- Failed Project: British Firm Drags FG Before US Court
An engineering and project management firm based in the British Virgin Islands, Process and Industrial Developments Limited, has approached the United States District Court of Columbia, seeking to enforce a $8.9bn arbitral award against the Federal Government.
According to the papers filed by the British firm before the US court, a copy of which our correspondent obtained on Sunday, the arbitral award against the Federal Government followed a failed power project for which the Federal Government signed a 20-year agreement with the foreign firm in 2010.
The British firm explained that in 2010 it signed a contract with the Ministry of Petroleum Resources to “help Nigeria harness its abundant natural gas reserves to solve the growing electricity crisis” in the country.
It said it was agreed that it (the British firm) would build necessary facilities to help refine Nigeria’s associated natural gas or wet gas into non-associated natural gas or lean, which would then be used to power the national electric grid in the country.
It said that in refining the wet gas into lean gas, it was to strip the wet gas of heavy hydrocarbons known as Natural Gas Liquids, which makes wet gas unsuitable for electricity generation.
P&ID said the agreement was that after refining the wet gas into lean gas, it would be permitted to retain the stripped NGLs as its compensation, which it would sell to get its own income from the project.
According to P&ID, it was agreed that while it built the necessary facilities, Nigeria would supply it with 400 million standard cubic feet of wet gas per day over a period of 20 years.
The British firm said with the contract, it had hoped to make a substantial profit from the sale of millions of metric tons of NGLs over the 20-year term.
It explained that though NGLs – which include ethane, propane and butane – render wet gas unsuitable for electricity generation, they could be marketed independently and profitably.
It said as part of the agreement, the Nigerian government was to “ensure that all necessary pipelines and associated infrastructure were installed and all requisite arrangements with agencies and/or third parties were in place to ensure the supply and delivery of wet gas in accordance with the scope of work set forth in the agreement, so as to facilitate the timely implementation of gas processing as provided for in this agreement.”
P&ID said the electricity project, however, hit the rock as Nigeria not only failed to supply it with the agreed daily quantity of wet gas but also failed to complete the construction of necessary infrastructure to transport the wet gas to P&ID’s operation site in Calabar.
“In particular, Nigeria never completed the Adanga Pipeline, which was intended to carry wet gas to the Calabar site where P&ID was to build the gas processing facilities.
“Nigeria’s failures to comply with these obligations caused the collapse of the project contemplated by the agreement.
“Nigeria abandoned the Adanga Pipeline, ceased its efforts to secure a suitable source of wet gas, and eventually stopped responding to P&ID’s correspondence. Nigeria’s breach ensured that no wet gas was ever delivered to the Calabar site,” P&ID said.
It said it was as a result of the breach that it dragged the Federal Government and the Ministry of Petroleum Resources (then under the watch of Mrs Diezani Alison-Madueke) to an arbitration court in London, as provided for in the contract agreement.
It said the arbitration panel, which comprised a former UK Supreme Court Justice, Leonard, Lord Hoffmann; a former Justice of the Court of Appeal of England and Wales, Sir Anthony Evans, Q.C.; and Nigeria’s former Attorney General of the Federation, Chief Bayo Ojo, on January 31, 2017, entered judgement against Nigeria.
In search Of Alternative Power Supply, Nigerians Spend N7T On Power Generation Annually
Nigerians, and by extension, their businesses, expend about N7 trillion annually on power generation, the Executive Director and Chief Operating Officer, Off-Grid Tech Solutions Ltd, Stephen Ogboko has said.
Ogboko, who made this known at a virtual news conference in Lagos said that inadequate power supply had been a major challenge facing businesses in the country, forcing them to source alternative power supply for their operations.
“Nigeria is among the countries with a very high need of electricity.
“A significant amount of the economy is powered largely by small-scale generators and almost 50 percent of the population have limited or no access to the grid.
“This could be effectively tackled with the deployment of off-grid renewable energy solutions by making electricity more cost effective and environmentally friendly,” Ogboko said.
He described renewable energy from off-grid resources as sustainable and cost-effective for farmers and Small and Medium Enterprises (SMEs).
Ogboko said Off-Grid Tech Solutions Ltd. partners with the global innovators of off-grid solutions to provide reliability.
“This is cost-effective and lasting solutions to societal problems toward improving the lives of people in developing nations.
“Our team of experts have worked all over Africa, and continue to work to provide solutions to a variety of sectors.
“We have marketed and delivered smart off-grid solutions for many years, providing permanent, efficient, safe and affordable solutions,” He said.
Ogboko said that the firm specialises in the marketing of heat lamps and incubators, gas-powered air conditioners and cooling fridge, mobile power solution-solar energy box, pressure cookers, among others.
He said that notable partners of the initiative were the Federal Ministry of Agriculture and Rural Development (FMARD), United Kingdom Department for International Trade (UK-DIT), International Institute of Tropical Agriculture (IITA), All Farmers Association of Nigeria (AFAN), Buckler Group, and Tywit.
The News Agency of Nigeria (NAN) reports that off-grid renewable energy solutions support the expanding access to modern energy services in an environmentally sustainable manner.
Off-grid renewable will deliver a wide spectrum of electricity services for households, public services, and also serve commercial and industrial purposes.
Off-grid energy solutions are one of the key drivers of the nation’s push for industrialisation.
Goldman Sachs Revised Down Brent Oil Forecast for Q3 2021
Goldman Sachs Group, an American multinational investment bank and financial services company, has revised down its Brent oil price projection for the third quarter (Q3) of 2021 by $5 from $80 per barrel previously predicted to $75 a barrel following the surge in Delta variant COVID-19.
The investment bank predicted that the surge in Delta variant COVID-19 cases will weigh on Brent oil price in Q3 2021 even with the expected increase in demand.
However, the bank projected a stronger second half of 2021, saying OPEC+ adopted slower production ramp-up will offset 1 million barrel per day demand hit from Delta.
Goldman said, “Our oil balances are slightly tighter in 2H21 than previously, with an assumed two-month 1 mb/d demand hit from Delta more than offset by OPEC+ slower production ramp-up.”
The leading investment banks now projected a deficit of 1.5 million barrels per day in the third quarter, down from 1.9 million barrels per day previously predicted.
Therefore, Brent crude oil is expected to average $80 per barrel in the fourth quarter, a $5 increase from the $75 initially predicted and the bank sees 1.7 million barrels per day in the fourth quarter.
“The oil market repricing to a higher equilibrium is far from over, with the bullish impulse shifting from the demand to the supply side,” the bank said.
Goldman added that even if vaccinations fail to curb hospitalisation rates, which could drive a longer slump to demand, the decline would be offset by lower OPEC+ and U.S. shale output given current prices.
“Oil prices may continue to gyrate wildly in the coming weeks, given the uncertainties around Delta variant and the slow velocity of supply developments relative to the recent demand gains,” it said.
Oil Extends Gains on Thursday on Expectations of Tighter Supplies
Oil prices rose about $1.50 a barrel on Thursday, extending gains made in the previous three sessions on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.
Brent crude settled at $73.79 a barrel, up $1.56, or 2.2%, while U.S. West Texas Intermediate (WTI) settled at $71.91 a barrel, rising $1.61, or 2.3%.
“The death of demand was greatly exaggerated,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “Demand is not going away, so we’re back looking at a very tight market.”
Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, collectively known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.
But as demand was still set to outstrip supply in the second half of the year, Morgan Stanley forecast that global benchmark Brent will trade in the mid to high-$70s per barrel for the remainder of 2021.
“In the end, the global GDP (gross domestic product) recovery will likely remain on track, inventory data continues to be encouraging, our balances show tightness in H2 and we expect OPEC to remain cohesive,” it said.
Russia may start the process of banning gasoline exports next week if fuel prices on domestic exchanges stay at current levels, Energy Minister Nikolai Shulginov said, further signalling tighter oil supplies ahead.
Crude inventories in the United States, the world’s top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.
Inventories at the Cushing, Oklahoma crude storage hub and delivery point for WTI, however, has plunged for six continuous weeks, and hit their lowest since January 2020 last week.
“Supplies fell further by 1.3 million barrels to the lowest level since early last year, theoretically offering support to the WTI curve,” said Jim Ritterbusch of Ritterbusch and Associates.
Gasoline and diesel demand, according to EIA figures, also jumped last week.
Barclays analysts also expected a faster-than-expected draw in global oil inventories to pre-pandemic levels, prompting the bank to raise its 2021 oil price forecast by $3 to $5 to average $69 a barrel.
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