Former NNPC GMD replaces Kachikwu as alternate board chairman
President Muhammadu Buhari has appointed Thomas John as acting alternate chairman of the Nigerian National Petroleum Corporation (NNPC) Governing Board.
The corporation disclosed this in a statement signed by Maikanti Baru, its outgoing group managing director, in Abuja on Tuesday.
According to the statement, John, a former GMD of the corporation, will hold the position until a new minister of petroleum resources or minister of state for petroleum resources is appointed.
Ibe Kachikwu, the current minister of state for petroleum resources, was until John’s appointment, the chairman of the NNPC governing board.
The board is made up of nine members headed by the chairman and includes the GMD, the director-general of the ministry of finance and three persons appointed by the National Council of Ministers by virtue of their experience or specialised knowledge of the oil industry.
Mahmoud Isa Dutse, permanent secretary of the federal ministry of finance and Abba Kyari, Buhari’s chief of staff, are two of the board members.
The statement said John will “assume the Chairmanship or Alternate Chairmanship position, respectively in line with Sections 1(3) and 2(1) of the NNPC Act” and the appointment is “with immediate effect.”
According to the NNPC Act, the president is empowered to appoint an “Alternate Chairman who may, pursuant to any general or special delegation given in that behalf by the Minister exercise the powers conferred upon the Minister or Chairman…provided that nothing in the foregoing shall be construed as preventing the exercise by the Minister himself of any power so relegated.”
John, an indigene of Cross River state, is a 1968 graduate of Chemical Engineering from Prague Institute of Chemical Technology, Czech Republic.
A commonwealth research fellow, he holds a Ph.D degree in Reaction Kinetics from Queen’s University Canada and is also a fellow of the Nigerian Society of Chemical Engineers.
He joined the NNPC in 1974 as a project engineer and spent 16 years supervising the design, engineering, construction and commissioning of the Warri and Kaduna refineries, as well as the three petrochemical plants in both states.
He rose through the ranks to become the first managing director of Eleme (Indorama) Petrochemical Company and was later appointed as NNPC GMD.
He voluntarily retired from the NNPC in 1992.
After his retirement, John served on the board of many companies including the United Bank for Africa (UBA).
He is the founder and chief executive officer of Hydropec Engineering Company Ltd.
I’ll resign, upgrade refineries… five times Kachikwu went back on his words
In the last four years and even as far back as one would want to go, Nigeria’s oil and gas industry has been an unending subject of controversy as it has been the nation’s cash cow for decades.
Issues in the upstream, midstream and downstream sector– ranging from award of oil licences and contracts, loss of oil revenue from non-application of production contracts, petrol scarcity, subsidy, pipeline vandalism, refinery rehabilitation and a lot more– have been put on the pedestal with calls for policies and actions that would kickstart industry-wide reforms.
At the heart of these discourses over the past four years has been Ibe Kachikwu, the minister of state for petroleum resources, who arguably seems to have good intentions for the ailing industry.
A man of many words, the minister is usually at the forefront, mostly representing and speaking on behalf of President Muhammadu Buhari who also doubles as the minister of petroleum resources.
However, it seems that despite his good intentions, some key issues have not been resolved or not gone in the direction that Kachikwu would have hoped they would.
As his tenure — or first term as a minister comes to a close — here are five times Kachikwu made promises or statements that have either not seen the light of day or did not last all through his stewardship.
ZERO PETROL IMPORTATION BY 2019
One of the most resounding promises made by Kachikwu in 2017 was that Nigeria will stop importing petrol into the country two years later — by 2019, with the hopes of saving billions of dollars spent on import of the product.
The minister’s promise was pegged two things — first, on the expectation that the 650,000 barrel per day (bpd) capacity refinery by billionaire businessman Aliko Dangote, would come on stream before the end of that year.
Secondly, it was pegged on plans by the Nigerian National Petroleum Corporation (NNPC) to repair the nation’s four refineries within a two-year period, counting from 2017.
He alluded to the latter instance while speaking at a public hearing on the review of petroleum pricing template for Premium Motor Spirit (PMS) or petrol organised by the house of representatives in February of that year.
Restating his promise with stronger conviction three months later, Kachikwu told BBC that he would resign if the nation has not achieved petrol self-sufficiency by 2019.
“Our target is 2019… don’t worry, I put the date, I’ll work it,” he had told Stephen Sackur on BBC HardTalk.
When asked if he would “walk” if the target is not achieved, the minister said: “Yes, of course, that is the reason why you are in government.”
As the days went by, it became clear that of the Dangote refinery would take off at a later time (in 2020). Overhaul of the four government-owned refineries was stalled by financial constraints arising from slow negotiations with potential investors who would sink funds into the repairs.
Kachikwu did not resign.
REFINERY UPGRADE BY 2019
The minister’s assurance that the nation’s ailing refineries would be up and running to at least 90% capacity was said in the same breath as the promise that petrol imports would cease in 2019.
Upon his appointment as minister in 2015, Kachikwu had said if it was left to him alone, the refineries should be sold outright– a move that experts and private sector players in the industry have said is a sure way out of the local refining quagmire that Nigeria has remained in for decades.
“Personally, I will have chosen to sell the refineries, but President Buhari has instructed that they remain. After they are fixed, if they still operate below 60 per cent, then we will know what to do,” he had said at the time.
Although the federal government had argued that fixing the refineries to some extent, before sale, will shore up it’s value, it was revealed by the NNPC last year that $363 million had been spent on turnaround maintenance (TAM) for the refineries in the last 10 years– between 1998 and 2008.
Some industry sources, however, say a huge chunk of the amount was diverted into the pockets of individuals in high places with nothing to show for the maintenance that should have been done on the refineries.
After 19 years in the lurch, the state oil firm announced in March that it had commenced the first phase of rehabilitation of the 210,000 bpd capacity refinery in Port Harcourt, the Rivers state capital.
When the initial phase is completed, the facility is expected to reach just 60% capacity utilization.
But here again, the minister has had to admit his 2019 target for the refineries could not be achieved.
Speaking on Hard Copy, a Channels TV programme, Kachikwu expressed regrets at the current state of the nation’s refineries.
“If there is one area where I feel sad, it’s the refineries because there is a huge gulf between my pronouncements and where I’d like it to be and what we’ve been able to achieve,” he said.
“The reality today is that we are still below 15% of utilisation of those refineries because they need to maintained, reworked, they almost need to be shut down and completely refurbished.
“Neglect of over a decade is forcing us to say are these scraps or how much will it cost to fix them.
“The 2019 plan is off, there is absolutely no way given that no contractual terms have been reached by the NNPC and the potential investors. So there is no way that you can get refineries to 90% capacity template in 2019 and for us to exit complete importation of petroleum products.”
SUBSIDY REMOVAL, CUT IN PETROL PRICES BELOW N145
In December 2015, Kachikwu had revealed government’s plans to end the fuel subsidy regime which he described as a fraud and said would lead to savings of up to one billion dollars and another one billion saved on fuel importation.
Five months later, the federal government through the minister, announced the removal of subsidy, pegging sale of petrol between N135 and N145 per litre from N86.50 — a decision that signalled an end of subsidy payment to private oil marketers.
The move was met by critcicism with Femi Falana, human rights lawyer, pointing to the fact that continued subsidy payment was a huge campaign message propagated by the Buhari-led administration.
In trying to placate Nigerians, the minister again came up with another assurance that removal of subsidy would in the near term benefit Nigerians as petrol prices would drop.
“As it gets better and it gets to a point where we find that the market has stabilised in terms of supply, we will begin to pull back a bit in terms of determinants for pricing,” he said during a Channels TV programme in December 2017.
“You will be amazed at what will happen to your N145 price because it will go downwards. We mean well and Nigerians should please trust us. Give us a chance, you will be surprised what will become of your PMS price over the next six to eight months.”
But then again the subsidy regime returned after government said landing cost of petrol had increased following crude oil price rally, with the NNPC becoming the sole importer of the product, and bearing the burden of subsidy.
In response to advice by the International Monetary Fund (IMF) to remove subsidy once again, Kachikwu said he will advise the president on the way forward.
TRANSPARENCY IN OIL CONTRACT BIDS
In what came as a surprise to many, the NNPC under the leadership of Kachikwu launched a system where annual crude term contracts would be aired on live television.
The first televised bid exercise was witnessed by representatives of the DPR, Bureau of Public Procurement (BPP), Nigerian Extractive Industry Transparency Initiative (NEITI) and Nigerian Content Development and Monitoring Board (NDCMB).
Prior to this, invitations to tender were published in newspapers but the bidding process itself and the contract awards were shrouded in secrecy.
The minister had, however, said the new system was introduced to strengthen the tenets of transparency as the process will be visible to all Nigerians and prevent calls for favours in contract allocation.
“The essence is to ensure that nobody needs to call me personally for him to get crude allocation,” he had said.
“You can imagine the burden the exercise has taken off my shoulders. It means a good amount of my time will now go into other relevant areas of operation where the country needs me most.”
This year, apart from the invitation to tender for the 2019-2020 petrol supply programme on the NNPC website and media reports, not much was seen with regards to the bid process.
Moreso, the state oil firm is yet to produce the list of local and international companies that it awarded contracts, out of the 254 companies that had placed bids in the previous term.
The minister has also been close-lipped about the contract awards in recent times.
KEROSENE TO GAS REVOLUTION
In his early days as minister, and while still the group managing director of the NNPC, Kachikwu had complained that kerosene subsidy was a huge burden on government and vowed to revolutionise domestic cooking fuel or Liquified Petroleum Gas (LPG) by 2016.
Although it seemed like a tall order, Kachikwu’s plan was that by the end of 2016 most of the households in Nigeria would have obtained the free gas cylinders distributed by the NNPC in preparation for the transition from kerosene to gas.
But some three years down the line, kerosene and even the gas that was to replace it as domestic cooking fuel have become more expensive.
When Kachikwu made the promise in September 2015, some fuel retail outlets in the country sold kerosene at the subsidised price of N50 per litre.
Recent data from the National Bureau of Statistics (NBS) show that as at March, the average price per litre of kerosene retails for as high as N327, with Anambra, Ebonyi and Ondo selling at N329.09, 326.83, and 326.67 respectively.
Similarly, the price of cooking gas has almost doubled with some states like Cross River selling for as high as N4,753.57 for a 12.5kg cylinder.
Although missing yet another deadline, the minister is still pushing for a higher LPG penetration in the country.
He says the government has set a target to build at least one gas filling plants across all the 774 local government areas in the country within the next three years.
How Nigeria lost $28bn oil revenue — 99% of 2019 budget
In the last 10 years, Nigeria may have lost revenues as high as $28.61 billion, from failure to review the Production Sharing Contract (PSC) terms guiding oil production from seven deepwater fields in the country.
This projection was made in a policy brief released by the Nigeria Extractive Industries Transparency Initiative (NEITI) on Sunday.
The document titled “1993 PSCs: The Steep Cost of Inaction”, showed that the federal government was denied oil revenue that would have been earned between 2008 and 2017 if the contracts were reviewed in line with applicable fiscal terms.
PSCs are agreements where oil companies bear the risk and cost of exploring for hydrocarbon resources covered by its licence, and subsequently recovers its operational costs from what is produced.
The Nigerian National Petroleum Corporation (NNPC) enter these agreements with International Oil Companies (IOCs) through their Nigerian subsidiaries and sometimes with indigenous oil companies.
Under the fiscal terms of the agreements between the IOCs and NNPC, the companies are under obligation to pay royalty oil and tax oil to the Department of Petroleum Resources (DPR) after which the other parties to the contract share the profit oil.
Quoting section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap. D3. LFN 2004, the NEITI brief showed that the fiscal terms for the PSCs between NNPC and IOCs “ought to have been reviewed” on two occasions.
First, in 2004 when real oil prices exceeded $20 per barrel, and most importantly, 15 years after the 1993 fiscal terms were launched, which should have been January 1, 2008.
AKPO, AGBAMI RECORD BIGGEST LOSSES
Using financial modelling analysis, the study examined oil production data from the seven fields, oil prices, and newer fiscal regimes, to arrive at estimated revenue figures for the period under review.
The seven deep water fields considered are Abo (OML 125), Agbami-Ekoli (OML 127 & OML 128), Akpo & Egina (OML 130), Bonga (OML 118), Erha (OML 133), Okwori & Nda (OML 126), and Usan (OML 138).
The field operators include, but are not limited to, Eni, Total, Shell, Chevron, Famfa Oil, Exxon Mobil, Petrobras, South Atlantic Petroleum and Addax petroleum.
The NEITI brief showed that under the fiscal terms of the 1993 PSCs, total revenue from the seven fields amounted to $73.78 billion.
If the terms of the 2005 PSCs had been used, however, total government revenue from these fields would have amounted to $89.81billion, meaning that $16.01 billion was lost in the review period.
Out of that, the Agbami field located in OML 127, operated by Chevron, Famfa Oil and Petrobras recorded the biggest loss.
Here, the government was denied revenue especially from profit oil and would have earned $22.15 billion instead of $17.72 billion, signifying a loss of $4.44 billion.
Depleting government revenues further, outdated fiscal terms on the Akpo field located on OML 130 and operated by Petrobras, South Atlantic Petroleum and Total, resulted in a loss of $3.22 billion.
Revenue was estimated to reach $9.54 billion instead of the $6.32 realised.
In percentage terms, there would have been a 50.91% increase in revenue from OML 130, if 2005 fiscal terms had guided the PSCs as against the 1993 fiscal terms applied.
In another scenario, NEITI concluded that if the government was able to obtain profit share from all seven fields based on the terms of the 2005 fiscal regime, revenue would have hit $102.39 billion. This represents a loss of $28.61 billion.
In this scenario, revenues from Agbami would have increased to $31.51 billion, representing a huge loss of $13.79 billion within the 10-year review period.
LOST REVENUE COULD FUND MAMBILA POWER PROJECT
Based on the empirical evidence provided in its policy brief, NEITI said the billions of dollars in lost revenue would have been used to fund long-standing capital projects to deal with the nation’s infrastructure deficit.
“The lower threshold loss of $16.03bn to the Federation Account would have funded the Port Harcourt – Maiduguri rail line put at between $14bn to $15bn,” the NEITI document read.
“Other projects that the lost revenue could have been used to fund include the Mambila Power Plant of 3,050 MW at $5.72 billion, while the estimated cost of the Ibadan-Ilorin-Minna-Kano Standard Gauge line is $6.1 billion.
“The combined cost of these projects is $11.82 billion, which is less than the lower threshold of estimated losses.”
Other projects listed by NEITI includes “the Calabar-Lagos Rail line ($11 billion), Fourth Mainland Bridge ($1.4 billion), Badagry Deep Water Port Complex ($1.6 billion), and Lekki Deep Seaport ($1.2 billion).”
REVENUE LOST COULD FUND 2019 BUDGET
The higher estimated loss of $28.61 billion, according to NEITI, can fund 99 percent of the proposed federal government budget for 2019.
The N8.83 trillion naira budget ( ($28.80 billion) was presented by President Muhammadu Buhari to the national assembly in December 2018.
The total projected revenue, according to Buhari, is N6.97 trillion, consisting of oil revenue projected at N3.73 trillion, and non-oil revenue estimated at N1.39 trillion.
But with the loss recorded from the outdated PSCs, government may have to resort borrowing in its struggle to fund the capital projects outlined in the 2019 budget.
In its recommendation, NEITI charged the federal government to use relevant agencies to “immediately” review the “outdated PSC terms” with oil companies.
The NEITI brief noted that the affected companies “have expressed willingness to negotiate these terms” and should therefore be carried along in the review process along with state governments.
Court fixes March 29 for hearing on suit asking Malami to revoke OPL 245
A Federal High Court in Lagos has fixed March 29 for the hearing of a suit seeking the revocation of OPL 245 awarded to oil giants Shell and Eni.
In April 2018, Human and Environmental Development Agenda (HEDA) had filed an ex-parte motion, seeking an order for Abubakar Malami, attorney-general of the federation (AGF) to revoke the licence on grounds that it was awarded illegally.
Giving details of the court’s proceeding in a statement on Wednesday, Lanre Suraju, executive director of HEDA, said the group was represented in court by R.A.O Adegoke and Aishat Odekunle.
Both counsels according to him, asked the court to grant its request to probe into processes involving the license which HEDA said were flawed.
Adegoke said that all parties had been served their processes, which had prompted “preliminary objections” from the defendants.
“The Plaintiff equally filed its reply to all, hence, counsel to the defendant applied for a short date for the hearing of the matter,” the statement read.
“O. Ojo and M. Nwodo stood for the 2nd Defendant, Abiodun Rufai for the 3rd Defendant and E. A. Ejiga, (Miss) for the 4th Defendant.
“The 2nd Defendant objected and rather requested a date for the hearing of the preliminary objections filed by the 2nd -4th Defendants which challenge the jurisdiction of the court and this was seconded by the other defendants.
“Consequently, the court adjourned to the 29th day of March 2019 for the hearing of the preliminary objections of all the defendants after which it will then give its ruling and decide whether there is a need to hear the Plaintiff’s application or not.”
OPL 245 is one of the largest oil blocks in Nigeria.
Oil revenue threatened as Nigeria’s largest buyer signs new deal for US shale
Nigeria’s crude oil revenue is set to take a hit as the country’s largest buyer, India, has struck a deal worth $1.5 billion, to buy oil from the US.
In a statement on Monday, state-owned Indian Oil Corporation Ltd (IOC), announced a year-long contract that will see the delivery of up to 60,000 barrels of oil per day (bpd) or three million tonnes worth of crude cargoes.
“Indian Oil has finalised a term contract for import of up to 3 million tonnes of crude oil of US origin grades as a part of its strategy to diversify term crude sources, Sanjiv Singh, IOC’s chairman said on Monday.
The new deal– the first of its kind– would cut India’s dependence on the Organisation of Petroleum Exporting Countries (OPEC) and its members including Middle Eastern nations and their West African counterparts.
This would enhance India’s bargaining power with the US, Sri Paravaikkarasu, an international energy consultant, told Reuters.
“Lots of geopolitical issues are going around. We expect lots of volume going away from Venezuela, west Africa and Iran, so it makes sense to have guaranteed term supplies from the U.S., where crude production is increasing,” she said.
As at 2017, India was the largest importer of Nigeria’s crude, buying over 131 million barrels of oil in that year, according to a report by the Nigerian National Petroleum Corporation (NNPC).
The second largest importer of Nigeria’s crude in 2017 was the US, with over 94 million barrels of oil sold to the North American country.
But with the changing dynamics in the global oil market, the US has now become the biggest producer of crude oil in the world, making it offer terms that address its location disadvantage with respect to its rivals in OPEC– all in a bid to secure the Indian market.
Oil sector’s contribution to GDP
In Nigeria, crude oil exports account for about 90 percent of foreign exchange earnings and 80 percent of government revenue, thereby making the nation’s economy heavily reliant on the petroleum sector.
The oil sector witnessed negative growth between 2013 and 2017 on the back of volatility in the international market and challenges to output as a result of militant attacks on pipelines and other infrastructures.
Although the sector picked up in 2017 after Nigeria exited its worst recession in 29 years, the latest figures released by the National Bureau of Statistics (NBS), shows that the nation may be heading for dire straits once again.
The NBS report shows that the oil sector recorded a real GDP growth rate of –1.62% (year-on-year) in Q4 2018, indicating a decline of –12.81% points relative to the growth rate recorded in the corresponding quarter of 2017.
On an annual basis, real GDP growth for the oil sector stood at 1.14% as against 4.69% recorded in 2017.
Contribution to aggregate real GDP in 2018 was 8.60%, slightly lower than the 8.67% recorded in 2017.
Conversely, the non-oil sector’s annual contribution to GDP was 91.40% as against 91.33% in year 2017.
The “key performing activities” responsible for the growth were said to include transport, information & communication, electricity, water, and arts & entertainment.
OPEC cuts and Nigeria’s oil revenue: risk or reward?
In 2018, Ibe Kachikwu, minister of state for petroleum resources had said foreign exchange reserves grew by about $20 billion as a result of oil production exemption granted to Nigeria in 2016 by OPEC, as well as the relative peace that has returned to the Niger Delta.
Nigeria’s exemption for the output cut deal has however ended and the nation is expected to cut her production by 53,000 barrels of oil per day (bpd), which is approximately 2.5 % of current productions figures.
This would bring the nation’s oil production to 1.68 million bpd excluding condensates.
Rather than being a cause for concern, the minister said Nigeria can cope with the reduced contribution to OPEC by focusing on local refining to meet local demand for petroleum products.
“If we can develop in-house production and just feed into our refineries, then what we are taking out becomes very minimal. That is what we are going to focus on,” Kachikwu had told TheCable Petrobarometer.
Compliance to OPEC cuts may also pose new challenges as a result of spike in oil production expected from new deepwater projects coming on stream including Total’s Egina and SNEPCo’s Bonga South-West Aparo.
But Kachikwu has said that in the case of oil produced from the Egina field, it might be classified as a condensate — a much lighter, more gasoline-rich oil that’s not bound by the OPEC cuts.
“We are trying to look at Egina more as a condensate production. We are looking at the crude configurations of Egina. Once we can certify that some of that, if not most of that is from condensates, then it (production cap) really won’t have much of an application,” he said.
OPL 245: Ex-AGF ‘collected $10m’ out of alleged $50m Malabu bribe
Adebayo Ojo, former minister of justice and attorney-general of the federation says he collected only $10 million as “legal fees” out of $50 million agreed with Dan Etete, former minister of petroleum resources, for the sale of the deepwater oil block, OPL 245 to Malabu Oil and Gas (Malabu) in 2011.
Located on the southern edge of the Niger Delta, OPL 254 is said to have about nine billion barrels of crude oil, estimated to worth half a trillion dollars.
In a Milan court proceeding on Thursday, Ojo said he provided legal advice to Etete between 2009 and 2011, while seeking possible buyers for the lucrative oil block.
However, investigation documents made available to the court said the $10 million “legal fees” Ojo received is just a tranche of a “$50 million bribe” paid by Italian oil giant, Eni, for the purchase of the oil block from Malabu.
The $50 million represents five percent of $1.1 billion allegedly used to bribe local politicians, intermediaries and others involved in the case.
Royal Dutch Shell and Eni, alongside a number of their senior executives have been involved in lawsuits for their alleged role in the deal, which both companies have denied.
In February 2017, both companies had through their Nigerian subsidiaries, asked a federal high court to reverse an order that revoked the award of OPL 245 to them after purchasing the block from Malabu.
During the Thursday trial, Sergio Spadaro, the lead prosecutor, questioned Ojo about the “legal work” he had done as claimed, but the former minister did not provide details of his assignment, claiming “professional secrecy”.
Ojo, however, specified that during that time, he didn’t know about the lawsuit initiated by Shell nor that both Shell and Eni “could be buyers” of OPL 245.
He confessed that he still had dealings with Vincenzo Armanna, a former manager at Eni and had in 2012 paid the Italian $1.2 million for a business in the “gold sector that aims to expand to the renewable energy sector and oil”.
The money paid to Armanna according to him, was from his $10 million “legal fees” which was transferred from one “Rocky Top Resources to his personal account because his firm did not have a foreign account.”
Referring to the payment made to Armanna, the former minister said: “The money has not been asked back because we still want to work together.”
Abubakar Aliyu, a Nigerian businessman who is also under trial for his alleged complicity in the case, was not present for court proceedings on Thursday as scheduled.
Aliyu said he only just discovered the same day his trial was to hold that he is being investigated in a related case.
The businessman claimed not to know the accusations made against him, adding that he “cannot assess whether or not to answer”.
His case was adjourned to February 13.
Kachikwu: Nigeria will focus on local refining to deal with OPEC cuts
Ibe Kachikwu, minister of state of petroleum resources, says Nigeria will deal with the cap on oil production by the Organisation of Petroleum Exporting Countries (OPEC), by focusing on refining crude oil locally and consuming what is produced.
Kachikwu made this known while speaking with TheCable Petrobarometer during the ongoing Nigeria International Petroleum Summit (NIPS 2019) in Abuja on Monday.
During the last OPEC and non-OPEC ministerial meetings in December, Nigeria voluntarily agreed to curb her quota by some 53,000 barrels per day (b/d), bringing it down to around 1.68 million barrels per day (mbpd) excluding condensates.
There are speculations that this will affect the implementation of the 2019 budget since the daily production will be below the budget benchmark in relation to oil prices.
But according to the minister, even if there new deepwater projects coming on stream, as long as the nation’s refineries are operating at full capacity and most of what is produced is consumed locally, then the nation’s contribution to OPEC can be “minimal”.
“Nigeria’s Crude Oil production is currently between 1.74 million barrels of oil per day (mbpd) and 1.75 mbpd. Condensate production is about 400,000 b/d,” he said.
“It is good enough to say we are cutting. The realism, what I see in the market today is that despite the cuts–the more we cut, the more the Shale keeps pumping back into the market.
“I have not tried to restrict production (by the producers), I have tried to say, first of all, respect the OPEC quota. What can we do to develop in-house consumption.
“Refineries are 400,000 barrels of oil per day (bpd). Dangote is about 650,000 b/d. if we can develop in-house production and just feed into our refineries, then what we are taking out becomes very minimal. That is what we are going to focus on.”
Egina output not affecting Nigeria’s OPEC quota
Citing the example of Total’s Egina field, Kachikwu said the OPEC cuts will not “have much application” if it is discovered that most of its (Egina) production are condensates.
“The more discoveries we’ve had, the more we struggle with the (OPEC) cuts, but luckily we are trying to look at Egina more as a condensate production,” he said.
“We are looking at the crude configurations of Egina. My guys are working with Total to look at the mix, because once we can certify that some of that, if not most of that is from condensates, then it (production cap) really won’t have much of an application.
Also speaking during his goodwill address, Nicolas Terraz, managing director, Total E&P Limted, represented by Ahmadu Kida-Musa, deputy managing director (deepwater), told the minister that the company’s new projects—Ikike and Preowei–would need government’s support.
“We shall also…introduce our new projects, Ikike, which is ready for sanctions and preowei, both of which my MD went to Paris to defend,” he said.
“I do understand honourable minister that… we need your attention on these advancements on the (FDP) field development plan.”
NEITI: Oil and gas sector generated $17.05bn in 2016 — lowest in 10 years
Revenue generated by Nigeria’s oil and gas sector fell to $17.05 billion in 2016, making it the lowest figure recorded in the last 10 years.
This is according to the Nigeria Extractive Industries Transparency Initiative (NEITI) 2016 Oil and Gas Industry Audit Report which was released on Friday.
In a statement signed by Orji Ogbonnaya Orji, NEITI’s director, communications and advocacy, the drop was attributed to low oil prices in the global market and reduced oil production in Nigeria.
The fall in oil production was further linked to vandalism of pipelines and other major assets in the sector, as well as a rise in crude oil theft occasioned by the affairs of the Niger Delta militants.
According to the report, the average price of crude oil per barrel in 2016 was $43.73 as against $52.5 in 2015.
Oil and Gas Earnings ($Billions)
Total oil production in the review period was 659 million barrels as against 776 million barrels produced in 2015.
This means there was a 31 percent decline in the sector’s earnings from $24.79 billion generated in 2015, and a 75 percent drop from $68.44 billion generated in 2011, leading to a 9.5 percent drop in the sector’s contribution to Gross Domestic Product (GDP).
A break down of the 2016 revenue figures also showed that export and domestic sale of crude oil and gas generated $7.97 billion, Petroleum Profit Tax (PPT) generated $4.21 billion, while royalty oil generated $1.57 billion.
The report revealed that in 2016, crude oil produced from Production Sharing Contracts (PSCs) overtook output from the Joint Ventures (JVs)– the first recorded in the sector’s history.
In the review period, PSCs accounted for 324 million barrels, while the JVs accounted for 289.1 million barrels, (as against the 320 million barrels for PSCs and 375.5 million barrels for JVs in 2015)
“This change in production structure pushes to the fore the need to renegotiate the terms of the PSCs as stipulated in the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 so as to increase government’s take,” the report read.
FG gets five-day grace as DAPPMAN suspends shutdown
The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has suspended its earlier directive to commence shutdown of depots across the country from loading petroleum products.
The suspension directive was made known in a statement issued in the early hours of Monday by Olufemi Adewole, DAPPMAN’s executive secretary.
The association had earlier directed marketers to shut down all loading operations by midnight on Sunday.
“However, following the intervention of well-meaning Nigerians including the National Assembly as represented by the Senate Committee of Petroleum Downstream and constructive engagement of the Federal Government team by the labour unions most affected by the disengagement of our personnel, namely, PENGASSAN, NUPENG NARTO, and the PTD, DAPPMAN has resolved to recall its disengaged personnel for 5-days to give the FG’s team the opportunity to conclude its process of paying marketers the full outstanding of N800 billion with the first trench being the amount already approved by the Federal Executive Council (FEC),” the statement read.
“The association has acted in good faith to avoid unnecessary hardship which could befall Nigerians during the yuletide season and we hope that government would make good its promise to see that those issues are resolved by Friday, December 14, 2018, as promised.
“To this, end, our disengaged personnel would be recalled on Monday, December 10 and considering the reactivation time or hitherto shut down system, all depots with fuel stock should be fully active same day.
“DAPPMAN depots are therefore advised to commence loading operations immediately and await further notification in respect of our long overdue payment.”
In the suspension directive released on Sunday, DAPPMAN had said members disengaged employees due to their inability to pay salaries.
More illegal refineries destroyed after undercover report on oil theft
Apochi Suleiman, commander of operation Delta safe (OPDS), says no fewer than 300 illegal refineries have been destroyed.
This is the second time the military will be destroying illegal refineries since TheCable’s undercover report on the activities of suspected oil thieves was published.
In the report, some of the pipeline vandals said they bribe security operatives before carrying out their operation.
On Wednesday at the Nigerian navy ship (NNS), Warri naval base, Suleiman said: “Cases of illegal bunkering, pipeline vandalism and associated criminalities do increase during major festivities and election years.
“This necessitated the launching of `OPERATION 777’ by the CDS and activated by the OPDS.
“The `OPERATION 777’ has made huge achievement as over 300 illegal refineries, 156 locally manufactured boats, 1,085 surface tanks have been destroyed.
“Additionally, 15 barges, 10 tanker trucks, 31 vehicles, 45 speed boats, 16 outboard engines, 41 pumping machines, 15 generating sets and 76 other items have been impounded.
“It is also worthy to mention that six different types of arms and over 100 items of munitions were recovered during the period in focus.
“Importantly, a wanted militant and member of `kill and bury’ gang named Gift Apollo was arrested during the operations.
“The group was responsible for the attack and death of our soldier deployed in Abua/Odua sometime in August.”
The commander said an anti-illegal bunkering/anti-illegal refining operation was also conducted at Okaki community in Bayelsa in which over 100 reservoirs and an estimated 210 metric tonnes of automated gasoline oil (AGO) were destroyed.