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91

As the prolonged crude oil prices continue to haunt the nation and other exporters, UDEME AKPAN reports the recent reduction of prices of the nation’s July deliveries would likely attract new buyers, thus generating more foreign exchange into the country.

It was indeed cheering when the Organisation of Petroleum Exporting Countries, OPEC predicted that prices of crude oil would start to leap in the second quarter of 2015. The Secretary General of OPEC, Dr. Abdalla Salem El-Badri that raise the hope at the 19th Middle East Oil & Gas Conference a few weeks ago indicated that global oil market which was over-supplied by about two million barrels per day, bpd would return to balance during the second half of the year.

The Secretary General put the global economic growth at 3.4 per cent, compared to 3.2 per cent in 2014. He remarked that, over the years, the global oil and gas industry had gone through a number of cycles and changes that had required the industry to adapt and evolve.

“There is no doubt that the last nine months have been one of those intermittent periods of volatility, after several years of stability. While prices will no doubt rebound, as they have done lately, it is clear that the industry is currently witnessing a landscape that is shifting the global oil industry,” he maintained.

“These are the current realities. It is a challenging time for the industry. However, there are clearly many things that the industry can do with one eye on the current situation, and one eye on the future. And for producers, it may be useful to use the situation of lower oil prices to create incentives to use energy more efficiently and implement sustainable policies that could lay the groundwork for more diversified and less energy-dependent economies,” he said.

El-Badri said the reason the industry’s stakeholders needed to keep their eyes on the longer term was because energy demand was expected to increase by 60 per cent by 2040, with fossils fuels remaining central to the energy mix. Referring to data contained in OPEC’s World Oil Outlook 2014, El-Badri said that oil-related investment requirements were estimated to be around $10 trillion between now and 2040.

Incidentally, the improved market scenario El-Badri painted has not been experienced, barely a few days to the end of the period. A survey showed that the prices of many crude oil prices, including Nigeria’s Bonny Light, Qua Iboe have hovered at between $59 and $65 per barrel throughout the period, thereby causing stakeholders, especially Nigeria, the leading African producer sleepless nights.

The situation has caused some stakeholders, including the Nigerian National Petroleum Corporation, NNPC to adopt additional measures. The Corporation is said to have reduced the prices of Nigeria’s crude oil grades — Bonny Light and Qua Iboe — to their lowest points in over a decade. The decline, according to reports, was due to declining demand for the country’s crude oil in the international market. Specifically, the Corporation has resolved to sell its July, 2015 deliveries of Bonny Light, the nation’s premium oil grade at 23 cents more than Dated Brent.

Market sources have it that this constitutes the smallest differential since 2005 and compares with a 50 cent premium in June and $2.55 a year earlier. The NNPC also lowered the official selling price for Nigeria’s largest crude oil stream, Qua Iboe, to dated Brent plus 35 cents per barrel, the lowest differential since May 2005.

The drop follows North Sea crude, which hit a 10-year low earlier this week as all Atlantic Basin sellers, particularly those with light, sweet oil, struggle to place cargoes. Rising output from US shale formations had over the last couple of months contributed to a market glut that drove crude down almost 50 per cent last year, roiling global markets as producer nations lost revenue and foreign-exchange reserves.

Officials of NNPC did not respond to telephone calls or text messages over the weekend. But a source in the organisation that was not permitted to speak said the reduction in crude prices would impact positively on the nation as additional demand would be attracted to buy Bonny Light and other crude oil grades. He said this would culminate in increased foreign exchange generation.

However, the development has attracted the comments of some observers. For instance, the National President of Oil and Gas Service Providers Association of Nigeria, Mr. Colman Obasi maintained that the action would attract more patronage to the nation’s crude oil which has not been getting much demand in recent times. He said that the nation would likely sell more cargoes as well as generate more foreign exchange because of the decision.

“I think it make sense to cut prices for the future deliveries, especially as the nation stands to attract more buyers to its oil grades. It is obvious that if our turnover is higher than what we currently have, we will be in a position to generate more funds. Indeed, we need to generate more, particularly because of our over-dependence on petroleum.”

“The nation and other members of OPEC should explore legitimate ways and means of boosting its revenue at least during this period of global recession. But I am optimistic that oil prices would leap in future because of expected economic growth in some oil importing countries,” he added.

Coincidentally, his view is in consonance with that of the cartel which has reported that the world will need more energy in the decades ahead, as the global population expands and economies grow, and as countries seek to provide the energy poor with access to modern energy services, the global need for energy will grow.

“In OPEC’s most recent World Oil Outlook, energy demand is set to increase by around 50per cent between 2015 and 2040. I think that most of us here today also understand that the world has enough energy resources to meet these expected future energy needs. The key questions about our energy future relate to deliverability and sustainability. In this regard, it is important to take on board all of the economic, social and environmental perspectives that feed into it. Firstly, to supply enough energy to meet demand and help provide access to modern energy services for all. And secondly, this needs to be done in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment. It is clear that all forms of energy will be needed. But it is crucial that we appreciate just what each energy source can provide in the future.”

“Renewables – from wind, solar, small hydro and geothermal – certainly hold promise, but globally their share of the energy mix will still be just 4 per cent by 2040, given their low initial base. The share of biomass, nuclear and large hydro is expected to remain at steady levels throughout the period 2015-to-2040, at around 9 per cent, 6 per cent and 2.5 per cent, respectively. This means that fossil fuels will continue to play a dominant role in meeting energy demand, although their overall share will fall from around 82 to 78 per cent during this period. By the 2030s, the share of oil, coal and gas are anticipated to be at similar levels, at around 25 to 27 per cent. Others will obviously have different views on how they see the future global energy mix. This is natural. But I think it is important to emphasize four key words: practical, realistic, logical and equitable,” it added.

The organisation indicated there is a great need to focus on the development of other energy resources. It maintained that over the past two centuries or more, much economic growth has been fuelled by the exploitation of fossil fuels. The cartel disclosed that this has certainly brought real benefits. The organisation maintained that it has helped improve living standards by providing such things as light, power and mobility.

“It has enabled the development of industries and the creation of jobs. And it has helped increase life expectancies. In short, the industrialized world has been built with fossil fuels. We should not forget that this has not been the story for everyone. When we start up our cars, switch on a light, turn on our mobile phones, we need to recognize that these everyday things are still unknown to billions of people across the world who continue to suffer from energy poverty. Today, around 2.7 billion people or more still rely on biomass for their basic needs, and 1.3 billion have no access to electricity.”

The organisation also tasked member states to work toward the diversification of their economies while sustaining huge investments in oil and gas. This seems is imperative as oil and gas are depleting resources that would be depleted in future. The world is waiting to witness to see what the President Muhammadu Buhari-led administration would deplore to boost the petroleum industry in particular and the nation’s economy in general.

http://nationalmirroronline.net/new/nigeria-cuts-oil-prices-as-market-defi-es-analysts-projections/?

92

In a renewed move to blackmail the federal government into reversing the withdrawal of the operatorship of some of the oil blocks sold by Shell and other International Oil Companies (IOCs) from the Nigerian Petroleum Development Company (NPDC) to the new buyers, the workers of the company have threatened to shut down crude oil production.

THISDAY gathered that the workers who resolved to embark on an indefinite strike on Monday, on Tuesday said the strike would now last for three days to give the present administration the final warning to reverse the decision taken by the administration of President Goodluck Jonathan on the operatorship of the acreages.

Insiders within the workers’ unions, however told THISDAY that the workers were really seeking a pay rise and were also using the operatorship tussle as a bargaining tool.

Based on a recent recommendation of the Department of Petroleum Resources (DPR), Jonathan’s administration withdrew the operatorship of some of the divested oil blocks from NPDC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC) to the new buyers, citing the need to offer training and understudy opportunities for NPDC to further develop its capacity in all areas of petroleum operation and compliance.

In protest, the workers of all the NNPC’s subsidiaries and their colleagues in the NPDC last month embarked on a strike during which they shut down oil production to protest the transfer of the operatorship of Oil Mining Leases (OMLs) 40 and 42 to the new buyers.

The action of the workers under the aegis of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG), which crippled economic activities for one week as it later caused acute scarcity of petrol was later suspended by the workers.

NPDC’s Manager (External Relations), Mr. Ugochukwu Atugbokoh, could not be reached on his mobile phone as at press time.

THISDAY however gathered that the unions met on Monday morning and resolved to embark on an indefinite strike, which was yesterday reviewed to a three-day action to give the new administration final warning to reverse the operatorship of assets, failing which the workers will shut down crude oil production and cripple the supply of petroleum products across the country.

NPDC was relieved of the operatorship of the blocks as it is said to lack the financial and technical capacity to operate the assets and has allegedly been using other contractors, particularly Operations and Maintenance (O &M) contractors to run the oil blocks.

Though the NPDC is the operator of the assets, the company allegedly hires other contractors to run the assets due to lack of financial, technical and competent human capital resources to operate the acreages.

For instance, sources close to some of the divested assets informed THISDAY that the O &M personnel at some of the flow stations were actually sub-contractors employed by Century Energy Services Limited, Lee Engineering and Construction Limited and other companies.

The new buyers have argued that this arrangement is more expensive for the NPDC and the federal government than using the new buyers of the assets to operate the blocks.

The unsatisfactory performance of NPDC in the operatorship of the assets is also said to have resulted in low production and poor returns on investment, as the company has failed to deliver on production revenue, despite years of promises.

According to sources familiar with the operation of the assets, of the five divested assets - OMLs 26,30,34,40 and 42, the gross production in 2015 to date averaged only 40,841 barrels of oil equivalent per day (bopd).

The 2014 average was said to be about 47,862 bopd, out of which 18,378 bopd was allocated to the private companies that were in partnership with NPDC, while the investors who staked about $2.85 billion to buy the assets continued to suffer financial losses due to poor operatorship.

NPDC’s alleged financial recklessness was also said to have contributed to the poor revenue from the divested assets as Longitudinally Submerged Arc Welding (LSAW) pipe, Seamless Steel Pipe and SMLS pipes of various diameters and thickness, for instance, which are sold in China for $500 per tonne are allegedly delivered to NPDC in Nigeria for over $4,000 per tonne.

http://www.thisdaylive.com/articles/again-npdc-workers-threaten-to-shut-down-crude-oil-production/212979/?

93
Agriculture / Point of Lay Pullets needed
« on: June 24, 2015, 08:44:33 AM »
Dear All,

Is there anyone in the house that can supply me Point of Lay Pullets?
We need these pullets as soon as possible.

Thanks

94
Oil & Gas Industry / NPDC workers go on strike
« on: June 23, 2015, 04:42:08 PM »


At least 115,000 barrels of crude oil per day, estimated at $6.9 million, may have been shut-in as Nigerian Petroleum Development Company (NPDC) workers, an arm of the Nigerian National Petroleum Corporation (NNPC), begin an indefinite strike.

The action is aimed at stalling the  planned transfer of operatorship of oil blocks divested by Shell Petroleum Development Company Limited to private sector investors that bought the assets.

The strike is coming barely a month the same workers called off their over week strike because the operatorship of one of the Shell divested assets located in oil mining lease (OML) 42, was transferred to the private sector joint venture partner of NPDC – Neconde Energy Limited. The workers are striking to halt further transfer of operatorship of about five more divested blocks by the Federal Government. It was also learnt that the workers are actually asking for salary increase in disguise.

The Nation gathered that the workers under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers (NUPENG) NPDC chapter simply referred to as NUPENGASSAN, had a meeting yesterday and decided to start the indefinite strike immediately after the meeting.

A source told The Nation that after their meeting yesterday, the striking workers locked the offices of the management and those of the private sector entrepreneurs that bought Shell’s divested oil blocks, asked all the consultants and visitors in the company to vacate the premises.

The source said: “NUPENGASSAN union met this morning and decided to go on an indefinite strike starting from today (yesterday). The unions asked all consultant, contract staff and visitors to vacate the company’s premises leaving only the staff in their offices. The staff will remain in their offices but they will not be working. The locked offices of all the management staff including those of their Joint Venture partners. This category of staff could not gain entrance into their offices.”

The source lamented the frequent strike noting that it disrupts production, works against output optimisation and results in revenue decline. This is economic sabotage and destabilisation of the new administration. It is just unfair because the new government needs money. What the Unions are really seeking is a pay rise but they are using the operatorship issue as blackmail to cover their inefficiencies in delivering production and revenue, the source added.

The private sector investors that bought Shell assets and are in Joint Venture with NPDC have decried the attitude of the striking workers because production is shut-in and they are losing money. Besides, the JV partners said because NPDC operates the oil blocks, the assets are hugely under-produced resulting in substantial loss or revenue.

The indigenous private sector JV partners of NPDC are Neconde Energy Limited oil mining lease (OML 42), Elcrest Exploration and Production Nigeria Limited (OML 40), Shoreline Natural Resources Limited (OML 30), ND Western Limited (OML 34) and First Hydrocarbon Nigeria FHN/Afren (OML 26).

http://thenationonlineng.net/new/npdc-workers-go-on-strike/

95
Nigeria Security and Civil Defence Corps (NSCDC) has announced plans to deploy about 500 drones and aircraft to keep surveillance of oil installations in the country.

NSCDC Commandant-General, Dr Ade Abolurin, who disclosed this on Monday in Abuja during a meeting with senior officers of the Corps to strengthen its operational strategy, said some drones have already been deployed in Bayelsa in Nigeria’s Niger Delta in a test-run to ascertain its efficacy.

The NSCDC boss, who decried the spate of pipeline vandalism and oil theft in the country, said the corps was exploring new ways to monitor and protect the pipelines, especially the use of technology to track down the perpetrators.

He said, “I can assure you that we are already exploring new approaches which will include the massive deployment of technology as opposed to the outdated conventional approach you are used to.”

Abolurin said about 250 vandals had been directly arrested, while another 100 were arrested by other security agencies and handed over to them for prosecution, with 35 successfully convicted this year alone.

He said the corps had also stepped up its protection of other critical infrastructure in the country such as power installation, telecommunication masts and equipment so as to ensure better service delivery to Nigerians.

http://dailyindependentnig.com/2015/06/nigerian-security-agency-monitor-oil-pipelines-drones-aircraft/

96
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97

Following allegations of massive fraud, the two chambers of the National Assembly have been advised to commence investigation into the activities of the Nigerian National Petroleum Corporation (NNPC), particularly in the areas of crude oil swap programme and offshore processing agreements (OPAs).

Making the call yesterday in a letter addressed to the Senate President and the Speaker of the House of Representatives, Lagos lawyer and human rights activist, Mr. Festus Keyamo, alleged the looting of the country resources by some NNPC officials in collaboration with some local companies.

The crude oil swaps  is an arrangement whereby about 50 per cent of the nation’s daily quota of crude oil meant for domestic refining and consumption are given to some local companies in the oil and gas sector which then sell the products in the international market and thereafter import petroleum products, including derivatives or byproducts on behalf of the NNPC and PPMC for sale and distribution in the country.

It was a programme put in place due to the inability of local refineries to operate at their fully installed capacities which would have been able to refine all the daily domestic quota of crude oil.
Similarly, the offshore processing agreements (OPAs) is the allocation of the daily domestic quota of crude oil to some local companies so that the companies then take the crude oil to refineries outside the country, refine them into petroleum products, including derivatives or byproducts, and import them into the country on behalf of the PPMC.

But according to Keyamo, there have been “colossal fraud in both programmes”  in recent years.
He alleged that: “The fraud occurs when far less quantity of petroleum products, byproducts and derivatives are imported into the country by the local companies in exchange for the crude oil allocated to them by the NNPC,” he alleged.

He added that: “The staggering shortfalls in the imported products are done with the active connivance, collusion and knowledge of the officials of the NNPC. The proceeds are, of course, subsequently shared between the NNPC officials and these local companies.

“In fact, it is reported that a colossal sum of about $50billion  have been stolen by these people through these fraudulent programmes in the last few years.”

The lawyer named some NNPC officials, who he said are already under investigation by  the Economic and Financial Crimes Commission  (EFCC) and the Directorate of State Security (DSS) as some of the brains behind the scam.

“I humbly request that you direct your searchlight on  the  Managing Director, NPDC, Mr. Tony Moneke;  Executive Director, Commercial, PPMC, Mr. Frank Amejo; Group General Manager, Crude Oil Marketing Division, Mr. Gbenga Komolafe and former Managing Director, NPDC, and later NNPC Group Executive Director, E & P, Mr. Abiye Membere.

“I also urge you to invite the following private, local companies in the oil and gas sector in the course of your probe to assist in getting to the bottom of the whole sordid affair: AITEO that is owned by Mr. Benny Peters; Sahara Energy owned by Tonye Cole; Tope Sonubi and Ade Odunsi;

Ontario Oil and Gas owned by Walter Wagbatsoma and Taleveras founded by Mr. Igho Sanomi,” he said.

He also called for probe into the roles that the immediate past Minister of Petroleum Resources, Mrs. Deziani Alison-Madueke may have played in the allegation of massive fraud.

“Though I understand she also wrote a petition in this regard few days before leaving office, but it is not always the case that it is the person that runs first to the police station to report an incident that is the victim.

“I find it extremely curious that she waited till a few days to the end of her tenure before writing that petition. I also find it curious that she wrote a petition in respect of matters over which she had total control and in respect of which she had complete access to all the documents and personnel involved. In fact, the above-mentioned personnel were her subordinates whom she could have queried long ago if she smelt any rat.

Keyamo reminded the lawmakers of their investigative responsibility and powers preserved under section 88(2)(b) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which is to ‘expose corruption, inefficiency or waste in the execution or administration of laws within its legislative competence and in the disbursement or administration of funds appropriated by it’.
“The danger in not exposing these acts of corruption through open and public hearings is that even the investigators may be tempted to engage in cover-ups and under-hand dealings because of the colossal sums involved in these shady deals,” he noted.

http://www.thisdaylive.com/articles/keyamo-asks-n-assembly-to-probe-alison-madueke-nnpc-others-over-oil-swaps/212390/?

98
Oil & Gas Industry / Rehabilitation of oil refineries
« on: June 18, 2015, 08:23:46 AM »
That the Port Harcourt Refinery may commence production at the end of this month, if reports credited to the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Joseph Dawha, some days ago are anything to go buy, came as a refreshing breather, especially when the immediate past civilian administration of President Goodluck Jonathan and others before it indulged in double-speak on the need for government to run refineries. On different occasions, the Presidency, Federal Ministry of Finance and Ministry of Petroleum Resources under Jonathan harped on the non-viability of refineries, on the one hand and on the other, gave approval for the building of new ones or maintaining the old ones. In 2002, the government of former President Olusegun Obasanjo issued licences to 18 investors to build new refineries. But 13 years on and still counting after, the country still relies almost wholly on imported petroleum products, with no visible capacity to refine enough of the products locally to meet even domestic needs.

The Federal Government in June 2012 also signed a Memorandum of Understanding (MoU) with some private American investors in respect of a $4.5 billion (N698 billion) deal to build six modular refineries in collaboration with the NNPC. The Minister of Trade and Investment, Dr. Olusegun Aganga, had stated that two of the new refineries would be ready by May 2013, and would be contributing 10 million litres of fuel daily. When fully operational, it was projected that the six refineries would have the capacity to refine 180,000 barrels of crude per day. But it ended there. Former NNPC Group Managing Director, Mr. Andrew Yakubu, once said all the MoUs signed with foreign firms since 2010 to establish refineries in the country could not work because “no investor will come and invest in a regulated environment”. Meanwhile, FG’s iron cast hold on and control of the pricing of petroleum products, which discourage competition and the abandonment at the National Assembly for over eight years of the Petroleum Industry Bill (PIB) meant to open up the oil sector, are among the main factors scaring away potential private investors in oil refining.

Dawha, NNPC’s new helmsman says, however that “We are carrying out phased implementation of rehabilitation of the refineries … the Port Harcourt Refinery, which has reached an advanced stage will start receiving crude by the end of this month… At the end of 18 months, most of the refineries would have been rehabilitated”. The country has four refineries, two in Port Harcourt, and one each in Kaduna and Warri, all with installed capacity of 445,000 barrels per day. But they have scarcely exceeded 35 percent production capacity.

Official figures say Nigeria’s average daily consumption of Premium Motor Spirit (petrol) is 40 million litres; Automotive Gas Oil (diesel) 12 million litres; Dual Purpose Kerosene (DPK) 11 million litres; and Liquefied Petroleum Gas (LPG) 1.2 million litres. But the country refines only 5.10 million litres of PMS; three million litres of AGO; 2.10 million litres of DPK; and 0.34 million litres of LPG daily and imports the difference of 34.90 million litres of PMS; nine million litres of AGO; 8.90 million litres of DPK; and 0.86 million litres of LPG per day; about 90 per cent of Nigeria’s daily petroleum products’ need on a rough average; and NNPC is calling the shots.

Former Petroleum Minister, Mrs. Diezani Allison-Madueke, said the FG would have spent N152 billion on refineries repairs by 2013; and that the total installed capacity of all the country’s refineries would be increased to 90 percent by 2014 – another failed promise. Billions of dollars also went down the drain, especially between 1990 to date, in the name of turnaround maintenance (TAM) of the four refineries, all with spittle as the result, contrary to what obtains in other well managed crude oil producing nations that earn handsome foreign exchange through refined petroleum products and enable their citizens enjoy that gift of nature.

If the Petroleum Resources Ministry and NNPC have now seen good reasons to revive the nation’s refineries, it is a huge relief, though belated. But it must be matched with sincere deregulation and opening up of the oil and gas upstream and downstream sectors to competition and transparency; as against their use before now as nests for corruption and dubious political patronage. The facts that diesel costs a fortune long after its pump price was deregulated; and kerosene is hardly sold at subsidised rate, have since exposed the rump of the oil sector. The rot is no longer a shrouded mystery.

http://nationalmirroronline.net/new/rehabilitation-of-oil-refineries/?

99
The Central Bank of Nigeria, CBN, yesterday paid gas suppliers the sum of N 6. 9 billion as part of its Nigerian Electricity Market Stabilisation Fund set aside to ensure a steady power supply to the Nigerian public.

The Governor of CBN, Mr. Godwin Emefiele, who handed cheques to seven companies in Abuja, said that the facility was a part payment for debts owed the gas suppliers by electricity Distribution Companies, Discos, across the country.

CBN had set aside N213 billion to help stabilize the electricity power sector by providing funds to operators in the sector to enable them make necessary investments as well as, clear debts that have been considered as inhibiting power supply to homes and businesses.

Mr. Emefiele disclosed that Discos were owing gas suppliers as much as, N40 billion as at the end of December 2014.

Companies that got paid were: Chevron, N2.04 billion; Ibom Power, N1.7 billion; Shell, N965 million; ND Western N852 million; Seplat, N739 million; NPDC, N407 million; and Pan Ocean, N 230 million. Eko Disco also received N4.4 million.

According to the CBN boss, “ these payments represent debts by the power sector in proportion to the obligations to repay the facility by the five DisCos: Eko, Ibadan, Kano, Port-Harcourt and Enugu, that have so far signed up to the facility.

“As more DisCos become confident that the issues with their tariff regimes will be resolved and sign up to the facility, we expect to make further disbursements to gas suppliers and other power sector participants.

“For us at the CBN this is very significant as we have started to clear your legacy debts. We will ensure that the outstanding debts are cleared once we are able to get the other DisCos that are supposed to be in the chain to fall in line so that we can all work together for the progress of this country, by ensuring that we have electricity for our people.”

The CBN boss noted that gas pricing in the country has become commercially viable to the to the extent that existing investors could expand their operations and that even new investors could be attracted to the Nigerian market.

His words, “What we have done is to ensure that gas pricing is commercially viable. On the day that we decided to review the gas pricing, you would agree with me that it was a major leap. Representatives of your companies, including your Managing Directors , all affirmed that the pricing is now commercially viable to the extent where it encourages you and even prospective investor to jump into the line and invest for more gas.”

The governor said that the money was not just a loan made to pay for gas delivered to DisCos but “a loan with clear development objectives” and that as such gas suppliers should deliver more gas output to existing power plants.

He added that CBN would work with the NNPC to ensure that it played all roles required of it in the MoU to ensure that gas production and gas supply is ramped up immediately. We cannot afford a situation where out of 23 generating plants that we have in Nigeria, 20 are gas-fired and they cannot achieve their optimum level of power generation because of inadequate gas supply.

Mr. Supo Shadiya of the Chevron/NNPC Joint Venture Company, who spoke on behalf of the gas suppliers, said that the payments were a major relief to the sub-sector and pledged that they were now more confident to play greater roles in the supply of stable electricity power to Nigerians.

“There is a very strong commitment on the part of suppliers to domestic gas market and indeed it is important for us to partner with the government to achieve the mission that the government has set for the power sector over the years. We are happy to be part of that”, he said.

According to him, the gas suppliers had been waiting anxiously since November, 2014, when the MoU for the facilities was signed.

He noted however that there were certain enablers which the NNPC had to make available, in line with the provisions of the 2014 MoU and there urged the national oil firm to play its part for a successful implementation of the agreement.

The enablers included gas infrastructure as well as security of facilities which attacks have in the recent past brought power generation to its lowest.

- See more at: http://www.vanguardngr.com/2015/06/cbn-to-clear-gas-legacy-debt-pays-gas-suppliers-n6-9b/?#sthash.6iARKrMF.dpuf

100
Nigerian authorities have launched an investigation to determine whether the government has been short-changed by a state oil company scheme to swap crude for refined products, the company, three oil traders and a security source said.

The Nigerian government may be losing money through opaque contracts in which crude oil worth billions of dollars is given to traders in exchange for refined imports, mainly gasoline, international and domestic watchdogs have said.

Nigeria's anti-corruption agency EFCC and domestic intelligence service DSS began the investigation last month. A spokesman for the EFCC said he was unable to comment for the moment and the DSS did not respond to requests for comment.

A security source with knowledge of the matter said the DSS wanted to find out how the value of the crude and products was computed.

"It appears that the value of the crude was more than the value of the refined imported," the security source said.

The contracts, known as offshore processing agreements (OPAs) are between Pipelines and Product Marketing Co (PPMC), a subsidiary of state-run Nigerian National Petroleum Corp (NNPC) and three oil trading companies: Sahara Group, Aiteo and Duke Oil, the trading subsidiary of NNPC.

Expired contracts with Swiss trader Trafigura, Taleveras, Ontario Oil and Gas are also being examined, the sources said.

The PPMC head was among the NNPC and company officials called in the investigating agencies in the past two weeks to answer questions about the agreements, the NNPC sources said.

"It started about two weeks ago...he was called in to the DSS everyday since Thursday and before that by the EFCC," one senior official at the company said.

A statement from the NNPC said some of its officials were invited by the agencies "to shed light" on the contracts and that none had been detained or arrested as part of this investigation.

The Nigerian Extractive Industries Transparency Initiative has said there was a revenue loss of at least $600 million due to a discrepancy between the value of the crude and the products delivered. The figure was taken from its 2009-2011 and 2012 audits of the oil and gas industry, the latest was released this year.

Some contract-holders have said that the discrepancies in value were reconciled.

JUSTIFIED

Sahara, which receives 90,000 barrels per day for processing through an agreement with the Societe Ivorienne de Raffinage (SIR), said it was invited to the EFCC and submitted information to show that its contract was justified.

Aiteo, which also has a 90,000 bpd contract, could not be reached for comment. There was no response to a Reuters email and no telephone details were given on its website.

Duke Oil, an NNPC subsidiary, which has a 30,000 bpd contract, could also not be reached for comment. The listed phone number led to NNPC and it did not respond to an email.

A spokesman for Taleveras, that held a crude swaps contract between 2011 and December 2014 via Duke Oil, said that the company did not owe any money and it would deliver gasoline until June this year to balance out what it received in crude.

A spokesman for Trafigura said that the EFCC had requested information about their swap contract and it was provided by the company in the past month. Trafigura held a Refined Products Exchange Agreement, or swap contract, between Oct. 2010 and Dec. 2014.

"Despite Trafigura facing extensive logistical challenges in delivering refined product into Nigeria...delivery would typically precede the corresponding swap of crude oil by an order of weeks - sometimes months," the spokesman said.

"This reality led to ongoing supply imbalances...and ultimately reconciled, every two months over the duration of the term."

Nigeria relies on imports for the bulk of its domestic gasoline demand, which is met by gasoline coming via the crude exchanges and through a subsidy scheme that was at the root of acute fuel shortages at the end of May.

The new administration of Muhammadu Buhari came into power on an anti-corruption platform and the EFCC is keen show it has teeth. Right after Buhari's inauguration on May 29, six central bankers and 16 commercial bank staff were accused of currency fraud by the EFCC, the agency said.

The EFCC has investigated various oil scandals in the recent past, namely a fuel subsidy fraud costing the government $6.8 billion between 2009-2011. But due to a lack of political will from the top, only a handful were prosecuted with little result. (Additional reporting by Chijioke Ohuocha in Lagos and Camillus Eboh in Abuja; editing by Anna Willard)

http://www.reuters.com/article/2015/06/13/nigeria-oil-idUSL5N0YW3FT20150613?rpc=401

101
Oil & Gas Industry / OML 42: NUPENG, PENGASSAN backing wrong horse
« on: June 12, 2015, 08:59:16 AM »

Although, the indus­trial action em­barked upon by the Petroleum and Natural Gas Senior Staff Associa­tion of Nigeria (PENGAS­SAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG) to protest the transfer of the operatorship of the Oil Mining Lease (OML) 42 to Neconde En­ergy Limited has been sus­pended, the oil unions are unrelenting in frustrating the strategic alliance of the OML 42 to Neconde.

The unions maintained that the transfer of OML 42 operatorship to Neconde did not follow due process and also questioned the capacity of Neconde to run the fields better than the Nigeria Petro­leum Development Company (NPDC), the exploration and production arm of the Nige­rian National Petroleum Cor­poration (NNPC). This is the same NPDC that has clearly shown it lacks the technical and financial ability to oper­ate the asset.

Until recently when the full operatorship of the OML 42 asset was ceded to Neconde; the NPDC was in charge of operating the asset, albeit unproductively. Its inability to deliver on the asset, saw a disturbing decline in produc­tion level from 30,000 barrels per day, bpd, achieved as at the period of acquisition from the Shell Petroleum Devel­opment Company (SPDC), the previous operator of the onshore block to 13,000 bpd in 2014.

It would be recalled that in 2011, the Federal Govern­ment assigned 55 per cent equity in eight assets divest­ed by the SPDC to NPDC. NPDC has since retained the operatorship of most of the assets which included: OMLs 4, 26, 30, 34, 38, 40, 41 and 42.

But given its inability to sustain any long lasting pro­duction increment, the Fed­eral Government decided to grant operatorship of the assets to indigenous oil com­panies that have the technical capacity to operate and de­liver on the assets.

While the NPDC branch of PENGASSAN was busy pushing back on the granting of operatorship of the OML 42 to Neconde, the immedi­ate past Minister of Petro­leum, Mrs. Diezani Allison- Madueke also went ahead to grant the wishes of Elcrest for operatorship of OML 40.

That NPDC was indicted by Pricewaterhouse Coopers’ (PWC’s) in the forensic audit of NNPC’s accounts for mis­appropriating $1.48 billion which it has since failed to refund to the Federation Ac­count, equally shows how the company is being run over the years. Some of the NPDC management practices is said to also be a major reason it falls short in delivering its mandate on oil mining assets under its charge.

Perhaps, to further its un­derperformance, the NPDC has resorted to playing up unnecessary sentiments so that it can continue to milk the country as well as fail in its financial obligations to the NNPC and, by exten­sion, the Federation Account. Sadly, this is the parastat­al, NUPENG and PENGAS­SAN are now backing against legitimate and well-meaning indigenous oil companies that have continued to dem­onstrate first rate capacity to get the job done, as in the case of Seplat which has been able to ramp up production on OML 4, 38 and 41 to 70,000 barrels per day, Afren and Atlantic Energy, and Elcrest which have doubled produc­tion of OML 26 and OML 40 respectively.

Speaking on the activities of the indigenous oil compa­nies, James Olaito, an oil sec­tor expert said that they have been very supportive of the Federal Government’s policy on local content in the oil and gas industry and the liber­alisation of the upstream oil sector to optimise value and make the industry work for the good of all. Unfortunate­ly, there are those who rather than feel a sense of pride in the accomplishment of these companies, are instead look­ing for avenues to pull them down. This is what the NPDC did by trying to cast asper­sions on the transfer process of OML 42 transfer that was by every way transparent.

Regrettably, NU­PENG and PENGAS­SAN either by ignorance or sheer conspiracy are backing the wrong horse. That the unions are worried over how the process will pan out in terms of retaining members’ job is understandable, how­ever trying to arm-twist the government of President Mu­hammadu Buhari, so that he will not be sympathetic to Neconde, Seplat and other indigenous oil companies’ show that they may have been compromised. How does one explain that the unions, despite knowing the role Neconde played in absorbing some of the Shell staff mem­bers working in OML 42 who NPDC could not retain, would be backing NPDC on this combative mission to re­tain control of the oil well as­sets so it can continue to feed off Nigeria’s prime treasure?

It is on record that the ceding of the management of OML 42 to Neconde Energy had nothing to do with the firm’s stake in the oil block. The transfer of management of OML 42 to Neconde was evidently about leveraging a national asset and obtaining optimal value, for which it clearly showed proof of capacity to deliver, so the question is, what do NUPENG and PEN­GASSAN seek to achieve by jumping ship with NPDC when it is obvious that they are better at an advantage having a capable and compe­tent hand steer the ship?

http://sunnewsonline.com/new/?p=122860

102
Oil & Gas Industry / Nigeria’s crude oil losing market appeal
« on: June 12, 2015, 08:57:52 AM »

NIGERIA may have to prepare for tougher times this year as the once a highly desired, easy-to-refine Nigeria’s sweet crude is now hard to sell, making the country to embark on discounted sales just to get the cargoes off the high seas.
International crude oil traders are said to have shunned the country’s export of sweet crude for the months of May and June 2015, making it difficult for the country to find buyers for the product, of which the country’s 2015 budget was planked on.

For example, Nigerian crude cargoes for January loading struggled to sell due to very weak demand with an oversupply of sweet crudes at the international market.

The Guardian gathered that the country’s crude oil suffered the same fate in March, April, May and June 2015 cargoes,
Asian and European demand for Nigeria and other West African cargoes has been slow so far, due to the availability of cheaper crude oil at the international market.

China, which became a large buyer of Nigerian crude oil, has reduced importation due to heavy build up of its products. The country now prefers Angola’s grade.

Specifically, latest information from Organisation of Petroleum Exporting Countries (OPEC) showed that China’s total commercial crude stocks fell by 5.6 million barrels, while product inventories rose 13.5 mb.

At 249.9 million barrels, commercial crude stocks represented a surplus of around 9.1 mb compared with the same period one year earlier. The fall in commercial crude stocks came mainly from the drop in crude oil imports, which declined by around 350,000 bpd to an average 6.3 mb/d. The increase of 5.5 per cent in crude throughput also contributed to the decline.

However, the increase of 2.1 per cent in crude oil production limited further drops in Chinese crude oil commercial stocks.
In contrast, total product stocks in China rose by 13.5 million barrels to end March at 161 million barrels, which is 2.5 million barrels below a year ago at the same time. All products went up. Gasoline rose by 5.2 mb, ending March at 52.3 mb driven by a decline in gasoline demand.

Early this year, the Organisation of Petroleum Exporting Countries (OPEC) disclosed in its monthly report that Nigeria’s 35 million barrels of crude oil was stranded at the high sea.

According to the cartel, Asian countries, which Nigeria turned to when the United States stopped buying Nigeria’s crude oil due to the shale boom, now prefer Angolan grades.

OPEC said that low European refinery demand amid weak gasoline and naphtha margins has put pressure on West African crudes, most especially, Nigerian light sweet crude.

“Asian refining margins dropped slightly during December on the back of losses seen in the gasoline and middle distillates cracks as the strong seasonal demand within the region was partially outweighed by increasing supplies from several countries in the region”, it added.

A fair share of Nigerian export crude cargoes every month are grappling to attract end-user and refinery demand, and are instead being stored on ships and on storage terminals, idling away.

The bulk of the oversupply in the Atlantic Basin crude market is composed of Nigerian crudes. A lot of Nigerian crude is floating on the seas and in storage tanks with no home and no destination.

http://www.ngrguardiannews.com/2015/06/nigerias-crude-oil-losing-market-appeal/?

103

The former Minister of Petroleum Resources, Diezani Alison-Madueke, has dispelled all the allegations of embezzlement levied against her, stating she at no point in the course of duty as a Minister stole from Nigeria.

In a recent interview with ThisDay, Allison-Madueke, acknowledged that mistakes were made, but was quick to add that she had nothing to do with the missing $20 billion or $18.5 billion in the Nigerian National Petroleum Corporation (NNPC) coffers.

She said, "did we make mistakes? There would always be mistakes. People would always make mistakes. Everybody make mistakes and there is no question about that. Have we learnt from our mistakes? Of course we have.

“But please do not say I stole $20 billion or $18.5 billion because I did not at any point in time. And if NNPC misappropriated funds or so, they have the entire explanation and more forensic audit should be done to determine how and why. But people should not make damaging accusations which have nothing to do with an individual.

“At no point did I steal from the Nigerian state. And if NNPC misappropriated funds or so, they have the entire explanation and more forensic audit should be done to determine how and why. But people should not make damaging accusations which have nothing to do with an individual. At no point did I steal from the Nigerian state.

“In fact, the first mantra I had from the time I came in was that I will never touch anything that has to do with the Federation Account and I never did and I will take that to my grave. So I will suggest that this issue of $20 billion or $18 billion be dropped because that is the major problem I had with my job. I was accused of unsavoury things, but which were actually accusations against NNPC and the audit was deployed to clarify all these things.

“So let us deal with the issues. I have never gone around accusing people of doing this or that, I have always stuck with the issues even when I was the most abused minister, I was professional, I stuck to the issues and responded only to the issues.”

The former minister, who is reportedly  to be undergoing treatment for breast cancer in London, also addressed the allegation that she rented N10 million jet for personal purposes during her tenure as a minister.

She said that she never used the jet for personal use, but rather official activities.

"No it was not for my personal use, it was for executive movement, which is has always been the case. I am saying just like the $20 billion, you find something, you throw it on the person to feel smart or to make it look as if the person is junketing all over the place or as if nobody had done that before in the annals of the NNPC.

"Of course we were not junketing all over the place. To be very honest, if they had never done that contract to lease the jet, we would have been hiring at a higher cost and which probably would have caused less of an issue. But to be frank, the lease that was put in place, to the best of my knowledge, was done with a company which even Shell and others have been using. So there was a known company with a very good track record and was being used in the industry by other multinationals,” Madueke added.

http://pulse.ng/local/diezani-alison-madueke-i-didnt-steal-from-nigeria-former-petroleum-minister-says-id3838585.html

104
The Independent Petroleum Marketers Association of Nigeria (IPMAN) at the weekend said it has started discussing with foreign partners to refine crude oil abroad and import Premium Motor Sprit (petrol) and Kerosene into the country.

It added that it has no intention to claim any subsidy payment from the Federal Government through the method.

IPMAN National Secretary Danladi Pasali, who spoke to reporters in Abuja, explained that should the Federal Government approve the intervention, it would be a temporal relief arrangement pending the improvement of the capacity of the Nigerian National Petroleum Corporation’s (NNPC’s) refineries and the construction of greenfield refining entities.

According to him, the initiative was developed by the association’s new executives to assist the present administration to reduce cost in subsidy payment at the same time meet products’ demand.

His words: “We urged  the Buhari  administration  to support  IPMAN  in mobilising  our foreign  partners  in importing  petroleum  products at no cost or  without  subsidies  payment to government.

”We have done all our mathematics that through our new model of Crude Oil SWAP arrangement; we can wet the country with petrol and kerosene and still gain from the transactions,” Pasali said.

Nigeria is currently consuming about 35 million litres of PMS. But only 30 per cent of the amount can be refined by the four local refineries at full capacities.

The IPMAN secretary said the association in the long run will construct two brand new refineries in the country with 400,000 barrel refining capacity with Blue Oil International.

He added that the association’s National President Mr. Chinedu Okoronkwo is in Lagos to monitor the distribution of the PMS to its members to stop its scarcity.

Pasali said with government’s cooperation, IPMAN members will stop fuel scarcity with their over 20,000 filling stations.

Read more: http://news2.onlinenigeria.com/news/418202-ipman-plans-to-import-fuel-without-subsidy-payment.html#ixzz3cSbsDCWf

105
Nigeria can boost its oil and gas production by changing the way capital investments are funded in its joint ventures with energy companies, according to Seplat Petroleum Development Co.
State-owned Nigerian National Petroleum Corp., or NNPC, holds an average 55 percent stake in five joint ventures with Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA that pump more than 80 percent of the country’s crude. It pays the same share of capital contributions for the operation of the oil ventures.

Seplat, a Nigerian producer now running a joint venture with NNPC after buying assets sold by Shell, wants the current funding arrangement in Africa’s biggest oil producer scrapped in favor of a method less dependent on the government. The “cash call” requirements are a “constraint” affecting production, Ambroise Orjiako, the company’s chairman, said in a June 5 interview at the World Economic Forum Africa in Cape Town.

“We need to find a situation where the joint-venture partners sit down and agree on what percentage of production should be dedicated on operation and capital expenditures,” Orjiako said. “That way you ensure that growth in the industry is guaranteed, that the production will increase, that the reserves will be increased and that there will be room for exploration activities as well,” he said.

The Nigerian government struggles to meet its share of funding to the operation of the joint ventures with energy companies, thereby limiting the scope for increasing production. It is currently indebted to companies including Shell, Exxon Mobil, Total and Eni, which had provided loans in the past to fill the funding gap.

‘Engage Communities’

“We would like to see government also thinking about divesting some of its joint-venture assets such that the private sector will drive the industry,” Orjiako said.

As energy companies including Shell, Chevron, Total and Eni continue to divest assets in onshore areas plagued by communal unrest and disruptions in favor of offshore investments, Seplat will be looking for opportunities to expand.

“We believe we can engage the communities where we operate differently, being Nigerian companies,” Orjiakor said. “We are looking to see more of that happen and that will create more opportunities.”

When Seplat took over its current oilfields from Shell, they were producing 14,000 barrels of crude per day, according to Orjiakor. Currently, the company pumps an average of 70,000 barrels a day and sees daily output reaching 85,000 barrels by 2017, he said.

With Nigeria seeking to tap its gas reserves to meet pent up power demand, Seplat has expanded its gas investments, improving output from 90 million cubic feet per day in 2010 to the current 200 million cubic feet, the chairman said. It plans to reach a capacity of 300 million cubic feet next year.

“We have increased the ability to deliver gas to different parts of the country, to the north and to the west and indeed into the West African gas pipeline,” he said.

http://www.bloomberg.com/news/articles/2015-06-08/nigeria-could-boost-oil-output-with-changed-funding-seplat-says?

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