Making revenue remittances more transparent



After protracted stalemates and series of postponements, the Federation Accounts Allocation Committee, FAAC, finally, penultimate week Friday July 20, 2018, shared the sum of six hundred and sixty eight billion Naira (N668 billion) for the month of May, despite lingering disagreements between the states and the Nigerian National Petroleum Corporation, NNPC, over alleged unwholesome remittance of revenues.
The lower tiers of government were virtually coerced to accept payments made by the NNPC despite misgivings over remittances made by NNPC. The states had to take what they were given due to pressures over unpaid salaries and other commitments which had accumulated. In the past couple of months, government activities in many states had virtually been grounded while allocations being awaited from FAAC were not forthcoming.
It is worrisome that complaints over shortages in revenue remittances by Federal Government’s revenue-making bodies, especially the NNPC, have not been addressed. Traditionally, NNPC’s operations are, at best, shrouded in mystery to non-oil minds, a situation that has fuelled allegations ofcorruption over the years. President Muhammadu Buhari who assumed the portfolio of Minister of Petroleum Resources on the ground that he would sanitise the oil sector is still being awaited to effect necessary reforms.
The Chairman, Commissioners of Finance Forum, Mr. Mahmood Yinusa, after the third FAAC failure, said: “It is no longer a joking matter. It has gone to the highest level. Mr. President is highly interested in this and he is taking his time to ensure the right thing is done”.
The irony here is that the NNPC is under the President who is the Minister of Petroleum Resources. The problem is simply being referred back to the office from which it emanated. When will the President come out with a once and for all solution?

In a system that works, it is the National Assembly that should be asked to look into the confusion of NNPC remittance of revenues. The constitution empowers the Federal Legislature to appropriate Federal funds and enquire into how they are spent. The National Assembly should be approached to call the NNPC to explain the confusion in the revenue remittances, but obviously, FAAC stakeholders feel more inclined to pass the buck back to the President.
Besides, this unwholesome dependency on oil rents by all tiers of government has gone on for too long. As long as oil continues as our mainstay, no regime will ever like to implement transparency in the oil sector. While we eagerly await the day when the system is restructured for stronger fiscal federalism, we call on the NNPC to be more accountable on Federal revenue remittance and win the confidence of all FAAC stakeholders for smoother running of governance.

Championing Indigenous Participation in Oil and Gas Industry



The woes of indigenous companies in Nigeria’s oil and gas industry seems not to have abated despite the signing of NOGIC Act on April 22, 2010.
Until the appointment of Dr Maikanti Baruas the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), the industry operated merely like a cult where access to information and leadership was like an elephant making effort to pass through the hole in a needle.

Since assumption of office, Baru has worked to eliminate agonies of the government, legislators, workers and contractors in the oil and gas industry. Hence, no more stories of fuel scarcity, long queues at filling stations disappeared and sanctity instituted in the project award process. The exclusion of indigenous companies from project awards and lack of direction for hydrocarbon exploration to build reserves have also become a forgotten issue.

Today, things are looking up for both the government and other stakeholders. The corporation from a position of loss in financial result has also begun to record significant profit in its operation.

Baru has unflinchingly continued to work for increased participation of indigenous companies in oil and gas and this is demonstrated whenever the opportunity arises.
At the commissioning of the Lagos Midstream Jetty (LMJ) at the Apapa Harbour in Lagos last year, Baru had pledged support for indigenous companies’ participation in the sector.

Earlier in the year, the NNPC had listed 32 indigenous players as part of the 50 companies selected to lift Nigeria’s crude for the export market for a two-year period (2018 – 2020), an improvement on the 18 Nigerian companies approved for the contract between 2017 and 2018.
This was an action which demonstrated in practical terms, NNPC’s commitment under Baru’s leadership to support indigenous companies.

In a statement signed by NNPC Group General Manager, Crude Oil Marketing Division, Mele Kyari, the Nigerian companies involved are Aipec, Masters Energy, MRS, Barbedos, Bono Energy, North West, Oando, Casiva, Cretus, Amazon Energy, Sahara Group, Ocean Bed, Eterna, AMG, Arkleen, Gladius Commodities, Leighton, Levene, Hinstock, AA Rano, Propetrol, Emadeb, Setana, Prudent and Setraco. The others are Shoreline, Ultimate Gas, Voyage, West African Gas, Zitts and Lords and Duke Oil, a subsidiary of NNPC.

All contracts are for 30,000 barrels per day except for Duke Oil Limited. The contract is expected to run from July 2018 to June 2020.
The increased participation of indigenous companies in the latest crude oil contracts is a practical proof that the Baru-led NNPC is committed to drive indigenous participation in the oil and gas sector, which will help keep a significant percentage of oil and gas spend in the country which in turn will translate to a significant boost in the economy.

This singular gesture is expected to trigger a lot of developmental strides in the country.
As indigenous players will build more capacity, a lot more oil and gas facilities will also be built, more opportunities will spring up giving birth to more businesses and several jobs created.
With more Nigerian manpower and facilities contributing to the sector, the Gross Domestic Product (GDP) will witness a significant upward surge.

Baru has on numerous occasions consistently voiced his support for building capacity of indigenous players to make them key players in the sector. While receiving members of the Independent Petroleum Producers Group (IPPG) at the tail end of 2017, he once again reiterated his support for collaborating with indigenous producers in order to grow their capacity and participation in the exploration and production sub sector while also urging them to tender bids for the marginal fields.
Speaking at an occasion to mark the Egina Manifold Sail Away celebration in Port Harcourt, the NNPC Group Managing Director disclosed that the Corporation will speed up local capacity development within the nation’s oil and gas industry.

Furthermore, Baru noted that NNPC would always support initiatives aimed at domesticating the ample opportunities in the oil and gas industry.
Baru recognises the need to allow local contractors carry out range of services like fabrication among others in the industry to boost the contribution of the sector to the economy.

He has at various times also pushed for university-industry partnership to grow local content initiatives.
Recently, at the convocation lecture of the Abubakar Tafawa Balewa University (ABTU), Baru called for a workable and symbiotic partnership between the industry and the nation’s educational institutions with the aim of breeding high skilled manpower, incubation of technology thereby enhancing the Nigerian Content initiative.

NNPC together with International Oil Companies (IOCs) have been able to work out a formula to secure oil pipelines and reasonably curb pipeline vandalism. This was achieved largely by engaging mechanism where members of the oil bearing communities are engaged to secure the oil facilities within their domain. This move has engaged the youths in the oil producing communities productively, and in the process empowered them to make income lawfully, curb environmental degradation arising from oil spillage and also ensure there is no downtime or loss of revenue by oil companies, a win-win situation for all parties.

In the downstream retail sector, NNPC’s retail outlets have continued to increase with a network of over 400 stations spread across the country which has helped create several jobs.

Upstream, the NNPC under the leadership of Baru has also embarked on oil search in the inland basins in a move to increase the nation’s oil reserves.
He said with renewed desire of the federal government to increase the nation’s reserve base and production, NNPC’s Frontier Exploration Services (FES) Division was reinvigorated to champion the exploration activities in the inland basins.

The oil search if successful will generate huge investments, improve local technical and financial capacity while also creating a lot of jobs for the citizenry. Conscious of the supply and demand gap for domestic gas supply, Baru’s administration recently signed agreements for seven Critical Gas Development Projects (7CGDP) to deliver about 3.4 billion standard cubic feet of gas per day (bscfd) to bridge the foreseen medium term supply gap by 2020 on an accelerated basis.

In promoting merit and identifying with excellence in performance, Baru at the just concluded NOG conference in Abuja identified with a few of the indigenous companies that have made a success of the opportunities presented by NNPC’s domestic capacity development initiatives.

He took a few moments during his walk through the Exhibition hall to identify with and commend the effort and strides of Amazon Energy, an indigenous firm that he knew from its humble beginnings, but that now provided Engineering, Procurement and Construction Services for major projects in the industry, stating that Amazon Energy was an example and a model of NNPC’s objective in its unrelenting quest to ensure the continuous development of local capacity in the Nigerian oil and gas sector.

Contrary to the fear of International Oil Companies (IOCs) about the technical capabilities of indigenous firms, the appointment of Baru by President Muhammadu Buhari has proved a point that the development and growth of technology in a country is only possible with the collaboration of indigenous stakeholders in the public and private sectors of the economy.

In order to secure support for several projects put in place by Dr Baru to drive in-country development and growth in the sector by indigenous firms, chief executive officers of indigenous firms must help to establish the trust that will encourage the federal government to support NNPC.

This trust will be identified by critics and stakeholders in terms of project completion according to deadline target, quality, transparency, accountability and least cost.
The benefits associated with the recent milestones under Baru will also be sustained if indigenous companies continue to invest in capacity building regardless of oil price volatility in preparation for future opportunities being driven by the NNPC under Baru and his team.

FG bans importation of 10-year old haulage vehicles

Mr. Boss Mustapha


The Federal Government has placed a ban on importation of haulage vehicles that are 10 years and above old from the date of manufacture. The ban is expected to take effect from 1st of January 2020.

This measure was one of the resolutions of the stakeholders’ forum organised by the Office of the Secretary to the Government of the Federation (SGF), Mr. Boss Mustapha, for haulage operators following the recent road traffic inferno on Otedola Bridge in Lagos where over many lives and properties were lost.
The communiqué issued at the end of the meeting directed that mandatory certification of all haulage vehicles will now be carried out twice in 12 months.
According to the communiqué which was signed by Mustapha, the Federal Government will also work closely with the Bank of Industry (BOI) and other financial institutions towards the establishment of a Fleet Acquisition Renewal Scheme for haulage operators.
Other resolution of the meeting was that: “Standard speed limiters must be installed in all haulage vehicles in Nigeria, and that “tankers without safety valves and the required number plates will henceforth be disallowed from loading”.
The meeting also agreed that: Department of Petroleum Resources (DPR), Nigeria National Petroleum Corporation (NNPC), Federal Road Safety Corps (FRSC) and other relevant agencies should immediately harmonize operating safety requirements at all tank farms”, even as it was agreed that “periodic checks of haulage vehicles must be carried out at relevant loading points”.
The communiqué also stated that, “payment of National Transportation Allowance (NTA) and bridging claims to tanker operators will henceforth be contingent on compliance to minimum safety standards” and that, henceforth “single operators of haulage vehicles must be duly registered with National Association of Road Transport Owners ( NARTO ) and comply with RTSSS provisions”.

PPMC gets N184.02bn from sale of petroleum products in March




Sale of petroleum products by the Pipeline and Products Marketing Company (PPMC) decreased from the N198.94 billion realised in the month of February to N184.02 billion in May, 2018.

Total revenues generated from the sales of white products for the period March 2017 to March 2018 stands at ₦2.129 trillion, where Premium Motor Spirit (PMS) contributed about 86.94 per cent of the total sales with a value of ₦1.851 trillion.

The Nigerian National Petroleum Corporation (NNPC), which made this disclosure in its recent monthly financial report, disclosed that a total of 1.43 billion litres of white products were distributed and sold by PPMC in the month of March 2018 compared with 1.52 billion litres in the month of February 2018.

This, it said, comprised of 1.30 billion litres of PMS, 38.02 million litres of Kerosene and 88.59million litres of Diesel.

“Total sale of white products for the period March 2017 to March 2018 stood at 17.21 billion litres, PMS amounted to 15.30 billion litres or 88.93 per cent”, it added.

In March 2018, 2,383.46 million litres of PMS was supplied into the country through the DSDP arrangements as against the 1,791.62million litres of PMS and 27.21million litres of DPK supplied in the month of February 2018.

According to the corporation, the petroleum products (PMS & Dual Purpose Kerosene only) production by the domestic refineries in March 2018 amounted to 153.37 million litres compared to 136.61 million litres in February 2018.

Total Crude processed by domestic Refineries (Warri Refining and Petrochemical Company (WRPC) only) for the month of March 2018 was 271,215 MT while Port Harcourt Refining Company (PHRC) and Kaduna Refining and Petrochemical Company Limited (KRPC) only processed intermediate 7,675MT and 12,675MT respectively.

This, it noted, translates to a combined yield efficiency of 83.64 per cent as against the 81.68 per cent in February 2018.

For the month of March 2018, the three refineries produced 159,424 MT of finished Petroleum Products and 67,428 MT of intermediate products out of the 271,215 MT of Crude processed at a combined capacity utilization of 14.41 per cent compared to 13.94 per cent combined capacity utilization achieved in the month of February 2018.

NNPC attributed the increase in operational performance to attributable to the revamping of the refineries especially WRPC despite the downturn in PHRC and KRPC during the month.

NNPC said that the ongoing revamping of the refineries will enhance capacity utilization once completed.

It stated: “The Corporation has been adopting a Merchant Plant Refineries Business Model since January 2017.

The model takes cognizance of the Products Worth and Crude Costs.

The combined value of output by the three refineries (at import parity price) for the month of March 2018 amounted to ₦42.39 billion while the associated Crude plus freight costs and operational expenses were ₦44.83 billion and ₦9.45 billion respectively.

This resulted to an operating deficit of ₦11.89billion by the refineries. Also, during the period under review, refineries combined capacity utilization was 14.41 per cent.”

NNPC Group Managing Director, Dr. Maikanti Baru, said the corporation is ever ready to support the Petroleum Tanker Drivers (PTD) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) in whatever way to enhance the distribution of petroleum products across the country.

He listed other palliative road rehabilitation intervention to the union by NNPC to include: Mokwa-Jebba Road and Iwuru 1 and Iwuru 2 portion of Ekpet-Ugep Road in Calabar, Cross River State.

Chinese oil corporation to invest $3bn in Nigeria



The China National Offshore Oil Corporation (CNOOC) is to invest an additional three billion dollars in its existing stakes in offshore oil and gas operations in Nigeria.

The Nigerian National Petroleum Corporation (NNPC) spokesman Mr Ndu Ughamadu, who made this known in a statement on Sunday in Abuja, the nation’s capital explained that the Chief Executive Officer of the Beijing-based Corporation, Mr Yuan Guangyu, made the pledge when he led a team of CNOOC top executives on a visit to the NNPC.

“Guangyu described its investment in Nigeria as the most strategic important overseas business undertaking and its largest investment destination. He said CNOOC had invested more than 14 billion dollars in its Nigerian operations, even as he called on the management of the NNPC to seek common grounds of beneficial interest with CNOOC for enhanced productivity,’’ Ughamadu said.

The Group Managing Director of NNPC, Dr Maikanti Baru commended the CNOOC for its interest in the Nigerian oil and gas industry.

Baru said the corporation was open to new investments and would foster meaningful and mutually beneficial relations with credible entities like CNOOC.

Founded in 1982, the CNOOC which is one of the three big Chinese national oil entities is originally focused on offshore upstream exploration and production.

NNPC, Shell, others sign NLNG Train-7 project

                                 The NNPC Group Managing Director, Dr. Maikanti Baru


The Nigerian National Petroleum Corporation (NNPC), Shell, Total and Eni have signed the Front End Engineering Design (FEED) contract of Train 7 of the Nigeria Liquefied Natural Gas Ltd (NLNG).

The NNPC Group Managing Director, Dr. Maikanti Baru, who expressed the corporation’s readiness to support the NLNG’s Train-7 project during the event in London, noted the contributions of the NNPC to the success of the company through its equity participation and shareholders loan.

“Through critical interface with relevant Government agencies, we have played a pivotal role in the actualization of Trains 1 to 6 (T1-T6). Given the success of T1-T6, NNPC is therefore fully committed and aligned with Government aspirations to replicate the success of this project. Therefore, our current focus is to kick start T7,” Baru noted.

Describing the NLNG as a jewel in the crown of Nigeria as well as a very strategic investment for the nation, Dr. Baru stated that the NLNG would continue to act as a catalyst for nation-building for years to come.

He said the prompt servicing of shareholders’ loan with accelerated repayments did not only demonstrate NLNG’s credit worthiness, but that it had also reiterated its robust financial position.

Dr. Baru, who lauded President Muhammadu Buhari and Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, for their support, also commended the efforts Shareholders, the IOCs and the NNPC Finance & Accounts as well as Gas & Power Directorates for working hard towards achieving the feat recorded so far.

“Your sacrifices, faith in Nigeria and unflinching support in providing the required financing and technical support for the NLNG is commendable. It is our hope that this relationship opens a new vista of opportunities for all the Shareholders to play more active roles in the Midstream Oil & Gas business in Nigeria,” the NNPC GMD added.

He also disclosed that the NLNG has generated revenues of more than US$25 billion to the Nigerian government comprising dividends of circa US$17 billion and taxes of US$7.2billion.

The event also witnessed the commemoration of the successful repayment of $5.45bn shareholders loan for Trains 1-6 by the NLNG Shareholders

The NLNG T7 expansion project aims to increase NLNG production capacity from 22 MPTA to over 30 MTPA by the debottlenecking of T1-6 and the addition of train -T7 and associated infrastructure at an estimated cost of US$4.3 billion.

The target Final Investment Decision (FID) date is fourth quarter 2018.

The event also witnessed the commemoration of the successful repayment of $5.45bn shareholders loan for Trains 1-6 by the NLNG Shareholders.



NNPC signs agreement for seven critical gas projects

The NNPC, in a statement in Abuja, said the 7CGDP is an integral leg of the gas development strategy designed by the NNPC to leverage the full potential of gas to meet the target of generating at least 15 gigawatts, GW, of electricity by 2020.

The Nigeria National Petroleum Corporation, NNPC, has signed agreements for seven Critical Gas Development Projects (7CGDP) to deliver about 3.4 billion standard cubic feet of gas per day (bscfd) to bridge the foreseen medium term supply gap by 2020 on an accelerated basis.

The 7CGDP, according to the NNPC include: development of the 4.3 trillion cubic feet (TCF) Assa North/Ohaji South field; development of the 6.4 TCF Unitized Gas fields (Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri); and the development of 7.0 TCF NPDC’s OML 26, 30 & 42.
Others, it said include: development of 2.2 TCF Shell Petroleum Development Company (SPDC) JV Gas Supply to Brass Fertilizer Company; cluster development of 5.0 TCF Oil Mining Lease OML, 13 to support the expansion of Seven Energy Uquo Gas Plant; and the cluster development of 10 TCF Okpokunou/Tuomo West (OML 35& 62).
Speaking at the signing ceremony, Group Managing Director of the NNPC, Dr. Maikanti Baru, enthused that the projects would not only bridge the projected shortfall in supply upon completion, but would also signal the beginning of the process of closing demand-supply gap in the domestic gas market. He said NNPC had engaged two world class project management consultants namely, DeltaAfrik/Worley Parson & Crestech/Penspen who will work with Nigerian Petroleum Development Company, NPDC, and NNPC Joint Venture, JV, partners and other stakeholders to achieve set project deliverables.
He listed some of the responsibilities of the project consultants to include: working with NNPC and partners to revalidate and carry out relevant technical studies to proposed development plans, provide financial advisory services for project funding/financing strategy and appraise the fiscal requirements for viability and advice on interventions that may be required.
“The Project Management Team, PMT, are also expected to study and recommend fast-track tendering process for field development and project implementation, establish realistic cost benchmark(s) for identified projects and develop project schedules and cost estimates for the respective projects among others,” he added.
Baru explained that in addition to the above, the NNPC Project Management groups would strengthen oversight function on the seven (7) critical gas development projects by ensuring prompt decision making and timely approvals in line with international best practices.
The NNPC boss said the Corporation was working closely with other agencies like the Department of Petroleum Resources, DPR, and the Nigerian Content Monitoring and Development Board, NCMDB, among others, to ensure timely approvals for the project and also ensure that lease renewals requests related to these projects were supported for renewals by relevant agency.
Also speaking, Mr. Osagie Okunbor, Managing Director of Shell Petroleum Development Company, SPDC, which is handling three out of the seven projects, pledged the commitment of the company to the successful execution of the 7CGDP, noting that Shell was fully aligned with Nigeria’s gas strategy and aspirations.
The NNPC said the highpoint of the event was the formal execution of agreement for the development of the 6.4 trillion cubic feet unitized gas fields — Samabri-Bisseni, Akri-Oguta, Ubie-Oshi fields by NNPC/Shell and NAOC JV.

NNPC begins seven gas projects


The Nigerian National Petroleum Corporation (NNPC), says it has begun to deliver on its seven gas projects to support power generation with 15 Gigawatts (GWs).

The NNPC’s spokesman, Mr Ndu Ughamadu on Tuesday in Abuja, the nation’s capital city, said the corporation would deliver about 3.4 billion standard cubic feet of gas per day (scf/d) to bridge the supply gap by 2020.

The Group Managing Director of the NNPC, Dr Maikanti Baru, on his part, explained that the projects would also signal the beginning of the process of closing demand-supply gap in the domestic gas market.

According to him, the project tagged “7CGDP” is part of the gas development strategy designed by NNPC to leverage the full potential of gas to meet the target of generating at least 15GWs of electricity by 2020.

Baru said the corporation had engaged two World-class management consultants – DeltaAfrik/Worley Parson and Crestech/Penspen – to work with NPDC and its Joint Venture partners and other stakeholders to achieve set project deliverables.

Baru explained that the NNPC Project Management groups would strengthen oversight function on the seven critical gas development projects by ensuring prompt decision making and timely approvals in line with international best practices.

He said the corporation was working closely with other agencies like the Department of Petroleum Resources (DPR) and the Nigerian Content Monitoring and Development Board (NCMDB), among others, to ensure timely approvals for the project.

The Managing Director of Shell Petroleum Development Company (SPDC), Mr Osagie Okunbor, which is handling three out of the seven projects, pledged the commitment of the company to the successful execution of the 7CGDP.