The Nation Newspaper

Tag: Oil

  • Oil prices to sag till year-end

    Oil prices to sag till year-end

    Crude oil prices remained weak early this week as a slowing demand outlook implied oversupply will remain in place for months, prompting speculators to cut their bets on rising prices.

    Front-month United States  crude futures were trading at $44.65 per barrel at  five cents above their last close but more than 12 percent lower than their October peak.

    International benchmark Brent was four cents higher at $48.03 a barrel, but more than 11 per cent below October’s high.

    ANZ bank said it expected prices to remain low for the remainder of this year and that speculators were cutting their bets on higher prices.

    “Net speculative (United States) long positions declined by 13,841 contracts for the week ending 20 October,” the bank said.”We remain cautious on commodity prices into year-end given weak demand conditions.”

    On the demand side, research agency, Energy Aspects, said in its quarterly outlook that it “forecast a sharp slowdown in global oil demand across the fourth quarter of 2015, at 0.8 million barrels per day, which marks the slowest pace of growth in five quarters”.

    Energy Aspects said the ongoing oversupply in crude oil was starting to spill into the market for refined products, with a product stock-build of 0.6 million barrels per day seen in the third quarter.

  • Oil and gas operations: rights and obligations

    Oil and gas operations: rights and obligations

    Also, certain interests can be created in oil and gas exploration. These interests are based on the parties’ interests and background.

     

    Concessions

    Concession is one of the main interests that can be created. It is the agreement which hands over and transfers certain interest in a property to another person. It has been used for a long time in many parts of the world for transfer of interest in land and resources from one party to the other. The interest is normally not an outright sale or purchase but for a certain period of time. This is usually between the company and the state that has petroleum embedded in its land. It does not involve complete transfer of the land but it signifies the permission by the owner to the company that wants to work upon and se the land

     

    Traditional Concession

    This is an agreement whereby the oil company received the exclusive right to explore for petroleum and if petroleum was discovered, to produce, market and transport the oil and gas. In return, the company paid specified costs and taxes. These concessions had certain characteristics. The area was often very large. In many cases it extended over the whole land in the nation. The duration was very long, usually between forty years to seventy-five years. They were in respect of very large areas of land of the host country. In Nigeria for example, the concession granted to Shell in 1938 was in respect of the entire mainland of Nigeria. It usually had exclusive ownership of and was free to dispose of them as it deemed fit.

     

    Modern Concession

    Modern concession is similar to the traditional concession in many ways. It is also an arrangement whereby the oil company receives the exclusive right to explore for petroleum and if petroleum was discovered, to produce, market and transport it. The company pays specified costs and taxes to the State that has the crude oil. Under this type of concession “the company has rights over the produced petroleum and owns it as from the point of extraction.” It is now called by various names such as licence or lease, but it is still the most widely used type of agreement. The duration is normally for an initial period of twenty years. The area of coverage has also been reduced. The company is usually given rights only in respect of crude oil and sometimes natural gas. Petroleum remains at all times the property of the State in almost all agreement of this nature.

     

    Petroleum sharing contracts

    These are legal arrangements in which crude oil is shared by the parties in prearranged proportions. In a standard PSC the company bears all the risks of exploration, and is often in charge of the operations and management of the contract area. When oil is discovered in commercial qualities, the company is entitled to recoup its investments from the crude oil produced from the contract area. The remainder is then shared between the National Oil Company (NOC) of the oil producing country and the company in a predetermined proportion. Unlike the concession, ownership of petroleum discovered remains vested in the State or its NOC and the contractor does not acquire title to its share of the petroleum until the oil reaches a mutually agreed point.

    Joint Venture Agreement: A joint venture is agreement between two or more companies/parties to jointly do a business or to jointly undertake the formation of a company/ business in which the parties jointly fund and bear the risks. It is common in the oil industry to have a JVA between the host country and the international oil company. This is so as to have the two parties engage in the exploration and prospecting for oil in the country.

     

    Participation Agreements

    This agreement sets out the respective rights of partners to the joint venture. Such agreements vary in detail, because they were individually negotiated, but they remain the same in substance. Participation enables the host country exercise more control on the operations of its industry. It makes for more effective technology transfer, since the host country is likely to become more familiar with the practical aspects of the petroleum industry. Through participation, the host country’s objectives are potentially capable of fulfillment, although its effectiveness depends on the way it is implemented.

     

    Operating Agreement

    This type of agreement spells out the legal relationships between the owners of the respective leases, and lays down rules and procedures for the joint development of the area concerned, and of property jointly owned by the two parties. It gives the details of the workings and activities that the oil company is expected to do, while also stating the roles of the host country. The national oil company’s scope of work in the operation is clearly defined in this type of agreement and each party is fully aware of its responsibility under the JVA.

     

    Oil Exploration License

    and Lease

    The Petroleum Act provides in Section 2 (1) that the Minister of Petroleum may grant any of the licenses or lease created subject to the provisions of the Act.  The Act further provides that an oil exploration license shall not confer any exclusive rights over the area of the license, and the grant of an oil exploration license in respect of any area shall not preclude the grant of another oil exploration license or of an oil prospecting license or oil mining lease over the same area or any part thereof.

    Oil Prospecting License: Oil prospecting under the Petroleum Act, includes the right to explore and carry away and dispose of petroleum won during prospecting operations subject to the fulfillment of obligations imposed upon him under the Act. An oil prospecting license (OPL) can only be granted to a company incorporated in Nigeria. The holder of an oil prospecting license has the exclusive right to explore and prospect for petroleum within the area of his license. The duration of an oil prospecting license is determined by the Minister but must not exceed five years including any periods of renewal.

     

    Oil Mining Lease

    Oil mining involves the exclusive right to conduct exploration and prospecting operations or otherwise treat petroleum discovered in or under the leased area. The Act provides that the term of an oil mining lease shall not exceed twenty years. This term may however be renewed in accordance with laid down procedures stipulated by the Act. The lessee of an oil mining lease shall have the exclusive right to conduct exploration and prospecting operation and to win, get, work, store, carry away, transport export or otherwise treat petroleum discovered in or under the leased area

    Assignment of Rights: The holder of an oil prospecting license or an oil mining lease shall not assign his license or lease or any right, power or interest therein or there under, without the prior consent of the minister.

    As already stated entire ownership and control of mineral oil or petroleum and natural gas in Nigeria is vested in the Federal Government. The Federal Government may grant the following rights to companies incorporated in Nigeria, an oil exploration license OEL, an oil prospecting license (OPL) and an oil-mining lease (OML).

    One advantage of the Act from the point of view of the oil companies is that there is no delay in land acquisition for oil operation. With both oil and land now being vested in the government, procuring the necessary licenses to drill oil and leases to enter upon land are now relatively quicker and easier. On the government side, in addition to royalty and rents from oil, the government, as land owner, now receives compensation for land hitherto paid to families and communities. For the local people, once there is an acquisition of land by the government, they are only entitled to compensation for improvements to the land.

     

    Rights, obligations,

    mitigation and innovations

    Most exploration and production activities in the oil and gas industry are carried out exclusively by multinationals under joint venture contracts whereby the Nigerian National Petroleum Corporation (NNPC), the state oil company, contributes to 55-60 percent of production contracts and claims the same ratio of total revenues. Despite the huge revenue that accrues to the nation from these resources, there is little to show for it as far as the oil producing areas are concerned. Rather they have suffered consequences of environmental pollution and other disturbing issues. S. 36 of Schedule 1 of the Petroleum Act 1969 provides for the payment of “fair” and “adequate” compensation, which refer to surface right including specified plants, crops and economic trees.

    A factor in the deteriorating economic condition of not just the Niger Delta is environmental pollution arising from careless and unmonitored oil production.  The byproduct of gas flaring continues to destroy the ecosystems of surrounding areas, and pipelines that have been constructed through numerous farmlands have ruptured, causing damage to vast areas of agricultural land.

    These are responsible for the environmental problems facing the country, but mostly the Niger Delta such as the destruction of the nitrogen cycle of the soil and plants, the contamination of water, and the extinction of plankton, fish, and other aquatic organisms.  Taking agriculture and fishing industry into account as the primary source of subsistence for a large portion of the Nigerian population, making up about 40 percent of the nation’s labour force, the current destruction of the ecological balance translates into depressed income and widespread poverty.

    Another factor is the large amount of displacement that has occurred over the course of oil exploration and production.  As stated earlier, land falls under the direct control and management of the state governor, or under the local government of the rural areas.  The act allows designated government officials to grant statutory rights of occupancy to any land, and this has been used to expropriate farmlands for the use of the oil companies.

    Since the law has been passed, a large number of families from the oil communities have lost their farmlands to claims on areas for oil production and transportation alone. Land in Nigeria represents a fundamental safety net for a great number of people who have traditionally depended on it for subsistence agriculture and various indigenous medicines.  Important food crops such as cassava, pepper, garri, and cocoyam have all been subject to poor yields over the past few decades.  Other crops such as yellow yam, one of the most commonly grown specie of yam in many communities, have all together disappeared from local markets, as evidence of serious pollution.

    Aside from crude oil, industrial wastes from exploration activities and refinery emissions, coupled with thermal pollution from gas flar

  • Three suspected oil thieves held in Delta

    •Woman among suspects

    The Navy has arrested three persons, including a woman, in Delta State for alleged oil theft.

    The operation was part of Navy’s quest to rid the Niger Delta of oil thieves and other criminals.

    It was led by the Flag Officer Commanding (FOC), the Central Naval Command, Rear Admiral Apochi Suleiman, in the Jones Creek of Warri Southwest Local Government Area.

    The Navy also destroyed five Illegal refineries and 320,000 metric tonnes of illegally-refined petroleum products.

    It raided some clandestine bases of oil thieves and burnt the equipment used to refine and steal petroleum products, including engine boats, estimated at several millions of naira.

    Twelve “Cotonou boats”, said to be laden with petroleum products, were destroyed.

    Addressing reporters after the operation, which lasted five hours, Suleiman said the crusade against illegal oil bunkering would continue until the perpetrators were brought to their knees.

    He said: “It is the mandate given to us by the Chief of Naval Staff, to go all out against illegal oil bunkerers. We must attain this through the effort of all concerned, including the media, stakeholders and informants.

    “It is possible that we may not be able to eradicate the scourge completely, but we will try as much as possible to reduce it to the barest minimum.”

    The Naval chief stressed the need to fight oil theft and save the nation a huge revenue loss.

    He said the suspects would be handed over to the appropriate authorities.

  • Buhari not to blame for Nigeria’s woes, says Yari

    Buhari not to blame for Nigeria’s woes, says Yari

    Chairman of the Nigeria Governors’ Forum (NGF) and Zamfara State Governor, Abdulaziz Yari at the weekend declared that President Muhammadu Buhari cannot be blamed for the present woes the country has found itself.

    According to him, what Nigeria is going through is partly a reflection of the global economy, which adversely affected the international prices of oil.

    Despite the drop in prices of oil, he said that President Buhari has done well in managing the Nigeria economy in past five months.

    The governor, who spoke with journalists in Abuja, said that only Nigerians who were aggrieved because of ministerial nomination and other appointments could be unhappy with Buhari.

    He said: “They all should understand how Buhari emerged as president and the situation he met on ground on the issue of economy which is the global issue. Despite the fact that the global leaders are trying, to mention economic recession, but there is bad signal and they are managing it at the top level but in the actual sense, this recess we are in now is more than that of 2008 because China is experiencing very slow production, Brazil, Argentina.

    “The only country that is doing well is America and India, so, there is significant drop in GDP globally except America and India. So, it is not about Buhari,” he added.

    “If we were selling at 102/110 and we were having 38 as production cost and over 70 were put in the basket for sharing, but today, we are selling at 46 and the Joint Venture partners are still taking 38 as their cost of production thereby leaving us with less than $20. So, how are we going to survive?

    “But we are still moving and thinking of how we are going to show that Nigeria has piloted change. So, the people of northern Nigeria or the entire Nigeria should look at this scenario because those in the global business know what the situation is and there is no magic. So, therefore I believe the President is doing well and he started very well.

    According to him, the Nigeria’s economy will experience a significant improvement as all the leakages are being blocked through the introduction of the Treasury Single Account.

    Stressing that Buhari came on board with many agenda, he said Nigerians need to give him time and the chance to do the work.

    “Definitely, he will deliver the campaign promises and at the same time, the issue of security, energy, productivity and discipline in the service, what he has achieved within the five months is remarkable,” Yari stated.

    Continuing, he said: “I have no idea that they are not happy because if anyone can say that, it should not be the north alone, it should be all Nigerians.

    “And I am surprised anyone will say he or she is not happy but maybe they are not happy because he did not consult them in the selection of who his ministers will be. But in general terms, he has done well.” the governor said.

    He also maintained that the NGF, which was crisis-ridden before his tenure, is now faring well under his leadership.

    He said: “Glory be to the Almighty who gave me the opportunity to be a chairman by the support of my colleagues and now, we are having one forum and it is a rallying point to all governors and a rallying point to the federal government in the issue of leadership of the governors and the federal government today.”

  • Navy invades community of oil thieves

    Navy invades community of oil thieves

    Rear Admiral Apochi Suleiman has just taken over the leadership of the strategically located Central Naval Command (CNC) of the Nigerian Navy. The CNC has its headquarters in Yenagoa, Bayelsa State. Its areas of operation, perhaps, have the largest deposit of petroleum, the mainstay of Nigerian economy.

    His body language indicates that he is a no-nonsense man and has a brief to confront oil theft head on without compromise.

    Suleiman, a former Chief Staff Officer, Naval Training Command, Apapa, Lagos State, took over from Rear Admiral Stanley Ogoigbe, who has been redeployed to the Nigerian Navy headquarters, Abuja.

    Immediately he took charge of the command, Suleiman warned commanders, officers and ratings against compromising rules of engagement in their areas of responsibilities.

    He appealed to the naval personnel to be totally committed to their work and avoid actions that could tarnish the image of the Navy.

    He said: “I want to reiterate here that naval personnel should work with the right attitude. They should be committed to their work to realise the mission of the Nigerian Navy and for the interest of Nigerians.

    “For the commanders on ground, let me sound it loud and clear that the authorities of the Nigerian Navy will not tolerate any form of compromise on their part in carrying out their operations.

    “Collaboratively, we are going to do the job set out by the Chief of Naval Staff without compromises. The Navy will not tolerate those who aid and abet criminal activities. The Nigerian Navy is paying all of us well and we must justify it and portray the force in good light. We must do our work well to achieve the mandate of the force in tackling illegalities.

    “To my commanders, whether my seniors, sub-ordinates and contemporaries, I urge you all to join hands with me to achieve our collective goals. We must put the interest of the force and Nigerians at heart at all times.”

    He warned against committing premeditated errors, saying that such mistakes would attract necessary sanctions.

    There are indications that the character of Suleiman has strengthened the war against oil theft. The commander has, no doubt, hit the ground running. He took his campaign against oil theft to Bilabiri community in Ekeremor Local Government Area.

    His troops invaded a notorious creek in the area where massive illegal deals on oil had gone on for a long time. The creek is like community of illegal refineries. The operators established six camps of illegal refineries and linked them together with big pipes.

    On sighting the troops, the operators abandoned the site and fled to different directions. The troops took over the cooking site.

    The troops also confiscated over N10.2 billion worth of stolen products consisting of two million litres of illegally-refined automated gas oil (AGO) and over one million barrels of stolen substances suspected to be crude oil. Six large Cotonou boats used by the suspected thieves to transport the products were impounded by the troops.

    Suleiman further explained that the command achieved the feat through a tip-off. He said the oil thieves operated on a landmass of over 100 hectares and created a black market for massive illegal deals on stolen petroleum products.

    He said the command deployed its patrol teams from Delta and Yenagoa to ensure daily surveillance of the camps and the impounded boats.

    The Flag Officer Commanding (FOC) was accompanied to the creeks by the Deputy Command Operations, CNC, Captain Mustapha Hassan and other senior officers.

    But Suleiman said destroying the camps as required by law, would lead to serious environmental pollution and detailed his men to take charge of the creek. He also ordered them to wait for further directive from the naval headquarters.

    A few days after the Bilabiri raid, Suleiman’s men nabbed 11 suspected workers of an oil exploration and production company for allegedly siphoning and selling crude oil from a wellhead in Bayelsa State.

    The suspected oil thieves were arrested at Eremor Field 1 at Peretorugbene town in Ekeremor Local Government Area. Suleiman said the suspects were apprehended from a vessel christened MT DERA 1.

    The vessel, which belongs to the exploration and production firm, was rounded up by naval troops during a routine patrol of oil facilities in the area. The FOC said he discovered that a pipe was connected from the wellhead to the vessel.

    He said the suspected thieves had already pumped crude oil valued at over 8,000 metric tonnes into the vessel when they were nabbed. Suleiman further said the oil firm was only authorised to take samples of the product from Eremor Field 1 but not to sell it out to buyers.

    He said: “Eremor Field 1 is not a loading point. So, selling of the product by staff of the oil firm was illegal.

    “They are only asked to take samples but from our investigation, we  understand that they have been selling the product from the barge.”

    The FOC revealed that the command, through investigation, discovered that members of staff of the company had sold 5,000 metric tonnes of the product. He further said the navy knew about the illegal deal when the buyer returned the product on the grounds that it was contaminated and then sued the exploration firm.

    The FOC noted that the suspects were handed over to the relevant agency while signals were sent to the Navy headquarters, Abuja for further direction. He warned persons involved in illegal oil activities in the area to desist from such nefarious activities forthwith or be ready to face the full wrath of the law.

    He insisted that there would be no hiding place for oil thieves within the command’s area of operation, adding that troops have intensified patrol of the creeks.

    He said the Navy will continue to make illegal business of crude oil theft, pipeline vandalism and sundry crimes unattractive. The FOC further warned that oil thieves should desist from all forms of illegalities and get involved in meaningful and legitimate businesses.

    He was accompanied on the raid by the Commander, Nigerian Navy Ship DELTA; Commodore Aliyu Sule, Commander Nigerian Naval Base Yenagoa; Commodore Yakubu Wambai, Command Deputy Operation Officer and Navy Captain Mustapha Hassan, among other principal staff officers of the Central Naval Command.

     

  • Oil marketers, govt dialogue over subsidy arrears

    Oil marketers, govt dialogue over subsidy arrears

    Oil marketers, including Oando and Mobil, have adopted moral suasion to woo the Federal Government to pay their fuel subsidy arrears.

    The Chief Operating Officer, Oando Marketing Company, a subsidiary of Oando Plc, Mrs. Williams Olaposi, gave this indication on the sidelines of the inauguration of Oando Truck Marshalling Yard 2, and Sapara Road project in Apapa, Lagos.

    She said the firms that were approved by the Federal Government to collect subsidies are law- abiding, and prefer dialogue to protest on the payment of subsidies arrears owed them by the government.

    She said oil marketing companies are corporate entities, which place the interest of the nation above personal interest, and would, therefore, not want to do anything that would affect the generality of the people.

    Olaposi said: “We (marketers) are corporate organisations; we are not going to down tools because we have not been paid subsidies by the government. We would continue to push for our subsidies until we are paid. We would not suffer the community, the good people of Nigeria, on the issue. We would not stop importing because that would amount to grounding the country to a halt.”

    She said the marketers  employed dialogue as part of efforts to identify with the resolve of the government of President Muhammad Buhari to fix the economy. Olaposi said the Chief Executive officers (CEOs) of oil marketing companies have been going to Abuja, the nation’s Federal Capital, to meet people who can considerably assist them in persuading the Federal Government to pay the subsidy arrears they have spent on importing fuel into the country.

    “We (marketers) meet with the Federal Government regularly on the issue of payment of subsidy arrears, which the government owes us. Our Chief Executive officers always in Abuja to meet the helmsmen of the Nigerian National Petroleum Corporation (NNPC); we are speaking with the think-tanks in the Presidency on the issue,” she added.

    Also, the Managing Director, Mobil Oil Nigeria Plc, Tunji Oyebanji said there was no where the major oil marketers had held the country to ransom over non-payment of their subsidy arrears. Fielding questions from reporters on why marketers still import fuel despite the huge subsidy arrears owed them, Oyebanji said the marketers are hopeful that the government would meet its debt obligations to them some day.

    He said the Mahammadu Buhari administration has promised to pay marketers their subsidy arrears.

  • ‘Oil, gas sector earnings audit report out soon’

    ‘Oil, gas sector earnings audit report out soon’

    The audit report on oil and gas sector earnings for 2013 would be made public before the end of  this year, the Nigeria Extractive Industries Transparency Initiative (NEITI),  has said.

    The audit is expected to establish how much money  the country earned from the oil sector within the period and bring to the lime light how much crude oil that was produced and how much of it was exported within the given time.

    Again, the report would  explain the processes used to manage the revenues that accrued to the government from from the oil and gas sales and how the revenues were managed. On the other hand, it would give specific answers to how much the country earned from petroleum profit tax, royalty, grants and concessions.

    NEITI Director of Communications,  Ogbonnaya Orji, in a telephone interview, said the report would also be able to make the difference between what the government received from oil and gas revenue and from all other sources and what the companies actually paid.

    He said: “We will establish from the audit if there was a difference between what companies said they paid in terms of tax, royalty, and other revenues and then find out if what they said they paid was what the government said they received or if there was a  variance.

    “We will also find out if companies paid what they were supposed to pay and if the government received what it is supposed to receive because in the past, companies had made claims that they paid so much while the government would say it received so little; we want to find out if that gap exists,” he said, adding that the report would establish if there were cases of over payment or under assessment of taxes.

    He said as soon as the report is ready, it would be made public to the media, civil societies, members of the National Assembly, adding that it would be used to ask informed questions and initiate debate that would help ongoing reforms in the sector.

    While commending the recent publication of financial statement by the Nigerian National Petroleum Corporation (NNPC), he urged the  oil firm to be more  transparent and accountable adding that its activities needed to be more in the public domain.

     

    He said there was the need for the NNPC to share more information on the internal reforms that are going on currently.

    “It needs to be faster and again there is the need for more information on what has been done and what needs to be done”, he uttered

    “We need them to support their information and communication department to come out almost weekly or monthly to brief Nigerians on what exactly is going on within the organization. For the reason that over 70 percent of the country’s revenue is coming from that organization, if anything goes on well with the NNPC it largely affects the wellbeing of Nigerians, and if anything goes wrong it will also affect them adversely”

    The NEITI boss has also stressed the urgent need for the government to exploit the huge potential in the mining sector

    He said as the oil price has collapsed globally it is high time Nigeria paid more attention to the mining sector adding the country can no longer depend on oil

    He said there were abundance of gold, diamond, copper, limestone and all sorts of solid minerals available in every nooks and cranny of the country waiting to be harnessed

    He urged the government to come out with a comprehensive policy and work closely with the NEITI recommendations on information and data that we have collated that are available in the mining sector expressing the hope that the federal government would appoint an experienced minister to take over the solid mineral sector

    Orji informed that a lot of illegal mining were going on especially in the northern part of the country where according to him are very rich in these solid minerals

    “Our concern is that most of these minerals are exploited illegally by foreigners and nobody seems to be paying attention”

    Meanwhile, he expressed the commitment to be bold in its efforts to continue to inform Nigerians on whatever that is going on not only in the NNPC but also in the mining sector

     

     

  • Govt earns $3.420b from oil in eight months

    Govt earns $3.420b from oil in eight months

    The Federal Government has earned $3.420billion in eight months (January-August) from sale of oil and gas, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, has said.

    A breakdown of the oil and gas proceeds showed that $0.61billion was remitted to the Federation Account as dollar proceeds while the balance of $2.815billion was used to fund the NNPC Joint Venture (JV) cash call (counterpart funding) within the period.

    NNPC spokesman Ohi Alegbe said Kachikwu broke the news in his report on the Corporation’s operations for the year — in line with his promise to keep the books of NNPC and transactions in the oil gas industry open to Nigerians. Kachikwu at the weekend began the monthly publication of its provisional financial and operational reports, which detail the activities of the Corporation for Nigerians to read.

    The report also noted that oil and gas receipts witnessed a sharp decline of more than 67 per cent between July, 2015 and September, 2014, when the receipt was at its peak. The decline has dire consequences for the Federation, it added.

    The NNPC chief stated that the continued decline in oil price led to insufficient cash available to meet monthly JV cash calls obligations of about $615.8million as appropriated by the National Assembly. To mitigate this effect, the Corporation was compelled to sweep all the export receipts to JV cash call funding implying a zero dollar proceed remittance to the Federation Account since April.

    About N723.82billion for domestic crude oil and gas sales proceeds has been paid to the Federation Account from January to August 2015 as Naira proceeds, he added, while $607.8 million has been paid to the Federation Accounts Allocation Committee (FAAC) in 2015 from sales of oil and gas as dollar proceeds.

    Kachikwu recently promised to begin a monthly publication that will contain NNPC’s financial and operational reports. The publication, he said, will be available on the Corporation’s website and will report on the oil and gas value chain (upstream, midstream & downstream) as well as NNPC’s agency function on behalf of the Federal Government.

    According to Alegbe, the report provides detailed and unprecedented statistical insight into crucial aspects of the Corporation’s activities ranging from national crude oil & natural gas production, lifting and utilization; refineries’ plants operations; and petroleum product supply & distribution to NNPC budget performance report and federation crude oil & gas revenue.

    He said the report Illustrated with tables, graphs and charts, and vividly throws light into aspects of NNPC’s operations that were once described as opaque. Issues like the status of the misunderstand JP Morgan foreign account, management and custody of revenue from crude oil sales, actual production capacity of the refineries, dollar accruals to NNPC/Federal Government from export crude oil and gas, as well as receipts and  payments laid bare.

  • Oil and missed opportunity

    What will Nigeria do in this new world where new forms of energy are in a stiff competition with oil after losing golden opportunities of oil wealth 45 years after the civil war?

    Nigerian political leaders, elected and appointed officials, should first determine the type of economy they want to build. An extractive and a preponderantly informal economy is a non-starter for a country pushing to a population of 200 million. Industrialization should be at the centre of economic plans and policies because its multiplier effects generate gainful employment. Gainful employment for the majority is the single most important measure of economic development. Any governing group which is not able to create the conditions for the emergence and sustainability of gainful employment in the economy has no business being in government. An annual GDP growth rate of immense proportion is of no use if it does not translate into gainful employment.

    Nigeria has been a haphazardly governed country since the end of the civil war. And the degree of haphazard governance increases with the passage of time. The country needs to return to the era of national and state development plans with benchmarks and deadlines in order bring order to governance at national and state levels.  National and regional governments should not turn their backs on the economy thinking that the market will work out itself and take Nigeria to the promised land of economic development. Governments of Nigeria should assume the role of a developmental state.

    The developmental state has existed from the time of the Industrial Revolution to the present day but the miracle economies of East Asia perfected it.  Economic history shows that states have directly and indirectly shepherded national economies across time and space. Late comers to economic development made this a truism from the British industrial revolution through industrialization of the rest of Western Europe to the Meiji Restoration in Japan and the rocket-like speed of the on-going industrialization in China. A few years ago, I saw some Nigerian politicians on a Chinese television marvel like children at the transformation of China within a short period of time. Instead of asserting confidence in what they would do to develop their country, they focused on how they needed help from China.  National development is not procured through help. Instead, leaders of countries hold the bull of development by its horns and construct a better society.  Nigerian political leaders should ask what they themselves, as custodians of national and regional leadership and governance, can do to broaden, deepen and strengthen the private sector so that the latter can help the country to achieve the feat that is now China.

    Bear in mind that the 36 states of the country cannot simultaneously industrialize. Nor is industrialization or economic development of states the sole responsibility of the federal government. Industrialization is often based on regional comparative advantage. Therefore a national industrial policy based on federal character will not work. Each state in concert with other states in a geo-political zone can draw its economic plans according to what it considers its comparative advantage and its chances of success. States and local governments should assume responsibility for their own industrial development while federal government provides the national trajectory and infrastructural support for industrialization.

    Unbridled corruption eats deep into the country’s treasury. Lower oil prices in the future will make the effect of corruption even more painful to ordinary Nigerians because there will be less revenue from which to appropriate national funds for private pockets, and therefore less revenue with which to build the economy. If oil prices fall to the point of implementing a national austerity plan, begin by drastically slashing the extravagant salaries and perquisites of elected and appointed officials at national, regional and local government levels.

    The minister of finance and coordinating minister for the economy in the Jonathan administration announced the intention of that government to increase taxes on luxury goods as a means to make up the shortfall in revenue caused by the dip in oil prices. That is a cosmetic policy for a country such as Nigeria. What items will be subject to tax increase – yachts, private jets, luxury cars, exotic drinks and furniture? How many Nigerians possess or regularly import such items into the country and how much tax revenue will they yield to mitigate the shortfall caused by low oil prices?  Deep slashes in the unconscionable emoluments awarded elected and appointed officials who contribute nothing in their positions as the people’s representatives and servants will save more revenue cosmetic increases in tax on luxury items.

    Nigerian political leaders especially should know that leadership does not mean waking up in the morning, eating a rich breakfast, putting on a flamboyant dress, relaxing at the back of a car, be chauffeured into a palatial office and receive a pay check 116 times the gross domestic product per capita. Those are perquisites of office due to incumbents. But enjoying such perquisites demands responsibility and results from incumbents. Results that justify such perquisites do not yet exist.

    It is a waste of national revenue to spend scarce foreign exchange on importing petroleum products while there are domestic refineries that should make the country self-sufficient in refined oil. The capacity utilization of national refineries in 2004 and 2013 were only 22% and 24% respectively. A country that has prospected oil for 57 years should be able to maximize comparative advantage by refining enough oil for domestic consumption and have extra for export. Commission mini and unconventional refineries, especially in oil producing areas, and recruit experts in various disciplines of petrology to monitor and oversee such mini refineries.  Remember that mini refineries helped Biafra to survive for three years under a situation of domestic and international blockade. The informal refineries in oil producing areas, which are currently dubbed illegal, can be consolidated and run with professional oversight for quality. Such refineries will create jobs and produce more petroleum products to substitute for import and so save foreign exchange for the country.

    The falling oil prices should not be an excuse for not moving the country toward industrialization. Expert speculators in the oil sector project that crude may settle at around $60.00 per barrel in the long term. That is still impressive revenue for a country that produces 2.5 million barrels a day and whose daily production is projected to hit four million barrels per day in 2020. Dedicate a lot of the funds to modernize the physical infrastructure and provide national security to enable Nigeria to get back its good name and attract foreign investments.         Foreign investments are spring boards to economic development. They can turn a country’s fortune for the better if citizens employed in them are allowed to hold strategic positions in those investments. A foreign investment strategy that keeps citizens at the laborer status makes a country perpetually underdeveloped. National development has never been, and will never be, a gift from one country to another. No country can give development to another country. National development is what the citizens of a country do by themselves for themselves under the leadership of a developmental state.   The four and half decades of missed opportunities are lost forever. It is up to the incoming ruling group to fashion how to use what remains of the country’s oil revenue to prevent continued loss of opportunities and take the country to economic development.

     

    • Ukaegbu, a Professor of Sociology & National Development writes from USA

    c-ukaegbu@northwestern.edu

  • Diezani: Oil investor not arrested by EFCC

    Contrary to reports,  an oil investor, Chief Jide Omokore, was not arrested by the Economic and Financial Crimes Commission (EFCC) for alleged corruption and money laundering.

    It was learnt on Tuesday that  following the invasion of his business premises, Omokore voluntarily went to the Chairman of the EFCC, Mr. Ibrahim Lamorde on Monday to ask questions on why the anti-graft agency took such a step.

    After an audience with Lamorde, the businessman returned to his residence in Abuja.

    None of the officials of the EFCC was willing to speak on what transpired when Omokore visited the agency on Monday.