The Nation Newspaper

Tag: Oil and Gas

  • Gas flaring: Baru charges gas companies to help in hastening process

    Federal government has charged gas producing companies in the Niger Delta to do more to help government in its efforts to end gas flaring by taking advantage of available gas processing plants around the region.

    The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, who gave the charge on Thursday at the commission of the Egbaoma Gas Processing plant in Ebedei community, Ukwuani council area of Delta state, also said government is working on a gradual phasing out of the gas flare era in the oil/gas-rich Niger Delta region.

    He said with the operations of the Ebedei processing plant, the gas flare in the Umutu gas field should be out before the end of the year, charging all gas producing companies in the Delta area to take advantage of the opportunities now provided by PNG Gas Limited in the area and help in the crusade to end gas flaring in the country.

    Dr Baru, who commended the operators of the gas processing company; PNG Gas Limited, for pioneering gas development efforts locally, also said the federal government is aggressively pursuing an expansion of domestic gas supply capacity to 5 bscfd (billion standard cubic feet per day).

    As part of the expansion project, Baru informed that the gas pipeline infrastructure network system is equally being expanded, adding that the Obiafu-Obrikom to Oven (OB3) gas pipeline, a 2 bscfd capacity pipeline,which is a project aimed at the creating a gas grid across the country, should be ready before the end of this year’s second quarter.

    Address journalists after the inspection and commissioning of the gas plant, Baru said “my visit here is to reassure the investors here that the gas that is being flared will go into the OB3 and that this flare, God willing, before the end of this year will be out.

    “I’m also encouraging the other producers who are flaring to connect their gas into this gas plant so that they can add value by processing it, removing the liquid that they can sell at a higher value and of course, putting out the flares and monetising the lean gas.

    “At this juncture, may I urge the operators whose assets are at close proximity to this plant and the OB3 pipeline to seize the opportunity presented by this gas plant to collaborate with PNG Gas Limited to supply gas to maximize the plant’s capacity, access and commercialize all existing flares and further develop the significant had reserves of 1Tcf in the area. I see this initiative as the beginning of an end to the last mile of gas flaring in Nigeria”, he said.

    In his Welcome Address, the Chairman and Chief Executive Officer Owel-Linkso Group, promoters of PNG Gas Limited, Engr. Charles Osezua, said his company had invested about $60 million in the Egbaoma Gas Processing Plant, with capacity to process some 30 mscfd of wet gas.

    According to him, about 500 Nigerians have become commercial beneficiaries of the operations of the processing plant, while more than 500 homes are being serviced with the LPG being produced from the place.

  • Pay more to flare less? Calculating the costs of flaring gas in the oil and gas sector

    It’s been 60 years since Nigeria joined the World Oil Producers and reaped riches from its oil production. It made its first oil discovery at Oloibiri, Bayelsa in 1956. In 1958, its first oil field came on stream, producing 5,100 barrels per day. By the late sixties and early seventies, Nigeria had attained a production level of over 2 million barrels of crude oil a day.  In 2016, the country could boast of 37 billion barrels oil and gas reserve as reported by the Nigerian National Petroleum Corporation (NNPC), the State’s oil company. Today, Nigeria’s crude oil production is at 2.2 million barrels per day.

    Since 1956, a good number of oil and gas companies (foreign and local) have set up shop in Nigeria. Shell Petroleum Development Company (formerly known as Shell BP) was the first oil and gas company in the country. It drilled 12,008 feet at Olobirin Well No.1 (now dried up). Today, Chevron Nigeria Ltd, ExxonMobil, Nigeria Total, Nigerian Agip Oil Company are some of the other key players in the Nigerian oil market.

    What we got from oil and gas in 15 years

    Data from the Nigeria Extractive Industries Transparency Initiative (NEITI) shows that companies in the oil and gas sector in Nigeria paid about $347 trillion revenue from 1999 to 2014. This amount was paid to government agencies through a variety of revenue streams such as extraordinary taxes on income, profits, and capital gains, royalties, bonuses, emission and pollution taxes, and general tax on goods and services etc.

    While extraordinary taxes on income, profits, and capital gains are paid for the sale of assets like land and properties, general taxes on goods and services are indirect taxes paid on consumption of goods and services by private individuals. Royalties, on the other hand, are paid for the exploitation of natural resources connected with land and minerals. In the oil and gas industry, royalties are pay for oil produced from a concession. he rates are set based on the location of the field. Therefore, the deeper the concession area is, the lower the applicable rate.

    Bonuses in the oil and gas industry are paid at a specific time within a project timeline. A very important one is the signature bonus. A signature bonus is paid by a concessionaire at the time an oil prospecting licence or oil mining lease is granted. Finally, emission and pollution taxes are paid for the emission of toxic particles that are devastating to our environment and harmful to health.  Oil and gas companies pay a certain amount for gas flared and oil spilled.

    In this article, because of their direct impact on host communities and the environment, we focus on the latter: emission and pollution taxes.

     

    The charts above help to identify the sources of gas flaring in Nigeria. If the assumption that the more gas an organization flares, the more emission and pollution taxes it pays is correct, the first set of companies to hold responsible for air pollution and environmental degradation in Nigeria would, of course, be Shell Petroleum Development Company and Chevron Nigeria Limited. These companies paid the highest taxes ($44,787,000 and $44,570,000) in 15 years. Addax Petroleum Development Nigeria Ltd (ADDAX/APDNL), Nigerian Agip Oil Company (NAOC), and Mobil Producing Nigeria Limited (MPNU) follow. How much volume of gas have these top emission and pollution taxpayers flared in 15 years? Let’s dig into data. A little arithmetic might also be needed.

    Charts E-I shows the top emission taxpayers, the amount paid in dollars and the exchange rates applicable in years covered by the data. Chart J shows the naira equivalent of the sum total of each company’s payments in those years. From the charts, it can be seen that Chevron appears to pay a little higher than Shell in naira while the converse is the case in dollars. It might therefore seem that one of these companies flares the most gas in Nigeria. However, a little more insight is required to draw any useful conclusions.

    In Nigeria, there are regulations governing gas flaring. Over time, there have been different penalty rates per 1,000 Standard Cubic Foot (scf). For example, N10 per 1,000scf was applicable in 1998-2008 while in 2009 – 2017, the government set $3.5 for every 1,000scf gas flared (although, a report by NEITI states that, up until now, the penalty hasn’t been enforced and adhered to). Going by the N10 per 1,000scf rate which was paid until 2018 when the rate was reviewed and set at $2 for 1,000scf, Shell Petroleum Development Company paid about N5.2 billion between 1999-2014. At N10 per 1,000scf rate, the company had flared a total of 520,392,266,400 scf gas. Using the same calculation model, Chevron Nigeria Limited flared 550,007,562,600 scf gas, Addax Petroleum Development Nigeria Ltd flared 317,890,191,000 scf gas, Nigerian Agip Oil Company 261,554,792,800 scf and Mobil Producing Nigeria Limited flared 249,794,641,300 scf gas.

    For those not familiar with SCF, the oil equivalent of the volume of gas flared might be easier to follow: If gas were to be oil, it simply means the five top companies had spilled more than 92 million, 97 million, 56 million, 46 million, and 44 million barrels of oil from 1999 – 2014 respectively. The chart below presents a clearer picture of this data.

    Making Amends

    The facts have not gone unnoticed. In 2015, the NNPC and Chevron Nigeria Limited (NNPC/CNL) Joint Venture revealed its plan to reduce gas flaring by 98 percent and it announced the completion and load-out of the topside module of the SONAM Non-Associated Gas, NAG, Wellhead Platform project in 2016. Unfortunately, the positive effect of this has not really been felt nor seen.

    It was also reported that the Federal Government’s plan to end gas flaring by 2020. It also planned to introduce the “National Gas Flaring Commercialisation Programme”, an initiative that would generate about 36,000 direct jobs, 200,000 indirect jobs in the Niger Delta and ensure the redirection of the utility of gas for cooking, electricity and other industrial purposes.

    In the meantime, Nigerians continue to suffer from the health hazards of gas flaring. The ordeal and agony of residents of Edo, Delta, Bayelsa, Imo, Akwa Ibom and Rivers states, (especially the host and neighboring communities of the oil and gas companies) are better imagined. Media reports have it that satellite images provided by the tracker located 222 of gas flaring incidents happening around 65 onshore oil wells these states.

    Respiratory problems, cardiac diseases, bronchitis (inflammation of the lungs), silicosis (lung disease contracted by inhaling impure air) skin rashes, insomnia (sleeplessness), and eye irritations are some of the frequent ailments in such communities. The residents are exposed to all kinds of airborne diseases.  Egbema and Mgbede  and many more cases were reported in the media.

    With the new law of $2 for 1000 scf gas flared, the oil companies are likely to flare less. The new penalty is aimed at discouraging gas flaring, to encourage the redirection of gas flared from waste to wealth and preserve the environment and the lives of the residents in such environments. The government might also call back the debt of companies who defaulted when the rate was at N10 and make them pay at the current rate. If this is done, the organisations involved would be made to pay heavily and as such, gas flaring would not be considered an alternative anymore.

     

  • Nigeria earned $640.35m from oil, gas in October

    The Nigerian National Petroleum Corporation (NNPC) on Tuesday said that Nigeria earned $640.35million from the export of crude oil and gas for the month of October, 2018.

    NNPC Monthly Financial and Operations Report for October 2018 that contained this, according to a statement of the Group General Managing, Group Public Affairs Division, Mr. Ndu Ughamadu, said the total export receipt of $640.35 million recorded in October 2018 was higher than the $527.70 million logged in September 2018.

    It explained the receipt showed $450.44million accrued from crude oil sale with gas and miscellaneous receipts standing at $173.92 million and $15.99 million respectively.

    The statement noted the downstream sector, the Petroleum Products Marketing Company (PPMC), a downstream subsidiary of NNPC, posted a receipt of ₦231.33billion from sales of white products in the month of October 2018 compared with ₦150.25 billion sold in of September 2018.

    Total revenues generated from the sales of white products for the period October 2017 to October 2018 stands at ₦2.684Trillion, where PMS contributed about 88.32 per cent of the total sales value of ₦2.371 Trillion.

    The corporation raised the alarm on increasing incidents of pipeline vandalism across the country, saying in October last year its pipeline network suffered a 42.9 per cent increase in the incidents of pipeline vandalism compared to the previous month during the year.

    He said the corporation recorded 219 pipeline vandalized points in the month under review, compared to 125 incidents it suffered in September of the same year.

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    He said the findings that were captured in the NNPC Monthly Financial and Operations Report for October 2018 revealed that among the breaches, four vandalized pipeline points failed to be welded and one point was ruptured.

    The report stated that cases of vandalism of pipeline facilities were high along Ibadan-Ilorin and Aba-Enugu axis, accounting for 81 (40%) and 39 (18%) vandalized points respectively.

    The spokesman stated despite the challenge posed by pipeline vandalism, the NNPC kept an eye on Premium Motor Spirit (PMS) stock level to ensure zero fuel queue across the nation.

    To ensure continuous increase of PMS supply and effective distribution across the country, a total of 1.66 billion litres of petrol, translating to 55.50milion liters/day, were supplied for the month under review.

    The report noted that out of the 1,066.88 million standard cubic feet of gas per day (mmscfd) of gas supplied to the domestic market in October 2018, about 627.33mmscfd of gas representing 58.81 per cent was supplied to gas-fired power plants to generate an average power of about 2,349MW compared with the September 2018, where an average of 615mmscfd was supplied to generate 2,303MW.

    The balance of 439.35mmscfd or 41.19 per cent was supplied to other industries.

    Similarly, for the period of October 2017 to October 2018 an average of 1,188.58mmscfd of gas was supplied to the domestic market, comprising of an average of 744.06mmscfd or (62.60 per cent) as gas supply to the power plants and 444.52mmscfd or (37.40 per cent) as gas supply to industries.

    About 3,096.18 mmscfd or 89.58 per cent of the export gas was sent to Nigerian Liquefied Natural Gas Company (NLNG) Bonny.

  • ‘Deregulation’ll unlock oil sector’s potential’

    Stakeholders in the economy, especially the oil and gas sector, have renewed the push for total deregulation of the downstream oil industry. Their worry is that the huge foreign exchange (forex) spent on fuel importation through subsidy has become outrageous as it depletes the national treasury, denies critical sectors and infrastructure of funds and, most importantly, fuels jobs exportation. EMEKA UGWUANYI reports.

    Stakeholders in oil and gas industry are of the opinion that total deregulation of the downstream sector of the petroleum industry will unlock the huge investment potential in the sector. They beleive it will stimulate sustainable growth as private investors will come in.

    They expressed worry over the huge money spent by the Federal Government on subsidy payment annually, which they said could be used to develop other sectors of the economy.

    According Minster of State, Petroleum Resources, Dr Ibe Kachikwu, the subsidy on premium motor spirit (PMS), popularly called petrol, stands at over N1.4 trillion.

    The stakeholders said with the huge money spent on subsidising petrol, it has become imperative for the government to embark on total deregulation of the downstream oil sector to attract investors and save the country from the huge amount spent on subsidy.

    The Director-General,  Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said perhaps the biggest burden on the economy today is the petrol subsidy regime.

    Yusuf said the government should encourage private sector players to take over the downstream sector of the petroleum business.

    He said: “When this is done,  most of the challenges we see as regards subsidy, refineries and others will be adequately addressed. The government should only play a regulatory and not an operational role.

    “Government has no business refining petroleum products, retailing or distributing fuel as well as the marketing of these products. We cannot continue to carry that kind of burden in the oil sector.

    “It is a big hole in the finances of government.  It puts tremendous pressure on the foreign exchange market and foreign reserves, just as it exerts immense stress on the nation’s treasury.

    “It remains a cause for concern that the subsidy regime had subsisted, especially at a time when the economy is facing unprecedented fiscal challenges;  at a time when productivity in the economy is constrained by acute infrastructure deficit;  at a time when public institutions are finding it hard to pay salaries. There cannot be a better example of resource misapplication.

    “There are two components of this; the first is the genuine subsidy, which is the differential between the pump price and the landing and other costs of fuel. The second and more disturbing component is the transparency problems inherent in the fuel subsidy administration, including the petroleum equalisation policy. For several years, the economy suffered severe bleeding from this phenomenon.”

    The LCCI  chief said one of the critical elements of the oil and gas sector reform, particularly the downstream, is the complete deregulation of the sector. “This is the spirit of the Petroleum Industry Bill (PIB) which, regrettably, has again got stuck in the legislative process.   The reform of the oil and gas sector would create a number of advantages for the economy,” he said.

    Total deregulation of the downstream, he said, would free resources for investment in critical infrastructure such as power, roads, the rail systems, health, and education sectors, among others.

    He said deregulation will also unlock the huge private investment potentials in the downstream oil sector, especially in petroleum product refining, adding that this will ultimately reduce importation of petroleum products and ease the pressure on the foreign exchange market as well as the burden on our foreign reserves.

    To him, deregulation will eliminate the patronage, rent seeking activities and corruption that currently characterise the downstream oil sector. “Full deregulation will create more jobs for the teeming youths of the country in the downstream as investment in the sector improves. It will permanently eliminate the fuel queues. The subsidy regime has done incalculable damage to the economy over the years.

    “The citizens have in the past suffered untold hardships resulting from scarcity of petrol and in many instances buying the product far above the regulated price. The nation’s treasury and foreign exchange market has been under severe pressure from the funding of petroleum product importation. This should not continue if the Nigerian economy must make progress.

    “Understandably, it may be difficult to undertake this reform at this time because of the elections; it should be top on the agenda of government post-elections. The current management model of the oil and gas sector is surely not sustainable,” he added.

    An energy expert, Mr. Felix Andrew, said continuous payment of subsidy is not sustainable, and urged the government to liberalise the downstream and encourage free entry, free exit system to attract investors in the sector.

    Andrew, who is also the Executive Director, Blue-Sea Energy Limited, said Nigeria spends about N1.7 trillion on fuel subsidy annually, while its education and health sector can only access a paltry part of budget. According to him, it is obvious, that the fuel subsidy programme is placing a huge financial burden on the nation’s resources.

    “Hence, there is no better time to deregulate as this initiative is an enabler in freeing up scarce resources to address the concerns clearly expressed by the citizens for which political leadership is unable to find the resources to satisfy such as providing adequate funding to support the health and education sectors; improved infrastructure and better working conditions for the average Nigerian worker.

    “One of the proposed reforms in the petroleum industry bill is the deregulation and liberalisation of the downstream oil and gas industry, which recommends total deregulation proposition. If fully implemented, will eradicate waste and corruption ravaging the country as a result of the tightly regulated economy; and that monies saved from fuel subsidy can be optimised for development projects that will be beneficial to the people.”

    He said fuel subsidy in Nigeria has brought about industry degradation such as poor maintenance of, and inadequate investment in facilities (jetties, depots & stations), infrastructure (roads, bridges, rail & pipelines), human resources, transportation (vessels & trucks), existing refineries and poorer implementation of health, safety, environment & quality matters.

    Subsidy spending in the sector, he said, amounts to a disproportionally high percentage of the country’s budget, adding that funds that  would have yielded better returns on investment in education, health services and agriculture, among others, are gobbled up in the subsidy of petroleum products.

    “The opportunity cost of the present regime of petroleum subsidy includes inability of government to achieve human development, which enables every Nigerian reach his or her full potential.

    “The current labour demand for wage increase at all levels could also be directly addressed through the savings that would be made from elimination of the subsidy, which will lead to a more efficient use of resources to address the diverse individual concerns in the country,” he said.

    Chairman, Independent Petroleum  Marketers  Association of Nigeria (IPMAN), Western  Zone, Alhaji Debo Ahmed, urged the government to liberalise and enforce total deregulation of the downstream sector to boost the country’s economic growth.

    Ahmed said deregulation remained the best option to move the economy forward, adding that full deregulation would bring in investments into the sector, adding that  only deregulation will encourage the establishment of private refineries in the country.

    According to him, the government should summon the courage to fully deregulate and remove subsidy totally to open the market for investors. “If the government likes, it can introduce gradual removal of subsidy, but it should not go beyond six to 18 months. If fully deregulated with rules, you will have serious investors coming to invest adequately.

    “Deregulation is the answer and the government must talk to the people and let them understand the advantages. The government must also show that where there is deregulation, people gain because the funds used in subsidy will be used for the benefit of the people,” he said.

    Ahmed said the passage of the Petroleum Industry Bill (PIB) remained the best options that would usher in deregulation, adding that even if it is not perfect, it could be amended after the passage.

    “Once you deregulate, these refineries will be coming up. So, we will plead that we get the National Assembly to expedite action on the passage of the PIB.

    “We believe that the PIB will go a long way in encouraging deregulation, but if we want a PIB that will be faultless before it will be passed, we are thinking that we are not human beings. Why do we have the word amendment? How many amendments have they done on the American Constitution?

    Also, President of the National Association of Liquefied Petroleum Gas Marketers, Mr. Nosa Ogieva-Okunbor, has said only full deregulation can bring the much needed investment to the sector.

    Ogieva-Okunbor said full deregulation remained the best option to attract investors for sector development against the backdrop of huge amount spent on subsidy. He said full liberalisation and deregulation of Nigeria’s downstream oil sector will remove all hindrances and bottlenecks that have been discouraging improvement of private investment and market competition.

    According to him, the government should fully deregulate the downstream sector to attract investors. “We need full deregulation of the downstream sector to boost the economy,” he said. He lauded government’s commitment to reposition the Liquefied Petroleum Gas (LPG) sector, especially as Nigeria is one of the lowest LPG consuming countries in Africa, which he said, is pathetic.

    Nigeria spent N2.582 trillion on fuel importation in nine months, from January to September 2018, rising by 12.9 per cent from N2.289 trillion recorded in the first three quarters of 2017. The amount spent on fuel import in the nine-month period is  28.3 per cent of Nigeria’s N9.12 trillion budget for the 2018 fiscal  year and 36 per cent of the N7.17 trillion proposed expenditure in the budget.

    This came as the Nigerian National Petroleum Corporation, (NNPC), said the government has paid petroleum products marketers N236 billion, being first tranche of the outstanding fuel subsidy claims owed marketers.

    According to data obtained from the National Bureau of Statistics (NBS), foreign trade statistics for the third quarter of 2018, Nigeria’s fuel import stood at N845.12 billion, N720.4 billion for the first and second quarters of 2018 respectively. However, in the third quarter of 2018, the report noted that fuel importation rose sharply by 41.03 per cent from N720.4 billion recorded in the second quarter to N1.016 trillion in the third quarter of 2018.

    This, according to report, was in comparison to fuel importation of N802.4 billion, N744.28 billion and N742.82 billion recorded in the first, second and third quarters of 2018 respectively.

    In its month-on-month analysis of the nation’s fuel importation, the report showed that in January, February, March, April, May and June 2018, Nigeria imported fuel valued at N384.59 billion, N357.45 billion, N103.08 billion, N190.26 billion, N380.7 billion and N149.44 billion respectively.

    For July, August and September 2018, the NBS report said N343.25 billion, N378 billion and N295.03 billion worth of fuel were imported respectively.

    The report further pointed out that fuel importation in the third quarter of 2018, accounted for 24.4 per cent of Nigeria’s total imports in the period under review.

    Specifically, the report stated that total imports into Nigeria in the third quarter of 2018 stood at N4.172 trillion, rising by 73.8 per cent from N2.4 trillion in the second quarter of 2018. The report further attributed the sharp rise in the third quarter to the importation of an oil rig.

    Particularly, the report said the floating or submersible drilling or production platforms worth N1.159 trillion was imported from South Korea in August 2018. In the same way, there was a rise of 67.7 per cent when compared with the importation value of the corresponding quarter in 2017.

    The huge increase in import value during the quarter resulted into a decrease in the country’s trade balance from N2.103 trillion in the second quarter to N681.3 billion in third quarter representing a decrease of 67.6 per cent.

     

  • Oil marketer faces N12.8m fraud charge

    Oil marketer faces N12.8m fraud charge

    Managing Director of Sunjay Oil and Gas Ltd, Isolo, Lagos, Sunday Adeolu, was today brought before an Igbosere Magistrates’ Court in Lagos, alleged for defrauding Erewane Enterprises Ltd of 12.8 million naira.

    Adeolu, 47, was charged alongside his company, on a four-count charge bordering on conspiracy, fraud and forgery.

    The Prosecutor, Insp. Abbas Abayomi, told the court that the accused committed the offences between March and April, 2017, in Isolo area of Lagos.

    Abayomi said the accused fraudulently obtained 60, 000 litres of Automated Gas Oil (AGO) valued at N11 million from Erewane Enterprises Ltd, and promised to remit the money after sales.

    The prosecutor told the court that the accused knew that the promise was false.

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    He said the accused also fraudulently forged Erewane Enterprises Ltd Local Purchase Order (LPO) with intent that it should be acted upon as genuine.

    Adayomi said the accused also collected 10, 000 litres of diesel worth N1.8 million from Adewunmi Oil and Gas Ltd and failed to remit the money.

    “The accused failed to refund the total sum of N12.8 million he obtained from the two companies,’’ he said.

    He said the offences contravened Sections 315, 365 and 411 of the Criminal Law of Lagos State, 2015, where Sections 315 stipulates a 15-year jail term for offenders.

    The accused, however, pleaded not guilty to the charge.

    In her ruling, the Magistrate, Mrs Abimbola Komolafe, granted the accused bail in the sum of N5 million each with two sureties each in like sum.

    She said that the sureties must be gainfully employed and should reside within the jurisdiction of the court.

    Komolafe said the sureties must show evidence of three years tax payment to the Lagos State Government.

    She adjourned the case until March 27 for mention.

  • Oil and gas: The good, the bad and the unpredictable

    Oil and gas: The good, the bad and the unpredictable

    For stakeholders in the oil and gas industry, the outgoing year is a mixed bag of blessing. AKINOLA AJIBADE examines events that shaped the sector during the year.

    Increase in crude oil prices

    The year started on a very good note, as prices of Brent crude, rose to $58 per barrel from $44. 73cent per barrel, a development which excited stakeholders as well as rekindled hope in them that better days were ahead in the global oil sector. Though the price slipped to between $45 per barrel in August, that has not in any way doubted the future of the market, as the price hits an all-time high of $65.88 per barrel this December. As usual, the issue elicited positive response from stakeholders, including the government, as they projected that crude oil price will hit  $68 per barrel by the first quarter of next year.

     

    Pipeline vandalism

    Like a recurring decimal, pipeline vandalism kept on resonating in the Nigerian petroleum sector. In the first two quarters of 2017, cases of destruction of oil and gas installations by militants were on the increase, a development which necessitated the declaration of Force Majeure on such facilities, by the Federal Government. The issue made crude oil output to fall below 2.2 million barrels per day, even as a group known as Movement for the Emancipation of Niger-Delta (MEND) claimed responsibilities for some of the attacks.

    In November, Nigeria’s crude oil output slipped to 70,000 barrels per day (bpd) as exports of Bonny Light crude were under force majeure for part of the month. This, no doubt, affected earnings since Nigeria derived 70 per cent of its revenue from oil imports. In all these, the Federal Government, local and foreign oil companies were badly hit by the development.

    For example, Seplat Production Development Company reported a net loss of $98 million (N24 billion) in the first nine months of 20I6, compared to a net profit of $69 million (N14 billion) in 2015, following the shut–in of the Forcados terminal and suspension of exports from mid-October, and combined with the effects of lower prices of crude oil.

    Also, Oando Energy Resources (OER) during the nine months, which ended on September 30, 2016 recorded a 20 per cent decrease in total production of 12.0 million barrels oil equivalent (MMboe) (average 43,617 boe/day), compared to 15.1 MMboe (average 55,154 boe/day), in the company’s gross profit, which decreased by 52 per cent, N28.7 billion compared to N60 billion it recorded in the previous year. The company said it faced operational challenges due to the unrest in the Niger Delta. Lekoil also recorded a net loss of $8.1 million during the first half of 20I6.

    Besides, oil majors including Exxon Mobil and Royal Dutch Shell Plc in 2016, reported their lowest quarterly profits since 1999 and 2005, respectively, due to attacks on their operation and other issues.

    The former country President, National Association of Energy Economists (NAEE), Wunmi Iledare, said incessant attacks on oil facilities affected operations in the industry in 2017, adding that production and exploration activities are worst hit. He added that despite talks on how to end unrest between leaders in the region and the Vice President, Yemi Osinbajo in May, attacks on oil facilities persist.

     

    Passage of Petroleum Industry Bill

    The passage of the Petroleum Industry Governance Bill (PIGB) by the Senate has rekindled hopes in the sector. The bill, which suffered delays in the National Assembly for almost 17 years, due to bureaucratic bottlenecks, is expected to  transform the industry in future.

    Through the PIGB, a new agency, known as the Nigeria Petroleum Regulatory Commission (NPRC) will be established with a view to take over the functions of the Petroleum Inspectorate (PI), the Department of Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory Agency (PPPRA). The Commission will also administer and enforce  policies, laws and regulations relating to all aspects of petroleum operations as  spelt out in the provisions of the Act.

    In the PIGB, the Ministry of Petroleum Resources will be renamed Ministry of Petroleum Incorporated, while the Minister of Petroleum Resources, on the recommendation of the new Commission, can grant, amend, renew, extend or revoke any licence or lease facilities required for petroleum production, pursuant to the provisions of the Act or any other enactment.

    The bill also proposed that when the commission is created, it shall be vested with all assets, funds, resources and other movable and immovable property, which immediately before the commencement of operation of the new commission,were held by the PI, DPR and PPPRA. According to the Senate, the move was geared towards unbundling the Nigerian National Petroleum Corporation (NNPC) and the petroleum industry.

    An expert in energy law, Dr Ayoade Adedayo, said the bill will revolutionise the industry, as well as ensure competitiveness among operators. The industry, he said, will be competing with its counterparts abroad when the bill is finally passed, urging operators to prepare themselves for the task ahead.

    Adedayo, who lectures at the University of Lagos, said changes, which have eluded the sector, will start manifesting now that the PIGB has been passed by the Senate.

     

    Fuel scarcity

    Fuel scarcity in the industry has become a perennial issue and unpredictable, as Nigerians experience it yearly. The country is still going through its throes caused by both human and material factors such as distribution bottlenecks and differential prices paid by marketers for the product. The scarcity pitched stakeholders against one another as they trade blames on the issue.

    The Independent Petroleum Marketers Association of Nigeria (IPMAN) Southwest Chairman, Alhaji Debo Ahmed, said the fuel scarcity was caused by the Nigerian National Petroleum Corporation(NNPC), which according to him, connived with the  Depot and Private Marketers Association of Nigeria (DAPMAN) to shortchange its members.

    He said the problem was instigated by the NNPC, which supplies fuel to DAPMAN at N33.80 per litre, while DAPMAN sells the product to them at N42 per litre.

    According to him, the development has left little or no gains for the marketers, which he said, are struggling to survive.

    But DAPMAN Secretary, Femi Adewole, said the allegations are plausible, accusing marketers of crying foul because they are unable to get direct supply from the NNPC.

    While this lasted, the NNPC intervened by increasing fuel supply to Lagos and its environs.

     

    PENGASSAN strike

    The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), fixed December 18th for its nationwide strike, following inability of the Minister of Petroleum Resources, Dr Ibe Kachikwu, to broker peace between PENGASSAN and Neconde Energy Service Limited.

    PENGASSAN had demanded the re-instatement of some sacked workers by Neconde management, a request which the company was not willing to grant. This informed the decision by PENGASSAN to embark on the strike. It was, however, called off by the Association earlier in the week at government’s intervention.

     

    Power sector

    The sector is plagued by poor power generation, distribution and transmission, a development, which has worsened the situation in the industry. Generation was increased by 687megwatts(Mw) of electricity from 3,000 megawatts (Mw) in the fourth quarter of 2016 to 3,687 megawatts (Mw) in the first quarter of 2017. Similarly, the country increased its generation capacity to 6,803 megawatts (Mw) of electricity in August.

    The Power, Works and Housing Minister, Mr Babatunde Fashola, attributed it to the resolve by the Federal Government to substantially improve the sector and the economy. At the 18th monthly power sector meeting in Kano, Fashola said: “As  at August 10,  6803Mw  was  recorded  as the current available generating capability, with a wheeling capacity of 6700 Mw by the Transmission Company of Nigeria(TCN), currently constrained by the inability of the power distribution companies (DisCos) to take load.’’

    Commenting further, the Minister said the Federal Government was doing its best to ensure improvement in electricity supply, adding that the government has embarked on serious expansion of transmission capacity with some power plants already completed, while others have reached advanced stage of completion.

     

    DisCos problems

    The eleven power distribution companies (DisCos) tried their best to improve electricity supply in the country, but were limited by problems of poor distribution networks, meters supply,  shortage of transformers and other infrastructural facilities. More worrisome are issues of epileptic power supply and scarcity of meters.

    Despite the decision by power firms to conduct enumeration exercise and provide meters to their customers, the problem persists. To solve metering problem, Fashola urged operators to democratise the process of supplying meters to customers.

    He said meter provision is not a monopoly of DisCos, but is open and regulated by the National Electricity Regulatory Commission( NERC), adding that the democratisation of meter provision is intended to reduce the conflict between customers and DisCos and reduce losses to the sector.

    Ikeja Electric (IE) Chief Executive Officer,  Anthony Youdeweoi, said the firm has distributed meters to its teeming customers, adding that meter is a problem in the sector. He said the firm has lined up programmes in 2018 to meet the yearnings of its customers.

    ‘’We at (Ikeja Electric) are aware of problems facing customers in the industry. Of importance is shortage of meters; an area where we have been doing our best and will continue to do our best in the years ahead,’’ he said.

  • A better Nigeria without oil and gas

    A better Nigeria without oil and gas

    Gold Minds Growers ( GMG ) is an empowerment initiative to change the mindset of Nigerians about the oil and gas sector, and to advocate the need to refocus our policies in the direction of “non-oil sectors” of the economy.

    This will be a significant step towards solving the perpetual problems of unemployment and idleness (especially amongst the youths).

    The programme with theme: “a better Nigeria without Oil & Gas” by Addright Oyetunji Empowerment Foundation, a non-governmental organization (NGO) was launched in 2013, founded by Ademola Issac Oyetunji who is also the president of GMG .

    The NGO which birthed Gold minds growers works in synergy with other well-meaning Nigerians, Government, Agencies, Organization and NGOs to transform Nigeria by utilizing their comparative advantage in other sectors such as Agriculture, Real Estate, ICT, Industries, Miming, Trade and commerce for Nigeria.

    Nigeria, was widely known and recognized across Africa for its economic strength, especially in Agriculture.

    Agriculture was the mainstay of the country for its foreign exchange. However, after the discovery of fossil deposits (crude oil) in Oloibiri (1956), our attention gradually drifted from agriculture. The giant of Africa began to sag in stature and lose its glory.

    According to Mr. Oketokun Tolulope, a member of GMG and a farmer, “I became a member three months ago and fully registered three weeks ago.

    “I got to know about this organization through social media.

    “It really falls in place with what I wanted because I have passion for agriculture; this seems to be an easy way to start. It gives a platform where you can do other work while other people are on your farm working for you.”

    Also, another member of the organization, Mr. Oluwole Otelade said, “I have been a member for three month.

    “I got to know about this GMG through bulk sms. At first I ignored it, however, the text kept coming and I show interest by calling the number.

    “I later met the Director who further explained and I gave it a trial out of risk. Have always been looking for a way to start agriculture my problem has always been about time, land, fund and how to start.

    “This organization has helped me a lot even when I’m not present. All I need to do is pay a certain amount, and they will in turn get people to help with the farming and monitoring.

    However, when it’s harvest time I have to be there physically.

    Presently I am into cassava and short term crops, like maize, melon, ugwu.

    While asking the participants about the economic future of Nigeria without oil and gas, this is what they had to say:

    Oketokun said, “Yes I think so we still have the coco house which was built with agricultural funds; we still have some pyramid in the north built with groundnut fund. Other infrastructures like roads were constructed with agricultural funds.

    “If every Nigerian can find something doing without depending on oil and gas, Nigeria will be rebuilt by Nigerians. The future sets of Millionaires are going to be from agricultural business.”

    Oluwole said, “There is something oil and gas cannot give. When you take from oil, it gradually reduces (obeying the law of nature), but when you take from agriculture you can replenish the soil nutrient; the more the farm area the higher the profit. I think agriculture is the way forward.”

    Bolaji Olayinka, a staff of one of Nigeria’s financial institution – First City Monument Bank (FCMB) also explained the partnership arrangement between GMG and the bank she represents.

    According to her, “this organization have a cooperate account with our bank FCMB. We grant SMA loans especially to farmers. FCMB is like a middle man between farmers and Central Bank of Nigeria ( CBN ).

    “Every fully registered member of GMG has an account with us which means they can be given loan for farming. Before they can grant a loan the account should be above six month. This is an opportunity for farmers to get the much needed help for a successful farming business.”

  • Buhari, Baru lauded over oil exploration in Chad Basin

    Buhari, Baru lauded over oil exploration in Chad Basin

    President Muhammadu Buhari and Group Managing Director, Nigeria National Petroleum Corporation, Maikanti Baru, Thursday received commendation for oil exploration drive in the Chad Basin.

    A group, PMB’s Oil and Gas Progress gave the commendation after its annual meeting in Abuja.

    A statement by the coordinator of the group, Mohammed Abdullahi, said President Buhari and NNPC GMD has won the heart of majority of Nigerians for their political will to initiate and encourage oil exploration in the northern part of the country.

    It accused past governments in the country of paying lip service to oil exploration in the north.

    It expressed hope that with the commitment of the President and the zeal of the NNPC GMD, some states in the north will soon assume oil producing status.

    The group noted that the commitment of President Buhari administration toward the discovery of oil in the northern part of the country would go a long way to douse tension in the country and ensure economic stability in the north.

    It recalled that the GMD had visited some states in the north, including Nasarawa, Sokoto, Bauchi, Yobe, Katsina, among others, with a view to commencing oil exploration in the areas for the purpose of generating more revenue for the country.

    It also recalled that the GMD NNPC had declared his readiness to grow the country’s crude oil reserves and increasing daily national production with a view to boosting the nation’s revenue generation.

    The group noted that the GMD had expressed this desire during the flag-off ceremonies of the NNPC/First E&P Oil Mining Leases (OMLs) 83/85 partnership for marine seismic data acquisition in Lagos.

    It said that Baru while performing the flag-off ceremony aboard Marine Vessel BGP Prospector offshore Lagos, declared that the project would boost NNPC’s drive towards enhancing the nation’s abundant hydrocarbon deposits.

    The development, Baru added, also reinforced the Federal Government’s commitment to further harness Nigeria’s numerous resources to enhance income streams and ultimately boost the nation’s economic prosperity.

     “Without doubt, this development resonates perfectly with NNPC’s commitment to growing the nation’s reserves and increase production, as enshrined in our corporate vision of 12 Business Focus Areas (12 BUFA),” Baru was quoted to have said. 

  • Leadway boosts journalists’ knowledge on marine, oil and gas

    Leadway boosts journalists’ knowledge on marine, oil and gas

    Leadway Assurance Plc has boosted the skills and knowledge of media practitioners reporting Insurance on oil and gas, marine and aviation insurance as well as legislations and policies in the insurance sector.

    It was at a capacity building training, organised in partnership with the National Association of Insurance and Pension Correspondents (NAIPCO). The training was part of activities for the 2017 NAIPCO Conference.

    The training, which is the maiden edition of the initiative, focused on key areas including oil and gas insurance, marine insurance as well as legislations and policies in the insurance sector.

    Speaking on the training, Executive Director, General Business, Leadway Assurance, Ms. Adetola Adegbayi, reiterated the organisation’s commitment to empowering media practitioners to attain world class standard in the delivery of their profession.

    According to Adegbayi, the training was part of the Leadway’s contribution to improving the media sector through regular capacity development training.

    The media practitioners, who participated in the training workshop, commended the company for its laudable initiative designed to improve their skills and knowledge about the insurance industry.

    Its Managing Director, Riskshield, Roland Okoro, described the training as an initiative organised at the right time when the country was in need of balanced and accurate reporting.

    “This platform provided by Leadway Assurance is indeed, a positive one and is avaluable platform for knowledge acquisition for media practitioners,” Okoro added.

  • Oil and Gas Free Zones Authority unveils four-year roadmap

    •To grow investment by 80 per cent

    The Oil and Gas Free Zones Authority (OGFZA) has unveiled a four-year roadmap, which is designed to achieve 80 per cent increase in investment inflow to the country.

    Its Managing Director, Mr. Umana Okon Umana, spoke while unveiling the roadmap at the end of a two-day  management retreat.

    Umana said the adoption of the roadmap would guide OGFZA’s operations for the next four years.

    He explained that “the roadmap revolves around OGFZA’s vision to be the premier agency of government attracting investments into Nigeria through the oil and gas free zones”.

    Umana added that one of the key goals of the roadmap is guided by OGFZA’s mission statement to facilitate investment inflow for the optimal benefits of stakeholders in the free zones.

    The retreat, he said, resolved that all work processes in OGFZA would be automated to optimise performance.

    According to Umana, the retreat anchored on the theme, “Enhancing service delivery in the Oil and Gas Free Zones in Nigeria”, agreed on a standard operating procedure to enhance job performance efficiency.

    The retreat, he added,  agreed on a six-point set of values to engender the right organisational culture for OGFZA.

    The new culture orientation binds the management and workers of OGFZA to live by the creed of integrity, passion for their job, transparency and accountability, creativity, professionalism and respect (for self, clients, time, etc).

    His words: “With a roadmap drawn up and core values agreed to provide the right culture orientation to drive operations at OGFZA, we can now engage investors and operators in the oil and gas free zones in a manner that facilitates the achievement of our mandate.”

    Umana stressed that the new work ethics in the agency would emphasise performance, reward exceptional contribution and accept no excuses for failure.

    He described the retreat as “a very rewarding engagement” that has set the tone for OGFZA to move in the right direction, projecting that the impact of the brainstorming session would be seen and felt immediately.

    “The rebranding is well underway and with it a new way to doing business and dealing with clients,” he said, adding that he was ready to drive the change in the investment agency.

    Umana acknowledged the “excellent presentations by resource persons” at the retreat and said the era of excellence has dawned to “impact work processes, training, manpower development and service delivery in all ramifications at OGFZA”.