Oil & Energy
PEF Bridges To Ensure Uniformity In Petroleum Prices (II)
This is the continuation of the story published last Monday, August 27, 2012
The Executive Secretary of the Petroleum Equalisation Fund
(PEF), Mrs Adefunke Kasali in this interview
with our correspondent gives an
insight into the operation of the PEF. Excerpts:
Once that is done, the information immediately and
automatically to the server in our head office and when they scan the entire
document into the server and attach it here, our processing department
processes it and from there it goes electronically to audit and all the
verifiers and approval levels and straight into our e-payment system. It is the
first fully end-to-end operations and payment solutions anywhere in the
country.
Question:Is the equipment fool-proof and how do you deal
with the human factor?
Answer:The design is done to have little human interference.
Our depot representative at the loading facility may have to click on some
issues, which have been preset, so that he just picks.
Once a marketer is registered on our database and he comes
into our office to do some transactions, all the depot representatives have to
do is to just pick that information. The truck would have been registered and
that information is sitting on the server and all in all the devices. It’s not
subject to a lot of human manipulation and that is the beauty of it.
Question: What are you doing to ensure that all depots are
captured in the project?
Answer: Our plan is that it will be 100 per cent deployed.
Now we have achieved just 60 per cent of the depots that are Aquila-ready. We
are in the process of deploying to the other depots and it’s really proper that
we follow up on all the procurement processes that have sort of delayed us.
Yesterday, one of the MDs of the facilities called me and
asked when are you bringing Aquila because all his marketers are saying with
Aquila they can get their money more quickly because nobody wants to buy from a
facility where they are not PEF Aquila-ready.
We are working very hard to ensure that in the shortest
possible time, we have all the depots in the country that are doing petroleum
transaction on Aquila so that they can all enjoy the benefits of what
government is doing.
I can be specific that by end of November, we should have
all the depots ready because the last bit of the procurement processes is that
we should be having all the equipment in Abuja in for deployment by the end of
September.
In the new Petroleum Industry Bill (PIB) what are the
assigned roles for PEF? The PIB as I have seen the PEF is still very much part
of the PIB that has been submitted by the executive to the legislative arm of
government. The roles will be clearer but basically, the mandate of the board
is still very much maintained by the PIB.
Question: The House of Representatives Committee on Public
Accounts ordered the management of PEF to refund N27 billion into the Federal
Government coffers within three months being 80 per cent of the operating
surpluses of the agency in the last five years. How far have you gone in this regard?
Answer: It is true that the House of Representatives Public
accounts invited the Board for a review of the 2009 accounts of the Board and
at that meeting, directed that the board should refund some money to the
federation account.
At that meeting, management tried to clarify the issues to
the members of the committee and I hope we still have an opportunity to discuss
the matter further.
PEF uses cash basis of accounting and so because the feeling
is that as a Fund, we should recognise what comes in and what goes out and that
is basically what cash basis accounting says.
Cash basis of accounting does not recognise receipts and
receivables that you are expecting and it basically does not recognise payables
that you haven’t been able to process and pay.
The starter of our payables as at the time these audited
accounts were submitted was not taken into recognition, so asking the board to
pay back money at that time doesn’t necessarily take into the account if the
money is still there. Because when you are looking back at an account, you do
not even know what that situation is a few years down the road. Needless to
say, the board has been given 90 days to do that.
Question: When an agency is asked to refund, the conclusion
is that some fraudulent practices must have taken place. Could you use the
occasion of this forum to set the records straight?
Answer: Certainly there was no untoward act, no corrupt act.
What the committee did was that if the board had receipts in the year at the
beginning or throughout the year and then the board then paid some monies out,
whatever was outstanding was considered surplus income. And that meant, for
instance, if one billion was outstanding that was not paid out, the committee
did not take into view that there could be 10 billion worth of claims waiting
to be paid at the end of the year.
Basically, they didn’t find very much that was wrong with
the account of the board except what they called surpluses and they then took
the position that those surpluses are supposed to be refunded to the federation
account and then supposed to be gotten out.
But the fund does not get money from the federation account
to pay its claims. So, if the money is returned into the federation account,
then the board will have an issue as to where the funding to pay the claims
when they are processed.
Question: Is this the same thing with the N20 million scam
on land? The committee also directed the board to refund another N20.22 million
within the same period for expenses incurred on a plot of land acquired in 2001
for its corporate head office but which was revoked by the Federal Capital
Development Authority, FCDA in 2006?
Answer:The other issue that was raised by the committee was
that in 2003 which predates my coming into the office, the FCT had allocated a
piece of land to the PEF for the purposes of developing its corporate
headquarters.
The files available to me actually indicate that the board
has prepared all the drawing and everything. It also forwarded all those things
to the appropriate department in the FCT for granting of a building plan
approval.
But before that could be done, the exercise that took place
around that time, the land was revoked and government took it back. I know that
when I came in 2007 as the executive secretary and I met that situation, I made
several attempts. In fact, I spoke to two past ministers of the FCTs and made
several vigorous attempts for us to get the land back and to develop the head
office.
But the House Committee has now taken the decision that
since the board had expended some of that money [20 million naira]… [cuts in]
and to the best of my knowledge a large chunk of that money was spent on
payment of license fee to the FCT, engineering design and drawing… the board
paid back and the N20 million into government coffers.
Question:How can the nation eradicate the issue of fuel
scarcity especially with the recent strikes by NUPENG, DAPPMA and JEPFON over
nonpayment of subsidy claims?
Answer: The issue of fuel scarcity is an issue of supply and
I think the focus that government has to rehabilitate and get our refineries up
and running efficiently is really the long term solution.
I know that there is a lot of work being done on getting the
refineries back, and the Turnaround Maintenance (TAM). The Honourable Minister
of Petroleum Resources had mentioned that contract for the TAM had been awarded
to the original builders of the refineries so that we can get the expertise
that went into building them the first place.
That is the long term solution when we have our refineries
working to meet our local demand then, the issue of distribution is easier.
Question: How can we ensure that petroleum products are not
diverted to neighbouring countries as it is commonly practised?
Answer:The issue like I said, is that of supply which is
ensuring that as much as possible we are refining what we produce in crude.
Also one of the benefits of Aquila is a truck that is headed for a particular
location cannot deliver to another location.
For instance, several marketers have said we are moving this
product to Suleja and it never arrives. Then they take it to another location.
When it gets in there and once our depot representative can’t even find it on
the server even if they try to receive that product through another means, it
won’t go.
So those are the things we are doing now to curb diversion.
Therefore, Aquila will curb a lot of that. Phase one of Aquila is depot to
depot, phase two is to ensure that when it leaves the receiving depot it ends
up in the retail outlet that it’s meant to go.
With this project over time, cases of diversion will be
really severely cut if not totally eliminated.
Question: How will the PIB affect operations in the oil and
gas industry?
Answer: I believe that the review of the laws and the
transformation plans will just help Nigeria. I believe that it will be good for
Nigeria.
As far as PEF is concerned as I said earlier, we have the
bill that has been presented to the National Assembly and our commitment to
Nigeria is that we will do whatever we need to do and work very hard to ensure
that the benefits that government had in mind in putting together PEF are
delivered to Nigerian public.
This is by way of our products being available in the retail
outlet s and also by way of cutting people who are exploiting the situation
that causes the products not being sold at the appropriate prices.
Oil & Energy
Savannah To Take Over Stubb Creek Field in Nigeria
Savannah Energy PLC has signed agreements to take over Sinopec International Petroleum Exploration and Production Company Nigeria Ltd. (SIPEC), the British company’s co-venturer in the Stubb Creek oil and gas field in Nigeria, for $61.5 million.
SIPEC owns a 49 percent interest in the proven onshore asset in the Akwa Ibom State, which sits on the southern coast of the Western African country.
Savannah affiliate Universal Energy Resources Ltd. operates Stubb Creek with a 51 percent interest.
London-based Savannah, in a Press Release, said it has now inked separate share purchase agreements (SPAs) with the Chinese and Nigerian owners of SIPEC—Sinopec International Petroleum Exploration and Production Corp. (SIPC) and Jagal Ventures Ltd., the completion of which will result in Savannah taking full ownership of Stubb Creek, SIPEC’s principal asset.
“The SIPC SPA will see Savannah Energy SC Limited (a wholly owned subsidiary of Savannah) acquire a 75 percent equity interest in SIPEC for cash consideration of US$52 million, payable on completion and subject to customary adjustments for a transaction of this nature from 1 September 2023.
“The Jagal SPA will see Savannah Energy SC Limited acquire a 25 percent equity interest in SIPEC for cash consideration of US$7.5 million (without adjustment), payable on completion, plus US$2 million in deferred cash consideration payable in eight equal quarterly installments post-completion”, it stated.
Savannah simultaneously released an independent analysis showing gross proven and probable (2P) oil and condensate reserves of 11.9 million stock tank barrels (MMstb), as well as a gross best contingent gas estimate (2C) of 515.3 billion cubic feet (Bcf), in Stubb Creek as of January
It also holds an 80 percent interest in Accugas Midstream Business, which owns and operates the Uquo central gas processing facility and 260-kilometer (161.6 miles) pipeline network. The processing facility has a declared capacity of 200 million cubic feet a day.
SIPEC meanwhile had an estimated 8.1 MMstb of 2P oil reserves and 227 Bcf of 2C gas as of yearend, while its oil production is estimated to average 1,400 barrels per day (Kbpd) this year.
“Savannah’s Reserve and Resource base will increase by approximately 46 MMboe [million barrels of oil equivalent] following completion of the SIPEC Acquisition.
“It is anticipated that, within 12 months following completion of the SIPEC Acquisition, Stubb Creek gross production should increase by approximately 2.7 Kbopd to approximately 4.7 Kbopd through implementation of a de-bottlenecking program”, it said.
Oil & Energy
NNPCL Lists Transparency, Accountability, Others, As Transformation Drivers
The Executive Vice President, Gas, Power and New Energy, Nigerian National Petroleum Company Ltd, Olalekan Ogunleye, has identified transparency, accountability, research, technology and innovation as key drivers of the ongoing transformation in the company.
Ogunleye disclosed this while speaking during a Panel Session hosted by the NNPC Ltd at the ongoing 2024 CERAWeek Conference in Houston, the United States.
Ogunleye, whose session addressed the theme, “Africa’s Energy Future: Access, Investment & Sustainability”, said under the current leadership of Mr. Mele Kyari, the Company has institutionalized the use of modern technology to drive its operations, a development that has created tremendous value for the company in its quest to compete with its global peers.
He said with the coming of the Petroleum Industry Act (PIA) in 2021, NNPC Ltd has today transformed into an integrated commercial entity that is focused on transparency and accountability, two core values that are vital towards the Company’s quest to float an Initial Public Offer (IPO) at the stock exchange.
“Over the last five years, the NNPC Ltd has been pushing the agenda of transparency, accountability and performance excellence. I am glad to say that we are setting very high standards, and this is a journey that we are all committed to going forward”, Ogunleye stated.
He further observed that transparency and accountability have a commercial component to them, because they can make any organisation attractive to its partners and potential investors.
He said currently, the NNPC Ltd is working assiduously to become IPO-ready, stressing that once that is done, the IPO would be phenomenal and successful.
Ogunleye, who described the future as exciting for the NNPC Ltd, said as the biggest energy company in Africa with the biggest resources and largest market, the Company remained committed to delivering value to its shareholders by relentlessly improving its processes in line with global best standards.
He said gas would continue to be an important resource for Africa because it is the surest tool for economic development and for delivering better living standards for the teeming population on the continent.
Ogunleye called on all gas players to sustain the advocacy for gas as a major energy source that will be utilised to develop the economic and industrial fortunes of the continent.
According to him, gas is a top priority for NNPC Ltd because the Company is at the forefront of Nigeria’s gas commercialization efforts and flare elimination.
“Gas has come to stay. It is going to be part of the energy mix for us in the long term. We shall continue to be at the forefront of accelerating gas development and commercialisation in Nigeria”, he added.
Oil & Energy
Africa’s Energy Leap From Fossil Fuels To Renewable Powerhouse
The African continent is at a critical turning point. The region’s energy demand is set to skyrocket, just as climate change is starting to impact local livelihoods in earnest.
African countries are among those most vulnerable to climate change despite having contributed the least to the climate crisis.
Faced by a sharp population growth, and a need to develop local and national economies, Africa also must simultaneously contend with the urgent imperative to keep emissions in check. It’s a tall order.
Indeed, Africa is a perfect example of what is known as the energy trilemma: the tricky problem of creating enough energy while also keeping that energy sustainable and affordable.
What makes Africa’s situation so unique and so dire is the intense scale of each of these trends. The continent has some of the most underdeveloped energy grids on the globe, and is also facing the biggest population boom anywhere on Earth.
Africa has the fastest growing population in the world, expected to double between now and 2050. This means that, by midcentury, a quarter of the global population will be in sub-Saharan Africa. This presents a massive energy and infrastructure gap in the coming decades.
Currently, about 600 million people across Africa completely lack access to electricity. Furthermore, for a great many of those who do have access, it is not reliable or stable, as power failures and rolling blackouts are a common occurrence.
Such intermittent electricity is common in urban areas, while in rural areas establishing any form of grid connectivity can present a major challenge.
African energy demand is expected to increase by a third over the next decade as sub-Saharan Africa grows, develops, and industrializses.
To meet this demand, power generation capacity will have to increase by a factor of 10 by 2065. But to advance toward such goals without breaking climate pledges and more generally counteracting global progress toward decarbonization, Africa has to “leapfrog” over what is normally the next phase of development in a poor nation’s economic journey.
Unlike other nations in history which have enriched themselves and developed their economy by burning massive amounts of cheap and abundant fossil fuels with abandon, countries developing now do not have the same option.
Luckily, Africa is a goldmine of potential renewable energy resources.
“The continent is extremely rich in natural gas (considered to be a stepping stone away from dirtier fossil fuels like coal and oil), as well as abundant sunshine, wind, and highly sought-after rare Earth minerals such as lithium and cobalt which are essential components of renewable technologies including photovoltaic solar panels and lithium-ion batteries for electric vehicles and renewable energy storage”, Oilprice reported in July of 2023.
It’s just a matter of securing sufficient investment, fostering a supportive political environment, and establishing trans-national intra-African energy sharing agreements to be able to tap all of that green energy potential. If managed properly, clean energy could benefit the African economy enormously while helping to solve the riddle of the energy trilemma.
According to a new database of planned and installed renewable energy capacity across Africa, the continent is well on its way to achieving its ambitious energy “leapfrogging” goals.
In fact, figures show that if all planned additions are carried out without issue, some African nations could totally decarbonize by midcentury.
The Renewable Power Plant Database Africa, built by a renewable energy scientific modelling team from Rwanda and Germany, is the first comprehensive overview of renewable energy plants in Africa to include key details such as their geographic coordinates, construction status and capacity (in megawatts), allowing for more accurate and sophisticated modelling.
Such modelling shows that some of the countries with the most advanced renewable energy sectors and plans (such as Nigeria and Zimbabwe) already have enough clean energy projects lined up to conceivably transition away from fossil fuels as soon as 2050.
Furthermore, 76% of Africa’s electricity demand could be supplied by renewable sources by just 2040 in a scenario in which all clean energy plants in the pipeline are built as planned, and existing hydro-, solar and wind power plants are used to their full capacity.
This 76% would be composed of 82% hydropower, 11% solar power and 7% wind power.
However, the heavy dependence on hydropower in the short term is not a good long-term solution as periods of drought pose serious energy security risks.
“We conclude that combining the advantages of hydropower with wind and solar would be a more sustainable alternative to hydropower alone”, the Database team states, adding, “And that hybrid solutions would be the best option’.
Despite Africa’s many challenges, it stands to be one of the most important players in the global energy industry going forward. Its climatic and ecological characteristics and relatively low population density compared to other key regions gives it a major advantage as a hydro, wind, and solar powerhouse.
If built out according to plan, its clean energy output will be formidable. And as the continent develops, its massive workforce could make it a clean energy manufacturing source to reckon with.
Zaremba writes for oilprice.com concessional and semi-concessional.
By: Haley Zaremba
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