The Nation Newspaper

Tag: Dr. Ibe Kachikwu

  • Buhari, Kachikwu meet in Aso Rock

    Buhari, Kachikwu meet in Aso Rock

    President Muhammadu Buhari on Friday met behind closed doors with the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, at the Presidential Villa, Abuja.

    Kachikwu arrived Aso Rock around 11.30a. m.

    The minister has alleged that $25 billion contracts have been wrongly awarded by the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC),  Dr. Maikanti Baru.

    His protest was contained in a letter to the President, which somehow got leaked to the public on Tuesday.

    Apart from the Senate mandating its committee to probe the matter, the People’s Democratic Party (PDP) had demanded for Baru’s sack.

    The meeting was still in progress at the time of filling this report.

    Details later…

     

     

  • I inherited N600bn debt owed to marketers of PMS – Kachikwu

    I inherited N600bn debt owed to marketers of PMS – Kachikwu

    Cheap petrol is coming, Minister of State for Petroleum Resources Dr. Ibe Kachikwu predicted yesterday.

    His forecast is based on what he described as the competition inherent in the Premium Motor Spirit (PMS) price modulation.

    He said the price of diesel, which is now 40 per cent down amid surplus supply, was enough evidence that petrol prices will also crash. Petrol is N145 per litre.

    Presenting his scorecard on his two years in office in a podcast released to reporters in Abuja, Kachikwu said that “once Nigerians throw their trading skill in it, once competition thrives, the prices will continue to tumble.

    “My guess is that you will see the prices tumble in the next four, five to six months. The market will be more stable and definitely, the prices will be lower than what we see today.”

    Besides, said the minister, in the last 10 years, this is the first time that the three refineries are working simultaneously, although at 50 per cent of their capacity.

    “We expect to put in investment to put them to 90 per cent capacity,” he said.

    According to Kachikwu, this is the first time the NNPC group has recorded savings, which could be used to address the refineries alongside the Joint Venture Partners.

    The minister noted that this is the first time the government has upgraded the depots. Of the 19, only three are grounded.

    He said this is the first time that a government is considering the replacement of the 35-year-old pipelines.

    “It has been one massive problem after the other for the sector to stabilise in term of product supply.

    To Kachikwu, “the time has come to take on the problem bullishly and that is what we are trying to do”. “So, we believe the ire will be money for infrastructural development in the downstream sector”, he said, adding:

    “We believe that a lot of the companies will jump up now and be able to sell at the right prices and not the pump down by the problem of price control and will be able to grow their businesses. We believe that most of them, efficient ones will drive prices southward rather than northward.

    “And we believe that almost 200,000 jobs will be created in this sector and over 400,000 jobs will be saved, which would have been lost if we had continued on the path we were in.”

    On the assumption of office two years ago, Kachikwu said, he inherited a debt of N600billion owed to marketers of Premium Motor Spirit (PMS), which the Federal Government settled.

    His words: “Now, why do we have to do this? The first one is that when we came into position in August, last two years, about  N600billion was owed to marketers. And all of them basically ceased importing products.

    He spoke of how he lifted Nigerians from the pains of the scarcity of the Premium Motor Spirit and its concomitants queues.

    He noted that the product was scarce because its selling price was higher than its cost price, hence the removal of the Petrol Support Fund (PSF), also known as petrol subsidy.

    Kachikwu said: “ I know that a lot of you watched as we moved price from N86.50; you to N145 were screaming where were we heading ?”

    According to him, there would have been no better time to accomplish the feat other than in the administration of President Muhammadu Buhari, who is trusted enough to utilise the benefits from PMS for the betterment of the country.

    This, according to him, upon the removal of the subsidy, the marketers were reluctant to import the product owing to their lack of access to forex.

    He said the government had no money from crude oil following the reduction in production as the militants were on rampage .

    The minister said: “The reality was that we did have the barrel to throw at it; we didn’t have the refineries . The Federal Government was bleeding. The production today is about 1.4  because the militants attack had taken away about 800,000 barrels per day. Once you do not have the barrel, foreign exchange does not come in.

    “So foreign exchange was depleting and the question was what did we do with the foreign exchange we had.

    “And the President made the right choice to leave what we have intact so that we do not run into a state of bankruptcy. The only option we had was to create a liberalised environment so that people can bring in their products, source their money from secondary markets, charge the right price, which they would not do unless the price was high. Fellow Nigerians, we were left with no option than what we did.”

    According to Kachikwu, the refineries were not working but as soon as the government was able to revamp, the 445 barrels per day was sent to the refineries

    He noted that the situation culminated in almost making the Nigerian National Petroleum Corporation (NNPC) the sole importer of PMS instead of its statutory provision of 55 per cent.

  • Petrol prices to fall, says Kachikwu

    Petrol prices to fall, says Kachikwu

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu on Thursday said that owing to the competition inherent in the Premium Motor Spirit (PMS) price modulation, the product’s prices will crash  in the next four to six months.
    He urged Nigerians not to undermine the present prices of the product, stressing that a look at the prices of the diesel which are now 40% down and recording surplus supply is enough evidence that the petrol prices will also crash.
    Presenting his scorecard on his two years in office in a podcast released to reporters in Abuja he said that “once Nigerians throw their trading skill in, once competition thrives, the prices will continue to tumble.
    ” My guess is that you will see the prices tumble in the next four, five to six months. The market will be more stable and definitely the prices will be lower than what we see today.”
    Still capturing hope in the petroleum downstream sector, he said that in the last 10 years, this is the first time that the three refineries are working simultaneously, although at 50 % of their capacity.
    “We expect to put in investment to put them to 90% capacity,” he said.
    Kachikwu said that this is the first that the NNPC group of companies are recording savings which could be used to address the issue of the refineries alongside the Joint Venture Partners.
    The minister noted that this is the first time the government is upgrading the depots to extent that of the 19 only three are not functioning at the moment.
    He said this is the first time that a government is considering the replacement of the 35 year old pipelines.
    It has been one massive problem after the other in order for the sector to stabilize in term of product supply in the country.
    Kachikwu however submitted that but “the time has come to take on the problem bullishly and that is what we are trying to do. So, we believe the ire will be money for infrastructural development in the downstream sector.
    “We believe that a lot of the companies will jump up now and be able to sell at the right prices and not the pump down by the problem of price control and will be able to grow their businesses. We believe that most of them efficient ones will drive prices southward  rather than northward.
    “And we believe that almost 200,000 jobs will be created in this sector and over 400,000 jobs will be saved which would have been lost if we had continued on the path we were in.”
    He revealed that on assumption of office two years ago, he inherited a debt of N600billion owed to marketers of Premium Motor Spirit (PMS) which the  federal government settled.
    He recalled that they seized importing the products prior to the payment of their debt.
  • Total, NNPC sign agreement to deliver without pipelines 

    Total, NNPC sign agreement to deliver without pipelines 

    The Nigerian National Petroleum Corporation (NNPC) on Tuesday signed a Joint Venture agreement with the Greenville Oil and Gas Co. Limited for the production and distribution of Liquified Natural Gas (LNG) from Rumuji, Rivers state without pipelines to other parts of Nigeria, especially in the north.
    It is the pioneer Nigerian LNG that will distribute gas using special trucks for domestic consumption, by creating a virtual gas pipeline to supply natural gas to those regions not served or under served by physical pipelines.
    The project which stretches for about 1,000Km is said to have the capacity of creating numerous jobs for truck drivers, attendants and others.
    Speaking at the ceremony in Abuja, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, noted that the negotiation of the agreement had been on in the past three years.
    He said the agreement which would in the first instance produce 250 Standard Cubic Feet per can increase to 500SCUF per day in the long run.
    According to him, the “agreement will help us unlock undeliverable opportunities in terms of supply to power and supply entities. It will help some of the oil companies to meet up with their Direct Supply Obligations that they had earlier signed that they have been unable to execute.”
    He added that “we need to find our ways that in the absence of sufficient trucking to put pipelines in place very rapidly we needed to look for new technology.  And we had been having this conversation over the last two three years. We started first by looking at the structure in which the gas and power of NNPC was working and we set up two companies -the NGLC which is the marketing company itself and of course the NGPTC, which is supposed to deal with the infrastructural provision.”
    The minister predicated the success that led to the signing of the agreement on the calmness in the Niger Delta which will enable the company access the gas.
    He said that the pioneer gas trucked project is coming as a challenge and opportunity to other investors that have been looking for a way to access and distribute gas in the absence of pipelines.
    Continuing, he said that “this doesn’t take away the need for pipelines. We are going to continue providing pipelines. But what is there is that we no longer can wait. We can actually move in a very robust manner and to get gas up in the north.”
    Kachikwu noted that what is still needed to be done is ensure that the payments issues are dealt with and the financing is being smooth for both the producer of the gas and the individuals who take responsibility to distribute it are both adequately paid.
    The minister stressed that “I think we will be working with you as federal government agencies once we begin to deploy to places like NNPC, the Central Bank, the Senate to ensure that payment under the new system is made on time. So that there is a good financing and funding for you to do the future expansion project.
    Kachikwu said that: “The first one is 220 per day but it has the capacity to go up to 5,000 per day. So it is quite massive. So what you find is that over the next three to four years if the right finances are put in place and adequate patronage and market are created this could actual metamorphose into the avenue for deploying gas in the country.”
    He urged other investors to emulate the model especially at the centre where people can afford to pay the right kind of pricing for the supply of power.
  • NNPC, Total sign agreement to deliver without pipelines

    NNPC, Total sign agreement to deliver without pipelines

    The Nigerian National Petroleum Corporation (NNPC) Tuesday signed a Joint Venture agreement with the Greenville Oil and Gas Co. Limited and Total for the production and distribution of Liquified Natural Gas (LNG) from Rumuji, Rivers state without pipelines to other parts of Nigeria, especially in the north.

    It is the pioneer Nigerian LNG that will distribute gas using special trucks for domestic consumption, by creating a virtual gas pipeline to supply natural gas to those regions not served or under served by physical pipelines.

    The project which stretch for about 1,000Km is said to have the capacity of creating numerous jobs for truck drivers, attendants and others.

    Speaking at the ceremony in Abuja, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, noted that the negotiation of the agreement had been on in the past three years.
    He said the agreement which would in the first instance produce 250 Standard Cubic Feet per can increase to 500SCUF per day in the long run.

    According to him, the “agreement will help us unlock undeliverable opportunities in terms of supply to power and supply entities. It will help some of the oil companies to meet up with their Direct Supply Obligations that they had earlier signed that they have been unable to execute.”

    He added that “we need to find our ways that in the absence of sufficient trucking to put pipelines in place very rapidly we needed to look for new technology. And we had been having this conversation over the last two three years. We started first by looking at the structure in which the gas and power of NNPC was working and we set up two companies -the NGLC which is the marketing company itself and of course the NGPTC, which is supposed to deal with the infrastructural provision.”

    The minister predicated the success that led to the signing of the agreement on the calmness in the Niger Delta which will enable the company access the gas.

    He said that the pioneer gas trucked project is coming as a challenge and opportunity to other investors that have been looking for a way to access and distribute gas in the absence of pipelines.

    Continuing, he said that “this doesn’t take away the need for pipelines. We are going to continue providing pipelines. But what is there is that we no longer can wait. We can actually move in a very robust manner and to get gas up in the north.”

    Kachikwu noted that what is still needed to be done is ensure that the payments issues are dealt with and the financing is being smooth for both the producer of the gas and the individuals who take responsibility to distribute it are both adequately paid.

    The minister stressed that “I think we will be working with you as federal government agencies once we begin to deploy to places like NNPC, the Central Bank, the Senate to ensure that payment under the new system are made on time. So that there is a good financing and funding for you to do the future expansion project.

    Kachikwu said: “The first one is 220 per day but it has the capacity to go up to 5,000 per day. So it is quite massive. So what you find is that over the next three to four years if the right finances are put in place and adequate patronage and market is created this could actual metamorphose into the avenue for deploying gas in the country.”

    He urged other investors to emulate the model especially at the centre where people can afford to pay the right kind of pricing for the supply of power.

     

     

  • FG not eager to sell refineries – Kachikwu

    FG not eager to sell refineries – Kachikwu

    The Federal Government, Thursday, said that it’s not ready to sell or concession any of its four refineries in whole or in part, as the refineries are yet to return to optimal level, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu has said.

    He said the refineries are currently operating below their capacity level, despite several years of turnaround maintenance check carried out on them, by the government.

    Speaking at the 2017 edition of the National Association of Energy Correspondents (NAEC) Conference in Lagos, Kachikwu said the government looks for external funds to rehabiliate the exisitng refineires, adding that the government met and discussed with one of the investors to invest $1billion in the rehabilation of the refineries, without having any shares in it. The theme is: ” PICB: Prospects and Challenges to Nigerian Oil and Gas Industry.”

    Represented by the Deputy Director, Department of Petroleum Resources(DPR), Kachikwu said the intention of the Federal Government to carry out the turnaround maintenance check on Warri, Port Harcourt 1 &2  and Kaduna refineries years ago, was not sell them, but to prepare them for improved processing of crude oil into petroleum products.

    He said: ” We sought externally for resources to finance the rehabiltation of the  existing refineries, which was a very tall order, telling someone to invest $1billion in the refineries rehabilitation, with no equity, and wait for incremental volumes of refined products to recoup their investment.

    According to him, the actual rehabilitation work would be carried out by the original refinery builders (ORBs), with financers funding the repair work, and a joint management team comprising ORBs, Financiers and NNPC, to steer the operation of the refineries over a period of 5-6 years to bleed incremental liquids for recouping investments.

    Kachikwu said the government has not done the valuation of the refineries, talk less of thinking of selling them to the investors, adding that the government needs to be sure of the worth of the refineries, before placing a price on them.

    On modular refineries, he said only two out of between agency 40 and 50 companies, which got the licences to operate the refineries have shown considerable interest in the project, adding that majority of them are yet realise the task involved in setting up refineries in the country.

    He said DPR is yet to ascertain what holders existing licences has done since they were issued licences, adding that the high percentage of  non-performance of the refineries made DOR to engage the owners or the licensees to ascertain their problems.

    On collocation, he said the government has moved from its initial model of collocating the refineries with the existing refineries to the co-location of brand new greenfield refineries.

    He said for Nigeria to become net exporter of petroleum products, the government needs to encourage companies to participate in the process of refining crude oil.

    He added that when Dangote Petrochemical Refineries is completed in 2019 with its over 600,000 capacity, coupled with modular refineries in operation, Nigeria would be self-sufficiency in the area of crude processing

    Also, the Chairman, Integrated Oil Limited, Captain Emmanuel Ihenacho (rtd), said funding is the major problem hindering the operation of modular refineries in the country.

    He said operating a refinery costs N$2billion, adding that local banks are not interested in providing the loan to present and prospective investors in refineries.

     

  • Oil industry loses $300b to price slump

    Oil industry loses $300b to price slump

    THE Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said the global oil and gas industry lost over $300 billion worth of investment in three years due to decline in oil prices.

    He stated this yesterday at the ongoing 2017 Society of Petroleum Engineers (SPE), Nigeria Council’s Annual International Conference & Exhibition (NAICE) in Lagos.

    The theme of the conference is: Building the Waves of Boom and Burst: Common Objectives Diverse Perspective.

    The minister said African countries were worst hit in the loss of these investments due to inefficiencies caused by  security issues, policy inconsistencies and infrastructure gap.

    According to Kachikwu, investors prefer to invest their scarce and limited resources elsewhere than in African countries, lamenting that  what Africa is losing, others are gaining it.

    “The situation was very challenging when it comes to losing opportunity arising from investment. For the first time in oil sector, the decline in the oil price resulted into loss of jobs.

    “Infrastructural gap is another factor that the decline in the price caused. We have Infrastructural deficit because government was responsible for infrastructure, we did not engage private sector.

    “The whole idea of new petroleum policy is to move the private sector into financing part of the project because government cannot do it alone,” he said.

    The minister said the boom and burst had become the way of life in oil and gas sector.

    “I think we have had about five circles of burst and boom over the last 35 years and each time we begin as if we did not expect it. The boom and burst has become the nature of oil and we should not be surprised anymore.

    “Over 80 per cent decline in world oil price was recorded between 2014 and 2016 with oil price falling between 25 dollars per barrel.

    “All the same, we have managed through the principles of OPEC to keep the price going between $45 and $50 per barrel.

    “For now, our expectations between the year 2017 and 2018 is to keep the price to 60 dollars per barrel,” he said.

    He however, said countries and people were moving away from oil, adding that electric motors were taking over globally.

    “In the next 20 to 25 years, oil lifespan will expire, so we just need only five years to make a change of policy in the sector.

    “We must make a traumatic decision on oil sector to survive the innovation.

    “The country needs a consistent policy and deal with inefficiency in our system to survive the trend,” he said.

    Welcoming the participants, Mr Saka Matemilola, the SPE Nigeria Council President, said the mission of the conference was to disseminate information as regard to oil and gas sector.

  • FEC okays new policies for oil, labour

    FEC okays new policies for oil, labour

    …FG to end fuel importation by 2019

     

    The Federal Executive Council (FEC) on Wednesday approved new policies for oil and labour sectors.

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and Minister of Labour, Chris Ngige disclosed this to State House correspondents at the end of the FEC meeting chaired by Acting President Yemi Osinbajo at the Presidential Villa, Abuja.

    They were with the Minister of Information, Lai Mohammed and Minister of State for Budget and National Planning, Zainab Ahmed.

    Kachikwu said that the Federal Government is committed to ending fuel importation into Nigeria by 2019.

    He said “In terms of specifics. What a policy document does is that it gives you a general guideline in terms of where you are headed then you go into the specifics in other separate documents for purpose of execution. If you take the 2019 time frame for refinery for instance, it won’t tell you what I’m doing today but will tell you that I have set a timeline to exit importation and to get the refineries working by 2019.

    “But if you ask me specially off the shelve what are we doing on that? There is a steering committee already in place which I head, there is a technical committee team already set up headed by chief operating officer in NNPC, we have had series of meetings with individuals who are willing to put money into the refineries.

    “I need to state this clearly, this is not a sale, this is not a concession, this is a financing scheme and there are over 30 people who have indicated interest in that financing.

    “They are going to go through the usual due process mechanism to see who qualifies for that financing. What we have resolved however which we have at least have a landing is that each of the refineries would be repaired by the individual company that built the refinery.

    “Who does the  work is different from who does  finance the work to be done. We are still dialoguing who is going to get the financing opportunity but who is going to get the contracting opportunity to do the work is already decided. If you check the companies that built I think is Chioda in the north, Saitem in Warri if I’m not mistaken. I have forgotten the one in Port Harcourt but all of them have reached agreement with us in terms of willingness and readiness to do the so work.

    “Government is not putting money into this. It’s going to be very sector led effort and they will recover their money through incremental volumes that will arise from the production increase arising from the repairs. We are doing about 30 percent performances on most refineries now so if you get them to above 90 percent template we are going to use some of the product line to pay for some of the debts and free ourselves from the importation problems.” he said

    While noting that all the refineries in Nigeria today when repaired cannot cover all her consumption, he said that some level of efficiency and upgrade will increase the refineries capacity in the country.

    He said “We are banking on the fact that efficiency steps we are taking will reduce the consumption. We have gone from the 50 million liter per day when I resumed office down to today that is about 28 million liters per day.

    “So, obviously efficiency has wiped off smuggling, efficiency has reduced consumption and also whatever gains we made under the subsidy regime by taking the subsidy out has also taken out. So if we are reducing the level of consumption and increasing the efficiency of the refineries, we are banking that we will be able to exit importation completely. And this is not building in Dangote refinery that is 165,000 barrel cap on it, or the modular refineries we are looking at or the AGIP we are looking at.

    “So I think we are finally on course and we are going to be very aggressive on target,” he said.

    But he said that improving oil production target was very dicey.

    “We are targeting to recover full barrels; it’s going to be a longer time provided the OPEC environment permits I think I see the potential of 2.5 and 3 million barrels over the two year period. But then we are all looking at market fluidity and the challenges that goes with how much we pump into this market,” he said.

    On legislation, he said that a policy is a policy and cannot over take the legislation that will help drive inputs into some of what the National Assembly has done.

    “Ultimately we are going to work collaboratively to make sure all is put in place to push some of the policies we are doing here. Some are efficiency off the shelf things we can do on our own but some the legislative mandates behind it would have to crystallized.” he said

    According to him, the Council on Wednesday considered the Nigeria Petroleum Policy document.

    Stressing that the essence of the gas policy, which was considered three weeks ago, is towards changing the imperatives of Nigeria from an oil producing country to a gas producing country.

    He said “We are lot more privileged to produce more gas. Today policy focused on oil, the imperative needed to change in policy in the oil sector, it dealt in certain fundamentals we are already pursuing some of the policy.

    “We are working assiduously to exit the importation of fuel in 2019 and captured the cash calls changed we have done which enables the sector to fund itself through incremental volumes, it captures the reorganisation in the NNPC for efficiency and enable accountability, it captured the issues in the Niger Delta and what we needed to do as a government to focus on stability and consistency in the sector.

    “It is a very comprehensive 100 page document that deals with all the spectrum in the industry, the last time this was done was in 2007 and it has been 10 Years and you are aware that the dynamics of the oil industry has changed dramatically.

    “Apart from the fact fluidity in pricing and uncertainty in terms of the price regime in crude. We are pushing for a refining processing environment and move away from exporting as it were to refining petroleum product, that’s one change you will see.

    “Secondly how we sell our crude is going to be looked at, there is a lot of geographical market we need to look at long term contracting and sales as opposed to systemic contracting we have been doing,” he added.

    He was optimistic that the change process that was started in 2015 will be brought to logical conclusion in next few years if the new document is well executed.

    Ngige disclosed that FEC received the National Employment Policy which will guide the administration.

    He said that the last employment policy in operation in Nigeria was approved in 2002.

    “That’s 14 years and in that 14 years a lot of things have changed in labour and employment industry.  Things like employment, for people with disabilities, decent jobs programme and doing jobs without polluting the environment and other things that are new and contemporary in the labour market.

    “So this policy was reviewed in 2013 with technical assistance from international labour organisations and major stakeholders like employers were involved, workers, unions and this document was crystallised and this policy seeks to give decent jobs to people.

    “Job creation is multi sectoral, it is not limited to one ministry, not limited to the public service alone and private sector is involved and this policy seeks to capture the relevant affected persons and people that will apply this so that we can fight unemployment and under employment,” he said.

    On the issue of minimum wage, he said “You were here in May when FRC approved the composition of the minimum wage committee. We have since then gone into action

    “Government has approved their representation which is the secretariat. The secretariat is domiciled at the National Council for Salaries and Wages Commission with the chairman there acting as secretary.

    “We also have the minister of labour and employment as deputy chairman, minister of finance, minister of budget and national planning as members. The only appointee which is being awaited now is the chairman and we have concluded the process for the nomination. We are waiting for the requisite approval.

    “The labour centers that is NLC and TUC are yet to bring their nomination that is on the workers side. On the employers’ side, you know we are like a subunit. We have Nigeria Employers Consultative Assembly, Nigeria Employers Consultative Association (NECA), Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture. (NACCIMA), Small and Medium Scale Industry Association (SMSIA).

    “These groups will give us nominations so we are waiting. Once these nominations are in place the president will then inaugurate the committee.

    “On the other side, the labour laws are clear; the labour laws seek to protect both the workers and the employers. You don’t sleep on your right. When you know what is there your worker cannot take you for granted provided you also conform to the law. You cannot lock them out and if you do the law says you pay them for the period of lock out. They too cannot take the law into their hands and embark on strike without giving you the mandatory notice, due consideration and social dialogue with you internally, second level with the ministry of labour and employment and third level is the issue of giving you notice.” he added

    Ahmed said that her Ministry presented the National Social Protection policy to the Council on Wednesday.

    The policy, she said, is a framework that seeks to provide social justice equity and inclusive growth by using a transformative mechanism for mitigating poverty and unemployment in Nigeria.

    According to her, the social investment programme started by the Federal Government since 2016 were drawn from the policy, which is currently in a draft form.

    “What we have done is to submit to the council today, a policy that is largely inspirational, aspirational but seeks to ensure that every Nigerian gets at least a minimum of what is required in terms of human development and protection,” she stated.

  • NNPC gets $2b discounts on upstream contracts

    NNPC gets $2b discounts on upstream contracts

    …reduces cost of prodcution to $22/barrel
    The Nigerian National Petroleum Corporation  (NNPC), has secured $2billion discounts in the last one year from renegotiated Upstream contracts being executed by its various service providers.

    The Corporation said the feat was achieved in the quest to continually drive down the high cost of production in the industry.

    This was made known on Tuesday by NNPC Group Managing Director, Dr. Maikanti Baru, in a podcast message to the Corporation’s Staff to mark One-Year Anniversary of his appointment as the Corporation’s helmsman.

    Dr. Baru, who took over the mantle of leadership of NNPC from Honourable Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, July 4, last year, said already NNPC had lowered operating costs of production from $27/barrels to $22/barrels.

    “For the Upstream, cost reduction and efficiency are key features that we will pay attention to”, Dr. Baru stated in the 25-minute podcast.

    Dr. Baru directed that focal points for efficiency in each of the Corporation’s Autonomous Business Units, ABUs, and Corporate Services Units, CSUs, should be identified to ensure the realisation of the key performance indicators enshrined in the 2017 budget, adding that the Corporation must attain a six-month contracting cycle.  

    Speaking further on the achievement of NNPC in the past year with him at the helms of affairs of the Corporation, Dr. Baru said there had been a significant increase in crude oil reserves and production, stressing that during the period, the national average daily production was 1.83million barrels of oil and condensate while currently, the Year-To-Date 2017 average production hovers around 1.88million barrels.

    He said with the improvement in security and resumption of production operation on the Forcados Oil Terminal (FOT) and Qua Iboe Terminal (QIT) pipelines, the average national production was expected to increase and surpass 2017 target of 2.2million barrels of oil and condensate per day.

    The GMD stated that in October last year, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found, adding that the Field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading (FPSO).

    The Field, he noted, had added a currently estimated reserve of 1billion barrels to the national crude oil reserves.

    Baru noted that the Corporation had grown the production of the Nigerian Petroleum Development Company, NPDC, NNPC’s flagship Upstream Company, from 15,000 barrels of oil per day (bopd) to the current peak-operated volume of 210,000bopd in June 2017.

    He stated that the ownership of Oil Mining Licence, OML13 had been restored to NPDC following a presidential intervention, with first oil from the well expected before the end of the year.

    The GMD said the confidence of the NNPC JV partners to pursue new projects had been rekindled following the repayment agreements for JV cash call arrears that were negotiated and executed for outstanding up to end 2015 by all the IOC Partners of the Corporation’s Joint Venture Companies (JVCs).

    In the gas sector, the GMD said gas supply to power plants and industries in the Country had been significantly increased.

    Dr. Baru listed the accomplishments of the Corporation in the sector to include: Completion of the repairs of the vandalized 20” Escravos Lagos Pipeline System A (ELPS –A) in August 2016 which ramped up Chevron Escravos Gas plant supply from nil to 259MMscfd and the Completion of repairs of the vandalized Chevron offshore gas pipeline in February 2017 which equally peaked the company’s gas supply to 430MMscfd.

    Other accomplishments under this category are: the completion of repair works on the vandalized 48” Forcados Oil Terminal (FOT) export gas pipeline in June 2017, which had reactivated shut down gas plants, including Oredo Gas Plant, Sapele Gas Plant, Ovade Gas Plant, Oben and NGC Gas Compressors; and the commissioning of NPDC’s Utorogu NAG2 and Oredo EPF 2 gas plants.

    The GMD explained that the concomitant effect of the efforts was a significant growth in domestic gas supply in the last few months, adding that during the period, domestic gas supply had increased from an average of 700MMscf in July 2016 to an average of 1,220MMscfd currently, with about 7 of the volume supplied to thermal power plants.

    “A lot of Generation Companies (GENCOs) are rejecting gas due to the inability of Transmission Company of Nigeria (TCN), to wheel-out the power generated”, Dr. Baru said.

    Dr. Baru informed that since his assumption of office a year ago, resources had been deployed to the Benue Trough, with exploration efforts commenced there in earnest.

    He explained that seismic data acquisition was ongoing in the frontier region using the services of Integrated Data Services limited, IDSL, and her partners to pursue Government’s aspiration to grow the reserves base of the Country.

    The GMD stated that drilling activities were expected to commence in Benue Trough in Q4 this year.
    He said: “We are working with the security agencies for an early return to the Chad Basin. Drilling activities will be a priority on resumption while continuing with seismic data acquisition with improved parameters.”

    In the Downstream Sector, Dr. Baru explained that in the last one year, NNPC had stabilised the market with sufficient products’ availability across the Country through modest local refining efforts as well as the Direct Supply Direct Purchase, DSDP, scheme,  which he observed had saved the nation about N40billion in 2017.

    “We have also commenced the resuscitation of our products transportation pipelines network, thus enabling us to move products to depots at a faster rate and cheaper distribution costs to consumers. The Aba, Mosimi, Atlas-Cove and Kano Depots have all been re-commissioned and are currently receiving products, thereby enhancing products’ availability across the Country”, the GMD said. 

    Baru said in the last one year, NNPC had improved capacity utilisation of the refineries with the projection that they would attain supplying 50 per cent of the non-gasoline white products to the nation, including Diesel and Kerosene that are commonly consumed in the Country.

    The GMD said after more than seven years of dormancy, the Asphalt Blowing Unit of the Kaduna Refining and Petrochemical Company, KRPC, was resuscitated to meet road construction needs in the Country.
    He declared that efforts were ongoing to secure 3rd party financing to revamp the refineries to their full operational capacities.

    Drawing his address to a close, Dr. Baru disclosed that the overwhelming support he received from the Corporation’s staff and the Industry’s in-house Unions, Nigerian Union of Petroleum and Natural Gas Workers, NUPENG, and Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, contributed to the successes recorded by NNPC Management under his leadership in the past year.

    “I look forward to your continued cooperation and support as we navigate the Corporation out of its current challenges towards profitability with integrity and transparency,” the GMD stated.

  • FG to spend N3.4tr on petroleum products in 2017

    FG to spend N3.4tr on petroleum products in 2017

    …requires $1.1b, $1.2b for repairing refineries
    The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, on Thursday revealed that the Federal Government would in this year spend N3.4trillion on the importation of petroleum products.
    Addressing newsmen in Abuja, he refuted reports that quoted him to have said that government was concessioning its refineries.
    He said that government has no plans to concession the refineries but it is only making arrangements for private financing of their repair. The minister denied the claims that Oando has won the contract for financing the repair of the refineries.
    According to him, Nigeria that consumes 35million daily presently has domestic refining capacity of six million liters, which is about 25% of the demand.
    “The importation of products even between January and December of this year, amounts to 20million metric tonnes and a total amounting of N3.4 trillion. The logistic cost of that importation shipping clearing and all that is about N1.34trillion since the same one year period,” the minister said.
    Owing to this domestic and demand situation, the government had to plan for the improvement of its domestic refining capacity.
    Kachikwu noted that government raised a technical and steering committees on the financing of the refineries that its report will be presented to the National Assembly and Federal Executive Council upon conclusion.
    He however noted that what has been so far established is the magnitude of work that is required in the entities.
    The minister said that apart from piping, about $1.1billion, $1.2billion (depending of the category), will be required to fix the refineries.
    His words: “Internally, we have been able to determine the amount we want to do this work in terms of what work is required to be done. And the total cumulative amount if I am not mistaking is the $1.1, $1.2b type category depend on the refineries with specific breakdown. That of course does not include the cost of piping.”
    Explaining why government has decided to deal with the Chioda, Sapiem and GGC, he said that Chioda built Kaduna refinery, Sapiem built Warri refineries while CGC built the PortHacourt refineries.
    These companies, according to him, have the designs, engineering outlay and upgrade capability for the refineries.
    Today, the reality is still that the reality for downstream product surges that very few people will undertake the financing.
    “So that is why we have created a business model that tie them to the Direct Sale Direct Purchase (DSDP) Programme and that is still working and that is still work in progress.
    “When they finish this and are done with the analysis, I will expect that they will then invite everybody who is interested to the commercial terms set out formally…before we get to FEC, National Assembly and Mr. President. We haven’t reached there and so nobody can say contracts have been given.”
    Kachikwu advised the International Oil Companies to invest in building refineries in Nigeria in order to avoid the negative effects of dip in oil prices.
    He said more importantly, we need to address IOCs in terms of what they need to do to help local refining because if you encourage all these refining capabilities whenever they run out of crude availability we need to look at them why are you taking out crude when you can get the same pricing equivalent in local refining.”
    In terms of the incentives or guarantee for the corporations that would finance the repair of the refineries, he said that there will incremental volumes, access to sales to cushion the challenge in the markets in terms of pricing.
    He revealed that the Organization of Petroleum Exporting Countries (OPEC) is reaching out to its non-members including the US on measures to control the glut in the market.