The Nation Newspaper

Tag: crude

  • Crude theft

    Crude theft

    •We wonder why govt appears helpless in stopping illegal bunkering

    We are losing revenue; 400,000 barrels of crude oil are lost on a daily basis due to illegal bunkering, vandalism and production shut-in … I have to clarify that it is not as if the entire 400,000 barrels is stolen. What happens is that whenever the pipelines are attacked and oil is taken, there is a total shutdown. All the quantity of oil produced for that day will be lost because it means government cannot sell it and it means a drop in revenue.”

    The foregoing official confessions by Ngozi Okonjo-Iweala, Minister of Finance and Coordinating Minister for the Economy were made during her appearance before the House of Representatives Joint Committee on Appropriation/Finance. She was responding to a question on revenue shortfalls into the federation account.

    To us, a daily loss of 400,000 barrels of crude oil is condemnable. But a further ascription of such loss to illegal bunkering, vandalism of infrastructure and halt in production smacks of gross irresponsibility on government’s part. After all, all avenues mentioned by the minister are areas that could be blocked if only to show this government’s serious-mindedness, having been in-charge of security that should have curbed illegal bunkering. Once this is effectively checked, any halt in production activities, to a reasonable extent, becomes difficult.

    In mathematical terms, the daily loss of 400,000 barrels of oil at an international price of $117 per barrel, when converted to naira equivalent at an exchange rate of N157 to a dollar would mean that N7.35 billion is being lost daily. What this translates to is that the dwindling oil revenue accruing to the Federation Account is self-inflicted. Such is a consequence of absolute dereliction of duties by the government. It must do the needful in the oil sector.

    We are aware that the National Economic Council (NEC) at one of its meetings set up an Oil Theft Committee to look into this crucial issue. But the truth is that the effect of that committee is not being felt. The way to resolve the matter is not in convening stakeholders’ meetings; several of such meetings had been held, with well crafted submissions and recommendations that are gathering dust in the shelves in various government houses.

    The vandals and oil thieves are not bigger than the Nigerian state. Oil theft business is not one for the pauperised in the society; it requires huge capital and sophisticated equipment to freight and for trans-loading on the high seas where buyers that are usually rich and influential members of the society and outside it take illegal delivery. This trend cannot continue.

    Furthermore, the immoral award of pipelines protection security contract to people like Government Tompolo and other erstwhile militants, at a huge cost to the country, has not yielded any meaningful result. Rather, the infrastructure and architecture of violence is now formally institutionalised by this administration.

    We call for a more potent pursuit and prosecution of pipeline vandals and oil thieves. No doubt, when we add this illegal parallel production to state thievery, one should be enraged by what the country is losing to the oil thieves. But then, the recent setting up of an ad-hoc legal task force with a life span of one year by NEC to commence the prosecution of verified cases of oil-related offenders, using applicable laws, is unnecessary duplication of relevant security agencies’ duties.  It was reported that about 300 oil offenders are already in police custody. They should be arraigned by appropriate agencies to face the full wrath of the enabling Miscellaneous Offences Act which specifies a sanction of 21 years without an option of fine for offenders.

  • Excess crude account down by $7b to $5b

    Excess crude account down by $7b to $5b

    Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi has said for Nigeria to beat the ingenuity of counterfeiters, there is a need to redesign the Naira.

    Sanusi also revealed that the Excess Crude Account is down by $7bn from $12billion to $5billion.

    Sanusi told the Jones Onyereri- headed House Committee on Banking and Currency yesterday that the “ noise” about the 5000 Naira notes was the reason the CBN shelved the plan, which, according to him, should be done every seven to eight years.

    The House brought the CBN and other stakeholders to an interactive session on three motions referred to the committee. The motions are: •the rising incidence of fake Naira being dispensed from Automated Teller Machines (ATMs); •the urgent need to stop banks from introducing N100 maintenance charges on ATM cards; and •need for a single digit interest rate to encourage small- scale investors.

    Sanusi said restructuring of the Naira would stop fake currency.

    He said: “One of the reasons we wanted to have a restructuring of the redesign of the currency a few months ago was because, as explained, many of our notes had been in existence for upward of eight or even ten years. Now best practice is that within a period of five to eight years, you redesign the currency because after that period counterfeiters tend to catch up. Even at that, Nigerian notes in terms of what we see as counterfeit and processing, the percentage is very low.”

    Giving the percentage of counterfeit notes per million, he said: “We had about 3.9 per million in 2007, 6 per million in 2008, 8.4 per million in 2009, 7.4 in 2010, 5.4 in 2011 and 8.4 per million in 2012 of the notes processed which were counterfeit.

    “But with ATM machines, it should not happen because it has been processed and we would be very pleased to know if there are specifics about any bank so that we can draw their attention on the importance of processing them before putting them in ATM machines.

    “Now, unfortunately, the redesign suffered because of all the noise around N5,000 and, therefore, it is being delayed because that is what would have made it impossible for counterfeiters to forge so they have to wait for another five, six, seven years before they learn how to counterfeit by which point , the CBN should be redesigning the notes again.

    “So I suppose that at some point the country would have to revisit the issue of redesigning the notes but at the moment, based on popular demands, we have had to step down the redesign.”

    On interest rates, the CBN governor said delivering a low rate of interest is the easiest thing for the apex bank “because the CBN prints money and interest rates come down when you have a lot of money and that is not a problem.”

    “If you want interest rates of 2 per cent, it is not a problem; we simply double and triple the money supply in the system.”

    He, however, said that was not the way to go.

    Sanusi said a weak currency shoots up import and banks may not be lending to the real sector for other reasons, apart from interest rates. Other things to consider, according to the CBN boss, are power, security, storages, credit records and customer identification, amongst others.

    “ When MPR was at 8 percent, how much were being lent to manufacturers? It was going to shares and oil marketers,” he said.

    The CBN governor said there was need to attract foreign exchange because the country is import dependent. “In the current environment, the likelihood of rates going down is very low. It is more likely to go up,” he said.

    Sanusi gave the solution to the problem as reduction in government domestic borrowing, completing reforms in the power and petroleum sectors, ensuring security and providing infrastructure that will attract foreign investment and stimulate domestic business.

    He revealed that the Excess Crude Account is down from $12 billion to $5 billion because the economy is import dependent and money had to be moved to balance the budget.

    Sanusi warned that there are economic postulations that oil may likely sell for as low as $60 and that there is need for the country to diversify, if the government keeps borrowing at the between 13 to 14 per cent and keeps increasing the budget deficit, the country may be in trouble.

  • States want $1b from excess crude account

    States want $1b from excess crude account

    There seems to be no hope that Nigeria’s fuel crisis will soon end.

    The Federal Government has N100billion outstanding subsidy claims to settle, after paying N881billion this year as subsidy claims.

    Speaking to reporters at the end of the National Economic Council (NEC) meeting, which lasted about five hours, Governor Ibrahim Dankwambo (Gombe), with whom were Governors Kayode Fayemi (Ekiti), Martins Elechi (Ebonyi) and Deputy Governor of Sokoto State, Mukhtar Shagari, said verification of claims by the suppliers was still ongoing.

    On the governors request for $1billion (N157b) from the excess crude account in spite of the fact that both parties (Federal Government and states) agreed that the case should run full course at the Supreme Court, Shagari said the money is needed by states to offset some of their debts. He said some of the states are indebted to their contractors.

    He however said a final decision has not been reached on the matter, adding that since the case is still before the Supreme Court, the Attorney General has been asked to advise the council on the request.

    “It was agreed that the court issue should continue so as to finally lay the issue to rest and this should not be as a dispute between the Federal Government and states.”

    On the external borrowing, the council asked states involved to appear before the National Assembly to defend their borrowing plans.

    Fayemi also said council reassured states of the readiness of the Federal Government to reimburse them for rehabilitation of federal roads within their states.

    According to Fayemi, payment to states will commence next year. He said all monies due the states will be paid.

    He also said the verification has been concluded.

    Also, Council approved the setting up of complementary security outfit.

    Besides, the council warned against improper usage of number-plates.

    For security reasons, the governors said council agreed that henceforth, “No one should drive around with an unidentified number plates.”

    The decisions was reached after receiving briefing from the National Security Adviser, Col. Sambo Dasuki, on the establishment of security outfits in the states as part of measures to improve security in the country.

    Council also urged security agencies to procure tracking equipment to support their operation.

    Fayemi said the NSA and the Council had extensive discussions on abuse of siren by security personnel by government officials, with council urging the Office of NSA to proceed to collaborate with states and expedite action on stopping the use of siren.

    Council also urged states to submit preliminary plan on grazing land to curb clashes between farmers and herdsmen.

    It endorsed Nigeria’s centenary celebration.

    The celebration which will commenc early next year will end early 2014.

    Council agreed to set up a committee on multiple taxation on telecommunication services.

    Members are: governor of Gombe as chairman, governors of Kwara, Oyo, Abia, Edo, vice chairman NCC, minister of communication Technology, FIRS and four members each of telecom operators.

    It also endorsed the building of a national broadband and ICT infrastructure.

     

  • Floods cut 500,000 barrels of Nigeria’s daily crude production

    Floods cut 500,000 barrels of Nigeria’s daily crude production

    •Nation loses $53.5m daily

     

    Nigeria’s oil production has been cut by 500,000 barrels of crude oil daily, due to the massive flooding that swept across the country.

    The loss translates to $53.5million daily.

    Department of Petroleum Resources (DPR) Director Osten Olorunsola stated this yesterday during the DPR’s third quarter media briefing in Lagos.

    He said the situation forced the country’s production down to 2.1 million barrels per day (bpd) from over 2.5 million but noted that as the flood is receding, production has begun to ramp up to 2.3 million bpd.

    Mr. Olorunsola said both the big and small players are affected, but noted that the small players particularly the marginal fields’ operators are worst hit.

    “We had quite very unfortunate situation of flooding in the last couple of weeks and that certainly dipped production by 500,000 barrels per day. Quite a lot of firms and companies were hit. Actually, some companies went completely out. Companies like Sterling Energy and other little companies, especially the marginal field players. Even the big players got seriously hit, Total was completely out in OML 58, Agip was seriously hit at Obiafo, Mbede and Oguta, among other areas. They were really down and total shut down at the peak was about 500,000 bpd.”

    Olorunsola explained that crude oil reserves as at end of September stood at 31.170 billion barrels. Condensate was 5.018 billion, bringing the total liquids to 36.2 billion barrels. Total gas reserves stood at 182.750 trillion standard cubic feet out of which non associated gas (NAG) was 90.150 trillion standard cubic feet.

    Gas flaring, as at end of September, dropped to 1.4 billion cubic feet per day which is 18 per cent of total gas produced as against 25 per cent by end of last year. This is a reduction of about 5.7 per cent from volume flared last year.

    The DPR boss said gas utilisation has risen in excess of 80 per cent of total production.

    Olorunsola said the DPR was also in the process of renewing expired licences for shallow water projects of Exxon Mobil, Shell and Chevron and that it has begun full implementation of trucking policy for depot owners.

    He said besides the four traditional refineries, an independent oil firm – Niger Delta Petroleum Resources – has built a refinery that refines 1000 barrels per day. He praised the development, especially as it is coming from a marginal field operator.