Just when the world is coming to terms with the country’s resignation as a member of the Organisation of the Petroleum Exporting Countries, OPEC, Qatar has delved another blow, to invest $20 billion in the United States’ booming shale industry, as well as its Liquefied Natural Gas, LNG.

A report by Reuters on Sunday, quoted Saad al-Kaabi, chief executive of the world’s top liquefied natural gas, LNG supplier, Qatar Petroleum, QP, as saying the funds will be spread “over the coming few years”.

Qatar which unexpectedly quit OPEC this month 57 years, had announced it would now focus on its major economic strength, LNG, while it also maintains its oil customers. The country is the world’s highest producer and exporter of natural gas.

The country has an annual gas production of 77 million tonnes. It plans to boost capacity 43 percent by 2023-2024 and will be building four liquefaction trains for the LNG expansion.

The country had quitted OPEC over row with Saudi Arabia which also holds the presidential seat in OPEC, likewise its unwillingness to make additional cuts in the Declaration of Cooperation, DoC. Following accusation of involvement in terrorism, Saudi Arabia, United Arab Emirates, Bahrain, and Egypt, had imposed a political and economic boycott on Qatar since June 2017, accusing it of supporting terrorism. The country has since denied all allegations of supporting terrorism.

According to al-Kaabi, QP will announce its foreign partners for the new LNG trains it is building by the middle of next year, and the company has decided to self-finance the expansion rather than borrowing-QP used to borrow up to 70 percent of its needs from banks.

“We are looking at many assets in the U.S. We’re looking at gas and oil, conventional and non-conventional,” Kaabi said in an interview at his office in Doha.

“We are looking for a lot of things (in our partners) including asset swaps, things that will help me in my international expansion,” he said.

“If I don’t get good deals, nobody will come. I’m telling you, mark my words: if I don’t get a good deal, we go alone”.

According to the report, QP is still in talks with international oil companies for the new expansion project. Existing oil companies operating in Qatar include Exxon Mobil Corp, Total, Royal Dutch Shell, and ENI.

QP currently pumps 4.8 million barrels of oil equivalent per day (boed) and aims to boost its output to 6.5 million boed in the next 8 years by expanding its upstream business abroad.

Kaabi also said that proposed U.S. legislation known as “NOPEC”, or No Oil Producing and Exporting Cartels Act, which could open the group up to anti-trust lawsuits, was one of the reasons for quitting the oil exporting club.

Kaabi said he expected to make a final decision on the investment and whether to move ahead with the project “by the end of the year, if not January,” the report said.

The Federal Government said it had filed a $1.1 billion lawsuit against Royal Dutch Shell and Eni in a commercial court in London in relation to a 2011 oilfield deal in Nigeria.

The two oil majors are embroiled in a long-running corruption case revolving around the purchase of Oil Prospecting Licence (OPL)245.

OPL 245, which is one of the biggest sources of untapped oil reserves on the African continent with reserves estimated at nine billion barrels, is also at the heart of an ongoing corruption trial in Milan, Italy, in which former and current Shell and Eni officials are on the bench.

Milan prosecutors alleged bribes totalling around $1.1bn were paid to win the licence to explore the field which, because of disputes, had never entered into production.

The new London case also related to payments made by the companies to get the OPL 245 oilfield licence in 2011, Reuters reported on Thursday.

“It is alleged that purchase monies purportedly paid to the Federal Republic of Nigeria were in fact immediately paid through a company controlled by Dan Etete, formerly the Nigerian Minister of Petroleum, and used for, among other things, bribes and kickbacks,” Nigeria said on Thursday.

“Accordingly, it is alleged that Shell and Eni engaged in bribery and unlawful conspiracy to harm the Federal Republic of Nigeria and that they dishonestly assisted corrupt Nigerian government officials.”

The Nigerian government also included Nigeria-based Malabu Oil & Gas in the lawsuit, and a company called Energy Venture Partners Ltd., according to Bloomberg.

Malabu was allegedly controlled by Etete, who took possession of the $1.1bn payment and used it for bribes and kickbacks, according to the lawsuit.

Antonio Secci, a lawyer for Etete, was quoted as saying that the London suit “surprises” because the Nigerian government is already seeking damages in Milan.

“This situation cannot be represented again in London because it is repetitive,” he said.

Shell said “the 2011 settlement of long-standing legal disputes related to OPL 245 was a fully legal transaction with Eni and the Federal Government of Nigeria, represented by the most senior officials of the relevant ministries.”

Eni was quoted as saying in an emailed statement that it rejected “any allegation of impropriety or irregularity in connection with this transaction.”

“Eni (…) signed a commercial agreement in 2011 for a new licence for OPL 245 with the Federal Government of Nigeria and the Nigerian National Petroleum Corporation and the consideration for the licence was paid directly to the Nigerian government,” it said.

Nigeria has already filed a London case against a US bank, JPMorgan, for its role in transferring over $800m of government funds to Etete, who has been convicted of money laundering.

In another separate trial, a Milan court in September found a middleman guilty of corruption after prosecutors alleged he had received a mandate from Etete, who had denied any wrongdoing, to find a buyer for OPL 245, collecting $114m for his services.

Last month, a global anti-corruption and accountability watchdog group, Global Witness, calculated that the OPL 245 deal deprived Nigeria of double its annual education and healthcare budget.

Hopes that the 2019 federal budget oil price benchmark would not be completely eroded appears strengthened as oil prices sustain stability days after output cut by members of the oil producing nations’ cartel, the Organisation of Petroleum Exporting Countries, OPEC, and their allies inked the papers to reduce output and starve off glut. The global benchmark, Brent crude  for February delivery, yesterday sold for $61.25 a barrel.

The benchmark of $60 per barrel was eroded by a sustained price drops from the year’s high of $86 p/b to about $58 p/b last week. But just as the Federal Executive Council, FEC emergency meeting on the budget was about to hold last Friday, a successful OPEC meeting on output cut prompted a price rally, rebounding to over $62 p/b. It had sustained that range with miner ups and declines since then. The OPEC and some non-OPEC producers, including heavyweight Russia, agreed last Friday to cut oil supply by 1.2 million barrels per day (bpd).   OPEC had agreed to an 800,000-bpd reduction, while non-OPEC members said they would reduce by 400,000 bpd.

Nigeria is expected to take 40,000 bpd cut in its output as part of the total OPEC’s cut. The Minister of State for Petroleum Resources, Ibe Kachikwu said this represents about 2.5 percent of the 1.7mbpd current production level of Nigeria.  He also stated at the recent OPEC meeting in Vienna, Austria, that OPEC did not grant Nigeria further exemption in the cartel’s output cut deal because the country did not request for that.

“We didn’t ask for exemption. We wanted to make sure everybody shared in the pain. If some happenstance occur, you are expected to come back to ask for exemption,” Kachikwu said.   Prior to the OPEC agreement, oil price had hovered below the $60 benchmark for more than four weeks, thus propping up fears that government may not realise its capital expenditure plans, as a downward review may become imperative if the downward oil price movement is sustained.

Meanwhile, industry experts have expressed mixed reactions following the OPEC production cut and the attendant price surge. Chambers Oyibo, former Group Managing Director, NNPC and  Chairman/CEO of Prime Energy Resources Limited, believes that Nigeria needs the oil price increase to boost its economy.   He stated:  “Nigeria needs the oil price to be above $60, so as to boost our economy. That is the reason the government supported production cut from the outset, though I am yet to know Nigeria’s share of the cut. It is good for us indeed. It is good.
“Nigeria has a budget benchmark of $60 per barrel. The budget needs to be funded adequately. The price increase therefore is a welcome development as it will help to fund the budget. “As for the sustainability of the price, it depends on OPEC, which I think wants it for a sometime. Though President Donald Trump of the United States does not want it OPEC has a lot of influence when it comes to pricing and its sustainability. Nigeria will definitely benefit from the OPEC decision.”

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Abiodun Adesanya,  Chief Executive Officer, Degeconek, an oil servicing firm specialising on geosciences consultancy, called for caution. “Nigeria should not be too excited about the production cut. We need to see what the United States and Saudi Arabia are up to. They are now friends following the killing of Khashoggi. Who knows what they  have up their sleeves?   President Trump did not want OPEC to cut production. He wants a low oil price. He knows the United States is the largest oil consumer in the world.

“However, the production cut has its plus and minus. You lose something, you gain something. Nigeria doesn’t want to lose in vain. We need to look at what we will gain if we cut production.   Nigeria has to be cautiously optimistic. We hope it works the way it is intended to work. “For the price increase, it is not something we can jump up to. It is not sustainable. In the long term, Nigeria should be concerned with getting out of oil price volatility by making sure we consume more of our products in-country. We must embrace gas usage, get our refineries working and encourage establishment of more refineries, use more of our oil and gas than we export. That will create jobs and grow our economy,” he said.

Emeka Ene, Managing Director, Oildata Services Limited, said that OPEC’s days as price swing appear to be numbered with the unfolding events. “The days of OPEC as a swing producer are becoming numbered. It took the combined efforts of OPEC and non OPEC producers including Russia to hammer out this current deal. Not discounting the influence of the Trump factor, geopolitics, United States – China trade issues and Middle East politics in establishing the oil price.

“All of this suggests uncertainty and dark clouds on the horizon. The only winners at this game have to be low cost producers for which Nigeria is not one. There should be urgent front and centre in restructuring the oil and gas industry. There are extremely high systemic costs which make it near impossible to drive the cost of production to below $10.

“Local content is now is now being used as a cover for corruption and high project delivery costs and established Nigerian companies who borrowed lots of money to expand capacity and train people are dumped in favour of brief case contractors with their international partners. Ultimately, what two people did in secret becomes inevitable 9 months later and Nigeria pays the price in high operating costs.

“The solution lies inwards driven by a relentless strategy of pursuing our national interest just like other more endowed countries seem to favour these days. NCDMB initiates such as supporting the top 100 Nigerian service companies, growing the domestic gas market, refining our crude, selling inefficient refineries etc will point us in the right direction,” he said.          For Dr. Boniface Chizea, an economist and management consultant, the production cut is welcome development. “The decision to cut production is a welcome development as the price of oil was trending southwards due to glut in supply. this is assuring as Russia, leading a pack of non OPEC producing members are also in the pact. “The only one authority we are sure is unhappy with this development is President Trump, who has been tweeting that the price of oil should be allowed to go further southwards to boost productivity and create jobs.

“We do not know if Nigeria and Libya were exempt from contributing to this withdrawal of supply as has been the case so far. If we have contributed, then the short term impact would result in reduced revenue which would worsen the country’s predicament, particularly with regard to deficit included in the budget of 2018. The fact that the price of oil has leapfrogged the budget benchmark price is music to our ears. As you know, it is eminently easier managing a surplus situation,” he added.

Source – vanguardngr

 Exxon Mobil and Chevron are seeking to sell their stakes in Azerbaijan’s largest oilfield, marking the retreat of the U.S. majors from the former Soviet state after 25 years as they re-focus on domestic production.

Exxon is hoping to raise up to $2 billion from the sale of its 6.8 percent in the Azeri-Chirag-Gunashli (ACG) field in the Caspian Sea, according to industry sources.

Rival Chevron said in a statement to Reuters it had also decided to launch the sale of its 9.57 percent stake in ACG as well as its 8.9 percent interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline.

Exxon spokeswoman Julie King declined to comment, saying “we don’t comment on market rumors or speculation”. A spokesman for Azerbaijan’s state energy company Socar said: “The report is about Exxon and there is no need for Socar to get involved.”

The deal was dubbed by Azerbaijan and partners as the “the contract of the century” thanks to the field’s large reserves and hopes of future major discoveries that would help Europe diversify away from Russian oil and gas.

Even though the project is operated by British oil major BP, it had received substantial U.S. government support and a total of five American companies initially participated in the deal, including Exxon, Amoco, Unocal, Pennzoil and McDermott.

BP said it had no information about Exxon’s or Chevron’s plans.

Most U.S. companies sold out of the project or were acquired by rivals, while U.S. support to the Azeri administration also shrank.

Azerbaijan also became more assertive in controlling its energy wealth by building up large stakes in its energy projects via state company Socar.

Other than Exxon and Chevron, BP holds a 30.4 percent stake in ACG and Socar a 25 percent stake.

The ACG fields still account for the lion’s share of Azeri oil output. They produced around three quarters of overall Azeri crude output, or nearly 600,000 barrels per day, in the first half of 2018.

Other ACG consortium members include Japan’s Inpex with 9.3 percent and Norway’s Equinor with 7.3 percent. Turkey’s TPAO, Japan’s Itochu, and India’s ONGC Videsh have smaller stakes.

Exxon and Chevron have in recent years increasingly focused on developing shale fields in the United States. Exxon is also set to invest billions in developing a string of large oil discoveries in Guyana, while Chevron is developing the extension of the giant Tengiz field in Kazakhstan, estimated to cost $37 billion.

The BTC pipeline transports the majority of ACG production from Baku through Georgia to the Mediterranean port of Ceyhan, Turkey.

• Reuters

Patrick Egwu, Enugu

 

The Chief Executive Officer of Oilserv Nig Ltd, Engr Emeka Okwuosa has described Nigeria’s sole dependence on oil as her means of foreign exchange as one of the factors responsible for the country’s economic woes and underdevelopment.

 

Engr Okwuosa said that the country’s over dependence on oil for many years had led to unemployment, corruption, mismanagement and Infrastructural deficits at all levels in the country.

 

Okwuosa stated this at the 48th convocation lecture at the University of Nigeria, Nsukka.

 

Delivering a keynote speech titled “Infrastructural development: key to economic growth and development in Nigeria,” he said “upon our shift from an agro-based economy to crude oil and gas in the 1960s, our economic policies failed to diversify our economy as our continued dependence on import and crude oil sales doomed our development. 

 

“Our economy is structured to be consumption driven depending on imports and have remained undiversified. Oil and gas account for about 95 per cent of exports and foreign exchange earnings and the manufacturing sector account for less than 1 per cent of total exports. Majority of Nigerians remain under the dire burden of poverty, unemployment and inequality. The underperformance of our economy is drastically undermined and has been excerbated by the deplorable infrastructure, corruption, and mismanagement of public funds, lack of visionary leadership and ideas and other extreneous variables.

 

“Nigeria is losing 69% of it’s budget to servicing local debts. Poor infrastructure, and lack of conducive environment for business staunts our economic growth and development. Nigeria is ranked poorly in the World Bank development index and these have all contributed to all our problems today,” he said.

 

Continuing, he said “following decades of economic growth that failed to record a concomitant infrastructural development, and the sharp and continous decline in crude oil production and prices, the source of revenue and foreign exchange led to a recession. The economy was in this regard, adversely challenged, negatively impacting government revenue and export earnings, as well as the fiscal capacity to prevent the economy from contracting and starving it of the highly needed funds for infrastructural development. It is regrettably apparent that the economy has remained on a path of steady and steep decline and that this unfortunate trajectory, if not challenged, will constrain economic growth.”

 

On the problems facing the power sector, he called on the government to build more power plants as a way of improving power supply in the country.

 

“Recognising that power is an essential element to economic growth and development, I will implore the government to pursue it’s plan to build more power plants. The proposed Mambila hydropower plant must be prioritised. The repositioning of the power sector through the Electric Power Sector Reform Act of 2005, which aims at changing the structure and privatising generation and distribution while retaining transmission under government control, has gained limited success. Presently, Nigeria has 12.5 GW of installed capacity, but less than one-third is operational. Only about 15 per cent of installed capacity is distributed to electricity users, resulting in a huge shortage of electricity supply across the entire industrial and domestic destinations. How can our economy grow and develop under these exigent conditions? The inability of the government regulatory agencies to enforce the rules on distribution companies by making them invest adequately in distribution systems, ensuring collection of payment for electricity supplied to consumers and making payments for electricity supplied by power generation companies, has created a totally broken down value chain in electricity supply.”

 

He further said the purpose of the lecture is to, “while expressing the widely held opinion that Nigeria has become the potential to become a major power and player in the global economy by virtue of its of it’s human and natural resources endowments, expose the reasons why this potential has remained relatively unachieved.”

 

While proferring solutions to the problems facing the economy, he said “to achieve this, we must focus on achieving macroeconomic stability and economic diversification. The variance of this stability can only be achieved by undertaking fiscal stimulus measures that ensure monetary stability by improving our external balance of trade with particular focus on the key sectors that I have consistently mentioned in this lecture, will increase investment in other sectors, reduce the ever incessant need for expenditure of foreign exchange for intermediate goods, raw materials and services. This incentive and action will improve our macroeconomic conditions, and Infrastructural development in Nigeria. Encouragement of initiatives by laying solid foundation for our students and encouraging our young graduates to venture into such initiatives will go a long way in infrastructural development of out country, Nigeria.”

he management of the Nigerian National Petroleum Corporation, NNPC, has provided explanation on the reported award of oil infrastructure surveillance contract to an indigenous firm, Ocean Marine Solutions, OMS, for the protection of the strategic 87-kilometre Trans Forcados Pipeline, TFP.

The NNPC in a press release by its Group General Manager, Group Public Affairs Division, Ndu Ughamadu, explained that the decision to assign the TFP surveillance package to Ocean Marine Solutions was reached after consideration of huge losses on TFP and rigorous appraisal of the company’s impressive record of performance on the Bonny-Port Harcourt and Warri-Escravos crude evacuation lines.

The Corporation clarified that the new contract which requires the contractor to pay for any damage to any inch of pipeline under its watch, offers immeasurable benefits to the NNPC, its Joint Venture partners, the host communities and the entire Federation.

According to the NNPC, faced with massive losses in projected revenue, stakeholders in the TFP which today account for daily production throughput of over 250,000 barrels of crude oil were unanimous in the decision to seek better ways of ensuring reliability and availability of the line.

“In 2018, we lost over 60 days of production due to incessant breaches on the TFP despite having a security contract in place. In terms of production numbers, this translates to over 11 million barrels of crude oil which on face value equates to over $800m in lost revenue to all the stakeholders in the matrix which includes:  NNPC, its Joint Venture partners and the Nigerian Federation,’’ the Corporation said.

The NNPC stated that no responsible business entity or government would allow this level of hemorrhage to subsist without acting swiftly to protect the enterprise from further bleeding.

The Corporation said based on the above scenario, Ocean Marine Solution was assigned to handle the TFP under the proof of concept arrangement which is yielding great results in the Bonny-Port Harcourt and Escravos-Warri crude evacuation lines.

Under this package, the surveillance company is obligated to protect the lines and bear the cost of repairs if and when there is any breach to the pipeline.

“This arrangement is totally different from the old order where the contractor gets paid for surveillance duties and totally exempted from repair cost or any form of responsibility in the event of any line break or breach to the pipeline he is paid to watch”.

On the alleged huge cost of the new contract, the Corporation explained that the cost of the new deal pales into insignificance when placed side by side and value-for-money with the old arrangement.

“In 2018, after we lost over 60 days of production, under the old contract, the NNPC and its stakeholders spent over $32m on repairs, protection of the TFP and clean-up. This is a verifiable fact which makes the new deal not only better but far more rewarding to all stakeholders,’’ the Corporation said.

The NNPC also dismissed mounting insinuations that the entry of OMS into the TFP would spell doom for host community youths on the pipeline right-of-way currently rendering sundry services to the old service provider.

The Corporation argued that the issue of TFP security is purely a matter of criminality which the host communities along the pipeline corridor are totally against. It noted that long before now, the Corporation had evolved a host community participation model which naturally incorporates youths within the vicinity of its assets and areas of operations as veritable stakeholders cum participants in the running of such facility.

“We want to state for the umpteenth time that based on our community engagement model for asset protection, OMS is obligated to engage youths in the TFP right-of-way in executing its mandate thus reports of imminent loss of jobs by host community youths are totally incorrect and mischievous,” the Corporation said.

The NNPC also noted that community participation model is already in practice on Escravos-Warri and Bonny-Port Harcourt lines and these host communities have absolutely no issues with the Corporation or the pipeline surveillance service provider.

NNPC argued that the employment opportunities for youths in the area would be bolstered by the assured all-year availability of the TFP under the new proof of concept agreement.

OPEC has problems with some oil producers, and the reasons for Qatar’s exit from the organisation must be examined, Iranian Oil Minister Bijan Zanganeh said on Tuesday, according to the Islamic Republic News Agency (IRNA).

Zanganeh did not elaborate but he appeared to be noting that Qatar is not one of the problematic oil producers in OPEC.

• Reuters