JUNE 2020 VOL. 3 NO. 06 C ONTENTS 4 EDITORIAL 24 INDUSTRY 5 Global Upstream Investments Set for Buhari Kick-starts 15-year Low in 2020 6 PIGB: Stakeholders in Cautious Optimism 8 Intrigues as FG Finally Deregulates $2.8b AKK Gas Petroleum Sector 10 Publication of NNPC’s Audited Accounts Pipeline Construction Signals Openness 15 World LNG Demand to Plummet First …Project to unlock moribund Time in 8 Years 17 NCDMB Inaugurates New Women industries in the North Group, Fund for Women in Oil Sector 18 Treating Asset Protection as an Investment 30 Baru: The Life & Times of a Peaceful, Inspiring and Dedicated Oil Technocrat 32 COMMENTARY: Looking Over Kyari’s Shoulder 34 What it Takes to Get a Marginal Oil and Gas Field in Nigeria 40 JUNE SHORT TAKES COLUMN 42 Fête de la Musique — World Music Day ENTERTAINMENT 44 7 Nigerian celebrities who renounced 36 Law for Entertainment HEALTH NIMASA to Earn N12bn Revenue Annually from Idle 46 World Sickle Cell Day: Special Focus on Floating Dock ...As Jamoh the Cells of a Generation’s Didi Project Marks 100 Days in Offi ce MOTORING 48 Transporters Groan as FG’s Ban on Inter-State Movements Lingers AVIATION 50 Concerns Over Reopening of Domestic Flights PROPERTY 52 Experts Advocate Joint Venture Schemes 21 to Bridge Housing Defi cit Star of the Industry SPORT Dr. Omar Farouk Ibrahim Secretary General, African Petroleum 53 ‘I Will Never Forget This Day’ – Adepoju reminisces Nigeria’s historic Producers’ Organisation he 2018 NNPC Audit- where accountability is the ed account was re- norm, people around him Tleased this month by won’t even notice his pres- the nation’s oil company for ence. the fi rst time in history. This That is why it was often action attracts many com- said that African leaders mendations from the Indus- should concentrate on build- try far and near, and it was ing strong institutions that a promise redeemed by the will midwife a system that Group Managing Director of guarantees accountability, the NNPC, Mallam Mele K. fairness, and justice. It is President alone, all of us in Kyari. It will be recalled that pertinent to note that a lead- various highest positions of while delivering his inaugural er here doesn’t mean Mr. stewardship are leaders. His- speech one year ago, Kyari tory will always remember promised to be accountable us for the positive changes to Nigerians who according we made during our lifetime. to him are the real share- We at Valuechain Maga- holders of the corporation. zine will like to lend our voice Publisher/Editor-in-Chief too and commend NNPC for There is something cer- Musa Bashir Usman tainly wrong with our coun- the publication of the 2018 Acting Editor Audited report. We acknowl- try. A normal act which is Benjamin Ike edged that the report may viewed as a norm in other Deputy Editor climes is always like rocket Fred Ojiegbe not be perfect, but we want to encourage the corpora- science in our own environ- Contributors ment. If not, then how do we Gideon Osaka tion to continue to be trans- always fi nd it diffi cult to do Ironhand S. Chukwuemeka parent in its future dealings. Hauwa Muhammad Lawal As usual, this month’s edi- the right thing? The alien cul- Aisha Sambo tion is packed with juicy re- ture of mismanagement and Graphic Consultant ‘not doing it right’ has pene- Theresa Ogbonna ports for our esteemed read- ers. Do continue to keep a trated deep into our genes to Business Dev. Executives the extent that when anyone Adeniyi Onifade (South) date with us as we strive to Abdulkarim Sani (North) of us decides to do things keep you informed on the Circulation Manager happenings in the Industry right he will be seen as an Danlami Nasir Isah Angel. and across. Online Editor Regards. It is interesting to know Saidu Abubakar that when you pick an ‘Angel’ Photo Editor M.B. Usman amongst us and drop him in Bashir Bello Dollars NB. Feel free to send in your views any of the developed world Legal Adviser and have your say @ Lamir Kasim Idris (Esq.) [email protected] Head Offi ce: Abuja Liaison Offi ce: 1-2 Abu-Rayyan Street, New NDC Layout, Kaduna. SF 3, Rhema Mall, Ahmadu Bello Email: [email protected] Way, Opp. NAF Conference & Contact: 08032324370, 09071492222 Suites, Abuja. [email protected] @thevaluechainng.com thevaluechainng.com 4 Industry 06:20 Global Upstream Investments Set for 15-year Low in 2020 –By Fred Ojiegbe lobal upstream spending and fluctuating exchange rates, while reduced greenfield capital is expected to reach $383 every dollar cut will strike directly spending will make it difficult to Gbillion this year, the lowest to the bone,” said Rystad Energy replace declines with new produc- level in 15 years and a staggering upstream analyst Olga Savenkova. tion coming on stream. These two 29 percent decrease of $156 billion In the beginning of the crisis, factors could impact the stability compared to 2019, Rystad Energy it was assumed that global up- of the global liquids supply in the analysis shows following publica- stream spending would fall by 15- future, changing the industry land- tion of the industry’s first quarter 20 percent in 2020 around $80- scape for good. “Our research in- results. 100 billion below total investments dicates that about 125 E&Ps have With 2019’s upstream invest- in 2019 as operator budgets were thus far commenced spending ments calculated at $539 billion, already lean after the previous mar- cuts, amounting to a reduction of the decline is set to bring annual in- ket downturn. In this new price re- $100 billion in 2020. National Oil vestment to a level lower than that ality, operators were forced to cut Companies (NOCs) are the larg- of the previous downturn. Spending even deeper. est contributors to the global re- is also expected to be largely flat in In terms of percentages, the duction, decreasing spending by 2021, landing only marginally high- drop in investment is comparable $32 billion. Most shale operators er than 2020 at $386 billion. Before to 2014–2015. However, this time have revised their capital guidance the COVID-19 pandemic, Rystad around, industry spending is falling range as well,” Savenkova said. expected total upstream invest- from a lower starting point, which Although National Oil Companies ment would maintain last year’s will quickly affect industry perfor- would not normally be expected to levels, both in 2020 and 2021. mance, even in a short term. make such drastic cuts, the $25/ Shale and tight oil investments In 2014-2015, according to Rys- bbl of oil equivalent (boe) environ- is expected to take the biggest hit, tad, the 27 percent fall in spending ment has ushered in a new reality, now forecast to fall by 52.2 per- did not significantly impact produc- where even the most reliable com- cent year-on-year to $67.3 billion. tion performance as companies panies are tightening their belts Oil sands investments will follow, were able to adapt and streamline. and embracing deeper cuts. Im- with a decline of 44 percent to $5.1 Within all supply segments, some portantly, first quarter reports also billion. Other onshore investments players even managed to increase revealed that almost all majors are are forecast to fall by 23.4 percent y-o-y production. Virtually no pro- seeing production decline as an in- to $182.4 billion this year. duction was shut-in, even at the evitable part of survival, choosing Least affected in terms of de- facilities with the highest breakev- to optimize cash flows and provide flated investment is the offshore en prices, as the costs associated sustainable dividends. segment. Offshore deepwater with shuttering production were “Companies are now highly risk- spending is estimated to fall by too high. Spending cuts were main- averse, with finances and opera- 15.6 percent to $69 billion this year, ly delivered through lower supply tional performance under intense while offshore shelf will lose about chain costs and by cutting out un- pressure. Nevertheless, E&Ps will 14 percent, landing at $59.5 billion. necessary expenses. need to prepare for opportunities “As the impact will be more se- However, the industry’s ability to and threats that may await them vere than in the previous downturn, keep high costs per barrel is now once the crisis is past. Their future companies are fiercely defending being put to the test, with almost success depends on how prudent shareholder value and pivoting to- all supply segments cutting pro- they are in adapting new strategies, wards more conservative spending duction in 2020. In the longer-term, taking advantage of emerging op- strategies in the near-term. As the reduced brownfield capital expen- portunities and mitigating risks,” global upstream sector contends diture will make it more challeng- Savenkova concluded. with low prices, falling demand, ing to maintain existing production, 5 Industry 06:20 PIGB: Stakeholders in Cautious Optimism –By Fred Ojiegbe here is much anxiety and However, industry stakehold- commercial, regulatory and policy cautious optimism over the ers have continued to express institutions. It will make institu- Tpassage of the much-await- cautious optimism as they await tions more apolitical with well de- ed petroleum industry governance the passage of the bill. Dr. Frank fined criteria to select board mem- bill (PIGB) as the month of June Ihekwoaba, Chief Finance Officer, bers based on experience and comes to an end. Eroton Exploration and Production competence for value addition. This is based on promises Company Limited, while express- “There will be interconnectivity of made by government officials that ing caution, stated that the PIGB the value chain in terms of effec- the PIGB will be passed this June.