BusinessDay 21 Aug 2018
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Tuesday <strong>21</strong> <strong>Aug</strong>ust <strong>2018</strong><br />
24 BUSINESS DAY<br />
C002D5556<br />
Aramco charges Nigeria, other<br />
OPEC members to turn on the taps<br />
ISAAC ANYAOGU<br />
Saudi Aramco has<br />
charged other oil<br />
producers to ramp<br />
up production to<br />
offset $1 trillion investment<br />
loss since the market downturn<br />
began address declining<br />
production in matured<br />
fields.<br />
In the organisation’s<br />
latest report, Saudi Aramco<br />
Annual Review, Khalid Al-<br />
Falih, chairman of Aramco’s<br />
board said mature oil<br />
fields are seeing an increase<br />
in declining production<br />
rates, and this must be<br />
offset by continued investments<br />
in the industry if<br />
the world is to meet what<br />
is thought to be an 1-1.5<br />
million barrel per day annual<br />
demand growth rate<br />
in coming years.<br />
“To respond to this situation,<br />
significant new investments<br />
are required in<br />
additional capacity and<br />
expanded and upgraded<br />
infrastructure, as well as<br />
the development of pioneering<br />
technology to<br />
make petroleum energy<br />
more sustainable and accessible,”<br />
Al-Falih said in<br />
his opening message to the<br />
42-page report published<br />
on Friday.<br />
Aramco’s annual report<br />
cites the International Energy<br />
Agency’s World Energy<br />
Outlook 2017 New Policies<br />
Scenario estimates that call<br />
for a 30 percent increase<br />
in global energy needs between<br />
now and 2040.<br />
Saudi Aramco, for now<br />
the world’s top oil producer,<br />
is doing its part to meet this<br />
future demand, according<br />
to the report.<br />
“Saudi Aramco is committed<br />
to playing its unique<br />
part in meeting the world’s<br />
energy needs today and<br />
tomorrow by continuing<br />
to invest wisely throughout<br />
the cycle and across the<br />
value chain, reinforcing<br />
our preeminent leadership<br />
position in the industry,”<br />
Energy Report<br />
Nigeria ignores coal as Trump sets new emission rules to boost use<br />
…environmentalists fear rise in emissions<br />
STEPHEN ONYEKWELU<br />
Nigeria’s vast<br />
coal resource<br />
wastes away<br />
for inefficiency<br />
as<br />
the Trump administration<br />
plans to formally overhaul<br />
climate change regulations<br />
that would allow individual<br />
states to decide how, or even<br />
whether to curb carbon dioxide<br />
emissions from coal<br />
plants, come <strong>Aug</strong>ust <strong>21</strong>, according<br />
to three people who<br />
have seen the full proposal.<br />
The plan would also relax<br />
pollution rules for power<br />
plants that need upgrades.<br />
That, combined with allowing<br />
states to set their own<br />
rules, creates a serious risk<br />
that emissions, which had<br />
been falling, could start<br />
to rise again, according to<br />
environmentalists.<br />
The proposal, which<br />
President Trump is expected<br />
to highlight <strong>Aug</strong>ust<br />
<strong>21</strong>at a rally in West Virginia,<br />
amounts to the administration’s<br />
strongest and broadest<br />
effort yet to address<br />
what the president has long<br />
described as a regulatory<br />
“war on coal.”<br />
It would considerably<br />
weaken what is known<br />
as the Clean Power Plan,<br />
former President Barack<br />
Obama’s signature regulation<br />
for cutting planetwarming<br />
emissions at coalfired<br />
plants.<br />
Back to Africa’s most<br />
populous and energy hungry<br />
nation, Nigeria’s coal<br />
industry suffered a blow<br />
in the 1950s when oil was<br />
discovered. Up until this<br />
point, the Nigerian Railway<br />
Corporation was the largest<br />
consumer of coal in the<br />
country.<br />
However, after the discovery<br />
of oil, the Railway<br />
Corporation began to replace<br />
its coal burning trains<br />
with diesel-powered engines.<br />
An additional negative<br />
impact came when the<br />
Electricity Corporation of<br />
Nigeria began converting<br />
its power generation equipment<br />
from coal to diesel and<br />
gas as well.<br />
The Nigerian Civil War<br />
also negatively impacted<br />
coal production; many<br />
mines were abandoned<br />
during the war. Following<br />
the war, production never<br />
completely recovered and<br />
coal production levels were<br />
erratic.<br />
Attempts at mechanising<br />
production ended badly, as<br />
Al-Falih added.<br />
Aramco referenced its<br />
new discoveries in the Sakab<br />
and Zumul oil fields, as<br />
well as its gas reservoir find<br />
in Sahba field. Other projects<br />
in 2017 that Aramco has<br />
invested include Khurais<br />
field (300,000 bpd by <strong>2018</strong>),<br />
Fazran field (75,000 bpd<br />
by 2020), Dammam field<br />
(25,000 bpd by 20<strong>21</strong>; 75,000<br />
by 2026). Fadhili Gas Plant<br />
(start up 2019, 2.5 billion<br />
scfd), Hawiyah Gas Plant<br />
(1.1 billion scfd).<br />
However for OPEC producers<br />
in Africa especially<br />
Nigeria and Libya, this will<br />
be a tough call considering<br />
the internal crises in<br />
these countries. Libya has to<br />
check activities of different<br />
groups fighting for political<br />
and economic power.<br />
The challenge for Nigeria<br />
is to raise production by attracting<br />
new investments.<br />
But in order to do this, it<br />
must embark on deep reforms<br />
in a sector that is<br />
beset by challenges.<br />
both the implementation<br />
and maintenance of imported<br />
mining equipment<br />
proved troublesome, and<br />
hurt production. After the<br />
civil war, the Nigerian coal<br />
industry was not able to return<br />
to its peak production,<br />
this is hurting industries<br />
because the cost of electricity<br />
eats away profit margins.<br />
Against the backdrop of<br />
severe shortages in much<br />
needed supply of electricity,<br />
it is inevitable that Nigeria<br />
must move from rhetoric<br />
to concrete action in the<br />
OLUSOLA BELLO<br />
Following public<br />
scepticism over the<br />
execution of the<br />
Ajaokuta Kaduna –<br />
Kano gas pipeline projects<br />
the group managing director<br />
of the Nigerian National<br />
Petroleum Corporation<br />
(NNPC), Maikanti Baru has<br />
directed the Chinese Consortium<br />
and the NNPC team<br />
working on the Project to<br />
ensure timely finalization<br />
of the term sheet for the<br />
project’s contractor financing<br />
agreement<br />
The Chinese consortium<br />
is made up of Bank of China<br />
and Sinosure.<br />
Baru maikanti, who had<br />
to cut short his trip to Saudi<br />
Arabia for a stop-over in<br />
Dubai to meet with the Chi-<br />
NNPC want timely delivery of gas project<br />
development and addition<br />
of coal-fired electricity to<br />
the nation’s electricity supply<br />
mix.<br />
Two of the biggest cement<br />
markers in Nigeria,<br />
Dangote Cement Plc and<br />
Lafarge Plc have been investing<br />
massively in coal as<br />
source of energy to power<br />
its plants.<br />
“Companies are turning<br />
to coal for their energy<br />
needs. What we tend to forget<br />
is that coal as a major<br />
source of energy might not<br />
be clean and it is ultimately<br />
cheaper to use liquefied<br />
natural gas (LNG) rather<br />
than coal because of social<br />
and environmental<br />
concerns” Eddy van Den<br />
Broeke, founder of Abujabased<br />
Greenville Oil and<br />
Gas Limited said at a gas<br />
development roundtable<br />
in Lagos.<br />
Dangote Cement<br />
switched to using coal at its<br />
cement plants in response<br />
to disruption to gas supplies<br />
and to lower input<br />
costs. The cement producer<br />
uses 12,000 metric tonnes<br />
(MT/day) of coal. Ashaka<br />
Cement, a fully-owned subsidiary<br />
of Lafarge Africa,<br />
said coal accounted for 82<br />
percent of its power usage<br />
over the period, while work<br />
is ongoing on its 16-megawatt<br />
lignite-fired coal power<br />
plant at its factory in Gombe<br />
State.<br />
“Coal business is booming.<br />
I have some Chinese<br />
companies that need about<br />
a million metric tonnes<br />
(MT) of coal from me every<br />
month and I don’t meet up<br />
with the demand. Dangote<br />
Cement Plc is ready to buy<br />
up every piece of coal we<br />
excavate in Kogi state for its<br />
Obajana cement factory”<br />
Leo Nwankwo, a commodities<br />
analyst and trader told<br />
<strong>BusinessDay</strong>.<br />
“There are jobs to be<br />
created, when we develop<br />
our coal industry. I trade in<br />
commodities and coal is just<br />
one of the many commodities<br />
I trade in. When you visit<br />
our coal excavation sites in<br />
Kogi state and see the level<br />
of unemployment and poverty,<br />
I fear for this country.<br />
Let us focus on developing<br />
our economy and not let the<br />
shouts about clean energy<br />
deter us from creating jobs<br />
for our bulging youth population”<br />
Nwankwo said.<br />
Trump’s plan is the latest<br />
move in a string of efforts,<br />
including prodding<br />
grid operators to purchase<br />
more electricity from coal<br />
plants and asserting that<br />
coal plant retirements are<br />
threatening the reliability of<br />
the national power grid, to<br />
end what Trump has called<br />
his predecessor’s war on coal<br />
and a sure sign to the industry<br />
that the Trump administration<br />
still has its back, even as<br />
coal production continues<br />
to decline.<br />
nese consortium reiterated<br />
the need for both parties<br />
to ensure speedy conclusion<br />
on the details of the<br />
agreement towards its full<br />
execution during President<br />
Muhammadu Buhari’s state<br />
visit to China next month.<br />
The is scheduled to attend<br />
the Forum of China-Africa<br />
Cooperation (FOCAC)<br />
Summit holding from the<br />
1st to 4th September, <strong>2018</strong> in<br />
the Chinese capital, Beijing<br />
and it is expected that AKK<br />
Project will be top on Mr.<br />
President’s agenda.<br />
The NNPC had earlier<br />
clarified that the execution<br />
of the AKK gas pipeline<br />
project is progressing under<br />
the original concept of 100<br />
percent contractor financing<br />
model contrary to some<br />
media report of a possible<br />
resort to ‘’proceed of gas tariffs’’<br />
as new means of funding<br />
because of purported<br />
collapse of negotiation with<br />
Chinese lenders.<br />
The Corporation noted<br />
that the successful conclusion<br />
of the contractor<br />
financing terms would pave<br />
way for the historic groundbreaking<br />
ceremony which<br />
would take place after the<br />
conclusion of the front-end<br />
activities.<br />
Already the Corporation<br />
had concluded the<br />
vital Front End Engineering<br />
Design (FEED) and the<br />
Environmental Impact Assessment<br />
(EIA) report while<br />
work on the detailed engineering<br />
design is nearing<br />
conclusion.<br />
Upon completion within<br />
a projected 24-month<br />
window, the NNPC stated<br />
that the AKK gas pipeline<br />
would enable connectivity<br />
between the East, West and<br />
North, which is currently<br />
non-existent.<br />
It would also enable gas<br />
supply and utilization to key<br />
commercial centres in the<br />
Northern corridor of Nigeria<br />
with the attendant positive<br />
spin-off on power generation<br />
and industrial growth.