Post your Questions, Observations, Comments, Ideas and receive feedback from members. Listen to the "wisdom of the crowd"

Show Posts

This section allows you to view all posts made by this member. Note that you can only see posts made in areas you currently have access to.

Messages - Admin

Pages: 1 ... 15 16 [17] 18 19 ... 79

Nigeria is currently losing $3.72 million, about N632.4 million daily, as the Federal Government yesterday, said crude oil theft had dropped to about 60,000 barrels per day (bpd) from a high of about 200,000bpd.

Speaking in an interview with CNBC Africa, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, said the decline was due to efforts by security agencies and other government agencies in reducing the menace of crude oil theft.

She said: “Security agencies, along with other government agencies, have gone a long way towards reducing the actual incidence of theft. We went to an all-time high of 200,000bpd or perhaps even more to what is currently estimated to be something in the region of 60,000bpd. So we have dropped.”

Crude oil price rose to $62 a barrel, yesterday, close to its 2015 high. Brent crude rose 60 cents to $62.00 a barrel midday on account of the crisis between North African countries, Egypt and Libya as well as supply threats from Iraq and Baghdad.

Therefore, using the current crude oil price, the inability of the country to export the stolen 60,000 bpd translates to a loss of $3.72 million, about N632.4 million per day in Nigeria’s crude oil earnings. If not addressed on time, this will translate to a loss of N4.43 billion in one week or N18.97 billion in one month.

FG laments rising incidence of vandalism

Alison-Madueke, however, stated that despite the major decline in crude theft, the country is currently recording an unprecedented incident of vandalism of gas pipelines.

She disclosed that the rising incidence of vandalism is an act of sabotage and terrorism, and blamed enemies of the country for sponsoring the sabotage.

She said: “While we were dropping in terms of oil theft, unfortunately, we are going up incredibly in the issue of vandalism and sabotage, which again is a major mystery to us, as to why anybody would want to come in, vandalise our crude and by the way, gas pipelines, not for the sake of stealing, but just to disrupt production.”

“This is not oil theft, this is just to disrupt production, because you cannot burst a gas pipeline with the intent to gather gas, you can’t gather the gas in drums or in basket. It is clearly an act of sabotage.

“Once that happens, it means we have to shut in major tranches of pipeline to fix them over a number of weeks. What happens then is what we call shut-in or deferred production, either with the crude or with gas.

“Again, the production volume drops drastically for that period of time until that tranche is reopened. We have seen a major surge in this sabotage, which I actually liken to terrorism, because they come at it in all kinds of remote locations.”

- See more at:

Contrary to the public posturing by some of the oil companies operating in Nigeria that their projects would not be affected by the slump in the price of crude oil, THISDAY has gathered that most of the projects initiated by some of these companies are facing delays or outright cancellation.

This is coming as Addax Petroleum Development Company, last Monday, sacked over 90 per cent of the contract staff without prior notice, fuelling concern that the slump in oil price is taking its tolls on the company.

The Chinese company, however, said it conducted a detailed review of contractors’ services in line with its business needs, adding that its cost optimisation initiative supports its long-term reflection on how to secure  business sustainability in a challenging economic environment.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Joseph Dawha, had stated that three deepwater projects and one shallow water project would suffer delays or cancellation in Nigeria.

But Shell Nigeria Exploration and Production Company Limited (SNEPCo) said the implementation of the SNEP Co-operated Bonga South West/Aparo (BSWA) project, which is one of the deepwater projects, would not be affected.

However, the Chief Executive Officer of SEPLAT Petroleum Development Company Plc, Mr. Austin Avuru, told THISDAY in an interview that whenever there was a sharp fall in oil prices, companies that are properly run would cut both operational expenditure (OPEX) and capital expenditure (CAPEX).

According to him, some companies, excluding SEPLAT, are already cutting jobs in view of their diminished revenue.

“You know, whenever you see a sharp fall in prices, a few things happen almost immediately. Companies that are properly run will take another look at their work programme and cut the work programme to a size that fits what their overall revenue will be in the light of diminished oil prices. That is why, you have, across the world, companies, whether it is Total, Shell, Mobil, they are all cutting their capital expenditure outlay. For us, we are doing exactly the same. So, we have slashed our capital expenditure considerably,” he said.

Avuru further stated that some oil firms are also cutting jobs, adding that his company is not cutting jobs but is being prudent in the deployment of human resources.

“So, we have to task our staff a little more without having to cut jobs but certainly, we are cutting down on both our OPEX and CAPEX,” Avuru added.

Avuru, noted that SEPLAT, which is listed on both the Nigerian Stock Exchange and the London Stock Exchange, had been in the growth phase since 2010, adding that the company’s capital expenditure has been quite huge during the past four years.

According to him, while the total expenditure on Oil Mining Leases (OMLs) 4, 38 and 41 in the 10 years before SEPLAT took over amounted to not more than $40 million yearly, his company, as a joint venture, spent in excess of $800 million on these three leases in 2014 alone.

“That is to tell you the kind of investment we are making in the past four years to get to where we are. So, now the current reality of the low oil price is such that we have to cut down our OPEX and our CAPEX,” he added.

Also in apparent response to the slump in oil prices, Addax Petroleum last Monday sacked over 90 per cent of contract staff.

When contacted on the matter, the company’s General Manager in charge of External and Government’s Affairs, Mrs. Dorothy Atake, told THISDAY that the reality of the falling oil prices requires prompt action by all Exploration and Production (E&P) companies.

According to her, Addax Petroleum has acted quickly and defined cost optimisation initiatives for immediate implementation across the entire organisation.

”Consequently, we have conducted a detailed review of contractors’ services in line with business needs. Our cost optimisation initiative supports our long-term reflection on how to secure our business sustainability in a challenging economic environment. We will continue to monitor our progress against business objectives during these challenging times,” she said.

Halliburton Co. is cutting as much as 8 percent of its global workforce of more than 80,000 as it confronts the collapse of oil prices and brings job reductions more in line with its largest competitors.

The world’s second-largest oilfield services company, which announced general plans to boost dismissals last month, expects to reduce its workforce by 6.5% to 8%, according to an e-mailed statement Tuesday. The reductions include the company’s previous announcement in December of 1,000 cuts in the Eastern Hemisphere, Emily Mir, a spokeswoman said in the statement.

“We are faced with the difficult reality that reductions are necessary to work through this challenging market environment,” Mir said. “The impact will be across all areas of Halliburton’s operations.”

The oilfield services industry, which helps explorers find and produce oil and natural gas, has been the first to feel the effects of the price collapse. Oil companies have slashed spending in the past quarter after crude plunged more than 50% since June as U.S. production surged and OPEC resisted output cuts.

“As activity in North America begins to fall more sharply, we will make similar adjustments here as well,” President Jeff Miller told analysts and investors Jan. 20 on an earnings conference call. “Between actions already taken in the fourth quarter and actions we anticipate taking by the end of the first quarter, we expect our head count adjustments to be in line with our primary competitors.”

Schlumberger Ltd. has announced cuts of 9,000 jobs and Baker Hughes Inc. has reduced 7,000 positions. Weatherford International Plc has announced 8,000 dismissals.

Oil & Gas Industry / Over $6b lost yearly to oil theft, says labour
« on: February 11, 2015, 09:04:31 AM »
Nigeria loses over $6billion yearly to crude oil theft, Chairman, Rivers State chapter of Trade Union Congress of Nigeria (TUC), Comrade Hyginus Chika Onuegbu, has said.

“In fact our concern is that hardly does any day go by in Nigeria, without the story of how large sums of money are stolen by Nigerians who are in positions of trust.

“Hardly does a day pass without the stories of how Nigerian crude oil is brazenly stolen by oil thieves assisted by their collaborators in high places.

“It is on record that by government’s own admission, which is very conservative, about 10 per cent of Nigeria’s total crude oil production of about 2.5million barrels per day (MMbpd), which is about 250,000bpd is stolen, this is almost two and a half times the total production of our neighbour, Ghana.

“We are of the considered view that the falling crude oil price provides a good opportunity for government at all levels to block all leakages in the system such as corruption, inefficiency, oil theft and the huge cost of governance in Nigeria,” he said.

Onuegbu said  the volume of money lost to corruption and inefficiency in Nigeria may be more than 40 per cent of the annual budget, adding that the amount of money lost to oil theft and pipeline vandalism is humongous.

He said the revelations at the various probes by the National Assembly, are heart-breaking as billions of naira, and now trillions of naira meant for the improvement in the welfare and condition of living of ordinary Nigerians, have been stolen by those who are entrusted with the treasury.

Onuegbu called for the quick passage of Petroleum Industry Bill (PIB), saying that this will address so many things in the sector.

“What the government should do is to immediately pass the PIB into law because Nigeria has lost hundreds of billions of US dollars in oil and gas investment due to the non-passage of the PIB,” he said.

Oil & Gas Industry / Nigeria Looks to Harness Natural Gas
« on: February 06, 2015, 01:05:30 PM »
Many Nigerian communities where oil is pumped or piped say they see little development brought by the country's largest industry. Some are looking to alternative energies as a way of reducing poverty and illness.

For the past 10 years, Dokas Obonyano has worked drying cassava by the heat of a natural gas flare. The Shell oil company's flow station in Uzere in Nigeria's Delta State pumps oil from the well and separates bubbles of natural gas trapped in the sweet crude. The gas is a by-product piped out into the air and set on fire.

"It's dangerous, it's very dangerous. but what are we going to do?" said Obonyano as she lays out cassava on woven mats and places them near the flare.

Obonyano comes here with three of her children because she can't afford to put them through school.

"There's no help. We labor before we eat. That's why we come here - for our children," said Obonyano. "I don't have any money to pay the school fees, that's why I come here," she added.

In Nigeria's Delta region, oil is pumped, the gas is burned off, and the liquid crude is exported.

Though natural gas is not a renewable energy, it's a source of power otherwise lost in the oil extraction process.

Estimates show enough gas is flared to reliably power much of the country.

The toxic fumes have been linked to health problems for people who live nearby. They release huge amounts of carbon dioxide into the atmosphere.

Gas to power

Shell's Afam 2 power plant was built to turn some of that natural gas into power for the country.

The company says the project also improves nearby communities by providing training opportunities and directly delivering electricity.

"Impacted communities are connected to the grid with 24-hour electricity. Economic development has changed from the time we moved in until now," said Ben Agbajogu, director of the Afam 2 power plant.

The impact is certainly not only local.

This plant alone produces about 15 percent of the entire country's grid electricity, when the whole system is operational.

Agbajogu blames illegal tapping of oil pipelines for disrupting the flow to power stations.

"There is always an issue around vandalization on the trunkline," he said.

"When the trunkline is distressed, you will not be able to deliver those liquids and the gas facilities will have to shut down because the trunklines are down. This will impact heavily on both the domestic gas supply and electricity to the grid," he said.

However, if Shell and the government have reduced flaring, delivered electricity and provided training opportunities, not everyone in the Delta is seeing this.

Many communities where oil is pumped or piped say they see little development brought by the country's largest industry.

"For over 58 years now this community have been producing oil for Nigeria. The government just abandoned us, as in no development has been coming," said Orevaoghene Jathtah Ogbiki, a representative of the chief in Uzere.

He says residents have become ill from burning charcoal to cook, and cutting down the trees has caused floods because of erosion.
"It's destroying our forest because we cook with firewood," said Jathtah Ogbiki.

"It generates smoke and the smoke is hazardous to health."

A renewable approach

Now the community is getting some help from Ifeanyi Charles Aghaulor, an engineer from the Delta region and the executive director of the Biotech Development Network.

He invented a biodigestor that takes kitchen waste, along with husks and stocks left over from farming, and turns it into methane cooking fuel.

The community built 10 biogas units through the Ministry of the Environment's Territorial Approach to Climate Change program.

"It doesn't have smoke and can improve the health condition of the people, the sanitation of dropping waste haphazardly has now stopped. You can now use it to clean up the environment," said Aghaulor.

Ready for change

Felicia Egoru has been cooking with charcoal her whole life in Uzere.

She is concerned about the health impacts from the smoke and is ready to make the change to biogas.

"The firewood is always smoking and this one cannot be smoking," said Egoru. "I will use it to cook. I prefer it to firewood."

She says this small change can make a big impact on her health and the wellbeing of the community.

Research on this article was made possible with the support of the European Journalism Centre


In late 2013, Nigeria's then central bank governor Lamido Sanusi wrote to President Goodluck Jonathan claiming that the state oil company had failed to remit tens of billions of oil revenues it owed the state.

After the letter was leaked to Reuters and a local news site, Jonathan publicly dismissed the claim and replaced Sanusi, saying the banker had mismanaged the central bank's budget. A Senate committee later found Sanusi’s account lacked substance.

Sanusi has since become Emir of Kano, the country's second highest Islamic authority, and has smoothed over relations with the president. He declined to discuss his earlier assertions. Before he was sacked, though, the central banker submitted to Nigeria’s parliament more than 300 pages of documentation in support of his claim. Reuters has reviewed that dossier, which offers one of the most comprehensive studies of waste, mismanagement and what Sanusi called “leakages” of cash in Nigeria’s oil industry. Detailed here, the dossier includes oil contracts, confidential government letters, private presidential correspondence and legal opinions.

Sanusi’s letter and documents do not state whether he thinks the money was stolen or lost through mismanagement. Nor did he make allegations of illegal acts against any specific individuals or entities. Both corruption and bad governance are perennial problems in Africa’s most populous nation, and central issues in elections due on Feb. 14.

Nigeria’s oil industry accounts for around 95 percent of the country’s foreign exchange earnings. If Nigeria continued to leak cash at the rate described in his letter to the president, Sanusi said at the time, the consequences for the economy would be disastrous. Specifically, the failure of state-owned Nigerian National Petroleum Corporation “to remit foreign exchange to the Federation Account in a period of rising oil prices has made our management of exchange rates and price stability ... extremely difficult," he wrote. "The central bank of Nigeria is always blamed for high rates of interest,” but “given these leakages, the alternative is a devalued currency ... and financial instability."

That is exactly what has happened. As oil prices have plummeted to around $55 a barrel, half their level at the beginning of 2014, Sanusi’s successor Godwin Emefiele has devalued the naira, Nigeria’s currency, by 8 percent, and raised interest rates for the first time in more than two years.

Nigerian foreign exchange reserves are down around 20 percent on a year ago, while the balance in the country's oil savings account has fallen from $9 billion (5.87 billion pounds) in December 2012 to $2.5 billion at the start of this year, even though oil prices were buoyant over much of that period. Finance Minister Ngozi Okonjo-Iweala told reporters at a press conference in November that a significant portion of that money was distributed to the powerful governors of Nigeria’s 36 states instead of being saved for a rainy day.

Nigerians are rarely shocked by stories of billions going unaccounted for, or ending up with politically powerful individuals. Africa’s largest oil producer has for years consistently ranked towards the bottom of Transparency International’s Corruption Perceptions Index.

Sanusi handed his documents to a parliamentary inquiry set up last February to investigate the assertion in his letter that billions of dollars in oil revenue had not reached the central bank. He told the inquiry that state oil group NNPC had made $67 billion worth of oil sales in the previous 19 months. Of that, he said, between $10.8 billion and $20 billion was unaccounted for.

A spokesman for the president declined to comment on the specific contents of Sanusi’s dossier. He referred to a statement made at the time the banker was pushed out. It said the government “remains committed to ensuring integrity and accountability and discipline in every sector of the economy ... And indeed we look forward to a situation whereby Mr. Sanusi will continue to assist the legislature in their investigations.”

Those investigations include a “forensic audit” of the oil industry set up by Okonjo-Iweala. The audit was given to Jonathan on Feb. 2 and he said he would hand it on to Nigeria’s auditor general. NNPC said on Feb. 5 it had received a copy of the audit, before it was made public. The firm said the audit cleared it of wrongdoing, although it found NNPC owed the government $1.48 billion for a separate shortfall.

A spokesman for NNPC rejected Sanusi's allegations and referred Reuters to last August’s Senate inquiry. The inquiry expressed satisfaction that most of the money not remitted was withheld for legitimate reasons. But it urged the NNPC to remit $700 million that the committee said it could not account for.

Diezani Alison-Madueke, the oil minister who oversees NNPC, did not respond to a request for comment. She told the inquiry at the time that the correct sum for money not remitted was $10.8 billion, which was to pay for subsidies.

The NNPC has consistently said it did nothing wrong. The oil company said last year that Sanusi’s allegations came from his "misunderstanding" of how the oil industry works. The central bank is “a banking outfit ... how will they understand petroleum engineering issues?" then managing director Andrew Yakubu asked journalists. "They are not auditors."

Sanusi’s claims were seen by some Nigerians as part of the historic tensions between the country’s wealthy, Christian south and poorer Muslim north. Jonathan and oil minister Alison-Madueke are Christians from the oil-producing Niger Delta in the south. Sanusi is a Muslim from the country’s north, as is Muhammadu Buhari, a former military ruler of Nigeria who is the main presidential candidate running against Jonathan. The two regions have historically taken it in turns to hold the presidency. Since 2009, though, Jonathan has broken with this tradition.

Sanusi has said any notion there were religious or ethnic politics behind his allegations is absurd. He has declined to be interviewed since becoming the Emir of Kano.

But last April, two months after he was sacked but before he took on his new role, Sanusi told Reuters he worried that the sheer quantities of cash going missing were “unsustainable.”

“You are taking what doesn’t belong to you and transferring it to private hands,” he told Reuters. “The state is captive to vested interests.”


Sanusi’s documents identify three key mechanisms through which Nigeria has allegedly allowed middlemen to channel oil funds away from the central bank. Among the recipients, Sanusi alleges, are government officials and high-flying society figures.

The three mechanisms are: contracts awarded non-competitively to two companies that did not supply services but sub-contracted the work; a kerosene subsidy that doesn’t help the people it is meant to; and a series of complex, opaque "swap deals" that might be short-changing the state.

Sanusi’s concerns around the first of these mechanisms centre on the 2011 sale by Royal Dutch Shell of its interests in five oil fields. The blocks were majority-owned by NNPC. The government, keen to end the domination of the oil industry by foreign oil majors, had been encouraging Shell and others to sell to local firms.

Shell sold its interest in the fields to companies in Poland and Britain. But the new owners did not get the same rights Shell had. To promote local control, the NNPC gave the right to operate the fields to its own subsidiary, the Nigerian Petroleum Development Company (NPDC).

Without soliciting bids, the NPDC signed "strategic partnership agreements" worth around $6.6 billion with two other local firms to manage them.

One firm, Seven Energy, signed for three fields; another, Atlantic Energy, for two.

Seven Energy was co-founded in 2004 by Kola Aluko, an oil trader and Christian southerner. Aluko also co-owned Atlantic with another southerner, former oil trader Jide Omokore. Atlantic was incorporated the day before it signed the deals.

Geneva-based Aluko is a high-profile member of Nigeria's elite. He owns a fleet of supercars, including a Ferrari 458 GT2 that he races with Swiss team Kessel Racing. He also owns a $50 million yacht, according to Forbes magazine, and divides his time between a $40 million home in Los Angeles, an $8.6 million duplex on Fifth Avenue in New York, and homes in Abuja and Geneva. A colleague describes him as a "work hard, play harder kind of guy. He’s extravagant. That’s just his style.”

Aluko, whose stake in Seven is now minimal, did not respond to emailed questions.

Omokore has also become rich from oil and gas. Forbes has estimated annual revenue at another of his companies, Energy Resources Group, at $400 million. His jet-setting lifestyle is a regular feature in the local press. Omokore could not be reached for comment.

Reuters has reviewed the contracts the firms signed with NPDC. They give Seven Energy 10 percent of profits in the three oil blocks it operates, while Atlantic gets 30 percent of profits in its two blocks. The contracts also show that, unlike Shell, neither firm pays royalties, profit tax or duties to the state.

Both companies quickly sub-contracted production work to other operators, according to Sanusi's submission to parliament and several market sources. The companies did not disclose terms of these contracts.

Atlantic does not publish accounts, but Seven’s 2013 annual report shows its deal with NPDC helped its revenue more than triple to $345 million.

In May 2013, Nigeria’s parliament threatened to investigate the NPDC contracts because they were not issued through competitive tender. But the NNPC argued no tender was needed because the contracts involved no sale of equity in the oil fields; the probe did not go ahead.

Sanusi did not accuse Seven and Atlantic of any illegalities, but he did question why the NPDC chose those companies. His report said the deals’ only purpose seemed to be “acquiring assets belonging to the federation (state) and transferring the income to private hands."

Asked about this, NNPC referred to the Senate report, which found that no-bid partnership agreements are not new. It also said that "it may be good policy to encourage indigenous players by giving them greater participation," but called for such deals "to be conducted in a transparent and competitive manner."

Seven did not comment. It says on its website its agreement with NPDC pre-dated the Jonathan administration and included an allowance for taxes. The company says it has invested more than $500 million, more than doubled production from its three blocks, and paid $48.8 million in taxes in 2013. Atlantic did not comment.


The second mechanism Sanusi’s report identifies as problematic is a decades-old state subsidy provided to retailers of kerosene, the fuel most Nigerians use for cooking.

Nigeria lacks the refining capacity to make kerosene, so imports it instead. The government then sells the kerosene to retailers at a cheaper price than the import price. This subsidy is meant to make kerosene affordable for the poor. In reality, though, retailers have long hiked prices so consumers pay much more than official levels.

In June 2009, Jonathan’s predecessor, Umaru Yar'Adua, ordered a halt to the scheme on the grounds that it was not working. But the subsidies carried on regardless. The NNPC told parliament last February that it still deducts billions of dollars a year from its earnings to cover it.

In his report, Sanusi called the kerosene subsidy a "racket" that lines the pockets of private kerosene retailers and NNPC staff. The report estimated the cost of the subsidy at $100 million a month. It said kerosene retailers – there are hundreds of them around the country – routinely charged customers much higher prices than the government pays to import the fuel.

Sanusi’s report included an analysis of kerosene prices across Nigeria’s 36 states over two years. It found that the government buys kerosene at 150 naira per litre from importers and then sells it to retailers at just 40 naira per litre. Sanusi’s analysis found consumers pay an average of 170-200 naira per litre, and sometimes as much as 270 naira.

“The margin of 300 percent to 500 percent over purchase price is economic rent, which never got to the man on the street,” Sanusi wrote.

NNPC said in a statement last year that it can't force retailers to sell kerosene at the subsidised price.


The third mechanism Sanusi identified involves other types of refined petroleum products, such as gasoline. Like kerosene, these are also imported. Nigeria is Africa’s biggest oil producer but it depends on imports for 80 percent of its fuel needs because its refining capacity is tiny.

To pay for the imported products, Nigeria barters its crude oil. Sanusi’s dossier focuses on these barter exchanges, which are known as "swap deals." The idea is that importers who bring in refined fuel worth a given amount receive an “equivalent value” in crude oil.

How that equivalent value is determined is unclear. Sanusi said he was uncertain how much, if anything, is lost in these deals. But he expressed concern at the sheer value of oil that changes hands and the lack of oversight. His report estimated that between 2010 and 2011, traders involved in swap deals effectively bartered 200,000 barrels of crude a day – worth nearly $20 million at average crude prices over the period - for a loosely determined equivalent value in refined products. It is impossible to tell, he said, if all the refined products were delivered, let alone if the terms were fair.

“It was clear to us that these transactions ... were not properly structured, monitored and audited,” he wrote.

Sanusi wrote in his report that mismanagement and “leakages” of cash in the industry cost Nigeria billions of dollars a year.

Since the price of oil has fallen by around half since the start of 2014, such losses are even more significant. As it approaches elections, Nigeria faces plummeting oil revenues and a lack of buffers to shield the economy. Construction projects are on hold and the government is struggling to pay its sizeable workforce.

Multiple scandals in the oil sector since Jonathan took power have boosted the popularity of his rival, former military leader Muhammadu Buhari. Remembered by some for deposing a civilian government in a 1983 coup and trampling on civil liberties, the sandal-wearing general often promises to "free Nigeria from corruption."

Jonathan, too, says he will “clean up” Nigeria. By using technology and strengthening institutions, “I will solve the problem of corruption in this country,” he told a crowd in Ibadan in January.

Nigeria’s state oil company operates an “unsustainable model” and should refund a minimum $1.48 billion to the government, a PricewaterhouseCoopers LLP audit recommends.

The Nigerian National Petroleum Corp. spends 46 percent of domestic oil proceeds on operations and subsidies, according to highlights of an 18-month review between January 2012 and July 2013 released by the office of Nigeria’s Auditor General. The NNPC can’t sustain monthly remittances to government or meet operational costs from crude revenue and incurs third-party liabilities to fund the gap, according to the statement.

“PwC therefore recommended that the NNPC model of operation must be urgently reviewed and restructured,” according to Auditor General Ukura Samuel’s statement. “The current model which has been in operation since the creation of the corporation cannot be sustained.”

The audit came after the former central bank governor of Africa’s largest oil producer, Lamido Sanusi, wrote to President Goodluck Jonathan in late 2013 alleging the NNPC had retained almost $50 billion in revenue that was due to the government. He later amended the figure to $12 billion at a news briefing with the finance minister before raising it to $20 billion at a Feb. 4 meeting with lawmakers. The NNPC has denied the allegations.

Jonathan then suspended Sanusi in February last year for alleged financial recklessness and misconduct. Jonathan’s office said that under Sanusi’s watch the central bank was “distracted” from its mandate.

The audit “has absolved the NNPC of culpability over the allegation of non-remittance of $20 billion,” Ohi Alegbe, a spokesman for NNPC based in the capital, Abuja, said in an e-mailed statement. “The $1.48 billion was never in dispute as it is made up of statutory payments such as signature bonus, taxes and royalties which are statutory payments that come with assets acquisition.”

Total crude sold during the audit period was $69.3 billion and not $67 billion earlier claimed by NNPC, according to the audit highlights, with the state oil company spending $8.7 billion on gasoline and kerosene subsidies.

Petroleum Minister Diezani Alison-Madueke “has directed the NNPC to defray the signature bonuses, taxes and royalties in line with the recommendation of the forensic audit report,” Alegbe said.


As more Nigerians are calling on the federal government to diversify the economy so that Nigeria no longer depends on the crude oil as the mainstay of the economy, the former Rector, Maritime Academy of Nigeria (MAN), Oron, Akwa Ibom State, Mr. Nseyen Ebong has called for the resuscitation of the defunct national shipping carrier, Nigerian National Shipping Line Limited (NNSL).

Describing it as the “fastest way” to bring Nigeria out of the present economic predicaments arising from the dwindling price of crude oil in the international market, Ebong who was the immediate past rector of MAN, Oron , said the move would also ensure the sustainable development of the maritime industry.

He expressed regret over the absence of a national shipping carrier as well as what he called the “backward approach” to the nation’s economic planning.

He recalled that in 1985 NNSL had 20 big ships while Malaysian International Shipping Corporation had only seven.

“Today, the Malaysian International Shipping Corporation has 151 ships in its fleet, while the Nigerian National Shipping Line has none. In fact, it is in a complete state of liquidation. I also remember that at that time, all the cadet students in the Maritime Academy of Nigeria, Oron, were sponsored by government agencies to encourage development of the area, but today, Nigerian National Petroleum Corporation (NNPC) which should have developed the NNSL to in turn develop the maritime academy, is an island unto itself," he said.

Ebong, who spoke in his office in Uyo enjoined the government to fast-track the conversion of MAN, Oron into a degree-awarding institution.

"This is based on the consideration that the maritime industry, if well harnessed and developed can generate three times what the nation is getting as revenue from the oil and gas sector. If the government had in the last 10 years given attention to development of the maritime industry, today’s economic crisis would have been averted.

To develop the sector, therefore, we need more sea professionals and so I want to appeal to President Jonathan fast track the conversion of the maritime academy into Maritime University of Nigeria," he said.

According to him, the request was based on the conviction that the maritime sector which had been abandoned for so long, is the fastest way to bring the nation out of its mono-economic state, hence the need for more professionals to be trained in the area.

Ebong stated that the government need to maximize the huge potential in Nigeria’s coastline of about 840 kilometres from Calabar to Lagos and about 3000 kilometres of inland water ways.

He dismissed the idea that the resuscitation of the national shipping carrier should be private sector driven, pointing out that government should lead the way because it is capital intensive.

According to the former rector, waiting for the private sector to resuscitate the national shipping carrier means we are not heading anywhere.

Ebong expressed dismay that MAN, Oron cadets in the past had two ships for their sea trainings but it has gotten to a point it can no longer afford even a ship for students to carry out such trainings.

He maintained that with the current price per barrel which has severely affected the nation’s budget.

According to Ebong, Nigeria should invest in other sectors of the economy such as maritime and agriculture where it has comparative advantages.

The Federal Government ordered forensic audit on the operations of the Nigerian National Petroleum Corporation, NNPC, has indicted the national oil company for various questionable transactions.

Highlights of the recommendations by the audit firm of PriceWaterhouseCoopers, PwC Nigeria, which conducted the audit, asked the Nigerian Petroleum Development Company, NPDC, the upstream subsidiary of the NNPC, to refund a total of $1.48billion (about N248.6billion) to the Federation Account for various unreconciled transactions.

The Auditor General of the Federation, AuGF, Samuel Ukura, who said he was presenting the highlights of the report at the request of President Goodluck Jonathan, pointed out that it was not his responsibility to present such audit reports to arms of government other than the National Assembly in line with the Constitution.

According to Mr. Ukura, contrary to the allegation by the former Central Bank of Nigeria, CBN, Lamido Sanusi, that only $67billion was the total unremitted revenue from crude oil lifting by the NNPC between January 2012 and July 2013, findings by PwC Nigeria showed that the total amount involved was $69.34 billion.

He said the amount included about $28.22billion, being the value of the domestic crude oil allocated to the NNPC for local refining during the period, while total cost directly attributable to domestic crude oil was $1.46billion.

In addition, he said total amount spent on subsidy for premium motor spirit, PMS, or petrol, was about $5.32billion, while a similar expenditure for dual purpose kerosene, DPK, or diesel stood at about $3.38billion.

Other third party financing arrangements, including equity crude oil processing costs, the report said, was $1.19billion, while other costs incurred by NNPC that were not directly attributable to domestic crude oil was $2.81billion.

According to the report, total revenue submitted by the NPDC, after petroleum profit tax, PPT, and Royalty were deducted amounted to $5.11billion, pointing out that the amount needs to be included in the financial statements of the company from where dividend should be declared to the Federation Account.
It noted that signature bonus PPT and royalty yet to be paid by NPDC to the government stood at about $2.22billion.

“Total cash remitted to the Federation Accounts in relation to crude oil liftings for the period from January 2012 and July 2013 was $50.81billion and not $47billion,” the report said. “Based on the information available to PwC and from the analysis above, the firm submitted that NNPC and NPDC should refund to the Federation Accounts a minimum of $1.48billion.”

Further analysis, the AuGF said, centred on NNPC costs, ownership of NPDC revenues and DPK subsidy, pointing out that the corporation was operating an “unsustainable model”.

While 46 per cent of the revenues realized from domestic crude oil for the period was spent on its operations and payment and subsidies, the NNPC was unable to either sustain its monthly obligation to remit to the Federation Account Allocation Committee, FAAC, or meet its operational costs from such revenues.

To bridge the funding gap between available revenue and third party liabilities, the report said transaction documents valued at about $2.81 billion, representing additional costs for such funding arrangements based on the NNPC Act No. 33 of 1977 required further clarification to justify such deductions by NNPC as a first line charge.

Echoing the need to revisit the issue of the Petroleum Industry Bill, PIB, currently pending before the National Assembly, the report called for an urgent review and restructuring of the NNPC operational model to bring it up to the global standard.

On ownership of NPDC revenues, the report noted that out of about $1.85billion realized from NNPC’s 55 percent stake in the oil mining leases, OMLs, involved in the Shell Petroleum Development Company, SPDC divestment of from eight OMLs, only $100 million has so far been remitted to government coffers.

Noting that the NPDC had conducted a self-assessment of PPT and Royalty it collected, about $470 million was yet to be remitted, while there were no records to suggest that the company had done the assessment for the period under review.

“NPDC should remit dividend to NNPC and ultimately to the Federation Accounts based on NPDC’s dividend policy and declaration of dividend for the period,” the report said.

On kerosene subsidy, the report said information obtained from the Petroleum Products Pricing Regulatory Agency, PPPRA, revealed that NNPC incurred about $3.38billion cost relating to subsidy for diesel for the period.

Despite a correspondence by the Presidency confirming a 2009 presidential directive stopping payment of subsidy on diesel, and another from the PPPRA to the CBN governor clarifying that the agency had ceased to grant subsidy, kerosene subsidy was not appropriated for in the 2012 and 2013 federal budget.

The report recommended that an official directive be written to legalise the presidential directive on cancellation of subsidy payment on diesel, while also issuing same to support the directive on kerosene subsidy, both of which were not gazette.

“There should be followed by adequate budgeting and appropriation for the costs,” the report.

The audit became necessary after the former CBN governor had alleged that as much as $49 billion was diverted by the NNPC. Though the figure was reconciled between the CBN, Finance Ministry and NNPC, Mr. Sanusi said about $12 billion was involved, while Minister of Finance, Ngozi Okonjo-Iweala said the amount left was $10.8bilion.

Mr. Sanusi later reviewed the amount to $20 billion, and called for investigations, A Senate probe failed to get to the roots of allegation.

In April, Mrs. Okonjo-Iweala, had announced the appointment of PwC Nigeria, to conduct a detailed investigation into the accounts and activities of NNPC.

Though the auditors were given 16 weeks till September 2014 to complete its assignment, the report was coming several months after the deadline, triggering huge concerns from Nigerians, who demanded the release of the audit findings.

Apart from the Presidential candidate of the All Progressives Congress, APC, Muhammadu Buhari, who made the call on government to publish the report, the former Vice President of the World Bank, Oby Ezekwesili also joined to demand for the report.

The former CBN governor, Chukwuma Soludo, also touched on the issue in his recent article accusing the managers of the Nigerian economy of not accounting for several billions of oil money.


A Federal High Court in Lagos has directed Shell Petroleum Development Company of Nigeria Ltd and two other oil companies to preserve their 45 per cent participating interests in Oil Mining Lease, OML 25.

Other oil companies affected by the order are Total E & P Nigeria Limited and Nigeria Agip Oil Company Limited. Justice Mohammed Idris made the order after hearing arguments presented by counsel to Crestar Integrated Natural Resources Limited, Mr. Tayo Oyetibo, SAN.

The applicant had sued the oil companies on the claim that they were planning to dispose their shares in the Oil Minning Lease, OML, 25.

The order reads ‘’an order is hereby made restraining the defendants/ respondents, whether by themselves, their management, servants, agents, assigns, privies, proxies, fronts, staffers or any other person whomsoever called acting under their authority from proceeding or continuing to negotiate or engage in any transaction or contract calculated or purported to transfer, sell, farm out or otherwise charge, encumber, dealing, dispose of or divest the defendants/respondents 45 per cent participating interest in Oil Minning Lease No. 25 ,OML, to any person, authority or agency pending the determination of the motion on notice.”

The court also made an order restraining the defendants, their agents, assigns or others acting under their authority from declaring any other bidder apart from the applicant as the preferred bidder for the assignment of the defendants 45 per cent undivided participating interest in OML 25 pending the determination of the motion on notice.

According to Crestar in its 16 paragraph affidavit in support of the application deposed to by its managing director, Mr. Adeniyi Olaniyan, OML 25 is jointly owned by NNPC with 55 per cent interests and the three defendants with 45 per cent .

The company had alleged that it had paid $453,320,000 to an escrow account with JP Morgan in London, which was nominated by the defendants, consequent upon which a Sale and Purchase Agreement, SPA, was executed by Crestar and the defendants.

It further alleged that under the Joint Operating Agreement, JOA, by which the defendants and NNPC were operating the OML 25, NNPC had 30 days, from the date it was notified of the intention of the defendants to assign their interests to Crestar, within which to exercise its pre-emption rights.

The defendants’ notice to NNPC was alleged to have been dated July 3, 2014 and promptly delivered to NNPC which responded by a letter dated October 27, 2014 to exercise its pre-emption rights to buy the defendants’ interests in the OML 25.


The forensic audit conducted by the audit firm of PriceWaterHouseCoopers on behalf of the Federal Government on the operations of the Nigerian National Petroleum Corporation [NNPC] has indicted the management of the national oil company for various questionable transactions.

Part of the recommendations include that the Nigerian Petroleum Development Company, NPDC, the upstream subsidy of the NNPC should refund about $1.48billion to the Federation Account for various unreconciled transactions.
More details of report to come.

President Goodluck Jonathan had on Monday publicly received the report a day after a former Governor of the Central Bank of Nigeria [CBN], Chukwuma Soludo, wrote a long, acerbic article accusing the managers of the Nigerian economy of misappropriating over N30trillion of public funds, including several billions in oil money.

The forensic audit was commissioned following allegation by the immediate past Governor of the CBN, Lamido Sanusi, that about $20 billion oil money was missing from the NNPC.

The Presidency had on March 12, 2014 announced, through a statement by the president’s spokesperson, Reuben Abati, that it had authorised the engagement of reputable international firms to carry out the forensic audit of the accounts of the NNPC.

The allegation that the huge amount had been stolen was raised in 2013 by a former governor of the Central Bank of Nigeria, Lamido Sanusi, who is now the Emir of Kano.

Mr. Sanusi said as much as $49 billion was diverted by state oil company, Nigerian National Petroleum Corporation, NNPC.

He later reviewed the amount to $20 billion, and called for investigations after writing to President Goodluck Jonathan.

A Senate probe into the allegation yielded no result. Mr. Sanusi was later fired by President Jonathan after he was accused of “financial recklessness”.
The government said no money was missing, but promised a forensic investigation of NNPC.

In April 2014, the Minister of Finance, Ngozi Okonjo-Iweala, announced the appointment of the accounting firm, PriceWaterHouseCoopers (PwC), to conduct a detailed investigation into the accounts and activities of NNPC.

The minister said the investigation, under the supervision of the Office of the Auditor-General of the Federation, would take about 16 weeks.

That schedule meant at most by September 2014 ending, the report should have been ready. A two-month delay meant the report should have been ready by November.

But the government only publicly received the report on Monday.

Oil & Gas Industry / MOMAN predicts crude oil price rise in 2015
« on: February 05, 2015, 01:46:04 PM »

The Major Oil Marketers Association of Nigeria (MOMAN) has expressed optimism that the falling crude oil prices would rise again in the global market before the end of 2015.

Speaking at a quarterly roundtable on the economy organised by Nigerian NewsDirect, the Executive Secretary, MOMAN, Mr. Femi Olawore, said that it was characteristic for the crude prices to rise and fall.

Olawore said policy makers should address the challenges of foreign exchange fluctuations to enable investors plan ahead, including the need to save in the Sovereign Wealth Fund whenever there is a rise in prices of the commodities.

He said the government should look inward by halting what the country does not really need like importation of toothpicks and other items.

Olawore called for the passage of the Petroleum Industry Bill, PIB in order to boost investment in the upstream sector.

“If we can fix the power sector, patronage of diesel will drop, and price of diesel will also drop. Unless the downstream sector is fully deregulated, domestic price may not reflect current price at the international market, “he said.

The chairman of the roundtable, Dr Diran Fawibe, explained that the fall in crude oil prices was affecting the country because the government focuses only on the oil and gas sector as main source of foreign exchange earnings.

He suggested that if the government could focus more on non-oil and gas sector and other mineral resources like palm oil, cocoa and other mineral materials, the fall or increase in the prices of oil would not have any impact on Nigeria’s economy.

The representative of Muda Yusuf, the Director-General, Lagos Chamber Commerce and Industry (LCCI), Mr Vincent Nwani, said that if the crude oil price continued to go south, there would be a huge fiscal problem in the economy.

“If the crude price continues to drop, some state governments may find it difficult to pay salaries. But Nigeria may not be ready to diversify until say crude oil price falls to $10 per barrel.’’

Oil & Gas Industry / One dead as pirates hijack oil tanker off Nigeria
« on: February 05, 2015, 01:44:50 PM »
Pirates have hijacked a crude oil tanker off the Nigerian coast, taking three hostages and killing the vessel’s Greek deputy commander, the Greek coastguard said Wednesday.

The Malta-flagged Kalamos was anchored and awaiting fresh cargo from Qua Iboe, an oil terminal in Nigeria’s southeastern region operated by ExxonMobil, when it was boarded on Tuesday.

Two of the three hostages are Greek, and Greeks make up 10 out of the total 23 crew, a spokeswoman for the coastguard told AFP.

The hijacking of the 15-year-old tanker took place in the Gulf of Guinea, which experts have said is the new epicentre of piracy in Africa.

Between January and September last year the area recorded 33 incidents of piracy and armed robbery, according to the International Maritime Bureau (IMB).

It said the pirates operating off the coast of Nigeria, Togo and Benin are heavily armed and violent, and often hold crews hostage for several days.

- See more at:

Oil & Gas Industry / China steps up LNG imports from Nigeria
« on: February 05, 2015, 09:20:05 AM »
China's state-owned buyers have stepped up imports from Nigeria LNG (NLNG), with six cargoes delivered to the country's LNG terminals so far this year, according to Platts' shiptracking software cFlow Wednesday.

China imported two cargoes from Nigeria in the period January-February 2014 and seven cargoes for the year as a whole -- all in the first seven months, according to Platts ship tracking software cFlow and China's import data.

The increase comes during limited inter-basin arbitrage opportunities caused by weak demand and falling spot prices in Asian markets.

In the period January to February 2014, the NBP-JKM spread averaged $7.382/MMBtu versus $1.676/MMBtu in the same delivery months in 2015.

But most of the deliveries were heard to be part of long-term supply deals between China's state-owned buyers and portfolio sellers, sources said.

State-owned Petrochina received a Nigerian cargo aboard the LNG carrier Solaris at its Rudong terminal in China's eastern Jiangsu province Wednesday.

Sources said the cargo was likely a spot delivery by Shell, which currently controls the vessel and has no known long-term contracts with the buyer.

Petrochina was heard to have secured a spot cargo in H2 December for delivery in late January or early February in the mid-to-high $9s/MMBtu, but it was unclear at the time whether Shell was the seller.

Petrochina received another NLNG-sourced cargo aboard the Neo Energy to its Tangshan terminal in China's northern Hebei province on January 15.

Portfolio seller BG was heard to have delivered this cargo as part of an agreement signed with PetroChina in 2014 for the supply of LNG from the seller's portfolio.

No further details on the timeline, quantity or price of the deal were immediately available.

Elsewhere, China's state owned buyer CNOOC (China National Offshore Oil Corp.) received its fourth NLNG cargo of 2015 Wednesday, according to cFlow.

The Maran Gas Coronis delivered the cargo to CNNOC's Tianjin FSRU on Wednesday, cFlow data showed.

Previous NLNG deliveries to CNOOC include cargoes aboard LNG River Orashi to Shanghai LNG on February 2, the LNG Adamawa to Shanghai LNG on January 25 and the Gaslog Santiago to Tianjin FSRU on January 10.

The seller of at least some of these volumes was portfolio player BG, which has current long-term contracts with CNOOC for the supply of 3.6 million mt/year -- four to five cargoes a month -- according to a source close to the buyer.

The Nigerian National Petroleum Corporation on Wednesday deplored the recent increase in attacks on crude oil and gas pipelines, saying it was adversely affecting the nation’s economy.

This was contained in a statement in Abuja by the Group General Manager, Group Public Affairs Division, NNPC, Mr Ohi Alegbe.

Alegbe said the nation lost about 60,000 barrels of crude oil per day to acts of vandalism on its pipeline.

He added that the sudden increase in the activities of saboteurs around the Trans-Forcados Pipeline and the Escravos-Lagos Pipeline in the last six weeks was shocking.

He said the Escravos-Lagos Gas Pipeline was vandalised with four breaks over the weekend.

“The act had robbed the nation of several billions of naira to the detriment of the national economy.

“NNPC loses between 50,000 and 60,000 barrels of crude oil and condensate on a daily basis to pipeline breaks,” he said.

NAN reports that at $53 per barrel, Nigeria loses about $3.2m (about N534.3m) per day to oil theft.

The NNPC spokesman said there appeared to be a syndicate behind the economic sabotage.

Alegbe stated that most of the power plants, including those in Calabar, Alaoji, Omoku and Olorunsogo had been connected to gas.

He said all the efforts of the Federal Government to construct unprecedented massive gas pipeline infrastructure were being sabotaged by pipeline vandals.

He noted that it was unfortunate that between January and early February 2015 alone, the Trans-Forcados Crude Pipeline was attacked and vandalised four times.

Alegbe said none of NNPC’s gas pipelines had been able to run two straight days without being brought down.

He added that the corporation was exploring a number of options on how to tackle the menace of pipeline vandalism.

He said the options ranged from an aggressive community engagement to installation of technological gadgets to stave off the vandals.

Pages: 1 ... 15 16 [17] 18 19 ... 79

Sponsored Ads

Quick Links

About Us
Contact us
Privacy Policy

Contact Info

Nigeria Oil & Gas Forum

Email Address
Contact Form
Business Hours
9.00am - 5.00pm (Mon - Sat)

Would you like to partner with us on this forum?

Then you can contact us here

Nairaland     Oil Prices     UK Gas Forum     Ghana Gas Forum     Russian Oil & Gas Forum     Israel Oil Forum     Agric Forum

Powered by EzPortal