- FG May Sell NNPC’s Refineries as Scrap Metals
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has stated that the federal government might sold the country’s refineries as scrap metals in few years’ time if the Nigerian National Petroleum Corporation (NNPC) did not sit up and make the refineries to be functional.
As the then Group Managing Director of NNPC, Kachikwu had in September 2015 given a 90-day ultimatum to the Warri Refining and Petrochemicals Company (WRPC), to commence operation at its full 125,000 barrels per day capacity.
“So, whatever you need to do to get your refinery back on track please do it now because this is the time. It’s a 90-day fast-track programme and whatever you need me to do to make that happen, let me know,’’ Kachikwu reportedly said at the end of a facility tour of the plant.
But nearly two years after the expiration of the ultimatum, the refinery has continued to operate epileptically.
For instance, the NNPC’s latest financial report for May 2017 showed that the consolidated capacity utilisation of the three refineries declined from 24.59 per cent in April 2017, to 23.09 per cent in May.
In fact, the Warri Refinery, which got the ultimatum to operate at full capacity, had operated at zero capacity utilisation in May was zero as it did not refine any crude in May, compared to the 9.92 per cent capacity utilisation it recorded in April.
Also the capacity utilisation of the Kaduna Refinery dropped to 27.59 per cent in May 2017, down from 31.3 per cent in April.
In a remark during a facility tour of Dangote Refinery in Ibeju-Lekki area of Lagos, Kachikwu disclosed that the country might end up selling the refineries as scrap metals in a matter of years if the NNPC did not sit up to rehabilitate the plants.
Kachikwu noted that apart from the savings in foreign exchange for Nigeria, Dangote Refinery has brought hope in a country where the people have lost hope in the ability of the country to do things right.
According to him, the foreign exchange savings is minute compared to what the refinery “is doing in terms of the hope that the future portends because we are in a country where increasingly people are losing hope in our ability to do anything right.”
“I said it in very many speeches that if our own refineries do not sit up, we probably, would be selling scrap metals in a matter of years and that is the reality. So, what this project has also done is motivated substantially, the NNPC because to take very seriously my drive to repair the refineries and get them working.
It is not anything compared to the sheer size of what you are doing here, but at least, it complements. I think Nigeria should be the citadel of petroleum exports in Africa. We have wasted this opportunity when we would have done it cheaper. But the time is never too late. If you could do a project of $12 billion to $14 billion at the private sector basis, it goes to say that the private sector is really the answer to Nigeria’s problems,” Kachikwu explained.
Kachikwu said Nigeria’s oil and gas industry had in the past destroyed itself in terms of practices and policies and habits.
“Now, where do we come in as government? I think the first thing is that we must look seriously at whatever incentives this business needs. You don’t invest $14 billion in a country without sufficient incentives to drive the business. So, whatever it takes and I think somebody is doing studies,” he added.
Sirius Petroleum and Baker Hughes Collaborate on OML 65 Drilling in Nigeria
Sirius Petroleum, the Africa-focused oil and gas production and development company, has signed a memorandum of understanding with Baker Hughes. The MoU names Baker Hughes as the approved service provider for Phase 1 of the Approved Work Program (AWP) of the OML 65 permit, a large onshore block in the western Niger Delta, Nigeria. Baker Hughes will provide a range of drilling and related services at a mutually agreed upon pricing structure to deliver the initial nine-well program.
Sirius has signed various legal agreements with COPDC, a Nigerian joint venture, to implement this program. COPDC has signed a Financial and Technical Services Agreement (FTSA) with the Nigerian Petroleum Development Company (NPDC) for the development and production of petroleum reserves and resources on OML 65. The FTSA includes an AWP which provides for development in three phases of the block. and Sirius has entered into an agreement with the joint venture to provide financing and technical services for the execution of the PTA.
The joint venture will initially focus on the redevelopment of the Abura field, involving the drilling and completion of up to nine development wells, intended to produce the remaining 2P reserves of 16.2 Mbbl, as certified by Gaffney Cline and Associates (GCA) in a CPR dated June 2021.
Commenting, Toks Azeez, Sales & Commercial Executive of Baker Hughes, said: “We are extremely happy to have been selected for this project with Sirius and their JV partners. This project represents an important step towards providing our world-class integrated well-service solutions in one of the most prolific fields in the Niger Delta. Baker Hughes’ technological efficiency and execution excellence will help Sirius improve its profitability and competitiveness in the energy market.”
Bobo Kuti, CEO of Sirius, commented: “We are delighted to have secured the services of one of the world’s leading energy technology companies to work with our joint venture team to deliver the approved work program on the block. OML 65. We look forward to building a long and mutually beneficial partnership with Baker Hughes.”
Egbin Decries N388B NBET Debt, Idle Capacity
Egbin Power Plc, the biggest power station in Nigeria, has said it is owed N388bn by the Nigerian Bulk Electricity Trading Plc for electricity generated and fed into the national grid.
The company disclosed this on Tuesday during an oversight visit by the Senate Committee on Privatisation, led by its Chairman, Senator Theodore Orji, to the power station, located in Ikorodu, Lagos.
The government-owned NBET buys electricity in bulk from generation companies through Power Purchase Agreements and sells it to the distribution companies, which then supply it to the consumers.
The Group Managing Director, Sahara Power Group, Mr. Kola Adesina, told the lawmakers that the total amount owed to Egbin by NBET included money for actual energy wheeled out, interest for late payments and available capacity payments.
Egbin is one of the operating entities of Sahara Power Group, which is an affiliate of Sahara Group. The plant has an installed capacity of 1,320MW consisting of six turbines of 220 megawatts each.
The company said from 2020 till date, the plant had been unable to utilize 175MW of its available capacity due to gas and transmission constraints.
Adesina said, “At the time when we took over this asset, we were generating averagely 400MW of electricity; today, we are averaging about 800MW. At a point in time, we went as high as 1,100MW. Invariably, this is an asset of strategic importance to Nigeria.
“The plant needs to be nurtured and maintained. If you don’t give this plant gas, there won’t be electricity. Gas is not within our control.
“Our availability is limited to the regularity of gas that we receive. The more irregular the gas supply, the less likely there will be electricity.”
He noted that if the power generated at the station was not evacuated by the Transmission Company of Nigeria, it would be useless.
Adesina said, “Unfortunately, as of today, technology has not allowed the power of this size to be stored; so, we can’t keep it anywhere.
“So, invariably, we will have to switch off the plant, and when we switch off the plant, we have to pay our workers irrespective of whether there is gas or transmission.
“Sadly, the plant is aging. So, this plant requires more nurturing and maintenance for it to remain readily available for Nigerians.
“Now, where you have exchange rate move from N157/$1 during acquisition in 2013 to N502-N505/$1 in 2021, and the revenue profile is not in any way commensurate to that significant change, then we have a very serious problem.”
He said at the meeting of the Association of Power Generation Companies on Monday, members raised concern about the debts owed to them.
He added, “All the owners were there, and the concern that was expressed was that this money that is being owed, when are we going to get paid?
“The longer it takes us to be paid, the more detrimental to the health and wellbeing our machines and more importantly, to our staff.”
Adesina lamented that the country’s power generation had been hovering around 4,000MW in recent years.
Oil Rises on U.S. Fuel Drawdowns Despite Surging Coronavirus Cases
Oil prices climbed on Wednesday after industry data showed U.S. crude and product inventories fell more sharply than expected last week, reinforcing expectations that demand will outstrip supply growth even amid a surge in Covid-19 cases.
U.S. West Texas Intermediate (WTI) crude futures rose 48 cents, or 0.7%, to $72.13 a barrel, reversing Tuesday’s 0.4% decline.
Brent crude futures rose 34 cents, or 0.5%, to $74.82 a barrel, after shedding 2 cents on Tuesday in the first decline in six days.
Data from the American Petroleum Institute industry group showed U.S. crude stocks fell by 4.7 million barrels for the week ended July 23, gasoline inventories dropped by 6.2 million barrels and distillate stocks were down 1.9 million barrels, according to two market sources, who spoke on condition of anonymity.
That compared with analysts’ expectations for a 2.9 million fall in crude stocks, following a surprise rise in crude inventories the previous week in what was the first increase since May.
Traders are awaiting data from the U.S. Energy Information Administration (EIA) on Wednesday to confirm the drop in stocks.
“Most energy traders were unfazed by last week’s build, so expectations should be high for the EIA crude oil inventory data to confirm inventories resumed their declining trend,” OANDA analyst Edward Moya said in a research note.
On gasoline stocks, analysts had expected a 900,000 barrel decline drop in the week to July 23.
“The U.S. is still in peak driving season and everyone is trying to make the most of this summer,” Moya said.
Fuel demand expectations are undented by soaring cases of the highly infectious delta variant of the coronavirus in the United States, where the seven-day average for new cases has risen to 57,126. That is about a quarter of the pandemic peak.
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