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OML 11 Licence Not Revoked, NPDC Becomes Operator May 2

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  • OML 11 Licence Not Revoked, NPDC Becomes Operator May 2

The licence of a joint venture partner in Oil Mining Lease 11 has not been revoked as speculated but stakeholders are concerned about the recent presidential directive on the operatorship of the oil block, OKECHUKWU NNODIM reports

The licence for Oil Mining Lease 11 has neither been revoked nor withdrawn from Shell Petroleum Development Company, rather the operatorship of the oil block was transferred from the SPDC to the Nigerian Petroleum Development Company.

Senior officials from the Federal Ministry of Petroleum Resources and others in the OML 11 joint venture explained that the directive from President Muhammadu Buhari to the Group Managing Director of the Nigerian National Petroleum Corporation, the parent firm of NPDC, was that the operatorship of the block should be taken over by NNPC.

Sources familiar with the issue told our correspondent in Abuja on Friday that aside from the fact that the process of getting back the licence for such oil block was tedious, the joint venture partners in OML 11 were not just NPDC and SPDC.

They stated that two other international oil companies, Total and Agip, were also partners in the oil block.

This came as stakeholders in the oil sector expressed concern over the presidential directive and urged the Federal Government to be more transparent in handling the matter.

The media reported on Wednesday that Buhari had ordered the NNPC to take over the operatorship of the entire OML 11 from the SPDC.

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/NPDC not later than April 30, 2019.

The NPDC is the flagship oil exploration and production subsidiary of the NNPC and the liaison office of the company acknowledged the 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.”

Following the presidential directive, it was widely speculated that the President had withdrawn the licence of Shell, but this was refuted by partners in the JV as well as informed officials at the FMPR.

“What the directive of the President is all about is operatorship. The letter is very clear that operatorship should be transferred from one party of the JV to another party. I’ve seen a copy of the letter and it did not talk about the licence. There is no mention of withdrawal or revocation of licence in that letter,” an official in one of the firms in the joint venture, who spoke to our correspondent in confidence, said.

An official at the FMPR also stated that “whoever says the letter mentioned withdrawal or revocation of licence is just being unnecessarily sensational about that letter because there was nowhere in the letter where such was mentioned. The letter is very clear that operatorship should be given to another party.

“How can you operate if you are revoking the licence? If you withdraw the licence, who will operate the field? This is because you have to go through another round of processes before you can get the licence. Shell and NPDC are not the only partners; Total and Agip are also involved.

“So the licence is held on behalf of the partners and as we speak, the holder of the licence on behalf of the partners now is NPDC, of course. If the licence was revoked, do you think the NPDC will continue to run the asset? People don’t understand the scope of OML 11. They think OML 11 is just Ogoniland. No, that’s just a small fraction.”

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 swamp 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 are both located in Bonny.

When asked to comment on the issue, the Group General Manager, Group Public Affairs Division, Ndu Ughamadu, told our correspondent that he had not seen the document and had received no briefing on the matter and so would not comment.

“I’ve not sighted it, neither have I been briefed. Until I sight the authentic document and I’m briefed on it, that’s when I will comment on it,” Ughamadu said.

In their reaction, the Movement for the Survival of the Ogoni People faulted Buhari’s order to the NNPC to take over the operatorship of OML 11 in Ogoniland from SPDC.

MOSOP specifically said it had resisted attempts by anybody to resume oil production in Ogoniland without consulting the people of the area.

MOSOP President, Fegalo Nsuke, who made this remark, said it was wrong for Ogoni’s resources to be taken away and shared without involving Ogoni people.

Nsuke, who insisted that he was not a factional president of MOSOP, said, “It is unfair for us as Nigerians to live in a country and they (government) will take away our resources and share it amongst themselves. They take away our land and leave us with nothing; when we protest, they kill us.

“They (government) take a crucial decision without consulting with the Ogoni people, we disapprove of that and strongly kick against that. We have resisted the decision from the outset. We should be part of such a critical decision; we cannot live in a country where everything will be taken away from us and we will be left only to bear the consequences of oil production.”

Also, the Lagos Chamber of Commerce and Industry called on the Federal Government to be transparent on how it handled the matter.

The Director-General, LCCI, Muda Yusuf, told our correspondent that the government needed to make more facts about the matter public.

He said, “We need to have the facts about this matter. All the facts must be laid on the table concerning the movement of operatorship of OML 11 from Shell to NNPC. Now, did the government say it was taking it over because Shell couldn’t operate it? Of course, not.

“So I go back to my point that the government needs to explain further in the spirit of transparency that this government has been preaching. The reasons behind this decision need to be clearly stated and put in the public domain to avoid misinformation or to avoid people misconstruing the intention of the government.”

Yusuf observed that there had been concerns as to whether due process was followed in the transfer of operatorship of OML 11, adding that this was why the government needed to provide further explanations.

He added, “The reasons must be put on the table and it must also be established that due process has been followed. I am sure there must be some procedure in taking over the operatorship of such asset. So, was that procedure followed?

“We are a country that is guided by rules, regulations and standards through which we manage such very strategic assets. So, I think all the processes should be examined and, therefore, there is a need for proper disclosure and circumstances that have led to this decision.”

He, however, noted that the issue must not be politicised, adding that “for those who think this has to do with politics, my word to them is to ask for more information; we need to hear from government and Shell.”

On his part, the leader of Conscience of Ogoni People, Gani Topba, said although Buhari took the right decision, the NPDC must reverse all actions it had taken concerning the drilling of oil in Ogoniland.

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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ECOWAS@46: Commission Seeks Trade Partnership With OPS To Deepen Intra-African Trade

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The Economic Community of West African States (ECOWAS) in commemoration of its 46th anniversary has sought partnership with the Organised Private Sector (OPS) to deepen intra-African trade and lift millions out of poverty.

This was revealed yesterday by the president of the ECOWAS Commission, Mr. Jean-Claude Brou, at a webinar organised in collaboration with the Lagos Chamber of Commerce and Industry (LCCI) yesterday.

The theme of the webinar is “Optimising Sustainable Trade, Investment and Regional Economic Integration through Effective Partnership between ECOWAS Institutions and the Organised Private Sector”.

Jean-Claude, represented by Mr. Kolawole Sopola, Acting Director, Trade, ECOWAS, said the commission, in recognition of the private sector’s role, created a stronger framework to boost the sector’s capacity for enhanced trade.

He said that the commission had also adopted more than 100 regional standards with 70 others under development on some products.

Brou listed mango, cassava, textile and garments as well as information and communication technology among such products.

“The growing importance of informal trade compels the ECOWAS to create a framework expected to engender more availability and reliability of up to date information on informal trade.

“The framework also seeks to implement reform that is essential to eliminate obstacles to informal trade among others.

“It is important to improve investment, particularly, private investment, in all sectors and I stress that digitalization must be at the center of activities for economic recovery.

“Infrastructural deficit must be addressed as well as sustainable and cheaper energy for the competitiveness of products.”

“The commission is developing projects on roads, renewable energy and education, needed for private sector development; all these to lift millions in the sub-region out of poverty,” he said.

Dr. George Donkor, President of, ECOWAS Bank for Investment and Development (EBID) said that many western states showed numerous hurdles to overcome as countries continue to export raw materials, therefore maintaining low levels of development.

Donkor, however, said that reforms were already underway to accelerate the capacities of the Micro, Small and Medium Enterprises (MSME) to spur private sector development for intra-African trade.

He noted that the EBID 2025 strategy was aimed at ensuring that the private sector benefitted up to 65 percent of the $1.6 billion available facilities.

“A vibrant private sector is key in driving regional integration and securing its active participation and has the potential to create a win-win situation for all participants.

“Increasing credit to the private sector will enhance capacity and the EBID is ready with strategies to ensure that the sector’s capacity is boosted,” he said.

Also, Otunba Niyi Adebayo, Minister of Industry, Trade and Investment, said that collaboration across societal sectors had emerged as one of the defining concepts of international development in the 21st century.

He stressed the need for ECOWAS member states to work together as a bloc to take advantage of the opportunities in the African Continental Free Trade Area.

“Since the establishment of ECOWAS in 1975, various protocols and supplementary protocols regulating member countries conduct have been signed.

“Our world has limited resources — whether financial, natural, or human — and as a society we must optimize their use.

“The fundamental of a good partnership is the ability to bring together diverse resources in ways that we can together achieve more impact, greater sustainability and increased value for all.

“This is so because it emphasises the need to work together as a bloc to leverage and take advantage of the opportunities offered by the African Continental Free Trade Area.

“My Ministry will do everything possible to ensure that the vision of the commission is taken to the next level,” he said.

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IMF Retains 2.5 Percent Economic Growth Estimate For Nigeria

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The International Monetary Fund (IMF) has retained Nigeria’s 2.5 percent economic growth forecast for 2021.

The institution said this in its World Economic Outlook (WEO) for July titled “Fault Lines Widen in the Global Recovery” released on Tuesday in Washington DC.

According to it, the slow rollout of vaccines is the main factor weighing on the recovery for Low-Income Developing Countries (LIDCs) which Nigeria is part of.

It also retained its 6.0 percent growth forecast for the global economy for 2021 and 4.9 percent in 2022, adding that though the global forecast was unchanged from the April 2021 WEO, there were offsetting revisions.

The IMF had at its 2021 Virtual Spring Meetings in April, projected a 2.5 percent growth for Nigeria’s economy in 2021, up from 1.5 percent it projected in January.

It said that in LIDCs, the overall fiscal deficit in 2021 was revised up by 0.3 percentage points from the April 2021 WEO, mainly because of the re-emergence of fuel subsidies as well as the additional COVID-19 and security related support in Nigeria.

“Still, at 5.2 percent of Gross Domestic Product (GDP), the overall fiscal deficit remains well below that of advanced and emerging market economies, reflecting financing constraints, about 60 percent of LIDCs are assessed to be at high risk of or in debt distress.

“The public debt-to-GDP ratio for 2021 is projected at 48.5 percent.

“Several LIDCs have announced an intention to restructure their debts and some have sought debt relief under the G20 Common Framework (Chad, Ethiopia, and Zambia),” it said.

On the global scene, the IMF said that uncertainty surrounding the global baseline remain high, primarily related to the prospects of emerging market and developing economies.

It added that although growth could turn out to be stronger than projected, downside risks dominated in the near term.

“On the upside, better global cooperation on vaccines could help prevent renewed waves of infection and the emergence of new variants, end the health crisis sooner than assumed, and allow for faster normalisation of activity, particularly among emerging market and developing economies.

“Moreover, a sooner-than-anticipated end to the health crisis could lead to a faster-than-expected release of excess savings by households, higher confidence and more front-loaded investment spending by firms.”

On the downside, it said growth would be weaker than projected if logistical hurdles in procuring and distributing vaccines in emerging markets and developing economies led to an even slower pace of vaccination than assumed.

The report added that such delays would allow new variants to spread, with possibly higher risks of breakthrough infections among vaccinated populations.

“Emerging market and developing economies, in particular, could face a double hit from tighter external financial conditions and the worsening health crisis, further widening the fault lines in the global recovery.

“Weaker growth would, in turn, further adversely affect debt dynamics and compound fiscal risks.

“Finally, social unrest, geopolitical tensions, cyber-attacks on critical infrastructure, or weather-related natural disasters, which have increased in frequency and intensity due to climate change could further weigh on the recovery.”

On ensuring a fast-paced recovery, the IMF said the highest priority was to ensure rapid, worldwide access to vaccines and substantially hasten the timeline of rollout relative to the assumed baseline pace.

According to it, the global community needs to vastly step up efforts to vaccinate adequate numbers of people and ensure global herd immunity.

This, it said, would save lives, prevent new variants from emerging and add trillions to the global economic recovery.

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FG to Put an End to N360 Billion Annual Electricity Subsidy Payments in 2022 – Osinbajo

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Vice President Yemi Osinbajo on Monday said the Federal Government will end an estimated N360 billion annual subsidy payments in the electricity sector in 2022. This represents a monthly subsidy payment of N30 billion.

Osinbajo disclosed this while speaking at the 14th Nigerian Association for Energy Economics/IAEE conference in Abuja on Monday.

At the conference titled “Strategic responses of energy sector to COVID-19 impacts on African economies“, the vice president, who was represented by Engr. Ahmad Zakari, the Special Assistant to the President on Infrastructure, said the federal government would be investing over $3 billion in the sector to strengthen distribution and transmission infrastructure across the nation.

He stated that the numerous efforts of President Muhammadu Buhari at ensuring the power sector plays a critical role in the growth of the nation’s social and economic well-being will materialise fully once the ongoing reform in the energy sector is complete.

He said: “Electricity tariff reforms with service-based tariff has led to collections from the electricity sector by 63 per cent, increasing revenue assurance for gas producers and stabilizing the value chain.

“It is anticipated that all electricity market revenues will be obtained from the market with limited subsidy from next year as reforms in metering and efficiency with the DISCOs continue to improve.

“Accelerated investment in transmission and distribution, over $3 billion will be out into this sub-segment of the electricity value chain that will put us on the path to delivering 10 gigawatts through the interventions of the Central Bank of Nigeria, Siemens partnership, World Bank and Africa Development Bank, and others.”

He said as the electricity sector continued to be stabilized, more power was needed for the country’s large population.

“That is why this administration continues to invest in generation to cater for our current and future needs,” he said.

Osinbajo charged the participants to come up with solutions to key energy challenges facing the country, especially with the COVID-19 pandemic and energy transition.

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