- Gas Supply From Nigeria to Ghana, Others Drops
The West African gas pipeline has yet to recover from the impact of militant attacks on oil and gas facilities in the Niger Delta as gas flowing into it have been significantly curtailed.
The $1bn gas pipeline, operated by the West Africa Pipeline Company Limited, was built to supply natural gas from Nigeria to customers in Benin, Togo and Ghana.
Last year, Nigeria saw a resurgence of militant attacks in the Niger Delta that caused the nation’s production to plummet to a near 30-year low and disrupted gas supply to power plants.
The Managing Director, WAPCo, Mr. Walter Perez, told our correspondent that the company’s operation was severely affected by the militancy in the Niger Delta.
“Our business is still in place but the gas volumes have been significantly curtailed,” he said on the sidelines of the inauguration of the Ajido Community Health Centre in Badagry.
Perez noted that the continued shutdown of the Trans Forcados Pipeline had affected gas supply to the gas pipeline.
He said, “What we see is that the militancy is being addressed properly and that the volumes will come back.
“My understanding is that Forcados handles liquids that come from production of crude oil and so associated gas, as it is called, that has been connected to the facility, is not being available in the quantity that it was available prior to the militancy. Yes, it definitely affected our business, we believe. But we hope and pray that one day that will be a thing of the past.”
Commenting on the debt owed by Ghana for the supply of gas through the pipeline, the WAPCo MD said, “We are delivering gas now because we put arrangement in place for Ghana to prepay for the deliveries that they receive, and so that is working. We have every expectation that this will continue to work.
“There is a new government in Ghana, and so we are working with that government to understand what the situation is as we develop plans to retire the debt that they have accumulated.”
Ghana gets about 25 per cent of its power supply through gas from Nigeria, which flows through the pipeline via Benin and Togo. It has a deal with Nigeria to receive a contractual 120 million standard cubic feet of gas daily.
According to Perez, there is enough gas in Nigeria to supply all of Africa for a long time, with reserves of 187 trillion cubic feet of gas in the country.
He disclosed that WAPCo was considering “a pipeline enlargement whereby we will be reversing the flow on the West Africa gas pipeline.”
He also said, “When the pipeline was built, it was constructed so that the gas from Escravos and Utorogu (in Nigeria) can flow into our pipeline in a place called Itoki in Ogun State. Now, we envision that gas will enter the pipeline from many locations, the first of which is Takoradi (Ghana).
“One time, Takoradi was thought to be the major offtaker for the West Africa gas pipeline. At this point, in a year’s time, we will be reversing the flow from Takoradi to Tema using the West African gas pipeline. No one ever conceived that our asset will be used like this.”
Noting that gas would play a more prominent role in the world, Perez said, “You see liquefied natural gas being available almost everywhere. We are a gas pipeline company; we operate in four countries and the pipelines exist in the major load centres in each of the four countries.
“So, we think we are very well-positioned so that when the market grows, we will be able to meet the needs of the communities. I think gas is definitely a big part of the future for our economy.”
Oil Firms Borrowed N130B From Banks in February – CBN
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.
Fall in Economic Activities in Nigeria Created N485.51 Billion Fiscal Deficit in January -CBN
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.
NNPC Supplies 1.44 Billion Litres of Petrol in January 2021
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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