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1
Vacancies / Vacancy - Offshore Piping Surveyor
« on: June 19, 2017, 09:46:14 AM »
Dear All,

As part of our commitment to Local content, we will like to inform the general public of the need for an Offshore Piping Surveyor for one of our clients.

The basic duties/responsibilities of the prospective candidate would be
1. Survey offshore Pipe Networks
2. Identify all piping components and instrumentation items on the network.
3. Develop Piping Isometrics for Fabrication of the replacement Pipe Network.
4. Verify and take responsibility over the developed isometrics.

Basic Requirements include:
1. BOSIET / HUET Certificate
2. DPR Offshore Safety Permit
3. Proficiency with CAD ERP systems such as PDMS, SmartPlant, Autocad etc as applicable.
4. Accountability & responsiveness.
5. Previous experience in a similar position will be an added advantage

Interested candidates should forward their resume and certificates to info@oilandgasforum.com.ng for consideration.

Deadline for submission is Friday 15th, September, 2017.

2
How to make a post on Nigeria Oil & Gas Forum / Thank You
« on: April 10, 2017, 11:08:53 AM »
Dear Members / Readers,

I will like to seize this opportunity to appreciate you all for your support and solidarity all the while and especially in the last one week.

Few days ago, we made a request for help to our esteemed members and readers of Nigeria Oil & Gas Forum and we will like to appreciate you all the huge feedback and support we received following that request.

I'm are happy to inform you all that we are still in the business of connecting people and helping you guys find your feet in the Oil & Gas Industry all because you have stood by us at this time.

Thank you so much and God Bless You real good in return.

Adewale Odubiyi
Owner, Nigeria Oil & Gas Forum (www.oilandgasforum.com.ng)

3
Dear Readers / Members,

I would like to seize this opportunity to appreciate you all for allowing Nigeria Oil & Gas Forum (www.oilandgasforum.com.ng) help you out in any capacity we have in the last five (5) years. And believe me, we would love to continue assisting you guys out there as much as we are able to.

This initiative was borne in 2011, out of the desire to bridge the information gap in the Oil & Gas industry and help buyers meet sellers, help students get required information and link people to their career dreams.

In all sincerity, I am very happy to have being at the forefront of it all. The feedback we get all the time reflects the true intentions of this forum and we are glad in all respects.

However, considering the current economic situation in the country, it has become a huge burden for us to keep this forum running year-in-year-out largely due to the huge investment involved.

We have, since inception, been running this website out of proceeds from personal engagements and all services on the website for absolutely free of charge.

Indeed it has been financially tasking and as a result, the site may have to close down by 05th April, 2017 when our hosting space rental expires.

To this effect, we are calling on well meaning individuals and corporate bodies to kindly assist us, help our cause and help us stay afloat at this time. All contributions in this regard will be so much appreciated.

I remain available for any details you require as to how you can be of help to us at this time. Please get in touch with me on +2347064249509 or whalleh@yahoo.com.

Thank you and God bless you.

Adewale Odubiyi
Owner, Nigeria Oil & Gas Forum (www.oilandgasforum.com.ng)

4
Events / Maritime Business Awards 2016
« on: September 19, 2016, 01:39:02 PM »
Celebrating excellent achievers in the Nigerian Maritime Industry

The Maritime Industry in Nigeria is constantly moving forward to a higher level despite global challenges in the industry. Being a key sector of the economy, there are major achievements that should not go unnoticed.


The Maritime Business Awards 2016 seeks to identify major achievements and milestones in recent years and honor diligent minds who have contributed immensely to the growth of the sector and in-turn the Nigerian economy.

The Maritime Business Awards 2016 is open to all operators in marine industry only. Nominations are currently on-going and shortlisted finalists will be notified by November 2016 after the close of an open and transparent nomination process with the players in the industry.





Venue: Nicon Luxury Hotels, Abuja               |                Date: 6th December, 2016

Available award categories include:

Technical & Operational
  • Safety and Quality Award
  • Education and Training Award
  • Technical Innovation Award
  • Cooperate policy  Governance Development Award

Industry
  • Offshore Marine Award for Owners & Operators
  • Ship Repair Innovation Award
  • Port Authority Award
  • Ship Agent Award
  • Port Terminal Operator Award
  • Contribution to the Development of the Regional Maritime Cluster
  • Shipping Company of the Year Award
  • Maritime Logistics Award

Personality & Community
  • Lifetime Achievement Award
  • Personality of the Year Award
  • Young Person of the Year Award
  • Outstanding Achievement

Click here for more details and to register.

For general inquiries and speaking opportunities, please contact:
Utibe Joseph
Managing Director
Tel:+2348054887754
Email: uej@prodena-ng.com

For sponsorship, partnership & exhibition inquiries
Hilda Okoneto
General Manager
Tel:+2348033171987
Email: hio@prodena-ng.com

For public relations, media & business interviews inquiries
Queen Edukere
Head of Communication
Email :qke@prodena-ng.com

For marketing, delegate, networking & reception inquiries
Christiana Obora
Conference Marketing Executive-Oil, Gas & LNG
Email:cho@prodena-ng.com

Vigilance Elibor
Conference Marketing Executive- Maritime, Offshore & Power
Email: vie@prodena-ng.com

This event is organized and hosted by Prodena Energy

5

Oil prices jumped over 2 percent on Monday to their highest since November 2015 on growing Nigerian oil output disruptions and after long-time bear Goldman Sachs said the market had ended almost two years of oversupply and flipped to a deficit.

Brent crude futures were trading at $48.83 per barrel at 1118 GMT, up $1 or 2.05 percent. U.S. crude futures were up 98 cents, or 2.08 percent, at $47.19 a barrel.

Supply disruptions around the world of as much as 3.75 million barrels per day (b/d) have wiped out a glut that pulled down oil prices by as much as 70 percent between 2014 and early 2016.

The disruptions triggered a U-turn in the outlook of Goldman Sachs, which had long warned of global storage hitting capacity and of yet another oil price crash to as low as $20 per barrel.

“The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected,” Goldman said.

“The market likely shifted into deficit in May … driven by both sustained strong demand as well as sharply declining production,” it said.

However, Goldman cautioned that the market would flip back into a surplus in the first half of 2017 as it said prices around $50 per barrel in the second half of 2016 would see exploration and production activity picking up.

In Nigeria, output has fallen to its lowest in decades following several acts of sabotage.

In the Americas, U.S. officials warned they were growing increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices.

Venezuela’s oil production has already fallen by at least 188,000 b/d this year.

In the United States, crude production has fallen to 8.8 million b/d, 8.4 percent below 2015 peaks as the sector suffers a wave of bankruptcies.

And in China, output fell 5.6 percent to 4.04 million b/d in April, year-on-year.

Countering this, supply rose from the Organization of the Petroleum Exporting Countries (OPEC) as its producers are engaged in a race for market share.

OPEC pumped 32.44 million b/d in April, up 188,000 b/d from March, the highest since at least 2008.

Also preventing steeper price jumps was a recovery in output in Canada following closures due to a wildfire, as well as bloated global crude storages.

“The inventory buffer may be preventing full price recovery and … the market is rightly nervous about the sustainability of outages,” said Morgan Stanley.

Barclays said that “while the supply-side disruptions are supporting oil market balances, refinery margins are starting to weaken, especially in Asia,” adding that weaker demand from those refiners could produce “downside risk to prices in Q3 16.”

*Dmitry Zhdannikov, Henning Gloystein; editing – Adrian Croft & Jason Neely – Reuters

6
News & Happenings / Nigerians brace for more fuel queues
« on: May 17, 2016, 08:55:07 AM »

(Reuters) The growing fleet of tankers stuck off Nigeria unable to unload their cargoes of diesel and petrol is a reminder for President Muhammadu Buhari that another fuel crisis is looming on the horizon.

At least 75 ships with two and a half million tonnes of fuel are waiting for importers in Africa’s biggest economy to find the dollars they need to pay for the cargoes, according to ship tracking data and fuel traders.

Some of the vessels arrived a month ago and their frustrated owners have almost given up hope and started to offer their fuel to buyers outside Nigeria, several traders told Reuters.

A slump in world oil prices has hammered Nigeria’s state income and because crude sales are the government’s main source of revenue the fall has caused crippling shortages of dollars within the economy that have been hurting businesses for months.

In a bid to break the impasse and head off more fuel shortages, the government raised the price cap for petrol by 67 percent, officially sanctioned importers to use the black market to find the hard currency they need to get cargoes off the ships and allowed any Nigerian company to import fuel.

Announced last week, the reforms were welcomed by some in the oil industry as badly needed steps in the right direction. The changes have largely eliminated the system of heavily subsidized fuel prices, removing one strain on Nigeria’s increasingly stretched finances.

But the so-called parallel market has struggled to cope with the demand for U.S. dollars that followed the reforms.

Nigeria consumes 45 million liters of gasoline a day, or roughly 280,000 barrels, which would require the market to provide some $18 million a day. Though importers cover about 30 percent of this, with the state oil firm covering the rest, it is still a big strain on the market for dollars.

The naira has already weakened due to the spike in demand for dollars from fuel importers. Last week, the U.S. currency fell to 324 Naira on the parallel market, whereas the official exchange rate has been held firm just under 200.

“The risk is that the parallel rate will depreciate, even more, giving the marketers a pretext for yet further price increases at the pump,” said Alan Cameron, an economist covering Africa with Exotix Partners.

GENERAL STRIKE
President Buhari has resisted International Monetary Fund calls to devalue the naira, though Vice President Yemi Osinbajo sparked speculation a devaluation may be on the cards when he said the central bank had to change its policies.

Nigeria has four refineries but decades of neglect mean it has to import most of its fuel, which was less of a problem when crude was at $115 a barrel and the OPEC member was the leading oil exporter in Africa ahead of Angola.

As well as the slump in crude prices, which touched a 2016 low of $27 in January and were below $48 last week, Nigeria’s output has also been hit by instability in its oil-producing Delta region, further reducing the state’s dollar revenues.

Nigeria’s production dropped this month to 1.65 million barrels per day from 2.2 million and risks slumping to its lowest since 1970.

In an effort to address the looming fuel shortages, the Nigerian National Petroleum Corporation (NNPC) has begun talks with at least three international firms to swap more of its crude for gasoline, according to traders and oil executives.

But the drop in output due to the unrest in the Delta – as well as the fact oil firms take more physical cargoes as payment for services when prices are low – means the NNPC has less crude to swap for fuel.

“There aren’t enough cargoes available to NNPC,” said Dolapo Oni, head of energy research at Ecobank. “I don’t see how it can get more from international oil companies.”

Signs of trouble ahead are growing. On Saturday, Nigeria’s two main labor unions called for an indefinite general strike from Wednesday unless the government reverses its plan to increase the price of petrol, which many rely on for power generation as well as transport.

Raising fuel prices is sensitive because many Nigerians see the state subsidy as the only benefit they derive from living in a major oil producing country which is nevertheless gripped by endemic corruption and poverty.

The West African country tried to end fuel subsidies in 2012, doubling the price of gasoline overnight, but later reinstated some of the oil subsidies to end a wave of protests.

The only long-term solution for Nigeria is to build its own refineries and fix the infrastructure, according to Chinedu Ukadike, chief of staff to the national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN).

*Libby George & Chijioke Ohuocha, Claire Milhench, Alexis Akwagyiram & Ulf Laessing; Editing – Dmitry Zhdannikov & David Clarke –

7

Last week’s 80 percent increase in the pump price of Premium Motor Spirit, PMS also known as petrol from N86.50 per litre to N145 might just be a tip of the worst that awaits the over 180 million Nigerians as there are indications that petrol may sell above N250 per litre in the coming days.

Petroleum Products Pricing Regulatory Agency, PPPRA in a memo titled ‘New Framework for Petroleum Products Supply, Distribution and Pricing – May 2016’ posted on its website on the 11 of May 2016 explained that the estimated “true” cost of PMS was valued at N243.05 per litre.

“This is factoring the estimated average time spent to obtain PMS at the official price, the estimated hourly wage of the average Nigerian, the average price of PMS on the black market and the estimated average volume bought per visit to the filling stations and also factoring in the frequency Nigerians source PMS from the different markets,” the memo stated.

On why Nigerians should not enjoy low petroleum prices as a major oil producer, the memo states that “Crude oil price is an internationally traded commodity, the prices are not set by countries that produce it. Neither do oil producing countries get a discount in the international market for producing this product.

“Furthermore, crude oil price account for about 80 percent of the final cost of fuel. Other costs include depot charges, transportation cost, chemicals, spare parts, raw material etc are related to a host of economic factors. Therefore, at the current crude oil price of $40 per barrels, the finished domestic refined fuel sold to Nigerians cannot be priced lower than the cost of the crude plus other associated costs incurred in converting the crude into PMS and supplying the product to the consumer.”

Another cause for worry is that PPPRA in the same memo stated that the new price regime will allow marketers source their foreign exchange independently of the Central Bank of Nigeria, CBN to import PMS.

This according to financial expert, Mr Johnson Chukwu means that the pump price of petrol will sell far above N145 per litre to enable the marketers to recoup their money.

“When marketers source for foreign exchange independently from CBN, that is from secondary sources (parallel market) which are above CBN rate (N197 to a dollar) pump price of petrol will increase above N145 to a litre,” Mr Chukwu said.

Check by Sweetcrudereports on Monday shows that parallel market price for foreign exchange was at N360 to a dollar, indicating that pump price of petrol should be sold above N250 per litre when marketers exhaust their current stock .

Commenting on this development, a marketer who spoke with our correspondent on the phone in confidence said the Federal Government have taken note of the variables noting that consultations are in advanced stage.

Sweetcrudereports

8

Petrol stations in the country seem not to be satisfied with the recent hike in the price of petrol to between N135 and N145 per litre, as a majority of them now resort to under-dispensing of the product.

It was observed in Abuja and environs that a number of the petrol stations, though selling at N145 per litre, had manipulated their pumps, and were now defrauding motorists with incorrect measurements.

Petrotec filling station in Suleja, Niger State, along the Abuja-Kaduna Expressway, was selling at N135 per litre, but a motorist complained that he bought 20 litres of petrol but was served about 15 litres.

At the NNPC Mega Station at Kado in Abuja, one motorist complained that before the hike, it took N2,500 to fill his tank when it was at half tank but was shocked to spend N5,000 to fill his tank in the same position at the NNPC petrol station.

He wondered why it would take double the initial amount when the price was not doubled. Motorists called on the Department of Petroleum Resources, DPR, and other regulatory agencies to come to the aid of motorists and sanction defaulting petrol stations.

Meanwhile, the Nigerian Association for Energy Economics, NAEE, weekend, emphasized the need for the Federal Government to fix the country’s refineries, stating that if all the refineries were working at about 80 to 90 percent capacity, the price of Premium Motor Spirit, PMS, would drop to between N115 and N125 per litre.

Addressing newsmen in Abuja, Professor Wumi Iledare, President, NAEE, also called for the proper calibration and adjustment of the Petroleum Product Pricing Regulatory Agency’s, PPPRA, pricing template for a market dictated margin.

*Michael Eboh – Vanguard

9

On the 12th of May, 2016 Nigerians woke up to the detestable reality that they will now have to pay ₦145 per litre for Premium Motor Spirit (PMS), otherwise called petrol representing over 40% increase from the previous pump price, ₦86.50

While some are mobilizing for '#OccupyNigeria season 2', labour unions in the country are currently planning to commence an indefinite nationwide strike action that will 'shutdown the economy on Wednesday in a bid to protest the increase in fuel price.

Following the harsh economic realities Nigeria is currently facing, many Nigerians have labelled the Federal Government as being insensitive to the plight of its citizenry by making fuel too expensive for consumption.

But really, how expensive is fuel in Nigeria, compared to other countries? and is the Nigerian government really insensitive? We are about to find out.


At ₦145/Litre, is fuel too expensive in Nigeria?
As surprising as it may seem, Nigeria is ranked 12th as per cheapest price of petrol in 173 countries even with the new  ₦145 per litre price according to Globalpetrolprices.com

In Nigeria, fuel now costs ₦145/L and with the current exchange rate that is fluctuating between ₦320-₦360 to a dollar, it means we are paying  about $0.44/L

It may however interest you to know that in United States, fuel is sold at the pump price of $0.65/L ( ₦214/L), In South Africa $0.84/L (₦277), In Russia $0.55/L (₦181/L), $0.91/L (₦300/L) in Canada, $0.92 (₦303/L) in Ghana, and it costs $0.93 (₦306/L) in China.

Some will argue that the countries above are not petroleum exporting countries (OPEC) like Nigeria, but what about OPEC member countries like Angola, where PMS is sold at $1/L (about ₦330), In Iraq at $0.64/L (₦211), In Venezuela pump price is $0.60/L (₦198/L) with President Nicolas Maduro calling the approximately ₦198/L pump price 'one of the cheapest in the world'. 

Even in the oil rich, United Arab Emirates (UAE) PMS is sold at $0.45/L which is about (₦148/L) which is more expensive than the price in Nigeria.



According to Globalpetrolprices.com In Hong Kong, the pump price is set at $1.85/L (about ₦610/L) making the country the most expensive seller of gasoline in the world.



With the facts and figures above, at ₦145/L fuel is not expensive, it's actually one of the cheapest in the world, but because of the poor living conditions of millions of Nigerians, it appears expensive and thus, many Nigerians struggle to afford it.

That is why the government needs to provide welfare programs, kill that disease called corruption, invest in electricity, education, fix refineries, provide jobs and increase minimum wage to reduce poverty in the country, because the current ₦18,000 minimum wage is too small compared to how much we buy petrol.

Is Nigeria the only country increasing pump price?



Again, the answer is a 'BIG NO'.The excruciating increase in pump price is not even limited to Nigeria alone, major oil rich countries of the world have increased their fuel price this year, some even by over 50%.

See examples below

Saudi Arabia 40% increase
In December 2015, Saudi Arabia increased fuel price in the country by 40%
http://www.aljazeera.com/news/2015/12/saudi-arabia-hikes-petrol-prices-40-pump-151228154350415.html
Oil rich Saudi Arabia, last year announced a record $98bn budget deficit due to 'rock-bottom global petroleum prices' Like Nigeria, Saudi Arabia suffered a sharp drop in revenues as oil prices have fallen more than 60 percent since mid-2014 to below $40 a barrel. To address the situation, the Gulf kingdom increased fuel price by 40%

Venezuela increased fuel price in February, 2016
President Nicolas Maduro in February increased fuel price to $0.60 (₦198) as Venezuela's economy was pushed to the brink by the collapse in the oil price, which accounts for about 95% of the country's export revenues.
He said the price over 50% rise was "a necessary measure, a necessary action to balance things, I take responsibility for it."
http://www.bbc.com/news/business-35600921?SThisFB

Fuel price increased in UAE in May, 2016
The oil rich, United Arab Emirates also increased pump price about 2 weeks ago.
Fuel is now sold at $0.45/L in UAE, which is about ₦148/L in Nigerian Naira, ₦3 more than the pump price in Nigeria today.
http://english.alarabiya.net/en/business/energy/2016/04/28/Fuel-prices-in-the-UAE-will-increase-in-May.html

Qatar increased fuel price by 30% in January, 2016
The oil rich country that last increased petrol prices in 2011, also increased pump price in January, 2016 to $0.36 (₦118) which is the 5th cheapest pump price in the world.
http://dohanews.co/qatar-increases-petrol-prices-from-midnight-tonight/

50% increase in pump price in Bahrain in January, 2016
As a result of the unprecedented drop in global oil prices, which has seen the price of oil per barrel decline by over 60%.
The government in Bahrain followed the steps of fellow Gulf Cooperation Council (GCC) member countries the country increased fuel price by 50% in January.
http://bna.bh/portal/en/news/705611

I could go on and on, to give more examples of oil rich countries like Nigeria that have increased pump price in 2016, Nigerians need to understand that this is not a Nigerian, Kachikwu, APC or PDP problem, this is a global problem we are dealing with affecting even the oil rich countries of the world.



We need to stop seeing the Federal government as insensitive, wicked, heartless, unfeeling, inconsiderate, thoughtless and hard-hearted for increasing the pump price to ₦145/L. We need to temporary sacrifice for the greater good, with the hope that as promised we will be better off in the long term.

To cushion the current challenges, the Federal Government must also sincerely provide social provisions for millions of poor Nigerians who will suffer from the fuel hike. Some of the oil rich countries listed above have increased fuel price this year, but due to the several welfare packages provided, the citizens can ease through this rough patch.

I am glad about the N500 billion social intervention programmes provided in the 2016 budget, which includes jobs, social safety allowance for the most vulnerable people, free schooling for students, soft loan to traders, investment in infrastructure etc. Hopefully Buhari's 'anti-corruption' centered government can channel the funds with 100% sincerity and accountability.

But why did the fuel price have to increase?

For that barber down the street who relies on petrol most times to power his small generator to keep his business running, it will be difficult for him to understand how the fuel price increase will benefit him in the long run. Infact, he will most likely rant everyday about the hardship the government is causing him.

I'm sure many have wondered why a country like Nigeria, blessed with oil suffer for it? But unfortunately, Crude oil price is an internationally traded commodity , the prices are not set by the countries that produce it. Neither do oil producing countries get a discount in the international market for producing this product.



While many think the current increase in fuel price is about removal of fuel subsidy, this notion is totally wrong because it was brought about by the non-availability of foreign exchange to import petroleum products. infact, there is no provision for subsidy in the 2016 budget according to the Vice President, Yemi Osinbajo.

Oil is selling at below 40 dollars and the currency (dollar) needed to purchase the refined petrol is no longer available, that is just simply the problem here.

Oil and gas make up more than 90 percent of exports in Nigeria, providing the critical source of Nigeria’s foreign exchange.

It’s that simple; a collapse in oil prices could lead to the same in Nigeria’s foreign exchange which is crucial to support consumption of imports. Foreign exchange rates also influence capital flows- investment funds that move into and out of a country. If oil prices continue to drop it would have an adverse effect on the country’s currency value, making it less attractive to foreign investors.

Since our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers.

However marketers have drastically reduced their importation for several months due to a scarcity of FOREX, thus the need for them to source independent of CBN to be able to meet the nation’s demand arose.

Now any Nigerian entity is free to import the product, subject to existing quality specifications and other guidelines issued by Regulatory Agencies.

All oil marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources.

It is expected that this new policy will lead to improved supply and competition and eventually drive down pump prices.

In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector.

The difference between Jonathan's attempt to increase fuel price in 2012 and this? - And why the anti-₦145/L protests will fail

Former President Goodluck Jonathan ran into trouble after he removed fuel subsidy on New Year’s Day in 2012.


This took fuel price from ₦65 to ₦141 at filling stations. This led to massive protests by civil-rights groups, labour unions, and Nigerians generally. APC, the opposition party at that time, took political advantage of the situation by identifying with the suffering and criticizing the Jonathan administration for removing subsidy.

Four years later President Buhari officially removes fuel subsidy. Millions of Nigerians are angry. Nigerians are understandably accusing the present administration of cowardice, deception, and hypocrisy, but how true is this?

How much was oil price in 2011? Oil price was $113 per barrel. Today, oil price is just about $40 per barrel after going below $30  early this year.

And the exchange rate? Under Goodluck Jonathan’s leadership, the exchange rate was $1 to N162. Today, exchange rate is officially N199 to a dollar; N320-N360 in the parallel market.

And foreign reserves? Nigeria’s foreign reserves stood at $35billion in January 2012 and $29.61billion as at 28 May 2015, the eve of hand over to President Buhari. Today, foreign reserve is $27.1 billion, amid myriad of restrictive measures to stem the steady slide in the economy’s external sector.

 Under the previous administration, Nigeria was enjoying an economic-growth rate of 6% averagely. Thanks to Foreign Direct Investment (FDI) riding on the back of a devalued Naira. President Jonathan also, largely, had the right economic mix. But corruption and terrorism were two of its greatest challenges. There were allegations of massive corruption, particularly what was reported to be a fuel-subsidy scam right under Goodluck Jonathan’s nose.

Rather than tackle these allegations by investigating and prosecuting those involved in the scam, President Jonathan decided to remove subsidy as the solution to the problem. The administration claimed removing fuel subsidy would free up funds for capital projects. But Nigerians had little or no trust in the administration. The administration was incompetent and corrupt. How can it be trusted to save for the future? This was a fundamental issue. So ‪#‎OccupyNigeria‬ shot down Nigeria’s economy in January 2012, not simply because Goodluck Jonathan increased fuel price but mainly because millions of Nigerians did not trust the administration with the money it claimed it would “save” for the future.


Today there are strong reasons to believe that if fuel-subsidy removal had been allowed in 2012, most of it would have ended up in private bank accounts.

Under Buhari administration, though partly due to some of its own reactive and over-restrictive economic policies, the Nigerian economy is sick. There is scarcity of foreign exchange. Oil marketers are finding it extremely difficult to import petroleum products into the country. FDI has nose-dived. The low international-oil price meant there was no need for it.

 Now that fuel price has increased internationally, we expected the government to subsidize to alleviate people’s suffering. The Buhari administration says ‘No. We don’t have enough foreign exchange to do so.” Oil marketers are having difficulties opening letters of credit to import petroleum products. The result is that NNPC alone has had to supply over 90% of petroleum products since October 2015. This has not always been so.

NNPC used to supply 48% of petroleum products. Since NNPC does not have what it takes to supply so much, there will continue to be fuel scarcity. To tackle the scarcity problem, the government painfully decides to free up the oil-supply system by allowing the international-oil price determine fuel price locally without any fiscal intervention. Oil marketers are now accessing foreign exchange (through secondary sources) to import petroleum products into the country since ₦145 naira per litre provides some reasonable profit margin after supply costs.

Meanwhile, the government is taking measures to block leakages through zero budgeting, Single Treasury Account (TSA), and its Anti-Corruption Agenda. We are now talking about refineries, public and private-owned refineries that will eventually make fuel scarcity a thing of the past.

Nigerians asked Jonathan to work on old refineries and build new ones, given the resources available at the time, and first kill the regime of fuel importation. Subsidy would have died a natural death and the process of privatization would have been smoother. Today, some of the refineries are functional again, which were not in Jonathan’s days. Government-owned outlets sell refined fuel today, at a far cheaper rate. Not the private ones.

As labour go all out on Wednesday to attempt to shutdown Nigeria, my prediction is that they will not even achieve up to 5% of what the 2012 #OccupyNigeria protests achieved, the protest is bound to be a massive failure, because more Nigerians trust the sincerity of Buhari's government unlike his predecessor. And while the ₦145/L price remains a hard pill to swallow, it's still the 12th cheapest price in the world, facts only.

Source: http://www.nigerianeye.com/2016/05/at-145l-price-nigerians-buy-one-of.html

10

After months of prevarications, the federal government last week finally announced the end to the corrupt-ridden regime of subsidy on Premium Motor Spirit, PMS, otherwise known as petrol, with the official price now pegged at N145 per litre. Even when we think the decision could have been better-managed, it is a policy choice we wholeheartedly endorse.

We, however, hope that the authorities will be prepared to deal with the consequences of this difficult but necessary choice in a constructive and civil manner.

Already, the Nigeria Labour Congress, NLC, and the Trade Union Congress, TUC, have already served notice of their intention to resist the decision. But Vice- President Yemi Osinbajo has already explained that the federal government was left with no choice in the face of foreign exchange earnings that had dwindled to $550 million a month.

To be sure, there are compelling arguments to make removal of subsidy at this point very tricky. Those opposed to the idea usually cite its potentially inflationary impact and the multiplier effects that place a disproportionate burden on the poor. This is a legitimate concern especially in an economy with a high incidence of poverty, erratic power supply and inadequate public transport system.

As we have argued on this page several times, subsidies can make political and social sense when they allow a government to pursue strategic objectives beyond the remit of the market and are well targeted. However, the fuel subsidy regime in Nigeria has been largely captured by an importation cartel and is simply unsustainable. Besides, spending a substantial slice of the national budget to service the consumption of one single item is detrimental to the development of any nation.

Even if all the sharp practices associated with it are discounted, the fact remains that Nigeria does not have the capacity to sustain petroleum products subsidy. For an economy that is getting weaker and weaker due to exogenous factors beyond the control of the country, the “luxury” of sustaining a warped subsidy regime is not only deceptive, it is tantamount to merely postponing the evil day while wasting scarce resources.

We are well aware that this decision is not cost-free. But Nigerians should be objective in assessing the policy against the reality on the ground. For several weeks now, motorists across the country have been queuing desperately at petrol stations to fuel their vehicles. At the black market where the product is readily available, the cost is prohibitive as many pay between N150 and N300 per litre. To worsen matters, most of the access roads in major towns are blocked as a result of long vehicular queues at fuel stations.

In several instances, law and order have broken down as Nigerians struggled to fill their tanks, power generating sets and other fuel consuming machines. That is why we believe that with proper structure and incentives for the private sector, local refining of petroleum products is the only way out of this perennial crisis.

Now that subsidy has been removed, we expect private investors in the sector to build more refineries such that Nigeria could even begin to export refined products and bring to an end the shameful practice of petroleum products’ importation which hurts the economy. But the federal government will have to be deft in managing the fall-out of this decision even as we appeal to labour and the civil society to understand the rationale behind it.

The arcane argument that subsidy removal will impoverish the poor workers is not supported by any evidence. In actual fact, it is the elite and super businessmen who benefit most from oil subsidy. To, therefore, insist on protecting a false “I-feel-alright” feeling and refuse to take the bitter pill could spell danger to an ailing man. We, therefore, commend both NUPENG and PENGASSAN for their understanding of the issues involved and for backing the decision.

All factors considered, we believe that the removal of petroleum subsidy makes strong economic sense and given the dwindling price of crude oil in the international market, there could be no better time to do it than now.

“Spending a substantial slice of the national budget to service the consumption of one single item is detrimental to the development of any nation”.
*Thisday

11
(Reuters) - Exxon Mobil has declared force majeure on Nigerian Qua Iboe crude exports after trouble with a pipeline disrupted supplies, three traders said on Friday.

This brings the total Nigerian crude outage to about 700,000 barrels per day (bpd), one of the traders said. Reuters reported on Thursday that Exxon reduced Qua Iboe output following the pipeline problem.

Qua Iboe has the largest output of Nigeria's crude grades and was set to account for 317,000 bpd of exports in June. Exxon, which operates the terminal for Qua Iboe exports, could not be immediately reached for comment.

12
(Bloomberg) -- Three bankruptcies this week shows that $45 a barrel oil isn’t enough to rescue energy companies on the verge of collapse.

Since the start of 2015, 130 North American oil and gas producers and service companies have filed for bankruptcy owing almost $44 billion, according to law firm Haynes & Boone. The tally doesn’t include Chaparral Energy Inc., Penn Virginia Corp. and Linn Energy LLC, which filed for bankruptcy this week owing more than $11 billion combined.

At least four more oil and gas companies owing more than $8 billion are nearing default, including Breitburn Energy Partners LP and SandRidge Energy Inc. Bankruptcies have accelerated as cash-starved companies find it almost impossible to raise capital. Energy companies have been virtually shut out of the high-yield bond markets, banks are cutting credit lines and asset sales have slowed.

"I don’t think the E&P model in North America is economic and I don’t think it was real economic even at $80 and $100 oil," Jim Chanos, Kynikos Associates founder and president, said in an Bloomberg TV interview Thursday. "It’s certainly not economic at $45 oil."

Several more are struggling to sustain crippling debt loads. SandRidge Energy, which owes $4.13 billion, said in its annual financial report that auditors have raised doubts about its ability to stay in business. It delayed releasing its first-quarter results, citing ongoing discussions with creditors on a “potential comprehensive restructuring transaction.” Breitburn, which owes $3 billion, missed interest payments in April and is in talks with creditors.

W&T Offshore Inc. owes almost $1.5 billion and is overdrawn on its credit line, which was cut to $150 million from $350 million in March. The company has said it will pay off the loan in three monthly installments. Connacher Oil and Gas Ltd. has told creditors it’s making preparations to file for bankruptcy as it continues to search for a way to stave off default, according to two people familiar with the matter.

Lisa Elliott, an outside spokeswoman for W&T, declined to comment on whether the company is nearing default. David Kimmel, a spokesman for SandRidge, did not immediately return phone and e-mail messages seeking comment. Voicemails left with the investor relations departments at Breitburn and Connacher were not immediately returned.

Higher Prices

While troubled companies may not be saved by $45 oil, some of the better operators will turn profitable at $50, said Subash Chandra, an analyst with Guggenheim Securities in New York. Companies best able to take advantage will be those with with acreage in North Dakota’s Bakken shale, the Permian in Texas or the Scoop and Stack prospects in Oklahoma.

"If oil is at $50, fortunes turn dramatically," Chandra said. "But the problem is they turn so much that the service companies come in and raise prices and take a share of it, or if production responds so quickly that oil has a hard time staying at $50."

While some of the best operators in the most prolific acreage may boast well break-evens of $35 a barrel, that only includes the cost of drilling, said Spencer Cutter, a credit analyst with Bloomberg Intelligence. Expenses like overhead, salaries, taxes and interest expenses easily add another $10 to $15 a barrel, he said.

"The short answer is $45 a barrel doesn’t save anybody," Cutter said. "Anyone who was going bankrupt at $30 is still going bankrupt at $45. You need to see oil sustained at $60 to $65 before you see a real turnaround in profitability for the sector."


13
Oil prices jumped 3 percent on Thursday, resuming their rally from last week, as a raging wildfire near Canada’s oil sands region and escalating Libyan violence raised more worries about immediate oil supplies than a longer-term glut.

The wildfire near Fort McMurray in Alberta, Canada, has grown five times its initial size and spread south on Thursday, forcing more evacuations after 88,000 people fled the city in the nation’s energy heartland since Tuesday. Some pipelines in the region have been shut as precaution and output at several facilities were disrupted, though affected volumes were unclear.

In Libya, the state’s already crippled oil production was at further risk from a stand-off between eastern and western political factions that prevented a Glencore cargo from loading.

Brent futures LCOc1 were up $1, or 2.2 percent, at $45.62 a barrel by 10:51 a.m. EDT (1451 GMT), after soaring more than $2 earlier to $46.77.

U.S. crude’s West Texas Intermediate (WTI) futures CLc1 gained $1.25, or 2.9 percent, to $45.03, rallying to $46.07 earlier.

Brent’s premium over WTI CL-LCO1=R briefly vanished when the U.S. market traded at a premium before returning to its narrowest discount, or “contango”, in six weeks against the European benchmark.

On the WTI complex itself, the discount for front-month June over second month July CLc1-CLc2 fell to its smallest in seven months, driven by the potential for reduced shipments of Canadian crude to U.S. refiners.

“The $2 move in WTI is large relative to the size of the outage,” said Jackie Forrest, vice president in energy research at ARC Financial Corp in Calgary.

Just earlier this week, crude prices were losing steam after rallying more than 20 percent in April, giving Brent its best month in 7 years.

Over Monday and Tuesday, both benchmarks lost about 6 percent each as frenzied pumping by producers such as Iran, Iraq, Saudi Arabia and Russia renewed glut worries that forced prices below $30 a barrel from mid-2014 highs above $100.

“The market was again rescued by a larger than expected pace of U.S. production decline and overnight headlines regarding disrupted supply out of Canada and Libya,” said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.

Investment firm ETF Securities said unplanned outages within the Organization of the Petroleum Exporting Countries, including Libya, stood above 2 million barrels per day, the highest in at least five years.

“We are likely to be in a global oil supply deficit by Q3 2016,” said Nitesh Shah, director of commodity strategy at ETF Securities.

But some analysts said oil prices were on an unsustainable path higher with U.S. crude stockpiles hitting record highs above 543 million barrels last week with a surprising bearish build even in gasoline.

“The market seems willing to latch on to any bullish news item generally,” BNP Paribas global head of commodity strategy Harry Tchilinguirian said.

*Barani Krishnan, Amanda Cooper; Editing – Marguerita Choy – Reuters

14
Halliburton’s first-quarter loss widened as customers slashed budgets in half and the company took charges related to the failed $28-billion merger with Baker Hughes Inc.

The merger was called off Sunday in the face of stiff resistance from global regulators over antitrust concerns. Halliburton, the world’s largest provider of fracing services, recorded first-quarter costs of $378 million, or 44 cents a share, related to the Baker Hughes bid, according to a statement Tuesday. That’s higher than the $79 million, or 9 cents a share, acquisition-related costs in the final three months of the year.

Overall, Halliburton reported a loss of $2.4 billion, or $2.81 a share, deeper than a loss of $643 million, or 76 cents, a year earlier. Excluding certain items, profit was 7 cents a share, higher than the 4-cent average of 36 analysts’ estimates compiled by Bloomberg. The company also eliminated 6,000 more jobs in the quarter to reduce costs, according to a statement April 22.

The oil services industry is operating at a loss in North America, home to the world’s largest market for hydraulic fracturing. Schlumberger Ltd., the biggest oil servicer, lost $10 million in the U.S. and Canada, excluding taxes, during the first three months of the year. Halliburton, the world’s No. 2 provider, reported an operating loss of $39 million in North America, its largest region, on revenue of $1.8 billion, according to an April 22 statement announcing preliminary results.

The second- and third-largest oil-service firms had set a deadline for the end of April to complete the deal or walk away. The U.S. Justice Department heard concerns from dozens of companies and ultimately concluded that the deal was "not fixable at all," David Gelfand, deputy assistant attorney general, told reporters Monday on a conference call.

“In accordance with Generally Accepted Accounting Principles, and in conjunction with the termination of its merger agreement with Baker Hughes, Halliburton determined that its proposed businesses to be divested no longer meet the assets held for sale criteria as of March 31, 2016,” the company said in the statement.

Halliburton announced the Baker Hughes takeover in November 2014 in a bid to better compete against industry leader Schlumberger. The U.S. Justice Department filed a lawsuit in early April to stop the merger, saying it threatened to eliminate head-to-head competition in 23 products and services used in oil exploration.

The statement was released before the start of regular trading in New York.

WorldOil

15
Eland Oil & Gas plc announced Friday that is aiming to raise approximately $15 million through a placing of its shares in order to fund operations at the Gbetiokun-1 well in Nigeria.

The net proceeds of the placing will be used to fund the re-entry, completion and production of the Gbetiokun-1 well, an existing discovery within the OML 40 license. The Gbetiokun field has been estimated by Netherland, Sewell & Associates Inc. to contain gross 2P Reserves of 10.8 million barrels of oil. The re-entry of Gbetiokun-1 is anticipated to cost $6.5 million net to Eland, with the company is targeting initial production in the second half of 2016.

Eland CEO George Maxwell commented in a company statement:

"We look forward to further enhancing production through the development of the Gbetiokun-1 workover well.

“The initial rate from the Gbetiokun-1 well is expected to be circa 7,800 barrels of oil per day gross. This project will once again almost double the company's already significant production profile.

“This fundraise will facilitate the development of this project in the second half of this year prior to the planned Ubima Early Production System."

Rigzone

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