Oil
NNPC, NPDC Staff shuts down Nigeria’s oil sector over sale of OMLs 40, 42
LAGOS-FOLLOWING the eleventh hour decision of the outgoing Jonathan Government to award the operatorship of Oil Mining Leases 40 and 42 to Elcrest and Neconde Oil companies respectively, the Nigerian National Petroleum Corporation (NNPC) branch, by far the largest branch of the oil industry employees union in Nigeria has joined the strike to reverse the Nigerian Government’s highly controversial decision.
NNPC Towers, Abuja
The NNPC branch of the combined senior and junior staff unions: Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas (NUPENG) joined their counterparts at the NPDC, (the operating subsidiary of the state hydrocarbon company NNPC), with effect from Wednesday, May 20, 2015.
The solidarity action by NNPC staff has raised the temperature of the conflict. PENGASSAN and NUPENG members from all the NNPC business units, including the Products and Pipelines Marketing Company (PPMC), the three refinery companies, the Integrated Data Services Limited (IDSL), the National Engineering and Technical Company Limited (NETCO) and the Nigerian Gas Company have all signed on for the strike.
“It has taken us all by surprise”, said a manager at NAPIMS, the investment arm of the NNPC, in Lagos. “We just knew about the action around 4pm Tuesday, May 19”.
NPDC staff had shut in most of the oil fields in four acreages: OMLs 40, 42, 30, 34 and 26, as they began full scale strike action Friday, May 15, 2015. The staff shut in the flowstation at Batan in OML 42, but the Odidi field on the same acreage is in production. The strikers also shut in production of all oil fields in OML 30 (around 32,000BOPD), OML 40 (about 3,000BOPD) and OML 26 (~6,000BOPD). They were unable to shut in the Utorogu field in OML 34, because the staff of Lee Engineering, the contractor running the Utorogu station, said they were not part of the strike. However, crude oil produced in that acreage cannot be evacuated because it is pumped through the Afiesere field in OML 30, which the strikers shut in.
In effect, just as Shell was reporting the resumption of operation on the Trans Forcados Pipeline after about six weeks of disruption, some of the fields that pump through this line have been shut in.
Neconde and Elcrest, who are Nigerian independents, purchased 45% stakes in OMLs 42 and 40 respectively from Shell, TOTAL and ENI in 2012, but the operatorship of the assets were not granted with the purchases. The government company NNPC instead invoked its rights to operatorship of the assets, and assigned those rights to NPDC, its subsidiary. For most of the last three years, Neconde and Elcrest, along with First Hydrocarbon Limited, Shoreline Resources and NDWestern, who bought similar stakes in OMLs 26, 30 and 34 between 2011 and 2012, have lamented NPDC’s lack of capacity to continue as the operator of the acreages they purchased from the Shell-led consortium.
Their argument is that they could have gotten more production out of the fields than NPDC was doing as operator. The government appears to have finally agreed with them and the perception in the industry is that the remaining three companies will soon have their prayers for operatorship answered. The employees union, however, says the operatorship change would affect the jobs of its members.
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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