The Nation Newspaper

Tag: Oil

  • Falling oil prices stall SWF’s funding

    Falling oil prices stall SWF’s funding

    • $1b sovereign fund records N15.7b profit

    The Federal Government’s contribution to the Sovereign Wealth Fund (SWF) has been constrained by falling crude oil prices.

    The Managing Director of Nigeria Sovereign Investment Authority (NSIA), Mr Uche Orji, told State House correspondents after briefing President Muhammadu Buhari on the fund that the $1billion initial sovereign fund contributed by the government earned N15.7 billion profit last year.

    He said: “Oil price is below benchmark and because we are supposed to be funded when the oil price is above benchmark, so it will not make any sense for the government to make any contribution now that the oil price is still low.

    “But there are other ways to support the fund which we have discussed with the President. When the time is ripe, that will be made known by the President’s spokesperson.”

    On the state of the fund, he said: “The government gave us $1billion which is the only contribution we have received and we made N15.7billion profit last year from the contribution. We haven’t got additional fund from the goverment but the fund is structured in a way that it can go through hard time.

    “We all know that the oil price is volatile, it comes up and goes down but the fund is structured in such a way that it can remain continuously profitable.

    “The funds remain the government’s and the profit made. We also discussed about potential infrastructure investments that can be made, but when the time is right, the President can make that known.”

    He said he also discussed the commitment of the NSIA to the Second Niger Bridge, health care, agriculture and power with the President.

    Stressing that the meeting was a successful, he said: “Our commitment is that we have a vehicle called NSIA Motorways Investment Company that partners with Julius Berger investments to become the preferred bidder in the Second Niger bridge. We are still going through the process of signing concessional agreement to become a concessionaire and to do all of that we need to prepare the project.

    “The progress we have made so far is in preparation of the project; making sure that the environmental impact assessment is made, the bridge properly designed and funded through our financial structuring.

    “It is the project preparatory state that we are going into and that has cost us $2.2 million. This is a big project, the project we are looking at is 11.9km, the current Niger bridge is one lane going and one lane coming and what we are building is three lane coming and going; so, it is a big project. It is a four year construction period and we are looking at 2020 for the completion of the project.”

    On how to attract more funds, he said: “We have hired African Finance Cooperation as our lead financial adviser and engaged successfully with about five or six lenders so far and some of them have commitment.”

  • Oil workers advise Buhari to prioritise gas

    Oil workers advise Buhari to prioritise gas

    The Federal Government should make gas development its major source of earnings in view of the current global slump in oil price, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has said.

    The body in a document signed by Comrades Francis Johnson and Bayo  Olowoshile, President and General Secretary respectively, said it was high time the country diversified its economy by giving more attention to gas exploration and exportation for growth.

    It said Nigeria’s proven gas reserves of 183 trillion cubic feet (tcf) is huge and capable of bringing enormous revenue to the  government if well harnessed.

    The document said gas flared annually is estimated at 31.5 billion cubic metres (bcm) about 1.1 trillion cubic feet (tcf) valued $2.5billion is also a huge loss, adding that the waste can be prevented if the right policies are in place.

    “With 172million estimated population and our vast growing but grossly under exploited gas markets, the global campaign for the promotion of more environment friendly energy, emphasis on the activities of gas will preserve our forest, and generate more revenues for the country. Based on this, the government of President Muhammadu Buhari will be recording a far more success in the area of improving fiscal resources for the growth of the economy,” it said.

    The workers explained that the depletion of Nigeria’s foreign reserves and failure of the  government to meet budgetary expectations in recent times, was because the country depends solely on oil.

    According to the body, there is the need for a paradigm shift from oil to gas to grow the economy well, stressing that billions of dollars that Nigeria lose from oil was not good enough.

    PricewaterhouseCoopers estimates that Nigeria lost $5billon within five months this year, following the problems in the global industry. Also, the Oil Producers Trade Section (OPTS) of Lagos Chamber of Commerce and Industry (LCCI) estimated that Nigeria’s revenue  from oil could be cut by about $10billion or 30 per cent before December, if urgent steps are not taken to address problems in the oil and gas sector.

    Its Vice Chairperson and Managing Director, Total Upstream Companies in Nigeria, Elizabeth Proust, warned that low crude oil prices  have significantly reduced the level of investible funds at a time when competition for investment is sharpening.

  • Nigerian firm strikes first oil in Rivers

    Nigerian firm strikes first oil in Rivers

    An indigenous exploration and production oil firm, Green Energy International Ltd (GEIL), operator of the Otakikpo Marginal Field, has struck its first oil.

    A statement endorsed by its Director of Corporate Affairs, Mr. Olusegun Ilori explained that the  feat came on the heels of the re-entery and integrity test of Otakikpo well-02, perforation and testing of the E1000A sand of the same well.

    The field which lies approximately 60 km Southeast of Port Harcourt, Rivers State  is  based in the South of Shell’s OML 11, between the shore to the South and Chevron’s OML51 to the North and about 35 km East of Bonny Crude Export Terminal.

    “The E1000A is one of the two target reservoirs in Otakikpo-02. Achieving this critical milestone barely 15 months after receiving its ministerial consent for the farm-out from Shell and its JV partners, brought instant celebration to stakeholders of the company and its Technical Partners, Lekoil Oil & Gas Investment Ltd,” the statement read.

    The field was discovered by Shell and its JV partners in 1980 while the appraisal well- Otakikpo-02 which the company re- entered to produce the first Oil was first drilled in 1981 and this was followed by Otakikpo-03.

    Under a Farmout from Shell JV, the Federal Government awarded the marginal field to Green Energy which it designated as the operator, to implement the company’s innovative Small Scale Gas Utilisation Programme (SSGUP) Otakikpo field was identified as one of the suitable sites for a pilot programme that offers unique solution to improving the economy of the oil producing communities while ensuring zero routine gas flares.

    The programme  consist  of  oil production from the field while the associated gas will  be processed and utilised  for power generation for the communities and excess sold to the Port Harcourt Distribution Company (Disco) in addition to LPG extraction and  bottling facility to produce and distribute domestic cooking gas.

    The statement, explained that as  a way of implementing its mandate and the vision of its stakeholders as an integrated energy company, GEIL has recently obtained a license for 10 megawatt (Mw) captive power from the National Electricity Regulatory Commission (NERC). Also, the company was recently granted a licence by the Department of Petroleum Resources (DPR) for modular refinery to produce diesel and other refined products.

    The company has also pursued a stakeholder partnership model with the communities around the project area, a situation which has enabled the host communities to appreciate the presence of the company as partners for sustainable development.

    Its Chairman, Prof Anthony Adegbulugbe, was full of excitement for the milestone achieved so far within the short span of moving to the field.

    He thanked the host communities for the partnership with the company and hoped  the people would allow the company enjoy a hitch-free and conducive environment to unfold its unique development initiatives  for the overall good of the people and the nation.

    He said: “The project offers considerable benefit to all stakeholders and has the strong potential of a gas flares out solution, boosting the economic development potentials of the community, and indeed the nation, while bringing profitable returns to its Investors.”

  • Navy declares war on oil thieves

    Navy declares war on oil thieves

    •145,000 litres of stolen crude oil set ablaze in Rivers
    •Four illegal refineries operators arrested

    The Nigerian Navy Ship (NNS), Pathfinder, Rumuolumeni, Port Harcourt, Rivers State, seems to have declared war on illegal refining sites, following its destruction of illegal bunkering and refining sites in the state almost two weeks ago.

    The naval personnel, who had been combing the creeks  to prevent the activities of the illegal bunkerers and refiners, were offered N600,000.

    The Commander of the NNS Pathfinder, Commodore Shuwa Mohammed, told reporters yesterday in Port Harcourt that four suspects, who were arrested and would be handed over to the Nigerian Security and Civil Defence Corps (NSCDC).

    “Ironically, while setting the refinery ablaze, four out of the fleeing oil thieves came back and offered us a bribe of N600,000 to leave the refinery.

    “The four suspects were subsequently arrested and would be handed over to the Nigeria Security and Civil Defence Corps (NSCDC) for investigation and prosecution,” he said.

    Mohammed said despite the renewed efforts by the naval high command to stop oil theft, the government should also sensitise of Nigerians  rather than destruction alone,” he said.

    During an aerial surveillance, many artisanal/illegal refineries, hidden under the mangrove forest, were sighted, with the environment polluted.

    There are over 33,000 creeks in the Niger Delta. NNS Pathfinder  monitors more than 1,000 of the creeks and waterways.

    Mohammed said the mop-up was aimed at ending the colossal damage done to the environment by activities of the oil thieves, who he said had been puncturing pipelines to obtain crude oil illegally.

    The commander, who was represented by the Base Operation Officer, Commander Chidi Ejiofor, said there would be no hiding place for oil thieves and pipeline vandals.

    Mohammed said: “The mop-up ordered by the Chief of Naval Staff, Vice-Admiral Ibok-Ette Ibas, is part of a series of operations lined up to end incessant crude oil theft and pipeline vandalism in Rivers State.

    “During the aerial surveillance, many new illegal refineries were sighted, which prompted troops’ mobilisation.

    “In the course of our operations, an illegal refinery with 15 storage metal tanks, loaded with 145,000 litres of stolen crude oil, was set ablaze in Buguma, Asari-Toru LGA of Rivers State.”

    He also stated that more than 50,000 litres of illegally-refined diesel, stored in 10 cooking tanks, was also destroyed.

    He noted that a metal badge and dump, with the capacity of storing thousands of litres of petroleum products, were also destroyed.

    Mohammed maintained that more ilegal operators  who had fled the sites upon sighting the naval personnel, would soon be apprehended and prosecuted to serve as a deterrent to others.

    He noted that in spite of the renewed efforts by the naval high command to stop oil theft, sensitisation was key to end the illegal activity.

    The commander said: “It is difficult to maintain 24-hour presence in all the creeks and oil facilities, especially considering the shallowness of some of the creeks, making them near impossible to patrol.”

     

  • Oil glut: GE, others explore non-oil sectors

    Oil glut: GE, others explore non-oil sectors

    Multinational oil service firms, inc luding General Electric and Schlumberger are investing and consolidating their non-oil investments in order to lessen the impact of the fall in price of crude oil.

    The glut in the global oil market has exceeded a year, a development which made the companies to review their portfolios by way of increasing investment in non- oil sectors. The new-found sectors by oil firms include transportation, construction, aviation and healthcare, among others.

    The Chief Operating Officer, General Electric, West Africa, Uzochi Nwagwu, said the firm will not scale down its operation in response to the slump in the oil price, because it has invested considerably in many areas outside oil. He listed the areas to include aviation, health, power and water resources.

    He said the organisation is supplying and servicing equipment used in hospitals, servicing aviation operators such as Arik, Kenyan and Ethiopian Airways, among other airlines. He said the firm is equally providing equipment and services to power generation companies (GenCos); and exploring opportunities in rail transportation by moving heavy goods across the country in order to help reduce hazards, occasioned by road and water transportation.

    Nwagwu, while speaking during a tour of GE facility in Onne, Rivers State, said the firm has diversified its operation, so as to have a balanced portfolio and further reduce whatever shocks that are coming from the tumble in the oil market.

    “We at GE have created a balanced portfolio as part of efforts to guide against turbulence in the oil and gas sector. A downturn period is a period that is actually meant for investment. During turbulent times, we invest more because we are looking for more friends or customers. It is during such period that an organisation knows its true friends,” he said.

    He explained that the fall in global oil crisis has resulted in lack of new investment and reduction in number of activities carried out by operators, noting that GE has positioned itself in such a way that it can actually prevent a spillover effect of the fall in oil prices on its operation.

    “In terms of value proposition, GE is there. The firm is providing services to multiple companies or institutions. Apart from rendering services to oil majors such as Shell, ExxonMobil, Agip, Seplat, and others, GE provides services for the Niger Delta Development Company (NDDC) and other local operators in the oil and gas industry. That is why the company is not bothered as such,” he said.

    Also, Schlumberger is said to be considering investment in rail construction as part of its divestment programmes. The company, which has a long record of service in the nation’s oil and gas has intimated Nigerians of its plan to diversify its operations, with a view to expand its growth.

    Efforts made to speak to Mr. Tonye Briggs, Vice President, Africa, Schneider Electric on measures his organisation is putting in place to reduce the shocks created by the slump in oil price proved abortive as he neither picked his calls, nor replied to the short messages (sms) sent to him on the issue.

    The President, Petroleum and Technology Association of Nigeria (PETAN), Emeka Ene, said it is normal for companies to strategise during a turbulent period by looking for areas where they can maximise their potentials in order to improve their earnings.

    He said the decline in the prices of oil is impacting negatively on operation of both local and foreign owned oil service  companies operating in Nigeria, adding that firms rejig their portfolios to enable them turn their  weaknesses into strengths.

    He said a well diversified portfolio is a good option to foreign conglomerates operating in Nigeria because they want to continue in business. He noted that indigenous oil servicing firms are witnessing what he described as a period of realignment of ideas, as a result of challenges facing the sector.

    Ene listed the problems to include the divestment of shares in the industry by the International Oil Companies (IOCs), absence of new business, reviewing of the old contracts by operators, fall in the global oil price, and many others.

     

  • Total E&P to fix vandalised oil export pipeline

    Total Exploration and Production Nigeria Limited (TEPNL) has begun repairing its vandalised export pipeline in Rivers State.

    The company in a statement signed by its Deputy General Manager, Media & Public Affairs, Charles Ogan, said: “Following the oil spill reported at Kilometre 25 and 27 locations on our Obagi – Rumuekpe oil export pipeline, on August 16, 2015, a Joint Investigation Visit (JIV), in accordance with the extant regulations, was carried out on the oil spill locations, with relevant regulatory agencies including the Department of Petroleum Resources (DPR), NOSDRA, and Rivers State Ministry of Environment). The JIV team recorded that the oil spill incident was due to third-party interference (sabotage).

    “Total mobilised intervention teams to clamp the leaks on the pipeline. Relevant agencies and service providers were also mobilised and have deployed containment booms to contain the spill and prevent further spread.

    “TEPNG is committed to preventing further spread of the spill and to restore the environment. Total will continue to work with the relevant government authorities and communities, to ensure that this is achieved.

    “Further updates shall be provided in due course. Total E&P Nigeria operates oil mining lease (OML) 58 with a 40 per cent interest, alongside the Nigerian National Petroleum Corporation with 60 per cent.”

    On August 17, this year, the company reported it had stopped the expedition of crude on its Obagi-Rumuekpe oil export pipeline, after observing an oil spill at Kilometre 25 and 27 locations and said relevant authorities were informed immediately.

  • NBS blames low oil prices for slow economic growth

    NBS blames low oil prices for slow economic growth

    Nigeria’s economic growth slowed sharply in the second quarter of the year as lower crude prices took their toll on the local economy. Annual growth dropped to 2.35 per cent from 6.54 per cent a year earlier, the Nigerian Bureau of Statistics (NBS) said yesterday.

    Reuters report said oil production fell to 2.05 million barrels per day from 2.21 million over the same period. With oil accounting for more than 90 per cent of Nigeria’s foreign exchange earnings and about 70 per cent of government revenues, the fall in crude prices and output has hurt Nigeria’s finances and its naira currency, with foreign investors pulling out of its stock and bond markets.

    The naira has fallen about 15 per cent over the last one year, with devaluations in November and February, despite the central bank spending billions of dollars to prop up the currency.

    The weakening currency has fuelled inflation, which at 9.2 per cent is at its highest annual rate since February 2013 and above the central bank’s target range. Tuesday’s figures showed the continent’s second biggest economy, South Africa, shrank for the first time in over a year, raising the risk that labour disputes and slowing Chinese demand for commodities could push it towards recession.

  • Frontier Oil seeks better deal for local gas firms

    The Chief Executive Officer of Frontier Oil Limited, Dada Thomas, has called on the Federal Government to discuss with indigenous gas companies on ways of boosting gas production to meet the nation’s power and other domestic gas needs.

    He made the call in Lagos at the yearly conference of the National Association of Energy Correspondents (NAEC) titled: “Tackling gas supply challenges to arrest power crisis.”

    He said about 182 trillion cubic feet (tcf) of gas is in Nigeria waiting to be developed but that what is required to achieve it, is the political will, enabling policy, commercial and regulatory framework.

    Thomas said the future of gas and gas-to-power in the country is bright and called on the government to grant the kind of incentives it gave International Oil Companies (IOCs) in the past to the indigenous operators who contribute over 53 per cent of local gas production in Nigeria.

    He said: “I strongly believe that the Federal Government should incentivise indigenous operators to undertake domestic gas projects, which will help Nigeria meet its power and other gas related requirements. If the government could give incentives to IOCs in the past, then surely it is only fair and equitable that it also give similar incentives to the indigenous operators.”

    He said the highly successful Nigeria LNG project at Bonny owned by the Shell-led Joint Venture, the Chevron Escravos Gas project and similar projects were all given incentives to ensure these projects came to fruition.

    He condemned the gas prices in Nigeria, saying it is lower than what obtains in other markets around the world. This, according to him, has made the gas business less attractive than the oil business for more than 40 years.

    He said: “For the gas transactions to be based on a willing-buyer, willing-seller driven commercial platform, government should stay away from regulating the commercial transactions between interested parties.”

    He said though the Federal Government increased baseline gas price to the power sector to $3.3 per thousand standard cubic feet in 2014, the gas producers, transporters and end users were yet to actualise the new pricing regime as the necessary modalities were not put in place for the implementation of this price regime.

    He stressed the need for Nigeria to get a collaborative gas distribution system between the private sector and the government, which would be led by the private sector, and based on an open access and economic tariff basis. This, according to him, would enable gas producers tie in to the nearest pipeline and reduce the security challenges facing gas distribution in the country.

    “In spite of the fact that we lack adequate pipeline transportation and distribution system, the disturbing thing is that the little we have has been subjected to attacks and sabotage over the last five years, a phenomenon that created the crisis this conference is trying to address,” he added.

  • Govt urged to monitor oil, gas industry

    The Managing Director/CEO, Oilflow Global Energy Limited (OGEL), Noah Yakub has called on the federal government to give a close monitoring to the oil and gas industry in Nigeria, saying such is needed for any form of growth to be recorded in the industry.

    Yakub, who spoke in Lagos, said there is need for periodic financial audit reports, noting that regular meetings with stake-holders where lapses can be established and consequently ironed out, will also be needful.

    He said for any headway to be made in the industry, a lot still has to be done to enhance capacity building, technical and financial growth, especially among Nigerians, having been given the privilege to operate under the Nigerian Local Content Act.

    “At OGEL, we are already sailing on the present state of the business environment to actualise our mission towards the global industry growth. With an improved environment as promised by the current administration we shall sail smoothly.

    “We have our strategies to operate in the industry. The most important strategy that we put up, is an integration of integrity and performance. With our performance, we also delight our customers with performance icing,” he said.

    He pointed out that when technical manpower is supplied, a system is put in place, such that “when they are on vacation, or they are on time off, we develop them by giving them a particular training established as relevant to their field.

    “We also have a structured system that recognises and appreciates talents and job performance accuracy. Besides, we also strategise by giving them relationship training in the sense that we train them on how to mix with people that they are not familiar with, how to mix with their bosses, peers and work environment so that they can have a sense of understanding. That is just a few out of the lots of our business strategies,” he said.

    Yakub, praised President Muhammadu Buhari for his selection and placement procedure, especially on the recent appointment of Dr. Emmanuel Ibe Kachikwu as the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), describing it as a perfect example of putting a round peg in a round hole

  • NNPC reform: Oil workers disagree with Fed Govt

    NNPC reform: Oil workers disagree with Fed Govt

    Nigeria’s oil workers have criticised the on-going reform in the oil and gas industry, saying they would take steps to protect their members’ interest.

    The workers, under the aegis of the National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria (NUPENG/ PENGASSAN) described the reform as a cover-up and vindictive action against their members.

    The workers therefore urged President Muhammadu Buhari to call the newly appointed Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Dr. Emmanuel Kachikwu, to order by directing him to stop the on-going sack in the Corporation.

    Vowing to give equal response to whatever action of government they consider capable of suppressing worker’s interests, the unions suggested that a team should be set up immediately to review Kachikwu’s actions so far in the interest of justice, equity and fairness.

    They said within two weeks of the commencement of the reform,  Kachikwu has carried out massive restructuring of the management of the corporation. Apart from the sack and re-composition of the board, he has retired 38 top management staff, pruning the top hierarchy of the corporation from 122 to 83, while reducing the operational directorates from eight to four.

    In a joint statement by the President of PENGASSAN, Francis Johnson, and his counterpart in NUPENG, Igwe Achese, accused the NNPC management of executing an agenda that did not carry the workers’ unions along.

    The statement, which was also signed by their General Secretaries – Bayo Olowoshile and Joseph Ogbebor respectively, also accused Kachikwu of pursuing an agenda contrary to the idea canvassed by President Muhammadu Buhari.

    “While we are fully in support of the fight against corruption, the fight itself should not be turned against workers whom government swore to protect,” the oil workers said, noting that the ongoing exercise portends a great danger in the oil sector if workers are meant to bear the brunt of government’s current action where the fight against corruption is now being used as an act of vindictiveness against workers.

    The on-going exercise, the oil workers stated, did not show any attempt to fight corruption and block leakages, but was “an act of cover up.”

    “We dare the new GMD of NNPC, Dr. Kachikwu to recover the stolen trillions of naira in the sector than retiring and sacking of innocent workers. We are quite sure that the on-going action is not the idea of our dear President,” the workers stated.

    As players in all spheres of the industry’s operation, the unions said they have been trying to meet with the President to review the on-going reforms in the NNPC, saying they have so far been kept in the dark by his protocol staff.

    Despite being the representatives of organised workers in the industry, the union leaders claimed that all their suggestions on the critical challenges affecting the on-going reforms were not being considered by the authorities.