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UK government pledges energy review to cut ‘unacceptable’ prices

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* Government to review competition in energy sector

* Cameron says he will cut back green regulations

* Rising energy prices dominate political debate

* Labour says Cameron is panicking over high prices

LONDON – British Prime Minister David Cameron sought to regain the initiative in a political row over soaring energy prices on Wednesday, promising to try to improve competition in the sector and to cut green taxes that have helped inflate prices.

Energy costs have become a high-profile political issue in Britain after the opposition Labour Party promised to freeze bills for 20 months if it won the next election in 2015 and several energy firms unveiled sharp price increases.

Prime minister CameronHow much Britons pay to heat their homes has also played into a wider debate about the cost of living which has risen as inflation and price rises from everything from utility bills to train tickets have outstripped stagnant wages.

“We need to roll back some of the green regulations and charges,” Cameron told parliament during an emotionally-charged debate. “We will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be more competitive.”

Even though the overall economy is improving, Labour, who are just ahead in most opinion polls, have said many people will be faced with a choice between “eating and heating”, accusing Cameron’s ruling Conservatives of being out of touch.

Cameron on Wednesday described the high cost of energy bills as “unacceptable”, but said Labour’s plans to freeze prizes were an unworkable “con”. He too was prepared to intervene in the sector, he added, but in a way that was practical.

Energy supplier RWE npower raised electricity and gas charges by an average of 10.4 percent on Monday. That followed Centrica’s average 9.2 percent rise and an 8.2 percent increase by SSE. Centrica’s shares fell 1.2 percent after Cameron spoke.

The other three members of the “Big Six” who control 99 percent of the British retail energy market are Scottish Power, a unit of Spain’s Iberdrola, EDF Energy and E.ON.

The price rises stirred a debate about the profits made by the six firms and whether consumers are getting a fair deal.

COALITION RIFT?

Labour leader Ed Miliband seized the initiative on energy prices last month with an attack on a market he described as broken with a pledge to freeze bills.

Cameron dismissed the idea as unworkable but conceded that Miliband had “struck a chord” at a time of squeezed wages and rising household bills.

He came under further pressure on the issue on Tuesday when former Conservative prime minister John Major suggested Britain should tax energy firms’ “excess profits”.

Labour energy spokeswoman Caroline Flint said Cameron was “panicking over his failure to address soaring energy bills”.

Any cuts to environmental regulations are likely to anger Cameron’s coalition partners, the Liberal Democrats, a party keen to promote its record on green and social issues.

“(We) will not allow the Conservatives to undermine our commitment to the environment, hurt the fuel poor, or destroy our renewable energy industry,” said a Liberal Democrat source.

Environmental taxes and social charges contribute nearly 10 percent to domestic energy bills, which average more than 1,200 pounds ($1,900) a year for each household.

The competition review will start in the coming weeks and will look at “prices, profits and barriers to new entrants” to the sector and will rule nothing out when it comes to making it more competitive, Cameron’s spokesman said.

More details of any environmental tax reforms will be given in the government’s fiscal policy update to parliament on Dec. 4, the spokesman added.

The energy companies blame the rises on wholesale prices, the cost of the supply network, and the government’s environmental and social programmes.

“We have long recognized there is significant political and regulatory interest in energy supply markets and a balanced audit of competition in the market should be a useful additional step towards building customers’ trust”,” an SSE spokesman said.

– REUTERS

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Energy

NNPC Ltd Moots 70 Smart Stations

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The Nigerian National Petroleum Company Limited (NNPC Ltd) would be deploying between 50 and 70 smart, self-service filling stations across the country within the next six months.

The Executive Vice President, Downstream, NNPC Limited, Mumuni Dagazau, made the disclosure on Thursday in Abuja while speaking at the commissioning of a technology-driven service station with an electric vehicle charging facility.

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The initiative, he added, is part of a broader plan to transform its conventional retail outlets into modern energy and mobility hubs offering petrol, electric vehicle charging, liquefied petroleum gas, compressed natural gas and other services.

It was gathered that a model of the mega station is located along Bill Clinton Drive, Airport Road, Abuja.

Dagazau noted that the newly commissioned station was the first of several smart outlets to be introduced nationwide, adding that the concept was aimed at moving beyond traditional petrol retailing to provide customers with multiple energy and mobility services at a single location.

He said, “This is the first of many smart stations that we are going to have around the country. What the whole concept is, we are trying to turn from a filling station to an energy hub, and we are rolling out a lot of stations. I think even in Abuja, for this type of station, we have about four or five. We have another two that we’re launching out in Kano. This sort of smart stations that we’re doing.

“We are hoping to roll out a significant number, probably about 50 to 70 of these types of stations within the next six months. So this is what you’ll be seeing going forward from NNPC.

“So what you see here is that we are using all sorts of energy available to us, including EV, electric energy. We are going to be using gas; we are going to be using petrol. So it’s a centre where you can come, and we are going to be calling it our energy hub.”

The new model will allow customers to dispense petrol themselves, including at night, through a digital payment system, although attendants will remain at the stations to assist customers.

Dagazau dismissed concerns that the introduction of self-service pumps would result in job losses, arguing that the expanded services would require more workers to operate and support the technology.

“Well, you saw all of the pumps have attendants. So I really don’t know what they’re talking about when it comes to jobs. What NNPC does is create jobs. What this does is create a job.

“You have an energy hub today. If you look at the average filling station and you look at the energy hub, you’ll find more people in the energy hub than you would find in the filling stations, right? So what we are doing is creating jobs for that. Somebody has to support the integration.

“Somebody has to support the automation. The EVs, we have to be here to support people. So nothing really changes for us. What we’re doing is just what the delivery to the customer is. The guarantee, the comfort of the customer, that’s really what we’re after. That’s what the smart delivery is all about.”

On his part, the Executive Director, Retail Operations and Mobility, NNPC Limited, Shettima Baba-Kukawa, said the Abuja station had a storage capacity of 180,000 litres of Premium Motor Spirit (PMS) and 45,000 litres of Automotive Gas Oil (AGO).

The facility has 16 PMS pumps, two AGO pumps and six electric vehicle charging points installed in partnership with African Motor Works. It is powered entirely by solar energy through a system with a capacity of more than 200 kilowatts.

Baba-Kukawa said the outlet would also feature a quick-service restaurant, coffee shop, automated car wash, modern service bay and LPG dispensing facilities, while CNG and a vehicle conversion centre were also planned.

He said, “The station is going to run 24 hours. And it is fully self-service. So for customers who want to trust themselves and dispense themselves, they can actually do that. Transactions are done on their phone app and concluded by dispensing the exact amount of fuel they purchased into their tanks.”

Despite the digital system, he said customers unable to use the application would not be excluded, as staff would be available to assist them.

Dagazau also disclosed that the NNPC Ltd had begun plans to modernise its existing stations, stressing that the company was responding to changing customer expectations.

He said, “We’re going to modernise our station. That’s the word that we’re going to say.

“You don’t want to be going into the same station every day, every day, every day. You are demanding, so our modernisation is a demand from what the customer wants. The customer deserves a better quality of service, and we are delivering that quality of service.”

He said the company hoped that most of its stations would eventually adopt the new model, although the pace would depend on customer demand and the investment required.

Similarly, the Managing Director, NNPC Retail, Huub Stokman, said the transformation was necessary as the downstream petroleum market evolved following deregulation and the commencement of operations at the Dangote Refinery.

He said consumers were increasingly demanding quality products, competitive prices, faster services, digital payments and alternative energy options such as EV charging and CNG.

“Above all, especially the younger generation, they want us to deliver it sustainably, hence the fact that you also see that this station is completely solar-powered,” Stokman said.

In a goodwill message at the commissioning, the Comptroller-General, Nigeria Immigration Service, KN Nandap, commended the NNPC Ltd for combining conventional fuel retailing with electric vehicle charging and other modern services.

Nandap said the facility reflected Nigeria’s growing adoption of technology, cleaner energy and smart mobility, adding that such investments could create opportunities for employment, skills development and industrial growth.

The development comes as Nigeria’s downstream sector undergoes significant changes, with deregulation, increased domestic refining capacity and the emergence of alternative fuels reshaping how petroleum products are sold and consumed.

The NNPC Ltd said its smart-station programme was intended to position its retail network for the changing market by combining conventional fuel sales with cleaner energy, digital services and other consumer-focused offerings.

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Energy

WAEP Targets 24-Month Production Surge, Gas Monetisation to Unlock 1.6bn Barrels

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The Dangote Group’s upstream subsidiary, West Africa Exploration and Production Company (WAEP) is stepping up efforts to unlock more than 1.6 billion barrels of oil in place across its Nigerian assets, while targeting sustained production and gas monetisation within the next 24 months.

The company’s Managing Director and Chief Executive Officer, Olajumoke Cecilia Ajayi, said WAEP had adopted a phased strategy to revive production from its brownfield assets, generate early cash flow and reinvest the proceeds in wider field redevelopment.

Speaking at the AOW Energy Conference in Accra, Ghana, during a session titled “The Future of the African Operator: Building the IOCs of Tomorrow,” Ajayi said the company’s Oil Mining Leases 71 and 72, previously operated by Shell, represented a substantial resource opportunity, with more than 1.6 billion barrels of oil in place and about 1.9 trillion cubic feet of gas, based on discoveries to date.

The session, which also featured Olumide Ogunfowora, Adegbola Adesina, Temitope Edun and Uduakobong Equere, examined how African owned exploration and production companies can develop the technical, financial and institutional capacity required to compete at scale and take a larger role in the continent’s upstream industry. Ajayi, who is also President of the Nigerian Association of Petroleum Explorationists (NAPE), later moderated a separate session, “The Nigerian Upstream Opportunity: Unpacking Nigeria’s Basins.”

For WAEP, she said, the immediate priority is to extract value from existing production opportunities while building the foundation for long term redevelopment. “The first thing is to look at the low hanging fruit, the short term oil gains, generate cash flow from that, put it back into the assets and start redevelopment. And that’s exactly what is happening currently,” Ajayi said.

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The strategy is already moving into the execution phase as Ajayi noted that WAEP had signed contracts for three jack up rigs, with drilling expected to begin in December as the company seeks to increase production and unlock additional value from the OML 71 and OML 72 portfolio. “We will be drilling to ramp up production and also bring out the value in the asset,” she said. The drilling campaign is being supported by six field development plan studies currently under way, which Ajayi said would provide the basis for a series of “back to back developments” across the portfolio.

The combination of near term production opportunities, development drilling and field planning is expected to create a pipeline of activity beyond the initial drilling campaign. A potentially significant element of WAEP’s strategy is its relationship with Dangote Petroleum Refinery and Petrochemicals, which Ajayi identified as a potential domestic market for the company’s crude.

“One of the shareholders, one of the partners on this asset, is the owner of the largest refinery in Africa, Dangote Petroleum Refinery and Petrochemicals. So the oil would definitely be needed by the refinery,” she said.

The relationship could strengthen the link between Nigerian upstream production and domestic refining at a time when the country is seeking to retain more value from its crude within the domestic energy system.

Ajayi said WAEP was also working towards establishing a dedicated terminal to support crude evacuation as production increases. The proposed terminal could potentially serve not only WAEP but other producers seeking to aggregate and evacuate crude, creating an additional commercial opportunity around the company’s infrastructure.

Ajayi said the evolution of African independent operators would ultimately depend on their ability to transform asset ownership into sustained production and value creation. For companies taking over mature or brownfield assets from international oil companies, she said, the challenge extends beyond reserves and licences to include technical expertise, capital deployment, operational discipline and the ability to sustain production.

That capability, she said, was central to WAEP’s strategy. “We need to put round pegs in round holes. We need to put the right skill and competence in the different units,” Ajayi said. She said the company had been deliberate about strengthening its technical and organisational capabilities as it prepares for the next phase of development.

Within the next 24 months, she expects the company to have significantly ramped up production while putting gas monetisation infrastructure and arrangements in place. “Between now and the next 24 months, gas monetisation would have been in place. We would have ramped up production consistently,” she said. “Not produce today, tomorrow you are down. Consistent, sustained production.”

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Energy

Why Fuel Prices Remain Volatile — NMDPRA

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Subsidy Removal: NMDPRA Assures Smooth Fuel Supply

The Nigerian Midstream and Downstream Petroleum Regulatory Authority has identified crude oil sourcing, single-source domestic refining, logistics and transportation costs among factors driving volatility in fuel pump prices.

Head of Public Affairs, NMDPRA, Mr George Ene-Ita, made this known in an interview with the News Agency of Nigeria in Abuja on Sunday.

Ene-Ita described the issues surrounding continuous fuel price increases as knotty, adding that fuel prices had been completely deregulated and were, therefore, subject to market volatility.

He said the sourcing of crude oil as feedstock and the time lag between crude procurement and arrival at refineries were factored into product pricing.

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According to him, marine and inland taxes associated with the movement and supply of petroleum products were also factored into the pricing.

“This issue is knotty in the sense that there are various factors involved.

“Pump price of petrol has been completely deregulated. And if this is the case, it also means that all volatilities associated with supply have to be factored in.

“These factors include single-source domestic refining, sourcing of crude oil as feedstock, time lag between when crude is sourced offshore and when it eventually arrives at the refinery.

“They also include time lag between when PMS cargoes are ordered and when they eventually arrive our ports for subsequent inland distribution and supply in the case of imported fuel.

“There are also transportation and landing costs, as well as marine and inland taxes.

“Perhaps when the domestic refining ecosystem becomes more robust, competitive and sustainable, the issues regarding pricing will become clearer and more beneficial to consumers,” he said.

Ene-Ita said refinery pricing templates and ex-depot prices were not regulated under the current framework.

He, however, said NMDPRA was collaborating with stakeholders and agencies such as the Federal Competition and Consumer Protection Commission to ensure price equilibrium and parity at the last mile.

NAN reports that the current market price for Brent crude oil is $96.28 per barrel, driven by the ongoing geopolitical conflict and tensions in the Middle East.

The pump price of fuel currently ranges between N1,299 and N1,350 in the FCT, following an upward adjustment in the gantry (ex-depot) price by the Dangote Refinery, which ranges between N1,265 and N1,290 per litre.

Motorists and consumers have expressed concern over the continued rise in fuel pump prices, saying it has worsened hardship, inflation and the high cost of living.

Reacting to this, the Independent Petroleum Marketers Association of Nigeria urged the Federal Government to intervene in crude oil pricing for domestic refining to moderate fuel prices and ease pressure on consumers.

IPMAN President, Maigandi Garima, told NAN that the current international crude oil market posed challenges to domestic petrol pricing because refiners had to procure crude at prevailing market prices.

Garima said higher crude oil prices translated into higher production costs for refiners, who would subsequently pass the additional cost to the market.

He called for government intervention to reduce the cost of crude supplied to domestic refineries during periods of international market volatility.

According to him, such intervention should not be interpreted as a return to fuel subsidy, but as a temporary measure to support domestic refining and reduce pressure on consumers.

“What we are saying is that if Nigerians can make this huge investment, we should support them. Government can intervene by reducing the cost of crude oil to the refinery.

“When the refinery refines the product at a lower cost, it can also reduce the price for Nigerians, and this will help the economy,” he said.

Garima also called for a more predictable crude oil pricing arrangement for domestic refineries, saying frequent fluctuations made it difficult to sustain stable fuel prices.

He urged the government and relevant stakeholders to explore mechanisms that would provide a more stable crude supply and pricing framework for domestic refining.

He said such an arrangement would enable domestic refineries to plan better and potentially provide more stable prices for petroleum products.

Courtesy – NAN

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