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OML 118: NNPC, SNEPCo, Others Sign Multi-billion Dollars Agreement

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The Nigerian National Petroleum Corporation (NNPC) and its Production Sharing Contract (PSC) partners – Shell Nigeria Exploration and Production Company (SNEPCo), Total Exploration and Production Nigeria Limited (TEPNG), Esso Exploration and Production Nigeria Limited (EEPNL) and Nigerian Agip Exploration (NAE) – have executed agreements to renew Oil Mining Lease (OML) 118 for another 20 years.

The five agreements signed include Dispute Settlement Agreement, Settlement Agreement, Historical Gas Agreement, Escrow Agreement and Renewed PSC Agreement.

A statement by the Group General Manager, Group Public Affairs Division of the NNPC, Dr. Kennie Obateru, quoted the Group Managing Director of the Corporation, Mallam Mele Kyari, as saying that over $10bn of investment would be unlocked as a result of the agreements, which signaled the end of the long-standing disputes over the interpretation of the fiscal terms of the Production Sharing Contracts (PSC) and the emplacement of a clear and fair framework for the development of the huge deep-water assets in Nigeria.

According to him, this is an indication of “a renewed confidence between NNPC and her partners; between the Government and the investing communities which include NNPC. It produces value for all of us by providing a clear line of sight for investment in the Bonga bloc of around $10billion,” Mallam Kyari stated.

He disclosed the deal would yield over $780million in immediate revenues to the Federal Government while it would also free the parties from over $9billion in contingent liabilities.

“Ultimately, these agreements will engender growth in our country where investment will come in for other assets, not just in the deep-water, but even for new investors. It is an opportunity for them to see that this country is ready for business,” the GMD enthused.

He thanked President Muhammadu Buhari, the Minister of State for Petroleum Resources, Chief Timpre Sylva, and the NNPC Board of Directors for enabling the Corporation to achieve this laudable landmark.

Country Chair of Shell Companies in Nigeria, Mr. Osagie Osunbor, said the OML 118 renewal agreement would remain a watershed in the history of deep-water investments in Nigeria, assuring that the giant stride would further bolster investor confidence in the country.

Managing Director of SNEPCo, Mr. Bayo Ojulari, noted the agreements marked the end of a twelve-year dispute that had marred business relationship and affected trust and investment.

“Today, we have signed agreements that define the future of deep-water for Nigeria. This is the first deep-water block that was developed in Nigeria and it is also the first one that we are resolving all the disputes that will lay the foundation for the resolution of other PSCs,” the SNEPCo helmsman stated.

On their parts, the Managing Directors of Total, Mike Sangster, Exxonmobil, Richard Laing and NAOC, Roberto Danielle, all applauded the GMD NNPC, Mallam Kyari, for providing leadership which engendered the resolution of the disputes, assuring that the agreements would attract more investments into the Nigerian Oil and Gas Industry.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Federal Government Announces Free CNG Conversion for Commercial Vehicles

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The Federal Government declared on Thursday that the conversion of petrol and diesel-powered commercial vehicles to run on Compressed Natural Gas (CNG) will be free of charge.

The announcement came after the government signed agreements with several companies specializing in the conversion of petrol and diesel vehicles to CNG.

Michael Oluwagbemi, the Programme Director/Chief Executive of the Presidential Compressed Natural Gas Initiative (P-CNGI), disclosed the details of the program to journalists in Abuja.

“Today we’ve just signed with five partners here in the FCT (Federal Capital Territory) participating in the Conversion Incentive Programme,” Oluwagbemi stated.

“The program is tackling the barrier to Nigerian commercial transport operators to convert from PMS (petrol) to gas. Most of them have said that the cost of conversion is expensive, and so what we are doing here today is basically to respond to that concern.”

Benefits for Commercial Transport Operators

The initiative primarily targets commercial transporters under various unions, including the Road Transport Employers Association of Nigeria (RTEAN), National Union of Road Transport Workers (NURTW), and the Nigerian Association of Road Transport Owners (NARTO).

According to Oluwagbemi, these unionized operators will receive conversion kits and installation services completely free of charge.

“This is going to be done through certified conversion workshops that we are beginning to identify. We’ve identified about 123 of them, and five are here with us today in Abuja. As we expand across the country, we will activate more of them,” he said.

Ride Share Operators Included

In addition to unionized commercial transporters, ride share operators such as those working with Uber, Bolt, Lag-Ride, and Move will also benefit from the program. These operators will receive a 50% discount on the conversion equipment and free installation.

Furthermore, the arrangement allows them to pay for the remaining costs in installments, eliminating the need for upfront payments.

“We hope to add more ride share operators soon. Lag-Ride has already signed up, and we are going to send the agreement next week,” Oluwagbemi added.

Impact on Transportation Costs

Through this program, the government aims to reduce transportation costs for Nigerians. Oluwagbemi highlighted that over 20,000 kits will be available in the next three months, distributed across 25 states with existing CNG capacity.

This initiative is part of a broader palliative program funded by the National Assembly, which has allocated additional resources for the acquisition of more kits later this year.

“The agreement we signed today ensures that the savings from the conversion will be passed on to ordinary Nigerians. We will begin to see some impact in terms of reduced transportation costs,” Oluwagbemi noted.

Monitoring and Enforcement

To ensure the success of the program, the government has implemented a robust monitoring mechanism.

The Nigerian gas vehicle monitoring system will oversee the conversion process and ensure compliance with agreed pricing reductions.

“We have a very strong monitoring mechanism around conversion and the enforcement of reduced pricing for Nigerians. The framework of the agreement includes significant pass-on of savings to ensure the purpose of the palliative is achieved,” Oluwagbemi emphasized.

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CNG to Save Nigerians 40% on Fuel Costs, Says NNPC

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Oil and Gas

The Nigerian National Petroleum Company Limited (NNPC) announced on Thursday that the use of Compressed Natural Gas (CNG) in automobiles will be 40% cheaper than using Premium Motor Spirit (PMS), commonly known as petrol.

The announcement was made during the inauguration of 11 new CNG stations across Abuja and Lagos, part of an ambitious plan to establish 100 such stations nationwide within the next 12 months.

The NNPC’s initiative aims to provide Nigerians with an affordable alternative to petrol, leveraging the country’s abundant natural gas reserves of approximately 209 trillion standard cubic feet.

Huub Stokman, Managing Director of NNPC Retail Limited, highlighted the significance of this development, noting that the expansion of CNG stations represents a major step in diversifying Nigeria’s energy mix and making fuel more accessible and economical for the populace.

“Adding CNG to NNPC stations provides Nigeria with an affordable alternative to existing fuel products. CNG will be about 40% cheaper than petrol in Nigeria. And with continued investments, it could become a significant part of our energy mix,” Stokman stated during the inauguration event in Abuja.

The NNPC has committed to launching over 100 CNG sites within the next year, supported by the establishment of two mechanical training centers combined with conversion centers in Abuja and Lagos.

These centers will facilitate the transition to CNG by providing necessary skills and resources for vehicle conversion and maintenance.

Mele Kyari, Group Chief Executive Officer of NNPC, underscored the company’s dedication to enhancing CNG infrastructure.

“We are constructing six CNG mother stations across the country between now and December, and we are also building three LNG (Liquefied Natural Gas) stations in Ajaokuta. This initiative aims to bring gas closer to consumers, reducing transportation costs and making fuel more affordable,” Kyari said.

The rollout of CNG stations aligns with President Muhammadu Buhari’s initiative to promote sustainable and locally sourced energy solutions.

The new CNG facilities are designed to meet global best practices, ensuring safe, reliable, and efficient service to all customers.

The Executive Vice President of Cleanergy Innovation Ltd, Shettima Imam, emphasized the importance of this collaboration in achieving significant milestones in Nigeria’s energy sector.

The deployment of CNG is expected to provide substantial financial relief to car owners, who have been benefiting from government petrol subsidies ranging between N6 million and N9 million per annum.

With the switch to CNG, an average car owner could save approximately N12 million annually.

“This initiative is not just about providing cheaper fuel; it is about utilizing Nigeria’s natural resources to create a more dynamic and inclusive energy sector,” Imam added.

“The CNG stations are a testament to what can be achieved through collaboration and innovation.”

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IKEDC Revises Tariff for Band A Customers to N209.5/kWh

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Electricity - Investors King

The Ikeja Electricity Distribution Company (IKEDC) has revised its electricity tariff for Band A customers, increasing the rate from N206.80/kWh to N209.5/kWh.

This new tariff, set to take effect on July 1, 2024, is in accordance with the service-based tariff regime.

In a statement posted on its social media platforms, IKEDC assured customers that the adjustment is necessary to sustain and further enhance the improved service delivery currently being experienced across all feeder bands within the Ikeja Electric network.

The company, which provides electricity to parts of Lagos and Ogun states, said the revision applies only to Band A customers, while tariffs for Bands B, C, D, and E will remain unchanged.

“We have undertaken this tariff review to ensure the continued improvement and sustainability of our service delivery,” IKEDC stated. “Customers can be rest assured that this development will further sustain the improved service delivery currently being experienced across all Feeder Bands within the Ikeja Electric network.”

The service-based tariff regime, under which this revision falls, is designed to reflect the quality and consistency of electricity supply provided to consumers.

Band A customers typically receive the highest quality of service with fewer disruptions, hence the adjusted rate is intended to support and maintain this level of service.

IKEDC’s announcement comes amidst ongoing efforts to improve the reliability and efficiency of electricity supply in the region.

The company has been investing in infrastructure upgrades and maintenance to reduce outages and enhance customer satisfaction. The slight increase in tariff is seen as a step towards achieving these goals.

Consumers have been urged to stay informed about the changes and to reach out to IKEDC’s customer service for any clarifications or assistance.

The company also reiterated its commitment to transparency and responsiveness in handling customer queries and concerns.

“We understand that tariff adjustments can be a concern for our customers,” the statement continued.

“However, we want to assure you that this revision is necessary for the continued improvement of our services. We are committed to ensuring that our customers receive value for their money through reliable and consistent electricity supply.”

The reaction from customers has been mixed, with some expressing concern over the increased cost, while others acknowledge the necessity for such adjustments to improve service delivery.

“As long as the electricity supply remains consistent and reliable, a slight increase in tariff is acceptable,” said a resident of Lagos.

As the new tariff takes effect, IKEDC will be closely monitoring its impact on service delivery and customer satisfaction, promising to make further adjustments as necessary to meet the needs and expectations of its customers.

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