Oil
NNPC pays govt N2.6tr, says report
LAGOS – The Nigeria National Petroleum Corporation, NNPC, paid N2.6 trillion into the Federation Account in the first six months of this year.
Five insurance companies, including Leadway Insurance also paid the corporation N2, 680,535,195.2 billion in insurance claims for exported crude oil in May.
These were contained in the report the corporation submitted to the July Federation Account Allocation Committee, FAAC, meeting in Abuja last week.
The report, which was prepared by Onome Jack, checked by Nura Umar and approved by Mrs E. N. Eni-Kalu, included the statement of account as at last June.
The NNPC said it transferred $8,762,818,942.19 or N2, 649,721,229,327.49 into the Federation Account.
The corporation told the FAAC that it transferred N286, 862,007,820.52 to the Federation Account using the exchange rate of N154.76 per dollar in June.
Also included in the statement of account are the total proceeds of crude oil and gas for June, which stands at N289,198,407,820.52.
The grand total of the NNPC/FGN equity and crude oil, and other receipts was N150,794,471,986.27, including N22,258,059,323.78 for the NNPC/FGN Equity gas receipts.
The NNPC reported to the FAAC meeting that “there was increase in production from Forcados and Qua-Iboe terminals due to completion of pipeline repair works, however, lifting operations were adversely affected during the period due to the Force Majeure declared at Bonny terminal due to theft along Nembe Creek Trunk line, resulting in production shut down of about 150,000 bopd; drop in production at Brass terminal due to pipeline vandalism and theft activities as well as drop in production at Okono and Amenam terminals due to repair work on equipment.”
The domestic crude cost for March, the report said, was N112,382,568,750, while the gas and other Naira receipts stood at N1,426,907,760.47 by June.
The report stated that the May export sales volume of 9.18 million barrels was 4.2 million barrels higher than April export sales volume of 4.97 million barrels.
“The total revenue from crude oil export sales during the period under review at an average unit price of $104.754 per barrel is $951.87 million,”the report said.
This amount is $437.7 million higher than what was realised in the preceding April.
During the period under review NNPC said it lifted 5.68 million barrels of PPT oil valued at $598.30 million and 2.3 million BTU of Modified Carry Agreement (MCA) Gas valued at $5.4 million.
These amounts were paid into the Federal Inland Revenue Service, FIRS, account, with JP Morgan Chase.
Royalty Oil lifting of 1.01 million barrels and MCA Oil and Gas valued at $105 million were also paid into the DPR Account.
The report noted that the “domestic crude oil sales of 11.59 million barrels for the month of May, was 1.4 million barrels higher than April domestic sales volume. The total value of Domestic Crude oil sales, at an average unit price of $105.397 and exchange rate of $154.75/$ was N188.98 billion.
‘’This amount is higher than April Domestic Crude Oil sales value of N160.89 billion by N28.096 billion.”
Actual receipts from Domestic Crude oil sales for March 2013, was put at N112.38 billion,while gas sales of 94,739MT at an average unit price of $690.2462 generated total sales revenue of $65.39million.
NLNG Feedstock sale for the month was 47.871Millio BTU at an average unit price of $2.2787678. This generated total sales revenue of $109.087 million.
The corporation also signed a “Modified Carry Agreement” of $1.69 billion with Shell Petroleum development Company, SPDC, Total and Nigeria Agip Oil Company, NAOC, designed to finance their Joint Venture Upstream project in Gbaran-Ugbidie, in Bayelsa State.
Modified Carry Agreement is a financing agreement whereby the International Oil Companies, IOC’s, will advance loan to NNPC for investing in upstream projects. The three oil giants are operating in Nigeria under a Joint Venture arrangement with NNPC, in the NNPC/SPDC/Total/NAOC Joint Venture.
The last financing agreement signed was a modification of the Carry Agreement. The new “Modified Carry Agreement” (MCA) introduces greater level of transparency and accountability with repayment and compensation being on “cash and carry basis”, not oil.
In the deal, the NNPC would allow the three firms to take capital allowances as allowed by the Petroleum Profit Tax, PPT, to recover 85 per cent of the principal loan. By taking the allowance, the IOCs are reducing the taxable profit that they ought to have paid.
The remaining 15 per cent plus eight per cent interest would be paid in cash from the increased production from, which the investment was made. If, for any reason, the oil field where the investment was made could not produce, then payment of the 15 per cent plus the eight per cent interest would be stopped.
The signing of the agreement was as a result of a successful negotiation between the four oil giants involved, that is the NNPC, SPDC, Total and NAOC.
Meanwhile, Leadway Insurance was one of the insurance firms that made three insurance claims to NNPC while Sovereign Trust insurance settled two claims.
Leadway Assurance paid $16,628,480.38 as claims, Sovereign Trust Insurance paid $12,974.91, Linkage Assurance paid $105,082.60; Fin Insurance paid $2,797.08, while Great Nigeria Insurance, $4,000.
– THE NATION
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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