Home » OIL » TotalEnergies is Proudly Committed to Nigerian Content, Consolidate on Gains – Bandele

TotalEnergies is Proudly Committed to Nigerian Content, Consolidate on Gains – Bandele

…TotalEnergies present in Africa for more than 80 years in exploration activities and in Nigeria for almost 60 years……..

In his industry address at the Nigeria Oil and Gas Conference and Exhibition (NOG), the Deputy Managing Director, Deep Water District of TotalEnergies, Mr. Victor Bandele noted that the choice of “Expanding the Nigerian Content Frontier through Intra-African Trade” as the theme of the NOG seminar is apt, timely, and provides a great opportunity for the continuation of a conversation that the industry must sustain.

Bandele was represented by the Executive General Manager, Government Relations, TotalEnergies, Nigeria, Olalere Babasola, said it is necessary to share best practices and experiences at NOG to enable operators to learn from one another, adapt and quickly take actions that will sustain the industry.

Babasola revealed that TotalEnergies, as it is presently called, has been present in Africa for more than 80 years and has been involved in exploration activities in Nigeria for almost 60 years now. In the Upstream sector, the company has a broad and diversified portfolio in Nigeria, with activities spanning onshore, conventional offshore, deep water and LNG. TotalEnergies is proud of its strong partnership and has developed with the Nigerian National Petroleum Corporation (NNPC) including various partners, over the years.

The upstream branch plays a significant economic and social role in Nigeria, operating nearly 15% of the country’s production. Nigeria, as one of the company’s core areas of activities, is also crucial to the TotalEnergies Group, accounting for 12 % of its equity production. In the last few years alone, TotalEnergies has invested approximately 10 billion US dollars in the country. Through decades of executing development projects, the company’s activities have contributed to creating jobs and developing human capacity in Nigeria.

Babasola explained that despite the challenging environment that the company operate in as an industry, TotalEnergies remains committed to investing in the country because it is strongly believe in the potential of Nigeria and Nigerians. This is why it has been quite active in recent years even in the face of understandable uncertainties. The company completed Egina at the end of 2018 and has been progressing well with the development of Ikike project.

TotalEnergies Outstanding Projects

Egina Project

In 2013, three years after the Nigerian Oil & Gas Industry Content Development Act became law, TotalEnergies took the Final Investment Decision to develop Egina.

The Egina field is located in Oil Mining Lease OML 130 and is approximately 200km offshore Nigeria. The offshore development comprises a new build spread moored FPSO (330 x 61x 33.5m dimensions with 240 POB and 2.3MBBLs storage capacity) connected through a sub-sea production system to 44 wells (21 oil producers and 23 water injectors) via Umbilicals, flow-lines and risers.

Egina is TotalEnergies’ third deep offshore FPSO project in Nigeria after the successful delivery of AKPO project (2009) and USAN project (2012). These projects have brought progressive increase in levels of Nigerian Content, and Egina, being the first major project launched after the enactment of the Nigerian Oil & Gas Industry Content Development (NOGICD) Act of 2010, has so far the highest level of local content of any FPSO project in Nigeria:

Employment in Nigeria during life of project: 47 million man-hours (77% of total project workload).
Fabrication: approximately 60,000 tons of equipment fabricated in Nigeria.
600,000+ man-hours of human capacity development training across Egina contracts.
Construction of new fabrication facilities and quayside; Upgrade of existing fabrication facilities.
On December 29, 2018, Egina first oil was achieved with the opening of the first production well on the South Loop. With a capacity of 200,000 barrels of oil per day, Egina has increased Nigeria’s oil production by 10%.

Ikike Project

Ikike field development lies within Nigeria offshore block OML 99 (Amenam-Kpono), situated 20 km offshore, in 20m water depth and approximately 15 km north of the Amenam complex. It is outside the AMENAM unitized area in joint venture partnership with NNPC (NNPC-60% /TEPNG-40%).

The Ikike field is being developed as a satellite tieback to Amenam.

Despite its size and scope, our Nigerian Content objectives for Ikike are not any less ambitious.

The overall target is to achieve 90% Nigerian Content on Ikike with 100% of project management based in-country; 100% of detailed & basic engineering in Nigeria; 100% of procurement by local firms; 3,000 direct jobs; Refresher/On-the-job training for 53 NCDMB trainees; entry level training of 80 Geoscience students as well as infrastructure development support to some schools.

Taking Nigerian Content to the rest of Africa through Intra-African Trade

There are 18 oil-producing countries in Africa. The African continent is also home to five of the top 30 oil-producing countries in the world. The combined daily oil production of Africa was more than 7.9 million barrels per day in 2019, which is about 9.6% of world output. However, the coronavirus pandemic and recent OPEC production cuts have dramatically reduced daily outcome from the Continent.

There is no debating the fact that oil-rich African countries have not benefited satisfactorily from the exploitation of their hydrocarbons. Though they receive significant fiscal benefits from the export of oil and gas, the development linkages to other economic sectors remain marginal in terms of domestic value added and job creation. This is why there is a renewed zeal among these countries to try and extract as much value as they can from the Oil and Gas Industry. This is also why many of these oil-producing African nations have adopted local content policies as a development strategy aimed at increasing the benefits from the Industry.

In most cases, the objective of local content policy or regulation, as the case may be, is to transform the short-term benefits of oil production into long-term local economic development outcomes through capacity strengthening, institutional building and strategic policy tools that promote domestic economic linkages, job creation and the participation of indigenous companies in the sector’s value chain through the supply of goods and services. Governments of these oil-producing African countries often require foreign investors to develop ‘local content’ by creating jobs, opening equity to local partners and investing in local supply chains with the objective of transferring knowledge and value to the local economy.

All of Africa’s 18 oil-producing countries have enacted one form of local content regulatory framework or the other. Even in the mining sector, we have seen an enthusiasm for developing legal frameworks to ensure greater local participation across the continent. Therefore, in most of the continent, local content regulations and institutional controls are now entrenched.

But what has been the impact on the various economies of the countries where these frameworks exist? Are we seeing any significant change in the economic fortunes of these countries beyond the collection of royalties and fees? Are we seeing increased capacity in the key technical areas?

In the last decade, for instance, Ghana has joined the league of oil and gas producers. With its Tilenga Project, Uganda will soon become another oil producer. For its FPSO needs, Ghana had to turn to the Malaysia-based Yinson Holdings. And the experience appears set to repeat itself in the case of Uganda’s Tilenga. More than 65 years after the discovery of petroleum in Africa, the Continent has yet to develop local technical capacity to meet some of the Industry’s basic needs.

However, if the example from Nigeria is a good indicator of the state of affairs on the continent, then we can say, we are not yet there, but we are well on our way. For it was after the passage of the NOGICD Act that Nigeria built Africa’s first FPSO integration quay as well as built and installed six entire FPSO topside modules on Egina. What African countries need to do, as a matter of urgency, is to open the continent to freer exchange of capacity and trade among one another.

The Opportunities

There will be a great opportunity for intra-continental collaboration when the Nigerian Content and Development Monitoring Board (NCDMB) collaborates with sister local content authorities in the continent to share ideas, capacities, and competencies. Nigeria has a lot to export to other African countries in the area of local content.

It will be recalled that in March 2018, the 55-member nations of the Africa Union (AU) signed the African Continental Free Trade Area (AfCFTA) to create the largest free trade area in the world – measured by the number of participating countries. The AfCFTA was intended to connect 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. The agreement was also intended to promote the movement of capital and natural persons.

The World Economic Forum (WEF) describes AfCFTA as a “global game changer” for the following reasons:

Poverty reduction: The World Bank estimates that AfCFTA will boost regional income by 7% or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.
Many and varied economic outcomes: It is estimated that the AfCFTA will increase Africa’s exports by $560 billion, mostly in manufacturing. Intra-continental exports would also increase by 81%, while the increase to non-African countries would be 19%.
Promote trade integrity: an opportunity to promote good governance both globally and across Africa, through the concept of “Trade Integrity” to ensure the legitimacy of the global trading system.
Expected Economic Boost and Trade Diversity. The United Nations Economic Commission for Africa (UNECA) estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. It will diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources. Historically, more than 75% of African exports outside of the continent consisted of extractive commodities whereas only 40% of intra-African trade were extractive.
Growing Small and Medium-Sized Businesses: The elimination of import duties will open up trading activities to small businesses in the regional markets.
Encouraging Industrialization: The AfCFTA is expected to foster competitive manufacturing, which means Africa’s manufacturing sector will have the potential to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
Babasola opined that the oil industry should take advantage of AfCFTA to foster intra-African trade and expand the frontiers of Nigerian content. Operators need to explore the possibilities through collaboration with relevant government agencies of which the NCDMB has a critical role. The TotalEnergies Executive General Manager pointed out clearly that the company remains proudly committed to Nigeria and Nigerian content and will continue to act in ways that promote these ideals. “But it is now time to venture beyond Nigeria and foster intra-Africa business relations to consolidate on the gains of Nigerian Content. Nigeria can earn foreign exchange through the exportation of local content capacities, infrastructure and competencies within the continent of Africa.

Share about us

About admin

Leave a Reply

Your email address will not be published. Required fields are marked *

*