Marginal fields accounts for 2.1% of Nigeria’s crude production — DPR

BY MICHAEL EBOH & SEBASTINE OBASI
The Department of Petroleum Resources, DPR, Tuesday, said Marginal Fields only account for 2.1 per cent of the country’s total crude production, with a daily production of about 60,000 barrels of oil per day.

Speaking at the Society for Petroleum Engineers, SPE, 2013 Nigerian Annual International Conference and Exhibition, NAICE, in Lagos, Mr. George Osahon,  Director, Petroleum Resources, said, however, that the Marginal Fields’ grew their reserves to 302.6 million barrels as at 2013 from 141 million barrels in 2004.

Osahon who was represented by Mr. Sam Obiora, Head, Upstream, DPR, said of the 24 marginal fields awarded in 2003 and the five fields awarded on a discretionary basis, only nine are producing.

He listed the active and productive marginal fields’ owners as Platform Petroleum, owner of Asuokpu/Umutu field; Walter Smith and Morris Petroleum owners of the Ibigwe field and Frontier Oil, owner of the Uquo field.

Others are Britania-U, owners of Ajapa field; Midwestern Oil and Gas and Suntrust, owners of Umusadege field and Pillar Oil, owner of Obodogwa/Obodeti field.

He further stated that out of the five marginal fields that were awarded on a discretionary basis, only Oriental Energy owner of two of the fields — Okwok and Ebok fields and Niger Delta Petroleum Development Company, owner of Ogbelle field are involved in active production.

Osahon further noted that the country’s crude reserves holding is currently skewed in favour of Joint Ventures, JV, and Production Sharing Contracts, PSC, accounting for 70.86 per cent and 22.67 per cent respectively.

He further stated that Joint Ventures and Production Sharing Contracts still hold majority of the country’s gas reserves, accounting for 77.73 per cent and 14.52 per cent respectively.

He maintained that there is the need to affirmatively invest in indigenous participation in the Nigerian petroleum industry.

The DPR boss, however, stated that the challenges facing the marginal operators have been adequately analyzed and remedial legislation and actions are being proposed, especially as some of the marginal field operators are beginning to break new grounds in area of unlocking stranded molecules through deployment of new technologies, thereby creating opportunity for employment and empowerment among others.

He disclosed that identified enablers will be applied in the next marginal fields bid round, adding that numerous opportunities abound to unleash the potential of small operators.

130m Nigerians generate own electricity - NOI Polls

BY MICHAEL EBOH
About 81 per cent or 130 million Nigerians, out of the about 160 million Nigerians, generated their own electricity through alternative sources to compensate for irregular power supply, according to the result of a series of Power Sector Polls conducted by NOI Polls Limited for the second quarter of 2013.

According to the results made available to Vanguard, a combined average of 69 per cent of Nigerians or 110 million Nigerians, have experienced increase in their spending on alternative power supply compared to a year ago.

The result of the poll further showed that an average of 47 per cent of Nigerian adults said that electricity supply was poor or went from bad to worse in the second quarter of 2013.

According to the poll results, the Electric Power Sector Reform Act (EPSRA), passed in 2005, initiated the unbundling of government’s power plants under the Nigerian Electricity Power Authority (NEPA).

“They were formed into business units and regulated by the Nigerian Electricity Regulation Commission (NERC) thus paving the way for public-private partnership and consequently the privatization of the power sector.

“The privatisation process is still underway and is intended to revive the power sector and invariably the Nigerian economy, as homes and industries alike will receive adequate and consistent quality of power supply.

“In order to ascertain the perceptions of Nigerians regarding the power sector reforms, the hours of power supply received daily and expenditure on alternative sources of power compared to a year ago, NOI Polls introduced the Power Sector Polls Project in April 2013 to monitor these trends and will release quarterly reports on findings of the polls. This result release marks the first in the series,” the poll said.

Continuing, the researchers said, “Over 3000 phone owning Nigerian adults aged 18 years and above were interviewed across this three month period (April-June) and some of their responses to the poll will be analysed in this report.

“In order to measure the level of power supply to households, respondents were asked: ‘How would you describe power supply in your area in the past 1 month?’

“A combined average of 47 per cent said power supply had either remained bad (25 per cent) or had worsened (22 per cent); compared with about 33 per cent who said they witnessed some slight improvement, and 20 per cent who experienced no difference in the past month.

“Nonetheless, it is worth pointing that the poll results indicate a one-point increase between April and June (April: 31, June: 32) of respondents who saw some improvement, a 5-point drop in respondents who said it remains bad (April: 27, June: 22) and a 3-point increase in those who said it remained the same (April: 18, June: 21).

The polls have indicated a link between power supply and the president’s approval rating; as it was observed that in the months where respondents perceived that power improved, the president’s rating seemed to increase and vice versa. The month of May had the best power supply of the three months.

Figure 1 illustrates the three month trend.
”The next question sought to measure the typical number of hours of continuous power supply experienced in the household on a daily basis: ‘On the average, how many hours of continuous power supply does your household experience daily?’

“Averages across three months show that between April and June 42% of respondents claimed to experience about 1-4 hours of power supply on a typical day. There marks a 4-point decline in the proportion of respondents who received 1-4 hours of continuous power between April and June (April: 45%, June: 41%); a 7-point increase in respondents who received 15-19 hours of power (April: 3%, June 10%); and also a 2-point increase in respondents who received 10-14 hours of power (April: 9%, June: 11%).

52% Nigerians still buy petrol above N97/L – NOI Poll

By Clara Nwachukwu and Sebastine Obasi
Despite the huge subsidy and petroleum equalisation paid by the Federal Government to enable Nigerians buy petrol at regulated price of N97/litre, the reality is that more than half of Nigerians still buy the product above the prescribed amount.

[caption id="attachment_233142" align="alignnone" width="412"] Hawkers of PMS along Kashia road, Kaduna[/caption]

A survey released Tuesday in Abuja, by the Finance Minister’s private agency, Ngozi Okonjo-Iweala, NOI Polls Limited, has shown that at least five in every 10 Nigerians bought premium motor spirit or petrol above the regulated pump price of N97/L.

Already, the Ministry of Finance disclosed on Monday that about N240.5billion have been paid for subsidy claims in 2013 alone, thus negating the policy of the subsidy regime since Nigerians still buy the product above the pump price.

Findings of Poll

The NOI in its report said: “The second quarter results for the Petrol Pump Price Monitoring Pollsconducted by NOI Polls Limited reveal that between April and June 2013, an average of 52 percent adult Nigerians (about 45.2 million Nigerian adults) are still buying petrol above the official pump price of N97 per litre. This marks a 5-point decline from an average of 57 percent in Q1 2013.

“The poll further indicates that 6 in 10 Nigerians (60%) blame the differences in petrol price on lack of government monitoring of petrol sales. These form part of the findings of the polls for Quarter 2 (Q2), 2013.”

NOI said the poll findings were determined by administering a questionnaire to respondents “In order to determine the main petrol distributors that Nigerians patronise and analyse their purchase trends, respondents to the poll were asked: Where do you mainly buy petrol from?

“The responses indicate that in Q2 of 2013, 55% of Nigerians bought petrol from major marketer filling stations. This is followed by 34% of Nigerians who bought from independent marketer filling stations then 11% who bought from hawkers.

“The North-Central and South-West zones have the highest percentage of Nigerians purchasing petrol from major marketer filling stations with 64% and 62% respectively. The South-East zone has the highest percentage of people purchasing from independent marketer filling stations with 46 percent, while the North-East zone has the highest percentage of people purchasing from hawkers with 28%.

Need for poll
The agency explained that: “The purpose of the poll is to monitor and analyse the current pump price and uses of petrol in Nigeria, as well as to measure the perception of Nigerians towards the petrol price differences at various points of sale.”

As a result, NOI said the poll became expedient, following the January 2012 national crisis on petrol pump price increase from N65 to N141 as a result of the removal of subsidy in which over N1trillion was spent in 2011.

“After days of protest by Nigerians led by organised labour and civil societies who were unhappy about the perceived hardship this action would cause Nigerians and the lack of notice by the government to carry out such plans, the government as a stop-gap measure partially removed subsidy, bringing the official pump price of petrol to N97.

“In the course of and following the 2012 subsidy protest and partial removal of subsidy by government, many debates arose with erroneous and inaccurate information passed across as the truth, indicating a need for a dependable measure of public opinion on issues surrounding public policies. This led NOI Polls in January 2013 to initiate the Petrol Pump Price Monitoring Project. This result release is the second quarterly release in the series.”

The agency further noted that: “Over 3000 respondents have been interviewed across six months (January-June) and the respondents are asked ten questions for each monthly poll, but only five of these have been reviewed in this report.”

Power situation worsens as Shell shuts Afam VI Power Plant

BY MICHAEL EBOH
Nigeria’s power situation worsened Tuesday, as Shell Petroleum Development Company, SPDC, shut down its 624 mega watts Afam VI Power Plant.

Shell, in a statement signed by Mr. Tony Okonedo, Corporate Media Relations Manager, said the shut down is due to shortage of gas arising from the closure of the Trans Niger Pipeline (TNP) as a result of crude oil theft related leaks.

Prior to the shut down, he disclosed that the power plant was only supplying 105 mega watts of electricity to the national grid, due to insufficient gas supply.

According to him, the shutdown of the TNP system, comprising the 28-inch and 24-inch streams resulted in the deferment of 150,000 barrels of oil per day, and also led to tank tops and non-evacuation of condensate from Okoloma Gas Plant which supplies Afam VI Power Plant with feed gas.

He expressed concern about the negative impact of incessant crude theft activities on lives and environment in the Niger Delta, and also the loss of electricity to businesses and households across the country.

He said, “SPDC had to shut down Okoloma Gas Plant, as it could not continue to produce gas without the evacuation of condensate. Afam VI Power Plant was available at 624MW capacity, but supplying only 105MW to the national grid due to reduced gas volume at the time of shutdown.

“The latest leak on the TNP occurred on the 24inch stream at Owokiri on 11 July. A Joint Investigation Visit comprising government agencies, community and civil society representatives and SPDC personnel found that unknown persons had installed a 6inch crude theft valve on the facility.

“SPDC repaired that leak, and is working to remove other crude theft points that were discovered in the process. The 28-inch TNP had earlier been shut in for removal of similar oil theft connections. The company is striving to repair the TNP as quickly as possible, and restore operations that will enable power generation to resume at Afam VI.

The Transmission Company of Nigeria, TCN, had a couple of days ago put the power generating capacity of the country’s power plants at 2,290MW, blaming it on the vandalisation of two major gas pipelines supplying gas to eight power generating stations across the country.

According to TCN, the affected plants are Egbin/AES Thermal Stations, Olorunsogo, Omotoso, Geregu NIPP, Afam IV and VI Thermal Power Stations as well as River State Independent Power Station, which resulted in drastic reduction of power supply by 1,598MW.

 

File name: Power. July 16, 2013

NIMASA to allow LNG exports after $475 mln loss

LAGOS (AFP) - Nigerian Maritime Administration and Safety Agency, that has blockaded liquefied natural gas exports for three weeks, costing $475 million in revenue, agreed Friday to end its action after resolving a fees dispute, the company said.
Nigeria LNG Limited said it had decided under protest to pay $140 million in the dispute over levies claimed by the Nigerian Maritime Administration and Safety Agency, known by its acronym NIMASA.

That amount is in addition to an earlier $20 million paid under protest.

NLNG's shareholders include Shell at 25.6 percent, state firm NNPC with 49 percent, Total LNG Nigeria at 15 percent and Eni at 10.4 percent.

"In addition, NLNG has agreed to pay, again under protest, the levies as they become due until a judicial ruling on whether these payments are justified can be obtained," NLNG said in a statement.

The company maintains it is exempt from such levies under a law setting out conditions for Nigeria's LNG industry.

Nigerian Maritime Administration and Safety Agency, NIMASA  had continued to block shipments from the facility in southern Nigeria which provides some seven percent of global LNG supply despite court rulings ordering it to end the action, NLNG said.

A NIMASA spokesman did not return calls for comment.

Asked whether the agency would now lift the blockade, NLNG spokesman Kudo Eresia-Eke told AFP "that was what was agreed."

"Owing to the NIMASA blockade which persisted in spite of court orders, the company has lost revenues of over 76 billion naira ($475 million), 65 percent of which belongs to the federal government, which has thus lost about 50 billion naira in dividends, taxes, etc.," NLNG said in a statement.

According to NLNG, the blockade that began on June 21 also cut into cooking gas supplies in Nigeria because the facility produces liquefied petroleum gas as a byproduct.

According to local media reports, NIMASA has contracted with a security firm linked to a prominent ex-militant from the country's oil-producing Niger Delta region. The security firm, Global West, was named in court documents seeking an end to the blockade.

Nigeria exported some 19.6 million metric tons of LNG in 2012, the fourth-largest output worldwide, according to data compiled by research firm IHS. Qatar was first with 74.2 million metric tons.

LNG, which sees natural gas super-cooled and transformed into liquid for transport on tankers, has represented around nine percent of global gas demand, according to figures from the International Energy Agency.

Nigeria second to Russia in global gas flaring

… Senate worries over non-compliance to penalties
By Sebastine Obasi
Nigeria, the highest producer of gas in Africa, loses about $1.789 billion or N286.24 billion to gas flaring annually. Mr. George Osahon, Director, Department of Petroleum Resource, DPR, has said.

Osahon who was represented by his Deputy Director, Gas, Mr. Oliver Okparaojiako, disclosed this Wednesday,  at the Nigerian Gas Association, NGA Business Forum, held in Lagos.

According to him, at the rate of $3.5/1,000 standard cubic feet, scf, the country incurs about $4.9 million or N784 million daily losses from flaring and gas under-utilisation.

“As it is today, oil production stands at 2.5 million barrels per day.

Utilised gas is 6.6 billion bcfd, the rest is flared, which is 1.4 bcfd. If you take this loss at $3.50/1000scf, the average daily loss is $4.8 million, which is close to N789 miilion,” he said.

Already, Nigeria is second to Russia in global gas flaring, according to the World Bank-led Global Gas Flaring Reduction partnership (GGFR), and has remained so over a period of five years between 2007 and 2011.

A report from the bank last year said: “Russia still tops the world's flaring countries, followed by Nigeria, Iran and Iraq.  The USA is now the fifth flaring country in the world, with some 7.1 bcm of gas flared in 2011.”

It added: “Latest satellite estimates also show some continuous progress in flaring reduction in Nigeria, Algeria, Mexico and Qatar.

These countries need to sustain their flaring reduction and gas utilization efforts.

The revelation comes as the Senate Committee on Gas, expressed concern over the flagrant refusal by oil companies, particularly the International Oil Companies, IOCs, operating in Nigeria to pay the penalties prescribed for flaring Committee Chair, Senator Nkechi Nwogu, in a telephone interview with Vanguard yesterday, said that even the current penalty of $3.5 imposed is not been collected.

“We are going to make it mandatory for the IOCs to report to the regulators, and the regulators would render to the Senate on quarterly basis, the volume of gas flared, the penalty paid and when it is paid and we will investigate when the payment is made,”

As a result, she said the Senate is working on a modality that will lead to the imposition of stiffer penalties on flare violators in the Petroleum Industry Bill, PIB.

“In the PIB document before us, we are going to impose penalty and make sure that violators pay for it, With the PIB before us, we are going to look into the matter and know when and how to stop it,” she said.

She added that the Senate is concerned about the current situation, which makes the IOCs to act with impunity.

Production and utilization Expatiating further on the level of gas production and utilisation in the country, Osahon said that while Nigeria’s oil production remains at 2.5mpd, gas production is about 8.0 bcfd. Associated Gas (AG) production is about 5.20 bcfd, while Non Associated Gas (NAG) production is about 2.80 bcfd.

He, however, noted that in post-PIB, there would be future exploration for gas in new frontiers such as Anambra and Benue trough.

“Exploration efforts in the Chad Basin, Anambra basin and Benue trough shows that inland basins have potentials to add to national gas reserves,” he said.

He further said that problem of gas distribution network would soon be solved, adding that there are three backbone transmission pipelines, namely; South to North pipeline, Western pipeline and Interconnector  pipeline.

NNPC to acquire divested assets of IOCs

BY MICHAEL EBOH With Agency Report

Nigerian National Petroleum Corporation, NNPC, Monday, said it will acquire the divested assets of International Oil Companies, IOCs, in Nigeria.

The NNPC has also borrowed about N224 billion ($1.4 billion) from the international financial market to settle the N496 billion ($3.1 billion) indebtedness of its subsidiary — the Pipeline and Products Marketing Company, PPMC — to importers of petroleum products into the country over the last three years.

Speaking on plans to acquire the divested interests of oil majors, Mr. Andrew Yakubu, Group Managing Director, NNPC, said in a statement that it is prepared to take over and operate the assets sold off in Nigeria by foreign oil companies.

He said, “With the divestment of the oil majors, the Nigerian Petroleum Development Company, NPDC, comes across as the major option for indigenous participation that will replace companies like Shell and other companies that wanted to divest their equities.”

He disclosed that the NPDC has been repositioned to ensure that the acquired assets remain productive to boost the company's reserve base and ultimately ensure increases in revenue for Nigeria.

According to data from the NNPC, NPDC's crude oil production has averaged 130,000 barrel of oil per day with plans to raise output to 250,000 barrel per day by 2015.

This planned increase in production, the NNPC said, will be driven by production from fields sold off by the international oil majors.

[caption id="attachment_353520" align="alignnone" width="412"] Minister of Petroleum, Alison-Madueke and NNPC GMD, Andrew Yakubu[/caption]

NPDC has acquired over 55 per cent equity stake in four onshore oil assets divested by Shell, Eni and Total, including the promising Oil Mining Lease, OML 30, which is projected to be capable of producing around 300,000 barrels per day in the near future, up from 35,000 barrels per day at present.

Analysts are of the view that the NNPC stands the chance of acquiring the divested interests, as its partnership with the oil majors means that it will be given the right of first refusal in the acquisition of the assets.

On the N224 billion loan deal, reports said the loan deal was agreed in December but it took six months for the money to be disbursed as the deal structure needed to be validated with multiple stakeholders and Nigerian authorities.

The prepayment facility, guaranteed by future oil sales, was led by Standard Chartered Bank and also included BNP Paribas, Societe Generale, Natixis and several Nigerian banks.

The N224 billion loan, according to reports, will be repaid by the NNPC over a period of five years, while it will use as collateral, 15,000 barrels per day of oil production.

The remaining $1.7 billion of debt is owed to trading houses as well as oil majors, BP, Royal Dutch Shell and Total for supplies of fuel in the last three years.

Reports said the NNPC’s ability to repay the balance of the debt will be more challenging as it has committed most of its available oil flows for the next five years, which can generate additional cash only if oil prices stay much above $75 per barrel.

"Some more recent PPMC creditors did not get any proceeds from the recent drawdown, and cannot afford to be waiting and financially bleeding for another five years with no clear repayment roadmap.

“However, a solution could be found via an increase of the allocation of oil for creditors,” a source said.

Shell raises alarm over rising crude oil theft spills

BY MICHAEL EBOH

Shell Petroleum Development Company of Nigeria Limited, SPDC, operated Joint Venture, Tuesday, raised an alarm over the rising cases of sabotage on its facilities, saying that it recorded eight incidences of vandalisation on its pipelines at the Adibawa field in Eastern Niger Delta which led to the spilling of about 500 barrels of oil into the environment.

According to a statement by Tony Okonedo, Corporate Media Relations Manager, SPDC, the incident happened between January and June this year, adding that majority of the spills were caused when unknown persons inflicted extensive hacksaw cuts on pipelines.

He said the the Adibawa field straddles Biseni, Edagberi and Ikarama communities, stating that a joint team comprising regulators, government ministries, SPDC and communities investigated each of the spills and confirmed their findings in signed-off reports.

He disclosed that the latest spills occurred on the Adibawa - Okordia pipeline at Ikarama, May 24 and June 4, respectively.

He said the largest individual spilled volume of 447 barrels came from the June incident, stating further that investigation is continuing into another spill which occurred on the Adibawa North East flowline at Biseni, May 22.

He said, “In line with its spill response strategy and at the earliest opportunity, SPDC shut down the pipelines, mobilised teams to the site of the incidents for containment and recovery of spilled oil. Cleanup of impacted areas is planned for later in the year.”

Also speaking, Mutiu Sunmonu, SPDC Managing Director and Country Chair, Shell Companies in Nigeria, said, “We are very concerned over the rising trend of spills in Adibawa field. Just between April 9 and 26, we recorded four sabotage spills in the same area, polluting rivers and blighting swathes of land. All stakeholders must work together to try to stop this crime against Nigeria.

“SPDC continues to bring new level of transparency in spills reporting. In 2011, we set up a website www.shellnigeria.com/spills that captures all spills, sabotage and operational, and information on all the incidents in Adibawa and elsewhere are fully listed there. This is the only such website in Nigeria.”

Shell Petroleum Development Company of Nigeria Limited, SPDC, had on June 21, 2013, shut the Trans Niger Pipeline (TNP) following an explosion and fire at a crude theft point on the 28” section of the facility at Bodo West in Ogoni land.

This resulted to a shut in of 150,000 barrels of crude oil per day, leading to Nigeria losing about $14.73 million (N2.357 billion) daily.

Okonedo disclosed that prior to the incident, SPDC had shut down the 28” TNP to remove crude theft connections, and has now closed the 24” TNP as a precautionary response to the fire.

“This means that the entire TNP system, comprising the 28” and 24” pipelines have been shut-in. The 24” TNP will be reopened when it is safe to do so, while the 28” TNP will remain shut-in until the fire has been extinguished, and investigation and damage assessment completed,” he said.

Commenting on the shut down of the pipeline, Sunmonu said, “This is another sad reminder of the tragic consequences of crude oil theft. Unknown persons continued to reconnect illegal bunkering hoses at Bodo West even as our pipeline team was removing crude theft points. It was, therefore, not surprising that the fire occurred from the continuing illegal bunkering even as a previous crude oil theft point was being repaired by the team.

“So far, there is practically no spill from this event as the oil is burning off. What is visible in the water is from an earlier oil spill which was also as a result of oil theft. The explosion also triggered a fire on a nearby barge. Crude theft continues to pose significant challenges to people, the environment and the local and national economy, and all stakeholders must work together to stop this criminal activity.”