Nigeria signs £2.9 billion oil refining agreement

Nigeria has signed a preliminary £2.9 billion agreement with US-based Vulcan Petroleum to build six oil refineries in the West African country. The deal could potentially boost the country's refining capacity by 180,000 barrels a day, with two of the refineries due for completion this year.

Nigeria is the biggest oil producer in the region but its refineries are only able to refine a fraction of it into fuel.

Speaking about the new deal Nigeria's Trade and Investment Minister Olusegun Aganga said the MoU with Vulcan marked the "beginning of changing our old paradigm of exporting just raw materials and exporting jobs to Western countries.”

Last week, Nigeria's President Goodluck Jonathan sacked the boss and several other executives of the Nigerian National Petroleum Corporation (NNPC) after an inquiry into the industry found $6.8 billion had been lost due to fraud in the past two years.

The investigation into the fuel sector followed a number of angry protests in January after the government tried to remove a fuel subsidy. It reasoned that the subsidy is costing the country billions. The probe found the government guilty of chronic corruption and fraud.

Sources: Reuters, Bloomberg, WSJ

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

Nigeria: A fire rocks Chevron's oil rig in Bayelsa State

On Monday 16th January, a fire– thought to have been caused by a gas leakage – ripped through Chevron's oil rig in Bayelsa State, leaving two workers missing.

After several days of intensified searching, Chevron released a statement extending its condolence to the families of the two missing people. The company has, however, accounted for the remainder of workers, who had been present on the rig and a nearby barge when the fire broke out. It said two workers were treated for minor injuries.

The investigation into the fire is ongoing. There is little evidence of sabotage, and the company believes it was caused by equipment failure. It has been established that the explosion occurred between 4.30am and 5am and was reported to be an accident. Some of the evacuated workers confirmed that the drilling exercise encountered technical problems while working on a new gas well head.

Speaking about the incident, Chevron's General Manager of Public and Government Affairs said: "There was no explosion. It was a fire incident at the Finuwa Field. The name of the rig is KS Endeavour. It is owned by Fode Drilling. All workers are being evacuated."

Sources: Upstream, Afrique en Ligne, Reuters

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

Sea Trucks gets Hyundai contract

The Sea Trucks Group has announced a contract award from Hyundai Heavy Industries (HHI) for Total in Nigeria. The project comprises the charter of a DP3

accommodation support vessel and associated services for 430 company personnel at the USAN FPSO, located 100km offshore Nigeria inwater depths of 750 m to support the mooring, hook-up, commissioning, and start-up activities of the FPSO.

One of Sea Trucks' DP3 offshore construction/ accommodation vessels, with fleet number Jascon 30, will be used for the project with a new custom-built portable accommodation block installed on deck to provide extra facilities for 184 people. After Akpo in Nigeria and Girassol and Pazflor in Angola this is the fourth accommodation services project the group will execute for Total.

The work is expected to start at the end of July and to continue for a minimum of nine months with options to extend.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2011 Menas Associates

Oil-hosting communities get payout

The presidential adviser on petroleum matters, Emmanuel Egbogah, has revealed that the fed­eral government has worked out a new dividend payment formula for oil-hosting communities that will see them receive $1.1 billion in annual dividends. That is much higher than the $600 million annual dividend payment that Minister of Petroleum Resources Diezani Allison-Madueke had previously announced.

According to Egbogah, the onset of the amnesty programme has brought about an increase in Nigeria's production levels and thus it is perti­nent that the federal government seek a lasting solution to issues of militancy in the Niger Delta by coming through with its promise to pay divi­dends to oil-hosting communities. He also noted that the previous figure was 'not quite correct.'

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2011 Menas Associates

Nigeria: No oil round till Q3

Senior government and industry sources tell Nigeria Focus there won't be an oil licensing round in Nigeria earlier than the third quarter of 2011. According to these sources, President Goodluck Jonathan has been persuaded to rescind his earlier decision to conduct a new oil licensing round, which had previously been scheduled to take place between August and December 2010.

The delay was argued for on the grounds that it would probably be as unsuccessful as the round held before the 2007 elections by former president Olusegun Obasanjo: few awards were converted to production sharing contracts and major companies hesitated to participate for political reasons.

On several occasions last year, Minister of Petroleum Resources Deziani Allison-Madueke had offered reassurance that a new oil licensing round would indeed take place in 2010. She has, however, been silent recently on the issue of the licensing round.

The new licensing round is expected to be mainly for marginal oil fields and the Department of Petroleum Resources, the agency responsible for organising licensing rounds, is reported to have submitted a list of 38 marginal oil fields to the minister for consideration; she will in turn forward the list to the president for his final approval. The marginal fields up for grabs in the licensing round belong to the existing upstream joint ventures with major companies.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

Nigeria: Further personnel changes rumoured

As analysed in recent editions of Nigeria Politics & Security, Petroleum Minister Mrs Deziani Allison-Madueke escaped dismissal in the minor reshuffle on 11th August, despite rumours of her imminent removal. Deputy Finance Minister Remi Babalola was not so lucky, being summarily reassigned to a ministerial backwater following his “unguarded” public comments about the purported insolvency of the Nigerian National Petroleum Corporation (NNPC).

However, this may not be the end of the current struggle for influence in Nigeria's oil hierarchy. Our sources have suggested that the next person in the line of fire may be NNPC Group Managing Director (GMD) Austin Oniwon, upon whose letter to the Federation Account Allocation Committee (FAAC) Babalola's fatal comments were apparently based.

Whether this speculation has any mileage remains moot. However, Menas Associates has noted with interest the increasing behind-the-scenes frustration of the presidency with the slow progress in narrowing the gap between the NNPC's view of the Petroleum Investment Bill (PIB) and the views of the oil industry. Oniwon has been a key figure in the NNPC's uncompromising stance, and has resisted calls from Allison-Madueke to move towards the middle-ground.

While Oniwon's departure might serve the presidency's interests vis-à-vis the PIB, it would further reinforce criticisms of Jonathan's (and Allison-Madueke's) handling of the NNPC: Oniwon took over from Shehu Ladan only four months ago, while Ladan himself had barely spent seven weeks in the position before he was replaced. Sources suggest that Oniwon – an indigene of Kogi State – will be replaced by a GMD from the South-East.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

Asaba Delta High Court orders SPDC to pay damages

The Federal High Court sitting in Asaba Delta State has ordered multinational oil giant Shell Petroleum Development Company (SPDC) to pay ₦15.4 billion in special and punitive damages to the people of Ejama-Ebubu community in the Tai Eleme local government area of Rivers State.

The damages are for an oil spill in the community that first occurred in 1970. The spill affected an area of about 255,369 ha.The presiding judge, Justice Ibrahim Buba, also ordered SPDC to de-pollute and rehabilitate the dry land and swamps of the affected community to its pre-oil spill impact status. Justice Buba faulted the objection to the suit by Shell on the grounds that the suit, if predicated on the 1970 spill, was statute barred.

According to Justice Buba, the case was predicated upon Shell's continuing 'nuisance.' The judge further stated that since Shell and its two subsidiaries, Shell International Petroleum Company Ltd and Shell International Exploration and Production BV, which were co-defendants in the suit, elected not to call evidence to support their pleadings, all the facts raised in their defence pleadings went to no issue.

He stated, however, that this did not absolve the plaintiffs of their responsibility to prove their case, which he adjudged they had done. The suit was originally instituted in 2001 and had gone through two other judges – Justice Adamu Bello and Justice Regina Nwodo – before getting to Justice Buba. There were about 24 interlocutory applications and three interlocutory appeals by the defendants, all of which served to delay the matter.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates