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Tag: NNPC

  • NNPC: we’ll crash cooking gas price

    The Nigerian National Petroleum Corporation (NNPC) said it is set to implement effective commercial framework that would halt the export of propane and butane – the major components in the production of liquefied petroleum gas (LPG), also known as cooking gas.

    Its Group General Manager, Group Public Affairs Division, Ndu Ughamadu, explained in a statement that the move to stop the export of propane and butane, which is anchored by the Crude Oil Marketing Division of the Corporation would enable the Corporation to boost supply of LPG to the domestic market thereby leading to a natural downward slide in the price of the product in the country.

    He quoted the Group General Manager, Crude Oil Marketing Division (COMD) of the Corporation, Mallam Mele Kyari, as saying: “Currently some of our butane and propane entitlements are exported largely due to lack of vessels to make sure that these things come into the domestic markets and the absence of a commercial framework. What we are going to do is to make sure we put the right commercial framework in place so that those exports are converted into domestic consumption.”

    Mallam Kyari who spoke at a strategy session, said the Division was working in concert with stakeholders to create the enabling environment for in-country production of LPG and cessation of export of the country’s equity butane and propane entitlements due to absence of in-country vessels for transport and other considerations.

    He said the goal of the Division in 2019 is to complete the automation process in the marketing and sale of Nigerian crude oil grades which teed-off in 2017, noting that all hands must be on deck to achieve 100 per cent, end-to-end conclusion of the process.

     

  • Abide by rules, FG tells oil sector operators

    The Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR) on Thursday charged operators in the oil sector to play by stipulated regulations.

    According to them, an industry player’s simple mistake could finish the entire business in the value chain.

    Specifically, the corporation’s Group Managing Director, Maikanti Baru, noted non-compliance to regulations by operators in the sector was the biggest challenge confronting the industry currently in Nigeria.

    The DPR said it allowed illegal stations and gas plants three weeks of grace to regular isle their facilities or face justice.

    Baru, who was represented by a Group Executive Director of the NNPC, Henry Ikem-Obih, spoke at the DPR Annual General Stakeholders Meeting in Abuja.

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    He said: “We all remember that over the years we’ve learnt from a lot of very regrettable mistakes that led to incidents that transformed the way we do business in this industry.

    “It is important that we always remember that one mistake in the oil and gas industry is sufficient to wipe out the entire business. It is as bad as an aircraft crash.”

    Continuing, he said: “As operators, we have a responsibility to support the efforts of agencies like DPR, PPPRA (Petroleum Products Pricing Regulatory Agency), PEF (Petroleum Equalisation Fund) who daily drive compliance in the industry.”

    The NNPC boss also stated it was important for regulators to always enforce regulations, because without enforcement they will never achieve full compliance.

    Abuja Zonal Operations Controller for DPR, Abdul Abba, said the gathering was meant to bring together major players in the downstream oil and gas sector to review 2018 operational challenges and set out new plan for 2019.

    He noted: “We have seen where lack of compliance to the statutory regulations with respect to depots, filling stations and LPG outlets has led to huge losses in investment, lives and degradation of environment.”

    Abba also stated that the agency had taken measures to ensure that illegal retail outlets were regularised.

  • NNPC: PSCs account for most of oil production

    Most crude oil produced in the Niger Delta region come from Production Sharing Contracts (PSCs), a report by the Nigerian National Petroleum Corporation (NNPC) has disclosed.

    The NNPC in its monthly operations and financial report for September 2018, explained that between August 2017 and August 2018, the volume of oil produced from PSCs fields were 310,424,845 barrels, while that from Joint Venture Agreements (JVA) were 245,537,573 barrels, indicating a difference of 64,887,272 barrels.

    On the average, the report showed that oil output from PSCs  amounted to 23,878,834.23 barrels per month and 770,284.975 barrels per day; while that of JVA was 18,887,505.61 barrels per month and 609,274.37 barrels per day.

    PSCs and JVA oil production were closely followed by Alternative Financing (AF), which accounted for 102,162,516 barrels in the production-to-date (PTD) period, as well as the Nigerian Petroleum Development Company (NPDC) which also accounted for 51,018,207 barrels of oil within the review period. In the same vein, marginal field operators and independents produced 55,739,537 barrels of oil within the period.

     

  • NNPC spends N623.16b on fuel subsidy

    The Nigerian National Petroleum Corporation (NNPC), said it has spent N623.16 billion on under recovery otherwise known as subsidy from January to November, 2018.

    The Corporation said it made this known to the Federation Account Allocation Committee (FAAC)  at the last meeting in Abuja where revenue generating agencies gave account of their performances in the year.

    The NNPC in its report dated 19th December, 2018  revealed that it also has an arrears of N67.23 billion for deductions made from FAAC.

    The report said there was a total FAAC deduction of N676.49 billion comprising of N599.74 billion as under recovery for Direct Sales Direct Purchase (DSDP) arrangement and N23.43 billion as under recovered from it’s refineries.

    The document said that the amount incurred by the NNPC as under-recovery was deducted from the Federation Account as follows: January N45.78 billion, February N59.51 billion, March N34.03 billion, April N77.9 billion and May N88.9 billion.

    The breakdown of the N623.16 billion under-recovery showed that N51.24 billion was incurred in January, while February, March and April recorded N58.66 billion, N36.09 billion, and N82.4 billion respectively.

    In the month of May, the amount of under-recovery incurred by NNPC on PMS dropped to N36.87 billion, but rose to N53.41 billion in June, N52.43 billion in July and N63.18 billion in the month of August.

    In the month of June 2018, the Corporation deducted about N68.6 billion, in July, August, September, October and November, it made deductions of N52.5 billion, N60.6 billion, N71.56 billion, N51.18 billion and N65.86 billion respectively.

    Apart from the deductions from FAAC, the amount spent on subsidy, or as under-recovery by the NNPC went up to N71.8 billion in September, before dropping again to N51.18 billion and N65.86 billion in the months of October and November respectively.

    From the document, it was indicated that NNPC is currently subsidising Premium Motor Spirit, popularly known as petrol through its under recovery arrangements.

  • NNPC cautions against oil theft

    The Nigerian National Petroleum Corporation (NNPC) has advised Nigerians to be vigilant and report miscreants, suspected of planning to disrupt product distribution across the country.

    According to NNPC’s Group General Manager, Public Affairs Division, Ndu Ugbamadu, the development became necessary in order to reduce cases of pipeline vandalism during the yuletide period.

    In an interview with The Nation, he said miscreants leverage the festive period to break pipelines in order to cause harm on the society.

    He said the rate at which people vandalise pipelines to steal petroleum products was alarming and should be discouraged.

    He said the destruction of oil installations by militants cause the government a lot of money to fix, stressing that the government spends huge amount of money in fixing such facilities. He added that such money would have been spent on other infrastructure.

    On dangers of pipeline vandalism, he said the discovery of a lifeless body at Gbaga- Ojijo axis of Ogun State should be a lesson to other Nigerians. He warned oil thieves and other miscreants to stay clear of the Corporation’s pipelines and other facilities.

    He said the discovery of a lifeless body in pipeline in Gbaga axis of Ogijo sends clear warnings to those who breach oil and gas pipelines to steal petroleum products, adding that it was suicidal to do so.

    Ughamadu called on relevant government agencies to collaborate with the Corporation to appropriately tame the vandalism of oil facilities, adding that host communities should also partner NNPC in order to stop the menace.

    He said petrol price remains N145 per litre, adding that any station, which attempts to sell the product at a higher price, should be reported to the Department of Petroleum Resources (DPR).

    He assured that the Corporation has put in place strategies to ensure a hitch-free festive period by keeping in stock more than two billion litres of fuel for Nigerians.

  • NNPC records N9.85b trading surplus

    The Nigerian National Petroleum Corporation (NNPC), said it recorded a N9.85billion trading surplus for in September 2018, a figure which is higher than the previous month’s deficit of N3.90 billion.

    Details of the report contained in the newly released September 2018 edition of the NNPC Monthly Financial and Operations Report, indicated that the improved performance of N13.75 billion increase, relative to that of August 2018, is attributable to higher revenue by the Nigerian Petroleum Development Company (NPDC), the corporation’s upstream subsidiary.

    The Corporation’s Group General Manager, Group Public Affairs, Ndu Ughamadu, in the press, said NPDC’s production has been on the rise as a result of successes recorded in repairs of vandalised pipeline in the Niger Delta and the resumption of crude oil lifting activities at Forcados Terminal.

    He said a total crude oil and gas export sale of $626.62million was made in September, 2018 under the NNPC’s US dollar transactions which is 33.32 per cent higher than the previous month.

    He said crude oil export sales contributed $508.54 million, which is 81.16 per cent of the dollar transactions compared with $337.62million contribution in the previous month, pointing out that export gas sales amounted to $118.08 million in the month, while from  September 2017 to September 2018, crude oil and gas transactions  worth $5.45 billion was exported.

    In the downstream sector, the report noted that during the period, NNPC continued to ensure increased petrol supply and effective distribution across the country, saying during the month, 1.66billion litres of petrol, translating to 55.50 million liters/day, was supplied by the corporation.

    It also stated that in the month under review, a total of 125 pipeline points were vandalised; out of which eight pipeline points failed to be welded and only one pipeline point was ruptured. The figure translates to a significant increase from the 86 vandalised points recorded last month.

    A further breakdown of the September, 2018 records, indicated that Aba-Enugu and Mosimi-Ibadan, accounted for 36 points and 33 points respectively, or approximately 29 per cent or 26 per cent of the vandalised points respectively.

    On the other hand, PHC-Aba and Zaria-Gusau accounted for 10 per cent each; Atlas Cove-Mosimi and other locations accounted for 14 per cent and 11 per cent of the pipeline breaks respectively.

    Regarding natural gas off-take, commercialisation & utilisation, the report indicated that out of the 238.91 billion cubic feet (BCF) of gas supplied in September 2018, a total of 142.09 bcf  of gas was commercialised, comprising 30.36bcf and 111.73bcf  for the domestic and export market respectively.

    This translates to a total supply of 1,011.96mmscf/d of gas to the domestic market and 3,724.26mmscf/d of gas supplied to the export market for the month.

    This implied that 59.47 per cent of the average daily gas produced was commercialised, while the balance of 40.53 per cent of gas was re-injected, used as upstream fuel gas or flared.

    The report gave gas flare rate for the month at 8.60 per cent, equivalent of  684.69mmscfd compared with average Gas flare rate of 10.17 per cent which is 800.59mmscfd for the period September 2017 to September 2018.

  • NNPC spends N623.16bn on fuel subsidy in 11 months

    Despite claims to the contrary, the Nigerian National Petroleum Corporation (NNPC) has reported to the Federation Account Allocation Committee (FAAC) that it spent N623.16 billion on under recovery otherwise known as subsidy from January to November, 2018.
    The report to FAAC was made at the last meeting in Abuja where revenue generating agencies gave account of their performances in the year.
    The NNPC in its report dated 19th December, 2018  revealed that it also has an arrears of N67.23 billion for deductions made from FAAC.
    The report said there is a total FAAC deduction of N676.49 billion comprising of N599.74 billion as under recovery for Direct Sales Direct Purchase (DSDP) arrangement and the sum of N23.43 billion as under recovered from it’s refineries.
    The document said that the amount incurred by the NNPC as under-recovery was deducted from the Federation Account as follows: January N45.78 billion, February N59.51 billion, March N34.03 billion, April N77.9 billion and May N88.9 billion.
    Breakdown of the N623.16 billion under-recovery showed that the sum of N51.24 billion was incurred in January while February, March and April recorded N58.66 billion, N36.09 billion, and N82.4 billion respectively.
    In the month of May, the amount of under-recovery incurred by NNPC on PMS dropped to N36.87 billion but rose to N53.41 billion in June, N52.43 billion in July and N63.18 billion in the month of August.
    In the month of June 2018, the corporation deducted about N68.6 billion, in July, August, September, October and November the Corporation made deductions of N52.5 billion, N60.6 billion, N71.56 billion, N51.18 billion and N65.86 billion respectively.
    Apart from the deductions from FAAC, the amount spent on subsidy or as under-recovery by the NNPC went up to N71.8 billion in September before dropping again to N51.18 billion and N65.86 billion in the months of October and November respectively.
    From the document it shows that the Nigerian National Petroleum Corporation (NNPC) is currently subsidising Premium Motor Spirit, popularly known as petrol through its under recovery arrangements.

  • NNPC, NEITI engagement attains global transparency

    The Nigerian National Petroleum Corporation (NNPC) and Nigerian Extractive Transparency Initiative (NEITI) have attained global standards set for operators in the oil and gas industry, NNPC’s General Manager, Crude Oil Marketing, Mansur Sambo, has said.

    He said since the enactment of NEITI law by the government, NNPC and NEITI have committed themselves to transparecy in every aspect of their operation.

    He said the two agencies have  been having frequent engagments on transparency, as regards attaing global standards, adding that their efforts have paid off, as the two bodies were adjudged to have attained the standard.

    Sambo said the engagement started with the reconciliation of crude oil produced, recalling at some point the allegations/issues that we didn’t know what we were producing as a country. He added that through frequent engagment the story has changed today.

    In an interview with The Nation in Abuja,  Sambo said Nigeria  has moved from hydrocarbon accounting to hydrocarbon revenue accounting, and has transited to hydrocarbon revenue utilisation. “We have moved through all these stages because of the engagements we have been having in the past.

    “We moved from the level where we hear that crude oil is disappearing at the terminals through ships, and the engagements have brought much enlightenment to the public on what happens in the terminals,” he said, adding that some of those perceptions people were having did not even happen at the terminals

    Stressing the need for continuous engagement, he said the Corporation has been able to clear some of the issues in the industry with further engagements.

    On the deep offshore Act, he said the industry has pursued the deep offshore, however, there are many other fundamental and salient items that if looked at would generate more revenue than the deep offshore Act.

    “The deep offshore Act can only increase profit sharing we will get from the production sharing contracts (PSCs). Similarly, the petroleum industry bill (PIB) is part of the solution to the increase in revenue that we are heading to, however, the bill alone will not address all the issues to the problem, and it has to go beyond the deep offshore Act,” he added.

  • NNPC may finalise negotiations on repair of refineries by month end

    The Nigerian National Petroleum Corporation (NNPC) may conclude negotiations with private operators on the repairs of its four refineries by the end of the month, its Chief Operating Officer for Liquefied Natural Gas (LNG) Dividends, Mr Isiaka Abdulrazaq, has said. The refineries are Port Harcourt 1&2, Warri and Kaduna.

    He said the NNPC began negotiations with the operators some months ago, adding that the corporation would finalise the deal by the end of the year.

    Speaking on the achievements  of the national oil company during a media forum in Lagos, he said the  rehabilitation of the refineries was vital to the Federal Government, as it is one of its strategies to end fuel import.

    Isiaka said: “We, at the NNPC, agreed that the best way to stop  the shortage of petroleum products, caused by near collapse of the government’s refineries, was to allow a private sector to come in and finance the repairs of the refineries and get paid for the services. As part of the negotiation, the NNPC has agreed to pay the operators from the proceeds of the refineries.

    ‘’The negotiations are on-going, probably they would be finalised before the end of this year’’.

    He said the NNPC had brought in some firms, which specialise in the production of petroleum products and negotiated with them on how to fix the refineries.

    According to him, the negotiations did not achieve their objectives, as the refineries remain in comatose.

    He said the inability of the NNPC to achieve its desired objectives of returning the refineries to optimal capacity through negotiations with some refining companies informed the decision of the NNPC  to negotiate with private sector operators on the issue.

    Isiaka debunked the claims that NNPC is selling the refineries to private operators, stressing that the issue of sharing the proceeds of the refineries would be not based on the number of shares each stakeholder has.

    “Now, the issue of fixing the refineries is not based on equity holdings.What the NNPC is saying is that  a competent private-driven operator should be hired to repair the refineries and get paid instantly. The NNPC needs to get private sector operators and work with them all the time,” he added.

    On the National Assembly, Isiaka said the Senate, in line with the constitution, performs oversight functions on some matters, especially the legality of spending public funds by the government agencies, and whether an agency has followed due process or not.

    The NNPC, he said, is transparent in its spending. Successive administrations have spent huge funds on the Turnaround Maintenance (TAM), a scheme introduced by the government to fix the refineries.

    The checks conducted by the NNPC on the refineries to gauge their performance, however, revealed that they were operating between 30 and 60 per cent capacity, suggesting that they were far from recording optimal performance.

  • $3.9b Egina FPSO contract: NNPC, Samsung disagree on variation cost

    The Nigerian National Petroleum Corporation (NNPC) and Samsung Heavy Industries (SHI) are in discussion over further variation of the $3.9billion Engina Floating, Production, Storage, Offloading (FPSO) vessel contract.

    While the NNPC appears not to be  favourably disposed to further payment of variation costs to SHI, the latter is pushing for variation cost of $800 million citing extra ordinary increase in the quantities of structure and piping materials of the FPSO. The contract was awarded to SHI by Total Upstream Nigeria Ltd, the operator of the ultra deep offshore Egina oilfield in Oil Mining Lease (OML) 130 and a joint venture (Jv) partner with NNPC, in 2013, at an initial sum of $2,993,800,514. It was later reviewed up to $3,335,941,349.

    The FPSO vessel, adjudged the largest in the world, measuring 330 million in length and 61 million in breadth, was designed to have an oil storage capacity of two million barrels.

    In line with the Federal Government’s resolve to grow local content, ensure speedy technology transfer and in conformity with the Local Content Act, indigenous firms were allotted leading roles in the engineering design of the vessel and its fabrication and integration were to be carried out in-country. It was a first major move at local content promotion in the upstream sector of the oil industry.

    High level oil industry sources however said the local content initiative, which was seen as a step in the right direction, seems to have now become the excuse to compel the government to pay astronomical cost for the contract.

    Relying on the clause in the contract which allows variation cost requests, SHI had, at various times made requests for variation costs, claiming that it incurred additional cost because the engineering works on the vessel by Nigerians were below standard.

    Investigations reveal that the Total/NNPC JV has paid additional $546,755,118 as variation costs to SHI to date , thus bringing the total cost of the project to $3.9Billion.

    High level NNPC contact disclosed that Samsung is currently in discussion with the National Petroleum Investment Management Services Ltd (NAPIMS), the upstream subsidiary of NNPC and Total on variation costs of $800 million.

    SHI last April, had threatened to stop work on the vessel by serving a “notice of dispute” on Total. It carried out the threat the following month after which it resorted to legal battle.

    Shocked by the turn of event, NAPIMS and Total met with Samsung and handed it an August 24 ultimatum to launch the FPSO or face the termination of the contract. To show how serious it was, NAPIMS threatened to place a 10 year ban on Samsung if it fails to comply with its directive.

    Although SHI went back to work and the  FPSO had since sailed away to Egina oilfied, the LADOL fabrication Yard and Quay where it was built, SHI has intensified its agitation for variation cost payment and has made it clear that it was going to press on with its suit at the Arbitration in London where it is seeking for the payment of $1.6 billion if Total /NNPC JV fails to honour its variation cost invoice.

    A top oil industry source, who retired as the head of one of the key oil industry agencies, weekend expressed disbelief over such huge variation costs, insisting that it is only in Nigeria that such could happen.

    He said: “Don’t forget that the Bonga oilfield vessel had a similar, if not exactly the same crisis situation. NAPIMS did a thorough investigation, forensic audit was done, a report was written thereafter, but what becomes of this effort?
    “If NAPIMS and Total accede to Samsung’s request for additional US$800 million, total increase in approved contract variation costs would have hit US$1,708,895,953. This will be 57 % of the original cost price.
    ” In my 33 years in the oil industry, I never heard of such ridiculous variation cost, especially when you do not have any significant increase on work scope or any remarkable unusual development which may have had profound impact on project execution, manpower and man hour. Even by Nigerian bizarre standard, this will emerge as the highest level of variations in the history of EPC contract,” he said.

    Another oil industry chieftain, the CEO of an oil producing company describes the situation as truly unfortunate. “ Generally projects of this kind are  too expensive in Nigeria. To appreciate the seriousness of this issue, go and take the total development cost of the field, total development cost of the FPSO and all the variation costs they are talking about and divide it by the ultimate recovery, that is the number of barrels of oil they will recover and you will see what the development cost is.

    “Elsewhere in the world, development cost is between US$5 and 7, check that one, it is probably betweenUS$20 and 30. So you start asking yourself, if the price of crude oil falls to US$50, other than royalty, the government does not get anything because the development cost already wipes out everything.”

    Impeccable NNPC sources disclosed that the corporation’s management has taken a position similar to the one taken by these oil industry chiefs.

    “I can say it emphatically that NNPC is opposed to any further variation cost. As an EPC contract, paying even 30% over the original contract price is mind boggling, given that there was never any major engineering redesigning and no significant increase in scope of work. To take it to the level of 57% of the original cost is simply absurd. Don’t forget that as a joint venture partner to Total, NNPC, and by implication, Nigeria, is being called upon to cough out this unjustifiable huge amount at a time when every cent is needed to build our infrastructure.”

    Checks revealed that while a key manager of Total Upstream who is fully involved in the project argued in favour of the payment of the US$800 million being requested by Samsung, other management staff are said to be opposed to any further variation, and are not willing to discuss any variation cost