…FG plans to sell its stakes to less than 40%

Nigeria has put on hold, for now, some proposals, regarded as ‘ambitious,’ including selling down government stakes in joint-venture agreements changing the way it pays Nigeria National Petroleum Corporation’s (NNPC) portion of the bills owed under those deals.

Speaking to Reuters yesterday, the group managing director of the national oil Corporation, Mele Kolo Kyari, informed that the Nigerian government intends to sell its stakes to less than 40%. He said however that there is currently no framework in place for the sales.

The NNPC boss explained that top officials of the Corporation are in talks with all operating partners to improve commercial terms, but little progress is being made due to the lingering Petroleum Industry Bill [PIB] which is still on the desks of lawmakers in the national assembly

According to Kyari, the long-delayed legislation that will overhaul the oil sector needed to be passed into law quickly to spur critical investment into the sector. “There are investment decisions that cannot be made now because the investors are wary of the fiscal environment,” he told the agency

The PIB, which experts say covers everything from fiscal terms to Niger Delta community engagement has been in the works for over a decade. But Kyari said the current government, with the legislature controlled by the party of President Muhammadu Buhari, could pass it. “This time around, you have the best alignment. And I’m sure getting it passed will not be difficult,” he said.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said that Nigeria with its huge petroleum resources has no reason to continue to import petroleum products.

Speaking at the opening ceremony of the 43rd Society of Petroleum Engineers’ Nigeria Annual International Conference and Exhibition (SPENAICE) in Lagos on Monday, Kyari described the trend as a shame to the country, stating also that it is unacceptable for a country with over 187tcf of gas resources to be faced with the dilemma of lack of gas for its power plants.

Stating that it was high time Nigerians and stakeholders in the country’s oil and gas industry quit lamenting over the various challenges confronting the industry, the NNPC GMD challenged stakeholders and industry players to join forces with the Nigerian National Petroleum Corporation’s (NNPC) in remedying the situation.

Kyari said, “We keep talking about the gas to power initiative. Today, we are unable to deliver gas to our domestic market as an industry for many reasons. We are not just willing to invest, we are not sure of the future of the investment which crystallizes on the issue of pricing, among others.

“Because our refineries are not operating optimally, we have become a net importer of petroleum products. Today, it is a shame that this country is a net importer of petroleum products and we are going to change that.  The way to do it is that NNPC will get its act together.

 “For many years now, we have been talking about increasing our oil reserve to 40 billion barrels and our oil production to 3 million barrels per day and this we are determined to work together so that we can deliver value to our country,” he said.

Speaking on the theme of the conference, “Artificial Intelligence, Big Data and Mobile Technology: Changing the Future of the Energy industry”, the NNPC GMD said it is a timely topic, noting that the emergence of artificial intelligence has continued to change the dynamics of operations in the oil and gas business. Adding that effective deployment of big data enables for quicker processes and interventions in the conduct of business in the industry.

According to Kyari, the country needs to attract more investments across the energy value chain to pave way for more effective deployment of improved technology in the exploration and production of hydrocarbon from inland as well as the ultra-deep offshore basins.

To achieve this ambition, the NNPC GMD said that NNPC, industry players and stakeholders must work together to bring appropriate petroleum legislation on the table.

“One of the things to do is to make sure that the business environment is clearly understood by all. Today, we have issues around the physical regime, about contractual challenges, about disputes that need not be there in the first instance.

 “As you all know, since 1999 till date, efforts to get the petroleum industry bill passed hasn’t worked. I think it is a big challenge but this time around, we need to get it done.

“We can’t do without having the right processes, the right systems and then the right places for investment, the right technology,” Kyari said.

Patronas, Malaysia’s state-owned oil company has signed an agreement with central African country, Gabon for two exploration permits after Gabon enacted a new oil law last month, Bloomberg quoted a government statement citing the petroleum minister, Noel Mboumba.

Petroliam Nasional Bhd, also known as Petronas, already has a presence in Gabon and is the first company to sign an exploration and production contract in the country in five years, according to the statement.

Bloomberg said the new deal follows the enactment of a revised hydrocarbons code last month, made with the support of the International Monetary Fund. The new code is more fiscally attractive than the previous one.

Like several other Central African nations, Gabon — a member of the Organization of Petroleum Exporting Countries (OPEC) — relies on oil revenue. Despite a slump in production, the country sees potential in offshore output, according to the country’s oil minister, Mboumba.

Gabon recently put 35 oil blocks for sale, Radio Francaise International reported. The deal with Petronas is for offshore blocks F12 and F13. Once developed, the blocks will have a production of 200,000 bpd, the government’s statement said.

Following the confirmation last weekend that Kenya has joined the league of global oil-exporting countries, reports say the country’s commercial oil prospects have received a boost from the recent pricing of the first batch of crude oil at an optimal ($60) per barrel.

According to agency reports, investors have from the purchase of the estimated 200,000 barrels of crude, warmed up to opportunities presented by the nearly 600 million barrels of oil reserves in Turkana as the pricing of the premier batch matches up to world-leading crude classifications.

An elated President Uhuru Kenyatta has confirmed last weekend that Kenya’s first deal was indeed concluded with 200,000 barrels sold at a price of 12 million US dollars. “We did not have to yield to a heavy discount from the sale. Other countries who have pioneered early oil have unlike ourselves discounted their prices by nearly Ksh.1036 ($10) per barrel,” a source close to the transaction said.

The appraisal of Kenya’s black gold at current market prices sits behind only the premium valued Brent Crude and well ahead of the medium ranked West Texas Intermediate (WTI). Both Brent and the WTI crude component benefited from the rebounding crude prices in the week to rise by 1.39 and 1.71% by close of trade on Friday to Ksh.6412 ($61.89) and Ksh.5766 ($55.66) respectively.

Like Brent, the Turkana based Kenyan crude has been described as sweet and light, its light attribute describing its low relatively low density as the sweet sentiment underpins the crude’s low sulphur content.

The significant transaction by the Kenyan government is expected to provide impetus to the country’s drive towards full commercial production ahead of the final investment decision (FID) by the British based exploration and production firm Tullow.

Kenya’s Ministry of Petroleum and Mining has, despite the good tidings held its grave silence on the details of the oil’s buyer(s), shrugging off the majority of media queries. Citizen Digital request for commentary on the first oil sale from the Petroleum State Department went largely unanswered.

Kenya seeks to output crude at a rate of 60,000-100000 barrels per day (bpd) upon full commercial development putting the life of the Turkana crude reserves at between 15 and 26 years.

Following the removal of marketers from importing fuel for the country, leaving the Nigerian National Petroleum Corporation (NNPC), latest reports said the volume of petrol imports increased by 1.18 billion litres within two months.

In 2017, oil marketers stopped participating in the importation of petrol due to the high differential between the landing cost of the PMS and the pump price of the product at fillings stations, which the oil marketers complained were not favourable.

Figures obtained last Friday in Abuja showed that the oil firm’s importation of petrol rose significantly between the months of March and May 2019. In March 2019, the corporation imported 916.51 million litres of petrol. This increased to 1.9 billion litres in April and climbed further to 2.1 billion litres in May this year.

The analysis further showed that between May 2018 and May 2019, the difference in the volume of petrol imported by the NNPC was about 991 million litres. The total volume of petrol imported by the corporation from May last year to the same period this year was put at 20.4 billion litres.

The report indicated that the NNPC made no import of the Dual Purpose Kerosene, popularly called kerosene, in the months of March and May this year. The same report was for kerosene in May, September, October, November and December 2018.

The total volume of kerosene imported by the corporation from May 2018 to May 2019 was 310.97 million litres, while the cumulative volume of the products, petrol and kerosene, imported by the NNPC during the period under review was put at 20.71 billion litres.

Petrol import was far higher than kerosene volume that came into the country during the period. Officials said that the significant rise in petrol imports between March and May this year was due to an increase in consumption.

“This, of course, would mean more under-recovery for the NNPC, as this corporation is the supplier of last resort and has the task of ensuring that the country is wet with refined petroleum products, especially the PMS,” said an official.

The discovery that the Nigerian National Petroleum Corporation (NNPC) spent over N15 billion to maintain and repair oil pipelines in November 2018 is raising concern among state governments, whose opinion is that the figure can be reduced if necessary steps were taken.

In the report submitted by the NNPC to the Federation Account Allocation Committee (FAAC), the national oil corporation said during the period in review, it spent N1,556,985,671.03 on security and maintenance of pipelines; N154,293,264.32 on pipeline and other facility repairs, N8,746,257,727.19 on marine distribution, N3,353,698,696.33 on pipeline management and another N1,724,039,089.22 on “strategic holding”.

An impeccable source said that at the last FAAC meeting, some state governors were miffed by the NNPC report, pointing out that the cost of these repairs and maintenance were being deducted from revenue that ordinarily should have accrued to the Federation Account.

The NNPC report had listed some of the issues that affected production in the month of October 2018 (which in turn necessitated the need for the repair and maintenance of the pipelines). They include Bonny Terminal that suffered a loss of 710,000 barrels of crude; Forcados that suffered a loss of 1,085,000; Agbami that lost 157,000 barrels; Akpo terminal that lost 162,000 barrels; Brass, 360,000 barrels; Qua Ibo terminal, 165,000barrels; Oyo (not the state) 155,000 barrels; Tulja 682,000 and Erha terminal lost 10,000 barrels.

Total of barrels lost during the period in review amounted to 3,607,000 barrels, or about $183,957,000 or N56,106,885,000 lost in one month, by currents estimates

The FAAC report said Nigeria suffered crude oil pipeline losses of N88,422,130.82 basically from the pipeline segment of CNL- WRPC where 700,344 barrels were pumped, but only 695,535 barrels was received. The report further said that the pipeline at A/Cove-Mosimi and A/Cove-Idimu- Satellite from where 192,590 cubic metres of Premium Motor Spirit (PMS) was pumped but only 170,482 cubic metre of PMS was received resulting in a loss of 22,108 cubic metres or N2,946,554,240.

Another loss of N1,366,919,680 was recorded from the Mosimi-Ibadan pipeline while the Port Harcourt- Aba pipeline suffered a loss of N58,201,777, all amounting to N4,371,675,696.64 loss to the federation account.

Edo Refinery and Petrochemicals Limited will become the first to respond to Federal Government’s recent mandate for all modular refineries to open shop or risk losing their licences.

Developed by AIPCC Energy Limited at Ologbo, Ikpoba Okha local government area of Edo State, management of Edo Refinery has assured that it will begin operations in October.

The modular refinery will get its feedstock (crude) from the Nigerian Petroleum Development Company’s (NPDC) facility – oil mining lease (OML) 111, located in Oredo, Ologbo near Benin.

According to the management of AIPCC Energy Limited, the 6,000 barrels per day (bpd) capacity modular refinery, is developed with the support of Edo State government. The technical director, Mr Tim Tian, said the fabrication of the refinery had been done in China and is awaiting inspection and approval by the DPR before they will be into Nigeria.

Tian explained that, while the local community will have a participating interest in the project, the idea is to build a mini LNG plant that will capture some flared gas, which will be processed into LNG and be used as fuel to power the power plant that will be used to operate the refinery.

While inspecting a modular refinery facility last Friday in Rivers state, acting director of the Department Petroleum Resources [DPR] Mr Ahmad Shakur, had said the Federal Government was passionate about the success of modular refineries in the nation’s oil and gas industry.

Shakur explained that the features for modular refineries are small capacity and simple process. Modular refinery is of advantage to Nigeria because its crude is light and sweet. By simple process, you can have good quality products from the crude that can be used in the local market directly, he stated.

“In China it is quite different because we are short of crude oil and the crude we have is small and sour. Therefore the cost of refining in China is higher than in Nigeria,” the DPR boss said

The Edo Refinery, when operational, will produce from its feedstock 50% of diesel (500,000 litres), 25% of naphta (300,000 litres and 20% of fuel oil (200,000) litres. The refinery will not be producing PMS presently because government regulates its price and it will not be economically viable to go into its refining.

Tian stated that it is because of regulation of the price of PMS (petrol) that those licensed by the DPR in the past to set up private refineries could not build. They (licensees) rather would choose to trade the crude than refine it in-country because government subsidizes PMS. Diesel can be refined in Nigeria because the price is deregulated.

AIPCC Energy Limited is a subsidiary of African Infrastructure Partners (AIP), a business group with interests in oil and gas, power, financial services, agriculture and technology.

United Arab Emirates-bases Dana Gas may have resolved to sell its oil and gas assets in Egypt. Last Monday, the company informed the Abu Dhabi Securities Exchange (ADX) in a statement that it had hired financial advisers to look at a possible sale at full value, having substantially developed the said assets.

In a report by The National, the company said it is currently focusing on the development of its oil and gas assets in the Kurdistan region of northern Iraq, which houses around 90% of the company’s proved and probable reserves. Dana Gas said that a potential sale process was still in its early stages.

In the statement to ADX, Dana said: “The company will notify the ADX if and when a deal is reached.” Quoting the company website, the journal reported that Dana Gas generated about 56% of its energy output, or 35,200 of barrels of oil equivalent per day, in the North African country last year.

An investor’s presentation issued alongside the company’s first-quarter results in May showed that Dana Gas’ proved and probable reserves in Egypt stood at 89 million barrels of oil equivalent last year. The company also has 14 development leases under three concessions in the Nile Delta region and a 26.4% stake in a gas liquids extraction plant in the Gulf of Suez.

Last week, the company also announced that it had completed the drilling of its exploratory Merak-1 well in the North El Arish offshore (Block 6) concession area in Egypt but “did not encounter commercial hydrocarbons” and was plugging the well. It said that there were at least three other prospects within the same concession area with “material resource potential”.

Reuters confirmed last Sunday that Dana Gas hired investment bank Tudor, Pickering, Halt & Co to advise on the sale of its Egyptian assets. The company has been operating in Egypt since 2007. Sharjah-based Crescent Petroleum is its biggest single shareholder, with a 19.67% stake in the company, according to the ADX website.

Kenya, the eastern African country has joined the league of global oil-exporting countries. In a dispatch from the statehouse, in Nairobi, President Uhuru Kenyatta said the country’s first deal was concluded on Thursday.

“We are now an oil exporter. Our first deal was concluded this afternoon with 200,000 barrels sold at a price of 12 million US dollars. I think we have started the journey and it is up to us to ensure that those resources are put to the best use to make our country both prosperous and to ensure we eliminate poverty,” President Kenyatta said in a dispatch from State House.

The statement was issued following a cabinet meeting where Mr Kenyatta assured that the government will step up interventions aimed at containing the growing cases of cancer-related deaths in the country.

“We need to see what more we can do to assist both in prevention but also in treatment of the disease. And we need to do that as a Government together with the county governments,” President Kenyatta said.

“This is an issue that we need to take more seriously and galvanise all of us to come up with a solution both in preventive, which is most important, but also in helping fellow Kenyans to get treatment, and get it early for those already affected by the disease,” the Head of State added.

The President had led the cabinet in a moment of silence in honour of the late Bomet Governor Dr Joyce Laboso and the late Kibra MP Ken Okoth, both of whom had succumbed to cancer recently.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said that until and unless the petroleum legislation is passed, the volume of foreign investment flow into the country would not be as robust as it should be.

The petroleum legislation has been lingering on the desks of lawmakers in the National Assembly since 1999, recording little or no success.

Addressing the Nigeria Guild of Editors (NGE) who paid him a courtesy visit yesterday in Abuja, Kyari called for the synergy between the Corporation and the Guild to bear on the lawmakers in the 9th National Assembly to pass the orchestrated bill into law.   

The NNPC boss craved the indulgence of the journalists to join hands with the Corporation and enlighten members of the 9th National Assembly on the need for the accelerated passage of oil and gas industry-related bills in order to create the right environment to attract more investments.

“We need the NGE’s help to get the petroleum bill passed through sufficient enlightenment of the National Assembly and all other stakeholders,” Mallam Kyari sued. He said NNPC management under his watch would enhance gas supply to the power and industrial sectors to boost the economy, adding that the oil and gas industry under his watch would promote the common good for all Nigerians.

The NNPC helmsman informed that NNPC would continue to work closely with the NGE to ensure a transparent and accountable industry, stressing that the Corporation must work for the economy to remain buoyant. “We recognise that we have to work together with the NGE. We promised that we are going to be transparent and accountable to all our shareholders who are, the over 180 million Nigerians. We have the responsibility to make sure that NNPC works for all of us”, he said. 

Mallam Kyari stated that the visit of the NGE was the greatest honour on the corporation by the journalism profession, maintaining that the profession’s role in nation-building was key to providing policy direction and guide for people in power.

On her part, the President of the NGE, Mrs Funke Egbemode, said the Guild would collaborate with the new management of NNPC by providing credible platforms that would enable the Corporation to always inform Nigerians and the world about its mandate.