In line with the promise of President Muhammadu Buhari to ensure an efficient oil and gas sector for economic development in Nigeria, the president not only assented to the Petroleum Industry Bill (PIB) but has approved a steering committee to oversee the process of implementation of the act.
The committee, according to the Special Adviser to the President on Media and Publicity, Mr Femi Adesina, will be headed by the Minister of State for Petroleum Resources, Chief Timipre Sylva.
Other members of the committee are: permanent secretary, Ministry of Petroleum Resources, Group Managing Director of the NNPC, Executive Chairman, FIRS, Representatives of the Ministries of Justice, Finance, Budget and National Planning, the Senior Special Assistant to the president On Natural Resources.
Mr Olufemi Lijadu will serve as Legal Adviser while the Executive Secretary, Petroleum Technology Development Fund, PTDF, will serve as head of the coordinating Secretariat and the Implementation Working Group.
The primary responsibility of the committee shall be to guide the effective and timely implementation of the PIA in the course of transition to the petroleum industry envisaged in the reform programme, and ensure that new institutions created have the full capability to deliver on their mandate under the new legislation.
According to the president, the committee has 12 months to complete the assignment and periodic updates will be given to the president.
In the week under review, the Nigerian National Petroleum Corporation (NNPC) assured Nigerians that the Federal Government has no immediate plans to increase the price of petrol following the signing of the PIB into law by Buhari.
According to the Corporation, the Minister of State for Petroleum Resources, Chief Timpre Sylva, revealed this at a news conference to mark his second year in office, adding that the ministry had delivered on its promise to have the PIB passed into law.
Sylva highlighted the achievements of the ministry in the last two years to include the reduction of smuggling of petroleum products which has brought down the daily consumption of petrol from 66million liters per day to 52 million, reduction of cost of crude oil production by five per cent, with the possibility of hitting 10 per cent.
He said though the subsidy regime has ended with the coming into effect of the Petroleum Industry Act (PIA), the government was mindful of the impact of deregulation on Nigerians and so would not rush into its implementation to ensure the welfare of ordinary Nigerians.
The Minister further explained the incorporation of the NNPC Limited as required by the PIA and the, the three percent host community fund as enshrined in the act.
On the planned divestment by Shell, the Minister said that Shell was still keen on investing in Nigeria as it is an existing partner in the operation of OML 245, adding that he was in consultation with the Attorney General and Minister of Justice to iron out the legal issues.
He noted that Nigeria currently had the capacity to produce three million barrels of crude oil per day but was restricted to 1.4million barrels because of international obligations.
Also, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari has expressed his appreciation to President Muhamadu Buhari for signing the Petroleum Industry Bill into law without delay.
Kyari who spoke after the signing of the bill allayed the concerns of the oil producing communities, explaining that the three per cent approved under the new Petroleum Industry Act for Host Communities Fund could be bigger than what the Niger Delta Development Commission (NDDC) currently gets.
He clarified that the law mandates the payment of three per cent of oil companies’ operating expenses in the previous year to the host oil communities, which are mostly in the Niger Delta.
According to him, with about 16 billion dollars total operating expenditure by the oil and gas sector last year, as much as 500 million dollars could accrue to the Host Communities Fund yearly.
The GMD said although in the past there were attempts to make sure that oil companies provided for the host communities, it was not done in the right manner, even if carried out in the name of Corporate Social Responsibility (CSR) projects.
He stressed that the signing into law of the new Act essentially means transforming from the Petroleum Act which was enacted in 1969 to a law that is relevant to current realities, adding that with the legislation, the NNPC would now operate under the Company and Allied Matters Act (CAMA).
Given the new scenario, Kyari pointed out that the NNPC would become more efficient, slimmer and a much more commercially focused national oil company at par with its peers across the globe, pledging that the company will do better under the new arrangement.
He added that there was already a framework established by government, which would take care of the transition within the time frame of six months to incorporate and transfer assets and personnel, among others.
While the new law envisages a fully deregulated market, Kyari stressed that a number of engagements have been going on to ensure a smooth transition.
However, he said when deregulation eventually happens, there would be safeguards against market manipulation to ensure that the poor and vulnerable are not unduly exposed.
Still in the week under review, the Corporation pledged improved collaboration with the Institute of Chartered Accountants of Nigeria (ICAN) to enhance the Corporation’s transparency and accountability quotient while receiving the President of ICAN, Mrs. Comfort Olu Eyitayo, at the NNPC Towers, Abuja.
On her part, Eyitayo commended the GMD for his leadership style while noting that the institute was taking note of the deliberate steps taken by the NNPC to institute global best practices in accounting.
On poor power supply in Borno State, The NNPC said that to tackle the challenge, it has taken the execution of the Engineering, Procurement, and Construction (EPC) and Equipment Procurement contracts for a 50 Megawatts (MW) Emergency Power Project in Maiduguri.
The project which is an integral part of the ongoing efforts to deepen the Corporation’s domestic gas utilisation plan for the nation’s socio-economic growth has China Machinery Engineering Company (CMEC) as the EPC contractor while General Electric (GE), the equipment manufacturer.
Speaking at the contract signing event Kyari explained that the Corporation through its subsidiary, NNPC Gas and Power Investment Company (NGPIC), decided to intervene in the Maiduguri power situation by undertaking the project which would be fired with Liquefied Natural Gas (LNG) and run commercially.
He said NNPC, as a state-owned oil company and enabler organisation, was determined to boost power generation and supply to Nigerian homes through increased investment in gas-fired combined cycle power plants to produce at least five gigawatts (GW) additional power for the country.
Vice President of GE Africa & Europe, Mr. Raisin Brice, said the company was committed to working with NNPC to achieve success in the Power Project, noting that GE would be tapping into its vast experience in the country to deliver on the project.
Similar support and commitment were echoed by Mr Fang Yanshui, President of CMEC, the main EPC contractor for the project.
As a mark of confidence in the project, the contractors have already started moving vital equipment to site as work has commenced.
On Fire Safety, the Federal Fire Service (FFS) has commended the NNPC for its strict adherence and commitment to fire and environmental safety practice in all its operations.
The commendation was given by the Comptroller General of the FFS, Alhaji Liman Ibrahim, while presenting certificates of fire safety to the Corporation at the NNPC Towers, Abuja.
Speaking at the event, the Comptroller General, represented by Deputy Superintendent of Fire, Mr. Sunday Oduye, said NNPC had always prioritised the health and safety of its workforce as well as that of the environment, adding that the revalidation of its fire safety certificates for the next three years was a testament to that fact.
On his part, the General Manager, Group Health, Safety, Environment and Quality, GHSEQ, NNPC, Mr Hussaini Ali, said the revalidation was part of efforts to secure the NNPC Towers against fire incidents.
He noted that as a public limited liability company, it was necessary for the corporation to be insured comprehensively to attract investment.
Fire safety certification is an instrument required for the procurement of insurance cover which indemnifies the organization against liabilities in case of fire or any damage to its properties.
Also in the week under review, Kyari reiterated the Corporation’s commitment to support the Nigeria Liquefied Natural Gas (NLNG) Limited towards achieving its goal of becoming a global LNG company of choice.
Speaking as a Guest of Honour at the 2021 NLNG Health Safety and Environment (HSE) Day, the GMD, who was represented by the Group General Manager, LNG Investment Management Services (LIMS), Nike Kolawole, said HSE was a critical determinant of business performance success across the oil and gas industry.
Kyari stated that as a principal shareholder in the company, NNPC would continue to ensure that NLNG placed more emphasis on HSE, stressing that “no matter the figures, indices or values recorded in production, sales, profit or revenue, a dismal HSE performance would lead to obliteration of long built achievements”.
He remarked that the rapid growth of NLNG from the base project (Trains 1 and 2) to six trains was unprecedented and commended the company for its ability to adapt and effectively manage changes within the period.
Earlier in his remarks, the outgoing Managing Director of NLNG, Mr. Tony Attah, said the focus of this year’s HSE Day was on identifying the weak and dark corners for continuous improvement on the organization’s HSE policy.
Global Crude Oil Outlook
Oil prices weakened for a fourth session due to a strong dollar as surging cases of coronavirus in Japan added to a weak demand picture in Asia.
Brent crude ended the session down 48 cents, or 0.7 per cent, at 69.03 dollars per barrel, while U.S. West Intermediate crude (WTI) settled 70 cents, or one per cent lower at 66.59 dollars a barrel.
The dollar advanced for a second straight session, bolstered by safe-haven demand. A strong dollar makes oil more expensive for holders of other currencies.
Japan, the world’s third-largest economy, extended its state of emergency in Tokyo and other regions on Tuesday and announced new measures covering seven more prefectures to counter a spike in COVID-19 infections that is threatening the medical system.
Hedge funds and money managers cut net long positions in U.S. crude to the lowest since November in the week to Aug. 10 as resurgent coronavirus infections in several countries dampened hopes of a rapid resumption in long-distance air travel.
Meanwhile, the market intelligent department of the NNPC London office reported that Russian crude oil production costs hit a 10-year high in the second quarter of 2021 as companies increased their capital spending in response to the OPEC-plus alliance’s move to gradually increase output.
A rising tax burden and a deterioration in the quality of Russia’s oil reserves — which are becoming more difficult to extract — also contributed to the increase in costs.
Daily crude processing in China, the world’s biggest oil importer, fell to its lowest in July since May 2020 as independent plants slashed production amid tighter quotas, high inventories and weakening profits, data showed.
China’s factory output and retail sales growth also slowed sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted businesses.
On the supply side, U.S. shale oil output is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020, according to government data.
Last week, U.S. President Joe Biden’s administration urged OPEC+, a group comprising of members of the Organization of the Petroleum Exporting Countries and other producers such as Russia, to boost oil output to tackle rising gasoline prices.
