Tag Archives: Crude oil

Crude Oil Theft: Navy-EFCC-NNPC And The Web Of Sordid Details – By Ifeanyi Izeze

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In his 2017 budget defense at the House of Representatives, the Chief of Naval Staff, Vice Admiral Ibok-Ete Ibas, while presenting the operational scorecard for his service for 2016 disclosed that the Nigerian Navy confiscated crude oil and diesel worth about N420 billion from oil thieves and illegal refinery operators. According to him, the “specific quantity of crude oil and diesel stood at 810,725 and 1,078 metric tons, respectively.”

Using the OPEC conversion factor for Nigerian crude oil, one metric ton has about 7.420 barrels of crude oil while one metric ton of diesel would give 7.22 barrels. So the declared volume of crude oil seized by the Nigerian Navy in 2016 is about 6,015,579.5 barrels. Also for the diesel, one metric ton is approximately 1130 liters. So 1,078 metric tons would be about 1.23 million liters.

Now, as said by the Chief of Naval Staff, the combined proceeds from the sale of the seized crude oil and diesel are about N420 billion. This is just for 2016 alone where we are meant to believe that this administration through its security apparatuses has drastically curtailed the magnitude of the menace. So from 2015 backward, we will be talking of multiples of 6 N420 billion generated from the sale of recovered stolen oil from Nigeria.

Without a doubt, this disclosure is throwing up again very serious issues of accounting for the proceeds from sales of crude and products recovered from oil thieves and pipeline vandals. There is an obvious aberration in the transactions involving the warehousing and selling of recovered stocks.

First, who actually owns these recovered crude oil? This question is pertinent because most of the stolen crude were supposedly tapped from oil facilities, particularly trunk lines belonging to either a foreign international oil companies or a Nigerian indigenous operator or both. So when these crude oils are recovered, whose produced crude account does it go to?  Does it now belong to the government/NNPC or the Navy, or the Economic and Financial Crimes Commission (EFCC)? Are serious efforts actually made to ascribed whatever recovered volumes to the rightful owner – the producer(s)?

Secondly, when the Navy seizes stolen crude oil from oil thieves and pipeline vandals, where does the recovered stock go – to the Navy, NNPC, or EFCC?  Who are the buyers of these seized or rather recovered crude oil – the traditional government certified crude oil marketers, another group of contractors, or the same criminal cartels that also buy from oil thieves that escape the Navy?

If the mind-blowing figures of volumes of crude oil recovered by the Navy have been going to the NNPC, how has it been accounted for – as NNPC productions and from what well/field? These issues need to be explained because severally we have heard of conflicts of interests between the Navy, NNPC and the Economic and Financial Crimes Commission (EFCC) on whose responsibility it is to sell off recovered stolen crude oil.

It would be recalled that at the wake of the Salt Pond crude oil theft scandal, the company involved disclosed that it purchased crude oil legally from the Nigerian government’s Economic and Financial Crimes Commission (EFCC), the authority with primary responsibility for cracking down on financial crimes, as oil theft is classified as one. As said then in a statement issued in Ghana by the chief executive officer of the accused company, Fenix Impex, his company has been one of the official EFCC contractors that help the commission to dispose of (i.e., sell) crude oil consignments seized by the Nigerian military and law enforcement agencies from oil thieves and illegal bunkerers. His words: “The only crude we take from Nigeria…has been seized by the government. We have invoices that we pay to EFCC Nigeria.”

Does the EFCC have offshore or coastal receptor facilities (tank farms/floating storage facilities) where they warehouse recovered crude oil received from the Naval authorities? If yes, where are these facilities located in the entire stretch of the Nigerian coastline?

And if the Navy and the EFCC have no facility to store recovered stolen crude oil from Nigeria, how are the buyers (now the EFCC or Navy or even NNPC contractors) picking up the stock for disposal abroad – onboard naval ships, seized barges/ships/boats/drums in the custody of the Navy? Who ascertains the correct volumes and price before the contractors pick the consignments? We also need to know the actual volumes and dates of the consignment(s) lifted by the contractor(s) on behalf of the federal government (in this instance the EFCC).

Above all, how much has the EFCC, Navy or NNPC generated from the sale of crude oil recovered from oil thieves since this transaction started some years ago? The figure the Chief of Naval Staff dangled at the National Assembly, was it proceeds from sales by the Navy or the EFCC? The monies generated over time from these transactions, where were they lodged? Is the revenue with the anti-graft commission or handed over to the NNPC or transmitted directly to the Single Treasury Account (TSA)? Do we have records of these sales with the Revenue Mobilisation and Fiscal Commission (RMFC) or even the Federation Account?

The federal government seriously needs to address these issues in its efforts to convince Nigerians and even the international community that this administration is sincere in its fight against corruption in the country, especially as it affects the mismanagement of oil proceeds. We need more a serious and detailed explanation of the involvement, if at all, of the Navy, EFCC or NNPC in the serial sale of confiscated crude recovered from oil thieves in Nigeria. It is not enough to tell us that millions of metric tons of crude oil were intercepted and captured by the Navy and then we end the story there. The illegal bunkering economy bleeding Nigeria as ascertained by various respectable international financial and security agencies is estimated to have an average annual value of about $17 billion. So we need accountability and transparency organizations, particularly the Nigerian Extractive Industry Transparency Initiatives (NEITI), to actually live up to their mandates and do the needful. God bless Nigeria!!

 

Ifeanyi Izeze writes from Abuja. He can be reached at iizeze@yahoo.com

Nigeria saves $500 million through direct sales of crude oil — NNPC

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More than $500 million has been saved through the Direct Sale of Crude Oil and Direct Purchase of Products (DSDP) programme, the Nigerian National Petroleum Corporation, NNPC, has said.

The Group Managing Director of the Corporation, Maikanti Baru, made this disclosure, Thursday, while addressing interested bidders and at the NNPC Towers in Abuja.

A release by NNPC spokesperson, Ndu Ughumadu, stated that no fewer than 128 Indigenous and International Oil and Gas companies have indicated interest to participate in the DSDP programme.

The DSDP arrangement, Mr. Ughumadu said, is a model introduced last year and is carried out through direct sales of crude oil to refiners or consultants, who in turn supply NNPC with equivalent worth of products. The batch over which the bids were opened is scheduled to last for the next one year, starting from April 1, he added.

The statement quoted Mr. Baru as saying that the DSDP had saved over $500 million, particularly through reduction in the amount paid on demurrage by the corporation.

The NNPC boss described the DSDP as a major component of the NNPC’s
petroleum products supply portfolio, stressing that since inception, it has greatly helped in the stabilization of product supply to the nation.

“The DSDP programme has ensured that the supply from the refineries is fully augmented to meet national supply and sustained over 30 days sufficiency of Premium Motor Spirit, PMS, otherwise known as petrol,” he said.

Touting the transparency of the programme, Mr. Baru said the DSDP arrangement was a major instrument of partnership between NNPC and product suppliers, both local and international, adding that over the last one year, significant lessons have been learnt which have been incorporated into the tender process in order to improve quality assurance.

“One of the cardinal principles of NNPC under my leadership is the entrenchment of measures that will ensure transparency, accountability, performance and profitability in line with our FACTI principle of a Focused, Accountable, Competitive, Transparent Organization conducting its business with Integrity as enshrined in our 12 Business Focus Areas (BUFA),” the GMD stated.

According to him, the DSDP programme was a major instrument for the attainment of this cardinal objective which he declared would be guided by the overriding public interest and in compliance with extant laws and regulations.

According to the statement, the Group General Manager, Crude Oil Marketing Division, Mele Kyari, said the tender process was to optimize revenue for the Federal Government in compliance with the anti-corruption drive of the Government, adding that yardsticks for successful bidders would include, possession of financial strength, cognate experience in crude oil business as well as competence to deliver on mandate.

Apple And Crude Oil – By Alex Otti

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Let me start with a confession. I like Apple products, from the iPod, through the iPad to the iPhone and of course the iTunes. Apple makes beautiful and very user-friendly products, and sometimes, they are intoxicating, seductive and addictive. This write-up, however, is not about the products as such, as it is about innovation and what happens when the human intellect is combined with a thinking-friendly environment and a clime that supports creativity and industry.

The story of Apple is a very interesting one. Two friends who, by the way, were school dropouts, Steve Jobs and Steve Wozniak, founded the company from their garage on April fool’s day in 1976. A third friend Ronald Wayne, was invited by Jobs to take a minority stake in the company and act as an arbiter, should the two Steves fight. The company has since grown to become the most valuable company in the world with a market capitalization of over $630b and revenues of over $216b as at the end of last year.

Their products are some of the most important products in the technology space. Apple remains one of the most innovative companies in the world. Could Apple have done so well if the founders were from and operated out of Nigeria? I believe opinion would vary on this question, but one thing we should all agree on is that our country is not wired to support startups, innovation and industry.

Of course, the founders had their fair share of challenges when they were starting. Banks were unwilling to touch them when they were trying to commercialize their innovations.  In compiling the story of Steve Jobs, Nik Rawlinson wrote that Wozniak was the real “techie” guy while Jobs was the businessman. Both of them sold something, (HP calculator by the former, and Volkswagen microbus by the latter) to finance the production of the first apple, christened “Apple 1”.

Jobs, having fixed a commercial price against Wozniak’s position of selling the computer at a price that would just cover the cost of the component parts, got a deal to sell 50 units of the computer to Mr. Paul Terrel, owner of the Byte Shop. Walter Isaacson in his book, “Steve Jobs: The Exclusive Biography” stated that the two youngsters didn’t have resources to fulfil the orders, neither could they get loans from banks at that time. Virtually all the parts stores, including Atari, where Jobs had worked, wanted cash for any components sold. At the end of the day, it was Byte Shop’s order that heralded the Apple Corporation.

Jobs had taken the order to a parts dealer, Cramer Electronics and convinced the manager to put a call through to Mr. Terrel to confirm the order. “Terrel was at a conference when he heard over a loudspeaker that he had an emergency call (Jobs had been persistent). The Cramer manager told him that two scruffy kids had just walked in waving an order from the Byte Shop. Was it real? Terrel confirmed that it was, and the store agreed to front Jobs the parts on thirty-day credit” The rest, as they say, is history.

 

Nigeria is the 6th largest oil producer in the world. Oil was discovered in Oloibiri in the present day Bayelsa state in 1956. There is no doubt that a lot of innovation has been introduced in the way oil is produced from the time oil was discovered and now.

 

What we have not done is to harness the opportunity such that Nigerians would be technically sound enough to take over most of the production in the country. I’m aware of all the efforts that have been made to domesticate oil production. I know about the Nigerian Content Development initiative. I also know about the Cabotage law which is not just about oil, but also about Shipping and vessel ownership.

 

I’m also not unaware of the efforts made by Nigerians to implement some of these laws in breach. I’m aware that some foreigners in connivance with unscrupulous Nigerians go into joint ventures that present Nigerians as owners of companies which in reality are foreign companies. The whole idea is to present those companies as Nigerian companies for the purpose of defeating the law on indigenous ownership and local content. This normally goes with compensation to the shortsighted Nigerian accomplices.

We have unfortunately failed to add significant value to the crude we produce. While apple has created so many products and continue to improve on existing ones, we have basically been shipping crude oil in its crudest form since it was discovered. Again, I am aware that we had set up four refineries in the past to process the crude oil into final products like diesel, premium motor spirit, kerosene, aviation fuel, etc.

 

It was a great idea to set up those refineries, but at the moment the 455,000 barrels per day refineries are operating at a shameful 5% capacity. Like I had stated elsewhere, per 2015 figures, given that our local consumption stood at 408,000 barrels per day, while we produced an average of 24,000 barrels per day, we had a wide local consumption gap of 384,000 barrels per day which is filled with importation. Meanwhile, other OPEC countries are doing a lot better.

 

Algeria, for instance, has installed refining capacity of 650,000 barrels per day and actually refines 628,000 barrels, while it consumes 418,000 barrels per day and exports 210,000 barrels per day of refined products. Kuwait with a population of 4 million people has installed refining capacity of 936,000 barrels of crude per day. It however, refines over a million barrels per day, the excess being accounted for by Gas to Liquids. Kuwaitis consume just 345,000 barrels per day while they export over 680,000 barrels of refined products per day.

 

The question to ask is who or what has bewitched us? Beyond all the primary products listed above, there is a lot we could have done with our crude to make our life better and diversify our sources of revenue. The most pathetic is that gas associated with crude production which other countries reinject or produce are flared with reckless abandon. Someone described that action as setting money on fire. Of course, little or no attention is paid to the environmental hazard of the continuous flaring of gas to host communities and their neighborhoods.

 

We also got so lazy that virtually everyone in the country is now dependent on oil. When prices came tumbling down, we all became prostrate. Meanwhile, we had demonstrated that we were just pretending when we convinced ourselves that we were an oil economy.

 

From our estimated population of over 180m people and our average production of about 1.7m barrels per day, about 370 people will share 1 barrel of oil per day and at a price of $55 per barrel, each person would be entitled to a little less than 15 cents per day and at the current exchange rate of N305 per dollar, it would amount to less than N46 apiece. I don’t know that it makes sense for us to pay as much attention to oil at the detriment of a lot of other possibilities open to us.

 

Statistics indicate that Nigeria earned $95b from petroleum exports in 2012, $90b in 2013, $77.5b in 2014 and $42b in 2015. Looking at the revenues for Apple for the same period, the company earned $157b in 2012, $171b in 2013, $183b in 2014 and $234b in 2015. The difference is very clear.

 

It is almost becoming too late for us to sit down and hold an honest conversation about the structure of our economy. Is this the way we want to continue? Where are we going to be in the next five to ten years? Can we do things differently? What sectors of the global economy would continue to boom in the foreseeable future. Can we refocus our people to become more productive and creative? I believe that all the ingredients exist to move this country from the joke of potentially great to a truly great country.

 

The most important ingredient, to my mind, is human capital. However, there must be the political will and the honesty of purpose to ensure that we harness the great potentials and the ingenuity of our people. As we go from town to town and from village to village, we are confronted with the reality of very industrious and hardworking people. But all sorts of speed breakers are placed on their way. We must begin to dismantle them for our people’s ingenuity and creativity to blossom.

 

We must first and foremost remove barriers to entry into business. There is a comparative report compiled annually by the World Bank Group referred to as “ease of doing business report”. This report rates 190 countries on a scale such that higher rankings indicate more conducive business and regulatory environments for starting and running a local firm while low rankings indicate the opposite.

 

As of last year, Nigeria ranked 169 out of the 190 countries rated. In Sub-Saharan Africa, countries that placed better than us include Mauritius 49, Rwanda 56, Botswana 71, South Africa 74, Kenya 92, Ghana 108, Zimbabwe 162, and some other 30 countries before getting to us, unenviably sitting at the 169th position. For ease of understanding, it is important that we highlight some of the issues that the World Bank measures to arrive at the report.

 

These include starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. I thought this was important to underscore that everyone has a role to play in resolving the problem of roadblocks to creative and innovative thinking.

 

I cannot conclude without drawing the attention of the young people to some of the lessons to be learnt from the story of Apple. It is important because many a times, we are very quick to point fingers at the multitude of reasons why things could not be done. Regarding education, the two young Steves were drop-outs from school. They refused to allow that deter them.

 

They set up a joint company, complementing each other in terms of skills. These days, we want to go it alone, sharing no risks and sharing no skills. They brought in a minority shareholder who they believed could be an arbiter in case of a fracas. That was forward thinking. That banks rejected them could not stop them.

 

These days, what we hear is “I don’t have capital, banks are not lending money” etc. Those could just be excuses, and they are not new. Note that “Steve Jobs was persistent” and I dare add, creative, taking an LPO to a parts supplier to get credit. They had to sell what they had to produce the first Apple computer.

 

Sometimes, you may need to part with something of value to create better value. Finally, as they became successful, they worked harder, put on better-thinking caps and this led to new and better products. You don’t need to rest on your oars, when you think you have arrived. That is the time to work harder.

 

By the way, Apple products are so pricey going by the current dollar exchange rates. The iPhone 7 goes for anywhere between $769 and $969, the iPad sells for between $800 and $1100, the MacBook will set you back some $1000 to $2,400, and the iPod commands a tidy $400, depending on specification. Meanwhile, our crude oil is still struggling at around $55 per barrel. Just like the saying goes, you dare not compare Apples and Oranges, much less a product as crude as crude oil.

FG Confirms Discovery Of Crude Oil In Borno

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The federal government yesterday confirmed the discovery of crude oil in Borno State, North East Nigeria, thus raising the hope of the region joining the league of oil producing areas in the not-too-distant time.

The disclosure was made by the permanent secretary, Ministry of Petroleum Resources, Dr. Jamila Shua’ra, when she presented her welcome address at the presentation of the 2016 petroleum sector scorecard held at the auditorium of the Petroleum Technology Development Fund (PDF) in Abuja yesterday.

She brandished the discovery of crude oil in Borno State as one of the achievements of the ministry during the year, saying, “Our doggedness culminated in the discovery of oil in new frontiers – Lagos and Borno.”

Shua’ra listed other achievements of the ministry.

“Today, as a team, we have recorded commendable achievements in our sector:  the introduction of the PMS Price Modulation Matrix; the availability of PMS in all outlets; eradication of payment on fuel subsidies; located foreign direct investment to finance midstream oil and gas infrastructure; adopted exit strategies on Joint Venture Cash Call; robust engagement of host communities to reduce agitations; creation of more stable industrial relations,” she said.

Collaborating her statement, Vice President Yemi Osinbajo stated that the deregulation of the downstream sector, which led to the elimination of petroleum subsidy, saved the government a burden of N15.4 billion monthly.

The vice president, who was represented the attorney-general and minister of justice, Alhaji Abubakar Malami, stated that the oil and gas sector remain very critical to the stability and growth of the nation’s economy as it accounts for about 90 per cent of the country’s earnings, in addition to contributing substantially to the inflow of foreign exchange and growth of foreign reserves.

Prof. Osinbajo further disclosed that the Federal Executive Council (FEC) had recently approved new measures and strategies aimed at eliminating the burden of Joint Venture Cash Call arrears and easing future payments in the up-stream sector, stressing that the strategies are fully supported by the National Economic Council (NEC).

He noted that the measures will boost additional investments and raise daily production levels to about 2.8 million barrels per day (mbpd) in the long-run.

On his part, the minister of state for petroleum resources, Dr. Ibe Kachikwu, revealed that one of the fallouts of the removal of petroleum subsidy was the decline of the nation’s daily consumption of the premium motor spirit (PMS), from the 50 million litre per day (mlpd) previously to the current figure 28mlpd.

Credit:

http://leadership.ng/news/cover-stories/564094/fg-confirms-discovery-of-crude-oil-in-borno

Oil Prices Rise to $58, Highest Since 2015

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Oil prices spike over four per cent to their highest level since 2015 early on Monday after OPEC and other producers over the weekend in Vienna reached first output cut deal since 2001.


They jointly reduced output in order to rein in oversupply and prop up the market.

Brent sweet crude futures, the international benchmark for oil prices, soared to 57.89 dollars per barrel in overnight trading between Sunday and Monday, its highest level since July 2015.

U.S. West Texas Intermediate (WTI) crude futures also hit a July 2015 high of 54.51 dollars a barrel.

With the deal finally signed after a year, the market’s focus will now switch to compliance with the agreement.

OPEC has said it will slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd in a bid to end overproduction .

Oversupply has dogged markets for over two years and pushed the economies of many oil exporting countries into crisis.

On Saturday, producers from outside the 13- country OPEC group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd .

Nigeria Loses 130m Barrels of Crude Oil to 32 Militant Groups This Year

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Nigeria has lost over 130 million barrels of crude oil from January to November this year to the activities of 32 militant groups in the Niger Delta region since the resurgence of militancy in the oil-producing region in 2015, the Vice-Chairman of the Security Subcommittee of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Shina Bankole, has said.

This is coming as the Minister of State for Petroleum, Dr. Ibe Kachikwu, has stated that President Muhammadu Buhari’s Petroleum Industry Roadmap, better known as the “7 Big Wins”, will stabilise the region for oil and gas business.

Also, the former Minister of State for Energy and the Amayanabo of Nembe Kingdom in Bayelsa State, Dr. Edmund Daukoru, has called on the people of the Niger Delta to listen to themselves and the outside world, adding that blowing up pipelines amounted to cutting their nose to spite their face.

Speaking in Lagos yesterday at the 17th Health Safety and Environment (HSE) Biennial Conference on the Oil and Gas Industry in Nigeria organised by the Department of Petroleum Resources (DPR), Bankole, who is also the General Manager in charge of Security at Chevron Nigeria Limited, said insecurity in the Niger Delta had led to the proliferation of several militant groups, as well as small arms and weapons.

Bankole added that between January and November, 58 incidents of sabotage were recorded where oil and gas facilities belonging to the oil companies were vandalised.

“Again, within the same period, the rate of sabotage on oil and gas assets has led to lost production opportunities by the oil companies. As of today, more than 130 million barrels of crude oil have been lost due to the inability of the oil companies to produce as a result of the activities of the militants,” he added.

He said with the rehabilitation of about 30,000 ex-agitators, the Amnesty Programme introduced in 2009 by the federal government had successfully restored normalcy to the oil-producing region until 2015 when new militant groups began to emerge.

“The resurgence of militancy since 2015 has led to the proliferation of militant groups. As of today, no fewer than 32 of such groups have emerged in the Niger Delta – some with possible ethnic agenda, while others came with a criminal agenda,” he said.

Bankole disclosed that of the over 275 cases of kidnappings recorded across 29 states between January and November, 45 cases were related to oil and gas industry personnel and their dependants.

According to him, of the 99 incidents of sea robberies and pirates recorded within the same period, 19 cases involved the oil and gas industry.

In his keynote address, Kachikwu said the insecurity in the Niger Delta had raised the cost of security by six times over the past 10 years, adding that the entire ecosystem of Niger Delta was under threat as a result of the oil spills caused by vandalism of facilities by militants.

“In the last couple of weeks, the Ministry of Petroleum has launched the 7 Big Wins. The first of the Big Wins is getting the Niger Delta stabilised through engagement, empowerment and enforcement. The other aspect of the Big Wins is righting the wrongs through remediation and education,” Kachikwu, who was represented by his Senior Technical Adviser on Fiscal and Regulatory Matters, Dr. Tim Okon, said.

Read More: thisdaylive

Crude oil prices stabilize after Trump’s election shock.

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Oil prices reversed some early losses to push higher yesterday as markets recovered from their initial shock at U.S presidential election.

Traders said that crude fundamentals remained weak.

President-elect Donald Trump’s election win initially stunned markets and led Ian Bremmer, president of U.S. risk consultancy, Eurasia Group, to warn that “the world is heading into a profound geopolitical recession.”

However, markets shook off deep post-election losses and recovered yesterday.

“After initially selling off as it became clear Donald Trump would be the next president, commodity prices rallied strongly as the flight to safety unwound,” ANZ bank said yesterday in a note on Trump’s victory.

But the bank added that “there are still serious questions marks as to what it means for commodity markets.”

U.S. West Texas Intermediate (WTI) crude futures were up 15 cents, or 0.3 per cent, from their last settlement at $45.42 a barrel.

WTI was held back somewhat by a 2.4 million barrels rise in U.S. crude inventories to 485 million barrels last week, even though refineries hiked output and imports fell, the U.S. Energy Information Administration said on Wednesday.

International Brent crude oil futures traded at $46.70 per barrel, up 34 cents, or 0.7 per cent, from their last close.

BMI Research said Trump’s expected pro oil and gas industry policies might mean that U.S. “production of oil and gas could recover at a faster rate in 2017 as developers grow more encouraged.”

Goldman Sachs said a Trump presidency would likely result in higher investment and, in time, increased U.S. oil output as the new president-elect has said he would de-regulate fossil fuel production.

Internationally, the bank said Trump’s threat of renewed U.S. sanctions against OPEC-member Iran would, in the short-term, lead to higher production as it “would further incentivize Iran to maximise production in the short- term rather than comply to an OPEC freeze.”

Crude Oil Production Rises To 1.9M Barrels Per Day

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Nigeria’s crude oil production has risen to 1.9million barrels per day, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu disclosed yesterday.

Speaking when he formerly handed over to the newly appointed Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Dr. Maikanti Baru, the minister said the upstream sector of the oil industry was being repositioned to attain about 3million barrels per day.

Lately, Nigeria’s crude production had dropped to about 1.1 million barrels following attacks on oil installations in the Niger Delta region by the militant group, Niger Delta Avengers.

Expressing satisfaction in the performance of NNPC under his leadership, the minister said the Corporation has been positioned as a profit focus organisation, compared to what it was before he came on board.

While thanking President Muhammadu Buhari for giving him the opportunity to serve as both the Minister of State Petroleum Resources and Group Managing Director of NNPC, Kachikwu noted that public perception of NNPC was gradually changing for the better.

Credit: Leadership

Kaduna Refinery Shut Down Over Non-supply Of Crude Oil

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The Kaduna Refining and Petrochemical Company (KRPC) has stop production following renewed activities of Niger Delta militants.

It was gathered that the Kaduna refinery stopped production last week Tuesday over what a source attributed to lack of crude oil.

According to the source, “we have shut down production for now. We do not have crude supply, am sure it is due to the renewed militancy in the Niger Delta region.”

The source however assured that the refinery has enough Premium Motor Spirit (PMS) in reserve pending when they would start getting supply of the crude.

“We will resume production as soon as we started getting crude supply from the Niger Delta. We are ready and our equipment are functional, the only problem now is the crude,” said our source.

The Refinery only resumed production late April during the fuel scarcity period.

Credit: Leadership

Angola Overtakes Nigeria As Africa’s Top Oil Producer

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Nigeria has again lost its Africa’s top oil producer status to Angola, as the country’s crude oil production fell by 67,000 barrels per day last month, latest data from the Organisation of Petroleum Exporting Countries have shown.

OPEC, in its Monthly Oil Market Report for April, which was released on Wednesday, put crude oil production from Nigeria at 1.677 million bpd in March based on direct communication, down from 1.744 million bpd in February.

Nigeria recorded the biggest drop in output in the month among its peers in OPEC, followed by Venezuela, based on direct communication.

Exports and production of Nigeria’s popular crude grade Forcados continued to be shut in due to a sabotage-related spill on the subsea Forcados pipeline.  The country has recently seen a rise in militant attacks in its main oil-producing region, the Niger Delta, denting oil production.

The country’s production figure for March was put at 1.722 million bpd by secondary sources, compared to 1.762 million bpd the previous month.

According to secondary sources, total OPEC crude oil production in March averaged

32.25 million bpd, a marginal increase of 15, 000 bpd over the previous month.

The 13-member oil cartel, said in the report, “Crude oil output increased mostly from Iran, Iraq and Angola, while production decreased in UAE, Libya and Nigeria.”

Angola saw its oil output rise to 1.782 million bpd last month from 1.767 million bpd in February, based on direct communication, according to the OPEC report.

The southern African country had in November 2015 overtaken Nigeria in output level as it produced 1.722 million bpd, compared to 1.607 million bpd produced by Nigeria, OPEC’s December report showed.

According to the latest monthly report, OPEC believes crude supply outside the producer group is set to fall more than expected, with weaker Chinese, Colombian, UK and US oil output eclipsing better outlooks for Canada, Norway, Oman and Russia.

The outlook for non-OPEC supply has been hit largely by lower expectations for crude oil production from China’s onshore mature fields.

OPEC also cited the postponement of major new projects due to reduced cash flow as the impact of lower prices takes its toll.

It now sees output falling by 730,000 bpd over the year, up from a previous estimate of 700,000 bpd, to average 56.39 million bpd in 2016.

OPEC also partly attributed the 20 per cent surge in oil futures in March to weaker non-OPEC supply in 2016, supply disruptions in Iraq and Nigeria, signs US shale is shrinking, along with expectations of a supply intervention plan by major crude exporters in Doha on April 17.

Oil Prices Rise

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Brent crude was on track for its third weekly gain on Friday, supported by an optimistic report from the International Energy Agency.

 

Still, analysts cautioned that a large glut of oil remained, with Goldman Sachs warning that U.S. crude could saturate storage in the coming months.

 

U.S. crude futures were trading at 38.64 dollars a barrel, up 80 cents from their last close, having hit a 2016 high of 38.96 dollars earlier in the day.

 

Brent crude futures were at 40.65 dollars a barrel, up 60 cents, and on track for their third weekly gain in a row.

 

“We expect a decision next week on imposing sanctions on these three,” said one EU diplomat.

 

He stressed that EU foreign ministers are not expected to decide on Monday but that a decision could come later in the week.

 

(Reuters/NAN)

Suspected Oil Thieves Arrested With Over 65,000 Litres Of Crude Oil

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Nine suspects allegedly involved in illegal oil bunkering and illegal transportation of crude oil have been arrested by the Nigerian Army in Imo State.

 The arrest was made by the 34 Artillery Brigade Command in Owerri, the capital of Imo State

A spokesman for the Command, Captain Ajemasu Jingina, told reporters that the arrest was made through the command’s operation PULO Shield saddled with the responsibility of curbing illegal oil bunkering, illegal oil theft, pipeline vandalism and kidnapping of oil workers.

According to him, the command was able to intercept four different trucks along Owerri Port Harcourt expressway conveying products containing over 33,000 litres of AGO and crude oil suspected to be gotten from illegal oil bunkering.

Captain Jingina said most of the suspects were arrested along Owerri-Port Harcourt expressway and oil producing Oguta Local Government Area of the state.

He said a truck with registration number ABB 239 XA carting 10,800 litres of substance suspected to be AGO was loaded into a well-constructed metal and concealed with piles of two by four inches woods in order to bit the check of security operatives on the highway.

Credit: ChannelsTv

Crude Oil Slips As Saudi, Venezuela Meeting Yields Little

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Crude oil prices eased in thin trade on Monday as a meeting between OPEC producers, Saudi Arabia and Venezuela showed little indication that steps would be taken to boost prices.

 

Global benchmark Brent futures LCOc1 were down 8 cents at $34.98 while U.S. crude futures CLc1 fell by 23 cents to $30.66.

Both contracts firmed slightly earlier in the session on Monday in see-saw trade on low volumes as many Asian markets were on holiday for the Lunar New Year.

 

Saudi Arabia’s Oil Minister, Ali al-Naimi, discussed cooperation between members of OPEC and other oil producers to stabilise the global oil market on Sunday, but there was no sign any agreement had been reached.

 

“It was a successful meeting and (conducted) in a positive atmosphere,” Naimi was quoted as saying.

 

Venezuela’s Oil Minister, Eulogio Del Pino, who is on a tour of oil producers to lobby for action to prop up prices, said his meeting with Naimi was “productive”.

 

“The picture is neither clear nor harmonious,” PVM Oil Associates analyst David Hufton, said in a note on Monday. The market is likely to remain highly volatile and dangerous.  Unless there is some pretty bullish news in the next few days, the contracts are likely to erode value and head south,” Hufton warned.

 

The market is also eyeing U.S. Federal Reserve Chair, Janet Yellen’s testimony to lawmakers on Wednesday along with U.S. crude inventory data from the Energy Information Administration on the same day.

 

“We are on hold, waiting for that with a nervous tone,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

 

The International Energy Agency and OPEC are also due to release their monthly reports on Tuesday and Wednesday, respectively.

 

 

(Reuters/NAN)

No Document On Crude Oil Swap– PPMC

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Members of the House of Representatives Ad-Hoc Committee probing Refined Product Exchange Agreement/Crude Oil Swap were shocked at yesterday’s hearing when the newly appointed managing director of Petroleum Products Marketing Company (PPMC), Esther Nnamdi-Ogbue, told them that there was no document to show that there were other processes taken other than presidential and ministerial directives regarding lifting of oil in the oil swap deals between Duke Oil and Trafigura.

“We don’t know under what circumstances it (the contracts) was done as all of us are new; most of the dealings were done before our appointment.

“Before us, a lot of things happened; we met a lot of things as inconclusive, and this has led us into reconciliations which are still ongoing.

“We discovered that some contractual agreements were not favourable to PPMC, which was why we went into the reconciliations. I don’t want to jump into conclusions, but I should be clear that oil swap is practised globally,” she said.

When the committee asked if due process was followed in the selection of trading companies involved in the deals, the Petroleum Resources Ministry’s team said records at its disposal showed that the arrangement was carried out through presidential approvals.

The committee requested to see the presidential approval in question and the PPMC eventually presented one, but this was rejected by the committee on the ground that it was a wrong approval: it was an Offshore Processing Agreement (OPA) and not an oil swap agreement.

Credit: Leadership

U.S Likely To Resume Buying Nigeria’s Crude Oil- Kachikwu

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The Minister of State for Petroleum, Dr. Ibe Kachikwu, has disclosed that Nigeria and its former long-term crude oil trading partner, the United States, may soon rekindle their trading relationship in crude oil.

The minister, who also said in spite of the Nigerian National Petroleum Corporation’s (NNPC) difficulties in meeting its cash call obligations, would not sell some of its stakes in the Joint Ventures (JV) with local and international oil companies (IOCs), added weekend in Kaduna that the United States had made overtures to resume buying Nigeria’s crude oil.

He said the development was a fallout of President Muhammadu Buhari’s July 2015 visit to the US. He, however, did not disclose details of the development but said that the US had indicated its interest in buying “very limited” quantities of Nigeria’s crude and that negotiation on that was ongoing.

The minister, who was in Kaduna to inspect the status of repair works on one of the country’s refineries, noted that irrespective of the renewed interest from the US, Nigeria was still diversifying its crude oil trading destinations deeper into Asia and other parts of the world.

“The fact of US actually being back into the sales of crude market obviously will impact on prices but what you find is that the volume of export that US intends to do is really minimal because there is a lot of local internal consumption and strategically they are still reaching out to buy a couple of Saudi barrels and in fact they are opening up to buy a couple of Nigerian barrels,” Kachikwu said.

He explained that after the president’s visit in July, the US indicated interest in buying very limited quantity of Nigerian oil, partly to support the market, adding that conversations on the overtures were ongoing.

Credit: ThisDay

Saudi Monarch Pledges To Diversify Economy Amid Drop In Oil Prices

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Saudi King, Abdulaziz Salman, whose country is the world’s top oil exporter, pledged on Wednesday to diversify the economy in a bid to shore up national finances dented by a slide in crude oil prices.

 
“The kingdom is keen to implement programmes to diversify income resources and reduce reliance on oil as the main source of income,” Salman said in a statement.
Salman, who ascended to the throne in 2015, said his country had maintained economic growth despite global economic fluctuations.

 
“This growth is due to balanced and wise economic policies aimed at keeping a balance between resources and spending,” he added.

 
Saudi Arabia’s finances are under pressure resulting from the plunge in oil prices.

 
The regional economic heavyweight relies on oil revenues to finance welfare programmes for its citizens and military involvement in Yemen and Syria.

We Will Focus On Price Modulation, Not Subsidy Removal – Kachikwu

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The Minister of State for Petroleum, Dr. Ibe Kachikwu, said the Federal Government would focus on price modulation of petroleum products to ensure efficiency and provision of the products.

 

Kachikwu said this while addressing newsmen on Thursday in Abuja.

 

He said the price modulation had nothing to do with the removal or existence of subsidy.

 

“There is too much emotion around subsidy issue, but our focus is that the Federal Government should not spend as much as it spends every year on subsidy.

First, it is an issue of irresponsibility; this year we have spent about one trillion and given the state of the finances, we have to save money from every means.

What I am trying to do is to make sure that whatever we do, the poor people will not be affected. So whatever we are going to do will be intellectual,’’ he said.

 

On the way forward, the minister said that the NNPC would review the template of the Petroleum Products Pricing Regulatory Agency (PPPRA) and achieve reduction in the cost for clearing goods.

 

According to him, foreign exchange provisions will be looked into, to ensure stability in the system.

 

He added that efforts were being made to ensure more allocation to the oil industry to ensure certainty in the system.

 

He said that Nigeria consumed below 40 million litres of Premium Motor Spirit (PMS) per day, adding that a reduction in smuggled products would put the level of consumption between 35 and 36 million per day.

 

“If we take this analysis, we can deliver products today with the price of oil where it is and also sell close to the prices we have today.

It is not that we have removed subsidy but the application of market forces will enable you to sell products as close to the prices we have today.

Is it going to be between N87 and N90; we will have to get PPPRA to do those templates and at 35 million (litres) we may sell products at N87; by the time we consume 36, we may be selling at N90 or N91,’’ he said.

 

He said a band had been approved between N87 and N97 to look at price modulation, adding that it would look at price at every given time of crude.

 

The minister said that the price would no longer be fixed, noting that the price of crude would continue to determine what the price of product would be.

 

Kaichukwu said that the report that pump price would go back to N97 in 2016 was not true, adding that a band of N87 and N97might be adopted.

 

“Today the prices are largely close to N87; there might be no need to change the price by January, and it might go up or come down slightly by April.

 

It is all the dynamics of what the crude is; so, I have not put a static figure, myself and PPPRA will sit down and do the calculations and be able to announce what price PMS will sell in January,’’ he said.

 

The Minister added that there was no anticipation of any major shift in regards to the price of crude.

 

On the state of the refinery, he said that as at October, the four refineries performed at zero level but noted that in a few days, the Port Harcourt and Kaduna refineries might be able to bring up some production.

 

He said that the refineries would not be relied on until the state of their maintenance was completed, adding that Federal Government had agreed that it would not sell them at their present state.

 

“We are going to try and repair them; we are going to find external funding to be able to repair them, and my preference is to find somebody who is a technical partner to invest,’’ he said.

 

He expressed hope that two of the nation’s refineries would be at the level of completion in 2016, adding that if Port Harcourt reached 60 per cent completion, it would produce an average of five million barrels.

 

He blamed fall in global oil price, poor contracting, lack of efficiency, funding and even focus to losses in production in the year.

 

Commenting on the Petroleum Industry Bill, he said it would be split into segments to enable passage by the National Assembly.

 

He said that the two segments were fiscal and non fiscal segment, adding that a draft on the non fiscal had been received.

 

 

(NAN)

Angola Overtakes Nigeria In Crude Oil Production

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Nigeria’s crude oil production fell by 250,000 barrels per day (bpd) in November, making the country lose its status as Africa’s top oil producer to Angola, latest data from the Organisation of Petroleum Exporting Countries (OPEC) has shown. ¨Nigeria recorded the biggest drop in output in November among its peers in OPEC, followed by Saudi Arabia, the group’s biggest producer.¨

OPEC, in its latest monthly oil market report, put crude oil production from Nigeria at 1.607 million bpd in November based on direct communication, down from 1.812 million bpd in October. ¨Angola also saw its oil output drop to 1.722 million bpd last month from 1.762 million bpd in October.
Meanwhile, the oil cartel will hold urgent talks, if crude prices don’t recover by February, according to OPEC president and Minister of State for Petroleum, Dr. Ibe Kachikwu. “It is expected that the upward trend in oil prices will be seen by February next year.

If it does not happen, it is clear that OPEC will need to have a very urgent meeting,” Interfax quoted the OPEC president as saying. ¨On December 4, OPEC decided to keep the current output level of around 31.5 million barrels per day despite oversupply on the global oil market.¨On Monday, Brent and WTI benchmarks sank to lows not seen since 2009. Brent crude fell below $37 a barrel while the US benchmark WTI dropped to below $35 per barrel. ¨Crude prices rebounded slightly in early trading yesterday with Brent trading at $37.73 and WTI at $36.18 per barrel as of 8.36am GMT. ¨OPEC produced 31.7 million barrels per day in November. It is the highest output in over three years and 1.7 million barrels per day over its former production limit…”

Credit: ThisDay

Oil Marketers Call For Release Of N413bn Subsidy Claim

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Some accredited oil subsidy marketers on Thursday said the failure of Federal Government to release the approved N413 billion subsidy debt was disrupting their fuel importation schedule.

 

Speaking in an interview in Lagos, the marketers said that they were concerned that the money had not been released one week after the approval was granted.

The marketers alleged that the delay was affecting loading activities at depots and had led to the shutting down of some filling stations due to non-availability of petroleum products.

“Government, through the Central Bank of Nigeria, has not released any subsidy claims as promised.

“As I am talking to you we have been directed by the CBN to go and meet the Debt Management Office for clarification.

“All our efforts to get the said money have been in vain and to start importing has been a serious problem.

“There is no money to back up the cheques presented to the marketers.

“We do not even know the basis for the clarification of the cheques, but we are aware that there is no money in the account.

“It is like giving the marketers cheques only to discover that there was no money in the account.

“Nothing like importing now because all marketers are angry because of the failed promised,” one of the marketers al

The market said; “If you go outside Lagos you know how much they are selling fuel per litre now, it is the last stock that we are selling now.

“It is unfortunate that the Department of Petroleum (DPR) is saying that we are hoarding the products, which is not the truth.

“We have not collected a single coin from the money.

“If not the fact that some of the marketers are making some money from other products, how do you think we will be able to get anything for now?

“We have been summoned by DPR for a meeting this morning to settle the crisis, we are only managing what we have in stock at present,” he said.

It will be recalled that the Federal Government, had on Nov. 3, approved the sum of N413 billion to petroleum products marketers as the outstanding payment for subsidy claims.

NNPC cancels refinery crude delivery, offshore processing contracts

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The Nigerian National Petroleum Corporation (NNPC) has cancelled the contract for the delivery of crude oil to the refineries in Warri, Port Harcourt and Kaduna.

 

The corporation also announced the termination of the Offshore Processing Agreements (OPA) entered into in January 2015, with three companies, namely Duke Oil Company, Aiteo Energy Resources Limited, and Sahara Energy Resources.

 

Under this controversial agreement, the NNPC allocates a total of 210,000 barrels of crude oil per day for refining at offshore locations in exchange for petroleum products at a pre-agreed yield pattern.

 

Consequently, the NNPC has invited Messrs Oando, Sahara Energy, Calson, MRS, Duke Oil, BP/Nigermed and Total Trading to bid for the new offshore processing agreement while it has engaged AITEO, Sahara Energy and Duke Oil to exit the current OPA.

 

Announcing the new measures in a statement issued yesterday, the NNPC said that it is aimed at cost reduction and strengthening of operational efficiency across its value chain.

 

In the statement signed by its spokesman, Ohi Alegbe, the corporation stated that after proper evaluation and in line with the terms of contract for the delivery of crude oil to the nation’s refineries, the decision was reached to cancel the contract due to the exorbitant cost and inappropriate process of engagement.

 

“As a stop-gap measure, a subsidiary of the NNPC, the NIDAS Marine Limited, has been engaged to provide crude delivery services on negotiated industry standard rate pending the establishment of a substantive contract.

 

We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to the Port Harcourt and Warri/Kaduna refineries pending the restoration of the crude pipeline infrastructure,’’ the corporation stated.

 

The NNPC, however, explained that it resorted to the delivery of crude oil to the refineries by marine vessels following the incessant attacks on the Bonny-Port Harcourt refinery pipeline and the Escravos crude pipelines by vandals and oil thieves, resulting in the complete unavailability of the pipelines in 2013.

 

–Leadership

NNPC Terminates Crude Oil Delivery Contracts With 3 Oil Marketing Companies

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The Nigerian National Petroleum Corporation, NNPC, on Wednesday, terminated the Offshore Processing Agreements (OPA) with three oil marketing companies in January this year.

The companies are Duke Oil Company Inc., Aiteo Energy Resources Limited and Sahara Energy Resources (Nig) Ltd.

Under the agreement, the NNPC allocates a total of 210, 000 barrels of crude oil per day for refining at offshore locations in exchange for petroleum products at pre-agreed yield pattern.

The termination, according to the Corporation, is part of new measures aimed at cost reduction and strengthening of operational efficiency across the corporation’s value chain.

Read More: dailytimes

#INSIGHTWITHLARIGOLD: Nigeria: When the Oil is Over by @Lanre_Olagunju

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Insight pix

 

Nigeria’s oil and its derivatives are the most explored of all its natural resources; yet, oil money hasn’t done much for the country in terms of economic development, job creation and poverty reduction, basically because corruption, wastefulness, insensitivity, lack of structure and infrastructure has hindered its even distribution. With an average daily oil production of 2.4 million barrels, and other countless resources, rather than progress, Nigeria has remained an important case-study in explaining the intricacies of being broke and wretched even in the midst of abundance.

Whether Nigeria will remain an oil giant or not is gradually becoming non-debatable, after the World Bank’s published prediction. The prediction says Nigeria’s oil will be depleted in 41 years, though the nation can keep supplying at 2011 levels for another 41 years. Many aggrieved Nigerians are less concerned if the oil dries up tomorrow, hoping that if it does, probably the entire nation will sit up and diversify into other economic sectors.

According to the Association for the Study of Peak Oil and Gas (ASPO), the global rate of discovery has been falling steadily since 1965, after it was discovered that the world oil-field peaked at about 55 billion barrels (8.7×109 m3)(Gb)/year.

Though there’s been a whole lot of heavy criticism and sentiments on Matthew Simmons oil peak theory, most especially for being overly focused on Saudi Arabia in his book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Wikipedia explains peak oil as the point in time when the maximum rate of petroleum extraction is reached, after which, the rate of production is expected to enter terminal decline. Quoting Matthew Simmons, “…peaking is one of these fuzzy events that you only know clearly when you see it through a rear view mirror, and by then an alternate resolution is generally too late.”  The calculation of peak oil has a lot to do with observing and noting the rate of production of individual oil wells, and also the combined production of related oil wells. But Nigeria is not a nation that keeps records, how can one trust the Nigerian National Petroleum Corporation to have a detailed oil production data? So the World Bank’s prediction shouldn not be discarded. Moreover, crude oil falls in the category of non-renewable energy source, basically because it is produced from the remains of plants and animal, and that takes millions of years.

For energy source to be categorized as renewable, it essentially has to be replaceable within days or years. So mathematically, if we are consuming it faster than the earth produces it, obviously one day soon we will eventually run out of it. Happily, the world won’t run out of energy as long as there’s energy from the sun, singularly because a large percentage of all the energy we use comes from the sun. More so, energy from the sun that reaches the earth surface in an hour is literally much more than we can consume in a year.

There can’t be a more appropriate time for the Nigerian government to benefit from the power of foresight than now. There’s no guarantee that petroleum will remain a highly sought after source of energy. America’s import of Nigeria’s oil decreased by 125% between July 2011 and 2012. That aside, The United States Energy Department is all out to ensure that America produces 11.4 million barrels per day of oil and liquid hydrocarbon, come 2013. Energy wise, Obama’s administration is so concerned about America’s self-reliance.

This is the time for Nigeria to get back to her “economic first love”- agriculture, which used to be the mainstay of the economy before the advent of oil. Way back in 1961, Nigeria produced about 42% of the world’s consumed groundnut. The neglect of the agricultural sector ensured her dominance was eclipsed by China, USA and Argentina. Nigeria also lost palm oil relevance and dominance to Malaysia and Indonesia, just like she lost cocoa to Cote d’Ivoire and then cotton to Mali and Burkina Faso. Report has it that Nigeria losses US$10 Billion (1.6 Trillion Naira) in potential annual export revenue opportunity from groundnut, cocoa, cotton and palm oil, assuming Nigeria maintained her 1961 market share.

Currently, Nigeria is the world’s number two importer of rice, importing two Million MT of rice , besides that, Nigeria Imports over 1 Trillion Naira in wheat, rice, sugar and fish every year. Then we say there are no jobs! Nigeria depends majorly on importation of feed; hence, she imports inflation, driving poverty northward. The beauty about agriculture is that it actually provides jobs. So it’s not just about providing food. In practical terms it boosts the economy as well. Agricultural development has contributed to Thailand’s low rate of unemployment which is the lowest in the world at 1.2%. Malawi became absolutely self-sufficient in food production within one year by focusing on agricultural transformation after the late former President, Bingu wa Mutharika said “Enough is enough, I am not going to go on my knees to beg for food. Let us grow the food ourselves.” Another example is Kenya, look at the sea of jobs Kenya has created through Private sector driven marketing institutions. Kenya is now at the number one position in the global horticulture market, creating 8 Million jobs in the Kenyan Horticultural sector.

I am @Lanre_Olagunju

#INSIGHTWITHLARIGOLD runs on www.omojuwa.com every Saturday.

 

*A large part of this article was first published on www.AfricanLiberty.org