Business News
240 firms make another attempt to commercialise Nigeria’s flared gas
240 firms have submitted their statements of qualification to the Federal Government in a bid to commercialise gas-flaring in Nigeria.
240 firms have submitted their statements of qualification to the Federal Government in a bid to commercialise gas flaring in Nigeria.
The firms handed in their statements of qualification following a request by authorities, as part of the Nigerian Gas Flare Commercialisation Programme.
This was disclosed in an email sent by Mr Rabiu Suleiman, the Chairman of the Ministerial Steering Committee on the Nigerian Gas Flare Commercialisation Programme. According to him, the received statements of qualifications would be evaluated in June, even as results would be released four weeks afterwards.
“NGFCP is very pleased to advise that 240 SOQs (Statements of Qualification) were received. As you are aware, a Proposal Evaluation Committee and an Independent Observer Group have been appointed and inaugurated on the 11th of April, 2019 by the Minister of State for Petroleum Resources, Ibe Kachikwu.
“the PEC shall evaluate the SOQs submitted by the applicants to determine qualified applicant status in compliance with the design criteria of the request for qualification and also to evaluate the proposals that would be submitted by qualified applicant to determine those bidders that achieve preferred bidder and reserved bidders status.”
Why this matters: The Nigerian Gas Flaring Commercialisation Programme is a fundamental aspect of the Federal Government’s gas revolution initiative. The programme seeks to significantly reduce gas flaring significantly by exploiting it for economic purposes.
The programme is expected to encourage investments, create jobs (especially in the Niger Delta region), and ultimately facilitate economic development in the country.
More Insight: Note that the National Gas Policy was approved by the Federal Executive Council in June 2017. Its main objective is to ensure flare capture and utilisation. It is also expected to encourage industry collaboration and develop partners; including providers of flare-capture technologies and third-party investors.
Will it work this time? Note that this is not the first time efforts is being made to put an end to gas flaring along with the economic and environmental challenges that come with it. Last May, Nairametrics reported that world leading energy company, Vitol, has been in talks with stakeholders in Nigeria to monetise the country’s flared gas. One year later, nothing concrete has come out of those talks. Perhaps the story will be different this time around.
Business News
Oil & Gas: DPR announces 2020 marginal field licensing round
While we see the need for these asset sales to generate much-needed revenue for the Federal Government, we are concerned that a bidding process under the current environment will be fraught with difficulties.
The Department of Petroleum Resources (DPR) on Monday announced the commencement of the 2020 marginal field bid round. This bid round is coming 18 years after the last bid round in 2002 and is open to indigenous oil & gas companies and investors interested in participating in the exploration and production business in Nigeria. Marginal fields are known oil or gas discoveries on an IOC-owned block and where there has been no activity in at least the last 10 years. With the agreement of the IOC, the DPR carves-out a piece of land surrounding the discovery and this becomes a Marginal field. On this occasion, there are 57 marginal fields available for bidding, including 11 fields revoked by the DPR.
The exercise would be conducted electronically and would include expression of interest/registration, pre-qualification, technical and commercial bid submission, and bid evaluation. The process is expected to be completed in six months. The first bid round that was formally organised by the FGN began in 2001 and was concluded in 2003. At the end of the bid round, 24 licenses were awarded to 31 indigenous companies. Another bid round was proposed in 2013 with a lot of preparation and guidelines released. Unfortunately, it never held.
Flagging off this bid round under the current economic situation points to the government’s urgent need for funds. According to the DPR guidelines, interested bidders will be required to pay a total of US$115,000 and N5m in non-refundable statutory fees comprising an application fee of N2 million per field, Bid Processing Fee of N3million per field, Data Prying fee of $15,000 per field, Data Leasing fee of $25,000 per field, Competent Persons Report of $50,000 and $25,000 for Fields Specific Report.
While we see the need for these asset sales to generate much-needed revenue for the Federal Government, we are concerned that a bidding process under the current environment will be fraught with difficulties. Firstly, the current fluctuations in oil prices may mean that intending investors may base their valuations on pricing models that can become unrealistic in the near term and then are unable to develop such fields acquired. Many local companies have been hard hit by the effects of covid -19 and the ensuing significant decline in oil prices, hence they may not have sufficient cash flows nor be able to raise needed funds from both local and international banks.
In addition, we see regulatory difficulties hampering interest in the fields. For example, the lack of passage of the long awaited Petroleum Industry Bill (PIB) remains a significant deter. Furthermore, the recently passed Deep Offshore and Inland Basis Production Sharing Contracts (Amendment) Act (DOA) has made investments in Nigeria oil & gas assets less attractive. These negative regulatory sentiments has led to many IOCs decreasing investments in the Nigerian oil & gas industry. Overall, we think this may result in many of the fields ending up in the hands of individuals with cash but with no industry expertise. Again, with the current economic crunch, many of the fields may be sold significantly below their fair value.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly-owned subsidiary of FCMB Group Plc and is regulated by the Securities
and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.
Business News
May Output Cut: OPEC+ records 86% compliance as Nigeria beats expectation
Some of the non-OPEC member countries recorded less than impressive compliance rates. Kazakhstan, Brunei, and South Sudan recorded 47%, 22%, and 13% compliance respectively.
As OPEC+ pushes for an extension of the current output cut of 9.7 million barrels beyond June, a new report suggests that the alliance may have achieved a fairly impressive level of compliance in May, the first month of the biggest global effort to curtail oil production.
Energy Intelligence estimates that the alliance achieved an 86% compliance rate (in May) with the production cut of 9.7 million barrels per day that was agreed for both May and June. This contradicts the 74% compliance rate that was earlier reported by a Reuters survey.
The massive output cut is intended to counter the dramatic slump in global oil prices which was triggered by the coronavirus pandemic and supply glut. The output cut has since helped to move up prices well above the April lows.
Meanwhile, some West African OPEC members fell short of their pledged output cuts, with Angola and Congo recording compliance rates of 54% and 20%, respectively. Gabon’s May output actually exceeded its volumes in October 2018, which was chosen as the baseline month against which the cuts are measured.
(READ MORE: Oil prices hit 2-months high as Bonny light rises to $33.9/barrel over vaccine test optimism)
However, the compliance by Nigeria for the month of May was better than the expected 83% after its output fell by around 260,000 barrels per day between April and May. This is, however, at variance with 52% compliance that was disclosed by Nigeria’s Minister of State for Petroleum, Timipre Sylva.
Some of the non-OPEC member countries recorded less than impressive compliance rates. Kazakhstan, Brunei, and South Sudan recorded 47%, 22%, and 13% compliance respectively.
The OPEC+ alliance’s overall compliance rate was lifted by the performances from four of its top five producers, which were close to 100%. Among these heavyweights, only Iraq lagged well behind with a compliance level of less than 50%.
Energy Intelligence estimates that Opec plus achieved an 86% May compliance rate with the production cuts of 9.7 million bpd. https://t.co/nDs8dYzqkS #OOTT #opec @energyintel
— Amena Bakr (@Amena__Bakr) June 3, 2020
Russia failed to live up to its obligations under previous OPEC+ deal. But after removing condensate, which is not counted as part of its current quota, its oil output is 8.6 million barrels per day in the month of May; indicating an impressive 96% compliance rate.
Compliance is expected to improve in the month of June.
Business News
COVID-19 palliative: Sanwo-Olu concludes Homegrown School Feeding Programme
The homegrown school feeding programme, was targeted at providing food packages for 37,589 households of pupils in Public Primary Schools years 1-3
The modified homegrown school feeding programme, launched on May 21, as part of palliatives offered by the Lagos state government to cushion the economic impact of the COVID-19 pandemic, has been concluded.
The programme, which basically modified the already existing school feeding programme, was targeted at providing food packages for 37,589 households of pupils in Public Primary Schools years 1-3.
According to an official tweet from the Lagos state government, the programme was concluded on Tuesday, June 2, 2020.
The Modified Homegrown School Feeding Programme, which was flagged off in Lagos on the 21st of May, 2020 and targeted at 37,589 households of pupils in Public Primary Schools years 1-3, has been concluded@jidesanwoolu @lagossubeb#LASG #ForAGreaterLagos #CovidLASG pic.twitter.com/lWrQscf6NW
— The Lagos State Govt (@followlasg) June 2, 2020
The Executive Chairman of Lagos State Universal Basic Education Board, LASUBEB, Mr. Wahab Alawiye-King, noted that the distribution of the packages to the beneficiary households took off on May 21, and was spread across 202 centres across the 20 Local Government Education Authorities in the State.
(READ MORE:COVID-19: Lagos receives N200 Million, 5 ambulances from BUA Foundation)
Items contained in the Take-home rations:
Each beneficiary of the packages received a take-home ration made up of “5kg Bag of Rice; 5kg Bag of Beans; 500 ml Vegetable Oil; 750ml Palm Oil; 500mg Salt; 15 pieces of eggs and 140gm Tomato Paste,” which is expected to assist the parents and guardians feed the children as they remain at home during the prolonged holiday.
He explained that each beneficiary received a Take-Home Ration made up of 5kg Bag of Rice; 5kg Bag of Beans; 500 ml Vegetable Oil; 750ml Palm Oil; 500mg Salt; 15 pieces of eggs and 140gm Tomato Paste@jidesanwoolu @lagossubeb#LASG #ForAGreaterLagos #CovidLASG
— The Lagos State Govt (@followlasg) June 2, 2020
What you should know:
The Federal government also introduced a modified homegrown school feeding programme on May 15 to be coordinated by the Honourable Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar Farouq.
Farouq noted during one of the Presidential Task Force media briefings that the distribution of Take-Home Rations (THR) to the households of the children on the programme as a feasible method, after exploring several options of reaching children in vulnerable households.
Each Take-Home Ration is said to be worth N4,200, although the Minister has not released full details of the programme.
According to the World Food programme, there are 17 countries currently distributing Take-Home rations to school children. In Liberia, Take Home Rations have been distributed since 2019.
