Ijaw leaders threaten to disrupt AKK gas project over neglect of $16bn export processing zone
The Ijaw and Itsekiri people of Gbaramatu and Ugborodo in Delta state have threatened to disrupt the federal government’s $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
Speaking at a joint press conference on Sunday, Godspower Gbenekawa and Mike Odeli, representatives of Gbaramatu and Itsekiri respectively, demanded an immediate resumption of work on the abandoned $16 billion export processing zone (EPZ) in the state.
The EPZ project was inaugurated by Former President Goodluck Jonathan in March 2015 under the component of the gas revolution industrial park (GRIP) that comprises of the gas industry city at Ogidigben and the deep seaport at Gbaramatu.
President Muhammadu Buhari recently flagged off the construction of the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project, which he said would revive moribund factories and the development of new ones upon completion.
“It will interest you to note that the just concluded groundbreaking of the 614km long Ajaokuta-Kaduna-Kano (AKK) natural gas pipeline meant to convey gas to the northern part of the country, Morocco, the United Kingdom, etc. a 40-inches diameter pipeline expected to transport 3,500 million metric standard cubic feet (MMSCF/D) per day of dehydrated wet gas, which is the same amount of wet gas intended for the GRIP, in Warri south-west LGA but stalled for the former,” the leaders said.
“This is what we termed sheer insensitivity by a government that displays ill-attitude towards developing other regions, especially the ones that lay the golden eggs like ours.
“It beats our imagination as to how a government that claimed to practice and encourage local production suddenly deviate from its agenda rather than encourage local industrialization through projects such as the GRIP, instead opted to sustain the continued exportation of our natural gas without adding value to them.
“On this, while we are in total support of the AKK, we say the GRIP-EPZ must be continued or we will be constrained disrupt any attempt to continue with the AKK.”
Odeli also urged the Department of Petroleum Resources (DPR) to consider competent companies owned by indigenes of Itsekiri and Gbaramatu oil/gas communities.
The DPR has opened bidding rounds for 57 marginal oil fields in the country.
Sylva: We didn’t promise to keep petrol prices low permanently
Timipre Sylva, minister of state for petroleum resources, says the federal government did not promise to permanently reduce petrol price.
The pump price of petrol was fixed at N125 per litre in March and was reviewed downwards in April to N123.50.
In May, only the ex-depot price was reviewed downwards to N108 and the retail price was adjusted to N121.50 in June.
However, the price rose to N143.80 in July following a recommendation of the Petroleum Product Pricing Regulatory Agency (PPPRA).
The increase in petrol price led to public outcry, as Nigerians decried the government’s action amid the coronavirus pandemic.
In a statement on Wednesday, the minister said the price hike was not imposed on Nigerians but was necessitated by market forces.
Sylva said the deregulation of petroleum products was done after examining the effects of petrol subsidy.
He said the deregulation process eliminated the government’s monopoly and led to an open market for private investors, under the regulation of the government.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the FG concluded that it was unrealistic to continue with the burden of subsidizing PMS to the tune of trillions of naira every year. More so when this subsidy was benefiting in large part the rich rather than the poor and ordinary Nigerians,” the statement read.
“Deregulation means that the government will no longer continue to be the main supplier of petroleum products. But will encourage the private sector to take over the role of supplier of petroleum products.
“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation; to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers; a regulatory function not unlike the role played by the Central Bank of Nigeria in the banking sector; ensuring that commercial banks do not charge arbitrary interest rates.
“There was no time government promised to reduce pump price and keep it permanently low.”
— Ministry of Petroleum Resources, Nigeria (@FMPRng) July 9, 2020
Sylva said the government ensured that Nigerians benefited when the prices of crude oil reduced globally.
He said an increase in crude oil prices caused by market forces will also translate to an increase in retail pump price across the country.
“Petroleum products are refined from crude oil. Therefore the price of crude (the feedstock) for the refining process will affect the price of the refined product,” he explained.
“When crude oil prices were down, government, through its regulatory functions ensured that the benefits of lower crude oil prices were enjoyed by Nigerians by ensuring that PMS was lowered.
“At that time, we indicated that an increase in crude oil prices will also reflect at the pump.”
Sylva said there is a need to free up investment space in the midstream and downstream segment of the petroleum sector adding that Nigerians can “no longer avoid the inevitable and expect the impossible to continue”.
Reps probe NNPC over ‘$1bn illegal withdrawal’ from NLNG account
The house of representatives has resolved to investigate the Nigerian National Petroleum Corporation (NNPC) for “illegal withdrawals” from the Nigerian Liquefied Natural Gas Limited (NLNG) account.
At Tuesday’s plenary session, the green chamber accused the NNPC management of illegally withdrawing up to $1 billion from NLNG funds without due process.
The resolution followed a motion from Ndudi Elumelu, minority leader, who said the NNPC management tampered with the funds without first getting approval from states and the national assembly.
Elumelu said the NLNG, which was incorporated as a limited liability company in 1989, is jointly owned by the federal government — represented by the NNPC with a shareholding of 49 per cent — and other international oil companies.
He said the law provides that the NLNG dividends are to be paid into the consolidated revenue funds account and shared among the three tiers of government.
But the lawmaker said the NNPC had “without the required consultations with states and the mandatory appropriation from the national assembly, illegally tampered with the funds at the NLNG dividends account to the tune of $1.05bn, thereby violating the nation’s appropriation law.”
“The house is disturbed that there was no transparency in this extra-budgetary spending, as only the group managing director and the corporation’s chief financial officer had the knowledge of how the $1.05bn was spent,” he added.
“The house is concerned that there are no records showing the audit and recovery of accrued funds from the NLNG by the office of the auditor-general of the federation, hence the need for a thorough investigation of the activities on the NLNG dividends account.”
Thereafter, the house mandated the committee on public accounts to invite the managements of NNPC and NLNG “to conduct a thorough investigation on activities that have taken place on the dividends account and report back to the house in four weeks.”
Oil prices drop as US COVID-19 cases surge raise demand concerns
Oil prices fell on Tuesday, erasing earlier gains, on fears that the recent spike in confirmed COVID-19 cases in the US could affect the recovery in oil demand.
US West Texas Intermediate (WTI) crude futures dropped 0.64 percent to $40.37 per barrel, while Brent crude futures fell to $42.92 (0.42 percent).
In contrast, the price of Nigeria’s crude grades is on the increase. Bonny Light rose to $43.69 (0.36 percent), while Brass River and Qua Iboe also rose to $43.26 (0.39 percent) respectively on Monday.
According to a Reuters tally, 16 states in the US have recorded an increase in new COVID-19 cases between July 1 to July 5.
Florida has re-introduced some limits on economic reopening to tackle the rise in COVID-19 cases.
While California and Texas, two of the most populous and economical states in the US, are also reporting high infection rates as a percentage of COVID-19 tests conducted in the last week.
The Organisation of Petroleum Exporting Countries (OPEC) and its allies including Russia, also known as OPEC+, are cutting supply by 9.7 million barrels per day (bpd) in July; the third consecutive month.
The crude oil output would increase slightly in August as 7.7 million barrels per day would be cut off global supply.
NEITI wants ECA funds moved to NSIA as part of economic reform
The Nigeria Extractive Industries Transparency Initiative (NEITI) has advised that the federal government boost its savings by channelling more funds to the Nigerian Sovereign Investment Authority (NSIA).
In a policy brief titled ‘Insulating Nigeria from perennial oil price volatility’, NEITI said the NSIA is one of the smallest sovereign wealth funds in the world with $2 billion.
Providing ways to achieve better savings, NEITI recommended the abolishment of the excess crude account and the 0.5 percent stabilisation fund and then transferring the balance in those accounts to the NSIA.
Since its establishment in 2003, there have been questions about the legitimacy of the excess crude account.
NEITI also advised that the oil price-based fiscal rule (OPFR) which allows for revenues in excess of the oil price benchmark be abolished and replaced with a mandatory saving of a percentage of daily oil production.
All these, it said, would help Nigeria build buffers against the volatility of crude oil prices.
The COVID-19 pandemic, which resulted in lockdowns across various countries of the world, reduced demand for crude oil and a supply glut made crude prices tank on the global market.
However, countries have begun to emerge from lockdowns and a supply cut implemented by the Organisation of Petroleum Exporting Countries (OPEC) and its allies have helped prices rise to above $41 per barrel from a period when the US West Texas Intermediate (WTI) was offered to buyers at negative prices.
NEITI advised that Nigeria should not be distracted by rising oil prices saying the “next oil price crash is a matter of when not if”.
In total, all three crude earnings savings account held by Nigeria have a cumulative sum of $2.25 billion.
“By contrast, Norway (a country of 5.3 million people) has a sovereign wealth fund worth more than $1 trillion. The Scandinavian country is withdrawing $37 billion (382 Kroner) or less than 4% of its hefty savings to fund its 2020 budget,” NEITI said.
“Norway saves all its oil money while Angola saves proceeds from 10 percent of its daily production.
“At this stage of its development and based on its current needs, Nigeria cannot do like Norway but it can be like Angola and save proceeds of between 5 percent and 20 percent of its daily oil production.
“With this, Nigeria could easily save between $1 billion and $3 billion every year even in a period of low oil prices. Abolishing the OPFR also removes the constant political jousting about oil benchmark price and quantity.”
It also recommended that the stabilisation fund be increased from 20 percent to 40 percent of NSIA’s holdings and dividends from NSIA earnings be shared among the three tiers of government every year.
“Increasing NSIA’s stabilisation fund (the portion available for budget supplementation) and sharing dividends from the investment will give comfort to states and LGs to support the constitutional amendment and the scrapping of ECA,” it said.
“Instead of just sitting in ECA, the fund will be invested to generate other streams of income for the federation.”
Other recommendations provided by NEITI include increasing tax revenue using a low rate-wide base technique by capturing the informal sector, boosting non-oil exports, blocking leakages in the oil and gas sector, fast-tracking the passage of the petroleum industry bill and boosting gas production and utilisation.
Featured image: Waziri Adio, NEITI executive secretary
Atlas Petroleum resumes development of OML 109
Atlas Petroleum International has resumed activities at OML 109 to enhance production from the Ejulebe marginal field.
The licence was awarded to Atlas Petroleum International in 1991 and the block entered into production through the development of the Ejubele discovery in September 1998.
According to a statement by the company, OML 109 consists of 14 identified and mapped prospects and leads and un-risked resource potential in excess of 500 million barrels of oil equivalent.
“Its low-cost operating environment in shallow water and proximity to existing oil and gas infrastructure such as the Escravos Terminal makes it one of the most attractive assets in the Niger Delta, with significant untapped and under-explored hydrocarbons potential,” it said.
Arthur Eze, executive chairman of Atlas Oranto, said the company expects that the ongoing wells intervention will deliver quick wins on the recovery and enhancement of production from the field.
“The renewed development of OML109 will bring a boost to local content development in Nigeria, and support the industry’s recovery following the COVID-19 crisis.
“As Nigeria multiplies efforts to build domestic capacity and develop the Nigerian content, we intend to live up to expectations as one of the country’s major indigenous player.
“We expect the ongoing wells interventions on OML 109 to deliver quick wins on the recovery and enhancement of production from the field, and express our thanks to the Department of Petroleum Resources for facilitating all permits.”
The company currently hold 22 oil and gas licences in 11 countries and the production sharing contract of the OML 109 expires in 2037.
Top management staff affected in NNPC shake-up
The Nigerian National Petroleum Corporation (NNPC) has reshuffled and made new appointments to the management staff of some of its business units.
According to a statement signed by Kennie Obateru, general manager of the NNPC public affairs division, the shake-up is part of efforts to “strengthen and reposition the corporation for greater efficiency, transparency and profitability”.
Adokiye Tombomieye, NNPC general manager, crude oil marketing division (COMD), will now serve as the new chief operating officer (COO), upstream; while Mohammed Abdulkabir Ahmed, managing director of the Nigerian Gas Marketing Company (NGMC), takes over as the new chief operating officer for corporate services.
Adeyemi Adetunji was redeployed from being the chief operating officer upstream to the ventures and business development directorate as COO.
Billy Okoye was also redeployed from the corporation’s downstream company, NNPC Retail Limited, as managing director to replace Tombomieye’s previous position; while Elizabeth Aliyuda, the general manager, sales and marketing NNPC retail limited, takes over from Okoye as managing director.
Usman Farouk, NGMC executive director asset management and technical service, also takes over from Ahmed as NGMC managing director.
Commenting on the reshuffling, Mele Kyari, NNPC GMD, said the new appointments would help the corporation live up to the expectations of Nigerians and “give impetus to the ongoing restructuring within the corporation”.
Kyari added that the development was in line with the corporate vision of transparency, accountability & performance excellence (TAPE).
According to the statement, President Muhammadu Buhari has accepted the resignation of Roland Ewubare, the immediate past COO, ventures and new business directorate, and congratulated Farouk Garba, immediate past COO, corporate services, on his retirement.
The president was also said to have thanked the two former COOs for their meritorious service to the corporation.
Report: Nigeria’s imported petrol dirtier than illegally refined in Niger Delta
A new report published by Stakeholder Democracy Network (SDN), an international resource watchdog group, says refined petroleum products imported into Nigeria contain more pollutants than those refined by black market operators in the Niger Delta.
The organisation said it carried out laboratory analysis of fuel samples collected from 45 government-licensed filling stations and unofficial (46) fuel selling points in Lagos, Rivers and Bayelsa.
The report was titled Dirty Fuel: An analysis of official and unofficial petroleum products in the Niger Delta.
The official samples from Lagos were said to have been collected from filling stations close to the port on the assumption that it would be “most likely to be a true representation of imported refined products”.
Laboratory results were reported to have shown that the average official diesel sample contained 204 times more fuel sulphur than the European Union fuel standards and the petrol contained 43 times more sulphur.
However, unofficial diesel samples contained 152 times more fuel sulphur than the EU standard and the black market petrol contained 40 times more sulphur than the EU standard.
In the case of kerosine, official samples were reported to have higher standards than unofficial samples.
However, the demand for kerosine from unofficial refiners was attributed to the household use of the commodity.
Consumers were reported to have shown a tolerance for lower kerosine when official sources run out of the product.
“Our research suggests that Nigeria is having dirty fuel dumped on it that cannot be sold to other countries with higher and better-implemented standards,” the UK Guardian quoted Florence Kayemba, SDN programme manager, to have said.
“The situation is so bad that the average diesel sampled are of an even lower quality than that produced by artisanal refining camps in the creeks of the Niger Delta.”
The resultant effect of this is that vehicles have a higher risk of having fuel injector damage, poor engine performance and higher pollutant emissions that increase the rate of environmental pollution.
The Nigerian National Petroleum Corporation has been the major importer of petrol after the federal government said it would no longer pay importers to subsidise petrol.
Seeing as the landing cost of petrol was higher than the recommended retail price, the NNPC began to absorb the difference as under-recovery.
However, the federal government is now taking steps to fully deregulate the sector saying the price of petrol will be adjusted monthly to reflect market realities.
Nigeria has to import refined petroleum products because the refineries have been non-functional for an extended period.
An October 2019 investigation by TheCable detailed the activities of oil thieves from the diversion of crude oil from the nation’s pipelines to their illegal refineries with the knowledge of security operatives.
Buhari: AKK project will revive moribund industries, lead to new ones
President Muhammadu Buhari says the 614km Ajaokuta-Kaduna-Kano (AKK) gas pipeline, when completed, will lead to the revival of moribund industries and the development of new ones.
In an address delivered on Tuesday during the flag-off ceremony for the construction of the pipeline, Buhari said the project is part of the delivery of the present administration’s Next Level Agenda for sustainable development, enhancement of economic prosperity and increase of the country’s infrastructure assets.
Yahaya Bello and Nasir el-Rufai, governors of Kogi and Kaduna state, flagged off the commencement of works at Ajaokuta and Rigachikun sites, while the president watched remotely via video-conference from the council chamber in Abuja.
“We promised the nation that we will expand the critical gas infrastructure in the country to promote the use of gas in the domestic market,” he said.
“These include the Escravos to Lagos Pipeline System – 2 (ELPS-2), Obiafu to Obrikom (OB3) pipeline and AKK.
“These projects are fundamental to our desire to industrialize and energize the entrepreneurial spirit that is ever-present in our population.”
Buhari said it will provide gas for power generation and the revival of moribund industries along with transit towns in Kogi, Abuja (FCT), Niger, Kaduna and Kano, he said, adding that the cascading effect and impact of the AKK, when operational, will be immeasurable.
He said the country has learnt invaluable lessons from the global COVID-19 pandemic and some oil-rich countries that have used their crude as a pathway to economic and industrial diversification.
“Gulf countries that have similar levels of gas reserves as Nigeria have a strategy centred around gas-industrialization as their foundation towards export diversification. This has to be our guiding principle as we seek to attract investment and create opportunities for our people.
“As the world evolves, we owe our people the responsibility to prepare them for what the future holds. We, therefore, must be bold and fearless and can no longer be incremental in our approach.
The president also used the occasion to challenge the private sector to lead the charge in maximising the nation’s gas resources.
He also commended the Chinese government; the financiers of the Bank of China and SINOSURE; and the two EPC contractors (Brentex/China Petroleum Pipeline Bureau-CPP Consortia and Oilserve/China First Highway Engineering Company-CFHEC Consortia) for their support to deliver the important project.
He also congratulated the ministry of petroleum resources, Nigerian National Petroleum Corporation (NNPC) and all other stakeholders on the occasion, commending the resilience of the team to deliver on the project despite the COVID-19 pandemic.
In his remarks, Mele Kyari, NNPC group managing director, explained that the AKK gas pipeline project, which is part of the Trans-Nigeria gas pipeline project, involves the establishment of a connecting gas pipeline network that will integrate the northern region of the country with the Niger Delta, eastern and western regions of the country.
He said the EPC contract for the 614km AKK gas pipeline project was awarded at a total contract sum of $2.592 billion to Oilserv Plc/China First Highway Engineering Company (Oilserv/CFHEC Consortium) for the first segment covering 303km.
Kyari also said Brentex Petroleum Services/China Petroleum Pipeline Bureau (Brentex/CPP Consortium) got the contract for the second segment covering 311km under a debt-equity financing model with a loan from Bank of China and SINOSURE, to be repaid through the pipeline transmission tariff and supported by a sovereign guarantee.
Kyari added that upon completion, the project would enable the injection of 2.2bscf/d of gas into the domestic market and facilitate additional power generation capacity of 3,600MW.
Buhari to flag off construction of 614km AKK gas pipeline — 12 years after its conception
President Muhammadu Buhari will, on Tuesday, flag off the construction of the 40-inch x 614km Ajaokuta-Kaduna-Kano (AKK) gas pipeline.
The pipeline, which is expected to be completed within 24 months, is a section of the Trans-Nigeria Gas Pipeline (TNGP) with the capacity to transport 2.2 billion cubic feet of gas per day.
The pipeline begins at Ajaokuta, in Kogi state and traverse Abuja (FCT), Niger, Kaduna and terminates at Kano.
Kennie Obateru, the group general manager of the public affairs division of the Nigerian National Petroleum Corporation (NNPC), said the flag-off would be performed virtually from the Aso Rock Villa in Abuja with simultaneous link to two locations: Rigachukun, Kaduna state and Ajaokuta Steel Complex, in Kogi state.
Listing the economic benefits of the AKK pipeline, Obateru said it would boost domestic utilization of natural gas for Nigeria’s social-economic development when completed.
“It would also unlock 2.2billion cubic feet of gas to the domestic market, support the addition of 3,600 megawatts of power to the national grid and revitalize textile industries which alone boasts of over 3 million jobs in parts of the country,” he said.
The pipeline is also said to have to potential to generate employment as it would support the development of petrochemicals, fertilizer, methanol and other gas-based industries.
The NNPC explained that the right of way for the proposed AKK gas pipeline would run parallel to the existing Nigerian Pipelines and Storage Company’s 16 inch-crude oil and 12 inch-product pipelines wherever possible.
The corporation also said the pipeline would be fed from the existing domestic infrastructure with a capacity of over 1.5 billion cubic feet per day and is being expanded by Escravos-Lagos Pipeline System II (ELPS II) and Obiafu-Obrikom-Oben (OB3) gas pipeline (under construction) that will double the capacity to over 3 billion cubic gas per day.
The project was approved by the federal executive council in 2008 and the Buhari-led administration awarded the engineering, procurement and construction contract (EPC) in 2017.