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61

The National Oil Spill Detection and Response Agency, NOSDRA, has directed Shell Nigeria Exploration and Production Company, SNEPCO, to pay $3.6 billion to affected communities of Bonga oil spill.

NOSDRA’s Director-General, Sir Peter Idabor, in a letter to the oil firm, said that the agency imposed a sanction on the company in 2014 for the damage done to the natural resources and means of livelihood by the spill since 2011.

In a statement issued in Abuja by the Head/ Deputy Director, Public Affairs Unit in Abuja, Idabor, said the company did not make any attempt to provide relief materials for the shoreline fishing communities with respect to the acute and chronic impact of the crude oil on the environment.

“Despite the fact that the incident was caused by equipment failure and the admission by the then Managing Director that 40,000 barrels of crude oil spilled into the Atlantic Ocean, no attempt was made by the oil company to provide relief materials for the shoreline fishing communities with respect to the acute and chronic impact of the crude oil on the environment.

“NOSDRA DG, Sir Peter Idabor, has directed SNEPCO to pay the sum of $3,600,191,206.00 or its Naira equivalent as compensation and administrative costs for failure to effect clean up on the impacted site within the stipulated period, as provided in the agency’s Act and Regulations.

“NOSDRA in 2014 issued a notification of sanction to the oil company with regard to the Bonga spill incident but it has yet neither paid compensation to the affected shoreline communities nor provided relief materials to them, as directed by the Agency and the House Committee on Environment.

“Meanwhile, by virtue of the latest reminder on the notification of sanction on the spill incident, NOSDRA has directed SNEPCO to pay the said fine and compensation, or face the legal machinery available to the Agency to ensure its compliance,” it said.

62
Oil & Gas Industry / Oil spill halts Total’s crude export
« on: August 19, 2015, 04:00:37 PM »
A fresh oil spill has forced Total Exploration and Production Nigeria Limited to halt crude export along the Obagi-Rumuekpe 12 export pipeline in Rivers State.

The Obagi-Rumuekpe 12 oil export pipeline transports crude from Obagi field that produces 35, 000 barrels of oil to Bonny.

Speaking with reporters, Total’s E&P Deputy General Manager, Media and Public Affairs, Mr. Charles Ogan confirmed the spill but said cause was still unknown.

He explained that relevant authorities had been informed of the development and that his company was working with the security agencies to secure the location and provide safe access for intervention teams.

Ogan added that the volume of oil spilled and area of impact have not been estimated.

“During crude oil expedition operation on 16th of August 2015 an abnormal situation was observed as the oil from Obagi was not received at Rumuekpe metering station.

“Expedition was immediately stopped and a helicopter over-flight was carried out, which revealed oil spill and fresh excavations on the pipeline right of way. Relevant authorities have been informed.

“In view of the highly volatile nature of the area and the security concerns, we are working with the Nigerian security agencies to secure the location and provide safe access for intervention teams. The volume of oil spilled and area of impact have not been estimated.

“Further update shall be provided in due course. Total E&P Nigeria operates OML 58 with a 40 percent interest, alongside the Nigerian National Petroleum Corporation (60percent),” Mr. Ogan said in a statement.


63

Other than Nigeria’s plummeting finances, oil companies in the country's oil and gas sector, as is the case with oil producers worldwide, have been forced to scale down on investments, slash their budgets and lay off staff as plunging oil prices takes a toll on crude oil exporting countries and industry operators.

Brent sold at $45.54 Tuesday afternoon, down 20 cents but still some way from its 2015 low of $45.19, while US crude futures hit an intraday low of $41.43 - close to their lowest since early 2009 - before picking up when they traded at yesterday's close price of $41.87 a barrel.

A report by the London-based Financial Times (FT) yesterday also showed that for smaller oil firms, better known as independents, to survive, a new wave of industry consolidation is inevitable, as they struggle to remain afloat.

Inadvertently, the report brought to the fore the need for the Central Bank of Nigeria (CBN) and Nigerian Deposit Insurance Corporation (NDIC) to undertake another stress test on Nigerian lenders, which lent heavily to several local firms during their acquisition spree of oil assets sold by the international oil companies (IOCs).

According to FT, dozens of small oil companies are limping along, labouring under heavy debts and dwindling cash flows.

Brent crude has more than halved since June last year, with the slide accelerating after the Organisation of Petroleum Exporting Countries’ (OPEC) decision last November not to cut output, despite a US supply glut and weaker than expected demand in Asia.

The drop has inflicted massive pain on oil exporting countries, widening budget deficits and weakening currencies.

Energy companies have laid off an estimated 70,000 workers and scrapped projects worth billions of dollars, especially in high-cost areas such as Canada’s oil sands and the deepwater fields of the Gulf of Mexico.

The low oil price is reshaping the industry landscape: it drove Royal Dutch Shell’s $55 billion takeover of smaller rival BG Group, and triggered the fall of Nigeria-focused oil explorer Afren, which entered administration last month. Venezuela, a country whose crude oil accounts for 96 per cent of export revenues, and that loses $700 million for every dollar drop in the oil price, typifies the difficulties oil exporters face.

Amid slumping revenues, its cash reserves now stand at a 12-year low of $15.4 billion, according to the CBN data, and there are fears that the coffers could run empty in the first quarter of 2016.

Nigeria is only slightly better off with foreign exchange reserves at slightly over $31 billion, covering five months of imports.

But even Canada, a much wealthier country, is being squeezed. Economists are scaling back forecasts of future production, and Fort McMurray, the Albertan boomtown that was once nicknamed “Fort McMoney”, is seeing leaner times, with workers laid off and projects shelved. Unemployment in Alberta’s oil sands has doubled and councils are cutting their budgets.

But it is not all bad news. Lower oil prices have benefited consumers, leading to lower petrol prices. The windfall is worth more than $200 billion for the US, Eurozone, UK and Japan, according to a report by Capital Economics in May, although so far there is little evidence that consumers are spending much of their spare cash.

However, in the US, sales of petrol guzzlers such as sports utility vehicles (SUVs) are up, and the country is seeing something of a renaissance in motoring.

According to FT, the world’s big energy groups have shelved $200 billion of spending on new projects. Wood Mackenzie, the energy consultancy, says that companies have deferred 46 big oil and gas projects with 20 billion barrels of oil equivalent in reserves, which is more than Mexico’s entire proven holdings. Wood Mac says that the number of major upstream projects expected to be fully approved during 2015 could probably be counted “on one hand”.

Saudi Arabia, which drives OPEC’s policy, is determined to preserve market share and squeeze high-cost rivals, and is pumping crude at record levels to achieve those goals.

But a long period of low oil prices could play havoc with its public finances. Saudi officials say it is well insulated, and it has a huge buffer in the form of foreign exchange reserves, which peaked at about $800 billion in mid-2014. But it is burning through them fast: they dropped by $36 billion in March and April alone. The kingdom is now trying to relieve the pressure on its finances by returning to the bond market, with a plan to raise $27 billion by the end of the year.

Bankers say that its central bank has been sounding out demand for an issuance of about SR20 billion ($5.3 billion) a month in bonds for the rest of the year. As the lower oil price begins to bite, US shale producers, particularly those with weak balance sheets, could become targets for larger companies.

Goldman Sachs says that those that could be vulnerable include US independent oil firms Continental Resources, EP Energy and Halcón Resources, whose leverage (net debt as a percentage of capital employed) is predicted to reach 61 per cent, 49 per cent and 61 per cent respectively next year.

So far M&A involving US shale has been sluggish: most companies with good positions in places such as the Bakken in North Dakota are not yet under the financial strain that would force them to seek a buyer at a knockdown price. Analysts say that the longer oil prices stay low, the more likely that is to change.

One of the worst affected parts of the oil patch has been Alberta, home to Canada’s oil sands industry. Capital spending by the Canadian oil and gas industry will total C$45 billion (US$34.5 billion) this year, 40 per cent lower than 2014.

As a result, forecasts of future output growth are being scaled back. The Canadian Association of Petroleum Producers estimates that Canada will pump 5.3 million barrels a day (b/d) by 2030, a big drop from last year’s forecast of 6.4m b/d.

However, the plunge in the crude price has led to big savings for American consumers. Petrol is now selling at an average of $2.75 a gallon, which is 72 cents below its level a year ago.

US car sales are also humming, hitting annualised rates of more than 17 million in May and June, their highest levels since 2005, according to Motor Intelligence, a data provider. This has been propelled by bumper sales of SUVs and pick-up trucks.

The result: the US is experiencing a motoring renaissance. The distance that the average American traveled by road last year rose for the first time since 2005. When the oil price began its plunge last year, some said that it would have a chilling effect on investments in alternatives to fossil fuels. But that has not happened.

Analysts say that is understandable: oil is used to generate just 5 per cent of the world’s electricity globally, according to the International Energy Agency (IEA), so it does not compete directly with wind, solar or other renewable sources of power.

Unsurprisingly, as low oil prices hit harder on oil exporting countries, Angola has followed in the footsteps of Nigeria by imposing foreign exchange restrictions on the country.

But unlike Nigeria, which banned some imported items such as rice from accessing foreign exchange and introduced a rash of measures such as stopping dollar deposits in domiciliary accounts and limiting hard currency and local currency withdrawals, Angola has chosen a different route.

It’s central bank governor announced a limit on what foreign investors can repatriate, as regulators seek to prop up an economy weakened by a sharp drop in crude prices, reported Reuters.

Under new laws made public late on Monday, foreign firms investing in strategic sectors, which exclude the country’s dominant oil industry, would also have to sign up a local partner.

Africa’s second largest crude producer is struggling to prop up its economy after a halving of oil prices last year sapped dollar inflows, dented the local currency, hampered public finances and prompted huge government borrowing. Angola’s central bank devalued the local currency, the kwanza, by 6 per cent in June, taking the currency’s losses against the dollar to around 23 per cent this year. Economists believe currency weakness will trigger another devaluation in the coming months.

The new Private Investment Law was passed by Angola’s parliament on August 11 but details were initially not made public.

“A significant part of private investment has become a major drain, with foreign currency going abroad,” Governor Jose Pedro de Morais told reporters late on Monday. “This new law will correct this.”

De Morais earlier told the state television that companies operating in Angola and citizens should reduce their “foreign currency needs” by 50 per cent. It was not clear if this was part of the new investment law.

The new law will require foreign companies to run operations from an Angolan bank, de Morais said, a measure experts believe is aimed at monitoring firms which regularly report losses, meaning they don’t have to pay taxes.

Investors in “strategic sectors”, including telecoms, electricity, construction, water, technology and transportation, will need to give a local partner at least a 35 per cent share in the business, the legislation also stated.

Foreign oil majors including ExxonMobil, Chevron, BP, Total and Eni all have large operations in Angola. Portugal, once the colonial ruler in Angola, also plays a major role in the economy.

Standard & Poor’s lowered its credit outlook on Angola to negative last week, indicating it may cut its credit rating on sub-Saharan Africa’s third largest economy if things do not improve.

Meanwhile, the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, has restated his resolve to usher in a new dawn of transparency through the periodic publication of the corporation’s financial transactions and its finances, insisting that transparency must be the watchword of every staff in the new NNPC.

Kachikwu, who stated this at his maiden town hall meeting with the staff of the corporation at NNPC’s head office in Abuja, said the new NNPC of his dream is a corporation anchored on the foundation of transparency.

A statement by its spokesman Ohi Alegbe said Kachikwu charged the staff to break away from the old culture and bring creative solutions to the numerous challenges facing the corporation.

The GMD said with the kind of change he has in mind, the staff could not afford to continue with business as usual.

He challenged the staff not to obey any directive from him or any superior officer that runs contrary to the rules, adding that President Muhammadu Buhari would not ask him to do anything shady just as he himself would not ask any staff to carry out any unlawful duty.

“I want transparency. Beginning from next month, I want to be able to publish what the company makes. I have told the president that as from next week I will be sending him weekly reports,” he said.

Speaking further on the culture of transparency, he said it should begin with establishing the current financial status of the corporation and that he would sign on auditors “to do a proper forensic audit to tell us where we are”.

He promised to revisit old processes that used to make for efficient operations, adding that the staff should see themselves as the drivers of the changes required to bring about the new NNPC.

“You are the best consultants there are. While there may be need to refer certain issues to consultants, ultimately you are the ones who will implement whatever recommendations they come up with; you are the ones who have been around and who understand the system and so you are the ones who should drive the change,” he charged the staff.

He said the change would be anchored on three key issues of people, processes and profit, adding that the people element was key to the success of the other two elements which was the reason personnel motivation was dear to his heart.

Kachikwu also dismissed reports that he intends to sack 1,000 personnel of NNPC, adding that nothing could be farther from the truth, as he needed quality staff to drive the processes and business in the new NNPC.

Speaking on behalf of members of the Petroleum and Natural Gas Senior Staff Association (PENGASSAN), Mr. Francis Johnson pledged the readiness of the NNPC staff and the GMD to achieve the federal government’s reform agenda for the corporation and the oil and gas industry at large.

Echoing the position of PENGASSAN, Mr. Igwe Achese, President of the National Union of Petroleum and Natural Gas Workers (NUPENG), said that as a group, the union has implicit confidence in the ability of the new GMD to deliver on Buhari’s reform agenda in the oil and gas industry.

64
Oil & Gas Industry / Oil workers protest as NNPC is set to cut 700 jobs
« on: August 19, 2015, 10:15:28 AM »
Oil workers, acting under the aegis of the  National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria (NUPENGASSAN),  and the National Union of Petroleum and Natural  Gas Workers (NUPENG) have rejected  plans by the Nigerian National Petroleum Corporation (NNPC) to sack seven hundred of its workers.

It was gathered that the workers were holding consultations to stave off any immediate or future plans to lay off any of its members by the management of the NNPC.

The source said ongoing meeting between NNPC Group Managing Director (GMD), Dr Emmanuel Kachikwu and the representatives of the workers, would try and address the issue of retrenchment of workers in the industry.

The workers, had penul-timate last week, urged President Muhammad Buhari, to wade into the issue with a view to compelling the GMD not to sack its members.

PENGASSAN’s spokesman, Babatunde Oke, said workers have protested the sack at the NNPC few days ago to win support for their actions.

NNPC, through its spokesman,  Ohi Alegbe has rebuffed the claims that the state-run oil firm is going to cut about 700 jobs.

Alegbe said ongoing restructuring at the firm would not warrant massive job cuts, as being speculated by the workers, adding that it would only affect top management workers and that most of those affected had already been fired.

65
The crash in the global price of crude oil has impacted negatively on the performance of the oil and gas sector in the nation's capital market for the half year 2015. As a result the value(market capitalisation) of oil companies' shares dropped by N273.44 billion or 25.83 per cent from the corresponding period of 2014. This implies that shareholders in these companies lost the said amount.

Financial Vanguard's review of the performance of the oil and gas sector on the Nigerian Stock Exchange, NSE shows that the sector recorded N786.56 billion in the six month period ended June 2015 as against N1.06 trillion in the first half of 2014. Market capitalisation is the total value of companies quoted on the NSE and is determined by the performance of their share prices and issued share capital.

A cursory review of the oil and gas sector on the NSE shows that in the period under review, the NSE oil and gas index, another stock market gauge, dropped by 21.2 per cent to close at 368.54points from 468.24 points in the corresponding period of 2014.

The drop in the NSE oil and gas index is a reflection of the fall in the prices of petroleum equities. The equities are Beco Petroleum Product Plc, Conoil Plc, Eterna Plc, Forte Oil PLC, Mobil Oil Nigeria Plc, MRS Oil Nigeria Plc, Total Nigeria Plc, Oando Plc and Seplat Petroleum Development Company Plc.

Further review also showed that the oil and gas sector accounted for 7.12 per cent of the equity market capitalisation for the first of half 2015 as against 7.56 per cent in the corresponding period of 2014. Oil companies listed on the NSE are facing challenges of low global price of crude oil which has made investors to either sell off their stocks or adopt a wait and see attitude. The down turn is affecting oil companies and producing countries across the globe.

Meanwhile, the global price of crude oil from January 2015 to August 10, 2015 revealed steady decline. The prices for January was $48, February $54, March $52, April-$57, May $62, June $60, July $54, and August $48

Reacting to the decline in the global oil prices, Arthur Berman, in an interview with Oil Price. Com, said that the current situation with oil price is really very simple. " Crude oil demand is down because of high price that stayed for too long. Supply is up because of U.S. shale oil and the return of Libya's production and now Iran. Low demand and increased supply has resulted in low price.

The Saudis which is responsible for the continued low price are good at money and arithmetic. Faced with the painful choice of losing money maintaining current production at $60/barrel or taking 2 million barrels per day off the market and losing much more money--it's an easy choice: they took the path that is less painful. If there are secondary reasons like hurting U.S. tight oil producers or hurting Iran and Russia, that's great, but it's really just about the money."

Saudi Arabia had met with Russia before the November OPEC meeting and proposed that if Russia cut production, it would also cut and get Kuwait and the Emirates at least to cut along with it. Russia said, "No," so Saudi Arabia said, "Fine, maybe you will change your mind in six months." I think that Russia and maybe Iran, Venezuela, Nigeria and Angola will change their minds by the next OPEC meeting in June.

"We've seen several announcements by U.S. companies that they will spend less money drilling tight oil in the Bakken and Eagle Ford Shale Plains and in the Permian Basin in 2015. That's great but it will take a while before we see decreased production. In fact, it is more likely that production will increase before it decreases. That's because it takes time to finish the drilling that's started, do less drilling in 2015 and finally see a drop in production.

Eventually though, U.S. tight oil production will decrease. Perhaps near the end of 2015--world oil prices will recover somewhat due to OPEC and Russian cuts after June and increased demand because of lower oil price. Then, U.S. companies will drill more in 2016.

"Oil prices need to be around $90 to attract investment capital" he added. He however argues that prices have to be high and stay high for the plays to work. Also drilling can never stop once it begins because decline rates are high. Finally, no matter how big the play is, only about 10-15% of it--the core or sweet spot--has any chance of being commercial. If you don't know how to identify the core early on, the play will probably fail" Berman explained.

Another Economist, Mr. Horsnell, said: "Inventories are very much a second-quarter phenomenon, rather than something that carries on much beyond that. It will sort itself out, primarily because of seasonal increases in demand, but there will also be some falls in supply--the U.S.

Energy Information Administration has recorded drops in U.S. crude-oil production and expects shale-oil output to fall heavily in May. "Demand tends to be at a maximum in the third quarter, particularly demand in power generation for air-conditioning in emerging markets."

http://allafrica.com/stories/201508170018.html

66
Oil & Gas Industry / NUPENGASSAN Flays Gale Of Sacks At NNPC
« on: August 17, 2015, 10:12:28 AM »
Workers, under the aegis of Nigerian Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria (NUPENGASSAN), have challenged the new GMD of NNPC, Dr. Ibe Kachikwu, to recover the stolen trillions of Naira in the oil and gas sector rather than retiring and sacking innocent workers.

The workers claimed that the fight against corruption should not be turned against workers whom government have sworn to protect

NUPENGASSAN, in a statement signed by the NUPENG President, Comrade Igwe Achese, and his PENGASSAN counterpart, Comrade Francis Johnson, in Lagos, at the weekend, said the two unions in the oil and gas sector have reservations about the approach of government to the reform programme in the oil and gas industry without carrying the two unions along in the process.

Part of the statement read: “We dare the new GMD of NNPC, Dr. Ibe Kachikwu, to recover the stolen trillions of Naira in the sector than retiring and sacking of innocent workers. We see the action as an act of cover up.

“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 ongoing exercise portends a great danger in the oil and sector, if workers are meant to bear the brunt of government current action where the fight of corruption is now used as an act of vindictiveness against workers.

http://dailyindependentnig.com/2015/08/nupengassan-flays-gale-of-sacks-at-nnpc

67
Trainings / AACE Certification information needed urgently
« on: August 12, 2015, 02:45:35 PM »
Dear All,

Please anyone with valuable information on how one can get certified by AACE as a Cost Engineer should please help a friend in need.

Valuable feedback will be appreciated.

68

Many analysts agree that agriculture is the best alternative to crude oil as the main revenue source in Nigeria. However, problems of greedy middlemen, poor storage, weather effects, subsistence level, poor access to markets, cheaper imported food substitutes, poorly executed policies, and lack of funding constitute barriers to maximum output in the sector. In the face of these obstacles, how can Nigeria leverage on her comparative advantages in agriculture to ensure food security, employment, huge foreign revenue earnings, and overall development?


By ABIMBOLA AKOSILE

* Since oil price is no longer fashionable for our wellbeing, agriculture should be next focus of resource drive for development and other sundry. We have vast lands for agriculture cultivation and also to provide employment for skilled and unskilled people.
- Mr. Gordon Chika Nnorom, Public commentator, Umukabia, Abia State

* It is bad that the leadership of Nigeria is beginning to realise the need to liberalise and diversify our economy; and why not, when we recycle those who led us 30 years ago, and those who are not in line with current world realities. Now, we must not also forget to look towards technology, depend less on certificate, manufacturing and tourism; all these will help to look beyond oil, but its return and gain will not be immediate. In all we must aside fighting corruption and returning stashed wealth, block the loopholes through which these crimes are committed. As we move into agriculture, we must have in mind that Nigeria has six geo-political zones.
- Mr. Okechukwu Ikonne, Ogbor Aboh-Mbaise LGA, Imo state 

* Employment, food availability and export revenues.
- Mr. Feyisetan Kareem, Ogwashi-Ukwu, Delta State

* It is unfortunate that this is a country that likes building from the roof top rather than the foundation. Most of the schools now are more concerned with academics without total development of children. How many schools have school farms? Many do not even have playing field. Regardless of your background in our days you must farm. The seed and love for farming will be planted in you that will germinate throughout your lifetime. The kids nowadays believe their hands are only specially designed to play games while the older ones believe white collar jobs is their stepping stone to greatness. Until we start catching them young and stop licensing one room or one-flat schools without school farms we might just be playing lip service to agriculture and the fire brigade approach will continue.
- Mr. Kunle Osungbesan, Banker, Lagos

* Any nation that does not give priority to agriculture, security and employment, that nation will remain in abject poverty. Tractors should be manufactured in the country with its components, not finished product. Employment for the youth, where offered and anomaly observed, should be investigated and culprits punished. Expectedly, government programme should be a continuous process.
- Mr. Dogo Stephen, Kaduna

* Agriculture is a vital source of food and needed agro-produce for essential economic and industrial gains. The well-being of citizens largely depend on the quality of nutrition and so the quality of society or people. Total neglect has relegated farming to the background in Nigeria today. NLC demanding for N90,000 minimum wage and austerity measures proposed by governors e.t.c. in the face of frightful free fall of the naira insinuating chain reactions and side effects of inflation. We cannot pretend to forget Idi Amin's wrong economic policies and laws that destroyed Uganda's economy. How many employers paid the N18,000 minimum wage that warrants increase? Honestly, we must go into intensive farming now.
- Miss Apeji Patience Eneyeme, Badagry, Lagos State

* Government needs to ensure that farmers don’t produce and then are unable to sell and at a profit. Silos, cold rooms and other preservation methods should be adopted to buy and store agricultural produce and then sold to the public at highly subsidised rates. This will not only encourage and enlarge local production but force cheap imports out of the market, by making the locally-made one to be a lot cheaper than any imported produce.
- Mr. Buga Dunj, Jos, Plateau State

* Agriculture is the mainstay or livewire of Nigeria's economy, and provides the basics of life in terms of food, clothing, shelter e.t.c. It is also a vital source of employment, foreign exchange, income e.t.c. Our untapped human and natural resources have left us in abject penury. As a consumer economy, Nigeria unfortunately imports even subsidised toothpicks. It is shocking that we cannot produce our own foods upon our vast arable lands, not even toothpicks. The giant of Africa is bleeding and needs surgery so to speak. Our apex, commercial banks and other financial houses must give the attention that agriculture deserves before it is too late. We must regulate the middlemen and curtail their excesses during the process of distribution chain. Let us try marketing boards to minimise wastage, while silos availability is inevitable.
- Ms Saiki Ometere Tina, Gboko, Benue State

* Agriculture is a long overdue alternative to the petroleum that is disappointing us now even as we are wrongly tying our hopes on this oil like one-way traffic. Utter neglect of agriculture escalates insecurity, inflation and system failure. We must reform our import and export policies and laws to favour local content or indigenous farming. Farming needs urgent and concerted attention now. Government needs to ensure easy access to soft loans specifically for small-scale farming. God bless Nigeria.
- Mr. Apeji Onesi, Lagos

* Agriculture can create about 5 million jobs, ensure food security and boost the economy of the country only if the present administration embarks on massive renewal of the sector.
- Mr. Kessim Putme, Abuja

* Agriculture can help save Nigeria in many ways. It will help reduce unemployment greatly. Majority of our youths roaming our streets will be gainfully employed. Secondly, hunger will be reduced. If mass agriculture is introduced, food would be available and cheap in our markets. They are hard to come by today because they are imported and only few have the money to buy. There would be love and unity between citizens. These are lacking today due to the hardship the people are passing through. You wake up in the morning with nothing to eat and there is no way for it; then how can there be peace? Government should handle agriculture and build all infrastructures necessary, as we have land and the environment.
- Hon Babale Maiungwa, U/Romi, Kaduna

* Now that oil price is not stable to sustain our needs for development, let us focus on agriculture for revenue drive and amenity update.
- Mrs. Ijeoma Nnorom, Lagos State

69
Oil & Gas Industry / Fresh oil spill hits Bayelsa communities
« on: July 28, 2015, 12:21:09 PM »
A fresh oil spill from the Nigerian Agip Oil Company, NAOC’s Ossiama-Ogboinbiri and Ogboinbiri-Tebidaba pipelines has impacted the environment of Keme-Ebiama,Okpotuwari and Ondewari communities in Southern Ijaw Local Government Area of Bayelsa State.

The spill, the second in four months in the area, was reported on July 14, 2015 by the locals and is believed to have been caused by equipment failure.

It was gathered that the spill has spread to Gbaraun and Lobia communities in the council, aided by the terrain and the already rising flood levels in the environment.
Several incidences of spill had been recorded in the area, the last occurred on April 23, 2015.

A native of Ondewari and Project Officer, Ondewari Health, Education and Environmental Project, OHEEP, Tontiemote Yeiyei, said: “Incidentally, that spot was only the soft spot where the crude oil found its way to the surface; the main ruptured spot on the body of the oil bearing pipe was a little bit away from where the crude oil was gushing out on the ground.”

He said a team of Agip technicians had visited the spill site on July 21 to carry out clamping and repairs of the damaged point on the pipe promising to return the following day.

“Those of us present saw that even though the aqua-rap was still on the body of the pipe, the crude oil was escaping from the pipe,” he added.

But a fire outbreak was reported on Wednesday July 22 as “a familiar” thick column of dark smoke was rising from the current spill impacted environment.

It was, however, gathered that the identities of those who set the site ablaze could not be ascertained.

The group, Environmental Rights Action ERA, Fiends of the Earth Nigeria, FoEN, Bayelsa Field Coordinator, Alagoa Morris who was in the area called on Agip to promptly follow-up repairs with clean-up of the environment.

“Bayelsa State Government, through the state Ministry of Environment should take positive steps to protect the interest of all impacted communities,” he said.

- See more at: http://www.vanguardngr.com/2015/07/fresh-oil-spill-hits-bayelsa-communities/?#sthash.SlV9Xa4Y.dpuf

70
A former Managing Director of Nigeria Liquefied Natural Gas (NLNG), Mr. Chima Ibeneche has stated that the potential for major growth and direct impact on the economy is far greater for gas than for oil
Speaking at a recent meeting of the Nigerian Gas Association (NGA) in Lagos, Ibeneche however acknowledged that gas is certainly complementary to oil in driving Nigeria’s economy.

The theme of the meeting was “Harnessing and Monetisating the Potential of Stranded Gas Fields: A Key Enabler for Economic and National Growth.”
Ibeneche, who was also a former President of NGA, stated that stranded gas is an economic or commercial phrase.


“All natural gas is stranded in nature and normally requires investments to turn it into a useful resource by linking the gas in the reservoir to a consumer in a viable market. The requisite investments usually include policy changes that help create economic justification for gas exploitation; exploration investments to identify and quantify the gas reservoirs; gas field development investments for construction of production wells and for gas conditioning; distribution investments required to transport the gas from the well head, or gas gathering station to the consumer,” he explained.

He said the reality today was that the US which used to be a leading importer of Nigeria’s oil is now approaching self-sufficiency.

According to him, the consequence is that Nigeria has a decrease in the market demand for its sweet light crude.

“Couple with this is the global softening in oil prices with no immediate sign of recovery to the $100 per barrel world. As this reality sinks in, the relative importance of natural gas to the Nigerian economy has increased. The revenues from the export of gas have become more significant as receipts from oil have declined. The demand gap for gas created by the by the electricity generation sector should be good for stranded gas, though it will require stabilising the recent transformation and privatisation of the electricity sector. Additionally there are potential markets for gas in transportation and also in domestic heating and cooling. All these indicate a huge potential market for gas in Nigeria,” he added.

Also speaking, the President of NGA and Chief Executive Officer of Oando Gas and Power, Mr. Bolaji Osusanya stated that since 1999, the NGA had created and sustained necessary awareness about its programmes and activities within the local and global oil and gas community.

“We have also garnered the government’s support for businesses with respect to creating a more conducive business environment, as well as fostering the enactment of laws and policies that have enabled gas to be at par with oil as a natural resource geared towards value creation for the Nigerian economy.

Through our sustained approach and dialogue with key stakeholders, the gas business is now a key component of Nigeria’s energy sector, and can no longer be regarded as an afterthought as was the case prior to the NGA’s formation. Many have said that “Natural Gas is the future”. While that is true, it is also a big part of our present, as Natural gas is the cleanest and most efficient fossil fuel the world knows.

Environmentally-friendly and readily available, it can be pivotal to the development of other sources of renewable energy,” he explained.

Osusanya noted that Nigeria has prolific gas supply fields in the Niger Delta, but most of the gas markets remain underserved. The onus is on us to tweak the existing framework to mobilise all stranded reserves.

http://www.thisdaylive.com/articles/gas-has-greater-direct-impact-on-nigeria-s-economy-than-oil-says-ibeneche/215810/?

71
Eni SpA, Italy’s largest oil company, is considering selling part or all of its onshore Nigerian operations as it seeks to divest peripheral businesses amid a drop in oil prices, people familiar with the matter said.

Eni has asked advisers to look at options for the assets, which include interests in oil and natural-gas fields in the West African country, the people said, asking not to be identified as the information is private. Depending on what Eni decides to sell, the transaction may raise from $2 billion to $5 billion, the people said. It could also decide to keep the operations, they said.

A representative for the company declined to comment. Shares in Eni were trading at 15.94 euros ($17.50) at 4:54 p.m. in Milan.

Oil companies, including Royal Dutch Shell Plc and Chevron Corp., are selling fields as they scale back Nigerian operations following unrest, violence and the theft of crude in the Niger delta. The country’s daily output of about 2 Mbbl of oil makes it Africa’s largest producer.

Eni CEO Claudio Descalzi has announced plans to sell assets worth 8 billion euros ($8.8 billion) in 2015-2018, including shares in subsidiaries Galp Energia SGPS and Snam SpA. He also proposed a 17% cut in investment over the same four years compared to previous plans to adjust to lower prices.

Eni’s wholly owned subsidiary in the country, Nigerian Agip Oil Co., operates under a joint-venture agreement with Nigeria’s state oil company NNPC and ConocoPhillips. NAOC also operates two onshore exploration licenses.

The company said in July that 12 people died and three were injured in an explosion during repair work at its crude oil pipeline in Nigeria.

http://www.worldoil.com/news/2015/7/23/eni-to-weigh-sale-of-nigeria-assets-amid-oil-price-drop

72
Analysts have been pretty pessimistic about oil prices in 2015, drawing comparisons to the some of the worst oil slumps of the past three decades. The current downturn could even rival the iconic price crash of 1986, analysts had warned—but definitely no worse.

This week, a revision: It could be much worse.

Until recently, confidence in a strong recovery for oil prices—and oil companies—had been pretty high, wrote analysts including Martijn Rats and Haythem Rashed, in a report to investors yesterday. That confidence was based on four premises, they said, and only three have proven true.

1. Demand will rise: Check.
In theory: The crash in prices that started a year ago should stimulate demand. Cheap oil means cheaper manufacturing, cheaper shipping, more summer road trips.

In practice: Despite a softening Chinese economy, global demand has indeed surged by about 1.6 MMbopd over last year's average, according to the report.

2. Spending on new oil will fall: Check.
In theory: Lower oil prices should force energy companies to cut spending on new oil supplies, and the cost of drilling and pumping should decline.

In practice: Sure enough, since October the number of rigs actively drilling for new oil around the world has declined by about 42%. More than 70,000 oil workers have lost their jobs globally, and in 2015 alone listed oil companies have cut about $129 billion in capital expenditures.

3. Stock prices remain low: Check.
In theory: While oil markets rebalance themselves, stock prices of oil companies should remain cheap, setting the stage for a strong rebound.

In practice: Yep. The oil majors are trading near 35-year lows, using two different methods of valuation.

4. Oil supply will Drop: Uh-oh.
In theory: With strong demand for oil and less money for drilling and exploration, the global oil glut should diminish. Let the recovery commence.

In practice: The opposite has happened. While U.S. production has leveled off since June, OPEC has taken up the role of market spoiler. OPEC Production Surges in 2015.

For now, analysts like Morgan Stanley is sticking with its original thesis that prices will improve, largely because OPEC doesn't have much more spare capacity to fill and because oil stocks have already been hammered.

But another possibility is that the supply of new oil coming from outside the U.S. may continue to increase as sanctions against Iran dissolve and if the situation in Libya improves, the Morgan Stanley analysts said. U.S. production could also rise again. A recovery is less certain than it once was, and the slump could last for three years or more—"far worse than in 1986."

"In that case," they wrote, "there would be little in analyzable history that could be a guide" for what's to come.

http://www.worldoil.com/news/2015/7/23/oil-warning-crash-could-be-worst-in-more-than-45-years

73

According to the latest data from the Department of Petroleum resources, Nigeria’s gas reserve life index stands at 79 years as of January 1, 2015, The Punch reports. Out of this figure, some volumes are said to stranded or not developed. The country is also said to have 188 trillion cubic feet in gas reserves as of January 1 this year.

The Deputy Director, Gas Monitoring and Regulation, Department of Petroleum Resources, Mr. Antigha Ekaluo, disclosed this in a presentation at the 16th Annual General Meeting/Natural Gas Business Forum 2015 of the Nigerian Gas Association held in Lagos on Wednesday.

According to him, capital and operating expenditures are stifling the growth of gas infrastructure, as well as immature/sub-commercial domestic market, disincentive fiscal terms (high risk, low return) and absence of robust legislative and commercial framework for gas.

The existing legal and regulatory framework, written primarily for oil, does not provide robust technical and commercial framework for gas, he argued, adding, “There is, therefore, the need to pass the Petroleum Industry Bill into law, which will underpin the ongoing sector reforms”.

On the strategy for monetising stranded gas, the Council Chairman, Society of Petroleum Engineers, Nigeria, Mr. Emeka Ene, said there was the need for the country to identify and secure its closest markets, develop an integrated flare-out model, recognise that associated gas was not non-associated gas, determine the size the process based on average throughput, and modularise the solution.

For accelerated stranded gas monetisation, he called for the fast-tracking of captive power, adoption of gas-powered public transportation, Liquefied Petroleum Gas substitution programme, and the implementation of pipeline network code.


74
Out of a total of 162.425 million barrels of crude oil allocated to the Nigerian National Petroleum Corporation, NNPC, for the country’s four refineries in 2014, the refineries only received 25.84 million barrels of crude oil leaving 135.85 million barrels of crude oil, valued at about N2.62 trillion appropriated for other uses not disclosed by the NNPC.

The NNPC, in its Annual Statistics Bulletin for 2014, stated that the refineries were only able to refine 23.36 million barrels of crude oil, meaning that Nigeria’s refining capacity in 2014 dropped to 14.4 per cent from 22 per cent in 2013.

The amount of crude oil processed by the refineries, according to the NNPC, translates to an average daily production capacity of 64,001 barrels per day.

Using OPEC’s Reference Basket which puts the average price of crude oil for 2014 at $96.29 per barrel and current exchange rate realities, the unaccounted 135.85 million barrels of crude oil by the NNPC, amounts to N2.616 trillion.

The amount is about half of the Federal Government budget for 2015, and is almost four times the N556.9 billion earmarked for capital expenditure in the budget and is slightly higher than the N2.607 trillion budgeted for recurrent expenditure.

The NNPC disclosed that the refineries received a total of 25.84 million barrels (3.5 million metric tonnes) of (dry) crude oil, condensate and slops in the year under review. This translates to 70,793 barrels of crude oil, condensates and slops per day.

The amount of crude oil supplied to the refineries on a daily basis was 374,207 barrels less than the 445,000 barrels per day of crude oil allocated to the NNPC for the refineries in the country. With the amount allocated to the NNPC, the refineries were supposed to receive 162.425 million in 2014.

The daily supply to the refineries represents 15.91 per cent of the total crude oil allocation of 445,000 barrels per day. The balance of 135.85 million barrels was, however, not accounted for by the NNPC.

This means that 135.85 million barrels of crude oil might have been appropriated for other unexplained reasons, or used for the controversial Offshore Processing Agreement (OPA) or for the Crude oil for product SWAP arrangements entered into by the NNPC.

The closest explanation given on the crude swap and offshore arrangements by the NNPC in the report was the fact that products valued at N6.76 billion were received by the Pipelines and Products Marketing Company, PPMC.

Specifically, the NNPC said, “PPMC evacuated 3.208 million metric tonnes of petroleum products from the refineries and it also imported 7.038 million metric tonnes of Premium Motor Spirit (PMS) and Household kerosene (HHK) for distribution valued at N6.76 billion on Offshore Processing Agreement (OPA) and Crude oil for product SWAP arrangements.”

Crude paid for, swapped, proceeds remitted — NNPC

However, responding to queries for explanation on the unaccounted barrels of crude oil, Mr. Ohi Alegbe, ‎Group General Manager, ‎Group Public Affairs Division‎, NNPC, told Vanguard that crude oil that are not utilised by the refineries is sent abroad for the product-for-Crude exchange programme (crude swap) and the offshore processing agreement scheme, while refined products from the scheme are brought back into the country, sold and proceeds remitted into the Federation Account.

He further allayed fears of any missing money, as he stated that the NNPC pays for the 445,000 barrels per day of crude at the prevailing international market price.

He said, ‎”The term `allocation’ of crude to NNPC does not arise as the Corporation is required to pay for this crude at prevailing international market price. This practice has been in place since 2003.

“‎Thus NNPC receives 445, 000 bpd of crude for domestic refining, but because of the state of the refineries (which as you know are receiving massive attention) the refineries are unable to utilize the entire volume of crude.

“‎Consequently, the balance of what is left unutilized by the refineries is sent abroad for the product-for-Crude exchange programme (crude swap) and the offshore processing agreement scheme.

“T‎he refined products from the above arrangements are brought into the country and sold towards meeting Nigeria’s petroleum product domestic consumption requirement. Proceeds are then remitted into the Federation Accounts.”

The NNPC has four refineries — two in Port Harcourt, one in Kaduna and another in Warri, with a combined installed capacity of 445,000 barrels per day. A network of pipelines and depots located throughout the country link these refineries.

Nigeria produces around two million barrels of crude oil a day, but has to export it due to a lack of working refineries. It then imports fuel back into the country at international market prices.

The NNPC had a couple of days ago, stated that the four refineries in Port Harcourt, Warri and Kaduna will resume production this July, after a successful turn-around-maintenance (overhaul) of their facilities. The turn-around-maintenance has been on for some time.

The NNPC had stated that the refineries will start production as soon as they have delivery of crude oil for refining.

Group Managing Director of the NNPC, Mr. Joseph Dawha, had few days ago, disclosed that the NNPC is carrying out a phased implementation of the rehabilitation of the refineries, stating that work at almost all the refineries would be completed soon, and they would soon start producing at between 80 and 100 per cent of their installed capacity.

He said: “We took a conscious decision that if the refineries are not in a good state to process crude for maximum gains, then there was no point in sending crude to the refineries. What we do is to try and fix it, so that by the time it starts processing the crude, then we get real value for the crude we have sent to the refineries.

“We are satisfied with the level of work carried out so far on the Port Harcourt refinery so that if we start processing crude now, we will get real value, and they will not be any value distortion that would have been the case if the refineries are not operating optimally.”

- See more at: http://www.vanguardngr.com/2015/07/crude-used-for-swap-proceeds-remitted-to-federation-account-nnpc/?#sthash.IxYhtsuw.dpuf

75

 A ban on 113 oil tankers by Nigerian state oil company Nigerian National Petroleum Corporation (NNPC) must be lifted immediately as no grounds have been given for the measure, the global oil tanker industry association said in a letter of protest.

NNPC issued a letter on July 15, citing a directive from President Muhammadu Buhari, which said the vessels, mainly VLCC crude oil tankers, were banned from calling at Nigerian crude oil terminals and also from Nigerian waters with immediate effect.

Industry association INTERTANKO, whose independent members own the majority of the world’s tanker fleet, said in a letter to NNPC, dated July 22, that there were no “evidence or grounds” given for the ban.

“INTERTANKO protests in the strongest possible way that these bans should be lifted with immediate effect until grounds and evidence for the ban have been given to each vessel and vessel owner/operator, and the owner/operator has had an opportunity to respond,” General Counsel Michele White wrote in the letter.

Since taking office in May, Buhari has been working to fulfil a campaign promise to tackle corruption, particularly in the oil industry. He has dissolved the NNPC board and ordered an investigation into a scheme through which the country swaps crude for oil products such as gasoline.

White said separately the list of banned tankers was “not exhaustive and already further tankers are being added”.

“Our current understanding is that these ships may have been targeted due to a failure to provide official outturn figures at their last call and/or commercial differences between load and discharge figures for cargo and free water,” White said in a separate note to members.

“This may also however be part of a general crackdown by President Buhari on corruption in Nigeria’s maritime, oil and gas, financial services and security sectors, including illegal bunkering and fuel sales.”

White said after INTERTANKO had spoken with its members in some cases the ship had not called in Nigeria for several years, or at all.

“In others, the ship has changed ownership since her last call in Nigeria,” White said.

“Members have also advised that some oil majors are attempting to introduce charterparty clauses requiring the owner to warrant that the vessel is not subject to any Nigerian bans or restrictions due to failure to report any outturn figures for prior voyages.”
INTERTANKO said it had advised members to avoid such a provision.

http://www.pmnewsnigeria.com/2015/07/23/global-oil-tanker-association-orders-buhari-nnpc-to-lift-ban-on-113-oil-tankers/?

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