₦airaland Forum

The federal government may have perfected plans to privatise the nation’s refineries within the next one year, according to revelations by the Minister of State for Petroleum, Dr. Ibe Kachikwu.

According to Kachikwu, the federal government was looking at privatising its refineries within 12 months, disclosing that Agip and Chevron have already indicated interest in purchasing two of the refineries.

The minister, who doubles as the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), says his team is working with oil majors on improving the state-run refineries in Nigeria.

Kachikwu was quoted by Reuters as saying that the federal government wanted to privatise the refineries within 12 months following the much-needed maintenance work.

“We have gotten commitments from some of the majors. Agip has indicated interest to work with us on Port Harcourt, Chevron on Warri. We are talking to Total on Kaduna,” Kachikwu said.

He added that even if the refineries in question performed to their optimum capacity, their production would still not meet local demand for petrol.

He said the petroleum resources ministry was striving to utilise other sources of refining petrol while also depending on the coming on board of private refineries like the Dangote refinery.

He noted that the non-performance of the refineries was due to a number of factors, including fraud and lack of holistic maintenance. As a result of the long period of non-maintenance, a lot of components were ineffective.

However, the minister had earlier stated that the refineries would not disposed off, but said government would seek investors to co-locate new refineries near the existing ones which presently perform abysmally lower than their installed capacities.

ruling out a possible sale of the nation’s refineries, Kachikwu who was speaking during an official tour of the Okrika Jetty and the Port Harcourt Refining Company Limited, affirmed that “the refineries would not be sold but joint venture partners with established track records of success in refining would be invited to support the running of the refineries in order to ensure efficiency.”

He noted that the phased rehabilitation of all the state owned refineries would be given an accelerated vigour with the aim of reducing petroleum products importation into the country, adding that at full capacity, all the refineries could supply 20 million litres of petrol on a daily basis.

LEADERSHIP recalls that Kachikwu had assured that the corporation will provide all the necessary enablers to make the refineries operate commercially and optimally, while pointing out that though the current challenges militating against the operations of the refineries are huge, they are not insurmountable.

He stated that in view of the nation’s low refining capacity, there was need to establish more refineries in the country, adding that he plans to ensure the building of new refineries near the existing plants.

“I am pushing to build new refineries next to our existing plants in order to boost the nation’s refining capacity for the common good” he stated.

He explained that the new refineries will be developed by private investors and that NNPC’s role will be just to provide them with space close to the existing refineries to enable them share key facilities such as pipelines and storage facilities.

Kachikwu who praised the vision and foresight of past Nigerian leaders for establishing the refineries had then challenged the present generation to sustain the vision, adding that all hands must be on deck to salvage the situation.

 

Oando Bridges Gas Supply To North, Kicks Off LNG Project In Kogi

Oando Gas & Power Limited (OGP)  has commenced development of a mini Liquefied Natural Gas (LNG) facility through its Transit Gas Nigeria Limited (“TGNL”) subsidiary in Ajaokuta, Kogi State.

The pioneering 20 mmscf/day liquefaction plant is primarily directed towards fulfilling the gas supply requirement for captive power plants, embedded generation, and industrial clusters in the Northern region, as well as stranded customers in the South.

Off-takers, particularly, power plants and industrial customers who currently utilise liquid fuels such as diesel and LPFO, will be able to lower energy costs by up to 40%, while significantly decreasing carbon emissions.

Commenting on the initiative, OGP CEO, Mr. Bolaji Osunsanya said, “The establishment of the Ajaokuta mini LNG project is in firm alignment with our mid-to-long term gas conversion strategy.

This venture further emphasises our push to broaden our asset portfolio and strengthen our market play within the gas sector; and by providing the gas advantage, we will help spur the development of self-sustaining industrial clusters to bolster the country’s socio-economic growth.

LNG is a viable provisional solution and an industry game-changer for the development of gas markets ahead of the actualisation of a far-reaching nationwide gas pipeline network as stipulated by the Nigerian Gas Master Plan.”

With an unlimited supply radius across the country, the Ajaokuta mini-LNG project will provide the solution to the perennial power challenges suffered in certain regions by supplying gas to key foundation off-takers including strategic power plants and commercial concerns.

OGP provides gas and power solutions to over 170 industrial and commercial customers nationwide ensuring cost-savings across board, powering economic development, and engendering environmental awareness.

The company commissioned its expanding Compressed Natural Gas (CNG) program in 2013, and is currently spearheading several long term projects including a 400km South-West to North-West gas pipeline and a Central Processing Facility (CPF) which will serve as the primary gas gathering and processing hub in the Niger Delta.

Commenting further on the company’s strategic direction, Osunsanya said, “We are focused on aggressively developing Nigeria’s gas infrastructure and the Midstream sector at large as evidenced by the ongoing expansion efforts of our various assets.

We are poised to conclude the 10km Ijora to Marina expansion of our Greater Lagos pipeline to increase our supply capacity and market, while providing a cheaper power solution for industries and commercial enterprises along the axis. In cooperation with the Rivers State Government, we have also begun the 8km build out of the Central Horizon Gas Company pipeline franchise within the Trans-Amadi area which will have a socio-economic multiplier effect via the availability of power generated, job creation, and the growth of businesses.”

Though Nigeria boasts proven natural gas reserves of 187 trillion cubic feet (TCF), the 8th largest in the world and the largest in Africa, the gas industry has failed to realise its true potential due to a number of challenges including the lack of a suitable long-term fiscal and regulatory framework, insufficient infrastructure, sabotage in the Niger Delta, and slow market consolidation.

Analysts have continually touted gas as a means of diversifying Nigerian revenues from the usual reliance on oil.

“Gas must occur as a market-driven development, and Nigeria is not an exception.  With oil, there is a ready global market existing for the product. However in gas, you start with an end market and then you develop the gas infrastructure, including extraction, processing facilities, pipelines and connecting infrastructure,” said Osunsanya.

Oando’s holistic gas integration strategy includes methods of transmission and distribution through virtual pipeline solutions such as LNG and CNG to fulfill market requirements while the gestation period for the implementation of the Nigerian Gas Master Plan elapses.

The multi-billion Naira Ajaokuta LNG facility will commence operations in Q2 2017.

 

Militancy Forces Shell To Evacuate Workers From Bonga Fields

Shell workers at Nigeria’s Bonga oil field in the southern Niger Delta are being evacuated following a militant threat, a senior labour union official said on Monday.

“We are aware of the development and the evacuation is being done in categories of workers and cadres,” Cogent Ojobor, chairman of the Warri branch of the Nupeng oil labour union, said. “My members are yet to be evacuated”, reports Reuters.

He gave no numbers.

Shell said earlier on Monday that oil output was continuing at its oil fields in Nigeria despite local media reports of a militant attack near its Bonga facilities.

“Our operations at Bonga are continuing,” a spokesman for Shell Nigeria Exploration and Production Company (SNEPCo) said in a statement. It said it would continue to monitor the security situation in its operating areas and take all possible steps to ensure the safety of staff and contractors.

Last week, militants attacked a Chevron platform in the Delta where tensions have been building up since authorities issued an arrest warrant in January for a former militant leader on corruption charges.

President Muhammadu Buhari has said there would be a crack down on “vandals and saboteurs” in the Delta region, which produces most of the country’s oil.

A group known as the Niger Delta Avengers claimed responsibility for the Chevron attack. The same group has said it carried out an attack on a Shell oil pipeline in February which shut down the 250,000 barrel-a-day Forcados export terminal.

Residents in the Delta have been demanding a greater share of oil revenues. Crude oil sales account for around 70 per cent of national income in Nigeria but there has not been much development in the poor Delta region.

Buhari has extended a multi-million dollar amnesty signed with militants in 2009 but upset them by ending generous pipeline protection contracts.

The militancy is a further challenge for a government faced with an insurgency by the Islamist militant Boko Haram group in the northeast and violent clashes between armed nomadic herdsmen and locals over land use in various parts of the country.

 

Oil Prices To Rise In 2016 As Equilibrium Is Attained By Year-End

Oil markets are looking to the second half of 2016 for demand and supply to balance. A more meaningful adjustment to the demand/supply dynamic is likely to come about after oil consumption peaks during the third and fourth quarters of the year and when Non-Organisation of Petroleum Exporting Countries (OPEC) production, especially US light tight oil production (shale), records further declines in output, NBK’s update on oil market notes.

According to the International Energy Agency (IEA), the market should reach equilibrium in 3Q16. The agency also estimates that by 4Q16, non-Opec supply will have contracted by around 800,000 barrels per day (b/d). US shale production is expected to account for much of the fall, NBK analysts said.

US crude production, which fell by one per cent in 2015, was already down three per cent, or 280,000 b/d, at 8.9 mb/d by 22 April of this year, the US Energy Information Administration (EIA) noted. The increase in production efficiency that has come about despite sizable falls in drilling activity and capital spending by oil firms looks to be finally tapering off.

Rising Iranian output offsets losses in Nigeria to keep Opec production steady in March and OPEC and Russia fail to sign off on a production freeze in Doha.

Overall, Opec production held steady at 32.2 mb/d for the second consecutive month in March, according to OPEC secondary source data. Output declines in Nigeria and Libya due to supply disruptions and in the UAE as a result of maintenance were broadly offset by output gains in Iran and Iraq. Production in Saudi Arabia and Kuwait was unchanged.

Unshackled by sanctions, Iranian production has been increasing at the rate of about 135,000 b/d a month in 2016. Output reached 3.3 mb/d in March, an impressive rise of 405,000 b/d year-to-date. This is still short of the 500,000 b/d that Iranian officials boasted could be brought online immediately post-sanctions. Nevertheless, Iran is only a few months away from reaching its pre-sanctions production capacity level of 3.6 mb/d. Its target of 4.0 mb/d, however, is unlikely to be attained without significant investment in view of the weakened state of the country’s oil infrastructure.

Iran’s refusal to countenance capping production before reaching its target of 4.0 mb/d proved decisive in the Doha negotiations. Attention now shifts to OPEC’s biannual meeting in June, when members will likely resume their discussion of production ceilings.

April saw oil markets shrug off the failed OPEC/Russia output freeze accord and propel prices to their biggest monthly gain since 2009.

According to NBK analysts, April may come to be known as the month in which oil market sentiment turned perceptibly bullish. Shrugging off the failure of OPEC and Russia to agree on a production freeze, oil prices posted their largest monthly gain in seven years in April. By the end of the month, Brent crude, the international benchmark, had surged by almost 22 per cent to close at $48.1 per barrel (bbl)—its highest level since November 2015. Similarly, West Texas Intermediate (WTI), the US crude marker, ended the month 20 percent higher at $45.9/bbl.

Since hitting 13-year lows in mid-January, oil prices have rallied by a remarkable 72 per cent on the back of several bullish signals including the production freeze talks, supply outages among OPEC members, falling US shale production and a depreciating US dollar.

Rather than dwell on the inability of OPEC and Russia to agree on oil output cuts at the 17 April meeting in Doha, markets took their cues from the supply disruptions that have come thick and fast since February. Among the largest oil producers to witness falls in output were Iraq, Nigeria, Ghana and Kuwait.



http://leadership.ng/news/525095/kachikwu-fg-privatise-refineries-12-months

Ook but don't sell it to Tinubu.

Privatize privatize... they should just do it abeg

talk2alabama:
Privatize privatize... they should just do it abeg

Yeah. I think it's a welcome development.

The present administration has taken the decision to
privatize the refineries. The first question this begs is, “is
privatization the answer?” Perhaps yes, perhaps no. The
debate surrounding privatization of public enterprises is a
popular and on-going concern of scholars, public
administrators and concerned citizens the world over.

In the past, under some well-meaning regimes, unsuccessful attempts were made to revive the refineries. For the most part however, the refineries have been maintained as grand repositories of corruption for any government in power, in connivance with willing citizens and fraudulent foreigners.

God bless Nigeria.

donogaga:
Yeah. I think it's a welcome development.

The present administration has taken the decision to
privatize the refineries. The first question this begs is, “is
privatization the answer?” Perhaps yes, perhaps no. The
debate surrounding privatization of public enterprises is a
popular and on-going concern of scholars, public
administrators and concerned citizens the world over.

In the past, under some well-meaning regimes, unsuccessful attempts were made to revive the refineries. For the most part however, the refineries have been maintained as grand repositories of corruption for any government in power, in connivance with willing citizens and fraudulent foreigners.

privatization is the answer bro.. havnt u read the Petroleum industry bill? Damn...

cornoil:
Ook but don't sell it to Tinubu.

But don't you think that if Nigerians own majority shares in the refineries, regulatory issues could be more easily dealt with under a citizen watch arrangement, than when a government agency is burdened solely with this responsibility.

In addition, despite its aversion to organized labor force, government must encourage unionism in the private refineries as they will serve as watchdogs for reporting of factual situations in these firms. An ombudsman, similar to the NCC might also be necessary for the privatized refineries.

talk2alabama:
privatization is the answer bro.. havnt u read the Petroleum industry bill? Damn...

We are on the same page bro.

donogaga:
We are on the same page bro.

alright..

Definitely, FG has not successfully run any outfit (NEPA, NITEL, Railway service etc).... they should have no hand in the refineries.

However, Kachikwu should stop speaking from both sides of the mouth. Yesterday... he needs $700M to fix the refineries, today they want it sold. This is a very confused government.

the change chanters are now humming the same tune made by gej ,i keep wondering where the change they promised us is.today they tell us the refineries are at optimum performance the next day we get a different story entirely

I pray there be a stiff regulation on the activities of the new operators.

Like minimizing the number of expatriate workers, pricing, community affairs and so on.

cornoil:
Ook but don't sell it to Tinubu.

I think what matters is that the refineries work efficiently. If they work, there would ne jobs, fuel and less forex flight. I personally dont care if they dash it out free of charge to whomever, let the freaking refineries just work and then Nigerians may smile and one day buy fuel for N50/litre.

Joint ventures work well in nigeria in oil mining because the government is more of a regulator with business interests.....I think that is what we need in our government owned companies...PHCN shouldn't have been fully privatized.

A 60:40 with government regulations would do the work.

If it will workout that way then SELL IT!

pacino26:
I pray there be a stiff regulation on the activities of the new operators.

Like minimizing the number of expatriate workers, pricing, community affairs and so on.

Another regulatory loophole that plague Nigeria’s
upstream sector is in the area of workforce retention.
Qualified and experienced Nigerians ,that is, the petroleum,
mechanical, electrical engineers and others in related fields
are either practicing in the diaspora, or are in the country
working in banks, communication firms, are privately
employed or struggling to make ends meet. Not many are
employed in the oil and gas sector within the country.


It is a well known fact that foreign companies operating in
Nigeria’s upstream oil and gas sector are daily flouting the
local content agreement as far as worker recruitment is
concerned. Expatriate welders, crane operators,
instrument technicians, safety engineers, project managers,environmental advisors and other lower, middle and senior level workforce for which Nigerian equivalents abound fill thestaff registers of Shell, Chevron, etc . In the faceof d failure of existing legislation to address this very important
issue, how does the Ministry of Petroleum intend to correct dis anomaly and ensure that the privatization of Nigeria’s refineries truly benefit Nigerians?

Uduak2019:
We all know it would be sold to Dangote!

You,

Not "We"

donogaga:
Another regulatory loophole that plague Nigeria’s
upstream sector is in the area of workforce retention.
Qualified and experienced Nigerians ,that is, the petroleum,
mechanical, electrical engineers and others in related fields
are either practicing in the diaspora, or are in the country
working in banks, communication firms, are privately
employed or struggling to make ends meet. Not many are
employed in the oil and gas sector within the country.


It is a well known fact that foreign companies operating in
Nigeria’s upstream oil and gas sector are daily flouting the
local content agreement as far as worker recruitment is
concerned. Expatriate welders, crane operators,
instrument technicians, safety engineers, project managers,environmental advisors and other lower, middle and senior level workforce for which Nigerian equivalents abound fill thestaff registers of Shell, Chevron, etc . In the faceof d failure of existing legislation to address this very important
issue, how does the Ministry of Petroleum intend to correct dis anomaly and ensure that the privatization of Nigeria’s refineries truly benefit Nigerians?

PIB is sleeping but it took them less than a week to amend the CCB bill.

They rather collect commission from expatriate staffs than see their own people work.

Host communities do have a role to play here.