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Take Over Operation of OML 11 From Shell, Buhari Orders NNPC

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  • Take Over Operation of OML 11 From Shell, Buhari Orders NNPC

President Muhammadu Buhari has ordered the Nigerian National Petroleum Corporation to take over the operatorship of the entire Oil Mining Lease 11 from Shell Petroleum Development Company.

According to a letter from State House, Abuja, to the Group Managing Director of NNPC, dated March 1, 2019, with reference number SH/COS/24/A/8540 and signed by the Chief of Staff to the President, Abba Kyari, the President’s directive was clearly stated that the entire operatorship of OML 11 should be taken over by the NNPC/Nigeria Petroleum Development Company not later than April 30, 2019.

NPDC is the flagship oil exploration and production subsidiary of the NNPC and the liaison office of the company acknowledged receipt of the letter on March 5, 2019.

The letter from the Presidency to the NNPC, which had its title as, ‘Operatorship of Entire Oil Mining Lease 11,’ read in part, “Kindly note that the President has directed NNPC/NPDC to take over the operatorship, from Shell Petroleum Development Company, of the entire OML 11 not later than 30 April 2019, and ensure smooth re-entry given the delicate situation in Ogoniland.”

It added that the President has “directed NNPC/NPDC to confirm by 2 May 2019, of the assumption of the operatorship.”

OML 11 lies in the southeastern Niger Delta and contains 33 oil and gas fields of which eight are producing as per 2017. In terms of production, it is one of the most important blocks in Nigeria.

The terrain is swampy to the south with numerous rivers and creeks. Port Harcourt is located in the northwest of the block, while the major yard and logistics base at Onne is located by the Bonny River. The Bonny oil terminal – the largest in Nigeria – and Nigeria LNG (NLNG) are both located at Bonny.

When contacted, the Media Relations Manager, Shell Nigeria, Bamidele Odugbesan, declined to comment on the matter, as he specifically told our correspondent that he would not speak on the issue.

The Group General Manager, Group Public Affairs Division, NNPC, Ndu Ughamadu, also did not answer his telephone when contacted and had yet to respond to a text message on the matter up till the time of filing this report.

It was, however, gathered from sources at the Federal Ministry of Petroleum Resources in Abuja that there were four partners in the OML 11 joint venture.

“If you are talking about that operatorship, you are talking about a joint venture where you have four partners and you can pick any of the partners to run the asset on behalf of others. And whoever runs the asset will account to the partners when it comes to the sharing table,” a source at the FMPR said.

The source added, “So if you look at some deep water projects or if you look at the OPL 245, that is Zabazaba for instance, it is operated by Agip but Shell has 50 per cent stake in it. So if tomorrow Agip says it does not want to operate the asset anymore and asks Shell to come and operate it, that won’t change anything. Rather it is only the operatorship that will change.”

It was also gathered that the NNPC owns 55 per cent shares in the OML 11 partnership, while Shell, Total and Agip own 30, 15 and five per cent respectively in the joint venture.

Officials at the FMPR stated that the operatorship of the asset, based on the latest directive of the President, had moved from Shell to NPDC, the flagship oil exploration and production subsidiary of the NNPC.

Industry players further explained that whoever operated an OML on behalf of partners would bring in its expertise and that the NPDC had such capacity right now.

They noted that what was transferred to NNPC, based on Buhari’s order, was basically the operatorship of the OML and not the shares of the partners in the joint venture.

Our correspondent further gathered that Shell had not produced a drop of crude oil from Ogoniland for about five years and that partners were not earning revenue as a result of this.

“So if another partner is willing to run the asset, I think he should be allowed to try. Four persons own an asset and it is being run by owner number one and owner number one is not able to run the asset for several years, you can try owner number two. That’s what is happening,” another source said.

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.

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Economy

Nigeria Records Trade Deficit of 8.9 Trillion in Nine Months

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The National Bureau of Statistics (NBS) released a report that showed that Nigeria recorded a trade deficit of 8.9 Trillion Naira between January and September 2021. 

A trade deficit occurs when a country’s imports exceed its exports over a period. Within the period, foreign trade was 35.09 Trillion Naira which comprised imports of 22 Trillion Naira and exports of 13.1 Trillion which led to an 8.9 Trillion trade deficit.

A breakdown of the data by quarters shows that trade stood at 9.76 Trillion Naira in the first quarter, which represented imports of 6.85 Trillion Naira and exports of 2.91 Trillion Naira, this resulted in a trade deficit of 3.94 Trillion during the period.

The data went on to show that the majority of the goods imported in the first quarter were from China (valued at 2 Trillion), the Netherlands (valued at 726.09 Billion) the United States (valued at 608.12 Billion), India (valued at 589.1 Billion), and Belgium (valued at 238.5 Billion) while the majority of exports were to India (valued at 488.1 Billion), Spain (valued at 287.2 Billion), China (190.1 Billion), the Netherlands (160.0 Billion) and France (133 Billion).

In the third quarter, Crude oil dominated exports with 78.47% of exports, this was followed by natural gas with 9.5%. Imports were mainly motor spirit with 12.91% of imports, Durum wheat with 3.87%, gas oil with 2.77%, and used vehicles with 2.27%.

A renowned economist, Pat Utomi said the country’s huge appetite for imports was because of insufficient domestic production which is driven by worsening insecurity and stringent government regulations. He went on to say that although there were interventions introduced by the Government and the Central Bank of Nigeria to reduce imports and increase exports, the initiatives are fraught with inconsistencies and corrupt practices that prevent any real impact.

He went on to say that it was scandalous that Nigeria’s top imports were food products and motor spirits as those are products the country should be exporting because Nigeria is a food-producing nation and has oil in abundance.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Economy

Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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