Oil & Energy
Shell Builds Skills Of 9,500 N’Deltans In Four Years … Facilitates 10 Local Oil Firms
The strict implementation of the Nigerian Content Development initiative in Shell Petroleum Development Company of Nigeria (SPDC) between 2007 and now has resulted in the building of the capacity and capability of more than 9,500 community people to fit into the lucrative oil and gas sector, while also helping to establish over 10 indigenous oil servicing companies to take advantage of the gaps that exist in the industry.
The Tide notes that the actual monetary value of the NCD input into the oil and gas major’s activities in the Niger Delta is yet unknown, but available figures show that in 2008 alone, SPDC spent well over $1billion on local contracts, and more than $718million in 2009 on indigenous contractors’ contribution to capital project uptake in the industry while Gbaran Ubie Integrated Oil and Gas Project has invested more than $1billion on the procurement of needed labour, materials and services in-country between 2007 and 2010.
Speaking at the 2010 edition of the Bureau Chiefs and News Editors’ Forum in Port Harcourt, recently, Shell Africa Regional Manager, Supply and Procurement, Schmidt Laurie, said her mission was to ensure increased participation of Nigerians, particularly host communities, in the oil and gas business, so as to benefit from the resources in their areas, and expressed readiness to create the enabling environment for easy access of indigenous contractors to the necessary tools required to actively participate and succeed in the industry.
In his speech, Shell’s General Manager, Nigerian Content Development, Simbi Wabote, said the company would do anything to increase the number of indigenous people trained to participate in the operations of the oil industry, saying that more local contractors were being encouraged through training and capacity building to tap into the yawning field in order to up their stake in the nation’s economy.
Wabote noted the litany of successes recorded so far, and said that Shell’s effort has resulted in the growth of local contractors and emergence of new oil and gas-related businesses in the region, adding that barring the obviously daunting challenges posed by the dearth of functional steel industry, in addition to the poor power supply situation, the industry has achieved about 40 per cent local content.
Speaking on the catalogue of success stories, Ama Ikuru, Shell’s community content manager, said the initiative was anchored on the need to harness areas where gaps exist, adding that e-contracting and e-tendering were tools for achieving results, and ensuring level playing field for local contractors.
While presenting their score card for the four-year period, the NCD team said they were working with local contractors to build their capacity and capability to compete in the highly capital intensive and technically challenging industry, and also encourage the involvement and participation of indigenous stakeholders to benefit from the resources in the oil and gas industry.
According to available statistics, the NCD team facilitated the training of 44 Niger Delta youths on scaffolding in 2007, supported the development of eight local dredging companies and trained the workforce of three flowline contractors.
In 2008, the team stated that it ensured the training of 12 abseilers and painters, 75 marine craftsmen, 210 entrepreneurs on business development, built the capacity of 600 vendors, and completed the level two certification of 44 youths in scaffolding.
The team also explained the engagement of 1,800 contractors on Life Saving Rules for successful business operations, the training of 12 caterers, 270 entrepreneurs, 60 engineers in project management, 100 welders, and 1,000 vendors in general vendor development, just as it supported over 20 local vendors to the United Kingdom TI trade mission in London in 2009.
Between January and May this year, the NCD team noted that it has trained 90 engineers in project management, 100 welders, 60 artisans in plumbing, tiling and painting, 26 slickline engineers, while 32 youths are presently undergoing a one-year City and Guilds level 1 training at Bonny Vocational Centre.
Nelson Chukwudi
The Federal Government has expressed optimism in attracting more investments by International Oil Companies (IOCs) into Nigeria to foster growth and sustainability in the energy sector.
This is as some IOCs, particularly Shell and TotalEnergies, had announced plans to divest some of their assets from the country.
Recall that Shell in January, 2024 had said it would sell the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance.
According to the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, increasing investments by IOCs as well as boosting crude production to enhancing Nigeria’s position as a leading player in the global energy market, are the key objectives of the Government.
Lokpobiri emphasized the Ministry’s willingness to collaborate with State Governments, particularly Bayelsa State, in advancing energy sector transformation efforts.
The Minister, who stressed the importance of cooperation in achieving shared goals said, “we are open to partnerships with Bayelsa State Government for mutual progress”.
In response to Governor Douye Diri’s appeal for Ministry intervention in restoring the Atala Oil Field belonging to Bayelsa State, the Minister assured prompt attention to the matter.
He said, “We will look into the issue promptly and ensure fairness and equity in addressing state concerns”.
Lokpobiri explained that the Bayelsa State Governor, Douyi Diri’s visit reaffirmed the commitment of both the Federal and State Government’s readiness to work together towards a sustainable, inclusive, and prosperous energy future for Nigeria.
While speaking, Governor Diri commended the Minister for his remarkable performance in revitalisng the nation’s energy sector.
The Federal Government has assured investors in the nation’s gas sector of the security and safety of their investments.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, gave the assurance while hosting top officials of Shanghai Huayi Energy Chemical Company Group of China (HUAYI) and China Road and Bridge Corporation, who are strategic investors in Brass Methanol and Gas Hub Project in Bayelsa State.
The Minister in a statement stressed that Nigeria was open for investments and investors, insisting that present and prospective foreign investors have no need to entertain fear on the safety of their investment.
Describing the Brass project as one critical project of the President Bola Tinubu-led administration, Ekpo said.
“The Federal Government is committed to developing Nigeria’s gas reserves through projects such as the Brass Methanol project, which presents an opportunity for the diversification of Nigeria’s economy.
“It is for this and other reasons that the project has been accorded the significant concessions (or support) that it enjoys from the government.
“Let me, therefore, assure you of the strong commitment of our government to the security and safety of yours and other investments as we have continually done for similar Chinese investments in Nigeria through the years”, he added.
Ekpo further tasked investors and contractors working on the project to double their efforts, saying, “I want to see this project running for the good of Nigeria and its investors”.
Earlier in his speech, Leader of the Chinese delegation, Mr Zheng Bi Jun, said the visit to the country was to carry out feasibility studies for investments in methanol projects.
On his part, the Managing Director of Brass Fertiliser and Petrochemical Ltd, Mr Ben Okoye, expressed optimism in partnering with genuine investors on the project.
Crude oil prices recently logged their second monthly gain in a row as OPEC+ extended their supply curb deal until the end of Q2 2024.
The gains have been considerable, with WTI adding about $7 per barrel over the month of February.
Yet a lot of analysts remain bearish about the commodity’s prospects. In fact, they believe that there is enough oil supply globally to keep Brent around $81 this year and WTI at some $76.50, according to a Reuters poll.
Yet, like last year in U.S. shale showed, there is always the possibility of a major surprise.
According to the respondents in that poll, what’s keeping prices tame is, first, the fact that the Red Sea crisis has not yet affected oil shipments in the region, thanks to alternative routes.
The second reason cited by the analysts is OPEC+ spare capacity, which has increased, thanks to the cuts.
“Spare capacity has reached a multi-year high, which will keep overall market sentiment under pressure over the coming months”, senior analyst, Florian Grunberger, told Reuters.
The perception of ample spare capacity is definitely one factor keeping traders and analysts bearish as they assume this capacity would be put into operation as soon as the market needs it. This may well be an incorrect assumption.
Saudi Arabia and OPEC have given multiple signs that they would only release more production if prices are to their liking, and if cuts are getting extended, then current prices are not to OPEC’s liking yet.
There is more, too. The Saudis, which are cutting the most and have the greatest spare capacity at around 3 million barrels daily right now, are acutely aware that the moment they release additional supply, prices will plunge.
Therefore, the chance of Saudi cuts being reversed anytime soon is pretty slim.
Then there is the U.S. oil production factor. Last year, analysts expected modest output additions from the shale patch because the rig count remained consistently lower than what it was during the strongest shale boom years.
That assumption proved wrong as drillers made substantial gains in well productivity that pushed total production to yet another record.
Perhaps a bit oddly, analysts are once again making a bold assumption for this year: that the productivity gains will continue at the same rate this year as well.
The Energy Information Administration disagrees. In its latest Short-Term Energy Outlook, the authority estimated that U.S. oil output had reached a record high of 13.3 million barrels daily that in January fell to 12.6 million bpd due to harsh winter weather.
For the rest of the year, however, the EIA has forecast a production level remaining around the December record, which will only be broken in February 2025.
Oil demand, meanwhile, will be growing. Wood Mackenzie recently predicted 2024 demand growth at 1.9 million barrels daily.
OPEC sees this year’s demand growth at 2.25 million barrels daily. The IEA is, as usual, the most modest in its expectations, seeing 2024 demand for oil grow by 1.2 million bpd.
With OPEC+ keeping a lid on production and U.S. production remaining largely flat on 2023, if the EIA is correct, a tightening of the supply situation is only a matter of time. Indeed, some are predicting that already.
Natural resource-focused investors Goehring and Rozencwajg recently released their latest market outlook, in which they warned that the oil market may already be in a structural deficit, to manifest later this year.
They also noted a change in the methodology that the EIA uses to estimate oil production, which may well have led to a serious overestimation of production growth.
The discrepancy between actual and reported production, Goehring and Rozencwajg said, could be so significant that the EIA may be estimating growth where there’s a production decline.
So, on the one hand, some pretty important assumptions are being made about demand, namely, that it will grow more slowly this year than it did last year.
This assumption is based on another one, by the way, and this is the assumption that EV sales will rise as strongly as they did last year, when they failed to make a dent in oil demand growth, and kill some oil demand.
On the other hand, there is the assumption that U.S. drillers will keep drilling like they did last year. What would motivate such a development is unclear, besides the expectation that Europe will take in even more U.S. crude this year than it already is.
This is a much safer assumption than the one about demand, by the way. And yet, there are indications from the U.S. oil industry that there will be no pumping at will this year. There will be more production discipline.
Predicting oil prices accurately, even over the shortest of periods, is as safe as flipping a coin. With the number of variables at play at any moment, accurate predictions are usually little more than a fluke, especially when perceptions play such an outsized role in price movements.
One thing is for sure, though. There may be surprises this year in oil.
lrina Slav
Slav writes for Oilprice.com.
