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Bright future for joint ventures (1)
SINCE the beginning of Gulf War II in 2003 or perhaps since United State led invasion of Afghanistan after the event of September 11, 2001, oil prices have been on steady rise. Presently, it is hovering around $60 per barrel. The rise in prices of crude oil, apart from the war in Iraq is traceable to two other factors; (a) rise in demand from the United State and china; (b) strain global productions and refining capacity.
The demand in U.S is due to increase in local consumption, which could stabilise until next winter, when there is another natural increase in demand from that country. But the increase in demand from china is predicated on the giant strides being made by china in the area of economic growth leading to increase in industrial productions, which lead to additional purchasing power and thus increase in production and consumption for the Chinese which also result in demand for more cars local and increase industrial output and of course fuel to power the industries.
China’s case could also be explain by the fact that more international industries and manufacturing giant are opening up and even some out rightly relocating there. It therefore stands to reason that as long as china continues its phenomena growth there is bound to be increase in international demand for oil.
Additionally, strained global productions of refining capacity have also pushed prices up. This is caused by, among other factors, the unrest in Venezuela – one of world’s major oil producers and an  important member of OPEC – in 2004.
Nigeria is not also left out in contributing to the upward trend in the oil prices. First is due to violent activities of militant groups in the Niger Delta and by various pronouncement of Asari Dokubo, leader of the Nigeria Delta volunteer force, which took up arms against the government and oil producers in the Niger Delta. The various report of kidnapping and hostage – taking of oil workers also sent disturbing signals to the international community.
Slightly noticeable is also the aftermath of the Tsunami tragedy in the countries of south East Asia, which are presently rebuilding.  These reconstruction efforts have also contributed to increase in demand due to the fact that construction machineries need fuel to power them.
It is also noteworthy that Iraq which oil exportation has been embargoed since Gulf war I up until now, has its production reduced drastically.
However increase in demand without corresponding increase in supply pushes prices up. Although the consumer has to pay more for such; it has led to more money in the hands of government and the players in the oil industry, which invariable leads to additional investments in the industry.
A case in point is the pronouncement by the government that the sum of 39 billion has been made as excess revenue from crude oil sales so far.
Recently, zenon Oil Limited, a local player in the Nigeria down-stream sector has entered the big league by announcing its entrance into a joint Venture with another company for the establishment of a refinery in Nigeria. This is a step in the right direction, indicating that oil industry is continually looking inward and finding means of sustainability by local private investor with help from foreign companies resulting in joint venture undertakings.
As the industry positions to witness continued inflow of investment for some time, it behoves any local investors to be prepared in advance. Zenon oil having shown the way, other foreign companies which are going to invest in the sector will be willing to partner with local companies or individuals with enough financial muscle through joint venture partnership.
By Bayo Bello Esq- first published in Guardian on Sunday of August 21, 2005

 

Bright future for joint ventures (2)
The following is an insight to typical t joint venture Agreement.
Joint venture Agreement is the legal heart and soul of the joint venture, as such it must be comprehensive and unambiguous in its terms and conditions. In addition to number of relatively standard provisions, joint venture agreement should seek to anticipate all of the material contingencies that might come up    during the life of the joint venture and prescribed means of dealing with them.
This is particularly important in an international arrangement if the foreign joint venture partner(‘’JVP’’) is not accustomed to doing business in Nigeria or any emerging market for that matter many potential investors are understandable afraid of putting their money in emerging market- but with unprecedented and unimaginable profits being raked in by investors in telecom (GSM) subsector in Nigeria, the risk is worth the while – due to their lack of understanding of Nigeria regulatory environment, the security concern, corruption etc. all of which may be compounded by need to provide for the further disposition of rights in technological assets upon termination of the joint venture. The result more often than not is far more complicated comprehensive joint venture agreement than either party might customarily employ in its domestic affairs.
The agreement will serve as the critical source document in resolving disputes that arise between the JVP, and can be view as a combine ‘’marriage contract’’ and ‘’constitution’’, Difference between JVP will usually not result in litigation or arbitration. An unfriendly dissolution is also rarely desirable, especially in the early years when the joint venture can only distribute loans to the JVPs in the event of   Emphasis should be laid on                         the joint venture agreement considered weight and persuasiveness in                            the relationship and detailed agreement should be viewed as the  first step establishing the enterprise.
Prior to the drafting of a J.V agreement, it is essential that due diligence checks on the background of each partner company or individual be conducted. This is necessary in other that dirty money or unviable partner company does not contaminate the venture. This is important in the case of Nigeria, as the Economic and Financial Crimes Commission (EFCC) frowns at such laundered money, and if care is not taken such money or rogue directors could affect the business of the proposed new company. Bank of Credit and Commerce International in Pakistan, Erron Corporation in USA, Yukon in Russia and lately AIG in USA are example of such companies, even though the problems of these companies may stem from the political manipulations by the home countries.

 Important general provisions
As with any other agreement, each joint venture agreement is unique and takes into account the particular relationship contemplate by the JVPs, as well as local and foreign law considerations. There are certain provisions that should appear in all such agreements
Commencement
The ‘’whereas’’ provision or other pre factory of the agreement serve the same purpose as they do in other contracts – setting forth the underlying purpose of each party for entering into the joint venture agreement should litigation or arbitration over a particular provision of the agreement arise to later date, the intend of the party as reflected by the commencement clause may provide the best evidence of contemporaneous understanding of the parties in case of dispute and may influence the outcome of the controversy.
Example of commencement clause:
Whereas the companies have agreed to enter to this J.V agreement for the design, procurement, financing,  construction, commissioning, operation, processing of natural gas for the purpose of the manufacture, transportation and sale of LPG , naphtha and diesel or any other products.......
Definitions
As in contract for major transactions, the first substaintive section of agreement should set out the definitions of terms that will have particular significance to the undertaking. In a multinational situation, this is particularly important to ensure that both partners have some understanding of essential terms. This is more so important in a venture involving technology and technical connotations.
Choice of language clause also may be appropriate if a version of the agreement is being prepared in a foreign language. A choice of language clause should specify which the official version is.
“In the event of an inconsistency between any of the terms of this agreement and any translation thereof into another language the English language version shall apply.’’
Currency provision
Another standard provision of a multinational agreement, to the extent royalties or other payment by one party to the other are required is a payment or currency clause that prescribed the currency in which payment are to be made and, if agreed for currency fluctuation over the terms of the agreement sometimes, the agreement prescribed a list of acceptable currency fluctuations a tolerance of sorts beyond which the parties share the risk of unanticipated relations.
By Bayo Bello esq- first published in Guardian on Sunday of August 28, 2005

 

                                          

Nigeria 2005 oil and gas acreage bid
Compliance with the Enabling Law
The 2005 Oil and Gas Exploration & Production Acreage Bid Round has come and gone but has introduced many novelties too important to ignore by the stakeholders. Some of the new rules introduced by the ministry of petroleum resources may seem to make the bid more cumbersome but it shows that Nigeria is fast catching up with the rest of the word in embracing the best global practices in oil business and it also made the biding process more transparent.
Although the major oil producers operating in Nigeria ‘’boycotted’’ the bid rounds, it bid not take the shine off the bidding process in which about 60 per cent of the blocks on offer were sold, government raking in $3b on signature bonuses and bringing in new investors consisting of Chinese, Korean and local investing companies.
The bid round introduced the following new modifications as part of new strategies for commercial improvement measures which in the main is aimed at generating more revenue for the government of Nigeria. The modifications are as listed hereunder:

   Zoning of the available acreage (Niger Delta & deep off shore) to six zones terrain and maturation, targeting the spectrum of investors, majors, independents, local operators, down-stream operators and local content vehicles.
Registration of bidders: All bidding companies were enrolled in block/zones of their interest, providing all required technical, financial and legal information and specifics as to their particular role in operations i.e as strategic partners, operators or both.
Technical Evaluation: The bidders are qualified and participation in interest assigned to strategic partners and made public in interactive sessions with the bidders in a parallel session. Operators are also qualified in interactive sessions to participate in the commercial bidding.
Commercial Bidding Conference: This was held in singles over two days, on the basis of established parameters & weight via an automated process. The objective is to determine the operator for each block in an open and transparent manner, and obtain a fair value for the sale. Only operators participated and the blocks were awarded on the day of bidding.
After the bid has been auctioned and sold, it now behoves the ministry of petroleum Resource through its department of petroleum resource (DPR) as the supervisory agency to monitor the usage in which the licenses and leases are put. We might want to ask, what usage could a licence be put, if not for the purpose of which it was obtained albeit at a huge sum of money?
However, experience has shown that sometime past, acreage sold to some companies gotten through the patronage in place during the military era, were in turn sold abroad without due regard to the rules and regulation guiding such sale. And the eventual buyer with no valid contract with Nigerian government would come to prospect and mine oil without regard to the law of the land and without any sanction imposed on such erring companies.
In view of the above, section 14 of the first schedule to petroleum Act laws of the federation of Nigeria 2004 CAP P10 provides that ‘’without prior consent of the minister, the holder of an oil prospecting license or an oil mining lease, shall not assign his license or any right, power or interest therein’’. However, the minister’s consent may be given on payment of the prescribed fee or such premium or both.
Additionally, S.16 of the same act provides that the minister shall not give his consent to an assignment unless he is satisfied that:

The issue of compensation is also of importance here as the Petroleum Act stipulate that the holder of an oil exploration license, oil prospecting license or oil mining lease shall pay fair and adequate compensation for the disturbance of surface or other rights to any person who owns or is in lawful occupation of the licensed or lease lands.
The law also make provision to safeguard and empower Nigerians, especially people in oil producing areas by providing within it an avenue of social responsibility towards the people by the licensee. S.38 imposed an obligation on holder of oil mining lease (O.M.I) that within 10 years from the grant of lease, the lease shall ensure that:

This is a clear case of empowerment and if clearly monitored will give a definite edge to Nigerians in the area of employment in oil and gas sectors and will reduce the agitation by Nigerians who increasingly complain of discrimination. Example are situations where oil producing companies employ expatriates far less qualified and experience as Nigerians.
The Act also prescribed penalties for non payment of fee, rent or royalty due for period of one month. The ministers may:
Enter into and upon any land, property or premises possessed or occupied by the licensee or lease in connection with the license or lease; and

FINALLY, Licensee must know that their purchase of oil block and acceptance of signature bonus is not ‘’license’’ for them to engage in illegal activities or connived with countries and organisation whose interest is not in tandem with national interest and aspiration of Nigeria or who are known enemy or country enemy of Nigeria.
This was the scenario during the apartheid regime in south Africa where the apartheid government regarded Nigeria as its enemy because of its being a frontline state and against the regime. The apartheid government was about securing a foothold in Equatorial Guinea and using the country and some companies in that country with the aim of conniving with Nigerian oil companies and consequently getting a foothold in Nigeria.
The minister has a right to revoke any oil prospecting or oil mining lease if it is discovered that the licensee or leasee’s company is being controlled by a citizen of or company who is a subject of another country which is:

The minister may also revoke any OPL and OML if the license or leases is not conducting operation continuously, vigorously and in accordance with good oil feed practice of fail to comply with rules and regulation governing the award of license, fail to pay his due, rent or royalties of fail to furnish such report on his  operation as the minister may lawfully require.
By Bayo Bello esq- first published in Guardian on Sunday of October 23rd, 2005

Management  and control of joint venture
In determining control and functions, the joint venture partners (JVP) often will wish to provide for equal representation and equal control at all levels of decision-making and over all aspects of the joint venture operations. The first step in ensuring co-management authority will be setting up a board of director comprising an equal number of representatives each joint venture agreements often tilt towards representation in proportion of equity contributions, which in turn sometimes introduces another problem i.e is representation to be based on paid-up capital or should unpaid capital be taken into consideration in the determination of equity contribution based representation.
However, for the purpose of effective control and monitoring of investment, most joint venture agreements settle for proportional representation vis-a-vis equity contribution of paid-up capital. Management of the joint venture company involves more selection of a representative board of directors. The officers of the joint venture company also must chosen with a view to maintenance of equal joint venture partner participation and continued liason among the joint venture companies.
In any modern joint venture Agreement, provision for arbitral proceeding is always included for settlement of dispute. However, in a situation where joint venture partners have equal equity contribution and as such equal representation with no resort to veto, stalemate or deadlocks often occur, which in cases would not be referred to arbitration. Apart from arbitration, other internal resolution mechanisms are available to settle disputes. This is necessary as, unlike shareholder of a public limited company, the joint venture partner will have no ready market for its shareholders and share will be subject to transfer restrictions, premature termination of the joint venture or protracted and costly litigation can result from deadlocks unless the drafters anticipate major area of conflict and build into the agreement acceptable dispute resolution mechanisms.
The mechanism may include (a) The presence of tie-braking director (a Tie-breaker) elected every other year alternately party by each joint venture partner or filled by an unaffiliated third party: (b) A delegation of ultimate authority with respect to prearranged issues: (c) Buy sell options; (d) informal dispute resolution procedures; (e)  Arbitration; or (f) A combination of one or more of these mechanisms.
Tie-breaker: The joint venture agreement could provide for uneven board by consenting in advance in the Agreement to elect a particular person in specified circumstance and leaving the tie breaker position vacant until a deadlock occurs.
Delegation of Authority: A particular director or group of directors could be designated by the joint venture partners with the ultimate authority in the event of deadlock. This could be carried out where subject matters of decision are divided between directors, e.g. division into operational and financial matters. In Nigeria where some directors are given specific functions and are designated executive directors, a particular executive director may have the final say as far as his area of control is concerned in the event of deadlocks. Although division of ultimate authority by the partners may be the best solution, it will not be feasible or practical in all situations. There is further problem of resolving where particular matters fails. For example; an operational issue also may involve financial matters.
Buy-sell option: This is an extreme method of dispute resolution in joint venture that allowed a termination one joint venture partner’s interest while allowing the company to continue under the sole control of  the other joint venture partner. The method may work as follows: either has the right to make an offer to buy partner B’ stock for 100Million, B has the choice to (or is require to) either accept the offer or buy A’ stock for 100million.
In the alternative, provision could be made to such partners to submit sealed bids for other shares  the party specifying  the higher price will be entitled  to buy the other shares such provision would ensure to the large extent that a fair offer will be made and also would ensure a resolution of the deadlock and a  continuation of the enterprise albeit with shareholder gone.
The crucial determination in a buy-out is the price per share to be received; several method are available, use of book value, capitalised earnings, mutual agreement, appraisal, or a combination of one or more of these methods.
Arbitration; This is the last resort for resolution of disputes or disagreement arising in joint venture.  It is now standard clause joint venture Agreement. Indeed, a joint venture agreement is not complete without an arbitration clause.
The primary advantage of arbitration, if properly conducted, is that it generally can resolve controversies more quickly that court litigation and may more readily continuation of joint venture during the time a dispute is being resolved. At this juncture, it is important to note that for Nigeria joint venture partners in oil and gas industry, conflict resolution through Arbitration involving local project should be done locally. There are increasingly competent and knowledgeable arbitrator professionally except in a situation where partner countries should arbitrate.
One of the most important steps in arbitration is the drafting of an arbitration clause. In every contract executed in the oil and gas project, a lawyer knowledgeable in arbitration or an experienced arbitrator must be retained to draft the arbitration clause. The arbitration subject is so wide and important that in our subsequent writing under this column we shall endeavour to treat solely as a topic.

 

Nigeria’s gas potentials and the need for legislation
There is now increasing world focus on the production of natural gas, which provides cleaner energy and is less harmful to the environment. This arises from the real impact of global warning and green house effect (occasioned by mainly environment destructive carbon emission from burning fuel oil) which is gradually having a toll on the earth system through more devastating natural disasters tsunamis, hurricanes, mudslides, earthquakes – in recent time, Nigeria should brace up for this upcoming challenge by, among other things, harmonising its laws and reviewing all legislation as regards gas productions. Though Nigeria for over 30 years has established itself as a leading producer of crude oil, she is known in energy circle as ‘’ a gas province with only a little pool of oil’’.
The country’s natural gas reserves is put at more than 166 TSCF (trillion standard cubic feet), with her current gas production put at two billion SCF, which is the associated gas (AG) produced in the course of crude oil production. Until recently, virtually all of this had been flared, with the rest deployed to re – injection to aid secondary oil recovery in oil companies operational areas.
Current gas flare in Nigeria is put at about 63 per cent of the two billion SCF daily production – this is obscene and probably the highest in the world vis-a-vis crude production, However, despite government’s gas monetisation efforts, which has included gas flare penalties, incentive and tax credit to encourage gas – based projects, virtually all the major players failed to beat the year 2008 flare-out date (when all gas flaring is expected to stop in all oil and gas fields in Nigeria as directed by government), which has been further extended.
To this end, not only is gas re-injection being intensified, all the companies are involved in giant gas-based projects tied to utilising the gas being produced in their operation areas. It is for this reason that NNPC’s joint venture partners, such as SHELL, ELF and AGIP have been active in the Nigeria liquefied Natural Gas Limited (NLNG) not only as suppliers of gas feed stock from their various fields in Niger Delta, but also as investors.
Mobil, chevron and Texaco also have several projects geared at either taking Nigeria’s natural gas to the international market or utilising it for independent power production (IPP) in the country as well as the west African sub-region. This move is being fully backed by government in its desire to step up economic activities and realise the nation’s full economic potentials.
Also in recent past, the federal government entered into contract with General Electric Company to build seven natural gas powered medium size power stations to be sited in Niger Delta because of proximity to natural gas production companies, The power stations are estimated to cost N330 billion (US$2.5 billion) together with ancillary projects such as gas development and transportation facilities to deliver gas to the plants for power generation. It is unimaginable that the gas to be used to power these stations is current being flared.
With its associated and non-associated gas reserved estimated to be well over 166 trillion SCF, Nigeria is ranked among top 10 countries with the largest gas reserves in the world, what this portends is that if demand for crude oil dwindles, Nigeria will continue to make oil from gas sales.
Act of 1979, which was to take effect from 1984. Section 1 of the Act states: ‘’.... no company engaged in the production of oil and gas shall after January 1, 1984 flare gas produced in association with oil without the permission in writing of the minister. Section 4(c) prescribed forfeiture of concession granted as penalty for the offence of gas flaring after January 1, 1984.
Section 2 also empowers the minister to order the withholding of all or part of any entitlement of any offending person towards the cost of completion of implementation of desirable re-injection scheme or repair or restoration of any reservoir in the field in accordance with good oil field practice.
However, the military government of that period could not muster enough will power to implement the no-flaring law. In a subsequent regulation to the above-referred enartment, it decided to issue to some companies ‘’certificate of continued flaring of gas’’ by making exception to the law. Consequently, all the major oil producing companies eventually has this certificate, which enables them to flare gas with impurity and continues the destruction of the Niger Delta environment. In order to reap abundantly from the expected increase in demand for natural gas, the government should pay more attention to the development of all infrastructure necessary in this sector by building more LNG plants rail links and gas storage tanks.
It is, however, remarkable that some private companies, in conjunction with some established oil companies, have begun commercial production of liquefied Petroleum Gas (LPG) by building processing plants in Bonny. Also, a $600 million, 998-kilometre west Africa Gas pipeline (WAGP) Project that will traverse both on and off shore from Nigeria’s Niger Delta region to its final planned terminus at Ghana has been kicked off. This is an ambitious project initiated by the Nigeria government and it will go a long way in boosting not only the country’s economy but also that of its neighbouring countries of Benin, Togo and Ghana.
Furthermore, Nigeria and Algeria are seeking world bank’s assistance to construct a $7 billion, 5,955-kilometre Trans-Sahara Gas pipeline to deliver natural gas from the two countries to European market. The pipeline route is expected to extend from North Africa, crossing the Mediterranean and making land fall in Almeria, Spain.
The above development shows that despite its shortcomings government is already preparing for future onslaught on demand of the country’s gas. More has to be done, as demand from Europe which is the highest net importer of Nigeria’s gas, is on the increase, as cities f Europe are experiencing high population density and extensive urbanisation have contributed to increased gas usage within western Europe, Environmental concern have also prompted many European countries to favour the use of gas over coal or oil and thus further strength the role of gas in Europe’s energy economy.
Furthermore, in most European countries the production has been forecasted to decline significantly over the next decade, as existing gas fields mature and new discoveries are generally small. Europe’s declining gas production means it is increasingly dependent on imports from outside the region. Nigeria is Europe’s second-largest (LNG) supplier after Algeria and is expected to expand its LNG export capacity to compete with Europe’s North Africa LNG suppliers.
The foregoing is the scenario in the energy sector today. Government, therefore, needs to harmonise all laws relating to gas exploration, production, marketing etc, Nigeria’s marketing capacity of gas needs to be enlarged through enabling legislation.

Gas to liquids: The new issue in oil and gas world
ONE was privilege to attend late last month the first international petroleum Technology Conference (IPTC) which took place in Doha, the capital of Qatar, where the bussword among the major oil stakeholders in the world is gas to liquids, or GTL for short.
It has been said that the world’s commercial GTL era will start in 2006, in a simple or layman’s language, the difference between LNG and GTL is in the end product, because both are compressed natural gas turned into liquid for the purpose of transportation and then turned back to gas for the end users in the cause of LNG.
In the case of GTL, the end product remains liquid for the final consumer to be used as diesel in motor vehicles, and liquefied petroleum product (LPG). It must, however, be noted that the technologies for both LNG and GTL are not the same. Although the GTL technology dates back to 1913, when a Germany company discovered the probability of a mixture of higher hydrocarbon and oxygenated compound being produced through the catalytic read of hydrogen and carbon monozide, a pilot plant was not built until 1993 in Bintulu, Malaysia. The plant was designed to convert 110 million cubic feet per day (CF/D) of natural gas  into 12,500 b/d of high quality GTL product.
The driving force that propelled the oil and gas industry into focusing on GTL and in fact thinking on it as a motor and of the future is yes to grow. Motor vehicle which continue the faced with the challenge to the demand in a sustainable way by, among other things investing in alternative fuels.
By 2020, it has been predicted that up to 1.2b cars will  be on the road worldwide. This is good new for car manufacturers; growing underscore the portend of the global language of shanghai, Mumbai or Moscow are inevitable            by the presence of pall of among Decades of small and largely unenforced environmental regulation and policy on sustainable development, couple with languaging have meant growth indeed              delegation, should demand for mobility continue to rise unchecked, the environmental implications for our world is monumental. It is mostly agreed that transport contribute up to 25 per cent of total global energy related carbon dioxide (Co2) emissions. Of this road transport account for so payment and passenger vehicles 45 per cent. For car manufacturers the challenge is clear satisfying the world’s demand for mobile without sac    the above in mind, the industry has no choice than to develop an ultra-clean diesel fuel that is of lower toxicity and green house emissions and greater efficiency in  energy use. Thus, resort was made to develop GTL into commercial usage. GTL technology has been argued as the best so far more advantage than existing system. The system generate up to 40 per cent less solid waste than conventional refinery. The type of waste generated also differs; while GTL generate bio-sludge as waste, the conventional system generate more of all other types including harzardous waste.
Furthermore, GTL fuel in motor vehicles consumes fewer petroleum resources per distance travelled than with conventional diesel. This has major advantage because the combustion of less fuel for same distance travelled Can reduce negative effect on urban air quality   and with significantly emissions of acidifying gases. GTL, technology causes less air acidification, smog precursor and other release into the air than refinery technology. Although it is discovered that while green House Gas (GHG) emission from production and upstream processes of the GTL system are higher compared with refining based system, the advantages in the fuel consumption phase which is minimal,            for those differences and its commercialisation also extends the availability of world oil reserves, as attention is shifted to gas production. Due to positive response from early users of productions in the market where GTL have been launched, they have rapidly growth market show due to its emissions per      and because they are at the leading           new document on the fuels market fact that contribution of GTL produced be done through existing fuelling nature and can be used in existing vehicle makes it more cost effective option for suppliers than other alternative fuels, and also for drivers who can another advantage of a new fuel without changing vehicles.
The comparison of GTL fuel with other alternative fuel such as compressed natural Gas (CNG) and liquefied petroleum gas (LPG) shown that GTL is the most cost effective alternative fuel for the replacement of petroleum based products and in reducing local emissions.
THE flexibility of GTL, fuel is another attractive feature for the market. In particular, the use of GTL in a blend opens up growing opportunities in the light of the increasing use of diesel powered vehicles. In france diesel makes up 70 per cent of new registrations and in October 2004, total sales of diesel passenger cars in western Europe outstripped those gasoline powered car for the first time – that trend looks set to continue. It is however noteworthy that in the short to medium term, GTL fuel production will be small only 3-4 per cent of total diesel demand by 2020 – so crude oil will remain the main source of transportation target GTL fuel at particular  market          emissions performance an offer the most significant advantages.
The coming into commercial consciousness of GTL technology representing the production  of better alternative fuel, present another opportunity for gas rich countries such as Nigeria ( Whose proven gas reserve is more than its crude oil reserve) to further diversity their gas monetisation options and to improve returns on investment.
Although it was in shell’s Malaysia Bintulu plant that the first plant for GTL , technology was built as a test case, it was petroleum and gas corporation of North Africa ( protect that built the world’s first and largest commercial GTL plant (10,000b/bp)  in mugged       2002 However, Qatar, branding itself, the GTL capital of the world, has taken the qualitative by attracting investigation of                       lion with the building of the Oryx plants          announcement by other companies of               to build seven other GTL  plants in the started the investment frency in GTL country, The 34,000 b/pd Oryx GTL be commissioned by the end of this year similarly in Nigeria, chevron and NNPC  developing a similar GTL facility at            The advantage to Nigeria in the establishment of this facility is immense, including participation in a growing international business, minimization of value for exports derived from gas and a step up the technology ladder.
Nigeria will become one of the leaders of the GTL industry and can expect to develop a new range of skill appropriate to that position . This may further enhance the chemical processing industry already established in the country.
Construction is on – going  at the plant and is expected to be completed by 2009 to produce 34,000 (b/bp) of premium quality diesel and naphtha products, with a small amount of LPG. Also Oklahoma, United nation based syntroleum and its partner hope to developed a GPL scheme at Aje field in Nigeria when the nest four years that could lead to liquids productions of 1.4 b/pd. This is to take advantage of 170 million cubic feet of              in the Niger Delta, equivalent of the barrels of oil.
Additionally, Australia has also expressed interest in developing its GTL facility around this world; countries with significant gas reserves are new alternative for their monetisation.
In subsequent articles we shall analyse the challenges of the practitioners in the preparation of contracts involving any GTL technology product.
Compensation  in oil and gas industry:
What the law says and what is obtainable                                                                                                
Where eventually amount to be paid as compensation was presented by one of the parties in the court for adjudication. The court shall assure the cause of the land or interest injuriously affected as at the date immediately before the grant of the license and shall assess the residual value to the claimant of the same land to interest consequent upon and at the date of the grant of the licence and shall determine the loss suffered by the claimant of the difference between the value so found if each residual value the lesser sum.
A good understanding of this section by the payer and the claimant of compensation will solve a whole lot of problem as in a particular claim the          of valuation may            two million for example, where in a large compensation paid a building upon the land was completely dated through the demolition before a pipeline could be laid, the value of compensation to be paid on the building shall be different from that of the bare land  not affected injuriously ( although within the route of pipeline) the value to be paid on the building before the grant of the license and the value to  be placed on the bare land would be the value of the land as at the time the licence was granted.
Of note the section 20(4) oil pipeline Act which says that the compensation shall be awarded in respect of an occupied land as defined in this area have disowned that there is usually no land that is occupied. As far as compensation in oil industry is concerned, villager and communities as far as the kilometre from areas seemly uncoupled will come with several theory of ancestral burial sites, shrines and         duties to claim compensation. However, in order to reduced the protracted argument and negotiation vis-a-vis compensation, some oil producing companies have designed procedure and guidelines upon which compensation payment (whether for laying of gas pipeline for spillage – causing pollution – and       activities        on acquisition of land) is based. This however to be criticised as being          as against         as laid down by law. These procedure and guidelines provide a good starting point for negotiation and dispenses with preliminaries            . It is however, of importance to know the difference in the law as introduced in        of settlement of dispute between oil pipeline license and                             land and owner or occupier of land on the other hand. As land owner                     licence and landowner or occupier in compensation will eventually be referred to high court in the whose jurisdiction the dispute of $ 96 and 96 of  Act CAP constitution of federation of Nigeria 2004, which provide for reasonable compensation by mining       for disturbance of         rights to owner or occupier of the land in addition to          of compensation for destruction of crops, economic building and that if there is disagreement as to amount to be paid, the dispute shall be referred to the appropriate minister, who shall decide the amount to paid and such amount shall be paid within 14 days of the minister’s decision. The question that arose from the provision of the above section is; has the jurisdiction of court been done away with, by these provisions? One interesting thing to note is  that the law does not sat that the decision of the minister is fine, which gives room for dispute to still explores the court for publication where the decision of the minister is        either or both parties, In any one, the law would be      with the provision of the constitution of Nigeria section 27a (1) which gives       power in state High Court to hear and determine any evil processing in which the tendency or extent of a legal right, power, duty, ability, privilege, interest, obligation or claim is in issue or to hear and determine any criminal           involving or relating to penalty, punishment of any official committed by any person’’. It therefore          that the High Court has         to determine any dispute relating to compensation and any low        is inconsistent with the constitution shall be null and    to the extent of the              additionally, the law has also   for acquisition of sacred  recognition of our traditional system.
Section 8 (1) of the mineral and mining Act provide that ‘’No person shall in the course of prospecting or     out operation in or under any area held to be sacred or permit injury or destruction of any tree or other thing which is the subject of veneration. Where any question arises under this section as to whether an area is held to be sacred or a true or thing in the object of veneration, the question shall be decided by the Governor of the state whose decision shall be first.
The above, although the jurisdiction of the court in compensation claim for  “place, correct  with the fresher because empirical evidence of such location would only be known to local people. It is quite right for the governor to adjudicate custom of his subjects. The danger here is that the decision may be and continue eventually settle the   experience has shown that communities in oil producing areas prefer mediation by third party rather than one     with official of oil companies in  dispute to an end        law and competent valuers knowing this     that of the day everybody will go home rest assured that they have not been cheated as far as the issue of compensation claim is concerned.

 

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