Brazil is set to start exporting ethanol to Nigeria, Brazilian state energy company Petrobras said Wednesday in Rio de Janeiro.
The firm said in a statement that it successfully negotiated a deal with the Nigerian National Petroleum Corporation (NNPC), which intends to add 10 per cent ethanol to the petrol sold in the African country.
The first 20-million-litre load of Brazilian ethanol produced from sugar cane is set to arrive in Nigeria in the next few weeks. Future shipments will depend on the evolution of the Nigerian programme to use ethanol, the statement said.
Petrobras said the deal, which is a result of a memorandum of understanding that both companies signed in 2005, also includes technical support from the Brazilian firm 'not just to mix and handle the ethanol, but also to train NNPC employees for the implementation of the programme of adding 10 per cent ethanol to Nigerian petrol.'
Petrobras plans no investment for the construction of ethanol plants in Nigeria or of facilities to hold ethanol or handle the biofuel.
(C)news.monstersandcritics.com
PH Refinery Privatisation: workers strike, whose interest is it ?
The decision of government to privatise the Port Harcourt and Kaduna refineries pitched the government against labour leaders who rose up in their usual way to oppose the decision. This, last week led Nigeria into losses in revenue of 3 million barrels of crude per day; in sales of 30 millions litres of imported Petrol and immense suffering to nation in terms of electricity outages and annoying fuel queues as a result of oil workers who had to go on strike protesting government actions for fear of the effects on their welfare.
The striking workers were members of the National Union of Petroleum and Natural Gas Workers (NUPENG) and their senior counterpart, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) NNPC branch.
The strike led to the closure of all Nigerian National Petroleum Corporation offices all over the country, with that of its affiliates, including the strategic National Gas Company NGC, which shut gas supply to Gas Thermal Stations that supply the bulk of Nigerian electricity.
The 26 NNPC depots across the country as well as all NNPC mega stations were closed.
Also the lifting of Nigerian crude oil was stalled by the strike, as well as the oil-receiving terminal at Mosimi, in Lagos. The unions are not on strike because the refineries were sold to Bluestar Oil Services Limited Consortium, owned by Aliko Dangote’s Equity Energy Resources; Femi Otedola’s Zenon Oil and Transnational Corporation for $561m but the non compliance by government functionaries to agreement reached with workers to be affected by the sale. They were protesting to protect their interest.
From all findings, the strike action was clearly avertable had government kept to a simple and reasonable agreement it had reached with the two unions, signed in black and white and made available to the Press penultimate week.
Even when government had been notified a week about the intention of the two unions on an impending strike, government took no action, maintaining an aloof stand. Curiously, on the second day of the strike, the Minister of Energy Dr. Edmund Daukoru came out of a meeting with leaders of the two unions and informed the Press, that he had told the two unions, that government cannot be intimidated into talks through strike.
“We will not discus under duress”, he had said. “We will only discuss after they have convinced their members to go back to work”, he stated.
Of course they were piqued by such display of arrogance and lack of feeling for both the suffering masses and the very contentious and legitimate worry of the striking NNPC workers.
The genesis of the problem was when government, after several attempts to sell the PH refinery and three others failed, came to a rushed conclusion that it was finally selling the refineries.
Officials of the two unions then met the leadership of the Bureau of Public Enterprise (BPE) over the issue.
In a Memorandum of Understanding (MoU) signed by the Mrs. Irene Chigbue, the Director General of BPE with officials of the two Unions on May 9, 2007, it was agreed among others, that the BPE should give the Unions reasonable time (three weeks) to carry out due diligence on the companies buying the refineries, and that all issues concerning the severance packages of the estimated 4,000 workers to be affected by the sales must be concluded before the sale.
In the MoU, it was also agreed that workers would be allowed the bidding companies access to the refineries to carry out their due diligence.
But none of that happened. About a week later, the financial bid of the refineries where opened Live! On TV. This clearly showed that the BPE had reneged on its agreement with the workers.
The bidding companies also never seemed to bother about going into the refineries to make their checks. They seemed to be in a hurry to buy no matter the condition of the “goods”
The BPE that evening, sold 51 per cent equity in the Port Harcourt Refinery to Bluestar Oil Services Limited Consortium, owned by Aliko Dangote’s Equity Energy Resources; Femi Otedola’s Zenon Oil and Transnational Corporation for $561m.
The sole bidder for Kaduna Refinery, China National Petroleum Corporation failed to match the reserve price after offering $102m. In a press conference that evening the leaders of the two unions expressed their grievances and warned about a total strike that will paralysed key oil and gas services manned by their members in protest of the breach of agreement.
The two unions gave government one week to conclude negotiation with them, if not, they had warned, the country should brave up for hard times to come.
The Group Chairman PENGASSAN, NNPC, Mr. John Elibe, in what sounded prophetic, said that President Olusegun Obasanjo might just be handing over big troubles to the new government, if the issues are not well tackled before May 29, 2007.
In other words, while Mr. Obasanjo had sold key downstream investment in the oil sector, Mr. Ya’adua will be the one to carry the burden that comes with the aftermath.
“Our unions were not opposed to privatisation”, he said. “We only resented the manner that BPE sold PHCR without the necessary due diligence”, he said.
“It was in the same manner it sold out our monumental investment in Stallion House without our consent”, the union leader said.
“Our workers will not allow they new owners access to the refinery unless the fate of the over four thousand workers to go are known and accepted by the unions. On his part, the Group Chairman, NUPENG, NNPC chapter, Mr. Williams Ibiba Inko said “We are going to protest this sale, by ordering our members to down tools by Thursday (May 24, 2007), should we not reach an agreement before then”.
He said the sale of Stallion House, which is owned 49 per cent by NNPC staff, has led to a loss of N220 million in revenue to their Pension Scheme, a situation which he says is already a big burden to them. “ They should value our pension and look at its prospects with regard to retiring more people into the pension fund. Right now we have about 8,000 people out there and 9,000 people in the system sustaining them. If you shot out about 4,000 after completing the process, fewer persons would be contributing. Ultimately, it means the pension scheme can longer hold.
“We may land in the same state of Railways workers, where the pensions cannot be sustained. Foreseeing that, we want government and our members to agree on what government will give us as palliatives.” he said, “if not so, Nigerians should brace up for the struggle”.
With their declaration and proposal made to government in the open, it has hard to put their action as unreasonable given the fact that even after government had snub them for a week, it came out speaking tough that it cannot be cowed into negotiation through strike.
But even as Vanguard spoke to the two union leaders before press time, both were hopeful that the situation will be brought to normalcy, as they hinted about government offering their members, “what we are yet to clearly understand”, what ever that means.
And that is the kind of lack of respect and concern for the collective well-being of Nigerian that this outgoing government has persistently shown. It could be by way of arbitrarily increment in the prices of petroleum products, or the controversial sales of oil blocks. But this unusual speedy sale of the two refineries among 32 other government investments on the last day that the National Council of Privatisation was holding its last meeting, will certainly lead both the buyers, the sellers and the Nigerian people into more squabbles, more troubles, more loses. How ever one looks at it, the PBE has sold and bought trouble at the same time
The question then is whose cause are the unions fighting, nation or self interest?
(C)Luka Binniyat --Vanguard
The striking workers were members of the National Union of Petroleum and Natural Gas Workers (NUPENG) and their senior counterpart, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) NNPC branch.
The strike led to the closure of all Nigerian National Petroleum Corporation offices all over the country, with that of its affiliates, including the strategic National Gas Company NGC, which shut gas supply to Gas Thermal Stations that supply the bulk of Nigerian electricity.
The 26 NNPC depots across the country as well as all NNPC mega stations were closed.
Also the lifting of Nigerian crude oil was stalled by the strike, as well as the oil-receiving terminal at Mosimi, in Lagos. The unions are not on strike because the refineries were sold to Bluestar Oil Services Limited Consortium, owned by Aliko Dangote’s Equity Energy Resources; Femi Otedola’s Zenon Oil and Transnational Corporation for $561m but the non compliance by government functionaries to agreement reached with workers to be affected by the sale. They were protesting to protect their interest.
From all findings, the strike action was clearly avertable had government kept to a simple and reasonable agreement it had reached with the two unions, signed in black and white and made available to the Press penultimate week.
Even when government had been notified a week about the intention of the two unions on an impending strike, government took no action, maintaining an aloof stand. Curiously, on the second day of the strike, the Minister of Energy Dr. Edmund Daukoru came out of a meeting with leaders of the two unions and informed the Press, that he had told the two unions, that government cannot be intimidated into talks through strike.
“We will not discus under duress”, he had said. “We will only discuss after they have convinced their members to go back to work”, he stated.
Of course they were piqued by such display of arrogance and lack of feeling for both the suffering masses and the very contentious and legitimate worry of the striking NNPC workers.
The genesis of the problem was when government, after several attempts to sell the PH refinery and three others failed, came to a rushed conclusion that it was finally selling the refineries.
Officials of the two unions then met the leadership of the Bureau of Public Enterprise (BPE) over the issue.
In a Memorandum of Understanding (MoU) signed by the Mrs. Irene Chigbue, the Director General of BPE with officials of the two Unions on May 9, 2007, it was agreed among others, that the BPE should give the Unions reasonable time (three weeks) to carry out due diligence on the companies buying the refineries, and that all issues concerning the severance packages of the estimated 4,000 workers to be affected by the sales must be concluded before the sale.
In the MoU, it was also agreed that workers would be allowed the bidding companies access to the refineries to carry out their due diligence.
But none of that happened. About a week later, the financial bid of the refineries where opened Live! On TV. This clearly showed that the BPE had reneged on its agreement with the workers.
The bidding companies also never seemed to bother about going into the refineries to make their checks. They seemed to be in a hurry to buy no matter the condition of the “goods”
The BPE that evening, sold 51 per cent equity in the Port Harcourt Refinery to Bluestar Oil Services Limited Consortium, owned by Aliko Dangote’s Equity Energy Resources; Femi Otedola’s Zenon Oil and Transnational Corporation for $561m.
The sole bidder for Kaduna Refinery, China National Petroleum Corporation failed to match the reserve price after offering $102m. In a press conference that evening the leaders of the two unions expressed their grievances and warned about a total strike that will paralysed key oil and gas services manned by their members in protest of the breach of agreement.
The two unions gave government one week to conclude negotiation with them, if not, they had warned, the country should brave up for hard times to come.
The Group Chairman PENGASSAN, NNPC, Mr. John Elibe, in what sounded prophetic, said that President Olusegun Obasanjo might just be handing over big troubles to the new government, if the issues are not well tackled before May 29, 2007.
In other words, while Mr. Obasanjo had sold key downstream investment in the oil sector, Mr. Ya’adua will be the one to carry the burden that comes with the aftermath.
“Our unions were not opposed to privatisation”, he said. “We only resented the manner that BPE sold PHCR without the necessary due diligence”, he said.
“It was in the same manner it sold out our monumental investment in Stallion House without our consent”, the union leader said.
“Our workers will not allow they new owners access to the refinery unless the fate of the over four thousand workers to go are known and accepted by the unions. On his part, the Group Chairman, NUPENG, NNPC chapter, Mr. Williams Ibiba Inko said “We are going to protest this sale, by ordering our members to down tools by Thursday (May 24, 2007), should we not reach an agreement before then”.
He said the sale of Stallion House, which is owned 49 per cent by NNPC staff, has led to a loss of N220 million in revenue to their Pension Scheme, a situation which he says is already a big burden to them. “ They should value our pension and look at its prospects with regard to retiring more people into the pension fund. Right now we have about 8,000 people out there and 9,000 people in the system sustaining them. If you shot out about 4,000 after completing the process, fewer persons would be contributing. Ultimately, it means the pension scheme can longer hold.
“We may land in the same state of Railways workers, where the pensions cannot be sustained. Foreseeing that, we want government and our members to agree on what government will give us as palliatives.” he said, “if not so, Nigerians should brace up for the struggle”.
With their declaration and proposal made to government in the open, it has hard to put their action as unreasonable given the fact that even after government had snub them for a week, it came out speaking tough that it cannot be cowed into negotiation through strike.
But even as Vanguard spoke to the two union leaders before press time, both were hopeful that the situation will be brought to normalcy, as they hinted about government offering their members, “what we are yet to clearly understand”, what ever that means.
And that is the kind of lack of respect and concern for the collective well-being of Nigerian that this outgoing government has persistently shown. It could be by way of arbitrarily increment in the prices of petroleum products, or the controversial sales of oil blocks. But this unusual speedy sale of the two refineries among 32 other government investments on the last day that the National Council of Privatisation was holding its last meeting, will certainly lead both the buyers, the sellers and the Nigerian people into more squabbles, more troubles, more loses. How ever one looks at it, the PBE has sold and bought trouble at the same time
The question then is whose cause are the unions fighting, nation or self interest?
(C)Luka Binniyat --Vanguard
Petrol price hiked by 15%
Oil-rich Nigeria has hiked the pump price of petrol by 15 percent, raising fears of a dispute between unions and the government.
Although no official announcement has been made, Nigerian motorists woke up to find petrol stations in Lagos, Abuja and other cities had increased their pump price to 75 naira from 65 naira per litre.
The increase came just 24 hours before President Olusegun Obasanjo steps down after eight years in office.
Attendants at Nigerian garages told AFP that the adjustment was aimed at covering their rising cost of business.
Since Obasanjo came into office in 1999, past fuel price hikes, supported by authorities, have triggered strikes aimed at making the government to reverse its decision.
"This is one price increase too many. Obasanjo has increased fuel price by more than five times since he came to power in 1999," union leader Dele Dada told AFP.
He said unions would resist the hike.
"This is a bad parting gift to Nigerians. How can somebody who has less than 24 hours to leave government introduce a policy that will further impoverish the people?" Lagos lawyer Gani Fawehinmi asked.
Analysts say the hike might cause a quick crisis for new president Umaru Yar'Adua.
The oil unions suspended a two-day-old strike by 4,000 workers on Saturday after the government met their demands over the proposed sale of two state-owned oil refineries to private investors.
Nigeria, Africa's biggest producer and the world's sixth oil exporter, has seen a quarter of its daily output of 2.6 million barrels per day cut back by unrest in the Niger delta.
(C)www.africasia.com
Although no official announcement has been made, Nigerian motorists woke up to find petrol stations in Lagos, Abuja and other cities had increased their pump price to 75 naira from 65 naira per litre.
The increase came just 24 hours before President Olusegun Obasanjo steps down after eight years in office.
Attendants at Nigerian garages told AFP that the adjustment was aimed at covering their rising cost of business.
Since Obasanjo came into office in 1999, past fuel price hikes, supported by authorities, have triggered strikes aimed at making the government to reverse its decision.
"This is one price increase too many. Obasanjo has increased fuel price by more than five times since he came to power in 1999," union leader Dele Dada told AFP.
He said unions would resist the hike.
"This is a bad parting gift to Nigerians. How can somebody who has less than 24 hours to leave government introduce a policy that will further impoverish the people?" Lagos lawyer Gani Fawehinmi asked.
Analysts say the hike might cause a quick crisis for new president Umaru Yar'Adua.
The oil unions suspended a two-day-old strike by 4,000 workers on Saturday after the government met their demands over the proposed sale of two state-owned oil refineries to private investors.
Nigeria, Africa's biggest producer and the world's sixth oil exporter, has seen a quarter of its daily output of 2.6 million barrels per day cut back by unrest in the Niger delta.
(C)www.africasia.com
Petrol price hiked by 15%
Oil-rich Nigeria has hiked the pump price of petrol by 15 percent, raising fears of a dispute between unions and the government.
Although no official announcement has been made, Nigerian motorists woke up to find petrol stations in Lagos, Abuja and other cities had increased their pump price to 75 naira from 65 naira per litre.
The increase came just 24 hours before President Olusegun Obasanjo steps down after eight years in office.
Attendants at Nigerian garages told AFP that the adjustment was aimed at covering their rising cost of business.
Since Obasanjo came into office in 1999, past fuel price hikes, supported by authorities, have triggered strikes aimed at making the government to reverse its decision.
"This is one price increase too many. Obasanjo has increased fuel price by more than five times since he came to power in 1999," union leader Dele Dada told AFP.
He said unions would resist the hike.
"This is a bad parting gift to Nigerians. How can somebody who has less than 24 hours to leave government introduce a policy that will further impoverish the people?" Lagos lawyer Gani Fawehinmi asked.
Analysts say the hike might cause a quick crisis for new president Umaru Yar'Adua.
The oil unions suspended a two-day-old strike by 4,000 workers on Saturday after the government met their demands over the proposed sale of two state-owned oil refineries to private investors.
Nigeria, Africa's biggest producer and the world's sixth oil exporter, has seen a quarter of its daily output of 2.6 million barrels per day cut back by unrest in the Niger delta.
(C)www.africasia.com
Although no official announcement has been made, Nigerian motorists woke up to find petrol stations in Lagos, Abuja and other cities had increased their pump price to 75 naira from 65 naira per litre.
The increase came just 24 hours before President Olusegun Obasanjo steps down after eight years in office.
Attendants at Nigerian garages told AFP that the adjustment was aimed at covering their rising cost of business.
Since Obasanjo came into office in 1999, past fuel price hikes, supported by authorities, have triggered strikes aimed at making the government to reverse its decision.
"This is one price increase too many. Obasanjo has increased fuel price by more than five times since he came to power in 1999," union leader Dele Dada told AFP.
He said unions would resist the hike.
"This is a bad parting gift to Nigerians. How can somebody who has less than 24 hours to leave government introduce a policy that will further impoverish the people?" Lagos lawyer Gani Fawehinmi asked.
Analysts say the hike might cause a quick crisis for new president Umaru Yar'Adua.
The oil unions suspended a two-day-old strike by 4,000 workers on Saturday after the government met their demands over the proposed sale of two state-owned oil refineries to private investors.
Nigeria, Africa's biggest producer and the world's sixth oil exporter, has seen a quarter of its daily output of 2.6 million barrels per day cut back by unrest in the Niger delta.
(C)www.africasia.com
Nigeria's oil unions suspend strike
Nigeria's oil unions said Saturday they have suspended a two-day-old strike after the government met their demands over the proposed sale of two state-owned oil refineries.
"We have suspended the strike," Peter Esele, president of the senior oil workers union PENGASSAN, told AFP.
He said that the government has agreed to retain a 51 percent stake in the Port Harcourt and Kaduna refineries and only sell the remaining 49 percent to private investors. Previously the government wanted to sell 100 percent.
The government also agreed to a 15 percent wage increase.
Nigeria's PENGASSAN and NUPENG oil workers unions had began the strike on Thursday at the refineries, which have a combined production capacity of 210,000 barrels of crude oil per day and employ around 4,000 people.
"The sale of the refineries does not follow due process and was not agreed to by all the stakeholders in the industry," said NUPENG head Peter Akpatason.
"Some of these so-called investors are political in their activities, they may buy the refineries and keep them comatose to promote monopoly", he added.
Critics of Nigeria's outgoing President Olusegun Obasanjo, who steps down on Tuesday, accuse him of organising a fire sale of state assets to his cronies in his final days in power.
Nigeria is world's sixth oil exporter accounting for about 2.6 million barrels per day of crude but production has been cut by a quarter due to unrest in the Niger Delta, where more than 150 foreign workers have been kidnapped this year.
(C)www.africasia.com
"We have suspended the strike," Peter Esele, president of the senior oil workers union PENGASSAN, told AFP.
He said that the government has agreed to retain a 51 percent stake in the Port Harcourt and Kaduna refineries and only sell the remaining 49 percent to private investors. Previously the government wanted to sell 100 percent.
The government also agreed to a 15 percent wage increase.
Nigeria's PENGASSAN and NUPENG oil workers unions had began the strike on Thursday at the refineries, which have a combined production capacity of 210,000 barrels of crude oil per day and employ around 4,000 people.
"The sale of the refineries does not follow due process and was not agreed to by all the stakeholders in the industry," said NUPENG head Peter Akpatason.
"Some of these so-called investors are political in their activities, they may buy the refineries and keep them comatose to promote monopoly", he added.
Critics of Nigeria's outgoing President Olusegun Obasanjo, who steps down on Tuesday, accuse him of organising a fire sale of state assets to his cronies in his final days in power.
Nigeria is world's sixth oil exporter accounting for about 2.6 million barrels per day of crude but production has been cut by a quarter due to unrest in the Niger Delta, where more than 150 foreign workers have been kidnapped this year.
(C)www.africasia.com
Uproar Over FG's Last Minute Privatisation
THE entire nation may soon be plunged into another nation-wide energy crisis if the feelers from workers in the sector is to be relied on. For instance, workers at NNPC have threatened to put down tools while their counterparts in Power Holding Company of Nigeria ( PHCN) are said to be ready for a showdown with BPE over the sale of the Port-Harcourt Refinery and the sale of the Egbin Power Station in Lagos.
The privatisation of these two Federal Government owned companies and several others by BPE has generated uproar in some parts of the country. The BPE had, penultimate Thursday, sold 51 percent of the equity holding of the Port-Harcourt Refinery to Bluestar Oil Services Ltd.- a consortium jointly owned by a group which includes business mogul, Alhaji Aliko Dangote, and Femi Otedola's Zenon Oil, for $561 million. The announcement was made by the Chairman of the Technical Committee of the National Council on Privatisation (NCP), Mr. Patrick Akintokun, who said the sale was subject to the approval of the council.
Also privatised by BPE was the Ajaokuta Steel Company, which was sold to Global Infrastructure Nig. Ltd for the sum of $525m, representing the Federal Government's 60 percent shares in the company. The Federal Government had invested over six billion dollars in the company before it was privatised. The Egbin Power Station, which was also privatised, was sold to Korea Electric Power Corporation Energy Resources Ltd. (KEPCO) for $280m, representing the government's 51 percent equity holding in the company. The National Arts Theatre, Tafawa Balewa Square and International Trade Fair Complex, all in Lagos, were sold for N5.84b, N9.56b and N40b, respectively and were bought by Infrastructica, BHS International and Aulic Nig. Ltd. in that order.
However, only the sale of the Port-Harcourt Refinery and the Egbin Power Station have, so far, generated sharp reactions from workers in the power and energy sector. Militant youths of the Niger Delta region have also expressed their anger over the sale of the refinery.
Already, the National Union of Petroleum and Natural Gas Workers of Nigeria (NUPENG) and its senior staff counterpart - the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have issued strong warnings that their members would embark on a nation-wide strike, which would involve all the affiliates of the two unions, if the Federal Government refuses to reverse its sale of the Port-Harcourt Refinery. The leadership of both unions insist that the sale of the refinery runs contrary to the agreement earlier on reached with them on the sale of the Port-Harcourt and Kaduna refineries.
Last Monday, members of both unions embarked on what they called shadow strike ahead of a full strike which was scheduled to begin yesterday if the dialogue the leadership of both unions was having with the Federal Government failed to reach an agreement. The unions had warned that the planned strike would surely lead to the closure of petroleum products depots and this is likely to lead to scarcity of petrol and aviation fuel across the country. The workers' plan was confirmed by the Group Chairman of NNPC's branch of NUPENG, Mr. Williams Ibiba Inko.
He said both unions will down tools between 8 and 10 a.m. during the days of the shadow strike and proceed to offer prayers. During the period of the shadow strike, all NNPC workers were expected to wear red-crimson dresses to work as an exhibition of their anger over the sale of the refinery. Workers at the Nigerian Gas Company (NGC) would also cut gas supply to strategic investments such as power plants during the period of the industrial action.
Apart from NUPENG and PENGASSAN, militant youths of the Niger Delta have also threatened fire and brimstone over the sale of the refinery. Already, one of the most dreaded militant groups in the region- Movement for the Emancipation of Niger Delta ( MEND)- has threatened to blow up the refinery if the sale is not reversed. An official of MEND, who identified himself as Joshua Minisagha, said what Alhaji Dangote and Femi Otedola had bought was 'dust'.
Other groups in the region who also condemned the transaction are Initiative for Non-violent Change and Publish What You Pay Campaign Group (PWYP).
The Coordinator of PWYP, Rev. David Ugolor, had complained that the process leading up to the sale of the refinery lacked transparency, given the time frame within which it was concluded. He wanted to know the criteria used for selecting Bluestar Oil Services Ltd. as the preferred bidder.
On their part, electricity workers in the country are also bracing up for a showdown with BPE and KEPCO over the sale of Egbin Power Station.
Already, Nigeria Union of Electricity Employees (NUEE) has vowed not to allow KEPCO to take over the power station, insisting that a case concerning the transaction was still in court. According to NUEE's General Secretary Mr. Joe Ajaero, KEPCO was about to swim in murky waters. He alleged that the Korean company did not actually bid for purchase of the power station. Ajaero alleged that some top ranking government officials misled KEPCO into buying the power station, whereas the case was still in court.
(C)Okey Ndiribe--Vanguard
The privatisation of these two Federal Government owned companies and several others by BPE has generated uproar in some parts of the country. The BPE had, penultimate Thursday, sold 51 percent of the equity holding of the Port-Harcourt Refinery to Bluestar Oil Services Ltd.- a consortium jointly owned by a group which includes business mogul, Alhaji Aliko Dangote, and Femi Otedola's Zenon Oil, for $561 million. The announcement was made by the Chairman of the Technical Committee of the National Council on Privatisation (NCP), Mr. Patrick Akintokun, who said the sale was subject to the approval of the council.
Also privatised by BPE was the Ajaokuta Steel Company, which was sold to Global Infrastructure Nig. Ltd for the sum of $525m, representing the Federal Government's 60 percent shares in the company. The Federal Government had invested over six billion dollars in the company before it was privatised. The Egbin Power Station, which was also privatised, was sold to Korea Electric Power Corporation Energy Resources Ltd. (KEPCO) for $280m, representing the government's 51 percent equity holding in the company. The National Arts Theatre, Tafawa Balewa Square and International Trade Fair Complex, all in Lagos, were sold for N5.84b, N9.56b and N40b, respectively and were bought by Infrastructica, BHS International and Aulic Nig. Ltd. in that order.
However, only the sale of the Port-Harcourt Refinery and the Egbin Power Station have, so far, generated sharp reactions from workers in the power and energy sector. Militant youths of the Niger Delta region have also expressed their anger over the sale of the refinery.
Already, the National Union of Petroleum and Natural Gas Workers of Nigeria (NUPENG) and its senior staff counterpart - the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have issued strong warnings that their members would embark on a nation-wide strike, which would involve all the affiliates of the two unions, if the Federal Government refuses to reverse its sale of the Port-Harcourt Refinery. The leadership of both unions insist that the sale of the refinery runs contrary to the agreement earlier on reached with them on the sale of the Port-Harcourt and Kaduna refineries.
Last Monday, members of both unions embarked on what they called shadow strike ahead of a full strike which was scheduled to begin yesterday if the dialogue the leadership of both unions was having with the Federal Government failed to reach an agreement. The unions had warned that the planned strike would surely lead to the closure of petroleum products depots and this is likely to lead to scarcity of petrol and aviation fuel across the country. The workers' plan was confirmed by the Group Chairman of NNPC's branch of NUPENG, Mr. Williams Ibiba Inko.
He said both unions will down tools between 8 and 10 a.m. during the days of the shadow strike and proceed to offer prayers. During the period of the shadow strike, all NNPC workers were expected to wear red-crimson dresses to work as an exhibition of their anger over the sale of the refinery. Workers at the Nigerian Gas Company (NGC) would also cut gas supply to strategic investments such as power plants during the period of the industrial action.
Apart from NUPENG and PENGASSAN, militant youths of the Niger Delta have also threatened fire and brimstone over the sale of the refinery. Already, one of the most dreaded militant groups in the region- Movement for the Emancipation of Niger Delta ( MEND)- has threatened to blow up the refinery if the sale is not reversed. An official of MEND, who identified himself as Joshua Minisagha, said what Alhaji Dangote and Femi Otedola had bought was 'dust'.
Other groups in the region who also condemned the transaction are Initiative for Non-violent Change and Publish What You Pay Campaign Group (PWYP).
The Coordinator of PWYP, Rev. David Ugolor, had complained that the process leading up to the sale of the refinery lacked transparency, given the time frame within which it was concluded. He wanted to know the criteria used for selecting Bluestar Oil Services Ltd. as the preferred bidder.
On their part, electricity workers in the country are also bracing up for a showdown with BPE and KEPCO over the sale of Egbin Power Station.
Already, Nigeria Union of Electricity Employees (NUEE) has vowed not to allow KEPCO to take over the power station, insisting that a case concerning the transaction was still in court. According to NUEE's General Secretary Mr. Joe Ajaero, KEPCO was about to swim in murky waters. He alleged that the Korean company did not actually bid for purchase of the power station. Ajaero alleged that some top ranking government officials misled KEPCO into buying the power station, whereas the case was still in court.
(C)Okey Ndiribe--Vanguard
DPR invites Conoil over OPL 290--CHIDI NNADI(onlinenigeria)
Following decline of Dangote Oil and Gas to match the reserved price of $110 million and $105 million for oil blocks OPL 290 and OPL 2007 respectively, the Department of Petroleum Resources (DPR) has written to Conoil to come for discussions on OPL 290.
Conoil through its subsidiary, Continental Oil and Gas, at the recent 2007 licence bid round held in Abuja had bidded $105 million (N13.4 billion) as the highest signature bonus for OPL 290 on the continental shelf block while Dangote Oil and Gas bidded $21 million for the same oil block.
Also, Continental Oil and Gas bidded $110 million for OPL 2007 while Dangote Oil and Gas bidded $31.5 million for the same oil block.
But Daily Sun reliably gathered that Dangote opted out of the two blocks due to what an insider of the company referred to as "violatile business nature of the Niger Delta region" where the blocks are located.
The Dangote source said that the signature bonus sum was not the isuue why the company rejected the blocks, but how this could be explored in future in the militant-prone zone to good profitable venture.
Since Dangote turned down the blocks, Conoil has been on the lookout that the DPR would soon confirm it the winner of the two blocks.
Earlier, Dangote Oil and Gas, which had a pre-emptive Right of First Refusal, was given up till last Tuesday to match the Conoil bid, but was said to have vacated its Right of First Refusal on OPL 290.
About 54 oil operators participated in the bid round, which was seen as the largest and most transparent in the country.
At least more than 28 companies that bidded and won on the spot paid their 50 per cent signature bonuses in bank drafts while they were expected to complete the remaining 50 per cent in the next three weeks or risk their Rights of First Refusal (ROFR), a privilege reserved for those companies with investments in Nigeria’s downstream oil sector.
Conoil through its subsidiary, Continental Oil and Gas, at the recent 2007 licence bid round held in Abuja had bidded $105 million (N13.4 billion) as the highest signature bonus for OPL 290 on the continental shelf block while Dangote Oil and Gas bidded $21 million for the same oil block.
Also, Continental Oil and Gas bidded $110 million for OPL 2007 while Dangote Oil and Gas bidded $31.5 million for the same oil block.
But Daily Sun reliably gathered that Dangote opted out of the two blocks due to what an insider of the company referred to as "violatile business nature of the Niger Delta region" where the blocks are located.
The Dangote source said that the signature bonus sum was not the isuue why the company rejected the blocks, but how this could be explored in future in the militant-prone zone to good profitable venture.
Since Dangote turned down the blocks, Conoil has been on the lookout that the DPR would soon confirm it the winner of the two blocks.
Earlier, Dangote Oil and Gas, which had a pre-emptive Right of First Refusal, was given up till last Tuesday to match the Conoil bid, but was said to have vacated its Right of First Refusal on OPL 290.
About 54 oil operators participated in the bid round, which was seen as the largest and most transparent in the country.
At least more than 28 companies that bidded and won on the spot paid their 50 per cent signature bonuses in bank drafts while they were expected to complete the remaining 50 per cent in the next three weeks or risk their Rights of First Refusal (ROFR), a privilege reserved for those companies with investments in Nigeria’s downstream oil sector.
How FG Generated $615m in 2007 Bid Round--Ijeoma Nwogwugwu (Thisdayonline)
The 2007 oil licensing round held last Friday in Abuja has fetched the Federal Government $615.452 million in the form of signature bonuses to be paid by the winning companies that participated in the bidding conference.
A report of the revenue generated from the bid round which was obtained exclusively by THISDAY, showed that of the $615 million, 50 per cent, representing $351.536 million of the signature bonus was immediately deposited by the successful bidders on Friday in compliance with the 2007 oil licensing rules.
The balance will be paid on or before the execution of the production sharing contracts (PSCs) by the winning firms and the Nigerian National Petroleum Corporation (NNPC).
The report further indicated that out of the 45 oil blocks put up for auction by the Department of Petroleum Resources (DPR), only 18 oil blocks situated in deep waters, in the Niger Delta continental shelf and onshore received 60 bids (see table) from the contesting firms.
Meanwhile, four oil blocks to which companies have the rights of first refusal were part of the blocks contested for on the day of the bidding conference, with all of the companies signifying their preparedness to exercise their preemptive rights to the blocks by matching the highest bona fide bidders who had emerged during the bid round.
The blocks with rights of first refusal are blocks 2007, 275, 274 and 290. For block 2007 and 290, Conoil Production Limited emerged the highest bona fide winner with winning bids of $110 million respectively for the blocks. Conoil paid the mandatory 50 percent of $55 million for each of the blocks.
However, Dangote Oil and Gas which has preemptive rights to the blocks agreed to match the winning bid put up by Conoil and was given till today to pay the 50 per cent deposit of $83.750 million, representing the balance of the deposit it had paid on Friday.
If Dangote Oil and Gas fails to pay the deposit before the close of business today, it shall forfeit its rights to the blocks which will go to Conoil.
Similarly, Energy Resources Limited and Sterling Global E & P exercised their preemptive rights to blocks 274 and 275 for which the highest bona fide bidders - Coscharis Allenne Ltd and Pan Ocean Oil Corporation - had offered to pay signature bonuses of $50 million and $10 million for the two blocks.
Energy Resources and Sterling Global also have till today to match the deposits paid by the bona fide winners of both blocks by paying up the balance of the amounts they deposited on Friday.
A breakdown of other winning bids and the signature bonuses they attracted is as follows:
- Block No. 228 attracted a signature bonus of $6.25 million by the winning firm, Sahara Energy Fields for which the mandatory 50 per cent deposit of $3.125 million was paid on the day of the bidding conference.
- Blocks No. 231, 234 and 239 attracted winning bids of $26.5 million, $6.5 million and $11.5 million respectively from Moni Pulo. Moni Pulo paid deposits of $13.25 million, $3.25 million and $5.75 million for all three blocks at the conference.
- Sterling Global E & P won blocks 2005 and 2006 having bid $9.5 million and $7.5 million respective for the blocks. The firm paid the requisite 50 per cent deposits of $4.75 million and $3.75 million.
- Tenoil secured block 2008 with a winning bid of $12 million and paid a deposit of $6 million.
- Blocks No. 2009 and 2010 were won by Global Energy Co. Limited which bid $11.5 million for each of the blocks. Global Energy paid the 50 per cent deposit of $5.75 million for each block.
- Block No. 240 went to the BOC JNHP Consortium which bid $10.6 million. The consortium paid $5.3 million at the bid conference as its deposit for the signature bonus.
Yorkshire Energy World Limited won blocks 258 and 295 with winning bids of $60 million and $105 million respectively, of which it deposited $30 million and $52.5 million for the blocks.
- Oilworld Limited got block 241 by offering to pay $20.102 million. The company deposited $10.051 at the bidding conference.
- Essar Exploration posted a winning bid of $37 million for block 226, and paid the 50 per cent deposit of $18.5 million.
A report of the revenue generated from the bid round which was obtained exclusively by THISDAY, showed that of the $615 million, 50 per cent, representing $351.536 million of the signature bonus was immediately deposited by the successful bidders on Friday in compliance with the 2007 oil licensing rules.
The balance will be paid on or before the execution of the production sharing contracts (PSCs) by the winning firms and the Nigerian National Petroleum Corporation (NNPC).
The report further indicated that out of the 45 oil blocks put up for auction by the Department of Petroleum Resources (DPR), only 18 oil blocks situated in deep waters, in the Niger Delta continental shelf and onshore received 60 bids (see table) from the contesting firms.
Meanwhile, four oil blocks to which companies have the rights of first refusal were part of the blocks contested for on the day of the bidding conference, with all of the companies signifying their preparedness to exercise their preemptive rights to the blocks by matching the highest bona fide bidders who had emerged during the bid round.
The blocks with rights of first refusal are blocks 2007, 275, 274 and 290. For block 2007 and 290, Conoil Production Limited emerged the highest bona fide winner with winning bids of $110 million respectively for the blocks. Conoil paid the mandatory 50 percent of $55 million for each of the blocks.
However, Dangote Oil and Gas which has preemptive rights to the blocks agreed to match the winning bid put up by Conoil and was given till today to pay the 50 per cent deposit of $83.750 million, representing the balance of the deposit it had paid on Friday.
If Dangote Oil and Gas fails to pay the deposit before the close of business today, it shall forfeit its rights to the blocks which will go to Conoil.
Similarly, Energy Resources Limited and Sterling Global E & P exercised their preemptive rights to blocks 274 and 275 for which the highest bona fide bidders - Coscharis Allenne Ltd and Pan Ocean Oil Corporation - had offered to pay signature bonuses of $50 million and $10 million for the two blocks.
Energy Resources and Sterling Global also have till today to match the deposits paid by the bona fide winners of both blocks by paying up the balance of the amounts they deposited on Friday.
A breakdown of other winning bids and the signature bonuses they attracted is as follows:
- Block No. 228 attracted a signature bonus of $6.25 million by the winning firm, Sahara Energy Fields for which the mandatory 50 per cent deposit of $3.125 million was paid on the day of the bidding conference.
- Blocks No. 231, 234 and 239 attracted winning bids of $26.5 million, $6.5 million and $11.5 million respectively from Moni Pulo. Moni Pulo paid deposits of $13.25 million, $3.25 million and $5.75 million for all three blocks at the conference.
- Sterling Global E & P won blocks 2005 and 2006 having bid $9.5 million and $7.5 million respective for the blocks. The firm paid the requisite 50 per cent deposits of $4.75 million and $3.75 million.
- Tenoil secured block 2008 with a winning bid of $12 million and paid a deposit of $6 million.
- Blocks No. 2009 and 2010 were won by Global Energy Co. Limited which bid $11.5 million for each of the blocks. Global Energy paid the 50 per cent deposit of $5.75 million for each block.
- Block No. 240 went to the BOC JNHP Consortium which bid $10.6 million. The consortium paid $5.3 million at the bid conference as its deposit for the signature bonus.
Yorkshire Energy World Limited won blocks 258 and 295 with winning bids of $60 million and $105 million respectively, of which it deposited $30 million and $52.5 million for the blocks.
- Oilworld Limited got block 241 by offering to pay $20.102 million. The company deposited $10.051 at the bidding conference.
- Essar Exploration posted a winning bid of $37 million for block 226, and paid the 50 per cent deposit of $18.5 million.
AP Shares - IPMAN Wants Obasanjo to Intervene--Funmi Peter-Omale (Allafriacanews)
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has called on President Olusegun Obasanjo to intervene in the alleged illegal sale of the Nigerian National Petroleum Corporation (NNPC) shares in the African Petroleum to Zenon Oil saying it was a breach of the law.
Quoting the official Gazette No. 20 volume 93 of the Federal Republic, the independent marketers described the sale as lacking in transparency and due process.
In a letter addressed to Obasanjo, signed by Alhaji Danladi Pasali and Dibu Aderibigbe, dated March 9 and made available to THISDAY, IPMAN asserted that the sale was "conducted contrary to the directive Mr. President had given that the Bureau for Public Enterprise (BPE) should take over and conduct the sale through a competitive public bidding.
"The conduct of the sales of the share was lacking in transparency and due process which you advocated and came to be known as the hallmark of your administration. No advertisements were placed before the sales were effected and as it were, even the BPE denied any knowledge of the transaction. It is on record that Global Fleet Group purportedly paid the sum of N17.5 billion for an ascertained number of shares which sales was eventually withdrawn or cancelled. Surprisingly, Zenon Oil paid N17 billion for the same number of shares with a whooping N500 million difference".
While noting that IPMAN believed that the Federal Government is a transparent one and is willing to listen to Nigerians' clarion calls, the independent marketers cautioned that President Obasanjo should not fold his arms and watch any person, group of persons, government agency or parastatal tarnish the good image he had built for himself and his administration over the years.
"We want to believe that the transaction is still open and therefore pray that your Excellency intervene and order that same be stopped and reorganised to give more Nigerians (IPMAN) inclusive the right and opportunity to participate in the public sale of the African Petroleum Plc shares"
IPMAN affirmed that the group controls over 80 percent of the downstream sector stressing that the earlier the president orders the reversion of the alleged sale to Zenon, the better for the government, the down stream sector and even investors in general.
"IPMAN has demonstrated its ability and capability to all stakeholders in the oil sector by building one of the best loading depots in Lagos called NIPCO, whereof over N10 billion has been invested. We can confidently say that members of our organisation have invested over N250 billion in the down stream sector of the oil industry in Nigeria
Quoting the official Gazette No. 20 volume 93 of the Federal Republic, the independent marketers described the sale as lacking in transparency and due process.
In a letter addressed to Obasanjo, signed by Alhaji Danladi Pasali and Dibu Aderibigbe, dated March 9 and made available to THISDAY, IPMAN asserted that the sale was "conducted contrary to the directive Mr. President had given that the Bureau for Public Enterprise (BPE) should take over and conduct the sale through a competitive public bidding.
"The conduct of the sales of the share was lacking in transparency and due process which you advocated and came to be known as the hallmark of your administration. No advertisements were placed before the sales were effected and as it were, even the BPE denied any knowledge of the transaction. It is on record that Global Fleet Group purportedly paid the sum of N17.5 billion for an ascertained number of shares which sales was eventually withdrawn or cancelled. Surprisingly, Zenon Oil paid N17 billion for the same number of shares with a whooping N500 million difference".
While noting that IPMAN believed that the Federal Government is a transparent one and is willing to listen to Nigerians' clarion calls, the independent marketers cautioned that President Obasanjo should not fold his arms and watch any person, group of persons, government agency or parastatal tarnish the good image he had built for himself and his administration over the years.
"We want to believe that the transaction is still open and therefore pray that your Excellency intervene and order that same be stopped and reorganised to give more Nigerians (IPMAN) inclusive the right and opportunity to participate in the public sale of the African Petroleum Plc shares"
IPMAN affirmed that the group controls over 80 percent of the downstream sector stressing that the earlier the president orders the reversion of the alleged sale to Zenon, the better for the government, the down stream sector and even investors in general.
"IPMAN has demonstrated its ability and capability to all stakeholders in the oil sector by building one of the best loading depots in Lagos called NIPCO, whereof over N10 billion has been invested. We can confidently say that members of our organisation have invested over N250 billion in the down stream sector of the oil industry in Nigeria
Who's Afraid of Tony Chukwueke?.....Ijeoma Nwaogwugwu(Allafriacanews)
The 2007 oil licensing bid round has come gone. But like most processes with the potential to make billions of dollars several years down the line, it has been mired in controversy. Shell Petroleum and Development Company (SPDC), for one, got an interim injunction barring the Ministry of Energy and the Department of Petroleum Resources (DPR) from including two oil blocks, OMLs (Oil Mining Lease) 13 and 16, in the 2007 bid round held last Friday. Both blocks had been leased to Shell in 1989, but were revoked last year by DPR for failing to commence production from the blocks believed to be prolific.
DPR had revoked the blocks in compliance with existing regulations that had not been enforced for decades requiring oil companies to bring their concessions on stream within ten years of their conversion from oil production leases (OPLs) to oil mining leases. Although DPR, having obtained a legal mandate from the Ministry of Justice, went ahead to offer the two blocks now carved out as OPLs 2001, 2002, 2003 and 2004 to potential bidders during the bid round, it was cautious enough not declare a winning bidder for any the blocks pending the determination of the law suit brought against it by Shell.
Added to Shell's suit are concerns raised by several individuals within and outside the oil and gas industry over the rush by the outgoing administration to proceed with the licensing round in the dying days of this government. The word on the street is that the bid round would provide an avenue for top ranking officials and their cronies to secure choice oil concessions before the government winds down and is intended to undermine the incoming government of Umaru Musa Yar'Adua.
There is also the niggling issue that has been brought to the fore by multinationals in the sector hiding under the banner of concerned stakeholders about the impropriety of the introduction of the concept of right of first refusal into the bid process. The right of first refusal was first introduced in the 2005 bid round and grants an oil company or bidder preemptive rights over oil blocks it has expressed interest in as long as it can match the highest bid offered by a contending party during the bidding conference. The company is granted the right of first refusal or preemptive rights on certain blocks once it commits to investing additional resources in the establishment of downstream projects in the energy sector and/or non-oil and gas strategic projects such as railroad construction and agriculture.
However, the right of first refusal as a concept has been roundly criticised by oil industry insiders believed to be the oil multinationals who consider it a travesty of justice, as according to them it gives some undue advantage to mainly oil companies from Asia and some Nigerian firms that have committed to building various infrastructure projects in the downstream energy sector and the transport sector. The beneficiaries include Global Steel Holding/Sterling Global of India that is being promoted by Pramod Mittal, brother of the multi-billionaire and international steel magnet, Lakshmi Mittal. Others are two Chinese state-run oil firms ? the Chinese National Petroleum Corporation (CNPC), Chinese National Oil Offshore Corporation (CNOOC), Korean National Oil Corporation (KNOC), ONGC/Mittal and Dangote Oil and Gas, Repsol of Spain and Malaysia's Petronas.
Ironically, the man at the centre of the storm for introducing new rules to the oil licensing rounds is an oil industry insider and a product of the oil majors. Having worked for almost two decades for Shell in Nigeria, Algeria and the UK, Anthony Chukwueke who is currently the Director, DPR is quite conversant with the tricks of the trade and the pressure that can be mounted by the powerful multinationals and their home governments to compel the Nigerian government to do their bidding. But he is prepared to take them on by implementing measures that would reform the upstream and downstream segments of the oil and gas sector.During series of meetings with this writer, he disclosed that those who have taken umbrage with the introduction of the right of first refusal are companies which have the most to lose. The coupling of the lucrative upstream segment of the oil industry, according to him, along with the not-so-lucrative downstream segment characterised by lower profit margins is not an unusual concept that is practiced worldwide.
It is simply a measure designed to develop an integrated oil and gas sector in which investors operate in both segments and create greater job opportunities to unemployed youths in the oil rich Niger Delta region, he explained. In order to ensure that a level playing field is created, companies which have preemptive rights to some oil blocks are expected to match the highest bid for the said blocks, failing which the blocks shall go to the highest bidder. This makes a lot of sense.
But what happens in the event the company with the right of first refusal matches the highest bid for a block, pays the signature bonus and reneges on earlier commitments to invest in the construction of a refinery or power plant? To forestall the likelihood of such an event, Chukwueke indicated specific mechanisms have been built in by the DPR to serve as a deterrent. This entails the deposit of an associated collateral upfront, which translates to $1 million per 10,000 barrels per day capacity for oil projects such as refineries (or per 10 million standard cubic feet capacity for gas related projects such as IPPs and gas gathering and pipeline projects).
DPR had revoked the blocks in compliance with existing regulations that had not been enforced for decades requiring oil companies to bring their concessions on stream within ten years of their conversion from oil production leases (OPLs) to oil mining leases. Although DPR, having obtained a legal mandate from the Ministry of Justice, went ahead to offer the two blocks now carved out as OPLs 2001, 2002, 2003 and 2004 to potential bidders during the bid round, it was cautious enough not declare a winning bidder for any the blocks pending the determination of the law suit brought against it by Shell.
Added to Shell's suit are concerns raised by several individuals within and outside the oil and gas industry over the rush by the outgoing administration to proceed with the licensing round in the dying days of this government. The word on the street is that the bid round would provide an avenue for top ranking officials and their cronies to secure choice oil concessions before the government winds down and is intended to undermine the incoming government of Umaru Musa Yar'Adua.
There is also the niggling issue that has been brought to the fore by multinationals in the sector hiding under the banner of concerned stakeholders about the impropriety of the introduction of the concept of right of first refusal into the bid process. The right of first refusal was first introduced in the 2005 bid round and grants an oil company or bidder preemptive rights over oil blocks it has expressed interest in as long as it can match the highest bid offered by a contending party during the bidding conference. The company is granted the right of first refusal or preemptive rights on certain blocks once it commits to investing additional resources in the establishment of downstream projects in the energy sector and/or non-oil and gas strategic projects such as railroad construction and agriculture.
However, the right of first refusal as a concept has been roundly criticised by oil industry insiders believed to be the oil multinationals who consider it a travesty of justice, as according to them it gives some undue advantage to mainly oil companies from Asia and some Nigerian firms that have committed to building various infrastructure projects in the downstream energy sector and the transport sector. The beneficiaries include Global Steel Holding/Sterling Global of India that is being promoted by Pramod Mittal, brother of the multi-billionaire and international steel magnet, Lakshmi Mittal. Others are two Chinese state-run oil firms ? the Chinese National Petroleum Corporation (CNPC), Chinese National Oil Offshore Corporation (CNOOC), Korean National Oil Corporation (KNOC), ONGC/Mittal and Dangote Oil and Gas, Repsol of Spain and Malaysia's Petronas.
Ironically, the man at the centre of the storm for introducing new rules to the oil licensing rounds is an oil industry insider and a product of the oil majors. Having worked for almost two decades for Shell in Nigeria, Algeria and the UK, Anthony Chukwueke who is currently the Director, DPR is quite conversant with the tricks of the trade and the pressure that can be mounted by the powerful multinationals and their home governments to compel the Nigerian government to do their bidding. But he is prepared to take them on by implementing measures that would reform the upstream and downstream segments of the oil and gas sector.During series of meetings with this writer, he disclosed that those who have taken umbrage with the introduction of the right of first refusal are companies which have the most to lose. The coupling of the lucrative upstream segment of the oil industry, according to him, along with the not-so-lucrative downstream segment characterised by lower profit margins is not an unusual concept that is practiced worldwide.
It is simply a measure designed to develop an integrated oil and gas sector in which investors operate in both segments and create greater job opportunities to unemployed youths in the oil rich Niger Delta region, he explained. In order to ensure that a level playing field is created, companies which have preemptive rights to some oil blocks are expected to match the highest bid for the said blocks, failing which the blocks shall go to the highest bidder. This makes a lot of sense.
But what happens in the event the company with the right of first refusal matches the highest bid for a block, pays the signature bonus and reneges on earlier commitments to invest in the construction of a refinery or power plant? To forestall the likelihood of such an event, Chukwueke indicated specific mechanisms have been built in by the DPR to serve as a deterrent. This entails the deposit of an associated collateral upfront, which translates to $1 million per 10,000 barrels per day capacity for oil projects such as refineries (or per 10 million standard cubic feet capacity for gas related projects such as IPPs and gas gathering and pipeline projects).
DPR okays Redsquare Africa for 2007 oil bid rounds promo--vanguardngr
NIGERIA’s apex regulatory body for both the upstream and downstream sector of the petroleum industry the Department of Petroleum Resources (DPR) has granted the request of Redsquare Africa Limited to promote the 2007 oil licensing rounds.
In a letter to Redsquare Africa, the Director of DPR, Mr. Tony Chukwueke, noted that Redsquare Africa’s involvement oil bid rounds would prop up the Nigeria Content Policy in the 2007 bid round.
“In order to promote the Nigeria Content Policy in the 2007 bid round, please be informed that your company is welcome to participate in the commercial bidding conference, which is scheduled to take place on 11th May, 2007, in Abuja.” he said.
The 2007 bid round, according to the DPR, would improve the quantum of composite value added or created in the Nigerian economy through the utilization of Nigerian human and material resources for the provision of goods and services to the petroleum industry.
The Federal Government has made huge investment in the oil and gas sector, which averages about $10 billion per annum, but the investment in the industry had only contributed little to the nation’s Gross Domestic Product (GDP) growth due to the low Nigerian Content in the industry, which is evident from the over 80 per cent of work value carried out or executed abroad.
Nigeria Content Policy in the 2007 bid round would help to position the country as the hub for service delivery within the West African sub-region and beyond, as the policy would promote a framework that would guarantee active participation of Nigerians in oil and gas activities without compromising standards.
The Nigerian content policy promotion at the 2007 bid round has been hailed by industry experts as a major step forward indirectly linking local firms with bidders and eventually winners of oil blocks.
Many service companies see the opportunity generated by DPR/Resquare Africa relationship as a major step in being included in the proposed work programme of oil block winners from conception to first oil.
Major local Engineering, procurement, Construction and Installation (EPCI) firms and some government agencies indicated interest to promote their services at the 2007 bid round, which some industry experts said it is the first of its kind since the beginning of the oil bid round in Nigeria.
Also speaking the Chief Operating Officer of Resquare Africa, Mr. Iba Umoren, said: “We need to position local companies competence to those proposed oil block winners as quickly as possible so as to gain first advantage in the choice of qualified oil service companies to handle the oil production work programme in line with the Nigerian Content Policy.”
Redsquare Africa Limited is an indigenous company with a strategic focus of assisting the Federal Government and indigenous firms to achieve the Nigerian Content Policy in the nation’s oil and gas industry.
In a letter to Redsquare Africa, the Director of DPR, Mr. Tony Chukwueke, noted that Redsquare Africa’s involvement oil bid rounds would prop up the Nigeria Content Policy in the 2007 bid round.
“In order to promote the Nigeria Content Policy in the 2007 bid round, please be informed that your company is welcome to participate in the commercial bidding conference, which is scheduled to take place on 11th May, 2007, in Abuja.” he said.
The 2007 bid round, according to the DPR, would improve the quantum of composite value added or created in the Nigerian economy through the utilization of Nigerian human and material resources for the provision of goods and services to the petroleum industry.
The Federal Government has made huge investment in the oil and gas sector, which averages about $10 billion per annum, but the investment in the industry had only contributed little to the nation’s Gross Domestic Product (GDP) growth due to the low Nigerian Content in the industry, which is evident from the over 80 per cent of work value carried out or executed abroad.
Nigeria Content Policy in the 2007 bid round would help to position the country as the hub for service delivery within the West African sub-region and beyond, as the policy would promote a framework that would guarantee active participation of Nigerians in oil and gas activities without compromising standards.
The Nigerian content policy promotion at the 2007 bid round has been hailed by industry experts as a major step forward indirectly linking local firms with bidders and eventually winners of oil blocks.
Many service companies see the opportunity generated by DPR/Resquare Africa relationship as a major step in being included in the proposed work programme of oil block winners from conception to first oil.
Major local Engineering, procurement, Construction and Installation (EPCI) firms and some government agencies indicated interest to promote their services at the 2007 bid round, which some industry experts said it is the first of its kind since the beginning of the oil bid round in Nigeria.
Also speaking the Chief Operating Officer of Resquare Africa, Mr. Iba Umoren, said: “We need to position local companies competence to those proposed oil block winners as quickly as possible so as to gain first advantage in the choice of qualified oil service companies to handle the oil production work programme in line with the Nigerian Content Policy.”
Redsquare Africa Limited is an indigenous company with a strategic focus of assisting the Federal Government and indigenous firms to achieve the Nigerian Content Policy in the nation’s oil and gas industry.
Fuel queue: No cause for alarm -PPPRA---businessdayonline
The executive secretary of the Petroleum Products Pricing and Regulatory Agency (PPPRA), Oluwole Oluleye, told the News Agency of Nigeria (NAN) yesterday in Abuja that "there is no cause for alarm concerning the queues noticed on Friday and today in the metropolis."
Oluleye said the city usually experienced heavy purchasing of the commodity on Fridays and Mondays, which did not translate into scarcity.
He also said the FCT’s fuel reserve depot in Suleja was over stretched and exhausted as fuel could not be lifted at the weekend, coupled with the public holidays during the election period.
The executive secretary assured that normalcy would be restored within the next two days.
He added that the PPPRA had contacted NNPC and DPR to find out if any filling station had been closed down but discovered that the situation was normal.
Commenting on the fears of possible price hike in fuel and other petroleum products, the general manger, corporate affairs of the PPPRA, Wole Adamolekun, said there was no such plans.
He said the queue being experienced within the FCT should not be misconstrued for possible hike in prices of the products.
Adamolekun said "we do not anticipate any serious problems in the system and the current situation would correct itself in no time.’’
He added that, "there is availability of fuel, and the fuel is being lifted steadily so by Tuesday, everything will return to normalcy .’’
NAN checks at some fuel stations showed that though there were queues, but sales were going on and the rowdy situations always experienced during such scarcity, was not there.
NAN reports that at SEA Petroleum and Gas stations, there was scanty queue while the product was being sold at its normal price.
An official at one of the stations, who spoke on the condition of anonymity, said that "we have been selling fuel at it normally prices."
However, there was longer queue at Conoil station opposite the NNPC building, and vehicle owners who spoke to NAN expressed hope that they would get fuel shortly.
One Taiye Yusuf said, he preferred to buy fuel in the station, in spite of the long queue because there were many pump-outlets discharging the product at the same time.
He said "almost every Monday is a busy day at the petrol filling stations, so I am used to it, but it may not be like this tomorrow .’’
NAN also reports that most commuters were stranded as there were few buses plying the highway.
Oluleye said the city usually experienced heavy purchasing of the commodity on Fridays and Mondays, which did not translate into scarcity.
He also said the FCT’s fuel reserve depot in Suleja was over stretched and exhausted as fuel could not be lifted at the weekend, coupled with the public holidays during the election period.
The executive secretary assured that normalcy would be restored within the next two days.
He added that the PPPRA had contacted NNPC and DPR to find out if any filling station had been closed down but discovered that the situation was normal.
Commenting on the fears of possible price hike in fuel and other petroleum products, the general manger, corporate affairs of the PPPRA, Wole Adamolekun, said there was no such plans.
He said the queue being experienced within the FCT should not be misconstrued for possible hike in prices of the products.
Adamolekun said "we do not anticipate any serious problems in the system and the current situation would correct itself in no time.’’
He added that, "there is availability of fuel, and the fuel is being lifted steadily so by Tuesday, everything will return to normalcy .’’
NAN checks at some fuel stations showed that though there were queues, but sales were going on and the rowdy situations always experienced during such scarcity, was not there.
NAN reports that at SEA Petroleum and Gas stations, there was scanty queue while the product was being sold at its normal price.
An official at one of the stations, who spoke on the condition of anonymity, said that "we have been selling fuel at it normally prices."
However, there was longer queue at Conoil station opposite the NNPC building, and vehicle owners who spoke to NAN expressed hope that they would get fuel shortly.
One Taiye Yusuf said, he preferred to buy fuel in the station, in spite of the long queue because there were many pump-outlets discharging the product at the same time.
He said "almost every Monday is a busy day at the petrol filling stations, so I am used to it, but it may not be like this tomorrow .’’
NAN also reports that most commuters were stranded as there were few buses plying the highway.
DPR waves olive branch for downstream operators--Olusola Bello(businessdayonline)
The government policy of allowing private participation in crude oil refining was kicked-off in 1996, when three companies were granted licence to construct and operate private refineries in Nigeria. Five years later (2001), none of the three was able to make appreciable progress.
The DPR recently undertook a review of the guidelines for granting approvals to construct and operate private refineries in Nigeria and came up with the three stage process of licence to establish (LTE), approval to construct (ATC), and licence to operate (LTO). This was meant to tie standard to internationally recognised achievement in refinery projects to particular stages of approval that would assist the prospective refiners to deliver the refineries within specified periods.
Under this new setting, 18 companies out of the 105 that bided were granted licences to establish (LTE) private refineries in 2002, while the 1996 group had their licences converted to LTEs.
All the 21 LTEs each had a validity period of two years within which to fulfil conditions for the second stage of approvals (ATC).
The 17 ATCs with total refining capacity of 1,299,000 barrels per day (bpd) were granted between February 2004 and May 2005, each with a validity period of 18 months. These licences were granted based on company submissions, presentations and the vision of government to refine at least 50 percent of the national daily crude oil production locally.
Today, it is evident that there is no operational private crude oil refinery. Some of the companies have enjoyed 10 to 18 months after expiration of their ATCs.
In a bid to give opportunity to other applicants (about 23 being processed) and in line with reality of the terms of the grant, Chukwueke formally announced the cancellation of all the expired licences on March 2007 to a gathering of the companies granted ATC to construct private refineries.
The chairman, Private Petroleum Refiners Association of Nigeria, Justice Ilori, expressed the aggressiveness with which the refinery projects were pursued for timely actualisation and the difficulties encountered in securing foreign credible finance and technical partners. Some of the militating issues are; lack of documented incentives to encourage investors as obtainable in the gas sector, guarantee of crude oil supply and the international image of the country in terms of the business environment and the Niger-Delta crisis.
In recognition of continuing effort and some extent of financial commitments on the part of the licences, the director said the prospective refiners were free to apply for revalidation of their expired ATCs under a DPR proposed procedure guide to be ratified by the minister for energy. Mordecai Ladan, head, downstream, DPR, while presenting the proposed guidelines, said the agency would carry out thorough assessment of the projects and, as expressed by the director, revalidate only the viable ones.
Meanwhile, machinery has been put in place to identity and work with serious applicants who will physically deliver the private refinery projects and relief Nigeria of massive importations, with associated loss of foreign exchange and agonizing queues at filling stations.
The huge economic cost associated with massive importation of petroleum products as the sole source of supply to the domestic market, analysts said might push the DPR to step in with fresh strategies for recovery of the nation’s lost refining capacity. The strategies are to focus on arrangements that would build confidence among investors, funding partners and host community for seamless realisation of the projects and profitable operation of the refineries. The move followed the failure of previous attempt to encourage indigenous investors establish private refineries with concessionary award of licence, disruptions and alteration in the privatisation of existing refineries poorly managed by the Nigeria National Petroleum Corporation (NNPC).
Chukwueke expressed concern over the inability of the refiners to meet government’s expectations on the licences in terms of construction and operating of private refineries in Nigeria.
The policy of allowing private refining of petroleum products was conceived as part of the earliest plan for deregulation of the downstream sector of the industry for efficient creation of value across the chain.
Presently, apart from two or more companies that have actually gone to site or made convincing efforts in sourcing funding to actualise their projects, the rest appear to be at loss on what to do with the licences. Others that have broken the ground in terms of construction appear stuck with a host of community issues that are similar to the quasi-terrorist militancy in the Niger Delta.
In an interview recently at the Offshore West African (OWA) conference in Abuja, Energy Minister Edmund Daukoru dismissed the excuses as flimsy.
Daukoru accused them of hawking the licences in the international capital markets for quick cash instead of going for loans at the finance market for long-term gains and sustainable profits.
According to the minister, government has already provided generous incentives for private refiners under the downstream deregulation programme and also guaranteed steady feedstock for all refineries in the country.
The deregulation of the downstream sector has been marred by disproportionate pricing, sloppy playing field against investors.
An oil worker said over $5-billion or N650-billion had been spent on maintenance of the nation’s four refineries with combined processing capacity of 445,000 bpd, which were still moribund.
The National Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) recently in Lagos disclosed that NNPC had also spent about $20-billion or N2.6-trillion on petroleum products importation.
All these costs were incurred between 2003, when deregulation began till now.
Despite the promises of deregulation, sectoral reforms, transformation of NNPC, privatisation of public enterprises and local content policy in the industry, there is no significant economic growth impact due to absence of downstream processing facilities.
Former commonwealth secretary general and chairman, Orient Petroleum and Refinery Limited, Emeka Anyaoku, described the use of imported products to service the economy of Africa’s biggest crude oil exporter as "unacceptable paradox."
To address this problem, DPR is reviewing conditions for the award of licences for private refineries and also using award of oil blocs to attract credible investments in refining. This followed a result of analysis of the failed licences. In cancelling the licences of the companies that failed to initiate projects, Chukueke said about 23 new applications were being processed, while the 2007 bid round for oil blocs would prefer investors with downstream packages.
The cancellation has cleared the way for serious investors willing to meet new regulations that rule out obsolete technology in order to guarantee best products for commercial and industrial machinery in the economy.
The DPR recently undertook a review of the guidelines for granting approvals to construct and operate private refineries in Nigeria and came up with the three stage process of licence to establish (LTE), approval to construct (ATC), and licence to operate (LTO). This was meant to tie standard to internationally recognised achievement in refinery projects to particular stages of approval that would assist the prospective refiners to deliver the refineries within specified periods.
Under this new setting, 18 companies out of the 105 that bided were granted licences to establish (LTE) private refineries in 2002, while the 1996 group had their licences converted to LTEs.
All the 21 LTEs each had a validity period of two years within which to fulfil conditions for the second stage of approvals (ATC).
The 17 ATCs with total refining capacity of 1,299,000 barrels per day (bpd) were granted between February 2004 and May 2005, each with a validity period of 18 months. These licences were granted based on company submissions, presentations and the vision of government to refine at least 50 percent of the national daily crude oil production locally.
Today, it is evident that there is no operational private crude oil refinery. Some of the companies have enjoyed 10 to 18 months after expiration of their ATCs.
In a bid to give opportunity to other applicants (about 23 being processed) and in line with reality of the terms of the grant, Chukwueke formally announced the cancellation of all the expired licences on March 2007 to a gathering of the companies granted ATC to construct private refineries.
The chairman, Private Petroleum Refiners Association of Nigeria, Justice Ilori, expressed the aggressiveness with which the refinery projects were pursued for timely actualisation and the difficulties encountered in securing foreign credible finance and technical partners. Some of the militating issues are; lack of documented incentives to encourage investors as obtainable in the gas sector, guarantee of crude oil supply and the international image of the country in terms of the business environment and the Niger-Delta crisis.
In recognition of continuing effort and some extent of financial commitments on the part of the licences, the director said the prospective refiners were free to apply for revalidation of their expired ATCs under a DPR proposed procedure guide to be ratified by the minister for energy. Mordecai Ladan, head, downstream, DPR, while presenting the proposed guidelines, said the agency would carry out thorough assessment of the projects and, as expressed by the director, revalidate only the viable ones.
Meanwhile, machinery has been put in place to identity and work with serious applicants who will physically deliver the private refinery projects and relief Nigeria of massive importations, with associated loss of foreign exchange and agonizing queues at filling stations.
The huge economic cost associated with massive importation of petroleum products as the sole source of supply to the domestic market, analysts said might push the DPR to step in with fresh strategies for recovery of the nation’s lost refining capacity. The strategies are to focus on arrangements that would build confidence among investors, funding partners and host community for seamless realisation of the projects and profitable operation of the refineries. The move followed the failure of previous attempt to encourage indigenous investors establish private refineries with concessionary award of licence, disruptions and alteration in the privatisation of existing refineries poorly managed by the Nigeria National Petroleum Corporation (NNPC).
Chukwueke expressed concern over the inability of the refiners to meet government’s expectations on the licences in terms of construction and operating of private refineries in Nigeria.
The policy of allowing private refining of petroleum products was conceived as part of the earliest plan for deregulation of the downstream sector of the industry for efficient creation of value across the chain.
Presently, apart from two or more companies that have actually gone to site or made convincing efforts in sourcing funding to actualise their projects, the rest appear to be at loss on what to do with the licences. Others that have broken the ground in terms of construction appear stuck with a host of community issues that are similar to the quasi-terrorist militancy in the Niger Delta.
In an interview recently at the Offshore West African (OWA) conference in Abuja, Energy Minister Edmund Daukoru dismissed the excuses as flimsy.
Daukoru accused them of hawking the licences in the international capital markets for quick cash instead of going for loans at the finance market for long-term gains and sustainable profits.
According to the minister, government has already provided generous incentives for private refiners under the downstream deregulation programme and also guaranteed steady feedstock for all refineries in the country.
The deregulation of the downstream sector has been marred by disproportionate pricing, sloppy playing field against investors.
An oil worker said over $5-billion or N650-billion had been spent on maintenance of the nation’s four refineries with combined processing capacity of 445,000 bpd, which were still moribund.
The National Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) recently in Lagos disclosed that NNPC had also spent about $20-billion or N2.6-trillion on petroleum products importation.
All these costs were incurred between 2003, when deregulation began till now.
Despite the promises of deregulation, sectoral reforms, transformation of NNPC, privatisation of public enterprises and local content policy in the industry, there is no significant economic growth impact due to absence of downstream processing facilities.
Former commonwealth secretary general and chairman, Orient Petroleum and Refinery Limited, Emeka Anyaoku, described the use of imported products to service the economy of Africa’s biggest crude oil exporter as "unacceptable paradox."
To address this problem, DPR is reviewing conditions for the award of licences for private refineries and also using award of oil blocs to attract credible investments in refining. This followed a result of analysis of the failed licences. In cancelling the licences of the companies that failed to initiate projects, Chukueke said about 23 new applications were being processed, while the 2007 bid round for oil blocs would prefer investors with downstream packages.
The cancellation has cleared the way for serious investors willing to meet new regulations that rule out obsolete technology in order to guarantee best products for commercial and industrial machinery in the economy.
National oil companies (NOCs) will henceforth dictate the rules of global energy business--EJIOFOR ALIKE (Businessdayonline)
Olufisoye Delano, managing director, Nigerian Petroleum Development Company (NPDC) said NOCs were similar to other commercial companies but focus on delivering energy to their host countries.
This according to him has gone a long way in helping those countries increase economic growth.
"We don’t expect international oil companies (IOCs) to do that as they have a different agenda.
They will be committed to the Gross Domestic Products (GDPs) of their own countries."Delano said NPDC had seen different markets emerged, such as the Middle East and the Far East, when 30 years ago Nigeria dealt primarily with the West. The managing director pointed out that a key challenge for NOCs would be meeting domestic supply needs that would compete with exports as customers were now driven by market issues and security of supply.
The delegates agreed that the roles of the NOCs had greatly changed over the past 10 years.
According to them, NOCs hold the majority of the world’s energy resources and are increasingly exerting control over which foreign companies help them to develop these resources and on what terms.
However, 15 percent of delegates said IOCs would determine the future rules of doing business in energy, with 12 percent voting for those with break-through technologies, and three percent asserting it would be owners of assets, rigs, and large vessels. The delegates also identified the two main trends facing NOCs, which were shaping the way they do business.
Their governments see them as cash cows to gain revenues to invest in other social programmes; they focus on control of the reserves and prohibit others from coming in to develop them.
Jesús Reyes-Heroles, director general, Petroleos Mexicanos, a Mexico’s state owned oil company, said the challenge facing NOCs was developing the financial resources to meet opportunities within the market. Reyes-Heroles said there was now mature and diverse discussion within Mexico’s congress about how Pemex should evolve that wasn’t possible 10 years ago, adding that the future of Pemex would become clearer in 2013 once the current administration ends its term. Mexico’s constitution does not allow foreign ownership of its oil and gas resources.
Pemex also paid high taxes equal to 60.8 percent of total sales to the government, which crippled its ability to invest in expanding exploration and production of its most promising - but costly to develop-structures, maintain its infrastructure, and reduce its debt. The government has now adjusted the tax regime to tax profits rather than its revenue as in the past. "We don’t anticipate in the short term to have any private E & P companies come in, but there could be interesting opportunities in the downstream in the future," Reyes-Heroles said.
Mexico is producing 2.1-million barrels per day (bpd) of oil and expects to expand its refining capacity within the next few years. "There is very little that can be done.
"We import a third of our (petroleum products) and in Mexico the reduction of imports when our new refining capacity comes on-stream will ease up supply elsewhere in the market," Reyes-Heroles said.
With IOCs being increasingly pushed towards just managing reservoir risk, it is likely that they will no longer have operator roles in projects. This will be transferred instead to service companies as NOCs have access to the reserves, asserted Peter Goode, executive chairman, Aibel Group. "Service companies will continue to encroach on IOCs — they carry the burden of technical development, responsible for capital investment in equipment and operations personnel. Consolidation will accelerate within the services sector."
This according to him has gone a long way in helping those countries increase economic growth.
"We don’t expect international oil companies (IOCs) to do that as they have a different agenda.
They will be committed to the Gross Domestic Products (GDPs) of their own countries."Delano said NPDC had seen different markets emerged, such as the Middle East and the Far East, when 30 years ago Nigeria dealt primarily with the West. The managing director pointed out that a key challenge for NOCs would be meeting domestic supply needs that would compete with exports as customers were now driven by market issues and security of supply.
The delegates agreed that the roles of the NOCs had greatly changed over the past 10 years.
According to them, NOCs hold the majority of the world’s energy resources and are increasingly exerting control over which foreign companies help them to develop these resources and on what terms.
However, 15 percent of delegates said IOCs would determine the future rules of doing business in energy, with 12 percent voting for those with break-through technologies, and three percent asserting it would be owners of assets, rigs, and large vessels. The delegates also identified the two main trends facing NOCs, which were shaping the way they do business.
Their governments see them as cash cows to gain revenues to invest in other social programmes; they focus on control of the reserves and prohibit others from coming in to develop them.
Jesús Reyes-Heroles, director general, Petroleos Mexicanos, a Mexico’s state owned oil company, said the challenge facing NOCs was developing the financial resources to meet opportunities within the market. Reyes-Heroles said there was now mature and diverse discussion within Mexico’s congress about how Pemex should evolve that wasn’t possible 10 years ago, adding that the future of Pemex would become clearer in 2013 once the current administration ends its term. Mexico’s constitution does not allow foreign ownership of its oil and gas resources.
Pemex also paid high taxes equal to 60.8 percent of total sales to the government, which crippled its ability to invest in expanding exploration and production of its most promising - but costly to develop-structures, maintain its infrastructure, and reduce its debt. The government has now adjusted the tax regime to tax profits rather than its revenue as in the past. "We don’t anticipate in the short term to have any private E & P companies come in, but there could be interesting opportunities in the downstream in the future," Reyes-Heroles said.
Mexico is producing 2.1-million barrels per day (bpd) of oil and expects to expand its refining capacity within the next few years. "There is very little that can be done.
"We import a third of our (petroleum products) and in Mexico the reduction of imports when our new refining capacity comes on-stream will ease up supply elsewhere in the market," Reyes-Heroles said.
With IOCs being increasingly pushed towards just managing reservoir risk, it is likely that they will no longer have operator roles in projects. This will be transferred instead to service companies as NOCs have access to the reserves, asserted Peter Goode, executive chairman, Aibel Group. "Service companies will continue to encroach on IOCs — they carry the burden of technical development, responsible for capital investment in equipment and operations personnel. Consolidation will accelerate within the services sector."
Ogoni Oil Fire Unsettles Shell-Daily Trust (Abuja)
The Shell Petroleum Development Company has expressed concern about a fire that has continued to burn at Yorla-16, one of its non-producing wells in Ogoni land.
The company says it confirmed the fire during an over-fly on 25th April and immediately informed the Rivers State Government, the Department of Petroleum Resources and other relevant agencies.
A statement signed by the company's External Affairs Director, Mrs Allison Madueke and made available to Business Trust yesterday said SPDC mobilised its Fire and Well Services teams to determine how to secure the well and fight the fire. Representatives from the DPR and Federal and State Ministries of Environment were also notified, and the combined team is ready to move to Yorla-16 as soon as access is secured.
The statement however said, discussions with the communities over granting of access have yet to be concluded, even as SPDC expressed that a fire of this nature could intensify and pose serious danger to people and the environment.
"SPDC wishes to thank the Rivers State Government, community elders and youths for their efforts in ensuring that the combined teams have access to the site. We appeal to all parties concerned for access to be granted without further delay so that the teams will determine the cause of the fire and try to put it out", the statement adds.
The company says it confirmed the fire during an over-fly on 25th April and immediately informed the Rivers State Government, the Department of Petroleum Resources and other relevant agencies.
A statement signed by the company's External Affairs Director, Mrs Allison Madueke and made available to Business Trust yesterday said SPDC mobilised its Fire and Well Services teams to determine how to secure the well and fight the fire. Representatives from the DPR and Federal and State Ministries of Environment were also notified, and the combined team is ready to move to Yorla-16 as soon as access is secured.
The statement however said, discussions with the communities over granting of access have yet to be concluded, even as SPDC expressed that a fire of this nature could intensify and pose serious danger to people and the environment.
"SPDC wishes to thank the Rivers State Government, community elders and youths for their efforts in ensuring that the combined teams have access to the site. We appeal to all parties concerned for access to be granted without further delay so that the teams will determine the cause of the fire and try to put it out", the statement adds.
Sapetro expropriation of OPL 246, media reportage and FG-By Emeka Obioma(vanguardngr)
OUTSIDE the courtroom in which it is being vigorously contested, the expropriation by the Federal Government (FG) of South Atlantic Petroleum Ltd's (SAPETRO) OPL 246 continues to generate intense publicity and wide range of public commentary (informed and un-informed). Some of the commentary is impartial, but some of it is clearly inspired by covert interests.
The subject matter of the commentary is a pending litigation; SAPETRO VS Minister of Petroleum Resources, in which the FG purported expropriation of SAPETRO's rights in the extant portion of OPL 246 are being challenged by the company. The case is now in the Appeal Court where an Interim Injunction has been granted to SAPETRO against the Ministry of Petroleum Resources.
On Wednesday,7th February 2007, for example, two daily newspapers — THIS DAY and VANGUARD — published almost identical articles with the title “Danjuma's oil firm violated government's indigenization policy, FG tells court.” This was about one week after the court of appeal sitting at Lagos restrained the FG from proceeding with its attempt to alienate the subject matter of SAPETRO's claims.
The publications were remarkable because they reproduced as argument made before the court on 6th February 2007, the contents of a further affidavit filed by the FG on 26th January 2007.
The copious rebuttal of this tendentious and often perjurious affidavit by SAPETRO was not referred to. More remarkably, there were in fact no arguments on 6 February 2007 because the court of appeal did not empanel on that date. The reporters were obviously not in court on the 6th February 2007!!
The further affidavit filed by the Department of Petroleum Resources (DPR) is itself remarkable. For a document emanating from a statutory agency it is highly personal, very emotional and almost desperate in its tone.
Several statements made therein are misleading or deliberately false. The affidavit filed in response by SAPETRO on 2nd February 2007 contains documents originating from DPR itself as well as NNPC and the Minister of Petroleum which easily rebuts the main misrepresentations presented so enthusiastically by one Joseph Tolorunse from the DPR. Even facts previously admitted in open court by leading counsel for DPR in the High Court are amazingly denied on behalf of Professor Oditah SAN in a manner that is likely to embarrass both counsel and client.
In the midst of this type of information manipulation, the basic facts are untouched. SAPETRO is a “poster child” for responsible and effective indigenous participation in the national heritage that is the petroleum industry.
The public may wonder whether the extant policy to allow Nigerians to benefit from that heritage is somehow offensive in the primary success scenario for the policy.
The public may also wonder, whether the success of SAPETRO on a highly speculative investment deep offshore is a reason for recrimination and penalization, more so when commission agents who populate the industry continue to prosper under the same administration.
The origin of the indigenous participation policy in the Oil Sector was an idea mooted three years after General Babangida assumed office. The Federal Government mooted the prospect of liberalization of the Nigerian Upstream Sector by inviting indigenous companies to participate in oil exploration and production, which until then was the exclusive preserve of big multinational players.
The plan was actualized under Professor Jubril Aminu as Minister of Petroleum Resources between 1990 and 1992. The Official policy (Indigenous Concession Programme, “ICP”) was effected through the discretionary award of acreages to indigenous (Nigerian owned companies) and some form of preferential treatment was even accorded to indigenous bidders participating in the 1991 bidding round for oil acreages.
SAPETRO applied in September 1997 for the allocation of block OPL 246 in deep offshore within the continental shelf of the Federal Republic of Nigeria. The application contained very special merits. It was the first application presented to DPR, which was accompanied by the Letters of Intent of multinational companies indicating their disposition to participate together with an indigenous company as financial and technical partners.
In March 1998, SAPETRO was allocated OPL 246 and after payment of a signature bonus very substantial at that time when Nigeria deep offshore was not very attractive received it's Deed of Assignment from the Government.
By a letter dated 26th May 1998, the Honourable Minister of Petroleum Resources consented to the assignment by SAPETRO 40% of its interest in the block to foreign companies while retaining the remaining 60% of the direct equitable interests in the OPL to explore and develop it on a sole risk basis.
After the inauguration of President Obasanjo's democratic administration in 1999, the Christopher Kolade panel was constituted to review issues relating to all existing indigenous deep offshore acreage allocations. In total, all but six acreage allocations were cancelled. OPL 246 was one of those not affected by the cancellations.
On the 5th of July 2003, the “Deep Water Block Allocation to Companies (Back-in Rights) Regulations” was signed by Mr. President- with the main focus being “Federal Government's participation rights” by “acquiring five-sixths” of the indigenous company's interests, in the deep offshore blocks.
Pursuant to the said Back-in Rights Regulations, the Federal Government of Nigeria — represented by the Nigerian National Petroleum Corporation (NNPC) acquired 50% out of the 60% interest of the indigenous company (SAPETRO) in the Oil Mining Lease (OML), which was granted out of OPL 246. The foreign multinationals were not affected.
It is pertinent to recall that when SAPETRO applied for a grant of an OML covering a portion of the area of OPL 246 in August 2003, SAPETRO was requested by DPR to exclude the South East corner of the block (approximately 200km2) from OPL 246 map and to donate it to the Joint Development Zone (JDZ) of Nigeria and Sao Tome.
SAPETRO obliged this request in good faith and without asking for any compensation, in full compliance and respect for international treaties entered into by the Federal Republic of Nigeria. The geographical coordinates of OPL 246 were consequently changed but OPL maintained its status and nomenclature as OPL 246 with the full acknowledgment of DPR. This point is significant because of recent specious argument by DPR through Professor Oditah, that any change in the co-ordinates of OPL destroys the grant thereof.
SAPETRO has successfully built a team of Nigerian geologists, engineers, lawyers and financial officers who have benefitted from the abundant transfer of technology from her foreign partners in the most advanced frontier area of the oil and gas industry. Some of SAPETRO's technical staff are integrated in the development operations of OML 130. These SAPETRO staff has acquired great wealth of know-how and experience in all aspects of the oil and gas business and technology.
SAPETRO is equipped with state-of-the-art information technology in its brand new office tower in Victoria Island. Thus, making her one of the ‘most technologically advanced indigenous oil and gas companies in Nigeria.
Taking a bold step, and in order to demonstrate its maturity as a Nigerian indigenous oil and gas company, SAPETRO independently participated in an open international competitive bid in December 2004 and was awarded a block in the Republic of Benin which it is presently Operating. This offshore block includes the rehabilitation of the well-known SEME Oil Field.
On the 25th of April 2005 NNPC, SAPETRO and its Partners executed a PSC pursuant to which SAPETRO was appointed as the sole Contractor to NNPC for the PSC through negotiation with the Federal Government and as compensation for the expropriation of its rights in accordance with the Petroleum Act. SAPETRO's Partner was designated as the operator under the Contract to execute the petroleum operations on the Contractor's behalf.
With the approval of the Honourable Minister and the consent of NNPC, SAPETRO assigned to another Partner a part of its rights and obligations as a “Contractor” under the PSC in respect of OML 130. NNPC retains the ownership of the 50% equity interest in OML 130, which was acquired out of the 60% original interest of SAPETRO.
In consideration of becoming the divestee of a part of the Contractor rights and obligations under the PSC, the Partner paid to SAPETRO a certain sum of money a great portion of which was refunded to its OPL Partners being past cost paid on behalf of SAPETRO by the Partners.
Also SAPETRO and its PSC Co-Contractor respectively confirmed to NNPC that only the Contractor's expenses incurred in respect of past and future Petroleum Operations as defined in the PSC are recoverable, it being understood that any consideration paid or payable by the Co-Contractor to SAPETRO, not being Cost Oil as defined in the PSC, is not recoverable.
In OML 130, the Akpo development project is steaming ahead and is expected to come on stream in late 2008 and eventually reach peak production of 225,000 barrels of oil equivalent per day, of which nearly 80% is condensate.
In addition, after yielding several promising discoveries, the Egina field on OML 130 may be suitable for stand-alone development, with the peak production similar to Akpo.
With these two developments, SAPETRO and its partners will add in excess of 2.5 billion barrels to the oil reserves of the nation, and a production of 450,000 barrels/day.
After recovery of costs, the FG/ NNPC will benefit 5 7.5% of production oil (Tax oil and Profit oil), while SAPETRO and its other Partners will share the remaining 42.5%
All the above wealth produced by SAPETRO for the nation and future Nigerians should be compared with the heavy loses that will be produced by DPR through the nullification of the Petroleum Act by insisting on the non-observance of relinquishment obligations at OML stage. The nation will lose 50% of all the OML acreage required to be relinquished after 10 years of production.
According to THIS DAY publication of 22nd January 2007 “the DPR Director, in a letter to Esso E and P, dated February 8, 2006 had confirmed that “once OPL 209 is converted to an OML with the relinquishment of 50% of the block, no further relinquishments will be required, as Esso would have met all the relinquishment obligations regarding this bloc”.
“This decision of Mr. Chukwueke purports to amend the Act. The Director of DPR, Mr. Chukwueke, places himself over the legislators in the National Assembly by imposing his criteria and advising the petroleum companies not to pay attention to the Petroleum Act and to follow the instructions given by the Director of the DPR. This conflicts with the Petroleum Act 1969 and produces huge economic loses to the country.”
Since May 2006, the FG (Ministry of Petroleum Resources) has continued to insist on their right to expropriate the extant portion of the OPL, after issuing one OML out of OPL 246. SAPETRO is contending such action in the court and now the case is in the Appeal Court.
The expropriation if allowed to stand will not only affect SAPETRO, but also its Partners. These are multinational corporations that are listed in the international stock exchange of New York, London, Paris etc. Such an expropriation will attract serious international consequences for Nigeria as it gives the impression that foreign investments are not safe in Nigeria and Nigeria does not respect international bilateral agreements.
The application of back-in-rights Regulations in the OMLs arising from OPL 246 is in -fact an effective relinquishment of 50% of the block.
The so called “statutory duty” for the expropriation referred to by the FG/DPR is the desire to transfer SAPETRO's rights (a 100% wholly owned Nigerian company) to a foreign company controlled by an Indian businessman called, Lakshmi Mittal who has already been awarded several oil blocks by the N G in 2006 alone. The public is entitled to wonder whether it can be in the national interest to expropriate an indigenous interest in order to arrange a deal with a foreign businessman no matter how attractive he may be.
By the bad example demonstrated in SAPETRO's case, this administration is moving in a direction (indigenous companies to foreign companies) opposite to that intended by the Indigenous Concession Programme (ICP) (from foreign companies to indigenous companies). It appears therefore that to the question: who actually is violating the indigenization policy? The answer will not be Danjuma's oil firm”!
Mr. Emeka Obioma, a public affairs analyst and commentator wrote in from Lagos.
The subject matter of the commentary is a pending litigation; SAPETRO VS Minister of Petroleum Resources, in which the FG purported expropriation of SAPETRO's rights in the extant portion of OPL 246 are being challenged by the company. The case is now in the Appeal Court where an Interim Injunction has been granted to SAPETRO against the Ministry of Petroleum Resources.
On Wednesday,7th February 2007, for example, two daily newspapers — THIS DAY and VANGUARD — published almost identical articles with the title “Danjuma's oil firm violated government's indigenization policy, FG tells court.” This was about one week after the court of appeal sitting at Lagos restrained the FG from proceeding with its attempt to alienate the subject matter of SAPETRO's claims.
The publications were remarkable because they reproduced as argument made before the court on 6th February 2007, the contents of a further affidavit filed by the FG on 26th January 2007.
The copious rebuttal of this tendentious and often perjurious affidavit by SAPETRO was not referred to. More remarkably, there were in fact no arguments on 6 February 2007 because the court of appeal did not empanel on that date. The reporters were obviously not in court on the 6th February 2007!!
The further affidavit filed by the Department of Petroleum Resources (DPR) is itself remarkable. For a document emanating from a statutory agency it is highly personal, very emotional and almost desperate in its tone.
Several statements made therein are misleading or deliberately false. The affidavit filed in response by SAPETRO on 2nd February 2007 contains documents originating from DPR itself as well as NNPC and the Minister of Petroleum which easily rebuts the main misrepresentations presented so enthusiastically by one Joseph Tolorunse from the DPR. Even facts previously admitted in open court by leading counsel for DPR in the High Court are amazingly denied on behalf of Professor Oditah SAN in a manner that is likely to embarrass both counsel and client.
In the midst of this type of information manipulation, the basic facts are untouched. SAPETRO is a “poster child” for responsible and effective indigenous participation in the national heritage that is the petroleum industry.
The public may wonder whether the extant policy to allow Nigerians to benefit from that heritage is somehow offensive in the primary success scenario for the policy.
The public may also wonder, whether the success of SAPETRO on a highly speculative investment deep offshore is a reason for recrimination and penalization, more so when commission agents who populate the industry continue to prosper under the same administration.
The origin of the indigenous participation policy in the Oil Sector was an idea mooted three years after General Babangida assumed office. The Federal Government mooted the prospect of liberalization of the Nigerian Upstream Sector by inviting indigenous companies to participate in oil exploration and production, which until then was the exclusive preserve of big multinational players.
The plan was actualized under Professor Jubril Aminu as Minister of Petroleum Resources between 1990 and 1992. The Official policy (Indigenous Concession Programme, “ICP”) was effected through the discretionary award of acreages to indigenous (Nigerian owned companies) and some form of preferential treatment was even accorded to indigenous bidders participating in the 1991 bidding round for oil acreages.
SAPETRO applied in September 1997 for the allocation of block OPL 246 in deep offshore within the continental shelf of the Federal Republic of Nigeria. The application contained very special merits. It was the first application presented to DPR, which was accompanied by the Letters of Intent of multinational companies indicating their disposition to participate together with an indigenous company as financial and technical partners.
In March 1998, SAPETRO was allocated OPL 246 and after payment of a signature bonus very substantial at that time when Nigeria deep offshore was not very attractive received it's Deed of Assignment from the Government.
By a letter dated 26th May 1998, the Honourable Minister of Petroleum Resources consented to the assignment by SAPETRO 40% of its interest in the block to foreign companies while retaining the remaining 60% of the direct equitable interests in the OPL to explore and develop it on a sole risk basis.
After the inauguration of President Obasanjo's democratic administration in 1999, the Christopher Kolade panel was constituted to review issues relating to all existing indigenous deep offshore acreage allocations. In total, all but six acreage allocations were cancelled. OPL 246 was one of those not affected by the cancellations.
On the 5th of July 2003, the “Deep Water Block Allocation to Companies (Back-in Rights) Regulations” was signed by Mr. President- with the main focus being “Federal Government's participation rights” by “acquiring five-sixths” of the indigenous company's interests, in the deep offshore blocks.
Pursuant to the said Back-in Rights Regulations, the Federal Government of Nigeria — represented by the Nigerian National Petroleum Corporation (NNPC) acquired 50% out of the 60% interest of the indigenous company (SAPETRO) in the Oil Mining Lease (OML), which was granted out of OPL 246. The foreign multinationals were not affected.
It is pertinent to recall that when SAPETRO applied for a grant of an OML covering a portion of the area of OPL 246 in August 2003, SAPETRO was requested by DPR to exclude the South East corner of the block (approximately 200km2) from OPL 246 map and to donate it to the Joint Development Zone (JDZ) of Nigeria and Sao Tome.
SAPETRO obliged this request in good faith and without asking for any compensation, in full compliance and respect for international treaties entered into by the Federal Republic of Nigeria. The geographical coordinates of OPL 246 were consequently changed but OPL maintained its status and nomenclature as OPL 246 with the full acknowledgment of DPR. This point is significant because of recent specious argument by DPR through Professor Oditah, that any change in the co-ordinates of OPL destroys the grant thereof.
SAPETRO has successfully built a team of Nigerian geologists, engineers, lawyers and financial officers who have benefitted from the abundant transfer of technology from her foreign partners in the most advanced frontier area of the oil and gas industry. Some of SAPETRO's technical staff are integrated in the development operations of OML 130. These SAPETRO staff has acquired great wealth of know-how and experience in all aspects of the oil and gas business and technology.
SAPETRO is equipped with state-of-the-art information technology in its brand new office tower in Victoria Island. Thus, making her one of the ‘most technologically advanced indigenous oil and gas companies in Nigeria.
Taking a bold step, and in order to demonstrate its maturity as a Nigerian indigenous oil and gas company, SAPETRO independently participated in an open international competitive bid in December 2004 and was awarded a block in the Republic of Benin which it is presently Operating. This offshore block includes the rehabilitation of the well-known SEME Oil Field.
On the 25th of April 2005 NNPC, SAPETRO and its Partners executed a PSC pursuant to which SAPETRO was appointed as the sole Contractor to NNPC for the PSC through negotiation with the Federal Government and as compensation for the expropriation of its rights in accordance with the Petroleum Act. SAPETRO's Partner was designated as the operator under the Contract to execute the petroleum operations on the Contractor's behalf.
With the approval of the Honourable Minister and the consent of NNPC, SAPETRO assigned to another Partner a part of its rights and obligations as a “Contractor” under the PSC in respect of OML 130. NNPC retains the ownership of the 50% equity interest in OML 130, which was acquired out of the 60% original interest of SAPETRO.
In consideration of becoming the divestee of a part of the Contractor rights and obligations under the PSC, the Partner paid to SAPETRO a certain sum of money a great portion of which was refunded to its OPL Partners being past cost paid on behalf of SAPETRO by the Partners.
Also SAPETRO and its PSC Co-Contractor respectively confirmed to NNPC that only the Contractor's expenses incurred in respect of past and future Petroleum Operations as defined in the PSC are recoverable, it being understood that any consideration paid or payable by the Co-Contractor to SAPETRO, not being Cost Oil as defined in the PSC, is not recoverable.
In OML 130, the Akpo development project is steaming ahead and is expected to come on stream in late 2008 and eventually reach peak production of 225,000 barrels of oil equivalent per day, of which nearly 80% is condensate.
In addition, after yielding several promising discoveries, the Egina field on OML 130 may be suitable for stand-alone development, with the peak production similar to Akpo.
With these two developments, SAPETRO and its partners will add in excess of 2.5 billion barrels to the oil reserves of the nation, and a production of 450,000 barrels/day.
After recovery of costs, the FG/ NNPC will benefit 5 7.5% of production oil (Tax oil and Profit oil), while SAPETRO and its other Partners will share the remaining 42.5%
All the above wealth produced by SAPETRO for the nation and future Nigerians should be compared with the heavy loses that will be produced by DPR through the nullification of the Petroleum Act by insisting on the non-observance of relinquishment obligations at OML stage. The nation will lose 50% of all the OML acreage required to be relinquished after 10 years of production.
According to THIS DAY publication of 22nd January 2007 “the DPR Director, in a letter to Esso E and P, dated February 8, 2006 had confirmed that “once OPL 209 is converted to an OML with the relinquishment of 50% of the block, no further relinquishments will be required, as Esso would have met all the relinquishment obligations regarding this bloc”.
“This decision of Mr. Chukwueke purports to amend the Act. The Director of DPR, Mr. Chukwueke, places himself over the legislators in the National Assembly by imposing his criteria and advising the petroleum companies not to pay attention to the Petroleum Act and to follow the instructions given by the Director of the DPR. This conflicts with the Petroleum Act 1969 and produces huge economic loses to the country.”
Since May 2006, the FG (Ministry of Petroleum Resources) has continued to insist on their right to expropriate the extant portion of the OPL, after issuing one OML out of OPL 246. SAPETRO is contending such action in the court and now the case is in the Appeal Court.
The expropriation if allowed to stand will not only affect SAPETRO, but also its Partners. These are multinational corporations that are listed in the international stock exchange of New York, London, Paris etc. Such an expropriation will attract serious international consequences for Nigeria as it gives the impression that foreign investments are not safe in Nigeria and Nigeria does not respect international bilateral agreements.
The application of back-in-rights Regulations in the OMLs arising from OPL 246 is in -fact an effective relinquishment of 50% of the block.
The so called “statutory duty” for the expropriation referred to by the FG/DPR is the desire to transfer SAPETRO's rights (a 100% wholly owned Nigerian company) to a foreign company controlled by an Indian businessman called, Lakshmi Mittal who has already been awarded several oil blocks by the N G in 2006 alone. The public is entitled to wonder whether it can be in the national interest to expropriate an indigenous interest in order to arrange a deal with a foreign businessman no matter how attractive he may be.
By the bad example demonstrated in SAPETRO's case, this administration is moving in a direction (indigenous companies to foreign companies) opposite to that intended by the Indigenous Concession Programme (ICP) (from foreign companies to indigenous companies). It appears therefore that to the question: who actually is violating the indigenization policy? The answer will not be Danjuma's oil firm”!
Mr. Emeka Obioma, a public affairs analyst and commentator wrote in from Lagos.
The Final Investment Decision (FID) will determine the financing arrangement for the project. In effect, the amount to be contributed by the joint venture partners as well as the sourcing of the balance of the investment outlay through banks.
The development comes as Redsquare Africa Limited, a leading indigenous oil and gas consulting firm, has received the nod of the Department of Petroleum Resources (DPR) to promote this year’s oil bloc bid round.
In far away Houston, Minister Energy Edmund Daukoru assured the international investment community that the oil blocs licensing round would be fair, transparent and competitive in conformity with Nigeria’s commitment to the Extractive Industries Transparency Initiative (EITI).
The NLNG train seven, which would be the largest in the country has had its contract for Front–End-Engineering and Design (FEED) of a two 8.5-million metric tons per annum of LNG awarded to KBR and partners. The KBR is a global engineering, construction and services company supporting the energy, petrochemicals, government services and civil infrastructure sectors.
The project is part of the Federal Government gas utilisation programme from which it is expecting about N1.3-trillion as revenue by the year.
The train seven is part of the large scale LNG projects that will eventually terminate in eight trains. The first six trains have so far cost about N1.55-trillion ($12-billion).
The project stakeholders including Shell, Nigeria Agip Oil Company, EIF, and the Nigerian National Petroleum Corporation (NNPC), representing the Federal Government have earned N588.8-billion ($4.6-billion) as revenue from the project.
The NLNG has a long-term contract to supply LNG to Lake Charles Terminal as well as other terminals in the United States of America and Europe, establishing NLNG’s position as the foremost player in the Atlantic market.
The NLNG will be shipping over 14-million metric tons of per annum of LNG to Europe and over 8-million metric tons per annum of LNG the United States markets after train six comes on stream this year. The project is to be constructed at Bonny Island, Nigeria. NLNG Limited is a company registered in Nigeria, whose shareholders are the Nigerian National Petroleum Corporation (NNPC), Shell, Total and ENI.
The award of the FEED is part of a dual-FEED preparation activity being undertaking in parallel by KBR and its partners along with another consortium.
The project specifications and FEED packages for the NLNG SevenPlus Project include the design of two 8.5-million metric tons per annum LNG trains and related site utilities. The shareholders are to execute only one train in the current plan, with a decision on the second train deferred for a future date. Upon completion, the NLNG train seven will be the largest LNG train in the world.
The joint venture has been successfully executing the Nigeria LNG Projects since its inception, and the award of the FEED contract follows on this success. KBR and its joint venture partners are performing the FEED work from their offices in the UK and in the National Engineering and Technical.
Daukoru told industry operators and investors in Houston yesterday that the exercise would be fair, transparent and competitive in conformity with Nigeria’s commitment to the Extractive Industries Transparency Initiative (EITI).
"We are determined to ensure that Nigeria benefits from the best available state of the art technology and expertise in petroleum and gas acreage development and production."
Daukoru assured investors not to worry about continuity since the ruling party; the PDP had already been re-elected to form the next government. According to him, 45 oil blocs will be on offer and that the exercise will be carried out electronically and bidders will know the results instantly.
In a letter to Redsquare Africa, which was made available to Business Day, the director of DPR, Tony Chukwueke, noted that the company’s involvement would prop up the Nigeria content policy in the 2007 bid round.
The development comes as Redsquare Africa Limited, a leading indigenous oil and gas consulting firm, has received the nod of the Department of Petroleum Resources (DPR) to promote this year’s oil bloc bid round.
In far away Houston, Minister Energy Edmund Daukoru assured the international investment community that the oil blocs licensing round would be fair, transparent and competitive in conformity with Nigeria’s commitment to the Extractive Industries Transparency Initiative (EITI).
The NLNG train seven, which would be the largest in the country has had its contract for Front–End-Engineering and Design (FEED) of a two 8.5-million metric tons per annum of LNG awarded to KBR and partners. The KBR is a global engineering, construction and services company supporting the energy, petrochemicals, government services and civil infrastructure sectors.
The project is part of the Federal Government gas utilisation programme from which it is expecting about N1.3-trillion as revenue by the year.
The train seven is part of the large scale LNG projects that will eventually terminate in eight trains. The first six trains have so far cost about N1.55-trillion ($12-billion).
The project stakeholders including Shell, Nigeria Agip Oil Company, EIF, and the Nigerian National Petroleum Corporation (NNPC), representing the Federal Government have earned N588.8-billion ($4.6-billion) as revenue from the project.
The NLNG has a long-term contract to supply LNG to Lake Charles Terminal as well as other terminals in the United States of America and Europe, establishing NLNG’s position as the foremost player in the Atlantic market.
The NLNG will be shipping over 14-million metric tons of per annum of LNG to Europe and over 8-million metric tons per annum of LNG the United States markets after train six comes on stream this year. The project is to be constructed at Bonny Island, Nigeria. NLNG Limited is a company registered in Nigeria, whose shareholders are the Nigerian National Petroleum Corporation (NNPC), Shell, Total and ENI.
The award of the FEED is part of a dual-FEED preparation activity being undertaking in parallel by KBR and its partners along with another consortium.
The project specifications and FEED packages for the NLNG SevenPlus Project include the design of two 8.5-million metric tons per annum LNG trains and related site utilities. The shareholders are to execute only one train in the current plan, with a decision on the second train deferred for a future date. Upon completion, the NLNG train seven will be the largest LNG train in the world.
The joint venture has been successfully executing the Nigeria LNG Projects since its inception, and the award of the FEED contract follows on this success. KBR and its joint venture partners are performing the FEED work from their offices in the UK and in the National Engineering and Technical.
Daukoru told industry operators and investors in Houston yesterday that the exercise would be fair, transparent and competitive in conformity with Nigeria’s commitment to the Extractive Industries Transparency Initiative (EITI).
"We are determined to ensure that Nigeria benefits from the best available state of the art technology and expertise in petroleum and gas acreage development and production."
Daukoru assured investors not to worry about continuity since the ruling party; the PDP had already been re-elected to form the next government. According to him, 45 oil blocs will be on offer and that the exercise will be carried out electronically and bidders will know the results instantly.
In a letter to Redsquare Africa, which was made available to Business Day, the director of DPR, Tony Chukwueke, noted that the company’s involvement would prop up the Nigeria content policy in the 2007 bid round.
By every account, it is one of the biggest frauds in the history of the Nigerian oil industry. About 2.6 billion US dollars are involved. So mind boggling is the revelation that the Funsho Kupolukun headship of the Nigerian National Petroleum Corporation (NNPC) is quick to say they were not part of the long-winding heist.
Levi Ajuonuma, the General Manager, Group Public Affairs Division, NNPC, said the ingenious theft of 65 million barrels of crude oil did not happen in the period of the present administration of Engineer Kupolokun, the Group Managing Director of the NNPC.
According to Ajuonuma, the scam took place during the period of the former MD, Gaius Obaseki. In his words: “We were not there at that time. It was Obaseki’s time. I can’t say anything on that. It is not our regime.”
Indeed, no one expected such a shocking finding when Oby Ezekwesili, the former Minister of Solid Minerals, got the Federal government to engage the Hart Group – a United Kingdom-based audit firm – to direct its searchlight at the nation’s oil industry. For long, it has been shrouded in secrecy, in the vice-like grip of foreign and local players.
At the end, it was discovered that between 1999 and 2004, about 65 million barrels of crude oil could not be accounted for by the NNPC. The Hart Audit report, compiled for the Nigerian Extractive Industry Transparency Initiative (NEITI), said the missing crude oil was due to shortfalls in the amount of crude sent to refineries within the period under review. Specifically, the report said: “There were differences between the amounts reported within NNPC for the volume of crude sent for refining with the discrepancies between what the oil terminals recorded as sent to the refineries and what the refineries recorded as received from the terminals.”
A chart in the report, obtained by Saturday Sun, shows that in 1999, about 66 million barrels of crude oil was sent by the Crude Oil Marketing Department (COMD) of the NNPC but the nation’s refineries received 99 million barrels within the year which shows a difference of 33 million barrels unaccounted for.
Also, in 2000, 36 million barrels was sent to the refineries going by the record given by the COMD but within the same year, the Pipeline Products Marketing Company (PPMC), also a subsidiary of the NNPC, reported that about 46 million barrels passed through its hands in the same year, indicating a difference of 10 million barrels. However, the discrepancies shows a shortfall of 22 million barrels, of crude oil as follows: - 3 million, -2 million, - 6 million and – 11 million for the years 2001, 2002, 2003, 2004 respectively. The NNPC still has not accounted for the 22 million barrels stolen at a time when oil money hovered between $25 to $40.
The Hart report said the NNPC could not convincingly say how the refineries in 1999 and 2002 received more crude oil than what was sent from the oil terminals, neither could it account for the 22 million barrels sent to it which didn’t get to the refineries during the years 2001, 2002, 2003 and 2004. Industry watchers are helpless as they ask: ‘Are the refineries on one hand getting phony supplies from oil terminals and do they sometimes get extra crude from another source?’
Under the carpet
Clinical as the investigations by the Hart Group were, local civil society and international watchdog groups were stunned when the findings were made available to Aso rock only for a livid President Obasanjo to treat the efforts of the foreign consultants with scorn. Unwilling to admit that such a systemic fraud had been going on under his administration, the president, balking at throwing the report into his shredding machine, gave the marching order to a bewildered Hart Nurse to go and do a more thorough job.
For those who had all along followed the Obasanjo regime’s anti-corruption war with misgivings, the Hart treatment bore the same motif as the reception given by the same President to the Economic and Financial Crime Commission (EFCC)’s report on the decay in the Nigeria Ports Authority which allegedly indicted some sacred cows, including Chief Bode George, the People’s Democratic Party (PDP) national Vice-Chairman, South West. The EFCC’s forensic examination had been pronounced sacriligious and unacceptable with the anti-corruption czar reduced to a laughing stock as he was ordered to do his homework well.
While the ghost of what is now known as the original NEITI report was haunting everyone who had anything to do with the missing 65 million barrels of crude oil, facts emerged early this year, that contract for a $10.3 million Chevron/Texaco EGP – 3B FEED Gas gathering compression platform project was awarded without competitive biddings, allegedly to Crestville Engineering and Technologies Company Limited, owned by the current Group Managing Director of the NNPC, Engr. Funsho Kupolokun. Industry players have since said that the actual estimate for the project, is about one million dollars.
The same Kupolokun’s company also allegedly cornered a $7 billion Olokola LNG contract while emerging the prefered bidder for the OPOL 246 AKPO FPSO field development project and the TotalEfina Ofon Phase II Transport and Installation contract. Despite outrages over the sweeping aside of due process and the excess billions of dollars being funneled into the projects, the only official reaction is mum.
Saturday Sun gathered that in digging up the dirt which the Obasanjo regime has now browbeaten the consultant to dress in a cleaner garb, the UK-based firm extracted information from different groups and individuals manning sensitive positions in the oil and gas industry. For example, on March 31st, 2005, Hart Nurse of the Hart Group in conjunction with Samuel Afemikhe and S. Bantafi both of SS Afemikhe & Co met with Stanley Lawson, NNPC Group Executive Director (Finance & Administration; E. Akhuemonkhan, Group General Manager (Head office Accounts) and Alhaji T.A. Rufai, Group General Manager (Finance & Administration).
At the Federal Inland Revenue Service, the auditors had useful talks with the Chairman, Ifueko Omogui; the Director Assessment, Mr A. Sulu and the Auditor, Mr ILo. The session at the Petroleum Equalisation Fund had in attendance the Executive Secretary, Mr. A. Gurin and Alaji Kwara while at the Department of Petroleum Resources the quesitons were answered by Mac Ofurhie, the Director; and B.O. Ogunjana, the Deputy Director (Resource Management & Reserves).
Three people at the Central Bank were reportedly interviewed in the course of the investigations. They were the Director of Research, O.J. Nnamma; Mr Bon Okafor and Mr. Festus Odoko. The report stated that “each of these meetings was designed to acquaint the respective entities with the audits and to outline the deliverables and the role of the entity in question.”
The same principle was applied when the auditors had a meeting with representatives of the different oil companies. Both Pascal Raab and Tai Oshisanya stood in for Total (EPNL) while Funke Alade-Adeyefa and Deji Haastrup were there for Chevron Texaco. Others were Wale Raji and Ola Sobande for Shell; Monday Otabor for Addax and Paul Stevens and Pat Ahonsi for Exxon-Mobil.
Essentially, the audit was directed at reported production and sales figures for the 1999 – 2004 period as against the actual crude oil lifted and amount payable. Saturday Sun gathered that there are myriad open windows through which crude oil is stolen. Other shades of corrupt practices are legion.
In specific terms, the Hart Group carried out domestic crude oil sales and receipts validation in the NNPC – Crude oil Marketing Department, Treasury, Finance and Accounts Departments and CBN. The objective of the exercise was to confirm volume of domestic crude oil actually invoiced and to find out if domestic crude supplied in the period under review was paid for and proceeds swept into the Federation account.
To carry out the exercise, the auditors requested and obtained documents on domestic crude lifting profile from NNPC – COMD from November 1998 to December 2004; domestic crude oil templates from NNPC – COMD for the same period; schedule of payments to CBN for the transfer of money from NNPC Oil and Gas Naira Account.
This was obtained from the finance and Accounts Department of the NNPC. Other documents included statements of account for CBN/NNPC oil and Gas where lodgments for proceeds of domestic crude are made before being transferred to the federation account. Then, there was the Federation Account Component Statements for January 1999 – December 2004. This is a monthly analysis of what goes into the Federation Account; and lastly, Federation Account statements for the period under review. The job here was to verify the volume of domestic crude in the template populated by NNPC – COMD against that in the lifting profiles.
Mapping out the procedures in the nation’s oil industry, it was gathered that the NNPC is supplied with domestic crude for the purpose of refining it and distributing the petroleum products (Petrol, kerosene, etc) derived therefrom for domestic consumption. NNPC is then expected to pay for the agreed crude oil lifted from proceeds realized from sale of petroleum products.
NNPC pays for the domestic crude allocated to it monthly into the federation account maintained by the CBN. A credit facility of 60 days is granted to enable NNPC collect the sales proceeds from its customers who also have a 30-day credit facility which is a normal global business practice. However, from October 2003, this term was further extended to 90 days, following what was said to be “mounting liquidity problem experienced by NNPC as a result of the global increase in crude oil price.”
The quantity of export crude oil is determined by what is called metering or by a static method which involves ‘fiscalization and defizcalisation’ of the storage tanks designated for the crude oil export operations.
Be they domestic or export crude, the CBN warehouses funds that flow from the oil and gas sector. However, before the funds flow into the federation account, they pass through some designated bank accounts, both foreign and local, depending on the currency in which they are paid – dollars, pound sterling, euro, naira, etc. These designated accounts are operated by the NNPC for crude oil sales and the Accountant General of the Federation (AGF) for oil and gas taxes. The NNPC account is with JP Morgan Chase Bank, New York while the AGF account is with Federal Reserve Bank of New York. The AGF has another account for local taxes and this is with the Banking Operations Department (BOD) of CBN. In the period under review, two banks were used by the CBN to receive federation account funds.
They were Bank for International Settlement (BIS), Switzerland and JP Morgan Chase.
In his observations on the NEITI report, Prof. Ademola Ariyo of the Department of Economics, University of Ibadan, said: “It appears that the level of transparency in the operations within the nation’s oil and gas sector is less than desirable.” Both Prof Ariyo and Zacc Ososanya, Professor of Accounting, Olabisi Onabanjo University, Ago-Iwoye, agreed that there had been a regime of “under-assessment of actual revenue due to the nation and possible underreporting of revenue collected for and on behalf of the nation.”
Saturday Sun gathered that the lack of transparency in the oil and gas sector is traceable to an incurable langour on the part of officials of Department of Petroleum Resources (DPR) who are statutorily the police of the industry, but who are known to habitually turn a blind eye to or even partakers in the orgy of corruption which the NEITI audit was expected to unearth. This aspect of the assignment is named in the report as physical audit. The other two aspects are Financial Audit and the Process Audit.
Some of the roles of the DPR are stated as: “supervising all petroleum industry operations being carried out under licenses and leases in the country in order to ensure compliance with the applicable laws and regulations in line with good oil field practices; keeping and updating records on petroleum industry operations particularly on matters relating to petroleum reserves, production and exports of crude oil, gas and condensate, licenses and leases as well as rendering regular reports on them to government; ensuring timely and adequate payments of all rents and royalties as at when due; (and) enforcing safety and environmental regulations and ensuring that those operations conform to national and international industry practices and standards.”
It hardly came as a surprise to industry watchers that the notoriously sweetheart relationship between oil companies and DPR officials was one of the major attractions for the Hart Group. Indeed, one of the fallouts of the audit is a letter sent to Hart Nurse Limited by Atlas Petroleum International Limited on November 10, 2006. Signed by its General Manager, Emeka Gbulie, it was entitled ‘Representation of full disclosure.’
The body of the letter says: “In connection with the financial audit being undertaken for the National Stakeholder Working Group of the NEITI, concerning a retailation of the revenue flow as received by the relevant agencies of the Federal Republic of Nigeria with all payments made by participants in Nigeria’s oil industry for years 1999 – 2004, we confirm that to the best of our knowledge and belief, we have fully declared, in the templates to you, the financial amounts paid and/or received by us as regards the respective financial flows in the specific periods.”
It was paragraphs 3 and 4 that said it all. They read: “No further payment was made by the company to any official of the Federal Republic of Nigeria or of agencies thereof, aimed at securing benefits for the company. After making appropriate enquiry, no payment was made by any third party to any of the relevant agencies of the Federal Republic of Nigeria or officials thereof on behalf of the company…”
Interestingly, Atlas Petroleum was not the only one that forwarded a ‘Representation of Full Disclosure.’ Over a dozen other oil companies sent letter-head denials of monetary inducement or any kind of underhand dealing with government officials. The different letters, from the different companies as signed by their executives, came from Chevron Nigeria Limited (signed by C.A Taylor, General manager NNPC/CNL JV); Conoil Producing Ltd (M.E. Omatsola); Continental Oil and Gas Ltd (Anthony Nwosu); Dubri Oil Company Ltd (J.O. Onilude); ELF Petroleum Nig. Ltd (J. Marraud des Grottes, MD/Chief Exec); Express Petroleum and Gas Company Ltd (T.A. Dantata, MD); Exxon-Mobil (John P. Chaplin, Chairman/MD); Nigerian Agip Exploration Ltd (A. Panza) and Nigeria LNG Ltd (Dr. Chris Haynes, MD/CEO).
Others were Ocean Energy Nig. Ltd (Raymond S. Marchand, MD); Pan Ocean Oil Corporation (Dr. F.A. Fadeyi, Chairman/MD); Petroleo Brasileiro Nig. Ltd (Wilson De Oliverira Senna, Finance Manager); Phillips Oil Company (Nig) Ltd (Todd Creeger, MD); Shell Petroleum Development Company of Nig Ltd (Anolu O.M. Jonathan, JV Controller) and Agip Energy and Natural Resources Nig. Ltd (A. Panza).
Saturday Sun gathered that the verdict on oil companies operating in Nigeria are damning, as contained in the Neiti report. In the course of the audit, it was discovered that “there were differences between the amounts reported by the companies as paid and the amounts reported by the CBN as received.”
Another worrisome observation was that “comparison between the reconciled physical hydrocarbon balances and the declared volumes for PPT (Petroleum profit Tax) purposes revealed differences both higher and lower. These differences require investigation. Some companies have not provided explanation for the differences.”
Yet another grouse was that “comparisons of the deductions claimed by companies for PPT purposes against the expenditures in their audited accounts revealed in some cases differences which the companies have not explained.”
In fact, there were many things the oil companies did not want explained. Some of them even erected roadblocks for the auditors who in sheer frustration protested to the National Stakeholder Working Group that some companies were not cooperating with the audit process. On September 8th, 2005, the auditors reported that “there appear not to have been any change in the position of the companies during August. None has responded to the previously submitted requests for information.
The affected companies were given as Amni International Petroleum Development Co. Ltd, Continental Oil & Gas Ltd, Atlas Petroleum International Ltd, Moni Pulo Ltd, Cavendish Petroleum Nig. Ltd, and Express Petroleum & Gas Company Ltd. Others were Africa Petroleum Plc, Texaco(downstream), African Petroleum (downstream), Conoil Producing Ltd, Ocean Energy Nig. Ltd and Petrobras.
Royalty fraud
Saturday Sun gathered that massive frauds are known to occur at three major points: wellheads, oil terminals and refineries. One of the most notorious corrupt practices in the oil industry is said to be royalty fraud. This occurs when production figures and/or export crude are ingeniously understated merely to underpay government of royalties.
Because of this huge challenge, and to forestall cases of stolen crude, the DPR is expected to be most active at the oil terminals where they are expected to monitor and record crude oil/condensate and gas production from the fields into the terminals by metering and static measurement methods. DPR officials are to verify the vessels and the respective quantities of crude oil/condensate and gas nominated to be lifted by the vessels.
They are to participate in the calibration of storage tanks, maintain production and export figures data bank and also participate in the fiscalisation, defiscalisation exercises and dynamic metering to compute the quantity exported. Fiscalisation is the measuring of actual volumes of crude oil considered fit for export after undergoing degassing and dehydrating.
Investigations revealed that at either the flow stations or the production platforms, field by field production with their corresponding ‘API gravities’ are used for the computation of royalties. There is supposed to be a periodic check to ascertain if the companies are underpaying the government or not. It was gathered that not all flowstations have meters and not all the flowstations and/or production platforms that have meters get their meters calibrated forthnightly as is the standard practice. There are also serious question about meters at Lease Automatic Custody Transfer (LACT) points and at the export loading terminals.
Saturday Sun discovered that one contentious issue on royalty is the oil companies’ insistence that royalty be based on export volumes and not production from wellheads. When the Hart Group visited Shell’s Bonny Crude Oil terminal in August 2006, the Terminal Manager said that 19,500 bbls /day had been lost due to theft from the pipeline between the flow stations and the terminal and hence if the point of royalty calculation was the wellhead, then they could be paying royalty on crude they do not have to sell.
In addition, there is what is called “unaccounted oil”. This may come under unrecovered spilled crude oil, arising from acts of vandalization, that cannot be estimated. Plausible as the arguments may be, industry watchers say accidental spills and pipeline incidences are massively abused with stolen crude written off as unrecovered spilled crude.
The Hart Group visited the Escravos terminal as well as the Brass Crude Oil terminal. In their report, the auditors acknowledged five key personnel, Francis Damola, Emmanuel Okonkwo, Basoene S. Douglas, Francesco Arena and Romeo Evangelista for making their work at Brass as easy as possible. However, it was discovered that the flow computers were not fitted with numbered lead seals to show that they had not been tampered with between maintenance jobs. Similarly, numbered lead seals are not fitted to the detectors on the proover loop to show that they have not been changed since the annual calibration visit. In the industry generally, meter manipulation is a common problem.
Saturday Sun gathered that one of the bizarre finding by the auditor is a DPR standard form or certificate of quantity (a state security document printed by Nigeria Security and Minting Company) that have to have numbers filled in by typewriter. The auditors were equally alarmed that DPR procedure guide for the determination of the quantity of crude oil and petroleum products at custody transfer points “look like they have not been upgraded since the 1980s.”
Another plague detected by the auditors is the issue of underpayment or overpayment of invoices. It was observed that January 2001 funds swept by CBN was stated as N873, 857,000 instead of N8,738,857,000. Another sum of N734,642,000 deemed to have been paid by NNPC was not swept from CBN/NNPC oil and Gas account to the federal account as at December 31, 2004. What’s more, NNPC-COMD have no ledger in Abuja to track crude oil debtors, both export and domestic.
Speaking on the missing 65 million barrels of crude oil, Rev. David Ugolor, National Coordinator of Publish What You Pay (PWYP) Nigeria, said that Nigerians must insist that the truth be unearthed. He condemned the prevailing culture of secrecy in the oil industry, saying “the DPR did not keep a centralized computerized records of activities of the extractive industries to enable it get an overall picture of Hydrocarbon flows.”
Levi Ajuonuma, the General Manager, Group Public Affairs Division, NNPC, said the ingenious theft of 65 million barrels of crude oil did not happen in the period of the present administration of Engineer Kupolokun, the Group Managing Director of the NNPC.
According to Ajuonuma, the scam took place during the period of the former MD, Gaius Obaseki. In his words: “We were not there at that time. It was Obaseki’s time. I can’t say anything on that. It is not our regime.”
Indeed, no one expected such a shocking finding when Oby Ezekwesili, the former Minister of Solid Minerals, got the Federal government to engage the Hart Group – a United Kingdom-based audit firm – to direct its searchlight at the nation’s oil industry. For long, it has been shrouded in secrecy, in the vice-like grip of foreign and local players.
At the end, it was discovered that between 1999 and 2004, about 65 million barrels of crude oil could not be accounted for by the NNPC. The Hart Audit report, compiled for the Nigerian Extractive Industry Transparency Initiative (NEITI), said the missing crude oil was due to shortfalls in the amount of crude sent to refineries within the period under review. Specifically, the report said: “There were differences between the amounts reported within NNPC for the volume of crude sent for refining with the discrepancies between what the oil terminals recorded as sent to the refineries and what the refineries recorded as received from the terminals.”
A chart in the report, obtained by Saturday Sun, shows that in 1999, about 66 million barrels of crude oil was sent by the Crude Oil Marketing Department (COMD) of the NNPC but the nation’s refineries received 99 million barrels within the year which shows a difference of 33 million barrels unaccounted for.
Also, in 2000, 36 million barrels was sent to the refineries going by the record given by the COMD but within the same year, the Pipeline Products Marketing Company (PPMC), also a subsidiary of the NNPC, reported that about 46 million barrels passed through its hands in the same year, indicating a difference of 10 million barrels. However, the discrepancies shows a shortfall of 22 million barrels, of crude oil as follows: - 3 million, -2 million, - 6 million and – 11 million for the years 2001, 2002, 2003, 2004 respectively. The NNPC still has not accounted for the 22 million barrels stolen at a time when oil money hovered between $25 to $40.
The Hart report said the NNPC could not convincingly say how the refineries in 1999 and 2002 received more crude oil than what was sent from the oil terminals, neither could it account for the 22 million barrels sent to it which didn’t get to the refineries during the years 2001, 2002, 2003 and 2004. Industry watchers are helpless as they ask: ‘Are the refineries on one hand getting phony supplies from oil terminals and do they sometimes get extra crude from another source?’
Under the carpet
Clinical as the investigations by the Hart Group were, local civil society and international watchdog groups were stunned when the findings were made available to Aso rock only for a livid President Obasanjo to treat the efforts of the foreign consultants with scorn. Unwilling to admit that such a systemic fraud had been going on under his administration, the president, balking at throwing the report into his shredding machine, gave the marching order to a bewildered Hart Nurse to go and do a more thorough job.
For those who had all along followed the Obasanjo regime’s anti-corruption war with misgivings, the Hart treatment bore the same motif as the reception given by the same President to the Economic and Financial Crime Commission (EFCC)’s report on the decay in the Nigeria Ports Authority which allegedly indicted some sacred cows, including Chief Bode George, the People’s Democratic Party (PDP) national Vice-Chairman, South West. The EFCC’s forensic examination had been pronounced sacriligious and unacceptable with the anti-corruption czar reduced to a laughing stock as he was ordered to do his homework well.
While the ghost of what is now known as the original NEITI report was haunting everyone who had anything to do with the missing 65 million barrels of crude oil, facts emerged early this year, that contract for a $10.3 million Chevron/Texaco EGP – 3B FEED Gas gathering compression platform project was awarded without competitive biddings, allegedly to Crestville Engineering and Technologies Company Limited, owned by the current Group Managing Director of the NNPC, Engr. Funsho Kupolokun. Industry players have since said that the actual estimate for the project, is about one million dollars.
The same Kupolokun’s company also allegedly cornered a $7 billion Olokola LNG contract while emerging the prefered bidder for the OPOL 246 AKPO FPSO field development project and the TotalEfina Ofon Phase II Transport and Installation contract. Despite outrages over the sweeping aside of due process and the excess billions of dollars being funneled into the projects, the only official reaction is mum.
Saturday Sun gathered that in digging up the dirt which the Obasanjo regime has now browbeaten the consultant to dress in a cleaner garb, the UK-based firm extracted information from different groups and individuals manning sensitive positions in the oil and gas industry. For example, on March 31st, 2005, Hart Nurse of the Hart Group in conjunction with Samuel Afemikhe and S. Bantafi both of SS Afemikhe & Co met with Stanley Lawson, NNPC Group Executive Director (Finance & Administration; E. Akhuemonkhan, Group General Manager (Head office Accounts) and Alhaji T.A. Rufai, Group General Manager (Finance & Administration).
At the Federal Inland Revenue Service, the auditors had useful talks with the Chairman, Ifueko Omogui; the Director Assessment, Mr A. Sulu and the Auditor, Mr ILo. The session at the Petroleum Equalisation Fund had in attendance the Executive Secretary, Mr. A. Gurin and Alaji Kwara while at the Department of Petroleum Resources the quesitons were answered by Mac Ofurhie, the Director; and B.O. Ogunjana, the Deputy Director (Resource Management & Reserves).
Three people at the Central Bank were reportedly interviewed in the course of the investigations. They were the Director of Research, O.J. Nnamma; Mr Bon Okafor and Mr. Festus Odoko. The report stated that “each of these meetings was designed to acquaint the respective entities with the audits and to outline the deliverables and the role of the entity in question.”
The same principle was applied when the auditors had a meeting with representatives of the different oil companies. Both Pascal Raab and Tai Oshisanya stood in for Total (EPNL) while Funke Alade-Adeyefa and Deji Haastrup were there for Chevron Texaco. Others were Wale Raji and Ola Sobande for Shell; Monday Otabor for Addax and Paul Stevens and Pat Ahonsi for Exxon-Mobil.
Essentially, the audit was directed at reported production and sales figures for the 1999 – 2004 period as against the actual crude oil lifted and amount payable. Saturday Sun gathered that there are myriad open windows through which crude oil is stolen. Other shades of corrupt practices are legion.
In specific terms, the Hart Group carried out domestic crude oil sales and receipts validation in the NNPC – Crude oil Marketing Department, Treasury, Finance and Accounts Departments and CBN. The objective of the exercise was to confirm volume of domestic crude oil actually invoiced and to find out if domestic crude supplied in the period under review was paid for and proceeds swept into the Federation account.
To carry out the exercise, the auditors requested and obtained documents on domestic crude lifting profile from NNPC – COMD from November 1998 to December 2004; domestic crude oil templates from NNPC – COMD for the same period; schedule of payments to CBN for the transfer of money from NNPC Oil and Gas Naira Account.
This was obtained from the finance and Accounts Department of the NNPC. Other documents included statements of account for CBN/NNPC oil and Gas where lodgments for proceeds of domestic crude are made before being transferred to the federation account. Then, there was the Federation Account Component Statements for January 1999 – December 2004. This is a monthly analysis of what goes into the Federation Account; and lastly, Federation Account statements for the period under review. The job here was to verify the volume of domestic crude in the template populated by NNPC – COMD against that in the lifting profiles.
Mapping out the procedures in the nation’s oil industry, it was gathered that the NNPC is supplied with domestic crude for the purpose of refining it and distributing the petroleum products (Petrol, kerosene, etc) derived therefrom for domestic consumption. NNPC is then expected to pay for the agreed crude oil lifted from proceeds realized from sale of petroleum products.
NNPC pays for the domestic crude allocated to it monthly into the federation account maintained by the CBN. A credit facility of 60 days is granted to enable NNPC collect the sales proceeds from its customers who also have a 30-day credit facility which is a normal global business practice. However, from October 2003, this term was further extended to 90 days, following what was said to be “mounting liquidity problem experienced by NNPC as a result of the global increase in crude oil price.”
The quantity of export crude oil is determined by what is called metering or by a static method which involves ‘fiscalization and defizcalisation’ of the storage tanks designated for the crude oil export operations.
Be they domestic or export crude, the CBN warehouses funds that flow from the oil and gas sector. However, before the funds flow into the federation account, they pass through some designated bank accounts, both foreign and local, depending on the currency in which they are paid – dollars, pound sterling, euro, naira, etc. These designated accounts are operated by the NNPC for crude oil sales and the Accountant General of the Federation (AGF) for oil and gas taxes. The NNPC account is with JP Morgan Chase Bank, New York while the AGF account is with Federal Reserve Bank of New York. The AGF has another account for local taxes and this is with the Banking Operations Department (BOD) of CBN. In the period under review, two banks were used by the CBN to receive federation account funds.
They were Bank for International Settlement (BIS), Switzerland and JP Morgan Chase.
In his observations on the NEITI report, Prof. Ademola Ariyo of the Department of Economics, University of Ibadan, said: “It appears that the level of transparency in the operations within the nation’s oil and gas sector is less than desirable.” Both Prof Ariyo and Zacc Ososanya, Professor of Accounting, Olabisi Onabanjo University, Ago-Iwoye, agreed that there had been a regime of “under-assessment of actual revenue due to the nation and possible underreporting of revenue collected for and on behalf of the nation.”
Saturday Sun gathered that the lack of transparency in the oil and gas sector is traceable to an incurable langour on the part of officials of Department of Petroleum Resources (DPR) who are statutorily the police of the industry, but who are known to habitually turn a blind eye to or even partakers in the orgy of corruption which the NEITI audit was expected to unearth. This aspect of the assignment is named in the report as physical audit. The other two aspects are Financial Audit and the Process Audit.
Some of the roles of the DPR are stated as: “supervising all petroleum industry operations being carried out under licenses and leases in the country in order to ensure compliance with the applicable laws and regulations in line with good oil field practices; keeping and updating records on petroleum industry operations particularly on matters relating to petroleum reserves, production and exports of crude oil, gas and condensate, licenses and leases as well as rendering regular reports on them to government; ensuring timely and adequate payments of all rents and royalties as at when due; (and) enforcing safety and environmental regulations and ensuring that those operations conform to national and international industry practices and standards.”
It hardly came as a surprise to industry watchers that the notoriously sweetheart relationship between oil companies and DPR officials was one of the major attractions for the Hart Group. Indeed, one of the fallouts of the audit is a letter sent to Hart Nurse Limited by Atlas Petroleum International Limited on November 10, 2006. Signed by its General Manager, Emeka Gbulie, it was entitled ‘Representation of full disclosure.’
The body of the letter says: “In connection with the financial audit being undertaken for the National Stakeholder Working Group of the NEITI, concerning a retailation of the revenue flow as received by the relevant agencies of the Federal Republic of Nigeria with all payments made by participants in Nigeria’s oil industry for years 1999 – 2004, we confirm that to the best of our knowledge and belief, we have fully declared, in the templates to you, the financial amounts paid and/or received by us as regards the respective financial flows in the specific periods.”
It was paragraphs 3 and 4 that said it all. They read: “No further payment was made by the company to any official of the Federal Republic of Nigeria or of agencies thereof, aimed at securing benefits for the company. After making appropriate enquiry, no payment was made by any third party to any of the relevant agencies of the Federal Republic of Nigeria or officials thereof on behalf of the company…”
Interestingly, Atlas Petroleum was not the only one that forwarded a ‘Representation of Full Disclosure.’ Over a dozen other oil companies sent letter-head denials of monetary inducement or any kind of underhand dealing with government officials. The different letters, from the different companies as signed by their executives, came from Chevron Nigeria Limited (signed by C.A Taylor, General manager NNPC/CNL JV); Conoil Producing Ltd (M.E. Omatsola); Continental Oil and Gas Ltd (Anthony Nwosu); Dubri Oil Company Ltd (J.O. Onilude); ELF Petroleum Nig. Ltd (J. Marraud des Grottes, MD/Chief Exec); Express Petroleum and Gas Company Ltd (T.A. Dantata, MD); Exxon-Mobil (John P. Chaplin, Chairman/MD); Nigerian Agip Exploration Ltd (A. Panza) and Nigeria LNG Ltd (Dr. Chris Haynes, MD/CEO).
Others were Ocean Energy Nig. Ltd (Raymond S. Marchand, MD); Pan Ocean Oil Corporation (Dr. F.A. Fadeyi, Chairman/MD); Petroleo Brasileiro Nig. Ltd (Wilson De Oliverira Senna, Finance Manager); Phillips Oil Company (Nig) Ltd (Todd Creeger, MD); Shell Petroleum Development Company of Nig Ltd (Anolu O.M. Jonathan, JV Controller) and Agip Energy and Natural Resources Nig. Ltd (A. Panza).
Saturday Sun gathered that the verdict on oil companies operating in Nigeria are damning, as contained in the Neiti report. In the course of the audit, it was discovered that “there were differences between the amounts reported by the companies as paid and the amounts reported by the CBN as received.”
Another worrisome observation was that “comparison between the reconciled physical hydrocarbon balances and the declared volumes for PPT (Petroleum profit Tax) purposes revealed differences both higher and lower. These differences require investigation. Some companies have not provided explanation for the differences.”
Yet another grouse was that “comparisons of the deductions claimed by companies for PPT purposes against the expenditures in their audited accounts revealed in some cases differences which the companies have not explained.”
In fact, there were many things the oil companies did not want explained. Some of them even erected roadblocks for the auditors who in sheer frustration protested to the National Stakeholder Working Group that some companies were not cooperating with the audit process. On September 8th, 2005, the auditors reported that “there appear not to have been any change in the position of the companies during August. None has responded to the previously submitted requests for information.
The affected companies were given as Amni International Petroleum Development Co. Ltd, Continental Oil & Gas Ltd, Atlas Petroleum International Ltd, Moni Pulo Ltd, Cavendish Petroleum Nig. Ltd, and Express Petroleum & Gas Company Ltd. Others were Africa Petroleum Plc, Texaco(downstream), African Petroleum (downstream), Conoil Producing Ltd, Ocean Energy Nig. Ltd and Petrobras.
Royalty fraud
Saturday Sun gathered that massive frauds are known to occur at three major points: wellheads, oil terminals and refineries. One of the most notorious corrupt practices in the oil industry is said to be royalty fraud. This occurs when production figures and/or export crude are ingeniously understated merely to underpay government of royalties.
Because of this huge challenge, and to forestall cases of stolen crude, the DPR is expected to be most active at the oil terminals where they are expected to monitor and record crude oil/condensate and gas production from the fields into the terminals by metering and static measurement methods. DPR officials are to verify the vessels and the respective quantities of crude oil/condensate and gas nominated to be lifted by the vessels.
They are to participate in the calibration of storage tanks, maintain production and export figures data bank and also participate in the fiscalisation, defiscalisation exercises and dynamic metering to compute the quantity exported. Fiscalisation is the measuring of actual volumes of crude oil considered fit for export after undergoing degassing and dehydrating.
Investigations revealed that at either the flow stations or the production platforms, field by field production with their corresponding ‘API gravities’ are used for the computation of royalties. There is supposed to be a periodic check to ascertain if the companies are underpaying the government or not. It was gathered that not all flowstations have meters and not all the flowstations and/or production platforms that have meters get their meters calibrated forthnightly as is the standard practice. There are also serious question about meters at Lease Automatic Custody Transfer (LACT) points and at the export loading terminals.
Saturday Sun discovered that one contentious issue on royalty is the oil companies’ insistence that royalty be based on export volumes and not production from wellheads. When the Hart Group visited Shell’s Bonny Crude Oil terminal in August 2006, the Terminal Manager said that 19,500 bbls /day had been lost due to theft from the pipeline between the flow stations and the terminal and hence if the point of royalty calculation was the wellhead, then they could be paying royalty on crude they do not have to sell.
In addition, there is what is called “unaccounted oil”. This may come under unrecovered spilled crude oil, arising from acts of vandalization, that cannot be estimated. Plausible as the arguments may be, industry watchers say accidental spills and pipeline incidences are massively abused with stolen crude written off as unrecovered spilled crude.
The Hart Group visited the Escravos terminal as well as the Brass Crude Oil terminal. In their report, the auditors acknowledged five key personnel, Francis Damola, Emmanuel Okonkwo, Basoene S. Douglas, Francesco Arena and Romeo Evangelista for making their work at Brass as easy as possible. However, it was discovered that the flow computers were not fitted with numbered lead seals to show that they had not been tampered with between maintenance jobs. Similarly, numbered lead seals are not fitted to the detectors on the proover loop to show that they have not been changed since the annual calibration visit. In the industry generally, meter manipulation is a common problem.
Saturday Sun gathered that one of the bizarre finding by the auditor is a DPR standard form or certificate of quantity (a state security document printed by Nigeria Security and Minting Company) that have to have numbers filled in by typewriter. The auditors were equally alarmed that DPR procedure guide for the determination of the quantity of crude oil and petroleum products at custody transfer points “look like they have not been upgraded since the 1980s.”
Another plague detected by the auditors is the issue of underpayment or overpayment of invoices. It was observed that January 2001 funds swept by CBN was stated as N873, 857,000 instead of N8,738,857,000. Another sum of N734,642,000 deemed to have been paid by NNPC was not swept from CBN/NNPC oil and Gas account to the federal account as at December 31, 2004. What’s more, NNPC-COMD have no ledger in Abuja to track crude oil debtors, both export and domestic.
Speaking on the missing 65 million barrels of crude oil, Rev. David Ugolor, National Coordinator of Publish What You Pay (PWYP) Nigeria, said that Nigerians must insist that the truth be unearthed. He condemned the prevailing culture of secrecy in the oil industry, saying “the DPR did not keep a centralized computerized records of activities of the extractive industries to enable it get an overall picture of Hydrocarbon flows.”
THE Nigerian Stock Exchange (NSE) has criticized oil companies operating in Nigeria for failure to comply with tenets of good corporate governance.Speaking at a one day workshop on Code of corporate governance in Lagos last week, Director-General of the NSE, Dr. (Mrs) Ndi Okereke Onyiuke said: “Oil companies are the most defaulting entities with regard to corporate governance. The oil sector is not properly and effectively controlled. The Department of Petroleum Resources (DPR) is not policing oil companies effectively. For the financial sector, it is the most regulated.”
To this extent, she advocated that the code of good corporate governance initiated by Securities and Exchange Commission (SEC) be passed into law with appropriate sanctions entrenched.
According to her: “The need to sanitize corporate entities on the virtue of good corporate governance became imperative in the light of recent high profile scandals in our immediate environment. The case in point is the Cadbury Nigeria Plc issue which was extremely embarrassing to us, the regulators, especially given the level of reporting demanded by both the NSE and SEC.”
In this regard, she called on the participants who came from various sectors, to come out with a communique that would contain new ideas and solutions to making corporate governance work in the country.
Continuing, she said: “The NSE is in the process of reviewing its rules and regulations which when concluded, would be circulated to all quoted companies and market operators. Needless to say that in this workshop, efforts have been made to get international perspective on the issue at hand and the question and answer sessions would afford participants an opportunity to air their views.”
While presenting his paper on the corporate governance reforms in the USA and Nigeria and implications for the Nigerian companies at the workshop, Victor Odozi, former Deputy Governor of Central Bank of Nigeria, decried the non-harmonisation of issues affecting the financial industry by regulators of the finance companies.According to him: “The regulators in the finance sector should always agree on what sanction should be imposed on any firm that defaults on the rules of the game after thorough investigation, rather than all doing a different thing.”
He stated that there has been increased focus worldwide on corporate governance in terms of the processes and practices which drive the conduct of business.According to him, “ In specific terms, the main drivers for the increased global focus on corporate governance include: The globalisation of markets, dissatisfaction and frustration with the performance of publicly traded companies some of which had collapsed as a result of financial scandals and the failure of leadership - Enron, Global Crossing, WorldCom, Tyco, Adelphia, etc in 2001/2002."
Other drivers, he stated, are: The rewriting of the rules of the game and the imposition of more stringent responsibilities on directors; The emergence of international best practices promoted by regulators and the need to enhance market and investor confidence and protection through transparency, accountability and discipline.He noted that corporate governance has a critical role to play in the success or failure of companies, stressing that good corporate governance has become a strategic imperative.
To this extent, she advocated that the code of good corporate governance initiated by Securities and Exchange Commission (SEC) be passed into law with appropriate sanctions entrenched.
According to her: “The need to sanitize corporate entities on the virtue of good corporate governance became imperative in the light of recent high profile scandals in our immediate environment. The case in point is the Cadbury Nigeria Plc issue which was extremely embarrassing to us, the regulators, especially given the level of reporting demanded by both the NSE and SEC.”
In this regard, she called on the participants who came from various sectors, to come out with a communique that would contain new ideas and solutions to making corporate governance work in the country.
Continuing, she said: “The NSE is in the process of reviewing its rules and regulations which when concluded, would be circulated to all quoted companies and market operators. Needless to say that in this workshop, efforts have been made to get international perspective on the issue at hand and the question and answer sessions would afford participants an opportunity to air their views.”
While presenting his paper on the corporate governance reforms in the USA and Nigeria and implications for the Nigerian companies at the workshop, Victor Odozi, former Deputy Governor of Central Bank of Nigeria, decried the non-harmonisation of issues affecting the financial industry by regulators of the finance companies.According to him: “The regulators in the finance sector should always agree on what sanction should be imposed on any firm that defaults on the rules of the game after thorough investigation, rather than all doing a different thing.”
He stated that there has been increased focus worldwide on corporate governance in terms of the processes and practices which drive the conduct of business.According to him, “ In specific terms, the main drivers for the increased global focus on corporate governance include: The globalisation of markets, dissatisfaction and frustration with the performance of publicly traded companies some of which had collapsed as a result of financial scandals and the failure of leadership - Enron, Global Crossing, WorldCom, Tyco, Adelphia, etc in 2001/2002."
Other drivers, he stated, are: The rewriting of the rules of the game and the imposition of more stringent responsibilities on directors; The emergence of international best practices promoted by regulators and the need to enhance market and investor confidence and protection through transparency, accountability and discipline.He noted that corporate governance has a critical role to play in the success or failure of companies, stressing that good corporate governance has become a strategic imperative.
Nigeria, the largest oil producer in Africa and sixth in the world, will on Tuesday declare the date for the 2007 round of bids for the oil blocs, officials said on Monday. Energy Minister Edmund Daukoru on Tuesday " will announce the date and detailed procedure for the 2007 bid round for oil blocs," AFP, quoting spokesman for the state-run oil firm Nigerian National Petroleum Corporation (NNPC), Levi Ajuonuma, said. The announcement will likely specify the number of blocs to be put on auction and their locations, officials said. Bidding for the sale of Nigeria's offshore oil blocs was suspended several times last year. The Nigerian government last December suspended the sale of some 60 crude oil blocs until 2007, officials from the Department of Petroleum Resources (DPR) had said last January. The DPR director, Tony Chukwueke, had in October told journalists that the government was boosting the number of blocs up for tender to 60 from 50 previously, owing to increased interest by Asian investors, they said. "We have had a flood of investors from Asia who are interested in our downstream sector, in so far as we give them opportunity in the upstream and this is forcing us to increase the number of blocs on tender... from 50 blocs initially announced to 60," Chukwueke had said. Nigeria, which derives more than 95 percent of its foreign currency earnings from oil, hopes to realize about 500 million dollars from the bloc bid round, he added. The country normally produces about 2.6 million barrels of oil per day of which a quarter has been affected in the past several months by the restiveness in the oil-rich Niger Delta. Around 40 Nigerian troops and dozens of Nigerian oil workers were killed by separatist militants in the delta last year while more than 60 foreigners, mostly oil workers, were abducted.
Nigeria announced on Tuesday it would auction 45 exploration blocks to energy companies on May 3, a date which falls between landmark general elections and the handover of power.
Most of the areas on offer by Africa's top oil producer have been revoked from companies that failed to develop them, or were left unclaimed in two previous auctions in 2005 and 2006.
Tony Chukwueke, head of the Department of Petroleum Resources (DPR), said the time required to sell concessions would be shorter than normal in this case because bidders were already familiar with them.
"The blocks which we have retrieved this year are ones which are very familiar. People have been itching for them ... That's what made us think we can succeed in a month," he said during a presentation on the auction to investors and journalists.
Of the 45 blocks on offer, 11 are in deep water offshore, 10 are in shallow water on the continental shelf, 13 are onshore in the Niger Delta, and another 11 are located in little-fancied inland basins.
Nigeria is the world's eighth biggest exporter of crude oil. It has accelerated sales of drilling rights in the past three years in an effort to grow reserves and production capacity, generate income and attract new investment.
Chukwueke said he expected Nigeria to bag $500 million in signature bonuses alone from the auction.
Under the proposed timetable, investors have from now until May 1 to present their offers to the DPR for it to decide which bidders are qualified to take part in the May 3 auction.
Chukwueke said the aim was to sign production sharing contracts (PSCs) with the winners within two weeks of the auction in order to wrap up the whole process before the handover of power scheduled for May 29.
TIGHT TIMETABLE
"It's an extraordinarily tight timetable," said Antony Goldman, an independent risk analyst based in London, pointing out that it took between six and nine months for PSCs to be signed after the last two bidding rounds.
"This raises a lot of issues about whether it's technically possible, and also whether this administration has a mandate to be making an award of this magnitude at this stage, in the last second of its existence," he said.
Nigerians are due to vote for their president, state governors and legislators on April 14 and 21. President Olusegun Obasanjo, who has been in power since 1999, cannot stand for a third term under the constitution.
May 29 is therefore expected to mark the first transition from one elected president to another in Nigerian history.
Energy Minister Edmund Daukoru said this auction was delayed by complaints over the two previous ones. "We had to go back and restructure everything," he said.
The 2005 auction yielded high bids but in many cases the winners were unable to come up with the money.
The 2006 auction, which was on a much smaller scale, generated controversy after one block which went unsold during the public event was later sold behind closed doors to a little-known firm that quickly passed it on for a hefty profit.
One of Nigeria's strategies with its oil rights auctions is to attract investment in its derelict industrial infrastructure by offering a right of first refusal on attractive blocks to foreign firms that commit to put money into projects in Nigeria.
The strategy has yielded promises of major investments in railways, refineries and other projects, mostly by Asian firms which are keen to secure energy resources.
The DPR has shortlisted 17 blocks which could be used to give such investors a right of first refusal in this auction, Chukwueke said. It was a political decision that would be made at the highest level of government, he added.
Most of the areas on offer by Africa's top oil producer have been revoked from companies that failed to develop them, or were left unclaimed in two previous auctions in 2005 and 2006.
Tony Chukwueke, head of the Department of Petroleum Resources (DPR), said the time required to sell concessions would be shorter than normal in this case because bidders were already familiar with them.
"The blocks which we have retrieved this year are ones which are very familiar. People have been itching for them ... That's what made us think we can succeed in a month," he said during a presentation on the auction to investors and journalists.
Of the 45 blocks on offer, 11 are in deep water offshore, 10 are in shallow water on the continental shelf, 13 are onshore in the Niger Delta, and another 11 are located in little-fancied inland basins.
Nigeria is the world's eighth biggest exporter of crude oil. It has accelerated sales of drilling rights in the past three years in an effort to grow reserves and production capacity, generate income and attract new investment.
Chukwueke said he expected Nigeria to bag $500 million in signature bonuses alone from the auction.
Under the proposed timetable, investors have from now until May 1 to present their offers to the DPR for it to decide which bidders are qualified to take part in the May 3 auction.
Chukwueke said the aim was to sign production sharing contracts (PSCs) with the winners within two weeks of the auction in order to wrap up the whole process before the handover of power scheduled for May 29.
TIGHT TIMETABLE
"It's an extraordinarily tight timetable," said Antony Goldman, an independent risk analyst based in London, pointing out that it took between six and nine months for PSCs to be signed after the last two bidding rounds.
"This raises a lot of issues about whether it's technically possible, and also whether this administration has a mandate to be making an award of this magnitude at this stage, in the last second of its existence," he said.
Nigerians are due to vote for their president, state governors and legislators on April 14 and 21. President Olusegun Obasanjo, who has been in power since 1999, cannot stand for a third term under the constitution.
May 29 is therefore expected to mark the first transition from one elected president to another in Nigerian history.
Energy Minister Edmund Daukoru said this auction was delayed by complaints over the two previous ones. "We had to go back and restructure everything," he said.
The 2005 auction yielded high bids but in many cases the winners were unable to come up with the money.
The 2006 auction, which was on a much smaller scale, generated controversy after one block which went unsold during the public event was later sold behind closed doors to a little-known firm that quickly passed it on for a hefty profit.
One of Nigeria's strategies with its oil rights auctions is to attract investment in its derelict industrial infrastructure by offering a right of first refusal on attractive blocks to foreign firms that commit to put money into projects in Nigeria.
The strategy has yielded promises of major investments in railways, refineries and other projects, mostly by Asian firms which are keen to secure energy resources.
The DPR has shortlisted 17 blocks which could be used to give such investors a right of first refusal in this auction, Chukwueke said. It was a political decision that would be made at the highest level of government, he added.
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