United Bank for Africa (UBA) Plc is leading a consortium of Nigerian commercial and international banks in the $1.5 billion pre-export finance facility for the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).

The facility is structured in two tranches; the first tranche of $1 billion, to be repaid over a period of five years, will be provided in dollars, with UBA acting as the Facility Agent Bank. The second tranche of $500 million will be provided in local currency, over seven years, with UBA acting as Lead Bank, providing $200 million to be accessed in Naira.

The report said both facilities will be repaid from an allocation of 30,000 barrels per day of NPDC’s crude oil. UBA has a strong track record in the resources sector across Africa, having facilitated oil prepayment deals with the NNPC, including its 2013 $100 million participation in the PXF Funding Limited transaction, and a further $60 million in the 2015 Phoenix Export Funding Limited transaction.

It is reported that in Senegal, UBA was responsible for the EUR 240 million revolving crude oil financing facility for the Société Africaine de Raffinage and in Congo Brazzaville co-funded the $250 million crude oil prepayment facility for Orion Oil Limited. Other participants in the NNPC deal include Standard Chartered Bank, Afrexim Bank, Union Bank of Nigeria and two oil trading companies, Vitol and Matrix.

UBA group chairman, Tony Elumelu said the facility will provide the much- needed capital for investment in NNPC’s production capacity, which is of strategic importance to the economy and the country’s leading source of foreign exchange earnings.

Elumelu noted that UBA’s position as Lead Arranger recognises the group’s strength in structuring and deploying financing to the oil and gas sector, and the depth and liquidity of the group’s balance sheet. According to him, 2020 has been one of the most economically challenging years that Nigeria has witnessed. With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute to the economy.

“This facility is clear evidence of this – UBA is providing investment that will significantly improve Nigeria’s production capacity and in doing so also demonstrating the strength, depth, and sophistication of our commercial banking capability. I believe that together, working with governments, we can create more jobs and more wealth for people, not only in Nigeria, but across Africa,” Elumelu said.

By Chibisi Ohakah

Nigerian National Petroleum Corporation (NNPC), downstream subsidiary, Petroleum Products Marketing Company (PPMC), has fixed the ex-depot price of premium motor spirit (PMS), known as petrol at N138.62 per litre.

In a memo signed by its manager, sales, Mohammed Bello, in Abuja, on Tuesday, the ex-depot price is the price at which depot owners sell the commodity to retail outlets. It said that that the new price would come into effect from Aug. 5.

The PPMC also put the ex-coastal price of the commodity, which is the price at which the product is sold to depot owners, at N113.70 per litre.

The ex-depot price for automotive gasoline oil (AGO), also known as diesel, was fixed at N160 per litre and N165 per litre, for depots in Lagos and Oghara respectively.

It further fixed the ex-depot price for kerosene at N160 per litre.

The pricing modulation determines the pump price that the products will be sold to motorists.

By Peace Obi

     …Condition forcing firms to slash capital budgets

The slump in oil prices caused by the Coronavirus is believed to have forced many companies, including International Oil Companies (IOCs) to slash their capital budgets and suspend some projects.

These poor performances has forced analysts to suspect that several major oil and gas projects in Nigeria may suffer further delays as international oil companies operating in the country saw their financials take a dive in the second quarter of this year.

Brent crude, which is the global oil benchmark, reportedly plunged to as low as $15.98 per barrel in April, its lowest since June 1999. It traded around $44 per barrel on Monday.

On the other hand, Shell last week posted a loss of $18.4 billion in the second quarter of this year, compared to a profit of $3.5billion in the same period of 2019.

Shell said it had cut its exploration drilling plans for this year from 77 wells to just 22. The company confirmed that its capital spending budget for this in March from around $25 billion to $20 billion.

Last Friday, ExxonMobil reported its biggest-ever quarterly loss of $1.1 billion and confirmed plans to make deeper spending cuts. The company, which suffered a loss of $610 million  in Q1 2020, slashed capital spending by 30 per cent this year to around $23bn.

Chevron Corporation posted its worst quarterly loss of $8.3bn in Q2 in at least three decades and warned that the pandemic wreaking havoc upon energy markets might continue to drag on earnings.

“While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter of 2020,” Chevron’s Chairman and Chief Executive Officer, Michael Wirth, said.

News had it in December last year that a number of oil and gas projects valued at $58.4bn in Nigeria were facing an uncertain future as the IOCs failed to sanction them several years after they were announced.

The recent collapse in oil prices and demand caused by the coronavirus pandemic and the price war between Saudi Arabia and Russia has compounded the challenges facing the projects.
Before the pandemic, industry experts had said the regulatory and security challenges in the country had put a damper on the IOCs’ appetite to take final investment decisions on the projects.

The projects that have not reached FID include Shell’s $9.7bn Bonga South-West/Aparo, which would add 143,274 barrels per day in extra crude production capacity at its peak flow. It has the potential to boost Nigeria’s daily production by nearly 10 per cent.

Other projects without FID are ExxonMobil’s $6.2bn Bosi (126,784 bpd), Chevron’s $8.2bn Nsiko (95,685 bpd), ExxonMobil’s $8.2bn Owowo West (138,301 bpd), ExxonMobil’s $6.1bn Uge-Orso (99,532bpd) and Nigerian Agip Exploration Limited’s $9.2bn Zabazaba (146,739 bpd).

One of the major indigenous independent oil companies in the country, Seplat Petroleum Development Company Plc, posted a loss of $145.3m (N49.8bn on) in the first half of this year, compared to a profit of $120.4m (N37bn) in the same period of 2019.

“The sharp drop in oil prices and demand may slow down the speed with which indigenous producers pursue the aspiration to ramp up production to about 50 per cent of Nigeria’s daily oil and gas production,” the Managing Director/CEO, ND Western Limited, Eberechukwu Oji said.

By Chibisi Ohakah, Abuja

Deep production curbs by the Organisation of Petroleum Exporting Countries (OPEC) and its allies had helped oil rebound from its plunge below zero in April, but analysts say that it’s a not a comfortable time to pump up the volume at the market.

OPEC and their allies had planned to return supply to the market after the group’s output cuts, even as the notorious Covid-19 pandemic continues to spread across the globe. Reuters reported yesterday that OPEC+ plans to return about 1.5 million barrels a day to the market this August after cutting global supply by roughly 10% when demand plunged as U.S. shale companies are also returning production, with ConocoPhillips the latest to announce plans to bring back oil.

While West Texas Intermediate for September delivery added 0.3 per cent to $40.05 a barrel, WTI fell to trade beneath its 50-day moving average and Brent rose about 0.5 per cent to $43.15.

“If oil-producing countries do not continue the co-ordinate cuts, oil prices could again fall below $40. Although demand is expected to continue to recover and inventories are expected to decline, the pace of recovery in oil prices is expected to be moderate” said Jun Inoue, an economist at Mizuho Research Institute in Tokyo.

OPEC oil production increased by one million barrels per day in July, as the cartel reduced its production cuts and major gulf members also ended their added voluntary cuts, as the body plans to ease production cuts by 7.7 million barrels a day.

The cartel pumped an average of 23.32 million bpd for the month of July, which is over 900,000 more than June when OPEC production hit its lowest level in 20 years. In April, the oil cartel agreed to reduce production by almost 10 million barrels as the pandemic affected demand, leading to record price lows.

OPEC has however agreed to increase production from a cut of 9.6 million barrels to 7.7 million barrels a day from August.  The reduction in cuts was backed by both Saudi Arabia and Russia, including other participating oil ministers in the virtual conference.

Saudi Arabia saw the biggest increase in production, pumping close to 8.4 million bpd, which is up 850,000 from their June quota.  But Nigeria and Iraq did not add any further cuts to their production in July after both nations achieved most of their quota compliance for the month. Nigeria has also promised to comply with it production quota for the coming months.

Reuters reported that total compliance for the month of June for production was revised up to 111 per cent, while an International Energy Agency (IEA) executive director, Fatih Birol, says that even if market demand recovered, uncertainties still lie ahead due to the scale of global economic recovery and given a likely second wave of the coronavirus.

Analysts warned that OPEC’s increasing production could be ill-timed as demand may decline anytime soon which may lead to another supply glut hitting the market. Storage may still be a concern as the largest independent oil storage company, Royal Vopak warns it is running out of available space.

By Chibisi Ohakah, Abuja

Sixty-four years after the discovery of crude oil in commercial quantities at Oloibiri, Bayelsa State by Shell Darcy, the Federal Government working closely with the Bayelsa State Government and Shell Petroleum and Development Company (SPDC) have started the establishment of an Oil and Gas Museum and Research Center in the town.

The symbolic project was launched on Tuesday with the inauguration of key project committees and setting of delivery timelines by the Minister of State for Petroleum Resources, Chief Timipre Sylva.

The project is being promoted by four key institutions, namely the Nigerian Content Development and Monitoring Board (NCDMB), the Petroleum Technology Development Fund (PTDF), Shell Petroleum and Development Company (SPDC) and the Bayelsa State Government.

Speaking at the virtual event which had the leadership of the participating entities in attendance, the Minister stated that the Oil and Gas Museum and Research Center presented a unique opportunity to correct a historical oversight. Adding that the museum would preserve the heritage and developments in the oil sector, similar to what is obtainable in other oil producing nations.

He outlined the project execution plan, noting that the project would be fast-tracked, with pre-construction activities lasting for 8 months while actual construction should be completed within 36 months from the date of commencement.

Recalling that the project had been on the drawing board for over three decades, the Minister commended President Muhammadu Buhari for granting his approval in the midst of COVID-19 pandemic and its socio-economic impact.

He said “Mr President approved the establishment of the Oloibiri Museum and Research Center (OMRC) as part of his signature programs that would leave behind enduring legacies and impact the Oil and Gas Community, the people of the Niger Delta, and indeed the entire country.”

Providing details of the project, the Minister stated that “it consists of the construction of a Museum where historic developments, data, equipment, and tools used in the Nigerian oil and gas industry will be stored for posterity and the construction of a functional Research Center where prototypes can be tested and validated in fulfillment of the requirement for approval of new technologies.”

He expressed hope that the Research facility will close a major gap in the nation’s quest for home grown technology inputs required to service Exploration and Production activities in the Nigerian oil and gas industry

To ensure sustainability, the project adopted a development model that will leverage the benefits of public-private partnership, inter-agency collaboration, and inter-governmental alignment, so as to optimize resource utilization and ensure that the Oloibiri monument meets international standards, Sylva explained.

A critical success factor to timely project execution is the establishment of an optimal governance structure with clear reporting lines, key performance indicators and quality resource team he said. He added that two committees and five project teams have been created to provide necessary support and supervision essential to deliver the OMRC project.

They included the Steering Committee, which would be responsible for providing leadership and steer and the Coordinating Committee, responsible for providing oversight on activities of all the project teams.

The Project teams included Construction, Funds mobilization and management, ​Community Relations, Health, Safety & Environment and Secretariat, which shall be set up and operated in NCDMB Head Office in Yenagoa, Bayelsa State.

Proving further insight into the project, the Executive Secretary of NCDMB, Engr Simbi Kesiye Wabote explained that PTDF would contribute 40 percent of the project cost while NCDMB and SPDC would provide 30 percent and 20 percent respectively, with Bayelsa State Government providing the balance of 10 percent.

He listed some of the socio-economic benefits of the project to include creating Nigeria’s hub for Oil and gas artefacts, attracting petro- tourism, retention of history and dissemination of knowledge, opportunity to bring change and socio-economic development to Oloibiri.

Other benefits include human capital development and facilitation of prototype development and testing, facilitating commercialization of research and acceleration of home grown technology development.

Speaking on the immediate next steps, Wabote said the partners would contribute the take off funds, conduct design competition, conduct feasibility studies, establish project cost and take final investment decision and commence construction.

In his comments, the Managing Director and Chairman SPDC, Mr Osagie Okunbor noted that the history of the company in Nigeria was intertwined with Oloibiri.

He recalled that two attempts had been made in the past to launch a similar project but they failed for various reasons. He added that ”listening to the very well thought out details and framework, it gives us quite some confidence that this time all the ingredients are there to get it right and I pledge the support of the SPDC JV to this effort.”

Also speaking, the Governor of Bayelsa State, Senator Douye Diri assured that the state government would support the project by providing the enabling environment for its success and sustenance.

Orient Energy Review

The country’s earnings from the oil and gas sector dropped by 2.6 percent in the first quarter of 2020 the Central Bank of Nigeria has disclosed.

The Apex bank in a statement said Nigeria’s earning went down from N1.6 trillion realised in the fourth quarter of 2019 to N1.5 as recorded in the first quarter of 2020.

The CBN in its latest report titled “Economic Report for the First Quarter of 2020”, the apex bank disclosed that gross oil earnings accounted for 60.3 percent of N2.5 trillion total revenue collection by the Federal Government in the period under review.

At N1.6 trillion, oil revenue accounted for 58.9 percent of the total federally-collected revenue of N2.7 trillion recorded in the fourth quarter of 2019.

Breaking down the components of oil earnings in the first quarter of 2020, the CBN noted that crude oil and gas exports stood at N172.6 billion, rising by 47.1 percent from N117.3 billion recorded in the fourth quarter of 2019; while Petroleum Profit Tax/Royalties declined by 6.5 percent to N838.2 billion from N896.7 billion recorded in the previous quarter.

Other oil revenue also recorded a decline, dropping by 6.8 percent to N512.2 billion in the first quarter, compared to N549.6 billion recorded in the fourth quarter of 2019.

The CBN noted that, “At N2.527 trillion, federally-collected revenue, in the first quarter of 2020, was lower than the quarterly budget estimate of N3.948 trillion by 36.0 percent. Similarly, it fell below the receipt in the preceding quarter by 4.8 percent.

“The decline in federally-collected revenue (gross), relative to the quarterly budget estimate, was attributed to shortfalls in the receipt from both oil and non-oil revenue components during the review period.

“Gross oil receipt, at N1.523 trillion or 60.3 percent of the total revenue, was below the quarterly budget estimate and the receipt in the preceding quarter by 31.2 percent and 2.6 percent, respectively.

“The decline in oil revenue, relative to the quarterly budget estimate, was due to shortfall in the receipt from PPT and royalties.

“Non-oil revenue (gross), at N1.004 trillion or 39.7 percent of total revenue, fell below the quarterly budget estimate of N1.733 trillion by 42.1 percent. It also fell below the level in the preceding quarter by 8.0 percent.

“The lower non-oil revenue, relative to the quarterly budget estimate, was due to the decline in the receipt from Value Added Tax (VAT) and corporate tax.”

The CBN also revealed that Nigeria’s crude oil production, including condensates and natural gas liquids, averaged 1.84 million barrels per day or 167.44 million barrels in the first quarter of 2020, representing a decrease of 1.1 percent, compared with the 1.85 million barrels per day or 170.20 million barrels produced in the preceding quarter.

It disclosed that Nigeria exported an estimated 1.39 million barrels per day of crude oil, representing a decrease of 0.7 percent, compared with the 1.40 million per day recorded in the preceding quarter.

According to the CBN, the estimated decrease in production was attributed to the aftermath of the December 2019 meeting by the Organisation of the Petroleum Exporting Countries (OPEC) where members and their allies pledged a further production cut by 500,000 barrels per day beginning from January 2020 to stabilize the global crude market.

The apex bank explained that the average spot price of Nigeria’s reference crude oil, the Bonny Light stood at $52.51 per barrel in the first quarter of 2020, representing a decrease of 20.1 percent and 18.9 percent below the $65.71 per barrel and $64.75 per barrel recorded in the fourth quarter of 2019 and the corresponding period of 2019, respectively.

Orient Energy Review

The Honorable Minister of State for Petroleum Resources, Chief Timipre Sylva will today, August 4, 2020 inaugurate the project committee for the development of the Oloibiri Museum and Research Center (OMRC).

The Nigerian Content Development and Monitoring, NCDMB in statement said the important event will be held virtually.

Key dignitaries expected to participate include the Executive Governor of Bayelsa State, His Excellency Sen. Douye Diri, Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr Simbi Kesiye Wabote, Executive Secretary of Petroleum Technology Development Fund (PTDF), Dr. Bello Aliyu Gusau and the Managing Director/ Chairman of Shell Petroleum and Development Company (SPDC), Mr. Osagie Okunbor, Board said.

Members of the project committee will include personnel from the Bayelsa State Government, NCDMB, PTDF and Shell.

The symbolic project was approved by His Excellency, President Muhammadu Buhari, GCFR.

By Peace Obi

In less than five days, Lagos State recorded two explosions with yesterday’s claiming two lives and leaving five others seriously injured, Orient Energy Review reports.

The incident occurred at about 4:30pm near Wema Bank Bus Stop, between Coker and Alafia Bus Stops, in Ajeromi Ifelodun Local Government Area, barely five days after a similar explosion rocked Ajao Estate, Isolo area of the state.

An eye witness account stated that the incident happened as a result of activities of a welder who was welding on a truck.

“The welder was affected and he died instantly. Six other persons also sustained serious injury, and they were quickly rushed to a nearby hospital, but at the hospital, another person who was among the injured was confirmed dead.”

The injured persons include a driver who was stuck in traffic as a result of the incident. He was affected by high-tension cable that cut off due to the explosion. The cable instantly cut off the driver’s hand.

The Lagos Emergency Management Agency (LASEMA) said it recovered a dead artisan in the gas explosion.

Further investigations revealed that the explosion occurred as a result of a leak in the supply of gas from the cylinder, hence the death of the artisan utilising the welding equipment while working on a truck flatbed.

LASEMA said the deceased, Ajibola Olaoye, aged 35, died at the scene of the incident while four other adult males sustained injuries and were quickly taken to a nearby hospital.

“The dead victim (Ajibola Olaoye), was bagged by the LRT and handed over to his family in the presence of officers of the Nigeria Police Force from Amukoko Division. The entire area has been cordoned off,” LASEMA said.

Another Explosion in Lagos Claims Two Lives, Many Injured

Forum Energy Technologies has developed and demonstrated the ability to remotely operate Workclass and Observation Class (Perry and Sub-Atlantic) ROV systems between an offshore vessel and a remote location, Orient Energy has learnt.

 Forum in a statement on Monday said the new capability brings major opportunities to adapt operational practices in response to the latest industry drives as cost savings and reductions in HSE risks can be realised through reducing offshore crew sizes.

The global oilfield products company stated that the concept of remote piloting was proven by Forum 2010 when the company successfully operated its TXLX Workclass ROV in its test pool at Kirkbymoorside, UK  from a TXLX Console located in Florida, USA.

According to Forum, the remote Control capabilities demonstrated were camera and light controls, manifold power on/off, depth and gyro power, pan and tilt controls, manipulator controls, ROV thruster controls, auto heading controls.

It noted that at that time, internet speeds were much slower than today resulting in high latency telemetry which the control system software was not equipped to counter. 

 However, continued development in software efficiencies which reduced the effect of network latency coupled with increased availability and reliability of the global 4G network has now allowed Forum to offer remote operations on its full range of ROV systems, it stated.

“Forum’s ICE™ & subCAN™ remote operations suites provide a robust means of piloting vessel or platform-based systems from an onshore control facility via a wired, 4G or satellite connection.

“The onshore hardware replicates the offshore HMI hardware and GUI so controls will be immediately familiar to operators. The Onshore Control Module provides a local hub for power and data connections.

Existing offshore control station hardware can be upgraded to allow remote control and monitoring of power systems. The Offshore Control Module interfaces with the upgraded hardware providing control and monitoring via the existing ICE/subCAN network. A key-switch, in conjunction with the software, ensures secure control of hand-over between offshore and onshore stations.

 The ICE™ & subCAN™ control software applies enhanced position control when a compatible DVL and gyro are fitted to the ROV.

 The system upgrade components are manufactured and delivered from Forum’s UK facility in Kirkbymoorside, Yorkshire, the statement read in part.

Forum’s vice president – subsea vehicles, Kevin Taylor, said: “Forum has a strong reputation globally for manufacturing high quality, robust ROVs and associated auxiliary products for a number of industries ranging from oil and gas to renewables, defence, mining and telecommunications. This additional and important feature is part of our continued product support and development across the entire range.

 “Remote operations can reduce the number of personnel offshore, particularly during complex processes or technical procedures which may require a specialist to be deployed. The capability also aligns strongly with industry drives to reduce carbon footprint and deliver safe, efficient operations.”

 Forum Energy Technologies has 50 years’ experience producing Perry and Sub-Atlantic ROVs and has produced more than 800 ROV systems. Our Remote Intervention Technologies is unmatched throughout the world as is our range of ROVs, TMSs, winches and A-Frames. Our ROV manufacturing is certified and compliant to ISO 9001 and 18001.

By Peace Obi

The Nigerian National Petroleum Corporation (NNPC) has announced the death of Joseph Dawha, who was its 16th Group Managing Director (GMD).

The Corporation in a statement by its Spokesman, Kennie Obateru on Monday stated that Mr Dawha died after a brief illness.

The GMD, Mele Kyari, expressed shock over the sudden death of Mr Dawha.

Kyari said the NNPC family gravely mourned Mr Dawha’s death as he provided astute leadership and made immense contributions to the progress of the corporation.

He described his death as a great loss to not only NNPC but also Nigeria as a whole.

Mr Dawha was GMD of NNPC between August 2014 and August 2015.

The Shell Petroleum Development Company of Nigeria (SPDC) has begun discussions with 12 host communities in Bayelsa which demanded upward review of development obligations.

SPDC’s Media Relations Manager, Mr Bamidele Odugbesan, gave the assurance in an interview with the News Agency of Nigeria on Saturday in Yenagoa.

SPDC has since 2006 been administering community development initiatives driven by community development boards under a Global Memorandum of Understanding (GMoU) funding template.

Communities hosting Shell’s Estuaries Area (EA) oilfields in Bayelsa had at a press conference on Wednesday where it urged the oil company to review its annual development fund from $1 million to $10 million.

They also asked SPDC to review its other social obligations to them.

The communities made up of four Cluster Development Boards (CDBs) – Iduwini, Mein, Kou and Bassan – funded by Shell, also demanded payment of outstanding $14 million for sea anchorage for vessels deployed by Shell.

According to them, the amount, which accrues from 2006 till date, must be offset within the next 21 days or they will be compelled to stage a peaceful protest at Shell’s EA oilfield in Bayelsa.

The host communities claimed that 80 members of the host communities engaged by Shell in the ongoing oil drilling campaign to acquire experience had been rendered redundant and paid ‘stay-at-home allowance’ for the past one year.

The communities, which are in Ekeremor and Southern Ijaw local government areas of Bayelsa, claimed that SPDC was marginalising them in spite of their hospitality.

Odugbesan said that SPDC was engaging representatives of its EA oilfields on the issues raised.

“We are engaging the leadership of the communities for a peaceful resolution of the issues,” Odugbesan said.

The Chairman of Community Development Community (CDC) in Ekeni, Mr Wuka Brisibe, had said that coastline settlements lacked development in spite of having a Global Memorandum of Understanding (GMoU) with SPDC.

“The sum of One million dollars irregularly paid to the four CDBs covering the 12 host communities of the EA fields as the GMOU funds is inadequate.

“Each of the host community receives approximately 83,333 dollars which upon conversion at the present rate of N450.00 per dollar amounts to N37,499,850 only per annum.

“Our people cannot bear the brunt of years of oil and gas exploration and exploitation and not benefit from contracts, supplies and services provided for the operations of the said facilities.

“We are utterly displeased by the disposition of the SPDC in awarding vessel, service and supplies contracts envisaged within the local community content to non-natives and their companies.

“This is done in flagrant disregard for the capacity and capability of natives of host communities to provide the said services or execute such contracts.

“We totally condemn the attitude of the SPDC in its non-compliance with the Local Community Content Policy against its hosts at the EA oil fields in Bayelsa,” Brisibe said.

He called for review of the GMOU to limit interference by SPDC officials in determining the pace of the GMoU, especially concerning remuneration of contractors upon completion of contracts.

SPDC had at its 2019 inauguration of projects in Yenagoa, said its official contribution to the development of host communities in Bayelsa stood at over N23 billion.

The company said under the GMoU, the model placed the choice of community projects on the people while the company provided the funding and necessary mentoring.

SPDC General Manager External Relations, Mr Igo Weli, said the amount represented about half of the company’s GMoU spent in its host communities in Niger Delta since the introduction of the community development model in 2006.

NAN