A. INDUSTRY HIGHLIGHTS AND GLOBAL Nigeria's power grid records total collapse
AfDB in discussion with FG over writing off legacy
Oil and Gas
Nigeria earned $263bn from petroleum exports in 5 years
OPEC moves to balance market in the 2nd half of 2019
Nigeria's domestic gas market suffers low investments
Nigeria, Saudi, others sign new OPEC charter
Schneider Electric, EM-ONE Energy sign MoU
Microsoft initiative, Nigerian firm look to connect 10,000 SMEs to solar power
EU approves 165m for Nigeria's renewable energy sector
Eni/NNPC, FAO launch solar-powered water schemes in Nigeria's North-East
NERC grants Green Energy license for 40MW power Shell, Nigeria's communities sign MoU, agree to
reopen oil flow station
Only one power plant built from 100 licenses issued
B. GLOBAL TRENDS
Oil and Gas
Egypt agrees to $500m settlement with Israel Electric to end gas dispute
Rwanda looks to close energy supply-demand gap by 2024
Russia's Gazprom seeks to end agreement on oil production cuts with OPEC
Oil companies to take new concessions in Ethiopia
Chinese Energy firms push to acquire oil and gas assets in Equitorial Guinea
World Bank provides Mozambique $420m grants for transmission upgrades
West Africa's trans-border electricity sale to begin in
Morocco set for largest wind tower in Africa
Kenyan Green City to have solar power plant
AfDB receives 40m from European Commission
Russia and OPEC draw closer on oil, joining other producers to manage market
Coal production reduces in USA, natural gas becomes the climate background
B. INDUSTRY RISK/OPPORTUNITIES REVIEW SNAPSHOT
S/N RISK/CHALLENGES 1. Developments in the Power Sector
Construction of one power plant despite 100 issued licenses
Need for change in regulatory framework
Frequent grid collapses
Implementation of recently issued Policy Directives from the Ministry of Power by NERC and sector operators
This will create changes in the regulatory and commercial climate to allow for more investments
Deployment of loans and grants from relevant DFIs to boost the transmission and distribution networks
2. The Nigerian Domestic Gas Market
OPPORTUNITIES 3. European Union's
165 million investment in renewable energy sector
State intervention in gas pricing to protect endusers' sties investments in the sector
Physical qualities of natural gas and commercial consideration s impact gas pricing
Need for change of the 2008 Domestic Gas Pricing Regulations
Repeal of the current laws and regulations to reect the current realities
Operators can continue with the willing-buyer, willing-seller arrangement
Implementation of the National Gas Policy
The renewable energy sector in Nigeria to receive a N66 billion boost
Stakeholders and local operators can be positioned to take advantage of the funding opportunity
C. INDUSTRY FOCUS ANALYSIS UNDERGROUND PIPELINE SYSTEM: A SOLUTION TO PIPELINE VANDALISM?
In Nigeria, stable oil production and export has been threatened by grave insurgency and asset vandalism orchestrated by Niger Delta indigenes over the years. An underground pipeline system although advanced in technology appears to be a possible solution to curbing pipeline vandalism. This report analyzes the feasibility of underground pipeline systems in the oil and gas sector in the wake of pipeline vandalism viz-aviz the plan to increase the oil production above 2.3 million barrels per day. It is impossible to isolate Nigeria's reduced daily output from the frequent cases of pipeline vandalism and it is uncertain whether a transition from surface pipelines to underground pipeline systems would function to eliminate this problem. Hence, this report evaluates the effectiveness of underground pipeline systems and the implications for its success or otherwise.
Underground Pipeline Systems to the Rescue?
For decades, the industry has battled pipeline vandalism, an endemic which has brutalized its pipeline infrastructure. Operators in the sector have identified vandalism, sabotage and pipeline integrity issues as challenges to the construction, operation and maintenance of the existing pipelines in the country. In October 2018, pipeline vandalism had risen by 42.9% as reported by NNPC. It is expected that concrete plans would be birthed which would enable prompt replacement of defective pipelines with superior, wellconstructed and secured pipelines that fully exploit present-day technologies.
Developments in the oil and gas sector across other oil producing countries like Canada and the United States of America (USA) has shown a gradual switch from surface pipeline technologies to underground pipeline systems. Unlike exposed pipelines, underground pipelines are trenched below the earth surface. This system reduces the risk of pipeline vandalism and oil theft because it is buried deep in the ground. The transportation of petroleum products and natural gas had begun since the early 20th century by using buried
steel pipelines over a long distance. The measurements and capacity of a pipeline are dependent on its purpose. Oil and gas pipelines usually serve gathering and transmission purposes that is, they are used to transport crude oil and natural gas from one location to another or they are used to gather these products from surrounding wells to refineries. However, this system is prone to corrosion, difficult maintenance and late oil leak detection.
Key Considerations for Underground Pipeline Systems
As the Nigerian oil and gas industry progresses and technology switch to more efficient means of pipeline systems are witnessed, certain factors are worth considering in the execution of the underground pipeline system to wit:
1. Host Communities: Pipeline vandalism and oil theft in Nigeria are invariably linked to discontentment by the natives of host communities. The concept of Corporate Social Responsibility demands that these communities are duly compensated for the economic and environmental challenges they face due to the activities of oil producing companies. Although parties interested in constructing pipelines are expected to obtain an appropriate license from the Department of Petroleum Resources (DPR), it is highly recommended that the consent of host communities be sought and obtained during all stages of the pipeline project. This ensures robust stakeholder engagement at the grassroot level. Further, issues around 'Right of Way' for pipeline construction must be handled holistically both with the relevant regulatory agencies and the host communities. Environmental implications such as deforestation which may have long-term effects on the communities should also be considered. Provision for relocation of residents, where necessary, and adequate compensation should be made for instances where the pipeline project is sited within communities. In summary, it is essential that a healthy relationship subsists between the company and the host communities before and during the pipeline operations.
2. Legal and Regulatory Requirements: The relevant laws and regulations governing pipeline projects including the Oil Pipelines Act and the DPR Guidelines and Procedures for Construction, Operations and Maintenance of Oil and Gas Pipelines must be complied with. DPR regulations provide for certain considerations regarding construction materials for protection from corrosion, environmental implications, depth, width and length of underground pipelines, among others. Compliance with these specifications is to ensure that the integrity of the pipeline throughout its lifespan is maintained in accordance with the regulatory standards.
3. Operations and Maintenance: Underground pipeline systems are affected by corrosion, a degradation process which affects the strength of the pipelines in the long-term. The difficulty of detecting affected pipelines and challenges surrounding the repair and maintenance procedures are also present due to their location under the land. In the United States, the majority of pipelines are buried underground and are well concealed from the public; hence, most individuals are unaware of the existence of the vast network of pipelines under the land on which they operate. The process of excavating the portion of land to perform repairs and maintenance functions is a key consideration. In the Nigerian context and given that underground pipelines are a recent introduction to the national pipeline network, critical consideration should be given to factoring operations and maintenance procedures and costs into the project. More so, where the project envisages the relocation and re-settling of residents.
are resolved timeously. The technology detects oil spillage using high-frequency radar signals that are emitted from the surface under which the pipelines run.
The introduction of this technology in Nigeria will be highly useful for the detection of oil spill. However, it should be noted that where the ground surface is inconsistent and irregular, the technology might be ineffective. Therefore, where the surface density is altered, the signals become scattered and the picture generated by the GPR becomes unclear. This shortcoming makes the detection of spills difficult in certain geographical locations. Due to this challenge, investing companies should consider the geographical location of the project site, given the topography of the Niger Delta region, for the maximization of the GPR technology.
The underground pipeline system in Nigeria will lead to the growth of commercial transactions between operators in the industry, increased production of oil and gas to meet the national target, security of supply and reduce the rate of pipeline vandalism and oil theft in Nigerian oil and gas sector. However, potential investors must be knowledgeable about the pros and cons associated with adopting this mode of pipeline transportation in order to fully maximise its potential and yield its benefits.
Ivie Ehanmo Partner email@example.com
4. Oil Spill Monitoring: The possibility of pipeline leakages and failure is present with underground pipelines and this could result in human, environmental and financial losses. Underground pipelines are also prone to damage that can cause oil spillage. However, with the aid of the Ground Penetrating Radar (GPR) technology, pipeline monitoring is achievable. This ensures that oil spills, pipeline failures and leakages
Samson Ozah Associate firstname.lastname@example.org
DianaAbasi Okop Associate email@example.com