Reps direct Total to refund $592m to Fed Govt

Reps direct Total to refund $592m to Fed GovtThe House of Representatives yesterday directed Total Exploration and Production Nigeria (TEPNG) to refund $592million to the Federal Government.

This was sequel to the consideration of the Report of the Committee on Gas Resources on the Need to Investigate the Contract for the Upgrade of OML 58 Upgrade 1, the Execution of Obite-Ubeta-Rumuji (OUR) Pipeline and the Northern Option Pipeline Projects,.

The cash was the excess allegedly paid on the contract awarded by the Nigerian National Petroleum Corporation (NNPC) and the National Petroleum Investment Management Services (NAPIMS).

This was one of the recommendations in the report of the Hon. Fred Agbedi-headed House committee on Gas at the Committee of the whole yesterday.

They approved the recommendations that the excess payment of $592million should be recovered from TEPNG in consonance with the recommendations of Tabor VFM Audit Report.

“That a forensic investigative audit into the cost over-run emanating from all change orders, including $2.2 billion on OML 58 Upgrade 1, $560 million on OUR Pipeline and $528 million on NOPL Pipeline Projects be conducted.”

Similarly, the House while considering the report of the same Committee on the Need to Investigate the Contract for the Modification of the EGP 3B Production Platform following the Joint Venture Agreement between the NNPC and Chevron Nigeria Limited said:

“That a supposed entity called Diakrino Services Limited which was engaged by NNPC/NAPIMS to conduct a Value for Money (VFM) audit at the cost of $1million was not a legal entity as was confirmed by the Committee from a search at the Corporate Affairs Commission.”

The lawmakers therefore directed that the $1million awarded to Diakrino Services Limited should be paid back to the Federation Account by four workers of NNPC/NAPIMS involved in managing the contract awarded to Diakrino.

They said they should also be apprehended and prosecuted for violating the Procurement Act, 2007.

NNPC, Eroton donate items to IDPs in Adamawa

The Nigerian National Petroleum Corporation/ Eroton Exploration and Production Company joint venture says it has distributed items including mattresses to internally displaced persons in Adamawa State.

According to a statement, residents of Chambaaji village of Yola South Local Government Area, who were affected by insurgents around southern Adamawa and relocated to the Nana Asmau Nomadic Primary School, Chambaaji, Yola South Local Government Area, also received bedcovers, buckets, parboiled rice, maize, and vegetable oil.

Other items were millet, soaps, hygiene pads, mats, cooking pots, knives, sorghum, mosquito nets, tarpaulin and cloths.

According to the statement, the items came in several trailer loads to the Chambaaji village under the supervision of the Lamido of Adamawa, Barkindo Aliyu Mustapha, who was represented by the District Head of Yola South, Chikasoro Adamawa.

While distributing the items, the Managing Director, Eroton Exploration and Production Company, Mr Ebiaho Emafo, who was represented by the Head of Business Development, Mr Dele Aikhionbare, said the company was concerned about the plight of internally displaced persons in the North East and decided to go into a joint venture with the NNPC to try and salvage the situation.

Aikhionbare said Eroton had embarked on similar projects to reduce hardships been faced by the people affected by diverse crises around the country.

The Group Managing Director, NNPC, Dr Maikanti Baru, who was represented by Ogbonnaya Kalu, thanked Eroton, the National Emergency Management Agency and the Nigeria Red Cross for assisting in the distribution of the items.

He said the NNPC developed the joint venture to bring succour to the thousands of people displaced by insurgency and other crises, especially women and children.

Oil prices extend decline on growing supplies

Oil prices have declined due to a projected increase in United States crude stockpiles and as Saudi Arabia committed to keep markets balanced.

Brent crude futures, the international benchmark for oil prices, fell 39 cents per barrel to trade at $71.79 while US West Texas Intermediate crude futures for July delivery dipped 59 cents to reach $62.54 per barrel.

Despite the fall in prices, analysts opined that oil markets continue to experience tightness on account of ongoing Organisation of Petroleum Exporting Countries-led supply cuts and rising political tension in the Middle East, according to Offshore Technology.

Data released by industry body American Petroleum Institute showed that US crude inventories increased by 2.4 million barrels for the week ending May 17 to 480.2 million barrels.

Following a cabinet meeting on May 21, Saudi Arabia Media Minister Turki Al-Shabanah stated that the kingdom was committed to achieving balance and stability in the oil market on a sustainable basis.

Saudi Arabia is the de-facto leader of OPEC. The producer cartel enforced production cuts in January 2019 in a bid to reduce global oversupply.

Bank of America Merrill Lynch noted that crude production by OPEC and its allies fell by 2.3 million barrels per day during the period between November 2018 and April 2019 as a result of the cuts.

The supply cuts have had a say on Brent crude prices. Since the start of 2019, prices have soared by more than a third.

Meanwhile, Morgan Stanley has projected that tight supply and demand fundamentals will help push Brent prices to trade in a $75-$80 per barrel range in the second-half of 2019.

Oil well fire: Ondo communities demand $2.5bn from Chevron

Against the backdrop of the fire that erupted from an oil well belonging to Chevron Nigeria Limited last month in Ondo State, the affected communities have demanded a sum of $2.5bn as compensation from the oil company.

The fire incident, which engulfed the oil well at the Ojumole area in Ilaje Local Government Area of the state, was said to have affected about 10 communities.

The representative of the affected communities, Dr Akin Akinruntan, in a paper presented on behalf of the communities, made the demand at a stakeholders’ meeting with the representatives of the CNL.

The stakeholders meeting was organised by the Ondo State House of Assembly’s ad hoc committee on the fire outbreak.

Akinruntan, who diisclosed that the fire was yet to be put out, said the compensation was imperative in order to cushion the effects of the inferno on the lives of the residents of the affected area.

He said, “The implications of the incident on the people of the affected area is enormous; it has destroyed the land and nothing can grow on it.

“The people of the affected communities don’t have portable water to drink; the water there is not drinkable. Fishing is the major occupation of the people there and since the incident happened, people can no longer go for fishing because the water has been polluted.

“The inferno has also affected the climate which could later cause health challenges for the people of the area. So, we demand a sum of $2.5bn from Chevron as compensation. We also demand that Chevron should do a clean-up in the affected areas.”

In his response, the General Manager, Policy Government and Public Affairs, CNL, Mr Esimaje Brikinn, said the company had taken necessary steps to put the fire under control.

He said, “Chevron is currently working with emergency response contractors to safely put out the fire as quickly as possible.”

Brikinn, who explained that the company had already been discussing with some representatives of the affected communities on the matter, said many members of the communities were benefitting from the Corporate Social Responsibility initiatives of the company.

“Our activities will be consistent with the relevant environmental laws, regulations and guidelines. We will continue to conduct our operation safely, reliably and efficiently, with utmost consideration for the people and the environment,” he added.

In his remarks, the Speaker of the Ondo State House of Assembly, Mr Bamidele Oloyeloogun, expressed the displeasure of the House over the incident, urging Chevron to be more proactive on putting out the fire.

The speaker said the members of the House would visit the scene of the incident and adjourned the meeting till after the return of the legislators from the scene.

Nigeria’s gas reserves now 200.79 tcf, says DPR

Nigeria’s gas reserves have increased by 7.3 per cent from 187 trillion cubic feet to 200.79 tcf, according to the Director of Department of Petroleum Resources, Mr Mordecai Ladan.

He stated this at a technical workshop organised by the Society of Petroleum Engineers, Lagos branch, in Lagos on Wednesday, the News Agency of Nigeria reported.

Ladan, who was represented by the Deputy Manager, Gas Division of DPR, Mr Olawale Ogunsola, said, “National gas reserves have risen to 200.79 trillion cubic feet as at 1st January, 2019.”

He said the nation’s daily gas production stood at 1.2 billion standard cubic feet.

According to him, 41 per cent of the daily production is exported and 48 per cent goes to the domestic market while 11 per cent is being flared.

He said, “We have got greater potential if we are to increase the volume of gas reserves growth. It is very strategic to keep growing the reserves in other to boost export. We found our gas reserves by accidental exploration. So, a dedicated gas exploration is very important and that’s part of the regulatory initiatives of the DPR.

“It is also important to boost domestic gas supply to boost power supply. The DPR will keep working with industry stakeholders to meet gas supply obligations and always crave for your cooperation.”

Ladan said there was a need for collaboration among industry stakeholders to ensure effective market operations in the sector.

He urged all operators to support the Federal Government’s plan to end gas flaring by supporting the Nigerian Gas Flare Commercialisation Programme.

He said, “The NGFCP is designed as the strategy to implement the policy objectives of government for the elimination of gas flares with potentially enormous multiplier and development outcomes for Nigeria.

“The objective of the NGFCP is to eliminate gas flaring through technically and commercially sustainable gas utilisation projects developed by competent third party investors.”

The director said investors would be invited to participate in a competitive and transparent bid process.

He said, “The commercialisation approach has been considered from legal, technical, economic, commercial and developmental standpoints.

“It is a unique and historic opportunity to attract major investment in economically viable gas flare capture projects whilst permanently addressing a 60 year environmental problem in Nigeria.”

Shell pays N366b revenue to Fed Govt

Shell Nigeria Exploration and Production Company Limited (SNEPCo) yesterday said it paid N366 billion last year as revenue to the Federal Government from its exploration activities. It also made another N2.1 billion as statutory payment to the Niger Delta Development Commission (NDDC).

Its Managing Director, Bayo Ojulari, told reporters at a media launch of the 2019 edition of the Shell in Nigeria Briefing Notes in Lagos. Shell in Nigeria Briefing Notes is an annual publication detailing the activities of the business interests of the global energy giant in Nigeria covering SNEPCo; The Shell Petroleum Development Company of Nigeria Limited (SPDC); Shell Nigeria Gas; and the Nigeria Liquefied Natural Gas.

According to Ojulari, the payments resulted from oil and gas production by SNEPCo’s flagship investment, Bonga, which is Nigeria’s first oil and gas project in water depths of over 1,000 metres. “At the end of 2018, SNEPCo had produced 819 million barrels of oil from the Bonga field which translates into huge contributions to the Nigerian economy in addition to the significant human capital development of deep-water expertise among Nigerians.”

He said the pride of SNEPCo was the increase in its Nigerian workforce to over 96 per cent and the creation of Nigeria’s first oil and gas engineers with deep-water experience. “The success story at Bonga is not only that it is Nigeria’s first deep-water project but the fact that Bonga is a Nigerian venture delivered by Nigerians using global expertise and processes offered by the Shell Group that have launched Nigeria into the league of notable deep-water players.”

Aside the payments to government, SNEPCo is also credited with many social investment initiatives nationwide, particularly in education, health and sports which Ojulari said were considered very critical to the overall well-being of Nigerians. According to him, the company spent over N2.2 billion on various social investment programmes last year.

“Today, SNEPCo supports 298 undergraduates towards achieving their degrees with beneficiaries across the 36 states of Nigeria and another 375 scholars on full-board secondary school scholarship programme for pupils from public schools into seven top-flight private secondary schools across Nigeria to enhance access to quality education,” he said.

On the ongoing Bonga South West Aparo, a new project in the Bonga field, Ojulari said the company was making progress with the 150,000 barrel per day capacity project after signing the Head of Terms agreement with partners last February and released Invitation to Tenders to contractors in the same month.

“We are working with our government and other partners to take the project to a point where we are able to take the final investment decision,” he said.

NNPC remitted N1.26tn to Federation Account in 2018 —Okonkwo

The Nigerian National Petroleum Corporation on Tuesday announced that it met its financial obligations to the Federation Account in 2018 by remitting N1.26tn as against the N1.22tn projected in the 2018 budget.

The NNPC said it recorded a surplus of N41bn in its remittance to the Federation Account.

The Managing Director of NNPC Capital, Mr Godwin Okonkwo, disclosed this when he represented the Group Managing Director, Maikanti Baru, during a presentation to the House of Representatives Ad Hoc Committee on the Investigation of the Non-Remittances of Funds to the Federation Account by the corporation between July 2017 and December 2018 in Abuja.

NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, in a statement issued in Abuja,  quoted the GMD as saying that although 2.3 million barrels per day of crude oil were proposed in the 2018 budget, national daily production for the period under review oscillated between 1.9mbpd to 1.89mbpd.

Baru said the two sources of inflows into the Federation Account from the NNPC were equity crude oil sales less cost of recovery from the Joint Venture cash call arrears and domestic crude less cost recovery.

He noted that the JV cash call arrears were being efficiently managed to ensure steady inflows to the Federation Account.

Okonkwo said, “The NNPC ensures that it contributes to the cost of the production of crude oil and gas in the upstream sector to avoid a repeat of the mistakes of the past. If we had made cash call payments in the past, the arrears that we are liquidating now would not have arisen.

“The current situation creates a win-win scenario for the country. The NNPC is strategically saving for the rainy day to make a better future for all of us by liquidating the arrears.”

He noted that the corporation, on a regular basis, balanced up with the Federation Account Allocation Committee and the JV cash calls in order to make sure that the future generations did not suffer from the legacy debt.

Okonkwo dismissed the allegations by commissioners of finance of under remittances by the corporation, adding that the NNPC was a going business concern that met financial obligations to its various stakeholders.

Baru stated that investment in the oil and gas industry took time to mature, adding that if the NNPC failed in its obligation to invest in the sector, there would be nothing to share by the various tiers of government.

NNPC explains replacement exercise

The Nigerian National Petroleum Corporation has confirmed an exclusive report published on Monday by The PUNCH about a major reorganisation of top management employees of the country’s oil firm.

In an email that was made available to our correspondent on Monday in Abuja, the NNPC explained that the staff members movement was normal replacement and backfill exercise to bridge the gap occasioned by the impending retirement of some management staff members of the corporation, among others.

NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, said the exercise involved statutory retirement of 11 of its senior management staff members as well as the redeployment of 19 others and that such replacements were always effected before the final exit of the concerned staff member.

Ughamadu stated that in all, 30 senior members of staff were affected by both the statutory retirements and redeployment.

He gave the list of staff members on statutory retirement between May 1 and July 31 this year to include the General Manager, Chad Basin, Aniya Umaru, who is from the North-Eastern part of the country and retired on May 6, 2019; Adewale Ladenegan, Managing Director, Kaduna Refining and Petrochemical Company, who hails from the South-West and retired on May 13, 2019; and Musa Gimba, who is the Group General Manager, NNPC Leadership Academy, who is from the North-East and retired on May 14, 2019.

Others include Umma Musa, who is the General Manager, HR and Admin Services, Duke Oil, from North-West and retired on May 19, 2019;  Emmanuel–Ate Ndidi, General Manager, Support Services, Nigeria Gas Company, from the South-South region and retires on May 30, 2019; Tsavnande Atighir, Executive Director, Operations, from the North-Central; Okor Ovieghara, General Manager, Upstream/Technical Assistant to the Group Managing Director, who hails from the South-South region.

Private depot owners are lamenting Nigerian National Petroleum Corporation’s (NNPC’s) decision   to sell Premium Motor Spirit (PMS) to them at N117 per litre, admitting that the price is not only outrageous, but not cost effective. The depot owners  include members of Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Marketers Association of Nigeria (DAPMAN).

In a telephone interview with The Nation, its Executive Secretary, Mr Femi Adewole, lamented that the N111 per litre price, which NNPC was selling fuel to them, was at an insignificant margin, wondering what will happen when the state-run oil firm has ncreased the price to N117.

Adewole said NNPC’s  monopoly of fuel importation has compounded their woes.

He said: ‘’By the time depot owners, who are mostly marketers,  add other costs incurred in the course of buying fuel from NNPC and later sell the product at the pump price of N145 per litre to  consumers,  they will be left with little or no profits.  More worrisome is the fact that NNPC controls fuel importation, a development which has compelled marketers to sell the product at a particular price. That is the situation we find ourselves. We are praying for solutions to problems inhibiting the growth of the industry, especially the downstream sub-sector.’’

The NNPC, Adewole said, sells fuel only to depot owners, who have Profoma Invoice, a development, which implies that any depot owner or marketer, who do not have Profoma Invoice would not be able to buy fuel.

He said diesel price is deregulated, stressing that marketers are selling the product at between N220 to N230 per litre.

Also, MOMAN’s Secretary, Mr Clemens Isong, said depot owners, including MOMAN members, have no choice than to buy the fuel at N117 per litre, being the price from the Department of Petroleum Resources (DPR).

No depot owner or marketer, he said, can say he or she is making profit under the new price regime.

A member of the Independent Petroleum marketers Association of Nigeria (IPMAN), who does not want his name in print, said why the NNPC increased the fuel price at which it was selling to depot owners may not be unconnected with the rise in the landing cost of fuel into the country.

‘’The NNPC may have considered the cost of importing fuel into the country, ditto the cost of storing the product, cost of logistics, among other variables.  When one considers  these variables, which in most cases are not static, one would see that the tendency by  NNPC to increase the price at which fuel is being supplied to depot owners is high,’’ the IPMAN member said.

According to him, NNPC does not sell more than 10million litres to depot owner, stressing that the corporation has maintained that figure over the years.

“What I observed in the downstream sub-sector is that NNPC has not for once sold more than 10million litres of fuel to any depot owner. The reason is simple. NNPC believes that no private depot can contain more than 10 million litres of fuel at a stretch,” he said.

He said independent marketers buy fuel at N132.28 per litre from depot owners, not NNPC.

OPEC expects tighter oil market amid renewed geopolitical tensions

The Organisation of Petroleum Exporting Countries has said it expects the global oil market to tighten further in the coming months amid renewed geopolitical tensions but kept its 2019 oil demand growth figure steady as the “upside potential for global economic growth in 2019 remains limited.”

In its monthly oil market report, OPEC estimates that demand for its crude will average 30.58 million barrels per day in 2019, a fall of 1.01 million bpd on the year, suggesting that global oil inventories are going to decline sharply from current levels, according to S&P Global Platts.

But the report also showed a surprise rise in crude inventories in the last few months, suggesting that there may still be need for the producer group to continue its output cuts to balance the market.

The group’s 14 members pumped 30.031 million bpd in April, compared with 30.034 million bpd in March, according to OPEC secondary sources.

This is 549,000 bpd lower than the call on its own crude. Demand for OPEC crude in 2018 averaged 31.59 million bpd.

This report comes after key oil infrastructure and transit routes in the Middle East have been hit by attacks of sabotage in the past few days.

Tensions over threats to oil flows from the Middle East escalated Tuesday after an attack halted flows through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea.

OPEC also noted that non-OPEC upstream sanctioning activity appears set to reach an all-time high of $26.5bn this year, marking the start of a new cycle of investment.

“The total capital expenditure for non-OPEC’s tight oil – which consists mainly of the US – will be around $124n in 2019,” it said.

OPEC warned that non-OPEC growth in 2019 is likely to be slower than last year amid expected weaker global economic growth and due to costly logistical constraints especially in the US.

“North American producers will continue facing pressure by shareholders demanding capital discipline and a return on their investments, and this could come at the expense of increased disposable capex,” the report added.