Contrary to expectations, the Federal Government has failed to carry out its planned sale of some of its stake in joint venture oil assets, the second year in a row.
This can be seen from the highlights of the 2020 Budget presented by the Minister of Finance, Budget and National Planning, Mrs Ahmed Zainab as it was not included as one of the sources for expected revenue.
According to the 2019 approved budget presentation, President Muhammadu Buhari had directed that immediate action should commence to restructure the JV oil assets. This, he said was to enable the reduction of shareholding to not less than 40% and that this exercise must be completed within the 2019 fiscal year, Punch reported.
“The overall revenue performance in 2018 is only 55 per cent of the target in the 2018 budget partly because some one-off items such as the N710bn from Oil Joint Venture Asset restructuring and N320bn from revision of the Oil Production Sharing Contract legislation/terms have yet to be actualised and have thus been rolled over to 2019.
“We have again reflected projected proceeds from oil assets ownership restructuring as revenues for transparency and monitoring. Expected funds have been earmarked to fund critical capital projects as this was not achieved in 2018,” the document read.
What you should know: In 2017, the President Buhari administration stated that it would reduce its stakes in JV oil assets, refineries and other downstream subsidiaries such as pipelines and depots in its Economic Recovery and Growth Plan.
The Nigerian upstream operational structure is essentially divided between JV onshore and shallow water with local oil firms and multinationals. It also entails Production Sharing Contract (PSC) between both parties in deepwater offshore, which has attracted enormous interests and massive involvement of International Oil Companies (IOC) over the years.
Ownership Structure of JVs: The JV between the Nigerian National Petroleum Corporation (NNPC) and Shell allows the NNPC to own 55% stake while the one between the NNPC and others like Chevron and ExxonMobile allows the NNPC to own 60% shareholding.
The JV contract requires the government and the other parties to contribute to the funding of the operations according to their stake in the partnership. However, the government has, over the years, been accused of failing abysmally to live up to this obligation. This has made it heavily indebted to the other parties.
Agip shut oil facility in Bayelsa due to oil spillage, environmental pollution reported
Agip on Wednesday confirmed an oil leak, resulting in a shutdown.
The Nigerian Agip Oil Company (NAOC) has confirmed the shutdown of its Idu oilfields at Egbebiri settlement within Biseni in Yenagoa Local Government Area in Bayelsa, due to an oil spillage.
A Joint Investigative Visit (JIV) report on the incident said that the leakage at the facility could be traced to equipment failure due to a rupture at the wellhead.
According to a report from the News Agency of Nigeria (NAN), Eni, the parent company of NAOC, in a response statement, said the facility was shut down to prevent further damage to the environment.
What Eni is saying
An Eni Spokesperson on behalf of the Italian Energy firm, in a statement said, “As soon as the incident was reported, we activated our oil spill response, shut in the well and notified government regulatory agencies.
“The Joint Investigation Visit (JIV) was carried out on 09/05/2021, with participation of community representatives and the government regulatory agencies.
“The event occurred within the Company’s well head location which is paved and walled round. There is no significant third party impact,” Eni stated.
Environmental Rights Group reports environmental degradation
An environmental rights group, Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), however, said that the incident which discharged crude and associated gas had severely polluted the environment.
The Non-Governmental Organisation said that a visit to the spill site showed pictorial evidence of the crude spreading beyond NAOC’s right of way as nearby vegetation were affected as a result of the crude impact.
The Head of Field Operations at ERA/FoEN, Mr Alagoa Morris, in a field report on the spill said the Idu fields was notorious for frequent spills caused by equipment failure.
He said, “The people of Egbebiri in Biseni kingdom have experienced several oil spills over the years. And all the oil spill incidents documented by the Environmental Rights Action/ Friends of the Earth Nigeria (ERA/FoEN) in this community environment have occurred as a result of equipment failure and on Wellheads.
“ERA/FoEN has had cause to visit the environment of Idu Well 5 and 11 located within the same place in the past and it has always been Idu Well 11 spewing crude oil into the environment.
“Available records from ERA/FoEN indicate that there have been previous oil spills from this particular Idu Well 11 operated by Agip. Before concluding this Field Report, ERA/FoEN confirmed that Joint Investigation Visit (JIV) was carried out on Sunday, 9th May 2021.
“This is why the official Spill Reference No 2021/LAR/028/058 is indicated in this report; sourced from the JIV report. Cause of spill was attributed to equipment failure,” ERA/FoEN stated.
The report quoted a resident of the community simply identified as Georgie as saying that the spill incident of May 7 spilled oil from around 10 p.m till about 8 a.m the next day before the leak was stopped adding that the level of damage was enormous.
What you should know
It can be recalled that in a similar circumstance, Shell Petroleum Development Company reported an oil pipeline spillage at its Okordia-Rumekpe 14-inch crude truck line, discharging about 213 barrels of crude oil into the Ikarama community in Bayelsa State and polluting about 1.34 hectares of land.
This new leakage is the latest in a series of oil spillages by the multinational oil exploration and production companies, which has put them in conflict with the host communities.
Nigeria records system collapse during holidays
Nigeria’s national electricity grid collapsed on Wednesday morning.
The Nigerian grid has experienced a partial collapse, dealing a blow for stay at home Nigerians during the holidays.
This was confirmed in a statement by the Eko Electricity Distribution Company (EKEDC), as seen by Nairametrics.
What EKEDC is saying about the grid collapse:
“Dear customer, there is a partial system collapse on the National Grid. Our TCN partners are working to restore supply immediately. Please bear with us.”
According to latest reports, partial restoration of power is already occurring across the country.
Nairametrics | Company Earnings
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- Seplat Petroleum Development Company postpones Q1 2021 dividend payment date.
- FMDQ approves quotation of MTN’s Commercial Paper worth N73.5 billion.
- MTN Nigeria issues a 7-Year Series 1 bond worth N110 billion.
- Caverton Offshore Support Group reports profit after tax of N520 million in Q1 2021.
- Okomu Oil proposes dividend worth N6.7 billion for shareholders.