Nigerian oil and gas sector news and developments...


Gas Flaring: FG Restates Commitment to Deadline Mandate

The Federal Government has reiterated its decision to stop gas flaring by 2008, even as major oil producing companies appealed for more time. Director, Department of Petroleum Resources (DPR), Mr Tony Chukwueke, said this at the 25th Annual International Conference of the Nigerian Association of Petroleum Explorationists (NAPE), adding that the 2008 zero gas flaring deadline would never be compromised.

However, Ms Kim Bates, Area Manager, ExxonMobil Corporation, on behalf of major oil producing companies, urged government to extend the deadline to 2010. Bates made the proposal, while speaking on "Gaps in the Gas Development Chain: ExxonMobil Perspective."  She said the realistic flares down will be end of 2010. Shell had originally proposed the 2007 date, which was adopted by the Federal Government after series of suspension of deadlines. She argued that ending flares would require continued cooperation between the industry and government.

Meanwhile, the Federal Government has targeted on-shore gas for domestic market.
Nigerian gas flaring accounts for 20 per cent of world total, which could be ended by 2008 by collecting associated natural gas and processing it into Liquefied Natural Gas (LNG), making the Federal Government to raise earnings from natural gas exports to 50 per cent of oil revenues by 2010. Nigerian National Petroleum Corporation (NNPC) estimated that $15 billion in private sector investments was necessary to meet the countrys natural gas development goals by 2010. 


Gulf of Guinea: Nigeria, US Collaborate over Oil Theft

The Federal Government is   collaborating with the United States Government and some European countries in a bid to forestall crude oil theft in the Gulf of Guinea.
The collaboration would be under the aegis of the Gulf of Guinea Energy Security Strategy (GGESS).
Minister of Foreign Affairs, Chief Ojo Maduekwe, said this  yesterday in a statement made available to the News Agency of Nigeria (NAN) in Abuja. He said the GGESS would ensure that adequate care was taken to promote sustainable development, while exploiting the energy resources in the Niger Delta. “The collaboration with the international stakeholders would also combat trafficking in small arms and money-laundering, enhance maritime security and sustainable development,'' he said.

The minister said as a key player, economically, Nigeria had enormous stake in the resources of the region, adding that apart from the oil and gas, the region had vast marine resources to be harnessed and explored for the benefit of concerned parties.
“ Nigeria cannot do this in isolation.   Moreover, individual nations in the region can not also be allowed to exercise unrestricted independence in this direction,'' Maduekwe said.
He observed that due to the abundant resources, varied economic and military interests were now attracted to the area.
“It will serve Nigeria's best interest to ensure that these interests do not, in their effort to gain a foot hold, endanger the peace of the region,'' he said.
Meanwhile as part of government's commitment to the successful implementation of GGESS, a committee has been set up to monitor and facilitate its activities in Nigeria.
Membership of the Committee include Office of the SFG, Ministries of Energy, Defence, Justice, Finance, Environment, Transport, Agriculture and Water Resources
.Others are Office of the National Security Adviser, SSS, NIA, EFCC and NNPC.


DPR laments lack of legal framework for gas sector

The Department of Petroleum Resources has lamented the absence of a legislative framework for gas, and an inappropriate pricing structure for gas sales. The Head, Gas, DPR, Mr. Billy Agha, said, “This is a major challenge that the department is faced with, in addition to the fact that the gas re-injection decree 1995 (amended) still permits companies to flare gas even as the 2008 deadline for gas flare down is around the corner.”

He was speaking on Tuesday while presenting a paper to the Senate Committee on Gas which visited the DPR office in Lagos as part of its oversight functions. “Other challenges the department is faced with include the fact that there is inadequate infrastructure for the pipeline transmission network, and recurrent cases of pipeline vandalism,” he said.

He stated that these challenges had been a setback to the DPR in performing its functions as a regulator in the sector. Agha said that Nigeria was still flaring most of its associated gas. He said, “some 42trillion cubic feet of associated gas has been produced in Nigeria up-to-date, and a lot of this associated gas is still being wasted through flaring.”

He said that of the 6.50bcf/day current total gas production, 30 per cent is being flared, and that it is a huge loss to the Nigerian economy. “ Nigeria flares 2.1bcf everyday, and the implication of this is that the environment is degraded, and there is a great economic loss of over $1m daily. Also, there is an adverse effect on the health and social life of the immediate inhabitants of such environment.”

He decried the low utilization of gas in Nigeria, and maintained that reduction of flaring of associated gas has been limited in absolute terms because of lack of infrastructure to gather associated gas. “Only 70 per cent of the gas produced in Nigeria is being utilised, and that is not good enough for our economy,” he stated and appealed to the Committee members to look into all these issues and make appropriate policies to ensure that the DPR is strengthened and empowered to perform their functions effectively.

In response, the chairman of the Committee, Mr. Osita Izunaso, agreed that the DPR needed to be empowered to meet with its challenges. He promised that the committee would look into all the issues raised by the department.


Senators question N444.6bn for security, N’Delta

The Senate resumed debate on the 2008 Appropriation Bill with most senators asking for clarifications on its policy thrust and the N444.6bn voted for security and Niger Delta.

The Senate Leader, Senator Teslim Folarin, led the debate with a presentation on Tuesday. Senator Heineken Lokpobiri (PDP Bayelsa) said that the budget was not prepared to benefit the people of Bayelsa State and the Niger Delta as a whole.

“If you take the budget details together, you will discover that the whole amount (N444.6bn) is meant to buy arms and ammunition for the Army and the Navy. It is not the amount of arms and ammunition you have that will guarantee peace but the level of development”, he said.

Senator Ikechukwu Obiora (PDP Anambra) faulted the amount appropriated for capital expenditure. He said, “The amount proposed for capital expenditure is insignificant. N29bn is what is required to be spent immediately in the South-East if the roads there are not to collapse. “The N79bn for road construction is laughable.” He said the nation would benefit if the budget benchmark was reviewed upwards from $53 to $55.

Obiora also faulted the proposal by the executive to rely on public-private partnership to fund the construction of the Second Niger Bridge.

“The people of the South-East find it unacceptable that the Second Niger Bridge is going to be constructed through public-private partnership. It is the responsibility of the Federal Government to fully and wholly fund the project,” he said. Senator Nimi Barigha- Amange (PDP Bayesla) said, “I went through the figures and from the breakdown of it, it did not fully take into account the needs of the Niger Delta, but that of the Army, Navy and other sundry matters. The issue of Niger Delta is not about the Army or the Navy, but lack of development and if that issue is taking care of, I don’t think we need the Army, Navy and police.”

He said what the people of the Niger Delta needed was development and not military presence. “It was important for the executive to explain to Nigerians the percentage of the N444.6bn voted for security that is meant for development. My people in Niger Delta need development and not the presence of the Army or the Navy.”

Senator Ayogu Eze (PDP Enugu) urged his colleagues to “pass only the budget we can implement as we shall be held responsible for implementation and non-implementation of the budget.” Senator Bode Olajumoke, who is also the Chairman of the Senate Committee on Navy, asked for an upward review of the allocation to the Navy.

“The Navy is expected to protect the Niger Delta area and whatever projection we are making is unachievable unless we have stability in Niger Delta. We need to secure the area,” he said. He also called for an improvement in the allocation to education. He said education was pivotal to the attainment of Vision 2020.

Olajumoke drew the attention of the executive to the importance of agriculture. He said the Soviet Union collapsed largely because it could no longer feed its people. He said communism had survived in China because it took agriculture seriously.

Senator Ahmed Makarfi, who chairs the Committee on Finance, called for a review of the benchmark of the budget. He also made a case for the diversification of Nigeria’s revenue base to ease the dependence on oil revenues. The senators, who spoke on the general principles of the budget on Wednesday included Ahmed Makarfi, Ayim Ude; George Sekibo; Grace Bent, Andrew Babalola; Adefemi Kila Murudeen Musa, Joel Ikenya, Joseph Akaageger, Suleiman Adokwe, Simeon Oduoye, and Kaleb Zagi.


Illegal Bunkering: Navy Arrests 260 Ships, Beefs up security around Bonny – Adekeye

 The Chief of Naval Staff (CNS), Vice Admiral Ganiyu Adekeye, yesterday said 260 ships involved in illegal bunkering have been arrested by the Nigerian Navy. Adekeye disclosed this while fielding questions from newsmen during the maiden tour of the Minister of State for Defence, Mrs Fidelia Akuabata Njeze, to Naval headquarters, to enable her interact with principal staff officers.

Adekeye said both political and military solutions were needed to halt the crisis in the Niger Delta region, which had made the creeks unsafe and hampered oil production.
He said the Navy is in possession of documents to the effect that some of the ships arrested were deeply involved in oil theft and vowed not to succumb to pressure or litigation to release them. He said there were established cases against some naval officers collaborating with those involved in illegal bunkering, adding that those caught have faced the music, in line with military tradition.
He said though the Navy lack operational vessel it did not lack efficient officers to carry out their professional duties. He said the country’s maritime boundary was too large with about 200 nautical miles. He also said the removal of the Navy from the ports since 1988 was partly responsible for its inability to control movement of ships or monitor their activities in the country’s waters. On the Niger Delta crisis, he said Nigeria should be able to exact its influence, be it political, social, military or economic. “When law and order breaks down beyond what the police can handle, the military is there to step in,” he said.  

Adekeye informed the minister that the Nigerian Navy is tasked statutorily to provide the maritime component of the Nigerian Armed Forces in protection of the country’s interest within the nation’s maritime borders, adding that the Navy undertakes its responsibilities by performing the three basic naval roles of military, diplomatic and policing.

In another development, the CNS has said that the navy would beef up security around the Bonny sea to curb the problems of piracy. Adekeye said this in Port Harcourt in November while addressing officers and men of the Nigerian Navy at the end of his three-day visit to naval formations in Rivers. Adekeye said since the Joint Military Task Force chased out cultists in and around Port Harcourt, the criminals have relocated to the creeks and seas. He said the navy had revived the concept of special boat service in the Niger Delta to ensure adequate security on the seas and in the creeks. The naval chief said the navy would soon take delivery of new sets of arms and ammunition.


Oil spill: Youths demand N5bn from Shell;

...Company plans to divest from two Nigerian fields.

Angry community youths, demanding N5 billion compensation as a pre-condition, have prevented Shell Petroleum Development Company (SPDC) from assessing and conducting remediation efforts at Ibibio in Akwa Ibom State. But in another development, the Wall Street Journal has reported that Royal Dutch Shell may sell stakes in two oil and gas fields in Nigeria, with Chinese oil firm CNOOC a potential buyer. Addressing journalists in Lagos yesterday, Mr. Mutiu Sunmonu, Production Director of the SPDC said sometime in August last year, representatives of the SPDC, the community, Federal Ministry of Environment and the Akwa Ibom State Ministry of Environment conducted a joint visit to the spill site.

"The Joint Investigation Team (JIT) confirmed that there was a leak with a spill volume of less than one barrel, and that the leak was restricted to the cellar pit and SPDC right-of-way, but with a little quantity washed by rain into neighbouring third party farm land.

"Unfortunately, community youths interrupted the investigation process, protesting the volume spilled. On the 8th of September 2006, the SPDC’s Well Integrity Team attempted to arrest and contain the leak, but were violently resisted by the youths. Several other attempts were made to access, clean up and/or remediate the impacted area, and were again resisted by the youths from the community. Consequently, there has been no formal assessment," he said.

Sunmonu explained that the company had also responded to invitations by the Akwa Ibom State Government and House of Assembly where representatives of the company, the community and the National Oil Spill Detection and Response Agency (NOSDRA) as well as the Federal and State Ministries of Environment held two separate meetings on the spill incident but that delegates from the community insisted on payment of money and compensation before investigation into the cause and extent of the spill can be determined. The industry regulations stipulate that a spill must first be investigated, the site remediated before payment of money or compensation if at all. When the community finally agreed to grant access to the JIT, the actual visit to the site was postponed twice at the instance of the community.

The investigation visit would have taken place on October 31 and November 5, 2007 but on each occasion, the community asked that the exercise be postponed.

In a related development, the Senate has strongly condemned Shell, the multinational oil giant, for what it described as the company’s "dastardly act of neglect of the Ikot Ado Udo Oil spillage" in Akwa Ibom State three months ago. The Senate’s condemnation came despite strong moves by some Senators including Senators Jubril Aminu (PDP, Adamawa Central) and Abubakar Dada (PDP, Sokoto East) to hear Shell’s defence on the issue before the blame. The motion arose from observations made by Senators during the recent Senate expedition to the Niger Delta creeks and was moved by the Senate Leader, Senator Teslim Folarin.

According to him, observations from "one of the areas visited, specifically the Ibibio 1 Field in Ikot Ado Udo, Akwa Ibom State (showed) there was oil spillage which has not been attended to for the past three months.’’ Noting that the "neglect of the oil spillage had led to consequent destruction of aquatic and marine life and the surrounding farm lands,’’ Senator Folarin thus moved for the condemnation of Shell and an appeal to the President to direct the Nigerian National Petroleum Corporation (NNPC), Shell and other related agencies to clean up the spillage. Senator Folarin also sought the Senate’s move for the legislative house’s Committees on Environment, Upstream Petroleum and Judiciary to review prevailing legislations with the intention that oil companies be compelled to bear responsibility for spillages, degradation and other ecological problems that arise within their operating areas. Once he moved the motion, Senator Nimi Barigha-Amange (PDP, Bayelsa East) stood up to support the motion, saying the neglect of the oil spillage in Akwa Ibom was representative of what was happening across the country.

However, a move by Senate President David Mark to rush through the prayers of the motion was stemmed by Senator Aminu who said it was improper to condemn Shell without a defence from the oil corporation.

"No condemnation without investigation and I don’t believe that Shell would hear and not do something unless there is a problem of access to that site and in that case it would be a problem of Nigeria to resolve. You don’t condemn without investigation because I don’t believe that Shell as a responsible company would allow its oil to be spilling," he said.

Several other Senators sided with the Senate President in asserting the culpability of Shell despite spirited efforts by some others who sided with Senator Aminu in seeking what they described as due process in bringing about a condemnation of the multinational.

Among those who spoke in support of a condemnation were Senators Effiong Bob (PDP, Akwa Ibom North-East), Patrick Osakwe (Accord, Delta North), Lee Maeba (PDP, Rivers), Bassey Ewa-Henshaw (PDP, Cross River South) and Joy Emodi (PDP, Anambra North). Senator Ikechukwu Obiora (PDP, Anambra South) in pleading for the removal of a condemnation said the oil field was now in dispute between Shell and another company as a marginal field. Following the debate, the Senate agreed that the condemnation be shared between Shell and other agencies of government that should have a role in the clean up.

The two 49.8% stakes Shell plans to sell could fetch as much as $900m (£435.8m, 606.4m euros), the Wall Street Journal reported. China's booming economy has sucked in commodities from all over the world and it has invested in a string of ventures in Africa in recent years. China has huge oil investments in Sudan, a fact that has ignited the anger of campaigners who say this is blocking efforts to resolve the conflict in Darfur.

For Shell, a decision to reduce its presence in Nigeria may be welcomed by investors. A sale would reflect well on a management which is "clearly not afraid to take hard decisions on assets which might be considered part of the family jewels", said Citigroup oil analyst James Neale in a note, according to the paper.








4th Quarter 2007


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