Tag: Oil Sector

70 percent corruption in Nigeria traceable to oil sector — HEDA chair, Suraju

The Chairman, Human and Environmental Development Agenda (HEDA) Olanrewaju Olanrewaju Suraju, has said that about 70 per cent of corruption in Nigeria is traced to the oil sector.

Suraju stated this on Monday while speaking in Lagos at the public presentation of its latest publication titled: ‘Spotlighting the Oil & Gas: A Review of the 2020/2021 Marginal Fields Bids Licensing Round in Nigeria.’

He said that the organisation was extremely worried and concerned about the corruption in the oil and gas sector, stating that it’s been the worst any country could have anywhere in the world.

“It is not only about Nigeria and that is the point we have made over time, that this is also about many of our foreign operators that are here. It is not only about the public sector but also the private sector including the banks that you have in Nigeria and the banks you have abroad.

“The whole corruption that actually revolved around the OPL 245 that I mentioned earlier, it was not only about Nigerian banks it was even including JP Morgan Chase Bank, based in the UK which is why Nigeria actually takes JP Morgan Chase Bank to court in UK for failing to undertake some necessary due diligence about the know your customer thing.

“About 70 per cent of corruption in Nigeria is traced to the oil sector and that is the area where you also have international players being part of the process. It means that these international players are also meant to be held to account for some of the things that are happening here,” he said.

He said among these indices were low discovery and drilling activities, high cost of production, declining joint venture (JV) production and revenues earnings, and other gamut of challenges.

“The other challenges included manifest decline in gas for power supply, job creation, project funding constraints, maturing fields amidst aging facilities without corresponding development of new fields, growing insecurity compounded by oil theft, and uncertainties around stalled reforms anticipated from the implementation of the Petroleum Industry Act.

“All of these stifled investment and production outputs in a sense that terribly affected the growth and development of the oil and gas industry,” he said.

June 27, 2023
4 startling revelations that shook the oil sector in 2022
The Oil and Gas sector has remained the mainstay of the Nigerian economy despite Government’s best efforts at diversification into Agriculture and Mining in order to manage volatility and provide a more stable path for equitable growth and development.

In 2022, Nigerians experienced the results of a supply shock with a tight oil supply and supply disruptions that drove prices as high as N300 per liter in some parts of the country and forced food inflation to soar to 23.7 per cent as of October.

Nigeria failed to benefit from higher crude oil prices witnessed this year in the global oil market in the wake of Russia’s invasion of Ukraine which not only caused a global disruption in the oil and gas supply but also affected every economic activity reliant on hydrocarbons.

Crude oil prices skyrocketed from $74.1 per barrel in January and peaked at $123.7 per barrel in June, according to Statista.

Oil production has been on the decline since mid-2020, reflecting low investment and significant leakages associated with poor maintenance and theft.

Here are the four most outstanding revelations that shook the Nigerian oil sector in 2022:
1. Importation of substandard fuel: The Nigerian National Petroleum Company Limited (NNPCL) said it received a report from its quality inspector on 20th January 2022, confirming the presence of emulsion particles in Premium Motor Spirit (PMS) cargoes shipped to Nigeria from Antwerp-Belgium. This resulted in a supply disruption and created long fuel queues that characterised the rest of the year.
2. Drop in Gross Domestic Product (GDP) contribution to the Nigerian economy: According to the latest GDP figures released by the National Bureau of Statistics (NBS), the contribution of the oil sector to the economy fell from 6.33 percent in the second quarter of 2022 to 5.66 per cent in the third quarter. Figures recorded in the corresponding period of 2021 showed that the sector contributed 7.49 percent to GDP.
3. Over 700, 000 barrels of crude stolen per day: Nigeria’s Minister of State for Petroleum Resources Timipre Sylva, disclosed that the country loses at least 700, 000 barrels of crude per day. In October, an intercepted vessel, MT Deima with International Maritime Organisation Number: 7210525 was later set on fire by Nigerian security agents, amidst calls for a probe.
4. Nigeria unable to meet OPEC quota: The country’s crude oil production which hovers around 900, 000 barrels per day falls far short of the quota of 1.826 million barrels per day quota approved by the Organisation of Petroleum Exporting Countries (OPEC), a trend which industry analysts describe as a fiscal time bomb. Pipeline vandalism, lack of investment in the sector, operational and maintenance issues have been identified as some of the factors responsible for the decline in crude oil production.
December 15, 2022
NNPCL releases 1.9 billion litres of fuel to ease scarcity

Following a biting fuel scarcity that has enveloped many parts of the country for some time now, the Nigerian National Petroleum Corporation Limited, NNPCL, has released 1.9 billion litres of petrol.

Recall that the Department of State Services, DSS, gave stakeholders in the oil sector ultimatum to make petrol available to Nigerians

DSS had given the NNPCL, oil marketers and other stakeholders a 48-hour ultimatum to make fuel available to Nigerians.

The 48 hour ultimatum was contained in a briefing by the secret service spokesperson, Dr Peter Afunanya on Thursday.

In reaction to the ultimatum, the NNPC, Group Chief Executive Officer, Mallam Mele Kyari later announced the determination of the company to release the 1.9billion litres of fuel.

Kyari, who was represented by the NNPC Chief Financial Officer, Umar Ajiya assured Nigerians of the availability of Premium Motor Spirit, PMS.

“We have also directed operation team to engage in 24hours loading of PMS in the next couple of days and make sure some outlets operate 24hours without compromising security in order to bring quick relief to the people,” he stated.

Earlier, the Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Engr. Farouk Ahmed pledged to collaborate with the NNPC and all stakeholders in order to make sure issues regarding supply of petroleum products are well addressed and to ensure smooth access.

Major stakeholders in the sector, the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Independent Petroleum Marketers Association of Nigeria (IPMAN), Nigerian Association of Road Transport Owners (NARTO), Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) reiterated commitment to end the scarcity.

December 9, 2022
Traditional ruler seeks host communities’ participation in oil sector

King Bubaraye Dokolo, the Chairman, of the Bayelsa State Council of Traditional Rulers, has said that host communities should play more active roles in the oil and gas value chain.

Dokolo, also the Paramount Ruler, Ekpetiama Kingdom, made the advocacy while speaking at the torch lighting ceremony for the 2022 Oil and Gas Stakeholders Festival (OGSFEST) in Yenagoa on Sunday.

He said that Niger Delta communities would become more peaceful and productive if they played more active roles in managing the oil and gas resources in their domain.

Dakolo said it was morally wrong for the Federal Government to give oil blocs to people who do not suffer the adverse effects of oil and gas explorations

”As a region, the Niger Delta has nothing to show after six decades of exploration and production in its land.

”We should play key roles in managing and determining how our resources are used. This is in the interest of justice and fairness,” he said.

In her address, OGSFEST 2022 Convener, Ms Onome Wilkinson, said the ceremony was to kickstart the event billed to hold in Uyo, Akwa Ibom in August.

She said that OGSFEST was aimed at promoting peace, unity and a symbiotic relationship among oil and gas host communities through a funfair approach.

She said the Festival would showcase essay competitions, epic dramas, colourfully packaged cultural performances and roundtable discussions.

”The roundtable discussions will focus mainly on issues concerning the environment, oil spillage, enabling laws and more,” he said.

July 25, 2022
Foreign investment into Nigeria’s oil sector drops 51%

A data recently released by the National Bureau of Statistics (NBS) revealed that foreign investment inflow into the Nigerian oil and gas industry dropped 51 percent within three months.

The stats office said in its report that investments from non-resident investors in the first quarter of 2020 went down to $10.1 million from $20.6 million recorded in the fourth quarter of 2019.

In the report titled National Capital Importation Report for the Q1 2020, the statistical body also stated that foreign investment inflow into the oil and gas sector in the first quarter of 2020 accounted for 0.17 percent of the total inflow into the Nigerian economy in the period under review.

The NBS further stated that the inflow into the sector in the first quarter of 2020 was 41.4 percent, lower than the $17.22 million inflow into the sector recorded in the same period in 2019.

The bureau also stated that total foreign capital inflow into the oil and gas sector in 2019 stood at $216.2 million, representing 0.9 percent of total inflow into the economy in the year.

The total value of capital importation into Nigeria stood at $5.9 billion in the first quarter of 2020, stating that this represented an increase of 53.9 percent compared to fourth quarter 2019 and 31.2 percent decrease compared to the first quarter of 2019.

The largest amount of capital importation by type was received through portfolio investment, which accounted for 73.6 percent ($4.3 billion) of total capital importation, followed by other Investment, which accounted for 22.7 percent ($1.33 billion) of total capital, and then Foreign Direct Investment FDI, which accounted for 3.7 percent ($214.3 million) of total capital imported in the first quarter of 2020.

The NBS report further noted that the banking sector recorded the highest foreign capital inflow in the quarter under review, as foreign investment inflow into the sector stood at $2.99 billion.

The United Kingdom emerged as the top source of capital investment in Nigeria in first quarter 2020 with $2.9 billion. This accounted for 49.7 percent of the total capital inflow in the first quarter of 2020.

By destination of investment, Lagos state emerged as the top destination of capital investment in Nigeria in first quarter 2019 with $5.1 billion This accounted for 87.7 percent of the total capital inflow in Q1 2020.

By bank, Standard Chartered Bank Nigeria Limited emerged at the top of capital investment in Nigeria in the first quarter of 2020 again with $1.7 billion. This accounted for 28.3 percent of the total capital inflow in the first quarter of 2020.

June 29, 2020
Buhari mourns Baru, says he contributed to stability of oil sector

President Muhammadu Buhari has sent his condolences to the family, friends and associates of the immediate past Group Managing Director of the Nigeria National Petroleum Corporation (NNPC), Dr Maikanti Baru.

The President also commiserated with the Government of Bauchi State as well as the Management and staff of the NNPC over Baru’s death.

In a statement issued by his Special Adviser on Media and Publicity, Mr Femi Adesina, President Buhari recalled the immense contributions of Dr Baru to the development of the nation’s oil and gas industry, especially how his reorganised reformed the NNPC while in the saddle as its GMD.

“President Muhammadu Buhari condoles with family, friends and professional colleagues of former Group Managing Director of Nigeria National Petroleum Corporation (NNPC), Dr Maikanti Kachalla Baru.

“The President also commiserates with government and people of Bauchi State, management and staff of NNPC over the passing of the former GMD, who worked very hard to initiate reforms in virtually all departments of the of the corporation, bringing it up to speed with global trends and best practices.

“President Buhari acknowledges Dr Baru’s contributions to ensuring stability in the oil sector in Nigeria, with a more guaranteed supply and predictable price regime that weakened unscrupulous parallel marketers, especially during festive seasons.

“The President prays that the almighty God will receive the soul of the departed, grant eternal rest, and comfort all who mourn him,” the statement said.

May 30, 2020
Downstream operators renew quest for total deregulation of oil sector

Operators in the petroleum downstream have told the Federal Government to take advantage of the unique opportunity provided by the crash in global crude oil prices to fully deregulate the sector.

They also called for a legislative framework to address compliance, enforcement and pricing in the importation of Premium Motor Spirit (PMS), to ensure that market forces solely determined the cost of the product for Nigerians.

The operators spoke at the Nigerian Petroleum Downstream Summit webinar, hosted by Oil Trading and Logistics (OTL) Africa Downstream.

Mr Adetunji Oyebanji, Chairman of the Major Oil Marketers Association of Nigeria, said the crash in crude oil price was a unique opportunity to take fundamental decisions to revolutionise the downstream.

Oyebanji, who is the Managing Director of 11Plc, said the government must allow private sector input in deliberations leading up to full market deregulation.

He explained that the government never stopped marketing companies from importing PMS, adding that market forces were responsible for their decision.

“We need a framework to avoid past mistakes. When government retains control of prices, it brings pressure on itself and this is not sustainable.

“Take in the following numbers: N10 trillion has been spent on subsidies in 15 years,” he said.

Also, Hajiya Amina Maina, Chief Operating Officer of MRS Holding Ltd., said the company had invested in West Africa’s largest petroleum jetty facility in anticipation of deregulation.

Maina said the facility had capacity for 100,00MT LR2 vessels to save cost, improve efficiency and transfer savings to consumers, adding that deregulation would provide the best time for depot operators to put their investments to work.

Dr Billy Gillis-Harry, President of the Petroleum Products Owners Association of Nigeria, said the group supported total deregulation and that it would be wrong to assume that retail outlets operators were indifferent to the initiative.

He, however, argued that pressure from deregulation weighed heavily on last-mile operators as they were the operators in direct contact with consumers.

Mr Emeka Akabogu, Chairman of OTL Africa, explained that the legislative framework was critical because the prices of crude would rise definitely in future, which might result to another subsidy regime.

“There must be a legislative framework that addresses compliance; that addresses enforcement and also addresses a pricing formula.

“This is important so that at any point in time, no matter how high the crude price becomes at the global market, the formula will help to adjust the price to protect the market,” he said.

May 22, 2020
We are ready to invest €1bn in Nigeria’s oil sector – French Govt

The French government has announced its intention to invest about €1bn in the nation’s oil and gas industry while also declaring Nigeria as its first economic trading partner in Africa.

The France Ambassador to Nigeria, Denys Gauer, announced this when the Group General Manager, Group Public Affairs Division of the Nigerian National Petroleum Corporation, Mr. Ndu Ughamadu, led a delegation to his office in Abuja.

Gauer said the French Development Agency had put in place about €1bn to encourage investors from his country to invest in the Nigeria oil and gas sector, adding that the French government was also cooperating with the Federal Government in the fight against Boko Haram insurgency.

He commended the Federal Government for stemming the insecurity situation in the Niger Delta, noting that Total, a French multinational oil and gas company, had significant investment equity in the Nigeria Liquefied Natural Gas Limited and the Egina Project.

Gauer, however, expressed concern that some other French companies were having challenges with the unclear fiscal policies in the oil and gas sector in Nigeria.

He revealed that some French investors were currently developing wind and solar energy in Katsina State.

NNPC was well positioned and opened to investment opportunities from the French government and investors.

He noted that with the significant scale down in pipeline vandalism and insecurity, which had boosted oil production, global investors such as the French government could now invest in renewable energy, gas and power infrastructure development, pipeline construction, storage facility and the direct sales and direct purchase of Nigeria’s crude oil grades.

Ughamadu said the NNPC, as the state owned oil and gas corporation, had global operations and called for closer collaboration between the French government and the corporation, especially in the area of consular services in order to enable the NNPC top executives and staff meet their global engagements.

He thanked the ambassador for the warm reception accorded the NNPC delegation and assured him that the corporation was determined to develop a robust business atmosphere for investors.

June 28, 2017