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‎Kerosene subsidy, government policies, others frustrates LPG development

Published

10 years ago

on

Fraction of domestic gas require to save N65b on fuel subsidy annually

By Kunle Kalejaye
The Federal Government continuous subsidy on Dual Purpose Kerosene, DPK also known as domestic kerosene and a number of issues have been identify as the clog in the wheel of Liquefied Petroleum Gas, LPG development in Nigeria.
Other issues according to some LPG dealers in Nigeria who spoke with BIZTELLERS in Miami, Florida  in the just concluded 27th World LPGA conference includes‎ lack of infrastructure development, funding, interest rate, lack of banks interest to fund long term projects in the LPG sector.
Others lamented the absent of the LPG market in country regardless of the huge investment made by willing private operators.
These private investors as gathered are now left to develop the LPG market both in rural and urban areas with little or no fund from the federal government.
BIZTELLERS findings revealed that this herculean task embarked upon by LPG investors in the country has left some with little return of investment while others are on the brick to close shop.
Meanwhile some off-takers in the LPG sector also decry the multiple regulation ‎of the industry by different government agencies such as Standard Organisation of Nigeria, SON, Department of Petroleum Resources, DPR, Nigeria Content Development and Mornitor Board, NCDMB among others.
‎These off-takers reiterated that having different government agencies to regulate LPG sector which they described as an emerging market may likely hinder the growth of the sector and scare off potential foreign investors.
 Aside from multiple regulation from government agencies, it was reported that ‎the federal government and the Nigerian National Petroleum Corporation, NNPC illegally spent about $4.5 billion on kerosene subsidy from the federation account without appropriation.
In addition, between 2010 and 2012 which is a period of three years, the federal government also spent N634 billion as subsidy for kerosene which some government officials described as a ‘network of corruption and fraud’.
Worst still, other government officials have described the N700 million being spent daily on kerosene as wasteful.
20 percent of these funds according to some LPG operation‎ is all what is required to transform the sector into a viable and and competitive one.
Commenting on government policies in the sector, President of Nigeria Liquefied Petroleum Gas Association, NL‎PGA, Mr. Dayo Adeshina said no preference is given on LPG imported equipment to ensure duties and tariffs are reduced. 
Adeshina who stated this in the 2014 NLPGA conference in Abuja explained that rather than a downward reduction of duties on imported LPG equipment, there has been a steady increase.
He further explained that the increase has resulted in discouraging the provision of LPG facilities by willing organisation in the sector.
“This sometimes creates a situation whereby the LPG allocated by the government to the domestic market does not fit the quantity of LPG equipment that would facilitate the usage of the allocated LPG, hence there is a slow growth in the industry.
‎”Fabrication of LPG equipment is very expensive due to the lack of stable power and high cost of raw material, labor and generating power for production.
“On the other hand, the duties and tariffs on imported equipment is very high in certain countries (20% – 35%)
“There is no major policy that encourages widely promoted green projects (e.g. auto gas, power generation etc.) using LPG in order to stimulate the rapid growth of the industry,” Adeshina said.
 
Listing other constrains in sector, NLPGA president said ‎there is “no unified policy targeted at LPG development by the governments of W/African countries
“No specific funding has been set aside by governments to encourage the growth of LPG industry via infrastructure development, equipment supplies, etc
“Interest rate for available funds is very high such that it leads to organisations defaulting in re-payments of loans and thereby collapsing
“There is no major government incentive to attract regional financial institutions (ADB ) to assist SMEs in growing the LPG market.‎”
Managing Director and Chief Executive Officer of Nigeria Liquefied Natural Gas, NLNG, ‎Mr. Babs Omotowa who also spoke at the fourth NLPGA conference in Abuja said there has been intervention program embarked upon by NLNG to develop the LPG sector.
‎”In response to supply shortages in the Domestic LPG, NLNG intervened in September 2007 with domestic LPG supply scheme to 6 pre-qualified offtakers. The number of offtakers have increased to 17‎.
‎”The scheme commenced with an annual volume commitment of 150,000mt which was subsequently increased in 2013/2014 to 250,000mt,” he said.
Mr. Omotowa added that‎ the intervention scheme has led to reserved Volumes increased from150,000 Metric Tonnes to 250,000 Metric Tonnes in 2013 due to growing demand.
“‎ Other gains of the intervention includes improved Jetty Availability/Capacity and increased revenue for owners such as Navgas, NIPCO and  PPMC and NOJ.
“Human Capacity Development -Training at Bonny Terminal, increased revenue to Government and Economy such as taxes and levies, and ‎increased Market Awareness – Price, Quality & Quantity,” Mr. Omotowa said.
Despite this intervention scheme and NLNG supply of 80 percent of LPG consumed in the country the NLNG MD admitted that supply still outstrips demand.
‎To help the LPG sector to grow, the NLNG boss suggested that a ‘five point agenda’ must be followed.
The five point agenda include creating awareness by means of advert, media campaigns, branding, workshops, seminars and safety campaign.
Others are granting incentive to suppliers, off-takers, bottling, storage, trucking, retailer, tax holiday and LPG vat removal.
“There should be empowering of consumers, improving existing LPG infrastructure and favourable government regulation,” he said.
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Gas

Platform Petroleum targets a billion-dollar investment

Published

7 months ago

on

May 17, 2024

By

Platform Petroleum

Announces ambitious expansion plans

 

Platform Petroleum says the company is targeting a billion-dollar investment as it announces an ambitious strategic plan to bring 3 marginal fields into production by 2025, with a target of 10,000 barrels of oil and at least 50 billion standard cubic feet of gas per day.

Speaking on the sidelines of the 2024 Offshore Technology Conference (OTC) in Houston, USA, Chief Dumo Lulu-Briggs, Chairman of Platform Petroleum said that the company has scheduled a roadshow in London this June 2024 to raise extra funding to finance their ambitious expansion plans.

“The upcoming roadshow aims to attract equity partners and prepare for future opportunities, targeting a billion-dollar investment. We are seeking partners ready to invest in Nigeria’s oil and gas potential.

Our goal is to showcase the country’s vast opportunities and its potential to international investors” Lulu-Briggs said.
Platform Petroleum’s roadshow in London will highlight the company’s efficient production, upgraded flow stations, increased capacity, and achievements in nearly zero emissions.

With about one percent gas flare currently, Platform aims for zero gas flares by the last quarter.

“Nigeria is a vast market, and Platform Petroleum is thinking big. With the government’s ambitious plans, such as the Lagos-Calabar coastal line, Platform is poised for growth; pushing itself to the next level, building on a strong foundation and following Seplat’s successful precedent”, Lulu-Briggs said.

Despite being a small company, he emphasized that Platform Petroleum has demonstrated significant success and efficiency, showcasing that smaller oil and gas entities can indeed achieve remarkable feats adding that he believes that the company deserves recognition and more assets.

“Platform Petroleum is ambitious, aspiring to become a tier-1 company akin to international oil companies (IOCs) or a tier-2 company like Seplat. Interestingly, Seplat originated from Maurel & Prom, Shebah Petroleum, and Platform Petroleum, and today stands as a major player in the industry.

This history underlines Platform’s potential for substantial growth”, Lulu-Briggs said.
Furthermore, the Platform Petroleum Chairman said that the Offshore Technology Conference (OTC) is a crucial event for promoting Nigeria’s significant market potential.

“Partnering with the Petroleum Technology Association of Nigeria (PETAN) at OTC is key to attracting investment. The current proactive government understands the necessity for economic growth, and Platform is prepared to leverage every opportunity in the oil and gas industry to contribute to this expansion”, he concluded.

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NNPC JV Unveils New Crude Oil Grade ‘Nembe’, Commences Exports With 1,900 Barrels

Published

1 year ago

on

November 8, 2023

By

Precious ADELOLA

The NNPC/Aiteo Joint venture has announced the introduction of Nembe Crude Oil Grade, a new crude oil grade into the international crude oil market.

 

The announcement of the Nembe Crude Oil Blend, produced by Aiteo, the Operator of the NNPC/Aiteo Oil Mining Lease (OML) 29 Joint Venture (JV), was made at the ongoing Argus European Crude Conference in London, on Tuesday.

 

OML 29, an asset located onshore Nigeria, is operated by Aiteo Eastern Exploration & Production Ltd, Africa’s leading indigenous hydrocarbon producer, following a historic acquisition from Shell in 2014.

 

NNPCL Boss, Engr. Mele Kyari

The Nembe Crude was previously blended with the popular Bonny Light grade and exported via the Bonny Oil & Gas Terminal.

The unique selling point of the Nembe Crude Oil grade with an API gravity was highlighted by both the Aiteo E & P and NNPC Limited Leadership at the Argus Conference in London.

The Nembe Crude Oil grade also has a low sulphur content and low carbon footprint due to flare gas elimination, fitting perfectly into the required spec of major buyers in Europe.

Two cargoes of 950,000 barrels each of the Nembe Crude Oil grade have since been exported to France and the Netherlands. With its attractive Assay of API 29 and low sulphur content, the Nembe Crude Oil grade commands a premium to the global Brent benchmark.

 

With the NNPC-Aiteo OML 29 JV back on-stream, Nigeria now boasts of an additional crude oil export of 2 Cargoes at 950,000 barrels each per month and 1.2 Bcf of export gas monthly.

 

This remarkable achievement signals the commencement of activities at Nigeria’s newest crude oil terminal, the Nembe Crude Oil Export Terminal (NCOET), which was licensed in line with the extant laws and Crude Oil Terminal establishment regulations.

 

The terminal was conceived as a Floating Storage and Offloading Vessel (FSO) with a storage capacity of two (2) Million Barrels and the ability to offload crude oil to any export tanker from AFRAMAX to Very Large Crude Carriers (VLCC).

 

It has a loading capacity of 25,000 barrels per hour and will be exporting over 3.6 million barrels of Crude oil monthly at full scale of operation.

 

Currently, hydrocarbon production from OML 29, which was hitherto constrained due to evacuation challenges owing to the security issues around the Nembe Creek Trunk Line (NCTL) corridor, has now been resolved through a collaborative and creative approach that led to the innovation of the Alternative Crude Oil Evacuation Solution.

 

The Argus European Crude Conference 2023 in London is a gathering of energy majors, refiners, NOCs, traders, financial institutions, and other representatives from across the global oil markets. The event also provides a critical opportunity for business leaders to connect, discuss, share and learn from one another.

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Business

NNPCL, NCDMB, Oil Majors Agree Improved Efficiencies

Published

1 year ago

on

September 26, 2023

By

Modupe Asudo

Major players in the oil and gas sector in Nigeria led by the Nigerian National Petroleum Company Limited (NNPCL) have covenanted to optimise operations by reducing contracting cycle to not more than 180 days.

A statement issued by the company disclosed that the Memorandum of Understanding (MoU) to this effect was endorced on Monday in Abuja at the company’s head office.

Other parties to the the contract include, the Nigerian Content Development and Monitoring Board, (NCDMB) and international oil companies.

Biztellers reports that an optimised contracting cycle was expected to improve the ease of doing business, reduce cost and drive efficiency, which would eventually translate to production growth, increased revenues, and ultimately improved profitability.

In addition, the MoU was expected to contribute significantly to the double-digit economic growth rate agenda of the Federal Government and generate value for all stakeholders, including investors, companies, host communities and Nigeria.

Notable elements in the framework of the MoU, going by the statement, included a reduction of the contracting cycle for open competitive tender, selective tender, and single sourcing tender to 180, 178, and 128 working days respectively.

This was in contrast with the current best effort performance of 327, 333, and 185 working days respectively.

According to Group Chief Executive Officer, NNPCL, Mele Kyari, signing the agreement portends exciting times for Nigeria’s oil and gas industry, in addition to standing as a bold testimony that the company was plunging into the future of hope, productivity and success.

Kyari, represented at the occasion by Executive Vice President, Upstream, NNPCL, Oritsemeyiwa Eyesan, pointed out that with oil and gas as the bedrock of Nigeria’s economy, there was need to get the contracting process in the Industry right so as to get the economy back on track.

In his remarks, Executive Secretary, NCDMB, Simbi Wabote, described the MoU as a way forward and a critical step towards enhancing the nation’s crude oil production.

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