Ethics & Professionalism In The Nigerian Oil & Gas Industry

Presented by

Dr Jude O. Amaefule Vice Chairman/CEO

Emerald Energy Resources Limited Lagos, Nigeria At The Institute of Petroleum Studies, IPS

University Of Port Harcourt

Port Harcourt, Rivers State November 30, 2011

Protocols & Presentation Summary

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

The Global Energy Challenge

World energy supplies need to grow to meet humanity s globally growing energy needs  The global energy industry has the challenge to meet those needs in a way that is safe, secure, affordable, honest, and environmentally responsible.

DR JUDE O. AMAEFULE PRESENTATION AT IPS-UNIPORT ON NOV. 30 2011
3

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Meeting the Challenge

E & P companies continue to discover commercially producible oil and gas in sizeable quantities around the world  Continuing technological innovation enable E & P companies to locate and economically develop new fields, and to extend existing fields and increase efficiencies in them

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011
7

The Most Rewarding Profession

E

& P companies play a critical role in meeting humanity s rapidly growing demand for oil and gas.  The best E & P companies consist of teams of professionals who enjoy meeting that need by combining honesty and integrity with the daily pursuit of technological innovation and operational excellence
DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011
8

Some Recent Supergiant Finds Around the World

Year 2010 2010 2010 2009 2009 2009 2008 2007 2001 2000 2000 Name Perla Windjammer. etc. Leviathan Poseidon Tiber Lake Albert Carioca Bohai Bay Azadegan Kashagan Abadi Location Venezuela Offshore Mozambique Offshore Israel Offshore Australia Gulf of Mexico Uganda Campos Basin, offshore Brazil Offshore North East China Iran Offshore Kazakhstan Offshore Indonesia Size 16+ TCF 3-4 TCF 16+ TCF 7.6 TCF 3 BBO 2.5 BBO 10-33 BBO 7.5 BBO 26 BBO 9-11 BBO 5+TCF

Source: Signet DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

9

The outlook is bright globally



Many regions with large potential additional oil and gas reserves remain underexplored or unexplored
Location Offshore Mexico/USA Offshore Brazil Russia Eastern Mediterranean Central Asia Australia Indonesia/China Potential additional reserves 20 BBO 123 205 BBO 145 BBOE 68 BBOE 60 BBOE 27.5 BBO/BBOE 73.6 BBO/BBOE
Source: Signet
10

Selected underexplored regions Gulf of Mexico Santos/Campos/Espirito Santo West Siberian Basin Nile/Levant Basins Caspian Basin Southern Georgina Basin Southeast Asia

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

 at our front door, Africa Has Great HC Potential - 1

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

11

Source: USGS

at our front doorNigeria is Relatively Underexplored - 2

Source: USGS DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

12

at our front door- 3

Source: HRT Participacoes DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

13

and in our backyard

Sud Province, North-Central Africa: 7.31BBO, 13.42 TCF, 353 MMBO NGL

Source: USGS DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

14

Crude Oil Production by Region-Last 30 Years

15

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Key Lessons
Forward Forward-thinking E&P companies focus on building shareholder value, and know that best practices is the foundation for long term success  Excellence and integrity in all aspects of their operations, being good employers, and being good citizens in their host communities are manifested in higher returns on assets, lower production costs, better safety records, which will create better profit margins.
16

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Nigeria s Underdevelopment as Measured by the HDI

HDI (Human Development Index) is a summary measure for assessing long-term longprogress in three basic dimensions of human development: development: a long and healthy life, access to knowledge and a decent standard of living. living.  Nigeria s HDI value for 2010 is 0.423 in the low human development category positioning the country at 142 out of 169 countries and areas.
Source: UNDP Report 2010 DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011
17

 The

Wealth Creation Triangle

RESOURCES

WEALTH($$$)
CAPITAL TECHNOLOGY

Nigeria Has Abundant Resources, Limited Technology & Inadequate Capital

18

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

The Petroleum Industry Drives The Nigerian Economy 30% GDP; 85% Govt Revenue; 95% Of Foreign Exchange

Power $$$

Agriculture

Refinery Fuels

Petrochemicals

Oil & Gas Education

Banking/ Finance Insurance
Infrastructure
DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011
19

Pharmaceuticals

Manufacturing

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

20

Summary of E&P Challenges In Nigeria

         

Youth restiveness & lack of host community empowerment High Capex & Opex Low Nigeria/Local content Lack of Sustained rule of law (sanctity of contracts, regulations & legislation) High cost of project financing Low human capacity development Lack of ethics & integrity Energy Poverty Poor Corporate Governance Inadequate Capital
21

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Business Drivers of the Oil & Gas Industry

   

Reserves Replenishment & Growth Productivity Enhancement Reserves/Production Ratio Return On Assets (ROA), Return On Invested Capital (ROIC), Return On Equity (ROE), Net Present Value (NPV) & Expected Monetary Value ( EMV) Earnings Per Share (EPS) Growth
22

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Oil & Gas: Value Creation

 Value

creation is the optimal use of time, money and management to effect possible growth in assets, cash flow and profits.  Value can only be created in a sustained manner in an environment of Integrity and Excellence marked by Mutual Respect, Responsibility and Trust
23

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Ingredients for Reserves Growth, Productivity & EMV Enhancement

+ Human Capital+Skills =Knowledge Knowledge + Value-Leadership Value+Integrity = Excellence Operational Integrity +Excellent Management = EMV Enhancement
DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011
24

Technology

SPE CORE VALUES

Stewardship. Integrity. Safety. Accountability. Excellence.

These five simple values are meant to be our guideposts for every action we take as employees or board members. They give us a shared set of principles and beliefs. They are not overly complicated and do not need a great deal of explanation. In most ways they speak for themselves, but they are very powerful reminders of our obligations to each other, to our customers, to our shareholders, and to the communities where we live and work.
25

(Source: SPE)

SPE Guide for Professional Conduct

Preamble -- Engineers recognize that the practice of engineering has a vital influence on the quality of life for all people. Engineers should exhibit high standards of competency, honesty, integrity, and impartiality; be fair and equitable; and accept a personal responsibility for adherence to applicable laws, the protection of the environment, and safeguarding the public welfare in their professional actions and behavior. These principles govern professional conduct in serving the interests of the public, clients, employers, colleagues, and the profession. The Fundamental Principle -- The engineer as a professional is dedicated to improving competence, service, fairness, and the exercise of well-founded judgment in the ethical practice of engineering for all who use engineering services with fundamental concern for protecting the environment and safeguarding the health, safety and well-being of the public in the pursuit of this practice. (Source: SPE) 26

Why Ethics and Engineering

 The

engineer as a professional is dedicated to improving competence, service, fairness, and the exercise of well-founded judgment in the wellethical practice of engineering for all who use engineering services with fundamental concern for protecting the environment and safeguarding the health, safety and wellwellbeing of the public in the pursuit of this practice.
27

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

SOURCE: SPE

Some Definitions
A. Ethics: Behavioral principles for satisfying morals; implies standards of conduct, duty and choices; Obedience to the Unenforceable.
B. Professional: A person who is highly accomplished in a specialized occupation to earn a living; implies learned study, personal dedication, service to mankind, and high standards of conduct.

C.Morals: Core values for living, relative to what is right, good or proper. D.Manners: Personal behavior in public; Not making the people around you uncomfortable. (Source: Peter Rose 2004)
DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

28

Some Definitions
E. Integrity: Soundness of moral principle; the character of uncorrupted virtue, especially in relation to truth and fair dealing; uprightness, honesty, sincerity. F. Conflict of Interest: A situation wherein an individual or organization understood to have accepted responsibilities on behalf of others, finds its fiduciary duties compromised by co-existing opportunities from which it could privately benefit and/or damage the interests of those who are ostensibly being represented. (Source: Peter Rose 2004)

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

29

Common E&P Ethical Issues  Simple Fraud

       Conflicts of Interest Absence of Objectivity Misuse of Best Practices Improper Use of a Professional s Work by Others Violating Confidentiality Outside Employment/Activities (Moonlighting) Greed
(Source: Peter Rose 2004)

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

30

Ethics: Decision Framework



Ask yourself: Would the resulting action be legal? Would stakeholders see the action as responsible stewardship? Would I feel good about the resulting action? Would I mind having information regarding the decision publicized? Have I consulted with peers/others regarding the perceived action and possible ramifications? Would the public view the perceived act as a responsible professional action?
31

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

SOURCE: SPE

Obligations of E&P Professionals

  Recognize Inherent Fiduciary Responsibility Honor Professional Tenets:       Objectivity Technically Current Thoroughness Candor Team Work

Inescapably Tied to Ethics (Source: Peter Rose 2004) 32

Greed And Corruption

It is normal to want to enjoy the material fruits of your honest labors. That is very different from greed. Greed is not normal. It is the sinful, excessive and rapacious desire for wealth and possessions. Greed fuels corruption, which is the perversion of integrity Corruption insidiously undermines trust and faith in institutions, and rends our social fabric

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

33

Post Graduation Challenges and Opportunities

 

        

Employability Employment/Remuneration/Productivity/Job Satisfaction/Promotion & Job Security Family/Marriage/Spouse/Children/Family Care & Responsibility Prosperity & Wealth Creation Societal Expectations & Management Food Security Energy Poverty Population Growth & Competition for Jobs Global Warming/Environment and Health National Economic Growth Explore opportunities as Technopreneurs
34

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Alignment of Corporate and Employee Interests Enhances Value Creation

Individual Interest Corporation Interest

Bright Careers

Excellence & Innovation

Fairness, Trust, Integrity Reasonable Job Security Financial Compensation

Commitment & Loyalty & Trust Long-Term Viability Commercial Success

Source: JPT, January 07 (fig.3 pg 17) DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

35

Lasting Thoughts to Remember

 

Your degree is a passport to adventure, not the adventure itself Use your degree and everything you learn on the job and in life to be a better professional and a better colleague Every day you should be energized to meet and surmount challenges Remain restlessly curious and enthusiastic about the remarkable world we live in, and what you can do to make it better place for your generation and your children and their children who will follow you: make them you: proud
36

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Moral Behaviour & Excellent Success

 The

most admired and successful companies in the world protect and build their reputations every day by serving human needs with reliable products, by developing and caring for their employees, and by being good global citizens  Corruption and moral short-cuts are shortrepellent to their corporate DNA
37

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

With His loving kindness and His mercy, the Good Lord created and blessed each of us with a certain element of creativity
 

Matthew 22;36-40: Teacher, which is the greatest commandment in the Law? Jesus replied: Love the Lord your God with all your heart and with all your soul and with all your mind. This is the first and greatest commandment. And the second is like it: Love your neighbor as yourself. All the Law and the Prophets hang on these two commandments. If you take to heart and live those two commandments every day of your life, your life will be immeasurably enriched by those you meet on your life s journey, regardless of their backgrounds, as yours will be by theirs Love of the Lord and treat your neighbors with love, respect, consideration, trust and integrity
38

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

Concluding Remarks
Once you get employed in the Oil and Gas Industry,you must endeavour to avoid Corrupt practices such as bribery from Service Contractors, Ownership of private Service Companies, abuse of the bidding process in the procurement of goods and services  Ensure & Preserve Integrity of Leadership; Personnel; Leadership; Personnel; Systems; Systems; Processes & Procedures
 

Don t Compromise Excellence for Mediocrity and Preserve the tenets of Our Great Profession Acquire wealth honestly and be charitable
39

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

If a Village Boy Like Me Can Do It With Ethical Behaviour, Integrity & Professional Excellence , You Can Definitely Do It Better With

Mutually Assured Respect, Responsibility & Trust (MARRT)

DR JUDE O. AMAEFULE PRESENTATION AT-IPS UNIPORT NOV 30 2011

40

QUESTION & ANSWERS

41