ExxonMobil, Shell, Chevron and other International Oil Companies (IOCs) are delaying investment worth $58.4 billion in oil and gas projects across Nigeria.
The delay, which happened due to circumstances beyond the control of the IOCs, is denying Nigeria’s oil and gas industry the much-needed liquidity to finalise projects.
The international oil companies have held on to their final investment decision on projects like Shell’s Bonga South-West/Aparo project.
ExxonMobil, Shell, Chevron and Nigerian Agip Exploration are involved in 46 oil projects under development across sub-Saharan Africa but majority of the projects are situated in Nigeria, according to the Africa Energy Outlook published by Africa Energy Chamber last month.
“Nine of these (projects) are planned, the rest (37) have been announced, with varying prospects for reaching the FID in the near term. Nigeria accounts for half of all these projects, with Angola being the second most active market, followed by Chad.”
Why the delay in investment? A report disclosed that in Nigeria, regulatory and security challenges were major obstacle preventing these companies from approving the final investment decision. It was also added that the slump in global oil prices further compounded their fears.
Also, the statistical arm of the US Energy Department, US Energy Information Administration, said uncertainty surrounding the passage of the Petroleum Industry Bill contributed to the jitteriness of the foreign oil and gas companies in Nigeria.
“Regulatory uncertainty has resulted in fewer investments in new oil and natural gas projects, and no licensing round has occurred since 2007. The amount of money that Nigeria loses every year from not passing the PIB is estimated to be as high as $15bn,” the EIA said.
About the delayed projects: It was learnt that Shell’s $9.7 billion Bonga South-West/Aparo hadn’t received the final investment decision despite having the potential to boost Nigeria’s daily production by nearly 10, adding 143,274 barrels per day in extra crude production capacity at its peak flow.
To further buttress the value of the Shell project, it would be the largest major deepwater project since Total’s Egina which came on stream in 2019.
“The $10 billion project has encountered difficulties. The tendering process has been delayed twice already. While Shell and its partners are still in negotiations with the government over production sharing contracts, the FID is, therefore, unlikely before the second half of 2020,” it said.
Other projects without the FID are ExxonMobil’s $6.2 billion Bosi (126,784 bpd); Chevron’s $8.2 billion Nsiko (95,685 bpd); ExxonMobil’s $8.2 billion Owowo West (138,301 bpd); ExxonMobil’s $6.1 billion Uge-Orso (99,532bpd) and Nigerian Agip Exploration Ltd’s $9.2 billion Zabazaba (146,739 bpd).
Meanwhile, Shell’s $1.5 billion Gbaran Phase 3, Eni’s $1.1 billion Samabri-Biseni and Shell’s $1.2 billion Uzu are part of the announced gas projects that have not been sanctioned.
[READ ALSO: Shell to witness weaker margins in Q4)
Delay is not denial: Despite the delay in the investment by the international oil companies, Africa Energy Chamber projected a positive outlook for sub-Saharan Africa’s gas market, citing the ongoing development of 24 projects. Punch reported that $44 billion had been committed by the foreign oil companies in capital expenditure to Africa but Mozambique accounting for nearly 80% of the investment.
“Nigeria will see more modest investment of around $1.7bn but there are multiple projects worth nearly $5bn (led by Eni/Shell) that could achieve the FID in the coming years and expand its production capacity. Of the 14 announced projects, the Mamba Complex LNG project in the Rovuma Basin in Mozambique is the most significant.”
HealthPlus crisis: Alta Semper directors reported to Police for trespassing
HealthPlus has made a formal complaint to the Police following its ensuing battle with Alta Semper.
Nigerian Pharmacy Chain, HealthPlus Ltd which is in a battle for control with private equity firm Alta Semper Capital took a new twist as Health plus reported Alta Semper directors to the police last week, as observed in a document seen by Nairametrics.
In a letter sent to the Assistant Inspector General of Police on the 25th of September, HealthPlus stated, “We had the presence of unknown persons around our head office locations.”
The locations stated were 4 HealthPlus branches in Lekki, Lagos.
HealthPlus stated further, “We are aware that there are unauthorized and illegal plans by certain persons to take over our company premises to steal sensitive company property and assets, and ultimately take over operations of the company”
The 4 persons mentioned by HealthPlus are; Zachary Fond and Ivan Genadiev (both Alta Semper Directors), Ernest Eguasa, CFO of company and an unidentified middle-aged white man.
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Niarametrics reported last week that HealthPlus Limited appointed Chidi Okoro as Chief Transformation Officer.
However, the announcement set off a chain of allegations and counter-accusations, including online media mudslinging with both sides trying to court public sympathy for who is in control of the company.
P&ID dispute: UK Court orders $200 million guarantee to FG
Nigeria’s Foreign Exchange Reserves was boosted after a London Court ordered the release of $200Million placed as security in the case against P&ID.
A London Commercial Court has ordered the release of a $200 million guarantee as security to be paid to the Nigerian government in the P&ID $10 billion Arbitral Claim.
This was disclosed in a social media statement by the Central Bank of Nigeria on Tuesday.
Nigeria's Foreign Exchange Reserves was this morning boosted by over $200Million when the London Commercial Court ordered the release of the $200Million guarantee put in place as security in respect of the execution of the much discredited P&ID $10 Billion Arbitral Claim.
— Central Bank of Nigeria (@cenbank) September 29, 2020
Nairametrics reported earlier this month that The Federal Government secured a landmark victory in its bid to overturn a $10 billion arbitration judgment award against it in a case against Process and Industrial Developments (P&ID).
The Court said that Nigeria has established a strong prima case that the contract was procured by bribes paid to insiders as part of a larger scheme to defraud Nigeria. He said that there is also a strong prima face case that the P&ID’s main witness in the arbitration, Mr Quinn, gave perjured evidence to the tribunal, and that contrary to that evidence, P&ID was not in the position to perform the contract.
In today’s statement, the CBN said, “Nigeria’s Foreign Exchange Reserves was this morning boosted by over $200Million when the London Commercial Court ordered the release of the $200Million guarantee put in place as security in respect of the execution of the much discredited P&ID $10 Billion Arbitral Claim.”
“The court also awarded a £70,000 cost in favour of Nigeria in addition to an earlier award of £1.5m.”
On January 31, 2017, an arbitration tribunal had ruled that Nigeria should pay P&ID, the sum of $6.6 billion as damages and breach of contract after a 2010 deal for a gas project in the Niger Delta part of Nigeria collapsed. The pre and post judgement accrued interest of 7% has seen the amount standing against Nigeria, rise to almost $10 billion, an amount that will be a serious dent on the country’s external reserve.
FG to revitalize rice farms in rice producing regions
The Minister stated that rice production is expected to increase as the government continues to revitalize rice farmers.
The Federal Government has stated that Rice Farms in Anambra State and other regions will be revitalized to boost rice production, create jobs and also improve the living standard of the people in the State and the region.
This was disclosed by the Minister of State, Agriculture and Rural Development, Hon. Mustapha Baba Shehuri, during the assessment of Federal Government Rice Farms/Mills in Omor and Umerum in Anambra State.
Given the importance of rice as a staple in Nigeria, the Minister stated that the Federal Government is taking steps to achieve self-sufficiency in rice production, and this is evident in the policies of the government in achieving food and nutrition security, import substitution and promotion of inclusive economic growth across all sectors of the economy.
Government Policy Interventions in Agriculture and Rural Development has helped to develop the rice sector, and these interventions include the provision of farm inputs such as agrochemicals, organic fertilizers, knapsack sprayers, planting & harvesting equipment such as reapers, mini combine harvesters, threshers at a subsidized rate in order to increase productivity.
The Minister added that these policies have not only increased the quantity of rice produced annually but interventions through the provision of modern rice milling machines to small/medium scale processors, has also helped to improve the quality of Nigeria milled rice to international standard.
However, Nigeria’s rice consumption still holds higher than production, but government interventions through myriads of policies have increased rice production from 4.8 million metric tons of milled rice in 2015 to over 6 million metric tons by 2019 with a huge reduction in the nation’s deficit. Hon. Mustapha Baba Shehuri explained that production is expected to increase as the government continues to revitalize rice farmers.
Shehuri said that ”the Ministry has established 23 Paddy Aggregation Centers nationwide to aggregate and store paddy. The centres were given to members of the Paddy Dealers Association of Nigeria (PRIDAN) under the public-private partnership arrangement”.
In like manners, there will be the dissemination of modern rice production and processing technologies, through capacity building of farmers and processors directly and also in conjunction with the international donor agencies such as Japan International Cooperation Agency (JICA), Food and Agriculture Organization (FAO), German International Cooperation (GIZ), International Fund for Agricultural Development (IFAD), Competitive Africa Rice Initiative (CARI), AfricaRice.
He reiterated that the Ministry is currently responding to the challenges of food availability posed by the COVID-19 pandemic by supporting smallholder farmers nationwide with various inputs including certified seeds of improved varieties of food crops such as rice, maize, sorghum, wheat, orange-flesh sweet potato, groundnut cowpea, soybean, yam, as well as cash crops like cashew, cocoa, sesame, oil palm, gum Arabic. Others include herbicides, pesticides and agricultural machinery such as rice reapers, transplanters, power tillers motorized sprayers and processing equipment.
These interventions are expected to alleviate the effect of the pandemic on farmers and ensure that they keep producing food for the country.