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New PIB amends royalties by oil firms as Sylva clarifies position on scrapping of NNPC

The Minister has clarified that the new PIB seeks to commercialize the NNPC rather than scrap it.

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FG estimates that alternative petrol, CNG would cost N97 per litre, New PIB amends royalties by oil firms as Sylva clarifies position on scrapping of NNPC, autogas, FG to establish petroleum depot, oil and gas logistic centre in Akwa Ibom

The long-awaited new Petroleum Industry Bill (PIB), which was just submitted by President Muhammadu Buhari to the National Assembly, has taken steps to amend changes to deep water royalties made last year.

This is as the Minister of State for Petroleum Resources, Timipre Sylva, has clarified that the new PIB seeks to commercialize the Nigerian National Petroleum Corporation (NNPC) rather than scrap it.

According to Reuters, while confirming the receipt of the Petroleum Industry Bill (PIB) from the President, the Senate President, Ahmed Lawan, said that it would be officially presented on the floor of the 2 chambers of the National Assembly on Tuesday and would get quick consideration.

READ: Senate urges FG to diversify from crude oil to natural gas production 

In addition to the earlier reported creation of a new company, Nigerian National Petroleum Company Limited, to take over the assets and liabilities of NNPC and the establishment of some new regulatory bodies, a section of the bill proposes an amendment to controversial changes to deep offshore royalties made late last year. This involves reducing the royalty that oil companies pay the Federal Government for offshore fields producing less than 15,000 barrels per day from 10% to 7.5%.

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It would change a price-based royalty too so that it kicked in when oil prices climbed above $50 per barrel, rather than the initial $35.

It would also codify in law that companies cannot deduct gas flaring penalties from taxes, a practice that was the subject of a court case.

READ: FG projects $2 billion annual revenue from Escravos Gas project

Sylva made the disclosure during an interaction with journalists at the National Assembly complex after an interactive session with the leadership of the assembly.

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Sylva said, “We have heard so much noise about NNPC being scrapped but that is not being envisaged by the bill at all. NNPC will not be scrapped but commercialized in line with deregulation move being made across all the streams in the sector comprising of upstream, downstream and midstream. We have said that NNPC will be commercialized.

“But if you are talking about transforming the industry, the only new thing that we are introducing is the development of the midstream, that is the pipeline sector. So we have provided robustly for the growth of the midstream sector. Through commercialization, the required competitiveness in the sector will be achieved.

READ: NNPC signs gas development and commercialization deal with SEEPCO

Sylva also pointed out that the host communities would have the best deal from the bill.

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Nairametrics had earlier reported the scrapping of the Petroleum Product Pricing Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF) in the proposed new bill, in addition to the creation of a new entity, NNPC Ltd.

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The Federal Government is expected to pay cash for shares of the company, which would operate as a commercial entity without access to state funds.

READ: Board room squabble tears HealthPlus apart

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The changes could make it easier for the struggling company to raise funds. However, the bill does not require the government to sell shares in the company and, unlike previous reform proposals, does not set a deadline for privatization to be completed.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. Shakour Ogunsanya

    October 3, 2020 at 12:55 pm

    This is another good decision from the President but what about the turnaround maintenance fund on the refinery, are they going to recoup it since the refinery is not working because Nigeria cannot continue to maintain and fuel a dead vehicle.

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Energy

Nigeria’s Qua Iboe crude exports resume as ExxonMobil lifts force majeure

ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil exports as production resumes.

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ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil export terminal, as crude exports resume for the first time in almost six weeks after a fire at the terminal halted operations.

This is according to a company spokesman yesterday, who confirmed the company had lifted force majeure on Qua Iboe crude loadings.

Qua Iboe production started to ramp up to normal levels of 200,000 b/d in the past week, according to sources, with the release of both the February and March loading programs.

The VLCC Dalia was also in the process of loading a 1-million-barrel stem at the Qua terminal since January 21, 2021, according to data intelligence firm Kpler. This will be the first export of Qua Iboe since December 15, 2020, after a fire hit the facility and injured two workers.

The company has been under pressure since the closure and prices have taken a hit as a result of the disruption. S&P Global Platts last assessed the grade at a discount to Dated Brent of 50 cents/b, down from a premium against the benchmark in December.

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Bonny Light, a mainstay Nigerian crude which typically trades at roughly the same level as Qua Iboe, was last assessed 30 cents/b higher.

What they are saying

One trader said: “If you get a cargo of Qua now it could be 50 cents to a dollar below Bonny even – a January cargo is completely out of cycle and the reliability issues mean people won’t touch it.”

Another trader stated that: “[The return of Qua Iboe] is not what West African crude assessments (WAF) differentials needed.”

What you should know

  • Qua Iboe is one of Nigeria’s largest export grades, and is very popular among global refiners, with India, the US, Canada, Italy, Spain, Indonesia, and the Netherlands being key buyers.
  • Qua Iboe is light sweet crude, which has a gravity of 36 API and sulfur content of 0.13%. The crude, produced from fields 20-40 miles off the coast of southeast Nigeria, is brought to shore at the Qua Iboe terminal via a seabed pipeline system.
  • Indian demand has steadied following a buying spree late last year, and European demand has been hit by renewed coronavirus lockdowns in the region.
  • Prices for Nigerian crude have suffered in recent weeks, even with lower supply due to the outage.
  • February and March loading programs have been issued for Qua Iboe averaging 169,643 b/d and 153,226 b/d respectively.
  • Production of this key grade ranged between 180,000-220,000 b/d in 2020, according to S&P Global Platts estimates.

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Malabu Oil Scandal: Prosecutors demand JPMorgan documents

U.S bank, JPMorgan has been ordered by a court to present documents of a transaction regarding the $1.3 billion Malabu oil field sale.

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Oil, DPR, FG announces commencement of bids for marginal oilfields despite court injunction

Prosecutors at the Milan Court holding a trial for the $1.3 billion Malabu oil field sale have demanded that U.S bank JPMorgan present documents of a transaction as part of the corruption case regarding the sale of the oilfield.

This was revealed in a report by Reuters, as the court case over the sale of the oil field continues. Prosecutors claim that nearly $1.1 billion was stolen by Nigerian politicians and middlemen, with former oil minister, Dan Etete, keeping half.

Prosecutors demanded that the Milan court accept emails sent by UK authorities, coming from a separate case launched by the Nigerian government against the bank for its role in the controversial deal.

READ: FG’s plan for N350 billion revenue from oil field licensing suffers setback

The emails include a transaction between Nigerian Attorney General Mohammed Adoke Bello and JPMorgan using the address of a company owned by another Nigerian named Aliyu Abubakar. Prosecutors allege that he paid $500 million in cash as part of a bribe.

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Both men have also been charged for corruption relating to the deal, with both pleading not guilty.

READ: FG seizes Dan Etete’s luxury private jet linked to Malabu oil deal

The second email includes two JPMorgan executives expressing views on whether to transfer $1.1 billion to accounts related to Nigerian banks. The Milan prosecutors said the emails were valid, stating that a Swiss and Lebanese bank had also expressed doubts over the transaction.

The Milan court said it would make a decision over the emails on the 3rd of February. The verdict of the court case is expected to be announced in March 2020.

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READ: Shell faces Dutch prosecution over Nigeria license

What you should know 

  • Nairametrics reported that Dan Etete, former Nigerian Minister of Petroleum, said that the $1.3 billion sales of Malabu oil field to Shell and Eni in 2021 was legally perfect, with zero traces of corruption in the deal.
  • Royal Dutch Shell announced that it would write down its investment in the controversial Malabu OPL 245 offshore field in Nigeria.
  • Malcolm Brinded, an ex-Upstream Chief of Shell Petroleum, told international prosecutors that the sum of $1.3 billion paid by Shell and Eni in 2011 to acquire OPL 245 offshore field was lawful, and he had no reason to think it was illegal.
  • A lawsuit filed by the Nigerian government against US bank JPMorgan Chase, claiming over $1.7 billion for its role in a disputed 2011 Malabu oil deal, will proceed to trial. The six-week trial in London is expected to commence on the first available date after November 1 2021, meaning that proceedings may not begin until 2022.

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Energy

First cargo of Nigeria’s newest crude grade, Ayala, to arrive Europe

The first export cargo of Nigeria’s newest crude grade, Anyala, is reported to be on its way to Northwest Europe.

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Oil tanker volumes dropped by 18.6% Year-Over-Year in July - Lloyd’s List Intelligence, First cargo of Nigeria’s newest crude grade, Ayala, to arrive Europe

The first export cargo of Nigeria’s newest crude grade, Anyala, is reported to be on its way to Northwest Europe.

According to a report from S&P Global Platts, while quoting trading and shipping sources, the cargo is likely to travel from Fos-sur-Mer to the Cressier refinery in Switzerland through the SPSE pipeline.

It reported that Data Intelligence firm, Kpler, said the Aframax Minerva Clara loaded a 700,000 barrel stem of Anyala crude from the Abigail-Joseph floating production, storage, and offloading vessel on January 10 with the tanker on its way to the Fos-sur-Mer terminal, located at France’s Mediterranean port of Marseille.

The report also said that trading house Vitol had chartered this tanker, as it has a stake in indigenous producer FIRST E&P, which is the operator of the Anyala West oil fields, located in the shallow waters of the Niger Delta.

This is as a market source said the cargo is likely to travel from Fos-sur-Mer to the 68,000 b/d Cressier refinery in Switzerland, which is operated by Varo Energy, through the SPSE pipeline.

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Varo Energy is a joint venture between Vitol, private equity fund, the Carlyle Group, and private investment fund Reggeborgh.

What you should know

  • The new crude is from Nigeria’s shallow-water Anyala West oil fields in the Niger Delta, which struck first oil in November. Anyala is the country’s newest oil development since the start-up of the giant Egina field in late-2018.
  • Anyala has been labeled a medium sweet crude grade, similar in quality to Nigeria’s flagship crude Bonny Light and when refined, Anyala will produce a high yield of middle distillates, making it attractive to both simple and complex refineries.
  • It is also reported that a second cargo will load in March, with some Asian refiners already showing buying interest.

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