Oil
NNPC Denies Colluding with Oil Traders on Shady Deals
ABUJA – The Management of the Nigerian National Petroleum Corporation (NNPC) has denounced the recent report by Swiss-based NGO (The Berne Declaration) accusing the corporation of colluding with some local and international oil traders to execute unfair industry practices.
Speaking with journalists in Abuja, Acting Group General Manager, Group Public Affairs Division of the Corporation, Tumini Green stated that the publication is not only bogus but strewn with inaccurate and poorly researched data, which defies common sense and verifiable evidence on ground in Nigeria.
“For instance, how can anybody who claims to be a close observer of the Nigeria oil and gas industry say that the process leading to the award of Term Contract for lifting of Nigeria’s crude is shrouded in mystery when it is common knowledge that the call for tender for this contract is periodically published by almost all the newspapers in Nigeria via paid advert placements by the NNPC,” Green wondered.
“In practice, the corporation sells Nigerian Government equity crude oil to Lifters/Traders engaged on Annual Term Contract basis. At present, there are about 50 such term contracts.
“No company has a monopoly or exclusive right to lift any quantity of Nigerian crude oil. The process of selection of Traders/lifters is competitive and transparent. Traders lift crude oil according to the terms of Contractual agreements applicable to all traders, among others on (Free on Board) FOB basis and proceeds paid directly into designated Central Bank of Nigeria Crude oil sales accounts.”
She also denied that Nigeria’s crude is sold to some companies at special discounted rate.
“Nigeria Crude Oil is sold at published Official Selling Price (OSP), which is not only benchmarked against the internationally recognized pricing institution, Platts daily publications, but also fixed after a critical analysis of market fundamentals and price determinants at global level,” she said, adding that “OSP differentials are crude stream determined and cannot favour an individual or group of traders as being insinuated.”
Green thanked the Nigerian media for their sustained show of support for the growth of the oil and gas industry while appealing to them to always resist the temptation of endorsing foreign media reports about the industry as gospel truth.
In a report titled, Swiss Traders’ Opaque Deals in Nigeria, Swiss-based non-governmental advocacy group, Berne Declaration, accused NNPC of robbing the country of several billions of dollars in connivance with major oil trading companies based in the European nation.
The report particularly indicted Vitol and Trafigura, two major oil traders in Switzerland, and seven Nigerian oil importers of creating offshore subsidiaries referred to as ‘letterbox companies’ to defraud the country of over $6.8bn in subsidy payments between 2009 and 2011 — in addition to such activities as ship-to-ship transfer to create untraceable paperwork, payment of subsidy money to non-existing importers, and partnering with politically exposed fraudsters.
“Every year, the Nigerian state coffers lose billions of dollars as large volumes of oil are exported for well below the market price, and the subsidy scheme for imports of refined crude oil products is systematically defrauded,” a part of the report stated.
“Ongoing investigations by the Nigerian authorities show that those Swiss traders dominant in oil exports have been making good business with dubious Nigerian import firms.
“The all-powerful national company, the Nigerian National Petroleum Corporation, categorised as the most opaque national oil company on the planet, itself is evidence of Nigeria’s ‘resource curse’ at work.
“The extent of the problem is illustrated by the fact that the NNPC has not published detailed financial reports since 2005! But this company, with its dozen subsidiaries operating at all levels of the supply chain, from production to distribution, cannot be ignored by anyone wanting to produce, export or import crude oil or petroleum products in Nigeria. It is here that Swiss commodity traders occupy a position of choice.”
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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