Nigerian National Petroleum Corporation
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Nigerian state oil firm spent $5.8 bln on fuel imports since late 2017

Comments (0) Actualites, Africa, Business, Economy, Oil, Politics

ABUJA (Reuters) – Nigeria’s state oil firm said on Tuesday it had spent $5.8 billion on fuel imports since late 2017, as it combats a fuel shortage that has left people queuing for hours at filling stations and hobbled an already-struggling economy.

“The corporation’s intervention became necessary following the inability of the major and independent marketers to import the product because of the high landing cost which made cost recovery and profitability difficult,” the Nigerian National Petroleum Corporation (NNPC) said in a statement.

The price of gasoline is a highly charged subject in Nigeria, Africa’s largest oil exporter. President Muhammadu Buhari in 2016 raised the top gasoline price to 145 naira ($0.4603) per litre, a 67 percent hike, but did not remove a cap for fear of hurting people on low incomes.

The price cap makes it tough for many importers to profit from gasoline and NNPC has imported as much as 90 percent of the nation’s gasoline needs over the past year. Fuel shortages have gripped much of the country in the last few months.

An economic body that advises Nigeria’s government has been in discussion with the state oil company to determine whether gasoline is appropriately priced in the country, a state governor said last week.

The relatively cheaper cost of Nigerian fuel combined with crude oil price rises in the last few months mean smugglers can make more money selling fuel intended for the Nigerian market across borders, creating shortages in the West African giant.

Nigeria’s refining system means it is almost wholly reliant on imports for the 40 million litres per day of gasoline it consumes.

Efforts by Buhari’s predecessor, Goodluck Jonathan, to end expensive subsidies in 2012 led to riots in the streets because the move would have doubled gasoline prices, angering citizens who see cheap pump prices as the only benefit from living in an oil-rich country

(Reporting by Paul Carsten, editing by David Evans)


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Keeping House: Cleaning Up Nigeria’s Oil Industry

Comments (0) Africa, Business, Featured

Nigerian Oil Industry

After the rollout of a $1 billion cleanup plan for Ogoniland, Nigeria–a region that has been severely damaged by the oil extraction industry–Nigeria’s state-owned petroleum corporation has voiced its support for environmental reform within the sector.

Nigeria is Africa’s largest producer and exporter of crude oil, and is estimated to have one of the world’s largest oil reserves. Unfortunately, Nigerians have yet to reap the benefits of such a potentially lucrative industry due to historically lax regulations. Nigeria has not been a competitive operator in the oil industry due to its historically bad practices, such as lack of oversight in production, virtually non-existent environmental regulations and not infrequent oil spills.

In early June 2016, Nigerian Vice-President Yemi Osinbajo set a $1 billion project to clean up Ogoniland, a part of the Niger Delta that has been intensely contaminated by the oil extraction industry. Following the example of the federal government, The Nigerian National Petroleum Corporation (NNPC) has decided to voice its concern for Nigeria’s environment as well. Following the federal roll-out of the massive internationally-funded cleanup plan, the NNPC announced their intention to reform the oil sector, although did not provide any details on how this would be done. The NNPC did, however, encourage members of the corporation to support conservation centres and parks.

Why Now?

Following an expansive 2011 study by the UNEP on the impact of oil extraction in the Niger Delta, Nigeria has been in the spotlight as one of the industry’s worst environmental offenders. The report found severe and widespread contamination of groundwater and soil across Ogoniland. In a number of areas, public health was compromised through contaminated drinking water and the presence of unnatural levels of certain carcinogens associated with oil extraction. Ecosystems unique to the delta region, such as mangroves, have been decimated by the virtually unregulated operations of the petroleum industry. All of the report’s findings pointed to a lack of institutional control within the oil industry and within the regulatory systems of the government. The report recommended that an initial investment of $1 billion would be needed to begin the restoration process.

It has taken more than five years to establish the infrastructure and amass the funding necessary to begin what is considered the “world’s most wide-ranging and long-term oil cleanup exercise ever undertaken,” but the project is finally underway. Experts estimate that it may take up to 25 years to restore the Ogoniland ecosystem to its pre-contamination status, but that such a long-term commitment is the only way to reverse the damage caused to the region.

Healthy on the Inside, Healthy on the Outside

A cleanup is a good place to start, but in order for the $1 billion investment to really contribute to positive change, a complete overhaul of Nigeria’s oil industry is vital.  Recognizing its role in the project, the NNPC announced its “20 Fixes” plan, aimed at reforming the chronically mismanaged oil industry. Among these “20 Fixes” were goals such as reducing and auditing costs, restructuring corporate centres and staffing, renegotiating existing contracts, unbundling the Nigerian Gas Company and improving information technology, among others. Reducing environmental impact was, surprisingly, not among these 20 top-concerns. Following the announcement of Ogoniland project, however, the NNPC voiced its support for the project, encouraging its workers to support environmental conservation, and committed to improving its environmental protection policies. A concrete plan to turn verbal commitments into action has yet to materialize.

Kachikwu pointed to the Lekki Conservation Centre, established in 1990, as an example of its commitment to conservation efforts. The NNPC claims that, with the support of Chevron Nigeria and others, it has contributed to the creation of the 78-hectare conservation centre, although no evidence for that is available.

This is not to say that the NNPC is not making a positive change, because it is. Recently appointed Managing Director Dr. Ibe Kachikwu has been hard at work to bring transparency to one of the world’s murkiest oil production lines. The World Bank, which committed more than $1 billion to a variety of projects in Nigeria for 2016, applauded the efforts of Dr. Kachikwu for the initiatives outlined in the aforementioned “20 Fixes.” Dr. Kachikwu urged the World Bank to offer additional support for an institutional framework “and training for the ministry and NNPC, [because] the training would provide the necessary skill sets that are required to grow Nigeria’s oil and gas industry.” With such financial support, the NNPC may be able to make the reforms necessary to clean up its act.

Time for Change

After decades of mismanagement, Nigeria’s oil industry may finally be at a turning point. Under the new direction of Dr. Kachikwu, the NNPC may be able to institute real, positive change that will make the cleanup efforts long-lasting. It is only with the moral and financial investment of the oil industry that the environment can be protected. Ogoniland will not be restored overnight, and it is of the utmost importance that the oil industry do its part to ensure it does not simply move the problem elsewhere.

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Nigeria to begin exploratory oil drilling in Chad Basin by October

Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria plans to begin exploratory drilling in search of oil in the northeastern Chad Basin region by October, the head of the state oil company has said.

Emmanuel Ibe Kachikwu, who last year said Africa’s biggest crude exporter may be on the verge of a significant oil find in the Lake Chad area, said in a statement on Sunday that seismic studies were ongoing.

“Drilling activities will commence by the last quarter of 2016,” the Nigerian National Petroleum Corporation (NNPC) chief, who is also minister of state for oil, was quoted as saying in the statement issued by the state oil company.

Africa’s biggest economy has been hit hard by the sharp fall in global oil prices because it relies on crude exports for around 70 percent of government revenue.

NNPC spokesman Garba Deen Muhammad said exploration in the region was intended to “add value to the hydrocarbon potentials of the Nigerian inland basin, provide investment opportunities, boost the economy as well as create millions of new jobs”.



(Reporting by Camillus Eboh and Alexis Akwagyiram, editing by David Evans)

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