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.

NNPC negotiating Brass Liquefied Natural Gas project with international partners

There are reports that Nigerian National Petroleum Corporation (NNPC) is currently in negotiation with LNG Japan and Itochu Corporation and the US-based Sempra Energy, to jointly acquire 9 per cent of NNPC's stake in the Brass Liquefied Natural Gas (LNG) project. Negotiations are said to have reached an advanced stage and will soon be concluded. NNPC currently has a 49 per cent stake in the potentially hugely lucrative project, whilst ConocoPhillips, Eni and Total each hold 17 per cent stakes in the project which is located in Bayelsa State.

As part of the Federal Government's Niger Delta post amnesty policy the NNPC will cede 10 per cent of its stake in the Brass LNG project to Rivers and Bayelsa States, under the scheme to allow host States to own stakes in such projects. This means that if the current negotiations are indeed successful the NNPC will only hold a 30 percent stake in Brass LNG after ceding 9 per cent to the consortium and 10 percent to the Bayelsa and Rivers State Governments.

Long fuel queues have suddenly returned to most of Nigeria's major cities. On Friday 18th March residents in Abuja and Lagos State awoke to the reality of fuel scarcity and the resultant queues.

The NNPC has not yet made any statement on the reasons for this recent fuel scarcity. Some observers believe that, unless the fuel scarcities are quickly resolved, it could definitely have an adverse effect on President Goodluck Jonathan's popularity in the presidential polls which is now less than a month away.

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

© 2011 Menas Associates

PIB advances, but further delays likely

The House of Representatives' Joint Committee responsible for review of the Petroleum Industry Bill (PIB) has reportedly agreed on a draft of the Bill, which will now be submitted to the chamber of the House for a third reading on 15th March.

The Joint Committee, led by the Committee on Petroleum Upstream, met on 10th March to approve the draft following a compromise on deepwater fiscals was hammered out with the technical committee of the Nigerian National Petroleum Corporation (NNPC).

While there has been a recent increase in pressure from the presidency to secure the PIB's ratification prior to the elections scheduled for April, it remains highly uncertain that the PIB will be passed in this term, because the legislature is scheduled to go into recess on 16th March. We understand that additional drafting is required, before at least a week's consideration in committee and several days of line-by-line debate in the House. It therefore now seems likely that the final version of the PIB will be passed after the April elections but before the official end of the current government in May.

According to sources in Abuja, members of President Goodluck Jonathan's Campaign Committee are increasingly concerned that the incumbent may not secure victory in the first round of the presidential election on 9th April. If these concerns prove prescient, then the ratification of the PIB – in whatever form – could be delayed by a number of months.

Moreover, if the Bill's ratification is not undertaken before the end of the current term, more substantial reformulation may be required, with new legislators likely to push for modifications in an effort assert their control over the legislative process.

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

© 2011 Menas Associates

Oil production in Ghana will not compromise the WAGP project

Managing Director of the Nigerian Gas Company (NGC) Saidu Mohammed has said that the commencement of oil production in Ghana will not compromise the West Africa Gas Pipeline Project (WAGP).

The WAGP project was set up by Chevron, the Nigerian National Petroleum Corporation (NNPC) and other investors to pipe Nigerian gas from Niger Delta to Ghana through Benin and Togo.

The $600 million deal was initiated before Ghana's oil reserves were discovered. Speaking to the media in Warri, Mohammed told journalists that Ghana's impending oil production would not constitute a threat to the WAGP project.

“Yes, gas may come in from Ghana, but it wouldn't be a threat to the WAGP project. Indeed, I believe it will open another window of opportunities for Nigerians. I think Nigerians will even be involved in the oil and gas business in Ghana,” he said.

Mohammed also said that the debt to NGC by the Power Holding Company of Nigeria (PHCN), has been “substantially offset.” NGC is a subsidiary of the NNPC, responsible for the supply and distribution of gas in Nigeria. PHCN's gas purchase accounts for around 70 per cent.

Speaking about the ongoing divestment by the Shell Petroleum Development Company (SPDC) Mohammed said, “NNPC is deliberately making sure the divestment does not impact the gas system in the country”, adding that the gas project in places like Sapele was conceived in this respect.

He added that the local gas pipeline system would be extended to the northern part of the country under the WAGP agreement.

“The Nigerian gas master plan will ensure the extension of gas pipeline beyond Ajaokuta (in Kwara State ) while on the other hand, Ajaokuta could link the eastern parts as far as Akwa Ibom State. The pipelines are not being viewed as Ajaokuta-Kaduana-Kano lines; but rather as backbone of the (proposed) trans-Saharan gas pipeline project,” he said.

Source: World Stage

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

Nigeria: Mend claims Warri-Escravos pipeline attack

The Movement for the Emancipation of the Niger Delta (Mend) has claimed responsibility for a weekend attack on the Warri-Escravos pipeline in the Niger Delta. The attack on the pipeline, supplying a large refinery, was confirmed by the Nigerian National Petroleum Corporation (NNPC).

Over the past year, Mend's activities in the oil-rich Delta subsided following a ceasefire agreement but a small faction of the group's activists have recently resumed criminal activity. The group, fighting for equal distribution of oil wealth, issued a warning to the media, saying, "This attack and similar attacks on pipelines which will take place within the next few days is a reminder to the Nigerian government of the futility of wasting the nation's resources in combating militancy without addressing the underlying causes of agitation in the Niger Delta".

The Nigerian authorities believe that the breakaway faction is also responsible for the twin car bombings which killed 12 people during a celebration of Nigeria's 50 years of independence last month.

Over the weekend, the army said it had arrested 63 militants in connection with the recent kidnapping of ExxonMobil, Afren and Shell oil workers released last Wednesday [17th November]. The operation was the first successful rescue of foreign captives in the Delta without any of the hostages being killed in the process.

Source: BBC News

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