Host Communities Threaten To Shutdown Oil Production Over 3% PIA Fund

Oil communities in Bayelsa State at the weekend warned that oil production across the state may be halted if Nigerian Upstream Petroleum Regulatory Commission (NUPRC) fails to refrain from actions that could potentially reduce or create bottlenecks for the three percent host community fund under the Petroleum Industry Act (PIA). The warning was contained in a statement jointly signed by a foremost youth leader, Mr Christopher Tuduo, His Royal Highness, Theophilus Moses, chairman Dodo River Rural Development Authority, Francis Amamogiran, Hon. Target Segibo of Oporoma Rural Development Authority and former Chairman of Koluama Clan Oil and Gas Committee, Engr Ebimielayefa Dick- Ogbeyan. The communities, in the statement declared their readiness to take decisive action and escalate their efforts to address the concerns of the oil and gas communities if the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) fails to treat the matter as an emergency. Emphasizing their proactive engagement in pacifying the youths across various communities since the signing of the Petroleum Industry Act (PIA), the communities stated that the stability of oil operations could be compromised if NUPRC allows the situation to deteriorate further. The communities asked NUPRC to recognize the urgency of the matter and take immediate, substantive steps to resolve the concerns at hand. They warned that improper handling of host community issues could have negative repercussions on Nigeria’s oil production and economy. The communities stated that the NUPRC must reverse any action and regulations adversely affecting the host community to avoid a severe backlash. He noted that host communities are often excluded from the decision-making process, which results in the use of public resources to defend decisions in newspapers. They criticized NUPRC’s intention, outlined in a letter dated 9th October, 2023, and signed by Capt. John R. Tonlagha for the Commission Chief Executive, which proposed participation in various activities related to the host community fund, such as BOT nominations, selection and inauguration, Management Committee Advisory Committee nomination and selection, and facilitation of NEEDs assessment. He argued that this would be too much for the three per cent to fund. The group maintained that while NUPRC’s oversight function is essential, over-involvement in the activities of the HCDTs is counterproductive and financially burdensome.  “They are getting into the operations arena, and this will not augur well for the industry because each participation by the NUPRC will be funded from the HCDT trust.” The also criticized the mandate for HCDTs to hire lawyers and accountants with a minimum of 10 years’ experience, stating that it would be impossible to pay such professionals from the five per cent administrative fund, which comes from the three per cent. They argued, “In reality, no NGO organizations, including those like Accord or the Nigerian Conservation Foundation, which is one of the most successful NGOs in Nigeria, employ full-time lawyers, let alone one with 10 years experience. The HCDTs are styled as NGO organizations and should be expected to act according to the best practices and standards of that sector,” The statement stressed further that by insisting that NUPRC must stop overstepping its boundaries, avoid acting as operators, and cease deducting expenses from the three per cent in cunning ways.  The group supports transparency and accountability, but the HostComply portal being developed by NUPRC to manage the administration of the fund should not be funded from the three per cent, as per Sele-Epri.  He stated that the regulator should bear the financial burden for the application, which enables it to monitor activities of different players more effectively. Additionally, the group accused the regulator of insensitivity to the host communities’ concerns, particularly the allocation in the PIA and the criminalization of oil and gas asset destruction against communities lacking surveillance contracts.  They questioned the timing of NUPRC’s review of host community regulations, suggesting that the focus should be on setting up HCDTs and prioritizing benefits to the community.

We’re Not Responsible For Soaring Cooking Gas Prices, Says NLNG

The Nigerian Liquified Natural Gas (NLNG) has dissociated itself from the soaring price of cooking gas in the country, blaming it on foreign exchange pressures.   General Manager, External Relations and Sustainable Development, Andy Odeh, said the company has been making defining contributions to the domestic LPG market, spurring the steady growth of the nation’s DLPG market volume from less than 50,000 metric tonnes of imported LPG in 2007 to over 1.3 million metric tons of both domestic and imported LPG today.  Odeh, said NLNG currently delivers over 450,000 metric tonnes per annum of Butane, the main product in cooking gas and has embarked on domestic propane supply to further grow the market. The Company, he continued, has committed its entire Butane and Propane production to the domestic market from 2023 and despite feed gas challenges, continues to supply LPG to the domestic market, accounting for approximately 40% of the total market volume.  Since the beginning of the year, NLNG has delivered over 380,000 metric tonnes of LPG using the Company’s dedicated LPG vessel. He said the NLNG has remained committed to delivering domestic LPG to locations as close to the market as possible by diversifying delivery points starting with Lagos in 2023, fostering competition among terminal owners and ultimately reducing consumer supply chain costs. Efforts are ongoing to reach terminals in Warri and Calabar as soon as the challenges limiting safe delivery of volumes to these other locations are cleared. “The domestic LPG market, like any other, is subject to dynamic market forces and various external factors. Such factors as changes in exchange rates, and escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs especially for imported LPG, have had significant effect on energy prices in the recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market. “NLNG maintains an unwavering commitment to ensuring the reliable supply of its LPG production to the domestic market at prices that are reflective of the market. The Company is collaborating with relevant industry stakeholders to achieve this objective and will remain focused on achieving its mission through this avenue among others,” Odeh said.

NNPCL raises concerns over Eni Sale

Nigeria National Petroleum Corporation Limited (NNPCL) has raised reservations about Eni SpA’s sale of a subsidiary to local producer Oando Plc which could complicate the transaction. The Italian firm announced on September 4 an agreement to sell to Oando one of its units that has a 20 per cent operating stake in four onshore oil and gas blocks. The deal is the latest in a string of asset sales concluded by international producers in onshore and shallow-water areas of the Niger Delta. The failure to obtain the NNPCL’s prior authorization for the sale “constitutes a grave breach” of the contract governing the joint venture that holds the four permits, the state-owned company said in a letter to the Eni subsidiary, which was dated September 4 and confirmed by Bloomberg. The NNPCL “reserves its rights in relation to the said breach” including an entitlement to invalidate the agreement, the letter said. The letter is “not an objection to the transaction,” NNPCL spokesman Garba Deen Muhammad said by text message on Wednesday. It is “only drawing attention to certain important clauses” in the joint venture agreement that “might have been overlooked in error,” he said. “Adherence to those clauses will protect the transaction now and in the future.” Oando already had a 20 per cent interest in the licenses before the deal was agreed, while the NNPC holds a 60 per cent stake. An Oando spokeswoman declined to comment on the letter because it was addressed to Eni. She said the companies had agreed to the sale of shares in a subsidiary rather than the assignment of an interest in the joint venture. Eni denied committing any breach of the joint venture agreement in selling the subsidiary to Oando. While NNPC has pre-emption rights, Eni had no obligation to inform the state firm in advance of the announcement, the Rome-based company said in a statement Thursday. “Preemption procedures and other consents will be duly and carefully followed,” it said. Oando said in a statement on September 4 that completion of the transaction is subject to ministerial consent and other regulatory approvals. The Nigerian Upstream Petroleum Regulatory Commission and a spokesman for President Bola Tinubu didn’t immediately respond to requests for comment. Oil majors have been offloading onshore and shallow water blocks — located in a challenging operating environment where infrastructure damage from crude theft is a regular occurrence — to domestic producers for more than a decade. The trend is accelerating as international firms focus on deep-water projects in the West African country. Shell Plc and Exxon Mobil Corp. are also working to finalize sales that stalled under former President Muhammadu Buhari, who was succeeded by Tinubu in late May. A lawsuit over alleged pollution in the Delta is holding up Shell’s deal, while the NNPCL has opposed Exxon’s agreement with Seplat Energy Plc and asserted a right to acquire the permits itself.