The Nation Newspaper

Tag: NPDC

  • NPDC’s questionable hide-and-seek

    If threats are anything to go by, the Nigerian Petroleum Development Company (NPDC) may soon have to close shops. The fate of Shell Petroleum Development Company (SPDC) in Ogoniland may befall it.  For some time now, it has run into turbulent waters with many of its host communities in Delta State. Protests now characterise the company’s daily dealings with many of its host communities. Things have, indeed, fallen apart and the centre will soon give way.

     NPDC, which operates most of the divested oil facilities of the SPDC, is the oil prospecting and exploitation arm of the Nigerian National Petroleum Company (NNPC).

    Of recent, not less than three communities in different parts of the state demanded the company’s exit over alleged agreement breaches. The people of Otu-Jeremi community, Ughelli South Local Government  Area last week threatened to shut down the company’s facilities if its management failed to repair a pipeline, which has been leaking gas into the community. They claim many residents have fled to avert sicknesses.

     The Otu-Jeremi issue was occasioned by an integrity test on the Abura line from the Utorogun Flow station. The leak has negatively impacted the environment in Iwhrekan, Iyara, Okpare and Agbowhiame, Otu-Jeremi’s neighbours, forcing many residents to seek refuge in safer places.

     The company is also in trouble in Opuama (Ikpotogbene) community, Warri North. Tuesday last week, it demanded that the company halt its operations in their area, citing the company’s failure to follow due process. Addressing reporters in Sapele, members of the community, under the aegis of the Concerned Oloduwa Descendants (COD), alleged that the company entered their “native-land and commenced clearing as well as dredging work without conducting the necessary Environmental Impact Assessment (EIA)”.

    They also said the company failed to sign a Memorandum of Understanding (MoU) with them.  The community’s list of grouses, which was titled “Our Demand”, was signed by Mr French O. Ukuto, Chief Samuel Peggy, Chief Stephen Ukulor,  Elisha Ukuto, Mrs Alero Ugedi, Ati Reach, Mrs Evelyn Ukulor, DSP (retired) Abel Sule, Ebipade Elisha and Damage-Clark Aboh.

     A neighbouring community to Opuama, Polobubo (Tsekelewu) earlier gave a six-day ultimatum to the company to either enter into what it called a “proper agreement” on how to use its land or wind up its activities. It threatened to deal with it if it did not heed their words.

     The company has dodged this reporter’s attempts to respond to the allegations against. All official channels explored were frustrated. When this reporter called its Manager (External Relations Department), Ugo Atugbokoh, on phone, he said he was in a meeting and promised to get back. He never did.  A repeat call to Atugbokoh  was unanswered. He also did not respond to a message sent to persuade him to respond to the growing opposition to his company’s interest in the state.

    The way things are: the company is dodging its hosts and the media, raising the poser: what does it have to hide? Issues, such as the ones raised against it by the host communities, should be addressed. When gas leaks into the atmosphere, like the communities allege, it has dire consequence on the ozone layer and the people’s health. These are things that should not be toyed with. And dodging press enquiries also give the impression that the company has something to hide. Atugbokoh has done the company a disservice by shunning enquiries.

  • NPDC and dwindling crude oil reserves

    SIR: Two breaking news in Nigeria in recent time should not go without comment. One was  news of the successful listings of Seplat on the Nigeria Stock Exchange (NSE) and London Stock Exchange (LSE).  The other was the disturbing news that Nigeria’s crude oil reserves had dropped to 35 billion barrels from the 37 billion barrels it stood in the last two years.  The reasons were linked to the lull in hydrocarbon exploration activities to replace depleted ones. This sorry situation was further confirmed with the recent rebasing of Nigeria’s Gross Domestic Product (GDP), showing that the share of crude oil and natural gas to the nominal GDP has declined to 17.52 percent, 15.89 percent and 14.40 percent for 2011, 2012 and 2013 respectively.

    I doubt that there is any Nigerian that would not  reflect on that news considering the harm that depleting reserves could do to Nigeria’s economy given that crude oil accounts for more than 90 per cent of the nation’s revenue. The question  that most people have demanded an answer to is, ‘what really is responsible for the dearth in the exploration and production of crude oil in Nigeria’? The answer lies in the inability to pass the proposed Petroleum Industry Bill (PIB) into law.

    But then, there is another issue.   And that has to do with the challenges that serious exploration and production firms partnering with state-owned firms like the Nigerian National Petroleum Corporation (NNPC) and the Nigerian Petroleum Development Company (NPDC) face in the quest to jointly bring on-stream, projects that would boost both Nigeria’s crude oil reserves and production capacity.

    Seplat’s success can be traced back to the period between 2010 and 2012, when Shell Petroleum Development Company (SPDC) in the bid to divest some of its onshore assets, sold about eight Oil Mining Licenses to some indigenous companies. Today, only Seplat has been in full production since it acquired these assets from Shell. The reasons have to do with undue delays from government bureaucracy.  It is one factor that has dampened indigenous companies’ ability to fund and develop the oil and gas sector, and to build a promising indigenous upstream industry. And one of the reasons why local banks are refusing to fund any project where NPDC is the operator is because of the inconsistency in government policy and bureaucratic delays and undue government interferences.

    Delays stifle investments; it is inimical to efforts to create jobs and curb rising unemployment; it diminishes the opportunity for human capital development and training opportunities for Nigerians; provides less or fewer contracts opportunities for local contractors, and thus contributing to militancy in the oil communities.

    •Chinedu Gregory,  

  • Nigeria unveils plans for Shell’s, Total’s Eni’s assets

    To ensure the viability of the six oil wells it acquired from the International Oil Companies (IOCs), the Nigerian Petroleum Development Company (NPDC) has adopted a new employment strategy.

    The NPDC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), took over some oil wells from Shell, Total and Eni, following their decision to sell their stakes because of what they called losses from crude oil theft and pipeline vandalism.

    While unfolding plans to expand NPDC’s business, including spending $5.2billion in the next five years at a stakeholders’ meeting in Lagos, its Managing Director, Mr Victor Briggs, said human resources were vital to the companies’ growth.

    He said NPDC was not following its traditional method of recruitment, in view of the huge assets at its disposal.

    He said a paradigm shift from periodic to constant recruitment of experienced professionals was necessary, in view of the enormous challenges of growing the assets to an enviable height.

    He said: “NNPC recruitment is subject to the rules of the government. However, we have to look at other options to improve oil production in the industry. We look at the assets we took over from the IOCs operating in Nigeria, to see how best we can manage them well. We do not have the time to train people; we employ whenever we see the opportunities. We lay ambush when we hear that some people are trying to leave and employ them.

    “We look for contractors to manage the assets. Sometimes, we train others at a short period to grow the assets. Upstream services sector of NNPC has been well developed. ‘’

    According to him, crude oil production is complex and comes with its own attendant cost.

    ‘’The cost of sustaining increase in crude oil production is high. There is a lot of demand for crude oil globally. People look at the sector from the point of volumes of barrels produced per day; without looking at the human resources required to grow it. When companies come into the industry, they need to ask themselves this question: What does it take to employ expatriates or local staff? That has become a challenge to many operators,’’ he added.

    NPDC is hoping to in increase its output on Oil Mining Lease, OML, 42 by an additional 30,000 barrels per day(bpd), to bring total output from the asset to 60,000 bpd. Currently, the OML 42 licence produces 30,500 bpd.

    The company took over the operatorship of the licence from SPDC in January 2012 when it was producing 25,000 bpd from 11 strings.

  • ‘NPDC’s gas projection’ll improve power’

    The decision of the Nigerian Petroleum Development Company (NPDC) to increase its gas delivery from 410million standard cubit feet to 600million standard cubic feet per day by the end of the year will impact positively on the power sector, stakeholders have said.

    President, Petroleum Technology Association of Nigeria (PETAN) Emeka Ene and President, International Association of Energy Economics (IAEE), Prof. Adeola Akinnisiju, said the issue would bring production and environmental benefits to the economy.

    Ene said the development would help in improving the operations of the power generation companies (GENCOs). He said the inability of the firms to access gas is having undesirable effects on power generation and distribution in the country.

    He said: “The immediate impact of rise in natural gas delivery by NPDC would be on the power sector. Domestic gas obligations have not been met in Nigeria. Now that NPDC plans to raise its gas delivery from 410mmscf/d to 600mmscf/, it is a good omen for the country. Once the GENCOs are able to get additional gas supply, they would improve their operations by way of meeting the electricity needs of the populace.

    “Eighty per cent of the power plants are fired by gas, implying that the firms have a crucial role to play in the nation’s energy sector. Ability to solve the gas problem would help in improving the power industry.’’

    Akinnisiju said the environmental and production benefits of increase in gas production cannot be underestimated, giving the fact that Nigeria is an emerging economy.

    ‘’ Whether the gas is coming from the green field projects or old oil wells, it has an environmental and production impacts on the economy. If the gas is coming from old oil fields, it would reduce the incidence of gas flaring. Also, if the gas is going to be sourced from green fields, the issue of gas flaring would not arise. It is an associated gas. That means that the gas must have been flared before it is prepared for use. When this happens, the health hazards occasioned by the release of carbon dioxide into the air would not occur.’’ he added.

  • NPDC votes $3.6b for capital expenditure

    NPDC votes $3.6b for capital expenditure

    The Nigerian Petroleum Development Company (NPDC), the upstream subsidiary of the Nigerian National Petroleum Corporation (NNPC), has set aside $3.6billion for its capital expenditure for the year and 2015.

    The firm set 300,000 barrels per day (bpd) and 900million standard cubic feet of gas per day (mscf/d) as its oil and gas production targets over the next four years.

    Its Managing Director, Victor Briggs, who unveiled the company’s programmes as well as the state of the divested assets from Shell at the weekend, said, the firm produces 140 barrels per day (bpd) and expects to increase it to 160,000bpd by end of this year while it delivers 410 mmscf/d and plans to raise it to 600mmscf/d by end of the year.

    He said from the operational projections, the expenditure from 2016 would decrease by 50 per cent from the budget of $1.8 billion for the year and 2015 to between $700 million and $800 million despite projected increases in oil and gas outputs.

    According to him, many investments are going into the newly acquired assets from Shell to optimise production and connect the well to where crude can be piped to the export terminals through the flow lines, flow stations and trunk lines.

    He explained the extent of works done on oil mining licences (OMLs) 26 4340 42 34, current levels of production, plans and timelines to increase their output.

    He said: “The company started in 1988 with few assets. At that time the company was producing less than 1000bpd. NPDC then was very active in exploration and production. Most of the fields that are keeping Total were discovered by NPDC as well as some of those of Conoil but because the NPDC didn’t have the funds to continue with the development phase of these assets where the bulk of the money was needed, they were taken away and given to other companies to develop.

    “We started with OMLs 65 and III but today NPDC is involved in several OMLs, about 28, with some in deep offshore where we are not operators but equity partners. One is shallow offshore (OML119), which we are operating, some in swamp where we have OMLs 40 and 42, which we also operate. The remaining OMLs are on land. Currently, we are concentrating on swamp, land and offshore, which we have been doing over a long period.

    “Today, NPDC has the capacity to produce about 140,000bpd. Production varies each day depending on absence of any issue. If there is any breach on our pipeline or flow line, the safe thing to do is to shut down. The main impact on our production is really when there is a breach on a trunk line, which is a big pipe which carries production from different companies’ pipe to the terminal. The essence of the trunk line is that it is cost-effective for the oil companies. Therefore, if there is a breach on such line, all the companies using it will be forced to shut down.”

  • Service agreement covers just 10%, says NPDC official

    Service agreement covers just 10%, says NPDC official

    Following the spate of criticisms of the Financial Service Agreement between the Nigerian Petroleum Development Company (NPDC) and two indigenous companies, Atlantic Energy Drilling Concept and Septa, an official of NPDC said on the contrary, the working arrangement has enhanced indigenous participation in the oil sector.

    The senior official, who asked that his identity be veiled, said the agreement has widened the scope of local content, expanded capacity and reach of indigenous companies, which for the first time are providing major financial muscle that NPDC lacks to ensure uninterrupted operations of the blocs.

    He said contrary to reports that the two firms merely put down $50 million, the actual amount was much higher and that only 10per cent of NPDC crude and not 60 per cent was covered by the terms of the contract. The official described as phony and totally untrue, that the two firms were lifting as much as 60 per cent of NPDC crude, describing  the claim as a “figment of their imagination.”

    Also reacting to the reports is an official of one of the companies who declined his name in print, but  confirmed that  $135 million is what was paid. He said $135 million was paid to NPDC and it was fully receipted, adding that the money was borrowed at interest rate, which is already affecting the companies bottom line.”

    He expressed doubt that in the next five to six years the company would be unable to break even.  “We are always shocked by the figures we hear and see in the papers, they are so far from reality that sometimes we wonder whether they are referring to the actual agreement, or something else. We seriously think that our participation in this technically complex and capital intensive venture should encourage other Nigerians to venture into it,” he said.

  • ‘Nigeria incurs huge cost on imported oil equipment’

    ‘Nigeria incurs huge cost on imported oil equipment’

    Nigeria is spending a fortune on the importation of oil and gas equipment because of the poor state of local market. At an energy forum in Lagos last week, participants said the country spends billions of dollars on the importation.

    Among the participants are Executive Secretary, Nigerian Content Development and Monitoring Board, Ernest Nwapa, the Managing Director, the National Petroleum Development Company(NPDC) Mr Victor Briggs and former Director, Department of Petroleum Resources, Tony Chukwueke.

    Nwapa said efforts were now geared towards domesticating manufacturing of these equipment.

    He said there were equipment that could be manufactured locally, adding that the government and operators were planning to ensure such facilities are produced in Nigeria. The need to keep a higher percentage of the yearly oil spend within, he said, was imperative to move the country forward, adding that the country would realise a lot of money from production of vessels, pipe and others.

    He said the pilot project of a pipe mill would soon be launched, adding that the idea will help in encouraging local expertise, provide jobs, and save the country a lot of money.

    Nwapa said: “We are working with the operators to establish pipe mills for the carriage of crude. Projects worth billions of dollars are going on across the country. We want to see a revamp of the dockyards and subsequent construction of oil vessels. Indigenous marine vessel operators include Aero Marine, Britannia, Vigeo and others. We want to see an expansion of local segment of the oil and industry in the next few years.

    “We want to see a situation whereby rigs and fabricated yards are owned by Nigerians, and not foreign oil services companies. We should get our people owing these assets for growth. We are trying to increase what we are doing in terms of facilities and human resources deployed to the sector. That is the fundamental thing the Board is doing. Nigeria has been buying ideas and equipment, a development that has resulted in capital flight and loss of opportunities to employers locally.

    Nwapa said the nation was moving towards entrenching the Nigerian Content Perspective in the industry, saying the Board has engaged the managing directors of International Oil Companies (IOCs) on the issue. “We are training people holistically, Thereafter, we attach them to a company to demonstrate what they have taught,” he said.

    Nwapa said the Petroleum Industry Bill (PIB) has resulted in a change in the mindset of operators, suppliers and vendors, stressing that they have a local content benchmark in what they are doing in the industry.

    Briggs said the PIB was having a spillover effect on other sectors, noting that many organisations were introducing local content policies.

    He said hitherto, indigenous oil production accounted for less than ten per cent of the upstream operations, but added that local producers have increased their output to over 30 per cent.

    “Local producers produce lower quantities of oil because there is shortage of blocks. There is an aspect of PIB that make provision for increase in the production of indigenous companies. When the bill is passed, there would be blocks for operators to work with. The bill ensures that idle blocks are made productive. We are looking at a tax regime of between 55 per cent and 57 per cent for small operators, as against 88 per cent tax rate imposed on them. There is provision for tax holidays as well, explaining that based on this, small firms would be able to play well and grow their businesses.

    He lamented the government inability to get enough oil royalties, stressing that things would change when the bill is passed. He said there are lots of gas export projects compared to domestic gas market, adding that PIB will remove cross- subsidisation of gas market and its attendant inefficiency.

    “There is an aspect of PIB that is devoted to strengthening of the domestic market.The bill will galvanise the interest of the stakeholders when passed into law,” he said.

    Chukwueke urged the government to improve oil production for growth, saying no crude oil producer would like the price to crash because of the benefits derived from it.

    He advised the government to put in place measures that would improve production, arguing that the development will help the country absorb volatilities in the market.

    “The reason oil price has not fallen to $6 per barrel is because countries are not ready to crash for the sake of their economies. They need high price of crude. If Nigeria does not do something now, when the price is crashed, the impact will be on the country, “ he said.

  • Our production rights intact, says NPDC

    The strategic alliance agreement with Atlantic Energy Drilling Concepts did not include transfer of the production rights of Nigerian Petroleum Development Company’s (NPDC), The Nation has learnt.

    This is contrary to the petition by a group called Restoration Niger Delta.

    A reliable source in NPDC, which is the exploration and production arm of the Nigerian National Petroleum Corporation (NNPC), told The Nation that the pact between the two parties was neither divestment of asset nor transfer of operatorship but simply an alternative funding arrangement in order to meet the NPDC’s cash call obligations in the Oil Mining Leases (OMLs) 26, 30, 34 and 42 in question.

    The Restoration Niger Delta in a petition alleged an untoward transfer of 60 per cent of the 55 per cent equity holding in the form of production rights of NPDC in OMLs 26, 30, 34 and 42 to Atlantic Energy Drilling Concepts.

    Dismissing the petition, the NPDC source said: “There is no place in the petition where the particulars of NPDC ‘s equity interest in the OMLs were shown to have been transferred whether in part or wholly to Atlantic Energy Drilling Concept Limited in defiance of the intendment of the Procurement Act.”