Oil & Energy
PH Residents React To Petrol Price Preduction
Since last week when
the Federal Government announced a reduction of N10 from the official price of the petrol pump price, in response to the fall in crude oil price at the global market, divergent views have continued to trail the action of the government.
Our correspondent who spoke with some of the residents reports that while some commend the reduction, others see it as a new campaign strategy of President Goodluck Jonathan to secure popularity and victory in next month’s general election, yet others feel reducing the pump price from N97 to N87 per litre was insignificant and not commensurate with the more than 50% fall of crude oil price in world market.
An economist and social analyst, Mr Jefat Edum, is of the view that the N10.00 reduction is quite insignificant compared to the big fall of crude oil price that is drastically devastating economies of oil-producing nations in the world.
“You can see the cries and woes of most companies in the sector and huge negative impact on the economies of oil-producing nations. One had expected that any slash in the petrol price should be significant to at least the point that it would reduce the cost of transport fares paid by Nigerians,” he said.
Edum is worried that with over 50 per cent drop in crude oil price, at least N35.00 should be reduced, so that one litre can go for at most N52.00 and this would further enable transporters meaningfully reduce the fares charged Nigerians.
You can see the effect of the reduction is not felt at all because it has not reflected on the prices of fare as much as the crude oil price fall is impacting on oil-producing nations.
He urged the Federal Government to revisit the reduction and slash more so that a litre of petrol can sell for N55 or N62 for the interest of Nigerians.
Another respondent, Dr. Donald Alozie picked holes with the way and manner government arrived at the N10 reduction.
Alozie disagreed with the sidelining of other stakeholders in the reduction. “Imagine the Trade Union Congress and oil marketers opposing the reduction. That means that these two important stakeholders were not properly consulted and their inputs were not in such a crucial decision which impacts heavily on Nigerians.
He described the government’s decision and approach as undemocratic and should therefore be reviewed so that a more acceptable level of reduction is achieved.
“Government cannot just wake up one morning and make such decision without proper consultations with other stakeholders in the sector.”
He criticized the refusal of some petroleum marketers in Nigeria to revert to the new pump price.
But Tunde John, a Port Harcourt-based businessman said the reduction is in order. “It is a show of magnanimity of the government to announce price reduction of petrol pump price promptly without allowing a build up of sentiments that could have resulted in mass actions.”
John lauded the Federal Government’s action but cautioned that, “the N10 reduction should not be seen to be the last action. The trend should be studied and further actions which may require more readjustments be made.”
Also speaking in a similar tune, a taxi driver, Macleans Anderson said, “the reduction is a proof of government’s sensitivity to the plights of the people.
According to him, “all we have been hearing for the past decades is increase in petrol price but it is a thing of joy that the President Jonathan-led Federal Government broke the jinx by reducing the burden on Nigerian masses. I commend the government for doing that.”
Anderson views the refusal of petrol marketers in other parts of Nigeria as sabortage and urged the Directorate of Petroleum Resources (DPR) to take more drastic actions against defaulters.
“The marketers cannot be bigger than the Federal Government. Slash in petrol price was taken in the interest of Nigerian masses and any attempt by marketers to reject the order should be viewed as a move against the people and government and must be resisted,” he maintained.
But a political colouration was given to the order by Chief Mathias Njoku. “If you look at the timing, you will see that because the president is desperate now to return for a second term, he has decided to make the reduction few weeks to the election time.
“Yes, we know that oil price has fallen in the global market but this has been on since last year, why did it take the Federal Government this long to take such decision,” he querried.
Nkoku said the aim of Federal Government is to win the sympathy of some gullible Nigerians whose votes he desperately needs to return himself and his party to power.
However, to Etim Clement, a trader, “government has done well. Let the taxi and bus drivers also reduce their fares. Petrol now costs less, and what it means is that the transporters should equally reduce their charges otherwise the reduction is meaningless.”
Clement also wants reduction in other products such as kerosene, and gas since they are products of crude oil. “As the price of crude oil drops, not only petrol price should drop, let others as kerosene and gas also reduce.”
He particularly appealed to marketers in Aba, Calabar and other cities that have refused to readjust to be selling at the new pump price.
Clement advised the government to take steps that could improve the agricultural sector so that sector so that most Nigerians who lost their jobs in the oil companies as a result of the fall in crude oil price as well as other unemployed youths can be engaged in meaningful economic activities.
He regretted that Nigerian’s past leaders failed to plough back oil money to agriculture and other sectors for the economic development of the nation instead of concentrating on oil for national earnings.
“Inability to properly diversify our economy has remained our major problem in the country. Those involved in agriculture should be encouraged. Apart from providing employment and creating wealth, it would boost our foreign exchange base,” he noted.
The Petroleum Products Pricing Regulatory Agency (PPPRA), in defending the new pump price of petrol said it considered the fundamental trends in global crude oil market before arriving at the N10 reduction.
Executive Secretary of the agency, Mr Ahmed Farouk, who disclosed this in Abuja said even with the N87.00 per litre, the government was still subsidizing it with N2.50 per litre.
He explained that in determining the new price, government considered the economic implications on an average Nigerian.
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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