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Nigeria became a top drawer when she joined the league of crude oil exporters in 1958. With that achievement, Shell d’Arcy, the company that first struck oil, took significant move to construct the first Port Harcourt refinery in 1965.

After that quantum leap why has none of the International Oil Companies (IOCs) otherwise known as super majors including Shell got involved in constructing any other refinery in Nigeria?

To unravel what went wrong on issues of petroleum refining, importation, subsidy and the attendant inefficiencies, we should not pass over the IOCs long absence in this aspect of the Nigerian downstream petroleum sector.


In finding explanation on how to refine locally, we should be guided by this axiom; that the best answers are found in asking the best questions. Why are the super majors not investing in the Nigerian downstream sector even when they do so in non-oil producing consumer nations?

The petroleum industry is divided into two main categories videlicet the National Oil Companies (NOCs) and the International Oil Companies. It is also segmented into upstream, downstream, pipeline, marine, as well as service and supply.

The Upstream is the searching for potential underground and underwater oil and gas fields, drilling of wells and recovering crude oil and, or natural gas to the surface. The downstream sector is made up of the processing plants called refineries and sometimes petrochemical plants, distribution and marketing of byproducts. Our discourse here is the absence of super majors in the downstream especially as it relates to refining.

National Oil Companies and Super Majors

National Oil Companies: They are petroleum companies nationally owned and operated by governments. More than half of the world’s reserves are controlled by NOCs. Most global oil supplies are from the National Oil Companies.

The development of NOCs in countries with large oil reserves was a struggle to control petroleum resources.

The top 10 NOCs in the world are: Saudi Aramco (Saudi Arabia), National Iranian Oil Company (Iran), Qatar Petroleum (Qatar), Iraq National Oil Company (Iraq), Petroleos de Venezuela (Venezuela), Abu Dhabi National Oil Company (UAE), Kuwait Petroleum Corporation (Kuwait), Nigerian National Petroleum Corporation (Nigeria), Libya National Oil Corporation (Libya), and Sonatrach (Algeria). (Courtesy: Petroleum UK). These NOCs belong to OPEC. There are also NOCs that are non – OPEC.

International Oil Companies: They are publicly owned petroleum companies not operated by governments. The six largest publicly traded IOCs in the world a.k.a. super majors are ExxonMobil (Texas, USA), Royal Dutch Shell (The Hague, Netherlands), BP/Amoco (London, UK) Total SA (Paris, France), Chevron (California, USA) and ConocoPhillips (Texas, USA).

Market and Price Control

We should underscore the point that a cold war between the NOCs and the IOCs existed over time. While NOCs control the reserve size of the industry, IOCs tend to control both reserve size and the market using technology and expertise to manipulate and dominate.

NOCs control about 88 percent of the oil reserves while the IOCs control only 6 percent of the reserves. It should however be noted that NOCs perceived control of the reserve size does not translate to large revenues.

International Oil companies control the price of oil paid to petroleum producing nations. It was in response to imbalances in the bargaining power of IOCs that OPEC was founded in 1960. OPEC encouraged its members to put more pressure on Oil Companies to offer more concessions and also for NOCs to devise better means of extracting and refining with a view to reduce reliance on IOCs.

Super Majors Subsidy

Many governments do not operate nationally owned oil companies. These governments grant publicly owned petroleum companies subsidies. The reason is that oil is of strategic importance to a nation’s security. These subsidies are also granted by governments not to drive companies overseas.

The fear is that home countries will become even more dependent than they already are on foreign nations for oil. So for those governments their oil companies are protected via subsidies at home. The United States government for instance provides large subsidies to publicly owned oil companies a tax rate of nine percent, well below the standard 25 percent corporate rate.


Shell struck oil at Oloibiri in present day Bayelsa State on Sunday 15th January 1956 after about half a century of petroleum prospecting in the Niger Delta. The company extracted and exported crude and refined abroad. In 1965, Shell constructed the 38,000 barrels per day capacity refinery in Port Harcourt. It was expanded to 60,000 barrels per day after the Nigerian civil war.
Nationalisation of Downstream Assets and Consequences

In 1971, Nigeria was to join the Organisation of Petroleum Exporting Countries (OPEC). A requirement was that a country must have a 51 percent stake in the industry. The then military government of General Yakubu Gowon promulgated the indigenization decree to increase the participation of Nigerians in businesses dominated by foreigners.

With that law by fiat, the Nigerian National Oil Corporation (NNOC) was formed as the National Oil Company. The Shell Refinery was then nationalized. One is not sure whether there was a buy out of the nationalised Shell refinery. That was an albatross around Nigeria’s neck and dimmed the spirit of international oil companies to further invest in refineries.

Before indigenization the Federal Government had limited involvement in the oil industry; just taxes and royalties were paid by the oil companies. Nationalisation may have generated large amounts of income and technology for Nigeria but the country paid dearly for it. The Nigerian state built three more refineries in Warri (1978), Kaduna (1980) and the 2nd Port Harcourt (1989). The Eleme Petrochemical Complex (1990) now privatised completes the list.

By 1979, the government of then General Olusegun Obasanjo merged the NNOC and the Ministry of Petroleum Resources to form what is now the NNPC to gain more power over the allocation and concessions through the NNOC. The NNPC then acquired about 60 percent participation in the oil industry; a regime that is still operational today.

Again, the Obasanjo administration in 1978 nationalized Shell and BP downstream facilities because their home government support for the defunct apartheid regime in South Africa. Shell was changed to National and BP became AP. That again may have put the death knell on IOCs downstream investments in Nigeria.

Expertise to explore and develop crude makes IOCs almost indispensable in Nigeria. If not how do we explain their heavy investment in the downstream sector in countries that are net oil importers, and worse still in non-oil producing consumer nations.

Exxon Mobil Corporation of the United States, the largest refiner in the world has no refinery in Nigeria. It owns the ExxonMobil Refining & Supply Company in Singapore with a refining capacity of 605,000 barrels per day capacity. That refinery is the 5th largest in the world. Its refining capacity is higher than our four refineries combined capacity of 445,000 barrels per day. Also, Shell the biggest player in Nigeria, owns the Shell Eastern Petroleum (Pte) Ltd Singapore with a refining capacity of 462,000 barrels per day. It is the 13th largest in global ranking (Courtesy: OGJ).


With the legal and regulatory frameworks of decrees, corporate entities could not enforce their rights. It became expedient for international oil companies to
operate only in the upstream sector as it is today.

Petroleum Industry Bill: The bill to provide for the establishment of legal, fiscal and regulatory framework for the Petroleum industry in Nigeria and other related matters otherwise known as the Petroleum Industry Bill (PIB) is a way to go.

That bill proposed the establishment of a progressive fiscal framework that encourages further investment in the industry while optimizing revenues accruing to government.

The bill also proposed a Downstream Petroleum Regulatory Agency. It makes the Agency a body corporate with perpetual succession. It means the Agency can sue and be sued.


One believes that Nigeria’s nationalisation even when it increased the revenue base to the nation caused a problem in that the International oil companies were forced out of the downstream sector. As a solution, we may renegotiate with these oil companies as they have the technology and expertise to dominate the upstream and downstream sectors for now. We may also tinker and reform our fiscal, legal and regulatory frameworks to accommodate the partnerships we longingly desire with IOCs in the construction of refineries.

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Just last week, President Muhammadu Buhari was inaugurated at the Eagle Square, Abuja, as part of a historically peaceful and democratic transition of power in sub-Saharan Africa’s most populous nation. And this new president has his work cut out for him: slowing growth, low oil prices, and subsequent declining government revenues are threatening its economy, which is the biggest in the region. In addition, the Boko Haram insurgency still rages on in the north, though Nigeria and its neighbours have made recent strides in fighting the group.

To address these challenges, President Buhari has already offered a blueprint for his administration: Shortly before his inauguration, he released his 100-day plan, what he calls “My Covenant with Nigerians,” in which he states commitments to supporting agriculture, stamping out corruption, tackling insecurity, and boosting health, among many other objectives.

But to what extent is his plan achievable? What are the realistic expectations for the Buhari administration? What are the biggest obstacles in his way? And, as Brookings Africa Growth Initiative Non-resident Senior Fellow Richard Joseph put it, with this peaceful transition, has Nigeria’s hope for democratic development been renewed?

Next Monday, the Africa Growth Initiative (AGI) is convening a panel of Nigeria experts to discuss these (and other) opportunities and challenges President Buhari is facing at a public Brookings event entitled: “Nigeria in transition: Prospects and challenges for the new government.”

In the build up to this event, AGI scholars and colleagues have produced a number of briefs on the economic, political, and security developments in the country over the past few years. Here is a recap of some of this work:

Oil and Nigeria’s economy

Nigeria’s economy depends heavily on oil. In fact, crude oil accounts for over 70 per cent of its government revenue — so, the past year’s major decline in oil prices has hit the country hard. In a piece on the consequences of falling oil prices on the continent, Amadou Sy discusses how these dropping commodity prices caused the naira to depreciate, making it even harder for the country to service its debt. In times of low prices, many experts, like AGI’s Non-resident Senior Fellow Vera Songwe, recommend that policymakers take advantage of the opportunity and remove fuel subsidies.

The subsidy system, along with strikes by fuel marketers and unions, has also been blamed for the oil scarcities and widespread power outages just last week. These are not the only problems related to oil: Inquiries over accusations of embezzlement of $20 billion from crude oil sales have been taking place for months.

Nigeria’s political transitions

The first quarter of the year saw Nigeria’s most closely fought election in its history. Nigerian politics are particularly complex, as AGI’s Foresight Africa 2015 explored: Religious, geographic, ethnic, and security issues, among others, create a multi-faceted political landscape. The recent emergence of President Buhari’s new political party — the All Progressives Congress (APC) — through a merger of disparate parties created a true competitor for the former ruling People’s Democratic Party (PDP). According to AGI Senior Fellow Mwangi Kimenyi, the results of this election were a “surprise” to many — and not necessarily in that Buhari was the winner. For example, unlike many Nigerian watchers’ predictions, there were relatively few incidences of violence, even though the six-week postponement of the elections made many nervous. Also, and, perhaps most importantly, Buhari’s rival, former President Goodluck Jonathan, defied recent trends in the region and quickly respected the election results and agreed to step down.

For more information not only on historical political transitions since the end of colonialism, but those of other sub-Saharan countries too, check out AGI’s new interactive the “African Leadership Transitions Tracker.”

Security and Boko Haram

President Buhari, a former military leader, still faces an uphill battle in the fight against Boko Haram, whose frequent attacks remain a consistent threat to peace and security, especially in the north of the country. While Nigeria and its neighbours Cameroon, Niger, Benin and Chad have made in-roads into Boko Haram territory, the group continues to perpetuate kidnappings, bombings, and other violence.

In the wake of the 2014 kidnapping of some schoolgirls in Chibok, Bornu State, and as Western forces and actors contemplated heightened involvement in the region, Richard Joseph, highlighted key issues for policymakers as they consider their choices and strategies. At the same time, and as part of a wider AGI study on the impact of conflict on agriculture in West Africa, AGI posted a series of blogs examining the origins, goals, and potential trajectory of the continuing conflict with Boko Haram.

Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has adviced President Muhammadu Buhari to focus the deregulation policy of the nation’s oil and gas industry on local production rather than importation.

In a statement by its National Public Relations Officer, Mr Emmanuel Ojugbana, the association noted that if local refining was not increased to meet local demand for petroleum products, especially the premium motor spirit (petrol), removing subsidy on petroleum products will bring inflict serious hardship on Nigerians.

The association said removing subsidy while the country depends on importation of refined products would make prices of refined petroleum products to be out of the reach of the masses and causes inflation.

Ojugbana stated that importation of refined petroleum products was a drain on the nation’s revenue, adding that it creates jobs for the refining nations in spite of the high unemployment rate confronting Nigeria.

He stated: “Importation of refined petroleum products is also putting the Naira under undue pressure and creating social problems for the economy. This is unacceptable to PENGASSAN. Abrupt removal of fuel subsidy will create chaos that may ground the economy.

PENGASSAN calls for well-coordinated measures with timeline to achieve selfsufficiency in local refining as a means of proffering acceptable steps to end fuel subsidy. “This should be combined with such other measures for effective optimization of gas especially for domestic, industrial, electricity and automotive energy. Such will create other affordable and friendly sources for energy needs.”

He called on the government to declare a state of emergency in the downstream oil and gas sector and convene an all-stakeholders forum to come up with concrete and sustainable steps with reliable timeline for achieving demand-supply equilibrium through local refining.

The strategy must be to guarantee a total stoppage of both petroleum products importation and fuel subsidy. According to him, Nigerians expect relying on the resources that the nation is endowed with should be able to guarantee refined products at affordable prices to the populace, adding that this could have been possible if local refining capacities are enhanced.

Ojugbana explained that both the government and industry operators had always yearned to promote competition and efficiency but failed to assure on how to enhance local refining capacity to contain local demand.

Oil workers acting under the umbrella of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have urged the Federal Government to make gas its major source of earnings.

In a statement signed by Comrades Francis Johnson and Bayo Olowoshile, (President and General Secretary respectively), the group said it is high time the country diversified its economy by giving more attention to gas exploration and exportation for growth.

It said Nigeria’s proven gas reserves estimated at 5.2 trillion cubit meters (tcm)/183 trillion cubic feet(tcf) is huge and capable of bringing huge revenue to the Federal Government if well harnessed.

It said the annual gas flared estimated at 31.5 billion cubit metres bcm / 1.1 trillion cubic feet (tcf) valued at $2.5billion is also a huge economic waste, adding that the waste can be prevented if the right policies are in place.

“With 172million estimated population and our vast growing, but grossly under exploited gas markets, the global campaign for the promotion of more environment friendly energy, emphasis on the activities of gas will preserve our forest, curtail diversification, and generate more revenues for the country.

Based on this, the government of President Muhammad Buhari will be recording a far more success in the area of improving fiscal resources for the growth of the economy,’’ it said.

It explained that the depleted fortune of Nigeria’s foreign reserves and failure of the Federal Government to meet budgetary expectations in recent time, was as a result of the fact that the country depends majorly on oil.

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

A national conference of contracts and procurement general managers in private sector and directors of procurement in public sector is being convened by Nigeria LNG Limited (NLNG) to hold on June, 8, 2015 in Lagos.

The company stated with the prevailing oil and gas prices, which are 40 per cent lower than previous levels and its resultant significant reduction in revenues of oil and gas producing countries and companies, there is an urgent need for cost efficiency and value for money.

According to Babs Omotowa, NLNG’s Managing Director/Chief Executive Officer and Global President of Chartered Institute of Procurement & Supply (CIPS) headquartered in the UK, “The conference is NLNG’s contribution to the ongoing drive to find strategies to survive the significant loss of revenue which is affecting GDP growth with potential for negative social impact. This is against the backdrop that costs, especially capital costs, have increased by over 500 per cent in the past two decades. Therefore, driving cost efficiency and value-for-money out of government and organization spend and lowering costs through efficiency, discipline, creativity and innovation, is critical.|

Omotowa added: “Good procurement strategies and practices can bring about significant benefits as seen in developed countries, and it also provides a significant tool for addressing corruption and capacity building in developing countries. This conference is to enable major players in contracting and procurement activities discuss how to deliver higher benefits to their organisations and to the Nigerian economy at large. This is our hope for Nigeria, in line with our vision to help build a better Nigeria, and as the number 1 ranked home-grown Nigerian Company,” he added.

The conference is expected to attract industry leaders, Contracting and Procurement General Managers and Directors of Procurement in Public Sectors.

NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49%),  Shell Gas BV, SGBV, (25.6%), Total LNG Nigeria Limited (15%), and Eni International (N.A,) N. V. S. a. r. l (10.4%).

May 29, 2015 has come and gone. Goodluck Ebele Jonathan is now a former president, and Nigeria’s prevalent electricity crisis is no longer his headache. The problem is now wholly owned by Muhammadu Buhari, the new President of the Federal Republic of Nigeria and Commander-In-Chief of the Armed Forces. Thus far, Buhari has started on a good note, declaring in his inaugural speech that “Careful studies are under way during this transition to identify the quickest, safest and most cost-effective way to bring light and relief to Nigerians.”

Clearly, President Buhari is inheriting dizzying catalogues of crisis on all fronts. However, considering the importance of electricity in national development as well as human life, the new government cannot afford the luxury of an extended study or any level of presidential honeymoon in the area of the current energy crisis. There is an urgent need for immediate solution.

Truth be told, while it can be very apt to equate the past Jonathan government with every failure to proffer practical solutions in many areas, the team can hardly be faulted for the failure to identify and echo the problems. Thus, the last official press conference granted by the former Minister of Power, Prof. Chinedu Nebo, on the electricity crisis is very instructive. In his words, “Energy security must be addressed in a holistic manner…The first phase of the war has to do with the issue of gas pipeline vandalism and it may interest you to know that millions of dollars are spent fixing these gas pipelines on a monthly basis.”

Unlike in the past, the issue of pipeline vandalism requires every sense of urgency and decisiveness. It is time to view the matter with similar lens as in an act of war.

The point is that, even as the existing energy policy is fraught with various challenges, the situation no longer requires a rocket scientist to discern that the most immediate challenge is that gas pipelines to Nigeria’s main feed to the National Power Grid are constantly being vandalised, particularly along the Trans Forcardos and Escravos-Lagos axis.

A corpus of research has pegged the main cause of pipeline vandalism to restless youths who are agitated because of a long history of neglect of host communities. The area is replete with high unemployment, abject poverty, inadequate social amenities, and environmental hazards. Various governments responded by establishing agencies, such as the Niger Delta Basin Development Authority (NDBDA), the Niger Delta Development Commission (NDDC), and the Niger Delta Ministry. However, despite billions of dollars in annual budget, the programmes are mired in all manners of controversy, including massive corruption, phantom projects, and the gross neglect of the intended beneficiaries.

Unlike in the past, the issue of pipeline vandalism requires every sense of urgency and decisiveness. It is time to view the matter with similar lens as in an act of war. Not only has the current electricity crisis cost thousands of lives, directly or indirectly, it has also resulted in billions of dollars more of incalculable loss to the national economy. Further, depending on the index of measurement, several studies have cited the linear cost of the sabotage as anywhere from $7 to $24 billion per annum. Moreover, the pattern of vandalism and attendant epileptic power supply has historically discouraged both local and foreign investment in Nigeria. The objective fact is that the incessant vandalism of energy assets is a serious threat to national security and potentially as grave as the Boko Haram menace terrorising the country.

…the “quickest, safest and most cost-effective way” to curb the problem, in the interim, is to deploy with immediate effect Nigeria’s armed forces to fully safeguard every pole in the breadth and depth of the problematic areas along the Trans Forcardos and Escravos-Lagos axis of the pipelines. The phalanx can be augmented with ever-ready labour from the National Youth Service Corps or the other teeming unemployed graduates who are eager to work.

Accordingly, President Buhari should, without any delay, isolate the problem and inaugurate a presidential task force on Pipeline Vandalism. Such task force should include but not be limited to some influential representatives from Niger Delta and other host communities. With new faces expected soon at the helm of the Niger Delta Ministry, the host communities can be reassured by also effecting necessary changes to the leaderships of both NDBDA and NDDC, commonly associated with corruption and ineptitude.

In the process, the president should demonstrate the common sense leadership that has eluded Nigeria for ages. Buhari’s unique pedigree, the manner of his second coming, and charming political goodwill have combined to position him better than anyone in the national history to effectively influence followers towards the desired change. Influence! Now is the time to lead by influencing the people of the host communities with a clear message that crystallises the impact of pipeline vandalism, the sincerity of purpose of government, and the implications for the greater good.

The measures above should go in tandem with practical solutions. Of course, a permanent solution to pipeline vandalism ought to include 100 percent digital surveillance systems, but such approach requires longer time to install. Thus, the “quickest, safest and most cost-effective way” to curb the problem, in the interim, is to deploy with immediate effect Nigeria’s armed forces to fully safeguard every pole in the breadth and depth of the problematic areas along the Trans Forcardos and Escravos-Lagos axis of the pipelines. The phalanx can be augmented with ever-ready labour from the National Youth Service Corps or the other teeming unemployed graduates who are eager to work. The recurring costs of fixing the pipelines, current security, and other contingencies are well adequate to fund this proposal. The ancient idea of entrusting recreant militants with the nation’s oil and gas pipelines was never a solution in the first place.

Yet, I pity Muhammadu Buhari here. True. Given his background, any mention of war or mere emphasis on punishment in relation to his presidency is sure to awaken critics who are anxious to castigate such notion as a perpetual vestige of the man’s military regime…

Next, unlike the case of oil pipelines, there are no visible benefits to the perpetrators of gas pipeline vandalism themselves. The most likely justification is a possible conspiracy within the electric generator industry whose businesses thrive upon any drop in power supply. The other scheme resides within the maintenance structure that gulps about N1.5 billion per year for fixing vandalised pipelines. But these conspiracy theories have lingered for far too long. The cabals are well known. Their activities are traceable. It is time to unmask and mete them with commensurate punishment once and for all.

Also important, similar to other countries of the world, Nigeria has in place specific anti-sabotage laws that address punishment for vandalism and conspiracy in the oil and gas sector. But a major Nigerian problem had been the absence of a leader with the will power to enforce the laws. This was exactly where and why Nigerian masses beckoned Muhammadu Buhari back to power. The president must seize the moment and work with relevant agencies to ensure that culprits face the full wrath of the law.

Buhari does not need to be reminded that his impeccable track record against indiscipline remains the prime seal of his contract with the Nigerian masses.

Yet, I pity Muhammadu Buhari here. True. Given his background, any mention of war or mere emphasis on punishment in relation to his presidency is sure to awaken critics who are anxious to castigate such notion as a perpetual vestige of the man’s military regime, serially discredited during the past election.

But Mr. President should not waver. Buhari does not need to be reminded that his impeccable track record against indiscipline remains the prime seal of his contract with the Nigerian masses. Moreover, not only is leadership contingent upon the prevailing environment, effective democracies are consistent with accountability, checks and balances and, of course, consequences. A mere tampering of an electric metre in the State of Texas, USA, for instance, is treated as a felony let alone any threat to national security like the endemic sabotage of oil and gas pipelines in Nigeria. Where there are no serious consequences for bad behaviours, the bad behaviours usually worsen. And that has been Nigeria’s Achilles’ heel for the longest time.

Petralon Energy, a Nigerian indigenous exploration and production company targets to record first oil milestone by early July 2015, and stressed that it has already committed in excess of $10 million over the last six months to complete the re-entry of the existing Dawes Island-1 well in the Dawes Island marginal oilfield.

The company said in a statement at the weekend that the drilling campaign in the Dawes Island well was at an advanced stage, having drilled over 4,100 feet with the side-track to a target depth of 7,010 feet well underway.

Petralon Energy farmed into the Dawes Island Field in Oil Prospecting Leases (OPLs) 2005 and 2006 in July 2014, in partnership with Tako Exploration and Production (E&P) Solutions Limited and has made considerable headway in operations in this field.

The Dawes Island Marginal Field is located in OPLs 2005 and 2006 (formerly Oil Mining Lease (OML) 54, in Swamp Terrain, about 15 kilometres South West of Port Harcourt and has a Field Coverage Area of 40 kilometres squared.
The field, previously owned by Chevron (formerly OML 54), is currently owned by Eurafric Energy Limited.

Petralon acquired a joint stake in Dawes Island with Tako E&P – 35 per cent and 14 per cent, respectively.

The Chief Executive Officer (CEO) of Petralon Energy Limited, Mr. Ahonsi Unuigbe said his company was extremely delighted to be developing the Dawes Island Marginal Field.

“At Petralon, local content meets global best practice and I am confident that our dynamic approach coupled with our experience and expertise will make this project a success.  We anticipate a base case initial production from the field of 1,500 bopd, ramping this up to 3,000 barrels of oil equivalent per day (bopd) by year-end. We are proud to be part of the rapidly growing group of indigenous companies who have the technical competence and financial resources to own and operate assets in Nigeria, fueling the growth and development the indigenous upstream sector Nigeria,” he explained.

Petralon Energy is based in Nigeria but with regional expansion plans into other African countries.

The company, which has already raised over $50million to fund it’s immediate growth plans, is set up to acquire, develop, and operate assets in the oil and gas sector, including, but not limited to farm-in opportunities with indigenous and international oil companies, marginal fields, and bid rounds and concessions.

Oil & Gas Industry / Bayelsa Community Shuts Down Agip's Oil Wells
« on: June 02, 2015, 08:57:50 AM »
The people of Egbebiri Community in Biseni, Yenagoa Local Government Area of Bayelsa State have shut down six oil wells operated by Nigerian Agip Oil Company (NAOC), alleging neglect of its Cooperate Social Responsibilities.

The News Agency of Nigeria (NAN) reports that the aggrieved residents, comprising youths and women, blocked all access roads leading to the affected oil wells with logs.

The paramount ruler of Egbebiri, Chief Aniedima Nicholas, told NAN that they disrupted the oil production because of NAOC refusal to renew the Memorandum of Understanding (MoU) with the community.

Nicholas said the maiden MoU signed in 2001 lapsed in 2005, but efforts to get the oil firm to renew the MoU proved abortive.

"Our grievances are due to the insensitive posture of Agip to our developmental aspirations.

"Our needs and expectations are captured in that agreement and if you look at the few amenities we have here, they are products of the first MoU.

"From 2005 till date, Agip abdicated its role and that stagnated development here; the road you see was from that MoU, we have waited for so long a time and decided to take this final step.

"We are prepared to go to every length to bring them to the negotiation table to renew the MoU as well as pay outstanding liabilities for jobs done by the community for more than one year.

"Our surveillance jobs on their pipelines have continued despite heavy debts owed to us as well as pending compensation for oil spills since 2010," Nicholas said.

The Chairman, Ijaw Youths Council in Egbebiri, Mr John Aniedima, said the youths have sacked security operatives deployed to safeguard the facilities after shutting down the flow of oil.

"We have taken over the wells to compel Agip to come to a negotiating table with community leaders.


To  ease cooking gas scarcity, the Nigeria Liquefied Natural Gas(NLNG) has supplied 6,000 metric tonnes of Liquefied Petroleum Gas(LPG) to oil marketers.

The product arrived in Lagos at the weekend, by MT Gas Provident, which  left Bonny, Rivers State, a few days ago.

Few hours after the vessel  berthed in Lagos, the product  was  distributed to oil marketing firms  such as Conoil, Mobil, MRS, Nipco and others, by the Federal Government.

The aim was to ease     scarcity caused by  the strike embarked upon by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigerian Association of Petroleum and Natural Gas Workers (NUPENG).

The strike, which was called off last week, has seen prices of cooking gas normalising because tanker’ drivers who are members of PENGASSAN and NUPENG have resumed  supply  of the product to marketers.

The Nation  findings  revealed     that   prices of cooking gas have reduced  because  marketers are no longer rationalising the product.

It was found that prices which went up by  between 70 to 100 per cent has reduced to 30 per cent, depending on the areas  consumers buy from.

In some places, consumers  now refill a 12.5kilogramme gas cylinder with between 3, 000 and N3,200,  as against N4,000 they paid during the scarcity.

At Iyana- Ipaja, Egbeda, Ikeja, Oshodi,  Yaba, Maryland, among other  has visited by The Nation, the price of the cooking gas has reduced slightly.

Marketers said the scarcity of the product and the attendant increase in prices caused by the strike has reduced.

A marketer, who identified himself as Joshua Roland, said the scarcity of cooking gas  has disappeared, adding that marketers are  getting  the product to sell.

He said: “Anytime there is shortfall in the supply of gas in the country, either due to strike or technical problems from the Nigeria Liquefied Natural Gas Limited (NLNG), what I do for my loyal customers, is reserve and sell to them. “A good businessman must know the needs and mindset of his customers to stay in business,” he said.

A  gas dealer in Ikeja,  Moses Adeoye, said the scarcity has had untold effect on their operation. He said the problem was compounded by power supply and fuel scarcity.

He said the campaign for increased use of cooking gas by the Nigerian National Petroleum Corporation (NNPC) and operators such as Oando and Forte Oil, have not been effective because of the problems in the sector. “How can people use cooking gas for domestic and industrial purposes when they cannot get the product to buy when needed? How can the government achieve the goal of making people use cooking gas when it cannot remove the bottlenecks hindering supply of the product?

The President, Liquefied Petroleum Gas Association of Nigeria (LPGAN), Dapo Adesina, said the scarcity of cooking gas and rise in price was expected, given the strike. He said the strike affected the distribution of the product across the country, stressing the situation is normalising  now that the strike has been called off.


In the escalating duel over oil production between the United States of America and Organisation of Petroleum Exporting Countries (OPEC), few countries’ oil industries have been hit as hard as Nigeria, highlighting a challenge for the petroleum cartel ahead of its meeting on Friday, a report by the Wall Street Journal (WSJ) has shown.

Nigeria has lost business in its main market in the US and struggled to gain footholds elsewhere, raising a question for OPEC over whether its decision to fight for market share may have left behind more vulnerable members.

Once a highly desired, easy-to-refine product, Nigeria’s oil is now hard to sell. In 2014, it fetched over $2 a barrel more than the global benchmark, Brent crude, according to OPEC data. This year, that premium has plunged to 74 cents, on average—the lowest in a decade.

Nigerian cargoes that normally sell a month ahead of delivery have languished without buyers. In early May, at least 80 million barrels of Nigerian and Angolan crude were still seeking buyers, according to Barclays.

“Nigeria is in immense pain,” said Amrita Sen, chief oil analyst at Energy Aspects.
OPEC last year abandoned its traditional role of propping up prices through production cuts, figuring that surging American production would depress prices no matter what it did and opting to fight for market share instead. Within OPEC, Ms. Sen said, Nigeria has been the worst affected by these changes.

The state-run Nigeria National Petroleum Corporation (NNPC) and the country's oil ministry declined to comment.
Its plight highlights divisions within OPEC, as the group’s ministers begin arriving in Vienna this week. Venezuela, Algeria and Angola have also struggled while wealthier OPEC members such as Saudi Arabia and Kuwait ramp up production and lock down buyers in Asia.
Nigeria’s situation also raises a red flag about the strength of a recent oil-price recovery. After crashing from $114 a barrel to $45 from July to January, Brent price has gone up more than 30 per cent since, closing at about $65 last Friday.

A disconnect between the price of oil-futures’ contracts and the price paid in daily physical transactions was a precursor to the collapse last year, though analysts disagree about whether Nigeria is symbolic of the larger market.

“The Nigerian barrel is really now the swing barrel,” said Eugene Lindell, an oil market analyst at JBC Energy. “That’s on our radar and when we see West African barrels underperforming, then we’re worried about the global crude market.”

Nigeria is Africa’s largest oil producer and ranks 13th in the world, pumping about 1.9 million barrels of oil a day. That is less than the Middle East’s biggest producers that include Saudi Arabia, Iran and Iraq, and about the same as Norway.

Its flagship crude oil, known as Bonny Light, is similar to American shale oil. It is generally called “light and sweet” because of its low sulfur levels and low density, which means it will flow easily at room temperature and is more easily refined into high-value products such as petrol and diesel.

US refineries have generally moved to buy the cheaper, easier-to-access local version rather than importing Nigerian product in recent years. Imports of Nigerian crude oil into the US have plummeted from nearly 1 million barrels a day in 2010 to less than 60,000 barrels a day in 2014, according to the US Energy Information Administration (EIA).

Around the world, Nigeria’s barrels have had trouble competing with cheaper products from the Middle East. It has found buyers in India and Europe, but some new and high-tech refineries in Asia prefer to run different oil grades, leaving Nigeria in need of a new core customer base.

That has made it difficult for Nigeria’s government to balance its budget. Oil accounts for close to 80 per cent of Nigeria’s export earnings and roughly 70 per cent of its consolidated budgetary revenue, according to the World Bank.

The International Monetary Fund (IMF) predicts Nigeria’s oil exports will be worth $52 billion this year, down from $88 billion in 2014.
According to Deutsche Bank, Nigeria needs oil prices at $87.90 to balance its budget, a level most oil analysts don't see happening soon.

Stubbornly low prices prompted Nigeria to raise the issue of an emergency OPEC meeting earlier this year, though it didn’t materialise.
It all comes at a sensitive moment for Nigeria. Last Friday, Mohammadu Buhari was sworn in as president in a rare peaceful transition of power. The country had also recently been rocked by fuel shortages, though some have blamed politics and not revenue problems for the issue.

For OPEC, Nigeria’s struggles could signal a potential problem for the group’s unity as it decides this week whether to continue its strategy of fighting for market share—a strategy kingpin Saudi Arabia argues is working.

According to its latest public projections, the producer group expects non-OPEC production to grow by just 680,000 barrels a day this year, a precipitous drop from 2.17 million barrels a day in 2014. That is expected to increase demand for OPEC’s oil.

But that strategy doesn’t take into account the seismic shift the oil market has undergone in the last few years that underpins the challenge facing Nigeria's oil sector. The producer group needs to go further, said Dolapo Oni, energy analyst at Lagos-based Ecobank Capital.

“OPEC should focus on how OPEC members can gain market share as a group,” Mr. Oni said.

Oil & Gas Industry / Scrap SURE-P, PENGASSAN urges BUHARI
« on: June 01, 2015, 12:49:42 PM »
THE Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has urged President Muhammadu Buhari to scrap the Subsidy Reinvestment Programme (SURE-P), arguing that the N21billion is provided for its operations in the year’s budget should be spent on infrastructure.

Its President, Mr. Francis Johnson, alleged the SURE-P was set up by former President Goodluck Jonathan to settle some people, adding that it was the major reason for the problem of integrity that dogged the implementation of the programme.

He said: “Subsidy Reinvestment Programme (SURE-P) for which N21 billion is provided in the 2015 Budget should be scrapped. SURE-P largesse is at the whims of the party in power to settle those it wishes to favour with a lot of integrity issues around the program regarding fostering balance and accountability.”

He said the Nigerian National Petroleum Corporation (NNPC), made up of the holding companies and 10 subsidiaries, had been subjected to undue political interference, which he claimed, hindered its autonomy for effective running and competitiveness.

Johnson said: “Operations and administration of NNPC come under several masters and conflicting instructions, some of which defy the national objectives and aspirations for setting up the national oil corporation and its subsidiaries.

“Appointment, removal and/or transfer of the heads and the staff of the corporation and its subsidiaries are often executed in the manner that undermine by fiat, the extant national laws, NNPC Act and its Corporate Policy and Procedure Guide.”

He called for the reorganisation of the NNPC and its subsidiaries to function effectively with clearer mandate and empowerment. This, he noted, would make the NNPC to operate and compete professionally in line with corporate governance principles and without undue political interference.

On the Nigeria Petroleum Development Company (NPDC), he said there was the need for full autonomy and responsibility, good corporate governance principles and practices.

He said pipeline vandalism is a major dent to nation and business integrity in the oil and gas industry, adding that the menace is the major cause of incessant shut-in of production, force majeure and high cost of maintenance and repairs

“The nation has continued to groan in unimaginable economic /revenue losses particularly with the depletion in revenue to the Federation Account and the attendant impact on governance. The menace continues to build up weaning confidence in the Industry’s operators and players,” Johnson said.


For the first time in Nigeria, power supply from the national grid hit ground zero, throwing Africa’s largest economy into unprecedented darkness and chaos. The three-day blackout, which began on May 24, was triggered by a system collapse and the strike action embarked upon by oil and gas workers. Although, normalcy is gradually returning, the crisis left business operators in all sectors of the economy, especially manufacturers, severely bruised, prompting renewed calls for the deregulation of the downstream sector of the oil industry. Assistant Editor CHIKODI OKEREOCHA reports.

Nigerians are known for their resilience and never-say-die disposition. They have the uncanny ability to endure unsavory situations, smiling through them or shrugging them off. But in the last two weeks, it has been extremely difficult to extract a smile from Nigerians. The precarious state of the economy, especially in the days and weeks leading to the inauguration of President Muhammadu Buhari as Nigeria’s fifth democratically elected President on Friday, May 29, hardly gave anybody cause to smile. For the first time in history, there was zero electricity supply from the national grid. For three days, Sunday, May 24 to Tuesday, May 26, most residential, commercial and industrial consumers watched helplessly as their businesses crumbled under the weight of a major system collapse that plunged the nation into unprecedented darkness.

The system collapse was said to have been caused by Nigeria’s weak transmission infrastructure. And as if that was not enough embarrassment, the situation was worsened by the industrial action embarked upon by Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG). The strike by the two major unions in the oil and gas industry disrupted gas supply to the electricity plants. Eighteen out of the 23 power plants in the country were unable to generate electricity due to shortage in gas supply to the thermal plants, according to Chairman of National Electricity Regulatory Commission (NERC), Dr. Sam Amadi.

Going by the record, Nigeria, that prides itself Africa’s largest economy, generates 1, 327 megawatts (MW) of electricity for its 170 million people, even as the former Minister of Power, Prof Chinedu Nebo put the electricity need of the people at more than 150,000 megawatts.

Amadi stated that one of the hydro stations had water management issue, which led to the loss of over 2, 000 mw. The Nation learnt that 70 per cent of power generation in the country is from gas-fired turbines, leaving 30 per cent to hydro. The Federal Government under the ousted Peoples Democratic Party (PDP) declined experts’ calls for the diversification of energy sources. It failed to explore alternative power sources such as renewable energy, including coal, solar, wind and biomass. In the heat of the crisis, power generation dropped to an all-time low of 1, 327 mw down from about 4, 500 mw in April.
Manufacturers, business operators groan

Although, normalcy is gradually returning after the aggrieved unions called off the strike on May 25, but business operators in all sectors of the economy, especially manufacturers and industrialists, have been counting their loses. Before the blackout, the electricity demand by members of Manufacturers Association of Nigeria (MAN) stood at about 3, 000 mw for optimal performance, but they have been getting less than 1, 000 mw gets to the Association.

Records have shown that over 75 per cent of the electricity needs of manufacturers are generated in-house, leaving only 25 per cent coming from the utility firms. A source close to the Electronics and Electrical Sectorial Group of MAN confirmed this. The source said members of MAN invest about N2 billion per week to power their plants.

The source, who pleaded anonymity because he was not authorised to speak for the group, described as unfortunate that MAN members pay electricity consumption bills above N120 million monthly.

Noting that it is difficult to quantify how much manufacturers lost to the three-day outage, manufacturers may have lost about N5 billion.

The amount, he said, does not include man-hour losses damages to machines, tools, raw materials and disruption to production processes as well as staff redundancy as workers earned their salaries for the period they were unproductive. “When power goes off, waste materials, manpower, time and so many things are wasted. At the end of the day, you discover that you are not making profit,” the source said.

It is easy to see why manufacturers rue the economic lockdown. For one, it added to their long list of woes, as most of them have long been bogged down by rising production cost due to inclement operating environment.

The business environment had taken a turn for the worse following the devaluation of the naira in the wake of the crashing crude oil prices at the international market.

The implication of the latest crisis is that the hope of an early reversal of Nigeria’s record as the most expensive country to do manufacturing business in the world may not be realised soon. At the moment, cost of manufacturing in the country is about nine times that of China, four times that of South Africa and about twice that of Ghana. Manufacturers have had to contend with falling profit margin, which remains a major threat to business sustainability and global competitiveness.

MAN’ President Dr. Frank Jacobs said last week that manufacturers are faced with payment for electricity not consumed.

“Despite the poor energy situation in the country, NERC has maintained increased electricity charges not considering its implication on the economy, especially on the productive sector,” he said at a media luncheon at MAN’s House, in Lagos.

Dr. Jacobs said despite the current high tariff from NERC, the manufacturing sector spends so much on alternative energy sources for production and the implication was increase in the average cost of production in the sector, which lowers the competitiveness of locally produced goods against imported close substitutes.

He urged the new government to streamline electricity tariff to reflect the actual consumption by the industries instead of the current use of estimated bills.

Yet, manufacturers are not the only ones counting their losses. Smaller business operators are equally feeling the pains. For instance, dealers in frozen foods in Ijora-Olopa,  Lagos, last week, cried out over heavy loses inflicted on them by the blackout. The frozen food dealers under their umbrella association, Ajeromi Frozen Food Market Association, raised the alarm that between May 23 and May 25 alone, they lost food items estimated at N10 million.

President of the association, Alhaja Afusat Popoola, who listed the lost items to include chicken, turkey, fish, shrimps, gizzard and prawns, said members of the association were caught unawares because they never envisaged a prolonged energy crisis.

Her words: “The traders were crying when we ordered them to surrender all the decayed food items for destruction on Tuesday. The market has a reputation for selling fresh frozen food and we cannot allow any trader to sell bad frozen food under our leadership.

“What we destroyed on Tuesday because of power outages and our inability to buy petrol and diesel was worth more than N10 million. We are appealing to the Eko Electricity Distribution Company (EKEDC) to always consider the impact of outages on our business and the health of the general public. Our business depends on regular supply of electricity.”

She lamented that irregular electricity supply had forced many traders out of business and also made many to be indebted to the banks.

Mrs. Popoola said: “We used to have many frozen food traders in this market before, but this power outage has forced them out business. Previously, when power supply was regular, we used to sell more than seven trucks of fish, turkey and chicken, daily.

“There is no kind of fish that one will not find in this market before because it is the number one frozen food market. But, the poor power supply has liquidated many traders. Some of them who use generating sets spend close to N80, 000 to buy diesel or petrol monthly. By the time one removes this amount from monthly sales, you discover that you’ve spent above your profit and part of your capital to buy diesel.”

The crisis also left sour taste in the mouths of operators in the aviation sector. The blackout forced many domestic airlines to cancel flights due to scarcity of Jet A- One. Most passengers were stranded at the general aviation terminal of the Murital Mohammed International Airport (MMIA), Ikeja, Lagos, as fuel shortage disrupted flights’ schedules. The collateral losses were mind-boggling. An aviation source told The Nation that for each of the three days, Arik, the biggest domestic airline, lost about $1 million.

This translates to about $3 million for the three days the crisis lasted. With about seven domestic airlines operating in the country, the source, who declined to be mentioned, said the local aviation industry lost close to $10 million in ticket sales alone to the economic shut down.
Banks, telecom firms also affected

Bank customers were jolted when, in the hit of the crisis, banks started scaling down operational time from the official closing time of 4pm to 1pm, citing the crippling fuel shortage as reason. The Guarantee Trust Bank (GTB), First City Monument Bank (FCMB), Sterling Bank and First Bank Pls, among others, sent SMS to their customers to bear with them.

For instance, in a message sent to its customers, FCMB stated clearly, “Dear customer, our branches will close at 1pm from Monday May 25th, 2015 due to the shortage of petroleum products. All our alternative channels will remain available.” However, there are banks that shut down banking operations, but could not communicate same to their customers, a situation that infuriated their customers.

Unlike in the other sectors, the loss suffered by the banking sector to the crisis could not be ascertained. Some banking and finance experts who told The Nation that banks only wanted to minimise or cut their losses; that much as the banks were losing money, they were also saving cost by scaling down operations. Besides, all their electronic (e-channels) were active, allowing transactions to go on.

However, customers did not find the situation funny, as some of the Automated Teller Machines (ATMs) in major cities across the country had network problems as the inverters that power the network had little or no power to run the machines. It is inverter that powers ATMs after daily banking operations. Anytime the inverter runs down, the ATM will seize to work. The result: long queues of angry and frustrated customers.

Many customers of telecoms services providers also got their share of the frustration following serious service degradation caused by difficulties in getting diesel to power the base stations.
All the major service providers such as MTN, Airtel and Etisalat warned that the scarcity of petroleum products particularly diesel was hitting hard on their operations.

For instance, MTN, in SMS sent to its subscribers, informed that they might experience “degraded service” due to the scarcity. The message read: “Dear customer, due to the diesel scarcity nationwide, you may experience degraded services.” The message, however, said the company was working hard to tackle the problem and solicited for the understanding of its subscribers.

Although, MTN and indeed, all other operators assured that they were working to continue to deliver quality services despite the fuel scarcity challenge. The Nation however learnt that such assurances were only intended to pre-empt a possible backlash from angry subscribers, who were actually experiencing poor quality of services, and it could not have been otherwise, as base stations and switches across the country are powered with generators.

The situation was not different at the nation’s ports where operations suffered serious hitches due to the scarcity. “The ports and terminals are driven by heavy-duty equipment and cranes, which are powered by diesel. It is sad to note that it is becoming increasingly difficult for our members to replenish their diesel stock due to the lingering scarcity of the product,” members of Seaport Terminal Operators Association of Nigeria (STOAN), said in a statement last week.
Small scale businesses shut down

Most small scale businesses simply went on vacation and locked up their ware points. Soft drink, bottled water and sachet water hawkers, (aka pure water), recorded huge losses, as patronage tumbled because of lack of electricity to chill the drinks. Barbing and hair salon operators shut down for lack of fuel to power their generators. Those who managed to maintain skeletal services after scouting for fuel at between N600 and N650 per litre, jerked up the cost of their services.

Recounting her ordeal, a supervisor with an upscale hotel in Lagos, Miss Chidi Igwe, said she trekked the entire Shagari Estate on Ipaja Road in search of a salon to fix her hair. She said the one that opened for business in the sprawling estate charged her N1, 800 against the usual N800.

She also lamented power outage in the last one month despite the fact that her subscription to DSTV, the PayTV service provider, never stopped running. Besides, Miss Igwe said she cannot even remember the last time she went to work with her dress ironed.

Eateries, beer parlour owners recorded low sales, as customers stayed indoors. Those who managed to leave their homes contended with skyrocketed fare, as transporters increased fares fivefold. For instance, passengers commuting from Iyana-Ipaja to Obalande/CMS coughed out between N600 and N700, up from the original N200. Those who could not cope with the high transportation cost trekked long distances. Nigerians cursed and hissed. It was bedlam.

It is extremely difficult to put a figure to what the nation lost to the economic lockdown, considering the nation’s penchant for poor record keeping. However, experts and operators say that the financial hemorrhage and social dislocation could be huge running into hundreds of billions of naira.
Calls for deregulation heighten

With the inauguration of a new government on May 29, the Director-General, Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA), Mr. Emeka Okereke, said a fresh impetus has come the way of President Buhari to deregulate the downstream sector of the oil and gas industry. He said the new government only needs to muster the necessary political will and courage to call the bluff of certain cabals in the oil and gas industry and deregulate.

“The government has no business in doing business. Deregulation is an idea whose time has come. Put the right policies in place so that private investors can come in,” he told The Nation.
Mr. Okereke noted that because of political exigency, the administration of former President Goodluck Jonathan failed to take the bull by the horns and deregulate the sector.

While pointing out that this was why the administration buckled under the pressure of labour unions and civil society groups in 2012 when there was nationwide protest against the removal of fuel subsidy, he said subsidy has become unsustainable.

“Subsidy doesn’t make economic sense anymore. It has become unsustainable. We will never come out of the wood as long as we continue to subsidise the price of petroleum products. We cannot continue to postpone the evil day,” Okereke said.

He also urged the new administration to sustain the normalcy that is gradually returning to stabilise the oil sector by plugging all the leakages.

The ECCIMA chief has an ally in the Nigeria Employers’ Consultative Association (NECA) which has also called for proper deregulation of the sector. NECA’s Director General Segun Oshinowo argued that the recent reduction in the price of petroleum products by the government begs the more fundamental issues of appropriate policy framework that will promote investment in the downstream sector of the oil and gas industry and put a stop to the embarrassing and shameful importation of petrol.

He said: “Our expectation therefore, is that the government will seize the opportunity of the current decline in the price of crude oil to commence implementation of the policy on deregulation of the downstream sector of the oil and gas industry.

“This is a unique timing the government cannot afford to miss as full implementation of deregulation, which in time past had led to price increase and reaction by the labour movement in form of industrial action, does not have any negative effect on the masses.”

The NECA director-general added that rather than reducing the price of petrol from N97 to N87, there ought to have been a more holistic announcement of a new policy thrust of deregulation of the downstream sector and privatisation of the four refineries, which have now become sink-holes.

According to him, the economy stands to gain from deregulation.

Oil marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) could not agree less, noting that deregulation would stimulate investment in the sector and encourage the establishment of private refineries.

Its Executive Secretary, Mr. Obafemi Olawore, said the government should muster the courage to fully deregulate and remove subsidy or embark on continuous subsidy regime payment as at when due.

“If the government likes, it can introduce gradual removal of subsidy, but it should not go beyond six to 18 months,” Olawore said, adding that if fully deregulated with rules, Nigeria will have serious investors coming in to invest adequately.

He insisted that deregulation remains the answer and that the government must talk to the people and let them understand the advantages.

Henry Boyo, an economist, noted that the 23 firms franchised to established refineries have not invested their funds for fear of being asked by the government to sell products at regulated prices

According to Boyo, crude oil produced in Nigeria, Saudi Arabia, or America has a uniform international commodity price.

“In the same vein, the process of producing crude oil or refined petroleum products is the same everywhere in the world; it is the same equipment. So, if you put in the same feed stock what you will get at the end will be the same price,” he told The Nation.

Noting that monies spent by the Federal Government through the Nigerian National Petroleum Corporation (NNPC) on Turn Around Maintenance (TAM) of the state-owned refineries were enough to build new refineries, Boyo said the point remains at what price will the government sell the products.

He said notwithstanding the federal ownership of the refineries, products cannot be sold to marketers at below production cost.

His words: “In no time they will pack their loads and go. So, the question of whether we sell off the refineries is not the issue, it is pricing, “ adding that once the pricing is right, those who got licenses for refineries will swing to action.

He, however, said the process of influencing the pricing has to do with the  naira-dollar mechanism.

Will the payment of about N1 trillion annually as subsidy continue under the President Buhari administration, when the nation’s revenue base is bleeding amidst rising debt burden of about $60 billion?  Will the new administration remove subsidy and risk confrontation with organised labour and the civil society? How he dances around this minefield will be a litmus test of his resolve to fix the economy.

Oil & Gas Industry / NUPENG makes u-turn, supports subsidy removal
« on: May 28, 2015, 08:50:37 AM »
The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has reversed its position on petroleum products subsidy and has declared its support for its total removal, The Punch reports.

The union said that the subsidy funds should be channelled to the rehabilitation of refineries and infrastructural development in the country.

Speaking at a press conference on Monday, the President, NUPENG, Igwe Achese, stressed that if the government continued to fund the businesses of fuel marketers through subsidy and interest payments, fuel crisis in the country would continue unabated.

He therefore advised the government to deregulate the sector and reduce the dependence of the country on imported petroleum products.

Achese also questioned the failure of the Nigerian National Petroleum Corporation (NNPC) to provide fuel for Nigerians despite being the major oil importer in the country. In the same vein, he urged Lagos State Government to create access lanes especially for fuel tankers on the highways and trailer parks close to the depots to avoid further occurrence of gridlock on the roads.


As part of efforts to promote the local content policy of the federal government in the oil and gas sector, Samsung Heavy Industries Nigeria (SHI) and the Nigerian Liquefied Natural Gas (NLNG), have completed the training of 57 Nigerian youths at the SHI Shipyard in Geoje, South Korea.

The youths, who arrived Nigeria on Sunday, were taught naval architecture, ship design, fabrication and fittings, electrical installation, mechanical and maintenance, erections and scaffolding among other areas.

Speaking on the training programme, the General Manager, Samsung Heavy Industries in Nigeria, Mr. Frank Ejizu said the company was determined to grow local capacity through an intensive training programme expected to build the capacity of local engineers.

Ejizu further stated that efforts are being made to select another set of 60 Nigerians for the next round of training in South Korea by July this year.

“Samsung in December last year in collaboration with Nigerian Liquefied Natural Gas (NLNG) decided to train some Nigerians in ship building and all aspect of ship development. Since then, they have been in South Korea for the training and we came here today to welcome them after a successful training,” he said.

Ejizu stated that the training has contributed immensely to improving their knowledge, “because it is purely a capacity building exercise, now that they are back home, we will assist to absorb them into various aspects of the job”.

Ejizu said Samsung and NLNG decided to fill the gap through the training programme, adding that they also expected to do more of such trainings to encourage more Nigerians in the oil and gas sector.

He, however, described it as a pre- training, adding that many more people will be trained in Nigeria when the planned training centre in Nigeria is completed.

On the part of NLNG, the training was one aspect of Nigeria LNG’s inclusion of a local content clause in its contract with shipbuilders Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) for the building of six new vessels costing $1.6 billion for Bonny Gas Transport (BGT), NLNG’s shipping subsidiary.

NLNG Limited had said the need to build local capacity in the field of shipbuilding informed its decision to send 57 Ni gerians to South Korea for the training.

NLNG’s General Man ager, External Relations, Mr. Kudo Eresia-Eke, said the company’s goal in helping to attain the objective of the Ni gerian Oil and Gas Industry Content Development Act (NOGICD) 2010, equally informed its decision to take the giant stride.

In his remarks, the Team Leader, Jamiu Suleiman, said they achieved the training objectives and even surpassed expectations.

“We have been certified by the American Bureau of Shipping (ABS). Our trainers did not hide anything from us on structural engineering in ship building, so we can deliver services to international standards now,” he said.

Samsung Heavy is an industry giant in the building of Floating Production Storage and Offloading vessels (FPSOs), LNG FPSOs, production platforms, Drillship Rigs and other special offshore vessels.


Nigeria’s main oil union has shut down the local operations of the United States oilfield services provider, Halliburton Co. in protest against job cuts, the trade body told Reuters on Tuesday.

The Chairman of the Lagos State chapter of the National Union of Petroleum and Natural Gas Workers (NUPENG), said the group halted operations on Monday, saying it was opposed to Halliburton’s decision to sack 46 local staff members. The union accused Halliburton of not following due process.

Halliburton’s staff cuts in Nigeria are part of a company-wide jobs cut announced earlier this year to counter a sharp downturn in global oil prices since last summer that has shrunk profits.

In April, the company, which provides drilling services to Royal Dutch Shell PLC and Chevron Corp in Africa’s top oil producer, said it had cut 9,000 jobs, or about 10 per cent of the global workforce, and that more were planned. “Halliburton is in conversations with the union to resolve the pending issues,” a company spokeswoman said via email. “We will continue to monitor the business environment and will make additional adjustments as needed,” she said.

She declined to comment on how many jobs had been cut or what operations were impacted.

The shutdown was confirmed by another oil industry trade union - Petroleum and Natural Gas Association of Nigeria (PENGASSAN) - which said the US company sacked trade union executives in an attempt to weaken the bodies representing workers’ rights, Emmanuel Ojugbana, spokesman for PENGASSAN said.

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