Northern Nigeria’s oil barons lap luxury as poverty spurs insurgency

 

http://businessdayonline.com/2014/05/northern-nigerias-oil-barons-lap-luxury-as-poverty-spurs-insurgency/#.U3oXHsAU9Ms

 

The palatial home of Ahmed Mai Deribe, the famed billionaire of Bornu, in northern Nigeria is purported to be the most expensive home ever built in modern Africa.

 

Fit for a king, the mansion which was completed at a staggering cost of $100 million in 1991 is today a tourist attraction for people brave enough to visit the battleground that its location, Maiduguri, has become.

 

Northern Nigerian oil barons like Deribe, who is now late, got their start as businessmen in the freewheeling days of military rule in Nigeria when the government, dominated by Northerners, dispensed favours by gifting off state-owned oil fields to friends and cronies.

 

The beneficiaries in turn controlled a disproportionate amount of the Nigerian economy through their dominance of the country’s natural resources, even as the northern regions progressively got poorer over the years.

 

The north-east, base of the murderous Islamist group, Boko Haram, is the poorest region in the nation, with 69.1 percent and 76.3 percent absolute and relative poverty levels, respectively, according to the National Bureau of Statistics (NBS) Poverty Profile Report.

 

On the other hand, OML 110, with the good yielding OBE field, awarded to Mai Deribe by military dictator Sani Abacha on July 8, 1996 and operated by Cavendish Petroleum, is estimated to have proven oil reserves in excess of 500 million barrels.

 

Oriental Energy Resources Limited is another of such oil bloc awardees. It is a company owned by Mohammed Indimi who, sources say, is a close friend of former Nigerian military ruler Ibrahim Babangida.

 

Oriental Energy Resources Limited runs three oil blocs: OML 115, the Okwok field and the Ebok field. OML 115 and Okwok are OML PSC, while Ebok is an OML JV.

 

Perhaps the most famous northern oil bloc owner is T. Y. Danjuma, a retired general who served as defence minister during former President Olusegun Obasanjo’s stint as civilian ruler.

 

South Atlantic Petroleum (SAPETRO), owned by Danjuma, was awarded the Oil Prospecting Licence (OPL) 246 in February 1998 by Abacha. SAPETRO divested 45 percent of its contractor rights and obligations to China National Offshore Oil Corporation (CNOOC) for $1.75 billion (N283.5 billion) in 2006, retaining a 5-percent stake.

 

Another northern oil baron is Sani Bello, chairman of AMNI International Petroleum and Development Company, who hails from Kontagora, Niger State.

 

AMNI International Petroleum Development Company owns two oil blocs, OML 112 and OML 117, both awarded by Abdulsalami Abubakar who presided over elections that ushered in Nigeria’s current civilian democracy.

 

The Okoro and Setu fields in OML 112 are operated by Afren Energy, a company in which  a former petroleum minister from northern Nigeria is believed to have substantial interest.

 

The Okoro and Setu oil fields have about 50 million barrels in reserve and currently produce/export just a little below 20,000 barrels per day.

 

Express Petroleum and Gas Limited floated by Aminu Dantata are owners of OML 108 awarded by Abacha in 1995, and OPL 227. The firm’s holding which contains up to 2.7 million barrels per day of oil may be valued as high as $22 million, according to research and investment firm CBO Capital.

 

While these indigenous energy companies are seen by some as a sign of the maturing Nigerian oil and gas industry, which has seen numerous homegrown players emerge in recent times, critics say they are only existing as a result of undue political influence.

 

“These companies usually lack the technical know-how to operate their oil licences and often have to partner with established international oil majors to extract either crude, gas or condensate,” said one industry source who preferred to remain anonymous. 

 

The Nigerian government, eager to lessen the country’s dependence on oil and gas, is pushing a marshal plan for the blighted north-east to attract investments and jobs to the area. However, there have been few takers from within the northern oil barons or elsewhere.

 

Many see the solution to this problem in investment that would create jobs and generate reasonably distributed wealth. “Unless we create more jobs, we won’t eliminate Boko Haram. Even if we do, another such group will come. We have to empower our people,”  said one major investor in the Nigerian economy.

PATRICK ATUANYA

Ghana losing 5,000 barrels of oil daily

http://www.citifmonline.com/2014/05/12/ghana-losing-5000-barrels-of-oil-daily/

 

Ghana is losing 5,000 barrels of oil per day as a result of re-injection of gas into the wells.

 

The Jubilee partners have no option than to choke production by 5,000 barrels of oil per day to make way for successful re-injection of 120 million standard cubic feet of gas every day.

The re-injection has been occasioned by the lack of plant to process the gas.

On April 14, 2014, the FPSO Kwame Nkrumah completed the 100th off-take from the Jubilee fields’; followed closely by the production of the 100 millionth barrel on May 4.

Mr. Charles Darku, General Director (GM), Tullow Oil Company, said that if the gas processing plant was in operation, 70 million standard cubic feet of gas would have been taken care of by the processing plant every day while between 45 million and 50 million cubic feet of gas would be re-injected every day.

He explained that the re-injection of 45 million and 50 million cubic feet of gas is what should be done every day at the Jubilee fields to sustain oil production at optimum level.

However, he said because government policy bans flaring of gas, they had to be re-injecting 120 million standard cubic feet of gas every day, thereby choking production by 5,000 barrels of oil per day.

Consequently, he said Tullow was collaborating with Ghana Gas Company to install a by-pass facility to provide an alternative route to give a limited processed gas to the Volta River Authority (VRA).

Mr. Charles said the FPSO has the capacity to process 30 million standard cubic feet of gas a day and the by-pass facility will carry the gas directly to VRA thermal plants.

He said the imported equipment for the project had already been imported and arrived in the country last Tues-, day, with installations expected to begin this week.

He explained that the by-pass facility is not taking over from the Ghana. Gas Processing Plant, but would serve as a back-up facility when the plant breaks down or shuts down for routine maintenance.

Mr. Darku said the collaboration centres mainly on engineering assistance in terms of quality and installation procedures and did not go into any agreement on financial assistance.

He said the collaboration was necessary to find quick solutions to the problem while government continues to find ways to complete the gas plant.

The GM noted that for now the company is re-injecting gas back to the wells, and assured the public that their engineers are on the ground and are monitoring their operations very critically.

“For now, we are managing the situation well and we are comfortable at the rate at which we are re-injecting and we will continue to do that to avoid damaging our reservoirs,” he said.

Mr. Darku said the company spent $100 million in developing the third gas rejecting ,well last October to augment the existing two wells.

He said though it turned out to take less gas than expected, there is enough space in the other two wells to accommodate the capacity being injected currently.

Answering a question on how long the company would continue to re-inject gas, Mr Darku said the decision is in the domain of the engineers, who are monitoring the issue on daily basis and would offer an advice when they reach their ultimate limit.

“I can assure you that we do not have imminent problem, at hand now. We are currently re-injecting 120 mil-lion standard cubic feet of gas daily and we are comfortable with that, but we also want to urge government and Ghana Gas Company* to facilitate work on the plant to the benefit of all,” he added.

Earlier, there was an investor forum to take stock of the company’s performance in 2013 and strategies for 2014.

The forum was an annual event after the Shareholders’ Annual General Meeting (AGM) in London.

The 2013 AGM took place last week, during which the company declared a dividend of 12.0 pence per share.

Ian Springett, Chief Finance Officer of Tullow, said the company had also recorded a net debt of S1, 909 million as against $989 million in 2012, an increase 93%.

He stated that the company paid the Government of Ghana $300 million last year.

He said $130 million was spent on local suppliers, explaining that over 40% of Tullow Ghana’s contracts under $100,000 were awarded to local businesses, as well as 24% of contracts between $100,000 and $1 mil- ; lion were also awarded to local businesses.

Diezani challenges Nigerian oil companies to take over IOC divestments

Diezani Allison-Madueke, Nigeria’s Minister of Petroleum. [Photo: ynaija.com]

 

http://www.premiumtimesng.com/business/160661-diezani-challenges-nigerian-oil-companies-take-ioc-divestments.html

 

The recent spate of asset divestments by IOCs operating in Nigeria is a positive trend, the Petroleum Minister said.

 

Nigerian operators in the country’s oil and gas industry must brace up to take over asset that multinational oil companies have divested from, the Minister of Petroleum Resources, Diezani Alison-Madueke, has said.

 

The Minister was speaking at an investment luncheon organized by the Petroleum Technology Association of Nigeria, PETAN, during the recent Offshore Technology Conference in Houston, Texas.

 

Ms. Alison-Madueke was represented by the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Andrew Yakubu.

 

She said contrary to the apprehension in some quarters that the recent spate of asset divestments by IOCs operating in Nigeria could create crisis in the oil and gas industry, the trend is actually positive.

 

The Minister said rather than result in crisis, the divested asset provide opportunity for indigenous oil and gas companies to become active players in the upstream sub-sector of the industry.

 

She said that with the divestments, indigenous oil and gas companies now have opportunity to acquire the asset being divested as springboard for the development of local capacity.

 

Speaking on “Assets divestments in the Nigerian Oil and Gas Industry: Opportunities and Challenges”, the minister said, “Let me allay your fears that the spate of divestments would not lead to crisis in the nation’s oil and gas industry.

 

“Rather the divestment by the majors is changing the onshore corporate landscape and creating material brownfield opportunities for upstream players looking to enter the Nigerian upstream space.”

U.S. energy giants use crude oil loophole to post record petroleum exports

 

http://www.washingtontimes.com/news/2014/may/11/us-energy-giants-use-crude-oil-loophole-to-post-re/?page=1

 

Even as big U.S. oil companies call for an end to a 1970s-era law banning exports of crude, they are exploiting a loophole that last year enabled them to export record amounts of gasoline and other petroleum products.

 

The loophole allows oil companies to export products that they refine from crude oil, though not the crude itself. With a major surplus of high-quality crude extracted by shale oil wells from Texas to North Dakota — and a declining appetite among American drivers — the little-known provision has resulted in an unprecedented boom in petroleum exports that is drawing down chronic U.S. trade deficits for the first time in decades.

 

Exports of gasoline, diesel, distillate, propane and other petroleum products soared to a record 4.3 million barrels a day in December, more than twice the 2.1 million barrels a day of petroleum products that the U.S. imported on average last year, according to the Energy Information Administration. The average 3.5 million barrels of petroleum exports a day in 2013 was double the 1.7 million five years ago.

 

“The U.S. is one of the largest petroleum exporters in the world,” even without lifting the ban on crude exports, said Energy Information Administration chief Adam Sieminski.

 

He said the U.S. is exporting gasoline primarily to Latin America and diesel to Europe. He expects the U.S. to become a net exporter of natural gas and petroleum by 2017. The U.S. already is exporting a lot of liquids that are produced as byproducts of drilling for natural gas, such as naphtha and condensates, he said.

 

Enlarge Photo

 

“It’s a trade opportunity for the U.S.,” he told the Natural Gas Roundtable last week, although the rapid expansion of exports does raise questions about fuel costs for Americans because they will be competing with consumers overseas who generally pay higher prices.

 

Fuel prices in Europe are significantly higher than in the U.S., so lower-priced U.S. fuel is in demand. Countries in Central America, South America and Africa import gasoline and other refined products from the U.S. because their own refineries cannot meet growing demand for fuel. Mexico imports gasoline from the U.S. while exporting much of its crude oil to U.S. Gulf Coast refineries because they have the technologies and facilities needed to convert heavy crude into consumable products.

 

Stealth boon

 

The stealth surge in petroleum exports drove down the U.S. current account deficit to $81 billion — the lowest in 14 years — in the final quarter of 2013. For all of last year, the trade deficit fell to $474.9 billion from $535.7 billion in 2012.

 

“The declining trade deficit is good news,” and it is largely because of rapidly growing exports of surplus petroleum products in the past five years, said Jerry Jasinowski, former president of the National Association of Manufacturers. “All of a sudden the U.S. energy picture — thanks to refinements in fracking technology — is much more robust than anyone thought possible.”

 

Because U.S. shale oil must be refined at factories on the Gulf Coast, East Coast or West Coast before it is sent overseas, the refining revival also has contributed in a big way to the rebound in U.S. manufacturing output, exports and jobs since the recession. Investment in oil- and gas-producing facilities has led all investment by U.S. businesses in recent years.

 

Moreover, the availability of inexpensive oil and natural gas has been an elixir for other U.S. manufacturers and exporters that are heavily dependent on energy, including plastics, chemicals and agriculture. As a result, the energy revival has fed a renaissance in manufacturing. That, in turn, has served to drive up U.S. exports of goods and services by 3 percent in the past year, helping narrow the trade deficit.

 

“The falling trade deficit is a clear confirmation of our competitive gains in both energy and manufacturing,” said Mr. Jasinowski.

 

Like Mr. Sieminski, he noted that the energy export boom has only begun. Construction is under way on several export terminals for liquefied natural gas, which the U.S. has the ability to produce in abundance as a result of the shale revolution.

 

“By 2016, we will probably be exporting more oil and natural gas than we import,” and will have achieved energy independence, he said.

 

Hitting a wall?

 

While exports of gasoline have been soaring, analysts say, the trend could be cut short if U.S. refiners reach a limit on how much surplus crude oil they can absorb. Before the premium shale oil boom, U.S. refiners spent billions of dollars retooling their factories to handle heavy crude that they expected to import from the Canadian oil sands, Venezuela, Mexico and other sources. Now, they have too much capacity for such heavy crude and may be nearing the limits of how much light, sweet crude they can handle, some analysts say.

 

Michael Fitzsimmons, an engineer and energy analyst, said U.S. refiners may be unable to absorb much more surplus premium crude. With U.S. refineries hitting capacity, particularly those in the huge refining complex along the Gulf Coast of Louisiana and Texas, he said, they are in a position to take advantage of the crude producers upstream, forcing drilling companies to heavily discount the price of high-quality crude and enabling the refiners use the low-cost oil to fatten profit margins on their own refined products.

 

Refiners such as Phillips 66, Valero and Chevron have been profiting at the expense of shale oil drillers such as Continental Resources and Whiting Petroleum, which don’t own refining operations, Mr. Fitzsimmons said.

 

Mr. Sieminski questioned whether refiners are likely to reach a point where they cannot absorb any more surplus crude oil. He noted that facilities that process light, sweet crude do not have to be as big and complex as the refineries that process heavy crude, and “there’s a lot of construction” right now to build those simpler refineries, called “splitters.”

 

Mr. Sieminski estimated that U.S. refineries will have added enough splitters by 2016 to process another 800,000 barrels of crude oil a day. The gasoline they produce will go mainly for export.

 

Calls for crude exports

 

The refining bonanza has fueled a growing campaign to lift the ban on crude exports, which was enacted during the 1970s oil crisis. Mr. Sieminski said his agency has received many requests from Congress for studies on possible effects of crude oil exports, including whether such exports would result in higher fuel prices for Americans.

 

Squeezed by declining prices for Midwestern crude, major oil companies such as ConocoPhillips and Exxon Mobil have been arguing to lift the export ban so they can earn higher prices overseas. ConocoPhillips CEO Ryan Lance noted last month that Mexico and many South American and European countries have the capacity to refine premium crude and could serve as outlets to ease restraints at U.S. factories.

 

Sen. Lisa Murkowski, Alaska Republican, has taken the lead in advocating an end to the ban in Congress. Short of lifting the ban, she said, President Obama could use his executive authority to create exceptions to the ban if he determines it is in the national interest. For years, the U.S. has exported crude oil from Alaska to Japan, for example, under a presidential exemption from the export ban.

 

The Senate Energy and Natural Resources Committee held a hearing on the issue of crude oil exports in January, and Ms. Murkowski and Chairwoman Mary L. Landrieu, Louisiana Democrat, asked the Energy Information Administration last month to study the effects of lifting the ban.

 

“While we are aware that the EIA has limited resources and numerous reporting requirements to the Congress, we would like to convey the interest of our committee in the issue of crude oil exports, which are largely banned by statute,” the lawmakers wrote.

 

Mr. Fitzsimmons said he doesn’t expect the government to allow the export of crude oil, which remains a politically fraught topic. But even the idea that Mr. Obama could approve exemptions from the export ban is discouraging refiners from tooling up to handle more premium crude, he said, increasing the pressure on shale oil companies and their prices for crude.

 

He expects the refining boom to continue at the expense of the shale oil revolutionaries who made the export boom possible. “Shale oil producers will be victims of their own success,” he said.

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Blast on oil refinery pipeline, output not disrupted

 

http://businessdayonline.com/2014/05/blast-on-oil-refinery-pipeline-output-not-disrupted/#.U3DZDcAU_IU

 

An explosion on a pipeline linking Ghana’s 45,000 barrel-per-day Tema Oil Refinery in an industrial hub near the capital Accra to a nearby port has been reported. The 5 km (3 mile) stretch of pipeline was transporting naphtha, primarily used as a feedstock for producing gasoline, when it began to leak around midday. Passersby had begun collecting the highly flammable liquid, when a sudden fire broke out.

 

The fire sent a column of dense black smoke billowing hundreds of metres into the sky above Tema, around 20 km (12 miles) east of Accra.

 

The fire was brought under control in around three hours and output from the refinery would not be disrupted.

 

The fire also damaged part of Cocoa Processing Company’s nearby factory forcing it to shut down. The facility has capacity to process 64,500 tonnes of cocoa beans annually. 

 

The refinery has been hobbled by repeated shutdowns over the last few years, but was close to signing a joint venture agreement with PetroSaudi International. The refinery’s managing director was in London at the time of the accident as part of a delegation meeting with PetroSaudi to conclude the deal. 

Nigeria: schoolgirls' kidnapping sparks international outrage

Techno Oil Wins Lagos Chamber of Commerce Award

 

http://www.petroleumafrica.com/techno-oil-wins-lagos-chamber-of-commerce-award/

 

Nigerian downstream firm, Techno Oil Ltd., has been awarded the Lagos Chamber of Commerce and Industry’s (LCCI) 2014 Industry Award for the “most innovative and impactful company in the downstream.” This is the first year for the LCCI awards.

 

Speaking at a ceremony, the president of the LCCI, Alhaji Remi Bello, said Techno Oil was among other companies selected after a grueling elimination process by a jury headed by the vice chancellor of Pan African University, Lagos, Prof. Juan Elegido with other distinguished men and women.

 

Bello said Techno Oil’s investment in technologically advanced assets that have help it achieve a daily distribution capacity of 10 million liters of petroleum products through its 45,000 metric ton fuel terminal facility and other retail outlets across the country.

 

Techno is at present promoting the use of cooking gas across Lagos and other parts of Nigeria and has had groundbreaking success in popularizing the use of LPG.

 

Speaking on behalf of Techno, Nkechi Obi executive vice-chairman of the company said that the company was humbled by the recognition of its modest contribution to the nation’s growth. “All our investments have aided increased National Gross Domestic Product (GDP) and given meaning to the whole essence of the Local Content Act,” she said.