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Energy

Aiteo accuses Shell of theft of 16 million barrel of crude oil

Aiteo has alleged that it has been shortchanged alongside the FG, a total of 16 million barrels of crude oil by SPDC, in an oil theft claim.

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Aiteo Exploration and Production Company have alleged that it has been shortchanged alongside the Federal Government, a total of 16 million barrels of crude oil by Shell Petroleum Development Company (SPDC), in an oil theft claim.

The indigenous oil exploration and production company said that the 16 million crude shortfall recorded at the Bonny Export Terminal between 2016 and 2018 is owned by then and the Federal Government.

According to a report from the News Agency of Nigeria (NAN), this disclosure is contained in a statement issued by the Group Head, Media Operations at Aiteo, Mr Ndiana Matthew, on Friday, March 20, 2021.

Aiteo alleged that Shell, operator of the Bonny Crude Export Terminal, was behind ongoing media reports to tarnish its image and that of Aiteo’s founder to divert attention.

READ: Italian court acquits Shell, Eni in Malabu oil corruption case

What Aiteo is saying

Aiteo in its statement said, “By doing so, the outcome will create unnecessary digressions and distractions from the current issues encapsulated by our demand that Shell accounts and pays for over 16 million barrels of oil belonging to us and the Nigerian government.

“The crude is missing through their actions and activities. Hitherto unchallenged evidence of this missing crude is exemplified by the discrepancies in the production figures independently reported by the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR). 

“As is standard in the industry, DPR reports actually reconciled production volumes from the wells that flow to the terminal. Their records and statistics align with Aiteo’s reconciled production figures. NNPC, on the other hand, reports crude measured at the tanks in the terminal exclusively managed, operated and controlled by the IOC. 

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“It is the analysis of these independent reports that demonstrate the glaring discrepancies. Indeed, over the relevant three-year period, the figures from both government agencies.

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In 2016, NNPC reported 16 million barrels while DPR records showed 22 million, while in 2017, NNPC data showed 13.5 million barrels whereas DPR recorded 21 million barrels and in 2018, NNPC recorded 15 million and DPR 25 million barrels,” the oil firm stated.

It was learnt that the crude deficit between 2016 and 2018 reported at the Bonny terminal operated by SPDC had caused a dispute amongst several oil firms that used the oil export facility.

READ: Shell estimates $15bn investments in Nigerian gas project

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What Shell Petroleum Development Company is saying

In its response, SPDC described allegations of involvement in oil theft at its Bonny Crude Export Terminal as misleading with the Media Relations Manager, Mr Bamidele Odugbesan, in a statement made available to the press, saying the claim was factually incorrect.

Odugbesan in its statement said, “The crude theft and diversion allegation is also factually incorrect. This is a distinct issue that relates to the directive by the DPR to SPDC as operator of the Bonny Oil and Gas Terminal, an asset belonging to the SPDC Joint Venture to implement a crude reallocation programme between injectors into the SPDC JV’s Trans Niger Pipeline and injectors into the NCTL.

“Crude allocation review and reallocation is a normal industry practice to reallocate previous provisional allocated volumes under the directive and supervision of DPR and this is not an exercise resulting from crude diversion, underreporting or theft at the terminal.

READ: Rivers acquires Shell’s 45% stake in Ogoni land 

“This industry practice is not peculiar to the SPDC-operated Bonny Oil and Gas Terminal alone and does not translate into any loss of volumes to the Federal Government of Nigeria. The reallocation issue was initiated by SPDC as operator of the Bonny Oil and Gas Terminal, while the DPR validated and confirmed it for implementation for the concerned oil producers.

“Crude oil production metering and allocation are subject to specific guidelines issued by the industry regulator, DPR, SPDC strictly adheres to these guidelines and the implementation is regularly verified by the regulator,” he stated.

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What you should know

  • It can be recalled that in February 2021, a federal court in Lagos had issued an injunction barring Shell from withdrawing money at 20 local banks in a lawsuit brought against the oil major by Aiteo.
  • Aiteo is seeking about $4 billion in total over alleged problems with the Nembe Creek Trunk Line (NCTL) pipeline it bought from the Anglo-Dutch group in 2015 and over claims Shell undercounted its oil exports pointing out poor condition of the pipeline and associated lost oil sales.
  • The indigenous oil firm also accused Shell of deliberate improper metering of the Nigerian company’s oil exports from the Bonny Light terminal. It is seeking $2.7 billion over the pipeline deal plus $1.28 billion for lost oil sales.

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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]

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Business

NNPC says NO to petrol pump price hike in May

There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.

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Crude oil market remains unpredictable- NNPC Boss

The Nigerian National Petroleum Corporation (NNPC) has assured Nigerians that there would be no increase in the ex-depot price of Premium Motor Spirit, popularly known as Petrol in May.

This was disclosed by the Group Managing Director of NNPC, Mele Kyari, on Monday via the Corporation’s Twitter handle.

It tweeted, “There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.”

Ex-depot price is the cost of petrol at depots, from where filling stations purchase the commodity before dispensing to final consumers.

READ: Nigerian automaker raises $9 million despite protest against electric car in Nigeria

Kyari also added that Petroleum Tanker Drivers had suspended their proposed strike after the intervention of NNPC in the impasse between the PTD and the National Association of Road Transport Owners.

“We have given our commitment to both NARTO and PTD that we will resolve the underlining issue between them and come back to the table within a week so that we’ll have a total closure of the dispute,” he added.

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READ: Oil marketers give conditions to resume fuel importation

What you should know

  • NNPC has maintained an ex-depot price of N148/litre since February despite the hike in the actual cost of the commodity, hence incurring subsidy of over N120bn monthly.
  • Also in March, the NNPC said it would maintain its ex-depot price for petrol until the conclusion of ongoing engagement with the organised labour and other stakeholders.

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Energy

NCDMB’s Oil and Gas Parks and their many adversaries

New businesses within the NOGAPS will face intense competition from foreign OEMs that do not have to battle with tariffs, a harsh business terrain and different tax treatment.

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In 2018 the Nigerian Content Development and Monitoring Board (NCDMB), the body saddled with driving the development of Nigerian content in the Nigerian oil and gas sector, did a groundbreaking of the Nigerian Oil and Gas Park Scheme (NOGAPS), a scheme that involves the construction of sprawling oil and gas parks in Bayelsa, Imo and Cross Rivers State.

In a visit last week to one of the parks currently under construction in Emeya 1, Ogbia, Bayelsa State, the Minister of Petroleum for State, Chief Timipre Sylva, expressed delight at how the project was quickly progressing and was now at 70% completion. Mr Simbi Wabote, Executive Secretary of the NCDMB, during the visit also noted that the Oil and Gas Park project “is in line with the Federal Government’s mandate to develop indigenous capacities for the oil and gas industry.”

READ: NCDMB, BOI, won’t relax conditions to access $200 million NCI Fund despite complaint 

While this is highly commendable, as the project will indeed reduce Nigeria’s dependence on import of oil and gas equipment and provide jobs for local indigenes -which would likely reduce restiveness in the area-, there exist significant challenges to this project achieving its goals.

Perhaps one of the biggest of them is the African Continental Free Trade Area (AfCFTA) regime which is expected to open Nigeria’s borders to an influx of imports from other countries within Africa. Beyond opening the borders, however, the tax treatment given to domestically produced items will be no different from similar products imported, and the typical tariffs for imported items will be removed.

READ: Aiteo accuses Shell of theft of 16 million barrel of crude oil

This essentially means that large and established original equipment manufacturers (OEMs) from other African countries may on the basis of their economies of scale be able to supply the same products produced in the oil and gas parks at lower rates. A report by Dun & Bradstreet reveals that in Africa, countries like Guinea, Gabon, Burkina Faso and Ghana that flank Nigeria play host to various oil and gas OEMs.

With the large oil and gas market Nigeria has, these companies will seek to make inroads into Nigeria under the AfCFTA regime. This will mean that the new businesses within the NOGAPS will face intense competition from foreign players that do not have to battle with tariffs and different tax treatment. Additionally, the Nigerian culture of preferring imported products over domestically manufactured ones might play a role in this, particularly if the prices of the imported ones even up with domestically produced ones or only have a slim margin.

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READ: NNPC says local operators must improve capacity to achieve low cost of oil production

If the patronage for Innoson vehicles is anything to go by, in a market where there is no real difference in price between that and the domestically produced ones, we will see a preference for imported products.

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All of this will be further aggravated by Nigeria’s doing business difficulties. Things like delays in obtaining permits, approvals and licenses, the corruption that accompanies these processes, weak currency and dual exchange rates, poor infrastructure and lack of power supply abound. While the Nigerian businesses struggle with this, their foreign counterparts get to produce under more convenient conditions and are thus able to deliver within time and without the additional costs passed to consumers through these poor doing business practices.

While Mr Wabote has promised that the park in Ogbia will have dedicated power supply, it is hard to imagine that this power will not significantly cost the businesses if they are served at maximum capacity. At number 131 on the World Bank’s Ease of Doing Business Ranking, a park would not solve Nigeria’s problems, only a positive commitment to fix these doing business issues will.

READ: Seplat incurs N41.1 billion loss from OML 55, blames fall in oil prices

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The christening of a park as an “oil and gas park” in the 21st century, where countries of the world –and indeed private companies- are working towards achieving increased use of cleaner energy sources, is counterintuitive. The park should be an energy park that integrates significant research and development in its function as well as innovation and production of renewable energy equipment, both adapted to benefit from local conditions and standardized for export purposes.

It seems too, that not much consideration has been given to export of these equipment, as the parks earmarked so far are in landlocked Imo, port-less Bayelsa and Cross River that feeds into Cameroon, which is not a very prime market, although the DRC on the other end could attempt to compensate for this. It might be worth considering, the setting up of a park in Lagos – perhaps in the same vicinity as the Dangote refinery.

The park would benefit from being able to supply equipment to the refinery (especially as the refinery starts production in early 2023). It will also be able to tap into the global market through export via the Lekki port. This might also be a good time for the Agge deep sea port mulled by the Bayelsa State government to come onstream to open up the Ogbia park to a global market.

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