.

orient energy review, march 2015

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