THE Nigeria National Petroleum Corporation, NNPC, has absolved itself of owing the federal government the sum of $218 million oil revenue. Andrew Yakubu, group managing director, made this point while fielding questions from journalists at a workshop organised for energy reporters in Uyo, Akwa Ibom State.
The denial followed a directive by the Nigerian Senate to return the said amount to government. Yakubu said the corporation would continue to engage the National Assembly over the non-remittance of funds to the federation account. “We will continue to talk and see, may be, by and large, they will have a change of mind,” he said.
The Senate on Thursday, July 10, during the presentation of its Committee’s report on Finance, asked the NNPC to remit to the Federation Account the sum of $218,069 millio being part of the unremitted $49.8 billion from oil sale proceeds by the NNPC for the removal of fuel subsidy alleged by Sanusi Lamido Sanusi, former governor of the Central Bank of Nigeria, CBN. The Senate, while deliberating on the report, had ordered the corporation to refund to the federation account about $218.069 million being the share from third party financing agreement it did not remit.
But Yakubu said the corporation would continue to engage the National Assembly on the allegation and resolutions, as the money in question was spent on operations to avert fuel crisis in the country. He explained that the corporation engaged in business ventures that necessitated the spending of the money. “We will collect the report, we will look at it again and we will continue to explain. It is left for them to judge. I am an accused. I cannot be a judge in my case. Should I be punished for doing the right things? We will continue to talk to see, may be, by and large, they will have a change of mind on any wrong doing. If you are to go into a profit making venture, you must operate within the business environment that will enable you to make that profit. So, if you create a pricing template that does not take into cognizance some of the challenges that are faced, by virtue of the operating environment, that is difficult.
“We have had challenges in Arepo, you know very well that any time that line is breached, I cannot use that line. I have vessels and I am made to understand that to avert energy crisis in the country, I must have strategic storage. I don’t have access to my onshore facilities, I don’t have access to my pipeline, so I have offshore storage facility, that is not reflected in the pricing template and when PPPRA is reconciling with me, it uses their template. What we are simply saying is that if we have to do this job, this is the real and true situation of things. Senate, in its wisdom, looked at it and said well, if it is not captured in their template, we don’t care. The question is: If I did not do it last year, I don’t think I will be here to talk to you. The same Senate will summon me and ask me why there is no fuel, the only person that can do that is a magician,” he said.
Nigerians to Dominate Oil and Gas Market in 2018
ABOUT half of the domestic gas market in the country’s oil and gas sector will be in the hands of Nigerians by 2018. This is the prediction of Austin Avuru, managing director of Seplat Petroleum. According to Avuru, independent producers would be responsible for 1.5 billion cubic feet per day,Bcf/d, or half of the total supply of natural gas in the domestic market.
Avuru also said that indigenous companies would produce 500,000 barrels of oil per day, or about 20 percent of the Nigerian output by that same year. “The ongoing divestments by Shell and other IOCs, including Chevron, are transferring significant asset holdings to Nigerians,” he said.
According to Avuru, “these figures can only be reached and sustained by the indigenous companies if they focus on strong corporate governance, which allows quality planning and delivery and policy consistency, leading to long term sustainability.” He said local firms were yet to cultivate the habit of sustained improvement in production over time, unlike the IOCs operating in the country. “There is no IOC which was doing 30,000 barrels of oil per day years ago that is not producing 50,000 barrels per day. But take a look at Nigerian companies which were producing 40,000 barrels per day just 10 years ago.”
However, the Seplat boss expressed optimism that indigenous companies were making head way in the gas sub-sector. “We are getting to a point where long term domestic energy security is becoming the forte of indigenous companies at the rate we are going. You all know that in the past 40 years, we have spoken about LPG (domestic consumption of LPG and its consumption in this country).
“No multinational company has dared, even when in the last 40 years we have been flaring rich gas, no LPG has come out of the LNG plants, because the gas feeding the LNG plant has to be as dry as possible. It became a requirement to put up an LPG plant upstream of the LNG. And the LNG extracted out of the gas stream is meant for export. It is only when government forced them to put something in the domestic market that they came up with a very complex transportation scheme that made the whole thing almost impossible to transmit the LPG to the domestic market,” he said.
For Avuru, the indigenous outlook beyond 2017 portends an increase in the production of oil and gas in the country. “When I talk about indigenous outlook beyond 2017, what do I see? I see production. With the wave of divestments, I see that by the end of 2017, indigenous operators, including NPDC and partners will account for at least 500,000 barrels of oil production, and in my view about 1.5 billion scf of gas per day (which will be about 50 percent of domestic gas demand). Gas demand in the last four years has climbed from under 500 million scf per day to over 1 billion scf per day. By the end of 2016, it will be approaching between 2.5 billion scf and 3 billion scf per day.”