Oil and Gas

US President Donald Trump has accused the Organisation of Petroleum Exporting Countries (OPEC) of “keeping oil prices artificially very high.”

In tweet, Trump said the cartel’s pricing cycle “will not be accepted” as there is no scarcity of oil supply to warrant such “high prices.”

But OPEC secretary general, Mohammad Barkindo, in a swift response, said the US oil and gas industry benefits from the cartel’s efforts to restore stability in the market.

He was speaking from Jeddah, Saudi Arabia.

“We in OPEC pride ourselves as friends of the United States who have vested interest in their growth, development and prosperity,” he said,  adding that OPEC, non-OPEC deal “has not only arrested the decline but rescued the oil industry from imminent collapse and is now on course to restore stability on a sustainable basis in the interest of producers, consumers and the global economy”.

Oil prices recorded slight increase on Friday ahead of a meeting by members of the joint OPEC and non-OPEC ministerial monitoring committee (JMMC) meeting, same day.

As at Thursday, OPEC daily basket price stood at $70.96 a barrel, compared with $69.39 on Wednesday, according to calculations by the secretariat.

But West Texas Intermediate (WTI) crude, rose to $68.53 a barrel on Friday, from $68.29 a barrel on the New York Mercantile Exchange on Thursday.

Similarly, Brent crude, the global benchmark inched above the $73 mark on Friday, the highest since 2014.

Expectations are high that the OPEC and non-OPEC JMMC gathering will announce a specific timeline for further extension of its production cap agreement.

CNBC reports that Trump’s agitation may be fueled by news that major oil producers may be targeting much higher oil prices.

Saudi Arabia, a key OPEC member, has conveyed desire to see crude prices at around $80 or even $100 a barrel.

This is partly due to the kingdom’s planned initial public offering of Saudi Aramco, its state oil company.

Speaking in an interview withBloomberg TV, Barkindo said “geopolitical tensions in the Middle East (Iran) have brought back a premium to crude oil prices”.

According to him, “it wouldn’t be in the interest of producers or consumers to see a price shock” if Iran leaves the cartel based on US “re-imposed” sanctions.

The Nigerian National Petroleum Corporation (NNPC) has brought down the cost of producing a barrel of crude oil to $20, even as it now targets producing the black gold at $15 per barrel.

NNPC Group Managing Director, Dr. Maikanti Baru, who disclosed this Monday in Abuja during the NNPC Day at the ongoing Technology and Innovation Expo 2018, attributed the feat to the impact of science, technology and efficient work processes, saying the mileage would enable more revenue generation to the Federal Government.

The Expo 2018 has the theme: Fast Tracking Sustainable Development of Nigeria Through Science and Technology in Abuja.

Represented by the Chief Operating Officer (COO), Gas and Power, Engr. Saidu Mohammed, the GMD noted that the NNPC had been innovative and efficient in its various operations to drive down the cost of production of crude oil and gas.

Dr. Baru said the NNPC was not only participating in the Science Fair but was also in full support of the ideals behind the event, stressing that science and technology is the bedrock of the Oil and Gas Industry.

The GMD stated that the corporation had succeeded in domesticating engineering, procurement, construction and most of the major activities of the Oil and Gas Industry, adding that heading to London to prepare mere tender documents for engineering, procurement and construction belonged to the distant past.

“Today we have fully domesticated the engineering, procurement and construction aspect of the Oil and Gas Industry and we are working hand-in-hand with the Nigerian Content Development and Monitoring Board (NCDMB) to get Nigerians who are willing to invest and innovative to propel this country going forward to go into the ventures of fabrication where we spend the big chunk of the money in the industry. In other words, we have gone far to domesticate procurement,” Dr. Baru stated.

He explained that today, there were fabrications going on in the areas of valves, line pipes, stressing that Nigeria has also gone into fabrication of vessels.

Dr. Baru disclosed that NNPC would continue to support all sorts of innovations in the upstream, midstream and downstream sector.

Commenting on the Ajaokuta-Kaduna and Kano pipeline project, popularly referred to as AKK pipeline project, the GMD stated that the pipelines of the project were fully domesticated in line with the local content policy of the Federal Government, saying for the other areas of services required, Nigerians would do all the pre-commissioning and commissioning services of the project.

On the refinery revamp, the GMD disclosed that already the NNPC was training some Nigerians that would be fully engaged in the refineries revamp, stressing that tremendous amount of jobs and services that would be required would all be provided by Nigerians.

The GMD stated that the NNPC was committed to promotion of efficient consumption of energy in the mold of biofuels, adding that already the corporation has signed four Memoranda of Understanding (MoU) with different State Governments and investors to actualize the introduction of more environmentally friendly fuel.

An Italian court has postponed to May 14 the trial of Royal Dutch Shell and Eni executives over alleged corruption in Nigeria.

The trial was originally expected to start in a Milan court on Monday but the judge said due to a high number of cases, it would be transferred to another chamber to avoid further delays.

The trial will now begin on May 14.

The case involves the 2011 purchase by Eni and Shell of Nigeria’s OPL-245 offshore oilfield – one of Africa’s most valuable oil blocks – for about $1.3 billion.

Eni — also charged with corruption in Algeria in a separate trial — and Shell stand accused of handing out bribes during the 2011 purchase of OPL245, an offshore oil block estimated to hold nine billion barrels of crude, for $1.3 billion (1.06 billion euros).

Prosecutors said bribes were paid to win the licence to explore the field, which has never entered into production.

Meanwhile, Human Environmental Development Agenda (HEDA), one of the activist groups that sparked off the trial, has said it was shocked and deeply disturbed by the “confused appearance” of the federal government in court on Monday.

In a statement by Olanrewaju Suraju, its chairman, HEDA said “while we applaud the action of the Federal Government to intervene in the case, the presence of two lawyers with contradictory instructions was an embarrassment and presents Nigeria in a poor light before the Milan Court”.

“We were further shocked that one of these lawyers, Mr Sedu, declared his intention not to ask for damages from Eni,” Suraju said.

“There is now a very real risk that  both instructed lawyers will not be recognized by the court, leaving the FRN out in the cold.

“Powers of Attorney to represent Nigeria should not be handed out like confetti. The Attorney General must explain why he has so disastrously mismanaged Nigeria’s intervention, potentially losing the chances of recovering billions of dollars in compensation to Nigeria.

“HEDA is calling on the President of Nigeria, Mr. Muhammadu Buhari to, as a matter of urgency, call his Attorney General to order, considering the what happened today in Milan and adversary actions of the AGF in the recent past.”

The Nigerian National Petroleum Corporation (NNPC) on Tuesday said it has spent $5.8 billion to import 9.8 million metric tons of petrol since late last year to combat the fuel crisis.

Mainkati Baru, NNPC group managing director, said at the public hearing held by the senate committee on public accounts in Abuja that the corporation had to carry out the massive importation after private fuel marketing companies abandoned the trade because of the high landing cost of the fuel.

This, he said, made cost recovery and profitability difficult owing to the regulated price regime.

“This is in fulfilment of (NNPC’s) statutory role of supplier of last resort to ensure that Nigerians do not suffer as a result of product unavailability,” a statement from the corporation quoted Baru as saying.

The NNPC boss, however, pointed out that cross-border smuggling owing to price disparity between Nigeria and neighbouring countries where a litre of petrol sells above N350 per litre as well as logistic issues in trucking products to different locations across the country remained serious challenges in the quest for fuel queue-free situation in the country.

Nigeria, Africa’s biggest oil producing country with over 2 million barrels per day of output, imports more than 85% needs of its PMS needs because of inadequate local refining.

Ibe Kachikwu, minister of state for petroleum resources, said on Tuesday the government was working on plans to bring in private sector investment in the repair and management of the refineries and get them up to about 90% of capacity.

“That process is almost completed now, probably in a matter of weeks, we will be announcing the winners,” he said.

“We want to get the private sector to be major investors in building new refineries.”

The Minister of State for Petroleum Resources, Dr Ibe Kachikwu says the federal government will not sell its refineries.

Rather, the aim is to make Nigeria the refinery corridor for the rest of the continent, he said.

The minister was speaking on Tuesday on the short and medium term priorities directed towards growing the country’s oil and gas industry at the Nigeria International Petroleum Summit in Abuja.

According to him, a dearth in oil and gas infrastructure had affected the sector’s refining capacity which birthed an infrastructural map by government to address all the defects in crude pipeline and their leakages, depots and all related aspects.

He reaffirmed that rather than selling off Nigeria’s ailing refineries, the federal government will ramp up investments such that new refineries will be built across the country.

“The President (Muhammadu Buhari) has made it clear that he was not going to sell the refineries, because if we sell them, we are going to be selling them as scraps,” he said.

“So the model we came up with is to bring in private sector investment in the repair and management of the refineries and get them up to about 90% of capacity.”

“That process is almost completed now, probably in a matter of weeks, we will be announcing the winners.”

The minister continued: “We want to get the private sector to be major investors in building new refineries.

“There are two or three modular refineries that are ready to come up.

“Agip is working towards final investment decision (FID) on 100,000 barrel per day (bpd) refinery in  Bayelsa state, and of course there is the Niger Republic Refinery that we are discussing- also a 100,000 bpd potential.

“The objective is to make Nigeria a refinery corridor in Africa.”

On Monday, Kachikwu had said that  Nigeria targets to raise its domestic refining capacity from 14% to 90% between the next 18 to 20 months.

He said the vision is to have Nigeria refine most of its crude locally rather than exporting them.

Minister of State for petroleum resources, Dr Ibe Kachikwu says Nigeria is unruffled by the slide in crude oil prices, maintaining that the country can comfortable ride the storm with oil prices hovering between $60 and $70 a barrel band.

The global crude oil market had been rattled recently on the back of mounting fears of another supply glut with the Brent crude, the international benchmark of crude oil, shedding $5 during the past eight days of trading.

But with Nigeria’s oil production on the ascendancy, the federal government believes the oil price band for now will not create another shock for the economy.

Kachikwu, at a world press conference on Thursday in Abuja, said rather than the oil prices, what the country and oil producing companies should be worried about is that of keeping production cost low.

“I don’t think we need to be panicky about it, we hit $70 per barrel in December which was a surprise to all of us. We are not ruffled by it. I know it has come down to highest $60s now,” the minister said.

“We were producing 2.07 million b/d at the end of January was at 2.07 million b/d, with crude oil alone averaging 1,707,294 million b/d. So we are not rattled at all by the decline in oil prices, but to focus on production costs.”

The 2018 budget is anchored on oil price assumption of $45 a barrel and production benchmark of 2.3 million b/d.

The Organisation of Petroleum Exporting Countries (OPEC) had reached an agreement with non-member countries in November to reduce crude supply to the market in the bid to boost prices.

Prices recovered from as low as $40 a barrel to a high of $71 a barrel at the end of January this year.

However, a surge in shale oil output by the US has threatened to overturn the gains of the historic accord between OPEC and non-OPEC countries.

Kachikwu, however, said it is not yet time for OPEC to press the panic button.

“The recent drop in oil prices was still insignificant to worry OPEC,” he said.

“But I have always said that OPEC needs to just focus on itself and what it needs to do, and forget what is happening in shale.

“Every OPEC producer must work hard to be a least cost producer because the truth is that if Shale can produce at $65, there is absolutely no reason why we should be struggling. So, upper $60s is not too bad, we moved from $27 and $28, let’s not begin to complain, it is a bit too early. These things fluctuate.”

The Kaduna Refining and Petrochemical Company (KRPC) shut down operations on January 15 due to the non availability of crude oil.

Abdullahi Idris, executive director, services, of KRPC, disclosed this to NAN in Kaduna.

He said the refinery, whose fuel plant was commissioned in 1980, was functioning at 60 percent capacity “but shut down on January 15 due to unavailability of crude oil”.

Idris responded to an e-mail NAN sent to him to provide details of the company’s operations as part of a national survey on the state of the country’s refineries operated by the Nigerian National Petroleum Corporation (NNPC).

The EDS said the lubes plant was commissioned in 1983 and the petrochemical plant in 1988.

According to him, before it was shut down, the KRPC produced four million litres of petrol (PMS) per day.

Idris explained that the plant was also producing 2.5 million litres of (AGO) diesel and 1.6 million litres of kerosene per day.

The official said the plant had undergone a turn around maintenance (TAM) in 2013 and currently has a workforce of 1,004 staff.

However, a source at the Warri Refining and Petrochemical Company (WRPC) told NAN that it was incorporated in 1988 following the merger of the Warri Refinery and Ekpan Petrochemical Plants.

According to the source, WRPC, one of the subsidiaries of the NNPC, produces at installed capacity of 125,000 Barrel Per Stream Day (BPSD).

“The WRPC was incorporated in 1988 following the merger of the Warri Refinery and Ekpan Petrochemical Plants which was producing a nameplate capacity of 100,000 BPSD,” the source was quoted as saying.

“Following the merger, WRPC is now designed to produce installed capacity of 125,000 BPSD,.”

The source, however, declined comment as to whether the company was currently refining or not.

Oil marketers on Thursday asked the Federal Government to deduct the N27bn they owed the Nigerian National Petroleum Corporation from the $2bn that it owed them.

The marketers stated that the petrol scarcity being experienced across the country would have been averted if the NNPC had listened to their warnings in October that there was a drop in supply of Premium Motor Spirit (petrol).

On Wednesday, the NNPC attacked the Depot and Petroleum Products Marketers Association over the statement by DAPPMA that its members had no petrol in their tanks despite the corporation’s claims of importing millions of litres of petrol.

The national oil firm also stated that DAPPMA members owed it the sum of N26.7bn for products received from it, adding that the statement credited to the association on the fuel supply situation, especially PMS, was very unfortunate.

But while speaking on a television programme monitored by our correspondent in Abuja on Thursday, the Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, asked the government to deduct the marketers’ debt from the $2bn it owed the oil dealers.

He said, “I know they (NNPC) were referring to DAPPMA, but talking about who is owing who, this is all about trade; we are always buying from the NNPC to sell. So sometimes, we owe and other times we are in credit, but the truth is that the government is owing us.

“And we have agreed with the government since June that when you (government) are going to pay us, deduct whatever we are owing you. Collectively, marketers in the industry are owed close to $2bn, so you can’t compare it to N27bn. It is not only the NNPC that we are owing.”

He added, “We owe other government agencies, but we are saying that let’s start from the biggest and that is the fuel subsidy, the interest and the foreign exchange. We’ve done several reconciliations supervised by the Chief of Staff (to the President) and the Federal Ministry of Finance.

“So nobody is saying we are not owing, rather the government is owing us more and they should pay us and deduct whatever we are owing them.”

When asked why oil marketers were hoarding and diverting petrol as claimed by the Group Managing Director of the NNPC, Dr. Maikanti Baru, the MOMAN spokesman stated, “I wish we could meet face-to-face and I will tell him (Baru) when the problem started and when we started warning.

“I’d stated in the past that if you leave the NNPC as the sole importer of products, you will get to a point where the slightest shock will create a problem. The truth must be told, they (NNPC) are just getting the supply in some appreciable quantities. The supply dropped in October up until some two, three weeks ago; that’s the truth!”

Olawore added, “Supply into the system dropped and somebody must own up to this. I’m not here to pass any blame; we are here to see how we can solve the problem and after that, we can sit at the table to look at what went wrong and how to prevent it from happening again. But we all saw it coming.

“We saw it coming and we said it that your suppliers are defaulting; they are not supplying enough.”

NNPC lied, we didn’t owe it – DAPPMA

Meanwhile, DAPPMA on Thursday accused the NNPC of lying when it claimed that its members owed the national oil firm N26.7bn.

According to DAPPMA, its members have in the past one month paid over N90bn for petrol supply but have yet to receive any cargo from the Petroleum Products Marketing Company, a subsidiary of the NNPC.

The Executive Secretary, DAPPMA, Mr. Olufemi Adewole, said it was unfortunate for the national oil firm to attack and accuse marketers falsely.

In a statement signed by Adewole on Thursday, the association said, “It is an undisputable fact that DAPPMA members have paid for petrol supply (with bank funds) for over one month, the value of which is in excess of N90bn, yet the PPMC/NNPC had no cargo to allocate to them. As such how can we be held responsible for hoarding?

“The PPMC/NNPC does not transact business with DAPPMA members on credit; hence, we are not aware of any indebtedness to the PPMC/NNPC by our members. We again reject any attempt to blame marketers for the shortfall in supply as it is not our making since the NNPC has been the sole importer since October 2017.”

Adewole said marketers had continued to sacrifice to keep the country wet with fuel despite over N600bn debt owed DAPPMA members and over N800bn owed the different marketers’ groups as a whole by the Federal Government.

He stated, “The essence of our initial press release was to shed light on salient issues surrounding the shortfall in current petrol supply, which is presently solely handled by the NNPC. It was not an attempt to join issues with the PPMC/NNPC with whom we are partners.

“The NNPC’s view of our press release stating our side of the story and seeking to defend marketers for the very first time against the unwarranted accusations of hoarding and profiteering is rather unfortunate.”

The association, however, assured Nigerians that all possible steps were being taken to cooperate with the PPMC/NNPC to eliminate fuel queues nationwide in the next few days.

Amidst the confusion, queues by motorists for petrol in Abuja and neighbouring states of Nasarawa, Niger and Kaduna failed to disappear, as some filling stations were said to be collecting illegal “gate fees” before allowing vehicles to drive in to purchase PMS.

In Lagos, the Director, Department of Petroleum Resources, Mr. Mordecai Ladan, commended the load-out history of Nipco Plc since the resurgence of petrol scarcity across the country, with the firm increasing the trucking of the product across the country.

The DPR boss, who made an unscheduled visit to the Nipco terminal in Apapa on Thursday, said he was impressed with the load-out and the assurances by the company’s management on hitch-free product loading as supplies from the NNPC improved significantly.

Mordecai, who was received by the company’s Chief Operating Officer, Mr. Suresh Kumar, and the Chief Corporate Affairs Manager, Mr. Taofeek Lawal, said his team was on tour of depots to ascertain the availability of product stocks.

Earlier, Lawal had informed the DPR team that the company had in stock 17,000 metric tonnes of petrol or approximately about 23 million litres courtesy of supply by the NNPC via the Apapa jetty on Wednesday.

The Nigerian National Petroleum Corporation (NNPC) says oil revenue in the first ten months of the year exceeded the 2017 budget oil benchmark of $44.50 per barrel by 18 per cent.

Ndu Ughamadu, NNPC’s spokesperson, made this known in a statement on Monday.

Mr. Ughamadu said that the corporation’s Group General Manager, Corporate Planning and Strategy, Bala Wunti, disclosed this during a presentation to the House of Representatives Joint Committee on 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The disclosure, the statement said, revealed that oil has sold at an average of $52.49 per barrel between January and October, adding that the 18 per cent recorded above budget benchmark was due to stability in the crude oil markets and various geopolitical dynamics around the world.

The statement also explained that the federal government’s oil production target of 2.3 million barrels per day (mbd) in the 2018 budget was realistic and achievable, adding that the price projection of $45 per barrel was conservative and based on price scenarios of $35 at the lowest, $45 at the medium and $55 at the highest.

Mr. Wunti, the statement said, stressed that most price forecasting agencies were of the view that the medium price scenario had the highest probability of occurrence on which the 2018 budget was hinged upon.

The NNPC official added that the current production capacity in the country was more than 2.3mbd but due to the insecurity in the Niger Delta region, full production capacity had not been achieved over the years.
“The 2018 crude oil national production projection for the joint ventures, modified carrier arrangements or external financing, production sharing contracts, independents, marginal fields and service contracts is about 2,298,000 barrels per day,” he said.

The statement noted that Mr. Wunti expressed worry about oversupply of oil in the international market, adding that the outlook for the market was reassuring given the positive global economic growth and improved compliance by member countries of the Organisation of the Petroleum Exporting Countries (OPEC) and Non-OPEC members with production cuts.

On crude oil production from January to October 2017, Mr. Wunti stated that average output stood at 1.885mbd, put at 86 per cent of the budgeted target of 2.2mbd.

He, however, blamed the shortfall on Niger Delta security-related factors and vandalism of key export infrastructure, including the Trans-Forcados Pipeline (TFP), Forcados Oil Terminal (FOT) export line, Nembe Creek Trunk Line (NCTL) and Trans Niger Pipeline (TNP).