alj harem:

[size=14pt]And after you chase them out, what would you do ? drink your oil or what

people why not ask your government to build her refinary for his indigenous government oil company at least 1 so we have a bargaining power.

Why do we reason like this in Nigeria [/size]

Because government does not drill oil and NNPC's own contribution through NPDC is microscopic. Why would you insist that the man who knows next to nothing about a business be entrusted in creating and running one while leaving those with the expertise to be marketers only. That is the lopsided argument. Shell should be doing the refining while government does the administration not the other way round. If I am a cattle rearer I am in the best position to produce milk not a middlemen who hires my cattle to milk them. It is scandalous for Shell, AGIP and Co. to be giving out LPO's for the supply of AGO for their own use and billing the country by way of JV funding whereas they burn free gas willy nilly after powering their own gas turbines at our cost. party violation is better than that. If the government is up and doing they should set targets for total refining of all the crude we produce in this country say over twenty years. No more crude export. This country should be littered with refineries  by now with supertankers on queue in the high seas.

By the way the British and American governments own no refineries or oil companies. They have divested eons ago. The refineries owned by IOC's are built by the IOC's using amongst others profits garnered from less than right thinking countries such as Nigeria. If you have a couple of hundreds of millions go ahead and build one. But I can't see how your tomato puree will be cheaper than that produced by a tomato farmer in the business for generations. After forty years of exploration there's nothing on ground to show for it. We used to accuse government of laxity and ineptitude. Now they are beginning to wake up and are calling these companies to higher responsibility we the people are now turning to support the IOC's. Tired.

alj harem:

Talking about Mypoic views you are not better yourself.

How does the western world and china after common logic  

You see my friend simplicity is brilliance. Being open minded and view things for a simply point of view would make one find a solution to something not just be overly complicating things. That is why Nigeria is and would still remain under-develop until we wake up and do the right thing at the right time

Now wake up my brother. So according to you, once the shell and co leaves, Chinese companies would come and be the new over lord in the pretence of building our refinery right ?

Changing one master to the next is the New game plan ?

Why not free yourself and acquire wealth yourself that would rival that of China and the western world

Our people say

It is only an fool that would keep buying pounded yam when he has yam himself at home.

Maybe it is high time Nigerians start engaging in thinking.

Couldn't make out a point from all the gibberish written in the quote above. I'd however point out that ATM if they refuse to comply, we would be  faced with three options:

1, Continue with our exploitive neo-colonial masters and maintain status quo gaining nothing.

2, Switch to a new partner offering an all round better package.

3, Wait for the Nigerian Government, which for inception has been known to promise and not fulfil to do things themselves?

Make your pick?

I don't see how the government will force foreign oil companies into a refining business that is guaranteed to lose money! Which financial institution on earth will lend money for building a plant that its input costs are at market prices yet its output prices are fixed? That is the reason why why no bank has funded the building of refineries in Nigeria and refinery licenses lie fallow. A refinery business in Nigeria will not pass the feasibility smell test

To secure financing to build a refinery, there are some things you need:

1) Long term crude oil supply agreement (industry average is 20 years). The question is at what price will that crude be supplied considering the opportunity cost of exporting?
2) Guaranteed long term refined product off-taker. This is the major one that will kill bankability. Who will you sell to? At what price? and for what tenor? A financial institution will want to see a long term guaranteed off-taker at market prices.

Only a state owned entity can pass those two tests above. It is therefore no coincidence that only government owned refineries exist in Nigeria. A private company with shareholders WILL NOT invest in refienries in Nigeria.

If we tell the IOCs to leave our land, who will run the Joint Ventures? IS it the chronically incompetent and corrupt NNPC? Compare the JVs run by the IOCS such as NLNG, SPDC, Total, NAOC and compare to the ones run by the NNPC like NPDC, refineries and imagine what will happen to our oil exports if NNPC runs the show.

gentleoyink:

@ekt /efisher How much will it take to build a Refinery, that you think Shell/Chevron cannot aford?
I think mulitinational oil companies will be more efficient in operating a refineries than our Govt. has done so far.
That na if this bill come out as them talk am o.

The first refinery in Nigeria was built by Shell. It was privately operated and had a rail link. Shell, then Shell-Bp, also operated petrol stations and depots.

Jarus:

HMMMN, oya close your laptop and face front.

see late comer calling kettle black

jp philips:

lets talk about this present day subsidy
regime, the Cbn gov has already confessed
he has evidence of round tripping , he said
he paid subsidy on 15 fake vessels
approved by customs.
what did madueke do? nothing

the reasons investors did not build
refineries over the years was lack of cheap
crude but the biggest reason is corruption
how?

licences were given to companies without
the financial muscle to build refineries also
part b of the license clearly states that
these armed robbers have oil lifting license
embedded in their refining license,
tell me who will choose refining over lifting
where he makes instant profit and inflated
subsidy
what did madueke do? nothing as usual

do you know that NNPC does not have
storage facilities for all those millions of
products they are quoting and importing.
how exactly does Nnpc wish to store
30million litres of pms?
do you know that these fg goons went
ahead to licence importers without storage
facilities leading to the govt paying extra
for storage on a product they are paying
over 70 naira as subsidy can u beat this
stup1dity and incompetence?

what did iweala and madueke do? nothing,

do you know that these leppers in Nnpc
have no grading structure for imported
pms low grade,mid grade and high grade
all are pms same subsidy, same price even
ethanol blends have subsidy paid on them,
can you beat that?
even abroad where the products come
from have different prices. some are far
cheaper than others which ordinarily
should attract low subsidy


what did madueke do? nothing.

do you know that these bingos at Nnpc
dont maintain their pipeline networks
which ordinarily should link one depot to
the other,
they have to pay extra for tankers
transporting these products all are
subsidies.
eventhough their foreign jv partners are
maintaining over 1000 pipeline networks in
Nigeria.
what did madueke do?
nothing.


do you know that under madueke's watch
demurrage is paid as subsidy to these
importers .
how cant they be reponsible for their
import schedule?
is it not commonsensical for madueke to
prioritize the discharge of those vessels
quickly in tank farms as not to attract
demurrage for a product you are
subsidizing?


and they want us to tighten for a better
future? which future ? can iweala,Sls and
madueke plan for a sustainable future if
given the task?
dead failures.


for every extra kobo you pay on pms you
paid for madueke's incompetence.
now they can see high expenditure but
cant see how their incompetence is
inflating the subsidy regime.
Do u seriously think iweala will see it
comming if it was true that economy will
crash?


Let us analyze the genere and politics of
these issues
There are more misnomers than facts
surrounding this subsidy brouhaha.
First,
the Govt said the economy will collapse,
ridiculous indeed

secondly,

the Govt said
oil importers are a 'cabal', nearly fell off
my seat.
Comrades, there are no cabals, in 2009 the
scarcity of petroleum products became
intense and the Govt admitted that Nnpc
through its subsidiary PPMC has failed
Nigerians by their inability to meet up with
the supply of pet. Products and that
phenomenon gave rise to licensing of
some people to 'assist' the Nnpc in doing
their job for which they are paid for.
Please don't forget that hitherto, Nnpc has
been doing the importation and refining
themselves before corruption eroded their
common sense.
These importers went abroad and came
back with a price Nnpc is already aware of
comprising of logistics, storage and
administrative costs, these were quantified
before they arrived at a price.
The FG now fixed a price tag of 65naira on
Pms and agreed to be reimbursing the
importers the balance not oblivious of the
fact that the landing cost is higher than
the stipulated price
To my greatest chagrin, the Jonathan’s
administration woke up and termed them
'cabals' who are fleecing the nation.


Assuming Ruben Abati goes abroad to buy
a TM underwear for 1k and decides to sell
it 1.5k adding purchase price plus logistics
plus profit and the Govt tells him to sell at
900 naira, wont he ask for the 600naira
balance? When the incompetent NNPC
agrees to reimburse him, then he has
become a cabal stealing from the GOvt?
We are not docile, If Nnpc lived up to their
responsibility, we won’t have need for the
importers in the first place.There is no
doubt that the subsidy regime is met with
corrupt practices, is it not the
responsibility of the govt to clamp down on
those malfeasance?
the Governor of central bank confessed
during the town hall meeting that he paid
subsidy to 15 fake vessels who connived
with customs to falsify their papers.
is this not fierce corruption?
and we have a shameless commander in
chief? by the way, how many naval officers
patrol our waters on tax payers account?
efcc,icpc etc
The only solution that came to the minds
of this disgruntled PDP administration is to
remove subsidy into-to not minding its
inflationary consequences.
This is the si1liest approach any human
being with brain if they have one can
summon.

Thirdly,

Jonathan insulted the intelligence of
Nigerians telling us that we don't benefit
from this subsidy except for the importers
and he had the unbridled temerity to be
advertising it on NTA saying the rich are
getting richer.
This people are demons.
When Ruben abiati's mother goes to the
market to buy vegetable at a price, does he
not know that the seller included cost of
transportation to that price?
So when the transporter buys PMS @
65naira and fixes his price based on that,
he says his mother did not benefit from
the subsidy that guaranteed the price in
the first place?
In a generator driven economy like ours?
It is either Ruben Abiati and his employers
are drunks or they think that Nigerians are
m0rons.

I feel sorry for people that think that
competition will crash the deregulated
price erroneously juxtaposing it with GSM.
Do you know that the price of crude being
the raw material for refined pet. Products
are sold at the same price world overl?
If you agree to this, then, even if you
deregulate and license 5million importers
the product will still be expensive because
crude itself is expensive.
You will still need to subsidize it to
65naira, exactly why deregulation of diesel
in part did not work.The only reason you
have not bought diesel @ 200naira is
because there are so many illegal
refineries who bunker crude, settle JTF and
refine diesel at a lower price.
This people still pose a great threat to the
importers who buy at a higher price that is
why you get diesel @ 140naira elsewhere
but in the delta i buy as low as 70naira. At
this verge you will not over rule the fact
that these unscrupulous elements
contribute to the availability of diesel, if
you are in doubt, anywhere you see cheap
diesel, ask the dealer the source of his
consignment If he is honest he will tell you
the truth, when i was told, i took an hr
20mins boat ride to a remote village in the
delta between Belema and Kola
communities and i saw the local refinery
myself.
Conduct a chemical test on those cheap
diesels if you are not convinced and you
will realize a lot of additives are
missing.Sounds incredible but those are
the realities on ground.You now know why
many importers in the delta hardly have
diesel.
I still feel sorry for those who think the
Govt should build more refineries, that will
not solve the problem either because there
is no cheap crude to supply these
refineries.


Do you know that even the petroleum
products from our present refineries at a
disappointing capacity attract subsidy?
that is what Sanusi is not telling Nigerians.
This Sanusi's buisness model of increasing
local price to attract investors is
misleading.

He should ask himself why so
many buisnesses left the USA for Asia and
Arrica between 1998 till 2008.
The reason was because cost of doing
buisness in America was high so there was
need to tap into Africa's cheap land and
asia's cheap labour.

If you increase the pump price the spiral
inflation will discourage investors, you pay
high for land,labour, enegy etc.


A brief insight in Nigeria's oil and gas
model gives us a better outlook
The oil production of Nigeria stands at
2.37 million barrels of crude daily. Nigeria
get this crude in a JV (joint venture) with
IOC's (international oil companies) and the
Nigeria's cut stand btw 55% to 60% of the
lot, if we go by 60% then, that gives a
total of 1.4m barrels daily.If we average
the crude price from 2009 till date, the
price falls close to 100usd/bbl.In that case,
Nigeria makes 140,000,000usd daily from
this JV.
Nigeria has a policy called DSO (domestic
supply obligation) which mandates
250,000bbl/d of this crude to be refined
and consumed locally,In monetary terms,
the Nigerian govt is giving us
25,000,000usd worth of crude to refine.
Our three refineries at optimum capacity
utilizes about 450,000bbl/d which gives
45,000,000usd in monetary terms in other
words, the price of raw material in this
case, crude, accrued to our refineries
comes at 45m usd per day
, if you add refining cost and profit of 6usd
per bbl,The total cost becomes
270,000,000usd per day.There is no way
you can refine that crude at that price and
sell it 65naira/ l and make profit.
Meanwhile, once we mark out that 45m
usd worth of crude for our refineries
(assuming they are working at optimum
capacity), the govt has already lost 45m
usd from their 140m usd daily earnings
(which will affect budget implementation)
and after refining will still spend more
money to subsidize it to 65naira/ l
(you now understand why NNPC subsidizes
the products from our refineries)
With this analogy, you will agree with me
that if all our refineries are working
optimally, the govt will spend 3times our
present day subsidy to bring the pump
price down to 65naira/l .


So, for those of you clamoring for
refineries should be careful what you wish
for because there is no cheap crude for
you to refine.

I have argued abinitio that the sales of
other derivatives of crude will bring down
the cost of most sort PMS,DPK etc but
after doing some feasibility studies, i
realized i was dead wrong.


I further argued that to make cheaper
crude available for our refineries, the Govt
should reduce the price at which it is
supplied unfortunately, the senate
mandated the then GMD of Nnpc that the
DSO must be sold at international crude
price.
This i believe was proposed for the
following reasons:


1 the refineries are working below capacity
so what the heck does Nnpc use the crude
for?


2, there is a benchmark on crude price for
budget implementation.With these
reasons, any existing or yet to exist
refinery in Nigeria will get crude at a high
price and must need subsidy to sell at
65naira/ l, at this cross road, the then
GMD of Nnpc decided that all crude
should be exported and subsidy be paid on
imported products.


At this verge, i must reiterate here that
competition amongst importers will only
crash the profit margin but not cost
price.Even if every Nigerian becomes an
importer of pet. Prods, we can never
change the fact that crude in the int l
market is already expensive before thinking
of refined prod. So we must need subsidy
to make profit.

Before this issue of subsidizing petroleum
products can be addressed,You must have
the following at the back of your minds:

1, Nigeria pegs a benchmark on crude
prices to enable it implement budget. This
stands at 75usd/bbl. And this crude is sort
from the JV
.2, if crude price exceed the benchmark
above, Nigeria makes excess crude revenue
(ECR) 3, conversely, if we make excess
crude revenue, the price of subsidy on
refined products shoot up.With the above
analogy,
One can argue that the ECR be used to
subsidize imported petroleum products
since both are a function of each other
unfortunately in Nigeria, it comes with its
own challenges.
By law, the constitution clearly states that
all revenue accrued to the FG be shared
amongst the three tiers of Govt.This alone
makes it illegal for the FG to keep the ECR
to itself for whatever reason.
This is where the wahala started, during
GEJ's campaign, he astronomically
increased workers salary without
consulting the state Governors,most
Governors have refused to pay on the
grounds that they cannot afford it.
On that grounds Taraba, jigawa and some
other states have a genuine case.With the
above development, the states started
scrambling for funds and remembered the
ECR and insisted it must be shared to
enable them pay the new wage and
develop infrastructures.
you now understand why all state
governors are for subsidy removal
including the literally "one of us" comrade
Adams oshiomole, because they know it
will be shared just like the ECR


The way forward:


In the short run:


All unions must ensure the FG, must
consider these options,

1, identify and tackle the corruption and
incompetence prevalent in the subsidy
regime above. That will push down the cost
of the subsidy in the first place.Like i said
in April, no matter how sincere GEJ think
his administration is, he cannot make any
reasonable progress in the face of
corruption,


2, the power projects must come upstream
before removing subsidy, this will reduce
the demand on pet. Products to a very
great extent.


3, Nigeria must accommodate Gas export,
port duties and other forms of revenue in
their budget implementation policies.


4, Govt must never invest an extra kobo in
our moribund refineries, by doing
otherwise, the cost price of the refineries
will rise to an extent that it will no longer
be attractive to investors or will prolong
their repayment plan.Thereby making it
very capital intensive.


5, Instead of deceiving Nigerians with their
cabal bullshit and deluding them that they
don't benefit from this subsidy, the FG
should channel that propaganda with
intense lobbying to the senate,NLC and
civil society organizations to stop the state
governors from demanding for the ECR,
this can be achieved by the FG asking the
state to pay whatever increment they can
afford for the workers that way the ECR
will be used for subsidizing pet. Products.


In the long run:


Nigeria must seek local production
capacity.It is no longer news that Nnpc
and its subsidiaries have failed woefully in
meeting the needs of the Nigerian people.
Nnpc through its subsidiaries Npdc and
Ngc are saddled with the responsibility of
the above for oil and gas production
respectively, but as i write, the current
production of NPDC stands at a paltry
90,000bbl/ day which is a huge failure for
an agency set up 23yrs ago,

The IOC's has made us believe that it will
cost less than 12usd to extract 1bbl of our
oil.

The Management of NPDC must be
reshuffled and if possible experts brought
in on contract basis to improve NPDC's
production.These experts must be placed
on targets appraised by milestones. in
ogoni land for instance, Anglo dutch has a
lot of abandoned production facilities and
marginal wells and others scattered all over
the country, these can be bought by NPDC
with the money FG want to waste on
refineries to improve production,

If NPDC can extract oil at 12usd/bbl and
make a little profit, with this cheap oil
available, Nigeria will have no reason going
to the JV.

This cheap crude is what will attract investors to build refineries and create jobs against sanusi's pump price increase to attract investors and create another monster called INFLATION,
A 250,000bbl/d refinery will cost a little
above 5b usd, dangote alone can afford
two of those only if NPDC can guarantee
cheap oil. This is why no investor is coming
to build refineries.
A crude price of 18usd/bbl from NPDC will
guarantee pump price of less than 22naira
per litre of pms from these refineries.With
this plan,By the end of this Administration,
NPDC will have robust production capacity
and the refineries will guarantee steady
refined products.
These refineries shouldn't be operated by
the Govt for any reason.The FG will
generate revenue from both ends, export
of crude and export refined products and
the production of NPDC must be
increasing periodically.
this is necessary because Nigeria as a
member of OPEC has a limit to crude
export but we can earn more revenue from
petroleum products export.
Once the above takes effect, there won’t
be any need to be paying subsidy because
pump price will be around 23naira/ l and
inflation will reduce by 40‰.
Now, how competent is Allison Madueke
and iweala if they can’t figure this out?

To think of removing subsidy at this stage
where there is no electricity and high
corruption rate will be tantamount to
economic suicide.

I cant believe iweala and sanusi are using
trial and error approach to economic
solutions please try the next country or
preferably Haiti.

What iweala forgot is that in the face of
inflation, the cost of running Govt projects
will be high, All Govt contractors will
definitely come back for contract variations
or Abandon those projects.

As a sound economist, she should tell
Nigerians the value of 1.3 trillion naira
( she intends to save on subsidy removal)
in the face of 60% inflation and how many
projects Nigerians will benefit from the
subsidy removal.If you remove subsidy and
the money disappears, then it is a NO NO
for Nigerians.

Now, let us analyze possible solutions to
this economic quagmire.


I have a deal for iweala.


fight corruption and inefficiencies in the
subsidy regime and bring it down to
300billion for this year.

The management of Npdc must have a
target
of 150,000bbl/d by dec 2012.
on january 2013 subsidy will go by 50%
and by dec 2013 Npdc should guarantee
200,000bbl/d on

1st january 2014 subsidy must go 100%.
with or without the refineries on ground,
then if Nigerians are sacrificing, they will
know it has a
limit pending when refineries that will
utilize the cheap oil on ground arrives.

tell me what WE are sacrifising for today?
eternal slavery?

I and my generations cannot and will not
sacrifice for Govt's incompetence.

All unions should never accept partial
deregulation, it is more dangerous than
total deregulation because Nigeria hasn't a
price regulatory agency who ordinarily
should put the markets and commuters on
check.

Deregulation in the down stream sector is
not same as telecoms, we need structures
to support it which Nigeria have not got
unlike the later.

God bless you as you fight this battle for
mankind

Written by;

concerned oil and gas activists

Very educative piece there are many things I don't know that I just read here. We need to wake up to reality in this country because it appears we are living in a fantasy world.

Reference:

Because government does not drill oil and NNPC's own contribution through NPDC is microscopic. Why would you insist that the man who knows next to nothing about a business be entrusted in creating and running one while leaving those with the expertise to be marketers only. That is the lopsided argument. Shell should be doing the refining while government does the administration not the other way round. If I am a cattle rearer I am in the best position to produce milk not a middlemen who hires my cattle to milk them. It is scandalous for Shell, AGIP and Co. to be giving out LPO's for the supply of AGO for their own use and billing the country by way of JV funding whereas they burn free gas willy nilly after powering their own gas turbines at our cost. triple sin violation is better than that. If the government is up and doing they should set targets for total refining of all the crude we produce in this country say over twenty years. No more crude export. This country should be littered with refineries  by now with supertankers on queue in the high seas.

By the way the British and American governments own no refineries or oil companies. They have divested eons ago. The refineries owned by IOC's are built by the IOC's using amongst others profits garnered from less than right thinking countries such as Nigeria. If you have a couple of hundreds of millions go ahead and build one. But I can't see how your tomato puree will be cheaper than that produced by a tomato farmer in the business for generations. After forty years of exploration there's nothing on ground to show for it. We used to accuse government of laxity and ineptitude. Now they are beginning to wake up and are calling these companies to higher responsibility we the people are now turning to support the IOC's. Tired.

Ok, The government does not have to go into Oil business per se. All the government needs to do is encourage the indigenous companies in whatever way she can even if it means building the refinery and privating it later.

BP ( British petroleum) is indigenous to England and was just recently privated around 1979-1989 but they still pay their tax to the British government and also employs a good size of British people all over the world. Same with Shell and co

Now today, different oil producing countries have their own indigenous oil companies which MIGHT not be run by the government  but by private investors with the aid of the government and that is why they are global and are ready to explore a country as (I am sorry) dumb as Nigeria and refine, steal and cheat from her land and oil and destroy her environment. These companies cannot easily be brought to books why ?? because they have their government backing.

We need to leave "the bubble" and start seeing things from a new preceptive as human beings that have evolved and have learnt some few things over the years.

We cannot keep doing the same thing and expect a different result. If you want something, you have to do it yourself. No one, I mean no country would spoon-feed Nigeria because she is Oil producing. Nigeria is not the first oil producer and would certainly not be the last.

Ogoni land today is suffering from oil spillage by Shell and co, Have they been brought to books ? NO

We have indigenous Car maunfacturing company like Innoson, why have we not supported them ? Why have our government not done policies that support the company ?

We have Onado and co, why are we not supporting them ?

Hitv why are we not supporting them ?

Lets be real with ourselves, over the years, we meant to have learnt that this world is every country for herself and we are meant to support indigenous companies even if it means the government building some infrastructures for them then so be it.

Shell and others started with the government, why is ours different ?

We keep deceiving ourselves to think things would get better after each successive government by it is a plain lie. Until we wake up and support our own companies that can go to other countries as well. We would remain in this quagmire.

When Nigeria wanted to bar BA, why did the british government talk to Nigeria immediately ? Ofcourse to protect her interest .

phreakabit:

Couldn't make out a point from all the gibberish written in the quote above. I'd however point out that ATM if they refuse to comply, we would be  faced with three options:

1, Continue with our exploitive neo-colonial masters and maintain status quo gaining nothing.

2, Switch to a new partner offering an all round better package.

3, Wait for the Nigerian Government, which for inception has been known to promise and not fulfil to do things themselves?

Make your pick?

Why not make the 4th option which I would pick

4. Build your refinery and support your own indigenous oil company so rather than be a slave which your 3 option gives room for, you would be independent.

buttkick i like your point because every company that operate in any economy or country should try to contribute to that countries economy,
phreakabit nice point too companies in nigeria must follow rules and regulation guiding business in nigeria,
alj harem i like your point, we should as a country focus on building our own brand like other countries did, but i have a little problem with government establishments in nigeria, they simply never work because of to much special interest, so i will rather advice we focus on a private sector driven system like most of the countries in the west do take for example:

BP is completely private sector owned, completely owned by shareholders all over the world from asia to america see this reference http://ryankett.hubpages.com/hub/British-Petroleum-Ownership-Who-Owns-BP

Shell and Chevron are also owned by private sector, individuals who have money and are ready to invest

Aramco is owned and controled by saudi government

nigeria is not like saudi so we cannot run state owned companies well because we have to many special interest problems, let spit it out simply we are not one, hard truth but that is the truth, when you put a southerner in charge he put his people they whether they know the job of not, if the northerner is put in charge he also does thesame thing, in this country is either we embrace full private sector ran companies and let the government the regulation otherwise i simply dont see a wayout of our current state, it is just my opinion ooooo

alj harem:

Ok, The government does not have to go into Oil business per se. All the government needs to do is encourage the indigenous companies in whatever way she can even if it means building the refinery and privating it later.

BP ( British petroleum) is indigenous to England and was just recently privated around 1979-1989 but they still pay their tax to the British government and also employs a good size of British people all over the world. Same with Shell and co

Now today, different oil producing countries have their own indigenous oil companies which MIGHT not be run by the government  but by private investors with the aid of the government and that is why they are global and are ready to explore a country as (I am sorry) dumb as Nigeria and refine, steal and cheat from her land and oil and destroy her environment. These companies cannot easily be brought to books why ?? because they have their government backing.

We need to leave "the bubble" and start seeing things from a new preceptive as human beings that have evolved and have learnt some few things over the years.

We cannot keep doing the same thing and expect a different result. If you want something, you have to do it yourself. No one, I mean no country would spoon-feed Nigeria because she is Oil producing. Nigeria is not the first oil producer and would certainly not be the last.

Ogoni land today is suffering from oil spillage by Shell and co, Have they been brought to books ? NO

We have indigenous Car maunfacturing company like Innoson, why have we not supported them ? Why have our government not done policies that support the company ?

We have Onado and co, why are we not supporting them ?

Hitv why are we not supporting them ?

Lets be real with ourselves, over the years, we meant to have learnt that this world is every country for herself and we are meant to support indigenous companies even if it means the government building some infrastructures for them then so be it.

Shell and others started with the government, why is ours different ?

We keep deceiving ourselves to think things would get better after each successive government by it is a plain lie. Until we wake up and support our own companies that can go to other countries as well. We would remain in this quagmire.

When Nigeria wanted to bar BA, why did the british government talk to Nigeria immediately ? Ofcourse to protect her interest .

Haj, You know what you're absolutely right. It is demeaning and strategically dangerous for your core industries to be 'out of your hands'. The problem is that we were never in control at any time. They have always exploited, transported and sold the stuff. The US buys the bulk of our crude. It will not surprise me if SPDC transports the stuff directly to their monster refinery in Houston. Granted America has better infrastructure and more profitable markets, we are talking about development here. We will never develop selling only base materials and commodities. The greatest benefit our resources will purchase for us is technological transfer. It weighs more than any financial benefit.

No one is saying new indigenous players cannot paticipate. That is a core essence of the PIB, to empower Nigerians to actively participate. It recognises the lopsided nature of the industry in favour of the IOC's. That is destination. Fact remains the IOC's have a forty year headstart. Telling them to refine is trying to weaken their strnglehold by subjecting them to our tough business environment for the purpose of using them as a springboard for our internal development. Just like the telecoms. MTN and Co had a great headstart over GLO and much later Visa. That key move has greatly helped the telecoms industry. If it was the other way round I tell you telecoms will have been in a mess like other industries deregulated and privatised perhaps similar to what we are seeing with the Dangote line of businesses. Investment without impact. Totalitarian monopolistic price regimes with little emphasis on service delivery.

Nigerians need economic emancipation from both government and multinationals but there is a huge paradox here. You need foreign investment as well. We need to grow but we need to learn as well. We have not developed adequate capacities in corporate governance, technology and best practices. We shouldn't kid ourselves Oando and Co can and should build refineries but I insist like with MTN and GLO, Oando will not beat Shell or Chevron in the short term. But government as the referee should cheat in our favour as it did for GLO.

Wait, wait, wait! The government forced Shell to cede its refinery, and now again, the same Nigerian government wants to force Shell to build new refineries, then ib the next 15 years, the government will again force all those companies to surrender their refineries to government incompetence again.

As consumers who have been failed by our government, it is easy to support the government in putting the blame on someone else who can be arm-twisted to pay, but as an entrepreneur who suffers the consequences of doing business under the Nigerian government daily, I know this is wrong. Very wrong.

If this goes through then it will be great!!!! The truth is no Nigerian company has the internal expertise and experience to build refineries, none has ever done it before so it will be great to allow these companies do it for us, however, Exxon and Co should assume the role of contractors and technical partners. They will build it, run it for some time whilst training our people. We need jobs in this country! You may not have an idea of the thousands of jobs oil from Nigeria creates in the US, these jobs are needed in the country!

Have you ever wondered how Nigeria is building one of the largest LNG plants in the world The contract signed by TSKJ consortium is such that they are paid not by CASH but by LNG! So basically these guys build what pays them! That's why NLNG has grown astronomically over the years!

Another case in point is the Afam Power plant (650MW) built by Shell and NNPC. Do u know that NNPC initially did not contribute their usual quota to that project but Shell did it anyway in record time for $2.5b.

I'm not saying we shouldn't encourage indigenous companies but pray tell which indigenous company can prove that it has all the expertise to build a refinery? It takes a lot o, to even find and get the oil from the ground is not easy at all. Many of the indigenous companies will still subcontract it out to foreign firms and of course you know it will open terrible avenues for corruption.

I support this abeg!

In case u're wondering, TSKJ = Technip, Snamprogetti, KBR (Kellogg Brown & Root, Inc.) and JGC (business partnership)

u just need to come a little closer to see how these oil majors milk nigeria dry. building a refinery is a chicken change for them.

Under certain conditions, Shell et al will be more thab glad to build refineries and even operate them. The conditions are what we should be debating eg price of crude, market price, taxes/ royalties, etc. Also, the company doesn't have to do everything. They can sign a service level agreement or something. There are many possibilities but the bottom line is simple: WE MUST STOP IMPORTING REFINED PRODUCTS.

Russia sometime ago kicked out some majors when they introduced new policies. Also, Venezuela introduced some new policies and those that couldn't cope had to leave! Today, Russia and Venezula are better for it. Take note that the majors already have existing licences and those ones will be allowed to run. It is at renewal that the new policy will be invoked. There are many capable oil companies out there who will gladly take the opportunity. If it doesn't tally with your strategic objectives, you find your way.

BTW, the majors are already preparing themselves for PIB hence the repositioning you must have heard of in companies like Shell, Total etc.

No long thing!

@efisher

I like your comment man!

Do you know that initially when the PIB came out, Shell and Chevron kicked against it in the strongest way claiming that it'll leave Nigeria Oil and Gas industry bereft of funding.

Funny enough it was an independent international Oil and Gas analyst from the Netherlands that announced that Nigeria has the most lax fiscal system (compared with Angola, Ghana etc) in place so that Multinationals can execute huge expatriation of cash. The fellow also said that for every comapany wanting to leave Nigeria, there are 40 others willing to take its place!!!

Well said Gideonyte. A lot of people don't know these things hence their stance on this issue. It takes people who have more info to see that policies like this are what we really need. These are the little issues that have kept the PIB from seing the light of day. It's all about interests.

Build your refinery and support your own indigenous oil company so rather than be a slave which your 3 option gives room for, you would be independent.

I support this.

And if Gov't can't manage it properly lease 'em out to private companies that can.

I hope the bill also includes a clause for the oil companies to be required to scratch my azz.

And for the CEOs of the oil companies to fight a lion armed with a stick.

For those claiming China and co are also options, this is certainly true. But if you see the way China is polluting their own homeland, are you very sure that you want to invite them to pollute yours?

At least with the Western companies, there is some sense of morality, some basic lines they'd be hesitant to cross.

With the Chinese, anything goes.

Choose wisely.

Anyway, regardless what the bill says, the oil companies can and will drag their feet on building refineries.

The time when we could force oil companies to do stuff is long gone. We should have done that 20+ years ago.
You all need to stop feeling special. The oil that you keep shouting about is no longer special. There are other areas with oil. If we make business too difficult for these companies, they can either choose to stay with the difficult rules or move out. Trust me, if they move out, we will be the biggest losers. Do you think that the US will continue buying crude from Nigeria if EXXON and CHEVRON are forced out?
It's a two way bargaining chip. The Govt will need to provide an enabling environment first and guarantee them that their investment wont be wasted. I doubt the government can guarantee anything of that sort because even the so called upstream pipelines (which generates the most revenue) have not been spared from niger delta bombings. What guarantee will the companies have that the refineries and assoicated pipelines won;t be subjected to BOMBINGS

ekt_bear:

I hope the bill also includes a clause for the oil companies to be required to scratch my azz.

And for the CEOs of the oil companies to fight a lion armed with a stick.

For those claiming China and co are also options, this is certainly true. But if you see the way China is polluting their own homeland, are you very sure that you want to invite them to pollute yours?

At least with the Western companies, there is some sense of morality, some basic lines they'd be hesitant to cross.

With the Chinese, anything goes.

Choose wisely.

Anyway, regardless what the bill says, the oil companies can and will drag their feet on building refineries.

If China becomes a major player, then we'll be in for a very rough ride. Someone let me know so i can burn my green Pali. No IOC will build a refinery in Nigeria and that's a fact, y'all must think they are running a charity.

Gideonyte:

If this goes through then it will be great!!!! The truth is no Nigerian company has the internal expertise and experience to build refineries, none has ever done it before so it will be great to allow these companies do it for us, however, Exxon and Co should assume the role of contractors and technical partners. They will build it, run it for some time whilst training our people. We need jobs in this country! You may not have an idea of the thousands of jobs oil from Nigeria creates in the US, these jobs are needed in the country!

Have you ever wondered how Nigeria is building one of the largest LNG plants in the world The contract signed by TSKJ consortium is such that they are paid not by CASH but by LNG! So basically these guys build what pays them! That's why NLNG has grown astronomically over the years!

Another case in point is the Afam Power plant (650MW) built by Shell and NNPC. Do u know that NNPC initially did not contribute their usual quota to that project but Shell did it anyway in record time for $2.5b.

I'm not saying we shouldn't encourage indigenous companies but pray tell which indigenous company can prove that it has all the expertise to build a refinery? It takes a lot o, to even find and get the oil from the ground is not easy at all. Many of the indigenous companies will still subcontract it out to foreign firms and of course you know it will open terrible avenues for corruption.

I support this abeg!

I agree with you that Nigerian companies are not there in terms of experience and expertise, but they can grow and learn through proper corporate planning, joint ventures and necessary government support. We don’t have to allow foreign companies to build whatever infrastructures, refineries e.t.c alone. By allowing them to do it alone, we’re depriving the country and ourselves necessary experience that’s suppose to accumulate to Nigerians in the process.

Imagine for example if we allow Shell/Exxon to build refinery themselves. That means the whole EPC process will be done by their employee. Engineering experience, financial, logistics experience and other experiences that Nigerians can and should benefit from; through the job process will be lost. The knowledge and experience through the job will stay within the foreign company.

Assuming the project has a partner such as Oando or other Indigenous companies under a joint venture agreement. Assuming a (40:60 agreement) where foreign company retain the operatorship of the proposed venture, but have representatives to oversee the project scope including financing, engineering, safety, logistics and others. At least the proposed venture will ensure certain experience are ceded to the indigenous company which they can always applied somewhere else.  

Government should incentivise our indigenous companies, and make it easy to joint venture with foreign companies. Government should help mitigate certain risk issues that these foreign companies might be looking at while dealing with indigenous companies. Issues such as financing capabilities should be looked at; government can provide funding along side of other financial institution, World Bank, US EXIM bank, at a reduced interest rate and high tenor to ensure these indigenous companies meet escrow account funding, cash calls and other funding activities. These funding approach should be structured to allow FG recoup its investment same time other financial institution get their payment.

I don’t see how FG can compel these companies to build refineries when their business model clearly shows the opposite. Majority of these companies are getting out of the downstream business while beefing up their upstream businesses. They are no more a refining company, but exploration and production companies.

Chevron, Exxon Conoco Phillips, Marathon Oil, Murphy Oil, and other upstream companies are clearly divesting majority of their refinery businesses worldwide, and what they have left remains strategic.
Example of this is the sale of Pembroke refinery in UK to Valero, divestment from Nigerian petroleum products marketing businesses.

Exxon selling its Japanese refining and marketing business to partner TonenGeneral Sekiyu K.K.,
ExxonMobil selling off its interest in three businesses operating an oil refinery and retail stations in Malaysia to San Miguel Corporation (SMC) of the Philippines for a total of US$610 million.

Conoco Phillips and Marathon split their company into two public companies to drive home the point.

This plan of compelling these companies to build refineries on the pretext of pumping product out of Nigeria is dead on arrival, considering their action.

if the laws of the land says, you must build refineries. then its what you will do or loose you license. there are many companies that are ready to take over. Nigeria is bigger than the oil firms, not the other way round.

It isn't an issue of that.

You can pass any law you like (even a law for their CEOs to fight lions), but don't be surprised if they work hard to frustrate you.

Also, I doubt they are hoping to pass this law retroactively. . . you cannot tack on conditions once you've already signed a contract with somebody

@Courage

Your analysis is spot on only in an ideal situation which we are far from now. I only wish you know what kind of profits these guys get from Nigeria, they don't get it anywhere else. I know because I have worked for several years in one of the MNCs in Nigeria. Trust me, we are been scammed!

There's practically no stakeholder in the JVs and PS contracts that is not corrupt, from govt to Napims, DPR, top mgt in the MNCs etc. So given this unhealthy situation it would still be good for the these companies to build them. As for experience, there is already a Nigerian content law.

I'm supporting this because I know anything Nigerian govt involves in usually fails.

@ekt

We can not force them abi? Are you sure of that? Get in a strong President who takes no prisoners and they will fall in line sharply, forget all of that nonsense about not being profitable, they will bring out spreadsheets that show that the business will be very very profitable, we only lack good leaders.
@Beaf
The PIB should be passed, the people holding it up are the House guys and your president not your ordinary man on the street, the two houses have been controlled by PDP in the last 13 years, your GEJ is from the SS, let him get the PIB passed, do not try to put the blame on the common man, if GEJ increases fuel price tomorrow without appropriate palliatives in place, we will protest again and again, worst he can do is to order the military out, hope he knows that the peeps in Fadeyi Onipanu area control more guns than the police (your Soboma George was supplying them dynamite before he died).

china no be saint oooo they will come with their own interest too so we should stop seeing them in that light and rather try as a country to make strong rules for foriegn investors as they come to nigeria to do business, rules that favor us as a nation. also rules that help our own local companies to acquire the technology from the foriegn comapnies hence biulding our our own local companies capacity todo business

The Question is Asked if it is possible to build a refinery in 24 months, The answer is ☀̤̣̈̇ː̖́​Ɣξah☀̤̣̈̇, You can setup a modular refinery in 4-6 months. Have you not seen mansions that took some people 2-3 years built in months? The only impossible thing is that which ў<3Ůr mind cannot fathom.

On whether the govt can compel the multinationals to comply, the answer is ☀̤̣̈̇ː̖́​Ɣξah☀̤̣̈̇.

@ekt bear, I think you may like this idea iff we have more info. They have not said the majors must run these refineries with their own money for free. Remember that FG has about 55% stake in most of these companies. It is all about leveraging on them to get what we need. Also, we know that any money (CAPEX and OPEX) spent by the majors is paid back as oil is sold. I can authoritatively tell you that right now, some majors are executing projects on behalf of FG using their staff, contractors, etc. The question should be "What are the terms?". As I said earlier, under certain terms, the majors will gladly build the refineries and even operate them.

Gideonyte:

If this goes through then it will be great!!!! The truth is no Nigerian company has the internal expertise and experience to build refineries, none has ever done it before so it will be great to allow these companies do it for us, however, Exxon and Co should assume the role of contractors and technical partners. They will build it, run it for some time whilst training our people. We need jobs in this country! You may not have an idea of the thousands of jobs oil from Nigeria creates in the US, these jobs are needed in the country!

Have you ever wondered how Nigeria is building one of the largest LNG plants in the world The contract signed by TSKJ consortium is such that they are paid not by CASH but by LNG! So basically these guys build what pays them! That's why NLNG has grown astronomically over the years!

Another case in point is the Afam Power plant (650MW) built by Shell and NNPC. Do u know that NNPC initially did not contribute their usual quota to that project but Shell did it anyway in record time for $2.5b.

I'm not saying we shouldn't encourage indigenous companies but pray tell which indigenous company can prove that it has all the expertise to build a refinery? It takes a lot o, to even find and get the oil from the ground is not easy at all. Many of the indigenous companies will still subcontract it out to foreign firms and of course you know it will open terrible avenues for corruption.
I support this abeg!

Bros Well said, The sooner we start telling our selves the truth the sooner things will change in this country, Letz our leaders just admitt dat we have failed as a country, You want to force business men to do business  IMPOSSIBLE!!!!![size=8pt][/size][b][/b][color=#990000][/color]. iF IT HAD BEEN PROFITTABLE TO BUILD REFINERIES IN NIGERIA, THEY WOULD HAVE DONE IT BEFORE OUR GOVERNMENT EVEN THINKS ABOUT IT