The Nation Newspaper

Tag: Oil

  • Imo oil communities: Exploited, abandoned

    Imo oil communities: Exploited, abandoned

    The agony of oil-bearing communities in Imo State is double-fold. Their natural resources are wasted, while Federal Government projects are abandoned. OKODILI NDIDI reports

    ould they have been better off if the crude oil in their area lay still and untouched where nature kept it? Some residents of Ohaji-Egbema and Oguta council areas in Imo State have been forced to ask that question since the exploration of petroleum in their communities has left them in agony.  For decades, they endured the ravaging of their land by oil explorers. Their farmlands have been eroded and their rivers poisoned by oil spillage. From Ejemekwuru to Izombe, Umuofor, Obidiagwa, Oguta and Awara, among others in both councils, the story is the same.

    The indigenous people of these riverside, oil-rich communities are among the most socially and economically deprived in the state. Several of their children and loved ones have met with tragic death in the frequent incidents of pipeline explosions and other health hazards that attend oil exploration. Their youths are jobless, the aged racked by poverty and sickness.

    The little efforts made by the Federal Government to alleviate their sufferings were sabotaged, most painfully, by their own. The politicians, who ought to have argued their case before the appropriate authorities, took advantage of their plight to line their pockets.

    That is not all. Today several Federal Government projects awarded to impact the lives of the people have been abandoned by the contractors after collecting huge sums of money. Most painfully are the Egbema Gas Plant and the Skill Acquisition Centre in Ohaji-Egbema, which have been abandoned and overgrown with weeds.

    The depth of the marginalisation of these oil-producing communities was recently captured by the Acting President, Prof. Yemi Osinbajo during his tour of the Niger Delta.

    Prof Osinbajo confirmed that the oil-producing communities in the state have been treated unfairly by the Federal Government, compared to other oil-producing communities in the region. He was particularly touched by the dearth of infrastructure and number of abandoned Federal Government projects in the two oil-bearing council areas of the state.

    Osinbajo regretted that the oil producing communities in Imo State have largely been neglected by the Federal Government, noting that the time has come for the affected communities to receive adequate attention like their counterparts in other States.

    The Acting President after assessing the abandoned facilities assured that the facilities will be completed and put to use to serve the purpose for which it was installed, stressing that Power is key to the development of the area.

    He said, “The oil-producing communities in Imo have a lot of vibrant young men and women who must be carried along in the scheme of things. My interaction today with those concerned has given the government the opportunity to discuss with the people directly involved with a view of making sure that there is justice and even development across the Niger Delta Communities.

    “We are going to ask the contractors to return to site, while we probe all the abandoned contracts and all erring contractors will be brought to book. A situation where contracts are abandoned after they were awarded is not acceptable to this government”.

    He assured that Imo State would get its fair share of federal projects.

    Similarly, the state governor, Rochas Okorocha bemoaned the fate of the communities.

    He said, “The theory and songs of marginalisation cannot be sung better by any other ethnic group than the Igbo in this present dispensation. We have nothing absolutely to show, neither do we have any serious sense of belonging in the present government at the National level”.

    Continuing, the governor said, “I know you are the Acting President and has the ears of the President. Sometimes we Christians don’t go to God directly, we go through His son Jesus Christ. So there is no better person to tell our painful story than you. You need to take a second look at what is happening in the Southeast. No serious political appointments, no visible federal infrastructure so far, to show the presence of Federal Government in Imo State and Southeast in general. I beg that as the government gives subsequent appointments, let the qualified sons and daughters of the state be considered. Those in business should be considered for federal patronage.

    “Imo State played a major role in bringing APC to power because if what had taken place in other states was allowed to happen in Imo State and other states in the Southeast, probably we wouldn’t have had the APC government today”.

    He pleaded that “the dilapidated skill acquisition Centre be changed to University of Niger Delta to help bring about lasting peace in the area, while the gas plant at Egbema should be made to work to help in industrialising the area”.

    “Given the role that I played as a sacrificial lamb in the Southeast during the elections, my state deserves more. There is no Federal Government presence in the oil producing area and none benefitted from the Federal Government Amnesty Programme. I also ask for the quick refund of the money spent by the state on Imo International Cargo Airport and federal roads in the state”.

    Also angered by the neglect of the communities, the Minister of Petroleum, Ibe Kachikwu, frowned at the deliberate sabotage of Federal Government’s efforts by fraudulent contractors.

    He asserted that with the quantity of mineral deposit in the state, it should be accorded required attention, while promising to assist the state recover their lost oil wells.

  • Fed Govt owes oil marketers N300b subsidy

    The Federal Government is owing oil marketers N300billion in oil subsidy, Group Chief Executive Officer (GCEO), Forte Oil Nigeria, Akin Akinfemiwa, has said

    Akinfemiwa spoke before the Hon. Abdullahi Mahmud Gaya-headed House of Representatives Adhoc committee investigating alleged huge debts and criminal,act of sabotage by major oil marketers in connivance with  Products Pipeline Marketing Company (PPMC).

    He told the investigative hearing committee that his firm is being owed N13.8 billion and owes PPMC N5.9 billion from the oil lifted.

    He said:  “From our records, as at January 31, out indebtedness was to the tune of N5.995 billion . But we’re being owed N13.8 billion from subsidy. This is part of the over N300 billion the government is owing different oil companies.”

    The Forte Oil boss said government is however trying to,settle the debt.

    He said: “So far, the government, led by the Chief of Staff to the president invited us to a meeting with other stakeholders to address two issues. One was to continue petrol supply and two was for Federal Government to pay its debts.

    “Under the debts, a committee was set up to settle them. The total stands at over N300 billion. Right now, we can’t even do much, but we don’t want a situation where there will be queues in the country.

    “If you look at the N13.8 billion, we’re the ones being owed about N8 billion. We have also written to the Senate in recent times where we asked them to assist us with the payments of subsidy. The banks are not even borrowing as at now. We even paid about N5 billion as at the end of December.”

    In line with the mandate given the committee by the House, which is to recover the huge debts oil markers owe the government, the committee  wanted to know how and when the N5.9 billion Forte Oil is owing the government would be paid

    Bode Ayorinde, a member of the committee said: “ From this paper, you’re owing N5.955 billion. Did your agreement give room for debts? What’s the circle of the debts? What is the security for the debts? What is the interest agreed to be paid on outstanding debts? Do you sell on credits to those who buy from you?”

    Henry Nwaoba, also a member of the committee said in order to verify Forte Oil’s claims, t here is need to,have the details of the company’s credit dealers.

    “Do you have bank loans taken to assist you do retail business?” He asked.

    Akinfemiwa told the lawmakers that there was a 15 days debt payment agreement on oil lifting.

    He said: “Even if you lift N500 billion worth of oil, you need to pay within 15 days. Ideally, we should have reviewed the agreement terms after the fuel price increase from N87.5 to N145.”

  • Oil rises as OPEC aims deeper cuts

    Oil rises as OPEC aims deeper cuts

    Oil prices rose more than one dollar a barrel on Tuesday after OPEC said it was sticking to its agreement to cut production and hoped compliance with the deal would be

    even higher.

    OPEC Secretary General, Mohammad Barkindo, told an industry conference in London that January data showed conformity from participating OPEC nations with output curbs above 90 per cent and oil inventories would decline further this year.

    “All countries involved remain resolute in the determination to achieve a higher level of conformity,” Barkindo said.

    Benchmark Brent crude oil jumped 1.13 dollars a barrel to a high  57.20 dollars  by 1410 GMT.(Reuters/NAN )

  • Banks’ loans to oil, gas, power firms hit N4tr

    •Financial institutions may go to capital market for funds

    Nigerian banks are battling imminent liquidity crisis over huge exposure and non-performing loans to oil and gas and power sector, which is presently in excess of N4 trillion, The Nation has learnt.

    The situation is making it difficult for operators in the oil and gas and power to secure loans for operations.

    Head, Energy Research, Ecobank Group Mr. Dolapo Oni told The Nation banks could not release funds to oil and gas industries because there was no fund to release unless they go and raise money in the capital market.

    He stated that this year, a lot of banks will go to the market to raise capital “because if they don’t raise capital, there will be nothing to lend”.

    Oni said: “Banks don’t have funds to release unless they go the capital market to raise capital. If they don’t raise capital, there is nothing to lend. A lot of banks are exposed to 30-40 per cent of their loan books to oil and gas.  The implication of this is that if oil price continues to remain low, most of those banks will start recording losses on those particular assets.

    “Currently, we have about 12.8 per cent of all loans that are non-performing in banking industry, and the bulk of that is from the power, oil and gas sector.

    “So, it is pushing the banking industry into a region that they are approaching a crisis in terms of non-performing loans. Also, the banks have an issue of foreign exchange (forex) in their hands. Most of the loans are in dollars and these companies that took loans are not getting dollars. So, the banks have dollar issues too.

    “Besides, those banks borrowed from their foreign bankers to lend to the oil and gas companies and so, they are finding it difficult to pay their own foreign bankers too. I think for the banks to continue their duties, they need to raise capital or there will be no funds to lend to the oil and gas this year. Next year, things might be a lot easier and we will see banks lending to oil and gas and power sector.

    “As at Q3 (third quarter) last year, banks’ exposure to oil and gas and power sector was N4 trillion but as the value of Naira depreciates, the amount of those loans rise because the loans were in dollars. Also, by the time the Central Bank of Nigeria (CBN) comes out with its 2016 report, banks’ exposure to the energy sector may be much higher.”

    Oni added that the CBN was not providing enough dollars to the banks, but noted that the apex bank “is having meetings with the banks to see how (they) banks will source more dollars to pay their foreign bankers and other clients”.

    “But unfortunately, CBN insists it doesn’t have such dollars,” the banker said.

    To resolve the forex problem, he said the “Federal Government needs to deregulate the forex market fully so that people can come into the market”.

  • Why Fed Govt ‘ll continue to support investors in oil, gas free zones

    Why Fed Govt ‘ll continue to support investors in oil, gas free zones

    Minister of Industry, Trade and Investment Dr. Okechukwu Enelamah has said the Federal Government will continue to support the Oil and Gas Free Zones Authority (OGFZA) and investors in the free zones.

    He noted that over the years, the oil and gas free zones attracted more than $20 billion in investments and created about 200,000 direct and indirect jobs, facilitating the transfer  of skills and technology to Nigerians.

    Enelamah spoke yesterday at a stakeholders’ forum organised by OGFZA at Onne in Eleme Local Government Area of Rivers State.

    The minister,  who declared the stakeholders’ forum open, was represented by the Minister of State for Industry, Trade and Investment, Hajia Aisha Abubakar.

     Enelamah said: “Our ministry has developed what we term the MITI plan, which rests on five pillars namely: creating a friendly business environment, coherence between monetary, fiscal and structural reforms, so that economic policies of government are coordinated and targeted at the common purpose of structural transformation to eliminate distortions and supply constraints, provision of hard and soft infrastructure for growth, implementing the Nigeria Industrial Revolution Plan, promoting the growth and development of MSMEs and trade facilitation.

    “By  working  out  a  detailed  roadmap   and an information-rich marketing   brochure, OGFZA will strengthen investors’ confidence and give a strong impetus to businesses that want to explore the numerous opportunities that abound in the oil and gas free zones and sectors.

    “Besides its national significance, the roadmap we are unveiling today (yesterday) is a critical work tool for OGFZA. It will provide the means to milestone  the performance of the authority and help to measure economic and social progress in the oil and gas free zones. The steps outlined by OGFZA to enhance service delivery, improve on the ease of doing business and automate its operations will help in creating the enabling environment to create and sustain investments.”

    The Managing Director/Chief Executive Officer of OGFZA,  Mr. Umana Okon Umana, described the stakeholders’ forum as an important event in the strategic plan of the authority.

    He noted that the minister’s presence at the forum underscored the strong support of government for OGFZA and the management’s efforts to achieve the mandate of the authority.

    He said: “This forum offers us a platform to introduce the new leadership of the authority to our stakeholders and show them the way in which we intend to work together to recreate OGFZA and rebuild prosperity for all in successful partnerships between government and private investors in the free zones.

    “The path to the new OGFZA is well laid out in our roadmap, which we are unveiling today (yesterday), along with our marketing brochure to guide existing and potential investors to the array of incentives available in our free zones. The roadmap is a product of our vision to be the premier investment promotion agency of government by facilitating the establishment of businesses in the Oil and Gas Free Zones, with the creation of an enabling environment for investment.

    “We will make the free zones the first ports of call for investors who are looking for the best opportunities in Africa, to either expand their existing businesses or start new ventures.”

  • PwC: Nigerian firms lack capacity for oil, gas exploration

    PwC: Nigerian firms lack capacity for oil, gas exploration

    •More assets divestments coming

    PricewaterhouseCoopers (PwC), an auditing firm, has said Nigerian indigenous oil firms still lack capacity to carry out oiland gas exploration despite the push by the Content Act passed into law in 2010.

    Its Director, Tax and Regulatory Services, Kenneth Erikume, said since the passage of the Act, aside funding challenges, indigenous operators still lacked  sufficient capacity to explore for oil and gas.

    Given these challenges, the Federal Government needs to focus more on building capacity at the local level and getting the Nigerian Content Development and Monitoring Board (NCDMB) to drive the acquisition of technical know-how requisite for the industry.

    He said with necessary expertise, the country would be able to create entities that could help other African countries in their oil and gas sector. This is the direction a country such as Nigeria, that started oil and gas operations in the 1950s, should be taking, he added.

    Erikume told The Nation that the government needed to address uncertainty of investments in the petroleum industry, respect some of the agreements and concessions it has with operators. When this is sorted out, investors would be more comfortable to invest, he added.

    He also urged the government to ensure that the Petroleum Industry Bill (PIB) is passed into law as quickly as possible.

    According to him, when an investor puts his money into a system, he will be interested in making progress.

    Since oil prices have started rebounding, he expressed optimism that investors would returm to the oil fields abandoned in the wake of the slump in prices.

    Erikume said the worst was over, adding that things could only get better. He said if oil price gets to about $60 per barrel, the country would begin to see more investments in the industry.

    “From the national perspective, what most investors are looking forward to is the final decision on the PIB, which has taken too much time to complete. It has implications on the fiscal quality which will impact on how much dollar an investor would be able to recover if he embarked on crude oil exploration and production,” he explained.

    Erikume said there would be more divestments by traditional international oil companies (IOCs). According to him, the multinationals will be focusing more on offshore and deepwater exploration where there are fewer issues of vandalisation and militancy.

    IOCs will continue to seek for divestment from onshore and shallow water assets and indigenous companies can pick up the assets.

    Erikume agreed that the challenge in passing the PIB was around balancing the interest of various stakeholders, including payment to the communities.

    In addition, there are conflicting issues around the fiscal provisions, which also have to be balanced in the interest of all.

    But, to address the issue, he said,  the National Assembly, in consultation with stakeholders, has to expunge the portion of the bill that is related to corporate governance and administration from the fiscal and commercial aspects of the bill.

    He noted that the oil and gas industry governance bill was being proposed. “So the industry governance bill is being considered now, I think it has passed second reading, I am hopeful because it is not carrying the baggage of the fiscal provisions of the full bill, it will be easier to pass into law,” he added.

  • Experts to govt: increase oil production

    With ongoing peace talks between the Federal Government and Niger Delta indigenes, experts have urged the Federal Government to increase oil production.

    The experts, including the President, International Institute of Energy and Law, Prof Wunmi Iledare, and the former Executive Director, National Integrated Power Project (NIPP), Dr Albert Okorogu, said  once government was able to substantially increase output, revenues accruing to the government would shoot up considerably.

    If government’s crude oil revenue  goes up by about 70 per cent, the foreign reserves will be expected to hit $35 billion in the next few years, they added.

    With increased revenue inflow, the government will be able to finance its budget, and meet other fiscal responsibilities, they noted.

    Speaking with The Nation on phone, against the backdrop of the rise in crude oil price to $56 per barrel, and ongoing peace moves of  Acting President Prof Yemi Osinbajo and his team in the region, they said growth in the oil industry, was dependent on the twin issues of peace in the Niger-Delta region and increased oil production.

    Iledare said the rise in the price of crude oil was a welcome development, urging inhabitants of the region to play a complementary role by allowing peace to reign. He said with this, the Federal Government would achieve its goal of having an improved and steady revenue from the sale of crude oil.

    He said: “No doubt, the industry is facing the twin problems of reduction in the production of crude oil and violence in the Niger-Delta region.  The issues have impacted negatively on the industry and the country, which relies on oil for sustenance. Now that the  price of crude oil is appreciating, residents of the Niger-Delta region must allow peace to reign in order to achieve optimal production of crude oil.”

    Iledare, who is the president, Association of International Energy Economists (AIEE), lamented that  breaking of oil pipelines, oil theft, departure of firms from onshore to offshore province, dwindling oil production and exploration activities, among others, had been hitting the industry.

    “For years now, the global price of crude oil has fallen steeply, resulting in the inability of the Federal Government to implement its fiscal policy. Now that the price of oil is rebounding, the problems that are associated with budget benchmark and implementation would become a thing of the past,” he added.

    Okorogu said the country was blessed with oil fields, which contained associated gas, adding that increase in production of oil would lead to a corresponding increase in production of gas.

    Okorogu said gas was the bane of the nation’s electricity industry, noting that the turbines would get gas for operation if activities in the petroleum industry improved.

    The six power generation companies (GenCos) and 10 power plants being managed by the Niger Delta Power Holding Company (NDPHC), under the National Integrated Power Project (NIPP) and others, would get gas and increase power generation. This means improvement in electricity supply and the economy, he said.

    They noted that Nigeria’s realisation of its 2.2 million bpd oil production budget benchmark was hinged on a peaceful Niger Delta and minimal or zero militancy. Therefore, government needed to improve ongoing dialogue with the region’s stakeholders to avoid the risk of being held to ransom due to delays.

  • Community: our oil, our burden

    Residents of Owaza community in Ukwa West Local Government Area of Abia State have crude oil, but rather than celebrate the black gold, they are agonising. In 1958 when Shell Petroleum Development Company (SPDC) commenced operations in the community, they have never known peace as the people of the area have been impoverished.    Their plight has been made worse with the entrance of Total Gas Producing company, the community said.

    The state governor, Dr Okezie Ikpeazu visited the community and decried the waste and environmental degradation that has been going on in the community over the years and called on the oil companies involved for a meeting on the way forward.

    The Nation went to the community to see the extent of degradation.

    It was revealed that one of the facilities called Imo River 1 which produces 60,000 barrels of crude oil per day including gas empties its content into a neighbouring state and the revenue accruable to Abia state is being paid into the account of that state.

    In spite of these, the oil companies have denied the community of the necessary incentives such as pipe-borne water, good roads and light while there is constant flaring of gas which damages their ecosystem and made them to go to the neighbouring communities to farm in order to eke out a living.

    The people of the community have not been spared the constant intimidation with security agencies especially the military by the oil companies which escorts the oil workers from Port Harcourt to their place of work every day fully armed and ready to shoot at anyone who tries to stop them from going to work.

    On the day our correspondent visited the community, the youths of Owaza community had demonstrated against Total Oil Company which has a gas producing plant in the area over their inability to employ people from the community.

    The oil company which came into the area a few years ago is alleged to be engaging workers from outside the area to work in the plant which the youths are protesting against, saying that they have capable hands to do the job.

    The Nation observed that in an effort to evade paying the required tax one of the oil companies devised a means of flaring their gas underground which increased the damage on the soil and also having serious health hazard on the community and it’s people.

    Speaking with The Nation at Owaza, the youths president of the area, Austin Nwarie said that the people in charge of the gas plant find it difficult to employ any of the youths despite the fact that most of them are more than qualified to work in any position there.

    Nwarie said that apart from Total, that there is also Shell oil company which has been in the area since 1958, stressing that all these years that the oil companies have been operating that the community has been suffering.

    The Owaza youths president regretted that the Total oil company and Shell company have been destroying their roads, “Yet they find it difficult to repair any of the roads they have been destroying, no water and light”.

    He said, “All we want is employment for our youths as there are no Owaza people working in any of the oil companies operating in our area all these years, we have over 5000 capable youths, yet they bring workers from outside our community which is no right”.

    The youths said that there will be no work at the plant as they blocked the road and stopped workers of the plant who were on the way to work from Port Harcourt in a convoy escorted by soldiers.

    One of the soldiers who was escorting the convoy of workers on sighting the protesting youths decided to shoot into the air with the aim of scaring them away but the youths surged forward asking the soldiers to kill everyone in the crowd.

    It took the prompt intervention of the former member of NDDC, Chief Sam Nwogu who was around the area at that time to stop the youths from attacking the convoy of Total oil workers and also averting a blood bath.

    Nwogu who is from the area pleaded with the youths not to do something that will give the community a bad name, stressing that their community has never been known to be militants despite the environmental degradation caused by the oil companies working there.

    The paramount ruler of Ipu West community, HRH Eze Young Ogbonna regretted that Shell which started operation since 1958 has not done anything to improve the welfare of the people of the area and that there was no agreement with them because oil exploration is being controlled by the federal government.

     

  • Maritime ready to take over from oil, says Peterside

    Maritime ready to take over from oil, says Peterside

    The Director-General of the Nigeria Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, has said maritime will soon take over from oil as the country’s leading revenue earner.

    He urged the media, especially maritime correspondents, to support the government’s drive to diversify the economy for growth and create alternative opportunities for investments.

    The NIMASA chief spoke while receiving the leadership of the Nigeria Union of Journalists (NUJ), led by its National President, Mr. Abdulwaheed Odusile, at the agency’s headquarters in Lagos.

    Peterside, while noting that the media is the interface between the public and the government, urged journalists to be professional in their reporting as people look up to them as major sources of information.

    He said: “We urge you to support the Government as it diversifies the economy for a better future for the entire Nigerian populace. You have to be fair and professional while reporting Government activities in order not to create unnecessary panic amongst the public.”

    Peterside urged stakeholders to tap opportunities  in the maritime sector.

    Peterside added: “The ocean is a resource a country can leverage on to grow its economy and blessed with a coastline of about 853km and 250 nautical mile Exclusive Economic zone, we must begin to take advantage of the maritime opportunities available to us to grow our economy.”

    Odusile, who had on his entourage Chairman of Lagos branch of NUJ, Mr. Deji Elumoye, said  his colleagues would do more to focus on government activities geared towards revamping the economy. He added that special attention would be on agencies, such as NIMASA that are in the frontline of driving the diversification process. He noted that this will help ensure a virile maritime industry and a greater economy.

  • NNPC prepares for global oil trading

    NNPC prepares for global oil trading

    The Group Managing Director,  Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has urged oil traders under the purview ofx the Corporation to sharpen their skills for the challenges ahead as the stste-run oil firm seeks to activate its vision of becoming a global player in the industry.

    Baru spoke ysterday at the NNPC Towers, Abuja while receiving participants billed to depart for onsite customised oil traders training programme organised by the Oxford Princeton, London, for select NNPC workers.

    Its Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu in a statement , quoted Baru as saying: “Trading on the major international platforms like the London mercantile exchange, the New York NYMEX, and of course Singapore requires in-depth understanding. It also requires total loyalty and commitment to your entity, as in the oil and gas industry, the margins are small so the volume definitely matters. We rely on you to make things happen.’’

    The NNPC GMD noted that because successful trading required in-depth networking, the trainees must do everything possible to develop and sustain a rich pool of contacts within the trading world.

    He recalled that various attempts made by the NNPC management in the past to have a strong hold on oil trading had not yielded the expected dividend because the Corporation relied on the so-called big trading companies to transfer trading skills to NNPC workers during routine secondment.

    “It is our aspiration that this crop of trainees would eventually realise our dream,’’ Baru said.

    The training programme is designed to equip the participants with crude oil trading fundamentals and develop their capacity to compete in the global trading space. The course is billed to take-off on February 6.