Oil bearing communities in Oleh, Isoko South local government area of Delta state, under Oil Mining Lease, OML 30, has issued a 21-day ultimatum to the management of Heritage Energy Services to meet up promises made to the communities.
The communities had threatened to institute a legal action against the company if it failed to address the issues ranging from non-employment, non-award of contracts to their indigenes and other demands.
The communities under the auspices of Forum of Communities Executives of Flow Stations, mentioned some of their demands to include; failure to pay 2017 ‘Freedom to Operate’ on the Operation and Maintenance, O&M, of the flow stations; failure to release 2017 and 2018 scholarship and outstanding 2016 GMOU funds that the company inherited from NPDC.
In a statement issued by the chairman, Mr. Wilson Kokarhaye and other Presidents General of the flow station communities said the company has been short-changing them and same time paying deaf ears to the genuine needs of the oil-producing communities in oil block.
The statement addressed to the Managing Director of Heritage Energy Services, had alleged the unwillingness of the company to give sufficient employment slots to the indigenes of the host communities even when they have qualified and experience persons.
It also alleged that the few persons engaged by the company are not in the management cadre, but rather, the company chose to flood the place with many non-indigenes as disregard to the Nigerian Local Content Act.
President Muhammadu Buhari promised yesterday that income accruing from rising oil prices in the international market would be spent on infrastructural development.
He made the promise while receiving a delegation from oil giant, Eni, led by the Chief Upstream Officer, Mr. Antonio Vella.
Extra funds outside the provision of the 2018 Budget, Buhari said “will be deployed to infrastructure projects like roads, rail and power for the good of our people and the development of the country.”
Budget 2018 was originally predicated on $45 per barrel by the executive, while the Senate adjusted it to $47 per barrel.
Oil prices have risen to $70 per barrel this week.
Buhari’s Special Adviser on Media and Publicity, Mr.Femi Adesina, said the President also appreciated Eni for its upcoming investments in the oil industry, including the rehabilitation of the Port Harcourt refinery and the building of a new one.
He was quoted as saying:”In my first coming, all our refineries were working.
“Port Harcourt used to refine 60,000 barrels per day, and it was later upgraded to 100,000 barrels.
“Kaduna and Warri were also working optimally, and we used to satisfy the demand of the local market.
“We equally exported 100,000 barrels of refined petrol. Now, no refinery is performing up to 50%. It is a disgraceful thing.”
Leader of the Eni delegation, Mr Antonio Vella, said his organization had presented a technical proposal to the NNPC to rehabilitate the Port Harcourt refinery, adding that it had also done a feasibility study on a new refinery of up to 150,000 barrels per day capacity.
Brent crude oil hit $71 a barrel yesterday for the first time since 2014, supported by OPEC-led supply curbs, a record-breaking run of declines in U.S. crude inventories and a weaker U.S. dollar. The WTI crude oil climbed to $66.44, also the highest since early December 2014. “The continuous fall in U.S. oil inventories and the prolonged weakness in the U.S. dollar have done the trick,” said Tamas Varga of broker PVM, referring to oil hitting a new high.
2018 offers new hopes and realities for operators in the oil and gas industry, amid challenges, writes AKINOLA AJIBADE.
Rising output
The country can produce of over 2.3 million barrels per day (bpd), which it hopes to achieve on the back of a sustained peace programme initiated by the Federal Government. The Nigerian National Petroleum Corporation (NNPC) General Manager, Corporate Planning and Strategy, Bala Wunti, said the 2018 crude oil national production projection for Joint Ventures(JVs), Production and Sharing Contract (PSC), Marginal Fields and Services Contract is about 2,298,000 barrels per day.
He said the target was achievable, when one considered the peace initiatives spearheaded by the Federal Government and the NNPC in the region. At a forum in Abuja, Wunti said the relative peace in the region had led to improved crude production, adding that the country’s crude output would increase further, if the initiative was sustained in the new year. He said the development would help in increasing output, recover price and support the aspiration of the government to generate revenue for economic growth.
Increase in crude oil prices
The global oil sector will continue with its gradual, but steady growth in prices of crude, in view of various mechanisms put in place by the Organisation of Petroleum Exporting Countries (OPEC) to halt slide in prices at its Extra-Ordinary General Meetings in Geneva, Switerland. The development is expected to rub off on the prices of Brent crude, which have been projected to hit between $58 and $60 per barrel by March. Though global prices of crude globally have had unimpressive runs in recent times, due to turbulence in the market, the prices are swinging up.
From less than $25 per barrel in 2008 to $52 per barrel in the last quarter of last year, Nigeria, which heavily relies on sustainance is better for it as the prices continue its gradual rise in the new year. An energy expert, Dr Ayoade Adedayo, said the rise in the price of crude oil is a good omen for Nigeria, which is looking for means of financing its over N7 trillion budget in the year. He said the country will record economic growth if the market sustains the growth in the prices of crude, adding that it holds much prospects for Nigeria, which recently exited recession.
Adedayo, a Senior Lecturer, Energy Law, University of Lagos, said the country would achieve its $72 per barrel benchmark set for the 2018 budget, once the price of crude continue to move at a much appreciable level.
Adedayo said: “I believe that 2018 has much prospect for Nigeria’s struggling economy, in the sense that the country would garner enough funds to achieve fiscal goals from oil.Through this, the country’s economy, which is experiencing high inflationary rates amid huge unemployment, would get some form of repositioning.’’
Improved power supply
The plans by the NNPC to build power plants that would generate 4,000 megawatts (Mw) of electricity, coupled with the decision of Egbin Power plant, to generate between 1,350 megawatts 9Mw) of electricity and 1,800 megawatts(Mw) of electricity, would help in improving power supply, this year. With power generation a little above 5,000 megawatts of electricity last December, coupled with the decision by NNPC and Egbin Power to generate 4,000 Mw and 1,800 Mw, power supply will certainly improve in the next few years.
Minister of Works, Housing and Power, Babatunde Fashola, said power supply is set for major improvement, in line with the government’s plan to galvanise investments to move the sector forward. He said the government is exploring opportunities in the Off-Grid and On-Grid methods of generating electricity to stabilise power supply, adding that 2018 will witness the implementation of more energy plants in the country.
At a conference in Lagos, he said the deployment of three energy sources, namely, gas, hydro and renewable would help the country to enable it to reach sufficiency level as from this year.
According to him, total percentage contribution of the three power generation companies in Nigeria – Kainji, Jebba, and Shiroro has increased from 15 per cent in 2015 to 26 per cent in 2017 and would likley increase this year.
Fashola said: “Using three energy sources, such as gas, hydro and renewable, would help us (Nigeria) – as part of efforts by the Federal Government, to improve power supply for economic growth. The idea is in sync with the government’s plans to implement robust economic policies in the country. In the next few years, Nigerians would heave a sigh of relief, as the government would improve power supply
Also, the Egbin Power Company Chairman, Mr Kola Adesina, said the firm will generate between 1,350 Mw and 1,800 Mw, using modern technologies and renewable energy sources, adding that the initiative would help in improving power supply in Nigeria. At the unveiling of the second edition of the company’s yearly sustainability report in Lagos, Adesina said the firm is bracing all odds to generate more 1, 800 megawatts of electricity, stressing that the idea would impact positively on the economy.
DisCos ‘expectations
The power distribution companies (DisCos) are targeting improved supply of electricity, investment in infrastructure, among others, in 2018. The Chief Executive officer, Association of Electricity Distributors of Nigeria (ANED), Mr Azu Obiaya, told the Nation, that the industry is seeking an improvement is service supply to individual and corporate customers. He said the DisCos hope the Federal Government will pay them their debts in the year, adding the development would enable the power firms to improve supply of electricity. He said DisCos want the Nigerian Electricity Regulatory Commission (NERC) to implement the new tariffs in 2018, adding that any attempt to delay it till 2019 would affect their operation.
He said: “2019 is an election year. If the implementation of the tariffs is delayed till 2019, the implication is that the DisCos may not be executing the tariffs plans to achieve their goal of improving their earnings.
Also, ANED Executive Director, Research and Advocacy, Sunday Oduntan, said the expectations of the companies are high, adding that collaborative efforts, among all stakeholders, are required to improve supply of power. He said metering of customers would improve in the New Year, in view of the fact that the DisCos have invested heavily on infrastructural facilities, such as meters, transformers and other equipment.
Solid Minerals
The sector will contribute to the Gross Domestic Product (GDP), improve the earnings of the Federal Government and open window of employment opportunities for the people. The Minister of Solid Minerals, Dr Kayode Fayemi, said the sector has been overlooked by past administrations, adding that the government of President Muhammad Buhari, is galvanising investment in the sector, by allowing investors to invest in it for improved activities.
He said: “In view of the Blueprint unveiled and implemented for the growth of the solid minerals sector by the Federal Government recently, the sector is set for success. Resources, previously untapped, are now being tapped in the country. Many resources have been discovered to improved economic growth. The domestic and export use of solid minerals are improving daily and the government will not hesitate to appropriate the gains in the sector for growth.
According to him, the World Bank has provided a $150million grant to the sector for distribution to operators. He said operators must have a proven record of operation in the sector, and should not have contravened the rules of corporate governance, among others.
Fayemi said: “The government does not want to be biased on the issue of allocation of funds for operators, hence it decision to call prospective and current operators to apply for grant. It is being done in an open and transparent manner, to prevent clashes among the operators. Due diligence was followed in the ways and manners in which people applied for the grants and hopefully the sector will improve greatly in the coming years.
“He said the government will improve exportation of solid minerals, adding that through this means, the government will garner enough revenue from the sector for growth.
‘’There are immense opportunities in the sector. There is huge revenue in the industry. Unfortunately, past governments failed to improve the growth of the sector. The potential in the industry, if well harnessed can provide the government will enough funds, required to promote the growth of the economy. At least, the sector would first of all, provide over 100,000 jobs for Nigerians. This is a remarkable improvement on the country’s which unemployment is put at over 40 per cent, by the Nigerian Bureau of Statistics(NBS)s
Also, the Special Assistant to the Minister on Media, Yinka Oyebode, said the sector would yield enough dividends for operators, including the government in 2018 and thereafter. He said efforts were ongoing by operators to create jobs for skilled and unskilled workers, stressing that Nigerians would derive a lot of benefits from the sector soon.
The Ministry, he said, is creating job opportunities for the teeming unemployed, calling on the operators to use the loans or grants, which they received well.
Exactly one year after he was kidnapped but rescued by the police, gunmen have again kidnapped Atser Kyausu, the octogenarian father of Makurdi based oil businessman.
When Kyausu was kidnapped last year, at his Vandeikya local Government country home, the then late Special Adviser to the governor Mr. Denen Igbana, led a crack team of security men who rescue him.
He was rescused in Kwande local government and the gang leader shot and killed. Three other members of the gang were arrested ,charged to court and remanded in Makurdi prison .
The Police Public Relation Officer DSP, Moses Yamu, told The Nation that the gunmen stormed the house of the victim, Atser in a red Toyota car popular called dog nyash.
” They bunddled him into the vehicle and drove away on the 28 December, and since then his whereabouts has remained unknown “
At press time, the gunmen were yet to contact the family or make their demand for ransom ,but there was likely hood they would soon demand for ransom soon.
At Kyabiz filling station located on Makurdi – Otukpo road, the son of the victim , popularly known by his business name Kyabiz told The Nation that he was devastated and appealed to the kidnappers to release his father as he was sick.
The police spokesman however said security men have launched a manhunt for the gunmen.
It is interesting to think of Nigeria as an overweight giant with unkempt beards irregularly scattered all over his face (at least we like to pride ourselves as THE GIANT OF AFRICA). Even an overweight giant becomes a burden to itself.
Giant of Africa?
His excessively rotund and roly-poly body is as a result of the over-consumption and excessive reliance on a particular kind of food nutrient.
He likes to drink oil and smoke gas.
Quite frankly, no human species can survive or thrive with that kind of dietary equation; in fact, such a one is a disaster waiting to happen.
After the discovery of fossil oil at Oloibiri area of Bayelsa in 1956 in commercial quantity, petroleum industry in Nigeria became the largest industry.
Oloibiri
Oil, therefore, supplied approximately 90 percent of foreign exchange earnings and about 80 percent of federal revenue and contributes to the growth rate of Gross Domestic Product (GDP) of our economy.
The oil boom of 1970s made Nigeria rely heavily on crude oil and natural gas for its continuous supply of economic diet. Crude oil has since then become the darling of our nation; she received preferential treatment to the detriment of our first love (Agriculture).
Eventually, agriculture which in times past earned us at least 70% of our foreign exchange deteriorated very fast because our policy wonks became derelict in their sacred obligations to her (Agriculture).
Today, the salubrious broth called crude oil has started to turn sour and rendered our taste buds sore. Significant precincts of oil-rich regions are no longer habitable due to oil spillage.
The persistent groundswells of legitimate agitations and destructive activities by militants in the Niger Delta have almost crippled the economic wheels of our dear country.
The bludgeoning and bloodying of our nation’s “economic head” by corrupt practices and sleazes in the public and private sectors are all a part of the curses and crosses emanating from our overreliance on crude oil.
It is shameful that we still grovel at the feet of crude oil when countries on the global pedestal have begun to embrace and deliberately fade out their reliance on it by cannibalizing and diversifying other sectors.
Thespians in the crude oil intoxication Melodrama
The thespians
Our ludicrous fixation on oil further deepened as we now have a President in the person of Muhammadu Buhari, who shuttles between his primary role as the chief executive helmsman of the Federal Republic of Nigeria and the substantive Minister of Petroleum.
However, when we thought that we have heard and seen the last of the behavioural debauchery that took place in past administrations from crude oil intoxication, the recent wrangling between the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti K. Baru regarding the alleged awarding of contracts without due consultation with the minister betrayed our gullible optimism.
The melodrama became even messier when the Vice President, Prof. Yemi Osinbajo debunked widespread statements that he approved the said sum as the Acting President during the period Muhammadu Buhari was on his medical vacation. Regardless of who is right or wrong, the obvious solution is a total overhaul and sanitation of the inherent tacky climate in the oil sector.
Sad yet is the fact that the President’s Chief of Staff, Abba Kyari is a member of the Board of Directors of the NNPC, according to legal experts, this is wrong in its totality. Unfortunately, this and much more have been handled like nothing is happening.
If truly our President intends to be involved personally, operationally and officially in the development of the Nigerian project, then he should hands-off the oil ministry as its head, and get a hands-on on some ministries like Agriculture, Health and Education – all of which are in dare need of a state of emergency.
If Nigeria perpetuates in this state of plateau; posturing itself as the biblical “fig tree”, it might eventually fall like the proverbial humpty dumpty for overreliance on oil “blocks”.
While the world is running, jumping and jetting into the future with precise plans and ground-breaking innovations in Science, Technology, Medicine, Agriculture, Art etc., Nigeria is busy performing the “moon walk” and sliding backward very fast into antiquity.
It is heartbreaking that our country is still unnecessarily dependent on fossil deposits that have become more or less a curse and an albatross to us as a nation instead of a great vault of opportunities to all and sundry.
Death and burial of crude oil
A Resident fetching Crude Oil from leakage at Adibawa Well 8 in Edagberi Community in Rivers State.
It is instructive to note that countries like Norway, India and France have decided to stop the exploration and production of crude oil by year 2025, 2030 and 2040 respectively in order to combat the deleterious and hazardous effects of climate change.
There seems to be a growing movement by these countries to force the extinction of vehicles that run on fossil fuels. They have resorted to the production of electric cars and the complete obliteration of petrol and diesel-driven engines.
Volvo Cars became the first mainstream automaker to sound the death knell of the internal combustion engine, saying that all the models it introduces starting in 2019 will be either hybrids or powered solely by batteries.
Their goal is to drive a sharp stake through the heart of carbon emissions; the boogeyman whose corollary effects manifests as global warming, depletion of the ozone layer and its other destructive appurtenances.
European countries like England, France, Norway, Denmark, the Netherlands, and Germany are making definitive moves away from the use of fossil fuels. They have completed plans to announce the death and burial of the era of fossil domination.
Big car manufacturers like Tesla, Volvo, Renault and the PSA Group are beginning to embrace alternative sources of powering cars through electric, solar and battery.
The repugnant smell of doom and gloom
On a macro scale, what are the economic implications of these decisions by some of the stakeholders and key players (countries and car companies) in the crude oil space on the African continent, heck!…on Nigeria? What will be its effect on our social, political and cultural survival?
Before reaching any hasty conclusions, it is important that we understand the sundry contributions of the oil sector to our nation.
Also, how bright will the future earnings of Nigeria be? Nigeria being a member of The Organization of the Petroleum Exporting Countries (OPEC) and the second largest producer of oil in Africa?
Your guess is almost as good as the writer’s.
We would definitely hit a slide due to the sudden drop in the demand for our crude oil.
In retrospect, when the price of oil fell from highs of about $112 a barrel in 2014 to below $50 in 2016, Nigeria was thrown into recession. It is, therefore, better imagined what will happen to Nigeria if European and Asian countries completely deviate from fossil fuel dependence to other healthy alternatives like electricity and solar, knowing fully well that Crude oil sales account for 70% of government income.
Although government have had tiny sparks of successes in several non-oil sectors like agriculture, however, it seems all we can boast of at best are “tiny sparks” because of poor storage, haulage and management of agricultural produce, which is gradually becoming an embarrassment to our nation especially with the outright rejection of our export agricultural produce in Europe, United States and other parts of the world in recent times. What a shame! We can do better in Agriculture only if we set our minds, hearts and hands to it.
Salvation in the Non-Oil sector?
There is a portion of one of the Holy Books that says: “At least there is hope for a tree: If it is cut down, it will sprout again, and its new shoots will not fail…. at the scent of water it will bud and sprout again like a new seedling.”
There’s hope
Last month, the National Bureau of Statistics (NBS) unveiled the bright figure of 0.55% GDP Growth in the second quarter (Q2) of 2017; this indicated that we are “statistically” out of recession. This momentous declaration by the bureau was a joyous daybreak to millions of Nigerians who had been seared in the flames of poverty and encumbered by the manacles of economic hardship.
However, for us to avoid our “joyous daybreak” reversing into long nights of starvation, those at the helms of affairs of our great country need to latch upon and capitalize on the non-oil sector to bring to us the dividends of democracy.
Below are a few statistics from the NBS:
According to the preliminary results for the second quarter of the year 2017, Nigeria’s economic recovery was driven principally by the performance of four main economic activities comprising Oil and Non-oil (agriculture, manufacturing and trade).
The results showed that Oil GDP recovered significantly from -11.63 per cent in Q2 2016 and -15.40 per cent in Q1 2017 to 1.64 per cent in Q2 2017.
While Oil GDP expanded considerably in the second quarter of 2017, Non-oil GDP only grew at 0.45 per cent, down from 0.72 per cent in the preceding quarter and -0.38 in the corresponding period in 2016.
Agriculture continued its strong and positive growth, which it had maintained throughout the recession, growing by 3.01 per cent in Q2 2017, from 3.39 per cent in Q1 2017 and 4.53 per cent in Q2 2016.
Manufacturing retained its positive growth for the second consecutive quarter in Q2 2017, growing at 0.64 per cent compared to 1.36 per cent in Q1 2017 and -3.36 per cent in Q2 2016.
Trade which has a dominant share of GDP remained negative at -1.62 per cent, but the contraction in the sector decelerated from the -3.08 per cent recorded in Q1 2017.
The results also showed that the industry sector grew positively by 1.45 per cent in Q2 2017, after nine consecutive quarters of negative growth since Q4 2014.
Service = 53.73%
Industries = 23.31%
Agriculture = 22.97%
Does it look like Nigeria’s economic future is bright? Yes! Can we begin to pop Champagne and take a little rest? Absolutely NOT!
Although the oil and gas sector accounts for about 35 per cent of gross domestic product, and petroleum exports revenue represents over 90 per cent of total exports revenue, Agriculture is expected to feature as one of the pertinent driving force in Africa’s economic rebirth and is already ranked among the critical factors contributing towards an increasing curiousity in the continent’s native resources.
It is estimated that over 60 percent of the world’s available and untapped farmland is in sub-Saharan Africa. Interestingly, for Nigeria, agriculture contributes about 22 percent of its GDP.
With the allocation of N92 Billion to the Agriculture sector, and the ubiquitous potentials in other sectors like tourism, entertainment, art and culture, manufacturing, trade and other non-oil sectors of the economy, the government might be able to improve the economic aesthetics of Nigeria.
A few Recommendations
We need to consciously divest our reliance on the oil sector and begin to focus on other non-oil sectors; especially those that are currently driving world economies. For example, in Asia, technology drives the wheel of their economy; in Europe, agriculture does it for them; even as they expand and bolster their technological strength.
Our leaders need to be selfless and sincere in the making of policies that are people-centred and not one to fuel their political and personal agendas.
Also, our Presidents need to eschew the ideologies of heading the oil sectors alongside their executive portfolios. This appears like they have ulterior motives.
Citizens should use the power of their votes to elect fresh and credible individuals with concrete antecedents of leadership and accomplishments. These should be individuals who can clearly enunciate their plans and can galvanise the people towards the achievement of these plans.
We need to invest more in tapping the resources between our ears and not those beneath the ground. In Asia, there are technological schools whose certifications are as valid as those of the universities; making it a viable alternative for everyone to have access to education. The never-ending battle between the B.Sc and the HND is a mere case of “potayto…potahto”; just mere nomenclature. We need to place more premiums on competence instead of certificates.
Moreover, the clamour for true federalism, especially when it bothers on resource control and decentralisation should be placed in the front burner. This will make states more competitive and accountable to their people.
These recommendations (though not exhaustive) are some of the immediate approaches we can engage to move the economic and political wheels of our country.
The Organisation of Petroleum Exporting Countries (OPEC) has said developing countries will lead oil demand growth in the next two decades.
In its 2017 World Oil Outlook launched in Vienna, the cartel said oil demand is expected to grow in the developing countries, especially Asian and the Middle East countries by almost 24 million barrels per day (bpd), to reach 67 million bpd by 2040.
The report said:“Total primary energy demand is set to increase by 35 per cent in the period to 2040 and oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period to 2040.
“Long-term oil demand has been revised upward by 1.7 million barrels per day compared to the World Oil Outlook of 2016, with total demand at over 111 million barrels per day by 2040. There is no expectation for peak oil demand over the forecast period to 2040.
“Developing countries will continue to lead demand growth, increasing by almost 24 million bpd to reach 67 million bpd by 2040. The long-term demand growth comes mainly from the transportation sector – road transportation (5.4 million bpd), petrochemicals (3.9 million bpd) and aviation (2.9 million bpd)”.
According to the report, oil demand in the road transportation sector is driven by the increasing car fleet in developing countries and declining oil use per vehicle in the Organisation for Economic Cooperation and Development (OECD) countries. The car fleet is anticipated to change smoothly over the forecast period. In the passenger car segment, electric vehicles are estimated to represent 12 per cent of the car fleet by 2040.
It said: “Non-OPEC liquids supply is forecast to increase from 57 million bpd in 2016 to 62 million bpd in 2022, but in the long-term non-OPEC liquids output is anticipated to see a decline, dropping to 60.4 million bpd by 2040, with United States (US) tight oil estimated to peak just after 2025;
“The demand for OPEC crude is anticipated to expand to 41.4 million bpd by 2040. The share of OPEC liquids in total global liquids supply is estimated to increase to 46 per cent by 2040, from 40 per cent in 2016.
“Around half of the estimated refining capacity additions are expected in the Asia-Pacific, which is projected to add 9.5 million bpd by 2040. Capacity rationalisation remains a long-term requirement, with some 6-8 million bpd of closures indicated as needed by 2040 if refining regions are to maintain utilisation rates of at least 80 per cent.
“Global crude movements are expected to increase by around 6.5 million bpd between 2016 and 2040, mostly supported by Asia-Pacific imports and Middle East exports. In the period to 2040, the required global oil sector investment is estimated at $10.5 trillion”.
Speaking during the launch, Director, Research Division of OPEC, Dr. Ayed S. Al-Qahtani, said: “The multi-faceted nature of the oil industry and the continued interdependence of all nations; the impact of the ongoing market rebalancing process, specifically on the medium-term outlook; that oil will remain a fuel of choice for the foreseeable future; that security of supply and security of demand are very much two sides of the same coin; and the importance of exploring and evaluating the possible challenges, uncertainties, as well as opportunities, the industry might face.”
Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) have signed the second and final phase of an Alternative Financing Agreement that will increase crude oil production by about 39,000 barrels per day.
The agreement, which was signed in London at the weekend, is also expected to achieve an incremental peak production of about 283 million standard cubic feet per day (MMSCFD) of gas.
NNPC Group Managing Director Dr. Maikanti Baru, who signed on behalf of his corporation, said the increment to be achieved by the agreement would spread “over the remaining life of the asset (until 2045)”.
The corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, in a statement yesterday, said the project, which is about 92 per cent completed, will cost about $1.7 billion, with $780 million expected to be funded by a third-party.
The project will produce natural gas liquids and condensate extracted from the Sonam and Okan fields located in OML 90 and 91 in the Niger Delta.
Baru described the deal as a step in the right direction, which would grow the nation’s daily production and support the Federal Government’s strategic domestic gas-to-power aspirations, while aligning with NNPC’s 12 Business Focus Areas (BUFAs).
He said the project would also include the completion of the Sonam non-associated gas (“NAG”) well platform and Sonam living quarters platform; drilling of seven wells in the Sonam field and the Okan 30E NAG well; as well as the completion of the 20″ x 32Km Sonam pipeline and Okan pig receiver platform and development of the associated facilities.
“As we speak now, the facilities are 100 per cent completed while wells are 40 per cent executed,” Baru stated.
“In carrying out the project, the NNPC/CNL JV adopted a two-staged financing approach. Stage 1 which provided $400 million sourced from Nigerian commercial banks (NCBs) achieved financial close on 1st August 2017, Stage 2, (signed today), is set to provide $380mn from international commercial banks (ICBs).
“Out of the US$780mn total financing for both stages, Chevron’s co-lending totals US$312mn while NNPC’s portion of the total facility stands at US$468mn,” the statement said.
Baru explained that it was aimed at plugging NNPC’s shortfall in funding JV cash call obligations, including settlement of pre-2016 cash call arrears.
“It will also enable full funding of NNPC’s JV obligations to restore investors’ confidence and stimulate further Foreign Direct Investments (FDIs) as we are beginning to witness,” he noted.
The people of Peretorugbene community in Ekeremor council area of Bayelsa state, over the weekend protested what they described as 47 years of neglect by the federal government.
The community residents, displaying placards with various inscriptions, including “Give us Skills Acquisition Centres in Peretorugbene”, “We need portable drinking water and gas turbine for electricity”, “Buhari give us 100 housing units” and “Give us an access road from Peretorugbene to Ojobo”, said Shell Petroleum Development Company (SPDC) had operated in their community for 47 years, without anything to show as benefit.
Speaking to newsmen during the protest, a leader of the community, Comrade Bossman Amoda, said though the community appreciates President Muhammadu Buhari for the approval of the pipeline surveillance job for the youths and men of the community, the approval should not be used to substitute the needed development for the community.
According to him, “in the history of Peretorugbene community, this is the first time such a unique and satisfactory job is coming to our people from the federal government. It is a welcomed development because it will curtail youth restiveness in our community, nut it shouldn’t be seen as a replacement for physical development.
“Peretorugbene community has been a host community to Shell Petroleum Development Company for over 47 years with the biggest oil manifold in West Africa, which is the Brass Creek Manifold. But you will be surprised to hear that there’s no government presence in our community, despite our large contribution towards the national economy.
“Up till this present moment, our only source of drinking and cooking water is the river, which has resulted to different kinds of illnesses in our community. We are calling on the federal government for an urgent attention. We need all the aid we can get now,” Amoda said.
Oil prices hit their highest levels early on Monday as markets tightened, while Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown that included high profile arrests.
Brent futures, the international benchmark for oil prices, hit 62.44 dollars per barrel early on Monday, their highest level for years now.
U.S. West Texas Intermediate (WTI) crude hit $56.00 per barrel in early trading, also the highest for many months now.
Crown Prince Mohammed bin Salman, Saudi Arabia’s designated future king, has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors.
The arrest includes prominent business Billionaire, Alwaleed bin Talal, and the Head of the National Guard, Prince Miteb bin Abdullah.
“This consolidates the reforming process underway, part of which is a desire to drive the price of oil higher,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Bin Salman’s reforms include a plan to list parts of giant state-owned oil company Saudi Aramco next year.
Meanwhile, a higher price is seen as beneficial for the market capitalisation of the future listed company.
In oil fundamentals, traders said that there were ongoing signs of tightening market conditions.
U.S. energy companies cut eight oil rigs last week, to 729, in the biggest reduction since May 2016.
The decline in U.S. drilling activity comes as the Organisation of the Petroleum-Exporting-Countries-(OPEC) and non-OPEC group led by Russia have pledged to hold back about 1.8 million barrels per day.
The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal.
While supplies are tightening, analysts say demand remains strong.
“Synchronous global economic growth and new supply disruptions are creating the most constructive oil price environment since 2014,” Barclays bank said.
