Oil & Energy
Stakeholders And Oil, Gas Exploration
Some stakeholders in the oil and gas industry have advised the Federal Government to make provision in subsequent national budgets for offshore and onshore exploration activities to encourage new discoveries.
They gave the advice in separate interviews with newsmen in Lagos last Friday while reviewing the oil and gas sector for 2018.
The former President, Nigerian Association of Petroleum Explorationists (NAPE), Mr Biodun Adesanya, said in 2018, there was noticeable improvement in the revenue generation occasioned by better oil price and less disruption in export volumes.
“In 2019, we should work harder to sustain and improve on the modest gains of 2018 especially the production and export infrastructures.
“They also need to conduct licensing round.”
Adesanya, who is also the Managing Director, Degeconek Nig. Ltd., urged government to develop the country’s modular refineries to reduce importation of refine petroleum products.
“The modular refinery concept is a good idea but its implementation will be difficult under the existing structure.
“How would it resolve the challenges of the Niger Delta region, how will it be funded?
“How can the crude supply be guaranteed, what currency will the crude be sold to the refineries given that products will be sold in Naira,” he said.
The former Chairman, Society of Petroleum Engineers (SPE), Nigeria Council, Mr Chikezie Nwosu, said establishing fairly comfortable oil price should be of particular interest to the oil and gas industry in 2019 and beyond.
He said the current uncertainty in global politics had effects on the global economy and that prediction of market trends was becoming increasingly difficult.
According to him, global political tensions add significant uncertainty to an already challenged oil and gas industry; demand versus supply economics.
“The tensions between the USA and Iran, the Saudi Arabian issues with the killing of the journalist Jamal Khashoggi and the withdrawal of Qatar from OPEC.
“The trade tariff skirmishes between China and the USA, BREXIT and the sudden announcement of the total withdrawal of the USA from Syria, all added to the global tensions,” he said.
Predicating the budget, Nwosu said it depended to a large extent on oil revenues, adding that an oil price of 60 dollars per barrel seemed a bit optimistic.
“A more realistic range will probably be between 40 dollars and 45 dollars per barrel, allowing for windfall receipts if higher, but also providing a hedge against lower oil prices.
“Oil production from the current data as at September stood between 2.03 million barrels per day and 2.3 million barrels per day is possible.
“This, however, provided the 2019 elections are peaceful and the results do not aggravate the Niger-Delta and host and impacted communities.
“It will be good if all four key component bills of the Petroleum Industry Bill are passed by the National Assembly, and assented to by the Presidency, early enough in the year before mid-year 2019.”
Nwosu said that would bring the needed peace to the host and impacted communities, as they become partners in the exploitation of oil and gas resources.
According to him, it will also restructure the industry and NNPC to be more effective, with a world class governance structure.
He said the bill would also attract the necessary direct investments, both local and foreign.
“Markets, including the oil and gas industry, do not like uncertainty and the PIB will go a long way to address the framework for doing business in the Nigerian oil and gas industry,” he said.
Nwosu said of particular importance was the full implementation of the seven big must wins initiated by Dr Ibe Kachikwu and supported by Dr Maikanti Baru which addresses many policy challenges in the industry.
He said unlocking the huge potential of the gas resources would also help in diversifying and growing the Nigerian economy through its impact on power, agriculture and other industry.
He said integrated Oil and Gas Field Development Plans (FDPs) must be emphasised by NNPC and some urban planning concepts must be encouraged.
This, he said was to ensure that there was leverage on synergies of development by the various operators, especially in offshore developments, and significantly lowering unit technical costs.
He said to encourage investments in exploration, it was important for NNPC to insist that exploration and appraisal plans are an integral part of all FDPs.
The Chairman, Integrated Oil and Gas Ltd., Mr Emmanuel Iheanacho, said that in the last 10 years, the demand for refined products had always been on the increase.
Iheanacho said that building a modular refinery of about 1,000 barrel cost over 1.2 billion dollars.
“Building a modular refinery is not easy, apart from citing your refinery beside the sea, one can as well site it near a marginal oil field.
“Finance is the major reasons why most investors in the modular refineries abandoned it.
“No bank is ready to give loan to any investor in modular refineries that is why it is just only two out of 40 investors given licences that were able to build it.
“Government should engage the banks to provide the finance needed for building modular refineries,” he said.
In his views, the Director-General, Lagos Chamber of Commerce and Industry, Mr Muda Yusuf, urged the Federal Government to review its policy on refined products to encourage investors into the sector.
Yusuf said: “It is a pity that after many years of oil discovery, the country is still importing its refined products for consumption.
“As long as we have oil and gas sector link with the government, private investors will continue to evade the sector.”
The chamber’s director-general also urged the government to overhaul the sector to encourage private investors.
The former Chairman, Nigerian Council of Society of Petroleum Engineers, Dr Saka Matemilola, urged NNPC to repair the existing refineries to improve its production.
Matemilola also urged Department of Petroleum Resources not to revoke the licences of investors who were unable to build modular refineries.
According to him, withdrawing the licences will not solve the problems facing the sector.
He said that there was need to work with the licence owners to address the issue of sourcing for finance from the banks to build the refineries.
Reports say that the Vice President, Prof. Yemi Osinbajo, in June, confirmed that 10 modular refineries were at advanced stages of development in the Niger Delta.
The 10 modular refineries are located in five out of the nine states in the Niger Delta region.
The states include Akwa Ibom, Cross River, Delta, Edo and Imo states.
Osinbajo said that two of the refineries, Amakpe Refinery (Akwa Ibom) and OPAC Refinery (Delta State), have had their mini-refinery modules already fabricated, assembled and containerised overseas and ready for shipment to Nigeria for installation.
The total proposed refining capacities of the 10 licensed refineries stands at 300,000 barrels.
Similarly, in November, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, said there were strong indications that three out of the 40 planned modular refineries would come on stream by end of 2019.
“Out of the 40 licenses issued, only 10 have shown progress by submitting their programmes and putting something on the ground.
“By end of 2019, we are assured that three private modular refineries would come on stream,’’ he said.
Yusuf writes for News Agency of Nigeria.
Yunus Yusuf
Traders have not been this bearish on oil in months or so bullish on United States natural gas in years.
The latest data on money managers’ positioning in the WTI and Brent crude and U.S. natural gas futures showed two contrasting trends—speculators are betting that oil prices would remain low or go even lower while increasing the bets that natural gas prices would continue marching higher.
So far this year, geopolitical and supply and demand factors have been increasingly bearish for the oil price outlook and increasingly bullish for natural gas prices.
In the oil market, hedge funds and other portfolio managers have been slashing their bullish bets since the end of January, when the U.S. sanctions on Russia’s oil trade were the primary bullish driver of managed money to bet on a tightening market.
With U.S. President, Donald Trump, now in office, the sentiment has quickly soured amid the president’s insistence on lower oil prices, his efforts to broker an end to the war in Ukraine, and – most of all – the enormous uncertainty about on-and-off tariffs and tariff threats and their potential impact on the American economy.
As a result, market participants are preparing for lower oil prices, even amid expectations of declining oil supply from Iran and Venezuela due to President Trump’s hawkish policy toward these OPEC producers.
Speaking of OPEC, the wider OPEC+ group has just said it would begin increasing supply as of April, adding further downward pressure on prices.
Faced with all these bearish drivers, money managers have been reducing their bullish bets on crude oil futures, with the U.S. WTI Crude hitting the lowest net long position – the difference between bullish and bearish bets – in 15 years at the end of February.
In the week to March 4, the latest reporting week with data released on March 7, speculators bought WTI amid a major selloff in all other commodities except for U.S. natural gas.
The net long in WTI rebounded from the 15-year low, but it wasn’t because the market suddenly started betting on higher prices going forward. The rise in WTI buying and the net long was the result of short covering in the U.S. crude futures contract.
In Brent, hedge funds cut their bullish-only bets in the week to March 4 for the biggest decline in longs since July 2024.
Unlike in crude oil, money managers have become increasingly bullish on U.S. natural gas after inventories dipped this winter to below the five-year average as demand surged in the coldest winter for six years.
The net long in natural gas further swelled in the week to March 4, as the number of new bullish bets was four times higher than the new short positions.
“Natural gas continues to benefit from rising demand, both domestically in the US and towards exports via LNG,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, commenting on the latest Commitment of Traders report.
At the start of the winter heating season in November, U.S. natural gas inventories were higher than average for the time of the year as America entered the season with stocks at their highest level since 2016.
These stocks, however, were quickly depleted during the coldest winter for six years, with demand for space heating and power generation soaring. A month before the end of the winter heating season, U.S. natural gas inventories have now slumped to below the five-year average and well below the levels from the same time in 2024, at the end of a mild winter.
The lower inventories and the higher demand – both for domestic consumption and LNG exports – have pushed prices higher, encouraging producers to boost gas output this year. Traders bet that prices will go even higher as demand from LNG plants is set to accelerate with the ramp-up of new U.S. export plants.
Paraskova writes for Oilprice.com.
By: Tsvetana Paraskova
Renaissance Africa Energy Holdings says it has successfully completed the acquisition of 100 percent equity holding in the Shell Petroleum Development Company of Nigeria (SPDC).
Spokesperson of the company, Tony Okonedo, who disclosed this in a Press Release, Last Thursday, said Renaissance has completed all processes for the full transfer of ownership of SPDC to the consortium, adding that it will now operate as Renaissance Africa Energy Company Limited.
“Renaissance Africa Energy Holdings today announced that it has successfully completed the landmark transaction between itself and Shell for the acquisition of the entire (100%) equity holding in the Shell Petroleum Development Company of Nigeria (SPDC).
“This follows the signing of a sale and purchase agreement with Shell in January 2024 and obtaining all regulatory approvals required for the transaction. Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited.
“Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited’.
“Renaissance Africa Energy Holdings is a consortium consisting of four successful Nigerian independent oil and gas companies: ND Western Limited, Aradel Holdings Plc. FIRST Exploration and Petroleum Development Company Limited and the Waltersmith Group, each with considerable operations experience in the Niger Delta, and Petrolin, an international energy company with global trading experience and a pan African outlook”, the statement reads.
Speaking on the acquisition, the Managing Director/CEO, Renaissance Africa Energy Holding,Tony Attah, said Renaissance Africa Energy Company Limited has a vision to be the leading oil and gas producer in Africa and to help the continent achieve energy security.
Attah expressed gratitude to the Federal Government for its support and pledged the company’s commitment to the Petroleum Industry Act.
“We are extremely proud to have completed this strategic acquisition. The Renaissance vision is to be ‘Africa’s leading oil and gas company, enabling energy security and industrialization in a sustainable manner’.
“We and our shareholder companies are therefore pleased that the Federal Government has given the green light for this milestone acquisition in line with the provisions of the Petroleum Industry Act”, he said.
The CEO acknowledged the contributions of Nigeria’s Minister of Petroleum Resources, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian National Petroleum Company Limited (NNPCL) in facilitating the deal.
He said, “we extend our appreciation to the Honourable Minister of Petroleum Resources, the CEO of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the CEO of Nigeria National Petroleum Company Limited (NNPCL) for their foresight and belief, paving the way for the rapid development of Nigeria’s vast oil and gas resources as strategic accelerator for the country’s industrial development”.
The Statement further revealed that Renaissance partner companies collectively have an asset base of more than $3 billion and currently safely produce approximately 100,000 barrels of oil per day (bpd) from 12 oil mining leases and operate two functioning modular refineries in Nigeria’s Niger Delta.
The Federal Government has cautioned oil-rich communities against infighting and disruption of oil production, saying it could hinder their access to the Host Community Development Fund.
Minister of State for Petroleum (Oil), Heineken Lokpobiri, made the appeal while speaking at the KEFFESO Stakeholders Forum, in Yenagoa, Bayelsa State.
Lokpobiri noted that the Petroleum Industry Act (PIA) was enacted to bring stability to the oil sector and address longstanding grievances about underdevelopment in host communities.
He lamented, however, that internal disputes among stakeholders have made it difficult for these communities to access and utilize the funds meant for their development.
Lokpobiri insisted that host communities must overcome internal conflicts that hinder their access to the funds.
“This KEFFESO Stakeholders Forum is to see how host communities can maximize the benefits from the Host Communities Trust Funds as prescribed by the PIA.
“If oil production is disrupted, everyone loses — the Federal Government, oil companies, and the host communities themselves. That is why host communities must collaborate with the government and oil companies to ensure smooth operations” Lokpobiri stated.
The Minister called on Host Community Development Trusts (HCDTs) in the Niger Delta to effectively utilize the 3% operational funds allocated to them under the PIA 2021 to drive sustainable development.
He further called that oil-producing communities should take ownership of the oil and gas facilities within their domains and work with relevant stakeholders to ensure sustainable benefits.
“As stakeholders who have their respective stakes in oil and gas operations in the country, we should work together to ensure that we maximize the benefits of oil and gas.”
The minister also emphasized the global push for cleaner energy, warning that the relevance of fossil fuels depends on their extraction and marketability.
“Don’t forget there is a global campaign against the continuation of production of fossil fuel.
“Fossil fuel will never go away. Fossil fuel will not have any value unless you bring it out of the ground or from the sea to the market, that is why we need this collaboration,” he said.
In his remarks, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Omotsola Ogbe, reaffirmed the board’s commitment to leveraging the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
Represented by the Board’s Director of Legal Services, Naboth Onyesoh, Ogbe noted that the NCDMB’s Community Content Guidelines were designed to ensure sustained community engagement as local content is prioritized throughout the oil and gas value chain.
Ogbe praised the KEFFESO Host Community Development Trust for its efforts in ensuring that oil revenues benefit local communities.
Also speaking, the Managing Director and Chief Executive Officer, First E & P, Ademola Adeyemi-Bero, described the KEFFESO Stakeholders Forum as a crucial platform for discussing and strategizing solutions to the challenges facing marginalized communities in the Niger Delta.
He reiterated the company’s commitment to fostering meaningful and sustainable development in the region.
The forum, themed “Envisioning Sustainable Community Development in Niger Delta Host Communities: Identifying Challenges and Actualising The PIA Paradigm Shift,” brought together key stakeholders to discuss strategies for maximising the benefits of the Petroleum Industry Act(PIA).