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US-China trade war sends oil climbing



US-China trade war sends oil climbing

Oil prices rose more than 1% on Tuesday as traders betting on falling prices bought back contracts to lock in profits after declines over the last three sessions due to the escalating trade tensions between China and United States.

Brent prices plunged more than 8% in the three sessions from their close on July 31, with U.S. President Donald Trump vowing to impose new tariffs on Chinese imports, and China making further moves against U.S. agricultural imports.

The United States also responded to a decline in the Chinese yuan on Monday by branding the country a currency manipulator later in the day.

Brent fell more than 3% on Monday as traders worried the ongoing trade dispute between the world’s two biggest oil buyers would dent demand, helping to prompt Tuesday’s short-covering.

International benchmark Brent crude futures LCOc1 climbed 61 cents, or 1%, to $60.42 a barrel by 0544 GMT on Tuesday after earlier dipping to $59.07, the lowest since Jan. 14.

West Texas Intermediate (WTI) crude CLc1 futures rose 56 cents, or 1%, to $55.25 per barrel.

“This is a more likely a correction from oversold doom and gloom positions,” said Stephen Innes, managing partner at VM Markets. “But with commodity markets in total disarray, this move should not be confused with a ‘risk-on’, especially in oil markets as the latest trade war escalation is flat out harmful to global growth and by extension, for oil markets.”

The United States accused Beijing of manipulating its currency after China let the yuan drop to its lowest in more than a decade. The weaker yuan would support Chinese exports by making them cheaper, but it would also raise oil-import costs for the world’s biggest importer.

The People’s Bank of China’s firmer-than-expected yuan fixing on Tuesday helped pull the currency away from the recent lows, as did an announced bond sale in the offshore market.

Concerns that the U.S.-China trade conflict has entered a phase of retaliatory action was weighing on sentiments in the oil market, which for the moment is taking less notice of tensions in the Middle East, analysts said.

Iran on Monday said it will no longer tolerate “maritime offences” in the Strait of Hormuz, a day after it seized a second oil tanker that it accused of smuggling fuel.

Oil prices may find some support later this week with a preliminary Reuters poll showing U.S. crude oil inventories were expected to fall for an eighth consecutive week, reports Reuters.

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1 Comment

1 Comment

  1. Tamela Iskra

    November 14, 2019 at 4:29 am

    very cool

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Dangote Refinery awards $368m contracts to local firms



Dangote Refinery awards $368m contracts to local firms

Policy to boost implementation of Nigerian Content Policy, says NCDBM


The award of $368 million contracts to 120 local contractors at the site of 650,000 barrels per day capacity Dangote Petroleum Refinery will further boost implementation of local content policy in Nigeria.

Executive Secretary, Nigerian Content Development Monitoring Board, (NCDMB), Simbi Wabote, who was quoted to have said this, maintained that the $12 billion project under construction is expected to be a part of major contributors to Nigeria content development initiative.

This, a statement from Dangote Petroleum Refinery quoted Wabote to have said, is already being done through the award of contracts to Nigerian contractors, thereby building local capacity.

The private refinery owned by Dangote Group is under construction in Lekki Free Trade Zone, Nigeria. When completed, it will have a capacity to process about 650,000 barrels per day of crude oil.

Recall that the company recently announced the award of $368 million contract to 120 local contractors at the site, as part of its contribution to Nigeria content development initiative.

The company revealed that there were several Nigerian content opportunities in the company’s refinery and petrochemical project.

Speaking on the sideline of the 9th Practical Nigerian Content, Wabote said: “First of all, to be able to drive local content you need projects. For the fact that Dangote has been able to site it project in-country is the first step to the actualisation of Local content.

“Dangote might as well had taken the refinery elsewhere, but he decided to execute the project in Nigeria, so that is a plus to the Nigeria investment sector. Secondly, at the peak of the construction of the refinery, about 65, 000 workers are on site, and the majority of those workers in terms of ratio that are providing various services, are Nigerians.

“Also, there is a lot of sub-contract that have been awarded within the projects site, the majority of those contracts are executed by Nigerian companies. To a very large extent, that is an example of believing in your country and trying to do things to enhance the development of your country.

“Although they are sited in the free trade zone, which has its own advantages, and off course he is entitled to enjoy those free trade advantages as enshrined in the law, but in terms of local content, it is a typical example of someone who believes in his country, someone who is patriotic to establish such a monumental projects within the shores of our land.”

He commended the company for training young Nigerians who will eventually take up the management of the refinery, saying “we will all eventually retire one day, and young people will take over from us. Those of us at the industry, at 60 we will all retire and then these engineers will take over from us.”

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Power: FG mulls deployment of effective metering



Power: FG mulls deployment of effective metering

The Federal Government at the weekend expressed readiness to improve the country’s power sector through effective metering that will meet consumers’ demands and also address liquidity challenges rocking the sector.

Investors in power sector have put the figures of liquidity in the sector at N1.1 trillion. The crisis, the investors including Group Head, Finance, Sahara Group Limited, Aigbe Olotu, argued, was growing by N30 billion per month.

Minister of Power, Mr. Saleh Mamman, who – during facility inspection of Momas Electricity Meters Manufacturing Company (MEMMCOL) factory in Ogun State, declared plans to tackle the power crisis including this liquidity with adequate monitoring, maintained that effective metering of electricity consumers remained the best option to help distribution companies get more money to pay generating companies.

Metering, the minister said, “is one of the things bothering Nigerians particularly the electricity consumers. When I resumed, I took it as my priority as one of the important areas on electricity market liquidity and sustainability.

“I have to produce meters to get more money for the sector. We will get more money from distribution companies to pay GenCos. And, the only way to justify that is to go by metering. That is why I’m here to see it and believe it and to also direct on how to get meters soonest.

“I am here to inspect the factory of MOMAS Meter Manufacturing Company because I don’t believe in sitting in the office and listening to story. I want to see things for myself and today am convinced that we have a Nigerian that has capacity and capability to meet metering gap in the country.

“This has now encouraged me to also tell our local companies has the capacity to produce meter that is expected and required in-country.”

The minister commended the management of MEMMCOL for puting up the gigantic meter manufacturing company that has capacity to meet Meter Assets Providers (MAPs) specification in the country.

“I am very much impressed with the local content driven initiative by MOMAS company. It is good to see a meter manufacturing company, to see a Nigerian producing meter up to 1,000 per day. This, is indeed commendable. Momas is one of the top meter manufactures in Nigeria that we should be proud of.

“We should allow and encourage investors into the country and also gives consideration to our own local manufacturers to grow.”

Chairman of MEMMCOL, Mr. Kola Balogun, said that his company had the capacity to produce above 50,000 smart meters per month if given the support by government and adequate patronage from distributing companies.

Balogun commended the minister for inspecting his meter manufacturing company, while assuring the minister that the company will continue to produce quality and standard meter that meets international best standard.

“I want to tell Nigerians that we have the capacity and the capability to deliver metering solution to also bridged metering requirement in the country. All we need is government interventions to be able to make liquidity available to us to produce for the larger populace that requires metering.

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Saudi Aramco prices shares at top of range in world’s biggest IPO



Saudi Aramco prices shares at top of range in world’s biggest IPO

State-owned oil giant Saudi Aramco’s initial public offering (IPO) will be the biggest in history, but will fall short of the towering $2 trillion valuation long sought by Crown Prince Mohammed bin Salman.

Aramco priced its IPO at 32 riyals ($8.53) per share, the top of its indicative range, the company said in a statement, raising $25.6 billion and beating Alibaba Group Holding Ltd’s (BABA.N) record $25 billion listing in 2014.

At that level, Aramco has a market valuation of $1.7 trillion, comfortably overtaking Apple Inc (AAPL.O) as the world’s most valuable listed firm. But the listing, expected later this month on the Riyadh stock exchange, is a far cry from the blockbuster debut originally envisaged by the Crown Prince, reports Reuters.

Aramco did not say when shares would start trading on the Saudi stock market but two sources said it was scheduled for Dec. 11.

Saudi Arabia relied on domestic and regional investors to sell a 1.5% stake after lukewarm interest from abroad, even at the reduced valuation of $1.7 trillion.

Demand from institutional investors, including Saudi funds and companies, reached $106 billion, while retail investment’s demand hit $12.6 billion.

Around 4.9 million Saudi retail investors have bought shares in the oil giant, including 2.3 million aged between 31-45.

Aramco’s advisors said they may partly or fully exercise a 15% “greenshoe” option, allowing it to increase the size of the deal to a maximum of $29.4 billion.

The pricing comes as the Organisation of the Petroleum Exporting Countries (OPEC) is gearing up to deepen oil supply cuts to support prices, provided it can strike a deal later this week with allies such as Russia.

Climate change concerns, political risk and a lack of corporate transparency put foreign investors off the offering, forcing the kingdom to ditch ambitions to raise as much as $100 billion via an international and domestic listing of a 5% stake.

Even at a $1.7 trillion valuation, international institutions baulked, prompting Aramco to scrap roadshows in New York and London and focus instead on marketing a 1.5% stake to Saudi investors and wealthy Gulf Arab allies. Saudi banks offered citizens cheap credit to bid for shares.


The IPO is the culmination of a years-long effort to sell a portion of the world’s most profitable company and raise funds to help diversify the kingdom away from oil and create jobs for a growing population.

“The amount raised by the IPO itself is relatively contained given the size of the economy and medium-term funding requirement of the transformation plan,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“Nevertheless, combined with other areas of funding, we believe that there is meaningful capital in place to progress with the investment plans aimed at diversifying the economy.”

The government promoted the investment as a patriotic duty, particularly after Aramco’s oil facilities were attacked in September, temporarily halving the kingdom’s oil output.

Despite the official push and offer of loans to fund share purchases, interest was relatively muted compared with other emerging market IPOs, including the listing of a top Saudi bank in 2014 which was oversubscribed many times over.

Alibaba’s listing in Hong Kong this month had bids for 40 times the number of shares on offer.

Sources have said the Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA), sovereign wealth funds of two of Saudi Arabia’s Gulf allies, planned to invest in the deal. ADIA declined to comment, while KIA did not respond to requests for comment.

Saudi citizens were offered 0.5% of the company or about a third of the offering, an unprecedented retail offering compared with previous Saudi IPOs.

Aramco has planned a dividend of $75 billion for 2020, more than five times larger than Apple’s payout, which is already among the biggest of any S&P 500 company.

But investing in Aramco is also a bet on the price of oil and growth in global demand for crude, which is expected to slow from 2025 as steps to cut greenhouse gas emissions are rolled out and the use of electric vehicles increases.

The IPO also carries political risk as the Saudi government, which relies on Aramco for the bulk of revenues, controls the company.

Saudi Arabia has faced international criticism after the murder of Saudi journalist Jamal Khashoggi last year in the Saudi consulate in Istanbul and for its role in a war in Yemen.

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AfDB approves $210m for Nigeria Transmission Expansion Project



AfDB approves $210m for Nigeria Transmission Expansion Project

The Board of Directors of the African Development Bank (AfDB) Group has approved 210 million dollars financing package for the Nigeria Transmission Expansion Project (NTEP1).

The bank in a statement issued on Friday said that the package sought to rehabilitate and upgrade the nation’s power lines and improve distribution and supply.

According to AfDB, the project, which will run across Kano, Kaduna, Delta, Edo, Anambra, Imo, and Abia, will improve the capacity and reliability of the Nigerian transmission grid where it is most constrained.

NTEP1 is part of 1.6 billion dollars Transmission Rehabilitation and Expansion Programme (TREP).

The statement quoted Ebrima Faal, AfDB Senior Director for Nigeria, as saying that the project would reduce Nigeria’s power deficit.

“Nigerians and their businesses spend 14 billion dollars annually on inefficient and expensive petrol or diesel-powered generators.

“This project will contribute significantly to the reduction of Nigeria’s power deficit, decrease air and noise pollution and reduce the cost of doing business,” Faal said.

The statement further said that AfDB’s financing of $160 million and $50 million loan from Africa Growing Together Fund would support construction of 330kv double circuit quad transmission lines and substations across the country.

It added that the project would upgrade existing 263km of 330kv lines, while adding an additional 204km of new lines to increase TCN’s wheeling capacity, stabilise the grid and reduce transmission losses.

The statement noted that upon completion, the project would significantly improve Nigeria’s electricity supply, and directly impact the economy, industries, businesses and the quality of life of Nigerians.

It noted that the project would also reduce the use of small-scale diesel generators and therefore contribute to the reduction of Green House Gas emissions by saving approximately 11,460ktCO2 per year.

“The project will create about 2,000 direct jobs; 1,500 during construction and 500 during operations, especially for youth: 30% of these jobs are expected to be taken by women.

“By increasing electricity supplies to Small and Medium Enterprises (SMEs), the project will foster the creation of additional indirect jobs,’’ the statement said.

Wale Shonibare, the Bank’s Acting Vice-President for Power and Energy, said implementation of the project would increase evacuation capacity from the south of the country towards the north, where power supply is limited.

“NTEP1 will increase the grid transmission stability and capacity, and reduce the amount of stranded power, whilst improving power export and regional power system integration to the West African Power pool, especially through Niger and Benin interconnections,” he said.

NTEP-1 is part of AfDB’s response to the power sector crisis in Nigeria and is aligned with the government’s strategic plans articulated in its Economic Recovery and Growth Plan (2017-2020) and Power Sector Recovery Programme.

The project also aligns with the Bank’s High 5 priority to ‘Light up and Power Africa” and the New Deal on Energy in Africa.

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OPEC+ likely to extend oil supply cuts until June – sources



OPEC+ likely to extend oil supply cuts until June – sources

OPEC and its allies are likely to extend existing oil output cuts when they meet next month until mid-2020, with non-OPEC oil producer Russia supporting Saudi Arabia’s push for stable oil prices amid the listing of state oil giant Saudi Aramco.

The Organisation of the Petroleum Exporting Countries meets on Dec. 5 at its headquarters in Vienna, followed by talks with a group of other oil producers, lead by Russia, known as OPEC+. The current oil supply cuts run through to March 2020.

On December 5, Saudi Arabia is set to announce the final pricing of the initial public offering of Aramco, in what it hopes will be the world’s largest IPO. The oil price at the time is likely to be key to Aramco’s listing, expected around mid-December, reports Reuters.

“So far we have two main scenarios: either meet in December and extend the current cuts until June; or defer the decision until early next year, meet before March to see how the market looks and extend the cuts until the middle of the year,” said an OPEC source.

“It is more likely that we will extend the agreement in December to send a positive message to the market. The Saudis don’t want oil prices to fall, they want to put a floor under the prices because of the (Aramco) IPO.”

OPEC sources said market conditions in the first quarter of 2020 remain unclear amid concerns of a slowdown in oil demand and weak output compliance by some producers such as Iraq and Nigeria, which is complicating the outlook.

An OPEC delegate said: “My feeling is that (an extension) to end-June to avoid meeting again early March, with the possibility of calling for an (earlier) meeting should market conditions require it … is the likely scenario as of today.”

The two sources said formally announcing deeper cuts looked unlikely for now although a message about better compliance with existing cuts could be sent to the market.

Saudi Arabia, OPEC’s de facto leader, wants to focus first on boosting adherence to the group’s production-reduction pact before committing to any more cuts, they said.

“The Saudis want to see how the rest of those who are not complying (with the cuts) do first. There are no numbers being circulated so far for deeper cuts or changing output quotas,” said the first OPEC source.

Amrita Sen, co-founder of Energy Aspects think-tank, which closely watches OPEC and Saudi oil policies, said a mere extension by OPEC+ of the existing output cuts until June might not be enough to support oil prices.

“The market expects a further cut and an extension until the end of 2020. In any other scenario, the market will sell,” she said.

Russian President Vladimir Putin set the tone for the December meeting last week, calling Saudi Arabia’s position ahead of the talks “tough”.

Moscow argues that it will find it hard to cut oil production voluntarily during the cold winter months, especially in western Siberia, where Russia produces two-thirds of its oil and where most of its well rigs are located.

Freezing temperatures make it difficult for Russia to shut in and restart wells in winter months.

“There is no doubt that Russia won’t let the Saudis down in case of a price collapse, given the upcoming IPO,” said one source familiar with Russian thinking.

He added that Putin had developed close ties with Saudi Crown Prince Mohammed bin Salman and the Russian government was aware that the three-year-old partnership could fall apart if Russia did not support Riyadh.

The OPEC+ alliance has since January implemented a deal to cut output by 1.2 million barrels per day, to help boost oil prices trading now at $62 a barrel.

“This is not only about supporting Saudi Arabia. The deal, without a doubt, is beneficial for Russia. The Russian budget has received more than $100 billion from the deal. And the deal has stabilized the Russian economy,” Kirill Dmitriev, the head of Russia’s Direct Investment Fund, told Reuters.

Dmitriev and Energy Minister Alexander Novak were the key architects of a deal with Saudi Arabia, which began in 2017.

Saudi Arabia and other Gulf producers in OPEC have been delivering more than their share of promised cuts to stabilise the market and prevent prices from falling.

In October, the kingdom raised its oil output to its OPEC target, pumping 10.3 million bpd to replenish its inventories after attacks on its facilities last month, but kept the volumes of crude supplied to the market at 9.9 million bpd.

Last week, OPEC Secretary-General Mohammad Barkindo said U.S. shale oil supply growth could slow next year while demand may have upside potential, appearing to downplay any need to cut output more deeply.

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OVH Energy fires 2 oil dealers over profiteering



OVH Energy fires 2 oil dealers over profiteering

Downstream oil major, OVH Energy Marketing Limited, on Wednesday declared that it had sacked two of its major dealers, sounding note of warning to others.

The Chief Executive Officer of OVH, Huub Stokman, who declared this on the side lines of a media briefing at the company’s office in Apapa, Lagos, maintained that the dealers were sack based on their violation of OVH’s firm stand against profiteering and cheating of customers.

“We released two dealers over cheating. We found out, we kicked them out,” he said, adding: “We will not pretend about it. We abhor cheating of our customers and with us they will always be in a safe hand.”

Noting that his company had surged investment in key areas of business like jetty and loading gantry, quality control, OVH academy and aviation, Stokman maintained that the war on cheating of customers is also taken seriously.

“If you keep doing the same thing over the time, you will keep having same result. When you desire improvement, you need to look at an improved way of doing the same thing.

“We invested in new equipment to guarantee efficiency. We also upgraded 50 of our retail sites. We have done a lot also on our lube bays. All of this is to give our customers a new exciting experience,” he said.

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Oil slips as concerns over US-China trade talks drag on



Oil slips as concerns over US-China trade talks drag on

U.S. oil prices fell for the second straight day on Tuesday amid market jitters over limited progress between China and the United States on rolling back trade tariffs, while expectations of a rise in U.S. inventories also jangled nerves.

West Texas Intermediate (WTI) crude CLc1 dropped 32 cents or 0.56% to $56.73 a barrel by 0803 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose.

Brent crude futures LCOc1 were down 26 cents, or 0.42%, at $62.18 a barrel, reports Reuters.

A Chinese government source was quoted by broadcaster CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by U.S. President Donald Trump’s comment that there was no agreement on phasing out tariffs.

“We had reports overnight that the mood in Beijing was pessimistic,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney. “The lack of announcement is really concerning for the demand outlook … the market is very nervous about the trade talks.”

The lingering trade battle that has seen the world’s two biggest economies impose tit-for-tat tariffs on each other has hit global growth prospects and clouded the outlook for future oil demand.

Meanwhile, a preliminary Reuters poll on Monday that showed U.S. crude oil stockpile are expected to rise for a fourth straight week also squeezed prices. [EIA/S]

The American Petroleum Institute is scheduled to release its data for the latest week at 4:30 p.m. EDT (2030 GMT) on Tuesday, while the Energy Information Administration’s official weekly report is due on Wednesday.

“Unless we get further concrete signs of global growth rally or an extension in production cuts by OPEC+ (the Organization of the Petroleum Exporting Countries and associated producers including Russia), WTI will struggle to attempt to recapture the $60-a-barrel mark,” said Edward Moya, senior market analyst at OANDA in New York.

One possible factor supporting prices going forward was a renewal in geopolitical tensions, with news from Dubai that armed members of Yemen’s Iran-aligned Houthi movement had seized a vessel towing a South Korean rig at the southern end of the Red Sea over the weekend.

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Why hike in cooking gas price may persist – Marketers



Why hike in cooking gas price may persist – Marketers

The Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) says the current hike in price of cooking gas might persist if activities of Liquefied Petroleum Gas (LPG) Terminal Owners and Off Takers is not checked.

The Executive Secretary of NALPGAM, Mr Bassey Essien told News Agency of Nigeria (NAN) in Lagos on Friday that the development had led to increase in the price of cooking gas from N2, 600 to about N4, 500 in retail outlets.

Essien said that the Nigerian Liquefied Natural Gas (NLNG) vessel on November 13, supplied products to two terminals in Lagos to reduce the scarcity within the South West zone.

He said that this was in line with the Federal Government’s approval for the allocation of about 350,000MT of Gas per annum for local consumption through the NLNG.

Essien said the product was distributed through the terminals/off takers to gas marketers who eventually distribute to end user

“We noticed recently that gas delivered to terminals/off takers sold at N3.2 million per 20 MT a week ago suddenly jumped to between N4 million and N4. 3 million per 20MT at the terminals.

“This singular action has taken cooking gas beyond the reach of ordinary Nigerians who are forced to pay a higher price for product that the price structure from NLNG has not significantly changed.

“We therefore, dissociate our association (NALPGAM) from such exploitative acts of the terminals who are taking the industry and stakeholders for granted,” he said.

Essien said the upsurge in the price of cooking gas was detrimental to the efforts of the Federal Government at deepening cooking gas utilisation in the country.

He said that with this development, many Nigerians would go back to using kerosene and firewood which had attendant health effects.

“A filling station which was selling 300 litres of kerosene a week has seen its sales increased to about 6,000 litres because people who cannot afford gas due to the increment are going back to kerosene.

“This has so many negative effects on the economy, especially as food sellers would have to increase the prices of their food or reduce the quantity not to run at a loss,” he said.

Essien commended the NLNG for its efforts in supplying gas to Nigerians.

He added that the company would improve on its performance to deliver gas to other coastal terminals outside Lagos to reduce the inherent pressure on the terminals in the South West.

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Energy theft: KEDCO collaborates with Ministry of Justic



Energy theft: KEDCO collaborates with Ministry of Justic

The Kano Electricity Distribution Company (KEDCO), has in collaboration with Federal Ministry of Justice, established a Special Investigation and Prosecution Task Force on Electricity Offenders (SIPTEO) to bring to book all offenders of various kinds.

This, according to the Managing Director of the Company, Mr Jamilu Isiyaku Gwamna, follows sabotage of the power sector reforms and operations of the company in Kano, Katsina and Jigawa states.

He said: “In view of these the management herewith uses this medium to inform the general public particularly those who are still in the business of vandalism, energy theft and meter by-pass and other unlawful acts to desist from such as there now exists a proper legal framework that will ensure that their next illegal act may become their last, as the laws of the Federal Republic of Nigeria will catch up with them.”

The Managing Director said all members of the taskforce have concluded a special training in line with global best practices to handle issues relating to power sector sabotage of any kind.

The members of the taskforce comprise KEDCO staff, security personnel and lawyers from the Federal Ministry of Justice.

“It is a well-balanced taskforce that will run all electricity offenders out of business and put them in their proper place according to the dictate of the laws,” he warned.

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Matters arising over new PSC Act



Matters arising over new PSC Act

The Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill assented to by President Muhammadu Buhari has caused an upheaval in Nigeria’s oil industry. Adeola Yusuf reports


The Nigeria’s proverbial oil and gas tree was, last week, shaken to its root by two events that happened.

First, which happened to Nigeria from far away London, the United Kingdom (UK), was President Muhammadu Buhari’s signing the bill, an Act, which amends the Deep Offshore (and Inland Basin Production Sharing Contract).

This was promptly followed, some hours after, by the news of plans by French super major, Total, to exit from Oil Mining Lease (OML) 118.

While the industry players and watchers are yet to establish an official link between the two events, Total immediately appointed Investment bank, Rothschild, to manage the $750 million asset sale in Nigeria.

Opinions have been pouring on the new PSCs law in no small measure; all trying to justify or repudiate the move, altering the entire firmament of the industry.

NEITI’s opinion

The recent PSC Amendment Bill, which was assented to by President Buhari would usher in significant improvement in oil revenue for Nigeria, the Nigeria Extractive Industries Transparency Initiative (NEITI) said.

The agency commended the Presidency and the National Assembly for the speedy manner, the amendment process was handled. The bill was signed by President Buhari in London just a few days after it was passed by the lawmakers.

Executive Secretary of NEITI, Waziri Adio, said in Abuja that the amendment of the law was long overdue.

“We commend the 9th National Assembly and the Presidency for breaking the jinx with the prompt action taken to amend the law in record time,” Mr. Adio said.

The development, he said, was quite consistent with NEITI’s agitation for urgent amendment of the law to forestall further revenue losses to the federation.

He recalled that in March 2019, NEITI had published a policy brief titled “the 1993 PSCs: the steep cost of inaction,” which revealed that Nigeria lost between $16 billion and $28.61 billion in ten years for failure to review the terms of the agreement in 2008 as required by the law governing the PSCs.

The official said there were two notable triggers for the review of the Act in 2004 when crude oil price crossed the $20 per barrel mark, and in January 2008 after 15 years of the 1993 PSCs.

Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap. D3. LFN 2004 spelled out the conditions under which the PSCs should be reviewed.

The provisions of the Act stipulates that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, the share of the revenue to the government of the federation shall be adjusted under the PSC.

The essence of the adjustment of the sharing formula was to ensure that the Production Sharing Contracts shall be economically beneficial to the government.

More revenue

The official expressed confidence that with the amendment of the law, revenue generation for the federation in the PSC arrangement in the oil and gas industry will witness significant improvement.

The Deep Offshore and Inland Basin Production Sharing Contracts Act was enacted on March 23, 1999, with its commencement backdated to January 1, 1993.

Bickering before review

Of late, the Federal Government, through the Office of the Attorney General of the Federation and Minister of Justice, Abubakar Malami, had been making a case for the recovery of over $62 billion from the international oil companies.

These are arrears of revenues that should have accrued to Nigeria over the years that oil sold above $20 a barrel.

Malami had accused the IOCs of frustrating efforts in the past for the government to negotiate the review of the PSC.

The morning after

Mass sack last Thursday loomed in Nigeria’s oil industry as more international oil companies mulled pull out from Nigeria’s oil bloc stakes.

The move, which came a few days after President Buhari assented to the bill, New Telegraph gathered, is to worsen the over 3500 job loss suffered by the Nigeria’s oil industry between 2016 and 2019.

French super major, Total, which pioneered the fresh exit plan from Oil Mining Lease (OML) 118, this newspaper gathered on Thursday, has appointed Investment bank, Rothschild, to manage the $750 million Nigeria’s asset sale.

Total is not the only international oil company that has stakes in the OML 118. The stake owners include Royal Dutch Shell 0- the operator, Exxon Mobil and Eni. While Royal Dutch Shell owns 55 per cent stake in the OLM 118, Exxon Mobil has 20 per cent, Eni and Total both own 12 per cent in the oil block.

There has been exchange of correspondences between the IOCs offices in Nigeria and their headquarters situated in their mother countries over this move, this newspaper can report authoritatively.

“While a lot of these correspondences centred on implications of the new law guiding Production Sharing Contracts (PSCs) to our bottomlines, our officers here in Nigeria have been tasked to take resolutions on the new bill as an emergency,” a top management staff of one of the oil majors told this newspaper.

Stating that there would be need for re-adjustment in revenues forecast and projections made on investments in Nigeria before the bill, he maintained that there would be “realignment in spending and possible right-sizing to reflect the new reality.”

Job loss fear

There has been mass sack of over 3,500 workers in Nigeria’s oil industry between 2016 and 2019, data compiled by this newspaper showed.

While the country’s economic recession was allegedly responsible for the sack of about 3,000 in 2016, the United States (U.S.) super oil major, Chevron, allegedly sacked 500 staff working on various projects of the company in Nigeria in 2019.

The two major unions in the oil and gas sector, Nigeria Union of Petroleum and Natural Gas (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), then, threatened to go on strike saying over 3,000 of their members were affected during the 2016 mass sack.

Total group is already looking for buyers for one of its major oil blocks in Nigeria. The oil company wants to sell off its 12.5 per cent stake and has already contracted an investment bank to manage the sale process of the deepwater oilfield.

Total’s 12.5 per cent stake in the deepwater oilfield, Oil Mining Lease 118, is estimated to worth $750 million. Part of the oil block includes Bonga field which began production in 2005.

According to report, the Bonga field has produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak. And with the $10 billion development of the Bonga Southwest field, production output is expected to grow.

OML 118 stakes

The decision to sell its stake in the OML 118, which is located some 120 kilometres (75 miles) off Niger Delta, is coming amidst Total’s expansion in Africa. The company was also reportedly planning to sell $5 billion of assets around the world by 2020; the sale of its stake in OML 118 is part of the assets’ sale.

The company appointed Investment bank, Rothschild to manage the sale process on its behalf.

Shell Nigeria Exploration and Production Company (SNEPCo), it would be recalled, invited interested bidders for the development of the Bonga South West Aparo (BSWA) oil field in February 2019.

It was reported that the project’s initial phaseincludes a new Floating, Production, Storage and Offloading (FPSO) vessel, more than 20 deep-water wells and related subsea infrastructure. The field lies across Oil Mining Leases 118, 132 and 140, about 15km southwest of the existing Bonga Main FPSO.

But Shell disclosed days after that the directive by the Nigerian government to foreign oil companies to pay $20 billion in taxes owed would delay the final investment decision (FID) on its Bonga Southwest deepwater oilfield.

OML 119 as a complement

What the government might lose in OML 118, it appears that it might gain from OML 119.

The Nigerian National Petroleum Corporation (NNPC) has publicly opened bids from the 14 companies for the financing and redevelopment of the oil bloc – OML 119.

The latest is that ten of the 14 firms jostling for the redevelopment financing deals for the oil  bloc are jittery over fate of their bids as four bids have already suffered “technical” disqualification.

The ill-fated bids submitted by four companies during an open bid round penultimate Friday, New Telegraph gathered exclusively yesterday, could not fly after a preliminary screening showed that the firms could not meet up with the financial requirement for the funding deals.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, it would be recalled, publicly opened bids from the 14 companies for the financing and redevelopment of Oil Mining Lease (OML) 119.

OML 119 is a twin offshore block made up of Okono and Okpoho Fields located approximately 50 kilometers offshore south-eastern Niger Delta.

“As we speak, four of the 14 bids can not fly because even from the preliminary screening they have been technically knocked out for their inability to meet up with the financial requirement for the financing deal,” a source close to the deal said.

Noting that this development might have sent jitters down the spines of 10 other bidders, the source maintained that the NNPC “conducted an open bid because of its resolve to ensure that only those who are genuinely qualified are allowed to secure the deals.”

OML 119 is operated by the Upstream subsidiary of the corporation, the Nigerian Petroleum Development Company Limited (NPDC).

Speaking at the public opening of bids for the Funding and Technical Services Entity (FTSE) which held penulrimate Friday in Abuja, the GMD, according to a statement, said that OML 119 was one of the corporation’s critical projects.

This project, the statement issued by Acting Group General Manager, Group Public affairs division, Samson Makoji, read, “aligns wholly with the Federal Government’s aspirations of boosting crude oil and gas production, growing reserves, and monetizing the nation’s enormous gas resources.”

The GMD who was represented by the Chief Operating Officer, Corporate Services, Engineer Faruk Sa’id, stated that the selection process for the potential FTSE was transparent and in strict compliance with extant laws and overriding national interest.

He added that it was also in tandem with the Economic Recovery and Growth Plan (ERGP) and the TAPE agenda of the NNPC.

In his remarks, the Group General Manager, Supply Chain Management, Mr. Abdulhamid Aliyu, assured the companies that the selection process would remain transparent and fair.

Last line

The signing of PSC act shows that government can achieve anything if it is so desired to achieve. However, the investors/ concessionaire/oil companies must be carried along in the review as they are critical stakeholders that need co-operation rather than confrontation on any issue of national development.

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