Tag Archives: crude oil

Nigeria: Days of Crude Oil Are Numbered – Govt

STRONG indications emerged Monday that hardship looms in Nigeria following the nation’s over-reliance on oil as the Federal Government has raised the alarm that the days of crude oil are numbered.

According to the Federal Government, it has become imperative for Nigerians to start making effective utilization of its oil wealth when it matters most before the commodity becomes worthless.

Speaking Monday in Abuja at an interactive meeting with the leadership of the National Assembly, Minister of State for Petroleum, Timipre Sylva cautioned that based on a forecast in the global oil industry, oil will in the next 20 years become less relevant in the global energy mix as the world looks beyond oil and seeks alternative sources.

The meeting, which was presided over by the President of the Senate, Senator Ahmad Lawan, with the Speaker, House of Representatives, Femi Gbajabiamila and other leaders of the National Assembly in attendance is aimed at discussing the details of a draft copy of the Petroleum Industry Bill(PIB).

Sylva who pleaded that Nigeria should make use of the best of the remaining days of the relevance of petroleum in the global market, however, sought the cooperation of the National Assembly for speedy passage of the Petroleum Industry Bill ( PIB) forwarded to both the Senate and the House of Representatives.

The Minister who spoke on the intendment of the bill said that having wasted 20 years in putting in place required laws for the regulation of the oil industry, the country needs to quickly pass the PIB to make the best of investments from the sector before 2040, already forecasted for 50 per cent loss of relevance of crude oil in the global market.

The Minister said: “It is quite unfortunate that since the year 2000 when attempts were made to come up with a draft copy of PIB, to 2007, 2009 and 2012 when draft bills were submitted to different sessions of the National Assembly by the executive arm of government without passage, up till 2018 when the legislators came up with one; that we are yet to put on the ground required laws for effective regulation of the oil industry.

“Twenty years have been wasted in putting the laws in place for a sector that has 20 more years of full relevance going by forecasts already made.

“Forecasts in oil industry circles indicate that oil will play less and less role in the global economy.

“Specifically, by the year 2040 which is 20 years away, the relevance of oil in the global economy will reduce by 50 per cent”

According to Sylva, the PIB as drafted and passed to both Chambers of the National Assembly, if expeditiously considered and passed, will serve as the foundation of investments, adding that one of the central aims of the bill, is to make Nigeria an attractive investment destination.

He warned saying, “The days of oil are numbered; deposits of coal did not run out before the world moved away from it. Today the world is talking about alternative energy and we should also move we should take advantage of making hay while the sun shines.”

Earlier in his opening remarks, the President of the Senate, Ahmad Lawan, said that though the PIB seemed to be jinxed since 2007 and 2019, the fresh effort will surely see the light of the day, adding that it is difficult to put a time frame on when the jinx would be broken through the passage of the bill because details of its contents must be understood and thoroughness applied in its consideration.

Lawan who disclosed that President Muhammadu Buhari’s communication will be read today said that the Ministry must be around to educate the National Assembly on the content of the Bill, adding, “the essence of this meeting between the leadership of the National Assembly and officials of the Ministry of Petroleum and NNPC is to discuss the essence and focus of the Petroleum Industry Bill that has been sent to the National Assembly about two weeks ago.

“We announce that the Bill is now in the National Assembly even though it is not before the National Assembly. By tomorrow when the letter of transmission is read on the floor of the Senate and House of Representatives, we will know what it is the Bill.

“The essence of this meeting is for us to understand what is in the Bill. That is the essence and purpose of the meeting.

This is just for us to interact with you on the content of the Bill so that we have some first-hand information, understanding, and idea of what is in there and of course from there the interaction will continue maybe at another level with our committees for the processing of the Bill by the National Assembly leading to its eventual passage by the grace of God.

“The PIB is said to be jinxed. Actually for a long time, roughly from 2007 to 2019, it was either the Bill was sponsored by the executive and not passed by the legislature as was the case in 2007 and 2011 in the 6th and 7th Assembly.

“In the 8th Assembly, the legislature sponsored the Bill by breaking it into three Bills which were passed but there was no assent.

Now the Bill is an executive Bill sent to the National Assembly. The two chambers promised even during our campaigns that we want to break that jinx.

We want to see an oil industry in Nigeria that is properly regulated and that does not only sustains the investments we have but attract even more investments. We want to see an oil industry that is very competitive and oil resources that are beneficial to Nigerians.”

Speaking in the same vein, the Speaker of the House of Representatives, Hon Femi Gbajabiamila, said that though the bill will be considered and passed speedily, thoroughness will not be sacrificed.

Gbajabiamila said, “Oil represents the livewire of our Nigeria’s economy, making the PIB the most important piece of legislation that will come out of the 9th National Assembly in months or years to come.

“We will pass the bill speedily, but not sacrifice thoroughness at the altar of speed. We have assembled a crack team of legislators who are versed in the workings of the industry.”

Vanguard

How NNPC Staff Sold 48 Million Barrels Of Stolen Crude Oil, Issued Death Threats To Whistleblower

Facts have emerged on how some Nigerian Government officials and senior Nigerian National Petroleum Corporations staff connived to sell 48 million barrels of Bonny Light crude oil stolen from the country during the first year of President Muhammadu Buhari’s first term in office in 2015.

The stolen crude was moved to China where it was stored in various ports and terminals including Sinochem tanks in Zhoushan bonded area and Vishal star tanks.

Potential buyers were from that point contacted for the stolen product by the Nigerian Government officials including a company that eventually blew the whistle on the monumental fraud.

Realising that the crude was stolen, SAMANO SA DE CV brought to the Nigerian Government’s attention the criminal activity involving the NNPC, according to documents seen by SaharaReporters.

Group Managing Director of the NNPC, Mr Mele Kyari, late Chief of Staff to President Buhari, Abba Kyari, and Mr Umar Mohammed were all promptly notified of the stolen crude in order to take appropriate action.

However, a letter written by the whistleblower to the President was prevented from getting to him by Mohammed.

In October 2015, the stolen crude was moved from China without the knowledge of President Buhari and sold illegally by some government and NNPC officials with the proceeds not remitted to the government’s coffers.

When the whistleblower pushed for its agreed five per cent cut of the sale of the crude for exposing the theft, its officials were harassed and issued death threats.

Several efforts for compensation by the whistleblower continues to be frustrated by government officials, who were part of the illegal deal and economic sabotage.

The whistleblower in a letter by its lawyer, Gboyega Oyewole of Lord and Temple, a United Kingdom-based law firm, dated July 23, 2020 to the NNPC GMD has demanded for the company’s compensation for helping to expose the criminal activity.

The whistleblower policy, an anti-corruption programme launched in 2016 by the Nigerian Government, encourages individuals to report cases of financial mismanagement or stolen funds in return for a share of the recovered item if the information provided turns out to be credible.

The letter reads, “Our client was approached by a group in the Peoples’ Republic of Chinas with the intent to sell 48 million barrels of Bonny Light Crude Oil believed to have been stolen from the Federal Republic of Nigeria and stored in various ports and terminals in China.

“It was revealed to our client that the Nigerian National Petroleum Corporations authorised certain companies to sell the stolen product.

“It was agreed that an investigation into the stolen products should be made to ascertain the veracity of the information and gather more facts as to the fraudulent activities. It was also agreed that if the information is found credible, the perpetrators of the offensive will be apprehended and that compensation due to our client for the information so brought forward will be awarded.

“In October 2015, our client got wind of the fact that the stolen products were being moved from their location in China by the Nigerian Government in calculated steps to recover the said products. Our client then caused a letter to be written to Mr Mele Kyari, through Mr. Marco Ramirez, offering to legally purchase the said products from the Nigerian Government if available for sale.

“Our client through its representative subsequently wrote to Mr Umar Mohammed clarifying its intention to the criminal activity in respect to the stolen products and not to make illegal purchases of the same.

“To date, our client has unfortunately not received any form of compensation for the information provided to the Nigerian Government in respect of the stolen products and or response to its offer to legally purchase the same when recovered.

“The upright act of reporting the criminal activity to appropriate quarters was not protected by the expected confidential nature of the policy, thereby exposing officials of our client to serious consequences including threat to life.”

The whistleblower’s lawyer further revealed that Minister of Niger Delta Affairs, Godswill Akpabio, and former Director-General of the Department of State Services, Lawal Daura, were contacted to help get its compensation but nothing tangible surfaced.

The company has now threatened to take legal action against the NNPC if after 14 days from the date of the receipt of the letter the demand was not met.

Sahara Reporters

BREAKING: Global oil price drops to $1 a barrel as traders caught in contract expiry squeeze

Oil prices plunged on Monday as traders got caught in a desperate race to offload contracts for just about any price they could get.

The price of a contract to deliver West Texas Intermediate crude oil next month plunged from $18 US to at one point as low as 16 cents per barrel as traders got caught in flurry to offload the contract before having to actually purchase the oil.

The oil price is determined through investments known as futures contracts, which are agreements to buy and sell a certain amount of oil, on a certain point in time in the future. The contract to deliver oil in May has been the most commonly traded contract of late, so it is currently considered to be the best proxy for the current oil price. Soon June will be.

Typically the contracts are bought and sold countless times before the oil is actually delivered to the final buyer. But the May contract is set to finalize on Tuesday, which means anyone who owns the contract after that has to actually acquire the oil somehow.

That’s easier said than done of late, as storage tanks in North America are almost full to the brim. The U.S. oil hub in Cushing, Okla. has 55 million barrels of oil in storage as of Friday, the highest level since 2018.

Monday’s startling oil price plunge is because traders are feverishly trying to offload the contract before they actually have to find a place to keep the oil starting next month.

“This may prove to be one of the worst deliveries in history,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Nobody wants or is in need of oil right now.”

Storage on land is filling up everywhere, so some producers have taken to storing their excess oil at sea, renting tankers to float aimlessly to store the crude until a higher price or buyer can be found. Rates for the biggest oil tankers have soared as producers scramble to secure space to keep the crude they don’t know what else to do with.

“Floating storage remains the only outlet for a mismatched production and consumption backdrop,” Evercore shipping analyst Jonathan Chappell said in a note to clients last week.

The going rate for the biggest oil tankers in the world hit $165,000 a day this weekend, Chappell calculates, but despite that up-front cost, “it is difficult to envision a scenario where floating storage is not economic and required over the coming months.”

June’s oil contract is also lower, but nowhere near as much. Late in the day on Monday, the June contract was changing hands at $22.27 a barrel, down almost $3 on the day.

While May’s plummet is excessive because of an unexpected imbalance, the intrinsic value of oil is indeed falling because there is too much supply and not enough demand for it.

The COVID-19 pandemic has walloped the global economy, as lockdowns, travel bans and factory shutdowns reduce the need for energy. Oil analyst Bjarne Schieldrop with SEB Research says global demand for oil has fallen by about 25 million barrels a day because of the pandemic.

The oil cartel known as OPEC tried to address that earlier this month by promising to pump 10 million fewer barrels of oil every day, but even that huge supply cut isn’t enough to offset the corresponding drop in demand.

“If your bathtub is about to overflow and you turn down the tap a little, it will still overflow,” Schieldrop said.

‘Negative prices are possible’

The type of oil that comes from Canada’s oilsands is known as Western Canadian Select and it, too, has seen its price plunge in the current economic climate.

WCS typically trades at a discount to WTI since it is harder to transport and refine, but the sell off in WTI’s price has pushed the price of WCS below zero — meaning Canadian oil companies are functionally having to pay to get rid of their product.

Raymond James analyst Jeremy McCrea told CBC News in an interview that he expects the price of WCS will continue to flirt with going below $0 for a little while yet.

“We did see WCS go negative this morning,” he said in an interview. “As we look forward into the next month it does seem to get a little bit better but with storage so full and getting more full by the day it doesn’t look too optimistic over the next couple months.”

©CBC