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As exploration and production (E &P) companies contend with the reality of lower oil prices translating to lower revenue and operating cash flows, the decline in prices has led to a substantial gain for Oando Energy Resources (OER), the Upstream subsidiary of Oando Plc.

The company said in a statement last night that it realised a cash windfall in the sum of $234 million due to the proactive fiscal measures put in place prior to the slump in oil prices.

The funds will be applied towards a $238 million loan pre-payment, thereby substantially reducing the company’s total debt from $900 million in August 2014 to $615 million today.

Effectively, the company said it had managed to reduce its debt by 30 per cent in the space of seven months post the acquisition of ConocoPhillips.

According to the statement, it successfully realised $234 million by resetting its crude oil hedge floor price from an average of $95.35 per barrel to $65.00 per barrel on 10,615 barrel per day for the next 18 months and another 1,553 barrels per day for a further 18 months until January 2019.

The company will pay an additional $4 million from its cash reserves.

Hedge positions are investment decisions often taken by companies with the intention of offsetting potential losses/gains that may be incurred, especially during a global downturn.

The company’s $1.5 billion landmark acquisition of ConcoPhillips Nigeria (COPN) was funded with a 50/50 debt-equity mix.

A repayment of $238 million on the debt portion used to close the acquisition implies that the company has effectively reduced the net purchase price to $1.2 billion.

Oando Energy, which has a current market capitalisation of $1 billion and a daily output of circa 53,100 barrels of oil equivalent per day (boepd), had initially adopted hedging tools on its future crude production in anticipation of ongoing oil price volatility.

The statement indicates that the proceeds from the hedge and additional funds will be used in prepayment of certain loan facilities, and commenting further,

Chief Executive Officer of Oando Energy, Pade Durotoyee, said the decline in global crude oil prices led to a substantial gain for our company and we have 10,832 barrels per ay average production hedged for the balance of 2015 and 8,000 barrels /day for 2016.

“Cashing out some value from this hedge will enable us reduce our outstanding loans and leverage by $238 Million, saving the company $65 Million in interest payments over the remaining term of the loan facilities, whilst preserving a floor of $65 per barrel. With 50 per cent of our oil production hedged and 65 per cent of our production being gas committed to stable long term priced contracts, we are well positioned with strong cashflow to meet our obligations and aspirations through this current oil price down cycle,” he said.

The hedge adoption effectively ensures OER receives income approximately pegged to a pre-agreed price, and enables it to conveniently service its debt obligations, which are denominated in both Naira and dollar, regardless of oil prices and without foreign exchange exposure.

In spite of the global trends and domestic challenges facing indigenous oil and gas companies, OER has steadily navigated the ups and downs of the cyclical oil and gas market by adapting quickly and being fiscally innovative to enable its business operations run as normal.

The company’s short to mid-term strategy is focused on the growth of its Nigerian-based assets portfolio, including viable oppor­tunities that optimise its operations, delivery, and upstream footprint such as the ramp up of its production from 5,000 barrels pre-acquisition of COPN to its present output of 53,100 barrels  per day, and the recently completed 45,000barrels /d, 51km Umuginni pipeline located in south-eastern Nigeria.

Oil & Gas Industry / Seplat set to drive growth in gas supply
« on: March 05, 2015, 01:54:51 PM »
An energy company listed on the Nigerian Stock Exchange, Seplat, expects its gas business to contribute around a third to its profits over the next two years, up from less than 10 per cent, as demand for electricity generation soars.

The company’s Chief Executive Officer, Mr. Austin Avuru told a Reuters Africa Investment Summit yesterday that the company, which listed in London and Lagos last year, aimed for at least a 20 per cent share of the domestic gas market by 2018.

Nigeria privatised its electricity sector 18 months ago, aiming to end decades of blackouts which have hampered economic growth. Most of the plants it sold were gas-fired, operating below capacity due to inadequate gas supply.

Avuru said Seplat aimed to increase gross output from around 120 million standard cubit feet per day to 400 million scuf by 2017, as demand for gas in Nigeria rises from 1.2 billion scuf per day to an estimated three billion scuf per day by 2017, ten times the 300 million of six years ago.

“By the end of 2017, our target is to … achieve a reserve/ production ratio of 20 years,” he said, adding that would mean more than 50,000 barrels of crude and a net gas output of 200 million scuf.

Shares in Seplat on the Lagos bourse have gained 27 per cent this year but are still down 22 per cent from their listing price of N576 in April last year.

Avuru said the performance had mirrored the drop in global oil prices. Seplat shares were down 1.5 per cent on the London stock market on Tuesday at 145.50 pence.

Avuru said Seplat had cut capital spending for 2015 to $300m, down from the $480m initially planned, due to the oil price drop. The company would only need to tap capital markets to finance acquisitions, he added.

He said Seplat had finalised the acquisition of a 40 per cent stake in OML 53, an onshore oil block, from Chevron, despite an ongoing legal case in which Nigeria’s Brittania- U has sought to block the US company from selling the assets which it says it had paid a deposit to buy.

“We have now been able to move that to closure and Chevron has handed over the asset to us,” Avuru said, adding that the company would be operating the oil block “while we thrash out whatever is left of the litigation.”

Avuru said his company was budgeting for 2015 with an oil price assumption of $50 a barrel, and $60 for 2016 and was not impacted by the devaluation of the local currency because the gas business with naira revenues provided a hedge.

House of Representatives  yesterday  resolved to investigate Nigerian Agip Oil Company (NAOC) over non-payment of N400 million compensation to Umu-Eze Iwerre community in Delta state.

The decision to institute the probe was an aftermath of the adoption of a motion to that effect sponsored by Nicholas Ossai.

In his lead debate, Ossai noted that the Irri/Kwale Gas Pipeline operated by Nigerian Agip Oil Company (NAOC) emitted gas between December 23 to 29, 2009, which polluted the entire community of Aboh in Ndokwa East local government area of Delta state.

He lamented that “NAOC had not only blatantly refused to pay the N400 million compensation requested by Umu-Eze Iwerre community as a result of the pollution, but also backed out from further negotiations that could have led to an agreement for the payment of a fair compensation.”

The lawmaker explained that the report on the gas emission was promptly brought to the attention of NAOC, which neglected to clamp the source of the leakage until six days after the disclosure of the information to it.

“Another report that the heavy and extensive emission densely polluted the environment and adversely affected the health of the people of the community, many of whom were consequently hospitalized for long periods,” he said.

The lawmaker who called for the intervention of the House, disclosed that the claim that the pollution damaged crops, surface water, marine life, roofs of houses, vegetation and also caused the death of hundreds of domestic and wild animals as well as poultry.

He explained that the post-impact assessment carried out by the representatives of the Delta state ministry of environment, National Oil Spill Detection and Response Agency (NOSDRA), NAOC and Umu-Eze Iwerre Community was contained in the report dated December 29, 2009.

According to him, NAOC was directed to effect immediate repairs of the facility and compensate the impacted community.

Deputy House Leader,  Leo Ogor, in his contribution to the debate said it is necessary that the committees should find out why the oil company withdrew from the negotiations completely after refusing to pay the compensation.

In his ruling, Speaker Aminu Tambuwal who presided over the plenary referred the motion to the committees on Environment and Gas Resources for further legislative input and report back within three weeks.

Nigeria’s electricity industry is being hindered by producers’ inability to raise finance and natural-gas shortages, curbing companies’ ability to boost investment in output as the country suffers from daily blackouts, an energy regulator said.

Peak electricity output of Africa’s biggest economy is about 3,800 megawatts, with another 1,500 megawatts unavailable because of gas shortages, said Sam Amadi, chairman of the Nigerian Electricity Regulatory Commission, which oversees the power industry. South Africa, with a third of Nigeria’s population, has eight times more installed capacity. One megawatt is enough to provide energy to 2,000 average European homes, or about 333 in Japan.

“There are still issues of creditworthiness,” he said in an interview Tuesday in the capital, Abuja. “Power generation is not coming on board because the distribution companies are weak, they’re not credit-worthy and can’t get financing.”

Distribution companies are struggling to get consumers to pay their bills and this means that their revenue is so poor they are unable to pay producers for power, he said.

Nigeria, beset by frequent blackouts, dismantled the state monopoly and sold hydro- and gas-powered plants to try bring in investment needed to expand electricity supply. The industry requires $18 billion to $20 billion to boost supplies to 10,000 megawatts within six years, according to the nation’s privatization agency.

Bailout Support

Power generation and distribution companies can now access a 213 billion-naira ($1 billion) bailout announced by authorities in September to shore up struggling operators, Amadi said. The fund is supposed to help them pay off gas-supply debts and meet debt-service obligations to lenders on loans of almost 500 billion naira, on which some were falling behind.

While Nigeria was the world’s fourth-biggest exporter of liquefied natural gas in 2012, it’s struggling to meet local demand for the fuel used by plants that generate at least 70 percent of the country’s electricity needs. The nation, which holds Africa’s biggest gas reserves of more than 180 trillion cubic feet, is expanding pipeline networks so that they can service power plants and industries and not just exports.

For now, the country has “one of the lowest rates of net electricity generation per capita in the world,” the U.S. Energy Information Administration said in a statement posted on its website on Wednesday.

“There is hope that gas is coming,” Amadi said. “We have promised that by the end of this year we should be able to have enough gas to fire about probably 5,500 megawatts.”

News & Happenings / New Nigerian Discoveries Boost Exxon Mobil Reserves
« on: February 27, 2015, 12:07:16 PM »

Exxon Mobil has replaced by 104 per cent its 2014 production by adding proved oil and gas reserves totalling 1.5 billion oil-equivalent barrels, including a 162 per cent replacement ratio for crude oil and other liquids.

According to the company’s chairman and chief executive officer, Rex Tillerson, ExxonMobil’s diverse global portfolio of attractive opportunities puts it in a unique position to execute its strategy to identify, evaluate and develop new energy supplies.

Continuing, he said: “Our ability to achieve an industry-leading record of long-term reserves replacement is made possible by the size and diversity of ExxonMobil’s resource base along with its project execution and technical capabilities.”

At year-end 2014, ExxonMobil’s proved reserves totalled 25.3 billion oil-equivalent barrels, which was made up of 54 per cent liquids, up from 53 per cent in 2013, and 46 per cent natural gas.

Liquid additions during 2014 totalled more than 1.2 billion barrels, or 162 per cent of production, and natural gas additions totaled approximately 300 million oil-equivalent barrels for a 42 per cent replacement ratio.

During 2014, according to the News Agency of Nigeria (NAN), ExxonMobil added 3.2 billion oil-equivalent barrels to its resource base, driven primarily by resource additions in Nigeria Argentina, Canada, Tanzania and the US

The additions include continued success in by-the-bit exploration discoveries, undeveloped resource additions and strategic acquisitions.
ExxonMobil’s by-the-bit conventional exploration success in 2014 included discoveries in Nigeria, Argentina, Australia, Norway and Tanzania.

Overall, the corporation’s resource base totalled more than 92 billion oil-equivalent barrels at year-end 2014, taking into account field revisions, production, and asset sales.

The resource base includes proved reserves and other discovered resources that are expected to be ultimately recovered.

News & Happenings / Nigeria’s economy is safe and resilient
« on: February 27, 2015, 12:06:06 PM »

I have read comments by various financial and economic experts on the current travail of the Nigeria currency, the naira and its free fall since the unabated drop in international price of crude oil. It’s about three months now that the naira was officially devalued by N13 or eight per cent by the Central Bank of Nigeria (CBN), a decision taken to rein-in speculation occasioned by the slump in oil price and depletion of the foreign reserves. Many informed analysts even predicted further devaluation of the local currency even before and when unexpectedly the Independent National Electoral Commission (INEC) announced a shift in the elections date on February 7, 2015 from February 14 and 28, 2015 to March 28 and April 11, 2015 respectively.

The shift further dealt a devastating blow on the naira, and ever since being on a free-fall. Currently, it exchanges between N212 and N215 to a dollar. This actually got investors alarmed. Prior the postponement, the apex bank had, in the process of defending the currency, spent about $1 billion in January with its attendant toll on the foreign reserves. Not surprising, however, was the action the bank took as stated in a press release issued by the its Communication’s Director, Mu’azu Ibrahim, on Wednesday, February 18, 2015, announcing the immediate closure of the CBN rDAS/wDAS foreign exchange window. To this effect, the CBN has now fixed the exchange rate of the naira to a dollar at N198, a difference of N30 above N168 (+/-five per cent). The apex bank had, in the wake of plunge in the international crude oil price, officially devalued the naira in November 2014 by eight per cent, pegging the currency exchange to a dollar at N160-N176 to the US dollar.

Unexpectedly, the shift in election dates by six weeks further took a devastating hit on the naira with an all-time low of N210/N215 to a dollar last week at the parallel market, while it exchanges at N202 at the interbank segment of the economy. This variable may have forced the CBN to once again devalue the naira after realising that the N168 earlier announced was unsustainable. The move by the CBN as the monetary regulator should be seen as an injection of US dollar liquidity to calm the foreign exchange market, while the N168 reference rate remains unchanged. More importantly is to ensure stability of the economy and its currency. Any further intermediation outside of the rDAS may further continue the erosion of the foreign reserves which currently stood at about $32 billion despite efforts to ensure exchange rate stability regime.

The bane of the economy is Nigeria’s forex exchange earning which is more than 80 per cent dependent on crude oil export receipts and high importation. There is no central bank in the world that will allow a free-float of its currency, reason the CBN had no option as the monetary authority than to take a decisive rescue measure and look for a comfortable price level the country can live with. The apex bank in the press release issued justified its action and said “it has become imperative that appropriate actions be taken to avert the emergence of a multiple exchange rate regime and preserve the country’s foreign exchange reserves”, as it has observed in recent times and with the sharp decline in global oil prices and the resultant fall in the country’s foreign exchange earnings, the bank observed a wide gap between the rates in the interbank and the rDAS windows. The dual exchange rates have engendered unwholesome practices like round-tripping, speculative demand, rent seeking and inefficient usage of the scarce foreign exchange, among other reasons as adduced by economic agents without accruable benefits to the productive sector of the economy.

Henceforth, the apex bank has directed that all demands for foreign exchange must be channelled through the interbank market, and only genuine demands would be considered. This measure will enable the CBN to monitor and regulate the forex market as stipulated by the Act that established it.

Though the economy has been tagged the third fastest growing in the world and number one in the continent, a good one on paper, but has not translated to better life for her citizens. Even the National Bureau of Statistics (NBS) in its past report estimated Nigeria’s real Gross Domestic Product (GDP) at 6.3 per cent in the third quarter of 2014, compared to 6.54 per cent in the second quarter, but the continued dominance of non-oil sector, particularly services which contributed 2.3 per cent, agriculture’s 1.21 per cent and trade, 1.08 per cent attested to the efforts of the Federal Government in improving the economy’s job creation prospects in the medium-to-long-term, but as observed the contribution by the oil sector to the national revenue was abysmally low which is now exacerbated by the rapid drop in non-oil prices since mid-last year, while not also forgetting the security challenge as caused by the Boko Haram sect.

The critical sector, the manufacturing, which should have served as the stop-gap at this critical period is suffering total neglect from the government and is in comatose due to non-availability of necessary infrastructure, particularly power needed to galvanize the sector and create jobs and wealth. Many of the factories have long closed shop or relocated to better climes as cost of production became prohibitively high with attendant job loss. The agricultural sector, however, is no doubt undergoing various reforms geared to steering away the economy from its mono-economy, while the fiscal authority is hereby admonished to walk its talk by increasing the level of power generation and distribution with attractive incentives needed to drive FDIs and revitalization of comatose industries for the economic growth. The Federal Government should encourage patronage of locally made goods by banning goods that are and can be easily produced in Nigeria.

Uncanny enough and to attest to the need for the ban was the damning report posted recently by the Organisation of Petroleum Exporting Countries (OPEC) on the Nigeria’s economy. And despite its position as number 12th oil producing nation in the world, 8th largest exporter of crude and the 6th country within OPEC could not record any economic progress, when other oil producing countries posted various positive economic results. Notwithstanding OPEC’s reluctance to cut its output as clamored, rather it opted to defend its market share against United States Shale oil, among other competing indices. The organisation could not post any record of economic progress for Nigeria, just because it is a mono-product nation with no other means of survival. Though, many have advised Nigeria to quit the cartel as it has never protected or projected the nation’s economic interest nor benefitted from the association. OPEC should not be blamed for Nigeria’s failure to exploit its other abundant resources as alternative source of revenue.

Not until the advice of the apex bank as often restated is heeded and in my view the economy may not witness a rebound as expected, not minding the likely outcome of the forthcoming elections. Why should Nigeria still be importing toothpick, cotton buds, evaporated milk, rice, among others, when they can be produced easily at home and ease the pressure on foreign reserves. It is all about quality of leadership, corruption, cluelessness and most unfortunately, the President and Commander-in-Chief, Goodluck Jonathan disappointedly described what is visibly seen as corruption as mere stealing and warped perception of the international community and mischief makers.

The Federal Government needs to fine-tune many of its policies that are anti-business and infrastructure development that are negatively discouraging foreign investments in the country, as well as rescuing the small and medium scale enterprises (SMEs) currently reeling under yoke of glitches, particularly, their inability to access adequate financing and market. If the Federal Government and its agencies can do things right, this economy is very safe, strong and resilient to be the best economy in the world.

Ademola Bakare is an Abuja, based media practitioner.


The strike action embarked upon by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) has continued to take its toll on the masses.

It was especially challenging for motorists and commuters in Abuja today as a queue of vehicles formed long lines at various fuel stations. The long lines first appeared in some filling stations in the city three days ago when residents thought the protest may result in a scarcity of petroleum products, besieging the filling stations to buy fuel in panic. Many of the stations who have fuel in stock decided to stop sale in anticipation of selling in high prices in few days to come.

Checks across the city revealed that many of the filling stations deliberately put their gates under lock, vehicles on a long queue. Oando, Conoil, and Total filling stations were seen selling the product, prompting motorists to engage in an endless struggle for space to buy fuel.

Black marketers made brisk business by taking the advantage of the scarcity to sell fuel to drivers at a very exorbitant price. These operators sell 10 liters of petrol for around N2,000 and N3,000.

Information available as this time reveals that some neighboring states have started experiencing the same hardship in getting oil products.

The unions say that the strike action is in protest of the Nigerian National Petroleum Corporation (NNPC)’s alleged refusal to address unresolved pension issues concerning workers in the oil sector.

There is no official statement from the officials of the NNPC with respect to the scarcity and how to mitigate the effect on the masses.


The Senate approved $52 per barrel as oil benchmark price for the N4.3 trillion 2015 budget.

The federal government had made a final proposal of $65 per barrel of crude oil to the lawmakers after two reviews.

The Minister of Finance, Ngozi Okonjo-Iweala, had in December 2014 presented the 2015 budget to the lawmakers based on a speculated oil production figure of 2.2 million barrels per day.

At its closed door session on Tuesday, the Senate said its decision was due to the fact that the current oil price in the international market was between $60 and $62.

President Goodluck Jonathan had forwarded three different Medium Term Expenditure Framework, MTEF, and Fiscal Strategy documents to the National Assembly between September and December last year with crude benchmark proposals of $77, $73 and $65 per barrel.

Other budget proposals include projected oil production of 2.2782 million barrels per day and average exchange rate of N165 to a US dollar. The dollar currently trades at about N199 to a US dollar as the oil-dependent Nigerian economy continues to suffer from the declining global price of crude oil.


Electricity generation in the country has dropped as Seplat Petroleum Development Company Plc shuts down the Oben Gas Plant, a joint venture between the company and the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

The 10-day long shut-down, which will enable the company to tie in its expansion unit with the existing plant, will reduce gas supply to the country’s power generating plants by 135 million standard cubic feet of gas per day (MMSCF).

Though different power generating plants consume gas at different rates, THISDAY gathered that 135mmscf per day generates an average of 528 megawatts of power.

Before the shut-down, power generation hovered around 3,800 megawatts, due to persistent acts of vandalism on the gas supply pipelines.

The Chief Executive Officer of Seplat Petroleum, operators of NPDC/Seplat Joint Venture, Mr. Austin Avuru, said in a statement Tuesday that the shutdown, which will end by March 5, will  enable the company to tie in its newly installed, 2 x 75 mmscf/d unit into the company’s existing gas plant.

“Post tie-in operation, SEPLAT will have a single homogenous plant consisting of 2 by 45 MMSCF and 2 by75 MMSCF trains and will be able to deliver 240MMSCF/D WAGP (West African Gas Pipeline) specification gas post-commissioning, from the Oben node. This facility expansion and upgrades will bring the company’s overall daily gas production capacity to slightly over 300mmscf/d,” he said.

Avuru further stated that during the shutdown, Seplat’s current daily production of 135MMSCF, from Oben node will“not be available, however, the company will maintain gas availability of 60mmscf daily from its Sapele node.”

According to him, the shut-down provides the company an opportunity to enhance its current gas delivery into the national gas grid.

He added that this achievement aligns with Seplat’s short to medium term domestic gas commercialisation strategy, while facilitating greater power generation in the country.

SEPLAT recently signed Memorandum of Understanding (MoU) with the Ministries of Petroleum Resources and Power, in conjunction with the Central Bank of Nigeria (CBN) and the National Electricity Regulatory commission (NERC) as well as NNPC, and Gas Aggregation Company Nigeria Limited for gas supply.

Avuru noted that: “The company’s investment to develop its gas infrastructure buttresses our commitment to boost gas supply to the Nigerian Electricity Supply Industry (NESI) and support the Federal Government’s commitment to the reform of the Power Sector.”

According to him, improved gas production enables the company meet its obligations and achieve its short to medium term gas objectives.


The global drop in crude oil prices continued to affect Nigeria, as the country recorded about N48.7 billion loss in revenue from oil exports in November and December, 2014.

The Accountant General of the Federation, Jonah Otunla, stated this in his revenue report during the January Federation Accounts Allocation Committee meeting held in Abuja on Tuesday.

According to Mr. Otunla, the country suffered a substantial loss in revenue of about $77.53 million (about N13.025 billion) in November as a result of the massive drop in crude oil price at the international oil market.

He said the loss dropped to about $52.34 million (about N8.79 billion) in December, in addition to a 33 per cent decrease in the volume of export of the country’s oil for the two months, which translated to a loss of about $159.88 million (about N26.9billion).

Consequently, the AGF said the trend in declining oil revenues had continued during the month of January 2015, which saw gross revenue for the month decreasing by about N73.94 billion, from N490.03 billion in December 2014 to N416.096 billion.

He also attributed the declining revenue situation to the continued shutdown of some oil production facilities, which resulted in the shut-in of operations on some oil export trunk and pipelines at various export terminals.

Revenue yields from non-oil sources, he noted, also performed poorly below 2014 budgetary estimates by about N54.624 billion (about N165.323 billion as against N110.699 billion that was realized.)

According to the AGF, apart from the distributable statutory revenue for the month of about N416.096 billion, the Nigerian National Petroleum Corporation refunded about N6.33 billion to the federal Government, being balance of the share of the N450 billion revenue illegally withheld in 2011 from crude oil sales.

Again, about N8.574 billion was realized from exchange rate gain, while the NNPC also paid about N776 million it owed the Federation Account, in addition to about N4.419 billion.

However, total revenue available for distribution to the three tiers of government, including the value added tax, Mr. Otunla said, was N500.130 billion.

The Minister of State for Finance and Chairman of the Committee, Bashir Yuguda, said the Federal Government was allocated about N194.349 billion, or 52.88 per cent; states N98.576 billion, or 26.72 per cent, and local governments N75.996 billion, or 20.6 per cent, while 13 per cent derivation to oil producing states took N39.45 billion.

Mr. Yuguda, who debunked insinuations that the country was broke, said contrary to insinuations, the government has been working hard to meet its obligations to workers on a regular basis, while servicing of the country’s debts and issued bonds have not failed whenever they were due.

The minister announced that the balance in the excess crude revenue account has dropped to about $2.060 billion, with the Naira component of the account at about N19 billion.

While announcing that a committee has been constituted to work out modalities for the sharing of the $1.48 billion recovered from the NNPC at the end of the recent audit of its operations by PriceWaterhouseCoopers, the minister asked the Federal Government to make the full report available to all Nigerians “very soon.”


Despite dilly-dallying on whether or not to make public the full report of the forensic audit on the operations of the Nigerian National Petroleum Corporation, President Goodluck Jonathan has approved the disbursement of the $1.48 billion (about N249 billion) recovered from the national oil company.

The return of the money by the NNPC is one of the major recommendations of the audit conducted by global firm, PriceWaterHouseCoopers. The full audit report is yet to be made public despite protests by Nigerians including civil society groups and opposition parties.

However, on Tuesday, officials stated that Mr. Jonathan had asked that the money, once returned by the state oil firm, be shared among the tiers of government.

The confirmation of the President’s approval came from both the Minister of State for Finance, Bashir Yuguda, and the Chairman of the Commissioners’ of Finance Forum, Timothy Odaah, who spoke at the end of the February meeting of the Federation Accounts Allocation Committee in Abuja.

According to the Minister, based on the President’s approval, he has since opened discussions with the Minister of Petroleum Resources, Diezani Alison-Madueke, and the Group Managing Director of NNPC, Joseph Dawha, on the modalities for sharing the money among the three tiers of government.

“We are working on the modalities and time-frame within which the money should be paid back to the Federation Account,” the minister said. “The President has addressed the issue. What we are waiting for now is to get the money from NNPC and distribute according to the three tiers of government.”

On the publication of the full report, the minister stated that “The report would be made public to Nigerians very soon. The Minister of Petroleum Resources has said that, and I am telling you also as the Minister of State for Finance that the report would be made public very soon.”

The Petroleum Minister, Diezani Alison-Madueke had told the Financial Times of London, that government would not publish the report ahead of election, to avoid a “rabid opposition” finding “all sorts of minute detail (in the full report) to create concern”.

Based on Mr. Yuguda’s “very soon” and Mrs. Alison-Madueke’s seeming fear of a “rabid opposition,” the government appears to have concluded to release the report only after the general elections on March 28 and April 11.

The audit was conducted after the immediate past Central Bank Governor, Lamido Sanusi, alleged that as much as $20 billion may have been missing in the national oil company’s accounts.

According to Mr. Odaah, who is also Ebonyi State Commissioner for Finance, the President approved the payment of the money into the Federation Account for immediate distribution during the next FAAC meeting to be held in March.

He said the state finance commissioners were worried when the issue was not captured in the report presented by the Accountant General of the Federation for Tuesday’s February meeting, particularly the clarification by the Central Bank of Nigeria on the exchange rate to be adopted in disbursing the money.

On other issues discussed during the meeting, Mr. Odaah said the attention of the president was drawn to the poor performances of the electricity distribution companies across the country.

He said the state commissioners were concerned that despite government’s effort to improve the level of electricity supply in the country, the performance of the power distribution companies were nothing to write home about.

“The Federal Government is making great effort to ensure that the electricity distribution is better, but, what we are seeing as commissioners of finance in our respective states, is different. We have to speak up against anything that would negatively impact the effort to energise our economies.

“Power supply is very important and therefore the president’s attention should be called to note that the EDCs have to be directed to do more to help the states,” he said.


Foreign airlines operating into Nigeria have urged the Federal Government to crash the price of aviation fuel (Jet A1) to reflect recent fall in crude oil and refined products prices at the international markets.

Aviation fuel in Nigeria is, however, deregulated and prices hover between N160 and N165 per litre depending on the marketer and location of purchase. Lagos usually has the lowest rate given the numerous marketers in the city, while in other locations like Enugu, Port Harcourt, Abuja and Kano, prices of aviation fuel could go above N167 per litre.

Kingsley Nwokoma, President of Association of Foreign Airlines Representatives in Nigeria (AFRAN), told journalists in Lagos that the government must take steps to ensure marketers reduce fuel price for airlines, noting that retaining aviation fuel price by Nigerian marketers at current rates while other countries are reducing prices could hurt hundreds of Nigerian passengers who still pay higher fares.

Getting oil marketers to crash aviation fuel prices in Nigeria in the last one month has remained a tough battle given the fact that that product is deregulated. And the failure or inability of marketers to independently reduce the price of the Jet A1 has tasked the stance of most proponents of a deregulated downstream industry who have been proved wrong that prices of such products like petrol and kerosene currently regulated in-country will also go down in response to happenings in the global market.

“It’s very unfortunate. Jet A1 remains high in Nigeria even though oil prices have fallen drastically all over the world,” Nwokoma said.

“We are dealing with world standard and it should be world standard; prices have been reduced. It must be applicable here in Nigeria. This falling oil price should also trigger a reduction in fares so that more people can fly,” he added.

Nwokoma also called on the Federal Government to move in and ensure the complete execution of the contract for the expansion of the cargo apron of the Murtala Mohammed International Airport, Lagos, to decongest it and allow the landing of more wide bodied aircraft.

He frowned at the way the cargo apron was abandoned by a contractor who got the contract for its expansion.

“We should have a government that will make people work. You can’t just collect money and disappear, especially for a facility that will benefit the whole country. It’s something that government must look into,” he said.

According to him, it was a bit frustrating for wide bodied aircraft to come to the Lagos airport as a result of the inability of the government to construct a bigger apron for the airport.

“We have an airline that brings in goods and is made to park at international airport in Lagos. The apron is so small and we have had issues and incidents involving planes. The cargo apron is an eyesore because that apron has been there since the airport was built, and we have been crying and calling for its expansion for safety reasons,” Nwokoma said.

He also demanded the installation of close circuit televisions within and around the airport to monitor every activity in the area.

“If we are going to achieve anything positive, manpower and equipment has to be at its peak. The airport must be illuminated,” he added.


Nigeria will call an extraordinary meeting of the Organisation of Petroleum Exporting Countries (OPEC) if crude oil prices slip any further, Minister of Petroleum Resources Mrs Diezani Alison Madueke has said.

Speaking in an interview with the Financial Times, she said: “We’re already talking with member countries. If the price slips any further, it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” she said.

Mrs Alison-Madueke as OPEC president is responsible for liaising with member countries and the producer group’s secretary-general in the event of an emergency meeting.

Almost all OPEC countries, except the Arab bloc, are “very uncomfortable,” she said.

The comments are the first public sign of the deepening unease about the oil crisis since Venezuela and Iran last month pushed for the cartel to cut output in a bid to reverse the more than 50-per-cent drop in prices since June last year.

In November, the 12-member group chose to hold production at 30 million barrels a day. The next official meeting is scheduled for June.

Brent oil prices briefly rose by more than $1  a barrel on the comments, reversing earlier losses, but quickly sank again as dealers doubted whether there was any scope for rapid action given core Gulf OPEC members led-by Saudi Arabia have given no sign they are ready to curb production.

Nigeria “obviously needs more money for its oil, but if the Saudis, who control one-third of OPEC production, do not go along, what can it do?” said James L. Williams, energy economist at WTRG Economics in London, Ark.

Oil extended three consecutive weekly gains in London as OPEC ministers signaled their confidence that the market can sustain its rebound.

Kuwait’s Oil Minister Ali Al-Omair said at a conference in Kuwait City on Monday that an oil surplus is smaller than previously estimated, while his Qatari counterpart Mohammed bin Saleh Al Sada said there is a “sense of optimism” about Brent crude prices, which traded near $62/bbl on Tuesday.

Brent crude is back in a bull market while West Texas Intermediate is close to one on signs that supply may be curbed. U.S. drillers idled 519 rigs in the past 10 weeks, a 33% reduction, according to data from Baker Hughes Inc.

The Organization of Petroleum Exporting Countries lowered its forecast for an oil-supply increase from countries outside the group, and the International Energy Agency said a faster economic expansion will help demand growth accelerate this year.

“The sharp reduction in the U.S. rig count is a sign that the applied medicine eventually will help the market to get rid of its oversupply,” Ole Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by email.

Brent for April settlement climbed as much as 94 cents to $62.34/bbl on the London-based ICE Futures Europe exchange. The contract fell 12 cents to $61.40 on Monday. The volume of all futures traded was about 8% above the 100-day average.

Price Optimism

WTI for March delivery climbed as much as 91 cents from Friday’s close to $53.69/bbl in electronic trading on the New York Mercantile Exchange. It was trading at $53.23 at 11:55 a.m. in London. The floor session was suspended on Monday for the U.S. Presidents’ Day holiday and transactions will be booked Tuesday for settlement purposes.

OPEC, which supplies about 40% of the world’s oil, on Feb. 9 made the deepest cut in at least six years in its monthly projection for output growth from other producers, predicting the market’s drop means U.S. drillers will pump less than previously anticipated.

“Brent is near $62 and there’s a sense of optimism surrounding this issue,” Qatar’s Al Sada said at an annual meeting of Mesaieed Petrochemical Holding Co. in Doha.

Libya Violence

Escalating violence in Libya, which holds Africa’s largest oil reserves, has added to supply fears. Egyptian President Abdel-Fattah El-Sisi, whose air force bombed Islamic State targets in Libya on Monday, said his country will ask the United Nations Security Council to authorize intervention in the North African nation.

Oil production, the main source of revenue in Libya, plunged to 350,000 bpd in January from 1.6 MMbopd before the 2011 rebellion that toppled Qaddafi.

“Brent’s premium looks justified due to Libya concerns and recently announced capex cuts,” Michael Hewson, senior market analyst at London-based CMC Markets Plc, said by email. “A general improvement in economic conditions in Europe is also helping underpin prices.”

U.S. drillers reduced the number of oil directed rigs in service by 84 to 1,056, according to Baker Hughes, an oilfield services company. The decrease in rig counts isn’t enough to stop production growth, said Goldman Sachs Group Inc. Lower prices may be needed to balance the market because U.S. output could still expand by 600,000 bopd in the fourth quarter, compared with a year earlier, the bank said in a note on Monday.

Storm Warnings

The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Permian and Eagle Ford in Texas and the Bakken in North Dakota. Production averaged 9.23 MMbopd through Feb. 6, the most in weekly Energy Information Administration records dating back to January 1983.

Winter storm warnings, meaning travel will be hazardous, stretched from eastern Oklahoma to southern New Jersey, including Washington, Baltimore and St. Louis.

Brent has technical resistance at $61.83/bbl, according to data compiled by Bloomberg. That’s the 23.6% Fibonacci retracement of the slide from a nine-month intraday high of $115.71 in June to January’s low of $45.19. Sell orders tend to be clustered around chart-resistance levels.

Economic experts have projected an average growth of five per cent for Nigeria in 2015, warning that the country will begin to feel the full impact of the decline in oil prices within the next couple of months.

Analysts at Dunn Loren Merrifield, in their Economic Review and Outlook, titled, ‘Growth encircled by vulnerabilities,’ said, “We highlight that dwindling oil prices coupled with lower oil production volumes and its attendant impact on macro-economic indicators remain significant risk to growth in the near term.”

They further projected an average inflation rate of about 10.5 per cent to 11 per cent for 2015, driven by pressures arising from the increase in electricity tariff expected to take off from June 2015 and the devaluation of the naira, among others.

They, however, expressed confidence that the reforms in the power sector will impact positively on inflation in the country, as a relatively stable power supply will help bring down the cost of doing business.

They said, “Though inflation rate remained within the single digit band in 2014, we expect renewed inflationary pressures particularly from January 2015, in reaction to the devaluation of the naira to N168 from N155 considering the fact that Nigeria largely remains an import dependent economy.

“Pressures arising from the increase in electricity tariff expected to kick in from June 2015 and the import duty on imported cars is also expected to push inflation higher in the current year.

“In view of the aforementioned, we project an average inflation rate of about 10.5 per cent to 11.0 per cent for 2015.

“In the medium to long term, we are optimistic that the multiplier effects of the on-going power reforms will also contribute in easing inflationary threats and reducing the cost of doing business. Our view is underpinned by the fact that inflation in Nigeria is largely driven by cost-push factors rather than demand pull factors.”

The analysts stated that oil revenue available for the federal government’s budget in 2015 is estimated at N1.92 trillion, compared with N2.11 trillion in 2014, whilst the non-oil revenue is expected to account for N1.68 trillion compared with N1.61 trillion in 2014.

According to them, although prices are expected to average $65-$70 in 2015, we also do not discount the possibility that global oil prices could continue to decline beyond these levels.

“We are of the view that oil prices would likely hover around current levels till the latter part of the second quarter of 2015. Consequently, we believe Nigeria, as a matter of urgency needs to successfully develop its non-oil sector and generate revenues from alternative sources. We are optimistic that non-oil revenue has immense potentials to increase in the near term,” they explained.

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