Oil & Energy
Fuel Scarcity: Any Hope In Sight?
As the current fuel scarcity
which is causing untold hardship to Nigerians lingers, most citizens look up to God amidst contradictory rhetorics from appropriate quarters and ask: when will this seemingly unending suffering come to pass?
In the word of Mrs Dema Ogba, a director of NEDAL Oil Company Limited, “before this present down-turn, one good credit to the present administration led by President Goodluck Jonathan, which the critics of his administration could not take away from him, is his ability to win the battle against scarcity of fuel which had been the albatross of past administrations.” The director who expressed regret at the ugly situation urged the oil marketers, the government and other major stakeholders in the sector to expedite actions towards restoring normalcy.
In Abuja, Kano, Sokoto, Lagos, Enugu and even down to Port Harcourt, the oil city, the story remains the same: That long queues have remained unabated at the filling stations selling fuel, thereby forcing innocent Nigerians towards the black market where the price of a litre of fuel has jumped from the official pump price of N97 to N200.
The harsh situation, Chief Akpangbo Christopher noted, “has drawn out the worst from some unpatriotic Nigerians who are taking undue advantage to hike price, hoard the product and the next stage now would be to start mixing solutions with little fuel for money, and you know the resultant danger; explosion.
From Okehi, the Etche Local Government Council headquarters, to Mile III Park in Port Harcourt that used to cost N300.00 commercial drivers now charge N350.00 and above. From Mile III Park to Lagos Bus Stop that normally takes N50.00 is now going for N100.00 and such fare increase is noticeable in many other routes across the country.
Market women who bear the brunt of increased fare told The Tide that they have no option than to increase prices of their commodities to meet the situation and make profit.
Mr Yusuf Adedayo, a commercial driver in Ibadan said I have been queuing for fuel since 9.00am and only got fuel at 2.00pm at N120 per litre. How can I make profit when I charge the same fare?
Udochukwu Nnadi, a black marketer, however is happy with the scarcity. “It is good business because many people who can’t buy from the petrol stations have no option than to patronise us. I sell at N200 per litre and when I observe that you belong to the top class, I sell at N250.00 per litre.” Nnadi disclosed that he has made real money within the past two weeks and prays that the scarcity should last longer.”
The black marketer also said they work together with the filling station attendants such that they always have supply since they also benefit from the deal.
Irked by the unpatriotic activities of some marketers who resorted to adjustment of metres and hoarding of products, the Rivers State Commissioner for Energy, Hon. Okey Amadi sealed two filling stations belonging to Oando and Conoil.
Amadi explained that normal supply still comes from the refinery and private tank farms and blamed the situation on dubious marketers who were worsening the situation by hoarding, selling above official pump price and tampering with their metres.
The commissioner advised residents of the state against panic-buying and stressed the inherent danger in hoarding petrol in our homes.
“If you hoard petrol in your homes so that you will make more money in a period of anticipated high price, the danger is that the product can cause fire outbreak that also goes with loss of lives and property.”
The cause of the scarcity is shrouded in secrecy as there has not been a clear explanation so far.
It was widely suspected that National Union of Petroleum and National Gas Workers (NUPENG) was behind the scarcity. But authorities of NUPENG quickly cleared the case last week when the union said it has no hand in the scarcity.
NUPENG said it has a case with some oil multinationals over quota and casual workers and was picketing the multinationals.
However, Comrade Godwin Eruba, chairman of NUPENG in the South-South Zone suspected that the scarcity could be as a result of the federal government not renewing licensing issues with the marketers, hence they could not import the product as at when due.
Eruba had pleaded with the government authorities to expedite actions so that the licence controversy could be resolved and petrol imported into the country to enable Nigerians get enough for their use.
Reports also said that the Department of Petroleum Resources (DPR) had attributed the current fuel scarcity across the country to the non-renewal of contracts of some independent marketers to import the product.
According to a source, the Zonal Operational Controller of DPR in Abuja, Mr Aliyu Halidu, who represents his director at the budget defence session before the Senate Committee on Petroleum (Downstream), the non-payment of subsidy fund to the marketers by the government had also hindered the importation of product, resulting in shortage in supply.
Halidu was reported to have urged the lawmakers to expedite action on the process of legislating on bunkering, in addition to resuscitating other laws which could facilitate elimination of illegal bunkering from the system.
He also urged the Senate to expedite action on the passage of the Petroleum Industry Bill (PIB) to help strengthen the DPR’s regulatory powers, according to the report.
But surprisingly, DPR authorities came up with a refutal denying claims that it attributed the current fuel scarcity to delays in the signing of contract for importation of petroleum products.
A statement issued by the Zonal Operational Controller, Mr Aliyu Halidu in Abuja office of DPR said that the agency did not discuss any issue of contract signing or illegal bunkering during the budget defence before the Senate Committee on Petroleum Resources (Downstream).
“The issue of renewal of contracts for the importation of petroleum was never discussed during the budget defence before the committee because we are not in the position to say that.”
The issue is not whether DPR authorities chose to swallow their vomit when the heat from above came up, or not, but that acute fuel shortage hit the nation and DPR should advance a convincing reason if actually they should earn their monthly pay.
The Petroleum Products Pricing Regulatory Agency (PPRA) said the reappearance of long queues at filling stations across the country is artificial and uncalled for.
The PPRA spokesperson, Mr Lanre Oladele told newsmen in Abuja that there was no basis for the scarcity currently being experienced adding that there was enough stock to keep the country going for days and that with the release of allocation of licences to marketers for the first quarter of 2014, there was no reason for the fuel scarcity.
He particularly described the claim that the scarcity was due to the delay in the release of import allocation to marketers as false and unfounded and stressed that the last allocation was enough to sustain the market till when the next allocation would be released.
But to some Nigerians, the allegations and contradictory rhetorics do not solve the nation’s practical challenges. Mrs Nkiru Emecheta, a student of the University of Science and Technology, Port Harcourt advised that “stakeholders should still continue to hide their secrets but find solutions to the embarrassing petroleum scarcity which they know to be real.”
There have been calls for transparency in the nation’s oil sector where most of the activities are shrouded in official secrecy.
The International Monetary Fund (IMF) in its concluding statement of the 2014 Articles IV Consultative Discussion of February 21, 2014, urged Nigeria not only to strengthen transparency and governance of its oil sector but also to advance policies that could focus on rebuilding external and fiscal buffers.
IMF forecast that the nation’s economic growth will accelerate this year to 7.3 per cent, motivated by sectors outside oil and energy industry which accounts for more than 90 per cent of the nation’s revenue.
Respite appears to have come as the federal government a couple of days ago announced that enough products have been imported into the country giving assurance that before the last weekend, there would be petrol across the nation.
But PENGASSAN industrial relations office dismissed the federal government assurances, saying even if there is fuel in all the depots across the nation, it will still take about more than two weeks to get the product to the filling stations in different parts of Nigeria.
“I’ve not seen the situation normalising before two weeks because if today there is fuel in all the depots, before they start loading and start distributing and off loading at all filling stations, I think it will take about two weeks.
PENGASSAN attributed the scarcity to delay in supply and urged Nigerians to avoid panic-buying because of its attendant dangers.
Chris Oluoh
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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