OML 11: Court orders FG to renew Shell’s licence
A federal high court in Abuja has ordered the federal government to renew the operating licence of the Shell Petroleum Development Company (SPDC).
Taiwo Taiwo, the presiding judge, said though the company had applied for a term of 30-year period for the oil mining lease (OML) 11, he could only grant a 20-year period in accordance with the petroleum act.
Shell, which is the plaintiff in the case, had approached the court to seek its intervention over the controversy surrounding the OML 11.
President Muhammadu Buhari who is the minister of petroleum resources, is the 1st defendant while Timipre Sylva, minister of state for petroleum resources, is the 2nd defendant.
SDPC had sought to compel the two ministers to renew OML 11, in addition to 14 other oil mining leases approved for it in June 30.
In March, Buhari had ordered the Nigerian National Petroleum Corporation (NNPC) to take over the operatorship of the entire OML 11 from SPDC.
The federal government had later told the court that its decision not to renew the operating licence of the company was in the interest of the nation’s security.
Mohammed Diri, counsel to the federal government, while objecting to SPDC’s suit, had said the primary objective of any responsible government was to guaranty the safety of lives and property.
He said the refusal to renew OML 11 was a pre-emptive measure to prevent the occurrence or escalation of security breach in Ogoni area.
He argued that the OML 11 covered an area of 3,095.25 square kilometers that stretched between Rivers and Imo states with 14 oilfields, 10 out of which are located in Ogoni area of Rivers.
He said besides the security challenges, SPDC tried to compel the government to commit an illegality because an approval by the minister of state for petroleum of “a single oil block size of 3, 095.25 is tantamount to facilitating illegality in contravention of the regulation which limits the size of OML block to 1.295 square kilometers (500 miles)”.
The lawyer, therefore, urged the judge to hold that SPDC suit was destitute of merit and suffered incurable legal deficiency and should be dismissed.
However, in his ruling, the judge said having gone through all the processes before him, it was the duty of the court to ensure that it was bound by the law.
He noted that the provision of the law makes it mandatory for the minister of petroleum to grant a renewal of licence if an applicant met all the conditions.
“My understanding of paragraph 13 (1) of the first schedule to the petroleum act states that it is mandatory for the minister to grant a renewal if all the conditions have been met,” he said.
The judge held that there was no evidence before him to prove that the plaintiff had not met with the conditions stated in the provision.
On the number of years sought for by the plaintiff, he said he could not go outside the provision of the law.
According to him, paragraph 10 of the first schedule of the petroleum act is “very clear” on it.
“I see no conflict in these two paragraphs. I am of the view that what these paragraphs say is that a term of mining lease shall not exceed 20 years, “he said.
“This to me, is mandatory.
“I therefore find that having fulfilled all obligations require for the renewal of Oil Mining Lease 11, including the payment of rent and royalties and having applied for the renewal of the lease in line with the law, the plaintiff should be granted the renewal.
“I hereby order that the defendants are hereby compel to grant the application for the OML 11 but it shall be in accordance with paragraph 10 of the first schedule to the petroleum act as regard the number of years stated therein and that there shall be no reduction in size of OML 11 as being contemplated by the defendants. “
NEITI: NNPC has admitted non-remittance of N77.9bn to FG in 2017
The Nigeria Extractive Industries Transparency Initiative (NEITI) says the Nigerian National Petroleum Corporation (NNPC) has acknowledged that it didn’t remit N77.92 billion to the federation account in 2017.
In a statement released on Thursday to announce the release of a pilot study that focused on the sale of Nigeria’s share of crude oil and gas produced in 2017, NEITI said a total of $14.5 billion was realised from the sale of the federation’s share of oil and gas for 2017.
Of this sum, $13.18 billion was realised from crude oil sales and $1.32 billion from gas.
“NNPC deducted N297 billion from earnings from the domestic crude allocation as costs and losses,” it said.
Out of the N297 billion, NNPC said N141.6 billion was used for under-recovery on petroleum products, N25 billion for crude and product losses and N130.4 billion for pipeline repairs and maintenance.
“The sum of N77.92 billion was under-remitted by NNPC to the federation account from domestic crude allocation in 2017.
“NNPC acknowledges the under-remittance and states that there is an on-going reconciliation to net off the N77.92 billion from the established federation indebtedness to the corporation of N797bn arising from KPMG forensic audit of the corporation at the instance of the federation.”
According to the report, 692 million barrels of crude oil was produced in 2017.
“Out of this volume, the share that went to the federation was 240.9 million barrels representing 35 per cent of the total crude oil production for the year 2017,” the report read.
“The pilot report shows that the federation crude went to 29 destinations in 2017.
“The top-five destinations were: India with 41.3 million barrels (17.12%); USA, 30.6 million (12.72%); local refineries, 26.5 million barrels (10.98%); Netherlands, 22.9 million barrels (9.5%); and Spain, 21 million barrels (8.83%).”
Waziri Adio, NEITI executive secretary, said the report was published to ensure transparency in the processes and details of sales of minerals as these sales “are mostly shrouded in
MRS, Total… here are the 34 oil companies that got NNPC’s crude-swap contract
The Nigerian National Petroleum Corporation (NNPC) has issued award letters to oil companies for contracts to exchange crude oil for imported fuel.
At present, the national oil company operates the crude-swap contract (also referred to as direct sale, direct purchase model) to meet the local demand for refined crude products as the inability of refineries to meet fuel demands.
The nation’s refineries have a combined refining capacity of 445,000 barrels per day, although they are currently operating at below capacity.
“Under the DSDP arrangement, the under listed fifteen (15) consortia/companies shall over the contract period, offtake crude oil and in return, deliver corresponding petroleum products of equivalent value to NNPC, subject to the terms of the agreement,” NNPC said in a statement released on Sunday.
The contract is for one year effective October 1, 2019, to September 30, 2020.
The companies that were issued letters are:
- BP/Aym Shafa
- Trafigura/AA Rano
- Eyrie/Masters/Cassiva/Asean Group
- UTM/Levene/Matrix/Petra Atlantic
- Duke Oil
- Litasco /Brittania-U
- Mocoh/Mocoh Nigeria
The list is more comprehensive than the previous one that had 10 pairings and 22 companies.
In May, the corporation had announced that 132 companies had submitted bids for the 2019 crude swap contract.
Mele Kyari, newly appointed group managing director of the NNPC, takes credit for leading the team that proposed and managed the direct sales and direct purchase (DSDP) arrangement of petroleum products from 2016 till date to replace the crude swap arrangement.
In DSDP, companies in the sector’s value chain including refiners, trading and indigenous companies are allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products.
In his takeover note, Kyari had promised to open NNPC books to public scrutiny, saying as a publicly owned company Nigerians deserve to know about the operations of the Ccompany.
ICYMI: Completion of Dangote refinery delayed till 2020 ending over Apapa gridlock
The ongoing construction of Dangote Refinery will be not be completed until the end of 2020.
This is later than the early 2020 projected completion date that was earlier announced.
Devakumar Edwin, Dangote Group’s executive officer, told Reuters that the delay is due to difficulty in importing products.
This difficulty, he explained, is caused by a gridlock at the Apapa ports.
Devakumar said the tank farms at the refinery would be used as a depot to warm up operations.
“We will be able to complete the (refinery) project by the end of next year – mechanical completion,” he said.
Upon completion, the 650,000 barrels per day capacity refinery will be the largest in the world.
During a visit to Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), Aliko Dangote had said that 53% of the facility would be dedicated to petrol refining.
Dangote had initially announced plans for a smaller refinery in 2013 with a projected completion date of 2016.
The federal government has been making efforts to resolve the gridlock at Nigeria’s busiest seaport.
On one occasion, the federal government had ordered that the port begin 24-hour operations.
On May 22, President Muhammadu Buhari also gave a directive ordering that the trucks be cleared within 72 hours.
However, the gridlock has remained.
Report: Nigeria sells the cheapest petrol in West Africa — recipe for smuggling
The Nigerian government has been subsidising the price of petrol for decades.
This has ensured that petrol has remained cheap and affordable for citizens of Africa’s most populous nation; so cheap that it is the cheapest in West Africa.
An analysis by SBM Intelligence showed that Nigeria’s petrol price converted to dollars is 40 cents while those of neighbouring Niger and Benin Republic is 90 cents and 97 cents respectively.
“Petrol in Nigeria costs less than half of what it costs in all of our neighbouring countries, and just about half what it costs in Liberia and Sierra Leone, the next cheapest countries in West Africa,” the research company said.
“On another hand, Nigeria’s daily petrol consumption numbers vary wildly depending on who your source is, and periodic spikes in consumption numbers constantly go unexplained. The subsidy regime in Nigeria provides an economic incentive for smuggling Nigerian petrol to our neighbours.”
Maikanti Baru, former managing director of the Nigerian National Petroleum Corporation (NNPC), had said there had been an uptick in the country’s petrol consumption; giving indications that the product is being smuggled out of the country.
Baru had said 55 million litres of petrol is supplied daily across the country, a trend that began in December 2017.
This is above the projected daily consumption of 35 million litres per day.
“The sudden and unnatural shock in fuel consumption to record levels has over-stretched the direct-sale-direct-supply (DSDP) crude for product supply arrangement which was originally based on 35 million per day petrol consumption pattern,” Baru said.
“Marketers purchase the fuel at a cheaper price of N145 per litre in Nigeria and sell at a higher price in neighbouring countries.”
Mele Kyari, newly appointed NNPC GMD, also echoed the same thoughts.
“The N145 per litre fuel price regime in Nigeria runs against the N350 per litre most of the other West African countries operate, encouraging smuggling,” he said.
“It is even very difficult for us to make the product available at N145.”
WILL SUBSIDY REGIME END SOON?
The Muhammadu Buhari-led administration has not given any indication that it would stop subsiding petrol.
An attempt made by former President Goodluck Jonathan to remove subsidy resulted in nationwide protests tagged #OccupyNigeria.
Zainab Ahmed, former minister of finance, had, however, said the plan is to gradually remove subsidy so that citizens would not feel hardship.
Also, Emmanuel Kachikwu, former minister of state for petroleum resources, had expressed hopes that the completion of Dangote Refinery would ensure that the country becomes self-sufficient in petrol production thus eliminating petrol importation and eventually end the subsidy regime.
NNPC: Why we increased price of Kerosene
The Nigerian National Petroleum Corporation (NNPC) has attributed the increase in the price of household kerosene in the country to the pressure of demand and supply.
Ndu Ughamadu, the NNPC group general manager, group public affairs division, told NAN in Abuja on Sunday that the price of the product had been deregulated.
“The point remains that the prices of the kerosene is deregulated,” he said.
“It is not as controlled with reference to Premium Motor Spirit (PMS) known as Petrol, that is why we see the prices moving up and down.
“The important thing is that the trend you are seeing there had to do with supply and demand. The more the demand, the higher the price locally.’’
Ughamadu said that the NNPC remained the sole importer of the product and had been augmenting it with the skeletal production from the refineries.
He reiterated the commitment of the corporation to the adequate supply of petroleum products for Nigerians.
“The corporation is doing everything to ensure that we import more volumes of kerosene because, we believe that this is the energy source that the low income earners in the country use,’’ he said.
A check by NAN in some parts of the federal capital territory (FCT) indicated that the price of kerosene ranged between N400 and N500 per litre.
NAN reports that most filling stations along the Kubwa express road, Dutse, and Zuba hardly sell the product.
Most of the consumers buy the products from the road side.
At Dutse market, the price was N400 per litre while within Kubwa, it is sold between N450 and N500 per litre.
Halima Saidu, a seller at Kubwa village market, told NAN that she buys from filling stations at different prices.
“I sell at N450 per litre now but if I buy at higher price at the filling station, I will sell above that,’’ she said.
The National Bureau of Statistics (NBS) had in its national house hold price watch in June said the average price per litre paid by consumers for kerosene increased to N316.43 in June 2, from N315.91 in May.
The NBS said the price of kerosene increased by 0.17 per cent month-on-month and 13.14 per cent year-on-year in the period under review.
The report said states with the highest average price per litre of kerosene were Anambra at N381.25; Abia, Bayelsa and Akwa Ibom N356.67 and Enugu N352.78.
We are not competing with you, Dangote tells NNPC
Aliko Dangote, president of Dangote Group, says his refinery will not be competing with the Nigerian National Petroleum Corporation (NNPC).
Dangote, who visited Mele Kyari, the new NNPC group managing director (GMD), said his team will rather partner with the state-run oil company to achieve a win-win situation.
“The most important thing for us is to see how we can partner with NNPC, it is not to see how we can compete with NNPC. We would like NNPC to be part of us and we also want to be part of NNPC. I think that is the only way we can achieve a win-win situation,” Dangote said.
Dangote, who is Africa’s richest man, said the refinery will dedicate 53% of its projected 650,000 barrels per day refining capacity to the production of petrol.
He said the company would rely heavily on NNPC’s knowledge of the refining business in Nigeria to achieve its central objective.
In his comments, Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation (NNPC), said the refinery is key to achieving the target of making Nigeria self-sufficiency and subsequently, an exporter of petroleum products.
A statement signed by Ndu Ughamadu, NNPC’s spokesman, quoted Kyari as saying that NNPC will give the same level of support to the other promoters of refineries.
Oil suppliers to marketers: Do not patronise pipeline vandals
The Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) has advised its members not to get products from pipeline vandals.
Benneth Korie, NOGASA president, told journalists in Abuja on Monday, that it has directed members to get products from government agencies.
Korie said as employers of labour, they want to see their businesses grow to employ more Nigerians.
“Our principal aim is to reinforce the ethical standards of the industry most Nigerians will agree with us that – natural oil and gas is critical in the development of this nation,” he said.
“We have come to do the needful – to protect our businesses and the end-users from the criminal practices of dishonest operators in the system.
“Those sharp practices; particularly dealing in adulterated products, have done a great deal of damage to end users and this is hurting our businesses as well. The source of our products will be at government (DPR) licensed Depots nationwide.
“As employers of labour, we want to see our businesses grow to employ more Nigerians. To reduce adulterated products, all our members are hereby advised to desist from patronizing the products of vandalized pipelines, if any.
“All our members are advised to patronise government and private depots only. Furthermore, there will be regular workshops for our members to update them with government policies in the petroleum sector.”
Korie urged the federal government to encourage the unity to marketers and suppliers in order to have an easier “interface and access to suppliers”.
‘It was compromised’ — Malami on why Buhari rejected PIGB
Abubakar Malami, the former attorney general of the federation, says President Muhammadu Buhari rejected the petroleum industry governance bill (PIGB) because the interest it represented was compromised.
He disclosed this during his ministerial screening at the senate, in Abuja, on Friday.
The PIGB is conceived to liberalise the governance structure of Nigeria’s oil industry by giving the Nigerian Petroleum Regulatory Commission (NPRC) the powers to enforce industry laws, regulations, and standards.
TheCable had reported that Buhari rejected the bill after it was passed by the national assembly.
At the time, the presidency had defended the rejection, saying it was based on “legal and constitutional reasons”.
At the screening on Friday, Malami said Buhari rejected the bill because the interest of host communities was compromised.
He said approving the bill would have led to conferring power on an individual as against the institution.
“That bill (the PIG Bill) was fundamentally rejected among others, by the president because of the fact that the interest of the host community was compromised, in the sense that self-serving sections were brought into it, conferring powers on an individual as against the institution,” he said
“The public interest element of the role of the president requires that the public interest should be factored more as against public or individual interests.”
The house of representatives had since passed the PIGB again, saying it has rectified the concerns raised by the president.
Subsidy payments ballon by 682% in 30 days
The cost of subsidising every litre of petrol consumed by Nigerians increased by 682% between December 2018 and January 2019.
According to the May 2019 financial report of the Nigerian National Petroleum Corporation (NNPC), N13.3 billion was expended on under-recovery in December while the cost of under-recovery stood at N104.3 billion in January.
In February, the figure stood at N102.3 billion.
The Buhari-led administration had said it would no longer pay subsidy on petrol saying the NNPC would absorb the additional cost of making petrol available at N145 per litre as under-recovery.
The NNPC has been the sole importer of petrol since 2017 and the cost of maintaining the official pump price is deducted before remitting to the federation account.
The increase cannot be due to exchange rate fluctuations because the NNPC uses the official government exchange rate, which has remained stable.
It could, however, be that the corporation has been taking more petrol to build its reserves to avoid petrol shortage.
While addressing a joint assembly in December, President Muhammadu Buhari had said $1 billion would be set aside for under-recoveries in 2019.
“We have allowed N305 billion, equivalent to $1 billion for under-recoveries by NNPC on premium motor spirit in 2019,” he had said.
“Let me also use this opportunity to address and clarify the under-recoveries or subsidies on petrol in a period of economic challenges, our purchasing power is weak, we must reduce some of the burden on Nigerians.
“The problem in subsidies in the past was abuse and corruption. Today, the government through the NNPC is the sole importer of premium motor spirit.
“Therefore the under-recovery is fro the NNPC trading account. This means the possibilities of some marketer falsifying claims are removed.”
In recent times, there have been increasing support for fuel subsidy removal with the most recent being the Nigeria Governors Forum who said the subsidy payment is not sustainable.