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Tag: international oil companies

  • Fed Govt urges IOCs to shore up oil output

    Fed Govt urges IOCs to shore up oil output

    Determined to attain its 2.5 million barrels per day (mbpd) crude oil production output target by 2027, the federal government yesterday challenged International Oil Companies (IOCs) operating in the country to take decisive and concrete steps to ramp up their oil production capacity.

    Making the charge while speaking at a panel session at the ongoing 9th edition of the Nigerian International Energy Summit (NIES), the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, said the performance of the petroleum industry is basically tied to the success of upstream operators, especially as the country’s economy remains largely dependent on foreign exchange earnings from the sector.

    Besides, he noted that the government has created an enabling environment for oil companies to operate effectively; therefore, they should not be an excuse not to meet the target.

    “I have always maintained that the success of the oil and gas industry is largely dependent on the success of the upstream. From upstream to midstream and downstream, everything is connected. If we do not produce crude oil, there will be nothing to refine and nothing to distribute. Therefore, the success of the petroleum sector begins with the success of the upstream.

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    “I am also happy with the team I have had the privilege to work with, a community of committed professionals.”

     From the government’s standpoint, it is important to state clearly that there is no discrimination between indigenous producers and other operators.

    “You are all companies operating in the same Nigerian space, under the same law. The Petroleum Industry Act (PIA) does not differentiate between local and foreign companies. While you may operate at different scales, you are governed by the same regulations. Our expectation, therefore, is that we will continue to work together, collaborate, and strengthen the upstream sector for the benefit of all Nigerians,” Lokpobiri said.

    He assured that of government’s continued support for the industry through reforms, tax incentives and regulatory adjustments aimed at unlocking the sector’s full potential.

    “We have provided extensive incentives to unlock the sector’s potential through reforms, tax reliefs and regulatory changes. Now is the time for industry players to reciprocate by investing, producing and delivering results,” he said, adding that Nigeria’s success in the upstream sector would have positive spillover effects across Africa, while failure would negatively impact the continent’s midstream and downstream segments.

  • You can’t divest without remediation for damaged environment, House tells exiting IOCs

    You can’t divest without remediation for damaged environment, House tells exiting IOCs

    The House of Representatives has approved the motion sponsored by member representing Ideato Federal Constituency and chairman, House Committee on Petroleum Resources (Downstream Sector), Hon. Ikenga Imo Ugochinyere Ikeagwuonu, that international oil companies (IOCs) leaving the country should not be allowed to divest their assets without measures for substantial remediation of the environment where they had operated for years.

    The motion titled: “Need to ensure that international oil companies involved in the divestment of assets in the Niger Delta Region of Nigeria comply with the decommissioning, abandonment regulations and guidelines of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as enshrined in the Petroleum Industry Act (PIA),” was adopted at plenary on Wednesday.

    Moving the motion, Ugochinyere noted that most international oil companies leaving the country were divesting their company assets in Nigeria and relocating out of the country without clearly complying with the decommissioning and abandonment guidelines as prescribed by NUPRC and as enshrined in the PIA.

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    Ugochinyere expressed concerns that as a result of the exploration and other activities of the international oil companies in the Niger Delta, the region has suffered great environmental degradation for years, with farmlands and water bodies being polluted and destroyed, leaving the communities’ ecosystem completely and irreparably exploited.

    He further expressed worries that if consent is given for the divestment of the assets of the international oil companies (IOCs) without ensuring their compliance with the guidelines and regulations put in place, the host communities will suffer irredeemably and the companies taking over the assets of the IOCs will not be able to remedy the degradation.

    The House resolved and urged the Minister of Petroleum Resources (Oil) and the Chief Executive Officer of NUPRC to refrain from granting consent to delivering IOCs until there is full compliance with the guidelines for decommissioning.

    The House also mandated its Committee on Petroleum Resources (Midstream), Host communities, Gas Resources, Petroleum Resources (Downstream) and Petroleum Resources (Upstream) to investigate the level of compliance with the decommissioning and abandonment guidelines of the NUPRC as enshrined in the PIA, 2021, and report back to the House within four weeks for further legislative action.

  • Nigeria owes IOCs $5.1b, says NNPC

    NIGERIA indebtedness to International Oil Companies (IOCs) stood at $5.1 billion, the Nigerian National Petroleum Corporation (NNPC) told the Senate yesterday.

    The $5.1 billion, according to the Corporation, was accumulated from the Joint Venture Cash Call (JVC) business arrangement the country has with IOCs on oil exploration.

    But the NNPC denied allegation of mismanagement of $3.2 billion said to have been withdrawn from the Nigerian Liquefied Natural Gas (NLNG) account between 2015 till date.

    The Chief Financial Officer (CFO) of NNPC, Isiaka Abdulrasaq, who appeared before the Senate Committee on Gas explained how the debt was incurred.

    Abdulrasaq told the panel that the JVC is a business arrangement between the Federal Government and the IOCs, explaining that Nigeria controls 60 per cent of the business venture and the IOCs the remaining 40 per cent.

    He NNPC official said: “The problem, however is that before this government came on board in 2015, Nigeria which holds 60 per cent of shares in the joint business, for many years did not contribute its own required capital into it.”

    Nigeria, he said, was “only collecting its equity share inform of revenues which made the country as at 2015, to have $6.8 billion unpaid capital into the venture.”

    He further explained that “the present government in 2016, succeeded in getting 35 per cent discount from the unpaid capital amounting to $1.9 billion from the unpaid capital, making the country to still owe the IOCs $5.1 billion outstanding.”

    On the alleged $3.2 billion reportedly withdrawn from the NLNG account by the NNPC within the last three years, the CFO insisted that there was no mismanagement in any of the withdrawals made.

    He noted that based on available records with NNPC, only 13 withdrawals were made from the account amounting to $1.2 billion.

    The official said that more than seven IOCs dealing with the NNPC have expressed concern about the continuity of their business operations as a result of bogus figures being bandied about withdrawals from the NLNG account.

    Chairman of the committee, Senator Albert Bassey Akpan, asked the NNPC CFO to submit approving documents for all the withdrawals by Tuesday next week.

    Akpan said: “We are not saying any money has been stolen. What we are doing is clarifying the processes of expenditures made from the account with a view to making management of the account more transparent and beneficial to Nigerians.”

  • Buhari pledges more employment opportunities for citizens

    President Muhammadu Buhari says his administration will continue to implement policies that attract investment and spark competition in critical sectors of the economy for employment creation and economic growth.

    The president gave the assurance when he received the Chairman and Management of the LADOL Integrated Logistics Enterprise, who visited him at the State House, Abuja on Thursday.

    Buhari commended the company for taking full advantage of the pro-business policies put in place by his administration and aimed at bringing domestic and direct foreign investment, which were yielding prosperity to the people of the country.

    He said: “Your competitive and aggressive activity has brought you success. I am pleased that you are investing in a critical area, the oil industry, in which I have developed interest.

    “I am happy you are training Nigerians and giving them respectful jobs.  What you are doing shows that whoever tries will succeed.”

    The Chairman and Chief Executive of the company, Chief Oladipo Jadesimi said they had come to thank President Buhari for creating an enabling environment and anti-corruption regime that had enabled their business to create a 10 billion dollars investment and 50,000 new jobs.

    On her part, the Managing Director, Dr. Amy Jadesimi, informed the President that their investment had a mission to attract local and international companies that would help reduce the cost of off-shore support services.

    According to her, the policies initiated by the Federal Government by abrogating monopoly, thereby allowing IOCs (International Oil Companies) to use any facility in Nigeria, yielded immediate positive result for the Nigerian economy by reducing costs by 50 per cent.

    She said that in the near future, seven more FPSO (floating production storage off-loading) units would be built in Nigeria, bringing 100 billion dollars investment, thousands of jobs and a diversification of the economy due to 70 per cent local content.

    The Managing Director expressed the determination of LADOL to turn Nigeria into a hub for logistics and heavy lifting in the sub-region by providing non-stop, 24 hours, seven days a week support services in the Lagos area.(NAN)

  • Kachikwu eyes over $3b investments for refineries

    The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has said that the investment drive that the government has embarked upon will attract over $3billion investments into refineries in the country. 

    This was contained in the 8th podcast that he released to the social media on Wednesday with special focus on the “country’s international energy relations and coordination.”

    He said that the Nigerian oil and gas sector is getting investments and supports from the International Oil Companies (IOCs).

    The minister added that for the first time, so many investments are coming and they are on the increase.

    His words: “Some of the support include investments like the Zabazaba where there is a push for the FID and it is $10bn to $14bn; Bonga Phase 2, investments of close to $12bn; Egina, investments of close to $10bn to $15bn. 

    “The investment drive that we are doing to bring money into the refineries are investments that will come to over $3bn. There are so many other investments for the first time.”

    Commenting on the effect of Nigeria’s exemption by the Organization of Petroleum Exporting Countries (OPEC) in terms of reduction of crude oil production by member countries, Kachikwu said that the concession has stabilized supply and the income to the country. 

    Read Also: Kachikwu for Nairobi summit

    According to him, “our budget was largely funded and we began to see our reserves, for the first time, grow dramatically from an all-time of 25 billion to as high as 45 billion currently. This is about 20 billion (barrels) movement in terms reserves growth.”

    Kachikwu, who attributed the increase in supply and reserve to the relative peace in the Niger Delta, said that the exception from OPEC was a great boost at the same time that the price of crude soared from $25 per barrel to $75barrel per barrel. 

    The minister said that: “All these could not have been possible if we didn’t solve the Niger Delta problem and if we didn’t get an exemption from OPEC to continue to produce irrespective of the cost. And, of course, the effect of this was that the prices of crude jumped, it moved from $25 per barrel to about $75 per barrel.”

  • Nigeria seeks IMF’s support on tax collection

    The Federal Government is seeking assistance from the International Monetary Fund (IMF)  on modalities  for improving  tax collection, especially  from the International Oil Companies (IOCs), Finance Minister  Zainab Ahmed, has said.

    She told reporters  on the sidelines of the ongoing 2018 International Monetary Fund (IMF)/World Bank Group Meetings, in Bali, Indonesia, that government has to be in a position to develop tools  that could help pursue taxes, especially  ”from very large corporates, like international oil companies (IOCs).”

    The IOCs,according to her, has the    greatest tax potential in Nigeria.

    ”This is the industry that, from the Thabo Mbeki Report, shows that about 70 per cent of the illicit financial flows that go out of Africa, Nigeria included, are related to the extractive industry,” she said.

    “So we did ask for how we can effect transfer pricing and how we can stop the flows from that sector.”

    She said  these revenues are needed to enhance development.

    Mrs. Ahmed said Nigeria’s  delegation also met  with investors from different parts of the world and told them “the Nigerian story and made it clear to them that Nigeria is a good place to do business and that the returns you get from Nigeria are high, at about 14 per cent, as against about four per cent,” in other countries.

    She was confident that “the Eurobond we are trying to raise will have a positive outcome.”

     

     

  • Ending the flare

    In spite of its potential for development, particularly in the generation of electricity, and its deleterious effect on the environment, indiscriminate gas flaring has been going on since the 1960s when oil production began in Nigeria. The international oil companies (IOCs) would seem comfy with flaring the gas rather than harnessing it for positive uses apparently because gas prices are low in the country and the penalty for flaring is by far too cheap to have any dent on their finances. Worse still is the fact that regulatory agents saddled with the responsibility of enforcing the fine are lax in the performance of their duties. At the receiving end of the evil effects of gas flaring are the people of the Niger Delta region, majority of who live in the rural areas despite the billions of petrodollars that the country has made from crude oil deposited in the region. For the Niger Delta’s about 30 million people therefore, it is not just the challenge of environmental pollution from oil spills; they also have to contend with pollution from gas flaring. The flaring is harmful to local health through emissions that have been linked to cancers, blood disorders, asthma, chronic bronchitis and other diseases.

    Indeed, gas flaring causes acid rain, which impacts soil fertility and is associated with reduced crop yields, causing hunger in the Niger Delta where fish populations have already reduced because of pollution by oil companies. Acid rain eats through villagers’ roofs that protect them from rain and sunshine. Yet, the villagers are too poor to replace their roofs that frequently.

    So, what is gas flaring? Justice in Nigeria Now simplifies it as “the burning of natural gas that is associated with crude oil when it is pumped up from the ground. In petroleum-producing areas where insufficient investment was made in infrastructure to utilise natural gas, flaring is employed to dispose of this associated gas.” According to the World Bank, Nigeria is the seventh highest gas flaring country in the world.

    The search for an end to gas flare began in 1969 when the Yakubu Gowon regime ordered that within five years of set-up, a company must cease flaring. The order was not respected. The Federal Government then came up with the Associated Gas Re-Injection Act Number 99 of 1979, that required oil corporations operating in Nigeria to guarantee zero flares by January 1, 1984. Nearly all successive governments set deadlines for ending gas flare. Thus, we had the 2005, 2007, 2008 and 2010 deadlines. As a matter of fact, the federal High Court of Nigeria ruled in 2005 that gas flaring by Shell and the NNPC, with which Chevron jointly operates, was illegal and a violation of the rights to life and dignity. Yet, flaring has continued 24 hours every day and 365 or 366 days all year-round.

    After these attempts at stopping the illegal and unjust practice, It would appear that the Federal Government is just getting serious about putting an end to it. It has just reviewed upward, the gas flare penalty from N10 per thousand standard cubic feet (SCF) of gas to $2 or N612.8 (at the official exchange rate of N306.4 to one dollar per thousand standard cubic feet of gas. But  the increase is for firms that produce 10,000 barrels of crude oil or more while those producing less than 10,000 barrels per day had their own penalty increased to $0.5 or N153.2 per thousand standard cubic square feet of gas.

    These were disclosed in the gazette Flare gas (Prevention of Waste and Pollution) Regulations, 2018 made available to a correspondent of The Punch last week Monday in Abuja by the Programme Manager, Nigerian Gas Flare Commercialisation Programme, Office of the Minister of State for Petroleum Resources, Mr Justice Derefaka. According to the report, “The current meagre flare payment (penalty) of N10 per thousand SCF is increased, in the case of any one producing 10,000 barrels of oil or more, to $2 per thousand standard cubic feet of gas; and in the case of anyone producing less than 10,000 barrels of oil per day, to $0.5 per thousand standard cubic square feet of gas.” The report also stipulates a fine of N50,000 or six months jail term, or both, for anyone who provides inaccurate flare data. “There are mandatory additional payments by the producer of $2.50 for failure to produce accurate flare data; failure to provide access to flares or flare sites; failure to sign a connection agreement; in the event of continuous or egregious breaches, there is a possibility of suspension of operations, or a termination of the producer’s licence,” the report added. There is also a penalty of $2.50 per day where the producer fails to install metering equipment within the time required to do so by the Department of Petroleum Resources, or fails to agree to enter into a concession agreement with a permit holder.

    Of course the regulations made room for exceptions, particularly as regards circumstances beyond the control of the international oil companies. For instance it states that the producer will not be liable in a situation “where the flaring was caused by an act of war, community disturbance, insurrection, storm, flood, earthquake or other natural phenomenon, which is beyond the reasonable control of the producer.”

    But it would appear that the penalty for providing inaccurate flare data is still low, compared with the seriousness of the offence. How can the penalty for such a grievous offence be a mere N50,000 or six months jail term? There should have been no option of fine because that is the only language that many multinationals operating in Nigeria understand. Things they dare not do in their home countries or in a place like China, because of the stiff penalties, sometimes capital punishment, they do in Nigeria and get away with because our laws are weak and also because of the level of corruption in the country which makes it easy for public officials to collude with the foreigners to break our laws with impunity.

    All the same, it is commendable that the Federal Government, for the first time, now seems set to bring about a new order in the way and manner Gas is being wantonly flared in the Niger Delta. The new regulations would seem to be government’s answer to the pleas by several experts in the Oil and Gas sector for an upward review of the gas flare penalty to something higher than N50 per 1,000 SCF in order to stem the tide of gas flare. This is because the oil multinationals have opted for the option of paying the fine because it is by far cheaper than what obtains in some other countries.

    However, laudable as this might be, there is not much to jubilate over yet because, as we all know, in Nigeria, the problem is not about lack of laws or policies to address some of the country’s challenges but that of enforcement. From the provisions of the new regulations, it does not appear that those who drafted them reflected on this aspect of our national life. The regulations and penalties appear to be silent on what happens to Nigerians who collude with these multinationals to cheat the country. This is important because, even at the abysmal N10 per SCF, some of the IOCs had been accused severally of not paying the fine. As a matter of fact, the country was said to have lost about $14.298billion between April 2008 and October 2016 in form of penalties for gas flaring which the IOCs allegedly failed to pay.

    These companies are stupendously rich and are therefore in a position to grease the palms of willing public officials to defraud the country. Patriotism is in short supply here. The IOCs are ever ready to exploit our weak institutions because even when the oil companies’ corrupt officials and their Nigerian collaborators are eventually caught and arraigned in court, the wheel of justice is too slow to gift them their just deserts timeously in the country.  We have tried all manner of ways to fast track this to no avail. Not even the much celebrated Administration of Criminal Justice Act (ACJA) has been able to resolve the logjam. We see examples in the Halliburton, Siemens and other cases involving Nigerians and corrupt foreigners where the latter had long been sentenced whereas their Nigerian collaborators’ cases are yet to go past the preliminary stages.

  • Anti-labour practices: NUPENG takes oil firms to ILO

    The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has dragged some International Oil Companies (IOCs) to the International Labour Organisation (ILO) Committee on Standards over anti-labour practices in Nigeria.

    Speaking at the ILO headquarters in Geneva, Switzerland, NUPENG President William Akporeha alleged that the status of NUPENG as a trade union, in terms of membership, financial capacity and ability to adequately organise and represent oil and gas workers, has been adversely affected by repressive anti-labour and union activities of the multinational oil companies.

    He said the struggle against  workers’exploitation was almost three decades old and that nothing had changed.

    ‘’The anti-union activities  include the depletion of its membership, indecent work entrenched resulting into upsurge in crime and social dislocations and defiant behaviours,’’ he said.

    Others, according to him, are refusal to allow the unionisation of contract and service contracts workers, forcing workers to sign agreement not to involve in unionism, among others.

    NUPENG accused Shell of introducing casualisation in Nigeria, which has been inculcated by other oil firms.

    ”Shell alone has close to 2000 contractors with over 20,000 precarious workers from their three subsidiaries of SNEPCo, SPDC and SNG; unfortunately, there is no  staff member of NUPENG in Shell Nigeria.

    “And they have continuously frustrated union activities in their contracting companies, which run their contractual policies, ranging from six to 12 months,” he said.

    He also alleged that Chevron Nigeria Limited in 2012 converted a stable labour contract of six contractors that had the benefits of permanent employment conditions to 15 contractors into precarious working conditions.

    He also alleged that in 2014, Mobil Producing Limited disengaged NUPENG’s members who were contract workers in Lagos and Eket through their contractor.

    He added: “As a result of this a lot of the workers have not been fully paid their terminal benefits, while those on the job are now being threatened not to join the Union as a condition to keep their jobs and moreover Mobil has also refused to employ permanent workers for more than 15 years.”

    NUPENG also reported that NAOC (AGIP) ENI Group is involving itself in the precarious work policies where all its services are handled by third party contractors with very poor working conditions.

  • Reps to investigate IOCs over huge debt to indigenous companies

    The House of Representatives is to investigate the huge debts owed indigenous firms by International Oil  Companies (IOCs).

    An ad hoc Committee that was given four weeks to undertake the exercise was mandated to explore the most effective means towards ensuring prompt repayment of the debts.

    This followed the adoption of a motion by Kingsley  Chinda (PDP, Rivers), who revealed that several indigenous companies that have rendered services, executed contracts or supplied items to IOCs operating in the country, are being owed huge sums of money by the IOCs.

    As a result, Chinda regretted that indegenous companies doing business with the IOCs, are not only going through difficult times, but the the nation’s economy equally suffers through job loss.

    He said: “The Nigerian Oil and Gas Industry Content Development Act, Cap. N124A, Laws of the Federation of Nigeria, 2004 which, among other things, provides for the development of Nigerian content, as well as supervision, co-ordination, monitoring and implementation of Nigerian content in the Oil and Gas industry in the country.

    “Those contracts, which run into millions of naira, or dollars and can span over short or long durations, are very significant to, and serve as the life wire to several of those companies and the main source of livelihood for the contractors.

    “There is a need to take cognizance of the urgent need to save those indigenous firms and contractors from likely bankruptcy and liquidation by reason of the huge debts being owed them, a development that would lead to job losses with the attendant hardship it will bring in its wake”.

    The motion was unanimously adopted after it was put to a voice vote by Speaker Yakubu Dogara.

     

  • ‘NNPC owes international oil companies $2b’

    THE Nigerian National Petroleum Corporation (NNPC) is owing multinational oil companies (IOCs) over $2 billion (about N400 billion) in cash call, a source has alleged.

    The money was part of counterpart funding for oil exploration, The Nation learnt at the weekend.

    A source close to the IOCs said the figure arose from the Federal Government’s inability to keep to its own side of some agreements it entered into in the last two years.

    Speaking with The Nation on phone in Lagos at the weekend, the source said: “The Federal Government has totally mismanaged crude oil revenue just as it misappropriated money for other projects and other government activities not in line with the budget.”

    According to him, the joint venture (JV) partners have decided not to continue carrying the responsibility further, lamenting that this has reduced the level of investments and exploration and production in the upstream oil sector.

    The Federal Government had entered into JV deals with the IOCs, which include Shell Petroleum Development Company of Nigeria (SPDC), ExxonMobil Producing Nigeria Unlimited, Chevron Nigeria Limited, Nigerian Agip Oil Company (NAOC), TotalFinaElf and Pan Ocean Oil.

    The equity shareholding in the partnership with the government through the NNPC is 45 per cent to 55 per cent with Shell while the other IOCs are in the ratio of 40 per cent to 60 per cent in favour of the government.

    He lamented that the JV option was employed by the government to ensure that the participating companies got a minimum profit margin after tax and royalties on their equity crude.

    The document, he said, contained procedures for reviewing such agreements in such a way that both parties (the NNPC and the joint venture partners) benefited from the dynamics of the economy, such as inflation, exchange rates fluctuations and dictates of the turning world oil market

    It also contained the basic understanding on the JVs as a response to the details of fiscal incentives. Again, it allows for reserve addition bonus, in any year that any company’s addition to oil and gas condensate recovery exceeds production target for the period, he stated

    He said the NNPC should employ competent and experienced professionals to run the industry, adding that the Federal Government should also reduce its participation in JVs. He said the funding could be reduced to between 20 per cent and 30 per cent.

    He said: “I think the burden of funding the cash call is taking a huge toll on the government. It should be reduced to between 20 per cent  and 30 per cent. The government could now sell the equity it is dropping to the public or interested multinational companies who have partnership with Nigerians”.

    According to him, the government could also raise bond in the local stock market fund the JV cash call, adding, that the public will now buy those bonds which are promissory note at a certain amount and after a given period the government will pay back the money with certain interest.

    Managing Director, Danvic Concepts International Limited, Afe Mayowa, said the NNPC is owing its partners. He urged the government to pay its counterpart funds to allow exploration and production to continue.

    Mayowa, a former president, Nigerian Association of Petroleum Explorationists (NAPE), urged President Muhammadu Buhari to declare a state of emergency in the  sector with special focus on the NNPC.

    He listed abuse of the local content, missing funds, irregularities in the allocation of oil blocs and the passage of the Petroleum Industry Bill (PIB) as issues Buhari should train his periscope at.