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Why Nigeria Should Brace Up For Oil Decline – Minister

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Nigeria is Africa’s largest oil-producing country, and understands it will have little choice but to wean its economy off a reliance on fossil fuels as the world inches onto a low-carbon path, its environment minister said.
Mohammad Mahmood Abubakar said he did not see a long-term future for Nigeria’s oil industry if governments follow through on their promise under the 2015 Paris Agreement to cut planet-warming emissions to net-zero by the second half of the century.
“These days, anything to do with fossil fuel may have its days numbered, or years numbered,” he told The Tide source at this month’s U.N. climate talks in Madrid.
Abubakar said Nigeria should use the royalties and export earnings it receives from oil – which account for about half of its revenues – to invest in alternative sources of energy, in order to “be ready” for a global transition to cleaner energy.
“If the world is truly willing… to quit fossil fuel, then if you are not ready and finally the world comes to terms with that and there are alternatives and no one is buying enough oil from you, at that point you are in trouble,” he said.
The federal government has started to diversify into renewable power generated from solar, wind and waste and is moving its universities onto solar power systems, he added.
It is also making efforts to end gas flaring from oil-industry operations on its soil by 2030, as part of its national climate action plan submitted to the United Nations.
Burning off the gas is a waste of energy and a major source of planet-warming emissions, and Nigeria is procuring technology to capture the gas instead to produce power or heat water, said the minister, a biologist and environmental protection expert.
Nigeria’s climate action plan also pledges to improve its energy grid and expand the use of efficient gas power plants, in an effort to cut widespread use of polluting diesel generators.
Nigeria has an overall target of cutting its emissions by 45% by 2030 from 2010-2014 levels, conditional on receiving international support to achieve that.
Like many other emerging economies, it is seeking funding from wealthy governments to pursue low-carbon development and adapt to climate change impacts such as creeping desertification in the north and rising sea levels affecting its coastal areas.
Abubakar said finance was “very critical” for Nigeria and called for processes to gain access to it, which many countries struggle with, to be “made easy”.
Nigeria faces what the minister called significant “climate disruption”, such as the shrinking of Lake Chad to less than a tenth of its size in 1960, depriving local fishermen and farmers of their livelihoods and forcing them to leave their homes.
The lake’s deterioration was one reason Islamist insurgent group Boko Haram had flourished in the region, he added.
“I am sure their recruiters used that opportunity to prey on young people, and even the old ones, because there are no jobs… they are sitting ducks for extremist organizations,” he said.
Deforestation is another issue Nigeria needs to tackle, he noted, as rural communities continue to use wood as their main fuel for heat and cooking, making climate change impacts worse as rainfall-stabilizing and carbon-absorbing trees disappear.
At the same time, Nigeria faces a huge task to repair the environmental damage caused by oil extraction in the Niger Delta, which has contaminated water supplies and soils as a result of spills.
International oil companies have recognized their role in causing that pollution, and agreed to provide about $1 billion to restore the affected areas, Abubakar said.
He recently visited some of the roughly 20 sites where clean-ups are underway so far and met with the companies and United Nations officials in Geneva to review progress. More effort was still required, he added.
Businesses that exploit fossil fuels, gold, diamonds or other resources in Africa should be held accountable if those activities harm local communities, the minister said.
“Wherever there is oil or mining or whatever it is, let them pay for the clean-up but also for the restoration of livelihoods of the people that are being displaced there,” he added.

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Oil & Energy

BUA Group, A’Ibom Sign MoU For Refinery’s Access Road

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Bua Group has signed a memorandum of understanding, (MoU), with Akwa Ibom State Government, and the host communities in Ibeno Local Government Area, for the construction of access road to the proposed Bua Refinery and Petrochemical plant site in Ibeno, last week.
Akwa Ibom State Commissioner for Power and Petroleum Development, Dr. John Etim, who presided over the signing of the MoU, applauded BUA for their commitment to the project, prompt documentation and the preparation of the site towards the construction of the refinery.
Etim said that the refinery project will bridge the gap between host communities and Akwa Ibom State, thereby bringing about more developments in the oil and gas sector of the State.
The Commissioner called on all parties concerned to be committed to the terms of agreement and to ensure that peace dominates their relationship, while appealing to the host communities to protect the facilities which is now in their custody
“The refinery and petrochemical project is in line with the Governor’s vision to industrialise the State, develop local capacity in key industries where value can be added and raw materials sourced locally.”
Speaking shortly after the MoU signing, the Chairman of Ibeno local government, Williams Mkpa, expressed delight over the development, describing it as a giant stride in the industrialisation vision of the Akwa Ibom State Government.
The paramount ruler of the area, Owong Effiong Archianga, assured the company of his people’s unalloyed support and cooperation to see to the actualisation of the project.

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CSO Urges Oil Communities To Challenge PIA In Court

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A Civil Society Organisation, Policy Alert, has faulted President Muhammadu Buhari’s signing of the Petroleum Industry Act 2021, urging communities to test the provisions of the Act before the courts.
President Buhari had signed the erstwhile Petroleum Industry Bill, PIB, into law last Monday amidst protests from community groups and many other stakeholders that the Bill do not adequately cover the rights and interests of the host communities.
In a statement signed by its Communications and Stakeholders Engagement Officer, Mrs. Nneka Luke-Ndumere, Policy Alert, which is working for economic and ecological justice, described the presidential assent to the PIB as “grossly insensitive and problematic.
“It is sad that the bill has been assented to in the most controversial manner despite its many obvious flaws and its rejection by many stakeholders,” the statement read.
It added: “For example, the controversial provision for a direct payment of 30 percent profit oil and profit gas to the Frontier Exploration Fund potentially shortchanges the oil producing states and local governments of some of its thirteen percent derivation as it bypasses the requirement in section 162 (2) of the 1999 Constitution (as amended) which provides that all revenues be channeled through the federation account.
“This is most unfair, viewed against the ceding of only three percent of previous years’ operating expenses to the Host Communities Development Trust Fund and the punitive provision to charge costs of any damage to facilities against the community’s Fund, among other obnoxious provisions.
“That Mr. President has gone ahead to give assent to these vexing provisions only reinforces the politics of exclusion and expropriation that has for long characterised the relationship between the Nigerian state and the oil producing communities.
“We are also concerned that the host communities’ component of the legislation flies in the face of one of its stated objectives to address tensions between host communities and companies as it has all the ingredients for escalating rather than abating such conflicts.
“At a time when fossil fuel investments are being deprioritised elsewhere as a result of the global energy transition, it is unfortunate that this Act failed to provide a bridge between the current era of fossil fuel dependency and the low-carbon energy future that Nigeria aspires to within the framework of government’s much vaunted commitments under the Paris Agreement.”
The statement also said: “Granted, the new legal framework introduces some predictability and clarity to the governance and fiscal arrangements in the oil and gas industry. We are also not oblivious to certain clauses that respond to some of our earlier demands, such as those providing that the Board of Trustees of the Host Communities Development Trust will now be determined in consultation with the host communities, with  membership drawn from community members. But that is just as far as it goes.
“As a tool for improved benefit sharing to host communities, the Act falls flat on its face. It actually ridicules the exertions of the host communities and advocacy groups that have clamoured over the years for a law that yields some space for participation, direct socio-economic benefits and environmental remediation for oil-rich communities.
“The theatre of action will now have to move to the communities and the courts of law. As implementation of the Act gets underway over the next 12 months, we urge host communities and civil society groups to begin to seek interpretation of some of its more controversial provisions before the courts.”

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Kyari Tasks Greenfield Refinery On Fuel Importation

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The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has charged members of the Board of the NNPC Greenfield Refinery Limited (NGRL), to explore all available options to bring an end to the current challenge of petroleum products importation.
Mallam Kyari gave the charge Thursday while inaugurating the Board of the newly incorporated subsidiary of the Corporation, NNPC Greenfield Refinery Limited (NGRL), at the NNPC Towers, Abuja.
The NNPC Greenfield Refinery Limited is a subsidiary of the Corporation set up in December 2020 with a mandate to oversee the establishment and operation of new refineries.
The GMD, who is also the Chairman of the NGRL Board, challenged members of the Board to focus on profitability in order to remain afloat and avoid liquidation.
“As a business, this is a big opportunity for us and this company’s balance sheet must change positively. Going forward, with the Petroleum Industry Act (PIA), I can tell you that if you continue to post negative for three years, you are out. So, there is really no excuse”, Mallam Kyari stated.
He urged the Board and Management Team of the new company to set up a proper structure with the required skills, technology and financing to drive the company’s operations, adding that he was optimistic that the company would be able to achieve its mandate.
“Our company must grow and we can’t do well except we are able to process our production whether it is the liquid or gas. If we don’t monetise it then we have done nothing. This is really a new chapter and we are committed to making it work,” he said.
The NNPC helmsman stated that all the Corporation’s initiatives in the areas of new refineries, condensate refineries and equity acquisition in credible private refineries were geared towards ensuring energy security for the country.
In his remarks, the Alternate Chairman of the Board and Group Executive Director, Refinery and Petrochemicals, Engr. Mustapha Yakubu, declared that the operations of the company would be guided by the principles of cost effectiveness in line with the new Petroleum Industry Act (PIA), noting that profitability would be the key focus.
Speaking in similar vein, the Group General Manager, Greenfield Refineries and Project Division (GRPD) and Managing Director of the NGRL, Engr. Bege Talson, disclosed that the Division was working with third party investors to establish greenfield, modular and condensate refineries with a combined capacity of 250,000barrels per stream day (bpsd).

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