Oil
FG moves to boost indigenous participation in crude oil marketing
…as indigenous Oil companies set to take over upstream sector
By Leo URIRI
ABUJA – The Federal Government appears set to boost indigenous participation in crude oil marketing as it clearly demonstrates this seismic policy shift in a recent award of excess crude marketing to indigenous Nigeria companies.
Indigenous traders were highly favored such that 21 indigenous companies were awarded lifting rights against eight international oil traders; two foreign refineries; two subsidiaries of the NNPC and three countries, represented by their state-owned National Oil Companies (NOCs).
The Upstream sector of the Nigerian oil and gas industry has witnessed a series of activities in the last couple of years which is in effect reducing the dominance by foreign oil companies and this is attributed to the enforcement of the federal government’s local content policy, as well as the preparedness of indigenous oil players to commence a gradual takeover of upstream activities in the oil sector.
Speaking on the development, a senior official of the Ministry of Petroleum Resources who spoke under the condition anonymity stated that the 21 indigenous companies accounts for 630,000 barrels per day of crude oil during the one-year period, representing 57 per cent of the 1,179,000 barrels per day awarded to the 38 beneficiaries.
A breakdown of the allocations showed that each of the 21 indigenous traders got an allocation of 30,000barrels per day.
These companies include; A-Z Petroleum Products Limited; Hyde Energy Nigeria Limited; DK Global Energy Resources Limited; Southfield Petroleum Limited (SPL), Aiteo Energy Resources,; Avidor Oil and Gas Company Limited; Azenith Energy Resource Limited; Barbados Oil and Gas Services Limited; Century Energy Services Limited and Crudex International Limited.
Other beneficiaries include, Eterna Plc; Bono Energy; Taleveras Limited; Mezcor SA; Sahara Energy Resources Limited; Tridax Energy SA and Tempo Energy SA; and Global Energy Acquisitions MOG, LTD.
The rest include, Ontario Trading SA; Voyage Oil & Gas Limited; Elektron Petroleum Energy and Mining Limited; Ibeto Petrochemical Industries Limited and Emo Oil and Petrochemical Company.
A beneficiary investor, Chief Anslem Gbemudu, CEO/ Chairman of Global Real Estate Investors and financial services a United States Corporation owned by a Nigerian, with its indigenous subsidiaries Global Energy Acquisitions MOG LTD and Southfield Petroleum LTD, was ecstatic on the latest development of empowering local companies in the oil and gas sector.
“The NNPC has exhibited the highest possible patriotism and sense of inclusion by this policy shift which favours indigenous companies in the oil and energy sector. The potential of empowering our people cannot be quantified in terms of job creation and the multiplier effect of this decision. It is a welcome development that while the upstream and downstream sector is localised, we remain in the global sphere of influence,” Gbemudu stated.
Industry experts have said that the long term goal of this policy is not to build up briefcase traders that will flip transactions over to major global traders rather to encourage, develop, nature and sustain a global competitive SMEs trading, refining and exploration industry that will contribute to the overall Nigeria’s GDP.
As an indication that the winning firms are not ‘briefcase traders’ wholly indigenous but US incorporated companies like Global Energy Acquisitions MOG LTD and Southfield Petroleum have a long history of playing in the oil and gas sector. The firms in 2009 won the bid for the $400 million (N60 billion) gas treatment processing scheme at Utorogu and Oben in Delta State.
The gas treatment plan was designed to end gas flaring and provide dry gas for improved power generation in the country. Though officialdom and devious schemes have tended to slow down the project, it cast shadow on the doubts in some foreign and local quarters that the awards were political consideration rather than on sound economic decisions.
Industry experts are also quick to add that the liberal policy on indigenization, institutional, sound financial and monetary policies will breed positive environmental conditions to foster and sure-up homemade global competitors that are sustainable and can compete in the global scheme.
It will be recalled that over 60 per cent of the 2014 to 2015 annual term contracts for lifting of Nigeria’s crude oil were awarded to local firms after what the NNPC termed a painstaking pre-qualification process.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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