Federal Government Backs Oil Industry On Shale Gas Reforms

oil and gasThe Federal Government on Thursday pledged to support the Nigerian Oil and Gas industry in its quest to square up against daunting global industry challenges and compete for relevance in the international energy space.

The Vice-President of Nigeria, Namadi Sambo, who was speaking at the 2014 Oloibiri Lecture Series and Energy Forum organized by the Nigerian Council of the Society of Petroleum Engineers, said that with the change in global demand and supply balance; the industry must begin to expand and grow processing capacity for local utilization as well as export of finished products.

Sambo, who was represented by the Group Managing Director of the NNPC, Andrew Yakubu, noted that the Government was ready to support the industry to join the Shale gas revolution in the next decade.

“I have no doubt that we have the required capacity and competence to tackle these challenges. Government has been and is ready and willing to support your effort in this direction. There is no doubt that oil and gas have played a big role in the economic development and transformation of our country over the last half century,” he said.

Vice-President Sambo stated that oil and gas has enabled the building of infrastructure as well as aided in the development of other sectors of the economy and national life. “We must therefore continue to maintain focus in doing the right things to transform the industry so as to meet the new challenges of the next century,” he said.

Fielding questions from members of the audience in the course of his presentation, Mr. Yakubu lamented the spate of negative criticism and public misconceptions of the operations of the NNPC. He noted that such comments were not only unfair to the Corporation but come as a morale dampener to the thousands of staff in the NNPC who toil day and night to ensure that the country reaps bountifully from proceeds of its hydrocarbon resources.

The Minister of Petroleum Resources, Deziani Alison–Madueke, who was represented by Engr. Abiye Membere, Group Executive Director, Exploration and Production of the NNPC, acknowledged the growing level of indigenous participation in mainstream exploration and production of the oil and gas business in the country.

The Minister stated that from a little over one percent some few years back, Nigerian companies now account for 10% of total daily crude production of 2.3 million barrels with a projected rise to 30% by the year 2020.

Also responding to questions on the purported stringent fiscal regime in the Petroleum Industry Bill currently before the National Assembly for legislative action, Membere cautioned the International Oil Companies against undue criticism of the bill and advised them to come forward with their numbers for proper debate.

“In 1993, under the existing Production Sharing Contracts, royalty was zero. The question now is, do the IOCs still want royalty to remain zero in 2014? We cannot as a nation have zero royalty in the eight most prolific oil and gas assets,” he argued.

Missing Or Not? Analysts Argue On NNPC $49.8 Billion Scandal

In a letter to the President of Nigeria, the Central Bank Governor, Lamido Sanusi alleged that the NNPC failed to remit a total of 49.8 billion dollars into the Federation Account between January 2012 and July 2013.

The news of such an enormous sum missing from the State’s coffers is coming on the heels of accussations against the Federal Government and its purported calm disposition towards corruption in government agencies.

In a swift response to CBN’s claims, NNPC has denied owing the government and accused the Central Bank Governor, Sanusi Lamido Sanusi, of having no knowledge of the structure of remittances of crude oil proceeds.

The Group Managing Director of the NNPC, Mr Andrew Yakubu said that the NNPC was by statutory requirement responsible for direct remittances of only one stream of crude oil lifting – the equity crude, which represents about 27.5 per cent of the entire lifting.

The four other streams including the royalty oil, tax oil, volume for third party financing and NPDC equity volume are paid to other agencies which in turn remit to the government,” Mr Yakubu explained.

Speaking on Channels Television’s Saturday breakfast programme, Sunrise, retired banker, Edwin Ikhinmwin argued that the said amount of money is “somewhere in the name of the Federal Government of Nigeria, maybe it has not reached the CBN yet.”

“It cannot be missing,” he said, adding that such an amount is too huge to be in any account without red flags being raised and so the letter by the CBN governor is only a precautionary measure to ensure that the funds are tracked and remitted to the FAAC.

According to Ikhinmwin, the letter written by the CBN governor hints at politics being played in the latest scandal involving the petroleum agency.

He however said that if the allegations of the CBN turn out true, the governor must be commended for being courageous especially in the face of claims that the Presidency’s body language towards corruption is mild.

However, Lawyer and Petroleum expert, Engineer Yomi Orenuga, raised questions as to the silence of the CBN concerning the unremitted funds within the period which it said the NNPC failed to fulfill its obligations, despite the monthly meetings they hold to balance their accounts.

“Reconciliation is done almost on a monthly basis with all the agencies of government, even from the IOC’s that lift crude oil. You reconcile and give reports of your liftings and productions,” he said.

In a telephone interview, the Group Executive Director, Exploration and Production, NNPC, Abiye Membere, disclosed that the agency had remitted about 18 billion in 2013 but the CBN acknowledged 15.52 billion.

Mr Membere also claimed that the NNPC paid more than 10.3 billion into the FAAC in 2012 and that the CBN did not have the accurate figure.

In his reaction, energy expert, Engineer Bala Zaka said that the whole situation attests to “a lack of congruency and inter-agency data and information sharing” between the two agencies.