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Anglo-Dutch oil giant Shell has declared force majeure on exports of Nigeria’s Forcados crude oil stream, a spokesman for the company said on Wednesday.

“Force majeure” is a legal term releasing a company from contractual obligations when faced with circumstances beyond its control.

It declared force majeure on the evening on May 5 following ‘a series of leaks’ in the Trans Forcados pipeline that brings the oil to the export terminal. The pipeline itself is operated by the Nigerian Petroleum Development Company (NPDC).

Several cargoes of Forcados for May loading were still on offer, with around 189,000 barrels per day (bpd) scheduled for export in six cargoes. The June export programme, with a total of 158,000 bpd, had not yet started trading, sources said.

An overhang of light sweet crudes in the Atlantic Basin has depressed differentials to dated Brent and limited the impact of recent supply disruptions on some West African crude oil grades.

Nigeria will slash petrol subsidies by 90 percent this year because government revenues have been hit by the slump in oil prices.

The government had said it would gradually phase out fuel subsidies which are a significant burden on public finances, but cutting subsidies risks aggravating a fuel crisis in the country.

Major cities are experiencing a crippling gasoline shortage as oil importers feel the pinch from unpaid government subsidies, a plummeting local currency and tighter credit lines triggered by lower crude prices, oil traders and local industry sources say.

While Nigeria is Africa's biggest oil producer, a neglected refining system means it is almost wholly reliant on imports for the 40 million litres per day of gasoline it consumes.

Parliament approved the reduction in subsidies to 100 billion naira ($505 million) for 2015, Finance Minister Ngozi Okonjo-Iweala said late on Tuesday. The cuts were accounted for in last week's 4.49 trillion naira budget for 2015, but the breakdown was not announced until Tuesday.

Lawmakers also approved 45.5 billion naira for a separate kerosene subsidy.

In November, the government said it hoped to gradually phase out the subsidies, reducing them to 408.68 billion naira next year and 371.18 billion naira for 2017.

Okonjo-Iweala said in her budget speech that the government had already spent half of the amount it had planned to borrow and that it had not released any funds for capital expenditure this year on account of lower oil revenue.

This year's budget took longer than usual getting through parliament, worsening a cash squeeze in government, because of the closely fought general elections in March that saw incumbent President Goodluck Jonathan defeated by opposition leader Muhammadu Buhari. He will take office later this month.

Nigeria tried to end subsidies in 2012 doubling the price of a litre of petrol overnight to 150 naira ($0.93), from about 65 naira, in efforts to cut government spending and encourage badly needed investment in local refining.

The move angered citizens who see cheap pump prices as the only benefit they derive from living in an oil-rich country and lead to 8 days of nationwide strikes. The government later reinstated part of the subsidy to end the strikes.

Oil & Gas Industry / Escravos-Lagos Pipeline Ready In August
« on: May 06, 2015, 09:10:12 AM »
The Nigerian National Petroleum Corporation (NNPC), on Tuesday, assured that the Escravos-Lagos gas pipeline would be completed by August, bringing the nation’s gas production capacity to about two billion cubic feet per day.

When completed, the pipeline would become Africa’s biggest, helping to boost gas supply to power plants and for export to neigbouring countries.

Speaking during the opening ceremony of the on-going Offshore Technology Conference (OTC), in Houston, U.S, NNPC Group Managing Director, Dr. Joseph Dawha, said the project has so far progressed very well.

Dawha, who spoke through the corporation’s Group Executive Director Gas and Power, Dr. David Ige, also said work on the construction of the East-West gas pipelines has started and would be completed by end of 2016.

According to him, “Lagos pipeline is almost completed and we expect that within the next three months that project is done. We have completed and commissioned Lagos all the way to Oben. We have completed Emore, all the way to Itoke in Lagos and so, the bit that is still left is Benin to Emore and that is progressing very well and the expectation is that before August this year the ELPS pipelines would have been completed and we would have doubled the capacity to two billion cubic feet per day. Virtually, it should be the biggest pipeline in Africa, in terms of triple.

“Construction has started on the East-West pipeline and we are beginning to make a lot of progress in terms of construction on both sides. Our expectation is that by December 2016, we would have mechanical completion of the pipelines and early 2017 we start to flow gas on the pipeline”.

He explained that several factors are hindering government’s effort to boost power supply in the country, including gas pipelines vandalism, low water for hydro plants and evacuation challenges.

But with generation hovering around 3,000 megawatts and most plants operating at 50 per cent of installed capacity or completely shut down, the NNPC boss assured that as measures put in place by government begin to come on stream, the benefits would visible through improved power generation.

“We are having quite a lot of issues that are interlinked in the power sector. For the past two months, the Escravos-Lagos pipeline between Escravos and Warri, one leg of it is down after the vandalism. It has taken us this long to repair that pipeline because the elections meant that the JTF could not provide security for our people to go in there and assess. It was only after the elections that people went there to assess, and work is going on there to effect that repairs.

“So, with the loss of the pipeline, at the moment we are losing 120 to150 million per day which has been the case for the last week or so. In addition to that, the Trans-Forcados pipeline was attacked about four weeks ago. There was an attempt to repair it. But when we tried to bring that back on line there was further leakage, which is being fixed right now.

“With Trans-Forcados pipeline out, we are losing gas supply from Oben, Sapele and from NPDC (Nigerian Petroleum Development Company) which is a significant chunk. So right now, we are losing gas from Escravos and we are losing gas from Oben axis and that is significant amount of our supply capacity that is down on the western axis.

“On the eastern side, we have largely evacuation issues, so even though we are able to supply Okpai Power Plant, the power sector challenges do not make them able to evacuate all of that power. So Okpai is not able to generate at full capacity.

“We are able to supply gas to Ibom Power, but Ibom Power has been operating at about 50 per cent capacity for quite a few months now. So although the gas is there, the power plant is not working at full capacity. We are able to supply gas to Alaoji, but Alaoji Power Plant is not able to evacuate power because when Alaoji is on, you cannot evacuate Alaoji, Calabar and some others,” he stressed.


Many Nigerians are facing darkness amid a dramatic decline in power supply across the West African country in recent weeks, local reports said. Cities nationwide -- including Abuja, the capital, and Lagos, the main commercial hub -- have experienced one of the worst electricity shortages in years, with power available for less than five hours per day in some areas.

The power ministry in Nigeria, Africa's most populous country, blamed the cut on “vandalism of gas pipelines,” local newspaper Premium Times reported Friday.

“As [of] April 3, which is the nearest reference point for us, we are able to generate about 4,500 [megawatts] on the grid, but as [of] this morning we had gone down to about 2,800 MW,” Godknows Igalis, the permanent secretary of the power ministry, told Premium Times in Abuja. “So you can see how much power we have lost as a result of vandalism, that is why power supply has become very bad all over the country because of these strange Nigerians that continue to deliberately blow up our gas pipelines as more power generations are built.

The power supply has waned further in recent weeks as temperatures heated up across sub-Saharan Africa. An unnamed source at the Transmission Company of Nigeria told Vanguard a distorted distribution of gas has also contributed to the declining megawatts. “Most of the country’s thermal and hydropower plants are dependent on gas for optimum performance to meet the demands of Nigerians desiring for robust power supply,” he said Tuesday.

Sam Amadi, chairman of the Nigeria Electricity Regulatory Commission, said the declining power supply was also due to low generation across the country. He said electricity output would improve within the next few years as Nigeria builds more power stations.

“Lights are going down. This is understandable. We don’t have enough capacity for everyone in this country. I think we should be truthful. We will get to a point where we have stable light,” Amadi told the Street Journal in Abuja on Monday. “You know, partly due to gas [vandalism]; partly because we are still building the power plants; they are not all there.”

Nigeria’s power ministry condemned the vandalism and said the damaged pipelines were under repair to boost generation. Igali said the ministry was working with security officials to ensure protection of Nigeria’s fragile power infrastructure.

Since January, the West African nation had lost a minimum of 8.04 billion Nigerian naira ($40.4 million) due to persistent vandalism of the country’s pipeline network, the Nigerian Gas Co., a subsidiary of the Nigerian National Petroleum Corp., told Vanguard in March. Much of the vandalism has taken place in the Niger Delta region, where former rebels had vowed to sabotage pipelines once again if President Goodluck Jonathan lost his re-election bid. Jonathan, of the Peoples Democratic Party, was defeated by Muhammadu Buhari of the All Progressives Congress in late March.

Oil & Gas Industry / Planned probe of NNPC operations
« on: May 04, 2015, 09:16:38 AM »

President-elect, General Muhammadu Buhari, rtd, recently assured the nation that a probe of the alleged $20 billion missing from the coffers of the Nigerian National Petroleum Corporation (NNPC) will be top on the list of priority of his administration that would be inaugurated on May 29, 2015. “Once we assume office, we will order a fresh probe into the matter. We will not allow people to steal money meant for Nigerians to buy shares and stash away in foreign lands”, he told a delegation of political stakeholders from Adamawa State on a courtesy visit to him. For many Nigerians, the expressed resolve of General Buhari is manifestly in synch with popular expectation. That it has received the endorsement of the World Bank shows the frustration of the West with the decadence entrenched in the nation’s oil industry by the outgoing administration. It is also one way to align with the resolve to support the cleaning of the nation’s Aegean Stables.

Taking on the hitherto almighty NNPC and all the opacity and impunity it represents, will be for Nigerians, an exciting evidence of the change quotient of the trust capital with which the President-elect won the last March 28 presidential election. General Buhari coasted to victory on the promised change of the status quo ante, which when interpreted means a halt to the rapacious corruption and impunity that define the approach of the outgoing administration to the governance of the country. So, General Buhari would, by this planned probe, bolster the trust capital of his relationship with the Nigerian electorate.

Unarguably, the popular imagination is that the NNPC is one of the most sullied public institutions on accounts of the opacity with which it does its transactions and the impunity exhibited by its top hierarchs. Several commissioned audits and reports have uncovered horrendous graft, unauthorised spending, alleged secret accounts and brazen theft. Corruption is encouraged by both the corporation’s inherent incentives and opportunities to be corrupt, while impunity festers there because of the enormous patronage capacity it flaunts.

During this new democratic dispensation, the corporation has been enmeshed in a series of controversies bordering on less than transparent transactions that elicited damaging exchanges between it and individual Nigerians and groups. The most scurrilous was the September 2013 whistle blowing by Mallam Sanusi Lamido Sanusi, the incumbent Emir of Kano, but then governor of the Central Bank of Nigeria (CBN), on NNPC’s unremitted $20 billion or 76 per cent of the value of oil lifted between January 2012 and July 2013 to the Federation Account, which prompted the engagement of the international accounting firm of PriceWaterhouse-Coopers (PwC) to carry out forensic audit on the alleged missing money.

Last December, a report by the Post Mortem Sub-committee of the Federation Accounts Allocation Committee (FAAC) alleged that the corporation had outstanding domestic crude sales proceeds due to the Federation Accounts valued at N3.87 trillion incurred between January 2011 and August 2014. There was also the allegation early in 2014 that the sum of N10 billion was spent in two years to service aircraft hire by NNPC for the use of the Petroleum Minister, Mrs Deziani Alison-Madueke. Efforts by the National Assembly to probe it were stalled by court suits. Still, the global audit firm, KPMG, reported that between 2007 and 2009, for instance, it over-billed the Nigerian government by N28.5 billion in subsidy deductions. In 2013, Switzerland-based Erklarung von Bern, a non-governmental organisation, alleged that $6.8 billion was siphoned in crude revenues, among other such scandalous transactions.

The planned probe will put all these issues and more in their correct perspectives. In a country where rumour is an industry, such probe as planned might be in the overall interest of a corporation, which has always presented a saintly image to the public in the face of the unveiled scandals involving it. The probe will also reestablish due process, probity and transparency as cherished national values in the conduct of the Nigerian public affairs.

For a country that is near mono-cultural and in which the oil and gas sector accounts for over 70 per cent of government revenues and 90 per cent of export earnings, the NNPC as the country’s sole enforcer of the government’s strategic enforcement frameworks in the oil and gas sector, must not only be made accountable, its operations must also be opened to public scrutiny. This is the big challenge for the incoming Buhari administration.

Nigerians would wish to see a remarkable departure from the sordid past, where the NNPC is believed by its supervisory ministry to enjoy the right under the law setting it up to spend part of its revenue without recourse to the parliament despite the constitutional provision that all revenues accruing to ministries, departments and agencies of the government must be remitted to the Federation Account.

Perhaps, it is a probe like this that will bring sanity into the nation’s corruption-ridden oil and gas sector that with a daily crude production capacity of 2.3 million barrels per day, importation of refined petroleum products for local consumption has been one of the low points of public administration in the country.

Comrade Seyi Gambo, Convener, Good Governance Group and the former Public Relations Officer (PRO) of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in this interview with Justice Ilevbare sets agenda for the incoming government

What Good Governance Group is all about?
It all started during a discussion at a friend’s house in Ikorodu mid last year. We discovered that we need a non partisan group that can work with government at all levels to achieve socio-economic development and qualitative service delivery to the Nigerian people. It is a fact that we can’t all be in government, but we can all contribute to the success of same. For anybody in position of influence in Nigeria, we have at least one hundred people qualified to man that ministry or institution.

So what we seek to do is through our network of specialists and intellectuals, develop alternative policies, or reinforce the prevailing policies where needed. We will also inform the public about what they should expect from government, be it federal, state or local government. When those in position know that the people have an expectation, they will be compelled to act more responsibly. The local government’s chairmen will use their budget for what it is set for; internally generated revenue will be closely monitored.

However, the group is still at its consultation stage. We held talks with former president Olusegun Obasanjo late last year, and it was an experience of a life time. He demystified our so called leadership challenges. Other prominent Nigerians who have been privileged to serve in government are also billed to be interviewed by the group as we seek to know the reasons behind our monumental failure as a people.

Need for technocrats in key sectors
Technocrats and professionals with proven records should be appointed to man key ministries and departmental agencies (MDAs). ?Like in the case of the governor of the Central Bank of Nigeria, the incoming government should appoint a policy bias individual – someone who knows about policy formulation and an analytical mind. Probably someone with sound Monetary Policy background and an Economist, probably with a PhD will do. Prof. Chukwuma Soludo and His Royal Highness Sanusi, we’re very good. Sanusi as you’ll agree with me was not a core banker; he was more of a regulator in the system. Commercial Banking is totally different from Central Bank role. CBN job is not deposit and lending, it’s a policy thing.

The president-elect, Muhammadu Buhari might need to look in the direction of research institute, World Bank and indigenous consultant with sound policy background. We have a lot of them – we need to get this right. We need people who “think globally and act locally” they must have a sound knowledge of Nigeria market or environment.

On the oil and gas sector
In my view to start with, oil revenue should no longer form major revenue to fund the budget. Revenue from the crude should go to a special fund or a sinking fund as reserve fund. Effective tax system should be put in place using Lagos as model. Citizens paying taxes will now be demanding for value for money and system of “national cake” will no longer be there. Agriculture should be subsidised by the federal government.

A lot have been said about how to get the refineries working and removal of subsidy. What is your take on this and profile of the personalities needed as minister of petroleum?

Transparency of this sector is very important. Nigerians are looking forward to a credible individual as the Petroleum Minister. Deregulation should be done and FG should probably sell like 30% of their stake in the JVs and deploy the proceeds into critical sector of the economy.

Fall in oil price provides ample opportunity for the subsidy to be removed. FG should put the current refineries into good shape and then sell off. However, the unions should be part of the process from the beginning to the end as partners not observers. We have seen where government under BPE got core investors that ran hitherto profit making government agencies aground, stripping them of their assets and sending the workforce away with peanuts. A perfect is example is NICON insurance. Hence, the type of privatisation, the choice of buyers should be debated with the union representatives. Greenfields should be encouraged as well as Petroleum Industry Bill (PIB) should be passed to law.

This is even more important than the restructuring as recommended in the Steve Oronsaye report, especially for critical government regulatory agencies in the hydrocarbon industry. This will keep government away from removing one problem and creating more problems on the other hand, the Nigerian way.

Fighting corruption
One man alone cannot fight corruption in Nigeria, but one man can lead the crusade. Office of the Nigerian Head of State is a very powerful one and therefore body language of the President gives the direction. Corruption with impunity was at all-time high during the administration of GEJ as all the anti-corruption agencies were moribund as a result of perceived GEJ’s body language to fighting corruption. The system is already responding to emergence of Buhari as the President-Elect and consequently everybody is sitting up. His zero tolerance for corruption is already getting people jittery. We are going to witness institution functioning with all anti-corruption agencies ready to go for kill. He who must come to equity must come with a clean hand. It takes one without history of corruption to fight corruption.

On security
Most of the security challenges in Nigeria can honesty be attributed to a self induced and self destruct process. Terrorism in the United States of America as a perfect example is more of offshore driven by people or what we can say ideologies that see America as a subversive nation-state, Islamic fundamentalists and others, who now have sympathisers within the system. However, in the case of Nigeria, we have a critical mass of people that are disenchanted with the way the country is being run. Suffering in the midst of plenty with attendant poverty. So we have millions of jobless youths who are idle hands and minds, prey to politicians and hate preaching religious clerics. In the religious fanatism example, we have youths whose disillusion in leadership have made them a ready army in the hands of wealthy African nations who are envious of Nigeria’s status, like Libya under Gaddafi. In the fight against Boko Haram insurgency, for years our armed forces were overwhelmed by a rag tag cult. Like it’s said in the IT world, garbage in, garbage out. Our men were ill equipped physically and mentally, whereas the defence budget kept soaring.

We need to get seasoned and patriotic Nigerians to look into operations of our security agencies. Take the Department of Secret Services (DSS) for example, the spokesperson of that highly respected organisation have brought the DSS into disrepute by her often times outlandish  statements which are not followed with arrest and persecution in the courts. You say people are Boko Haram sponsors and they are not arrested? The worst thing I have ever heard the head of an arm of the nation’s security network said was when the Director General of DSS said the service have decided to move on by forgiving the murderers of ten DSS operatives along with  forty-six  policemen. If DSS operatives can be killed in cold blood while carrying out a national assignment by Ombatse cult members, what is the fate of the common man?


Severe sack fever has already gripped staff, management and board of the Nigerian National Petroleum Corporation (NNPC) over an impending Augean stable cleansing in the state-owned oil company after the May 29 inauguration of President-elect, Gen. Muhammadu  Buhari.

A mass purge is seen as plausible option by the new administration to rid the agency described as a cesspit of corruption, off the rot that has infested it over the years.

Oil and gas sector stakeholders who spoke against the background of last week’s release of the 200-page forensic audit report conducted by PriceWaterhouseCoopers (PwC), on the NNPC, expressed fears that probing the rot in the agency may even confuse or distract Gen. Buhari, preferring instead to cleanse the place and institute structures that will make it difficult for its managers to steal from the commonwealth.

The audit firm had said in the report that the accounting and reconciliation systems for crude oil revenues used by all government agencies appears to be inaccurate and weak, with discrepancies in data from different sources in the course of carrying out the audit. The report also recommended an overhaul of how NNPC is run.

“The NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the corporation cannot be sustained,” it said in the 200-page document.

Commenting on the report, Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, said NNPC needs constitutional and structural reforms if it  is to meet the aspirations of a 21st century state oil firm.

The don regretted that the accounting books of NNPC are shrouded in secrecy, a development, he said, remained responsible for poor accounting records and data, leading to a situation that the state oil firm cannot give records of crude oil produced and sold.

He also pointed out that various NIETI report had alleged that the operations of NNPC remained opaque, adding that he supports the decision of Buhari to beam a searchlight on the operations of NNPC.

Adenikinju said the non-passage of the Petroleum Industry Bill (PIB) has further compounded the woes of the oil and gas sector, adding that had it been passed into law, NNPC should be running as a commercial entity paying profit tax and royalty to government just like the International Oil Companies (IOCs).

‘‘The PIB must be passed to align with international best practice. Many investors are reluctant and weary of the sector because there is so much uncertainty alongside human elements that obstruct the sector from functioning effectively, he lamented.

To get the best of the sector, the energy expert urged Buhari to institute another forensic audit where NNPC will be compelled to supply all documents instead of relying on secondary data as was the case with the PwC report in order to have an independent opinion.

Mr. Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), who hailed the release of PwC’s report, said the incoming administration has a lot of cleaning up to do in the corporation.

Yusuf said: “It is important that we do away with this regime of fuel subsidy payments. The report has shown that the bulk of fraud emanated from fuel subsidy management. To prevent the economy from further haemorrhage, subsidy should be discontinued with and the savings used to provide critical infrastructure.”

The LCCI chieftain stated that the report also showed the dangers of an economic policy that allows government agencies to earn revenue and disburse same without first remitting such accruals.

He suggested that revenue-yielding agencies should be barred from spending whatever they generate without approvals.Yusuf called for the amendment of the Fiscal Responsibility Act as a way of curbing extra budgetary disbursements by agencies.

In his remarks, the Vice President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. John Udeagbala, said the report has been over-flogged. He said the alleged corruption in NNPC was already in the public domain, even as he commended the outgoing administration of  President Goodluck Jonathan for making the report public to douse the rumours and controversies it has generated.

Udeagbala, an oil and gas sector operator, urged the incoming administration to hire another firm to conduct a fresh audit into the operations of the NNPC.

But Dr. Austin Nweze, an analyst and economist at the Pan Atlantic University, Lagos, feels conducting a further probe into the NNPC will be a waste of time because the more one looks into the NNPC account, the more one is lost and confused.

He advised the incoming Muhammadu Buhari-led government not to further probe the alleged missing $20 billion. He said that should Buhari go into probing the activities of NNPC, he will spend the entire first four years doing that because NNPC stinks.

Nweze stated that doing so will be a serious distraction and disservice to the nation, urging Buhari to exert his energies on identifying the loopholes through which public funds are siphoned and plug them.

He said: “From the beginning, NNPC has been a conduit pipe through which government officials divert public funds. It didn’t start today. It was like that under the military administration. NNPC is where every government goes to get money. Everything about the corporation stinks and the mess didn’t start today. The issue of corruption in NNPC is beyond PriceWaterhouseCoopers (PwC) report.

The report could have covered a longer period, from at least 1999, because no such report had been done in the past. My advice to Buhari is to overlook the report and focus on identifying the loopholes. If he focuses on probing NNPC activities, his first four years will be dedicated to the rot in the corporation.”

Oil & Gas Industry / Union Bank Finances N4bn Gas Plant Project
« on: May 04, 2015, 09:10:30 AM »

Union Bank of Nigeria Plc has signed a N4 billion agreement to finance Egboama Gas Plant owned by PNG Gas Limited.

A statement from the bank explained that the facility would will provide the required funding for the refurbishment and upgrade of gas plant located in Delta State.

Commenting on the agreement, the Executive Director, Corporate Banking at Union Bank, Mr. Emeka Okonkwo said Union Bank was pleased to support the PNG with the financing of Egboama plant, which is expected to produce about 101 tons of liquefied petroleum gas per day.

The project, according to him, would enhance efforts towards increasing domestic utilisation of gas in the country and reduce dependence on oil.

In addition to producing 101 tons of liquefied petroleum gas per day, the Egboama gas plant is also expected to produce 38 tons of propane gas per day, 750 barrels of natural gas liquids as well as 25 million standard cubic feet of lean gas per day.  The lean gas would be piped into the national gas grid to support power generation. Union Bank is a key player in oil and gas financing and is resolute in promoting and developing industries in the sector as part of its transformation programme. Established in 1917 and listed on the Nigerian Stock Exchange in 1971, Union Bank of Nigeria Plc is a household name and one of Nigeria’s long-standing and most respected financial institutions. The bank has an extensive network of over 320 branches across Nigeria.

In late 2012, a new board of directors and Executive Management team were appointed to Union Bank and in 2013 the bank embarked upon a transformation programme, designed to firmly re-establish it as one of Nigeria’s leading financial institutions.

The bank currently offers a variety of banking services to both Individual and corporate clients including current, savings and deposit account services, funds transfer, foreign currency domiciliation, loans, overdrafts, equipment leasing and trade finance.

The following vacancies exist in OMEGA RESOURCES LIMITED:
1. Business Development Executive: BSc Mechanical or Civil Engineering. Experience in Marketing will be a key advantage

2. Rotary Piling Machine Operator: 2 years experience in operation of concrete piling machine

Send applications to not later than 15th May 2015


Report of the forensic audit conducted by PricewaterhouseCoopers Limited (PWC) over the alleged ‘missing’ $20 billion from the accounts of the Nigerian National Petroleum Corporation (NNPC) between January 2012 and July 2013, shows that the corporation spends 46 per cent of proceeds of domestic crude oil revenues on overhead costs and subsidies.

The report, released by the Presidency on Monday, also warned that the NNPC operates an unsustainable model, warning that if this is not checked, “the corporation may have to exhaust all the proceeds of domestic crude oil sales, and may still require third party liabilities to meet costs of operations and subsidies, and may not be able to make any remittances to FAAC.”

This according to the report, shows that the corporation is technically broke, adding that the corporation was unable to sustain monthly remittances to the Federation Account Allocation Committee (FAAC), and also meet its operational costs entirely from the proceeds of domestic crude oil revenues.

While advocating a major restructuring, PWC recommended that the NNPC model of operation must be urgently reviewed and restructured, as the current model it has operated since its creation is unsustainable.

They auditors emphasised the need to review the NNPC Act, especially as it contradicts the requirement for the group to run as a commercially viable entity, especially as the Act appears to have given the corporation a “blank” cheque to spend money without limit.

The report also, recommended that the NNPC and its subsidiary- Nigerian Petroleum Development Company (NPDC) should refund to the Federation Account, a minimum of $1.48 billion and not $20 billion.

The audit firm explained that the refund arose from duplicated PMS (petrol) and kerosene subsidy claims within the period, in addition to subsidy computation errors, claims on un-incurred cost, over-claim of subsidy for the review period, unsubstantiated costs and errors in cost. Others include additional cost provided between January 12 and 29, 2015, unpaid signature bonus for divested assets and unpaid NPDC self assessed taxes and royalties.

The missing $20 billion was arrived at because the initial report said $67 billion was generated, but only $27 billion was remitted to the Federal Government. However, the report shows total gross revenues generated from FGN crude oil lifting’s was $69.34 billion and not $67 billion as earlier stated by the Reconciliation Committee for the period.

According to the report, total cash remitted into the Federation accounts in relation to crude oil liftings was $50.81 billion.

PWC also stated categorically that the accounting and reconciliation system for crude oil revenues used by Government agencies appear to be inaccurate and weak. They noted significant discrepancies in data from different sources. The lack of independent audit and reconciliation led to over reliance on data produced from NNPC. This matter is further compounded by the lack of independence within NNPC as the business has conflicting interests of being a stand-alone self-funding entity and also the main source of revenue to the Federation account.

The report notes that there is no official gazette to make this instruction legal. As such, kerosene subsidy continues till date. NNPC sells DPK to bulk DPK marketers in Nigeria at N40.90 per litre even though the expected/official regulated retail price of DPK in Nigeria is N50 per litre, the report reveals.

The report also said demurrage claims totaling $64.8 million between January 2012 and July 2013 could not be verified and that only demurrage claims by traders involved in swap arrangements resulted in a direct reduction in value from the refined products supplied by the traders. Such claims, it added, therefore account for the reduction in expected domestic crude revenue remittance.

The total claim by the affected four oil traders relating to January 2012 – July 2013 lifting amounted to $143 million, of which Trafigura accounted for $47,943,908. This was followed by Taleveras with $38,213,408; Ontario, $32,736,577; while Aiteo claimed $24,241,094.

The  report stated further that demurrage claims by SIR (the oil trader involved in Offshore Processing Arrangement with NNPC/PPMC) are invoiced and settled by cash.

Also, the report stated that cash payments by the NPDC to the Department of Petroleum Resources (DPR) was not captured by the Reconciliation Committee.

Reacting, President of the Nigeria Labour Congress (NLC), Ayuba Wabba, while applauding the release of the audit, on also on Tuesday said it offers Nigerians an opportunity to scrutinize the document for its merit and demerits.

According to Wabba, making the forensic document available to Nigerians was long overdue as the Freedom of Information Act already granted such privileges to Nigerian citizens, adding that the congress has presented the document to its accounting officers and chief economist to go through and provide a report upon which the Nigerian workers would verify the authenticity of the claims and take a formal position.

According to him, “certainly it will be a basis for us to interrogate the process as NLC we have tried to access the document,we are also going to look at it and consult our accountants and economists to look at those document and draw conclusion and then we can make an informed decision of our position on the document whether it satisfies our curiosity or not, so for me I think it is a welcomed development”.

On the comments credited to the President-elect, Muhammadu Buhari to probe the NNPC over the alleged miss fund, he said:”I think it is also in the right direction,the release of the document and the probing I think two of them should be taken up together because I think the firm that did the auditing is a firm that is recognised world wide. If they also do otherwise people should be able to say so that is why I said this is the first step”.

Many have however rubbished the report for not obtaining information directly from the principal actors and instead relied on third-party information, especially submissions to “the Senate Committee hearing on the subject matter,” among others. Many therefore have wondered what a forensic audit is.

Responding, Olufemi Awoyemi, a chartered accountant and chief executive of Proshare Nigeria Limited, an online finance and investment portal, told Daily Independent in a chat that “forensic investigation is not an audit and is not subjected to generally accepted audit principles.”

According to Awoyemi, PwC did not have access to all records, information or the parties, besides being time specific, following which it cannot form an opinion.

Instead, he noted, “it is a reconciliation based on available records which may be incomplete, defective or even unsubstantiated.”

Rather that rubbish the report, he said PwC should be applauded, adding that the incoming government may opt to continue from there and begin to ask questions relating to the noted gaps in the report.

He believes questions Nigerians should demand answers to are: “When was the last time an audit was conducted on the NNPC? How come the Auditor General did not notice money was missing? Who approves the NNPC expenses?”

Meanwhile, the NNPC says it has enough stock of petrol to service the country for 27 days at a national consumption rate of 40 million litres per day.

The corporation said in a statement that it has stepped up efforts to end the distribution challenges in the fuel supply system, adding that it has sufficient stock of petrol at its coastal depots in Port Harcourt, Warri, and Calabar besides the stock it holds in the national strategic reserves.

It said the distribution hitch was due to the strike action by the National Association of Road Transport Owners (NARTO) and the Petroleum Tanker Drivers (PTD) who have refused to lift petroleum products from the coastal depots in protest of the huge amounts they are being owed by the major marketers.

“We are, however, working towards a speedy resolution of the issues to ensure a hitch-free distribution of products across the country,” the Corporation stated, appealing to NARTO and PTD to call off the strike in the interest of the country and not unleash unnecessary hardship on Nigerians.

Oil & Gas Industry / Dangote Group unveils massive gas supply plan
« on: April 29, 2015, 10:25:42 AM »

Aliko Dangote, Africa’s richest man, plans to quadruple the supply of gas to Nigeria by building pipelines that may be backed by Carlyle Group LP and Blackstone Group LP, the world’s two biggest private-equity firms.

Dangote, who has a net worth of $15 billion, according to the Bloomberg Billionaires Index, will invest $2.2 billion to $2.5 billion in two sub-sea 550-kilometer (341-mile) pipelines running from the Niger Delta to the commercial hub of Lagos, Dangote, 58, said in an interview with Bloomberg.

The pipes will increase the amount of gas available in Africa’s biggest economy to four billion standard cubic feet per day from one billion, he said.

While Nigeria has  gas reserves  of about 180 trillion cubic feet, more than any other African country, most of what’s produced is flared or exported because of a lack of infrastructure to transport it to local companies and households. Boosting domestic supply will help increase electricity generation in a country where power cuts are common and about 70 per cent of electricity plants are fueled by gas, according to Dangote.

“Having an additional three billion scf will sort out all the gas issues we have today in Nigeria,” he said in the lounge of his house in the Victoria Island district of Lagos, overlooking a half moon-shaped swimming pool. “It’s badly needed.”

Dangote, who has interests ranging from cement to sugar and oil refineries, plans to start laying the pipelines before the end of the year, he said. The first one should be ready by mid-2017.

The International Finance Corp. is considering an investment in the pipelines as are Blackstone and Carlyle, Dangote said. Neither buyout firm responded to e-mails requesting comment. Desmond Dodd, a Johannesburg-based spokesman for the IFC, declined to comment by e-mail on Monday.

“We have a lot of companies that are very interested in participating,” Dangote said.
Blackstone and Carlyle said in August they would partner with Dangote Industries Ltd., the holding company for the billionaire’s operations, to invest in sub-Saharan Africa. Blackstone said its Johannesburg-based partner Black Rhino would jointly invest as much as $5 billion with the company on energy and other infrastructure in the region.

The pipelines could be used by oil producers in Nigeria that currently have little incentive to sell gas from their fields in the country, including Royal Dutch Shell Plc. and Exxon Mobil Corp., Dangote said.

“If today they process that gas, there’s no infrastructure to remove it, there’s no pipeline,” he said. “We’re trying to build that infrastructure.”

Nigeria’s economy, which gets 90 per cent of export earnings and two-thirds of government revenue from oil, has been hit by the 40 per cent fall in Brent crude prices since June. The naira has weakened 18 per cent against the dollar in that period, while the Nigerian Stock Exchange All Share Index is down 20 per cent.

Dangote, who controls Dangote Cement Plc., Nigeria’s largest listed company, has seen his wealth fall $3.4 billion this year, more than anybody else aside from Warren Buffett, according to the Billionaires Index.

His investments in oil and gas include a $9 billion refinery near Lagos, which will be able to process 650,000 barrels a day when completed. The company got a license from the government earlier this year and will export refined fuel to the rest of sub-Saharan Africa as well as sell it locally, Dangote said.

“We will be in the market with our petroleum products by the first quarter of 2018,” he said.

Dangote Cement, which has a market value of $15 billion and a free float of 7 per cent in Lagos, will be ready to list its shares in London by the end of next year, Dangote said. It is addressing investors’ concerns in the meantime about the composition of its board and other corporate governance issues, he said.

“There are a lot of criteria we’ve met,” he said. “Our aim is to create a world class company. That’s why we’re going to London. It’s not purely because we’re looking for money.”

Dangote Cement shares were unchanged at 175 naira at 12:12 p.m. in Lagos on Monday. The stock is down 13 percent this year, more than the Nigerian stock index, which has fallen 1.4 percent. Profit declined 21 percent last year after a bigger tax bill and higher import costs caused by the weaker naira, the company said last month.

Dangote’s companies will increasingly focus on exports from Nigeria, including of cement, fertilizer, petrochemicals and refined fuel.

“But 2018, in the worst case, the Dangote Group will be able to export about $8 billion to $10 billion worth of goods,” he said. “We are totally transforming the business to be export-orientated.”

Oil & Gas Industry / Local Content on Trial
« on: April 28, 2015, 01:27:02 PM »

How the Federal High Court in Port Harcourt decides on the suit between Arco Group Limited and the Nigerian Agip Oil Company will go a long way to show how Nigeria enforces its Local Content Act, writes Davidson Iriekpen

The legislative intention and the nation’s will to enforce  its own laws are about to be tested in a first-of-its-kind law suit filed at the Federal High Court Port Harcourt,   by Arco  Group  Plc,  one of the leading indigenous Nigerian engineering companies  in the oil and gas sector of the economy.

The suit is essentially a complaint against the Nigeria Agip Oil Company’s (NAOC)  for refusing to comply with the  provisions of section 3 subsections (2) and (3) of the Nigeria Oil and Gas Industry Content  Development Act (NOGICD) 2010  (popularly known as the Local Content law) and will also  highlight the extent  to which the foreign  multinationals are prepared to go  to perpetuate  their  domination  of the entire specter   of the oil industry, notwithstanding Nigeria’s national aspiration for self-reliance and technological

advancement,  as well as frustrate any  perceived  incursions by  indigenous Nigerian entities into the areas considered by them as their  exclusive zones of operations.

Not deterred  by the seemingly  herculean task, Arco by an originating summons in suit No. FH/PH/CS/02/2015 between Arco Group Plc v. Nigeria Agip Oil Company  Limited and three others, is among others, seeking  from the court, a declaration that by virtue of section 3 subsections (2) and (3) of the NOGICD Act, 2010, having demonstrated ownership of equipment, Nigerian personnel and capacity to execute the task of performing the contract for the maintenance service of rotating equipment machines at the Nigerian Agip Oil Company gas plants at OB/OB, Ebocha and Kwale, it is entitled, being a Nigerian company, to the exclusive  right to be considered and granted such contract including any extension of its duration.

It is further asking the court to declare that the persistent and deliberate refusal, failure and neglect by Agip to give exclusive consideration to it in respect of, and award to it, the contract for the maintenance service of rotating equipment machines at the Nigerian Agip Oil Company gas plants at OB/OB, Ebocha and Kwale, and to grant extension of the contract by way of an interim or a stop-gap contract, is a deliberate violation and sabotage of  both the spirit and letter of section 3 subsections (2) and (3) of the Nigerian Oil and Gas Industry Content Development Act, 2010, and is, therefore, illegal, unlawful, ultra vires its powers under the law, null and void and of no effect whatsoever.

The plaintiff wants the court to determine whether in view of the provision of section 3 subsections (2) and (3) of the Nigerian Oil and Gas Industry Content Development Act, 2010, having demonstrated ownership of equipment,

Nigerian personnel and capacity to execute the task of performing the contract for the maintenance service of rotating equipment at the Nigerian Agip Oil Company gas plants at OB/OB, Ebocha and Kwale, it is entitled, being a Nigerian company, to the exclusive right to be considered and granted such contract including any extension of its duration?

It also asked the court to determine whether the persistent and deliberate refusal, failure by the first defendant to give exclusive consideration to the Plaintiff in respect of, and award to the plaintiff, the contract for the maintenance and service of rotating equipment machines at the Nigerian Agip Oil Company gas plants at OB/OB, Ebocha and Kwale and to grant an extension of such contract by way of an interim or stop-gap contract is a violation of the spirit and letters of section 3 subsections (2) and (3) of the Nigerian Oil and Gas Industry Contract Development Act, 2010, and therefore illegal, unlawful, ultra vires its powers under the law, null and void and of no effect whatsoever.

The recourse to approach the court came after the Italian oil firm turned down many entreaties and appeals by Arco, the Nigerian National Petroleum Corporation (NNPC), Conoco Philips Petroleum Nigeria Limited and Nigeria Petroleum Investment Management Services (NAPIMS) to honour the agreement.

On February 4, the court restrained Agip and its agents from awarding or taking any step to award to any person, company or firm except Arco any contract whether designated as interim, stop-gap for the maintenance  of gas turbines or rotating equipment at Agip’s OB/OB, Ebocha and Kwale gas plant pending the hearing and determination of the motion on notice for the order of interlocutory injunction. Since the order was made, not only was the chief executives officer of the company alleged to have disobeyed it but was equally alleged be avoiding service of the court order. This prompted the Nigerian company to initiate a contempt proceeding against the Italian company.

When the case came up last week before Justice Lambo Akanbi, he ordered the Managing Directors of Agip and Plantgeria Company Limited, Mr. Insula Massimo and Mr. P. L. Carrodano to appear before the court on Monday, April 27, to tell the court why they should not be committed to prison for disobeying the order of the court. Justice Akanbi equally granted Arco the leave of the court to serve the chief executive officers of the companies the notices of the consequences of disobeying the court’s order (Form 48) by substituted means. Specifically, since the defendants were alleged to be avoiding service of the court order made on February 4, the court ordered that they be served by substituted means through advertorial in two national newspapers, namely THISDAY and The Guardian.

Trouble started when Agip refused to comply with the  provisions of section 3 subsections (2) and (3) of the Nigeria Oil & Gas Industry Content  Development Act, 2010, after NAPIMS, a subsidiary of the NNPC awarded a contract to them.  NAPIMS action  was entirely motivated by the need to reduce costs, preserve scarce foreign  exchange, create opportunities  for transfer of knowledge and technology to skilled Nigerians  as set out in the NOGID Act.
According  to the documents filed in court, Arco  with its erstwhile  partner,  General Electric International Operations Nigeria Ltd (GEION),  won a contract in 2006 to  maintain  NAOC’s  rotating equipment, gas turbines and machines at NAOC’s  OB/OB, Kwale and Ebocha gas plants in Delta and Rivers States of Nigeria.  NNPC’s approval conveyed to NAOC was that the award be made jointly to GEION  and Arco.  NAOC however, ignored the approval and gave the contract to GEION alone. It then compelled Arco to accept a subcontractor status,  rather than co-contractor  in the  scheme of things, which was seen as a clear  violation of NNPC’s  approval conveyed in writing via letter dated June 6, 2006.

Not deterred by that act of injustice, Arco forged ahead, and in 2007 the Niger Delta crisis erupted.  GEION of course immediately abandoned site, withdrew  its expatriate personnel  and sent them back to Italy.   Arco was then left behind to handle all of the maintenance work alone.  To everyone’s surprise, Arco single-handedly carried on with the job and ensured that the plants enjoyed smooth, uninterrupted  and efficient  operations throughout  the period of the crisis.  NAOC  was so impressed with the performance  that it issued letters of commendation to Arco staff engineers and technicians.

According to Arco, after the expiration of the contract in 2011, negotiations started for a short term or stop gap contract  that was to precede the award of a new five year contract to replace the expired one.  It said while those negotiations dragged on, NAOC resorted  to the issuance  of a Purchase Order every two days to GEION  to keep the plants running.

The cost of the every two day arrangement, it said, was a whopping US$87million per annum which  was a needless drain on the  nation’s  economy.

Not satisfied with the state of affairs, NNPC and its joint venture partners convened a meeting in Abuja  on July 17, 2013  to try to reduce the operational cost of the contract  as well as comply with the Nigeria Oil & Gas Industry Content  Development Act 2010    which had enshrined statutory provisions to guarantee the participation of Nigerian companies which  had demonstrated capacity and skill in the oil & gas  industry.

Prior to the meeting, the JV partners had  requested both GEION  and Arco  to submit separate bids  for the entire work scope of the stop gap contract which the JV wanted to put in place,  pending the award of a replacement  five year  contract.  Both bids were received, evaluated and fully considered.

It said its bid was adjudged as more competitive, and NNPC directed that the contract  be awarded to it.

The firm stated that the evaluation of all technical bids for the five-year replacement which had been advertised previously had also been concluded.
The firm said it had the highest score of 8.68 of all the 10 bidders.  The next ranked bidder scored 6.76, adding that in spite of this, NAOC steadfastly resisted the directive  that the stop gap  contract should be awarded to it.

Attempt by the NNPC and the Nigeria Content Development and Monitoring Board (NCDMB) wade into the crisis by writing several letters to the Italian firm  on the matter reiterating  the directive and urging that the stop-gap contract be awarded to Arco were ignored.

As at the time of filing this report, Agip was yet to file its defence to the suit and all efforts by THISDAY for the company to comment on the suit proved abortive. A source close to the company said it could no longer comment on it since the matter was already in court.

Many analysts believe that how the court will decide the case will go a long way to show how Nigeria enforces its own laws enacted to protect indigenous companies.


Barely few weeks after Seven Energy International Limited, an indigenous Nigerian oil and gas development, production and gas distribution company commenced supply of natural gas to Notore Chemical Industries Plc, a leading fertiliser and agro-allied company in Africa, the company has commenced the supply of gas to the 560 megawatt-capacity Calabar  Power Station built under the National Integrated Power Project (NIPP).

The commercial delivery of gas to Calabar NIPP, which will facilitate the addition of 560 megawatts to the national grid, is being executed through Accugas, a wholly-owned subsidiary of Seven Energy.

When operating at full capacity, Calabar NIPP will increase national power generation by over 10 percent.

According to a statement by the company, gas is being supplied to the power plant from Seven Energy’s Uquo Gas Processing Facility in Akwa Ibom State through the Seven Energy pipeline network.

The gas supply will enable the power plant to complete commissioning and start delivering electricity into the national grid.

Commenting on the achievement, the Chief Executive Officer of Seven Energy, Mr. Phillip Ihenacho noted that delivering a cost effective and reliable gas supply is critical to providing sustainable power supply into the national grid to meet the government’s reform objectives and to facilitate industrial development.

“I am delighted that our ability to deliver an indigenous gas solution, from end to end is now being recognised by a broad range of industrial and power sector customers. Not only will the gas we supply drive enhanced power generation, but when combined with improvements in transmission and distribution it will also facilitate industrial and commercial developments which will have a far reaching impact throughout the community, stimulating industry and generating employment as a result,” he said.

The Managing Director of  Accugas, Mr.  Steve Tierney said the Calabar NIPP was a major power plant in Calabar and a further endorsement of the quality and reliability of his company’s services.

“Our strong capability across the region with ownership of gas reserves and pipeline infrastructure has enabled us to commercialise our gas assets, delivering a solution that the market has been demanding for many years. We are ready and look forward to adding more customers to our network across the South East of Nigeria, bringing affordable and reliable gas to a wider audience,” he said.

Seven Energy has continued to champion an industrial gas revolution through the development and production of natural gas, and, critically, its commercialisation through investment in processing and distribution infrastructure, where the company has invested over $1 billion in the south east region of the Niger Delta in the last five years.

With significant capacity built into its distribution infrastructure, the Company is capable of providing a long-term supply of gas to additional off takers for power generation and for local industry.

Since the commissioning of the Uquo Gas Processing Facility in 2014, Seven Energy has begun the supply of gas to other off takers such as the Ibom Power Company, Notore Chemical Industries Limited and the United Cement Company of Nigeria, also in Calabar.

Gas is being supplied at a rate of 25 million cubic feet per day (MMcfpd) by Seven Energy as part of the feedstock to Notore’s fertiliser plant.

By this supply arrangement, Seven Energy is enabling the Notore fertiliser plant to improve its operational efficiency enhancing the plant’s output. Natural gas is the core input into the production of fertiliser.

The following vacancies exist in a construction company in lagos.

1.A young civil engineers with 3 years experience in construction industry.
Qualification: Bsc, HND.

2.A young storeman with 3 years of job experience.
Qualification: OND or its equivalent.

Interested applicant should send their CVs to

Vacancies / Vacancy - Civil Engineer (Click here for details
« on: April 22, 2015, 08:22:22 AM »
A firm requires the service of a young CIVIL Engineer with a minimum of 1-2 years post graduation., A as a site supervisor, He must be able to supervise projects and carried out cost estimates.

Interested individual should forward his CV to, on or before the 25th of April, 2015.

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