The amount spent on fuel subsidy by the Nigerian National Petroleum Corporation increased by N58.6bn within one month, the latest figures released by the corporation on its financial report for July 2019 has shown.

According to the report, obtained on Tuesday, the corporation spent the additional sum in April this year.

It showed that the national oil firm spent N89.2bn on petrol subsidy in April 2019, up from the N30.64bn which it incurred as subsidy in March this year.

Petrol is imported solely by the Federal Government-owned NNPC. The corporation subsidises the commodity to ensure that it is not sold above the approved price of N145 per litre at filling stations across the country.

The NNPC, however, classifies its subsidy spending as under-recovery as it has repeatedly argued that only the National Assembly can approve subsidy.

Under-recovery is the additional cost that the NNPC is incurring in subsidising the price of petrol in order to ensure that it is sold at the regulated price of N145 per litre, even when the real market price is above this rate.

Further findings from the July 2019 financial report showed that the N89.2bn subsidy spending in April was the third highest amount spent by the oil firm in one month since January 2019.

The NNPC spent N104.35bn, N102.24bn and N30.64bn on petrol subsidy in January, February and March this year, respectively

Experts and recognised institutions such as the Lagos Chamber of Commerce and Industry had on several occasions called on the government to discontinue the subsidy.

The PUNCH on Tuesday reported the International Monetary Fund as advising Nigeria to reduce fuel subsidy now, as oil prices were low.

This, the IMF said, was in order to bring about more productive government spending.

Source: The Punch

The Nigerian Association Petroleum Explorationists (NAPE), has urged the Federal Government to address concerns bordering on the long contracting cycle in the petroleum industry, adding that such practice continues to hamper investments and development.

According to the body, the long contracting cycle results in a high level of uncertainties in costing and planning thereby creating a sluggish business climate.

NAPE President, Ajibola Oyebamiji, noted that although there has been an improvement in the cycle, the reality is that operators still find the contracting cycle exceeding what ought to be for investors, especially for the International Oil Companies (IOCs), who need quick decisions.

“They need a shorter contracting cycle, shorter time to achieve this. In some other countries, even a nine-month cycle is too much not to talk of between nine months to 36 months. Although there is little improvement in some areas, it is not all-encompassing; it doesn’t cover the entire life cycle of oil and gas projects,” he said.

Oyebamiji noted that Nigeria was at the risk of long-term disruption to oil and gas supplies, power generation, a collapse of industries, and significant loss of revenue due to continued reduction in hydrocarbon exploration activities.

He said the reduction in hydrocarbon exploration and exploitation has dire consequences for a country like Nigeria, with a mono-economy hinged on crude oil.

“The procurement and contracting cycles in the Nigerian Oil and Gas industry is about 36 months, making it the longest and most inefficient in the World.

“Insecurity, oil theft, and illegal refining are bigger threats to the oil and gas industry in Nigeria than the declining price of oil. The current low oil price is rather a reflection of an over-supply of oil in the world market.

“In Nigeria, the low oil price regime has led to dwindling reserves, more burdens on foreign reserves, pressure on infrastructure and social services, inability to meet commitments to institutional lenders and the list of untoward outcomes is long,” he said.

Oyebamiji, also said the discovery of hydrocarbon deposits in the Kolmani River II Well on the Upper Benue trough, Gongola Basin, in the North-Eastern part of the country was good for the industry.

While speaking on issues to be addressed at NAPE’s forthcoming yearly international conference and exhibition, themed: “Expanding Nigeria’s Petroleum Landscape: Digitalisation, Innovation and Emerging New Technologies,” he said the discovery was a long-awaited core significant development.

“The discovery of oil and gas in commercial quantity in the Gongola Basin will attract foreign investment, generate employment for people to earn income, and increase government revenues.

He said participants at the conference would be deliberating on the petroleum business and the regulatory environment with a view to addressing the challenges of exploration.

He said it would also address production in the onshore, offshore and Nigeria’s frontier basins, as well as seek new approaches for exploration and production in the Cretaceous and Cenozoic basins.

“The conference will also be beaming its searchlight on new technology application in exploration and production using big data, digitalisation, data analytics, and artificial intelligence opportunities, among others.

“Participants at the conference will also be discussing the contributions of indigenous/marginal field operators and the imperatives of growing national reserves and grooming the next generation of E&P professionals.”

Source: Guardian 

Nigeria and Russia Thursday in Sochi, Russia, signed an important Memorandum of Understanding (MoU), which will enable both countries’ oil giants, Nigerian National Petroleum Corporation (NNPC) and Russia’s Lukoil to elevate commercial relationship to a government-to-government backed partnership.

With signing of the MoU, NNPC and Lukoil will work together in upstream operations and revamp Nigeria’s refineries.

Group Managing Director of NNPC, Mele Kyari and Vagit Alekperov, President of leading Russian oil company, Lukoil, signed the MoU, which entails cooperation in deep offshore exploration of oil in Nigeria, production, trading and refining.

The signing ceremony, which took place on the sidelines of the Russia-Africa Summit, was witnessed by the Minister of State for Petroleum, Timipre Sylva.

Earlier in his remarks at a meeting with Russian President Vladimir Lenin, President Muhammadu Buhari said Nigeria was prepared and willing to work with Russian businesses “to improve the efficiency of our oil and gas sector which provides us with the much-needed capital to invest in our security, infrastructure and economic diversification programmes”.

While taking note of the agreement between NNPC and Lukoil, President Buhari gave an assurance that his administration will “ensure this initiative is implemented within the shortest possible time.”

Source: NTA

Against the backdrop of recent accidents involving fuel tankers, the Department of Petroleum Resources said on Thursday that it would put an end to the loading and distribution of more than 33,000 litres by road tankers.

The DPR and other stakeholders, including the Federal Road Safety Corps, expressed concerns over the growing menace of tanker incidents in the country.

The Lagos Zonal Operations Controller, DPR, Mr Wole Akinyosoye, said at the zone’s 2019 Annual General Meeting in Lagos that the agency would enforce the maximum limit of 33,000 litres.

He noted that the pipelines built for the transportation of petroleum products had become inadequate and their integrity compromised, adding that products were mostly being transported from Lagos to different parts of the country.

He said, “Many of the roads were constructed to have maximum carrying capacity of 30 tonnes (about 33,000 litres). The Nigerian law only allows for 33,000 litres to be loaded out of the depots. Today, we have 60,000 litres, 45,000 litres and sometimes 90,000 litres loaded out of the depots.

“We admit that the DPR is culpable in these circumstances. But the department has taken a decision because of what has been happening in the last two to three months that we have to enforce the maximum limit, which is 33,000 litres, on our roads.”

The acting Director, DPR, Mr Ahmed Shakur, said the agency was taking proactive steps to find lasting solutions to the challenges of safe and efficient road distribution of petroleum products.

“We are liaising with relevant government agencies including the FRSC, federal and state fire service departments and relevant associations on solutions, including scheduling of tanker truck movement, provision of fast and efficient towing services,” he said.

The Lagos Sector Commander, FRSC, Mr Hyginus Omeje, said there were 302 tanker crashes in 2018, adding, “We have already surpassed that figure this year.”

Source: Punch

The combined yield efficiency of Nigeria’s refineries has crashed to zero, the latest report on the performance of the facilities has shown.

Nigeria’s refineries are the Warri Refining and Petrochemical Company, Kaduna Refining and Petrochemical Company, and Port Harcourt Refining Company.

In the report, which was released by the Nigerian National Petroleum Corporation, the refineries also performed woefully in terms of the volume of crude oil they processed.

The corporation stated in its just released monthly financial and operations report for July 2019 that the three refineries processed no drop of crude oil and produced no product during the month under review.

It said their combined yield efficiency dropped from the 31.19 per cent in June to zero per cent in July 2019.

An analysis of the combined performance of the facilities also showed that after they recorded an opening stock of 212,165 metric tonnes, the refineries posted zero per cent as crude processed, finished and intermediate products.

They also recorded zero per cent as plant consumption, losses and capacity utilisation. Their combined plant capacity was put at 445,000 barrels per day.

The NNPC said, “In July 2019, the three refineries processed no crude and produce no product for the month as against 38,977MT processed in June 2019.

“Combined yield efficiency is zero per cent compared to 31.19 per cent recorded in June 2019 owing largely to rehabilitation work being carried out in the refineries.”

The national oil firm insisted that the poor output of the facilities was due to the work being carried out on the refineries.

It said, “For the month of July 2019, the three refineries produced no intermediate product, hence, combined capacity utilisation is at zero per cent.

“The waning operational performance recorded is attributable to ongoing revamp of the refineries which is expected to further enhance capacity utilisation once completed.”

The NNPC also stated that the refineries posted a loss of N13.84bn in July 2019.

The report stated, “The corporation has been adopting a Merchant Plant Refineries Business Model since January 2017. The model takes cognisance of the products worth and crude costs.

“The combined value of output by the three refineries (at import parity price) for the month of July 2019 amounted to N0.83bn. No associated crude plus freight cost for the three refineries since there was no production while operational expenses amounted to N14.66bn. This resulted in an operating deficit of N13.84bn by the refineries.”

On Wednesday, the Group Managing Director, NNPC, Mele Kyari, announced that the corporation engaged Russian investors and the foreign nation’s state company to rehabilitate Nigeria’s refineries.

Kyari, in a message he retweeted, also stated that gas infrastructure development was discussed with the Russian investors.

He stated that a team involving himself, the Minister of State for Petroleum Resources, Timipre Sylva; the NNPC’s Chief Financial Officer, Umar Ajiya; the NNPC’s Chief Operating Officer, Refineries, Mustapha Yakubu; among others, engaged the investors during the Russia/Africa Economic Forum in Sochi, Russia.

“The team engaged Russian state company and private entities to secure development cooperation of mutual benefit,” Kyari retweeted.

He added, “Refinery rehabilitation and gas infrastructure development on the front burner.”

Nigeria’s refineries had over the years been performing abysmally, as they continue to fail to meet up to less than 50 per cent of their capacity utilisation.

Copyright PUNCH.