Tag Archives: Oil and Gas

Oil Price: Accelerated refinery set to end ‘fluctuation’ – LCCI

Advertisements

The LCCI DG said that to cushion the effects of petrol price increases on domestic prices, there was also an urgent need to scale up investment in mass transit transportation systems.

The Lagos Chamber of Commerce and Industry (LCCI) says accelerated domestic refining and processing of petroleum products would end the unstable petroleum pricing in the country, Dr Muda Yusuf, Director-Genera of the Chamber, said in an interview with NoRM‘s known Media on Saturday in Lagos.

He explained that this action was necessary to prevent both the deregulation policy from being derailed and a return to a subsidy regime fraught with corrupt practices.

Advertisements

Yusuf also called for a competitive market framework to enable the deregulation achieve positive impact, saying that quick approval of domestic refinery operations would boost access to petroleum products for economic development

The LCCI DG blamed NNPC’s monopolistic supply structure for the inability of Nigerians and the economy to benefit from the positives of deregulation.

Yusuf stressed that government needs to urgently put appropriate structures in place to ensure a level playing field and for the deregulation regime to achieve its objectives, because private sector players were strapped for foreign exchange to import petroleum products, while the refineries remained comatoe.

Advertisements

“A deregulated pricing regime is typically volatile, oscillating with global oil price. However, deregulation without competition would not give desired outcomes”, Yusuf said, adding, “We are still immersed in a monopolistic structure even as we claim to have deregulated the petroleum downstream sector”.

Similarly, Yusuf added: “The power sector recovery programme should also be accelerated to reduce the dependence of Micro, Small and Medium Enterprises (MSME) on petrol powered electricity generators.

“These two areas of intervention would reduce the adverse impact of petrol price volatility on small businesses and impact on the welfare of the citizens.


#Newsworthy…

Buhari govt inaugurate gas pipeline worth N1tr to boost electricity.

Advertisements

President Muhammadu Buhari, in company of Governor Yahaya Bello of Kogi State and his Kaduna counterpart, Nasir El-Rufai, as well as the Minister of State for Petroleum Resources, Timipre Sylva, yesterday inaugurated the 614-kilometre Ajaokuta-Kaduna-Kano (AKK) gas pipeline to tackle Nigeria’s critical economic problems.

During the virtual ceremony in Abuja, Buhari pointed out that the $2.8 billion (about N1.1 trillion) project, to be financed by a Chinese loan, would boost the nation’s energy capacity by nearly 4000 megawatts and generate over three million jobs.

He added that the undertaking would upscale domestic gas utilisation, uplift the textile industry, as well as address agricultural hiccups through the fertiliser and petrochemical sub-sector.

The Department of Petroleum Resources (DPR) had said the country’s gas reserves as at January 1, 2020, were 203.16 trillion cubic feet (TCF).

Advertisements

Being a component of the Trans-Nigeria Gas Pipeline (TNGP), with capacity to transport about 2.2 billion cubic feet of the product daily, the President charged the Kogi, Kaduna and FCT administrations to ensure the project was delivered within its two-year timeline.

His words: “We promised the nation that we will expand the critical gas infrastructure in the country to promote the use of gas in the domestic market.

“These include the Escravos-Lagos Pipeline System – 2 (ELPS-2); Obiafu– Obrikom (OB3) pipeline; and the AKK.

“These projects are fundamental to our desire to industrialise and energise the entrepreneurial spirit that is ever-present in our population.”

Advertisements

In his remarks, Sylva said the move would open up industrial activities in the northern corridor, adding: “We expect that in this corridor, a lot of investments will commence like fertiliser projects, gas industry, petrochemical, power plants and others.”

“On the part of this project, power plants will be built in Abuja and Kano,” he stated.

Also speaking, Group Managing Director (GMD) of the Nigerian National Petroleum Company (NNPC), Mele Kyari, clarified that the project, to be constructed by two groups, Brentex/China Petroleum Pipeline Bureau-CPP Consortia; and Oilserve/China First Highway Engineering Company-CFHEC Consortia; would connect the northern region with others.

“NNPC is thus transitioning towards becoming an integrated energy company to support Mr. President’s economic diversification efforts,” the GMD submitted.


#Newsworthy…

Advertisements

Oil Workers suspend proposed strike. | Details

Advertisements

A planned three-day strike by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas workers (NUGENG) has been called off.

According to the General Secretary of PENGASSAN, Lumumba Okugbawa, the strike action that was to commence today (Wednesday) was called off due to the intervention of the Minister of State for Petroleum Resources, Timpre Sylva.

In a memo to all PENGASSAN and NUPENG affiliate chapters and branches across the country, the unions said: “The matter has been apprehended and discussions ongoing with the Honourable Minister of State for Petroleum Resources.”

The strike action was called by the joint National Executive Committee of PENGASSAN and NUPENG on Sunday to protest alleged forceful enrolment of the oil workers into what they referred to as defective payment platform (the lntegrated Payroll and Personnel Information System (lPPlS)” by the federal government.

According to the unions, the strike action was called to press home demands for the payment of salaries of their members working with federal government agencies, whose salaries had been withheld since May over their failure to enroll on IPPIS payment platform.


#Newsworthy…

Advertisements

Why Oil Price could increase – Energy Minister speak up

Advertisements

UAE Energy Minister Suheil al-Mazrouei said on Monday current low oil and gas prices are unsustainable and warned that if they last longer, it could lead to energy shocks.

Mazrouei said that “very good signs” of rising demand for oil have been seen in China and India, two of the world’s biggest crude consumers, and to some degree in Europe.

“This environment of low oil and gas prices, I don’t think it’s sustainable,” the minister said in a virtual interview hosted by the US-UAE Business Council.

Advertisements

Mazrouei said that if low oil prices persist for a long period, some of the current high-cost producers will drop out leaving a supply gap, pushing prices higher.

“We need someone to fill in that gap, otherwise we are going to have shocks in… prices and the last thing we want is to have shocks,” he said.

Advertisements

“We need to have stability and to have a reasonable and fair price.”

Brent crude crashed to multi-year lows under $20 a barrel and WTI (for May delivery) sank into negative territory in April for the first time in history as demand slumped due to coronavirus lockdowns and a global supply glut.

Advertisements

The two benchmarks have recovered to around $40 a barrel after the OPEC+ producers alliance agreed to record production cuts of 9.7 million barrels per day in April, effective for two months starting May.

Earlier this month, the alliance extended the historic cuts through July as governments around the world ease unprecedented lockdowns in many countries.

Advertisements

Mazrouei said that although oil consumption has dropped to 2013 levels “we think things will go back to normal within one or two years.”

“Unless we have a second wave of Covid-19, I think we will see a demand recovery at a pace that is adequate to the cut we have done as… OPEC+, provided other producers do not rush and over-produce,” Mazrouei said.


#Newsworthy…

Advertisements

NNPC want partners to drop oil cost to 40%

Advertisements

The Nigerian National Petroleum Corporation (NNPC) said it has directed all its partners and suppliers to bring down their cost to between 30 and 40 per cent to ensure production efficiency.

NNPC’s Group Managing Director, Malam Melem Kyari, made the disclosure when he featured as a guest on a live Television programme on Thursday.

He said the corporation had resolved to cut down its capital expenditure and to ensure it achieved the crude oil production cost reduction of 10 dollars per barrel.

“Our target is to bring down the cost to $10 by the end of 2021. We have insisted on making sure that our partners and all our suppliers cut their costs to at least 30 to 40 percent and that will significantly bring down our costs. It’s very realistic and we are realising that,” he said.

Advertisements

He noted that the target of $10 per barrel by 2021 will help the country to remain competitive in the global market.

“If you can’t do this, you walk away, this is not a business of subsidies,” he noted.

Advertisements

Kyari assured the public that the corporation would not witness any job loss to the target, saying, “we will escape this year without job cuts in NNPC”.

“We are reviewing other heavy cost areas that can bring our cost to normality. But I know also that in terms of our partners, many of them are looking at a situation whereby job cuts will be unavoidable.

Advertisements

“But what is informing that much more than the cost, is actually the issue of efficiency that we have seen in the last couple of years,” he said.

On Crude oil sales discount, he said the NNPC had set July as the deadline to end the regime, adding that the corporation was looking at achieving the target either by June 30, or latest by July.

Advertisements

Kyari noted that if oil price settled at the current 42 dollars, it was still till a good business for NNPC and the country.

The NNPC boss said though Nigeria did not fully comply with a pact by oil producers to rein in output to balance markets, it would make additional cuts to make up for the lapses by mid-July.

Advertisements

On whether the NNPC would continue offering discounts on crude oil as the price recovers, Kyari said, “Absolutely not, discount will go away, definitely within the shortest period of time.

“As you know, what we did in the last two months was to close that gap much shorter than what it was, and by the end of either June or July we will see a situation where we can take out that discount because it’s no longer necessary.”


#Newsworthy…

Advertisements

Paksitan Fuel Crisis: Prime Minister set Ministry on ‘Lifeline’

Advertisements

Prime Minister Imran Khan Tuesday took notice of fuel crisis and ordered the petroleum ministry and the Oil and Gas Regulatory Authority (Ogra) to fix the problem in 72 hours.

Motorists are grappling with such a grave shortage at a time when they get little relief from restrictions in wake of COVID-19 spread.

Chairing a meeting of the federal cabinet, the premier ordered stern action against the people involved in hoarding and profiteering.

Advertisements

He said: “All companies should have the stock according to licence. They must abide by the rules. Violation won’t be tolerated. Such people will face music and pay heavy fines.”

The cabinet was told that this year stock was set at 850,000 metric tonnes while 650,000 last year. The cabinet directed constituting committees, comprising reps from Ogra, ministry, local admin and FIA, to nab the culprits.

Advertisements

The cabinet made an appeal to the public to point out profiteers so that such criminal could be brought to book.

As per the law, Ogra and the petroleum division officials can inspect stores of the oil companies.

Advertisements

Minister for Energy Omar Ayub said some companies stopped ‘buying petrol after an increase of $12 in the global market’.

Babar Awan bemoaned petroleum product issue questioning as to why such a serious issue remained unnoticed.

Advertisements

“Another crisis has been looming when the country has been fighting deadly coronavirus.

Filling stations has been running short for a few days. Consumers have been complaining about overcharging.


#Newsworthy…

Advertisements

Atiku speak on Oshiomhole’s plan to remove Fuel Subsidy.

Advertisements

Former Vice President and presidential candidate of the Peoples Democratic Party, PDP, in the 2019 general elections, Alhaji Atiku Abubakar, has accused the National Chairman of the All Progressives Congress, APC, Comrade Adams Oshiomhole, of resisting the removal of fuel subsidy during the administration of ex-President Olusegun Obasanjo.

Atiku, who recalled that he headed the negotiations with the Nigerian Labour Congress, NLC, with Oshiomhole as the Chairman, said the current APC Chairman stood strongly against it.

The Waziri of Adamawa was backing an earlier tweet by his Spokesman, Paul Ibe, which reads, “For the avoidance of doubt, the Obasanjo administration embarked on a regime of subsidy removal.

Advertisements

“But the former NLC Chairman frustrated the efforts. Even at that, the Obasanjo government achieved some measures of subsidy removal before their exit in 2007.”

And adding to the claim, Atiku added, “The Obasanjo government in which I served commenced a phased subsidy withdrawal.

Advertisements

“I was tasked with negotiating with then NLC Chairman and current APC Chairman who stood strongly against it.”

The Petroleum Products Pricing Regulatory Agency (PPPRA) on Thursday announced the removal of the price cap on the retail price of Premium Motor Spirit (PMS).

Advertisements

And in reaction to this, Atiku had tweeted saying, “FG finally withdraws from the fuel subsidy and price-fixing bazaar that had been rife with corruption and stalling investments,” adding that this was something well-meaning Nigerians have been calling for and for which he (Atiku) was demonized.

Recall that during the administration of Obasanjo, the move to withdraw fuel subsidy and increase fuel price was vehemently opposed by the Adams Oshiomhole-led NLC with series of nationwide protests at the time.


#Newsworthy…

Advertisements

NNPC clash with Senate over oil price.


The Senate Committee on Finance on Monday rejected the revenue targets projected for the various revenue-generating agencies in the country to fund the Revised 2020 Budget, describing their proposed sums as grossly inadequate.

Members of the Senate panel also condemned in strong terms the explanation by the Nigerian National Petroleum Corporation that it spent $21 to produce a barrel of oil.

They spoke when the heads of the various revenue-generating agencies including the Federal Inland Revenue Service, the NNPC, and the Nigeria Customs Service, led by the Finance Minister, Zainab Ahmed, appeared before the Senate panel to defend their proposals in the revised budget.

Advertisements

Trouble started when the Chief Operating Officer of the NNPC (Upstream), Mr Yemi Adetunji, told the panel that the agency reduced the production cost per barrel of crude oil from $25 proposed in the approved 2020 budget to $21 in the revised budget in line with the current realities.

The Chairman of the Senate panel, Senator Solomon Adeola, had asked the NNPC to explain why it was proposing $21 as production cost per barrel of crude when the new oil benchmark proposed in the revised budget was $25 per barrel.

Advertisements

Adeola said, “We want you (NNPC) to take us through why Nigeria’s cost of production per barrel of crude oil is the most expensive in the world by giving us the breakdown of what constitute those costs in to the variables and the technical cost and we want to know what you are doing as an agency of government to bring down this cost.”

In his response, Adetunji told the panel that security challenges in the Niger Delta region, oil theft, vandalism and the huge administrative costs were responsible for the high cost of oil production in the country.

Advertisements

He, however, said the NNPC was working with relevant stakeholders to reduce the administrative cost through a multi-disciplinary approach in terms of planning and engagement of various partners.

Obviously dissatisfied with Adetunji’s submission, the panel chairman asked him who determined the production cost, especially when the benchmark of $25 as proposed in the revised budget would mean that Nigeria would earn just $4 as its own return on investment.

Advertisements

He said, “I begin to look at the oil revenue and the mineral revenue as proposed in the MTEF/FSP that has dropped from almost N8.86tn to N3.33tn. Are you saying that it is worthwhile investment for us as a nation?

“Going by the fact that the cost of producing one barrel is $21 and the benchmark is $25 for over 180 million Nigerians and all these cost you have listed, who determines them? How do you ensure that Nigeria is being charged the right cost on each barrel of oil?

Advertisements

“In Saudi Arabia, it is $4 per barrel cost of production. In Russia, it is about $3 per barrel. Nigeria is $21. We are beginning to be afraid as to why we are channeling all our efforts to this oil and gas if the return on investment is nothing to write home about.”

The chairman’s position was re-echoed by Senators James Manager, Shaibu Gumau and Jibrin Issa, who rejected Adetunji’s explanation on the grounds that he dwelt more on fixed costs while still talking about administrative cost, and security challenges as variables for the high cost of production.

Advertisements

When given the opportunity to react again, Adetunji said, “We are working hard to bring down this fixed cost. Historically, our total cost has been $30 per barrel. So the objective of the new GMD, Mr Mele Kyari, is that we have to reduce the cost to $21 this year.

“We know that these costs are high that is why we have decided to go from even the initial approved $25 per barrel in the earlier approved budget to $21 per barrel.

Advertisements

“We believe that once we have the new framework in place going forward, we should even see lower cost of production.”

He added that security challenges were peculiar to Nigeria.

Advertisements

The panel also hit hard at the FIRS and the NCS, saying that their various revenue projections were unacceptable because they were too low.

The panel said it would not support the proposal of FIRS to reduce revenue from stamp duty from N463bn to N200bn judging from the fact that the number of transactions from the day-to-day basis ran into several billions.

Advertisements

The Executive Chairman of the agency, Muhammad Nami, pledged to work with his team to shore up its target by deploying technology for the purpose of increasing the tax base, having a seamless process of accessing, collecting and accounting for the taxes collectable by FIRS.

He, however, said accessing, collecting and accounting would depend largely on the performance of the economy of the country.


#Newsworthy…

Advertisements
Advertisements

Budget’20: Senate rise oil price benchmark to $28.


The Senate on Tuesday increased the 25 dollars per barrel oil price benchmark proposed by the executive in the revised Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) forwarded to it for approval.
The upper chamber made the increase on the oil price benchmark to 28 Dollars.

The resolution was sequel to the consideration and adoption of report of its Committee on Finance mandated to work on the revised MTEF/FSP documents by the executive during plenary.

The Chairman of the Committee, Sen. Solomon Olamilekan, presented the report.

Olamilekan in his submission said the increase effected on the oil price benchmark was as a result of the recent upward trend of the crude oil market which stood at 38 Dollars per barrel with a very strong expectation that the price would rise to as high as 40 to 45 Dollars per barrel.

Advertisements

The senate also reduced from 1.9 million barrel per day to 1.8 million barrel per day oil production proposed by the executive in the MTEF/FSP documents.

This is as it declared monies kept in the Natural Resources Development Accounts as waste.

Advertisements

However, other critical parameters including the exchange rate of N360 to a US dollar, 14.43 inflation growth rate and 4.42 Gross Domestic Product (GDP) growth rate were retained.

Other assumptions cum proposals retained include N5.09 trillion Federal Government’s revenue, N10 .51 trillion proposed expenditure, N4.95 trillion fiscal deficit, N4.17 trillion new borrowings (including Foreign and domestic Borrowings).

Advertisements

The Senate also retained the critical components of the proposal as presented by the executive with adoption of N10.51 trillion as total expenditure, N4.93 trillion as total recurrent, N2.83 trillion for personnel cost and N2.23 trillion for capital expenditure.

In his remarks, President of the Senate, Ahmad Lawan urged the Senate Committee on Privatisation to liaise with the Bureau of Public Enterprise (BPE) in ensuring that the projected N260 billion from proceeds of privatised agencies was realised and accordingly used to fund the budget.

Advertisements

He frowned at some of the special accounts being kept by the executive, particularly the Natural Resources Development Accounts.

According to him, such accounts at this time of scarcity of funds to finance the budget are not all that necessary.

Advertisements

“Keeping monies in Natural Resources Development Accounts is more of waste than serving critical purposes,” he said.

He thereafter adjourned sitting of the Senate to Tuesday, June 9, for consideration and possible passage of the revised N10.509 trillion 2020 budget.


#Newsworthy…

Advertisements
Advertisements

Oil market now rebalancing – OPEC sees.


The rebalancing of the oil market is underway and will accelerate, the OPEC cartel said Wednesday, days after some of its members voluntarily increased their production cuts.

The world oil market was thrown into disarray earlier this year as lockdown measures imposed by governments to slow the spread of the coronavirus led to plunge in demand just as crude producers had been stepping up output in a war for market share.

Prices tumbled, with the price of the benchmark US oil futures contract briefly plunging below zero.

But OPEC and its allies have agreed on major cuts in production, by 9.7 million barrels per day, and the cartel believes an improvement is on the horizon.

Advertisements

“The speedy supply adjustments in addressing the current acute imbalance in the global oil market has already started showing positive response, with rebalancing expected to pick up faster in the coming quarters,” OPEC said in its monthly report.

The collapse in oil prices — the main international benchmark has fallen by half since the start of the year — is leading some producers to shut down wells and the cartel now expects non-OPEC production to decline by 3.5 million barrels per day this year.

It believes the worst drop in demand will be recorded in the current April-June quarter.

Advertisements

The easing of restrictions and the massive stimulus programmes adopted by governments could now help the market bounce back.

OPEC said it now expects daily demand in 2020 to drop by some 8.5 million barrels per day from last year’s level, which is a roughly 8.5 percent drop.


#Newsworthy…

Advertisements
Advertisements

United States Oil Price Falls Below $15.

Advertisements

US oil prices fell heavily on Monday and slipped below $15 a barrel on renewed storage concerns as the coronavirus throttles demand, even as producers start slashing output to boost markets.

Advertisements

American benchmark West Texas Intermediate dropped 15 percent to $14.39 a barrel in Asian afternoon trade, reversing direction after several days of gains last week.

Brent crude, the international benchmark, was off nearly six percent at $20.16 a barrel.

Advertisements

Oil prices have collapsed in recent weeks as demand evaporated because of lockdowns and travel restrictions imposed worldwide to fight the virus.

Last week, US oil fell below zero for the first time as investors scrambled to offload it before the expiry of a trading contract, but could not readily find buyers.

Prices have recovered since, but remain at their lowest levels for years.

Advertisements

A key worry for traders is that storage facilities — particularly in the United States — cannot cope with the oversupply.

“Concerns surrounding rising global inventories, especially in the US with the coronavirus pandemic weighing on gasoline consumption, are pressuring oil prices,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc.

The oversupply could test storage capacity limits in three to four weeks as tanks fill up, Goldman Sachs warned in a report.

Advertisements

The continued concerns about storage overshadowed signs that some countries — including Kuwait and Algeria — are starting to slash production in line with a major agreement hammered out this month.

Top producers have agreed to reduce output by 10 million barrels a day from May to shore up markets, a deal that marked an end to a price war between Russia and Saudi Arabia.


Advertisements
Advertisements

Oil and Gas Games. [Update]


Minister of State for Petroleum Resources, Nigeria, H.E. Chief Timipre Sylva attended the closing ceremony of the 18th Nigeria Oil & Gas Industry Games. He was joined by the Captains of the Oil and Gas Sector in Nigeria to witness the applaudable capacity to collaborate and win collectively.

The Agencies of the Ministry of Petroleum Resources that participated made impressive deliveries with a combined medal reward of 80 representing over 40% of the total number of medals won.

A further breakdown revealed that the four Agencies, Nigerian National Petroleum Corporation, Department of Petroleum Resources, Nigerian Content Development & Monitoring Board and the Petroleum Training Institute, received 19 Gold, 25 Silver and 36 Bronze awards out of the total 199 medals won in the course of the tournament.

The Nigerian National Petroleum Corporation emerged as the Overall Winner of the 18th Nigeria Oil Industry Games with a combined award of 48 Medals representing 13 Gold, 16 Silver and 19 Bronze ahead of eleven participants at the tournament.


#Newsworthy…