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NLNG, NNPC on Collision over Pipeline Explosion

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  • NLNG, NNPC on Collision over Pipeline Explosion

Nigeria LNG Limited and the Nigerian National Petroleum Corporation (NNPC) may be heading for a collision over the explosion that hit the NLNG pipelines in Emohua Local Government Area of Rivers State, which was allegedly caused by the activities of Integrated Data Services Limited, (IDSL), a subsidiary of the corporation.

NLNG had reported an explosion on one of its gas transmission systems, which houses two gas pipelines in Rivers State.

According to a statement by the company’s General Manager, External Relations Division, Dr. Kudo Eresia-Eke, the explosion struck about three kilometres from Rumuji in Rivers State.

The company, however, added that no casualties were reported, and that the incident was being investigated.

“An explosion occurred in the afternoon of Wednesday, 22nd February 2017 on a section of the Right of Way housing two gas transmission pipelines, one of which belongs to Nigeria LNG, about 3 kilometres from Rumuji in Rivers State,” the statement said.

Though the NLNG added that the underlying cause of the incident was still to be determined, it was, however, alleged that it was the operation of IDSL, which involves the use of dynamites and grenades around the area that caused the explosion.

According to the allegation, when the IDSL denoted the explosives used in its operation, the vibration caused the explosion that hit NLNG pipelines.

But in a swift reaction, IDSL had explained that it was not responsible for the pipeline explosion.

NNPC’s spokesman, Ndu Ughamadu admitted that IDSL used explosives around the area but added that the IDSL’s operation crew, which was engaged in acquiring seismic data for SPDC in Oil Mining Lease (OML), 17/22 ROBO 3D prospect, observed approved safe distance standards contained in the Department of Petroleum Resources’ (DPR) regulations and as such could not be the cause of the blast.

“Our activities involve the use of seismic explosives of size 2kg and detonators. The drilled and exploded depth is 45 metres. At this depth the effect on the surface cannot affect any structure. The suspected gas leakage on the gas pipeline between Eveku and Rumodogo 1 communities in Emohua Local Government Area of Rivers State of February 22, 2017 was not caused and cannot be caused by NNPC, IDSL Party 05 seismic operations. Our closest activity around the incident area yesterday was 798 metres away from the pipeline”, IDSL stated.

“As a responsible corporate body, IDSL’s crew on operation in Emohua Local Government Area observed, to the letter, DPR’s regulations governing such activities which include: maintaining a minimum distance of 25 metres from tarmac roads, 50 metres from houses, 100 metres from pipelines, and a minimum distance of 200 metres from well heads or oil wells. IDSL crew was 798 metres away from the exploded pipeline,” Ughamadu added.

However, an official of NLNG, who spoke on condition of anonymity said the preliminary results of the interim investigation showed that IDSL may be culpable.

“Investigation is still ongoing but from what we have gathered so far, everything points to the operation of IDSL. When you are using explosives, you can’t be 100 per cent accurate on minimum safe distance. The impact of explosives may extend far beyond scientific projection. That is why the military warns civilians to stay away from certain areas when they want to carry out training exercises because you can’t be too sure of safe distance,” he explained.

The company had promised to provide official updates on the incident.

The pipeline explosion will potentially affect the company’s supply of LNG to its customers in Europe and Asia but it has not yet declared any force majeure to that effect.

Nigeria LNG used to account for 10 per cent of global LNG supplies, but this figure has since dropped to seven per cent as a result of lack of sustained investment in LNG by Nigeria.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Oil Firms Borrowed N130B From Banks in February – CBN

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Operators in the downstream, natural gas and crude oil refining sectors of the Nigerian oil and gas industry borrowed N130b from Nigerian banks in February amid the significant rise in global crude oil prices.

The debt owed by the oil and gas companies rose to N4.05tn in February from N3.92bn in January, according to the latest data obtained from the Central Bank of Nigeria on Monday.

Operators in the upstream and services subsectors owed banks N1.26tn in February, down from N1.27tn a month earlier.

The combined debt of N5.31tn owed by oil and gas operators as of February 2021 represents 25.29 percent of the N21tn loans advanced to the private sector by the banks, according to the sectoral analysis by the CBN of deposit money banks’ credit.

Oil and gas firms received the biggest share of the credit from the deposit money banks to the private sector.

The slump in oil prices in 2020 as a result of the coronavirus pandemic hit many oil and gas companies hard, forcing them to slash their capital budgets and suspend some projects.

A global credit rating agency, Moody’s Investors Service, said last month that the outlook for Nigeria’s banking system remains negative, reflecting expectations of rising asset risk and weakening government support capacity over the next 12 to 18 months.

“Nigerian banks’ loan quality will weaken in 2021 as coronavirus support measures implemented by the government and central bank last year, including the loan repayment holiday, are unwound,” said Peter Mushangwe, an analyst at Moody’s.

The rating agency estimated that between 40 percent and 45 percent of banking loans were restructured in 2020, easing pressure on borrowers following the outbreak of the pandemic.

Another global credit rating agency, Fitch Ratings, had noted in a December 8 report that Nigerian bank asset quality had historically fallen with oil prices, with the oil sector representing 28 percent of loans at the end of the first half of 2020.

It said the upstream and midstream segments (nearly seven percent of gross loans) had been particularly affected by low oil prices and production cuts.

“However, the sector has performed better than expected since the start of the crisis, limiting the rise in credit losses this year due to a combination of debt relief afforded to customers, a stabilisation in oil prices, the hedging of financial exposures and the widespread restructuring of loans to the sector following the 2015 crisis,” it said.

The rating agency predicted that Nigerian bank asset quality would weaken over the next 12 to 18 months.

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Fall in Economic Activities in Nigeria Created N485.51 Billion Fiscal Deficit in January -CBN

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The drop in economic activities in Africa’s largest economy Nigeria led to a N485.51 billion fiscal deficit in January, according to the latest data from the Central Bank of Nigeria (CBN).

In the monthly economic report released on Friday by the apex bank, the weak revenue performance in January 2021 was due to the decline in non-oil receipts following the lingering negative effects of COVID-19 pandemic on business activities and the resultant shortfall in tax revenues.

In part, the report read, “Federally collected revenue in January 2021 was N807.54bn.

“This was 4.6 per cent below the provisional budget benchmark and 12.8 per cent lower than the collection in the corresponding period of 2020.

“Oil and non-oil revenue constituted 45.4 per cent and 54.6 per cent of the total collection respectively. The modest rebound in crude oil prices in the preceding three months enhanced the contribution of oil revenue to total revenue, relative to the budget benchmark.

“Non-oil revenue sources underperformed, owing to the shortfalls in collections from VAT, corporate tax, and FGN independent revenue sources.

“Retained revenue of the Federal Government of Nigeria was lower-than-trend due to the lingering effects of the COVID-19 pandemic.”

“At N285.26bn, FGN’s retained revenue fell short of its programmed benchmark and collections in January 2020, by 41.3 per cent and 7.5 per cent respectively.

“In contrast, the provisional aggregate expenditure of the FGN rose from N717.6bn in December 2020 to N770.77bn in the reporting period, but remained 14.4 per cent below the monthly target of N900.88bn.

“Fiscal operations of the FGN in January 2021 resulted in a tentative overall deficit of N485.51bn.”

The report noted that Nigeria’s total public debt stood at N28.03 trillion as of the end-September 2020, with domestic and external debts accounting for 56.5 percent and 43.5 percent, respectively.

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NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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